IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
TA OPERATING LLC,

Plaintiff, Counterclaim-Defendant,

C.A. No. 12954-CB

V.

COMDATA, INC. and FLEETCOR
TECHNOLOGIES, INC.,

Defendants, Counterclaimants.

ORDER GRANTING PLAINTIFF’S FEE APPLICATION
AND DENYING DEFENDANTS’ FEE APPLICATION

WHEREAS:

A. On December 15, 2010, TA Operating LLC (“TA”) and Comdata, Inc.
executed a merchant agreement (the “Merchant Agreement”) With an expiration date
of January 2, 2016.

B. On December 14, 201 l, TA and Comdata executed a RFID agreement
and an amendment to the Merchant Agreement that extended its expiration date to
January 2, 2022.

C. On November 2, 2016, Comdata purported to terminate the Merchant
Agreement based on TA’s alleged breach of the RFID agreement

D. On November 30, 2016, TA filed a Verified Complaint (the
“Complaint”) against Comdata and its parent company, FleetCor Technologies, Inc.

(“FleetCor”) asserting four claims: Count I sought declaratory relief under the

Merchant Agreement, Count II sought specific performance for defendants’ breach
of the Merchant Agreement, Count III asserted that defendants breached the implied
duty of good faith and fair dealing under the Merchant Agreement, and Count IV
asserted a claim under the Tennessee Consumer Protection Act (“TCPA”).

E. On December 22, 2016, Comdata and FleetCor filed a counterclaim,
Which Was amended on February 23, 2017 (the “Counterclaim”).

F. On March 27, 2017, TA filed a Verified Supplement to the Complaint
alleging, among other things, that in November and December 2016, defendants
represented that their fee proposals “reilected substantially similar terms to those
that Defendants had agreed With [TA’s competitors].”l

G. On September ll, 2017, after a four-day trial, the court issued a post~
trial Memorandum Opinion (“Opinion”) (i) ruling that TA Was entitled to a judgment
in its favor against Comdata (but not FleetCor) on Counts I and II of the Complaint,
and on defendants’ Counterclaim; (ii) ruling that Comdata Was entitled to a judgment
in its favor on Count IV (the TCPA claim); (iii) dismissing Count III as moot; and
(iv) directing the parties to submit a form of final judgment and a schedule for
resolving the issue of attorneys’ fees and costs.

H. On October 17, 2017, after the parties Were unable to agree on a

procedure for resolving the issue of attorneys’ fees and costs, the court entered a

 

‘ Verified Suppl. to Compl. 1111 140-142 (Dkt. 123).
2

scheduling order setting forth a process for resolving the parties’ competing
applications for attorneys’ fees and costs and reserved entry of final judgment until
the issue of attorneys’ fees and costs was resolved.

I. On October 24, 2017, TA submitted affidavits in support of its request
for an award of attorneys’ fees and costs under Section l3(c) of the Merchant
Agreement,

J. On October 31, 2017, defendants filed an application for an award of
attorneys’ fees and costs under the TCPA with respect to Count IV of the Complaint.

K. The parties each filed briefs in opposition to the other side’s application
for an award of attorneys’ fees and costs.

NOW, THEREFORE, on this an day of April, 2018, IT IS HEREBY
ORDERED as follows:

I. TA’s Fee Application

l. TA contends that it is entitled under Section l3(c) of the Merchant
Agreement to an award for all of the attorneys’ fees and costs it incurred in this
litigation as the prevailing party. Section l3(c) states as follows:

In the event either party shall engage an attorney to enforce, protect, or

preserve any rights it might have under this Agreement, the prevailing

party in such suit shall be entitled to recover its reasonable attorney’s

fees and associated costs, in addition to any other relief to which it may
be entitled.2

 

2Jx0001 § 13(<;).

2. In support of its application, TA submitted affidavits from senior
members of its legal team quantifying the total amount of attorneys’ fees and costs
it incurred in this litigation at $9,975,623.36 for the period from inception through
September 30, 2017.3

3. Defendants “do not dispute that TA is entitled to recover the majority
of its fees and costs” but do contend that “TA is not entitled to recover the attorneys’
fees and costs it incurred for its failed non-contractual TCPA claim and its failed
claim against FleetCor.”4 Based on a line item review of the invoices submitted by
TA’s counsel, defendants contend that $1,076,912.84 should be deducted from TA’s
fee request: $1,051,339.84 for the TCPA claim and $25,573.00 for the claims
against FleetCor.5

4. In its reply, TA maintains that it is entitled to an award of all the fees
and costs it has incurred in this litigation, and provides supplemental affidavits from
its counsel quantifying the additional fees and costs it incurred from October 1, 2017

to November 30, 2017 at $388,644.30.6 Based on a review of the line items

 

3 Aff. of Robert S. Saunders 117 5, 25 (quantifying Skadden’s fees and costs through
September 30, 2017 at $2,657,141.59) (Dkt. 161); Aff. of Jane E. Wills 117 6, 35
(quantifying Ropes & Gray’s fees and costs through September 30, 2017 at $7,318,481.77)
(Dkt. 1.61).

4 Defs.’ Opp’n. 11 2 (Dkt. 173).
5 161.11115,20-21.

6 Supp. Aff. of Robert S. Saunders 11 8 (quantifying Skadden’s fees and costs for October
and November 2017 at $136,490) (Dkt. 176); Supp. Aff. of Jane E. Wills 11 8 (quantifying

4

identified in defendants’ opposition, TA also submits (without conceding that any
amount should be deducted from its request) that the amount attributable to the
TCPA claim and the work associated with FleetCor would be no more than
$529,598.54 in total, consisting of $520,648.94 for the TCPA claim and $8,949.60
for the claims against FleetCor.7

5. Under Tennessee law, which governs the Merchant Agreement,8 “the
cardinal rule for interpreting contracts is to ascertain the intention of the parties and
give effect to that intention.”9 Importantly, as the Tennessee Court of Appeals
recently stated, “[c]ontractual provisions creating a right to recovery of attorneys’
fees are strictly construed and will be interpreted as an exception to the American
rule ‘only when a contract specifically or expressly provides for the recovery of

attorney fees.”’lo

6. In support of its position that this court should adopt an “all-or-nothing”

approach to interpreting Section 13(c) of the Merchant Agreement, TA relies

 

Ropes & Gray’s fees and costs for October and November 2017 at $252,154.30) (Dkt.
176).

7 Supp. Aff. ofRobert S. Saunders 11 23 (Dkt. 176); Supp. Aff. of Jane E. Wills 1111 24, 29
(Dkt. 176).

8JX0001 § l3(g).
9 Clark v. Rhea, 2004 WL 63476, at *2 (Tenn. Ct. App. Jan. 13, 2004).

10 SK Foocl Corp. v. Fz'rstBank, 2017 WL 776116, at *4 (Tenn. Ct. App. Feb. 28, 2017)
(quoting Cracker Barrel Olcl Country Store, Inc. v. Epperson, 284 S.W.3d 303, 309 (Tenn.
2009) (emphasis in original)).

primarily on the Tennessee Court oprpeals’ decision in Brunstz'ng v. Brown, which
construed a provision similar to Section 13(c):
In the event any party hereto fails to perform any of its obligations
under this Agreement or in the event a dispute arises concerning the
meaning or interpretation of any provision of this Agreement, the
defaulting party or the party not prevailing in such dispute . . . shall pay
all costs and expenses incurred by the other party in enforcing or
establishing its rights hereunder . . .‘l
The core issue on appeal was whether the trial court erred in applying this provision
to award the appellees fees for claims on which they did not prevail. The appellate
court, which affirmed, explained the trial court’s reasoning for doing so as follows:
The Chancellor rejected this argument because all of the claims and
counterclaims “arose from a common core of facts,” and that the
plaintiffs case could not be evaluated as a series of discrete claims.12
7. In contrast to the findings the trial court made in Brunsting, the TCPA
claim was a discrete claim that was premised on a discrete set of facts that was not
in common with the core facts underlying the contractual claims. Specifically, as
explained in the Opinion, the only factual allegations TA identified to support its

TCPA claim were “defendants’ alleged misrepresentations that their ‘fee proposals

in November and later in December 2016 were the same or similar to those it had

 

" Brunsting v. Brown, 2001 WL 1168186, at *6 (Tenn. Ct. App. Oct. 4, 2001).

12 Brunstl`ng, 2001 WL 1 168186, at *6; see also id. at *8 (“As the Chancellor found, there
was a common core of facts involved, and such a lawsuit cannot be viewed as a series of
discrete claims.”).

agreed with Love’s and Pilot.”’13 Significantly, these representations were made
after Comdata terminated the Merchant Agreement on November 2, 2016, and thus
were irrelevant to TA’s contractual claims. Nonetheless, these subsequent facts
provided a basis for TA to assert a statutory claim under the TCPA, which requires
that a plaintiff allege a violation of one of the acts specifically enumerated in Tenn.
Code Ann. § 47-18-104(b).14

8. The Brunsting court began its analysis with the reminder that “[a]
contract for attorney fees should be construed as any other contract.”15 And, while
the appellate court noted that the language of the provision at issue was “broad and
sweeping” so as to “clearly encompass[] equitable relief,” its “parsing” of the
contract led it to find simply that “it provides that the party not prevailing in a dispute
concerning the meaning or interpretation of any provision of the Agreement shall
pay the fees of the other party in enforcing or establishing its rights under the
Agreement.’"6

9. Here, Section 13(c) of the Merchant Agreement provides that if a party

to the Merchant Agreement initiates a suit to “enforce, protect, or preserve any

 

13 Mem. Op. 96 (quoting Pl.’s Post-Trial Opening Br. 59-60).
14 Mem. Op. 9-5.
15 Brunstz`ng, 2001 WL 1168186, at *6.

16 ]al.; see also ia’. at *7 (“The contract provides for fees incurred (1) in enforcing or
establishing rights under the Agreement, and (2) in any dispute over the meaning or
interpretation of the Agreement.”).

rights” it might have under the Merchant Agreement, the prevailing party shall be
entitled to recover its reasonable attorneys’ fees and costs. The reference to “such
suit” in Section 13(c) plainly refers to a suit to enforce, protect, or preserve one’s
contractual rights under the Merchant Agreement,

10, “When a contract provision provides for the recovery of attorney’s fees
from the unsuccessful party in the event litigation arises, the prevailing party is
entitled to enforcement of the contract according to its express terms.”17 Under
Tennessee law, the “term ‘ prevailing party’ has commonly been defined as ‘the party
to a suit who successfully prosecutes the action or successfully defends against it,
prevailing on the main issue, even though not necessarily to the extent of his original
contention.”’18

11. Applying the rationale of Brunsling with these principles in mind, the
court finds that a reasonable interpretation of Section 13(c) of the Merchant
Agreement is that (a) the parties intended that the party who prevails on the main
issue in a fight over enforcing, protecting, or preserving rights under the Merchant

Agreement is entitled to fees for achieving that result without deduction for losing

on subsidiary issues with respect to claims arising out of the same core of common

 

17 Clark, 2004 WL 63476, at *2.

18 Dal'ry Gola', lnc, v. Thomas, 2002 WL 1751193, at *4 (Tenn. Ct. App. July 29, 2002)
(citing Black’s Law Dictionary 1188 (6111 Ed. 1990)).

8

facts, but (b) the parties did not reach any agreement on shifting fees for discrete
claims arising out of a different set of facts that is not in common with those
underlying a contractual claim concerning the Merchant Agreement. Based on this
analytical framework, I conclude that TA is not entitled to fees for the TCPA claim
but is entitled to fees with respect to the issues concerning FleetCor, which primarily
concerned whether FleetCor could be liable for a breach of the Merchant Agreement
even though it was not a signatory to that contract.19

12. The remaining issue is how much the court must deduct from the fees
TA incurred to account for the TCPA claim. Having reviewed both parties’
submissions on this point, I find that TA’s estimate that $520,648.94 in fees and
costs was attributable to the TCPA claim to be reasonable. This estimate is
supported by affidavits from two leading members of TA’s legal team who attest to
performing a good faith allocation of the time entries that defendants identified in
their opposition.20 I credit these affidavits, the bottom line result of which comports
with my own sense of the effort that likely was expended on the TCPA claim from

my familiarity with the nature of the claim and its relative importance in this case.

 

19 Mem. Op. 92-94.

20 Supp. Aff. ofRobert S. Saunders 1111 15-24 (Dkt. 176); Supp. Aff. ofJane E. Wills 1111 16-
29 (Di<t. 176).

13. Defendants have not objected to the reasonableness of TA’s rates or
hours or to TA receiving “fees on fees,” i.e. the attorneys’ fees TA incurred in
connection with recovering its attorneys’ fees and costs. Defendants also have not
objected to TA receiving pre-judgment interest (from the date TA paid the invoices
in question) and post-judgment interest at the Delaware legal rate.

14. Based on the foregoing, TA’s application for an award of attorneys’
fees and costs is GRANTED, and TA is awarded attorneys’ fees and costs in the
amount of $9,843,61 8.72 [i.e., ($9,975,623.36 + $388,644.30) - $520,648.94], plus
prejudgment and post-judgment at the Delaware legal rate.

II. Defendants’ Fee Application21

15. Section 109(e)(2) of the TCPA provides, as follows:

In any private action commenced under this section, upon finding that

the action is frivolous, without legal or factual merit, or brought for the

purpose of harassment, the court may require the person instituting the

action to indemnify the defendant for any damages incurred, including
reasonable attorney‘s fees and costs.22

16. Defendants contend that they are entitled to an award of attorneys’

fees and costs under this provision on the theory that “TA asserted a frivolous TCPA

 

21 TA argues that defendants’ request for fees under the TCPA was waived. I need not
address this issue given my conclusion that the application is without merit.

22 Tenn. Code Ann. § 47-18-109(e)(2) (West).
10

claim purely to increase the stakes of the suit, including to seek treble damages and
to put privileged settlement communications before the Court.”23

17. Section 109(e)(2) of the TCPA is “designed to discourage frivolous or
baseless claims.”24 lt “is not intended to punish plaintiffs who can demonstrate
wrongful acts on the part of defendants, but who are unable to prevail on their claims
for other reasons.”25 As such, Tennessee courts “do not interpret the statutory term
‘without legal or factual merit’ to mean without sufficient merit to prevail, but rather
as so utterly lacking in an adequate factual predicate or legal ground as to make the
filing of such a claim highly unlikely to succeed.”26 “As the language of the statute
makes clear, even where this prerequisite is met, whether or not to award fees is
discretionary with the court.”27

18. Although TA ultimately did not prevail on its TCPA claim because it
failed to prove causation, the claim was not frivolous, baseless, or brought for the

purpose of harassment in my opinion. To the contrary, TA proffered evidence that

led the court to find that Comdata made representations to TA that were “not entirely

 

23 Def.’s Mot. for Reasonable Attorneys’ Fees and Costs 11 1 (Dkt. 164) (internal citation
and quotation omitted).

24 Rothberg v. Cincl`nnatz`lns. Co., 2009 WL 10675318, at *3 (E.D. Tenn. Feb. 10, 2009).
25 Glanton v. Bob Parks Really, 2005 WL 1021559, at *9 (Tenn. Ct. App. April 27, 2005).
26 Ia'.

27 Jora’an v. Cliffora’, 2010 WL 2075871, at *6 (Tenn. Ct. App. May 25, 2010) (internal

citation and quotation omitted).

ll

honest” to the effect that certain rates Comdata proposed to charge TA were what a
“merchant similar in size to TA would pay.” These representations were intended
to induce TA to forego challenging Comdata’s breach of the Merchant Agreement
in order to go along with paying higher fees.28 As noted above, these representations
were made in mid-November and December of 2016-after Comdata already had
terminated the Merchant Agreement_and provided a potential basis for relief
independent of TA’s contract claims. Defendants acknowledge as much.29

19. Relying on the District Court’s observation in Arch Wooa’ Prot., Inc. v.
Flamea’xx, LLC that “a plaintiff may recover under both a breach of contract claim
and a TCPA claim as long as the damages are distinct,”30 defendants argue that TA’s
TCPA claim must have been frivolous because TA “never had a theory of TCPA

”31

damages that was independent of their theory of contract damages. I disagree.

20. As I read Arch Wooa’, the key point of the relevant passage is that a
plaintiff may not obtain a double recovery for the same wrong. Although the theory
of compensatory damages for TA’s breach of contract and TCPA claims ended up

being the same, that does not mean that the TCPA claim was frivolous or baseless.

 

28 Mem. Op. 36-51, 98 n.413.

29 Defs.’ Opp’n to Certain Aspects of Pl.’s Appl. for Attorncy`s Fees and Cosls 11 10
(acknowledging that the TCPA claim “is a separate claim that does not depend on the terms
of contract”) (Dkt. 166).

30 Arch Wooa’Prot., lnc. v. Flamea’xx, LLC, 932 F. Supp. 2d 858, 871 (E.D. Tenn. 2013).
31 Defs.’ Reply 11 4 (Dkt. 169).

12

It just means that TA could not recover the same measure of compensatory damages
twice if it were able to prevail on both claims.

21. In sum, there was nothing frivolous or baseless in my judgment about
TA asserting alternative theories to obtain the same measure of damages~_one based
on contract and the other based on the TCPA-where both claims were viable and
one (the TCPA claim) afforded the possibility of additional damages

22. Accordingly, defendants’ application for an award of attorneys’ fees
and costs is DENIED.

>|< >I< >l< >l< >l<
23. The parties are directed to confer and submit a form of final judgment

in accordance with the Opinion and this Order within five business days.

 

/ Chanc¢lor Andre G. Bouchard \

13

