Free Order on Motion for Attorney Fees - District Court of Arizona - Arizona

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA

MARLYN NUTRACEUTICALS, INC., an Arizona corporation,

) ) ) Plaintiff, ) ) vs. ) ) WILLIAM WONG, et al., ) ) Defendants. ) ___________________________________)

No. 2:02-cv-1876-HRH

O R D E R Motion for Award of Attorney Fees and Non-Taxable Expenses Marlyn Nutraceuticals, Inc., moves for an award of attorney fees and related non-taxable expenses in connection with its Lanham Act / false advertising claim against defendants William and Michelle Wong.1 The motion is opposed. Oral argument has not been

requested and is not deemed necessary. The Lanham Act provides in pertinent part that: "[t]he court

in exceptional cases may award reasonable attorney fees to the prevailing party." 15 U.S.C. § 1117(a). In this case, and after

a jury trial, plaintiff prevailed on its Lanham Act claim against the Wong defendants, obtaining a verdict of $1.00 in compensatory damages and $500,000.00 in punitive damages.2 In post-verdict

1

Docket No. 375. Verdicts at 7 and 10, Docket No. 221. - 1 -

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Case 2:02-cv-01876-HRH

Document 387

Filed 08/28/2008

Page 1 of 6

motion practice, the court was asked to and held that plaintiff's Lanham Act claim was an "exceptional" one for purposes of attorney fees.3 As a result of further motion practice, the court proposed,

and the Wong defendants accepted, a remittitur on punitive damages to $50,000.00; and judgment was entered in favor of plaintiff and against the Wongs for $50,001.00.4 Plaintiff and the Wongs have

been unable to resolve the attorney fees issue, and the above described motion practice has ensued. The allocation of attorney fees incurred by plaintiff as between parties and claims (including the defense of counterclaims and third-party claims) in any but a somewhat arbitrary fashion will be difficult (if not impossible) in this case as to the Wongs. Plaintiff has in substance recognized that circumstance and has suggested that the Wongs should pay 15% of plaintiff's attorney fees of "$285,816.61" without any explanation as to how or why that fraction of plaintiff's actual attorney fees would be appropriate.5

3

Order re Post-Verdict Motions at 9-12, Docket No. 282. Final Judgment against Defendants Wong at 4, Docket No. 360.

4

Plaintiff's motion states that the total fees in question through March 27, 2008, were $285,816.61. Memorandum of Points and Authorities in Support of Motion for Award of Attorneys' Fees [etc.] at 3, Docket No. 375. There is a problem even as to that gross number. Plaintiff's Exhibit A-1 suggests that the total fees billed by the McCarthy firm were $221,032.11. Billing Statement at 61, Docket No. 375-2. Plaintiff's Exhibit A-2 appears to document another $115,846.50 in attorney fees attributable to work performed by the Perkins Coie firm. Billing Statement, Docket No. 375-3. (The latter sum includes an apparent further bill of $8,600.00 without firm or attorney identification.) These two figures add up to $336,876.11. How plaintiff got from the latter sum to the $285,816.61 requested in the instant motion is not explained. - 2 Case 2:02-cv-01876-HRH Document 387 Filed 08/28/2008 Page 2 of 6

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Plaintiff suggests that 15% of the fees sought would be $44,548.39. In fact, 15% of $285,816.61 is $42,872.49. The court suggests that any attempt at allocating fees

incurred by plaintiff may be impossible for several reasons. First, while counsel for plaintiff has kept reasonably detailed records of work performed, it would be impossible for anyone, including plaintiff's counsel, to say how the myriad of individual tasks taken over a period of years should be spread amongst the various claims and parties. The case involved plaintiff's suit

against World Nutrition, Inc., the Wongs, and Buell. Counterclaims were asserted by World against Marlyn, and World asserted a thirdparty claim against Knobloch. were somewhat mixed. The results on all of these claims

Marlyn prevailed on its trade secrets claims World failed to achieve any

against World, the Wongs, and Buell.

recovery on its trade secrets claims against Marlyn and Knobloch. Marlyn prevailed on its conversion claim against Buell. World

obtained no recovery on its conversion claim against Knobloch who was defended by counsel for plaintiff since he was an employee of plaintiff. Marlyn prevailed on its Lanham Act / false advertising

claim against World and against the Wongs. Marlyn prevailed on its unfair competition claims against World and the Wongs. Marlyn

prevailed on its trade libel claim against Marlyn and the Wongs. World obtained a verdict for $1.00 on its breach of contract claim against third-party defendant Knobloch. Finally, Marlyn was

awarded punitive damages against World, the Wongs, and Buell. World was denied any punitive damages on its claims.

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The results of trial being viewed as a whole, there is no question but that plaintiff prevailed on the issues of substance in this litigation. The case more likely than not required the amount of time that the McCarthy firm devoted to it, and the rates charged by that firm are entirely reasonable in the Phoenix legal

community. Although this case had some odd aspects to it, the case was not particularly novel. The skills of plaintiff's counsel were appropriate to the job undertaken.6 The court doubts that plain-

tiff's counsel were precluded from taking other work because of this case. Again, plaintiff prevailed on the claims that required a great deal of work and that were obviously of the greatest importance to plaintiff: the trade secrets claim, the Lanham Act / false adver-

tising claim, the unfair competition claim, the trade libel claim, and the claim for punitive damages. However, attorney fees are

The Wongs object that plaintiff has included 16.9 hours spent researching attorney fees issues three weeks following trial. More likely than not, the entry is appropriate. As set out above in the text, there was an issue presented by plaintiff in a post-judgment motion of whether or not this was an exceptional case for purposes of Lanham Act attorney fees. Plaintiff also objects to the inclusion of what appears to be clerical charges at $35.00 per hour. The court deems these items to be inappropriate, since they do appear to be clerical as opposed to paralegal charges; but in the overall, they are de minimus in view of the far more complex problems of allocation which confront the court. Of more substance, the Wongs complain that the Perkins Coie statements do not comply with Local Rule 54.2(d)(4)(A) and (B). This objection, taken together with the Wongs' further objection that the Perkins Coie work was duplicative and therefore unreasonable, cause the court to decline to include the Perkins Coie statement for purposes of awarding attorney fees. It has never been clear to the court why it was necessary to involve two separate law firms in this case; and, as set out in footnote 5, plaintiff's motion is based on attorney fees of $285,816.61, which seemingly discounts heavily the Perkins Coie charges. - 4 Case 2:02-cv-01876-HRH Document 387 Filed 08/28/2008 Page 4 of 6

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available and sought only as to the Lanham Act / false advertising claim. The court finds that the Lanham Act / false advertising

claim alone would have required at least 50% of the preparation and trial time; and the claims against Wong were central to the Lanham Act / false advertising claims. The court finds that at least $221,032.117 in attorney fees were reasonably devoted to the litigation of this case. It is the

court's further view, as stated above, that a reasonable allocation of those fees to plaintiff's Lanham Act/ false advertising claim would be 50% of the total fees. As between the Wongs and World, The

the fees should be divided 35% to the Wongs and 65% to Marlyn.

court makes this latter division based upon its evaluation that the Wongs and World have roughly equal responsibility for the false advertising, but that World, as Wong's employer, had both the ability and the responsibility to prevent the false advertising but did not do so.8 The court finds that an award of attorney fees

pursuant to 15 U.S.C. § 1117(a) in the amount of $38,680.66 is appropriate in this case. Plaintiff's motion for non-taxable costs is denied. 15 U.S.C. § 1117(a) makes provision for an award of reasonable attorney fees,

The McCarthy firm's total bill. hibit A-1), Docket No. 375-2.
8

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Billing Statement (Ex-

The court does not overlook the fact that plaintiff recovered only nominal damages against Wong. Given the fact that the jury found in favor of Marlyn and against Wong in the amount of $500,000.00 in punitive damages, the jury plainly thought that Wong was responsible for false advertising; but for some unknown reason, the jury determined that the compensatory damages for that wrong should be paid by Marlyn. Perhaps the jury believed that World, as opposed to Wong, had profited from Wong's wrongful conduct. - 5 Case 2:02-cv-01876-HRH Document 387 Filed 08/28/2008 Page 5 of 6

and the court believes that taxable costs were allowed pursuant to 28 U.S.C. § 1920. Subsection 1117(a) makes no provision for the

award of costs, much less an express provision for non-taxable costs. In consideration of the foregoing, plaintiff's motion for an award of attorney fees is granted. The clerk of court shall amend

the judgment heretofore entered in this case to reflect an award of attorney fees in favor of Marlyn Nutraceuticals, Inc., and against William and Michelle Wong in the amount of $38,680.62 plus interest pursuant to 28 U.S.C. § 1961 from the date of entry of the amended judgment. Plaintiff's motion for non-taxable costs is denied.

DATED at Anchorage, Alaska, this 28th day of August, 2008.

/s/H. Russel Holland United States District Judge

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