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Category: Fee Entitlement

Ninth Circuit Affirms $29M Fee Award in Infringement Action

August 16, 2019

A recent Law 360 story by Dave Simpson, “9th Circ. Keeps Oracle’s Rimini Injunction, $29M Atty Fee Win,” reports that the Ninth Circuit said that Rimini Street Inc. still must pay Oracle Corp. $28.5 million in attorney fees and largely affirmed an injunction that bars the software support service company from copying Oracle's software identified in the copyright infringement case.  In a unanimous, unpublished decision, the panel found that Nevada federal court did not abuse its discretion when it issued the injunction and that the injunction is not moot.

“The court pointed to the fact that Oracle and Rimini were direct competitors, explained that Rimini was able to gain increasing market share by offering lower prices for its service than Oracle offered, and that these lower prices were possible because Rimini’s infringing conduct saved the company time and money,” the panel said.  “This conclusion was supported by the record, including Rimini’s own internal e-mails.”  The injunction is not moot because Rimini has not shown that although it has stopped the infringing behavior, the challenged conduct won’t start back up again, the panel said.

The finding is the most recent in a hotly contested lawsuit that Oracle filed against Rimini in 2010, seeking to stop the competitor from copying Oracle's software, which Rimini argued it needed to serve clients.  Oracle initially asserted two dozen claims against Rimini and its CEO, alleging willful copyright infringement and violations of federal and state computer hacking laws, among others, according to court documents.

Though Rimini had changed its business practices, the case went to trial in September 2015, and a jury found that the company's former practices infringed Oracle's copyright.  But the jury concluded that the infringement was "innocent" because the company had no reason to believe its conduct constituted infringement.  The jury awarded Oracle about $50 million in compensatory damages and found Rimini liable for copyright claims and state hacking claims, but the Ninth Circuit later tossed the state claims and reduced the damages award to $35.6 million.

A Nevada federal judge in August 2018 ordered Rimini to pay Oracle $28.5 million in attorney fees, saying the award was still justified even though the Ninth Circuit reversed Oracle’s state-law claims.  The case made its way to the U.S. Supreme Court last year when the high court agreed to hear a dispute over an award of $12 million in "nontaxable costs" spent by Oracle in the litigation.

In a unanimous opinion written by Justice Brett Kavanaugh in March, the high court overturned a ruling that awarded Oracle more than $12 million in litigation costs.  Although the Copyright Act states that prevailing parties can recover their "full costs," the justices held that costs are limited to six narrower categories found in the general litigation cost statute.

The panel affirmed the fee award.  “The district court permissibly concluded that the claims ‘involve[d] a common core of facts [and were] based on related legal theories because the action was first and foremost a copyright infringement action,’” the panel said.  “Accordingly, it was within the district court’s discretion to determine that apportionment was not required beyond the twenty percent reduction.”

Ambiguous Settlement Proposals Doom Insurer’s Request for Attorney Fees

August 9, 2019

A recent Daily Business Review story by Steven Meyerowitz, “Ambiguous Settlement Proposals Doom Insurer’s Bid for Attorney Fees,” reports that the Third District Court of Appeal affirmed an order denying an insurer’s motion for attorney fees and costs, concluding the indemnity provision in settlement proposals was ambiguous and would cause additional litigation rather than fair settlement of the dispute.  On July 31, 2015, Shanika Brown and Juanita Reid filed a claim with their insurer, Safepoint Insurance Company, for water damage. Brown and Reid subsequently sued Safepoint to recover damages for the alleged loss.

On May 11, 2017, Safepoint served separate proposals for settlement on both Brown and Reid, offering $2,500 each.  If either accepted the proposal, she would agree to indemnify Safepoint for attorney fees and costs, including any incurred from continuing litigation should the other party not settle.

Safepoint’s proposal to Reid stated: “Upon acceptance of this Proposal, Plaintiff shall defend and indemnify Safepoint Insurance Company, against any and all claims in any way related to the subject matter of this litigation, including, but not limited to, any remaining claims by Shanika Brown, any other named or omnibus insured(s), any mortgagees, any public adjusters, and any and all attorney’s fees, costs, and expenses incurred by Safepoint Insurance Company in defending the same, as well as any attorney’s fees and costs incurred in defense of such claims.”  Brown received an identical proposal, except it required indemnification against Reid.

On Sept. 27, 2017, the trial court granted summary judgment in favor of Safepoint. The company then moved to recover attorney fees and costs.  After a hearing, Miami-Dade Circuit Judge Bronwyn Miller denied Safepoint’s motion, concluding its proposals were, “at a minimum ambiguous, and violate[d] the differentiation requirement under Florida Rule of Civil Procedure 1.442(c)(3).”

Safepoint appealed, and the appellate court affirmed.  In its decision, the appellate court explained Rule 1.442(c)(3) requires that a joint proposal for settlement “state the amount and terms attributable to each party.”  It added that Florida Statutes Section 768.79(6)(b) requires courts to weigh “the amount of the offer” against “the judgment obtained.”

The appellate court then pointed out that, in Attorneys’ Title Insurance Fund v. Gorka, 36 So. 3d 646 (Fla. 2010), the Florida Supreme Court held that a proposal by an insurance company to multiple offerees was invalid because the proposal did not allow each individual offeree “to settle the suit knowing the extent of his or her financial responsibility.”  The Florida Supreme Court reasoned that if a proposal required mutual agreement and only one party agreed, he or she was forced to participate in further litigation out of his or her control, which went against the goal of ending litigation through settlements.

The Third DCA found Safepoint’s proposals “would only cause further litigation.” If Brown accepted Safepoint’s proposal and Reid continued litigation, Brown would be obligated to pay Safepoint “an indeterminable amount of money,” which went against the particularity requirement of Rule 1.442.  The appellate court ruled the trial court could not weigh the proposed amount versus the judgment as required by Section 768.79 because the future legal fees were an unknowable variable to be subtracted from the offered $2,500.

The appellate court observed the proposals prevented Brown and Reid from independently evaluating the offer.  “Absent joint acceptance, a settling plaintiff would be unable to evaluate her true financial exposure,” Judge Ivan Fernandez wrote for a unanimous panel.  The proposals divested Brown and Reid “of independent control of the decision to settle,” were tacitly contingent upon joint acceptance, failed to identify financial exposure and were “patently ambiguous,” he wrote.

Judge Alsup Skeptical of $10M Fee Request in IP Action

August 1, 2019

A recent Law 360 story by Hannah Albarazi, “‘Jaded’ Alsup Skeptial of Apple and Cisco’s $10M IP Fee Bid,” reports that a "jaded" U.S. District Judge William Alsup questioned whether Apple and Cisco are overreaching by seeking $10 million in attorney fees and costs from a tech company they say dragged them into "baseless" patent disputes, telling them "the law should be that we deny and give you zero." 

"You should be honest from the get-go," Judge Alsup told attorneys for the tech giants, saying they appeared to be overstating fees and costs incurred in the case.  "That's how I feel about it."  "That may not be the law," he added.  Judge Alsup's punishing comments came during a hearing at which Apple asked him to approve attorney fees and costs of $4.5 million, while Cisco asked the judge to approve $5.3 million in attorney fees and costs following the tech giants' summary judgment win against Straight Path IP Group Inc.

Straight Path argues that not only were the cases brought in good faith, but they do not warrant an award of fees.  The company claims that Apple is seeking inappropriate and excessive fees, including fees for proceedings outside the case as it was pending, and that Cisco's cost requests are not properly justified.  Counsel for Apple told Judge Alsup on that the company wasn't overreaching in seeking attorney fees and costs.  The debate over whether or not to award attorney fees and costs comes nearly two years after Judge Alsup granted summary judgment to both Cisco and Apple, after harshly criticizing Straight Path for trying to "wiggle out" of a Federal Circuit ruling that narrowed the claims.

In 2016, Straight Path launched infringement claims against Cisco, and followed up with similar claims against Apple over its FaceTime video call feature.  Straight Path claimed both companies had infringed on its Voice over Internet Protocol technology.  The patents-in-suit cover technology for checking whether a call recipient's device is connected to the network before attempting a call, but Cisco and Apple said their products don't do that until a call recipient answers their phone, a point on which the court ultimately agreed.

Despite the tech giants' summary judgment win, Judge Alsup aired his qualms with how the expert reports in these cases — and others — are being created.  He suggested that some of them appear to have been ghostwritten by counsel.  "Maybe I'll put you on the stand and ask you if you ghost wrote one of these," Judge Alsup told counsel for Apple.

"The experts are there for the money,” he added.  "I'm so jaded by how these patent cases are done."  Done airing his concerns with expert reports, Judge Alsup laid into a declaration by retired U.S. Circuit Judge Paul R. Michel in support of Straight Path's argument that the case was brought in good faith.

Judge Alsup berated Straight Path's counsel for not allowing Cisco and Apple time to challenge the declaration.  "Are we supposed to take that as gospel?" he asked, telling Straight Path that the declaration put him in an awkward position.  "We love Judge Michel, but it was submitted at the last minute," Judge Alsup said.  "The other side needs to be able to question Judge Michel.  It's a problem."  Notably, Judge Michel has recently teamed up with ex-patent officials and judges seeking to push Congress to pass a law expanding patent eligibility.

After allowing the parties to present their arguments on the nitty-gritty of the patent dispute and argue why the attorney fees and costs should or should not be approved, Judge Alsup took the matter under submission.  The cases are Straight Path IP Group Inc. v. Cisco Systems Inc., case number 3:16-cv-03463, and Straight Path IP Group Inc. v. Apple Inc., case number 3:16-cv-03582, in the U.S. District Court for the Northern District of California.

Chancery Awards $3M in Fees After ‘Significant’ Bylaws Changes

July 24, 2019

A recent Law 360 story by Rose  Krebs, “Chancery Awards $3M Fees for ‘Significant’ Bylaws Challenge,” reports that the Delaware Chancery Court on awarded $3 million in fees to an investor who scored a "significant and substantive" win in a case that struck down provisions in three companies' bylaws mandating that federal courts handle securities complaints.

In a 17-page decision, Vice Chancellor J. Travis Laster said he took into account factors such as results achieved, the complexity of the case and the effort made by counsel in awarding the $3 million in fees requested by investor Matthew Sciabacucchi's counsel for his lawsuit that successfully challenged federal forum provisions in the bylaws of Blue Apron Inc., Roku Inc. and Stitch Fix Inc.

"In this case, the plaintiff achieved a significant and substantive result by successfully invalidating the federal forum provisions," the vice chancellor ruled.  "Because the value of the relief is non quantifiable, the plaintiff looked to precedent to determine an appropriate fee."

Given case law regarding another suit over bylaw provisions dealing with forum selection, Vice Chancellor Laster found that the $3 million in fees — $1 million to be provided by each company — was reasonable.  The vice chancellor called the companies' request that only $364,723 plus expenses be awarded "not reasonable" and ruled that amount would "undercompensate plaintiff's counsel for the result they achieved."

In April, Sciabacucchi's counsel argued that the $3 million in fees should be awarded for a win in what they called one of the "hottest" and most closely watched corporate cases.  The case was one involving "cutting-edge legal issues," the counsel asserted.  The companies blasted the bid for attorney fees as being way too high given the hours actually put into the case.

In a Dec. 19 decision, Vice Chancellor Laster struck down as invalid provisions in the three Delaware-chartered companies' bylaws that required that Securities Act of 1933 complaints be handled in federal district court.  In the ruling, the vice chancellor also cautioned other companies that have adopted similar measures or are contemplating them, declaring that Delaware companies can only limit forum options for internal corporate matters.

Sciabacucchi argued that a $3 million award is fair given the significance of the ruling and the benefit that was bestowed on stockholders by having the provisions struck down.  In court filings, Sciabacucchi claimed he scored a permanent victory that "strikes a 'death blow'" to other companies' bylaws that attempt to limit securities cases to being heard in federal court.

In his ruling awarding the fees, Vice Chancellor Laster noted that "corporate lawyers are excellent mimics, and multiple companies often adopt similar corporate governance measures" and that "litigation in one case can establish a precedent that applies to other situations."

Thus, the result achieved by Sciabacucchi was significant and fees should be awarded based on such.  The vice chancellor also ruled that although Sciabacucchi "prevailed at a relatively early stage of the case, and accordingly incurred a relatively small number of hours to date, I do not believe that this factor warrants reducing the precedent-based award."  Vice Chancellor Laster said he was "satisfied that the award checks out."  The $3 million fee amount was also justified because Sciabacucchi "advanced nuanced public policy arguments," the opinion said.

No Fee Award for Winning ADA Award After Judge Tosses It?

July 19, 2019

A recent Law 360 story by Matthew Santoni, “Don’t Give Attys Fees for Losing ADA Award ‘Win’. Co. Says,reports that a Pittsburgh claims administration and management company said that attorneys for a woman denied extra breaks for her post-traumatic stress disorder shouldn't get to claim a "win" and seek fees after a federal judge vacated a jury's $285,000 damage award in May.

Premier Comp Solutions said that under a contingency fee structure, Stember Cohn & Davidson-Welling LLC shouldn't be able to ask for the company to pay almost $312,000 in fees and $24,000 in costs, since their client, former billing assistant Beth Schirnhofer, hadn't actually won the case after the judge tossed the award.

"Having lost the case, they want to be rewarded while their client receives nothing," said Premier's brief in opposition to the fees.  "If a contingent fee lawyer does not win money for the client, he or she does not get paid a fee.  For some reason, plaintiff's counsel believe they should get paid a fee even though they lost."

U.S. District Judge Billy Roy Wilson had erased the jury's award of $35,000 in back pay and $250,000 in noneconomic damages following a trial in April, citing its affirmative answer to the question of whether the company would have fired Schirnhofer regardless of her alleged disability.

Under the Americans with Disabilities Act, Judge Wilson said, the court could grant declaratory relief, injunctive relief and attorney fees in verdicts, but not any compensatory or punitive damages when the jury believed there could have been some other reason for firing Schirnhofer, also known as a "mixed motive."

Premier argued Monday that fees were inappropriate if there were no awards for Schirnhofer.  "Plaintiff's counsel took the risk that they would not win.  They should not be allowed to avoid the consequences of losing," Premier's brief said.  "By requesting a mixed-motive instruction on plaintiff's disability discrimination claims, plaintiff's counsel caused plaintiff to lose out on the $285,000 jury verdict and potential punitive damages."

Schirnhofer sued Premier in 2016, saying her doctor had provided the company with paperwork detailing her need for extra breaks due to PTSD, but Premier refused to provide them.  Premier allegedly decided Schirnhofer's PTSD was a disability, but it just didn't warrant accommodation, her suit said.  Her later firing, the company said, was because she violated its social media policy with Facebook comments about committing suicide, complaints about her coworkers, and a picture of a woman with a gun — not out of retaliation for her complaints.

Stember Cohn had claimed that the ADA and case law had shown the firm could still seek compensation for fighting the contentious case, since the jury had rejected Premier's claims it did no wrong.

"In mixed motive cases the award of attorney's fees is a matter left to the discretion of the district court," the firm wrote in its June 11 brief. "A court may award fees absent monetary or other tangible relief."

Premier countered that there had been no relief at all for Schirnhofer, since all she had sought was money damages. Five of her 11 claims were tossed before trial, three were determined in Premier's favor, and the three disability discrimination claims were not an "outright win" for her because of the mixed-motive verdict, the company said. After the judge had thrown out the award, nothing had changed for Schirnhofer; no precedents had been set and no declaratory judgments were made, Premier argued.

"Plaintiff and her counsel's principal purpose in bringing this lawsuit was to recover money from defendant ... Plaintiff did not make any specific claim for declaratory, injunctive, or any other kind of equitable relief," Premier's brief said.  "Plaintiff received none of the relief she sought in her complaint.  Such a result could not, with a straight face, be called a 'success.' ... Accordingly, plaintiff's counsel should not be rewarded with fees or costs."

Premier also said Stember Cohn's strategy had harmed its client's case because they had asked for the mixed-motive jury question rather than trying to present the social-media policy issue as a pretext for Schirnhofer's firing.  The firm could not then claim fees for work that had cost its client an award in her favor, the company said.