Case 1:20-cv-00393-LO-TCB Document 782 Filed 07/09/21 Page 1 of 16 PageID# 21000
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`UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF VIRGINIA
`ALEXANDRIA DIVISION
`
`
`
`RAI STRATEGIC HOLDINGS, INC. and
`R.J. REYNOLDS VAPOR COMPANY,
`
`
`Plaintiffs,
`
`v.
`
`
`
`
`ALTRIA CLIENT SERVICES LLC; PHILIP
`MORRIS USA INC.; and PHILIP MORRIS
`PRODUCTS S.A.
`
`Defendants.
`
`Civil Action No. 1:20-cv-393
`
`
`
`
`REPLY IN SUPPORT OF COUNTERCLAIM PLAINTIFFS’
`CROSS-MOTION FOR ATTORNEYS’ FEES AND COSTS
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`
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`

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`Case 1:20-cv-00393-LO-TCB Document 782 Filed 07/09/21 Page 2 of 16 PageID# 21001
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`TABLE OF CONTENTS
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`Page
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`I.
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`II.
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`INTRODUCTION ...............................................................................................................1
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`ARGUMENT .......................................................................................................................2
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`RJR’s Vexatious Conduct Warrants An Award Of Reasonable Attorneys’
`Fees And Costs ........................................................................................................2
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`The Court Has Authority To Sanction RJR For Its Bad Faith Litigation
`Conduct ....................................................................................................................6
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`1.
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`2.
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`3.
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`The Court May Award Fees And Costs Under Its Inherent
`Authority ......................................................................................................6
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`The Court Should Award Fees And Costs Under 28 U.S.C. § 1927 ...........8
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`The Court Should Award Fees And Costs Under Rule 41(a)(2) ...............10
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`A.
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`B.
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`i
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`

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`Case 1:20-cv-00393-LO-TCB Document 782 Filed 07/09/21 Page 3 of 16 PageID# 21002
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`TABLE OF AUTHORITIES
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`CASES
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`Carroll v. E One Inc.,
`893 F.3d 139 (3d Cir. 2018) ...................................................................................................... 11
`
`Chambers v. NASCO, Inc.,
`501 U.S. 32 (1991) ...................................................................................................................... 6
`
`Exergen Corp. v. Wal-Mart Stores, Inc.,
`575 F.3d 1312 (Fed. Cir. 2009) ................................................................................................. 10
`
`InternMatch, Inc. v. Nxtbigthing, LLC,
` No. 14-cv-05438-JST, 2016 WL 540812 (N.D. Cal. Feb. 11, 2016) ...................................... 11
`
`Mulugeta v. Ademachew.
`No. 1:17-cv-649, 2019 WL 7945712 (E.D. Va. Nov. 6, 2019) ........................................... 6, 7, 8
`
`Nat’l Satellite Sports, Inc. v. Comcast Satellite Commc’ns, Inc.,
`No. CIV. H-00-261, 2000 WL 1717304 (D. Md. Nov. 15, 2000) ....................................... 10, 11
`
`Ohio Willow Wood Co. v. Alps S., LLC,
`813 F.3d 1350 (Fed. Cir. 2016) ................................................................................................... 7
`
`Samsung Elec. Co. v. Rambus, Inc.,
`439 F. Supp. 2d 524 (E.D. Va. 2006) .......................................................................................... 6
`
`Six v. Generations Fed. Credit Union,
`891 F.3d 508 (4th Cir. 2018) ....................................................................................................... 8
`
`Stradtman v. Republic Servs., Inc., h
`121 F. Supp. 3d 578, 588 (E.D. Va. 2015) .............................................................................. 6, 9
`
`Strag v. Board of Trs.,
`55 F.3d 943 (4th Cir. 1995) ......................................................................................................... 8
`
`
`
`STATUTES
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`28 U.S.C. § 1927 ............................................................................................................................. 8
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`
`
`ii
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`I.
`
`INTRODUCTION
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`RJR concedes the key facts compelling the grant of PMP/Altria’s cross-motion for
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`reasonable fees and costs. First, RJR does not dispute that it waited until 6:46 P.M., after business
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`hours, the evening before the Court’s summary judgment deadline to “withdraw” its inequitable
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`conduct counterclaim. Dkt. 775 at 5-6. Second, RJR does not genuinely dispute that there never
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`were any newly discovered “true facts” supporting its amendment in the first place, contrary to its
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`(mis)representations to this Court. Third, RJR does not dispute that it failed to make even a
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`rudimentary effort in discovery to support its inflammatory pleadings, and that its inequitable
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`conduct contentions merely parroted its bare pleading—without any citations to documents,
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`testimony, expert analysis, or any “discovery.” Id. at 4-6. Fourth, RJR’s opposition now reveals,
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`in a lapse of candor, that it decided to drop its inequitable conduct by February 24, 2021—months
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`before summary judgment briefing and before RJR had even deposed the accused inventors. Id.
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`at 22. Yet RJR waited nearly four months to inform PMP/Altria of its intent to drop its inequitable
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`conduct counterclaim. Even then, RJR only did so when prompted and through an attempt to
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`extract a facially unreasonable stipulation. Reynolds provides the Court with no excuse for its
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`refusal to acknowledge its planned withdrawal sooner, other than its hollow assertion that
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`PMP/Altria “should have known.”
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`Instead, RJR shamelessly doubles-down on its misconduct, indeed going so far as to
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`suggest it made a laudable decision to streamline issues, and nothing more. Dkt. 775 at 18-19. Far
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`from laudable, RJR’s conduct is vexatious and sanctionable, and should neither be condoned nor
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`excused. RJR (i) misled the Court regarding the “true facts” it possessed to inject inequitable
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`conduct in this case in the first instance, (ii) failed to substantiate its counterclaim with discovery,
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`(iii) waited until the eleventh hour to declare its intent to drop this counterclaim, (iv) knowingly
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`proposed an untimely and facially unreasonable stipulation of dismissal, and (v) multiplied the
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`1
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`proceedings by opposing PMP/Altria’s summary judgment motion on procedural grounds despite
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`conceding each of PMP/Altria’s material facts and controlling law. RJR cites no facts or authority
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`that exonerate its conduct.
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`Based on the undisputed (and undisputable) facts, this Court should permit PMP/Altria to
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`recover their reasonable fees and costs.
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`II.
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`ARGUMENT
`A.
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`RJR’s Vexatious Conduct Warrants An Award Of Reasonable Attorneys’
`Fees And Costs
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`RJR does not dispute the key facts compelling the grant of PMP/Altria’s cross-motion for
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`reasonable fees and costs. See Dkt. 775 at 2-6, 18-26. That should be dispositive. Instead, RJR
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`asserts that its conduct does not amount to sanctionable bad faith. Id. at 18-26. RJR is wrong for
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`five reasons.
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`First, RJR’s brief confirms that its representation to the Court in its motion for leave to
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`amend that it had “discovered true facts” to support its inequitable conduct counterclaim was
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`misleading at best. Dkt. 775 at 23. RJR now attempts to walk back that representation of purported
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`“true facts” to a single sentence—“i.e., the ’545 patent relies on Brooks and McCafferty, but they
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`were not disclosed as prior art despite the ’545 inventors’ awareness of those patents[.]” Dkt. 775
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`at 23. But this is not what RJR told the Court when it sought leave to add its inequitable conduct
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`counterclaim.1 Nor could this lone, purported new “true fact” prevail, even at the pleadings stage,
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`as PMP/Altria stressed in its opposition to RJR’s motion for leave to add inequitable conduct. See,
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`1 Indeed, RJR’s reply brief in support of its motion for leave to add inequitable conduct comprised
`eight pages briefing detailing the purported “true facts” that RJR argued showed the materiality of
`the inequitable conduct references as well as facts that evidence the inventors’ specific intent. Dkt.
`137 at 1-8. And as discussed below, RJR never attempted to substantiate any of these “[un]true
`facts.”
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`2
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`e.g., Dkt. 130 at 6-7 (describing Federal Circuit authority that required RJR to allege facts
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`sufficient to establish that Brooks and McCafferty were not cumulative of record prior art). Under
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`the bright light of PMP/Altria’s cross-motion, RJR’s inequitable conduct defense is exposed for
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`what it was—baseless from the outset. RJR never had any newly developed “true facts.”
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`Second, RJR does not dispute that it failed to take even the most rudimentary discovery to
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`attempt to substantiate its inequitable conduct counterclaim. RJR contends only that it “pursu[ed]
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`proportionate discovery in support of” its inequitable conduct counterclaim. Dkt. 775 at 3-4, 23.
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`But even that is incorrect. RJR identifies only (i) seven requests for admission and (ii) 17 pages
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`of deposition testimony to support its inequitable conduct counterclaim. Dkt. 775 at 4. And RJR
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`cited none of this discovery in its contention interrogatory response served on October 29, 2020.
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`See Dkt. 766-1 at 7-10.
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`The discovery that RJR did not pursue evidences (in retrospect) RJR’s apparent lack of
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`serious intent to pursue its counterclaim all along. For example, RJR failed to question co-inventor,
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`Mr. Ripley, about Brooks, the only reference pertaining to his accused inequitable conduct. RJR
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`did not even reference Brooks during Mr. Ripley’s deposition. Ex. 1. Moreover, RJR did not ask
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`Altria’s technical expert, Mr. McAlexander, a single question at his deposition about his opinions
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`regarding the cumulativeness (non-materiality) of the inequitable conduct references. Ex. 2
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`(failing to question Mr. McAlexander on either Brooks or McCafferty). As detailed in
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`PMP/Altria’s summary judgment briefing, these uncontested opinions are dispositive. Dkt. 694 at
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`8-9, 11-12. Furthermore, RJR’s opposition concedes that “Reynolds’s expert reports do not
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`include opinions on inequitable conduct.” Dkt. 775 at 22.
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`3
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`RJR levied serious allegations of fraud attacking the reputations of the inventors, and then
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`made no attempt to substantiate them through discovery. This is vexatious, and should not be
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`condoned.
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`Third, RJR makes the demonstrably false assertion that it was “forthcoming regarding its
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`intent to dismiss the inequitable conduct claim” and it “put Altria/PMP on notice of Reynolds’s
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`narrowing of its claims.” Dkt. 775 at 22. RJR cannot (and does not) dispute that it maintained its
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`inequitable conduct counterclaim until 6:46 P.M. June 1, 2021—i.e., the evening before the
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`Court’s summary judgment deadline. Dkt. 775 at 5-6. It also now admits (for the first time) that
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`it decided to drop inequitable conduct at least nearly four months earlier—i.e., before Dr. Blalock
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`served his opening expert report purportedly narrowing the issues on February 24, 2021. Dkt. 775
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`at 22; see also generally Dkt 694-4. RJR’s assertion that PMP/Altria should simply somehow
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`have known of RJR’s withdrawal of its counterclaim is specious. Of course, had this been readily
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`apparent, RJR could have confirmed it was withdrawing its counterclaim when asked on May
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`14th.2 RJR’s assertion that it took PMP/Altria’s May 14th request to mean that “Altria/PMP was
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`not moving for summary judgment on the inequitable conduct claim” is incredible. Dkt. 775 at
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`22, n.12. RJR knew PMP/Altria sought to narrow the disputes before dispositive briefing. And
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`2 RJR contends that PMP/Altria’s decision not to maintain willful infringement on two of five
`patents is “identical” to its decision to abandon inequitable conduct. Dkt. 775 at 14. Not so.
`PMP/Altria litigated those claims throughout fact and expert discovery, developing a full record.
`See, e.g., Dkt. 690-7, Exs. O,P; Dkt. 733-8; Dkt. 751-2; Dkt. 733-3, ¶¶ 313-16; Dkt. 733-11, ¶¶
`633, 638. By contrast, RJR failed to take basic discovery regarding inequitable conduct. See
`Discussion at 3-4, supra. And as it now admits, RJR decided to abandon its inequitable conduct
`counterclaim at the start of expert discovery—i.e. February 2021—but did not inform PMP/Altria
`until the evening before summary judgment motions were due. Dkt. 775 at 22. Moreover,
`although PMP/Altria withdrew its willfulness claim for certain patents, PMP/Altria is evaluating
`whether to reinstate willfulness as to those patents based on Dr. Figlar’s recent Court-ordered
`deposition testimony and documents indicating, contrary to RJR’s previous interrogatory
`responses, that RJR was most likely aware of these patents at the time of their issuance.
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`4
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`RJR knew that it had no intent of proceeding with its inequitable conduct counterclaim. Still, RJR
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`chose to remain silent regarding withdrawal of its counterclaim until the evening before summary
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`judgement motions were due. Dkts. 763-4, 763-5. This is unexplainable as anything other than
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`bad faith.
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`Fourth, RJR asserts that it “engaged in a good faith effort to limit the claims at issue and
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`the resulting time and expense required to prepare for trial.” Dkt. 775 at 23. Not so. RJR now
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`admits that it knew no later than February 24, 2021 that it would not bring its inequitable conduct
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`counterclaim to trial. Dkt. 775 at 22. RJR waited four months while PMP/Altria incurred expenses
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`to defend against that counterclaim. And when RJR finally informed PMP/Altria of its plan, RJR
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`attempted to extract a facially unacceptable stipulation of dismissal that eliminated the Court’s
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`discretion to award fees and costs and failed to address RJR’s dropped affirmative defenses. Dkt.
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`720-9.
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`Fifth, even since RJR “withdrew” its counterclaim, it has multiplied the proceedings by
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`opposing PMP/Altria’s summary judgment motion on procedural grounds. Dkts. 718, 720, 728.
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`RJR admits that it failed to contest each material fact in its inequitable conduct summary judgment
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`motion. See Dkt. 775 at 8. RJR justifies its continued procedural fight stating that “[it] had no
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`obligation to respond to Altria and PMP’s statement of facts on claims and defenses that it was
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`withdrawing from the case . . . . ” Dkt. 775 at 8. This runs afoul of Local Rule 56(B), which
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`provides that a “brief in response to [a summary judgment] motion shall include a specifically
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`captioned section listing all material facts as to which it is contended that there exists a genuine
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`issue necessary to be litigated[.]” The circumstances here are straightforward: RJR did not dispute
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`any of PMP/Altria’s material facts and law. But instead of conceding defeat, RJR multiplied the
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`proceedings with needless procedural posturing and complexity.
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`5
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`

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`RJR’s undisputed conduct merits an award of reasonable attorneys’ fees and costs.
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`B.
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`The Court Has Authority To Sanction RJR For Its Bad Faith Litigation
`Conduct
`1.
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`The Court May Award Fees And Costs Under Its Inherent Authority
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`RJR does not dispute that the Court possesses “inherent powers to sanction litigation
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`misconduct . . . [if] a party has ‘acted in bad faith, vexatiously, wantonly, or for oppressive
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`reasons[.]’” Dkt. 775 at 24. Instead, RJR relies on three points to distinguish PMP/Altria’s
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`authority that compels sanctions. Id. at 24-26. Each fails.3
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`First, RJR contends that it did not “act in ‘bad faith, vexatiously, wantonly, or for
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`oppressive reasons[,]’” like the sanctioned party in Mulugeta v. Ademachew. No. 1:17-cv-649,
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`2019 WL 7945712, at *3 (E.D. Va. Nov. 6, 2019); Dkt. 775 at 25. Not so. Just as in Mulugeta,
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`RJR pursued a meritless defense to force litigation. RJR has cited no evidence in its contention
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`interrogatory response (or anywhere) that supports its counterclaim. See Dkt. 766-1 at 7-10.
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`Furthermore, RJR has conceded the merits of its inequitable conduct claim on summary judgment.
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`Dkt. 728 at 1-3, 6-8. Despite this, RJR still maintains that it has not conceded its inequitable
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`conduct counterclaim. RJR’s procedural maneuvering notwithstanding, RJR has conceded
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`inequitable conduct and that it never had a basis for asserting it.
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`3 RJR also argues that PMP/Altria is not entitled to fees under the Court’s inherent authority
`because it “has failed to demonstrate entitlement to fees under Rule 41 or Section 1927.” Dkt. 775
`at 24. RJR’s cases do not support its contention. Samsung Elec. Co. v. Rambus, Inc. stands for
`the unremarkable proposition that the Court is free to award sanctions under statutes and rules
`when applicable. 439 F. Supp. 2d 524, 574 (E.D. Va. 2006). And Stradtman v. Republic Servs.,
`Inc. holds that the “bad faith” standard under Section 1927 is lower than that required to sanction
`an attorney under the Court’s inherent authority. 121 F. Supp. 3d 578, 588 (E.D. Va. 2015).
`Nowhere do either of these cases condition the Court’s discretion to sanction pursuant to its
`inherent authority based on rules and statutes. Indeed, the Supreme Court has held that this power
`exists independent of its authority under the Federal Rules or statute. Chambers v. NASCO, Inc.,
`501 U.S. 32, 44-46 (1991).
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`6
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`

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`Like the sanctioned party in Mulugeta, RJR “failed to offer testimony or evidence to
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`support [its] claims at all stages of the litigation, [but] was nonetheless successful in forcing
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`[litigation] and thus [forced PMP/Altria] to incur [costs.]” Mulugeta, 2019 WL 7945712, at *4.
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`As this Court explained in Mulugeta, that is vexatious, bad faith conduct that warrants reasonable
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`attorneys’ fees and costs.
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`RJR also seeks to distinguish its conduct from that of the sanctioned party in Mulugeta by
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`presenting an untimely argument of the merits of its inequitable conduct counterclaim. Dkt. 775
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`at 8-10 (contending that PMP/Altria’s statement of material facts do not resolve issues of fact on
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`materiality and intent). RJR failed to raise these arguments in its summary judgment opposition.
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`Dkt. 728 at 1-3, 6-8. They are waived. They are also wrong for the reasons detailed in
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`PMP/Altria’s summary judgment briefing. As to materiality, PMP/Altria’s expert provided
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`unrefuted opinions that both Brooks and McCafferty are cumulative of record prior art. Dkt. 694
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`at 9, 13. As to intent, RJR pointed to zero evidence to support the fact finder concluding that the
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`single most reasonable inference to be drawn from the evidence is specific intent to deceive. See
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`Ohio Willow Wood Co. v. Alps S., LLC, 813 F.3d 1350, 1357 (Fed. Cir. 2016) (“[D]eceptive intent”
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`must be “the single most reasonable inference to be drawn from the evidence.”). RJR’s attempt to
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`resurrect its inequitable conduct counterclaim is too little too late and factually and legally
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`unsupported, and is still further evidence of bad faith. Mulugeta, 2019 WL 7945712, at *3.
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`Second, RJR attempts to distinguish PMP/Altria’s authority, contending that Reynolds did
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`not “misrepresent facts to the Court.” Dkt. 775 at 25. As discussed above, it did just that. RJR
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`never discovered “true facts” to support its inequitable conduct counterclaim as represented to the
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`Court on its motion for leave to amend and again in its present opposition. See Discussion at 2-3,
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`supra. RJR’s entire counterclaim is built upon its key misrepresentation of its discovered “true
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`7
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`facts.” Dkt. 137 at 1-8.4 RJR’s conduct mirrors the sanctioned parties’ conduct in the cases cited
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`by PMP/Altria. See Six v. Generations Fed. Credit Union, 891 F.3d 508, 520-21 (4th Cir. 2018);
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`Strag v. Board of Trs., 55 F.3d 943, 955 (4th Cir. 1995); Mulugeta 2019 WL 7945712, at *3.
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`Third, RJR contends that if “fees were awarded on this record, they could be awarded any
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`time a party moves to dismiss a claim.” Dkt. 775 at 26. Not so. The record demonstrates a pattern
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`of intentional misconduct designed to drive up PMP/Altria’s litigation costs. See Discussion at 5,
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`supra. This dishonest, vexatious conduct compels an award of reasonable attorneys’ fees and
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`costs. See Mulugeta, 2019 WL 7945712, at *4 (sanctioning a party where the party’s “participation
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`in this litigation was simply a scheme to defeat Plaintiff's valid claim, to abuse the judicial process
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`for oppressive reasons, and to delay justice”).
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`2.
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`The Court Should Award Fees And Costs Under 28 U.S.C. § 1927
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`RJR admits that the Court may award “attorneys’ fees for conduct that ‘unreasonably and
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`vexatiously’ multiplies the proceedings in a case.” Dkt. 775 at 21. RJR argues instead that
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`PMP/Altria has (i) waived fees under Section 1927 and (ii) that RJR’s “good faith” conduct did
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`not multiply the proceedings. RJR is wrong on both points.
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`First, PMP/Altria has not waived an award of fees and costs under Section 1927.
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`PMP/Altria explained the factual and legal basis for PMP/Altria’s sanctions request. Dkt. 763 at
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`3-7, 13-17 (citing 28 U.S.C. § 1927 as a basis for sanctions); see also Dkt. 761 (moving for
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`reasonable fees and costs under 28 U.S.C. § 1927).
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`4 RJR further contends (without any citation) that the “true facts supporting its pleading of
`inequitable conduct remain true.” Dkt. 775 at 25. The record and RJR’s conduct belie this
`statement. RJR identifies no support in its contention interrogatory response and has conceded
`each material fact raised by PMP/Altria’s summary judgment motion. RJR cannot credibly state
`that its materiality and specific intent contentions “remain true” after it failed to adduce any
`evidence in support.
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`8
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`

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`Second, RJR contends that PMP/Altria’s claim “under Section 1927 . . . fails on the merits”
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`because there was no multiplication of the proceedings and it engaged in “a good faith effort to
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`limit the claims at issue . . . to prepare for trial.” Dkt. 775 at 22-23. Not so. As noted, RJR’s
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`conduct multiplied the proceedings, leading to multiple motions that burdened the Court and drove
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`up substantial fees and costs for PMP/Altria. RJR misrepresented that it had “true facts” in order
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`to inject inequitable conduct in the case in the first instance. See Discussion at 2-3, supra. Then,
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`RJR waited months to announce its intent to drop its invasive allegations of fraud until after it
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`knew PMP/Altria would have drafted its summary judgment motion. Dkt. 763 at 6. Even then,
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`RJR did not drop the fight. Instead, RJR raised yet another procedural barrier, unilaterally moving
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`to dismiss its inequitable conduct counterclaim on the day summary judgment oppositions were
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`due. Dkts. 718, 720, 728. Each of these actions unreasonably multiplied the proceedings and
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`compels an award of reasonable fees and costs.
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`RJR cannot assert that it attempted to avoid costs in good faith and “resolve dismissal under
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`Rule 41 informally by . . . preparing a stipulation of dismissal.” Dkt. 775 at 22-23. RJR omits
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`that its “stipulation” arrived after 7 P.M. the day of the Court’s summary judgment deadline and
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`unreasonably (i) lacked a provision for its “withdrawn” affirmative defenses, and (ii) demanded
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`that PMP/Altria waive all future ability to recover fees and costs. Dkts. 720-8, 720-9. RJR’s
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`repeated attempt to reshape its misconduct to avoid the Court’s scrutiny confirms the vexatious
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`nature of RJR’s actions.
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`RJR’s unreasonable conduct did “nothing more than driv[e] up [PMP/Altria’s] litigation
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`costs.” Stradtman, 121 F. Supp. 3d at 585. Sanctions against RJR’s counsel under Section 1927
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`are proper.
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`9
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`3.
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`The Court Should Award Fees And Costs Under Rule 41(a)(2)
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`RJR admits that Rule 41 permits an award of attorneys’ fees and costs where there are
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`“exceptional circumstances such as a finding that plaintiff’s suit was . . . unnecessary, groundless,
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`vexatious and oppressive.” Dkt. 755 at 19 (citing Nat’l Satellite Sports, Inc. v. Comcast Satellite
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`Commc’ns, Inc., No. CIV. H-00-261, 2000 WL 1717304, at *2 (D. Md. Nov. 15, 2000)). RJR
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`contends that no exceptional circumstances exist. RJR is wrong for two reasons.
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`First, RJR argues (without support) that it performed pre-filing diligence to develop its
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`inequitable conduct counterclaim.5 But RJR’s opposition confirms that its “investigation,” if any,
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`revealed at most three facts: (i) that “Altria/PMP’s ’545 patent relied on two pieces of prior art,
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`Brooks and McCafferty,” (ii) “which had not been disclosed in the patent application,” and (iii)
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`“that ’545 inventors Mr. Higgins and Mr. Ripley were aware of Brooks and McCafferty at the time
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`they filed their patent application.” Dkt. 775 at 20. Even assuming RJR’s undisclosed
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`“investigation” revealed these facts, they are inadequate to sustain the inequitable conduct
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`counterclaim it pled. As the Federal Circuit has said, inequitable conduct allegations require (for
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`example) factual allegations to support “why” withheld references are but for material, and not
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`cumulative. See Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312, 1326-30 (Fed. Cir. 2009).
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`This exemplary omission shows that whatever purported “diligence” RJR performed, it fails as to
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`one of the most basic elements of inequitable conduct. It cannot be inequitable conduct to fail to
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`disclose that which is immaterial (or cumulative).
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`5 To the extent such pre-filing diligence exists, it has never been produced in discovery. RJR’s
`assertion now would appear to be a waiver of privilege and work product. At the very least, it
`should be disregarded as unsupported. RJR most certainly cannot withhold the evidence of such
`due diligence while at the same time relying on it.
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`10
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`Case 1:20-cv-00393-LO-TCB Document 782 Filed 07/09/21 Page 14 of 16 PageID# 21013
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`Second, RJR cites inapposite case law to argue its conduct does not meet the Rule 41
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`standard. In Nat’l Satellite Sports, the court denied fees and costs where (i) there was no evidence
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`of bad faith by the dismissing party and (ii) the dismissing party conducted pre-suit diligence and
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`conducted discovery. 2000 WL 1717304, at *2. By contrast, as noted, RJR has adduced no
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`evidence of pre-filing diligence, and failed to pursue its counterclaim during discovery. See
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`Discussion at 3-4, supra. In InternMatch, Inc. v. Nxtbigthing, LLC, the court denied attorneys’
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`fees where the motion for voluntary dismissal was not made at the eleventh hour and the court
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`could not “attribute the timing of [the] motion to any apparent gamesmanship.” No. 14-cv-05438-
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`JST, 2016 WL 540812, at *2-3 (N.D. Cal. Feb. 11, 2016). By contrast, RJR notified PMP/Altria
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`of its withdrawal on the evening before the summary judgment deadline, and filed its motion to
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`dismiss on the Court’s summary judgment opposition deadline. Dkts. 718, 720. Such conduct
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`reeks of gamesmanship.
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`Accordingly, if the Court dismisses RJR’s inequitable conduct counterclaim under Rule 41
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`(it should not), the Court should award PMP/Altria reasonable fees and costs related to the defense
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`of RJR’s inequitable conduct counterclaim in view of RJR’s exceptional conduct. See, e.g.,
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`Carroll v. E One Inc., 893 F.3d 139, 141 (3d Cir. 2018).
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`* * *
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`RJR’s bad faith conduct has forced PMP/Altria to incur significant fees and costs defending
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`against RJR’s conceded inequitable conduct counterclaim. Accordingly, the Court should grant
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`PMP/Altria’s cross-motion for reasonable attorneys’ fees and costs.
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`11
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`Case 1:20-cv-00393-LO-TCB Document 782 Filed 07/09/21 Page 15 of 16 PageID# 21014
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`Dated: July 9, 2021
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`Respectfully submitted,
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`/s/ Maximilian A. Grant
`Maximilian A. Grant (VSB No. 91792)
`max.grant@lw.com
`Lawrence J. Gotts (VSB No. 25337)
`lawrence.gotts@lw.com
`Matthew J. Moore (pro hac vice)
`matthew.moore@lw.com
`LATHAM & WATKINS LLP
`555 Eleventh Street, N.W., Ste. 1000
`Washington, DC 20004
`Tel: (202) 637-2200; Fax: (202) 637-2201
`
`Clement J. Naples (pro hac vice)
`clement.naples@lw.com
`LATHAM & WATKINS LLP
`1271 Avenue of the Americas
`New York, NY 10020-1300
`Tel: (212) 906-1200; Fax: (212) 751-4864
`
`Gregory K. Sobolski (pro hac vice)
`Greg.sobolski@lw.com
`LATHAM & WATKINS LLP
`505 Montgomery Street, Suite 2000
`San Francisco, CA 94111
`Tel: (415) 391-0600; Fax: (415) 395-8095
`
`Brenda L. Danek (pro hac vice)
`brenda.danek@lw.com
`LATHAM & WATKINS LLP
`330 North Wabash Avenue, Suite 2800
`Chicago, IL 60611
`Tel: (312) 876-7700; Fax: (312) 993-9767
`
`Counsel for Defendants-Counterclaim
`Plaintiffs Altria Client Services LLC, Philip
`Morris USA Inc., and Philip Morris
`Products S.A.
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`12
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`Case 1:20-cv-00393-LO-TCB Document 782 Filed 07/09/21 Page 16 of 16 PageID# 21015
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`CERTIFICATE OF SERVICE
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`I hereby certify that on this 9th day of July, 2021, a true and correct copy of the foregoing
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`was served using the Court’s CM/ECF system, with electronic notification of such filing to all
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`counsel of record:
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`/s/ Maximilian A. Grant
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`
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`Maximilian A. Grant (VSB No. 91792)
`LATHAM & WATKINS LLP
`555 Eleventh Street, N.W., Suite 1000
`Washington, DC 20004
`Telephone: (202) 637-2200
`Facsimile: (202) 637-2201
`Email: max.grant@lw.com
`
`
`Counsel for Defendants-Counterclaim
`Plaintiffs Altria Client Services LLC, Philip
`Morris USA Inc., and Philip Morris
`Products S.A.
`
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`13
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`