United States: District Court Does Not Have Unlimited Discretion In Assessing Reasonable Attorneys' Fees

Addressing attorneys' fees in the context of a breach of contract claim, the US Court of Appeals for the 11th Circuit reversed the district court's limited award of attorneys' fees, finding the award inconsistent with the express language of the contract between the parties. Yellow Pages Photos, Inc. v. Ziplocal, LP, Case No. 16-11868 (11th Cir., Jan. 24, 2017) (per curiam).

Yellow Pages Photos, Inc., (YPPI) and Ziplocal LP entered into a contract that provided Ziplocal with a license to a series of YPPI's stock photographic images and subject matter headings. YPPI eventually sued Ziplocal for breach of contract and copyright infringement, alleging that Ziplocal provided YPPI's licensed photographs to a third party without YPPI's permission. The jury found in YPPI's favor on both the breach of contract and copyright infringement claims. Although YPPI was the prevailing party and was entitled to recover fees and costs under its contract with Ziplocal, the district court substantially reduced YPPI's request for attorneys' fees to reflect YPPI's relative degree of success in the litigation, and also found that YPPI was not entitled to recover attorneys' fees related to its copyright infringement claims. The district court made similar adjustments to YPPI's award of nontaxable costs. YPPI appealed to the 11th Circuit. 

The 11th Circuit reversed, finding that the district court erred by not awarding fees for the copyright infringement claims. As the 11th Circuit explained, the copyright infringement claims arose directly out of the contract between YPPI and Ziplocal. As such, these claims fell within the scope of the attorneys' fees provision in the contract between YPPI and Ziplocal, which expressly contemplates the award of fees based on litigation "in conjunction with the use of the product." According to the 11th Circuit, the language of the contract is broad enough to cover YPPI's copyright infringement claims, and YPPI is entitled to reasonable attorneys' fees for that claim.

The 11th Circuit also found that the district court erred by substantially reducing the award of attorneys' fees, because the district court used a strictly mathematical approach based on a ratio of total claims to successfully litigated claims. This strictly mathematical approach failed to adequately take into account all relevant factors, such as the intention of the contract, and was improperly based on the application of a proportional modifier representing the degree of success YPPI enjoyed at trial. The contract between YPPI and Ziplocal explicitly entitles the winning party to recover "its attorney's fees and costs," without limiting the recovery of fees to a "reasonable" amount. This contract language suggests a full recovery of the fees expended in the litigation related to the contract. By reducing YPPI's attorneys' fees by more than 90 percent, the district court denied YPPI the benefit of its bargain, essentially rendering the contract's fee-shifting provision meaningless. 

Similarly, the 11th Circuit found that the district court abused its discretion by applying the same mathematical approach to the award of nontaxable costs. Eleventh Circuit precedent has established that shifting costs in favor of the prevailing party is appropriate even in the case of a nominal award, so long as the prevailing party "obtains judgment on even a fraction of the claims advanced." Although a reduction in costs can be justified on the grounds of minimal success, such justification is not met through the rote application of a mathematical formula, as in this case. For the above reasons, the 11th Circuit reversed the district court and remanded the case for further proceedings not inconsistent with its opinion.

District Court Does Not Have Unlimited Discretion in Assessing Reasonable Attorneys' Fees

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