Reversal is a $22 Million Swing for the Corporate Litigants.
In our December 11, 2008 post, we reported on C.D. Cal. U.S. District Judge David O. Carter’s fee awards in EchoStar Satellite Corp. v. NDS Group PLC, Case No. 8:03-cv-00950-DOC-JTL. There, EchoStar was awarded $12,972,547.91 in fees and NDS was awarded $8,968,118.90 in fees in a detailed district court decision finding that both parties prevailed under some fee shifting statutes. (E.g., Cal. Pen. Code, § 593e(d); Communications Act [47 U.S.C. § 605(e)(3)(B)(iii)]; Digital Millennium Copyright Act [17 U.S.C. § 1203(b)(5)].) Both sides appealed, and the Ninth Circuit reversed and remanded—although handing NDS a major victory on appeal.
The Ninth Circuit, in an unpublished memorandum decision from both appeals (Case Nos. 09-55005/09-55633 [9th Cir. Aug. 4, 2010]), reversed the fee awards in a way to deny fees to EchoStar and grant NDS fees of $17,936,237.80 plus reasonable costs—a $22 million swing of fortune from NDS’ perspective (owing a net $4 million in fees to owed $18 million in fees). How did this occur? We now tell you.
Both Judge Carter and the Ninth Circuit did not disagree on the standard governing which party prevailed in the litigation—the assessment was a practical one, but not allowing this status to be conferred on one who has a purely technical or de minimis success. (See Donner Mgmt. Co. v. Schaffer, 48 Cal. Rptr. 3d 534, 542-543 (2006) [state law]; Parents of Student W. v. Puyallup Sch. Dist. No. 3, 31 F.3d 1489, 1498 (9th Cir. 1994) [federal law].) However, they had sharply different perceptions on who prevailed with regard to EchoStar. The Ninth Circuit ruled that EchoStar did not prevail on a practical level: the focus of its suit—a December 2000 Internet posting alleged to have compromised security—was rejected by the jury (with NDS prevailing on this primary claim). EchoStar, instead, only recovered $45.69 (which was trebled), $1,500 in statutory damages, $284.94 in restitution, and a permanent injunction against NDS for a technical violation of the Communications Act and the California Penal Code (conduct not really disputed by NDS)—hardly a significant victory to the reviewing court. NDS, in turning away the intercept claims alleged to be worth billions, was the prevailing party in the view of the appellate court. NDS requested total fees of $23,914,983.74, a figure that Judge Carter indicated should be reduced by 25% down to $17,936,237.80 no matter what the eventual award (a discretionary reduction found reasonable by the Ninth Circuit). So, in the end, NDS got about $18 million in fees and EchoStar got nada in a dramatic swing on appeal.
For more information on this decision, see Alison Frankel’s August 12, 2010 post at Law.com, which also contains a link to the Ninth Circuit’s memorandum decision.