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National Collegiate Athletic Association v. Kizzang LLC

United States District Court, S.D. Indiana, Indianapolis Division

May 17, 2018

National Collegiate Athletic Association, Plaintiff,
v.
Kizzang LLC and Robert Alexander, Defendants.

          ORDER

          Hon. Jane Magnus-Stinson, Chief Judge

         In March 2017, Plaintiff National Collegiate Athletic Association (the “NCAA”) initiated this lawsuit against Defendants Kizzang LLC (“Kizzang”) and Robert Alexander, the founder and owner of Kizzang, for trademark infringement, trademark dilution, and unfair competition related to Defendants' alleged use of the marks “FINAL 3” and “APRIL MADNESS.” On November 7, 2017, the Court denied Defendants' Motion to Dismiss and granted the NCAA's Request for Entry of Default based on Defendants' failure to timely answer or otherwise plead to the Complaint. [Filing No. 73.] Then, on January 18, 2018, the Court granted the NCAA's Motion for Default Judgment and Motion for Permanent Injunction. [Filing No. 87.] In its January 18, 2018 Order, the Court found that this is an “exceptional case” which entitles the NCAA to an award of its attorneys' fees, and set a schedule related to any fee motion the NCAA should file. [Filing No. 87.] The NCAA has filed its Motion for Attorneys' Fees, [Filing No. 93], which is now ripe for the Court's decision.

         I.

         Background[1]

         On March 8, 2017, the NCAA filed its Complaint in which it alleged that Defendants “are in the business of marketing and providing nationwide Internet-based promotions that award prizes for predicting the results of sporting events, including the results of college basketball games played by and between NCAA member schools, and in particular games played during the NCAA's Division I Men's Basketball Championship.” [Filing No. 1 at 5.] It alleged that Defendants used the marks FINAL 3 and APRIL MADNESS in connection with their Final Four-based contests and “continue offering goods and services using the FINAL 3 and APRIL MADNESS marks via webpages and mobile-telephone applications….” [Filing No. 1 at 6-7.] The NCAA alleged that Kizzang has applied for federal trademark registration for FINAL 3 and APRIL MADNESS with the United States Patent and Trademark Office (“USPTO”). [Filing No. 1 at 7.]

         The NCAA set forth claims for: (1) trademark infringement under 15 U.S.C. § 1114; (2) trademark infringement under 15 U.S.C. § 1125(a); (3) trademark dilution under 15 U.S.C. § 1125; and (4) unfair competition. [Filing No. 1 at 8-11.] The NCAA filed a Motion for Preliminary Injunction on March 9, 2017, requesting that the Court preliminarily enjoin Defendants from the acts set forth in the request for relief contained in the Complaint. [Filing No. 5.] Seven days later, the Court entered a Stipulated Order, submitted on a motion by all parties, ordering that: (1) “[n]either Kizzang or Alexander, nor any of their officers, agents, servants, employees or attorneys, or anyone acting in concert with any of them, will use the marks FINAL 3 (or THREE) or APRIL MADNESS or any similar marks, in connection with any basketball themed contest, promotion or service in 2017”; (2) the NCAA's Motion for Preliminary Injunction is withdrawn without prejudice; and (3) “Defendants, having been served with the Complaint, shall answer by June 15, 2017.” [Filing No. 20.] The June 15, 2017 answer deadline was later extended to July 15, 2017. [Filing No. 28.]

         The July 15, 2017 deadline came and went without an answer or pleading from Defendants, and on July 21, 2017, the NCAA filed its Request for Entry of Default. [Filing No. 30.] Defendants responded to the Request for Entry of Default on August 10, 2017, [Filing No. 36], and filed a Motion to Dismiss or, in the alternative, to transfer the case to the United States District Court for the District of Nevada on August 31, 2017 - more than six weeks after the July 15, 2017 responsive pleading deadline, [Filing No. 50; Filing No. 51].

         On November 7, 2017, the Court denied Defendants' Motion to Dismiss as to Defendants' personal jurisdiction argument, denied as moot the remainder of the Motion to Dismiss, and granted the NCAA's Request for Entry of Default. [Filing No. 73.] Shortly thereafter, the NCAA filed a Motion for Default Judgment, [Filing No. 76], and a Motion for Preliminary Injunction, [Filing No. 78]. The Court granted both motions on January 18, 2018, and specifically found that the circumstances present made this an “exceptional case” such that the NCAA is entitled to attorneys' fees under the Lanham Act. [Filing No. 87 at 18-19.] The NCAA then filed a Motion for Attorneys' Fees. [Filing No. 93.]

         II.

         Standard of Review

         The Lanham Act provides for the recovery of attorneys' fees in “exceptional cases.” 15 U.S.C. § 1117(a) (“The court in exceptional cases may award reasonable attorney fees to the prevailing party”). The Court has already found that this case is an “exceptional” one, entitling the NCAA to attorneys' fees. [Filing No. 87 at 18-19.] District courts have wide discretion when awarding attorneys' fees under the Lanham Act. Dobbs v. DePuy Orthopedics, Inc., 842 F.3d 1045, 1048 (7th Cir. 2016) (appellate court's review of district court's award of attorneys' fees is “‘highly deferential' because the district court is in the best position to determine the reasonableness of an award for work done on litigation in that court”) (quoting Montanez v. Simon, 755 F.3d 547, 552-53 (7th Cir. 2014)); S Industries, Inc. v. Centra 2000, Inc., 249 F.3d 625, 627 (7th Cir. 2001) (“Under the Lanham Act, an award of attorneys fees is committed to the trial court's sound discretion, ” and on appeal, the court of appeals “review[s] a grant of attorney fees to a prevailing defendant under the Lanham Act only for clear error”).

         The Court “begins the fee calculation by computing a ‘lodestar': the product of the hours reasonably expended on the case multiplied by a reasonable hourly rate.” Montanez, 755 F.3d at 553. The lodestar calculation produces a “presumptively reasonable fee, ” which may be adjusted based on factors not accounted for by the award calculation. Id. (citing Hensley v. Eckerhart, 461 U.S. 424, 434 (1983)). The movant bears the burden of proving that the requested hourly rate is reasonable and “‘in line with those prevailing in the community.'” Pickett v. Sheridan Health Care Center, 664 F.3d 632, 640 (7th Cir. 2011) (quoting Blum v. Stenson, 465 U.S. 886, 895 n.11 (1984)). The best evidence is “the amount the attorney actually bills for similar work.” Montanez, 755 F.3d at 553 (internal quotation omitted). A movant may also prove the reasonableness of a requested rate with, for example, evidence of attorneys' fee awards in previous cases and evidence of the rates of similarly experienced attorneys performing similar work. Id.Not all evidence should be treated equally, however. Courts may properly discount “conclusory affidavits from attorneys merely opining on the reasonableness of another attorney's fee, ” evidence “involv[ing] different markets, ” and prior awards “based on compromises between parties.” Id.(internal alterations and quotations omitted). Moreover, “‘while evidence of fee awards in prior similar cases must be considered by a district court as evidence of an attorney's market rate, such evidence is not the sine qua non of that attorney's market rate - for each case may present its own special set of circumstances and problems.'” Pickett, 664 F.3d at 646 (quoting Uphoff v. Elegant Bath, Ltd., 176 F.3d 399, 408 (7th Cir. 1999)). Thus, while the Court may not ignore fee awards from other cases, the Court is not bound by such determinations, Spegon v. Catholic Bishop of Chi., 175 F.3d 544, 557 (7th Cir. 1999), particularly where a fee award lacks an “explanation as to how the court[ ] had arrived at [particular] rates.” Pickett, 664 F.3d at 643 n.4.

         Should the plaintiff establish that the requested rates are within the prevailing community rate, the burden shifts to the defendant to demonstrate “a good reason why a lower rate is essential.” Id. at 640 (internal quotation omitted). A defendant must offer at least some evidence to rebut a plaintiff's showing of a reasonable hourly rate, and may do so by pointing to market data, lower prior awards for the plaintiff's attorney, and past awards for other comparable attorneys in the market. Id. at 647. If the plaintiff does not meet the burden of proving that the requested rates are appropriate, the Court may independently determine an appropriate rate. Montanez, 755 F.3d at 553.

         “The Supreme Court has consistently held that the interest in uniformity of fee awards is not great enough to justify closer appellate scrutiny - indeed, the Court has said that there is hardly any ‘sphere of judicial decisionmaking in which appellate micromanagement has less to recommend it.'” Id. (quoting Fox v. Vice, 563 U.S. 826, 838 (2011)). “[T]rial courts need not, and indeed should not, become green-eyeshade accountants.” Fox, 563 U.S. at 838. Rather, “[t]he essential goal…is to do rough justice” and to avoid allowing the fee determination to “result in a second major litigation.” Id. (internal quotation omitted).

         III.

         Discussion

         In support of its Motion for Attorneys' Fees, the NCAA argues that it has incurred $242, 213.55 in attorneys' fees, and that those fees are reasonable in light of the history of this case. [Filing No. 94 at 2-4.][2] The NCAA argues that each attorney that worked on the case expended a reasonable amount of time, and that their rates were reasonable. [Filing No. 94 at 5-8.] It also notes that some of the attorneys have been representing the NCAA as litigation counsel for many years, and have “developed efficiencies in [their] practice due to [their] familiarity with the NCAA's intellectual property rights, as well as [their] relationships with the NCAA's in-house counsel and other key personnel.” [Filing No. 94 at 6.] The NCAA contends that local counsel and several paralegals spent a reasonable amount of time on this case, and that their rates are reasonable. [Filing No. 94 at 7-8.] Finally, the NCAA notes that, although the litigation ended with a default judgment, it involved “preparing two motions for preliminary injunction (both solely due to Defendants' intent to infringe on the NCAA's intellectual property rights), a motion for entry of default, a motion for entry of default judgment, and a motion for permanent injunction. The NCAA also had to oppose (successfully) Defendants' motion to dismiss and motion for evidentiary hearing, both of which were needlessly filed after entry of default.” [Filing No. 94 at 8.]

         In their response, Defendants argue that the attorneys' fees the NCAA seeks are unreasonable. First, they argue that the NCAA provided an estimate of its attorneys' fees for settlement purposes in January 2018 of $195, 000, and that “23 days later, …the total amount of the NCAA's fee request increased by nearly 25%, to $242, 213.55….” [Filing No. 98 at 6-7.] Second, Defendants assert that the NCAA's counsel's invoices reflect duplicative, excessive, and/or unnecessary time entries, including: (1) work on the NCAA's opposition to Defendants' Motion to Dismiss; (2) excessive time spent on research; (3) vague time entries; (4) preparation of never-filed motions for default judgment and a second motion for preliminary injunction; (5) time spent communicating between professionals; (6) time reflecting one attorney or paralegal's review of another attorney or paralegal's work; and (7) time reflecting administrative and/or secretarial work. [Filing No. 98 at 7-12.] Third, Defendants contend that the NCAA's fee request is “improperly based on higher rates from distant markets.” [Filing No. 98 at 13-15.] Defendants request that the NCAA's Motion for Attorneys' Fees be denied in its entirety or, in the alternative, that it be reduced by $47, 213.55 (the difference between the amount requested and the amount provided as an estimate in January 2018); that all administrative and secretarial tasks be removed from the bill; that all time spent on briefs that were never filed be stricken; that a negotiated rate of $234/hour be applied to all counsel; that all time spent between communicating professionals be reduced by 75%; and that “the remaining amount be reduced by at least 50% to reflect duplicative and excessive time.” [Filing No. 98 at 16.]

         In its reply, the NCAA argues that the attorneys' rates represent the actual market rate for each attorney, and that the Court should “conclude that counsel's decisions on how to spend time litigating a matter were reasonable in the absence of particularized evidence to the contrary.” [Filing No. 99 at 5.] The NCAA also contends that the amount of time spent is reasonable if the client paid for them, and that it has paid the invoices. [Filing No. 99 at 5.] The NCAA argues further that it should not be penalized for using its longtime counsel to continue litigating against Kizzang, and that the attorneys' hourly rates should not be adjusted to reflect the Indianapolis market. [Filing No. 99 at 6-7.] The NCAA asserts that many of the tasks that Defendants object to were necessitated by Defendants' litigation tactics - including filing a Motion to Dismiss while the NCAA's Motion for Clerk's Entry of Default was pending. [Filing No. 99 at 8-9.] It notes that Defendants' Motion to Dismiss involved many different issues which required legal research, and that the only unfiled motion for which the NCAA seeks fees is the NCAA's second Motion for Preliminary Injunction, which had to be prepared because Defendants would not agree to extend the stipulated preliminary injunction. [Filing No. 99 at 10.] Finally, the NCAA argues that the estimate of attorneys' fees it provided in January 2018 is not binding. [Filing No. 99 at 11.]

         The Court will address in turn the three main issues that Defendants raise in connection with the NCAA's Motion for Attorneys' Fees - the discrepancy between estimated fees and actual fees sought; the amount of hours spent (and the contentions that work was duplicative, excessive, and/or unnecessary); and the hourly billable rates. The Court notes at the outset that Defendants do not contest the time spent by the NCAA's local counsel, Faegre Baker Daniels LLP (“Faegre”), focusing only on time spent by attorneys and paralegals at Loeb & Loeb LLP (“Loeb”) and on the hourly rates of attorneys and paralegals at Loeb and, to some extent, Faegre. The Court will consider Defendants' arguments accordingly.

         A. Discrepancy Between Fee Estimate and Fees Ultimately Sought

         Defendants point to emails between their counsel and the NCAA's counsel in January 2018 which related to the possibility of settling the attorneys' fee issue. The string of emails began with Defendants' counsel stating “just so I am clear, what is the exact amount of attorneys' fees that NCAA plans to claim for reimbursement? Also, please send us your itemized bills reflecting the total so that we can use that information to have a substantive discussion with our client before the next conference with the court on 2/2.” [Filing No. 98-1 at 4.] Counsel for the NCAA responded:

[W]e are not going to send the bills before you are able to report back to the Court the extent of your client's willingness to entertain a stipulation of a substantial amount of attorneys' fees. We understand that the stipulated amount [would] be subject to review of rates and hours, but the Court was clear that before undertaking the process of such review Defendants need to express their position on our proposal to seek such a stipulation in lieu of a motion. Based on prior positions your clients have taken, we are skeptical that such a negotiation would be productive and are disinclined to do it without some assurance to the contrary.

[Filing No. 98-1 at 3-4.]

         Defendants' counsel responded that they could not “even meaningfully consider a stipulation unless we know the total amount of attorneys' fees, as well as the corresponding number of hours and your rates. Are you going to provide those figures? It not, then what, exactly, are you asking our clients to stipulate to?” [Filing No. 98-1 at 3.] Counsel for the NCAA responded “I mentioned the amount on the call - about $195, 000. If you can't meaningfully consider the stipulation under the circumstances that probably tells us what we need to know. You ...


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