United States District Court, N.D. California
ORDER DENYING MOTION TO STRIKE AND REQUESTING
AFFIDAVIT FROM PROPOSED SPECIAL MASTER
WILLIAM ALSUP UNITED STATES DISTRICT JUDGE
order directed the parties to engage in certain procedures
relating to the award of attorney's fees on appeal (Dkt.
No. 98). In response to defendant Kuwait Finance House
(Bahrain)'s assertion of its fees incurred on appeal,
plaintiff introduced a confidential settlement communication
from counsel for KFH(B). That defendant now moves to strike
that communication as inadmissible pursuant to Rule 408 of
the Federal Rules of Evidence.
408(a)(1) provides that evidence “furnishing,
promising, or offering - or accepting, promising to accept,
or offering to accept - a valuable consideration in
compromising or attempting to compromise [a] claim” is
inadmissible “to prove or disprove the validity or
amount of a disputed claim, ” subject to certain
exceptions not applicable here.
August 24, 2016, counsel for KFH(B) set forth “the
total amount due to satisfy Dr. Teece's obligations
arising out of the Northern District of California
litigation” (Cambria Decl., Exh. B). Defense counsel
provided a calculation of that total, which included the
previously agreed-upon amount due under the judgment, plus
the following calculation of fees and costs on appeal.
defense counsel stated, “KFH(B) incurred $200, 107.50
in attorneys' fees and $2, 214.76 in costs on
appeal.” They then acknowledged that total needed to be
reduced by half, pursuant to the undersigned's prior
decision reducing the recoverable appellate fees due to the
ruling on KFH(B)'s cross-appeal. Accordingly, that email
stated “KFH(B) is entitled to recover from Dr. Teece
$100, 053.75 in attorney's fees and, $1, 107.38 in costs
incurred in defending Dr. Teece's appeal”
hours later, Teece rejected that calculation, stating,
“[t]hat is ridiculous as you know. I don't have it
in front of me but there was no award of costs by the Ninth
Circuit. We will take your interest calculation and apply it
to the actual and only judgment and proceed
counsel for KFH(B) replied, stating, “if Dr. Teece
persists in refusing to pay the portion of KFH(B)'s
appellate attorneys' fees and costs outlined in [the
prior email]” then KFH(B) would seek “to recover
all of KFH(B)'s reasonable appellate attorneys'
fees” (Bassak Decl., Exh. A).
court of appeals then clarified that KFH(B) could recover
appellate fees, but not costs (Dkt. No. 95).
subsequent discussions pursuant to the Court's procedure
for resolving disputes involving attorney's fees, Teece
appended the first two communications discussed above as
evidence to support his position on the amount of appellate
fees owed, indicating Teece would rely on KFH(B)'s
calculation of the amount owed in any further proceedings. He
did not include the third communication.
contends that, when viewed in light of its subsequent
assertion that the amount first stated constituted only a
“portion of KFH(B)'s appellate attorneys'
fees” and that Teece's failure to accept that
amount would require it to seek to recover “all of
KFH(B)'s reasonable appellate attorneys' fees,
” its statement that Teece owed $100, 053.75
constituted an offer of settlement and is thereby
inadmissible under FRE 408(a). Not so.
expressly described the figures in its calculations as the
“total amount” owed, the fees
“incurred” and the amount KFH(B) was
“entitled to recover” (Cambria Decl., Exh. B).
KFH(B) recognized that “it would be unreasonable”
not to reduce the number in half based on a prior order of
the undersigned judge about recoverable fees in this action.
Nothing about that statement constituted an offer of
settlement. It was a matter-of-fact statement of the amount
in question. KFH(B)'s application of the fifty-percent
reduction was not a compromise, but rather an application of
what it understood to be the law of the case.
of no moment that KFH(B) later threatened that it
would seek all of its appellate fees, rather than
the half of the total fees it incurred, once Teece rejected
the notion that appellate fees were owed at all. Its initial
communication simply was not an offer “in compromising
or attempting to compromise” the amount at issue; it
was a matter-of-fact assertion of the total amount, reduced
according to a formula already set out in a prior order.
the motion to strike is Denied. The special
master may consider KFH(B)'s statement as evidence of the
total amount of fees owed, though it need not be accepted as
the parties both consent to the appointment of the Honorable
Richard Kramer (Retired) to act as the special master.
Accordingly, this order is inclined to appoint Judge Kramer
as the special master to resolve this dispute. Before any
appointment is made, by April 13, he shall
please file an affidavit disclosing any ground for
disqualification, agreeing to serve as a special master and
to file a written report and ...