Telegram Messenger Inc v. Lantah, LLC

Background

Telegram Messenger Inc. sued Lantah, LLC over the GRAM trademark in connection with cryptocurrency. Telegram brought claims for false designation of origin, common-law trademark infringement, and unfair competition. Lantah answered and asserted counterclaims alleging that it, rather than Telegram, had priority in the GRAM mark.

The court previously granted Telegram’s request for a preliminary injunction and denied Lantah’s summary-judgment motion. Telegram later moved to voluntarily dismiss its claims. The court granted that motion without prejudice on the conditions that the preliminary injunction be vacated and Telegram pay Lantah’s reasonable attorneys’ fees and costs. Lantah then moved to voluntarily dismiss its counterclaims. The court granted that motion without prejudice on the condition that Lantah pay Telegram’s reasonable attorneys’ fees and costs arising from the counterclaims.

Telegram sought $167,458 in attorneys’ fees under that condition. It did not seek costs. Lantah opposed the request and argued that Telegram should receive nothing or substantially less.

Legal standard

Under Federal Rule of Civil Procedure 41(a)(2), a court may allow a plaintiff to voluntarily dismiss an action on terms it considers proper. When setting fees after a voluntary dismissal without prejudice, courts generally consider possible duplicative expense from later litigation, the defendant’s trial-preparation expenses, how far the litigation progressed, and the plaintiff’s diligence in seeking dismissal.

The court used the lodestar method, which calculates fees by multiplying reasonable hours by a reasonable hourly rate. The court accepted Telegram’s requested hourly rates of $600 for partners, $500 for counsel, and $400 for associates. The court also followed its earlier ruling that recoverable fees were limited to fees spent defending against Lantah’s counterclaims.

Court’s analysis

The court rejected Telegram’s argument that it could recover fees for work concerning issues common to its affirmative claims and Lantah’s counterclaims. It held that Telegram could recover only fees incurred as a consequence of Lantah’s decision to assert the counterclaims. Work that Telegram would have performed to pursue its own claims was not recoverable under this standard.

The court awarded the following amounts:

- $10,835 for reviewing, researching, and responding to Lantah’s counterclaims. - $2,798.80 for settlement and mediation work, after applying a 90 percent reduction because most of that work was not caused by the counterclaims. - $772 for drafting discovery requests. - $3,735 for case-management tasks, the amount Lantah proposed as attributable to the counterclaims. - $702.40 for Telegram’s summary-judgment motion, after a 98 percent reduction. - $12,864.60 for Telegram’s reply brief on summary judgment, after a 30 percent reduction. - $0 for responding to Lantah’s discovery requests because Telegram did not show that those fees were caused by the counterclaims. - $2,432 for responding to Lantah’s motion to voluntarily dismiss its counterclaims. - $0 for work responding to Lantah’s confidentiality allegations because that work was not sufficiently related to the fee application. - $12,100 for preparing the fee motion and reply, after a 50 percent reduction based on Telegram’s limited success on the fee request.

The court declined to reduce the award based on Lantah’s allegations that Telegram violated confidentiality rules or that Telegram’s fee request was so excessive that all recovery should be barred. The court found that Telegram had made a good-faith effort to exclude unrecoverable fees, even though some requests were not justified.

Disposition

Judge Charles R. Breyer granted in part Telegram’s motion for attorneys’ fees and awarded Telegram $46,189.80 in fees. The order did not award costs.