                                                                              FILED
                           NOT FOR PUBLICATION                                AUG 06 2010

                                                                          MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                          U.S. COURT OF APPEALS



                            FOR THE NINTH CIRCUIT


FINISAR CORPORATION, a Delaware                  No. 08-17124
corporation,
                                                 D.C. No. 5:07-cv-04052-JF
              Plaintiff - Appellant,

  v.                                             MEMORANDUM*

U.S. BANK TRUST NATIONAL
ASSOCIATION, a National Banking
Association,

              Defendant - Appellee.



FINISAR CORPORATION, a Delaware                  No. 08-17761
corporation,
                                                 D.C. No. 5:07-cv-04052-JF
              Plaintiff - Appellant,

  v.

U.S. BANK TRUST NATIONAL
ASSOCIATION, a National Banking
Association,

              Defendant - Appellee.




        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
FINISAR CORPORATION, a Delaware                 No. 08-17762
corporation,
                                                D.C. No. 5:07-cv-04052-JF
               Plaintiff - Appellee,

  v.

U.S. BANK TRUST NATIONAL
ASSOCIATION, a National Banking
Association,

               Defendant - Appellant.


                    Appeal from the United States District Court
                       for the Northern District of California
                     Jeremy D. Fogel, District Judge, Presiding

                        Argued and Submitted June 16, 2010
                             San Francisco, California

Before: SCHROEDER and BYBEE, Circuit Judges, and STOTLER, Senior
District Judge.**

       This is an attorney’s fees dispute in which everyone is challenging

everything. Finisar Corporation (“Finisar”) challenges the district court’s award of

attorney’s fees to its opponent, U.S. Bank Trust National Association (“USB”), as

well as the amount of its own fee award. Not to be outdone, USB also challenges

both the award of fees to its opponent and the amount of its own fee award. We

affirm.


          **
             The Honorable Alicemarie H. Stotler, Senior United States District
Judge for the Central District of California, sitting by designation.
      The district court did not err in holding that USB was entitled to reasonable

attorney’s fees under § 7.06 of the Indentures, which provides that Finisar

             covenants and agrees to pay or reimburse [USB] . . . upon
             its request for all reasonable expenses [or] disbursements .
             . . incurred or made by or on behalf of it in accordance with
             any of the provisions of this Indenture (including . . . the
             reasonable compensation and the expenses and
             disbursements of its counsel . . .) except any such expense,
             disbursement, or advance as may arise from its negligence
             or bad faith.

Because USB did not act negligently or in bad faith in issuing notices of default

and in defending against Finisar’s declaratory judgment action, it was entitled to

recover its attorney’s fees under § 7.06.

      The district court did not abuse its discretion in awarding USB a lower

amount than it requested in attorney’s fees. Section 7.06 only entitles USB to

“reasonable” attorney’s fees, and the district court appropriately exercised its

discretion in reducing the amount of USB’s attorney’s fees by about fifteen percent

based on its finding that USB’s persistence in litigating the declaratory judgment

action in the face of mounting adverse (albeit non-binding) legal authority was

“questionable at best.” See Passantino v. Johnson & Johnson Consumer Prods.,

Inc., 212 F.3d 493, 517-18 (9th Cir. 2000) (district court has broad discretion to

determine appropriate amount of attorney’s fee award).



                                            -3-
      The district court correctly held that Finisar, as the prevailing party, was

entitled to recover its own reasonable attorney’s fees because California Civil Code

§ 1717 applied to § 7.06 of the Indentures. See Kachlon v. Markowitz, 85 Cal.

Rptr. 3d 532, 556-57 (Ct. App. 2008) (“Actions for a declaration of rights based

upon an agreement are ‘on the contract’ within the meaning of Civil Code section

1717.” (quotation marks omitted)). Although the Indentures contained a

“Governing Law” provision specifying that the Indentures were to be “governed

by, and construed in accordance with, the laws of the State of New York,” this

provision did not bar the application of California Civil Code § 1717. See

RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 187(2); ABF Capital Corp. v.

Grove Props. Co., 23 Cal. Rptr. 3d 803, 808, 813 (Ct. App. 2005) (stating that

California Civil Code § 1717 “reflects a fundamental public policy of th[e] state”

and that “California has a materially greater interest in enforcing . . . the reciprocal

attorney fees rule . . . than New York has in assuring the enforcement of New York

law concerning attorney fees”).

      Finally, the district court did not abuse its discretion in awarding Finisar

only those reasonable attorney’s fees it actually incurred under California Civil

Code § 1717. See PLCM Group v. Drexler, 997 P.2d 511, 519-20 (Cal. 2000).

      AFFIRMED.


                                          -4-
