American Registry, LLC v. Hanaw et al
Filing
79
OPINION AND ORDER granting 74 Motion for Attorney Fees. The Clerk shall enter an amended judgment adding attorney's fees in favor of defendants in the amount of $46,799.94. Signed by Judge John E. Steele on 9/25/2015. (RKR)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
AMERICAN
Delaware
company,
REGISTRY, LLC, a
limited liability
Plaintiff,
v.
Case No: 2:13-cv-352-FtM-29CM
YONAH HANAW, MICHAEL LEVY,
SHOWMARK HOLDINGS, LLC, a
Delaware limited liability
company, and SHOWMARK MEDIA,
LLC,
a
Delaware
limited
liability company,
Defendants.
OPINION AND ORDER
This matter comes before the Court on defendants’ Motion for
Attorneys’ Fees (Doc. #74) filed on January 12, 2015.
Plaintiff
filed a Response (Doc. #75), and defendants filed a Reply (Doc.
#78) with leave of Court.
I.
Procedural History
On May 7, 2013, plaintiff American Registry, LLC filed a
Complaint against Yonah Hanaw, Michael Levy, Showmark Holdings,
LLC, and Showmark Media, LLC.
The Complaint and a subsequent
Amended Complaint were dismissed sua sponte without prejudice
based on deficiencies in pleading subject-matter jurisdiction.
(Docs. #3, #6.)
Upon motion by defendants, the Second Amended
Complaint was dismissed as to defendant Levy for lack of personal
jurisdiction, and as to the remaining defendants for failure to
state a claim.
(Doc. #35.)
On December 19, 2013, plaintiff filed
a Third Amended Complaint (Doc. #36), and defendants once again
filed motions to dismiss.
On July 16, 2014, the Court issued an
Opinion and Order (Doc. #61) granting the motions in part and
dismissing Counts III (FDUTPA), IV (tortious interference with
business
relationships),
and
V
(tortious
interference
with
business relationships) of the Third Amended Complaint without
prejudice, and otherwise denying defendants’ motions to dismiss.
Defendants filed their Answer and Affirmative Defenses (Doc. #62)
on July 30, 2014, to the remaining counts.
As summarized in the Court’s Opinion and Order (Doc. #61), a
factual overview of the case was as follows:
Plaintiff
sells
customized
achievement
recognition items, such as plaques, marquees,
crystals, counter displays, and banners,
throughout the United States. In connection
with its business operations, plaintiff has
developed and acquired an extensive list of
trade secrets necessary to conduct its
business
operations,
including,
but
not
limited to, its business plan; customer lists;
system architecture; financial data; profits
and profit margins; statistical history with
its customers and vendors; computer programs
and software concerning its entire business
operations;
research
and
development
information related to its customers and
products offered for sale; information about
its strategic partners and relationships with
them; and data and information on its
employees, independent contractors, and third
party vendors (collectively, “Proprietary
Information”).
By
utilizing
this
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information, plaintiff is able to maintain a
competitive
advantage
in
the
personal
achievement recognition market.
Defendant Yonah Hanaw, a citizen and resident
of Israel, worked as a sales agent and
independent contractor for plaintiff from
November 2003 until his termination on March
26, 2010.
As a sales agent, Hanaw was
required to sign a Sales Agent Program
Agreement on November 1, 2009.
The Sales
Agent Program Agreement provides, in relevant
part, that the sales agent agrees to treat all
confidential business information and trade
secrets as confidential and proprietary to
plaintiff and is prohibited from using such
information for his own benefit or for the
benefit of another. Upon separation from the
company, the sales agent shall deliver all
records,
data,
information,
and
other
documents produced or acquired and all copies
thereof to plaintiff. (Doc. #36-2.)
After his termination, Hanaw met with Michael
Levy, also a citizen and resident of Israel,
to discuss the formation and organization of
a
company
that
would
sell
customized
achievement recognition items through an ecommerce website. On May 12, 2010, Hanaw and
Levy formed Showmark Media, LLC, a Florida
limited liability company, but dissolved it on
July 19, 2010. After the dissolution of the
Florida limited liability company, Hanaw and
Levy formed Showmark Media, LLC, a Delaware
limited liability company.
While working as an independent contractor for
plaintiff, Hanaw became intimately familiar
with, had access to, and acquired extensive
knowledge
of
plaintiff’s
Proprietary
Information, and was privy to plaintiff’s
business and marketing strategies and plans,
costs,
pricing,
customer
and
supplier
relationships,
and
financial
strategies.
Prior to his termination, Hanaw “physically
thieved,
copied,
reproduced,
replicated,
converted, and misappropriated” as much of
plaintiff’s
confidential
and
Proprietary
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Information as possible.
(Doc. #36, ¶ 46.)
Hanaw has utilized and disclosed plaintiff’s
Proprietary Information in the operation of
Showmark Media. Specifically, Hanaw has used
the
Proprietary
Information
to
emulate
plaintiff’s business model and to directly
target plaintiff’s customers.
(Doc. #61, pp. 2-4.)
On October 23, 2014, plaintiff filed a Verified Motion for
Voluntary Dismissal With Prejudice (Doc. #66) seeking a dismissal
with prejudice but without conditioning the dismissal on the
payment
of
costs
or
attorney’s
fees.
On
October
29,
2014,
plaintiff filed a Notice of Service of Proposal for Settlement
(Doc. #67).
Defendants filed a Response in Opposition (Doc. #68)
seeking to have the case decided on the merits, or for the payment
of fees and costs incurred.
Upon review, the Court took the matter
under advisement and directed plaintiff to file a reply.
#69.)
(Doc.
On December 5, 2014, the Court issued an Opinion and Order
(Doc. #72) finding that a dismissal with prejudice would place
defendants in no worse a position than if they were to prevail on
summary judgment or at trial.
the
dismissal
upon
The Court was unwilling to condition
attorney’s
fees
and
costs,
and
the
Court
declined to pre-determine entitlement to any said fees and costs,
but did not preclude such a claim.
Judgment (Doc. #73) was entered
on December 8, 2014.
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II.
Attorney’s Fees
Defendants seek attorneys’ fees in the amount of $46,799.94
for successfully defending claims under the Florida Deceptive and
Unfair Trade Practices Act (FDUTPA), “and all other claims arising
from a common core set of facts as the FDUTPA claim.”
p. 1.)
(Doc. #74,
Defendants state that this amount excludes fees for the
period following dismissal of the FDUTPA claim on the July 16,
2014.
Absent
recovery
statutory
of
attorney
authority
fees
by
or
even
an
a
enforceable
“prevailing
ordinarily not permitted under the “American Rule.”
contract,
party”
is
Alyeska
Pipeline Serv. Co. v. Wilderness Soc’y, 421 U.S. 240, 257 (1975);
Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep’t of Health & Human
Res., 532 U.S. 598, 602 (2001).
In this case, defendants assert
a statutory basis for fees under FDUPTA, Fla. Stat. § 501.2105(1).
Under this statute, a prevailing defendant is permitted to recover
attorney
fees
without
a
showing
of
frivolousness,
Mandel
v.
Decorator’s Mart, Inc. of Deerfield Beach, 965 So. 2d 311 (Fla.
4th DCA 2007); Humane Soc’y of Broward County, Inc. v. Fla. Humane
Soc’y, 951 So. 2d 966, 971-972 (Fla. 4th DCA 2007).
See also
Horowitch v. Diamond Aircraft Indus., Inc., 645 F.3d 1254, 1259
(11th Cir. 2011) (discussing fee-shifting provision of FDUTPA).
Even if defendants are prevailing parties, the Court maintains
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discretion to award fees.
GMAC v. Laesser, 791 So. 2d 517, 520
(Fla. 4th DCA 2001).
A. Timeliness
A preliminary issue raised by plaintiff is timeliness because
the motion was not filed within 14 days of the judgment.
Defendant
responds that FDUTPA requires that the motion for attorney fees be
filed after the time to appeal has run, and that plaintiff could
have attacked the motion as premature if filed before the appeal
time limitation had expired.
Under Federal Rule of Civil Procedure 54, unless otherwise
provided by statute or order, a motion for attorney’s fees must be
filed “no later than 14 days after the entry of judgment.”
R. Civ. P. 54(d)(2)(B)(i)(emphasis added).
Fed.
The same 14 days is
memorialized in the Middle District of Florida Local Rules, which
further state that the pendency of an appeal will not postpone the
deadline.
See M.D. Fla. R. 4.18(a).
Such a Local Rule is an
“order of the court” that trumps Rule 54(d)(2)’s requirements to
the extent they conflict.
Tire Kingdom, Inc. v. Morgan Tire &
Auto, Inc., 253 F.3d 1332, 1335 (11th Cir. 2001).
In this case, Judgment was entered on December 8, 2014, making
any motion for fees due on or by December 22, 2014.
Defendants
filed their Motion seeking fees and costs on January 12, 2015, and
therefore the motion was clearly untimely under both Rule 54(d)(2)
and the Local Rules of the Middle District of Florida.
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See, e.g.,
Grayden v. City of Orlando, 171 F. App'x 284, 286 (11th Cir. 2006)
(per curiam) (affirming enforcement of Rule 4.18, M.D. Fla., and
the district court's denial of fees as untimely).
Unless FDUTPA
“otherwise provides”, and trumps the Local Rule, the motion is
untimely.
Under FDUTPA, a “prevailing party, after judgment in the trial
court and exhaustion of all appeals, if any, may receive his or
her reasonable attorney’s fees and costs from the nonprevailing
party.”
Fla.
provisions
Stat.
for
§
501.2105(1).
attorney’s
fees,
“Unlike
section
most
statutory
501.2105
clearly
contemplates a two-step procedure under which judgment is first
entered on liability, and then, after any appeals, attorney's fees
are awarded.”
Nolan v. Altman, 449 So. 2d 898, 900 (Fla. 1st DCA
1984) (emphasis in original) (citations omitted).
The statute
does not literally address when an attorney fees motion is to be
filed, but only when fees may be “receive[d]”.
The statute does
seem to contemplate that the motion be filed after the expiration
of the appeal period, since it also provides that the attorney
seeking attorney fees file an affidavit as to time incurred “for
all
the
motions,
501.2105(2).
The
hearings,
Florida
and
appeals.”
Supreme
Court
has
Fla.
Stat.
stated:
§
“In
accordance with the plain language of this provision, to recover
attorney's fees in a FDUTPA action, a party must prevail in the
litigation;
meaning
that
the
party
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must
receive
a
favorable
judgment from a trial court with regard to the legal action,
including
the
exhaustion
of
all
appeals.”
Diamond
Aircraft
Indus., Inc. v. Horowitch, 107 So. 3d 362, 368 (Fla. 2013).
At
least one judge in this District has concluded the filing such a
motion is not proper until the conclusion of the appeal period.
Citibank (S. Dakota) N.A. v. Nat'l Arbitration Council, Inc., No.
3:04-CV-1076-J-32MCR, 2006 WL 2691528, at *7 (M.D. Fla. Sept. 19,
2006)
(denying
motion
without
prejudice
to
filing
after
the
expiration of the time to appeal or the conclusion of an appeal).
A local rule must be consistent with federal statutes.
Civ. P. 83(a)(1).
Fed. R.
The Court concludes that under the FDUTPA,
defendant had fourteen days from the expiration of the time to
appeal in which to file a motion for attorney fees.
If this is
inconsistent with Local Rule 4.18(a), it is a suspension of the
rules with respect to this case.
M.D. Fla. R. 1.01(c).
The deadline to appeal the Judgment to the Eleventh Circuit
expired on Thursday, January 8, 2015, Fed. R. App. P. 4(a)(1)(A),
and no Notice of Appeal was filed by that date.
Therefore, the
deadline to file a motion for attorney’s fees was January 23, 2015.
The motion was filed before this date, and the Court finds that
the motion was therefore timely filed.
B. Prevailing Party
A party is considered a “prevailing party” if “they succeed
on any significant issue in litigation which achieves some of the
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benefit the parties sought in bringing suit.”
506 U.S. 103, 109 (1992) (citations omitted).
Farrar v. Hobby,
There must be some
change in the legal relationship and some relief on the merits of
the claim achieved, with a resulting enforceable judgment.
at 111.
Id.
A voluntary dismissal with prejudice will render a
defendant a prevailing party, Mathews v. Crosby, 480 F.3d 1265,
1276
(11th
Cir.
2007),
however
there
must
be
some
“judicial
imprimatur” that prompts the corresponding change in the legal
relationship of the parties, Buckhannon Bd. & Care Home, Inc. v.
W. Virginia Dep’t of Health & Human Res., 532 U.S. 598, 605 (2001).
In this case, a voluntary dismissal was sought by plaintiff
but was opposed by defendants who had answered.
The dismissal was
with prejudice, a term and condition applied by the Court, and
judgment was entered dismissing the case against defendants with
prejudice.
Additionally, all parties agreed that the dismissal
would serve as an adjudication on the merits.
(Doc. #72, p. 2.)
Therefore, defendants were prevailing parties.
The Court further
finds that the dismissal of the FDUTPA claim on the basis of
preemption did not negate defendants’ status as prevailing for
purposes of attorney’s fees.
Diamond Aircraft Indus., Inc. v.
Horowitch, 107 So. 3d 362, 369 (Fla. 2013) (finding invocation of
FDUTPA sufficient to trigger benefits and consequences).
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C. Discretion and Reasonable Fees
Having determined that defendants are entitled to attorney’s
fees, the Court must still determine whether to award fees.
The
decision to award fees is within the Court’s discretion, and
factors to consider include, but are not limited to:
(1) the scope and history of the litigation;
(2) the ability of the opposing
satisfy an award of fees;
party
to
(3) whether an award of fees against the
opposing party would deter others from acting
in similar circumstances;
(4) the merits of the respective positionsincluding the degree of the opposing party's
culpability or bad faith;
(5) whether the claim brought
subjective
bad
faith
but
unreasonable, groundless;
was not in
frivolous,
(6) whether the defense raised
mainly to frustrate or stall;
a
defense
(7) whether the claim brought was to resolve
a significant legal question under FDUTPA law.
Humane Soc’y of Broward County, 951 So. 2d at 971-972.
Defendants
address these factors only generally in the motion, but in their
reply,
defendants
took
the
opportunity
to
identify
how
each
argument in the motion corresponded with a Humane Soc’y factor.
The Court finds that the factors are sufficiently addressed, and
therefore plaintiff’s objection on this basis is rejected.
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1. Scope and History
The case was originally filed in May 2013, and defendants
filed two rounds of motions to dismiss before the Court issued
judgment in defendants’ favor in December 2014, upon plaintiff’s
motion.
Significant time was expended getting to a viable Third
Amended Complaint, and defendants’ October 7, 2014 Motion to Compel
Better Discovery Responses and Imposition of Sanctions (Doc. #65)
was pending when plaintiffs filed a Verified Motion for Voluntary
Dismissal With Prejudice (Doc. #66) indicating that discovery
received on September 10, 2014, made proceeding difficult for
ethical reasons.
If not for plaintiff’s request for dismissal,
litigation would likely have been protracted.
This factor is
somewhat influenced by the issue of a tainted material witness, as
discussed below.
2. Ability to Pay and Significant Legal Question
Neither party has presented any evidence of an inability or
ability to pay an award of attorney’s fees.
Therefore, ability
to pay is not a significant factor warranting further discussion.
Additionally, the Court did not resolve any significant legal
questions related to FDUTPA, which was found to be preempted, and
therefore this factor weighs against an award.
3. Deterrence, Merits, and/or Bad Faith
Defendants concede that they are likely precluded from moving
for
fees
under
the
Florida
Uniform
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Trade
Secrets
Act
for
misappropriation because discovery requests were not fulfilled at
the time of voluntary dismissal to definitively establish bad
faith.
However,
in
the
alternative,
defendants
argue
that
plaintiff’s actions sufficiently support finding bad faith under
the Court’s inherent authority.
Plaintiff’s
Verified
(Doc. #74, P. 8.)
Motion
for
Voluntary
Dismissal
With
Prejudice (Doc. #66) was filed after plaintiff cross-referenced
documents produced by defendant with plaintiff’s own disclosures
regarding plaintiff’s witness identified only as PR.
This witness
initially established his credibility and reliability to counsel
based on detailed information provided by PR regarding defendants’
misappropriation
of
plaintiff’s
proprietary
information.
In
preparing for PR’s deposition, a demand for compensation was made
in exchange for incriminating emails and documents, and it was
learned that PR was essentially selling his testimony to the
highest bidder.
As a result, plaintiff determined that it could
not comfortably and in good faith proceed with evidence elicited
from PR.
The President and CEO for plaintiff swore to and affirmed
the contents of the motion.
Because plaintiff moved to dismiss
its case before any further costs were expended in preparation for
summary judgment or trial, the Court does not find bad faith.
That being said, plaintiff’s claims were dependent on PR and the
evidence provided by PR, and plaintiff found a lack of merit in
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its own claims.
There is no evidence that defendant advanced a
known frivolous defense or delayed proceedings.
4. Conclusion
The Court finds that the relative lack of merit of the claims
that formed the basis of the FDUTPA claim, coupled with several
attempts to state a claim before discovery revealed holes in the
theory of the case, support granting attorney’s fees.
The Court
further finds that an award in this case will serve as a deterrent.
The Court notes that an allocation of services to Count III
is not require unless the services were wholly unrelated to the
FDUTPA claim.
Heindel v. Southside Chrysler-Plymouth, Inc., 476
So. 2d 266, 272 (Fla. 1st DCA 1985).
entirely
dependent
on
the
other
In this case, the claim was
misappropriation
claims,
and
therefore the Court finds that counsel is not required to limit
the fees incurred to the FDUTPA count.
The Court does find that
defendants may only receive attorney’s fees up until FDUTPA was
found to be preempted and dismissed by the July 16, 2014 Opinion
and Order (Doc. #61).
Horowitch, 107 So. 3d at 371.
D. Reasonable Fees
In support of their claim of $46,799.94 in attorneys’ fees,
and pursuant to Fla. Stat. § 501.2105(2), defendants submit the
Declaration of Jonathan Pollard (Doc. #74-1, Exh. A) for time spent
on the case from June 24, 2013 through June 25, 2014 only, and no
costs are included in the demand.
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Also provided is the Client
Activity Report (Doc. #74-2, Exh. B) detailing the billed hours.
Plaintiff presents no argument for or against the reasonableness
of the amount requested.
In determining the reasonable amount of hours, the Court may
conduct an hour-by-hour analysis or it may reduce the requested
hours across the board, Bivins v. Wrap It Up, Inc., 548 F.3d 1348,
1350 (11th Cir. 2008), and the Court must eliminate excessive,
unnecessary, and redundant hours, Norman v. Housing Auth. of
Montgomery, 836 F.2d 1292, 1301-02 (11th Cir. 1988). “Generalized
statements that the time spent was reasonable or unreasonable of
course are not particularly helpful and not entitled to much
weight.”
Norman, at 1301 (citing Hensley v. Eckerhart, 461 U.S.
424, 434 (1983)).
When multiple attorneys are involved, the Court
must consider whether they are being compensated for their distinct
contributions
or
whether
there
is
duplication.
Johnson
v.
University Coll. of Univ. of Ala., 706 F.2d 1205, 1208 (11th Cir.
1983).
The Court finds that the individual hourly rates 1 for each
attorney
and
the
law
student
who
1
acted
as
a
paralegal
are
Jonathan Pollard has been practicing law since 2009, and
started his own practice in 2012. Mr. Pollard bills at a rate of
$300 an hour.
Michael Beltran has been practicing for
approximately the same length of time and also has his own law
practice. Mr. Beltran billed at a rate of $250.00. Scott Adkins
has been practicing since 1998 and Sarah Rispin has been practicing
for an unspecified length of time but was admitted to the D.C. Bar
in 2007, and both billed at a rate $200 an hour. Lastly, Evan
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reasonable.
The Court has also reviewed the billing records, and
finds that the entries are properly billable, not duplicative, and
reasonable.
Attorney’s fees will be granted for the requested
amount.
Accordingly, it is hereby
ORDERED:
Defendants' Motion for Attorneys' Fees (Doc. #74) is GRANTED.
The Clerk shall enter an amended judgment adding attorney’s fees
in favor of defendants in the amount of $46,799.94.
DONE and ORDERED at Fort Myers, Florida, this
25th
day
of September, 2015.
Copies:
Counsel of Record
Goldberg was a law student during the pendency of this case and
billed at a rate of $125.00 an hour, approximately that of a
paralegal.
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