Gust, Inc. v. AlphaCap Ventures, LLC
1:15-cv-06192
S.D.N.Y.Jul 6, 2017Background
- Gust, Inc. obtained an award of over $500,000 in fees and costs against AlphaCap Ventures, LLC and its counsel in December 2016.
- AlphaCap filed on January 3, 2017: (1) a motion for reconsideration of the fee award and (2) a Section 1927 motion seeking fees against Gust’s counsel; the Court stayed enforcement pending resolution.
- Gust moved (Jan. 24, 2017) to lift the stay or require a bond, and sought additional attorneys’ fees pursuant to 28 U.S.C. § 1927 and the Court’s inherent authority for work responding to AlphaCap’s post-judgment motions.
- The Court denied AlphaCap’s reconsideration motion (separately) and here addresses both fee motions; it finds the record shows AlphaCap’s counsel – not Gust’s – had unreasonably multiplied the proceedings.
- The Court rejects AlphaCap’s contentions that Gust acted vexatiously by refusing to settle, by filing a New York counterclaim, or by pursuing claims later dismissed as moot or on the merits.
- The Court found certain statements in AlphaCap’s reconsideration papers troubling but concluded they did not warrant additional fee awards; both fee motions were denied and the stay was lifted.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether AlphaCap (movant) is entitled to fees under 28 U.S.C. § 1927 against Gust’s counsel | AlphaCap: Gust and its counsel multiplied proceedings, refused a settlement without fee reimbursement, and pursued objectively frivolous claims | Gust: It was not required to dismiss a suit it reasonably believed frivolous; filings were not objectively frivolous and many claims were moot due to AlphaCap’s Covenant Not to Sue | Denied — Court found AlphaCap’s attorneys, not Gust, were responsible for unreasonable multiplication; AlphaCap’s arguments (including untimely Rule 11 points) fail |
| Whether Gust is entitled to additional fees (Section 1927 / inherent power) for responding to AlphaCap’s motions and for the stay | Gust: Sought $57,255 for work responding to AlphaCap’s motions and addressing the stay; argued awardable under § 1927 and inherent authority due to AlphaCap’s bad-faith litigation conduct | AlphaCap: Opposed additional fee award; argued its motions were not so baseless as to justify further sanctions | Denied — Although some statements by AlphaCap were concerning, the Court declined to find the conduct rose to the level warranting additional fees; response work was not sanctionable |
Key Cases Cited
- Oliveri v. Thompson, 803 F.2d 1265 (2d Cir. 1986) (attorney not liable for adversary’s fees merely because adversary prevails)
- Ransmeier v. Mariani, 718 F.3d 64 (2d Cir. 2013) (courts may exercise inherent power to sanction bad-faith litigation conduct)
- Hirschfeld v. Bd. of Elections in City of N.Y., 984 F.2d 35 (2d Cir. 1993) (bad faith may be found in conduct during litigation and supports fee awards under inherent power)
- DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014) (Federal Circuit decision relied upon by AlphaCap to justify patent validity)
- Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014) (Supreme Court decision central to patent-eligibility analysis)