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ECHOSTAR SATELLITE CORPORATION v. NDS GROUP PLC
Conclusion
The judgment of the district court is REVERSED, and this matter is REMANDED to the district court with instructions to enter judgment denying EchoStar's request for attorneys' fees and costs, and awarding attorneys' fees to NDS in the amount of $17,936,237.80, and reasonable costs. The costs of this appeal are awarded against EchoStar.
ECHOSTAR SATELLITE CORPORATION; et al., Plaintiffs-Appellees,
v.
NDS GROUP PLC; et al., Defendants-Appellants.
ECHOSTAR SATELLITE CORPORATION, et al., Plaintiffs-Appellants,
v.
NDS GROUP PLC, et al., Defendants-Appellees.
No. 09-55005.
United States Court of Appeals, Ninth Circuit.
Argued and Submitted April 6, 2010 Pasadena, California.
Filed August 4, 2010.
Before: PREGERSON and THOMPSON, Circuit Judges, and GRAHAM,[ 1 ] District Judge.
I. Introduction
EchoStar and NDS appeal the district court's award of attorneys' fees and costs. EchoStar challenges the amount of attorneys' fees and costs awarded to it by the district court. Conversely, NDS challenges the amount of attorneys' fees and costs awarded to it, and the amount of attorneys' fees and costs awarded to EchoStar. The district court awarded attorneys' fees to EchoStar in the amount of $12,972,547.91, plus reasonable costs, and awarded attorneys' fees to NDS in the amount of $8,968,118.90, and no costs. For the reasons that follow, we REVERSE and REMAND with instructions.
II. Standard of Review
This court reviews a district court's award of attorneys' fees and costs for an abuse of discretion. P.N. v. Seattle Sch. Dist. No. 1, 474 F.3d 1165, 1168 (9th Cir. 2007). A district court abuses its discretion if its ruling on a fee motion is based on an inaccurate view of the law or a clearly erroneous finding of fact. Richard S. v. Dep't of Developmental Servs. of Cal., 317 F.3d 1080, 1085-86 (9th Cir. 2003). Thus, any element of legal analysis and statutory interpretation underlying the district court's attorneys' fees decision is reviewed de novo, and factual findings underlying the district court's decision are reviewed for clear error. Barrios v. Cal. Interscholastic Fed'n, 277 F.3d 1128, 1133 (9th Cir. 2003).
III. Discussion
It is clear to us that this case, which involved over half a decade of litigation and a four week trial, was about the compromise of EchoStar's satellite television programming security system due to the December 2000 Internet posting and related conduct, not the P1 Test. EchoStar sought actual damages and lost profits totaling approximately $184.8 million, $823 million in disgorgement penalties, and statutory damages of $1 billion. All of EchoStar's claims were based on the allegation that NDS was responsible for the compromise of EchoStar's security system, which caused EchoStar to spend over $94 million to replace all of its access cards with new cards that used a different encryption technology. As stated by EchoStar in support of its motion for attorneys' fees and costs, "Each of EchoStar's claims was premised on the same core set of facts — that NDS engaged in unfair and unlawful business practices through conduct that compromised the integrity of EchoStar's security system." In other posttrial briefing, EchoStar characterized the P1 Test as an "inconsequential fact discussed briefly with few witnesses." In sum, this case was about the massive breach of EchoStar's security system, not the P1 Test.
The P1 Test was an incidental event, unrelated to the December 2000 posting. It was a technical violation of the Communications Act and the California Penal Code, and involved a single, unauthorized interception of EchoStar's signal in a test of a piracy method. As a result of this interception, the jury awarded to EchoStar actual damages of $45.69 (which were trebled pursuant to statute), and $1,500 in statutory damages, and the court awarded to EchoStar $284.94 in restitution and issued a permanent injunction against NDS prohibiting it from again engaging in the illegal conduct found by the jury.
The district court determined that the jury rejected EchoStar's theory that NDS was responsible for the December 2000 Internet posting, and that the violation findings were based on the evidence of the P1 Test. We agree. The jury's express findings, particularly its actual damages award of $45.69, necessarily lead to the conclusion that the jury rejected EchoStar's exclusive theory at trial that NDS was responsible for the December 2000 posting and its aftermath, but found that NDS illegally intercepted EchoStar's programming signal by conducting the P1 Test. EchoStar's arguments to the contrary are unpersuasive.
As a matter of law, we conclude that, for the purpose of awarding attorneys' fees and costs, NDS was the prevailing party in this litigation and that EchoStar fails to meet the legal definition of a prevailing party on any of its claims.
California case law provides that, in the absence of contrary legislative direction, a trial court must determine prevailing party status using a "pragmatic" approach to determine whether a party prevailed "on a practical level." See Donner Mgmt. Co. v. Schaffer, 48 Cal. Rptr. 3d 534, 542-43 (Cal. Ct. App. 2006). Unless a statute provides otherwise, California courts reject a "rigid definition of prevailing party." Id.
Under federal law, a "prevailing party" is one that succeeds "`on any significant issue in litigation which achieves some of the benefit the parties sought in bringing suit.'" Hensley v. Eckerhart, 461 U.S. 424, 433 (1983) (quoting Nadeau v. Helgemoe, 581 F.2d 275, 278-79 (1st Cir. 1978)). A litigant qualifies as a prevailing party if it has obtained a "court-ordered `change [in] the legal relationship between [the plaintiff] and the defendant.'" Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep't of Health & Human Res., 532 U.S. 598, 604 (2001) (alterations in original) (quoting Tex. State Teachers Ass'n v. Garland Indep. Sch. Dist., 489 U.S. 782, 792 (1989)). "`Where the plaintiff's success on a legal claim can be characterized as purely technical or de minimis,' " the plaintiff cannot recover fees as a prevailing party. Parents of Student W. v. Puyallup Sch. Dist., No. 3, 31 F.3d 1489, 1498 (9th Cir. 1994) (quoting Tex. State Teachers Ass'n, 489 U.S. at 792). But "[t]he touchstone of the prevailing party inquiry must be the material alteration of the legal relationship of the parties in a manner which Congress sought to promote in the fee statute. Where such a change has occurred, the degree of the plaintiff's overall success goes to the reasonableness of the award under Hensley, not to the availability of a fee award vel non" Tex. State Teachers Ass'n, 489 U.S. at 792-93. That is, "the prevailing party inquiry does not turn on the magnitude of the relief obtained." Farrar v. Hobby, 506 U.S. 103, 114 (1992).
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Admit Nothing, Deny EVERYTHING, DEMAND Pr00f!
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