Cadence Design Systems, Inc. v. Pounce Consulting, Inc.

Filing 242

ORDER by Judge Phyllis J. Hamilton granting 224 Motion for Attorneys' Fees. (pjhlc2S, COURT STAFF) (Filed on 6/26/2019)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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CADENCE DESIGN SYSTEMS, INC.,

v.

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ORDER GRANTING MOTION FOR
ATTORNEYS' FEES

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POUNCE CONSULTING, INC., et al.,

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United States District Court
Northern District of California

Case No. 17-cv-04732-PJH

Plaintiff,

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Defendants.

Re: Dkt. No. 224

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Plaintiff Cadence Design Systems, Inc.’s (“Cadence”) motion for attorneys’ fees

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came on for hearing before this court on June 19, 2019. Plaintiff appeared through its

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counsel, Guy Ruttenberg and Michael Eshaghian. Defendants Pounce Consulting, Inc.

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(“Pounce USA”) and Pounce Consulting, S.A. de C.V. (“Pounce Mexico,” together with

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Pounce USA, the “Pounce defendants”), both of which are in default, did not appear.

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Having read the papers filed by plaintiff and carefully considered the arguments therein

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and the relevant legal authority, and good cause appearing, the court hereby GRANTS

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plaintiff’s motion, for the following reasons.

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A.

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Background
The court declines to recite this action’s tortured procedural history. The court

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finds it enough to note that throughout this action’s nearly two-year history, the Pounce

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defendants’ on-and-off again participation has delayed resolution of this action and

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hindered plaintiff’s ability to obtain necessary discovery. Eventually, after both

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defendants failed to retain substitute counsel, the court entered default against the

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Pounce defendants. On April 22, 2019, the court granted plaintiff’s motions for default

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judgment against the both defendants and entered final judgment three days later on

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April 25, 2019.
As relevant here, that judgment awarded plaintiff $6,983,178.29 against the

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Pounce defendants for breach of contract, copyright infringement, and circumvention of

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copyright protections. Dkt. 221 at 2-3. In addition, the judgment awarded plaintiff

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“attorneys’ fees and costs . . . based on section 28 of the Software License Agreement[,]”

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which was the contract that defendants had breached. Id. at 3. The judgment directed

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plaintiff to file a motion for attorneys’ fees within 14 days. That motion is presently before

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the court.

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B.

Analysis
In California, “the prevailing party in an action is entitled to recover its costs,”

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United States District Court
Northern District of California

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including “[a]ttorney fees, when authorized by” (1) “[c]ontract,” (2) “[s]tatute,” or (3) “[l]aw.”

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Royster Constr. Co. v. Urban W. Cmtys., 40 Cal. App. 4th 1158, 1169 (1995). Here, the

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Software Licensing Agreement expressly authorizes the award of attorneys’ fees and

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costs. Thus, because the basis for the attorneys’ fee award is a state law breach of

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contract claim, “this court must apply California law on attorneys' fees.” Suretec Ins. Co.

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v. BRC Constr., Inc., 2013 WL 6199021, at *2 (E.D. Cal. Nov. 27, 2013) (citing Vizcaino

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v. Microsoft Corp., 290 F.3d 1043, 1047 (9th Cir. 2002)).

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California Civil Code § 1717 “governs the issue of attorneys' fees under a

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contract,” Makreas v. First Nat'l Bank of N. California, 2014 WL 2582027, at *5 (N.D. Cal.

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June 9, 2014), and provides for the provision of “reasonable attorney[s’] fees” when due

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under a contract, Cal. Civ. Code § 1717(a). That “fee setting inquiry in California

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ordinarily begins with the ‘lodestar,’ i.e., the number of hours reasonably expended

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multiplied by the reasonable hourly rate.” PLCM Grp. V. Drexler, 22 Cal. 4th 1084, 1095

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(2000).

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Here, as of May 9, 2019, plaintiff’s counsel’s total lodestar equaled $748,334.50.

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Having reviewed plaintiff’s counsel’s billing records and billing rates, the court finds that

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both the total number of hours plaintiff’s counsel expended on this litigation and plaintiff’s

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counsel’s hourly rates are reasonable. In addition, the court finds that because plaintiff’s
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contract claim and other claims are “inextricably intertwined,” apportioning plaintiff’s

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counsel’s time between the claims is “impracticable, if not impossible” and therefore

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unnecessary. Abdallah v. United Savings Bank, 43 Cal. App. 4th 1101, 1111 (1996)

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(“[A]ttorney[s’] fees need not be apportioned when incurred for representation on an issue

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common to both a cause of action in which fees are proper and one in which they are not

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allowed.”).

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“After determining the lodestar, the trial court may adjust the lodestar figure based

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on factors including, but not limited to[:] (1) the novelty and difficulty of the questions

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involved, (2) the skill displayed in presenting them, (3) success or failure, (4) the extent to
which the nature of the litigation precluded other employment by the attorneys, (5) the

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United States District Court
Northern District of California

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contingent nature of the fee award . . . .” Glaviano v. Sacramento City Unified Sch. Dist.,

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22 Cal. App. 5th 744, 751 (Ct. App. 2018).

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Here, the court finds that a significant upward multiplier is warranted based on the

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above factors as well as case-specific factors. “The purpose of such adjustment is to fix

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a fee at the fair market value for the particular action. In effect, the court [must]

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determine[ ], retrospectively, whether the litigation involved a contingent risk or required

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extraordinary legal skill[.]” Nishiki v. Danko Meredith, APC, 25 Cal. App. 5th 883, 897

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(Ct. App. 2018). “Of these factors, one of the most common fee enhancers is for

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contingency risk.” Id. The court finds that factor particularly relevant here.

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First, plaintiff’s counsel has litigated this action on a contingency basis. “A lawyer

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who both bears the risk of not being paid and provides legal services is not receiving the

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fair market value of his work if he is paid only for the second of those functions.” Id. at

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898. As relevant here, the plaintiff and its counsel’s representation agreement provided

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that plaintiff’s counsel would be awarded 30% of plaintiff’s recovery plus $2,500. Dkt.

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224-2 ¶¶ 15, 17. Under that fee arrangement, plaintiff would be entitled to an award of

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$2,097,453.49. Id. That figure shows that plaintiff’s lodestar significantly

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undercompensates plaintiff’s counsel for the risk it took on by representing plaintiff on a

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contingency basis. See Glendora Cmty. Redevelopment Agency v. Demeter, 155 Cal.
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App. 3d 465, 480 (Ct. App. 1984) (affirming fee award that matched contingency fee

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amount after trial court determined it was reasonable after weighing reasonableness

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factors).

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Second, and relatedly, plaintiff’s counsel faces a significant continued risk that it

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will not recover any fees. The Pounce defendants have abandoned this litigation and

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have apparently refused to voluntarily pay any amount due pursuant to the judgment

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against them. Such conduct has resulted in plaintiff’s counsel expending a significant

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number of hours in post-judgment litigation. See, e.g., Dkt. 229 (motion to amend

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judgment); Dkt. 238 (motion to for assignment order and for order restraining judgment
debtor). In all respects, it appears that plaintiff and its counsel have a long road ahead to

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United States District Court
Northern District of California

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recover any money due under the judgment. Thus, plaintiff’s counsel faces the continued

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risk of never collecting any fees despite successfully litigating this action.

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Taking into account those risks and the difference between the contractual

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contingency fee amount and the lodestar amount, and taking into account all the other

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attorneys’ fees factors, the court finds that an award of $2,097,453.49 is reasonable.

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Because that amount matches the amount plaintiff’s counsel could have received under

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its agreement with plaintiff, any additional attorneys’ fees—e.g., for post-judgment

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litigation—would give plaintiff’s counsel a windfall. For that reason, this court will not

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entertain any additional motions for attorneys’ fees.

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Lastly, the court awards plaintiff’s counsel $62,656.44 in non-taxable costs. That

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amount is supported by plaintiff’s counsel’s declaration and the attached billing invoices.
CONCLUSION

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For the foregoing reasons, plaintiff’s motion for attorneys’ fees and costs is
GRANTED.
IT IS SO ORDERED.
Dated: June 26, 2019

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PHYLLIS J. HAMILTON
United States District Judge
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