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Xlear, Inc. v. Focus Nutrition, L.L.C.

United States District Court, D. Utah, Central Division

January 29, 2019

XLEAR, INC., a Utah corporation, Plaintiff,
v.
FOCUS NUTRITION, L.L.C., a Utah limited liability company, Defendant.

          MEMORANDUM DECISION AND ORDER

          DEE BENSON UNITED STATES DISTRICT JUDGE

         Before the court is Defendant's timely filed Notice of Focus Nutrition, LLC's Accounting of Fees (“Defendant's Accounting”) Incurred in Defending Plaintiff Xlear's Utah Truth in Advertising Act (UTIAA) Claim. (Dkt. No. 57.) Plaintiff filed a timely Objection to Defendant's Notice. (Dkt. No. 58.) Defendant did not file a reply to Plaintiff's Objection. Based on the written arguments of the parties and on the relevant facts and the law, the court now enters the following Memorandum Decision and Order.

         BACKGROUND

         On August 31, 2018, this court determined on remand from the Tenth Circuit Court of Appeals that Defendant Focus Nutrition, LLC is the prevailing party with regard to Plaintiff's UTIAA (Utah Code § 13-11a-3) claim, entitling Defendant to recover the reasonable attorneys' fees it incurred defending that particular claim. (Dkt. No. 55.) Defendant was ordered to submit an accounting of its attorneys' fees within thirty days. (Id. at 4)

         In his Declaration in Support of Focus Nutrition LLC's Accounting of Attorney Fees (“the Declaration”), Defendant's attorney Matthew A. Steward declares that “Focus Nutrition has incurred attorneys' fees in its defense of Xlear's UTIAA claim in the amount of $20, 999.50.” (Dkt. No. 57-1 at 12.) He further testifies that this amount of fees and time “are reasonable given the complexity of the issues, the experience of counsel, and the amount of work required to be performed by Focus Nutrition's counsel.” (Id.) In support of this assertion, he includes in his Declaration a table of total hours of trial court work and appellate work performed by both him and another attorney, Shannon Zollinger, who he personally supervised over the course of the litigation, as well as their total fees from those hours. (Id. at 6, 8-11.) Also included as Exhibit 1 are the billing records prepared by his firm and sent to Focus Nutrition, with “discounts for non-recoverable work notated” and redacted time entries for those “fees [that] are not recoverable.” (See Id. at 4, 8, 13-20.)

         DISCUSSION

         As the Tenth Circuit's opinion emphasized, this court was instructed on remand to determine what portion of Defendant's originally requested fees of $26, 674 stemmed specifically from Focus Nutrition's defense of the UTIAA claim.[1] Accordingly, Focus Nutrition was instructed by both courts that Utah law requires that:

a party seeking fees must allocate its fee request according to its underlying claims. Indeed, the party must categorize the time and fees expended for “(1) successful claims for which there may be an entitlement to attorney fees, (2) unsuccessful claims for which there would have been an entitlement to attorney fees had the claims been successful, and (3) claims for which there is no entitlement to attorney fees.”

Foote v. Clark, 962 P.2d 52, 55 (Utah 1998) (quoting Cottonwood Mall Co. v. Sine, 830 P.2d 266, 269-70 (Utah 1992)).

         Thus for Defendant to recover its fees, it first needed to properly categorize all of its fees underlying each of the claims from this litigation. This allocation enables the court to determine which fees were specifically incurred defending the UTIAA claim (the successful claim), as well as which fees were incurred defending each of the other separate claims (i.e., the unsuccessful claims and the claims for which fee recovery is not authorized). Secondly, Defendant needed to submit sufficient evidence “to permit the court to make the necessary findings [of] . . . what a reasonable award of fees is relative to Focus Nutrition's defense of the UTIAA claim.” Xlear, 893 F.3d at 1242.

         I. Categorization of Fees

         “A party is . . . entitled only to those fees resulting from its principal cause of action for which there is a contractual (or statutory) obligation for attorney's fees.” Utah Farm Prod. Credit Ass'n v. Cox, 627 P.2d 62, 66 (Utah 1981). “Therefore, where a party incurs attorneys' fees prosecuting or defending multiple claims within a single litigation and the party has a statutory right only to recover fees relative to one of the claims, the party must submit sufficient evidence to permit the district court to determine what portion of the fees were incurred . . . defending the claim for which fee recovery is statutorily authorized.” Xlear, 893 F.3d at 1242.

         Accordingly, on appeal the Tenth Circuit remanded to allow the district court “to determine which of the requested fees are attributable to Focus Nutrition's defense of the UTIAA claim rather than to its defense of the non-UTIAA claims or to its pursuit of the counterclaim.” Xlear, 893 F.3d at 1240. In describing the inadequacy of Defendant's original affidavit and one-page billing record it submitted prior to the appeal, the Tenth Circuit found in part that Defendant failed to “delineate time spent defending the UTIAA claim from time spent defending the Lanham Act claim and the common law unfair competition claim or time spent pursuing the counterclaim.” Id. The circuit court also noted that Defendant's reply brief “did not provide any additional evidence in support of the requested fees” to permit the district court to assess the reasonableness of its requested fees. See Id. at 1232.

         Defendant was thus instructed by both the Tenth Circuit and this court (under Utah law) to “categorize the time and fees expended” by delineating the originally-requested fees based on 1) successful claims, 2) unsuccessful claims, and 3) claims for which fee recovery is not authorized. Id. at 1239, 1242; Dkt. No. 56 at 4. As Plaintiff persuasively ...


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