BladeRoom Group Limited v. Facebook, Inc.

Background

BladeRoom Group Limited and Bripco (UK) Limited, together called BladeRoom, prevailed at trial on a trade-secret misappropriation claim. The jury awarded $30 million in compensatory damages, and the court later awarded $30 million in exemplary damages and prejudgment interest under California law. BladeRoom sought attorneys’ fees and costs, including fees for outside counsel, in-house counsel, United Kingdom counsel, expert witnesses, and other litigation expenses.

A Special Master recommended reducing BladeRoom’s attorneys’ fees by 40%, awarding $12,272,017 in fees, taxing $2,495,161.87 in costs, and dividing the Special Master’s fees equally between BladeRoom and Emerson Electric Co., Emerson Network Power Solutions Inc., and Liebert Corporation, collectively called Emerson. Both sides objected. Judge Davila conducted a de novo review, meaning an independent review, of the recommendation.

Court’s Rulings

The court held that California Civil Code section 3426.4 allowed BladeRoom to recover reasonable expert-witness fees because the statute applies to trade-secret misappropriation cases involving willful and malicious conduct and does not directly conflict with federal cost rules. The court granted BladeRoom’s request for expert-witness fees and awarded $2,017,851.59.

The court allowed recovery for the work of BladeRoom’s General Counsel, Michael Joy, even though he was not a United States attorney and did not keep contemporaneous time records. But it found that much of his work involved traditional in-house counsel duties or duplicated outside counsel’s work. It reduced the requested $3,379,350 to $1,520,707.50.

The court rejected Emerson’s categorical challenge to fees for two United Kingdom law firms and a United Kingdom paralegal. It awarded the requested $71,744.95 less 10%, for a total of $64,570.45.

The court found that some fees needed to be apportioned between work involving Emerson and work involving Facebook. For approximately $1.3 million in fees incurred before Emerson was added as a defendant, the court allocated 70% to Facebook and 30% to Emerson, awarding BladeRoom the 30% attributable to Emerson without another reduction. For work after Emerson was added and before Facebook settled, the court found that much of the work concerned both defendants or was relevant to the claims against Emerson, but imposed a 10% reduction to account for block billing and insufficiently detailed records. The court also imposed a 10% reduction on fees incurred after Facebook settled on April 9, 2018. It did not require apportionment of fees incurred after the settlement.

The court rejected Emerson’s argument that BladeRoom’s limited success required a further fee reduction. Although the jury found for BladeRoom on only one of three asserted trade secrets and BladeRoom had dropped other asserted trade secrets before trial, the court characterized the $60 million total damages award as an excellent trial result.

The court rejected Emerson’s objections concerning the Special Master’s review of billing records and other materials outside Emerson’s initial access because Emerson later received redacted copies and had an opportunity to object. It also rejected Emerson’s request for discovery into the Facebook settlement and denied an attorneys’ fee offset. The court found that the settlement agreement required BladeRoom and Facebook to bear their own fees and costs, and that BladeRoom had paid the fees it sought from its own funds.

The court declined BladeRoom’s request for an upward adjustment under the factors used to assess whether a lodestar—the reasonable hours multiplied by a reasonable hourly rate—should be enhanced. The court concluded that the relevant factors did not justify increasing the award.

The court allowed only $29,165.34 in lodging costs for individuals on BladeRoom’s witness list. It rejected BladeRoom’s request to recover all $299,534.32 in lodging expenses because federal cost rules did not authorize lodging or hotel expenses for attorneys and other trial-team members.

Disposition

The court granted in part and denied in part BladeRoom’s motion for attorneys’ fees and costs. It adopted the Special Master’s report and recommendation with the stated modifications: $1,520,707.50 for Michael Joy’s fees; $64,570.45 for United Kingdom counsel and paralegal fees; the 30% allocation of pre-amended-complaint fees attributable to Emerson; 10% reductions for the later fee periods described in the order; $2,017,851.59 in expert-witness fees; and $29,165.34 in lodging costs. The court ordered BladeRoom to calculate the deductions and submit a proposed order stating the total fee and cost awards. BladeRoom and Emerson were each ordered to pay 50% of the Special Master’s $32,854 fee.