Phyto Tech Corp. v. Givaudan SA

Background

Phyto Tech Corp., doing business as Blue California, and Conagen Inc. sued Givaudan SA for trade-secret misappropriation under federal and Delaware law and for breach of contract. The contract claim concerned a confidentiality provision in an agreement that created BGN Tech LLC, a joint venture between Blue California and Givaudan.

After a four-day non-jury trial, the court ruled that the trade-secret claims failed. It also found that Givaudan breached the agreement’s confidentiality provision but that the plaintiffs did not prove damages caused by the breach. The court therefore awarded $1 in nominal damages on the contract claim. Nominal damages are a small amount awarded to recognize a legal violation when compensatory damages have not been proven.

The plaintiffs then sought $675,176.87 in attorneys’ fees and expenses under the agreement’s fee-shifting provision. That provision required the non-prevailing party to pay the prevailing party’s reasonable attorneys’ fees and litigation costs in an action concerning a breach of the agreement. Givaudan opposed the request.

Entitlement to Fees

The court applied Delaware law because the agreement contained a Delaware choice-of-law provision and a fee-shifting clause. It held that the plaintiffs qualified as prevailing parties on the contract claim even though they recovered only nominal damages. The court reasoned that the agreement’s language did not require a compensatory-damages award and that the plaintiffs succeeded on the main contract issue: proving that Givaudan breached the confidentiality provision.

The court limited the fee inquiry to work connected to the contract claim. The plaintiffs’ failure on the trade-secret claims did not eliminate their entitlement to fees for the contract dispute because the agreement’s fee-shifting provision applied to actions concerning a breach of that agreement.

Reasonableness of the Requested Amount

The court found that the attorneys’ average discounted hourly rates were reasonable. However, it reduced the senior paralegal’s hourly rate to $200 because the requested rates exceeded rates commonly approved for paralegal services in the district.

The court also found that the billing records made it difficult to determine how much work involved the contract claim. The law firm had issued combined monthly invoices for five related cases without expressly allocating hours among them. The records also combined work on the contract claim with work on the unsuccessful trade-secret claims and with work in another federal case that had been tried together with this case.

The court reduced the recoverable fees by category. It awarded $33,147.42 for Category 1, $71,418.01 for Category 2, and $7,629.32 for Category 3. It awarded $5,452.93 in nontaxable expenses. Before the final reduction, these amounts totaled $117,647.68.

Finally, the court applied an additional 10-percent reduction because the plaintiffs had sought substantial damages but obtained only $1, and their damages calculations were speculative. The court awarded $105,882.91 in total attorneys’ fees and expenses.

Disposition

Judge John G. Koeltl granted the plaintiffs’ motion for attorneys’ fees and costs and awarded them the reduced sum of $105,882.91. The Clerk was directed to close the fee-motion docket entry. This opinion addressed the fee request, not the underlying trade-secret and contract claims, which had been resolved in the earlier trial ruling.