Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-3_05-cv-03477/USCOURTS-azd-3_05-cv-03477-1/pdf.json

Nature of Suit Code: 820
Nature of Suit: Copyright
Cause of Action: 17:101 Copyright Infringement

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Dahn World Co. Ltd., A Korean

corporation, 

Plaintiff, 

vs.

Eun Hee Chung, a Maryland resident, 

Defendant. 

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No. CV 05-3477-PCT-JAT

ORDER

Pending before the Court is Defendant’s Motion for Award of Attorneys’ Fees and

Expenses (Doc. # 32). 

I. BACKGROUND

Plaintiff Dahn World Co. Ltd. is a Korean corporation authorized to do business in

Arizona. Plaintiff provides secure Intranet and Internet computer services for the operation

of Dahn Centers located in the United States and throughout the world. Dahn Centers

provide education and training for yoga, meditation, and other activities related to health,

spirituality and the martial arts. 

On October 31, 2005, Plaintiff filed its original Complaint against Zhibin Zhong,

alleged to be a fictitious name used to register newdahn.com, an Internet domain. In the

original Complaint, Plaintiff alleged that "Zhibin Zhong" gained unauthorized access to

Plaintiff's employee Intranet site and to computer servers based in Korea, maintained by

Case 3:05-cv-03477-JAT Document 37 Filed 11/14/06 Page 1 of 12
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At that time, Defendant's attorney fees and expenses totaled less than $1,000.00. 

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Plaintiff for the exclusive use of corporate executives. Plaintiff further alleged that "Zhibin

Zhong" then copied trade secrets and sensitive information belonging to Plaintiff and

published that information on an Intranet web site. Based on the alleged conduct, Plaintiff

asserted the following claims: (1) computer fraud and abuse under 18 U.S.C. § 1030; (2)

violation of the Digital Millennium Copyright Act ("DMCA"), 17 U.S.C. § 1201 et seq.; (3)

breach of contract; (4) tortious interference with business relations; and (5) misappropriation

of trade secrets under the Arizona Trade Secrets Act, A.R.S. § 44-401 et seq. 

After the filing of its original Complaint, Plaintiff obtained documents suggesting that

Eun Hee Chung's credit cards were used to purchase web hosting services from an Australian

company in connection with one of the “anti-Dahn” web sites on which Plaintiff’s

confidential information was published. Consequently, on February 10, 2006, Plaintiff filed

its Amended Complaint substituting Eun Hee Chung, a resident of the state of Maryland, as

the defendant. Otherwise, the Amended Complaint re-alleges the same factual and legal

claims.

Soon after service of the Amended Complaint, Defendant claims she provided

credible evidence to Plaintiff that the credit card charges were unauthorized. In light of the

evidence, Defendant requested a dismissal without prejudice to avoid unnecessary fees and

expenses while Plaintiff continued its investigation.1

 Plaintiff declined the offer and

Defendant began to actively defend the case. 

On March 24, 2006, Defendant filed a motion to dismiss based on a lack of personal

jurisdiction over Defendant (Rule 12(b)(2) of the Federal Rules of Civil Procedure) and

improper venue (Rule 12(b)(3) of the Federal Rules of Civil Procedure). On June 28, 2006,

the Court granted Defendant's motion to dismiss for lack of personal jurisdictional and

dismissed the case. Thereafter, Defendant filed a Motion for Award of Attorneys' Fees and

Expenses, claiming fees and expenses in the amount of $11,527.92. In her subsequently filed

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supporting memorandum, Plaintiff claimed fees and expenses in the amount of $17,352.57,

with the difference being additional fees and expenses related to the drafting of the motion

for attorney fees and supporting memorandum. Finally, in her reply memorandum,

Defendant claims an additional $2,660.00 in fees for drafting a reply memorandum, for a

total fee and expense claim of $20,012.57. Of the total amount, $550.07 is for expenses.

II. DISCUSSION

A. Attorney Fees and Expenses Under the Digital Millennium Copyright Act

Defendant first claims entitlement to attorney fees and expenses under §§ 1203(b)(4)

and (5) of the DMCA because of Plaintiff's claim under § 1201. Pursuant to § 1203(b)(4),

in a civil action for a violation of § 1201, a court "in its discretion may allow the recovery

of costs by or against any party other than the United States or an officer thereof." Also,

pursuant to § 1203(b)(5), a court "in its discretion may award reasonable attorney's fees to

the prevailing party." While § 1203(b)(4) apparently allows the recovery of costs by "any

party," § 1203(b)(5) only allows the Court to award Defendant her reasonable attorney fees

if she is the "prevailing party." Accordingly, the threshold issue is whether Defendant is the

"prevailing party," within the meaning of § 1203(b)(5), when she prevailed on a motion to

dismiss for lack of personal jurisdiction.

Under applicable federal jurisprudence, the Court finds that Defendant is not a

"prevailing party" within the meaning of § 1203(b)(5). The Ninth Circuit Court of Appeals

has consistently held that a party is not a "prevailing party" when dismissal is mandated by

a lack of subject matter jurisdiction. Elwood v. Drescher, 456 F.3d 943, 948 (9th Cir. 2006)

("Where a claim is dismissed for lack of subject matter jurisdiction, the defendant is not a

prevailing party within the meaning of § 1988."); Miles v. State of California, 320 F.3d 986,

989 (9th Cir. 2003) ("[I]n the context of a 42 U.S.C. § 1983 claim and request for attorneys'

fees under 42 U.S.C. § 1988 . . . a defendant is not a 'prevailing party' when dismissal is

mandated by a lack of subject matter jurisdiction."); Branson v. Nott, 62 F.3d 287, 293 (9th

Cir. 1994) ("Where, as here, dismissal is mandated by a lack of subject matter jurisdiction,

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a defendant is not a 'prevailing' party within the meaning of § 1988."). 

Other courts have reached similar conclusions. For example, in True Center Gate

Leasing, Inc. v. Sonoran Gate, L.L.C., 427 F.Supp.2d 946, 950 (D.Ariz. 2006) (Campbell,

J.), the court held that a defendant was not the prevailing party on a patent claim where the

court dismissed the claim for lack of jurisdiction and the defendant "did not obtain a

favorable ruling on the validity of its patents and did not defeat [plaintiff's] invalidity claim

on the merits." Similarly, in Kerner v. Cult Awareness Network, Washington, D.C., 843

F.Supp. 748, 749 (D.D.C. 1994), the Court held that the defendants, who were dismissed

without prejudice for failure of plaintiffs to properly serve process, were not prevailing

parties entitling them to attorney fees under Title II, 42 U.S.C. § 2000a-3(b). Finally, in

Hidahl v. Gilpin County Department of Social Services, 699 F.Supp. 846, 850 (D.Colo.

1988), the court held that 42 U.S.C. § 1988, which authorizes an attorney fee award to the

prevailing party in certain cases, does not authorize an award of attorney fees to a defendant

dismissed on the ground of lack of subject matter jurisdiction. See also Catalina Marketing

Int'l, Inc. v. Coolsavings.com, Inc., 2004 WL 421739, *2 (N.D.Ill. 2004) (Finding that a

party, dismissed for lack of personal jurisdiction in a patent infringement suit, is not a

prevailing party because the legal relationship between the parties was not altered; plaintiff

is free to file suit, making identical allegations, in another court.). 

While the foregoing jurisprudence addresses "prevailing party" status under statutes

other than the DMCA and dismissal on grounds other than for a lack of personal jurisdiction,

the Court finds the jurisprudence persuasive and applicable to the instant case. Accordingly,

the Court finds that Defendant is not a "prevailing party" within the meaning of 17 U.S.C.

§ 1203(b)(5) and that Defendant is not entitled to an award of attorney fees thereunder.

Because of this finding, the Court refuses to award Defendant her costs under 17 U.S.C. §

1203(b)(4). 

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The Court notes that § 12-341.01(A) does not provide for the award of expenses.

Instead, A.R.S. § 12-341 provides that "[t]he successful party to a civil action shall recover

from his adversary all costs expended or incurred therein unless otherwise provided by law."

Defendant does not cite this statutory provision in support of her request for expenses. 

3

The Court also must determine whether Plaintiff's action arises “out of a contract.”

A.R.S. § 12-341.01(A). To make this determination, the Court considers the “essence of the

action.” ASH, Inc. v. Mesa Unified Sch. Dist. No. 4, 673 P.2d 934, 937 (Ariz. Ct. App.

1983). If “a contract was a factor in causing the dispute,” the action arises out of a contract.

Id. at 936. In the instant case, Plaintiff’s Amended Complaint alleges that Defendant

breached the non-disclosure policy and that said non-disclosure policy is a contract.

Accordingly, the Court finds that this action arose out of a contract within the meaning of

A.R.S. § 12-341.01(A).

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B. Attorney Fees and Expenses under Arizona Law 

Defendant next claims entitlement to attorney fees and expenses under A.R.S. § 12-

341.01(A).2

 Pursuant to § 12-341.01(A), "[i]n any contested action arising out of a contract,

express or implied, the court may award the successful party reasonable attorney fees."

Similar to the analysis under 17 U.S.C. § 1203(b)(5), the Court must determine whether

Defendant is the "successful party." If the Court finds Defendant to be the "successful party"

within the meaning of § 12-341.01(A), then the Court must determine whether the award of

attorney fees is otherwise appropriate and, if so, whether the fees claimed are reasonable.3

1. "Successful Party" Status

Under applicable Arizona jurisprudence, the Court finds that Defendant is the

"successful party" within the meaning of A.R.S. § 12-341.01. The Arizona Court of Appeals

has concluded that "it is not always necessary to prevail on the merits of the underlying

claims in order to be a 'successful party' under A.R.S. § 12-341.01." Mark Lighting Fixture

Co., Inc. v. General Electric Supply Co., 745 P.2d 123, 128 (Ariz. Ct. App. 1986), vacated

on other grounds, 745 P.2d 85 (Ariz. 1987), citing Wagenseller v. Scottsdale Memorial

Hospital, 710 P.2d 1025 (Ariz. 1985). The court further explained:

It is apparent from the wording of [A.R.S. §§ 12-341 and 12-

341.01] that our legislature intended to allow the recovery of

costs and attorney's fees when a party succeeds in the particular

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Indeed, Plaintiff has filed a similar Complaint against Defendant in the District of

Maryland. 

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Plaintiff cites two Arizona decisions in its opposition to an award of attorney fees and

expenses. See U.S. Insulation, Inc. v. Hilro Constr. Co., Inc., 705 P.2d 490, 499 (Ariz. Ct.

App. 1985) (refusing to rule on attorney fee issue absent a decision on the merits); Esmark,

Inc. v. McKee, 578 P.2d 190 (Ariz. Ct. App. 1978) (finding attorney fee award to be

premature where no successful party in the action below). While the Court considers the

decisions to be distinguishable from the instant case, the Court finds a more compelling

reason to refuse to follow them. Specifically, the decisions predate the Arizona Supreme

Court's decision in Wagenseller, 710 P.2d 1025, in which the court rejected the argument that

a party is not the "successful party" under A.R.S. § 12-341.01 until it succeeds on the merits,

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proceeding, which is the 'action,' without regard to whether the

substantive allegations presented therein were disposed of at that

time. There can be no doubt that when appellant's action in this

case was dismissed without a judgment being entered against the

appellees, they were the successful parties to that 'action.' It is

not relevant under the terms of these statutes whether the

dismissal, purported to be without prejudice, operates as a

complete dismissal . . . or whether the underlying claim is still

viable and will be determined in a subsequently filed action.

The only relevant point is that the defendants were successful in

the particular action in question. 

 Id. at 129. A similar conclusion was reached in Harris v. Reserve Life Ins. Co., 762 P.2d

1334 (Ariz. Ct. App. 1988), wherein the court, relying on Mark Lighting, stated:

We have held that when a plaintiff's complaint is dismissed

because of plaintiff's failure to prosecute, the defendant may be

considered the successful party for purposes of recovering costs

pursuant to A.R.S. § 12-341. The fact that the action is

dismissed without prejudice and that plaintiff can refile is not

relevant. 

762 P.2d at 385. See also Vecsel Partners v. Scottsdale Conference Center, 29 F.3d 637,

1994 WL 315631, * 3 (9th Cir. 1994) ("Where a suit has been dismissed without prejudice,

the defendant is still considered a successful party for purposes of A.R.S. § 12-341.01."). 

In the instant case, the Defendant prevailed on her motion to dismiss for lack of

personal jurisdiction and the case was dismissed without prejudice. While Plaintiff may refile its Complaint against Defendant in a court of proper jurisdiction,4

 Arizona jurisprudence

indicates that Defendant is nonetheless the successful party in this case.5

 Accordingly,

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as well as the two subsequent appellate court decisions, Mark Lighting, 745 P.2d 123, and

Harris, 762 P.2d 1334, relied on by the Court. 

6

Again, even though Defendant did not cite A.R.S. § 12-341 in support of her request

for an award of expenses, the Court will nonetheless consider her request as being asserted

under that statute. 

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The Court need not engage in such an analysis under A.R.S. § 12-341 because the

Court has no discretion to deny costs to Defendant, who has been found to be the successful

party. See Roddy v. County of Maricopa, 911 P.2d 631, 633 (Ariz. Ct. App. 1996).

Accordingly, the Court will award Defendant $550.07 for costs, as requested in her motion,

because Plaintiff has not otherwise disputed the nature of the claimed costs.

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following Arizona law, the Court finds that Defendant is the successful party within the

meaning of A.R.S. § 12-341.01 and A.R.S. § 12-341.6

2. Appropriateness of Attorney Fee Award

Because the Court has concluded that Defendant is the successful party within the

meaning of A.R.S. § 12-341.01, the Court must now determine whether an award of attorney

fees is otherwise appropriate.7

 

As the wording of A.R.S. § 12-341.01 makes clear, the Court may award reasonable

attorney fees. The awarding of attorney fees in contract actions is a matter within the

discretion of the Court. Associated Indem. Corp. v. Warner, 694 P.2d 1181, 1183-84 (Ariz.

1985). To this end, the court in Warner enumerated six factors that courts should consider

when deciding whether to award attorney fees to the successful party: (1) the merits of the

unsuccessful party’s claim or defense; (2) whether litigation could have been avoided or

settled; (3) whether assessing fees against the unsuccessful party would cause extreme

hardship; (4) whether the successful party prevailed with respect to all relief sought; (5) the

novelty of the issues, and whether such claim or defense had previously been adjudicated in

this jurisdiction; and (6) whether the award of attorney fees would discourage other parties

with tenable claims from litigating or defending legitimate contract issues for fear of

incurring liability for substantial amounts of attorney fees. Id. at 1184. No single factor is

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determinative and the Court is to weigh all of the factors in exercising its discretion to award

attorney fees. Wilcox v. Waldman, 744 P.2d 444, 450 (Ariz. App. 1987). 

First, while the initial filing of suit in the District of Arizona was supported by

evidence that the fictitious defendant was located in Arizona, Plaintiff thereafter learned of

Defendant's identity and her residency in the state of Maryland. This subsequent knowledge

resulted in the filing of an Amended Complaint herein. While the filing of the Amended

Complaint herein was not completely without merit, considering Defendant's actual

residency, Plaintiff took a calculated risk by not re-filing its Complaint in the District of

Maryland where Defendant undoubtedly was subject to personal jurisdiction. 

Second, after serving the Amended Complaint, Plaintiff declined to dismiss Defendant

from the matter without prejudice so Defendant could avoid unnecessary fees while Plaintiff

continued its investigation. At that time, Defendant’s attorney fees totaled less than

$1,000.00. Currently, the total amount of fees and expenses sought by Defendant is

$20,012.57. Further, attorney fees associated with litigation in the District of Arizona could

have been avoided altogether if Plaintiff, instead of filing an Amended Complaint herein, had

filed a Complaint in the District of Maryland. 

Third, Plaintiff has failed to allege that an award of attorney fees would cause extreme

hardship. Plaintiff conducts business globally and has offered no evidence to show any

financial circumstances sufficient to suggest any hardship whatsoever.

Under the fourth factor, "the possibility of subsequent resolution on the merits is a

factor for the trial court to consider when exercising its discretion to award attorney's fees

under the statute." Mark Lighting, 745 P.2d at 130. However, it is "just one factor among

many." Id. And, while the merits of all five causes of action will be determined in the

District of Maryland action, the Court notes Defendant sought and received dismissal of the

Amended Complaint which was precisely the relief sought. 

Fifth, the principles regarding personal jurisdiction in this case are not novel. The

"purposeful availment" and "effects" test, relied upon by the Court in finding no personal

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jurisdiction, is not a recent jurisdictional standard. Further, the Ninth Circuit, in Cybersell,

Inc. v. Cybersell, Inc., 130 F.3d 414, 418 (9th Cir. 1997), adjudicated a similar issue when

it found that the maintenance of a website accessible to anyone does not indicate purposeful

direction of activity to the forum state sufficient to confer personal jurisdiction. 

Finally, Plaintiff has failed to show that an award of attorney fees would discourage

other parties with tenable claims from litigating for fear of incurring liability for substantial

amounts of attorney fees. In fact, an award of attorney fees would have the desirable effect

of making parties more cautious where they file their claims.

Based on the foregoing, the Court finds that the factors-based analysis of the

appropriateness of attorney fees tilts in favor of Defendant. Therefore, an award of attorney

fees is appropriate in this case.

3. Reasonableness of Attorney Fees

The final step in the attorney fee analysis is the reasonableness of the fees sought,

which includes consideration of the hourly billing rate and the hours expended. Schweiger

v. China Doll Rest., Inc., 673 P.2d 927, 931-32 (Ariz. Ct. App. 1983). While Defendant

submitted affidavits and bills in support of her contention that the attorney fees sought are

reasonable, Plaintiff failed to submit any evidence contradicting the reasonableness of the

hourly billing rates or the hours expended. In fact, Plaintiff's only argument attacking the

reasonableness of the fees is that the fees should be apportioned between the successful and

unsuccessful claims. However, Defendant correctly counters that apportionment is not

appropriate when the fees are related to work that encompassed all of the claims generally.

Id. at 933; see also Gametech Int'l, Inc. v. Trend Gaming Systems, L.L.C., 380 F.Supp.2d

1084, 1099-1100 (D.Ariz. 2005). In this case, the fees sought are related to the motion to

dismiss for lack of personal jurisdiction, and the motion for attorney fees, which

encompassed all of the claims generally. Accordingly, apportionment is not appropriate. 

Despite Plaintiff's failure to contest the reasonableness of the fees sought, the Court,

upon review of Defendant's memoranda and supporting documentation, is concerned with

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As the court in Schwartz v. Schwerin, 336 P.2d 144, 146 (Ariz. 1959), sets forth, the

Court may consider, inter alia, the difficulty and intricacy of the work performed when

determining the reasonableness of the attorney fees sought. 

9

Specifically, the Court notes that Christopher Davis, the summer law clerk, spent 12.4

hours on the motion for attorney fees and expenses and, thereafter, Robert Brennen,

Defendant's actual counsel, spent 12.2 hours on the motion, much of it duplicative of Mr.

Davis's efforts. Subsequently, Mr. Brennen attests that he spent another 7 hours on a reply

to Plaintiff's response to the motion for attorney fees and expenses. 

10The hourly rate for Mr. Brennen was $380.00. The hourly rate for Christopher Davis

was $145.00. 

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the reasonableness of the time Defendant's counsel spent on the motion for attorney fees and

expenses, especially considering that the issue does not involve overly complex principles

of law.8

 Further, Defendant's counsel spent more time on the motion for attorney fees and

expenses (approximately thirty-two (32) hours) than on all other matters up to the dismissal

of the case (approximately twenty-nine (29) hours). While Arizona law provides that

Defendant is entitled to recover attorney fees incurred in the preparation of a motion for

attorney fees and expenses, see Gametech Int'l, Inc., 380 F.Supp.2d at 1101, the Court finds

unreasonable the fact that more time was spent on the motion than on all other matters. The

Court also finds unreasonable the fact that efforts on the motion for attorney fees and

expenses were duplicated by the utilization of a summer law clerk.9

 

In contrast, the Court is satisfied with the reasonableness of the time Defendant's

counsel spent on all other matters in defending against Plaintiff's claims up to the dismissal

of the case. The Court also is satisfied with the reasonableness of the hourly rates charged

by Defendant's counsel.10 When determining the reasonableness of an hourly rate, "the rate

charged by the lawyer to the client is the best indication of what is reasonable under the

circumstances of the particular case." Schweiger, 673 P.2d at 931-32. Further, as noted

above, Plaintiff failed to offer any contradictory evidence that the hourly rates charged in this

case were unreasonable. 

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11While Defendant's supporting documentation provides that the attorney fees incurred

on the motion for attorney fees and expenses total $8,556.50, the Court's calculation of the

fees during the pertinent time period indicates that the correct amount sought is $9,094.00.

It appears that Defendant omitted four time entries, on June 28, July 5 and July 12, 2006,

from her calculation. 

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In closing, Defendant seeks $10,906.00 in attorney fees for the work performed up to

the dismissal of the case. The Court finds this amount to be reasonable and appropriate.

Accordingly, the Court will award Defendant $10,906.00 in attorney fees for the work

performed up through the dismissal of the case. Also, Defendant seeks $9,094.00 in attorney

fees for the work performed on the motion for attorney fees and expenses.11 As discussed,

the Court finds this amount to be unreasonable. Instead, the Court considers $4,000.00 in

attorney fees, which will account for the lack of complexity of the issue and the duplicative

effort, to be reasonable. Accordingly, the Court will award Defendant $4,000.00 in attorney

fees for the work performed on the motion for attorney fees and expenses.

III. CONCLUSION

Based on the foregoing,

IT IS ORDERED that Defendant’s Motion for Award of Attorneys’ Fees and

Expenses (Doc. # 32) is GRANTED;

IT IS FURTHER ORDERED that Defendant is awarded $14,906.00 in attorney

fees;

IT IS FURTHER ORDERED that Defendant is awarded $550.07 in expenses;

IT IS FURTHER ORDERED that the Clerk of the Court shall enter judgment in the

amount of $15,456.07, plus interest from the date of judgment until paid, in favor of

Defendant Eun Hee Chung and against Plaintiff Dahn World Co. Ltd.;

///

///

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IT IS FURTHER ORDERED that Defendant's Supplemental Memorandum in

Support of Defendant's Motion for Award of Attorneys' Fees and Expenses (Doc. # 34),

which was incorrectly filed as a motion and seeks no affirmative relief, is DENIED.

DATED this 13th day of November, 2006.

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