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Circuitronix, LLC v. Kapoor

United States District Court, S.D. Florida

July 25, 2019

CIRCUITRONIX, LLC, Plaintiff,
v.
SUNNY KAPOOR, et al., Defendants.

          ORDER

          BETH BLOOM UNITED STATES DISTRICT JUDGE.

         THIS CAUSE is before the Court upon Defendant Sunny Kapoor's Motion for Fees and Costs (“Kapoor's Motion for Fees and Costs”), ECF No. [127], Circuitronix, LLC's Motion for Attorneys' Fees and Non-Taxable Expenses and Costs (“Circuitronix's Motion for Fees and Costs”), ECF No. [128], Sunny Kapoor's Application for Appellate Attorneys' Fees (“Kapoor's Application for Appellate Fees”), ECF No. [156-1], and Defendant Sunny Kapoor's Motion for Attorneys' Fees incurred in connection with Circuitronix's Motion for Relief from Final Order under Rule 60(b), ECF No. [167] (collectively referred to as the “Motions”). The Court previously referred the Motions to the Honorable Alicia O. Valle, United States Magistrate Judge, for a Report and Recommendation, ECF Nos. [159], [163], [170].

         On April 12, 2019, Judge Valle issued a Report and Recommendation (the “Report”), recommending that the Motions be denied. See Report, ECF No. [175]. The Report advised the parties that objections to the Report must be filed within fourteen days. Id. at 17-18. Both parties timely filed objections to Judge Valle's Report. See ECF Nos. [179], [180]. Kapoor filed a response to Circuitronix's objection. See ECF No. [181].

         I. BACKGROUND

         The underlying facts of the instant action stem from an employment dispute between Circuitronix and Kapoor, a former employee of the company. ECF No. [110] at 2. Following Kapoor's termination in 2015, Circuitronix filed suit against him, asserting claims for the improper dissemination of Circuitronix's proprietary information, self-dealing, and other alleged breaches of employment agreements. Id. In response to Circuitronix's claims, Kapoor filed a counterclaim against Circuitronix and its CEO, asserting claims for breach of employment contract, unlawful retaliation, civil theft, and unpaid wages. Id. In December of 2015, the parties entered into a settlement agreement, which was subsequently approved by the Court. ECF No. [44].

         On December 30, 2015, Circuitronix filed its first motion for enforcement of the Settlement Agreement, claiming that Kapoor was competing directly with Circuitronix through work he was performing at the time for Bawa Machine and Tool Manufacturing (“BMTM”). See ECF No. [45]. That motion was resolved when the parties filed a Joint Stipulation on January 22, 2016, which specifically provided, inter alia, that “[p]ursuant to the Parties' Settlement Agreement, Kapoor shall not, directly or indirectly, engage in any line of Circuitronix's business, including within the scope of his work with [BMTM].” ECF No. [48]. The Joint Stipulation also identified certain metal parts that Kapoor's work with BMTM did not involve. See Id. at 2 n.1.

         On September 9, 2016, Kapoor filed a Motion to Enforce the Settlement Agreement. See ECF No. [50]. Kapoor filed the motion in response to letters sent by Circuitronix to BMTM and Koala Holdings, LLC (“Koala”), relating to Circuitronix's claim that Kapoor was improperly competing with the company in violation of the Settlement Agreement. ECF Nos. [73] at 3; [110] at 6. In the motion, Kapoor argued that the letters violated the Settlement Agreement's confidentiality and non-disparagement clauses. ECF No. [50]. Kapoor further requested that he be granted limited discovery to determine if Circuitronix had sent any additional violative letters to third parties On September 26, 2016, Circuitronix filed its own Cross-Motion to enforce the Settlement Agreement, claiming that Kapoor was competing directly with Circuitronix through work he was performing at the time for BMTM. See ECF No. [55]. Circuitronix also requested limited discovery in order to seek additional evidence of Kapoor's alleged breach of the Settlement Agreement. See Id.

         The Court held an initial evidentiary hearing on the Cross-Motions on December 8, 2016. Following the initial evidentiary hearing, the Court entered an Order defining Circuitronix's line of business for purposes of the Settlement Agreement. ECF No. [73] at 12-13. Having defined Circuitronix's line of business, this Order also allowed Circuitronix limited discovery going forward to determine whether Kapoor materially breached the Settlement Agreement by competing in that line of business or “by otherwise violating the restrictive covenants found under paragraphs 4 or 5 of the Settlement Agreement.” Id. at 15. With respect to relief, the Court held that Circuitronix would not be permitted to seek damages (including liquidated damages) for Kapoor's alleged breach of the Settlement Agreement. See Id. at 13-15. Instead, the Court explained that it would only consider Circuitronix's Cross-Motion “insofar as it seeks injunctive relief” because Circuitronix failed to meaningfully comply with the conferral requirements under Local Rule 7.1(a)(3) before filing the Cross-Motion. Id. at 15. Regarding Kapoor's Motion, the Court held in the December 16, 2016 Order that the two letters Circuitronix sent to BMTM and Koala Holdings did not violate the confidentiality or non-disparagement clauses of the Settlement Agreement, and therefore denied Kapoor's Motion to that extent. However, the Court allowed Kapoor limited discovery to determine whether other third-party communications that Circuitronix had apparently sent out violated the Settlement Agreements' confidentiality and non-disparagement clauses. Id. at 6-7, 15.

         At the final evidentiary hearing, the Court addressed both parties' Motions to Enforce the Settlement Agreement. During the hearing, Kapoor conceded that the additional letters Circuitronix had sent out to third parties, which were produced during the parties' limited discovery, did not violate the Settlement Agreements' confidentiality and non-disparagement clauses. On August 10, 2017, after considering the evidence presented at the hearing and in the parties briefing, the Court issued an Order denying the respective Motions in a Final Order on Cross-Motions to Enforce Settlement Agreement. ECF No. [110]. Thereafter, Circuitronix appealed the Court's ruling. ECF No. [125]. On October 1, 2018, the Eleventh Circuit issued its mandate affirming the Court's Final Order. ECF No. [150]. The Eleventh Circuit transferred Kapoor's Application for Appellate Attorney's Fees to the District Court for its consideration on the Application. ECF No. [156]. The parties then renewed their respective request for attorneys' fees and costs. ECF Nos. [159], [163]. Defendant Kapoor also sought his attorneys' fees related to the fees incurred as a result of the filing of Circuitronix's Motion for Relief from Final Order, ECF No. [145]. ECF No. [167].

         II. DISCUSSION

         Both parties have objected to the Report. See ECF Nos. [179], [180]. Defendant Sunny Kapoor objects to the Report's recommendation that his Motions for Attorneys' Fees be denied, arguing that while it initiated the post-settlement litigation, the substantial volume of the litigation related to the counterclaims asserted by Circuitronix. ECF No. [179], at 3-5. Defendant Kapoor also argues that the Report fails to undertake any factual analysis as to the significant issues tried, and therefore has improperly determined the attorneys' fee issue to be a “wash.” Id. at 2-6. Lastly, Kapoor argues that even if the Court adopts the Report's recommendation in denying his motions for attorneys' fees, his Application for Appellate Attorneys' Fees should nonetheless be granted. Id. at 11-14.

         Circuitronix also objects to the Report's recommendation that its Motion for Fees and Costs be denied, and the Report's finding that no party was the “prevailing party.” Specifically, Circuitronix argues that where a court has determined a “tie” has occurred, the party who was sued and found not liable should be determined to be the “prevailing party.” ECF No. [180], at 1. Circuitronix further objects as to Judge Valle's finding that because both parties lost on all of their claims, there was a “compelling reason” to find that neither party prevailed. Id. at 2.

         Turning to Defendant Kapoor's objections, the Court finds they are also without merit. Defendant Kapoor first appears to argue that the significant issue in an action should be determined by which issue resulted in the parties expending the most resources. However, Defendant Kapoor cites no authority to support this proposition. Further, an issue can be significant even if it was resolved efficiently by the Court during the duration of the litigation. Moreover, the Court disagrees with Defendant Kapoor's second objection that the Report fails to identify the significant issues that arose in this litigation. The Report specifically states

[W]here both parties sought to enforce the Settlement Agreement and neither succeeded, the undersigned finds that the application of the “significant issues” test results in a “wash.” Specifically, Kapoor lost on his claim that Circuitronix violated the Settlement Agreement's confidentiality and non-disparagement provisions ...

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