Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Linden v. X2 Biosystems, Inc.

United States District Court, W.D. Washington, Seattle

April 18, 2019

CHARLES LINDEN, and RONALD LANDER, Plaintiffs,
v.
X2 BIOSYSTEMS, INC., JOHN WU, CHRISTOPHER SIEGE, and BRIAN FLAIM, Defendants.

          ORDER GRANTING IN PART AND DEFERRING IN PART DEFENDANTS' MOTION FOR FEES, COSTS, AND DISBURSEMENTS

          RICARDO S. MARTINEZ CHIEF UNITED STATES DISTRICT JUDGE

         I. INTRODUCTION

         This matter is before the Court on Defendants' Post-Final Judgment Rule 54 Motion for Fees, Costs, and Disbursements. Dkt. #121. Plaintiffs filed this action after their employment was terminated, asserting that they were entitled to certain payments and that those payments constituted withheld wages. Dkt. #108. The Court dismissed Plaintiffs' claims on Defendants' motion to dismiss. Dkt. #119. Defendants now seek attorneys' fees, costs, and disbursements incurred by Defendant X2 Biosystems, Inc. (“Defendant X2”) in the amount of $545, 642.48. Dkt. #121 at 1. Plaintiffs contest Defendant X2's entitlement to fees, costs, and disbursements in this action. Dkt. #129. The parties have not requested oral argument and the Court does not find oral argument necessary to its resolution of this Motion. Having reviewed the record and for the reasons set forth below, the Court grants in part and defers in part Defendants' Motion.

         II. BACKGROUND

         Plaintiffs are former employees of Defendant X2. At the time they were hired by Defendant X2, Plaintiffs each executed employment contracts, Inventions and Confidentiality Agreements, and Phantom Stock Agreements. Dkt. #108 at 28-60. Plaintiffs were subsequently terminated and initiated this action against Defendant X2 seeking severance, annual bonuses, milestone bonuses, and phantom stock benefits they believed they were owed under the employment agreements. Id. at ¶¶ 8.1-8.5. Plaintiffs also brought claims against Defendant X2 and the individual Defendants for unlawfully withholding wages under Washington law, asserting their severance, annual bonuses, milestone bonuses, and phantom stock benefits constituted “wages” under the terms of their employment agreements. Id. at ¶¶ 9.1-9.8.

         Plaintiffs proceeded under three different complaints in this action and throughout, Plaintiffs have pursued claims for “phantom stock benefits” that they believed they were owed under their employment agreements with Defendant X2. Dkt. #1 at ¶¶ 5.1-5.4; Dkt. #71 at ¶¶ 6.1-6.5; Dkt. #108 at ¶¶ 8.1-8.5. Specifically, under the Phantom Stock Agreements, “a ‘share' of Phantom Stock shall mean a contractual right to receive distributions in like amount as, and as and when distributions are made to an owner, as of the Effective Date of one share of the common stock of X2 (a “Common Share”) by reason of ownership of such Common Share.” Dkt. #108 at 41, 58. Defendants sought dismissal of Plaintiffs' final Second Amended Complaint, prevailed, and the Court ordered dismissal of Plaintiffs' claims. Dkts. #110 and #119. Regarding Plaintiffs' stock benefit claims, the Court specifically found that Plaintiffs failed to plead a necessary condition precedent: that a distribution had been made to owners of common stock. Dkt. #119 at 7-8.

         The Phantom Stock Agreements, between Plaintiffs and Defendant X2, included a provision awarding attorneys' fees and costs to a prevailing party. Specifically, the Agreements provided:

If any Party hereto shall bring any suit, arbitration or action against another for relief, declaratory or otherwise, arising out of this Agreement, the prevailing Party shall have and recover against the other Party, in addition to all court costs and disbursements, such sum as the court or arbitrator may adjudge to be a reasonable attorneys' fee.

Dkt. #108 at 43, 60. On the basis of this provision and the outcome of this action, Defendant X2 now seeks fees and costs in defending this action. Dkt. #121.

         III. DISCUSSION

         A. Legal Standard

         Federal courts interpret and apply state law when enforcing contractual attorneys' fee provisions pursuant to Federal Rule of Civil Procedure 54(d). MRO Communications, Inc. v. AT&T Co., 197 F.3d 1276, 1281 (9th Cir. 1999). In turn, Washington courts generally “enforce attorney fee provisions in contracts ‘if the action arose out of the contract and if the contract is central to the dispute.'” LaCoursiere v. Camwest Dev., Inc., 181 Wash.2d 734, 748, 339 P.3d 963, 970 (2014) (quoting Seattle-First Nat'l Bank v. Wash. Ins. Guar. Ass'n, 116 Wash.2d 398, 413, 804 P.2d 1263 (1991)). Conversely, “[w]hen the underlying documents merely provide the background out of which the [plaintiff] allegedly acquires new rights and duties by operation of law . . ., it is apparent that the action is not ‘on the contract.'” Hemenway v. Miller, 116 Wn.2d 725, 742, 807 P.2d 863 (1991).

         B. Discussion

         In opposing Defendants' Motion, Plaintiffs seek to marginalize their stock benefit claims and the involvement of the Phantom Stock Agreements. Specifically, they argue that the Phantom Stock Agreements were not “central to the controversy” because Plaintiffs sought breach of contract remedies only under their employment contracts. Dkt. #129 at 3-5. The Court does not agree. Plaintiffs' breach of contract claims specifically alleged breach of contract due to a failure to pay “Phantom Stock benefits.” Dkt. #108 at ¶¶ 8.3, 8.4. Plaintiffs were entitled to financial gain from ownership of phantom stock only under the Phantom Stock Agreements. Id. at 41, 58 (providing that a share of phantom stock is a “contractual right to receive distributions” when distributions are made to holders of common stock). Otherwise, Plaintiffs were not entitled to “stock benefits” under their employment contracts. This ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.