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


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Date: April 24, 2008
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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 Defendants' Motion for Attorney Fees Defendant/third-party plaintiff, World Nutrition, Inc., moves for an award of attorney fees as to third-party defendant Craig Knobloch.1 The motion is opposed. Oral argument has not been

requested and is not deemed necessary. In responding to plaintiff Marlyn's multi-count complaint for trade secrets, Lanham Act/false advertising, unfair competition, trade libel, and conversion, World asserted a counterclaim against Marlyn Nutraceuticals and a third-party claim against Knobloch. As to Knobloch, World's third-party complaint alleged four claims: breach of contract, trade secrets violation, conversion, and unjust enrichment. Several of Marlyn's claims had to do with the

misappropriation of its customer list by World and/or individual
1

Docket No. 340. - 1 -

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World employees. World's third-party claim against Knobloch had to do with alleged misappropriation of World's customer list by Knobloch. The trial jury found for Marlyn on its claims, and The jury found for World and against The jury rejected

awarded substantial damages.

Knobloch on World's breach of contract claim.

World's other claims against Knobloch and awarded nominal damages of $1.00 for breach of contract. It is in the foregoing context

that World seeks an award of attorney fees against Knobloch. World theories: that [i]n any contested action arising out of a contract, express or implied, the court may award the successful party reasonable attorney fees[;] and paragraph 4(b) of Knobloch's contract of employment with World, which made express provision for the recovery of "reasonable attorney's hereunder."2 The court finds that, as between World and Knobloch, World was the successful or prevailing party and is therefore entitled to an award of attorney fees under both A.R.S. 12-341.01 and fees, incurred in protecting [World's] rights bases its claim for attorney fees on two legal

A.R.S. 12-341.01, which provides in pertinent part

paragraph 4 of the World/Knobloch employment contract. The hourly rate upon which World bases its claim for attorney fees ($140 per hour) is very reasonable given the nature of this

Employee Non-Disclosure & Non-Compete Agreement at 2 (Dec. 19, 2002), attached as Exhibit 1 to Third-Party World Nutrition's Motion for Attorneys' Fees, Docket No. 340. - 2 -

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litigation, the experience of defense counsel, and the fees charged by attorneys in the Phoenix area. The court had concerns about the amount of time that World's counsel was attributing to the presentation of the claim against Knobloch and sought additional information which was provided in a supplemental affidavit.3 Based upon that affidavit, the court is

satisfied that a fair and reasonable allocation of time has been made as between World's third-party claim against Knobloch and the substantial other work that counsel undertook for World in

connection with this litigation. Some further comment is appropriate with respect to the court's finding that World was the prevailing party as to Knobloch, as well as the allocation of time devoted to World's claims against Knobloch in light of the fact that the jury found for World on its breach of contract claim, but rejected World's three other claims against Knobloch. Had there been a different set of transactions

or a different factual foundation for one or more of World's claims against Knobloch, some further analysis of who prevailed and/or the reasonableness of time allocations that were made in seeking an award on the breach of contract claim would be necessary. However, this is not a case where both Marlyn's and World's claims were based upon the same transaction or nucleus of facts. Marlyn's

claims were in part based upon its customer list, whereas World's claims against Marlyn and Knobloch were based upon World's customer list.
3

As

reflected

by

counsel's

supplemental

affidavit,

an

Docket No. 361. - 3 -

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appropriate allocation has been made as between time devoted to World's claim against Marlyn and its claims against Knobloch. But

perhaps most important in this regard, all four of World's claims against Knobloch were based upon the same nucleus of facts -- a misappropriation of World's customer list by Knobloch. World

asserted four theories of its case, all based on the same facts. This is not a case where World's counsel devoted time to developing four independent causes of action, only one of which was

successful.

Therefore, no special prevailing party analysis or

time allocation is appropriate as between World's various claims against Knobloch. World's motion for an award of attorney fees is granted, and the clerk of court shall enter judgment in favor of World

Nutrition, Inc., and against Craig Knobloch in the amount of Eight Thousand, Two Hundred Eighteen Dollars ($8,218.00). DATED at Anchorage, Alaska, this 24th day of April, 2008.

/s/H. Russel Holland United States District Judge

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