January 9, 2018
A recent Delaware Business Court Insider by Tom McParland, “Seven-Figure Fee Request Crumble as Bouchard Calls Cookie Contract Case a Draw” reports that the Delaware Court of Chancery denied multimillion-dollar requests for attorney fees from Mrs. Fields Brand Inc. and Interbake Foods, ruling that neither party had prevailed in a dispute over a contract to sell Mrs. Fields cookies in grocery and convenience stores.
Chancellor Andre G. Bouchard said the baked-goods companies had fought to a draw on the two main issues of a 2016 trial, where Interbake argued that it could exit a five-year licensing agreement to sell Mrs. Fields’ products.
In June, Bouchard ruled in favor of Mrs. Fields, saying that Interbake could not rely on its “material adverse change” argument to escape the deal. But he also rejected Mrs. Fields’ “astounding” claim for $28.7 million in damages in the case.
Both sides later moved for attorney fees under a provision of the contract that required the “prevailing” party to be reimbursed for costs and expenses of litigation stemming from the licensing agreement. Interbake asked for $2.6 million, and Mrs. Fields requested $5.3 million for its efforts.
In an 11-page letter opinion, Bouchard said Interbake’s attempts to validate its exit from the agreement spawned a slew of related legal questions, which accounted for the bulk of his 108-page ruling in June. But he also noted that Mrs. Fields made its losing push for money damages a “central focus” of its litigation strategy, despite a standstill agreement that ensured the licensing agreement would remain in place throughout the case.
“In sum, because each side both won and lost on one of the two equally core issues in this case, I hold that neither Mrs. Fields nor Interbake predominated in the litigation and thus neither is entitled to an award of attorneys’ fees or expenses as the ‘prevailing party’ under [the licensing agreement],” the chancellor wrote.