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Jama Corp. v. Gupta

January 4, 2008

JAMA CORPORATION ET AL., PLAINTIFFS,
v.
DR. GIRIWARLAL GUPTA, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Judge Caputo

MEMORANDUM

Presently before the Court is Plaintiff's post-trial motion for attorneys' fees and costs pursuant to Section 35 of the Lanham Act. (Doc. 224.) For the reasons set forth below, the Court will grant in part and deny in part Plaintiff's motion for attorneys' fees and costs. The Plaintiff is entitled to attorneys' fees pursuant to the Lanham Act, but the Court will apportion the fees for failed claims, as the claims are not so intertwined that the factual and legal bases of the claims are the same. The Court will grant in part and deny in part the Plaintiff's requests for costs, as some of the costs are not permitted by 28 U.S.C. § 1920, and other costs are not properly documented.

BACKGROUND

The present motion requests attorneys' fees and costs for Jama Corporation in civil actions 3:99-CV-1574 and 3:99-CV-1624. Three issues were initially brought to trial in action 3:99-CV-1624. On a Rule 50 motion, the Court disposed of the first claim for tortious interference with contractual relations. On March 13, 2003, after trial, the jury entered a verdict in favor of the Plaintiff Jama Corporation in action 3:99-CV-1624 for breach of contract and trademark infringement. (Doc. 205.) On June 19, 2003, the Court entered judgment for the Defendants in civil action 3:99-CV-1574. (Doc. 235.) Plaintiff requests an award of attorneys' fees and costs in the amount of $652,272.93. This motion is fully briefed and ripe for disposition.

DISCUSSION

I. Attorneys' Fees

A. Appropriateness of Attorneys' Fees

Section 35(a) of the Lanham Act provides that "[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party." 15 U.S.C. § 1117(a). However, Section 35(a) does not explicitly define the meaning of an "exceptional case[ ]."

The Third Circuit Court of Appeals has recently determined that finding exceptional conduct requires a two-step inquiry. Green v. Fornario, 486 F.3d 100, 103 (3d Cir. 2007). First, the district court must determine if there was any culpable conduct, such as "bad faith, malice or knowing infringement" on the part of the losing party. Id. (citing Ferrero U.S.A., Inc. v. Ozak Trading, Inc., 952 F.2d 44, 47 (3d Cir. 1991); SecuraComm Consulting, Inc. v. Securacom, Inc., 224 F.3d 273, 280 (3d Cir. 2000)). Second, the court must determine if the circumstances are "exceptional" enough to warrant an award. Id.

A court may not award fees without finding culpable conduct, but it may decline to award them despite such conduct based upon the totality of the circumstances. Id.

A finding of culpable conduct for the awarding of attorney fees is reliant upon the specific facts of the case. SecuraComm, 224 F.3d at 280. In this case, the Plaintiff has demonstrated culpable conduct. The jury reached a verdict finding that the Defendants actions were "willful," which is conduct capable of supporting an award for attorneys' fees.

If culpable conduct exists, the court must then determine if the case is "exceptional." When determining if a case is exceptional, the court may consider factors such as "the closeness of the liability question and whether the plaintiff suffered damages." Green, 486 F.3d at 103-04 (citing Ferrero, 952 F.2d at 49). The Plaintiff has demonstrated that the case is exceptional for purposes of recovering attorneys' fees, as the jury awarded damages for the willful infringement by the Defendants. Therefore, the Court will award the Plaintiff attorneys' fees pursuant to the Lanham Act.

B. Apportionment

Defendants argue that apportionment of the attorneys' fees is appropriate in this case. First, Defendants argue that Plaintiff should not recover for attorneys' fees in civil action 3:99-CV-1574, as Jama Corporation was not a prevailing party in that action. Plaintiff counters that the action 3:99-CV-1574 was substantially identical to the action in 3:99-CV-1624, and therefore apportionment is not required. Plaintiff cites Aamco Transmissions v. Graham, Civ. A. Nos. 89-497, 89-6379, 1990 WL 118050, at *3 (E.D. Pa. Aug. 9, 1990) for the proposition that if the claims are so intermingled that the factual basis and legal theories are the same, the court need not apportion the Lanham Act and non-Lanham Act claims.

Plaintiff Jama Corporation was not a "prevailing party" in action 3:99-CV-1574. The term "prevailing party" is a legal term of art, and requires a party to "succeed on 'any significant issue in the litigation which achieves some of the benefit the parties sought in bringing suit.'" Wheeler by Wheeler v. Towanda Area Sch. Dist., 950 F.2d 128, 131 (3d Cir. 1991) (quoting Hensley v. Eckerhart, 461 U.S. 424, 434 (1983)). The Wheeler court then applied a two part test consistent with Hensley: (1) whether the plaintiffs achieved relief, and (2) whether there was a causal connection between the litigation and the relief from the defendant. Id. In this case, Plaintiff Jama Corporation was not a plaintiff that achieved relief. The listed plaintiffs in action 3:99-CV-1574 were Rajiv Jalan, Rishi Jalan, and Pushpa Jalan. Furthermore, judgment in that case was in favor of the defendants. (Doc. 235.) Although many of the same attorneys worked on both cases, the two cases involved different clients and different claims. Furthermore, the factual and legal bases of action 3:99-CV-1574 focused on the ownership of the Old West Cowboy Boots Corporation stock, and the potential imposition of a constructive trust, whereas the action 3:99-CV-1624 was based upon trademark infringement and breach of contract. These claims are not so intermingled that apportionment is impossible. Therefore, Plaintiff Jama Corporation is not entitled to the attorneys' fees for work on the action 3:99-CV-1574, and the Court will apportion the fees and costs between the two actions.

Defendants also request apportionment of the attorneys' fees between the successful Lanham Act claim and the other claims in 3:99-CV-1624, namely, the breach of contract and tortious interference claims. Although the Third Circuit Court of Appeals has not ruled as to the requirement of apportionment between Lanham Act and nonLanham Act claims, numerous courts have held that apportionment is required. See Gracie v. Gracie, 217 F.3d 1060, 1069 (9th Cir. 2000) ("[A]s a general matter, a prevailing party in a case involving Lanham Act and non-Lanham Act claims can recover attorneys' fees only for work related to the Lanham Act claims."); U.S. Structures, Inc. v. J.P. Structures, Inc., 130 F.3d 1185, 1193 (6th Cir. 1997) ("[U]nder 15 U.S.C. § 1117(a), attorneys' fees are recoverable only for work performed with claims filed under the Lanham Act."); Procter & Gamble Co. v. Amway Corp., 280 F.3d 519, 531 (5th Cir. 2002); Microsoft Corp. v. Software Wholesale Club, Inc., 129 F. Supp. 2d 995, 1011 (S.D. Tex. 2000) ("In [trademark] cases in which attorneys fees are awarded as to some claims and denied as to others, an apportionment of attorneys fees is proper.").

However, the Third Circuit Court of Appeals has discussed apportionment generally. Citing Supreme Court precedent, the Third Circuit Court of Appeals has held that "where a plaintiff presents 'distinctly different claims for relief that are based on different facts and legal theories . . . work on an unsuccessful claim cannot be deemed to have been expended in pursuit of the ultimate result achieved.'" Eichenlaub v. Twp. of Indiana, 213 Fed. App'x 218, 222 (3d Cir. 2007) (non-precedential) (quoting Hensley v. Eckerhart, 461 U.S. 424, 434-35 (1983)). The Third Circuit Court of Appeals has further held that attorneys' fees may be reduced for time "spent litigating claims on which the party did not succeed and that were distinct in all respects from claims on which the party did succeed." Rode v. Dellarciprete, 892 F.2d 1177, 1183 (3d Cir. 1990).

Therefore, the Third Circuit Court of Appeals requires apportionment of distinct claims when a claim is unsuccessful. Plaintiff's claim for tortious interference of business for contractual relations was unsuccessful, and the Court disposed of the count in the Rule 50 motion after the close of Plaintiff's case-in-chief. (Trial Tr. vol. 4, 5, Mar. 7, 2003.) A claim for tortious interference with contractual relations is a distinct claim from one of trademark infringement. The wrongful encouragement of one to enter or not to enter into a contract or business relationship is an actionable tort. See Thompson Coal Co. v. Pike Coal Co., 412 A.2d 466, 470 (Pa. 1979). The elements to prove such interference are: (1) a prospective contractual relation; (2) purpose of intent to harm the plaintiff by preventing the relation from occurring; (3) the absence of privilege of justification on the part of the defendant; and (4) the occasioning of actual damage resulting from the defendant's conduct. Id. at 471. These elements are distinct from a trademark infringement claim, as they require the interference with some contractual relation. A trademark infringement claim is distinct from such a contractual claim, and therefore, the Court will apportion the attorneys' fees and costs for this failed claim.

Plaintiff was successful on the breach of contract claim, which alleged breach of contract based upon the failure of Old West Cowboy Boots Corporation to pay five (5) Bills of Exchange to Jama Corporation. However, Plaintiff is not entitled to these fees based upon the intermingling of this claim with the trademark infringement claim. Breach of contract is distinct from the trademark infringement claim, as this claim specifically dealt with whether the Defendant breached its contract with the Plaintiff regarding the Bills of Exchange. Furthermore, Plaintiff is not entitled to recover attorneys' fees for the breach of contract claim, even though the Plaintiff was successful on the claim. Pennsylvania has adopted the American Rule, whereby attorneys' fees are generally not a taxable item of costs except as permitted by statute. See Krassnoski v. Rosey, 684 A.2d 635, 637 n.2 (Pa. Super. Ct. 1996) (citing 42 PA. CONS. STAT. ANN. § 1726(a)(1)).

Plaintiffs have not identified a statutory basis for their request for attorneys' fees for the breach of contract claim. In Yellow Transp., Inc. v. DM Transp. Mgmt. Servs., Inc., 2006 WL 2871745, at *4 (E.D. Pa. July 14, 2006), the court did not permit attorneys' fees for breach of contract, noting that there was no provision in the contract for such fees, and there was no statutory authority permitting them. The court held that "[t]his Court has consistently followed the general, American rule that there can be no recovery of attorneys' fees from an adverse party, absent an express statutory authorization, a clear agreement by the parties or some other established exception." Id. (quoting Merlino v. Delaware County, 728 A.2d 949, 951 (Pa. 1999)). Therefore, Plaintiff may not recover attorneys' fees on the basis of its breach of contract claim, as there is no provision for such fees in statutory authority or other agreement. The Court will therefore apportion the fees and costs accordingly.

C. Multiple Counsel

Plaintiff makes a claim for attorneys' fees for multiple sets of counsel. The counsel includes Ullman, Shapiro & Ullman, LLP; D. Bruce Hanes & Associates, P.C., Foley, Cognetti, Comerford & Cimini; and Khaitan & Company. Other trademark infringement cases have awarded attorneys' fees for more than one law firm, including lead counsel, local counsel, and in-house counsel. See Tamko Roofing Prod., Inc. v. Ideal Roofing Co., Ltd., 282 F.3d 23, 34 (1st Cir. 2002); Louis Vuitton, S.A. v. Ummat's, Civ. A. Nos. 1:87-CV2660HTW, 1:88CV2745HTW, 1992 WL 317523, at *5 (N.D. Ga. Feb. 10, 1992) (awarding fees to lead and local counsel). Therefore, Plaintiff may make a claim for attorneys' fees for lead and local counsel.

However, Plaintiff may not recover attorneys' fees for the Indian law firm of Khaitan & Company. One of the firm's attorneys, M.P. Rao, testified at trial and acted as an expert witness on the subject of Indian law. Khaitan & Company is not a law firm for the purposes of attorneys' fees. Rather, they served as experts in the field of Indian law. In Plaintiff's pre-trial brief on a motion in limine, the Plaintiff argued for the inclusion of M.P. Rao's testimony at trial. (Doc. 181.) Specifically, the Plaintiff argues in favor of permitting a "foreign law expert" to testify. (Doc. 181.) Thus, even the Plaintiff has characterized M.P. Rao as an expert. Furthermore, neither M.P. Rao, Tushna Thapliyal, nor any other attorney from the law firm of Khaitan & Company ever made an appearance in the case as an attorney for the plaintiffs. Such actions demonstrate that Khaitan & Company acted in the capacity of experts in the field of Indian law, and not as attorneys. Plaintiff may not reap the benefit of attorneys' fees for an expert witness, even if the expert witness is an attorney. Therefore, recovery for Khaitan & Company will be considered a cost.

D. Computation and Reasonableness

The United States Supreme Court has held that the "initial estimate of a reasonable attorney's fee is properly calculated by multiplying the number of hours reasonably expended on litigation times a reasonable hourly rate." Blum v. Stetson, 465 U.S. 886, 888 (1984). This amount is known as the "lodestar" figure, which is presumed to be the reasonable fee. Pennsylvania v. Delaware Valley Citizens' Counsel, 478 U.S. 546, 565 (1986); Pennsylvania v. Delaware Valley Citizens' Counsel, 483 U.S. 711, 730-31 (1987).

In calculating the reasonable rate, the Court looks to the prevailing market rates in the relevant community. Loughner v. Univ. of Pittsburgh, 260 F.3d 173, 180 (3d Cir. 2001). The Court should considered the experience and skill of the prevailing party's attorney, and compare the rates to those prevailing in the community for similar services by lawyers of reasonably comparable skill, experience, and reputation. Maldonado v. Houstoun, 256 F.3d 181, 184 (3d Cir. 2001). The prevailing party bears the burden of demonstrating that the requested hourly rates are reasonable. Id.

The Court must also determine whether the number of hours spent on the litigation was a reasonable number of hours. The Court "should review the time charged, decide whether the hours claimed were reasonably expended for each for the particular purposes described, and then exclude those that are 'excessive, redundant, or otherwise unnecessary.'" Public Interest Research Group of N.J., Inc. v. Windall, 51 F.3d 1179, 1188 (3d Cir. 1995) (citations omitted). Thus, a trial court will "exclude from this initial fee calculation hours that were not reasonably expended on the ...


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