2014-00170784-CU-BC

Ca Fire Roasted, LLC vs. General Mills Operations, LLC

Nature of Proceeding: Motion for Attorney Fees

Filed By: Thomas, Michael J.

Plaintiff California Fire-Roasted LLC’s (“Plaintiff”) motion for attorneys’ fees is GRANTED, in part, and DENIED, in part, as follows.

Overview

On 11/14/2017, the Court granted Plaintiff’s motion for summary adjudication on its breach of contract cause of action against Defendant Olam West Coast, Inc. as successor-in-interest to Olam Tomato Processors, Inc. (“Defendant”). The Court concluded that Defendant failed to satisfy its burden to show that there was no triable issue of material fact that Defendant breached the License and Consent Agreements (collectively “Agreements”) by: (1) using Plaintiff’s know-how encompassed in the GM Roaster and Roaster No. 2, and (2) failing to pay Plaintiff the license fees for products made for customers other than General Mills.

Judgment of $21,474,991.17 was eventually entered on 2/15/2018 in Plaintiff’s favor.

Defendant has now appealed the judgment.

Plaintiff’s request for judicial notice in support of and in reply is granted.

Pursuant to Civil Code §1717, Plaintiff moves for $1,778,546.37 as the prevailing party on its motion for summary adjudication. Paragraph 11.11 of the License Agreement provides:

If any party hereto commences an action or arbitration against another

party to interpret or enforce any terms of this Agreement, or

because of the other party’s breach of any provision in this Agreement,

the losing party shall pay to the prevailing party reasonable attorneys’

fees, costs and expenses, court costs and other

costs of action incurred in connection with the prosecution or defense of such action or arbitration, whether or not the action is prosecuted to a final judgment.

(Declaration of Michael Thomas, Ex. 13.)

Defendant’s arguments regarding enforceability of the License and Consent Agreements

Defendant contends that in granting Plaintiff’s motion for summary judgment, the Court’s interpretation of the Agreements violated the “Doctrine of Patent Misuse” and

renders both agreements unenforceable and void. According to Defendant, because both agreements are unenforceable and void, the prevailing party provision is similarly unenforceable and void.

The Court declines to rule on Defendant’s argument because issues regarding the merits of the litigation are on appeal. The perfecting of an appeal stays proceedings in the trial court upon the judgment or order appealed from or upon the matters embraced therein or affected thereby, including enforcement of the judgment or order, but the trial court may proceed upon any other matter embraced in the action and not affected

by the judgment or order. (CCP § 916(a); see also Varian Medical Systems, Inc. v. Delfino (2005) 35 Cal.4th 180.) To be clear, § 916(a) stays all further trial court proceedings “upon the matters embraced in” or “affected” by the appeal.

“In determining whether a proceeding is embraced in or affected by the appeal, we must consider the appeal and its possible outcome in relation to the proceeding and its possible results.'[W]hether a matter is ’embraced’ in or ‘affected’ by a judgment [or order] within the meaning of [section 916] depends on whether the postjudgment [or postorder] proceedings on the matter would have any effect on the ‘effectiveness’ of the appeal.'” (Varian, supra, 35 Cal.4th at 189 (citations omitted).) “If so, the proceedings are stayed; if not, the proceedings are permitted.” (Id.) “[T]he purpose of the automatic stay rule it ‘to protect the appellate court’s jurisdiction by preserving the status quo until the appeal is decided. The rule prevents the trial court from rending an appeal futile by altering the appealed judgment or order by conducting other proceedings that may affect it.” (Dowling v. Zimmerman (2001) 85 Cal.App.4th 1400, 1428.)

Here, the issue of the enforceability and validity of the Agreements is a matter “embraced” in or “affected” by the appeal. Indeed, if the Court were to find that the License and Consent Agreements were unenforceable, the ruling would render the appeal futile.

Attorney’s Fees to oppose Defendant’s two Inter Partes Review (“IPR”) Proceedings

Plaintiff seeks $146,184.30 for attorney’s fees paid to file two preliminary responses to Defendant’s two IPR petitions. As background, in October 2016, Defendant filed two IPR reviews with the U.S. Patent and Trademark Office (“PTO”) to determine the validity of U.S. Patent No. 6,099,882 (“882 Patent”). In December 2016, Defendant filed a motion to stay the litigation pending the IPR. The Court denied Defendant’s motion to stay the litigation. The Court concluded that a stay was not warranted at the time because trial was scheduled for October 17, 2017 and if the Patent Trial and Appeal Board (“PTAB”) granted review, a final determination of the validity of the patent (including appeals) would not be concluded until April 2020. Thus, if a stay were granted the adjudication of Plaintiff’s claims, including those not involving the 882

Patent, would be significantly delayed. The Court explained that the more prudent approach would be to wait until the PTAB determined whether it will grant the petition for IPR, then Defendant may re-file the motion. Ultimately, the PTO denied institution of both petitions. (Declaration of Michael Thomas, ¶¶ 320-325.)

Relying on Children’s Hospital & Medical Center v. Bontá (2002) 97 Cal.App.4th 740, Plaintiff insists that “[b]ecause the Court’s order indicated that institution of IPR proceedings could have been relevant to whether the Court stayed this action, and because Olam’s position was that the entire contract claim hinged upon the validity of CFR’s patent, it was imperative for CFR to vigorously oppose the IPRs. Doing so was not only absolutely necessary to the instant action, but was clearly “closely related” to this action.” (Motion, 8:22-26.) Children’s Hospital does not assist Plaintiff because the prevailing party sought attorneys’ fees pursuant to CCP §1021.5, otherwise known as the private attorney general doctrine. CCP §1021.5 provides, in part, “[u]pon motion, a court may award attorneys’ fees to a successful party against one or more opposing parties in any action which has resulted in the enforcement of an important right affecting the public interest if: (a) a significant benefit, whether pecuniary or nonpecuniary, has been conferred on the general public or a large class of persons,
(b) the necessity and financial burden of private enforcement, or of enforcement by one public entity against another public entity, are such as to make the award appropriate, and (c) such fees should not in the interest of justice be paid out of the recovery, if any.”

Nor is Deep Sky Software, Inc. v. Southwest Airlines Co. (S.D.Cal. Aug. 19, 2015, No. 10-cv-1234-CAB (KSC)) 2015 U.S.Dist.LEXIS 178030 helpful to Plaintiff. In Deep Sky, attorney’s fees were awarded pursuant to 35 U.S.C. §285 which provides that in a patent infringement case “the court in exceptional cases may award reasonable attorney fees to the prevailing party.”

In opposition, Defendant notes that Plaintiff here requests attorney’s fees pursuant to Civil Code §1717 and Paragraph 11.11. Thus, Defendant advances that Plaintiff is not entitled to attorney’s fees because the IPR was not “an action. . . to interpret or enforce any terms of this Agreement” and “does not apply to any collateral action or proceeding that is conceivably related to the subject matter of the dispute.” (Opposition, 16:1-3.)

In reply, Plaintiff advances that Paragraph 11.11 is broader than Defendant suggests and that the phrase “the losing party shall pay to the prevailing party reasonable attorneys’ fees, costs and expenses, court costs and other costs of action incurred in connection with the prosecution or defense of such action or arbitration” entitles it to attorneys’ fees.

Plaintiff’s argument it too attenuated. The IPR proceeding was not “an action. . . to interpret or enforce any terms of this Agreement.” While attorneys’ fees incurred to oppose Defendant’s motion to stay were fees “incurred in connection with the

prosecution or defense,” it is a stretch to construe the language to include fees incurred to respond to Defendant’s IPR petitions.

The Court, therefore, declines to award $146,184.30 for Plaintiff’s opposition to the IPR petitions.

Attorney’s Fees for Mediation

In the “Introduction” section of Defendant’s opposition, Defendant states that the “pre-lawsuit mediation” provision fall outside the scope of Paragraph 11.11. This is the only portion of the opposition that mentions mediation. Defendant fails to provide any analysis regarding mediation fees. Additionally, in Section 11.2 of the License Agreement the parties agreed to mediation before resorting to the court. Thus, the Court will not reduce the attorney’s fees incurred for mediation.

Remaining Attorney’s Fees

Plaintiff requests $1,632,362.07 in attorney’s fees unrelated to the IPR. Defendant does not dispute that Plaintiff is the prevailing party. It also does not oppose the hourly rate for Plaintiff’s attorneys. Instead, Defendant urges the Court to reduce the fee award to account for block billing and vague time entry practices, and for post-summary adjudication work.

Block Billing

Defendant does not identify which entries to which takes issue. At minimum, Defendant asks the Court to strike invoices from October 2016 through April 2017 which include time entries for both the IPR proceeding and this action. The Court need not strike the invoices because Plaintiff has identified which attorneys’ fees were incurred in relation to the IPR proceeding and, as seen above, has separately requested fees for the IPR proceeding.

There is no precedent that establishes that block billing is perforce entirely inappropriate. (See Heritage Pacific Financial, LLC v. Monroy (2013) 215 Cal.App.4th 972, 1010.) Nevertheless, counsel requesting an award of attorney fees must define the scope of his or her work to a sufficient degree of specificity in billing entries “so as to meaningfully enlighten the court of those [entries] related to” the claims upon which the attorney’s client prevailed. (Bell v. Vista Unified School Dist. (2000) 82 Cal.App.4th 672, 689.) In the absence of this requisite specificity, the trial court must exercise its discretion in “assigning a reasonable percentage to the entries, or simply cast them aside.” (Id.) “Trial courts retain discretion to penalize block billing when the practice prevents them from discerning which tasks are compensable and which are not.” ( Heritage Pacific, supra, at 1010; see Christian Research Institute v. Alnor (2008) 165 Cal.App.4th 1315, 1324-1325.) “[C]ounsel may not submit a plethora of noncompensable, vague, block-billed attorney time entries and expect particularized,

individual deletions as the only consequence.” (Christian Research Institute, supra, at 1329.) “It is the obligation of the party (and attorney) seeking the fee award ‘to prune the fee request to comply with the law,’ and the party (and attorney) cannot ‘transfer that responsibility onto the trial court.'” (Mountjoy v. Bank of America, N.A. (2016) 245 Cal.App.4th 266, 280.)

As noted above, Defendant fails to identify any specific instance of imprecise block billing. The Court observes that it should not have to do Defendant’s job in identifying entries that may potentially be improperly block billed and for which compensation could be denied. Further, the Court’s random sampling of various billing entries reveals that the description of the work performed is sufficiently clear – and the billing time assigned reasonable – to conclude that the time is compensable.

The Court declines to reduce these fees.

Post-Summary Adjudication Work

Defendant further requests a reduction for post-summary adjudication work because “CFR created unnecessary work due to certain unreasonable positions it took.” Such work includes Defendant’s motion for judgment on the pleadings, motion to withdraw the bond in lieu of attachment, and Plaintiff’s concurrent motion for costs of proof.

The Court declines to reduce the fees for such work as it is not convinced that Plaintiff took “unreasonable positions”, thus creating “unnecessary work.”

Disposition

Plaintiff’s motion for attorneys’ fees is GRANTED in the amount of $1,632,362.07.