United States District Court, S.D. New York
BENIHANA OF TOKYO, LLC, as successor to BENIHANA OF TOKYO, INC., Plaintiff and Counter-Defendant,
BENIHANA, INC., as successor to BENIHANA NATIONAL CORP., and NOODLE TIME, INC., Defendants and Counter-Plaintiffs,
KEIKO AOKI, Counter-Defendant.
OPINION & ORDER
A. Engelmayer United States District Judge.
decision resolves an application for attorneys' fees and
costs incurred during one lawsuit in a long-running series
among the two corporate entities that run different parts of
the worldwide Benihana restaurant empire. The chapter of
these disputes covered by this lawsuit involves claims under
the Lanham Act: specifically, claims by Benihana, Inc.
("BI") that the other entity, Benihana of Tokyo,
LLC ("BOT") and its chief executive, Keiko Aoki
("Aoki") repeatedly engaged in false and misleading
marketing practices. BI and its fellow counter-plaintiff,
Noodle Time, Inc. (collectively with BI, "BI")
prevailed in this case: BOT and Aoki capitulated after
opening statements at trial and agreed to a settlement that
gave BI substantively all the relief it sought, in the form
of a broad injunction.
now is BI's motion for an award of fees and costs under
§ 1117 of the Lanham Act from BOT and Aoki. For the
reasons that follow, the Court, after careful consideration
of the relevant circumstances and the parties'
submissions, finds that BI is entitled to fees and costs
totaling $936, 665.24, less than the figure ($1, 212, 897.02)
that BI requested.
decision proceeds in three parts. First, the Court briefly
reviews this lawsuit and the tortuous recent litigation
history between these parties. The Court then addresses
BI's claims of entitlement to fees and costs under the
Lanham Act. The Court then explains its determination as to
the proper amount of the award.
Court assumes familiarity with the background and procedural
history of this case, including the decisions in Benihana
of Tokyo, LLC v. Benihana, Inc., 73 F.Supp.3d 238
(S.D.N.Y. 2014) ("Benihana I''), which
dismissed some of BI's counterclaims in favor of
arbitration; and Benihana of Tokyo, LLC v. Benihana,
Inc., No. 14 Civ. 224 (PAE), 2017 WL 1424325 (S.D.N.Y.
Apr. 19, 2017) ("Benihana II''), which
denied BOT's motion to dismiss BI's remaining
counterclaims. The Court also assumes familiarity with the
related lawsuits that have unfolded over the past five years
between BI and BOT in this Court. Consequential decisions in
those cases include Benihana of Tokyo, LLC v. Angelo,
Gordon & Co., L.P., 259 F.Supp.3d 16 (S.D.N.Y.
2017), aff'd, 712 Fed.Appx. 85 (2d Cir. 2018);
Benihana, Inc. v. Benihana of Tokyo, LLC, No. 15
Civ. 7428 (PAE), 2016 WL 3913599 (S.D.N.Y. July 15, 2016);
and Benihana, Inc. v. Benihana of Tokyo, LLC, 784
F.3d 887 (2d Cir. 2015). These parties have also crossed
swords in other courts and in arbitration proceedings.
See, e.g., Benihana of Tokyo, Inc. v. Benihana,
Inc., 622 Fed.Appx. 169 (3d Cir. 2015); Benihana of
Tokyo, LLC v. Angelo, Gordon & Co., No. CV 15-00028
(ACK)(RLP), 2015 WL 5439357 (D. Haw. Sept. 14, 2015).
following are the key facts and procedural history of this
1963, Benihana of Tokyo, Inc. was incorporated by Rocky Aoki.
In 1964, he opened the first Benihana of Tokyo restaurant in
New York City. Dkt. 122 ("Joint Pretrial Order" or
"JPTO") at 3.
Benihana restaurant empire is today operated by two distinct
corporations, BOT and BI. Pursuant to a contract entitled the
Amended and Restated Agreement and Plan of Merger
("ARA"), executed on December 29, 1994 and amended
March 17, 1995, BI received the right to operate Benihana
restaurants and to own and use Benihana trademarks in the
United States, Central America, South America, and the
Caribbean ("the Territory"). BOT retained the
rights to operate Benihana restaurants and use Benihana
trademarks outside the Territory. See Benihana I, 73
F.Supp.3d at 243 (S.D.N.Y. 2014); Dkt. 122 at 3-4. As of
2016, when it filed its final amended counterclaims in this
case, BI owned or franchised 77 restaurants within the
Territory, whereas BOT owned or franchised 19 restaurants
outside of the Territory. Under a license agreement with BI
that has been subject of several of the lawsuits and an
arbitration, see, e.g., Benihana I, 73 F.Supp.3d at
243, BOT also operated a Benihana restaurant in Honolulu,
Hawaii. See Dkt. 87 ("TACC") ¶ 13.
lawsuit focused on claims by BI of Lanham Act violations by
BOT. On December 13, 2013, BI sent a letter to BOT, claiming
such violations. See Dkt. 1-3, Ex. B.
of such violations as cited there by BI included the
• "BOT's claim [on its website
www.benihanaworld.com] that it operates franchises 'all
around the world' is . .. false, material and misleads
the consuming public into believing that BOT owns the
BENIHANA Trademarks and/or has the right to operate BENIHANA
restaurants in every country in the world when it does not. .
. . [BI] owns exclusive rights to the BENIHANA Trademarks in
the United States, the Caribbean, Central America and South
America. Therefore, BOT's statements here are entirely
false and misleading." Id. at 2.
• "BOT makes several references [on its website] to
'Benihana of Toyko' as the 'Global Leader' or
'World Leader' in teppanyaki. . . . BOT makes such
statements knowing that BOT cannot be a 'world
leader' or 'global leader' since BOT does not
have the right to operate BENIHANA restaurants and does not
own the BENIHANA Trademarks throughout the world. BOT's
rights are limited geographically and its rights are
separate, apart, and distinct from [BI's] rights-
therefore, any suggestion to the contrary is false,
misleading, and damaging to [BI's] reputation and
[BI's] goodwill. It appears that BOT is attempting to
trade on Benihana's presence in the marketplace and to
deceive consumers into believing that [BI] and BOT are one
and the same .... At the same time, the website refers to
[BI] as a 'subsidiary company,' which is knowingly
false." Id. at 2.
• "BOT claims to be the 'originator of the
unique hibachi cooking style and "eatertainment"
created in the United States.' BOT has assigned all
rights to the BENIHANA System and the BENIHANA Trademarks in
the United States, the Caribbean, South America, and Central
America. Its statement that it is the originator in the
United States is intended to create confusion among consumers
that there continues to be an affiliation, sponsorship, or
partnership between [BI] and [BOT] (a relationship which BOT
claims it controls) and to trade on the goodwill residing in
our client's BENIHANA Trademarks." Id. at
January 13, 2014, BOT responded by filing the initial
complaint in this case. It sought a declaratory judgment that
its website did not violate the Lanham Act. See Dkt.
1 at 6.
March 20, 2014, BI filed its answer to the complaint. It also
filed counterclaims against BOT for, under the Lanham Act,
trademark infringement, false designation of origin and
unfair competition, and trademark dilution; and for, under
New York law, common law trademark infringement, common law
unfair competition, deceptive trade practices, trademark
dilution, and breach of contract. See Dkt. 7
("Answer") at 17-23. The factual allegations that
BI cited in support largely reprised, and expanded upon,
those in its initial letter to BOT.
2, 2014, BOT filed motions to arbitrate BI's
counterclaims. It also moved to dismiss its own claim for a
declaratory judgment. Dkts. 24 & 28. BI opposed the
motion to compel arbitration. Dkt. 35. On July 22, 2014, this
Court issued a decision in which, in addition to granting
BOT's unopposed motion to dismiss its claim for a
declaratory judgment, it denied in principal part BOT's
motion to compel arbitration. The Court, however, granted
that motion as to the portion of the Lanham Act claims
related to BOT's Hawaii restaurant. That is because the
operation and marketing of that restaurant is subject to a
unique license agreement that, unlike the ARA, contains an
arbitration provision entitling either side to pursue claims
in arbitration. Dkt. 42.
31, 2014, BI filed an amended counterclaim, amending the
claims remaining to be tried in this Court. Dkt. 43. On
February 18, 2015, in the interest of efficiency, the Court
stayed discovery, and this case as a whole, pending the
outcome of the pending arbitration relating to matters in
Hawaii, which included-in addition to other claims by BI of
material breaches by BOT-the Lanham Act claims the Court had
directed to arbitration. Dkt. 68.
15, 2016, the Court confirmed the arbitral award issued
relating to the Hawaii restaurant. See 15 Civ. 7428,
Dkt. 42. The Court thereafter lifted the stay in this case.
September 1, 2016, the Court granted BI leave to file third
amended counterclaims, Dkt. 86, which, on September 30, 2016,
BI filed. See Dkt. 87 ("TACC"). The TACC
is the operative document on which trial in this case
proceeded. The TACC added factual allegations about Lanham
Act violations that had occurred after the initiation of this
October 14, 2016, BOT and Aoki filed a motion to dismiss the
TACC, Dkt. 89, which BI opposed, Dkt. 92. On April 19, 2017,
this Court denied that motion. It held, inter alia,
that BI had adequately pled the elements of the claims at
issue. Dkt. 104 at 10.
case then proceeded to a bench trial, for which there was
extensive preparation and detailed pretrial submissions.
Trial commenced on January 22, 2018. As detailed further
below in connection with the Court's assessment of the
reasonable fee award, the parties, following opening
statements, entered into a settlement.
January 23, 2018, the Court entered an order embodying the
settlement terms. The order enjoined BOT and Aoki from taking
specified actions, including "directly or indirectly
infringing on the BENIHANA® Trademarks." Dkt. 132 at
1. The injunctive relief to which the parties agreed tracked
that which BI had sought in its prayer for relief in the
TACC, save for BI's application for fees and costs (an
issue the parties' settlement agreement expressly left
open, and which is addressed in this decision).
Compare Dkt. 132 with TACC at 13-14. There
was no injunctive relief issued against BI in the order. As
part of the settlement agreement, BI did, however, agree to
certain conditions, including to refrain from using certain
language on its websites and to create a landing page on its
website that directs visitors to both the BI website and the
BOT website. See Dkt. 131. The Court, consistent
with the settlement agreement, then enjoined BOT and Aoki
from infringing on the Benihana trademarks. See Dkt.
February 12, 2018, BI moved for attorney's fees and
costs. Dkt. 134 ("BI Br."). On March 5, 2018, BOT
filed its opposition, which noted that BI had failed to enter
its trial evidence into the record in support of its fee
application. Dkt. 139. On March 9, 2018, following letter
motions on the subject, the Court authorized BI to file
supplemental affidavits attaching the exhibits it needed to
support such claims, and authorized BOT to file a new
opposition brief in light of these filings. See
Dkts. 142-44. On March 14, 2018, BOT filed its revised
opposition. Dkt. 146 ("BOT Br.").
Alleged Bad-Faith Conduct by BOT and Aoki
moving for attorney's fees and costs, BI submitted
evidence of various areas of allegedly bad-faith conduct by
BOT and Aoki in initiating and litigating this case.
First, and most significant, BI argues that BOT and Aoki
engaged in the marketing practices that it challenges, and
then initiated this lawsuit and through the first day of
trial defended these practices, in demonstrable bad faith.
As to BOT's state of mind, BI relies on testimony given
earlier in related proceedings before this Court by
BOT's outside counsel at the time this lawsuit was
initiated, Richard Feldman, Esq. Feldman's testimony
was received at a June 6, 2017 hearing before this Court,
in connection with BI's successful pursuit of sanctions
against BOT for breaches of the injunction that the
arbitral panel had put in place relating to the Hawaii
restaurant; this Court, in confirming the arbitral award,
had adopted the injunctive terms in a court order, which
BOT proceeded to violate. In the June 2017 hearing, Feldman
recounted Aoki's statements to him about her overall
strategy and goals in initiating and litigating cases
against BI. See Dkt. 145-45 ("Feldman
Tr.") at 5, 1.Feldman testified that, on
numerous occasions, Aoki directed him "that it was her
strategy for BOT to challenge and contest the validity of
the [agreements between BOT and BI], whether there was
merit to those challenges or not." Further, Feldman
testified that Aoki's "strategy was to instigate
confrontations with BI, so that litigation would ensue, so
that the threat of actual or potential expenditures of huge
sums on legal fees would coerce [BI] into discussions [to
further Aoki's goal of reuniting all Benihana
restaurants under BOT]," and that Aoki's
"overall strategy [was] to force BI to expend large
counsel fees contesting her unreasonable actions."
Feldman Tr. at 5, 7. Aoki, in a responding submission,
denied such bad intentions. She stated that she had
"never acted with any intention to violate the Lanham
Act," that BOT had not filed this lawsuit for an
improper purpose, and that the strategy that Feldman
attributed to her would have been "nonsensical."
Dkt. 147 ("Aoki Decl.")¶¶ 15-18.
Second, BI argues, after this case was filed, BOT and Aoki
continued to engage in bad faith marketing practices. These
principally consisted of continuing to use terms and marks
that falsely depicted BOT as a worldwide or global entity,
improperly taking credit for BI operations in the
substantial part of the world (i.e., the Americas)
which the ARA allocated to BI, and holding Aoki out as
heading BI. For example:
• In October 2014, Aoki opened a restaurant named
KOA, in New York City. See Dkt. 145-2. An invitation
sent out to members of the Luxury Marketing Council
inaccurately referred to Aoki as the "CEO of Benihana,
Inc." Dkt. 145-3 (emphasis added).
• In 2015, the website for Keiko Aoki Inner Makeup, a
company founded by Aoki to providing catering and food sales
in New York City, i.e., within BI's territory,
see Dkt. 145-4; Dkt. 145-41 at 117-118, contained a
photograph of a chef wearing the Benihana uniform with the
Benihana trademark. See Dkt. 145-4 at 3; Dkt. 145-41
at 118. Aoki claims that by 2011, she had stopped "using
the website or operating the business at all [by 2011]."
Aoki Decl. ¶ 27. The website and the Benihana image on
it, however, remained accessible to the public.
• BOT continued to use the URL www.benihanaworld.com,
whose use had been an initial basis for BI's letter that
inspired this lawsuit. During the pendency of this case, BOT
also began using the URL www.benihanaglobal.com. See
Dkt. 145-41 at 72 (admission by Aoki in testimony to creating
a new ...