District Court Doesn't 'Like' Facebook In Fee Award Decision

By David J. McMahon and Tino X. Do

In Cohen v. Facebook, Inc., (April 10, 2012), the U.S. District Court for the Northern District of California denied defendant’s request for attorneys fees under a statutory fee-shifting provision. The court concluded that defendant was not entitled to recover fees because it could not be deemed a “prevailing party” given that it had obtained dismissal of the action due to lack of jurisdiction.

In a putative class action, plaintiffs alleged that defendant violated California Civil Code § 3344 by using the names and likenesses of members of the Facebook social network, without authorization or compensation, to promote a separate service. Section 3344(a) states that the:

prevailing party in any action under this section shall also be entitled to attorney’s fees and costs.” 

The defendant filed a Federal Rule of Civil Procedure Rule 12(b)(6) motion to dismiss the complaint that challenged the plaintiffs’ allegations that they had suffered “injury in fact” as unduly conclusory. This motion was granted but with leave to amend, and therefore did not render defendant a “prevailing party” for fee-shifting purposes.

Plaintiffs filed a First Amended Complaint that claimed a right to recover based on the alleged violation of §3344, and defendant submitted a second motion to dismiss that invoked both Rule 12(b)(1) (lack of standing) and 12(b)(6) (failure to state a claim). Defendant argued that “mere allegation of statutory violation” does not confer jurisdiction under Article III for a federal court to hear a plaintiff’s claim. 

Defendant’s second motion to dismiss was granted without leave to amend, based on the determination that plaintiffs lacked the requisite “injury in fact” necessary under federal Constitutional standards to support jurisdiction. 

The court then rejected defendant’s contention that even if it obtained a dismissal based on lack of jurisdiction, it could still be a prevailing party because it achieved its litigation objections on a practical level. 

While the court found that no California court had addressed the specific question at issue, it cited a California appellate decision that recognized that the interpretation of “prevailing party” should not be so broad as to include every defendant who obtains a dismissal or judgment that may appear favorable. The court also questioned whether a federal court even has the jurisdiction to award attorney fees once it has determined that it lacks jurisdiction to hear the merits of the controversy. 

Finally, the court held that the nature of the dismissal defendant obtained did not warrant characterizing it as having prevailed under §3344 for fee-shifting purposes because the decision in effect was only that plaintiffs had sued in the wrong forum, not that the claims failed for any substantive reason.

 

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