ProDox, LLC v. Professional Document Services, Inc.

District Court, D. Nevada·Decided August 16, 2024·No. 2:20-cv-02035·Unknown

Opinion

1 UNITED STATES DISTRICT COURT 2 DISTRICT OF NEVADA 3 Case No.: 2:20-cv-02035-JAD-NJK ProDox, LLC, 4 Plaintiff Order Awarding Fees and Costs 5 v. in Favor of ProDox, LLC

6 Professional Document Services, Inc., [ECF Nos. 177, 178]

7 Defendant

8 ProDox, LLC filed this suit against Professional Document Services, Inc. (PDS) after 9 PDS used the name “ProDoc” to sell its product outside of the state of California, in alleged 10 violation of the parties’ 2006 settlement agreement. The case eventually went to a bench trial on 11 the narrow question of ProDox’s entitlement to damages for PDS’s breach under the settlement 12 agreement’s liquidated-damages provision. With the benefit of additional briefing after that trial, 13 I denied PDS’s attempts to invalidate the liquidated-damages provision, considered testimony 14 regarding PDS’s sales to non-California customers in violation of the agreement, and awarded 15 ProDox $217,500 in damages for PDS’s breach. 16 ProDox and PDS now move for attorneys’ fees, each arguing that they are prevailing 17 parties entitled to such fees under the parties’ settlement agreement. PDS additionally contends 18 that it may seek fees under Nevada Revised Statute 18.010(2) and the Lanham Act. I find that 19 ProDox was the “prevailing party” because, while both parties won some and lost some issues 20 over the course of this case, ProDox prevailed on, and received an award of monetary damages 21 for, the most significant issue of whether PDS breached the parties’ settlement agreement, so 22 only ProDox is entitled to fees under the settlement agreement. I find that PDS has not shown 23 extraordinary circumstances or bad-faith conduct on ProDox’s part that would warrant a fee 1 award under the Lanham Act or NRS 18.010(2). So I deny PDS’s motion for fees and grant 2 ProDox’s. But I reduce ProDox’s award to account for the fact that it won substantially less than 3 it originally sought for PDS’s breach.1 And I grant ProDox’s request for costs under the 4 agreement, with a small reduction for some costs that rightfully shouldn’t be passed on to PDS. 5 A. ProDox is entitled to fees and costs under the settlement agreement as the only 6 prevailing party.

7 1. ProDox is the prevailing party.

8 Both parties move for attorneys’ fees under the terms of their 2006 settlement agreement. 9 Under both federal and Nevada law, valid contractual provisions for the payment of attorneys’ 10 fees constitute a sufficient source of authority for such an award.2 The agreement provides that, 11 “in the event of any lawsuit to enforce, interpret, modify, terminate, or declare rights under this 12 agreement, the prevailing party shall be entitled to recover its costs and attorneys’ fees, in 13 addition to any other remedies.”3 The parties’ agreement doesn’t define “prevailing party.” But 14 15 16 17 18

19 1 The parties are familiar with the facts of this case, so I don’t repeat them here. I instead incorporate herein the overviews contained in my prior orders. See ECF Nos. 122, 174. 20 2 See Alyeska Pipeline Serv. Co. v. Wilderness Soc’y, 421 U.S. 240, 257 (1975) (“[A]bsent statute or enforceable contract, litigants pay their own attorneys’ fees.”); MRO Commc’ns, Inc. v. 21 AT&T, 197 F.3d 1276, 1281 (9th Cir. 1999) (“[E]ach party must bear its own attorneys’ fees in the absence of a rule, statute[,] or contract authorizing such an award.”); Schouweiler v. Yancey 22 Co., 712 P.2d 786, 788 (Nev. 1985) (“It is well established in Nevada that attorney’s fees are not recoverable unless allowed by express or implied agreement or when authorized by statute or 23 rule.”) (citing Sun Realty v. Dist. Ct., 542 P.2d 1072 (Nev. 1975)). 3 ECF No. 178-2 at ¶ 19. 1 under Nevada law generally,4 a party prevails “if it succeeds on any significant issue in litigation 2 which achieves some of the benefit it sought in bringing [or defending] suit.”5 3 PDS contends that it is the prevailing party on ProDox’s implied-breach, trademark- 4 infringement, unfair-competition, and declaratory-judgment claims because ProDox lost or 5 dropped them. But Nevada law counsels that I look to the significance of a party’s successes,

6 and here, ProDox succeeded on the linchpin claim of this entire action: breach of the settlement 7 agreement in which PDS promised not to pursue certain clients under the ProDoc name in order 8 to avoid a trademark-infringement suit. ProDox’s failure to secure success on its remaining 9 claims didn’t really alter the net outcome of this suit or change what ProDox argued it was 10 entitled to all along: liquidated damages under the agreement. So I conclude that, for purposes of 11 awarding attorneys’ fees under the settlement agreement and Nevada law, ProDox is the 12 prevailing party in this action, and PDS is not. 13 2. ProDox’s limited success at trial warrants a fee reduction.

14 Federal courts sitting in diversity determine the reasonableness of attorneys’ fees 15 awarded under state law when those fees are connected to the substance of the case.6 Under 16

17 4 I look to Nevada law to resolve this question because, “[i]n an action involving state law claims,” courts “apply the law of the forum state to determine whether a party is entitled to 18 attorneys’ fees, unless it conflicts with a valid federal statute or procedural rule.” MRO Commc’ns, 197 F.3d at 1282. 19 5 Valley Elec. Ass’n v. Overfield, 106 P.3d 1198, 1200 (Nev. 2005) (cleaned up) (explaining that “‘prevailing party’ is broadly construed so as to encompass plaintiffs, counterclaimants, and 20 defendants”); see also Davis v. Beling, 278 P.3d 301, 322 (Nev. 2012) (noting that parties prevail “if they succeed on any substantial aspect of the case”). 21 6 In re Larry’s Apartment, 249 F.3d 832, 838 (9th Cir. 2001). Because I award fees based on the parties’ settlement agreement and only for ProDox’s successful state-law contract claim, I 22 consider ProDox’s fees request under Nevada law. PDS’s argument that federal, not Nevada, law applies here is unsound. See ECF No. 181 at 12–13. ProDox’s motion accurately supplies 23 the Nevada standard for awarding attorneys’ fees and sufficiently complies with this district’s local rules regarding the information that must be supplied to rule on an attorneys’ fees motion. 1 Nevada law, “the method upon which a reasonable fee is determined is subject to the discretion 2 of the court, which is tempered only by reason and fairness.”7 One permissible calculation 3 method is the lodestar approach, which involves “multiplying the number of hours reasonably 4 spent on the case by a reasonable hourly rate.”8 5 Nevada courts must also review the requested amount “in light of the factors set forth in”

6 the Supreme Court of Nevada's decision in Brunzell.9 They include: 7 (1) the qualities of the advocate: his ability, his training, education, experience, professional standing, and skill; 8 (2) the character of the work to be done: its difficulty, its intricacy, 9 its importance, time, and skill required, the responsibility imposed and the prominence and character of the parties where they affect 10 the importance of the litigation;

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