MED TRUST Handelsgesm.m.b.H. v. Intrinsyk Medical Devices, LLC

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
MED TRUST Handelsges.m.b.H.
v. 	Civil No. 19-cv-220-AJ
Intrinsyk Medical Devices, LLC
REPORT AND RECOMMENDATION
In April 2018, an arbitral tribunal in Vienna, Austria
awarded Plaintiff over $110,000, plus interest, costs and
attorneys’ fees, after finding that the defendant breached a
contract between the parties. 	Plaintiff subsequently filed a
petition (Doc. No. 1-5) to recognize and enforce the arbitral
award in this court. 	See 9 U.S.C. § 201 (implementing
Convention on the Recognition and Enforcement of Foreign
Arbitral Awards of June 10, 1958). 	The defendant has defaulted.
Doc. No. 9. 	Plaintiff’s unopposed motions for default judgment
(Doc. No. 11) and attorneys’ fees (Doc. Nos. 12 and 13) are
before the undersigned magistrate judge for a report and
recommendation. 	For the reasons that follow, the district judge
should grant plaintiff’s motion for default judgment.
I. 	Standard of Review
After default is entered and when, as here, the amount at
issue is not a sum certain, “the party must apply to the court
for a default judgment.” 	Fed. R. Civ. P. 55(b)(2); see also KPS
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& Assocs., Inc. v. Designs by FMC, Inc., 318 F.3d 1, 18-19 (1st
Cir. 2003). 	“Although a defaulting party admits the factual
basis of the claims asserted against it, the defaulting party
does not admit the legal sufficiency of those claims.” 	10 James
Wm. Moore, Moore's Federal Practice § 55.32[1][b] (3d ed. 2013).
Before entering default judgment, the court must determine
whether “[t]he claimant [has] state[d] a legally valid claim for
relief.” 	Id.; see also Ramos–Falcon v. Autoridad de Energia
Electrica, 301 F.3d 1, 2 (1st Cir. 2002).
II. 	Background
By virtue of their default, defendants have admitted the
following facts, as set forth in plaintiff’s Petition. 	In
September 2015, the parties entered into an International
Distribution Agreement, (the “Agreement”) for defendant
Intrinsyk’s distribution of plaintiff Med Trust’s diabetes
management products within the United States and Canada. 	The
Agreement included an arbitration clause pertaining to “all
disputes arising out of” the Agreement. 	Any arbitration was to
use the Rules of Arbitration and Conciliation of the
International Arbitral Centre of the Austrian federal Economic
Chamber in Vienna (the “Vienna Rules”).
In December 2016, plaintiff’s Austrian legal counsel
requested, in writing, that the defendants pay outstanding bills
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$57,660, stemming from an order in April 2016. 	The payment
request included an annual interest charge of 8.58 percent,
covering mid-September through mid-December 2016. 	The letter
further informed defendant that Austrian legal counsel had been
instructed by plaintiff to file a request for arbitration
according to Agreement in the event defendant failed to comply.
On January 24, 2017, having received no response to the
previous month’s latter, plaintiff’s counsel filed a request for
arbitration in the Vienna International Arbitral Center. 	The
plaintiff sought an award of $110,160. 	Counsel for the
defendant timely responded to plaintiff’s claim.
The arbitration proceedings took place in January 2018.
Both parties were represented by counsel. Each party had the
opportunity to question every witness. 	The arbitrator issued a
final award in plaintiff’s favor in April 2018. 	The arbitrator
found that the parties’ actions formed a contract and that the
defendant failed to pay for goods delivered by the plaintiff and
accepted by defendant; and, that Defendant failed to perform its
obligations under the Agreement. 	The arbitration award
obligated the defendant to pay plaintiff $110,160. 	The award
consisted of two parts: 1) $57,660 for the defendant’s failure
to pay for goods delivered as of November 12, 2016; and 2)
$52,500 for the defendant’s failure to satisfy certain
contractual obligations after January 13, 2017. 	Plaintiff was
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also awarded $20,426.77 in costs and fees associated with the
arbitration proceeding.1 	Despite two written requests from
plaintiff’s counsel, the defendant has not paid any part of the
arbitration award.
Plaintiff filed the instant action to enforce the
arbitration award in March 2019. 	(Doc. No. 1). 	Although
defendant was served, see Doc. Nos. 6-8, defendant did not
answer or otherwise appear. 	The Clerk of Court entered default
against the defendant on April 25, 2019. 	See Fed. R. Civ. P.
55(a); LR 55.1
III. 	Discussion
A. 	The Arbitration Award
An arbitration provision in an international commercial
contract such as the Agreement signed by the parties in this
matter is governed by Chapter Two of the Federal Arbitration Act
(“FAA”), 9 U.S.C. §§ 201–208, which implemented the United
Nations Convention on the Recognition and Enforcement of Foreign
Arbitral Awards (“the Convention”), ratified by the United
States, September 30, 1970, 21 U.S.T. 2517, T.I.A.S. No. 6997
(reprinted following 9 U.S.C. § 201). 	DiMercurio v. Sphere
1 The costs and fees award was slightly more than 18,237 Euros.
The plaintiff supplied the conversion to U.S. Dollars as of May
5, 2019, shortly before it filed the instant motion. Pl’s. Mot.
(Doc. No. 11) ¶ 5, n.1.
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Drake Ins., PLC, 202 F.3d 71, 74 (1st Cir. 2000). 	The
Convention is an international agreement designed “to encourage
the recognition and enforcement of commercial arbitration
agreements in international contracts and to unify the standards
by which agreements to arbitrate are observed and arbitral
awards are enforced.” 	Scherk v. Alberto–Culver Co., 417 U.S.
506, 520 n. 15 (1974). 	“A district court's duty to enforce
arbitration clauses that so qualify cannot seriously be
questioned.” 	InterGen v. Grina, 344 F.3d 134, 141 (1st Cir.
2003) (citing 9 U.S.C. § 201 (directing that the Convention
“shall be enforced in United States courts”)).
A proceeding to confirm an arbitration award “is intended
to be summary.” 	Popular Sec., Inc. v. Colon, 59 F. Supp. 3d
316, 318 (D.P.R. 2014) (citing Taylor v. Nelson, 788 F.2d 220,
225 (4th Cir. 1986)). “[R]eview of the arbitration award itself
is ‘extremely narrow and exceedingly deferential.’” 	Bangor Gas
Co., LLC v. H.Q. Energy Servs. (U.S.), Inc., 695 F.3d 181, 186
(1st Cir. 2012) (quoting Bull HN Info. Sys., Inc. v. Hutson, 229
F.3d 321, 330 (1st Cir. 2000)). 	“The confirmation of an
arbitration award finalizes the award and makes the award a
judgment of the court.” 	Bacardi Int’l Ltd. v. Suarez & Co.,
Inc., 719 F.3d 1, 13 (1st Cir. 2013). 	“The court shall confirm
the award unless it finds one of the grounds for refusal or
deferral of recognition or enforcement of the award specified in
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the said Convention.” 	9 U.S.C. § 207.2 	Given the admissions
inherent in defendant’s default, the court finds that there are
no grounds to refuse confirmation of the arbitration award.
2 “Article V [of the Convention] provides that:
1. Recognition and enforcement of the award may be
refused, at the request of the party against whom it
is invoked, only if that party furnishes to the
competent authority where the recognition and
enforcement is sought, proof that:
(a) The parties to the agreement referred to in
article II were, under the law applicable to them,
under some incapacity, or the said agreement is not
valid under the law to which the parties have
subjected it or, failing any indication thereon, under
the law of the country where the award was made; or
(b) The party against whom the award is invoked was
not given proper notice of the appointment of the
arbitrator or of the arbitration proceedings or was
otherwise unable to present his case; or
(c) The award deals with a difference not contemplated
by or not falling within the terms of the submission
to arbitration, or it contains decisions on *308
matters beyond the scope of the submission to
arbitration, provided that, if the decisions on
matters submitted to arbitration can be separated from
those not so submitted, that part of the award which
contains decisions on matters submitted to arbitration
may be recognized and enforced; or
(d) The composition of the arbitral authority or the
arbitral procedure was not in accordance with the
agreement of the parties, or, failing such agreement,
was not in accordance with the law of the country
where the arbitration took place; or
(e) The award has not yet become binding on the
parties, or has been set aside or suspended by a
competent authority of the country in which, or under
the law of which, that award was made.
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B. 	Damages
Plaintiff seeks to recover the arbitral award of $110,160,
plus interest, which totaled $22,665.37 through May 5. 	See
Award (Doc. No. 1-1) at 47. 	Plaintiff also seeks to recover its
awarded costs of the arbitration, which total $20,426.77. 	The
district judge should award plaintiff these amounts, plus any
interest that has accrued since May 5, 2019.
C. Costs and Attorneys’ Fees For This Action
Article XIV of the Agreement provides that the prevailing
party in an action to enforce any terms of the Agreement shall
recover its costs and reasonable attorneys’ fees. 	Agreement
(Doc. 1-2) at 13. 	Plaintiff requested $15,405.22 in costs and
fees. 	Motion (Doc. No. 11) at 3. 	On June 2, 2019, the court
ordered plaintiff to file documentary support for its request
for costs and fees, which the plaintiff did on June 19, 2019
2. Recognition and enforcement of an arbitral award
may also be refused if the competent authority in the
country where recognition and enforcement is sought
finds that:
(a) The subject matter of the difference is not
capable of settlement by arbitration under the law of
that country; or
(b) The recognition or enforcement of the award would
be contrary to the public policy of that country.”
Admart AG v. Stephen & Mary Birch Found., Inc., 457 F.3d
302, 307-08 (3d Cir. 2006).
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(Doc. No 12). 	Plaintiff reiterates the $15,405.22 amount at
page 1 of its supplement, but at page 3 and in its final prayer
for relief seeks nearly 50 percent more than that figure --
$23,058.28. 	There is no explanation for the increase or the
discrepancy.
A re-examination of the attorneys’ affidavits sheds little
light on the matter. 	In connection with the $15,405.22 request
in plaintiff’s motion for default judgment, Attorney Schumann –
plaintiff’s out-of-state counsel, stated in his affidavit that
“the plaintiff has incurred attorneys’ fees and costs of USD
$15,405.22 	. . . .” 	Affidavit (Doc. No. 11-1) at 4 (emphasis
in original). 	As that figure lacked documentary support, on
June 4, 2019, the court ordered supplementation. 	In his
affidavit in support of plaintiff’s supplement, Attorney
Schumann stated that his firm expended a total of $12,496.33. In
a second affidavit submitted in response to the June 4 Order,
plaintiff’s New Hampshire counsel, Jeffrey A. Rabinowitz, rather
than accounting for the difference between Attorney Schumann’s
two figures -- $15,405.22 and $12,496.33 -- stated that his firm
had compiled $10,161.95 in fees and costs. 	Most recently,
Attorney Rabinowitz submitted a supplemental affidavit (Doc. No.
13) in which he seeks an additional $2,071 in fees and costs for
responding to the court’s June 4 Order.
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“The party seeking the [fee] award has the burden of
producing materials that support the request.” 	Hutchinson ex
rel. Julien v. Patrick, 636 F.3d 1, 13 (1st Cir. 2011) (citing
Hensley v. Eckerhart, 461 U.S. 424, 433 (1983)). 	In the absence
of any attempt to explain the billing discrepancies, the court
recommends that the district judge award plaintiff its original
request for attorneys’ fees and costs, $15,405.22.3 	See DirectTV
v. Trawick, 359 F. Supp. 2d 1204, 1209 (M.D. Ala. 2005)
(declining to award attorney fees in amount greater than that
sought in the default application); 	DirectTV v. Meinecke, No.
03Civ.3731JGKGWG, 2004 WL 1535578, at *4 (S.D.N.Y. July 9, 2004)
(same).
IV. Conclusion
For the reasons set forth herein, the district judge should
grant plaintiff’s motion for default judgment (Doc. No. 11) as
follows:
1) the plaintiff shall recover from the defendant
$110,160.00, the amount it was awarded in arbitration;
3 The court also notes that, even with a cursory review, there
appears to be some conflict between the two attorneys’ bills.
For example, both appear to have included the filing fee for the
petition that commenced this action. 	See Doc. No. 12-3 at 11;
Doc. No. 12-3 at 3.
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2) the plaintiff shall recover interest, through May 5,
2019, in the amount of $22,665.37
3) the plaintiff shall recover interest from May 5, 2019,
until the judgment is paid, at a rate of $13.55 per diem with
respect to the $57,660 portion of the arbitral award, and $12.34
per diem with respect to the $52,500 portion of the award;
4) the plaintiff shall recover $20,926.77 in costs related
to the arbitration proceedings;
5) the plaintiff shall recover 	$15,405.22 in costs and
attorneys’ fees related to this action.
Any objections to this Report and Recommendation must be
filed within fourteen days of receipt of this notice. 	See Fed.
R. Civ. P. 72(b)(2). 	The fourteen-day period may be extended
upon motion. 	Failure to file objections within the specified
time waives the right to appeal the district court’s order. 	See
Santos-Santos v. Torres-Centeno, 842 F.3d 163, 168 (1st Cir.
2016).
__________________________
Andrea K. Johnstone
United States Magistrate Judge
September 13, 2019
cc: 	counsel of record
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