EarthCam, Inc. v. OxBlue Corp.

Citation: 658 F. App'x 526Docket: No. 16-10363

Court: Court of Appeals for the Eleventh Circuit; September 27, 2016; Federal Appellate Court

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The appeal concerns whether the District Court incorrectly awarded attorney's fees to OxBlue under Georgia's offer of settlement statute, O.C.G.A. 9-11-68, in a case involving both federal and state law claims, and whether the Court abused its discretion in determining the fee amount. The Court found no error in the application of the statute or in the fee determination, affirming the District Court’s decision.

OxBlue had served an offer of compromise to EarthCam, which went unanswered within the required 30 days, leading to its rejection. Following a court order granting summary judgment to OxBlue, EarthCam did not recover any claims, prompting OxBlue to seek attorney's fees based on the statute, asserting their entitlement due to EarthCam's failure to recover at least 75% of the settlement offer.

EarthCam opposed the motion, arguing that the statute conflicted with federal law, that it was premature, and that if applicable, its scope should consider the multiple claims involved. The Court addressed the applicability of O.C.G.A. 9-11-68, concluding it does apply despite EarthCam's argument for preemption by Fed. R. Civ. P. 68, based on the Erie doctrine, which dictates that federal courts must apply state substantive law when adjudicating state law claims.

In the Eleventh Circuit, the determination of whether to apply state or federal law involves a multi-step analysis. Initially, the court assesses if there is a conflict between state and federal law regarding the issue in question. If no conflict exists, both laws can be harmoniously applied. However, if a conflict is identified, the court must check for a relevant congressional statute or Federal Rule of Civil Procedure. If a federal statute or rule directly addresses the issue, federal law prevails. If not, the court decides whether to apply federal judge-made law instead of state law. In *Tanker Management Inc. v. Brunson*, the Eleventh Circuit utilized a "direct collision" test to evaluate whether a Florida statute conflicted with a federal rule. The court found that Rule 68, which pertains to interest and offers of judgment, did not directly collide with the Florida statute concerning attorney’s fees and settlement offers. The distinction made in *Walker v. Armco Steel Corp.* also supported the application of state law when no federal rule covered the specific point in dispute. In *Wheatley*, the court concluded that Rule 68 and O.C.G.A. 9-11-68 were not in direct conflict and emphasized that O.C.G.A. 9-11-68 establishes a substantive right to attorney's fees, which must be applied as it does not conflict with federal law or procedural rules. EarthCam's argument against the applicability of *Tanker* is noted, but the court is still required to apply the "direct collision" analysis established in that case, which found no conflict with O.C.G.A. 9-11-68. EarthCam failed to provide sufficient justification for disregarding this precedent.

Both Tanker and Wheatley being "pure diversity cases" does not alter the applicability of the Erie doctrine, which applies equally to state law claims under supplemental jurisdiction. The doctrine mandates the application of O.C.G.A. 9-11-68 as it is substantive and aligns with Rule 68. EarthCam contends that OxBlue’s Motion is premature, citing O.C.G.A. 9-11-68(d) which stipulates that attorney’s fees can only be ordered upon remitter affirming the judgment. EarthCam references Hall v. 84 Lumber Co. and Wheatley to support its claim, but neither case is controlling or directly relevant; Hall indicates fees are premature without a final judgment, while Wheatley reserved ruling without explaining its rationale. The statute's language restricts ordering payment until the judgment is affirmed but allows OxBlue to file its Motion and permits the Court to rule on it before the appeal concludes. Regarding specific fee challenges, EarthCam argues for reductions based on claimed attorneys' fees related to federal question claims, fees associated with a motion for summary judgment that was to be absorbed by Mr. Hermann, and non-litigation work that should be excluded. The Court will evaluate these arguments individually.

EarthCam's claims against OxBlue stem from alleged intrusions into its computer system to unlawfully obtain information about its products, leading to damages. The Court dismissed these federal and state law claims. EarthCam contends that a significant portion of OxBlue's attorneys’ fees relates to defending against its summary judgment motion on federal claims, while OxBlue argues that the intertwined nature of the federal and state claims justifies claiming all fees incurred since September 1, 2013. The Court found it challenging to separate the time spent on federal versus state claims due to their overlap.

To determine reasonable compensation under O.C.G.A. 9-11-68, the Court assessed the legal services necessary had EarthCam only pursued state claims. It concluded that while some legal work pertained solely to federal claims, much of OxBlue's fees were incurred for state claims, resulting in a $23,000 reduction in OxBlue's fee claim to account for federal claim-related work.

Regarding attorneys’ fees incurred by Hermann's separate counsel, EarthCam's argument that a Consent Order precludes such fees was rejected, as the Court deemed the charges relevant to OxBlue's litigation. Lastly, OxBlue conceded it should not be compensated for services provided by Ms. Smith on specific dates in March 2014, leading to a granted request to exclude $1,065 in fees.

Gregory’s travel expenses related to work performed by an attorney from OxBlue's Jacksonville office are contested by EarthCam, which claims that clients typically do not reimburse travel time for litigation-related trips. OxBlue asserts that Gregory's travel was specifically necessary for this case and was a cost-effective decision. EarthCam’s objections are deemed insufficient to exclude the claimed expenses. 

Additionally, EarthCam seeks to deduct costs for two deposition transcripts and one meal from August 2013, prior to OxBlue's demand under O.C.G.A. 9-11-68 being rejected. OxBlue clarifies that it does not seek recovery for these August expenses and is agreeable to the deductions, which total $6,931.85.

In conclusion, OxBlue's Motion for Attorneys’ Fees and Expenses is partially granted, resulting in an award of $292,611.17 after deductions. The enforcement of this judgment is stayed pending EarthCam's appeal to the Eleventh Circuit. EarthCam's response to the motion is acknowledged and referenced, while the Court reaffirms its adherence to the Eleventh Circuit's binding interpretation of relevant legal standards, rejecting EarthCam's proposed narrower analysis. Additional arguments from EarthCam are also considered in the Court's decision.