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Attorneys Awarded Bulk of $24.5M Fees Sought in IP Litigation

April 16, 2020 | Posted in : Billing Practices, Billing Record / Entries, Expenses / Costs, Fee Award, Fee Award Factors, Fee Calculation Method, Fee Expert / Member, Fee Reduction, Fee Request, Lodestar / Multiplier

A recent Law 360 story by Hannah Albarazi, “BladeRoom Attys Awarded Bulk of $24.5M Sought in IP Row,” reports that a California federal judge awarded BladeRoom most of the $24.5 million in attorney fees and costs it sought after it won a $77.4 million trial verdict over Emerson Electric's use of stolen trade secrets to win a lucrative Facebook contract, while also ordering a minor reduction and recalculation.  U.S. District Judge Edward J. Davila, who presided over the jury trial, ordered a 10% reduction to the lodestar as well as other adjustments, instructing BladeRoom's counsel at Farella Braun & Martel LLP to resubmit new calculations reflecting the alterations to the court for approval.

Judge Davila said the reductions would be appropriate to account for the “deficiencies in the billing records ... primarily due to the block-billing.”  Upon conducting a de novo review of the special master’s report and recommendation, the judge said he disagreed with the special master’s conclusion that BladeRoom’s attorney billing records were “improper and in various ways problematic" and justified a 40% haircut.  Judge Davila said upon reviewing the billing records and other evidence, he found BladeRoom counsel’s representations in support of its fee request to be “trustworthy.”

However, the judge did agree with the special master on other issues.  For instance, Judge Davila agreed that BladeRoom should not recoup the entirety of attorney fees for its in-house counsel, saying the requested amount “is not completely substantiated and to some degree excessive” and reducing the award for BladeRoom’s general counsel Michael Joy from $3.3 million to $1.5 million.

U.K.-based BladeRoom sued Facebook and Emerson five years ago, accusing the pair of stealing its method for manufacturing and installing prefabricated data centers, which it had pitched separately to Facebook and Emerson in 2011. After those meetings, BladeRoom claimed the two larger companies began secretly working together to steal BladeRoom's proprietary techniques for the Facebook project.

Facebook settled BladeRoom's claims mid-trial in April 2018 and a month later, a jury found that Emerson owed BladeRoom $30 million for using its stolen trade secrets to land a $200 million contract to build a Facebook data center in Sweden.  Judge Davila ruled last year that Emerson owed BladeRoom $77.4 million comprising $30 million in compensatory damages, $30 million in exemplary damages and $17.4 million in prejudgment interest on the compensatory damages.

Emerson filed a notice of appeal challenging, among other rulings, the jury's verdict and the judge's denial of Emerson's bid to compel Facebook and BladeRoom to disclose the terms of their settlement.

At a hearing in March, Emerson's counsel, Rudolph A. Telscher Jr. of Husch Blackwell LLP, urged Judge Davila not to grant BladeRoom's bid for attorney fees and costs, saying BladeRoom overbilled for its work and overredacted its billing statements to a degree that made it impossible for Emerson to see which activities BladeRoom had billed.

Jeffrey M. Fisher of Farella Braun told the judge during the March hearing that Emerson's and Facebook's misconduct "overlapped so much" that it made it a challenge to differentiate the litigation, but that BladeRoom is only seeking to recover money for work that contributed to its victory against Emerson, not Facebook.

But Judge Davila said that BladeRoom's fees and costs are reasonable.  “As BladeRoom pointed out during the hearing, litigation can resemble a tennis game or war in that when one side hits the ball or shoots heavy artillery, the other side necessarily spends time hitting the ball or shooting heavy artillery back,” Judge Davila said in his order.

The judge found that the work described in BladeRoom’s billing records, “even if certain entries may appear duplicative or inefficient, was reasonably necessary in the context of this heavily contested and time consuming litigation,” further noting that Farella’s team of six attorneys at times went up against 23 attorneys who represented Facebook and Emerson.

Judge Davila said he didn't observe “across-the-board duplicative and inefficient efforts” that would justify a 40% reduction of BladeRoom’s lodestar, as recommended by the special master.  Instead, Judge Davila awarded BladeRoom 30% of the fees it incurred prior to the filing of its second amended complaint and ordered a 10% percent reduction to the award sought by BladeRoom for all fees incurred after the filing of that complaint.  The judge also ordered BladeRoom and Emerson to split 50-50 the special master’s fees.  BladeRoom was instructed to submit its recalculations of attorney fees and costs to the court within the next two weeks.