Chow v. Chak Yam Chau, Philippe Miami, LLC

• Decision Date: 17 November 2015
• Docket Number: No. 14-14654,14-14654
• Parties: MICHAEL CHOW, a.k.a. Mr. Chow, MR. CHOW ENTERPRISES, LTD, a California limited partnership, MC MIAMI ENTERPRISES, LLC, a Florida limited liability company, et al., Plaintiffs - Counter Defendants - Appellants, v. CHAK YAM CHAU, PHILIPPE MIAMI, LLC, a Florida limited liability company, PHILIPPE WEST COAST LLC, et al., Defendants - Counter Claimants - Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

MICHAEL CHOW, a.k.a. Mr. Chow, MR. CHOW ENTERPRISES, LTD,a California limited partnership, MC MIAMI ENTERPRISES, LLC,a Florida limited liability company, et al., Plaintiffs - Counter Defendants - Appellants, v. CHAK YAM CHAU, PHILIPPE MIAMI, LLC, a Florida limited liability company,PHILIPPE WEST COAST LLC, et al., Defendants - Counter Claimants - Appellees.

No. 14-14654

UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT

November 17, 2015

[DO NOT PUBLISH]

D.C. Docket No. 1:09-cv-21893-WMH

Appeal from the United States District Court for the Southern District of Florida Before MARCUS and JILL PRYOR, Circuit Judges, and RESTANI,^* Judge.

PER CURIAM:

This appeal arises from a dispute over Chinese food.¹ Michael Chow ("Chow") is a chef who has opened a number of Chinese restaurants, all called "Mr Chow"² ("Mr Chow"), in Beverly Hills, New York City, and Miami Beach. Chow v. Chak Yam Chau, 555 F. App'x 842, 843-44 (11th Cir. 2014). The restaurants have distinctive menus and decors, and feature as entertainment a display of noodle-making by the staff. Id. at 844. A twenty-five-year employee of the New York Mr Chow, Philippe Chow Chau (born Chak Yam Chau), left his employment and, in December of 2005, collaborated with restaurateur Stratis Morfogen ("Morfogen") to open a Chinese restaurant called "Philippe by Philippe Chow" ("Philippe") a few blocks away from one of the New York Mr Chow restaurants. Id. New restaurants in Miami Beach and Beverly Hills, all with the same name, were subsequently opened. Id. The menus, decors, and entertainment at the Philippe restaurants are quite similar to those found at the Mr Chow restaurants. Id.

In 2009, Chow and corporations associated with Mr Chow filed suit in the United States District Court for the Southern District of Florida against Chau, Morfogen, and other individuals and corporations associated with Philippe. Id. The plaintiffs alleged trademark, trade name, and trade dress infringement; false advertising; misappropriation of trade secrets; and unfair competition under federal, state, and common law. Id. Some defendants counterclaimed for defamation and sought to deregister Chow's trademark in "Mr Chow." Id.

Prior to trial, the district court granted summary judgment to all defendants on Chow's unfair competition claims under California Business and Professions Code §§ 17200-17210 and the Florida Deceptive and Unfair Trade Practices Act ("FDUTPA"), Fla. Stat. §§ 501.201-213. Id. at 844. After trying the case on the remaining claims, but before submitting it to the jury, the district court also granted judgment as a matter of law to the defendants on Chow's trade secrets misappropriation claim, which was barred by the statute of limitations. Id. at 844-45.

The jury returned a verdict for corporate plaintiff TC Ventures, Inc., which operated the New York Mr Chow, against corporate defendant Davé 60 NYC, Inc. ("Davé 60 NYC"), which operated the New York Philippe, on the false advertising and unfair competition by deceptive conduct claims. Id. at 845. It also returned a verdict on those claims in favor of Chow, individually, against Morfogen. Id. Theplaintiffs prevailed on none of their remaining claims for trademark infringement, unfair competition, or conversion. The defendants received verdicts in their favor on the plaintiffs' remaining FDUTPA claim of unfair or deceptive practices. None of the defendants' counterclaims against the plaintiffs succeeded.

Following the entry of judgment, the prevailing defendants (which were all of the defendants other than Davé 60 NYC and Morfogen)³ moved for attorney's fees under FDUTPA, as well as under New York and federal law. In its order granting attorney's fees and costs under FDUTPA, the district court noted the following "relevant facts":

* Plaintiff TC Ventures, Inc., obtained a jury verdict in the amount of $520,451 against Defendant Davé 60 NYC, Inc., as to claims of false advertising under the Lanham Act and common law claims of unfair competition.

* Plaintiff Michael Chow was determined to be entitled to $500,000 from Defendant Stratis Morfogen as to claims of false advertising under the Lanham Act and common law claims of unfair competition.

* No other Plaintiffs were successful in their claims against any Defendants.

* Defendants Philippe Chow, David Lee, Manny Hailey, Costin Dumitrescu, Philippe Miami LLC, and Philippe West Coast LLC were not found liable as to any Plaintiffs' claims.

* Defendants who filed counterclaims were not successful.

The district court noted that, under FDUTPA, "the prevailing party, after the exhaustion of all appeals, may receive his or her reasonable attorney's fees and costs from the nonprevailing party." The plaintiffs had brought FDUTPA claims against every defendant, and all of the defendants had prevailed on those claims. The district court further noted that "Plaintiffs did not prevail on the majority of their claims and did not prevail at all as to the majority of the Defendants. Indeed, Plaintiffs only prevailed on a narrow issue: false advertising and a common law theory of unfair competition, and only as to Defendants Davé 60 NYC, Inc., and Stratis Morfogen."

Based on its view that "the major thrust of the evidence presented by Plaintiffs was as to the allegedly stolen trade secrets and the alleged infringement as to the Plaintiffs' name and style of cooking - which is at the heart of the FDUTPA claim," the district court concluded that the prevailing defendants were entitled to attorney's fees under the statute. Because it determined that the "evidence presented at trial as to false advertising [the claim on which plaintiffs prevailed] was less than one-fourth, at most, of the evidence presented, and as to the overall litigation the question of false advertising was of much less focus than the claimed trade secret theft and alleged infringement," the district court "determined that the most appropriate approach . . . is to simply reduce theDefendants' billed hours by one-fourth." On that basis, the district court calculated that the appropriate fees award was $1,160,290.69, which represented three-quarters of Defendants' total attorney's fees of $1,547,054.25. It further awarded costs⁴ totaling $182,992.12 to the prevailing defendants, which was the entire amount the prevailing defendants requested.

Plaintiffs had also moved for costs against Defendants. The district court decided that approximately 20%, or $8,000, was the appropriate amount of costs to be assessed in favor of Plaintiffs TC Ventures, Inc. and Michael Chow for their successful claims against Defendants Davé 60 NYC and Morfogen. As for Plaintiffs' costs in defending against Defendants' counterclaims, the district court decided that most of the costs incurred were unnecessary, and decided that only 10% ($8,150) of the requested award was appropriate.

Plaintiffs contest the district court's decision to award Defendants any attorney's fees and costs, contending that Defendants do not qualify under FDUTPA as the "prevailing party" in this litigation. Alternatively, even if Defendants were the prevailing party, Plaintiffs argue that the district court failed to consider the relevant equitable factors in exercising its discretion to awardattorney's fees. Finally, Plaintiffs challenge the district court's calculation of the attorney's fees and costs.

After careful review, we conclude that the district court correctly decided that Defendants were entitled to attorney's fees and costs. We do, however, correct an arithmetic error made in computing the amount of fees.

I.

"A district court's interpretation of a state statute is reviewed de novo." Mega Life & Health Ins. Co. v. Pieniozek, 516 F.3d 985, 989 (11th Cir. 2008). The decision to grant or deny attorney's fees is reviewed for abuse of discretion. Davis v. Nat'l Med. Enters., Inc., 253 F.3d 1314, 1318-19 (11th Cir. 2001). A district court's factual findings underlying its determination regarding prevailing party status is reviewed for clear error. Fireman's Fund Ins. Co. v. Tropical Shipping & Const. Co., 254 F.3d 987, 1012 (11th Cir. 2001). Whether the facts as found suffice to render a party a "prevailing party" is a legal question, which we review de novo. Id.

II.

Plaintiffs argue on appeal that because Defendants recovered nothing on their counterclaims, they cannot be said to have "prevailed" against Plaintiffs, as required by the statute. For this reason, Plaintiffs claim that the district court erred in awarding attorney's fees under FDUTPA to Defendants. We are unpersuaded.

A.

"Under FDUTPA, the Florida Legislature has declared that deceptive or unfair methods of competition and practices in trade and commerce are unlawful." Diamond Aircraft Indus., Inc. v. Horowitch, 107 So. 3d 362, 367 (Fla. 2013). "To encourage citizens to invoke the protections of FDUTPA and file actions under that statute, the Legislature has provided that a prevailing party in a FDUTPA action may recover reasonable costs and attorney's fees from the nonprevailing party." Id. The statutory provision reads this way: "In any civil litigation resulting from an act or practice involving a violation of this part . . . the prevailing party, after judgment in the trial court and exhaustion of all appeals, if any, may receive his or her reasonable attorney's fees and costs from the nonprevailing party." Fla. Stat. § 501.2105(1). "To recover attorney's fees, subsection 501.2105(2) provides that the attorney for the prevailing party must submit a sworn affidavit regarding the time expended litigating a civil action involving a FDUTPA claim." Diamond Aircraft, 107 So. 3d at 370. "Subsection 501.2105(3) permits an award of attorney's fees for the hours actually expended on a civil action involving a FDUTPA claim."⁵ Id.

As the Florida Supreme Court explained, "to recover attorney's fees in a FDUTPA action, a party must prevail in the litigation; meaning that the party must receive a favorable judgment from a...