Sharbat v. Iovance Biotherapeutics, Inc.

Background

The plaintiffs sued Iovance Biotherapeutics, Inc. over an alleged finder’s-fee agreement. After earlier rulings dismissed other claims and the court granted summary judgment to Iovance on the remaining unjust-enrichment and indemnity claims, the plaintiffs appealed. This opinion addressed three matters that remained before the district court: the amount of sanctions previously imposed under Federal Rule of Civil Procedure 11, Iovance’s request for attorney’s fees under the agreement, and Iovance’s request for an appeal bond.

Rule 11 Sanctions

The court had previously ordered the plaintiffs to pay Iovance’s reasonable attorney’s fees incurred in connection with Iovance’s sanctions motion but had not determined the amount. Iovance requested $51,005 for 103.2 hours of work. The plaintiffs argued that the hours and hourly rates were excessive and that the billing records were inadequate.

The court found the hours reasonable, approved the requested hourly rates, and granted Iovance’s motion for $51,005 in attorney’s fees connected to the Rule 11 motion.

Attorney’s Fees Under the MBA Agreement

Iovance also sought $598,100.70 under Section 9.8 of the MBA Agreement and California Civil Code § 1717. Section 9.8 provides that the prevailing party in an action to enforce or interpret the agreement may recover reasonable attorney’s fees. The plaintiffs argued that they were not parties to the agreement and that fees should be limited to work on a contract claim.

The court ruled that Iovance was entitled to seek fees. It reasoned that the plaintiffs had pursued their claims on the theory that they were third-party beneficiaries of the agreement. If they had prevailed on that theory, they could have attempted to invoke the agreement’s fee provision. The reciprocity principle in Section 1717 therefore allowed Iovance, the prevailing party, to invoke the same provision.

The court also ruled that the plaintiffs’ breach-of-contract, unjust-enrichment, and indemnity claims against Iovance were all sufficiently related to the agreement to qualify as actions “on a contract” for purposes of Section 1717. The court found most of Iovance’s billing rates and time reasonable, but reduced the hourly rate for attorney Chinelo Ikem to $355 and the hourly rate for paralegal Regina Dukach to $200. Because the submitted billing records did not allow the court to calculate the revised total, the court granted the fee motion but directed Iovance to resubmit billing records reflecting those reductions and excluding entries for which it was not seeking payment.

Appeal Bond

Iovance requested a $50,000 bond under Federal Rule of Appellate Procedure 7 to secure payment of appeal costs. The court considered the plaintiffs’ ability to pay, the risk of nonpayment, the apparent strength of the appeal, and alleged bad-faith or vexatious conduct.

The court found that the plaintiffs had not shown that they could not afford a bond, that there was a high risk of nonpayment, that the appeal was unlikely to succeed, and that prior Rule 11 sanctions supported Iovance’s concerns about the plaintiffs’ conduct. The court granted the motion and ordered the plaintiffs to post a $50,000 appeal bond.

Disposition

Judge Edgardo Ramos granted all three of Iovance’s applications: the request for $51,005 in Rule 11 attorney’s fees, the request for attorney’s fees under the MBA Agreement and Section 1717 subject to corrected billing submissions, and the request for a $50,000 appeal bond. The court also directed the Clerk to issue the bill of costs and terminate the relevant motions.