Dismissal With Prejudice Based On Convenant Not To Sue Does Not Defeat Fees

Highway Equipment Co., Inc. v. FECO, Ltd., 2006 U.S. App. LEXIS 28740 (Fed. Cir. Nov. 21, 2006)

Plaintiff sued for patent infringement, and defendant counter-claimed for wrongful termination of dealership. After the District Court granted plaintiff's motion for partial summary judgment on the counter-claim, plaintiff filed a covenant not to sue on its claim. As a result, the District Court dismissed plaintiff's claims with prejudice. Defendant then filed a motion for attorney's fees under 35 U.S.C. § 285, which authorizes fees for prevailing parties under "exceptional circumstances." The District Court found no exceptional circumstances and denied a fee award. Defendant appealed, and plaintiff argued that the District Court lacked subject matter jurisdiction to hear the fee request once the underlying matter was dismissed with prejudice based on plaintiff's covenant not to sue.  The Federal Circuit held that "as a matter of patent law, the dismissal with prejudice, based on the covenant and granted pursuant to the district court's discretion under Rule 41(a)(2), has the necessary judicial imprimatur to constitute a judicially sanctioned change in the legal relationship of the parties, such that the district court properly could entertain [defendant's] fee claim under 35 U.S.C. § 285." The Court, however, upheld the District Court's finding that the case did not involve exceptional circumstances justifying a fee award.

Dismissal on Jurisdiction Not Basis for Fee Award

Dahn World Co. v. Chung, 2006 U.S. Dist. LEXIS 83047 (D. Ariz. Nov. 13, 2006)

An Arizona district court refused to award attorney’s fees under the Digital Millennium Copyright Act, holding that the defendant was not a “prevailing party” when the matter was dismissed for lack of personal jurisdiction.  The Court relied on analogous Ninth Circuit law that a defendant is not a prevailing party within the meaning of § 1988 when the matter was dismissed for lack of subject matter jurisdiction, see Elwood v. Drescher, 456 F.3d 943, 948 (9th Cir. 2006). 

Unadjudicated Claim As Basis For Award

R.J. Reynolds Tobacco Co. v. McKenna, 2006 U.S. Dist. LEXIS 82497 (W.D. Wash. Nov. 13, 2006)

R.J. Reynolds’ (RJR) brought suit alleging that a state law banning cigarette sampling violated the First Amendment and/or was preempted by federal law.  Shortly thereafter, RJR filed a summary judgment motion on the preemption claim only, and the Court granted summary judgment. Recognizing that the preemption claim would not trigger a fee award pursuant to 42 U.S.C. § 1988  because it did not assert the violation of a federal right, RJR sought attorney’s fees based on the unadjudicated First Amendment claim. The Court observed that a plaintiff prevailing on a claim not cognizable under § 1983 may recover fees on the basis of an unadjudicated constitutional claim if the latter is substantial  and arises out of the same operative facts. However, RJR’s complaint only briefly mentioned the First Amendment claim and its motion for summary judgment omitted reference to that claim. RJR’s fee request therefore failed to provide a meaningful basis for evaluating the substantiality of the First Amendment claim.  Accordingly, RJR was not entitled to a fee award.

Unsettled = Non-Frivolous

Galen v. County of Los Angeles, 2006 U.S. App. LEXIS 27465 (9th Cir. Nov. 7, 2006)

In an action alleging that sheriff’s deputies violated his civil rights by setting excessive bail and that the County’s policy violated state bail law, the trial court granted summary judgment for defendants and awarded attorney’s fees pursuant to 42 U.S.C. §1988, which authorizes fee awards for prevailing civil rights defendants in “frivolous” litigation. The Ninth Circuit affirmed in part and reversed in part. Because plaintiff acquired no evidence in discovery that the County’s policies led to the setting of excessive bail, it was frivolous for plaintiff to litigate this claim post-discovery. Accordingly, a fee award to the County was appropriate. But because there was little precedent on the law of excessive bail, it was not frivolous for plaintiff to pursue its claim against the deputies. Accordingly, the court reversed the trial court’s award of fees to the deputies.

Shallow Pockets

United States ex rel. Jacobs v. Patrol Servs., Inc., 2006 U.S. App. LEXIS 26109 (11th Cir. Oct. 19, 2006)

District courts have considerable latitude in determining the method of allocating liability for attorney’s fees among multiple defendants.  In this qui tam action, the Eleventh Circuit approved the district court’s fault-based method of calculating each defendant’s proportionate liability for fees. Plaintiff objected that the district court shifted fees to an insolvent defendant, a result contrary to policies underlying the False Claims Act. The Eleventh Circuit rejected that argument, holding that culpability is a sound basis for allocation and the district court acted within its discretion in finding that it outweighed competing concerns.   

Exhaust Those Remedies!

Kuhl v. United States, 2006 U.S. App. LEXIS 25892 (2nd Cir. Oct. 18, 2006)

After the district court ruled that appellant’s bankrupt status barred the IRS from garnishing her wages, appellant moved for attorney’s fees pursuant to a provision of the bankruptcy code.  The Second Circuit found that appellant had not complied with a subsection of the statute outlining the administrative hurdles that a party must pass before bringing such a suit.  Though the subsection’s title indicated that it applied only to suits for damages, not fees, the Court interpreted the subsection in light of the overall statute and held that its requirements applied to motions for attorney’s fees as well.

Small FOIA Disclosure Not Enough

Peter S. Herrick’s Customs & Int’l Trade Newsletter v. U.S. Customs & Borders  Protection, 2006 U.S. Dist. LEXIS 77935 (D.D.C. Oct. 26, 2006)

Plaintiff filed a FOIA request when Customs refused to provide a copy of Customs' Fines, Penalties, and Forfeitures handbook.  Customs released much of the handbook voluntarily, and in the ensuing litigation, the court upheld the agency’s decision to withhold most of the remainder of the material, forcing disclosure of only 30 additional sentences. Upon conclusion of the litigation, Plaintiff sought attorney’s fees pursuant to FOIA’s fee shifting provision. The court denied the motion. While plaintiff established eligibility for an award because it was granted “some relief,” the three relevant factors -- public benefit, commercial benefit to plaintiff, and reasonableness of defendant’s actions -- weighed against an award. The handbook was likely of interest to only a small segment of the population, and plaintiff’s interest in it was primarily commercial. In addition,Customs had acted reasonably in disclosing only portions of the handbook given that the court agreed with most of its requested exemptions. 

Sloppy Lawyering Supports Fees In Removal Context

Yadzani v. Access ATM, 2006 U.S. Dist. LEXIS 78049 (D.D.C. Oct. 27, 2006)

28 U.S.C. § 1447(c) allows attorney’s fees and costs when opposing counsel sought removal in error, though courts generally award fees only when the error was obvious.  In this case, removal was denied because it was not sought in a timely fashion. Defendant failed to seek removal earlier because he was mistaken as to the date he received notice of the lawsuit.  The District Court for the District of Columbia granted fees, holding that an award is justified where defendant’s “sloppy lawyering” results in a plainly untimely request for removal.