A recent The Recorder story, “Judge Refuses Most Fees Sought in Acquihire Case,” reports that lawyers with Arnold & Porter and McCarter & English scored a win for their client at trial, but they didn’t do quite as well when it came time to award attorney fees.  The lawyers had asked for $1.6 million for defending New Jersey hardware manufacturer PNY Technologies Inc. in a dispute over an acquihire gone sour.  San Mateo County Judge Richard DuBois ruled $150,000 was more appropriate, citing the California Supreme Court’s recent ruling on attorney fees in Williams v. Chino Valley Independent Fire District.

PNY had requested compensation for its work defending the entire case, but DuBois concluded only one of plaintiff Lorenzo Salhi’s seven claims was brought in bad faith.  DuBois further reduced the fee award, ruling the claim was not brought in bad faith from the beginning.

In November a jury found PNY had a right to fire Salhi after acquiring his company, Silicon Valley Solutions Inc., and determined that Salhi was not entitled to the $1 million left on his contract.  Salhi, represented by Cotchett Pitre & McCarthy, used his contract with PNY as the basis to file an unpaid-wages claim under the California’s Labor Code.  Salhi originally said the contract qualified as a wage-and-earnings agreement, but as trial approached, he concluded it was not intended as such an agreement.

DuBois ruled Salhi should have known that switch doomed his unpaid-wages claim.  “The court finds that continuing into trial and litigating this issue was unreasonable and groundless,” DuBois wrote, “and, therefore in bad faith.”

California law allows successful defendants to recover attorney fees if the plaintiff brought the case in bad faith.  The Supreme Court’s May 14 decision in Williams affirmed the definition of bad faith as “frivolous, unreasonable, or groundless.”