Wye Oak Tech., Inc. v. Republic of Iraq
| Citation | 557 F.Supp.3d 65 |
| Decision Date | 17 August 2021 |
| Docket Number | Case No. 1:10-CV-01182-RCL |
| Parties | WYE OAK TECHNOLOGY, INC., Plaintiff, v. REPUBLIC OF IRAQ, Defendant. |
| Court | U.S. District Court — District of Columbia |
Charles Allen Foster, Erik David Bolog, Eric C. Rowe, Whiteford Taylor & Preston LLP, John Harvey Quinn, Jr., Patrick M. Klemz, Quinn Racusin & Gazzola Chartered, Nancie G. Marzulla, Roger Joseph Marzulla, Marzulla Law, LLC, Washington, DC, Jeffrey A. Leon, Pro Hac Vice, Robert J. Pavich, Pro Hac Vice, Pavich Law Group, P.C., Chicago, IL, for Plaintiff.
Bernard J. DiMuro, Stacey Rose Harris, Jonathan R. Mook, DiMuro Ginsberg, PC, Alexandria, VA, Boaz S. Morag, Cleary Gottlieb Steen & Hamilton LLP, New York, NY, Nowell David Beckett Bamberger, Cleary Gottlieb Steen & Hamilton LLP, Timothy B. Mills, Mills Law Group, LLP, Washington, DC, for Defendant.
Royce C. Lamberth, United States District Judge In July 2009, Wye Oak Technology, Inc. ("Wye Oak") sued the Republic of Iraq and its Ministry of Defense (collectively, "Iraq") in the Eastern District of Virginia for breach of contract. Compl. at 4, ECF No. 1. The contract at issue, the Broker Services Agreement ("BSA"), obligated Wye Oak to assist Iraq in re-equipping its military by, inter alia , conducting an inventory, providing refurbishment services, and arranging for the sale of unusable or unneeded equipment. Mem. Op. at 1, ECF No. 455. The parties executed the BSA in August 2004. BSA at 8, ECF No. 1-2. By October, Iraq had missed three payments to Wye Oak, having instead sent the money to a third party. Mem. Op. at 1, ECF No. 455. The parties reached an apparent understanding about payment in early December 2004. Id. But a few days later, under suspicious circumstances, Wye Oak president Dale Stoffel and his colleague Joe Wemple were murdered in Baghdad while en route to a meeting about the misdirected funds. Id. Wye Oak was never paid. Id. at 50.
After the Eastern District of Virginia transferred the case here due to improper venue, the Court conducted a bench trial in late 2018 and early 2019. Id. ; Mem. Op. at 1, ECF No. 40. The Court found that Iraq had breached the BSA and was liable for $120.3 million in damages. Mem. Op. at 105, ECF No. 455; Judgment at 1, ECF No. 466. The Court also found Iraq liable, pursuant to a fee-shifting provision in the BSA, for "reasonable attorneys’ fees and expenses" incurred by Wye Oak, but it reserved judgment on the exact amount of reimbursement owed. Mem. Op. at 104, ECF No. 455. In May 2020, the Court granted Wye Oak's motion for $934,962.65 in expenses but asked for further briefing on the issue of attorneys’ fees. Mem. Order at 11, ECF No. 486; Bill of Costs, ECF No. 467. Wye Oak submitted a revised fee request on July 9, 2020. Pl.’s Second Req., ECF 492. Iraq filed its opposition on September 22, challenging Wye Oak's fee estimate but raising no arguments about the Court's award of expenses. Def's Second Opp., ECF No. 500. Wye Oak replied on October 13. Pl.’s Second Reply, ECF No. 503. The parties then submitted a second round of briefing after the Court raised concerns with redactions in Wye Oak's timesheets. See ECF Nos. 505–15. Having considered these arguments, the Court will award Wye Oak $7,672,487.89 in attorneys’ fees pursuant to the BSA.
The Court has extensively detailed the facts of this case, which is nearing the twelfth anniversary of its relationship with the federal courts. See Mem. Op. at 1-2. ECF No. 455; Mem. Order at 1-2, ECF No. 486. Briefly, Wye Oak litigated this case with four law firms working on a contingency basis, with the aggregate fee eventually set at 46 percent of the amount collected, plus more than $1 million in expenses advanced by the firms. Pl.’s First Req. at 3, ECF No. 468-1.
At trial, in addition to arguing that Iraq had breached its payment obligations under the BSA, Wye Oak invoked Paragraph 15 of the contract. Titled "INDEMNIFICATION," it provides:
Each party shall indemnify, defend and hold harmless the other party from and against any and all liabilities, demands, claims, lawsuits, damages, actions, judgments, costs (including reasonable attorney's fees and expenses) including but not limited to injury to persons (including death), loss or damage to, or destruction of property arising out of that party's breach of this Agreement or that party's negligent or willful actions while performing hereunder.
BSA ¶ 15, ECF No. 1-2 at 8. Wye Oak argued that Paragraph 15 was a bilateral fee-shifting provision that required Iraq to compensate Wye Oak for the "reasonable attorneys’ fees and expenses" it incurred while vindicating its rights after Iraq's breach. Mem. Op. at 104, ECF No. 455. The Court agreed, holding that Iraq was so liable but reserving its judgment on the exact amount of fees and expenses that Wye Oak could recover. Id.
Shortly after trial, Wye Oak filed a request for attorneys’ fees. It demanded that Iraq pay the full freight of Wye Oak's contingent liability to its counsel: 46 percent of the $120.3 million damages award, which would have yielded a reimbursement of more than $55 million. First Fee Req. at 3, ECF No. 468-1; Mem. Order 2, ECF No. 486. The Court denied the request, explaining that "in theory, two parties could contract to pick up the tab of the non-breaching party's sizeable contingent fee arrangement," but that Iraq and Wye Oak did not do so in the BSA. Mem. Order at 6, ECF No. 486. The Court then ordered Wye Oak to submit a new fee request based on time records and reasonable hourly rates. Id. at 11.
In response, Wye Oak duly submitted a new estimate based on the hours worked by its counsel, multiplied by reasonable hourly rates pulled from the 2020 LSI Laffey matrix. Second Fee Req. at 12, ECF No. 492. This calculation returned an estimate of $10,688,634. Id. at 1. Notably, however, the calculation utilized 2020 rates, instead of the reasonable rate from the year each hour was billed. Id. at 14. Moreover, Wye Oak argued for two enhancements: application of both a 100 percent multiplier and eight years of interest at six percent. Id. Wye Oak explained that these measures were appropriate as compensation for "the substantial likelihood of non-collection [ ] resulting from the actions of the Defendants." Id. Thus, in Wye Oak's view, the total bill owed by Iraq for "reasonable attorneys’ fees" is $28,085,285.10.
Iraq, which is currently appealing the $120.3 million damages award, contests Wye Oak's accounting of attorneys’ fees on all fronts. Iraq spends the bulk of its briefing arguing that, under Iraqi law, Wye Oak is entitled to no reimbursement at all, despite the terms of Paragraph 15. For the reasons explained below, the Court rejects this argument. But it agrees with Iraq that Iraqi law does not support enhancement of the award of attorneys’ fees. Accordingly, the Court holds that Wye Oak is entitled to $7,672,487.89—a figure based on Iraqi law and on the estimated number of hours worked by Wye Oak's counsel, less appropriate reductions, multiplied by reasonable current rates.
This long-winding dispute implicates the Foreign Sovereign Immunities Act ("FSIA") and raises critical jurisdictional, venue, and choice-of-law issues. Beginning with subject-matter jurisdiction, the Court has power to adjudicate this fee-shifting case under the FSIA, which provides the only means of suing a foreign sovereign in U.S. courts. See 28 U.S.C. § 1330(a) ; Argentine Republic v. Amerada Hess Shipping Corp. , 488 U.S. 428, 439, 109 S.Ct. 683, 102 L.Ed.2d 818 (1989). The FSIA operates as a codification of immunity to foreign sovereigns, subject to enumerated exceptions. 28 U.S.C. § 1605(a). In this case, the Court has subject-matter jurisdiction under the FSIA's commercial activity exception:
A foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case ... in which the action is based [1] upon a commercial activity carried on in the United States by the foreign state; or [2] upon an act performed in the United States in connection with a commercial activity of the foreign state elsewhere; or [3] upon an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere and that act causes a direct effect in the United States.
28 U.S.C. § 1605(a). As the Court explained in its post-trial opinion, Wye Oak's contract claim falls squarely within clause two: it is based upon "an act performed in the United States in connection with a commercial activity of the foreign state elsewhere." Mem. Op. at 46, ECF No. 455; see § 1605(a). Namely, David Stoffel worked in the United States to write a computer program to track Iraq's military inventory, and other Wye Oak personnel in the U.S. performed administrative activities in furtherance of the company's obligations under the BSA. Mem. Op. at 45, ECF No. 455.
Next, the Court has personal jurisdiction over Iraq under 28 U.S.C. § 1330(b), which provides that "[p]ersonal jurisdiction over a foreign state shall exist as to every claim for relief over which the district court" has subject-matter jurisdiction, as long as service was proper under 28 U.S.C. § 1608. The Court has previously found that proper service occurred under § 1608(a)(3). Mem. Op. at 46, ECF No. 455. During the post-trial dispute over attorneys’ fees, neither party has raised additional jurisdictional arguments.
Turning to choice of law, this dispute implicates Paragraph 15 of the BSA, where the parties selected Iraqi law to govern any disputes. BSA ¶ 15, ECF No. 1-2. But because such choice-of-law provisions are not self-enforcing, the Court must also determine whether the appropriate body of law would apply Paragraph 15. Under established precedent of the D.C. Circuit and the D.C. Court of Appeals, District of Columbia choice-of-law doctrine controls this question. Oveissi v. Republic of Iran , 573 F.3d 835, 841 (D.C. Cir. 2009) ...
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