A recent Law 360 story by Bill Wichert, “Insurer Loses $1.9M Fee Bid After Defeating Rival’s Suit,” reports that a medical malpractice insurance carrier fell short in its bid for about $1.9 million in attorney fees and costs after defeating an unfair competition suit from New Jersey Physicians United Reciprocal Exchange, with a federal judge saying the matter was not an "exceptional" case that warranted a fee award.  U.S. District Judge Brian R. Martinotti rejected the fee request from The Medical Protective Co. Inc., doing business as Princeton Insurance Co., finding that the case did not meet the exceptional standard laid out in the Third Circuit's 2014 Fair Wind Sailing Inc. v. Dempster opinion for awarding such fees to the prevailing party in Lanham Act cases.

Based on the U.S. Supreme Court's 2014 opinion in Octane Fitness LLC v. ICON Health & Fitness , the Third Circuit held that a case is exceptional if "(a) there is an unusual discrepancy in the merits of the positions taken by the parties or (b) the losing party has litigated the case in an 'unreasonable manner,'" the judge noted.  "The court finds the parties' differing fact presentations were based on good faith and do not rise to the level of discrepancy in the merits warranting a finding of an 'exceptional case' to award fees under the Lanham Act," Judge Martinotti said in his written opinion. "Indeed, NJ PURE acted in good faith in filing and continuing with the litigation."

Although the claims from NJ PURE arguably "had little chance of success when filed and after discovery, they were not so 'uncommon' or 'exceptionally meritless' that it 'stands out from others,'" the judge later added, citing Octane Fitness LLC.  The ruling comes more than eight months after Judge Martinotti granted Princeton Insurance Co.'s summary judgment motion and tossed the case.

NJ PURE, which sells medical malpractice insurance to medical providers, launched the instant action against Princeton Insurance Co. in April 2013 in connection with so-called marketplace updates published by the latter company on an annual basis between 2005 and 2012, court documents state.  The lawsuit alleged that the publications — which compared financial information of the two businesses and other competitors — provided a false and misleading picture of NJ PURE's well-being, including by not disclosing that NJ PURE is a not-for-profit exchange and Princeton Insurance Co. is a for-profit carrier, court documents said.

In dismissing the suit on Sept. 20, however, Judge Martinotti said, "There is no evidence NJ PURE was harmed by the Princeton marketplace updates," and noted that Eric Poe, NJ PURE's chief operating officer, conceded in a deposition that "'virtually every individual sentence ... could be construed as true' in the Princeton marketplace updates."  A little more than a month after that decision, Princeton Insurance Co. submitted its request for attorney fees and costs, saying "NJ PURE's conduct in this matter was the very definition of exceptional."  The company said in part that, at one point, NJ PURE made "knowing misstatements of the governing law."

In rejecting the fees bid, Judge Martinotti concluded that NJ PURE's legal arguments were "an attempt at a colorable argument, despite unsuccessful" and that "it cannot be said that NJ PURE's arguments were 'exceptional' as to warrant an award of attorney's fees."  Although the case was unusual in that U.S. Magistrate Judge Tonianne J. Bongiovanni had to manage discovery — with the judge issuing "no fewer than eight discovery-related opinions and/or orders" — "neither side resorted to wasteful procedural or dilatory tactics that would make this matter exceptional," Judge Martinotti said.  The judge pointed out that both sides succeeded on motions to compel discovery.