Drafting Issues Abound Here—Make It Explicit!
We thank our AlvaradoSmith colleague Monisha Coelho for bringing the recent ruling in Epic Games, Inc. v. Apple Inc., Case No. 4:20-cv-05640-YGR (N.D. Cal. Sept. 10, 2021) (Doc. 812) to our attention. It highlights how indemnification clauses must be drafted with extremely clear language to make true attorney’s fees shifting clauses between the parties.
In this case, the district court judge concluded that Epic did not prove Apple was a monopolist in the digital mobile gaming transactions market, but Apple did engage in anticompetitive conduct under California’s unfair competition laws, warranting specified nationwide relief. However, Apple also moved to recover substantial fees for defeating contractual counterclaims under a written contractual clause in an Epic agreement.
The district judge denied fee entitlement to Apple. She found that the contractual fees clause was too narrow, only encompassing third-party liability given the words “indemnify” and “hold harmless” rather than claims between Apple and Epic. The federal judge found that there needed to be express language indicating fee recoveries regarding the issue of an action between the parties on a contract was covered, language not present in the germane contract. (Alki Partners, LP v. DB Fund Services, 4 Cal.App.5th 574, 600-602 (2016).)