867 F. Supp. 2d 427
S.D.N.Y.2012Background
- Burlington was found in contempt for violating a 1987 consent injunction against selling Fendi-trademarked merchandise; ordered to disgorge profits and pay Fendi's fees.
- Magistrate Judge Dolinger recommended $2,528,768.00 in disgorgement and $541,913.65 in fees; later Amended Judgment totaled $4,657,148.64.
- In 2010, the court granted summary judgment on Fendi’s remaining trademark claims, including treble damages and attorney’s fees, with prejudgment interest on disgorgement.
- A settlement reached December 1, 2010 reduced Fendi’s total relief to $10,050,000 in exchange for dismissal of all claims against Burlington.
- Burlington seeks summary judgment against Ashley Reed Trading, Inc. for indemnity from third-party defendants; the court must determine the proper amount and scope of indemnity.
- Court concludes Ashley Reed is liable for a portion (5.73781%) of certain costs, but not for treble damages; fees must be apportioned pro rata, with prejudgment interest on the indemnity amount.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Scope of indemnity for attorney’s fees and costs | Burlington argues Ashley Reed covers all fees/costs tied to trademark claims. | Ashley Reed contends only proportionate costs/fees tied to its counterfeit goods are indemnifiable. | Indemnity covers attorney’s fees and costs portion, not treble damages. |
| Liability for treble damages under indemnity | Burlington seeks indemnity for the entire damage including treble damages. | Indemnity cannot cover Burlington’s willful acts (treble damages). | Ashley Reed not liable for the treble damages portion. |
| Proportionate allocation of damages among third parties | Ashley Reed should cover 5.73781% of the settlement-amount-related costs and profits. | Indemnity should be apportioned to reflect actual liability and not shift all costs to Ashley Reed. | Ashley Reed liable for 5.73781% of specified components; proportional allocation adopted. |
| Reasonableness and scope of fees awarded | All defense costs related to the trademark claims are indemnifiable. | Fees must be reasonable and proportionate to liability; not 100%. | Fees apportioned proportionately; not 100% coverage by Ashley Reed. |
| Prejudgment interest on the indemnity award | Interest should accrue on the indemnity amount. | Interest should be governed by New Jersey prejudgment rules; not on all components. | Prejudgment interest awarded on $169,227.43 at Rule 4:42-11(a)(ii) simple rate; total $1,632.00. |
Key Cases Cited
- Ramos v. Browning Ferris Indus., Inc., 510 A.2d 1152 (N.J. 1986) (indemnity contracts interpreted under general contract principles; clear language favored)
- United States v. Carrara, 49 F.3d 105 (3d Cir. 1995) (indemnity cannot cover willful acts)
- Interfaith Cmty. Org. v. Honeywell Int’l, Inc., 426 F.3d 694 (3d Cir. 2005) (reasonableness and detailed analysis required in fee awards)
- Grubbs v. Knoll, 870 A.2d 713 (N.J. Super. Ct. App. Div. 2005) (heightened burden to justify attorney’s fees when the award far exceeds recovery)
- SL Indus. v. Am. Motorists Ins. Co., 607 A.2d 1266 (N.J. 1992) (proportionate defense costs; insurer responsibility for costs tied to covered claims)
- Musto v. Vidas, 754 A.2d 586 (N.J. Super. Ct. App. Div. 2000) (equitable basis for prejudgment interest in contract cases)