Opinion
No. 02 Civ. 8542 (RO).
July 28, 2004
OPINION AND ORDER
Before me is plaintiffs' motion for attorney's fees and expenses pursuant to the Lanham Act 15 U.S.C. § 1117(a), New York General Business Law § 349(h), and the bad faith exception to the American Rule following a partially directed verdict and a jury verdict in plaintiffs' favor.
Defendant DPF is a small non-profit organization that focuses on dance scholarship. DPF (and others) awarded "The de la Torre Bueno Prize" in honor of one of its founding members, Jose Rollins de la Torre Bueno, beginning in 1974. Mr. Rollins' daughter, Mary de la Torre Bueno ("Ms. Bueno"), had been a member of DPF's board for many years. In March, 2002, Ms. Bueno resigned from the board via a letter from her attorney stating that she was "very unsatisfied with the manner in which DPF has handled the de la Torre Bueno Prize . . ." and she "insists that DPF immediately stop using her family name." DPF's counsel responded to the letter on April 12, 2002 stating that the board accepted her resignation and advised that her "desire to have the Foundation . . . stop using her family name is granted effective immediately" and that "[Ms. Bueno's] family name will no longer be associated in any way with the Foundation, its work or its prizes."
Despite the April 12, 2002 letter in which the board agreed to Ms. Bueno's request to "stop using her family name," DPF reneged on its acquiescence and announced that it was going to award the "Jose Rollins de la Torre Bueno Prize in Dance Literature." This decision was apparently in response to DPF learning that a competing dance organization called the Society of Dance History Scholars would be administering the "de la Torre Bueno Prize."
DPF's muleish decision to renege on the April 12 letter (apparently spear-headed by its president Donald McDonagh) led to litigation and eventually a jury trial in which the jury awarded plaintiffs a total of $20,050.00 in compensatory damages and specifically found that DPF "willfully intended to dilute [plaintiffs' mark the `De La Torre Bueno Prize']." See Jury Verdict Form ¶ 2. I note that the decision to back-track on the April 12 letter comes on the heels of a competing dance organization's decision to award "The de la Torre Bueno Prize."
During oral argument on the attorney's fees motion, the Court questioned Mr. McDonagh on DPF's determination to add the "Jose Rollins" name to the award:
COURT: [W]hen you made that determination, did you have an awareness that that was going to cost your small organization which you treasured and you brought along was going to cost it $100,000?
THE WITNESS: No.
* * *
THE COURT: Did there come some point where one night, you and your good wife were . . . [having] a cup of coffee after dinner. And one of you says to the other: You know, Don, or you know, Leslie, this thing, the expenses of this thing are going through the roof. Did you ever say that to each other?
THE WITNESS: I said it to many people.
THE COURT: Well, I'm asking you: Did you say it to her?
THE WITNESS: Yes.
THE COURT: And then did you talk about, well, I guess you got no choice to go forward, or what did you say?
THE WITNESS: Well, when there were $500,000 worth of damages being requested, what choice did we have, your Honor?
THE COURT: Get rid of the name. You could have gotten rid of the name and walked away. . . . It seems to me she would have taken the name. You never talked about giving the name, please work it out?
Tr. 51-52.
This litigation was a rather extravagant detour that has essentially depleted the funds of the organization; DPF had almost $150,000 in the bank at the beginning of the litigation and now — essentially through the actions of Mr. McDonagh — DPF has squandered nearly all of its money.
Plaintiffs have moved for attorney's fees and expenses under various statutes. The Lanham Act, 15 U.S.C. § 1117(a), provides that "[t]he court in exceptional cases may award reasonable attorneys fees to the prevailing party." The Second Circuit has held the following circumstances satisfy the "exceptional cases" requirement including: (1) where the violation of rights was willful, Bambu Sales, Inc. v. Ozak Trading Inc., 58 F.3d 849, 854 (2d Cir. 1995); (2) where fraud or bad faith was involved,Twin Peaks Productions v. Publications International, Ltd., 996 F.2d 1366, 1383 (2d Cir. 1993) or (3) where the defendant engaged in misconduct during litigation by submission of fraudulent documents. Patsy's Brand, Inc. v. I.O.B. Realty, Inc., 317 F.3d 209, 221-222 (2d Cir. 2003). The Lanham Act also provides for the recovery of expenses.
I find that plaintiffs satisfy the "exceptional case" requirements and are thus entitled to attorney's fees under the Lanham Act. First, the jury explicitly found that DPF's violation of plaintiff's rights under Section 43 of the Lanham Act were willful (Jury Verdict Form ¶ 2). This alone is sufficient to satisfy the "exceptional case" requirement. Bambu Sales, Inc. v. Ozak Trading Inc., 58 F.3d 849, 854 (2d Cir. 1995).
In addition, fraud and bad faith are also present, both in terms of pre-litigation conduct of DPF and its conduct during litigation. For example, DPF, throughout the case, adamantly asserted that DPF's president, Mr. McDonagh, neither received a draft nor a final version of the April 12 letter. Mr. McDonagh's stead-fast assertions, however, were directly contradicted by testimony from Mr. Striggles (DPF's attorney who wrote the April 12 letter), DPF's treasurer Carl Taggersell, and documentary evidence — including fax confirmation pages — which established that Mr. Striggles had faxed copies of his draft letter to Mr. McDonagh and Mr. Taggersell. (See also Order and Opinion dated February 17, 2003.) Further, as described above, DPF's decision to renege on the agreement to stop using the family name suggests bad faith.
In addition to the Lanham Act, plaintiffs are also entitled to attorney's fees under New York General Business Law § 349(h) and to attorney's fees and costs under the bad faith exception to the general American Rule that parties bear their own attorney's fees. Chambers v. NASCO, Inc., 501 U.S. 32 (1991).
Plaintiffs have requested approximately $190,000 in attorney's fees and expenses. I find that plaintiffs are entitled to award in the amount of $95,000 — which is approximately the same amount that the defense lawyer was paid in this case.
Submit order on notice.