China Shipping Container Lines Co. Ltd. v. Big Port Service DMCC

Background

China Shipping asked the Court to award $45,617.14 in attorney’s fees and costs as a sanction against Big Port Service. The request concerned expenses from seeking recognition of decisions issued by the High Court of Singapore and from addressing Big Port’s prior representations about the effect of the Singapore proceedings on the New York case.

The underlying dispute involved proceedings in Singapore and New York. China Shipping had sought to stop a New York arbitration and obtain a declaration that the parties had no agreement to arbitrate. After the Singapore court concluded that there was no contract between the parties, the Court’s January 15, 2019 order gave preclusive effect to the Singapore decisions, granted declaratory relief, and permanently stopped the arbitration.

The Court referred the fee application to Judge Debra Freeman, who issued a Report and Recommendation recommending that the application be denied except for an award of $43.20 in copying costs. China Shipping objected to that recommendation.

Stay Request

China Shipping asked the Court to delay ruling on its objections until the Supreme Court decided whether to review the Second Circuit’s affirmance of the January 15, 2019 order. The Court concluded that a stay was unnecessary because the fee application concerned conduct that had already occurred. The Court therefore denied the request for a stay.

Attorney’s Fees

Under the American Rule, each side generally pays its own attorney’s fees. A court may make an exception under its inherent authority to control its proceedings when the losing party acted in bad faith, vexatiously, wantonly, or for oppressive reasons.

Judge Freeman found that Big Port had repeatedly presented unsupported arguments, but concluded that this did not establish that Big Port’s litigation strategy was intended to harass China Shipping or was sufficiently egregious to constitute bad faith. China Shipping argued that this finding was wrong, but the Court treated the objection as a repetition of the arguments made before Judge Freeman and reviewed it for clear error.

The Court acknowledged that Big Port had taken questionable and sometimes contradictory positions, including seeking a stay and later attempting to retract representations made in connection with that request. But the Court held that frivolous or unsupported positions do not, by themselves, prove an improper purpose. A party seeking fees on a bad-faith theory must provide specific evidence showing conduct so completely without merit that it must have been undertaken for an improper purpose. The Court found no clear error in Judge Freeman’s conclusion that China Shipping had not made that showing. It therefore overruled the objection to the denial of attorney’s fees.

The Court noted that, because it found no adequate showing of bad faith, it did not need to decide whether China Shipping had shown a separate form of personal bad faith.

Telephone and Online-Research Expenses

China Shipping also sought telephone expenses and online-research fees. It had conceded that these were not enumerated taxable costs under the applicable local rule. Because such expenses are generally recoverable only as part of an attorney’s-fee award, and the Court adopted the recommendation denying attorney’s fees, the Court also denied these expenses and overruled China Shipping’s objection.

Disposition

The Court adopted Judge Freeman’s Report and Recommendation in its entirety. It awarded China Shipping $43.20 in copying costs, denied the request for attorney’s fees, denied telephone and online-research expenses, denied the request for a stay, and directed the Clerk of Court to terminate the motion at ECF No. 85.