By Memorandum Opinion entered by The Honorable Maryellen Noreika in Mixing & Mass Transfer Technologies, LLC v. SPX Corporation et al., Civil Action No. 19-529-MN (D.Del. November 4, 2020), the Court denied the SPX Defendants’ motion for attorneys’ fees after finding that Defendants were not a prevailing party.

By way of background, between 2005 and 2007, Plaintiff and a division of SPX were involved in litigation.  In 2007, the litigation was resolved by Settlement Agreement between Plaintiff and SPX.  Id.at *1.  The Settlement Agreement contained a general waiver and release and included a provision for attorneys’ fees for the prevailing party in the event any party breached the Settlement Agreement and any other party was required to bring legal proceedings to enforce the Settlement Agreement.  Id.at *2.

In 2019, Plaintiff filed an action against the SPX Defendants asserting patent infringement claims, unfair competition and false advertising claims under the Lanham Act, and other common law claims.  Id. at *2.  In response, Defendants filed a motion to dismiss all claims for failure to state a claim based on the general waiver and release provision contained in the Settlement Agreement.  Defendants contended those provisions in the Settlement Agreement released them from all of the claims asserted by Plaintiff.  Id.  After oral argument on the motion to dismiss, the Court dismissed two of the six claims without prejudice and thereafter Plaintiff voluntarily dismissed without prejudice the remaining four claims.  Id. at * 2-3.  Thereafter, Defendants filed their motion seeking attorneys’ fees.  Id. at *3.

Defendants argued that attorneys’ fees should be granted on two grounds:  (1) the Settlement Agreement; and (2) the alleged exceptional nature of the case.  Id. at *4.  The Court recognized that both grounds required Defendants to be a “prevailing party.”  Id.  Plaintiffs disputed whether Defendants were a prevailing party because the Court only dismissed two of the six claims without prejudice and Plaintiff voluntarily dismissed the remaining four claims without prejudice.  Id. at *5.  Defendants argued that they were a prevailing party because “they prevented [Plaintiff’s] attempts to alter the legal relationship between the parties” and a stipulated dismissal with prejudice entered by the Court can constitute a “judgment” for purposes of a motion for attorneys’ fees under Federal Rule of Civil Procedure 54, citing Keith Manufacturing Co. v. Butterfield, 955 F.3d 936, 939-40 (Fed. Cir. 2020).

After evaluation of both sides arguments, the Court found that neither the Court’s dismissal of two claims without prejudice nor the voluntary dismissals without prejudice would materially alter the legal relationship of the parties.  Id. at *5-6.  The Court reasoned that“[n]either dismissal would prevent Plaintiff from reasserting those same claims against Defendants in another action.”  Id. at *6.  Thus, “in the Court’s view, [a dismissal without prejudice], is not the type of ‘material alteration of the legal relationship of the parties’ that is the touchstone of the prevailing-party inquiry.”  Id. (quoting CRST Van Expedited Inc. v. E.E.O.C., 136 S.Ct. 1642, 1646 (2016)).

Accordingly, having found Defendants were not a prevailing party for purposes of eligibility for attorneys’ fees under the Settlement Agreement or 35 U.S.C. § 285, the Court denied the motion.

A copy of the Memorandum Opinion is attached.

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