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 the appellate phase of a Lanham Act
The Award of Fees and Costs to BI Under the Lanham
25, 2018, this Court issued a decision resolving a motion by
defendant and counter-plaintiff Benihana, Inc.
(“BI”), for an award of fees and costs from
plaintiff and counter-defendant Benihana of Tokyo, LLC
(“BOT”), under § 1117 of the Lanham Act, 15
U.S.C. § 1117(a). See Benihana of Tokyo, LLC v.
Benihana, Inc., No. 14 Civ. 224 (PAE), 2018 WL 3574864
(S.D.N.Y. July 25, 2018) (“Fees
Decision”); see also Dkt. 153. The Court
incorporates by reference here the background and analysis
set out in that decision. As recapped briefly in the Fees
Decision, the Lanham Act dispute was the latest in a
series of litigations between BI and BOT in recent years, a
number of which centered in this Court.
1995 agreement with BOT, BI has held the right to operate
Benihana restaurants and to own and use Benihana trademarks
in the United States, Central America, South America, and
Canada (“the Territory”). Fees Decision,
2018 WL 3574864, at *2. BOT held these rights outside the
Territory. Id. Under a license agreement with BI
that has been the subject of numerous of the BI / BOT
lawsuits, BOT operated a Benihana restaurant in Honolulu,
litigation, BI claimed a range of glaring Lanham Act
violations by BOT. These largely consisted of website
statements by BOT that misleadingly stated or implied that
BOT owned or operated the 77 Benihana restaurants, and owned
the Benihana trademarks, within the Territory. See
Id. BI sought injunctive relief. See Id. at *3.
After discovery and motions practice, the case proceeded to a
bench trial, which began on January 22, 2018. Id.
The case settled during the first day of the trial. See
Id. The Court entered an order embodying the
parties' settlement terms. Id. In language
tracking the relief that BI had sought, the settlement
enjoined BOT and its chief executive, Keiko Aoki, from
infringing on BI's Benihana trademarks. Id.
February 12, 2018, BI moved for attorneys' fees and
costs, which it had reserved the right to do. Id. at
*4. In the Fees Decision, the Court granted that
motion. Id. at *16. The Court noted that under the
Lanham Act, a court “in exceptional cases may award
reasonable attorney fees to the prevailing party, ” 15
U.S.C. § 1117(a). Fees Decision, 2018 WL
3574864, at *5. The Court held both that BI had been the
prevailing party and that the case had been exceptional.
the former, the Court held that BI had been the prevailing
party, in that the injunctive relief entered pursuant to the
mid-trial settlement had paralleled the full relief BI sought
in its original prayer for relief, such that the relief
entered, although taking the form of a settlement, had been
tantamount to a full victory for BI at trial. See
Id. at *7-9.
the latter, the Court noted that there were two potentially
applicable tests for an “exceptional case.”
See Id. at *6-7; see also Id. at *9-12. The
first test, the use of which BOT advocated, was that used in
the Second Circuit before the Supreme Court's decision in
Octane Fitness, LLC v. ICON Health & Fitness,
Inc., 572 U.S. 545 (2014). See Fees Decision,
2018 WL 3574864, at *6-7. Octane interpreted the
Patent Act's fee-shifting provision, 35 U.S.C. §
285, which is identical to the fee-shifting provision of the
Lanham Act. See Octane, 572 U.S. at 553- 54. Under
the “pre-Octane” standard, a party
seeking fees was required to show bad faith, fraud, or
willful infringement. Fees Decision, 2018 WL
3574864, at *7; see also Id. at *9. Octane,
however, construed the term “exceptional case”
more broadly, as “simply one that stands out from the
others with respect to the substantive strength of the
party's litigating position (considering both the
governing law and the facts of the case) or the unreasonable
manner in which it was litigated.” Octane, 572
U.S. at 554. Octane held that a district court was
to determine a case's exceptional nature of a case on a
case-by-case basis, “considering the totality of the
circumstances”; in this test, the Court stated,
relevant factors include “frivolousness, motivation,
objective unreasonableness, both in the factual and legal
components of the case) and the need in particular
circumstances to advance considerations of compensation and
deterrence.” Id. at 554 n.6 (citation
omitted). Although the Second Circuit had yet to hold that
the Octane test applied to Lanham Act cases, BI
urged the Court to hold that it did. See Fees
Decision, 2018 WL 3574864, at *6.
Court agreed with BI that the Octane test applied to
§ 1117(a) of the Lanham Act. Id. at *9. But,
the Court held, the circumstances qualified as exceptional
under either test, warranting an award of fees. Id.
Under the pre-Octane test, the Court held, BOT
(which had initiated this litigation but later dropped its
claims) had engaged in bad faith. See Id. at *9-11.
Indeed, BOT's prior counsel had admitted in sworn
testimony before the Court that Aoki had instructed him to
bring meritless litigation to drive up BI's fees. See
Id. at *10. Further, BOT had also persisted in violating
the Lanham Act after the litigation was underway. See
Id. Under the Octane standard, the Court held,
this case stood out as exceptional because of BOT's
demonstrated bad faith, the blatant quality of BOT's
underlying Lanham Act violations, and the ongoing nature of
these violations. See Id. at *11. Further, the Court
held, given the admission by counsel that BOT had
deliberately pursued meritless claims here (and in other
litigations and arbitrations with BI), the factors of
deterrence and compensation strongly supported a fee award.
See Id. at *11-12.
Court, finally, found that an award of $936, 665.24 in fees
and costs from BOT to BI was reasonable. Id. at *16.
The Court approved the hourly rates of all relevant
timekeepers as reasonable. Id. at *12. As to the
hours for which BI sought compensation, upon close review of
time records, the Court, for various reasons, pruned by 25%
the hours worked by BI's principal outside law firm,
Miami-based Stearns Weaver Miller Weissler Alhadeff &
Sitterson, P.A. (“Stearns Weaver”), and by 5% the
hours worked by BI's local counsel, Clarick Gueron
Reisbaum LLP (“Clarick Gueron”). Id. at
*16. This yielded a fee award of $866, 448.72. Id.
The Court approved in its entirety BI's request for an
award of $70, 216.52 in costs. Id.
appealed. On June 21, 2019, after briefing and argument, the
Circuit affirmed in a brief summary order, stating that it
did so “for substantially the reasons set forth in the
district court's thorough and well-reasoned
opinion.” Benihana of Tokyo, LLC v. Benihana
Inc., 771 Fed.Appx. 71, 72 (2d Cir. 2019). The Circuit
affirmed the determinations both that BI was the prevailing
party and that the case presented “exceptional
circumstances.” Id. The Circuit added only
that, as to the latter standard, it had held, following the
onset of BOT's appeal, that the Octane standard
applied to fee litigation under the Lanham Act. See
Id. (citing Sleepy's LLC v. Select Comfort
Wholesale Corp., 909 F.3d 519, 530 (2d Cir. 2018)).
BI's Motion for Appellate Fees and Costs
29, 2019, BI timely moved before this Court for an award
under § 1117(a) for its appellate fees and costs, and
for the fees and costs it expended in connection with related
collection, bond, and stay issues incurred before BOT's
appeal. See Dkt. 174 (“BI Mem.”); Dkt.
175 (declaration of Alan H. Fein, Esq.) (“Fein
Decl.”). Specifically, BI sought (1) $302, 702.50 for
its appellate work including reviewing BOT's brief,
preparing its brief, and participating in mediation as
required by the Second Circuit; (2) $21, 925 for analysis of
BOT's reply brief and its follow-on efforts to supplement
the appellate record; (3) $96, 105 for preparation and
presentation of oral argument before the Circuit; and (4)
$37, 153 for its work litigating appellate bond, stay, and
collection issues. See BI Mem. at 7.
August 12, 2019, BOT submitted a memorandum of law opposing
such an award. See Dkt. 176 (“BOT
Mem.”); Dkt. 177 (declaration of Jeremy W. Schulman,
Esq.) (“Schulman Decl.”) On August 19, 2019, BI
submitted a reply. See Dkt. 178 (“BI
Reply”); Dkt. 179 (reply declaration of Alan H. Fein,
Esq.) (“Fein Reply Decl.”).