Telegram Messenger Inc v. Lantah, LLC

[4] 5 IN THE UNITED STATES DISTRICT COURT 6 FOR THE NORTHERN DISTRICT OF CALIFORNIA [7] 8 TELEGRAM MESSENGER INC, Case No. 18-cv-02811-CRB 9 Plaintiff, ORDER GRANTING IN PART 10 v. MOTION FOR ATTORNEYS’ FEES 11 LANTAH, LLC, 12 Defendant. 13 This is a trademark dispute between Plaintiff Telegram Messenger Inc. (“Telegram”) and 14 Defendant Lantah, LLC (“Lantah”) regarding the use of the GRAM mark for a cryptocurrency. In 15 August 2020, the Court granted Telegram’s motion to voluntarily dismiss the case without 16 prejudice, on the condition that Telegram pay Lantah’s reasonable attorneys’ fees and costs. In 17 response, Lantah moved to voluntarily dismiss its counterclaims. In November 2020, the Court 18 granted Lantah’s motion to voluntarily dismiss the counterclaims without prejudice, on the 19 condition that Lantah pay Telegram’s reasonable attorneys’ fees and costs. Telegram now moves 20 to recover those fees. The Court finds this matter suitable for resolution without oral argument 21 and therefore VACATES the hearing currently set for January 21, 2021. 22 For the reasons set forth below, the Court GRANTS in part Telegram’s motion, and 23 awards Telegram $46,189.80 in attorneys’ fees. 24 I. BACKGROUND 25 Parties 26 Plaintiff Telegram is a large technology company best known for its electronic messaging 27 service. See Compl. (dkt. 1) ¶¶ 16–19. In 2017, Telegram began developing a cryptocurrency 1 (dkt. 69) at 1. To finance this venture, Telegram executed over $1.5 billion worth of Purchase 2 Agreements with investors, promising future delivery of GRAMs. Compl. ¶¶ 28–34; Telegram’s 3 Mot. to Dismiss at 1. 4 Defendant Lantah is a small technology company founded in 2017 with the intention of 5 issuing a cryptocurrency also called GRAM. See Lantah’s Opp’n (dkt. 73) at 1. In 2018, Lantah 6 applied for the GRAM mark with the United States Patent and Trademark Office. Id. at 3. 7 Procedural History 8 1. Trademark Infringement Case 9 On May 11, 2018, Telegram filed this suit against Lantah, bringing claims of false 10 designation of origin, common law trademark infringement, and unfair competition. See generally 11 Compl. On June 8, 2018, Lantah filed its answer, along with counterclaims alleging that Lantah, 12 not Telegram, had priority over the GRAM mark. See generally Answer (dkt. 14). At this point, 13 some media coverage referred to Lantah as a “trademark squatter.” See Jeffery Decl. (dkt. 73-1). 14 Exs. 9–10 15 Telegram then moved for a preliminary injunction barring Lantah from using the GRAM 16 mark. Telegram’s Mot. to Dismiss at 1. Lantah opposed the preliminary injunction and filed for 17 summary judgment. Id. This Court granted Telegram’s motion for a preliminary injunction and 18 denied Lantah’s motion for summary judgment. Id. at 2. This Court held that Telegram was 19 likely to succeed on its claim that it had been using the mark in commerce before Lantah, relying 20 mostly on Telegram’s GRAM Purchase Agreements. See Order Granting Prelim. Inj. (dkt. 39) at 21 10. Following this decision, Telegram filed its own summary judgment motion, while Lantah 22 appealed the preliminary injunction order. Telegram’s Mot. to Dismiss at 2. The Court stayed 23 Telegram’s summary judgment motion pending appeal. Order Staying MSJ. (dkt. 48). 24 On July 17, 2019, the Ninth Circuit affirmed the preliminary injunction. Telegram’s Mot. 25 to Dismiss at 2. Lantah then filed petitions for rehearing and rehearing en banc, which the Ninth 26 Circuit denied. Id. 27 The case then returned to this Court. Lantah served third-party subpoenas and requests for 1 Lantah also served Telegram with 157 requests for admission, 32 requests for production of 2 documents, and 15 interrogatories. Id. at 3. These requests were mostly related to Telegram’s 3 ongoing litigation with the SEC, discussed below. Id. At the first and only case management 4 conference, on November 15, 2019, the Court stayed all discovery and dispositive motions. Id. 5 2. SEC Action 6 While Telegram and Lantah pursued their trademark claims in this Court, the SEC began 7 investigating Telegram. Thompson Decl. (dkt 73-2) Ex. 12 ¶¶ 8–11. 8 On October 11, 2019, the SEC sued Telegram in the Southern District of New York, 9 alleging that Telegram violated securities regulations by using the GRAM Purchase Agreements 10 as financing vehicles. SEC v. Telegram Grp. Inc., Case No. 1:19-cv-09439-PKC (S.D.N.Y. Oct. 11 11, 2019) (the “SEC Action”). 12 On March 24, 2020, the SEC obtained a preliminary injunction against Telegram, barring 13 the company from delivering GRAMs pursuant to those earlier Purchase Agreements. SEC v. 14 Telegram Grp. Inc., No. 19-CV-9439 (PKC), 2020 WL 1430035 (S.D.N.Y. Mar. 24, 2020). 15 Telegram initially appealed the preliminary injunction order to the Second Circuit, then withdrew 16 its appeal. Telegram’s Mot. to Dismiss at 3–4. 17 By May 2020, Telegram announced that it would no longer pursue its cryptocurrency 18 network and began exiting its Purchase Agreement transactions. Id. at 4. On June 26, 2020, the 19 Southern District of New York approved a settlement between the SEC and Telegram. Thompson 20 Decl., Ex. 16. Without admitting or denying the allegations in the SEC’s initial complaint, 21 Telegram agreed to return funds from its GRAM Purchase Agreements, pay an $18.5 million civil 22 penalty, and give the SEC notice before any new digital issuances for the next three years. Id. 23 3. Both Parties Move for Voluntary Dismissal 24 On June 9, 2020, as the SEC Action neared completion, Telegram filed a motion to 25 voluntarily dismiss its claims here. See generally Telegram’s Mot. to Dismiss. The Court granted 26 Telegram’s motion without prejudice on the conditions that (1) the preliminary injunction be 27 vacated, and (2) Telegram pay Lantah’s reasonable attorneys’ fees and costs. Order Granting 1 and $6,737.35 in costs. Order Granting Motion to Dismiss Counterclaims & for Attorneys’ Fees 2 (dkt. 86) at 1. 3 The Court also directed Lantah to advise the Court of how it wished to proceed with its 4 counterclaims. Order Granting Telegram’s Voluntary Dismissal at 10. On September 14, Lantah 5 informed the Court that it planned to seek voluntary dismissal of its counterclaims. See Lantah’s 6 Notice of Intent (dkt. 78) at 2. Shortly thereafter, Lantah filed a motion to voluntarily dismiss its 7 counterclaims without prejudice. See generally Lantah’s Mot to Dismiss (dkt. 80). Telegram 8 opposed Lantah’s motion to dismiss its counterclaims and argued that the Court should condition 9 dismissal without prejudice upon Lantah paying Telegram’s reasonable attorneys’ fees and costs. 10 Opp’n to Fee Mot. (dkt. 82) at 1. The Court granted Lantah’s motion to dismiss its counterclaims 11 without prejudice, on the condition that Lantah pay Telegram’s reasonable attorneys’ fees and 12 costs arising from the counterclaims. Order Granting Motion to Dismiss Counterclaims & for 13 Attorneys’ Fees at 1. 14 4. The Pending Motion 15 On December 2, 2020, Telegram filed this motion for attorneys’ fees pursuant to the 16 condition that this Court imposed upon granting Lantah’s motion for voluntary dismissal. See 17 generally Telegram’s Fee Mot. (dkt. 87); see also Order Granting Motion to Dismiss 18 Counterclaims at 1. Telegram does not seek any costs. Telegram’s Fee Mot. at 9 n.4. 19 Lantah opposed Telegram’s motion. Lantah’s Opp’n to Fee Mot. (dkt. 93) at 1. Telegram 20 filed a reply in support of its motion. Telegram’s Reply re Fee Mot. (dkt. 95). Lantah filed an 21 evidentiary objection to an Exhibit attached to Telegram’s reply. Response re Order to File Under 22 Seal (dkt. 97) at 2. 23 II. LEGAL STANDARD 24 A court may dismiss an action, at plaintiff’s request, on terms that it considers proper. See 25 Fed. R. Civ. P. 41(a)(2). Courts generally impose terms and conditions for the defendant’s 26 protection. See Westlands Water Dist v. United States, 100 F.3d 94 , 97 (9th Cir. 1996). Courts 27 are permitted, but not required, to impose payment of attorneys’ fees as a condition for granting a 1 following a voluntary dismissal without prejudice, courts generally consider the following factors: 2 (1) any excessive and duplicative expense of a second litigation; (2) the effort and expense 3 incurred by a defendant in preparing for trial; (3) the extent to which the litigation has progressed; 4 and (4) the plaintiff’s diligence in moving to dismiss. See Fraley v. Facebook, Inc., No. 11-CV5 01726-LHK, 2012 WL 893152 , at 4* (quoting Williams v. Peralta Cmty. Coll. Dist., 277 F.R.D. 6 538, 539 (N.D. Cal. 2005). 7 The lodestar method is the customary way to determine a reasonable attorneys’ fee award. 8 Morales v. City of San Rafael, 96 F.3d 359, 363 (9th Cir. 1996). The lodestar is calculated by 9 multiplying the number of hours reasonably expended on the litigation by a reasonable hourly rate. 10 McGrath v. Cty. of Nevada, 67 F.3d 248, 252 (9th Cir. 1995). The court may adjust the lodestar 11 figure based on other considerations. Hensley v. Eckerhart, 461 U.S. 424, 434 (1983). The party 12 seeking a fee award bears the burden of showing that the claimed rate and hours worked are 13 reasonable. Jordan v. Multnomah Cty., 815 F.2d 1258 , 1263 (9th Cir. 1987). 14 III. DISCUSSION 15 Telegram seeks $167,458 in fees. Telegram’s Fee Mot. at 9. Lantah argues that the Court 16 should award Telegram nothing, or substantially reduce Telegram’s requested award. See 17 Lantah’s Opp’n to Fee Mot. at 1. The Court agrees that Telegram’s requested award should be 18 substantially reduced. 19 Hourly Rate 20 Telegram requests an hourly rate of $600/hour for work performed by partners, $500/hour 21 for work performed by counsel, and $400/hour for work performed by associates. Telegram’s Fee 22 Mot. at 9. Telegram argues that these rates are reasonable because they are well below the actual 23 rates paid by Telegram and because this Court approved an hourly rate of $600/hour for Lantah’s 24 fee calculation. Id.; Order Granting Motion to Dismiss Counterclaims & for Attorneys’ Fees at 25 10. Lantah does not oppose these rates. Telegram’s Reply re Fee Mot. at 1 n.2. 26 The Court accepts Telegram’s requested hourly rates. 27 Time 1 Decl. (dkt. 92) Ex. 1; Neukom Reply Decl. This order now addresses each of Telegram’s billing 2 categories in turn—determining the number of hours reasonably expended and performing 3 loadstar calculations for each category. 4 In doing so, the Court is governed by its previous order which limited the scope of 5 recoverable fees to those fees expended “to defend against Lantah’s counterclaims.” Order 6 Granting Motion to Dismiss Counterclaims & for Attorneys’ Fees at 7. In that order, this Court 7 allowed that fees related to answering the counterclaims, researching affirmative defenses, and 8 preparing portions of a summary judgement brief directed to the counterclaims could be 9 recoverable. Id. However, this Court also cautioned that any award would likely be small under 10 the Williams factors because defending against counterclaims usually incurs fewer duplicative 11 fees than defending against affirmative claims. Id. at 7, 9. 12 Telegram’s fee request frames the issues differently. Telegram argues that it should be 13 able to recover fees for tasks that relate to Telegram’s affirmative claims so long as they also 14 relate to the counterclaims. Telegram’s Fee Mot. at 2. As support, Telegram cites Diamond v. 15 John Martin Co., 753 F.2d 1465, 1467 (9th Cir. 1985). Telegram’s Fee Mot. at 2 (“‘[a]ttorneys’ 16 fees’ need not be apportioned when incurred for representation of an issue common to both a 17 cause of action for which fees are proper and one in which they are not allowed”). Telegram 18 asserts that both the claims and the counterclaims turn on the issue of priority in the GRAM mark. 19 Id. at 3. Therefore, Telegram maintains, it should be able to recover all fees incurred in litigating 20 the issue of priority. Id. 21 Lantah argues that the issue of priority is really two issues: Telegram’s “use in commerce” 22 and Lantah’s “common law rights.” Lantah’s Opp’n to Fee Mot. at 2. Lantah claims that 23 Telegram’s “use in commerce” was the primary issue with respect to Telegram’s original claims 24 while Lantah’s “common law rights” was the primary issue with respect to the counterclaims. 25 Lantah asks that the Court only award fees for tasks related to litigating Lantah’s “common law 26 rights.” 27 Telegram may not recover fees for work related to Telegram’s affirmative claims. While 1 there is an overriding limitation to an award of attorney’s fees following a voluntary dismissal 2 without prejudice. As explained above, courts apply the Williams factors to define the scope of 3 recoverable fees. Tasks that relate to issues common to the original claims and the counterclaims 4 are not “duplicative expense[s]” under the Williams factors because Telegram incurred these fees 5 in litigating its original claims. See Williams, 277 F.R.D. at 539 . The Court holds that Telegram 6 may only recover fees incurred as a consequence of Lantah’s decision to assert counterclaims. 7 1. Time Spent Responding to Lantah’s Counterclaims 8 Telegram requests fees for 22.65 hours spent reviewing, researching, and responding to 9 Lantah’s counterclaim pleading. Telegram’s Fee Mot. at 4. Under the accepted hourly rates, this 10 comes to $10,835 in fees. Neukom Decl. Ex. 1 at 4. Telegram arrives at this number by making 11 several proactive reductions for block-billed entries which include tasks that are both related and 12 unrelated to the counterclaims. Id. at 3-4. 13 Lantah argues that the reductions for block-billed entries should be even greater because 14 Telegram’s answer was only 6 pages long and mostly consisted of denials. Lantah’s Opp’n to Fee 15 Mot. at 5. Lantah also argues that there should be a further 50% reduction because six 16 timekeepers worked on these tasks, likely leading to inefficiencies. Id. 17 Courts should exclude from a fee request any hours not “reasonably expended,” including 18 those that are “excessive, redundant, or otherwise unnecessary.” Jankey v. Poop Deck, 537 F.3d 19 1122, 1132 (9th Cir. 2008) (quoting Hensley v. Eckerhart, 461 U.S. at 434 ). Block-billing is not 20 per se unreasonable. See Fischer v. SJP-P.D., Inc., 214 F.3d 1115, 1121 (9th Cir. 2000). 21 However, block-billing poses special problems in this case because the Court must identify and 22 exclude from the fee award time spent on tasks without a connection to the counterclaims. See 23 Koch v. Hankins, 8 F.3d 650, 652 (9th Cir. 1993); see also Order Granting Motion to Dismiss 24 Counterclaims & for Attorneys’ Fees at 16. 25 Telegram’s proposed reductions are reasonable. Upon review of the time entries and 26 narratives, the block-billed entries at issue are generally more fine-grained that the block-billed 27 entries this Court dealt with in Lantah’s motion for fees. See generally Lantah’s Fee Mot. (dkt. 1 block-billed entries are at least 30%. Neukom Decl. Ex. 1 at 3–4. For comparison, this Court 2 applied a single 30% reduction to all of Lantah’s block-billed entries. Order Granting Motion to 3 Dismiss Counterclaims & for Attorneys’ Fees at 17. Furthermore, the 22.65 hours that Telegram 4 billed in this category is not inconsistent with the 42.1 hours awarded to Lantah for answering the 5 original complaint and asserting counterclaims. See Id. at 18. Lantah’s complaints about 6 overstaffing are conclusory. Lantah has not argued that the staffing on these tasks led to any 7 particular redundancy. See Johnson v. Shobeiri, No. 18-cv-04816-VKD, 2019 WL 5458106 , at 6* 8 (N.D. Cal. October 24, 2019) (“the billing statement does not indicate that the staffing of this 9 matter led to any particular redundancy in the work performed”). Based on the above facts and a 10 review of the narratives and Telegram’s proposed reductions, the Court concludes that Telegram’s 11 proposed reductions are reasonable. 12 The Court will award fees in the amount requested by Telegram of $10,835 for time spent 13 responding to Lantah’s counterclaims. 14 2. Time Spent on Settlement and Mediation 15 Telegram requests fees for 51.35 hours spent in connection with the parties’ various 16 settlement and mediation efforts. Telegram’s Fee Mot. at 4. Under the accepted hourly rates, this 17 comes to $27,988 in fees. Neukom Decl. Ex. 1 at 10. Telegram argues that all hours spent in 18 connection with the parties’ settlement and mediation efforts should be recoverable because 19 settlement discussions were aimed at a global resolution of all claims, including counterclaims. 20 Telegram’s Fee Mot. at 4. Therefore, Telegram argues, meaningful apportionment between the 21 claims and the counterclaims is impossible. Id. Telegram also argues that positions Lantah took 22 during settlement discussions made it clear that Lantah was making demands based on its 23 counterclaims. Id. 24 Lantah argues that the counterclaims neither necessitated nor motivated settlement in this 25 case. Lantah’s Opp’n to Fee Mot. at 8. Lantah argues that Telegram’s proposal to structure a 26 settlement as an acquisition of foreign rights in the GRAM mark demonstrates that Telegram’s 27 interest in settlement was not driven by the counterclaims. Id. Lantah also argues that the Court 1 The vast majority of the fees incurred by Telegram in this billing category were not 2 incurred as a consequence of the counterclaims. As Lantah correctly argues, Telegram assumed 3 an obligation to resolve this case when Telegram filed it. Lantah’s Opp’n to Fee Mot. at 8. The 4 various settlement discussions that took place would have taken place regardless of whether the 5 counterclaims were also filed. Id. However, according to the Neukom declaration, Lantah did 6 make demands of Telegram during settlement discussions on the basis of Lantah’s counterclaims. 7 Neukom Decl. (dkt. 89) at 1. In light of these demands, a small amount of fees incurred by 8 Telegram under this billing category were incurred as a consequence of the counterclaims. The 9 Court will apply a 90% reduction to Telegram’s requested award. 10 Lantah also argues that a further 90% reduction should be applied to time billed during a 11 stay in the case. Lantah’s Opp’n to Fee Mot. at 8. However, some continuing work during a stay 12 is appropriate. Alzheimer’s Inst. Of Am. v. Eli Lilly & Co., No. 10-cv-00482-EDL, 2016 WL 13 7732621, at *7 (N.D. Cal. Apr. 14, 2016). Telegram billed only 41.6 hours during the stay. See 14 Neukom Decl. Ex. 1 at 7–10. Considering that there was a settlement conference held during the 15 stay, this is a reasonable amount of time. See generally Order Regarding Settlement Conference 16 (dkt. 61). The Court will not apply any further reduction for settlement work performed during 17 the stay. 18 The Court will award fees in the amount of $2,798.80 for time spent on settlement and 19 mediation. 20 3. Time Spent on Offensive Discovery 21 Telegram requests fees for 1.67 hours spent in connection with drafting discovery requests. 22 Telegram’s Fee Mot. at 5. Under the accepted hourly rates, this comes to $772 in fees. Neukom 23 Decl. Ex. 1 at 12. Lantah does not oppose this fee award. Lantah’s Opp’n to Fee Mot. at 12. 24 The Court will award fees in the amount requested by Telegram of $772 for time spent on 25 offensive discovery. 26 4. Time Spent on Case Management Tasks 27 Telegram requests fees for 41.96 hours spent in connection with case management tasks. 1 Neukom Decl. Ex. 1 at 16. Telegram argues that all hours spent in connection with case 2 management tasks should be recoverable because case management tasks were focused on the 3 resolution of a single issue, and both the original claims and counterclaims turned on the 4 resolution of that issue. Telegram’s Fee Mot. at 5. Telegram also argues that case management 5 tasks are “directed to the case as a whole.” Id. For these reasons, Telegram argues, meaningful 6 apportionment between the original claims and the counterclaims is impossible. Id. 7 Lantah argues that the initial case management statement only briefly mentioned the 8 counterclaims and that subsequent case management statements did not vary with respect to the 9 counterclaims. Lantah’s Opp’n to Fee Mot. at 7. Lantah also argues that the parties would have 10 been obliged to perform case management tasks even if Lantah had never filed counterclaims. Id. 11 at 8. Lantah allows that $3,735 in fees can be attributed to the counterclaims. Id. at 7. 12 The vast majority of the fees incurred by Telegram in this billing category were not 13 incurred as a consequence of the counterclaims. Lantah is correct that all parties would have been 14 obliged to perform case management tasks even if Lantah had never filed counterclaims. See 15 Civil Local Rule 16-2. Telegram does not dispute that the only case management task performed 16 as a consequence of the counterclaims was the preparation of a brief section of the original case 17 management statement. See Telegram’s Reply re Fee Mot. at 5. 18 The Court will award fees in the amount proposed by Lantah of $3,735 for time spent on 19 case management tasks. 20 5. Time Spent on Telegram’s Summary Judgment Motion 21 Telegram requests fees for 109.88 hours spent in connection with its motion for summary 22 judgment. Telegram’s Fee Mot. at 5. Under the accepted hourly rates, this comes to $53,498 in 23 fees. Neukom Decl. Ex. 1 at 19. Of this total, $35,120 relates to the original motion and $18,378 24 relates to the reply brief. See id. at 16–19. Telegram argues that the issues addressed by the 25 motion for summary judgment are dispositive of both the claims and the counterclaims. 26 Telegram’s Fee Mot. at 5. Therefore, Telegram argues, meaningful apportionment between the 27 original claims and the counterclaims is impossible. Id. at 6. Telegram also argues that Lantah’s 1 counterclaims. Id. 2 Lantah argues that the motion for summary judgment only had two short paragraphs about 3 the counterclaims and contained no analysis unique to those claims. Lantah’s Opp’n to Fee Mot. 4 at 5. Lantah allows that 2% of the time spent on the motion for summary judgment can be 5 attributed to the counterclaims. Id. Lantah also argues that, while the new argument raised in the 6 opposition did relate to the counterclaims, it only accounted for one of the three arguments raised 7 in the opposition. Id. Lantah allows that 33% of the time spent on the reply brief can be attributed 8 to the counterclaims. Lastly, Lantah argues that all of this work was performed during a stay and 9 so should be discounted a further 90%. Id. at 6. 10 A vast majority of the fees incurrent by Telegram in preparing the motion for summary 11 judgment were not incurred as a consequence of the counterclaims. The motion for summary 12 judgment only briefly mentions the counterclaims and contains no analysis unique to the 13 counterclaims. See generally Summary Judgment Mot. (dkt. 43). The Court will apply the 98% 14 reduction requested by Lantah to fees incurred in connection with the motion for summary 15 judgment. 16 Most of the fees incurred by Telegram in preparing the reply brief were incurred as a 17 consequence of the counterclaims. The opposition brief contained three arguments, only one of 18 which relates to the counterclaims. See generally Opp’n to Summary Judgment (dkt. 47). 19 However, this one argument raised new issues and presented new arguments. Telegram’s Fee 20 Mot. at 6. It most likely required considerably more time to respond to this argument than to 21 respond to Lantah’s more predictable arguments concerning Rule 56(d) and a stay pending appeal. 22 Accordingly, the Court concludes that most, but not all, of the fees incurred by Telegram in 23 preparing the reply brief were incurred as a consequence of the counterclaims. The Court will 24 apply a 30% reduction to fees incurred in connection with the reply brief. 25 Also, Lantah’s argument that the motion and reply were filed during a stay is incorrect. 26 There was no stay in place when Telegram performed these tasks. Lantah claims that this Court 27 stayed the case during the preliminary injunction hearing on August 3, 2018. Lantah’s Opp’n to 1 generally Preliminary Injunction Hearing Transcript (dkt. 38). While this Court later stayed the 2 motion for summary judgement pending appeal, this did not occur until September 26, 2018. 3 Order Staying MSJ. Telegram does not bill any hours on the reply brief after this date. Neukom 4 Decl Ex. 1 at 19. This Court also ordered a stay on November 15, 2019, but this is more than a 5 year after Telegram billed its last hour on the summary judgement motion. Minute Entry 6 11/1/5/2019 (dkt. 58). 7 The Court will award fees in the amount of $702.40 for time spent on the motion for 8 summary judgment. The Court will award fees in the amount of $12,864.60 for time spent on the 9 reply brief. 10 6. Time Spent on Lantah’s Discovery Requests 11 Telegram requests fees for 76.27 hours in connection with Lantah’s discovery requests. 12 Telegram’s Fee Mot. at 7. Under the accepted hourly rates, this comes to $34,070 in fees. 13 Neukom Decl. Ex. 1 at 23. Telegram argues that Lantah’s discovery requests were related to 14 issues important to both the affirmative claims and the counterclaims. Telegram’s Fee Mot at 7. 15 Therefore, Telegram argues, meaningful apportionment between the original claims and the 16 counterclaims is impossible. Id. 17 Lantah responds that none of the discovery requests relate to the counterclaims. Lantah’s 18 Opp’n to Fee Mot. at 6. Lantah maintains that a portion of the hours billed related to preserving 19 evidence that Telegram had a preexisting duty to preserve. Id. Lantah further argues that much of 20 the discovery requests it served were related to its unclean hands and unlawful use defenses, and 21 therefore were entirely unrelated to the counterclaims. Id. at 7. Lastly, Lantah asserts that the 22 number of hours Telegram billed in this category is excessive because Telegram objected to all of 23 the discovery requests and provided no substantive responses. Id. at 3. Lantah contends that 24 merely raising objections should have taken far fewer hours. Id. at 7. 25 Telegram has not shown that any of the fees incurred in connection with Lantah’s 26 discovery requests were incurred as a consequence of the counterclaims. Telegram argues only 27 that the discovery requests were related to issues important to both the affirmative claims and the 1 Discovery relating to Lantah’s affirmative defenses is not related to the counterclaims. See 2 Lantah’s Opp’n to Fee Mot. at 7. As for the other discovery requests, Telegram acknowledges 3 that all of these requests relate to issues of importance to the original claims. Telegram’s Fee Mot 4 at 7. Because these requests were so related, they are not a consequence of the counterclaims. 5 The Court will not award fees for time spent on Lantah’s discovery requests. 6 7. Time Spent Responding to Lantah’s Motion to Voluntarily Dismiss 7 Telegram requests fees for 6.08 hours spent in connection with Lantah’s motion to 8 voluntarily dismiss its counterclaims. Telegram’s Fee Mot. at 7. Under the accepted hourly rates, 9 this comes to $2,432 in fees. Neukom Decl. Exhibit 1 at 24. Lantah does not oppose this fee 10 award. Lantah’s Opp’n to Fee Mot. at 13. 11 The Court will award fees in the amount requested by Telegram of $2,432 for time spent 12 responding to Lantah’s motion to voluntarily dismiss. 13 8. Time Spent Responding to Lantah’s Breach of Confidentiality Allegations [14] Telegram requests fees for 15.5 hours spent in connection with Lantah’s allegation that [15] Telegram disclosed certain facts in violation of Local Rule 7-4. Telegram’s Reply re Fee Mot. at [16] 2 n.4; Neukom Reply Decl. (dkt. 95-1) at 5. Under the accepted hourly rates, this comes to [17] $6,200. Neukom Reply Decl. at 5. Telegram argues that it should be able to recover these fees [18] because Lantah argued these breach of confidentiality allegations in its opposition to Telegram’s [19] fee application. Telegram’s Reply re Fee Mot. at 2 n.4. Telegram further argues that an email [20] from Lantah’s lawyer demonstrates that this breach of confidentiality allegation was part of a [21] strategy to coerce a settlement on the fee application. Id. at 2. [22] Lantah, for its part, objects to the admissibility of the email under Federal Rules of [23] Evidence Rules 402 and 408. Lanta Response re Administrative Motion (dkt. 97) at 2. [24] Regardless of the admissibility of the email, this breach of confidentiality allegation is not [25] sufficiently related to the fee application to justify an award of fees. Importantly, the work related [26] to Lantah’s breach of confidentiality allegation all occurred before Lantah filed its opposition on [27] December 16, 2020. See Neukom Reply Decl. at 4–5. 1 The Court will not award fees for time spent responding to Lantah’s breach of 2 confidentiality allegations. 3 9. Time Spent Preparing the Motion for Attorneys’ Fees 4 Telegram requests fees for 60.5 hours spent in connection with the motion for attorneys’ 5 fees and the reply. See Telegram’s Fee Mot. at 8 (requesting 38.9 hours for the initial motion); 6 Telegram’s Reply re Fee Mot. at 1 n.1 (requesting fees incurred preparing the reply); Neukom 7 Reply Decl. at 4 (listing the fees incurred preparing the reply at 21.6 hours). Under the accepted 8 hourly rates, this comes to $24,200 in fees. Neukom Decl. Exhibit 1 at 24 (listing the fees claimed 9 preparing the initial motion at $15,560; Neukom Reply Decl. at 4 (listing the fees claimed 10 preparing the reply at $8,640). 11 Lantah does not contest the loadstar calculation. However, Lantah argues that these fees 12 should be adjusted downward in proportion to Telegram’s success on the fee application. 13 Lantah’s Opp’n to Fee Mot. at 10. 14 The degree of success obtained is a “critical factor” in making post-calculation adjustments 15 to the fee award. Hensley, 461 U.S. at 436 . This principle applies with equal force to awards of 16 “fees-on-fees.” Thompson v. Gomez, 45 F.3d 1365, 1367 (9th Cir. 1995). 17 Telegram’s requested fees-on-fees award is not reasonable in light of the limited success of 18 the fee application. The Court has awarded only $34,089.80 in fees under other billing categories. 19 Infra p. 17. If this Court were to award the full amount of fees that Telegram requests in 20 connection with the fee application, then over 41.5% of Telegram’s total award would come from 21 the fee application. By comparison, only approximately 6% of Lantah’s fee award came in 22 connection with the fee application. See Order Granting Motion to Dismiss Counterclaims & for 23 Attorneys’ Fees at 18 (listing the hours awarded on the fee motion as 65 and the total hours as 24 1030.4). However, the Court is aware that it did not apply a reduction to Lantah’s fees-on-fees 25 award as a result of the limited success of that motion. See id. at 13–14. For this reason, instead 26 of applying a reduction in proportion to the success of the fee application, the Court will apply a 27 flat 50% reduction to reduce the disparity between the fees-on-fees award and the fee awards from 1 Cir. 1995) (holding that a district court is well within its discretion to award 50% of the fees-on2 fees requested when this ratio actually exceeds the percentage by which the requesting party 3 prevailed on its fee application). 4 The Court will award fees in the amount of $12,100 for time spent preparing the motion 5 for attorneys’ fees and the reply. 6 Other Adjustments to the Loadstar Calculations 7 Lantah makes two further arguments for why the Court should adjust the loadstar amounts 8 downwards. Neither is convincing. 9 1. Alleged Violation of Local Rules 10 Lantah argues that the Court should bar all recovery by Telegram because of its alleged 11 violation of ADR Local Rule 7-4. Lantah’s Opp’n to Fee Mot. at 9. Specifically, Lantah argues 12 that a declaration that Telegram filed alongside its fee motion disclosed confidential settlement 13 conference information in violation of ADR Local Rule 7-4. Id. 14 Telegram argues that, while it does not concede that the disclosure violated local rules, it 15 nonetheless moved rapidly to lock the declaration and remove it from the docket when it learned 16 about Lantah’s concerns. Telegram’s Reply re Fee Mot. at 2. Telegram also argues that Lantah 17 has not explained how it was harmed by the alleged breach of confidentiality. Id. 18 Telegram’s alleged breach of confidentiality does not necessitate a reduction of the fee 19 award. Lantah has not cited any authority explaining how this alleged breach of confidentiality 20 should factor into a fee award. See Lantah’s Opp’n to Fee Mot. at 9. Lantah does not even argue 21 that Telegram’s alleged breach of confidentiality caused it harm. In any case, a fee motion is not 22 the correct place to litigate these disputes. 23 The Court declines to reduce the fee award on these grounds. 24 2. Excessive Fee Request 25 Second, Lantah argues that the Court should bar all recovery by Telegram because its 26 requested fee award is grossly excessive. Lantah’s Opp’n to Fee Mot. at 10. 27 Telegram responds that it has asked for only a small portion of the total amount of time 1 Telegram asked for a smaller award than Lantah received in many of the same billing categories. 2 Telegram’s Reply re Fee Mot. at 3. Telegram further argues that its entire request is much less 3 than what Lantah sought and received. Id. 4 Courts have discretion to deny a fee motion in its entirety where the request is “so 5 outrageously excessive it shocks the conscience of the court.” Milton H. Greene Archives, Inc. v. 6 CMG Worldwide, Inc., No. CV 05-02200 MMM (MCx), 2009 WL 10669361 , at 21. A fee 7 request may shock the conscience if it fails to “make a good faith effort to exclude fees” that are 8 not recoverable. See id. (quoting Fair Housing Council v. Landow, 999 F.2d 92 , 97 (4th Cir. 9 1993)). 10 While Telegram’s fee motion took an aggressive position regarding the apportionment of 11 fees between the original claims and the counterclaims, Telegram nevertheless made a good faith 12 effort to exclude unrecoverable fees. Telegram’s table of billing entries reflects a good faith effort 13 to identify and subtract hours which could not possibly relate to the counterclaims. For example, 14 Telegram proactively subtracted time spent working on the motion for preliminary injunction. See 15 Neukom Decl. Ex. 1 at 3–4. However, Telegram’s fee motion also included a number of less 16 defensible requests. Telegram’s fee motion requested fees for a host of work related to issues 17 common to both the claims and the counterclaims. See Telegram’s Fee Mot. at 2. These requests 18 appear to be at odds with both this Court’s earlier order and the position Telegram took regarding 19 the scope of recoverable fees in earlier briefing. See Order Granting Motion to Dismiss 20 Counterclaims & for Attorneys’ Fees at 7; Telegram’s Opp’n to Voluntary Dismissal at 2. For 21 example, Telegram had conceded that “no discovery” took place in connection with the 22 counterclaims. Telegram’s Opp’n to Voluntary Dismissal at 2. However, Telegram’s motion for 23 fees seeks to recover $34,070 for discovery based on the theory that this discovery related to 24 issues common to both the claims and the counterclaims. Telegram’s Fee Mot. at 7; Neukom 25 Decl. Ex. 1 at 23. The parties should keep in mind that fee requests must comply with judicial 26 pronouncements. See Lewis v. Kendrick, 944 F.2d 949 , 958 (4th Cir. 1991) (“A request for 27 attorney’s fees is required to be in good faith and in reasonable compliance with judicial 1 However, the issue of apportionment in this case involved a complex interaction between the 2 normal apportionment standard and the special standard for awarding fees following a voluntary 3 dismissal without prejudice. See supra pp. 5–7. Given this uncertain legal footing, the Court does 4 not conclude that Telegram’s fee request shocks the conscience or was made in bad faith. 5 The Court will not reduce the fee award on these grounds. 6 Summary of Modifications 7 In sum, the Court modifies Telegram’s fee request as follows: 8 Time Category Requested Reduction Final Award 9 Award 10 Responding to Counterclaims $10,835 0% $10,835 11 Settlement and Mediation $27,988 90% $2,798.80 12 Offensive Discovery $722 0% $722 13 Case Management Tasks $22,303 ~83.25% $3,735 14 Summary Judgement Motion $35,120 98% $702.40 15 Reply re Summary Judgement $18,378 30% $12,864.60 16 Motion 17 Lantah’s Discovery Requests $34,070 100% $0 [18] Lantah’s Motion to Voluntarily $2,432 0% $2,432 [19] Dismiss [20] Breach of Confidentiality $6,200 100% $0 [21] Allegations [22] Telegram’s Motion for Fees $24,200 50% $12,100 [23] Total $46,189.80 [24] IV. CONCLUSION [25] For the foregoing reasons, the Court GRANTS in part Telegram’s Motion for Attorneys’ [26] Fees and awards Telegram $46,189.80 in fees. [27] IT IS SO ORDERED. 1 Dated: January 19 , 2021 a CHARLES R. BREYER 2 United States District Judge [10] 1] «a 12 ou o [16] Za 18