Benihana of Tokyo, L.L.C. v. Benihana Inc.

Background

This decision resolved Benihana, Inc.’s application for attorneys’ fees and costs incurred while defending an earlier Lanham Act fee award on appeal. The Lanham Act allows a court, in an exceptional case, to award reasonable attorneys’ fees and full costs to the prevailing party.

In the underlying litigation, Benihana, Inc. claimed that Benihana of Tokyo, LLC had made misleading statements about ownership or operation of Benihana restaurants and trademarks in the relevant territory. The case settled on the first day of a bench trial. The settlement barred Benihana of Tokyo and its chief executive, Keiko Aoki, from infringing Benihana, Inc.’s trademarks.

In a July 25, 2018 decision, the court found that Benihana, Inc. was the prevailing party because the settlement’s injunction provided relief that substantially matched the relief it had sought. The court also found the case exceptional under both the older standard and the broader standard adopted by the Supreme Court in Octane Fitness. It awarded Benihana, Inc. $936,665.24 in fees and costs. Benihana of Tokyo appealed, and the Second Circuit affirmed the fee decision on June 21, 2019.

Fee request and arguments

Benihana, Inc. sought $302,702.50 for reviewing and preparing appellate briefs and participating in mediation, $21,925 for work concerning the reply brief and appellate record, $96,105 for oral-argument preparation and presentation, and $37,153 for bond, stay, and collection matters. The total request was $457,885.50.

Benihana of Tokyo opposed an appellate fee award, although it primarily challenged the amount requested. It argued, among other things, that the appeal was not entirely frivolous and that some of its legal arguments had at least some basis. The opinion states that the question whether the older or newer exceptional-case standard applied to Lanham Act fee awards was still open when Benihana of Tokyo filed its opening brief, but the Second Circuit later resolved that issue.

Entitlement to appellate fees

The court held that the Lanham Act’s fee standard applies to fees incurred on appeal as well as fees incurred in the district court. It found that Benihana, Inc. prevailed on appeal because the Second Circuit affirmed the earlier decision after Benihana of Tokyo challenged the full range of that decision’s legal and factual determinations.

The court also found that exceptional circumstances justified an appellate fee award. It relied on the same circumstances supporting the earlier award, including the court’s findings concerning Benihana of Tokyo’s conduct and the purposes of compensation and deterrence. The court therefore ruled that Benihana, Inc. was entitled to reasonable fees and costs for defending the earlier Lanham Act fee award.

Reasonableness of the attorneys’ fees

The court found the requested $457,885.50 objectively unreasonable. The appeal concerned one main issue—whether the earlier Lanham Act fee award was justified—and did not involve other rulings such as discovery, pretrial motions, summary judgment, a jury trial, or a lengthy post-trial decision. Benihana, Inc. also used counsel already familiar with the parties’ agreement and litigation history, and it filed one appellee’s brief defending a detailed district court decision.

The court identified several problems in the billing records. Most of the 710 hours billed by Benihana, Inc.’s outside firm were recorded by partners with high billing rates, even though some work could have been performed by more junior lawyers or legal assistants. The records also contained repeated and vague entries, numerous whole-number time entries suggesting imprecision, and 15.1 hours spent on an initially deficient oral-argument statement. The court found that the latter work was not chargeable to Benihana of Tokyo.

Because the billing records were too opaque to support a reliable calculation based on individual deductions or a percentage reduction, the court used its experience with federal appellate work and the Second Circuit to assess the reasonable value of the work. It valued the attorneys’ fees at $125,000.

Costs and disposition

The $125,000 valuation covered attorneys’ fees only. Benihana, Inc. had not itemized or totaled its appeal-related out-of-pocket costs. The court permitted Benihana, Inc. to submit a declaration documenting those costs within one week. The court stated that it would determine the proper cost amount separately and that only costs connected with the Second Circuit appeal—not costs for bond, collection, or other ancillary matters—could be included.

Judge Paul A. Engelmayer ordered an award of $125,000 to Benihana, Inc. for its work opposing Benihana of Tokyo’s appeal. The court reserved the amount of costs for a separate order after Benihana, Inc.’s submission.