Swisher Sweets wins $10M in attorneys’ fees in antitrust case

Swisher Sweets won $10.46 million in attorneys' fees and costs after a years-long antitrust case was dismissed by a rival cigarillo manufacturer.

Trendsettah USA sued Swisher in October 2014, alleging antitrust violations, unfair competition and breach of private label agreements. The case went to trial in 2016, and Trendsettah won $44 million.

Five years later, on April 12, 2019, Trendsettah's founder and CEO was indicted for tax evasion. Following Akrum Alrahib's indictment, in August 2019, U.S. Judge James V. Selna of the Central District of California vacated the verdict and granted Swisher relief from the judgment. Trendsettah filed an unsuccessful appeal of Selna's vacatur to the 9th U.S. Circuit Court of Appeals. A new trial was ordered. Trendsettah USA v. Swisher International, 14-CV-01664 (C.D. Cal., filed Oct. 14, 2014)

Trendsettah had two choices: go through a second trial and get a final judgment, win or lose and then take it up to appeal. Trendsettah decided to take a shortcut instead, and moved to dismiss the case in September so that there could be a final judgment in order to take an immediate appeal to the 9th Circuit and avoid a second trial. The appeal now pending before the 9th Circuit asks the panel to overturn Selna's August 2019 vacatur.

Per the fee order, the two companies had private label agreements providing that if any legal dispute arose and litigation ensued, the prevailing party would be entitled to attorneys' fees. Swisher automatically became the prevailing party solely by virtue of the fact Trendsettah voluntarily dismissed the case.

Assuming Trendsettah wins its appeal to the 9th Circuit, Swisher's fee order would be vacated, and Trendsettah will become the prevailing party. Trendsettah will claim a similar amount of attorney's fees, according to Mark W. Poe, who represents Trendsettah.

Poe said he fully expects the 9th Circuit will reverse Selna, and order the verdict to be reinstated.

Poe urged Selna in court papers to postpone ruling on Swisher's attorneys' fees until the appeal is resolved. Poe also argued Trendsettah would be irreparably harmed due to its limited assets.

Selna, in his order Wednesday, wrote that courts typically consider fees promptly after the merits decision rather than issuing a stay until the conclusion of an appeal. Monetary harm doesn't constitute as irreparable harm, the judge wrote. If anything, Swisher would be the one harmed, as it faces a risk of not recovering attorneys' fees and costs. Evidence in the case showed how cash flowed from Trendsettah to and from Alrahib, his family members and their other businesses, Selna wrote in his order.

"Courts have found that a possibility of irreparable injury can be found where a liable party has a history of fraudulent intrafamily transfers that could result in a hiding of funds," Selna wrote.

Swisher Sweets is represented by Daniel G. Swanson, Theodore Boutrous Jr. and Cynthia E. Richman of Gibson, Dunn & Crutcher LLP.

"It's a welcome result," Swanson said. "This process has been prolonged enough and we look forward to collecting the fees. We're ready to defend the result on the merits if need be, but we believe procedurally that when Trendsettah dismissed their case with prejudice they lost their right to appeal."