Adstra, LLC v. Kinesso, LLC

Background

Adstra sued Kinesso and Acxiom over the assignment and termination of a Master Data Supply Agreement (MDSA) involving Adstra’s data product. Adstra asserted contract, trade-secret, misappropriation, unfair-competition, tortious-interference, and related claims. The court previously granted summary judgment to the defendants and dismissed all of Adstra’s claims, ruling that Kinesso could assign the MDSA to Acxiom without Adstra’s approval and that the defendants’ relevant access to and use of Adstra’s data was authorized by the agreement.

Adstra appealed that judgment. While the appeal was pending, Kinesso and Acxiom moved under Federal Rule of Civil Procedure 54(d) for attorneys’ fees and costs. The court decided to resolve the fee motion rather than defer it until after the appeal.

Contractual right to fees

Section 16 of the MDSA stated that, if a party brought a legal action to enforce the agreement, the prevailing party would be entitled to reasonable attorneys’ fees, court costs, and other out-of-pocket collection expenses. The court found this language clear and unambiguous.

Because Kinesso and Acxiom had obtained complete dismissal of Adstra’s claims, the court determined that both were prevailing parties. Kinesso qualified even though it had assigned the MDSA to Acxiom, because the fee provision continued to apply to disputes concerning the agreement after assignment or termination. Acxiom also received Kinesso’s contractual rights when the MDSA was assigned. The court further held that the defendants’ work was not divisible into separate fee components attributable to only one defendant, so the award would apply jointly and severally in favor of both defendants.

Reasonableness of the requested fees

The defendants sought $2,456,069, consisting of $2,117,524.47 in attorneys’ fees and $338,545.36 in other expenses, including expert expenses. The court rejected Adstra’s requests for broad percentage reductions. It found that the MDSA was central to all of Adstra’s claims and that the legal work defending the claims was closely connected. The court also found the billing rates reasonable based on the complexity of the case, the attorneys’ experience, the rates actually charged and paid, and the negotiated discount from the law firm’s standard rates.

The court ruled that the MDSA did not authorize recovery of expert fees. It interpreted the references to attorneys’ fees, court costs, and out-of-pocket collection expenses narrowly and concluded that none covered expert fees in this case. The court therefore excluded $238,517.22 in expert fees.

The court also ruled that the contract did not authorize recovery of “fees on fees”—attorneys’ fees incurred in litigating the fee application—because the agreement did not expressly or unmistakably provide for them. After reviewing the billing records, the court deducted approximately $22,500 for work on the fee motion.

Disposition

The court’s conclusion was: “The motion for attorneys’ fees is GRANTED IN PART and DENIED IN PART.” It was denied as to expert fees and fees on fees and otherwise granted. The defendants received $2,095,024.47 in attorneys’ fees and $100,028.14 in other costs and expenses, for a total of $2,195,052.61. Judge Lewis J. Liman directed the Clerk of Court to close the fee-motion docket entry.