Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—M.D. Fla.: Attorney fees awarded after FDUPTA claim was voluntarily dismissed, (Sep 30, 2015)

By Michael Menzhuber, J.D., LL.M.

A request by defendants for attorney fees for successfully defending claims made against them under the Florida Deceptive and Unfair Trade Practices Act (FDUTPA) was granted by the federal district court in Fort Myers, Florida. In granting the request, the court determined that: (1) the defendants’ request for attorney fees was timely filed under FDUTPA; (2) the defendants were prevailing parties; (3) the discretionary factors considered by the court supported the award; and (4) the attorneys’ fees requested were reasonable (American Registry, LLC v. Hanow, September 25, 2015, Steele, J.).

Background. American Registry, LLC (AR), a company that sold customized achievement recognition items, filed a complaint against a former salesman, Yonah Hanaw, Hanaw’s business partner, Michael Levy, and their company, Showmark Media, LLC, which also sold customized achievement recognition items. AR’s complaint alleged, among other things, a FDUPTA violation as a result of Hanaw allegedly stealing AR’s company secrets to form and operate a competing business.

AR’s initial complaint was dismissed, as was its first amended complaint based on deficiencies in pleading subject matter jurisdiction. AR’s second amended complaint was dismissed, as to Levy, for lack of personal jurisdiction, and as to the remaining defendants, for failure to state a claim. AR filed a third amended complaint which was dismissed only with respect to its FDUPTA and tortious interference claims. AR, after determining that its witness in the matter was not credible, filed a verified motion for voluntary dismissal with prejudice but did not condition the dismissal on the payment of costs or attorney fees.

The defendants filed a response in opposition seeking to have the case decided on its merits, or for payment of fees and costs incurred. After determining that a dismissal with prejudice would not put the defendants in a worse position than if they prevailed at trial, the court granted the motion to dismiss without awarding attorneys’ fees and costs to the defendants. The defendants subsequently filed a motion for attorneys’ fees and costs for successfully defending AR’s claims under FDUPTA.

Attorney fees. The defendants filed their motion for attorney fees and costs on January 12, 2015. AR argued that the motion was untimely because, under Federal Rule of Civil Procedure 54, a motion for attorney fees must be filed 14 days after the entry of judgment and the entry of judgment in the case was on December 8, 2015. Consequently, any motion for fees was due on or by December 22, 2014.

The court noted, however, that under Rule 54, a statute or order can trump the 14 day requirement after entry of judgment. It further noted that, under FDUPTA, there is a two-step procedure under which judgement is first entered on liability and then, after any appeals, attorney fees are awarded. The court, therefore, concluded that, under FDUPTA, the defendants had 14 days from the expiration of the time to appeal to file a motion for attorneys’ fees. Because the deadline to appeal the judgment expired on January 8 and no appeal was filed by that date, the defendants had until January 23, 2015 to file their motion for fees. The court determined that since the motion for fees was filed on January 12, 2015 it was timely filed.

The court determined that the defendants were the prevailing party because: (1) the voluntary dismissal by AR was with prejudice; (2) all the parties agreed that the dismissal would serve as an adjudication on the merits; and (3) the dismissal of the FDUPTA claim, on the basis of preemption, did not negate the defendants’ status as prevailing for purposes of an award of attorney fees.

The court noted the factors to be considered in determining whether to award attorney fees. It then determined that the relative lack of merit of the claims that formed the basis of the FDUPTA claim, coupled with there being several attempts by AR to state a claim before discovery revealed holes in the theory of the case, supported granting attorney fees. The court also found that awarding attorney fees in this case would serve as a deterrent.

The court determined that amount of attorney fees requested was reasonable because: (1) the individualized hourly rates were reasonable; and (2) the entries were properly billed and not duplicative.

The case is No. 2:13-cv-352-FtM-29CM.

Attorneys: C. Berk Edwards (Geraghty, Dougherty & Edwards, PA) for American Registry, LLC. Jonathan E. Pollard (Law Office of Jonathan E. Pollard) for Yonah Hanaw a/k/a John Hanaw, Showmark Holdings, LLC and Showmark Media, LLC.

Companies: Holdings, LLC; Showmark Media, LLC

Cases: StateUnfairTradePractices FloridaNews