United States District Court, E.D. Virginia, Alexandria Division
O'Grady, United States District Judge
matter comes before the Court on Plaintiffs Motion for
Attorney's Fees and Costs. Dkt. No. 159. For the reasons
discussed below, the Court hereby ORDERS that Plaintiffs
Motion is GRANTED. Plaintiff is entitled to $208, 790.95 in
attorney's fees and $11, 706.90 in costs.
demand for attorney's fees arises out of a contract
dispute between the Plaintiff, Hair Club for Men, LLC, and
one of its former employees, Defendant Lailuma Ehson, and
Defendants' misappropriation of Plaintiff s trade secrets
and wrongful interference with contract and business
advantage. Ms. Ehson served as a hair stylist with Plaintiff
from 2011 to July 2015 before opening a competing salon,
Defendant Illusion Day Spa. At the time of her employment,
Ms. Ehson executed a Confidentiality, Non-Solicitation, and
Non-Compete Agreement ("the Agreement"). The
Agreement provided that with respect to any breach of the
covenants or assurances in die agreement, "[i]n the
event that the Company is compelled to file a complaint in
any court of competent jurisdiction for an injunction, and
/or an accounting and damages, and the Company is successful
is [sic] such action, [employee] will pay reasonable
attorney's fees and court costs in connection
therewith." Dkt. No. 1, Exh. A at 4.
parties cross-moved for summary judgment. The Court granted
Plaintiffs Motion for Summary Judgment respecting the breach
of contract claims and denied Plaintiffs unjust enrichment
and tortious interference claims. Dkt. No. 112. The parties
undertook a jury trial to assess damages and liability for
the tort claims. After a three-day trial, the jury entered a
verdict finding Defendants liable on all of the remaining
claims and awarding damages to Plaintiff. Dkt. No. 144. The
Court subsequently awarded Plaintiff a permanent injunction
estopping Defendants from further interference with
Plaintiffs business advantage or making use of
misappropriated trade secrets. Dkt. No. 157. In the same
order, the Court granted a remittitur reducing the total
awarded damages to $258, 330. Id.
the Court's Order, Plaintiff moved for attorney's
fees and costs. Dkt. No. 159.
the American Rule, a prevailing litigant is generally not
entitled to recover attorney's fees from the
non-prevailing litigant unless a statute or contract provides
otherwise. Baker Bolts L.L.P. v. ASARCO LLC, 135
S.Ct. 2158, 2164 (2015). Pursuant to Virginia law,
"parties are free to draft and adopt contractual
provisions shifting the responsibility for attorneys'
fees to the losing party in a contract dispute."
Ulloa v. QSP, Inc., 271 Va. 72, 81 (2006). Where the
contract provides for an award of fees to the prevailing
party, that party bears "the burden of establishing, as
an element of its prima facie case, that the attorneys'
fees it seeks are reasonable in relation to the results
obtained and were necessary." Chawla v.
BurgerBusters, Inc., 255 Va. 616, 624 (1998). With
respect to claims made under the Virginia Uniform Trade
Secrets Act, a court may award "reasonable
attorneys' fees to the prevailing party" if
"willful and malicious misappropriation exists." VA
Code § 59.1-338.1.
party is entitled to recover attorney's fees, to
calculate the award the Court "must first determine a
lodestar figure by multiplying the number of reasonable hours
expended times a reasonable rate." Robinson v.
Equifax Info. Servs., LLC, 560 F.3d 235, 243 (4th Cir.
2009). In determining the reasonable number of hours and a
reasonable rate, the court may consider the twelve factors
set out in Johnson v. Georgia Highway Express Inc.:
(1) The time and labor expended; (2) the novelty and
difficulty of the questions raised; (3) the skill required to
properly perform the legal services rendered; (4) the
attorney's opportunity costs in pressing the instant
litigation; (5) the customary fee for like work; (6) the
attorney's expectations at the outset of the litigation;
(7) the time limitations imposed by the client or
circumstances; (8) the amount in controversy and the results
obtained; (9) the experience, reputation, and ability of the
attorney; (10) the undesirability of the case within the
legal community in which the suit arose; (11) the nature and
length of the professional relationship between attorney and
client; and (12) attorneys' fees awards in similar cases.
488 F.2d 714, 717-19 (5th Cir. 1974). There is "a strong
presumption that the lodestar represents the reasonable
fee." City of Burlington v. Dague, 505 U.S.
557, 562 (1992) (internal quotation marks omitted). After the
lodestar figure is calculated, "the court must subtract
fees for hours spent on unsuccessful claims unrelated to
successful ones." McAfee, 738 F.3d at 88.
Finally, the court "award[s] some percentage of the
remaining amount, depending on the degree of success enjoyed
by the plaintiff." Id.
seeks $297, 523.80' in attorney's fees and $11,
706.90 in costs. This memorandum sets forth Plaintiffs
entitlement to the requested fees, the reasonableness of
those fees, and Plaintiffs entitlement to costs.
Entitlement to Fees
determining whether the fees in this case are reasonable the
Court must first establish that Plaintiff is entitled to
recover its attorney's fees pursuant to contractual or
statutory obligations. See Manchester Oaks Homeowners
Ass'n, Inc. y, Batt, 732 S.E.2d 690, 702
(Va. 2012) ("[I]n an action encompassing several claims,
the prevailing party is entitled to an award of costs and
attorneys' fees only for those claims for which (a) there
is a contractual or statutory basis for such an award and (b)
the party has prevailed."). The parties have divided the
claims into three classes: the breach of contract claim; the
Virginia Uniform Trade Secret Act ("VUTSA") claim;
and residual claims. The memorandum addresses each of these
classes of claims in turn.
Breach of Contract Claim
discussed above, Virginia law permits contractual
fee-shifting provisions. See Ulloa, 271 Va. at 81.
The parties agree that the confidentiality, non-solicitation,
and non-compete agreement in this case included a
fee-shifting provision. The agreement provided that
''[i]n the event that the Company is compelled to
file a complaint in any court of competent jurisdiction for
an injunction, and /or an accounting and damages, and the
Company is successful is [sic] such action, [employee] will
pay reasonable attorney's fees and court costs in
connection therewith." Dkt. No. 1, Exh. A at 4.
Accordingly, the parties agree that Plaintiff is entitled to
reasonable attorney's fees for its breach of contract
is only permitted to recover attorney's fees for its
VUTSA claim if Defendants' misappropriation of Plaintiff
s trade secrets was willful and malicious. Va. Code §
59.1-338.1. Willful and malicious misappropriation is
"acting consciously in disregard of another person's
rights or acting with reckless indifference to the
consequences, with the defendant aware, from his knowledge of
existing circumstances and conditions, that his conduct
probably would cause injury to another."
Owens-Corning Fiherglas Corporation v. Watson, 413
S.E.2d 630, 640 (1992) (quoting Booth v. Robertson,
374 S.E.2d 1, 3 (Va.1988)).
parties do not dispute that the jury found Defendants had
misappropriated Plaintiffs trade secrets. Defendants contend
that this misappropriation was not willful or malicious.
Specifically, Defendants observe that the jury was not asked
to find whether the trade secrets were misappropriated
willfully or maliciously on the special verdict form.
Further, Plaintiff put forth no evidence that Defendants
deliberately intended to hurt Plaintiff or acted out of any
animosity towards it. Thus, Defendants argue that "while
selfish and ignorant, this Court should not find such
behavior to be reckless or malicious." Dkt. No. 163 at3.
counters that the willful and malicious nature of the
misappropriation was evident in Defendants' persistent
diversion of Plaintiff s customers and misappropriation of
trade secrets for the benefit of their competing business
even after they were put on notice that Plaintiff objected to
the conduct. Plaintiff also notes that Ms. Ehson lied about
her reason for leaving employment with Plaintiff to conceal
that she had started a competing business based on the
misappropriated trade secrets.
cite no authority for the proposition that a jury must
explicitly find on the special verdict form that
misappropriation was willful or malicious in order to assess
attorney's fees under VUTSA. In addition, while
Defendants are correct that Plaintiff must present some
evidence of willfulness or maliciousness, they are incorrect
in claiming that no such evidence was presented. The evidence
presented in support of die motion for summary judgment and
at trial established that Ms. Ehson concealed her competing
business from Plaintiff and misappropriated trade secrets in
furtherance of that business. Even if Defendants mistakenly
believed that they were free to provide hair replacement
services to those customers who no longer received services
from Plaintiff, this error would not account for all of the
misappropriation claims. The jury found Defendants liable for
the customers who received Defendants' services
notwithstanding whether they were still enrolled with
Plaintiff when it awarded a single lump sum of damages as to
the VUTSA claim.
Plaintiff rightly points out, and Defendants fail to rebut,
this case is substantially analogous to National Legal
Research Group v. Lathan, No. CIV. A. 92-0031 -C, 1993
WL 169789 (W.D. Va. May 17, 1993) affdsub nom. Nat'l
Legal Research Grp., Lnc. v. Lathan, 42 F.3d 1386 (4th
Cir. 1994). In National Legal Research Group, the
court found that punitive damages were appropriate for a
misappropriation claim brought pursuant to the VUTSA based on
the evidence presented at summary judgment. The court
described the misappropriation thusly:
Lathan's violation of his fiduciary duty to NLRG
established the willful and malicious aspects of his
misappropriation. The evidence showed that Lathan planned to
leave NLRG as early as November 21, 1988, but that he did not
actually resign until March 2, 1992, three years and three
months later. Over this period of time, Lathan concealed from
NLRG's management his knowledge of its customer
complaints, and of Mislow's diversions. Lathan knew that
this information was vital to the interests of NLRG. In
addition, Lathan concealed his own actions taken to establish
a competing business, specifically Ms diversions of
NLRG's clients, his toll-free telephone number, and his
Rolodex cards for his new business. Again, Lathan knew that
these actions would injure NLRG's business. This evidence
is sufficient to support an award of punitive damages.
Id. at * 11. Similarly, the Court found on summary j
udgment that Ms. Ehson had breached her fiduciary duty to
Plaintiff by soliciting clients prior to termination. The
solicitation and competing business were concealed from
Plaintiff. It is axiomatic that when one of Plaintiff s hair
replacement service customers leaves for a competitor that
Plaintiffs business suffers. Accordingly, Defendants attempts
to plead ignorance are to no avail. The misappropriation was
willful and malicious.
this reason, the Court awards attorney's fees for the
also seeks attorney's fees for successful claims for
wrongful interference and breach of fiduciary duty and
unsuccessful claims for tortious interference with
contractual relations and unjust enrichment. There is no
statutory or contractual duty to award fees for these claims.
Plaintiff contends that it is nevertheless entitled to
recover on these claims because they are related to and share
a common core of facts with Plaintiffs fee-shifting claims.
Defendants contest this characterization.
Fourth Circuit recently instructed the Court on the proper
standard for unsuccessful claims:
Prevailing party status does not, however, automatically make
that party eligible for all the fees they request. In
Virginia, "each party [has] the burden of establishing,
as an element of its prima facie case, that the
attorneys' fees it seeks are reasonable in relation to
the results obtained and were necessary." Chawla v.
BurgerBusters, Inc., 255 Va. 616, 624, 499 S.E.2d 829
(1998). Moreover, "[n]either party shall be entitled to
recover fees for duplicative work or for work that was
performed on unsuccessful claims." Id. It is
well-settled in Virginia that "under contractual
[fee-shifting] provisions a party is not entitled to recover
fees for work performed on unsuccessful claims."
Ulloa v. QSP, 271 Va. 72, 82, 624 S.E.2d 43 (2006).
Zoroastrian Ctr. & Darb-E-Mehr of Metro. Washington,
D. C. v. Rustam Gniv Found. of N. Y., 822 F.3d 739, 754
(4th Cir. 2016). The Fourth Circuit also noted that Virginia
steadfastly rejects the "common core of facts or related
legal theories" approach employed by federal courts as
to federal claims and endorsed by the parties in this case.
Id. at 754, n.8; see also Ulloa, 271 Va. at
83. In Zoroastrian, the Fourth Circuit vacated the
Court's award of attorney's fees and remanded for
further analysis under a contractual fee shifting provision
because, even though the defendants generally prevailed on
the merits, they did not prevail on one of their
counterclaims. Id. at 755. The Fourth Circuit
determined that "[a]bsent some discount or reduction for
this unsuccessful counterclaim, the court's fee award
includes time spent on matters for which Rustam Guiv was not
entitled to recover under Virginia law." Id.
Keeping in mind the Fourth Circuit's admonition in
Zoroastrian Center, attorney's fees for the
unsuccessful claims in this case are not appropriate.
fees are also not appropriate under Virginia law for the
remaining successful claims. Plaintiff concedes that these
fees are not provided for by statute or under the contract
but contends that they should nevertheless be awarded because
the claims are closely intertwined with the claims for which
fees were awarded. The Supreme Court of Virginia's
decision in Ulloa guides the assessment of fees for
successful claims for which no statutory or contractual basis
for fees has been provided. In Ulloa, the Supreme
Court of Virginia found that a prevailing party could not
recover for misappropriation of trade secrets where the only
basis that the party claimed for attorney's fees was the
contractual fee-shifting provision. Ulloa, 271 Va.
at 81. The Supreme Court held that the misappropriation claim
did not qualify as "any action relating to the
parties' contract as contemplated by the contract's
fee-shifting provision." Id. The Supreme Court
was not persuaded "that simply because all of QSP's
claims were intimately intertwined and depended upon a common
factual basis that QSP was relieved of the burden to
establish to a reasonable degree of specificity those
attorneys' fees associated with its breach of contract
claim[.]" Id. At 83.
courts have applied this reasoning in rejecting
attorney's fees for successful claims which are vested
with no independent statutory or contractual right to
recovery. See Couch v. Manassas Autocars, Inc., 77
Va. Cir. 30 (2008) (finding that attorney's fees should
not be permitted for successful revocation claim because the
claim was not statutorily or contractually eligible for fee
recovery); Kelley v. Little Charlie's Auto
Sales, No. 4:04CV00083, 2006 WL 2456355, at *6 (W.D. Va.
Aug. 22, 2006) (finding that the prevailing party on VCPA and
fraud claims was only entitled to recover half of the
lodestar figure because only the VCPA claim conferred a legal
basis for the recovery of fees); linger v. Beatty,
52 Va. Cir. 289 (2000) ("The separation of fees is thus
as to work for which no fees would ever have been
recoverable, as opposed to work for which, if successful,
fees might have been recovered.").
argues that the claims are all related and share a common
core of facts. This proffer does not satisfy the requirement
under Virginia law to clearly set out that each successful
claim is supported by a statutory or contractual right to
attorney's fees. Plaintiffs successful wrongful
interference and breach of fiduciary duty claims did not
depend on the existence of the contractual relationship
between Plaintiff and Defendants or the willful or malicious
misappropriation of trade secrets. Rather the claims arise
out of Defendants' interference with Plaintiffs contracts
with its customers, which is not a cognizable ground for
recovery of attorney's fees.
as here, the successful claims are not dependent on
provisions of contract or statute that permits recovery of
fees, the Court may not award fees for those claims. See
Uiloa, 271 Va. at 81 ("A successful claim under the
Act, including an award of attorneys' fees, is therefore
not dependent upon provisions contained in a contract between
the parties."). Accordingly, the Court does not award
fees for the time devoted to the wrongful interference and
breach of fiduciary duty claims.
discussed above, the Court determines the lodestar figure by
calculating the reasonable hourly rates and the reasonable
number of hours expended. Robinson, 560 F.3d at 243.