Allstate Insurance Company v. Fougere

594 F.Supp.3d 212

ALLSTATE INSURANCE COMPANY, Plaintiff/Counterclaim Defendant,

v.James FOUGERE, Sarah Brody-Isbill, and a Better Insurance Agency, Inc., Defendants/Counterclaimants.

CIVIL ACTION NO. 16-11652-JGD

United States District Court, D. Massachusetts.

Filed March 28, 2022

Erik W. Weibust, Dallin R. Wilson, Seyfarth Shaw, LLP, Boston, MA, J. Scott Humphrey, Pro Hac Vice, Kevin J. Mahoney, Pro Hac Vice, Seyfarth Shaw LLP, Chicago, IL, for Plaintiff/Counterclaim Defendant.

Timothy K. Cutler, Cutler & Wilensky LLP, Waltham, MA, for Defendants/Counterclaimants.

MEMORANDUM OF DECISION AND ORDER ON PLAINTIFF'S PETITION FOR ATTORNEYS’ FEES AND COSTS

DEIN, U.S.M.J.

I. INTRODUCTION

This matter is before the court on "Plaintiff's Petition for Attorneys’ Fees and Costs" (Docket No. 270) ("Fee Petition") pursuant to which the plaintiff, Allstate Insurance Company ("Allstate"), is seeking to recover its attorneys’ fees and costs incurred in prosecuting and defending its breach of contract claims against its former Exclusive Agents, the defendants James Fougere ("Fougere") and Sarah Brody-Isbill ("Brody-Isbill"), who used confidential Allstate information in their competing insurance business, the defendant A Better Insurance Agency, Inc., ("ABIA"), in violation of their Exclusive Agency Agreements ("EA Agreements").¹ As this court ruled in its "Memorandum of Decision and Order on Cross-Motions for Summary Judgment" ("SJ Order") (Docket No. 164), issued on September 30, 2019, the confidential (and trade secret) information was contained in two spreadsheets, known as "TU Framingham" and "TU Auburn," which were found on ABIA's computer system and included "the names of thousands of Allstate customers, along with their renewal dates, premiums, types of insurance, Allstate policy numbers, drivers’ license numbers, home addresses, phone numbers and email addresses." (SJ Order at 13-14).² Disgruntled former employees of ABIA had disclosed the possession and misuse of the confidential information to Allstate and worked with Allstate to identify the scope of ABIA's use of the information.

A preliminary injunction was issued early in litigation, on November 22, 2016, preventing the defendants from using and/or accessing the TU Framingham and TU Auburn spreadsheets. (Docket No. 14). Pursuant to the SJ Order of September 30, 2019, and a subsequent summary judgment ruling on March 26, 2020 (the "93A SJ Order") (Docket No. 195), all of the defendants’ counterclaims were dismissed, and judgment as to liability only was entered in Allstate's favor on its breach of contract and misappropriation of trade secrets claims against Fougere and Brody-Isbill, as well as on its breach of the Defend Trade Secrets Act of 2016, 18 U.S.C. §§ 1839 et seq. ("DTSA") claims against Fougere, Brody-Isbill and ABIA. Allstate subsequently dismissed its claims against all three defendants alleging violations of Mass. Gen. Laws ch. 93A. Allstate notified the court that it intended to go to trial to assess damages on the breach of contract, misappropriation of trade secrets and DTSA claims, including multiple damages on its trade secret misappropriation claims. (Docket No. 197). In addition, Allstate notified the court that it intended to pursue its interference with advantageous business relations claim against ABIA at trial. (Id. ).

A final trial date was set for September 20, 2021. (Docket No. 255). On August 25, 2021, Allstate informed the court that it would seek only a permanent injunction and nominal damages for its breach of contract claims, and dismiss all of its other claims, if it was permitted to seek attorneys’ fees and expenses in connection with its breach of contract claims in accordance with the terms of the EA Agreements. (Docket No. 262). Since it was undisputed that the EA Agreements provided for recovery of attorneys’ fees and costs in the event of a breach of their confidentiality provisions, the court terminated the scheduled jury trial and set a schedule for Allstate's proposed applications for fees and expenses and a permanent injunction. (See Docket No. 276).³ On October 15, 2021, Allstate filed its instant Fee Petition (Docket No. 270) and on December 15, 2021, it filed its "Motion for Entry of a Permanent Injunction." (Docket No. 280).

Following substantive briefing, on January 21, 2022, this court issued its "Memorandum of Decision and Order on Plaintiff's Motion for Entry of a Permanent Injunction" (Docket No. 283) ("PI Order") granting Allstate a permanent injunction prohibiting Fougere, Brody-Isbill and ABIA from "directly or indirectly, accessing, using, possessing, or having access to the spreadsheets entitled ‘TU Framingham’ and ‘TU Auburn’ ... and the information contained therein." (PI Order at 21). On the same date, the court entered an Order of Judgment (Docket No. 284) entering judgment in favor of Allstate on its claims for breach of contract against Fougere and Brody-Isbill and awarding Allstate $1.00 in nominal damages from each of those defendants. All of Allstate's remaining claims were dismissed in accordance with Allstate's agreement to do so. All of the defendants’ counterclaims were dismissed in accordance with the court's summary judgment orders. The court further noted that a subsequent judgment would be entered following its ruling on the Fee Petition.

Unfortunately, this case has been plagued by a lack of trust between the parties as well as between counsel, a "leave no stone unturned" philosophy of both prosecution and defense, and an inability of the parties to compromise. Thus, what should have been a straightforward breach of contract claim, which could have been concluded by the entry of a permanent injunction early on in the litigation, blossomed into almost six (6) years of intensive, overly-complicated and costly litigation. The extreme positions taken by the parties is evidenced by the pending Fee Petition: Allstate is seeking $583,229.00 in fees and $34,397.66 in costs for a total of $617,626.66 "to account for its attorneys’ fees and costs in successfully prosecuting its case and defending against Defendants’ counterclaims arising out of the confidentiality provision in their EA Agreements" (Fee Petition at 16) while the defendants contend that if Allstate is entitled to any fees, which they deny, "the total amount [of] fees potentially awardable to Allstate" is $4,224.52. ("Defendants’ Opposition to Plaintiff's Petition for Attorneys’ Fees and Costs" ("Opp.") (Docket No. 274) at 5). The broad generalities used both in billing and argument (by both parties) have made the parties’ briefing remarkably unhelpful in assessing an appropriate award of fees and costs.

After careful consideration of the evidence before the court, Allstate's Fee Petition is allowed in the amount of $220,807.05 in fees and $13,440.23 in expenses for a total of $234,247.28. The court's analysis is described below. The court assumes the reader's familiarity with the SJ Order and PI Order so that the procedural history and facts of this case are described only to the extent necessary to explain the award made here.

II. ALLSTATE'S ENTITLEMENT TO FEES

The EA Agreements between Allstate, Fougere and Brody-Isbill (each defendant being identified as "Agency" in their EA Agreement) provide as follows:

Agency recognizes that a breach of the foregoing provisions [regarding Allstate's confidential information] will cause irreparable damage to the Company's business and that such damage is difficult or impossible to measure. Agency agrees that in the event of such breach, the Company, in addition to such other rights and remedies it may have, will be immediately entitled to an order granting injunctive relief from any court of competent jurisdiction against any act which would violate any such provision, with the necessity of posting a bond, and Agency waives any defense to an application for such order, except that the violation did not occur. Agency agrees that the Company will be entitled to an award of reasonable attorneys’ fees in the event that it is successful in an application for injunctive relief or in an action based upon breach of the foregoing provisions.

(SJ Order at 38, EA Agreement ¶ IV.F) (emphasis added).

The defendants contend that Allstate is not the "prevailing party" entitled to fees on its breach of contract case because it was not awarded any damages. (Opp. at 4). This argument is defeated by the above-quoted contractual provision, which expressly provides that Allstate is entitled to recover "reasonable attorneys’ fees in the event that it is successful in an application for injunctive relief or in an action based upon breach" of the confidentiality provisions of the EA Agreements. Here, Allstate prevailed in obtaining injunctive relief and also in its action based on the defendants’ breach of their confidentiality obligations under their EA Agreements. As this court previously ruled in the PI Order, "[u]nder Massachusetts law, a person who is injured by a breach of contract has a right to judgment even if the breach caused no harm" and, thus, is the prevailing party entitled to at least nominal damages. Flynn v. AK Peters, Ltd., 377 F.3d 13, 23 (1st Cir. 2004) (and cases cited). See also Bos. Prop. Exch. Transfer Co. v. Iantosca, 720 F.3d 1, 11 (1st Cir. 2013) ("causation of damages is not an element of breach of contract, as a plaintiff is entitled to at least nominal damages upon proving a breach."). Contractual provisions entitling a party to recover their attorneys’ fees are enforceable. Bournewood Hosp., Inc. v. Mass. Comm'n Against Discrimination, 371 Mass. 303, 311-12, 358 N.E.2d 235, 240 (1976). Thus, Allstate is entitled to its reasonable attorneys’ fees and costs in connection with its efforts to obtain injunctive relief as well as its action for breach of contract.

As will be seen below, the more difficult questions here are whether the time spent on matters was excessive and how the prosecution of...