222 F. Supp. 3d 169
E.D.N.Y2016Background
- Sleepy’s sued Select Comfort asserting ten claims (breach of contract, fraudulent inducement, slander per se, breach of implied covenant, unfair competition, and a Lanham Act §43(a) claim) arising from a retailer agreement and “secret shop” disparagement evidence.
- After a bench trial, Judge Platt granted Select Comfort judgment as a matter of law on all claims; the Second Circuit affirmed in part and vacated in part, and on remand this Court dismissed the remaining claims.
- Select Comfort moved for attorneys’ fees under the Lanham Act § 1117(a); the Court found the case “exceptional” and referred the amount to Magistrate Judge Lindsay.
- Magistrate Lindsay recommended awarding fees and costs of $3,507,388.05 after certain reductions (exclude some counsel’s time, disallow post-dismissal fees, 10% hour reduction, 10% reduction for fee motion time, 50% reduction of travel/meal costs, allow online research).
- Sleepy’s objected, arguing fees should be limited to work on the Lanham Act claim (apportionment) and certain motions’ fees excluded; Select Comfort opposed, arguing claims were intertwined so apportionment was unnecessary.
- The district court adopted most of the R&R but held that apportionment was required; it applied a 25% reduction to account for non-Lanham Act work, yielding a final award of $2,630,541.04.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Entitlement to fees for non-Lanham Act work | Sleepy’s: fees should be limited to work on Lanham Act claim; non-Lanham claims distinct | Select Comfort: claims share common facts/legal theories so fees for all work are recoverable | Court: claims overlap but not "inextricably intertwined"; permit fee recovery for Lanham-related portion only; require apportionment (75% allocated to Lanham work) |
| Standard for apportionment | Sleepy’s: requests exclusion of five specific non-Lanham motions and broader apportionment | Select Comfort: objection is rehashed; apportionment unnecessary because common core of facts | Court: follows Ninth Circuit approach (Gracie) — make a reasonable apportionment unless truly inextricable; applied 25% reduction rather than exact audit |
| Review standard of R&R objections | Sleepy’s: pressed de novo review of apportionment issue | Select Comfort: argued objections merely rehash and should be reviewed for clear error | Court: reviewed apportionment de novo; reviewed other uncontested R&R portions for clear error and adopted them |
| Specific reductions recommended by magistrate | Sleepy’s: urged further exclusions for specific motions and tasks | Select Comfort: opposed further reductions; argued policy favors fee awards in exceptional/bad-faith cases | Court: adopted magistrate’s reductions (exclude certain counsel, post-dismissal fees, percentage reductions) and added 25% apportionment reduction; denied sanctions/inherent-authority award for non-Lanham work |
Key Cases Cited
- Sleepy’s LLC v. Select Comfort Wholesale Corp., 133 F. Supp. 3d 483 (E.D.N.Y. 2015) (district court opinion dismissing remaining claims on remand)
- Sleepy’s LLC v. Select Comfort Wholesale Corp., 779 F.3d 191 (2d Cir. 2015) (Second Circuit opinion affirming in part and vacating in part)
- Gracie v. Gracie, 217 F.3d 1060 (9th Cir. 2000) (requires an apportionment attempt for non-Lanham fees unless claims are inextricably intertwined)
- Hensley v. Eckerhart, 461 U.S. 424 (1983) (framework on apportionment of fees where claims overlap; instructive though under §1988)
- Fox v. Vice, 563 U.S. 826 (2011) (fee-shifting aims for "rough justice," not precise accounting)