A recent Law 360 story by Jonathan Capriel, “Tabacco Co. Calls Rival’s $10M Fee Bid A Waste Of Time”, reports that tobacco industry giant Swisher is needlessly taking up everyone's time by filing a motion for $10 million in fees in a case that it lost on appeal, cigarillo company Trendsettah said in court documents, urging a California federal judge to consider its request for $11 million in fees as the "real prevailing party." It's true that two years ago the trial court sided with Swisher in the antitrust and breach of contract lawsuit that Trendsettah had brought and approved Swisher's bid for attorney fees, Trendsettah said in its filing opposing fees. But the fee order was conditioned on Trendsettah losing its Ninth Circuit appeal.
Even though Trendsettah won part of that appeal, Swisher went ahead with the fee motion, taking the position that it is the "prevailing party" and is "still entitled to recover $10,462,480.60" in attorney fees and other litigation costs, Trendsettah said. "Swisher's decision to force motion practice over this issue is not a good use of anyone's time, and should be summarily rejected," Trendsettah said. "That order [approving Swisher's fees] should therefore be vacated, and the court should proceed to adjudicate the fees that are now claimed by the real prevailing party on the contract claims." Additionally, Trendsettah has filed its own motion seeking $11.76 million in attorney fees and $613,000 in "disbursements incurred in prosecuting this action."
The legal fight between the two companies, begun nearly a decade ago, has taken at least two detours into the Ninth Circuit and seen the indictment of one CEO. With fees and costs bids coming in from both sides, and a pending $19.9 million sanctions motion filed by Swisher, exactly which party will come out ahead remains "clearly uncertain" U.S. District Judge James Selna said in May.
Trendsettah originally filed suit in 2014 against Swisher for breach of contract and antitrust violations, claiming the tobacco company orchestrated a plot to snuff out the potential rival's supply of short, narrow cigars known as cigarillos. Trendsettah accused Swisher of using its market dominance to force it into a supply contract for the cigarillos, then later scrapped the deal.
Trendsettah won at trial, securing a $14.8 million jury award that was trebled to $44 million, plus $9.1 million on its breach of contract claim. But in 2016 Judge Selna tossed the antitrust verdict portion and ordered a new trial, saying the jury had been working off improper instructions on a key provision of antitrust law. Even though a Ninth Circuit panel reversed the judge's ruling three years later, Trendsettah's win would hit a massive pothole.
Federal prosecutors indicted Trendsettah's founder and CEO, Akrum Alrahib, alleging the company lied about the price paid for cigarillos imported from the Dominican Republic. This was part of an effort to avoid paying federal excise tax, according to the government. He pled guilty in November 2021 to conspiring to avoid paying excise taxes.
Judge Selna said Alrahib had committed fraud against the district court. He granted Swisher's motion for relief from the entire verdict and again ordered a new trial in August 2019. But by then, Trendsettah claimed it no longer had the money to afford a new trial and sought to voluntarily dismiss the case, at the same time the company was appealing the overturned verdict.
The case seemed to be winding down in December 2020, when Judge Selna granted Swisher's motion for fees in the entire litigation, awarding $7.96 million in attorney fees and $2.5 million in costs, according to court records. Roughly two years later, the Ninth Circuit ruled that Judge Selna was only half right when he tossed the jury verdict in 2019. The panel affirmed the dismissal of the antitrust claims, which held the larger award and the trebled damages, but upheld the jury's breach of contract finding, which was worth $9.1 million.
Trendsettah argues that its win on the breach of contract claims at the appellate level means that it is the true prevailing party and as such Swisher cannot now seek fees. Additionally, it argues that the private label agreement the parties signed explicitly says that the prevailing party is owed fees and costs from the loser.
After subtracting legal work provided for the failed antitrust claims, Trendsettah counsel Gaw Poe LLP and Goldstein & Russell PC claim that they've put in 8,754 and 1,658 hours, respectively. In total, that's worth more than $11 million, according to the motion for attorney fees.
Moreover, Trendsettah argued that the court should have no problem approving this request, as it is comparable to what it had already awarded. "Both the total number of hours and the total amount of the award compare favorably to what the court had previously approved as reasonable totals for Swisher," Trendsettah's motions for fees said. "This is particularly true given that Trendsettah brought this motion following two-and-a-half additional years of work since the court calculated Swisher's reasonable totals."