Ostrolenk Faber LLP v. Office Depot, Inc.

Background

Ostrolenk Faber LLP sued Office Depot, Inc. for unpaid legal fees. The main action between those parties had already been dismissed with prejudice. The remaining dispute was Office Depot’s third-party complaint against Sakar International, Inc., seeking indemnification for fees, costs, and damages arising from the litigation, including the cost of defending against Ostrolenk’s claim and prosecuting the third-party action.

Sakar and Office Depot’s relationship was governed by a Trade Vendor Purchasing Agreement and incorporated Operating Guidelines. The guidelines required Sakar to defend, indemnify, and hold Office Depot harmless, at Sakar’s expense, from claims and expenses connected to patent infringement involving covered products. Sakar had also agreed to assume control of the defense in an earlier patent case brought against Office Depot by Voltstar Technologies.

The opinion describes communications in which Sakar agreed to fully defend and indemnify Office Depot, including paying its law firm’s fees. Sakar ultimately settled with Ostrolenk, and Ostrolenk dismissed its claim against Office Depot. Office Depot and Sakar then agreed to submit the amount of reasonable attorneys’ fees and expenses to the Court for determination. Sakar’s only opposition was that the amount requested was unreasonable.

Legal standard and analysis

The agreements were governed by New York law. Under the fee-shifting provision, the court could award the prevailing party amounts spent on litigation if those amounts were reasonable. The Court applied the lodestar method, which calculates a presumptively reasonable fee by multiplying a reasonable hourly rate by a reasonable number of hours.

Office Depot requested $148,596.28. Its lawyers billed rates ranging from $210 to $595 per hour, with some rates increasing on September 1, 2019. The Court concluded that these rates reflected market rates for lawyers with comparable skills and experience in commercial cases. After reviewing the daily time entries, the Court also found the 316.5 hours billed from December 2018 through the time of the request reasonable and adequately described.

Sakar argued that Office Depot’s fees were disproportionate because Ostrolenk’s underlying claim sought approximately $239,000, while Office Depot incurred approximately $142,143 in attorney time defending that claim. The Court rejected that argument, explaining that the central question was whether the time spent at the rates charged was reasonable, not the size of the underlying claim. The Court also stated that Office Depot was not required to accept the claim or hire the least expensive lawyer, and that the parties could have placed a cap on fee shifting but did not do so.

The Court separately found $6,453.28 in expenses reasonable, most of which Office Depot had paid directly to an electronic-discovery vendor.

Disposition

Judge P. Castel granted Office Depot’s motion for attorneys’ fees and expenses from Sakar in the amount of $148,596.28. The Clerk was directed to enter judgment for Office Depot on the portion of Count I of the third-party complaint seeking fees and costs associated with defending the action and prosecuting the third-party complaint. The opinion states that all other claims in the third-party complaint and any other pleading were dismissed as moot, and the Clerk was directed to close the case.