≡ Menu

In litigation, parties will sometimes file motions whose prospects of success are questionable at best. Such a motion might be a Hail-Mary pass when it appears that the case is going badly for the moving party. And on the other side of the coin: Parties sometimes oppose meritorious motions for little reason other than, let’s make them work for it.

(Sometimes such motions are filed out of fear of being second-guessed. A hard-headed client, looking to point fingers somewhere else after a loss, might say to counsel, after the fact: You should have filed a motion for [whatever]; sure, the odds of success were low, but now we’ll never know. No lawyer likes to hear that from the client; likewise, no business executive wants to hear that question from her superiors — or worse, from her board of directors.)

The Hail-Mary pass motivation might have been at work in a recent Federal Circuit case:

  • A party, Benton Energy Services (BESCO) was sued for breach of contract (and on other grounds) by Cajun Services.
  • For months, the parties did “discovery,” and eventually each party filed motions for summary judgment.
  • But then — with trial just weeks away — BESCO filed a motion to compel arbitration, as called for by the parties contract.
  • It’s not a big stretch to speculate that BESCO felt that its prospects at trial were not so great, and so it wanted to try for a fresh start in an arbitration proceeding.
  • Cajun opposed BESCO’s motion to compel arbitration, on grounds that under well-established precedent, BESCO had waived its right to arbitration. The trial court agreed and denied the motion to compel.
  • BESCO lost the ensuing jury trial.

BESCO appealed the trial judge’s refusal to compel arbitration, but the appeals court affirmed, holding that the trial judge had not clearly erred. See Cajun Serv. Unlimited, LLC v. Benton Energy Serv. Co., No. 2020-1367, slip op. (Fed. Cir. Mar. 12, 2021) (nonprecedential). (Hat tip: Chael Clark of Carlton Fields.)

We don’t know what was going through the minds of BESCO and its counsel when they belatedly moved to compel arbitration. But it’s easy to imagine that they might have thinking something like the following: Things aren’t looking great for us; there’s not much percentage in trying now to compel arbitration, but it’s probably our best shot — and the worst that can happen is that the judge says no. (To reiterate: We don’t know whether this actually was BESCO’s or its counsel’s thinking.)

This attitude brings to mind the saying attributed to Walter Gretzky, father of hockey legend Wayne Gretzky: You miss 100% of the shots you don’t take. In the litigation context, Gretzky père‘s saying could be paraphrased as: You’ll be denied on 100% of the motions (and oppositions) that you don’t file.

The problem, of course, is that in situations like this, taking the shot inflicts extra burden, expense, and delay on the other party and the court — often to no real purpose.

Oh, sure: The applicable rules typically exhort lawyers and parties to play nice, and judges have the power to impose sanctions when they don’t.

But in the real world, sanctions seldom happen, so any fear of being sanctioned is often outweighed by the fear of losing (and/or the fear of being second-guessed).

So: How to combat this take-the-shot tendency? One possibility — by no means a panacea — might be for contract drafters to include a prevailing-party attorney-fee clause for motion practice, perhaps along something like the following lines:

Attorney Fees in Motion Practice

(a) This provision is agreed to as an incentive for the parties to amicably resolve any subsidiary- or ancillary dispute that is brought before a tribunal in a case (each, a Motion).

(b) The prevailing party in the Motion will be entitled to recover its Dispute Expenses for the Motion unless the Tribunal, for good cause, rules otherwise; the Tribunal’s decision on the attorney-fee recovery issue for the Motion is final and nonappeable.

(c) Motion-related Dispute Expense recoveries may not be recaptured as part of a later recovery of Dispute Expenses for the overall action.

Such a clause would not be a cure-all: In a Hail-Mary pass situation, a party that thought it might be losing the case could cold-bloodedly decide that filing a sketchy motion was worth the risk.

But even so: A contract’s attorney-fees clause for motion practice would at least cause counsel to think twice before filing a motion, or before opposing a meritorious motion by the other side.

And suppose that a client’s decision-makers were indeed of the hard-headed breed mentioned above, implacably convinced of the rightness of their cause: They just might start to rethink their view if they were to be forced to pay attorney fees after losing in motion practice.

{ 1 comment }

A settlement agreement should preferably contain an explicit agreement that the plaintiff (or would-be plaintiff) won’t sue the other party — that way, if the plaintiff does file suit, and the other party gets the case tossed on grounds of settlement, then the other party should be able to recover its attorney fees as damages for the breach of the agreement not to sue.

Why is it a good idea to include such explicit language? Because there’s apparently a split among different jurisdictions as to whether an express “covenant not to sue” is required in order to recover attorney fees in case of a lawsuit despite settlement. See Bolton v. McKinney, No. 200637, slip op. at 4-5 (Va. Apr. 1, 2021) (reversing lower court’s refusal to award attorney fees; reviewing case law).

UPDATE: Noted corporate-law practitioner Glenn West emailed me (because the comment feature on this blog is evidently having trouble) with a link to a useful piece that he posted on this subject, with additional citations: Releases and Covenants Not to Sue—Seeming Legal Redundancies That Aren’t (Weil.com 2019).

{ 0 comments }

This is making the rounds in the tech / IP bar: 

The United States District Court is not a wholly owned subsidiary of either TRT or Facebook Technologies. If the parties wanted to proceed in total privacy, they should have arbitrated this dispute. Instead, they brought this dispute to a public forum that belongs to the people of the United States, not TRT or Facebook. The United States people have every right to look over our shoulder and review the documents before the Court. The standard under Kamakana is not met for any document. 

Total Recall Technologies v. Luckey, No. C-15-02281, slip op. (N.D. Cal. Mar. 25, 2021) (Alsup, J., denying motion to seal) (emphasis added). (Hat tip: Prof. Eric Goldman.)

{ 0 comments }

This past week an appellate case out of Massachusetts was decided in which the employment agreement of a company, Covidien, required the employee, one Esch, to disclose and assign certain “Inventions” (a defined term) for one year after leaving Covidien. The jury found, and the appeals court affirmed:

  • that Esch, the former employee, had not breached his obligation to disclose and assign “Inventions” to Covidien — the appeals court held that the jury’s verdict implicitly meant that the jury had found that Esch’s new inventions were not “Inventions” as defined in his Covidien employment agreement; BUT
  • that Esch did breach his confidentiality obligation to Covidien by filing one of his patent applications, which apparently contained Covidien confidential information.

The jury awarded Covidien nearly $795,000 in damages against Esch, but the judge refused Covidien’s request to order Esch to assign his patent application(s) to Covidien.

Citation: Covidien LP v. Esch, No. 20-1515 (1st Cir. Apr. 8, 2021).

{ 0 comments }

Newbies: Anticipate the next step

I ran across some very useful advice for new lawyers — or really any new employee — at the ABA Journal Website; I’ll be citing the piece to my law students. Here’s an excerpt:

Doing good work means not only creating a strong work product but anticipating the next step.

  • If you are drafting a responsive pleading, you should be thinking about the discovery you will soon serve to support the claims or defenses.
  • If you are researching whether a particular contractual provision is permissible in a business contract, consider drafting your own clause.

Dustin M. Paul and Jennifer L. Eaton, 11 tips to survive your freshman year as an associate (ABAJournal.com Apr. 8, 2021) (emphasis and bullets added).

{ 0 comments }