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My Health, Inc. v. ALR Technologies, Inc.

United States District Court, E.D. Texas, Marshall Division

June 5, 2019

MY HEALTH, INC., Plaintiff,
v.
ALR TECHNOLOGIES, INC., et al., Defendant.

          MEMORANDUM OPINION AND ORDER

          ROY S. PAYNE, UNITED STATES MAGISTRATE JUDGE

         This case is one of several patent infringement actions filed by Plaintiff My Health, Inc. (“My Health”) in May 2016. For three years the parties have battled over the patent-in-suit (U.S. Patent No. 6, 612, 985) (the “'985 Patent”), with My Health contending that Defendants infringed the patent, while Defendants attacked the patent's invalidity under 35 U.S.C. § 101. Defendants were early victors in this action, prevailing on their motion to dismiss pursuant to 35 U.S.C. § 101. (Dkt. Nos. 66 and 68). After this Court declared the patent-in-suit invalid for failure to claim patent-eligible subject matter, Defendants sought attorneys' fees under 35 U.S.C. § 285.

         My Health appealed the § 101 decision (Dkt. No. 85) and asked the Court to stay Defendants' § 285 motion pending the appeal (Dkt. No. 89). In requesting the stay, My Health argued that there “is no allegation or basis to allege that My Health will be unable to pay an award of reasonable attorneys' fees following a ruling from the Federal Circuit should My Health lose the appeal.” (Id. at 7). This Court declined My Health's request to stay (Dkt. No. 98), and went on to declare this case exceptional under § 285 (Dkt. No. 131) (the “§ 285 Order). Plaintiff dismissed the appeal with the Federal Circuit. My Health was ordered to pay Defendants' attorneys' fees within 60 days of the Order, entered on December 19, 2017. (Id. at 13). Instead of paying, My Health appealed the Court's § 285 Order. Because My Health did not first object to the District Judge for review of the § 285 Order, the Federal Circuit dismissed the appeal for lack of jurisdiction. (Dkt. No. 162).

         My Health then submitted objections to the § 285 Order to the District Judge, arguing that this case was not exceptional. (Dkt. No. 167). My Health also, alternatively, sought relief from the § 285 Order, asking the District Judge to deem this case as exceptional but to deny any award of fees because “Defendants will suffer no prejudice where, as a practical matter, My Health simply is incapable of paying the fees award.” (Dkt. No. 168 at 7). The District Judge overruled the objection, adopted the § 285 Order, denied My Health's request for relief from the § 285 Order, and ordered My Health to pay Defendants' counsel within 30 days of the Order, entered on November 30, 2018. (Dkt. No. 175). My Health has yet to pay Defendants' attorneys' fees.

         Defendants now come seeking to collect their fees, not only from My Health, but from My Health's law firm, Pia Anderson Moss Hoyt LLC (“PAMH”), and My Health's sole officer, Dr. Michael Eiffert. PAMH seeks to withdraw as counsel for My Health (Dkt. No. 179), contending that My Health has failed to pay its attorneys' fees to PAMH. Defendants not only oppose this withdrawal (Dkt. No. 179), but also move to join PAMH and Dr. Eiffert under the premise that either or both of these non-parties are responsible for the conduct cited in this Court's § 285 Order (Dkt. Nos. 182 and 230). Defendants also seek an order to show cause why My Health should not be held in contempt of Court for failing to pay their attorneys' fees. (Dkt. No. 183).

         DISCUSSION

         A. Defendants' Joinder Motion

         Federal Rule of Civil Procedure 19 provides for joinder of required parties. Rule 19(a) states, in relevant part:

(a) Person to be Joined if Feasible.
(1) Required Party. A person who is subject to service of process and whose joinder will not deprive the court of subject-matter jurisdiction must be joined as a party if:
(A) in that person's absence, the court cannot accord complete relief among existing parties; or
(B) that person claims an interest relating to the subject of the action and is so situated that disposing of the action in the person's absence may:
(i) as a practical matter impair or impede the person's ability to protect the interest; or
(ii) leave an existing party subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations because of the interest.

         Fed. R. Civ. P. 19(a). Joinder of an additional party is mandatory only under the circumstances described in 19(a). The movant bears the initial burden of demonstrating that an absent party is necessary. Hood ex rel. Mississippi v. City of Memphis, 570 F.3d 625, 628 (5th Cir. 2009). When “an initial appraisal of the facts indicates that a possible necessary party is absent, the burden of disputing this initial appraisal falls on the party who opposes joinder.” Pulitzer-Polster v. Pulitzer, 784 F.2d 1305, 1309 (5th Cir. 1986).

         Defendants argue that PAMH and Dr. Eiffert should be joined, post-judgment, “as third parties to this case, at least for purposes of being jointly and severally liable for payment of Defendants' attorneys' fees.” (Dkt. No. 182 at 2). Defendants assert that joinder of PAMH and Dr. Eiffert is necessary because they are either individually or jointly responsible for the conduct that made this case exceptional and that My Health was created as a fiction for PAMH and Dr. Eiffert. (Id. at 1, 7). Defendants contend that “[i]n view of the pattern of litigation misconduct in their frivolous case, misleading dealings with this Court, the Federal Circuit, and Defendants, and repeated defiance of the Court's orders and rules, the Pia Firm and Dr. Eiffert should not now be allowed to hide behind the empty shell that is My Health, Inc., which appears to have been created by [PAMH] and Dr. Eiffert only as a vehicle to monetize its ‘unquestionably abstract' patent.” (Id. at 6).[1] Defendants further asks the Court to order additional payment of their attorneys' fees and costs incurred since the § 285 Order was issued, to permit post-judgment discovery to further explore the misconduct, and to impose sanctions on Joseph G. Pia. (Id. at 4, 8).

         1. ...


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