~~

GIBNEY ANTHONY & FI~HERT'Y~.P

Attorneys at Law 665 Fifth Avenue New York, NY 10022 212.688.5151 212.688.8315 Fax www.gibney.com

Michael Lee 212.705.9835 Direct mlee@gibney.com

May 29,2013

VIA FIRST CLASS MAIL and EMAIL: timebuilder(a,live.com Leland Stanford Hoffman, Jr. 2252 Table Rock Road, SPC 3 Medford, OR 97501 Re: Rolex Watch U.S.A., Inc. v. Leland Stanford Hoffman, Jr. et al.: 12-CV-00736-SI

Dear Mr. Hoffman: As you are aware, this firm is counsel to Rolex Watch U.S.A., Inc. ("Rolex") in the above captioned matter. Enclosed is a copy of Magistrate Judge Papak's May 29, 2013 "Opinion and Order" ordering you to pay to Rolex the amount of $15,000 as sanctions for your failure to comply with the settlement agreement. Please contact the undersigned as soon as possible to discuss your payment of the sanctions. If you do not contact the undersigned, Rolex will commence any and all available legal methods to collect the $15,000.

Very Truly Yours, GIBNEY,ANTHO & FL HERTY,LLP

By:
Enclosure

~
Michael Lee

San Francisco Office: 455 Market Street, Suite 2200, San Francisco, CA 94105 tel 415.901.2270 Associated Offices: Gros Si Waltenspuhl, Rue Beauregard 9, CH-1204 Geneva, Switzerland tel +41 22.311.3833 Magrath LLP, 66/67 Newman Street, London, W1T 3EQ, United Kingdom tel +44 207.495.3003

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1N THE Ui~IITED STATES DISTRICT COU~"I' FOR THE DISTRICT ~F OREGQN

ROLEX WATCH U.S.A., NC., Plaintiff, 3:12-CV-736-PK OPINIQN AND ORDER

v.

LELAND STANFORD HOF~'IviAN, JR., Defendant. PAPflK, Magistrate J~~dge: Plaintiff Rolex Watch U.S.A.,Ina ("Rolex") filed this action against defendant Leland Stanford Hoffiiian, Jr.(doing business as Az~tic~ue Time, www.i'OI~YCTown.com, and. www.ho~ologist.com), on April 2S, 2012, alleging Hoffinan's liability for trademark infringement in violation of 15 U.S.C. 1114, cybersquatting in violation of 15 U.S.C. ~ 1125(d)(1)(A), and unfair competition in violation of I S U.S.C. 1 l25(a), and seeking money damages, an accounti~ig, injunctive relief to enjoin Hoffman from engaging in any further allegedly infringing conduct, and award of its attorney fees and costs. On November 15, 2d 12, the pazties advised the count that they had settled their dispute in principle. Although Hoffman subsegilently took the

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position that his expressed consent to the parties' settlement agreement was not enfo~ceable, on Januazy 24, 2013, I ruled that the panties' settlement agreement was complete,binding, and enforceable. Now before the court is Rolex`s motion (#61}, styled as a motion for imposition of sanctions against Hoffman for his tailu~e to comply with his obligations under the parties' settlement agreement, but argued as a motion for award of attorney fees puzsuant to the parties' settlement agreement and, in the alternative, for imposition ofthe attorney-fee sanction. I have considered the motzon and ail ofthe pleadings and papars on file. Foz tlae reasons set forth below, RoleY's motion is granted as discussed below. LEGAL.STAi~IDARDS I. Motion for Ar~vard off' Attora~ey Fees Pursuant to Contract Under Oregon law: In at~y action or suit in which a claim is made based on a cont~act that specifically provides that attozney :Fees and casts incui7ed to enforce the provisions of the contract shall be awarded to one of tlae panties, the pazry that prevails on the claim shall be entitled to reasonable attorney fees in addition to costs and disbursements, 4vithout regazd.to whether the prevailing party is the panty specified in the cont~act anc~ without regard to ~vhethe~ the prevailing parry is a party to the contract, Or. Rev. Stat. 20.09&(1). "[A]waid [offees pursuant to Section 20.09&(1)) is mandatory; the trial court has no discretion to deny if, although it does have discretion as to what amount is `reasonable."' Benchr~r~zrklVo~~thft~est, Inc. v. Sambhr, 191 Oz. App. 520, 523(2004), quoting U.S. IVatzmcrl Resow~ees, Inc. v. Grcty, 66 Oa. App. 769, 773(1984), Moreover, the court has~an independent duty to review a party's fee petition for reasonableness. See Gates v. Dearkmejian, 937 F.2d 1392, 14Q1 (9th Cir. 1993).

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For purposes of dete~~znining the reasonableness of a fee petition made pursuant to Section 20.096(lj, the court should consider "not only ...the amount of time ~equi~ed, but also such additional factors as the novelty and difficulty of the question involved, the amount involved a~ad the result obtained, among other factors. Chalr~~ers v. Ofegon Atrto. Ins, Co., 263 Oz. ~4~49, ASS-456 (1972), II. tl~o#ion for Tinpositiou of the Attoincy-Fee San~ctior~ District courts have the inherent power to issue sanctions against a party or lawyer for a "full range of litigation abuses." Charf~bers v, 1VASC0, Inc., 501 U.S. 32, ~6 (1991). "Such "inherent power ...can be invoked even if procedu~al ~ules exist which sanction the same
COi1C1l1Ct."

Id. at ~9. The cou~t`s inhe~~ent power to sanction includes the power to tax a party with

an opposing parry's attorney fees "as a sanction for the [paaty'sj 'willfi~l disobedience of a court order,' id. Ott 45, garoti~~g Alyesku Pipeline Service Co. v. Y~'ilderness Society, 421 U.S. 2~0, 258 (1975), gzrolrr~g Fleischmanr~ Distilling Corp. v. 1Llaier Brewing Co., 386 U.S. 714, 718 (1967), or when the parry acts in the course of litigation "in bad faith, vexatiously, wantonly, or for oppressive reasons," id at X45-~46, garotisag~(lyeska, ~2I U.S. at 25$-259, g2rotigF. D. Rich Co. v. United St~rtes ex rel. Iradtrstt~ia! Lcrnrbe~~ Co., X1'1 U.S, 116, 129(1970. See also, e.g., Fink v. Gomez,239 F.3d 989, 991-993 (9th Cir. 2001). Where a count taxes a party with an opposing patty's attol~ey fees pursuant to the court's inherent power to sanction, "the~e is nothing to suggest that [the] sanctions award [must] directly corzelate with the additional time" incui~ed by the opposing party in consequence of the conduct wai7anting imposition of sanctions. E~~on v. La1c~ Offices ofSidney ILlrckell, 638 F.3d 1015, 1035 (9th Cir, 2012). To the contrary, "[t]he district count leas wide discretion in cra$in~ a sanctions Page 3 -OPINION AND ORDER

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award arid" award of atto;~z~ey fees as a sanction in an amount that differs fiom the opposing party's actually incu~~~ed fees is "not an abuse of discretion." Id. MATERIAL rACTS Following settlement negotiations, on November 15, 2012, counsel for Rolex ~~equested via email that counsel for Hoffman provide "confii7natian" that specific settlement tei7ns set forth in seven enumerated paragraphs were "acceptable" to his client. That same day, counsel for Hoffman responded via email that "We have a deal," advising that Hoffman would begin compliance with his obligations as set fo~~th in the seven enutnexated paragraphs. The following d1y, November 16, 2012, counsel for Roles foxwaxded to counsel for Hoffman a draft written settlement agreement incorporating ail seven of the enumerated paz~agraphs setting forth the tei7ns the panties had agreed to, as well as additional provisions that the panties had not yet negotiated. The thizteenth paragraph ofthe written settlement agreement, whzch~, the parties had not previously negotiated, read as follotivs: The parties agree that the confidentiality of this agreemefzt is a material consideration for their entering into this agreement. Accordingly, neithEr of the pa~ties, nor any of their respective directors, officers, agents, employees, affiliates, assigns, insuxers, successors, attorneys, or other representatives, shall disclose any tei7ns or contents of this agreement, or disparage the other party. Five days latex, on iV`ovember 21, 2012, counsel for Hoffrnan advised counsel for Rolex via email that I~zs client had "one requested change in the settlement agreement," such modification to be made to one of the negotiated terms of the agreement not at issue here. The parties negotiated the detail of Hoffman's requested change, and on November 30, 2012, counsel for Hoffman advised counsel for Rolex that a formulation of the requested modification proposed by counsel fox Rolex vas acceptable to Hoffman. Counsel requested that Rolex provide a copy

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of the "final settlement agreement" incorpozatiz~g the negotilted modification Coy his client's signature. Over the following weeks, counsel for Hoffman repeatedly advised counsel for Role1 that Hoffman intended to sign the agreement in the foiin provided by Rolex on ~Iovembex 30, 2012. Specifically, counsel advised on December 6, 2012, that Hoffman intends on signing the agreement," on December 7, 2012, that Hoffman indicated to him that he tivould sign the agreement the follotiving tiveek, on December 1~, 2012, that t~is client was undet~taking to satisfy his obligations under tine negotiated terms of t}~e agreement, and on December 21, 2412, that Hoffman "still indicates his intention to sign the agreement." Ultimately, however, Hoffman elected to attempt to repudiate the agreement, taking the position that the unnegotiated inutllal confidentiality provision sit forth at parag~aph 13 of the uneYecuted settlennent agreement was unacceptable to him. Hoffman expressed himself willing to sign the agreement absent that provision. On January 24, 2013,I issued an Opinion and Order (#52) by and tluougli which I found the p~i-ry's settlement agzeement to be complete, binding, and enforceable, and specifically ordering Hoffman to comply with its terms. Itis undisputed tkat the parties' settlement agieeinent required Hoffinan to hans:fez to Rolex a1I internat domain names registered to him that included the name "role;c" or other names trademarked by Rolex, to delete from all twitter accounts anci websites controlled by him any statements regarding Rolex's and/or its attorneys' business p~actices, reputations, or personal appearances, to stop advertising atoll-free telephone dumber addressed to him using the name "ROLEX" and to remove zefezences to the telephone number using that name from twitter accounts and websites contaolled by him, to remove from

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all twitter accounts, ~vebsites, and social media accounts controlled by him all photographs of Role:~'s products not created by Hoffman and all banners displaying trademarks registered to Role:, to stop using the tezms "exclusive" or "professional" in connection with efforts to market Rolex repair services, and to place a p~ozninent disclaimer at the top of each website page controlled by him on which Rolex product images or references are displayed. It is further undisputed that the parties' settleme~it ag~eeznei~t provided that in the event "any legal action, proceeding or a~bit~~ation [wa]s initiated to enforce or interpret" its provisions, Rolex would be "entitled to recover any and all ...fees and costs incucxed" in consequence ofI~offinan's conduct in violation of the ag~eernent. On January 25, 2Q13, counsel for Rote:c sent Hoffraan's then-counsel ofrecord an email message reiterating Hoffman's obligations under the panties' settlement agreement. Having received no response thereto, counsel for Role: followed up with a similar such e~~iail message o~i January 30, 2013. That same day, Hoffnnan's counsel responded via email as follows: What changes are you indicating that my c3ient has not made? My client represents that he has made all of the ~egttested changes. Also oFi January 30,2013, counsel for Rolex sent counsel for Hoffman a detailed email message setting forth with particularity all of the actions Hoffiman was required to lake under the panties' settlement agreement that he had not yet taken. These included Hoffman's failure to transfer to RoIeY the domain name http:/h~oleYcrawn.wordpress.com that had been registez~ed to Hoffman, approximately thirty specifically identified website pages and tweets controlled by Hoffman on rvhicli statements regarding Rolex's and/oa its attoi7ieys' business practices, reputations, or personal appearances weze displayed, approximately tlu~ee tivebsite pages

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controlled by Hoffman on tivhich the name "ROLEX" vas used in corulection with a telephone nlunber registered to Hoffman, approximately two website pages contaolled by Hoffman on which photogxaphs of Roles products were displayed, apptoYimately eleven website pages on wluoci~ Hoffman advertised his Roles ~epair services using the term "professional," and Hoffman's failure to place the xequired disclaimer at the top of pages referencing Rolex's trademarks. Counsel for Hoffman not having responded to Rolex's message, and Hoffman having failed to cot~ect any ofthe identified deficiencies in his compliance with the pai~ies' agreement, counsel for Role: requested this court's intervention, by letter. On Febzua~y 1, 2013, counsel for Hoffman ~esponded with a letter to the court izidzcating that Hoffman was in fixll compliance with his obligations under the agreement. On February 13, 2013, the panties and the court participated in a telephone conference to discuss the parties' dispute. Once it became apparent that Hoffman was not, in fact, in compliance with his obligations, the count removed itselffrom the discussion, and pe~~rnitted the parties to continue their discussions in the court's absence. Over the course of the teleconference, counsel for Rolex identifed with particularity each and every instance of Hoffman's failure to comply with his clear obligations tinder the agreement. Notwithstanding these efforts, Haffinan having continued his failure to comply tivith his obligations, on Feb~~uaiy 15, 2013, counsel for Role: xec~uested fiirther count intervention to enfo~ce the agreement. Rolex's letter request fox further court intervention was supported by documents identifying with particularity ail of the instances of Hoffnlan's continued noncompliance with his obligations, These included all deficiencies previously identified in Rolex's detailed email message of January 30, 2013. Page 7 -OPINION AND ORDER

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On Mazch 8, 2013, the parties appeared in open court to discuss Hoffman's noncorr~pliarice with his obligations under the settlement agreement. At that time, Hoffman had cai~ected none of tf~e deficiencies identified to him with particularity on January 30, 2013, and again on Febiliaiy 15, 20 Z 3. During the course ofthat hearing, Hoffinan tivas able to conziect to iris websites, twitter accounts, and social media accounts, and to malca changes so as to bring himself into partial compliance with his obligations, Over the couz~se of the nett three days, in xesponse to repeated prompting via email by counsel for Rolex, Hoffman corrected all remaining noncompliant website pages, tweets, and social media accounts. Hoffman's compliance with the obligation to transfer the http://rolexcrown.wordpzess.com domain was by that tune impossible, because Hoffman had canceled the domain name rather than transfez it to Roles, and no longer had authority to effect the transfez. This motion fotlowed on l~larch 1 S, 2013. ANALYSIS As noted above, Rolex both assents a contractual zight to a~~7ard of its attorney fees reasonably incurred in connection with obtaining Hoffman's compliance with his obligations under the parties' settlement agreement and, in the alternative, seeks imposition of the attotneyfee sanction on the basis of Hoffinan's dilatory compliance with those obligations. I address both of Ro1eY's fee-shifting theories in hirn, below. I. Atto~ney Fees as Contractual Entitlement A. Roles's Contracf~~11 ~utiticmcixt to Award of Fces

As noted above, the parties' settlement agreement pxovides that in the event "any legal action, proceeding or azbihation is initiated to enforce or interpret" its pzovisions, Rolex is

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"entitled to recover any and all ...fees and costs incurred" in consequence of Hoffman's conduct in violation of the agreement. Such provisions are clearly enforceable under Oregon law. See Or. Rev. Stat. 20.096(1); see also, e.g., Wilkes v. Zurlinden, 328 Or. 626, 631-63~ (1999); BenchrnarkNathtivest, 191 Or. App. at 523. I agree with Role: that Hoffman failed to comply with the terns and provisions of tf~e parties' settleme~it agreement, and that Rolex incurred attorney fees in connection with its reasonably necessary effozts to obtain his compliance. In consequence,I agree with Rolex that it is entitled to award of all its attorney fees reasonably incurred on any date subsequent to January 24, 2013 {the date on which I a~uled that the parties lead an enforceable agreement, and on which I e:cpxessly o~dered Hoffman to comply with its provisions). B. tees Reasonably Iucuared

Rolex seeks awa~d of its fees in the amount either of$46,6 1.87, which amount is characterized as constituting alI fees incurred by Rolex since November 30, 2012, or of $26,399.00, characterized as constituting all fees incui~ed by RoIeY since Jam~aiy 24,2013. In suppozt of its petition, Role:c offe~s the declaration of Walter-1~lichael Lee that Rolex has incui~ed fees in those amounts since those dates. Role: does not offer any contemporaneously maintained tinge records, any statement as to the ~~easonable hourly rate or rates of Roles's counsel, any identificatioza of tl~e attorney or attorneys or other timekeepers who performed work on Rolex's behalf during the ~elevant time period, or any description of the tasks in connection with which the requested fees were incurred. "The party seeking an awa~d offees must submit evidence supporting the hours worked and tlxe rates claimed." Van Gertiven. v. Garararrtee 1Llart. Life Co., 21~ F.3d 10 41, 1045 (9th Cis. Page 9 -OPINION AND ORDER

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2000), citing Hensley v..Ecke~lrart, X61 U.S. 42~, X33(19 3). F'ee petitions lacking sufficient supporting materials to peinlit the court to make a determination of the reasonableness of the hourly rates claimed or of the tasks pez~fo~med z~~ay be totally o~ paztially denied. See Lyon v. Chase Bank ~1SA, tV..~., 656 F.3d 877, 892 (9tli Cir. 2011); Dry CreekLandfiXl, Inc. v. YYaste Solutions Group, Inc., Case No. CV-0~-3029-ST, 2007 U.S. Dist. LEXIS 1670 ,x`14-15 (D. Or. Mat. 6, 2007). Here, it is impossible to determine from RoleY's supporting materials which attozneys incu~red the requested fees, the houzly ate charged in connection with those attoi~eys' services, what tasks those attorneys performed or how many hours those attorneys expended ors Role:c's behalf. Role:~'s failure to provide any matexials supporting its fee petition with paT~ticulariiy renders the courNs task of determi7ung the reasonableness of Rolex's fea petition not merely difficult or problematic but impossible. In consequence, I award Roles only a nominal fee of $100 in connection with its petition for fees pursuant to contract. II. Aftorney Fees as Sanction foz~ Failuze to Comply with a Court Order ~s noted above, this court has broad discretion to ta;~ a pa~ty with an opponent's attoi~ey fees as a sa~~ction for the party's failure to comply with a court o~der. See Chaj~7befs, 501 U.S. at 4S. Also as noted above, on ,Tanu~tiy 24, 2013,I expressly ordered Hoffman to comply tivith tl~e terms ofthe parties' settlement agreement, and despite multiple occasions on which the specific instances of his noncompliance were painstakingly identified to him in detail, he continued noncompliant until appz~oximately March 1.1, 2013, Before thlt time, Hoffman participated in a teleconference with the count and with counsel for Rolex, at which he committed to cozrecting the deficiencies in his compliance, and later appea~ed in ~erson before the court without having Page 10 - OPIiVION AND ORDER

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made az~y perceptible effort to follor~v tlu~ough on that commitment. I agree ~rvith Roles that Hoffman's failure to comply with this cow~t's ozdez of Januazy 2~4, 20]3, wittaout significant court intervention wai7ants imposition of the attorney-fee sanction. As noted above, Rolex offers the sworn declaration of Walter-Michael Lee that "[s]ince January 24, 2013, the date on which this Court ordered that the Settlement Ag~eement was binding on [Ho~fman][and expressly ordered him to comply ~.vith its provisions], Roles has inctu7~ed attorneys' fees related to this mattez in the amount of$26,399,00. Also as noted above, Rolex provides no supporting materials for the court to consider in determining whether all or some of those fees wez~e zeasanably inciii7~ed. However, when shifting fees as a sanction, also as taoted above the count need not award all or Drily relsonably incui7ed fees, but rather may tailor the fee-shifting sanction according to its discz~etion. See Evora, 688 F.3d at 1035. It is clew from the record before the count that counsel for Rolex was required to expend a significant amount of time combing through the various websites, twitter accounts, and social media accounts ~~egisteaed to Hoffman in ordex to deTezniine the degzee of his non.compliarzce with his obligations under the panties' settlement agreement Ind to identify the instances of his noncompliance with particularity, and moreover that counsel vas put to this task on more than one occasion. It, is fitt~ther clear that, in addition to the foregoing, counsel expended considezable efforts to obtain Hoffman's compliance, including sitting by tivhile Hoffman made the required changes one by one at laborious length in open count. I ~nc~ that it is reasonable under the circumstances to sanction Hoffman with an award of attorney fees in Rolex's favor in the amount of$1x,900.

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CONCLUSION Foe the reasons set forth above, RoleY's motion(#61)styled as a motion for imposition of sanctions is granted, and Hoffman is orde~ed to pay RoleY's attorney fees and costs in the total amount of $15,000.

Dated this 29th day oflYlay, 2013.

..\ j

Honorable Patel Papak Unzted States 1~Iagistrate Judge

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