CIGNEX Datamatics, Inc. v. Lam Research Corporation

CourtDistrict Court, D. Delaware
DecidedSeptember 29, 2022
Docket1:17-cv-00320
StatusUnknown

This text of CIGNEX Datamatics, Inc. v. Lam Research Corporation (CIGNEX Datamatics, Inc. v. Lam Research Corporation) is published on Counsel Stack Legal Research, covering District Court, D. Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
CIGNEX Datamatics, Inc. v. Lam Research Corporation, (D. Del. 2022).

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE CIGNEX DATAMATICS, INC., ) ) Plaintiff, ) ) v. ) C.A. No. 17-320 (MN) ) LAM RESEARCH CORPORATION, ) ) Defendant. )

MEMORANDUM OPINION Theodore A. Kittila, James G. McMillan, III, HALLORAN FARKAS + KITTILA LLP, Wilmington, DE – attorneys for Plaintiff

Christopher P. Simon, David G. Holmes, CROSS & SIMON, LLC, Wilmington, DE – attorneys for Defendant

September 29, 2022 Wilmington, Delaware Meteeble Norailen OREIKA, U.S. DISTRICT JUDGE: Presently before the Court is the renewed motion of Plaintiff CIGNEX Datamatics, Inc. (“Plaintiff or “CIGNEX”) for an award of attorneys’ fees. (D.I. 146).! For the reasons set forth below, CIGNEX’s motion is DENIED. This opinion constitutes the Court’s findings of fact and conclusions of law pursuant to Rule 54(d) of the Federal Rules of Civil Procedure. 1. BACKGROUND?’ This case involved a dispute between CIGNEX and Defendant Lam Research Corporation (“Defendant” or “Lam”) over a contract relating to software development services that CIGNEX was to provide to Lam (“the Agreement”). After a three-day bench trial, the Court found that CIGNEX had proven that Lam breached the Agreement by failing to pay for certain services rendered and, further, that Lam failed to prove that CIGNEX breached the Agreement, the covenant of good faith and fair dealing or that CIGNEX was unjustly enriched. (See D.I. 126; see also D.I. 127). On May 6, 2020, the Court entered judgment in favor of CIGNEX and against Lam in the amount of $232,039.71 (D.I. 129) and, on January 21, 2021, the Court amended its judgment to award pre- and post-judgment interest (D.I. 145). The Court of Appeals for the Third Circuit affirmed the judgment. (See D.I. 149). After the Third Circuit had issued its opinion but before the mandate issued, CIGNEX filed a renewed motion for attorneys’ fees based on the Agreement’s provision awarding reasonable fees to the prevailing party. (See D.I. 146 & 147).

CIGNEX requested attorneys’ fees in its post-trial motion seeking pre- and post-judgment interest, but the Court denied the request for fees with leave to renew after the then-pending appeal. (See D.I. 141 at 7:20-23). 2 A more detailed recitation of the procedural history of this case may be found in the Court’s post-trial opinion (D.I. 126) and opinion on Lam’s motion for a finding of spoliation and for sanctions (D.I. 100).

CIGNEX requests $593,142.85 in attorneys’ fees and other expenses. (See D.I. 147 at 19). In support of the amount requested, CIGNEX provided the Court with a declaration from Divya Kumat, former in-house General Counsel for CIGNEX and now Authorized Representative for CIGNEX. (See D.I. 148). Lam opposes the award of any fees. (D.I. 151). Briefing on the motion was completed on November 8, 2021. (D.I. 152).

II. LEGAL STANDARDS “Under the American Rule and Delaware law, litigants are normally responsible for paying their own litigation costs.” Mahani v. Edix Media Grp., Inc., 935 A.2d 242, 245 (Del. 2007). One exception to this rule may be found in litigation arising from contracts containing fee-shifting provisions. Id. A court may award a prevailing party its reasonable costs and fees in connection with litigating a contract dispute when the parties have so agreed by the terms of that contract. Id. In that case, the court’s task is to determine whether the requested costs and fees are reasonable. In assessing the reasonableness of attorneys’ fees requested in contract litigation,3 Delaware courts consider the factors set forth in the Delaware Lawyers’ Rules of Professional

Conduct: “(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly; (2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer; (3) the fee customarily charged in the locality for similar legal services; (4) the amount involved and the results obtained; (5) the time limitations imposed by the client or by the

3 The parties do not dispute that Delaware law recognizes fee-shifting contract provisions as enforceable or that the Agreement contains such a provision in Paragraph 19. (PTX-44 ¶ 19). CIGNEX acknowledges the use of the Rules of Professional Conduct in assessing reasonableness but intimates the factors may not be applicable in contractual fee-shifting cases. (See D.I. 147 at 13). CIGNEX cites nothing to suggest that Delaware law imposes some other standard in cases involving fee disputes arising out of contracts. And CIGNEX ultimately presents the individual factors set forth in the Rules of Professional Conduct. circumstances; (6) the nature and length of the professional relationship with the client; (7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and (8) whether the fee is fixed or contingent.” DEL. LAWYERS’ RULES OF PROF’L CONDUCT R. 1.5(a); see also Mahani, 935 A.2d at 245-46. Additionally, in reviewing a request for attorneys’ fees, a court should also ask whether the amount of time devoted to litigation was “excessive, redundant,

duplicative or otherwise unnecessary.” Mahani, 935 A.2d at 247-48. III. DISCUSSION The Agreement between the parties contemplates reasonable attorneys’ fees to the prevailing party in either litigation or arbitration: In any judicial or arbitration proceeding concerning a dispute relating to or arising out of this Agreement, the prevailing party is entitled to recover all reasonable expenses associated with such proceeding (including without limitation reasonable costs and fees of attorneys or other professionals), except that (i) if the prevailing party has at any time refused a settlement offer pertaining to such dispute which is equal to or greater than the prevailing party’s actual recovery determined in such judicial or arbitration proceeding, then no such fees or costs will be awarded, and (ii) if the prevailing party has at any time refused a settlement offer pertaining to such dispute which is less than the prevailing party’s actual recovery determined in such judicial or arbitration proceeding, then an such fees or costs associated with recovering the difference between the refused settlement offer and the actual recovery must bear a reasonable relation to such difference. (PTX-44 ¶ 19). There is no dispute that the present case qualifies as a judicial proceeding relating to the parties’ Agreement such that reasonable attorneys’ fees may be available to the prevailing party. Lam disputes, however, that CIGNEX is a prevailing party such that attorneys’ fees should be available. Indeed, Lam’s opposition to CIGNEX’s fee motion focuses heavily on the prevailing party issue. (See D.I. 151 at 6-10). A. CIGNEX Is a Prevailing Party In this case, CIGNEX asserted only one claim against Lam – a breach of contract claim. (See generally D.I. 1). Lam asserted a counterclaim for breach of contract, as well as counterclaims for bad faith breach of contract, breach of the duty of good faith and fair dealing and unjust enrichment. (See D.I. 8 at pgs. 10-14). At trial, CIGNEX prevailed on its breach of contract claim

against Lam, and Lam failed to prove its breach of contract claim against CIGNEX. In particular, CIGNEX proved its breach of contract claim as related to services rendered under CR-1, CR-2 and CR-3 (but not CR-4 and CR-5). (See D.I. 126 at 18-25). Although CIGNEX sought $434,096.71 in damages for its one claim (see D.I. 1 ¶¶ 15-19), based on the Court’s post-trial opinion, CIGNEX was awarded $232,039.71 in damages plus $60,564.56 in pre-judgment interest, as well as post- judgment interest (see D.I. 145).

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CIGNEX Datamatics, Inc. v. Lam Research Corporation, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cignex-datamatics-inc-v-lam-research-corporation-ded-2022.