Free Response in Opposition to Motion - District Court of Arizona - Arizona

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Stephen D. Hoffman, #13875 LEWIS BRISBOIS BISGAARD & SMITH LLP Phoenix Plaza Tower II 2929 North Central Avenue, Suite 1700 Phoenix, Arizona 85012-2761 Telephone: (602) 385-1040 Facsimile: (602) 385-1051 Attorneys for Wong and World Nutrition

UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA

MARLYN NUTRACEUTICALS, INC., an Arizona corporation, Plaintiff,

No. CIV 02-1876 PHX-HRH DEFENDANTS WILLIAM AND MICHELE WONGS' RESPONSE TO MARLYN'S NUTRACEUTICALS' MEMORANDUM IN SUPPORT OF ITS MOTION FOR ATTORNEYS' FEES AND NON-TAXABLE COSTS (Assigned to The Honorable H. Russell Holland)

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vs.
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WILLIAM WONG and JANE DOE WONG, husband and wife; PATRICK BUEHL and JANE DOE BUEHL, husband and wife; WORLD NUTRITION, INC., an Arizona corporation; ABC Corporations I-X; XYZ PARTNERSHIPS I-X; and JOHN DOES I-X and JANE DOES I-X, husbands and wives, respectively, Defendants,

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WORLD NUTRITION, INC., an Arizona corporation, Third Party Plaintiff/Counterclaimant/ Defendant, vs.

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MARLYN NUTRACEUTICALS, INC., an Arizona Corporation; and CRAIG KNOBLOCH, Counterdefendant/Plaintiff/Third Party Defendant.

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Defendants, William and Michele Wong (hereinafter collectively referred to as "Wong"), by and through counsel undersigned, hereby submit their Response to Marlyn Nutraceuticals, Inc.'s (hereinafter "Marlyn") Memorandum in Support of Its Motion for Attorneys' Fees and Non-Taxable Costs. Marlyn has moved for an award of its attorneys' fees under 15 U.S.C. §1117(a). (See, Clerk's Docket Nos. 362 and 375.) The Court has already determined that reasonable attorneys' fees will be awarded. (See, Clerk's Docket No. 360.) For the reasons set forth below, the Court should decline to award the fees as sought by Marlyn and substantially reduce the amount of attorneys' fees the Court awards against Wong. I. Marlyn's Allocation Includes Fees for Non-Lanham Act Matters.

In seeking attorneys' fees, the courts have held that a reasonable effort must be made to adjust the fees to reflect only those fees associated with the Lanham Act claims. Gracie v. Rorion Gracie, 217 F.2d 1060, 1069-1070 (9th Cir., 2000). Although Marlyn attempts to apportion its fees against Wong by arbitrarily selecting a percentage of fifteen percent (15%) of fees, Marlyn's effort at apportionment ignores many issues relevant to an apportionment, including the time and fees Marlyn incurred in defending the third-party claim against Craig Knobloch, the time and fees incurred in defending the Counter-claim, and the time and fees incurred for Marlyn's direct claims against co-defendant Patrick Buehl. Similarly, Marlyn makes no effort to allocate fees between the multiple and various causes of action it brought against the Defendants. Further, some of the fees sought are for matters that are entirely unrelated to the instant case. For instance, 6.8 hours of time is listed on March 7, 2006 for a "[c]onference with J. Lehman and M. Jelinic regarding AAM offer; conference with T. Fenzle regarding same and the response; draft response draft", as well as some amount of time for trial preparation. (See, Exhibit "A" (2), Clerk's Docket No. 375-3, p 2, emphasis added) Similarly, on March 6, 2007, there is an entry of a .2 which includes "review email message from M. Salapska regarding answer to settlement counter-offer and leave voicemail message from M. Salapska regarding same in Arthur Anderson case". (See,
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Exhibit "A" (2), Clerk's Docket No. 375-3, p 6, emphasis added.)

Obviously, there are at

least some entries that do not pertain to the matter at hand and those entries are not for an insignificant amount of time. II. Rule 54.2(d) Exhibit "A" (2) lists fees of $107,246.50. That exhibit also lists no less than nine (9) separate timekeepers (in addition to Ms. Salapska) for which Marlyn is requesting to be awarded fees. (See, Clerk's Docket No. 375-3, pp. 2, 3, 4 & 6.) However, there is no affidavit describing the "qualifications, experience and case-related contributions of each attorney for whom fees are claimed" as is required by Local Rule 54.2(d)(4)(A). Accordingly, none of the time or fees associated with those entries should be considered. Further, there is no identification of what job titles those individuals possess, or even the rates which are being charged for them by which the reasonableness of their rates could be assessed under Local Rule 54.2(d)(4)(B). Accordingly, none of the time or fees associated with those entries should be considered. Additionally Local Rule 54.2(d)(4)(C) requires that the time spent and expenses incurred be reasonable. It appears that the vast majority of the time sought in Exhibit "A" (2) should not be awarded as it is not reasonable. A review of the time entries reveals that the work for which time was charges is duplicative of the work performed as set forth in Exhibit "A" (1) by Plaintiff's other law firm. Further, there is nothing to indicate that the work was in any way different or unique from the other work and there is no indication as to why two separate law firms were needed to perform the same work. As such, that time should not be considered. (See, Ford Motor Co. v. B&H Supply, Inc., 1987 U.S. Dist. LEXIS 14939; 2 USPQ.2d (BNA) 1870. Duplication of effort and excessive time are not reasonable and therefore not recoverable.) There are also rather large blocks of time devoted to items, such as 16.9 hours spent researching the issue of attorneys' fees in the three weeks following the conclusion of the trial. (See, Clerk's Docket No. 375-3, pp. 7.) Further, as indicated above, there are at least
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The Request for Fees Identified in Exhibit "A" (2) do not Comply with Local

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7 hours identified for fees which include time descriptions for unrelated cases. Such fees are not recoverable against Wong. Finally, Defendant would suggest that whatever fees are awarded to Marlyn must also be reasonable in light of the actual damages Plaintiff sustained. As the Court

undoubtedly recalls, the jury only awarded Marlyn one dollar ($1.00) in compensatory damages as it pertains to Wong. III. Marlyn is Not Entitled to an Award for Clerical Time

Marlyn's submission also includes time for non-attorneys and what appear to be non-paralegals and other clerical charges. These amounts are not recoverable under 15 U.S.C. §1117 which provides for an award of reasonable attorneys' fees, but which does not provide for and award for the services of everyone who may have contributed to preparing and/or trying the case, including secretarial and/or other clerical service. Work that is clerical or secretarial in nature is not separately recoverable. See, Knazavich v. Siglers Auto Center, 2001 U.S. Dist. LEXIS 12576, 2001 W.L. 1335772, at *3 (N.D. Ill. 2001.) Clairol, Inc. v. Save-Way Ind., Inc., Lexsee 211 USPQ (BNA) 223 (1980); CTS Corp. v. Electro Materials Corp. of America, 476 F.Supp. 144, 203 USPQ 259 (S.D.N.Y. 1979). See also, Allen v. U.S. Steel Corp., 665 F.2d 689, 697, (5th Cir., 1982)(clerical work, even where performed by a paralegal, is viewed as falling within the category of unrecoverable overhead expenses.) Thus, the 48.25 hours (at $35.00/hour) for secretarial time listed in Exhibit "A" (1) to Marlyn's Memorandum should be excluded. (See, Clerk's Docket No. 375-2, pp. 4348.) Similarly, Exhibit "A" (2) also lists numerous, and multiple, non-recoverable clerical tasks, such as "case retrieval project", "document retrieval project", "attend to preparation of exhibit blowups", "attend to logistics for delivery of exhibits to court", "forward to vendor for enlargement", "deliver charts". "prepare small copies", "print distribution copies" and "collate". (Clerk's Docket No. 375-3, pp. 3, 4, 7 & 9). Unfortunately, neither Plaintiff's Memorandum in Support nor any of the exhibits thereto identify the hourly rates for these projects. They likewise do not provide any supporting evidence as to the

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backgrounds and experience of the individuals performing these tasks. As such, the entries in , Exhibit "A" (2) should not be considered in assessing any award of attorneys' fees. IV. Marlyn is Not Entitled to Any Award of Non-Taxable Costs

Marlyn previously submitted its Bill of Costs in the amount of $21,018.49. (Clerk's Docket No. 363). Of that amount, Marlyn was ultimately awarded $12,000.35 in taxable costs. (Clerk's Docket No. 374.) Marlyn now also seeks an additional award of nontaxable costs in the amount of $11,172.67. (See, Clerk's Docket No. 375, page 4.)

However, for the reasons set forth below, Marlyn is not entitled to any award of nontaxable costs. 28 U.S.C. §1920 provides for awards of taxable costs and enumerates those categories of costs which are recoverable. In order to award non-taxable costs, there must be plain evidence of congressional intent to supersede the limitations set forth in 28 U.S.C. §1920. Crawford Fitting co. v. J.T. Gibbons, Inc., 482 U.S. 437, 445, 107 S. Ct. 2494 (1987). By way of example, 17 U.S.C. §505 (part of the 1976 Copyright Act) provides that "the court in its discretion may allow the recovery of full costs by or against any party." (emphasis added.) The Ninth Circuit, in Twentieth Century Fox v. Entertainment Distributing Corp., et al., 429 F.3d 869 (9th Circ., 2005), held that the use of the language "full costs" in that statute is evidence that Congress intended to permit an award of costs beyond those costs which are taxable under 28 U.S.C. §1920. No such similar language exists in 15 U.S.C. §1117, which provides, in pertinent part, that "the plaintiff shall be entitled . . . to recover . . . (3) the costs of the action." Accordingly, Marlyn is only entitled to its taxable costs, which have already been awarded, and Marlyn is not entitled to an award for any non-taxable costs or expenses of the litigation. V. Conclusion

For the reasons set forth above, the Court should disregard those fees sought in Exhibit "A" (2) for failing to comply with Local Rule 54.2(d). The failure is more than trivial, as the lack of the required information prevents any type of meaningful assessment
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of the fees sought in that regard. Further, those fees are duplicative of the other fees sought and include fees for unrelated matters. Additionally, the Court should significantly reduce the other fees sought to the extent those fees do not pertain to the Lanham Act claims, including Marlyn's other claims against the Defendants, as well as Marlyn's fees incurred in defending the counterclaim and the third-party claim. Finally, Marlyn's request for an award of $44,548.39 in

attorneys' fees is excessive in light of the compensatory damages award of only $1.00. With respect to Marlyn's request for an award of non-taxable costs, such an award is not authorized by statute and the Court should deny Marlyn's request.
DATED this 27th day of June, 2008. LEWIS BRISBOIS BISGAARD & SMITH, LLP

By: /s Stephen D. Hoffman Stephen D. Hoffman Attorneys for Wong and World Nutrition

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CERTIFICATE OF SERVICE
I hereby certify that on the 26th day of June, 2008, a copy of the foregoing WILLIAM AND MICHELE WONG'S RESPONSE TO MARLYN'S MEMORANDUM IN SUPPORT OF ITS MOTION FOR ATTORNEYS' FEES was filed electronically. A Notice of Electronic Filing (NEF) will be sent by operation of the Court's Electronic Case Filing (ECF) system to the filing party, the assigned Judge and any registered user in the case as indicated on the NEF. All other parties will be served by regular U.S. mail. Parties may access this filing through the Court's system.

____S/Stephen D. Hoffman________________ Stephen D. Hoffman LEWIS BRISBOIS BISGAARD & SMITH LLP Phoenix Plaza Tower II 2929 North Central Avenue, Suite 1700 Phoenix, Arizona 85012-2761 Telephone: (602) 385-1040 Facsimile: (602) 385-1051

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