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Benihana, Inc. v. Benihana of Tokyo, LLC

United States District Court, S.D. New York

December 22, 2017

BENIHANA, INC., as successor to BENIHANA NATIONAL CORP., Petitioner,
BENIHANA OF TOKYO, LLC, as successor to BENIHANA OF TOKYO, INC., Respondent.

          OPINION & ORDER


         This decision, in this latest in a long-running series of lawsuits between two entities owning aspects of the operations of the Benihana restaurant empire, resolves an application for attorneys' fees and costs. Petitioner Benihana, Inc. ("BI") seeks an order directing respondent Benihana of Tokyo, LLC ("BOT") to pay BI for the fees and costs it reasonably incurred in attempting to enforce a permanent injunction that this Court entered on July 15, 2016, Dkt. 42 (the "Injunction"). On June 14, 2017, following an evidentiary hearing conducted on June 6 and 14, 2017, the Court, in a lengthy bench decision, found BOT in civil contempt for its failure to comply with the Injunction. Dkt. 84. The Court put in place a detailed regime of sanctions to coerce compliance with the Injunction. The Court also ordered that BOT pay the reasonable legal and investigative fees that BI reasonably incurred in connection with its efforts to establish violations of, and obtain compliance with, the Injunction.

         The remaining issue is the amount of the award of fees and costs. BI has requested a total award of $1, 062, 251.34, reflecting fees and expenses across its two law firms, while BOT argues that BI is entitled to no more than $49, 918. Following its close examination of BI's request, the Court holds that although BI reasonably incurred substantial fees and costs in establishing BOT's contempt with the Injunction, to assure reasonableness, BI's request must be pruned. The end result is that BI is awarded a total of $634, 680.04.

         I. Background

         The Court assumes familiarity with the facts and the baroque procedural history of this case and the related litigation between BI and BOT. The Court has summarized these in various decisions and in its June 14, 2017 bench ruling. The Court sets forth here only the background most central to the present fee dispute.

         On September 18, 2015, BI filed a petition seeking the partial confirmation and partial vacatur of an award resulting from an arbitration before the American Arbitration Association between BI and BOT. BOT had initiated that arbitration on January 13, 2014. BOT sought a declaration that, contrary to BI's claim, BOT had not breached the License Agreement between the parties in connection with BOT's operation of a Benihana restaurant in Honolulu, Hawaii. BOT also sought a judgment that BI's termination of BOT under the License Agreement as the franchisee entitled to operate that restaurant was unjustified. On September 18, 2015, the arbitral panel, by a 2-1 vote, issued its award. It found that BOT had committed numerous material breaches of the License Agreement, justifying entry of injunctive relief against BOT, but that, based on the panel's interpretation of the terms of the License Agreement, BI's termination of BOT's license had not been justified.

         On July 15, 2016, the Court confirmed the arbitral award in full. The Court thereby entered, as a court order, the Injunction, which tracked the terms of the injunction embodied in the arbitral award. See Dkt. 42. The Injunction obliged BOT to comply with various aspects of the parties' License Agreement.

         Over the ensuing approximately one half year, BI, largely through its outside counsel and its agents, including professional investigators, actively monitored BOT's activities and BOT's compliance-and, dismayingly often, its failure to comply-with the Injunction. BI discovered widespread and continuing breaches of the Injunction by BOT. The record, which includes extensive and detailed correspondence between BI's counsel and BOT, reflects BI's persistent and vigorous attempts to put BOT on notice of its breaches and BI's attempts to induce BOT to cure these breaches without need for recourse to this Court. As chronicled in the Court's detailed bench ruling on June 14, 2017, these efforts had only limited success and rectified BOT's breaches in only discrete areas of breaching conduct.

         On January 9, 2017, nearly six months after entry of the Injunction, BI filed in this Court a motion for sanctions and for a finding that BOT was in civil contempt for violating various terms of the Injunction, and included supporting declarations and factual materials. Dkts. 55-57. BOT opposed the motion and included declarations. Dkts. 60-62. On April 25, 2017, the Court notified the parties that it would entertain contempt sanctions only as to conduct post-dating the Court's entry of the Injunction on July 15, 2016, but not as to conduct occurring between the date of the arbitral award and the Court's confirmation of it. Dkt. 68. The Court also ascertained from counsel that they wished the Court to resolve BI's claims of contempt through a hearing with live testimony, not based solely on the parties' documentary submissions.

         On June 6 and 14, 2017, the Court held an evidentiary hearing at which it heard live testimony and received numerous exhibits. On June 14, 2017, the Court issued a detailed bench opinion making findings of fact and holding that BOT was in civil contempt of court. To coerce BOT's compliance with the Injunction going forward, the Court instated a regime of financial sanctions intended to incent BOT to comply as to four key areas of conduct in which the Court had found violations of License Agreement terms as incorporated in the Injunction. These involved the Honolulu restaurant's (1) regular menus, (2) holiday menus, (3) signage, and (4) photographs furnished to patrons of the restaurant. Relevant here, the Court also ruled that BOT must pay the legal and investigative fees that BI had reasonably incurred in bringing about BOT's compliance with the Injunction.

         On June 28, 2017, BI filed its application for attorneys' fees in the form of declarations submitted by its lead counsel, Alan H. Fein, Esq., Dkt. 86 ("Fein Decl"), of the Miami, Florida law firm Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A. ("Stearns Weaver"), and by its local counsel, Nicole Gueron, Esq., Dkt. 85 ("Gueron Deck"), of Clarick Gueron Reisbaum LLP ("Clarick Gueron"). The declarations reported the firms' fees and costs incurred and, as exhibits, attached counsel's contemporaneous time records, regular billing rates and professional biographies. On July 12, 2017, BOT filed a memorandum of law in opposition to BI's fees request. Dkt. 87.

         II. Applicable Legal Standards

         To determine a reasonable attorneys' fee, a court uses the lodestar approach, in which the court determines a "presumptively reasonable fee" by calculating the number of hours reasonably expended by counsel on the litigation and multiplies that number of hours by a reasonable hourly rate. E.g., Millea v. Metro-North R.R. Co., 658 F.3d 154, 166 (2d Cir. 2011) (quotation omitted). "The district court enjoys broad discretion in determining the amount of a fee award." Vincent v. Comm 'r of Social Sec, 651 F.3d 299, 307 (2d Cir. 2011).

         In determining the reasonable hourly rate, the Court's analysis is guided by the market rate "prevailing in the community for similar services by lawyers of reasonably comparable skill, experience and reputation." Blum v. Stenson,465 U.S. 886, 895 n. 11 (1984). The relevant community is the district in which the district court sits. Arbor Hill Concerned Citizens Neighborhood Ass'n v. Cty. of Albany,522 F.3d 182, 190-91 (2d Cir. 2008). The determination of the reasonable hourly rate is a case-specific inquiry and may sometimes require a court to conduct an evidentiary hearing when "it is evident that the material facts necessary to determine the fee award are genuinely in dispute and cannot be resolved from the record." Vincent, 651 F.3d at 308 (quoting Farbotko v. Clinton Cty.,433 F.3d 204, 209 (2d Cir. 2005) (modifications omitted)). The Court is to evaluate the evidence offered by the parties and may, of course, take "judicial notice of the rates awarded in prior cases and the court's own familiarity with the rates prevailing in the district." Farbotko ...

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