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Sweet Street Desserts, Inc. v. Better Bakery, LLC

United States District Court, E.D. Pennsylvania

December 11, 2017

SWEET STREET DESSERTS, INC., Plaintiff
v.
BETTER BAKERY, LLC, Defendant

          MEMORANDUM

          STENGEL, JUDGE

         Defendant Better Bakery has moved for an award of $450, 000 in attorney's fees pursuant to Rule 54(d)(2) of the Federal Rules of Civil Procedure. For the following reasons, I will deny the motion in its entirety.

         I. BACKGROUND [1]

         In the fall of 2011, Sweet Street approached Better Bakery proposing that the two collaborate in an effort to produce a new pretzel sandwich product. The parties entered into a Confidentiality and Nondisclosure Agreement (the “NDA”) on November 2, 2011 and began a relationship of collaboration for the purpose of producing the pretzel sandwich. The parties communicated and exchanged information on how best to produce the product to the desired specifications. Sometime after entering into the NDA, Sweet Street believed that the two parties had entered into an oral exclusive requirements contract related to the design, manufacture, and supply of the pretzel sandwiches.

         The working relationship between Better Bakery and Sweet Street turned sour in 2012. In March of that year, Brian Freeman of Better Bakery was “refusing to communicate” with Sweet Street's CEO, Sandy Solmon. Solmon, “frustrated that her months of effort and collaboration with [Better Bakery] had been wasted, ” sent an email to two Sweet Street employees stating that she wanted Brian Freeman of Better Bakery to “suffer.” In the summer of that year, Sweet Street discovered that Better Bakery had produced its own pretzel sandwich and had been selling that product at Sam's Club, Costco, Wal-Mart, and BJ's stores. Sweet Street, believing it had protectable intellectual property rights in the pretzel sandwich it had been developing with Better Bakery, brought suit against its former collaborating partner.

         II. LEGAL STANDARD

         Rule 54(d)(2) of the Federal Rules of Civil Procedure provides that, except under some conditions, within fourteen days after entry of judgment the prevailing party may file a motion claiming “attorney's fees and related nontaxable expenses.” Fed.R.Civ.P. 54(d)(2)(A) and (B)(i). The motion must “specify the judgment and the statute, rule, or other grounds entitling the movant to the award” and “state the amount sought or provide a fair estimate of it.” Id. at (B)(ii) and (iii). The opposing party must be given an opportunity to state its objections to the motion. Id. at (C).

         Here, Sweet Street's claims II, III, and IV of the complaint were dismissed on January 1, 2013. See Document #24, Sweet St. Desserts, Inc. v. Better Bakery, LLC, Civ. A. No. 12-6115, 2013 WL 81385 (E.D. Pa. Jan. 7, 2013). Thereafter, summary judgment was granted in favor of Better Bakery on all of Sweet Street's remaining claims on July 23, 2015. See Sweet St. Desserts, Inc. v. Better Bakery, LLC, 2015 U.S. Dist. LEXIS 95913 (E.D. Pa. Jul. 23, 2015). Better Bakery's counterclaims against Sweet Street were then dismissed with prejudice on February 18, 2016. See Document #85. Better Bakery timely filed its Motion to Recover Attorney's fees, now before the court, on March 3, 2016. Sweet Street has responded. In its motion, Better Bakery argues that four separate grounds entitle it to an award of attorney's fees: (1) 28 U.S.C. § 1927; (2) the Lanham Act; (3) 12 Pa.C.S.A § 5305(1); (4) and the court's inherent power to sanction.

         III. DISCUSSION

         A. Better Bakery is the Prevailing Party.

         Sweet Street does not dispute that Better Bakery is the prevailing party in this case. In determining the prevailing party, the Third Circuit examines whether the plaintiff achieved some of the benefit sought by the party bringing the suit. Tyler v. O'Neil, 112 F.App'x 158, 161 (3d Cir. 2004). Where, as here, a defendant has successfully defended against a plaintiff's substantial claims and a judgment has been entered accordingly, the defendant is generally considered the prevailing party for Purposes of Rule 54(d)(1). Id. (citing Russian River Watershed Protection Comm. v. City of Santa Rosa, 142 F.3d 1136, 1144 (9th Cir. 1998). The fact that Better Bakery dismissed its counterclaims does not mean that it cannot be the prevailing party. In fact, Judge Friendly of the Second Circuit rejected this view and held that the defendant is the prevailing party, despite an adverse judgment on its counterclaims. See Scientific Holding Co. v. Plessy Inc., 510 F.2d. 15, 28 (2d Cir. 1974).

         B. Recovery of Attorneys' Fees Under 28 U.S.C. § 1927

         Better Bakery first asserts that it has a right to recover attorney's fees under 28 U.S.C. § 1927, which provides:

Any attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and ...

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