10
Jun
By Eric Schweibenz
On June 7, 2010, the International Trade Commission issued its Opinion granting in part a motion for sanctions filed by complainants Magotteaux International S/A and Magotteaux Inc. (collectively, “Magotteaux”) in Certain Composite Wear Components and Products Containing Same (Inv. No. 337-TA-644).  In the Opinion, the Commission adopted the recommendation of ALJ Theodore R. Essex to award Magotteaux attorney’s fees, but reduced the amount.

By way of background, the Commission instituted this investigation on April 25, 2008, in response to a complaint filed by Magotteaux.  The complaint alleged a violation of Section 337 by respondents Fonderie Acciaierie Rioale S.P.A. (“FAR”), AIA Engineering Ltd., and Vega Industries (collectively, “AIAE”).  FAR was terminated from the investigation, leaving AIAE as the remaining respondents.

AIAE responded to the complaint, but thereafter reduced their participation in discovery.  On March 19, 2009, ALJ Essex issued Order No. 23, granting several motions to compel and ordering AIAE to respond to written discovery and to produce fact and expert witnesses for deposition.  AIAE failed to comply with the order and continued to refuse to participate in discovery.  On May 8, 2009, ALJ Essex issued an Initial Determination (“ID”) finding AIAE in default pursuant to Commission Rules 210.16(a)(2) and 210.17.  The Commission determined not to review the ID, and indicated that, in addition to finding a violation pursuant to Commission Rule 210.17, the Commission would presume the facts alleged in the Complaint to be true with respect to AIAE.  The Commission then issued a limited exclusion order, a cease and desist order, and terminated the investigation.  See our July 8, 2009, July 21, 2009, and November 30, 2009 posts for more details.

On May 27, 2009, Magotteaux moved for sanctions (in the form of attorney’s fees) against AIAE.  The motion was supported by the Commission Investigative Staff (“OUII”).  ALJ Essex issued a Recommended Determination (“RD”) granting the motion in part on July 17, 2009.

In its June 7, 2010 Opinion, the Commission agreed with ALJ Essex that AIAE’s conduct during the investigation warranted sanctions.  The Commission also agreed with ALJ Essex that, under Commission Rule 210.33(c), Magotteaux could only recover those attorney’s fees incurred as a result of AIAE’s failure to comply with an order to provide or permit discovery.  Thus, Magotteaux was entitled to attorney’s fees associated with AIAE’s failure to comply with Order No. 23, including fees incurred in connection with Magotteaux’s April 13, 2009 motion for default and Magotteaux’s response to OUII’s March 27, 2009 motion for default.

According to Magotteaux, the fees associated with the default motions totaled $75,504.67.  The Commission, however, determined that some of these entries were “mixed” entries, representing charges related to both the default motions and other tasks.  The Commission declined to award attorney’s fees with respect to these mixed entries, determining that Magotteaux did not meet its burden to show which portion of the mixed entries were associated only with the default motions.  Thus, the Commission awarded Magotteaux attorney’s fees in the amount of $43,366.

Lastly, the Opinion noted that Commissioner Lane dissented with regard to the total amount awarded.  According to Commissioner Lane, a reasonable fee for the default motions should have been based on a value-based services or flat-fee billing model, rather than an hourly rate model.