                   UNITED STATES DISTRICT COURT
                   FOR THE DISTRICT OF COLUMBIA
______________________________
                               )
FEDERAL TRADE COMMISSION,      )
COMMONWEALTH OF PENNSYVANIA, )
AND THE DISTRICT OF            )
COLUMBIA,                      )
                               )
               Plaintiffs,     )
                               ) Civil Action No.15-2115 (EGS)
          v.                   )
                               )
STAPLES, INC. and              )
OFFICE DEPOT, INC.             )
                               )
                               )
                               )
               Defendants.     )
______________________________)

                       MEMORANDUM OPINION


     Pending before the Court is the motion of the Commonwealth

of Pennsylvania and the District of Columbia (hereinafter

“Moving Plaintiffs”) for attorneys’ fees and costs under Section

16 of the Clayton Act. ECF No. 457. Upon consideration of the

parties' submissions, the governing statutory and case law, and

for the following reasons, Moving Plaintiffs’ motion is DENIED.

     I.   BACKGROUND

     On February 4, 2015, Staples and Office Depot entered into

an agreement under which Staples would acquire Office Depot. On

December 7, 2015, Moving Plaintiffs joined Co-Plaintiff Federal

Trade Commission (“FTC”) to bring suit to enjoin the merger.

Pls.’ Mot. Prelim. Inj., ECF No. 5. On May 10, 2016, this Court

                                1
determined that there was a reasonable probability that the

proposed merger would substantially impair competition and

granted Plaintiffs’ motion for a preliminary injunction under

Section 13(b) of the Federal Trade Commission Act, 15 U.S.C.

§53(b) (“FTC Act”). See Fed. Trade Comm'n v. Staples, Inc., 190

F. Supp. 3d 100 (D.D.C. 2016). After the Court’s ruling, Office

Depot and Staples abandoned the merger. Although the FTC is also

a plaintiff in this case, only Moving Plaintiffs seek attorneys’

costs and fees in the combined amount of $176,095.44.

     II.   LEGAL FRAMEWORK

           A. Section 16 of the Clayton Act

     In 1941, Congress passed the Clayton Act to address

provisions not covered by the Sherman Act, such as mergers and

acquisitions. See 15 U.S.C. §§ 12-27. In 1976, Congress amended

Section 16 of the Clayton Act, to provide that “[i]n any action

under this section in which the plaintiff substantially

prevails, the court shall award the cost of suit, including a

reasonable attorney's fee, to such plaintiff.” Hart-Scott-Rodino

Antitrust Improvements Act of 1976, Pub. L. No. 94-435, Title

III, § 302 (3), 90 Stat. 1383, 1396 (codified as amended at 15

U.S.C. § 26 (1998)). The party seeking attorneys’ fees “bears

the burden of establishing entitlement to an award and

documenting the appropriate hours expended and hourly rates.”

Hensley v. Eckerhart, 461 U.S. 424, 437 (1983).

                                2
          B. Section 13(b) of the FTC Act

     The FTC Act expanded the scope of illegal activities in

restraint of trade and provided a path for FTC enforcement of

antitrust laws. See 15 U.S.C. §§ 41-58. Section 13(b) of the Act

empowers the FTC to seek a temporary restraining order or

preliminary injunction in a federal district court if the

Commission believes “any person, partnership, or corporation is

violating, or is about to violate, any provision of law enforced

by the Federal Trade Commission.” 15 U.S.C. § 53(b). Unlike the

Clayton Act, the FTC Act does not grant attorneys’ fees to

prevailing plaintiffs. See generally id.

     III. DISCUSSION

     The parties disagree on two principal issues: (1) whether

Moving Plaintiffs are entitled to attorneys’ fees and reasonable

costs; and (2) if so, whether the calculated amounts that Moving

Plaintiffs have presented to the Court are reasonable.

     Moving Plaintiffs rest their argument for attorney’s fees

and costs on the theory that this Court’s entry of the

preliminary injunction that halted the Staples and Office Depot

merger established that the Plaintiffs “substantially prevailed

in this litigation” under Section 16 of the Clayton Act. Pls.’

Mot., ECF No. 457 at 5. Moving Plaintiffs assert that the

preliminary injunction “is the functional equivalent of a final

judgment in this matter” because the Plaintiffs achieved the

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relief they ultimately sought —— i.e., nonconsummation of the

Staples and Office Depot transaction. Id. at 4. Moving

Plaintiffs further claim that the attorneys’ fees and costs they

seek are reasonable in nature. See id. at 6-7.

     Defendants contend that Moving Plaintiffs are not entitled

to any fees and costs, characterizing the relief Moving

Plaintiffs seek as an “unprecedented windfall.” Defs.’ Opp’n,

ECF No. 470 at 1. Highlighting the fact that this case was never

litigated under Section 16 of the Clayton Act, Defendants argue

that Moving Plaintiffs are not entitled to any shifting costs or

fees “as a matter of law because they did not litigate, much

less substantially prevail, under the more demanding Section 16

standard.” Id. Instead, according to Defendants, the parties

only litigated, and the Court only granted, relief relating to

the FTC’s claim for a preliminary injunction under the standard

set forth in Section 13(b) of the FTC Act. Id. at 2. Defendants

further contend that even if the Court assumed that Moving

Plaintiffs were entitled to attorneys’ fees and costs under

Section 16 of the Clayton Act, Moving Plaintiffs’ calculation is

unreasonable and excessive. In response, Moving Plaintiffs argue

that they have satisfied the four-part preliminary injunction

standard set forth in Section 16 of the Clayton Act and maintain

that their calculated fees are reasonable. Pls.’ Reply, ECF No.

471 at 4-14.

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     As an initial matter, the Court need not examine whether

the costs presented by Moving Plaintiffs are reasonable because

the Court finds that Moving Plaintiffs are not entitled to

attorneys’ fees and costs as a matter of law. Section 16 of the

Clayton Act provides for attorneys’ fees and costs “[i]n any

action under this section in which the plaintiff substantially

prevails[.]” 15 U.S.C. § 26 (emphasis added). Plaintiffs insist

that the term “prevail” is not restricted to final judgments.

Pls.’ Mot., ECF No. 457 at 3. While this may be correct, see

Mahr v. Gagne, 448 U.S. 122, 129 (1980), Moving Plaintiffs

ignore the remaining text of Section 16. Here, Moving Plaintiffs

did not prevail, much less “substantially prevail,” under the

Clayton Act. Instead, this Court granted Plaintiffs’ request for

a preliminary injunction under Section 13(b) of the FTC Act.

Staples, 190 F. Supp. 3d at 114 n.7 (distinguishing the Section

13(b) standard from the traditional preliminary injunction

standard used in Section 16 Clayton Act claims); 1 see also Hewitt

v. Helms, 482 U.S. 755, 760 (1987) (“Respect for ordinary

language requires that a plaintiff receive at least some relief

on the merits of his claim before he can be said to prevail.”).

     As this Court explained, the preliminary injunction

standards under Section 13(b) of the FTC Act and Section 16 of


1Indeed, the Court’s memorandum opinion does not even reference
Section 16 of the Clayton Act. See generally Staples, 190 F.
Supp. 3d 100.
                                5
the Clayton Act are not identical. See Staples, 190 F. Supp. 3d

at 114; see also Fed. Trade Comm'n v. Sysco Corp., 113 F. Supp.

3d 1, 22 (D.D.C. 2015) (“The Section 13(b) standard for

preliminary injunctions differs from the familiar equity

standard applied in other contexts.”). Section 16 claims follow

the traditional four-part preliminary injunction standard ——

i.e., a court must balance: (1) the likelihood of success on the

merits; (2) the threat of irreparable harm in the absence of an

injunction; (3) the possibility of substantial harm to other

interested parties; and (4) the public interest. United States

v. Gillette Co., 828 F. Supp. 78, 80 (D.D.C. 1993). In contrast,

a movant under Section 13(b) of the FTC Act need only satisfy

two elements: “(1) a likelihood of success on the merits; and

(2) that the equities tip in favor of injunctive relief.”

Staples, 190 F. Supp. 3d at 114. Under Section 13(b), the

Court’s task is to assess the likelihood of whether or not the

government can prevail at a subsequent administrative hearing

before the Federal Trade Commission, not whether the proposed

merger would violate the Clayton Act. Id. at 115.

     Throughout this litigation, neither party disputed the

Court’s intended resolution pursuant to Section 13(b) of the FTC

Act, rather than Section 16 of the Clayton Act. While Moving

Plaintiffs make three fleeting references to Section 16 in their

Complaint, at no point in their preliminary injunction

                                6
submissions did they assert, much less prove at the hearing, the

elements of a preliminary injunction under Section 16. 2 See

Compl., ECF No. 3. Particularly revealing is the fact that

Plaintiffs’ proposed findings of fact and law specifically cites

to Section 13(b) as the applicable standard for a preliminary

injunction. See Sealed Pls.’ Proposed Findings of Fact and

Conclusions of Law, ECF No. 379-2 at 75-76. Defendants also rely

on the transcript from the preliminary injunction hearing in

which the FTC explained that the Court need not consider Section

16 of the Clayton Act in rendering its decision. 3 See Defs.’

Opp’n, ECF No. 470 at 7 n.3.

     Simply put, Moving Plaintiffs cannot have it both ways.

They cannot ride the FTC’s claim to a successful preliminary

injunction under the more permissive Section 13(b) standard and

then cite that favorable ruling as the sole justification for

fee-shifting under the more rigorous Clayton Act standard.



2 Defendants point out that Moving Plaintiffs failed to mention
Section 16 once in pre-trial briefing, discovery, during the 10-
day preliminary injunction hearing, or in their proposed
findings of fact and conclusions of law. See Defs.’ Opp’n, ECF
No. 470 at 7.
3 At the hearing, this Court confirmed that the applicable

authorities “dictate[d] that the Court should not focus on
whether or not the merger will, as a matter of law, violate the
Clayton Act...That’s not before the Court... correct?.” Hr’g Tr.
at 3561:10 – 3562:7. The FTC replied, “That’s correct, Your
Honor.” Id. The record does not suggest that Moving Plaintiffs
disputed the FTC’s response or otherwise asserted that the
preliminary injunction standard set forth in Section 16 of the
Clayton Act should govern. Id.
                                 7
Moving Plaintiffs’ decision to join the FTC’s Section 13(b)

claim was a strategic one, one that ultimately lead to the

dissolution of the Office Depot and Stables merger. Nonetheless,

Moving Plaintiffs cannot bring a petition for fee-shifting under

a provision under which they did not prevail. See Section 16 of

the Clayton Act, 15 U.S.C. § 26 (providing for attorneys’ fees

and costs “[i]n any action under this section in which the

plaintiff substantially prevails”).

     Moving Plaintiffs have failed to cite to a single case in

which a court has awarded attorneys’ fees and costs under

Section 16 of the Clayton Act where the moving party prevailed

only under Section 13(b) of the FTC Act. Instead, Moving

Plaintiffs effectively ask this Court to take an unprecedented

step. Defendants persuasively highlight that Moving Plaintiffs

have not requested fees and costs in analogous cases. See Defs.’

Opp’n, ECF No. 470 at 2 n.2.

     Rather than citing factually analogous cases to support

their claim for fees and costs, Moving Plaintiffs chiefly rely

on F&M Schaefer Corp. v. C. Schmidt & Sons, Inc., 476 F. Supp.

203, 206 (S.D.N.Y. 1979) and Grumman Corp. v. LTV Corp., 533 F.

Supp. 1385, 1390 (E.D.N.Y. 1982) for the proposition that courts

use the “catalyst rule” to determine whether a party has

substantially prevailed. See Pls.’ Mot., ECF No. 457 at 5. Under

the catalyst rule, a court examines the situation immediately

                                8
prior to the commencement of the suit, the situation today, and

the role that the litigation played in causing any changes

between the two. Schaefer, 476 F. Supp. at 206; Grumman, 533 F.

Supp. at 1390. Moving Plaintiffs argue that because the Court’s

entry of a preliminary injunction directly caused Defendants to

dissolve the merger, Moving Plaintiffs substantially prevailed.

Pls.’ Mot., ECF No. 457 at 5. Moving Plaintiffs’ argument is

unpersuasive for two reasons. First, as Defendants point out,

the catalyst rule as a mechanism for obtaining attorneys’ fees

in certain circumstances was rejected by the Supreme Court in

2001. See Buckhannon Bd. & Care Home, Inc. v. W. Virginia Dep't

of Health & Human Res., 532 U.S. 598, 600 (2001) (concluding

that fees may not be awarded on a catalyst theory simply because

plaintiff “achieved the desired result” or “because the suit

brought about a voluntary change in defendant’s conduct”).

Second, Schaefer and Schmidt are readily distinguishable because

they do not concern, as here, litigation under the FTC Act.

     Moving Plaintiffs fare no better with their attempt to

argue, for the first time in their reply brief, that they

substantially prevail under each element of the traditional

preliminary injunction test used in a Section 16 cases. See

Pls.’ Reply, ECF No. 471 at 4-10. As Defendants explain, this

four-factor injunction standard was never argued, briefed or

mentioned in the litigation up to this point. In any event,

                                9
Moving Plaintiffs’ argument that they could have prevailed under

that standard is irrelevant in light of the fact that this Court

resolved the case under Section 13(b) of the FTC Act which, as

explained supra, does not provide for fee-shifting. Because this

Court did not resolve the motion for preliminary injunction

under Section 16 of the Clayton Act, the Court finds that as a

matter of law, Moving Plaintiffs are not entitled to attorneys’

fees or costs.

     IV.   CONCLUSION

     For the foregoing reasons, Moving Plaintiffs’ motion for

attorneys’ fees and costs is DENIED. An appropriate Order

accompanies this Memorandum Opinion, filed this same day.

     SO ORDERED.

Signed:    Emmet G. Sullivan
           United States District Judge
           February 28, 2017




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