PHYLLIS J. HAMILTON, District Judge.
Before the court is the motion of defendant Savitr Capital, LLC ("Savitr") for attorney's fees pursuant to Fed. R. Civ. P. 54, Civil L.R. 54-1 and the Lanham Act, § 15 U.S.C. 1117(a). The motion is fully briefed and the court determines that the matter is suitable for decision without oral argument. Having carefully reviewed the parties' papers and the relevant legal authority, the court hereby DENIES the motion for attorney's fees for the reasons set forth below.
On September 13, 2012, plaintiff Western Wind Energy Corp. ("Western") filed a complaint against Savitr for trademark infringement and unfair competition, alleging unauthorized use of Western's trademark on materials sent to Western's shareholders. Western also filed an application for a temporary restraining order ("TRO"), on which the court set a deadline for Savitr to file an opposition brief and a hearing date.
According to the allegations of the complaint, Western is a publicly-traded Canadian energy company that develops and operates wind and solar energy generation facilities. Western owns a U.S. trademark for its company logo, Reg. No. 4,017,546, which is registered for use in connection with production of wind energy. Since 2003, Western has used its trademarked logo in communications with its investors, including those located in the United States.
Savitr is an investment manager that owns shares in Western. On July 30, 2012, Western announced its intention to sell its corporate assets. On September 5, 2012, Savitr distributed a proxy form to Western shareholders for the annual shareholder meeting on September 25, 2012, with materials recommending that shareholders vote against the recommendations of Western's current management and elect new directors nominated by Savitr. The materials included a flyer displaying the Western logo next to Savitr's logo. The flyer was accompanied by a letter that was signed by A. Midler, managing member of Savitr, criticizing the Western board for "inexperience" and "poor financial stewardship." The proxy form circulated by Savitr was printed on green paper, in contrast to the yellow proxy ballot form that was sent to shareholders by Western management. The Savitr form of proxy stated in block letters, "
In support of its application for a TRO, Western alleged that Savitr's use of Western's logo on the flyer was intended to cause confusion, mistake or deception as to whether Western sponsored or approved of Savitr's proxy statements and voting recommendations. The TRO application sought the following relief: that Savitr be immediately enjoined from further disseminating its flyer bearing Western's logo; that Savitr be enjoined from using Western's logo in any manner; and that Savitr inform every recipient of its proxy materials that Savitr did not have permission to use Western's logo, that neither Western nor its management sponsored or approved any of Savitr's materials, and that by submitting a green proxy, the shareholder would cast a vote adverse to Western's management.
On September 14, 2012, the court issued an order setting a briefing schedule and hearing on Western's TRO application. Savitr filed an opposition on September 17, 2012. The court held a TRO hearing on September 19, 2012, at which both parties were represented by counsel.
Addressing the likelihood of confusion caused by Savitr's use of the Western logo in its flyer, counsel for Savitr stated that after sending the flyer and letter with the green proxy form, it subsequently sent a letter to the shareholders on September 14, 2012, to clarify that its first letter used the Western logo "only to make clear which company meeting it concerned." Trans. at 17-20. Counsel for Savitr also represented that "no more flyers are going out," and that Savitr would not use the Western logo again, at least in the next two days before the proxy ballots were due, "in light of the issue that has been made over it." Trans. at 29, 35-36.
After hearing argument and reviewing the proxy materials sent by Savitr, the court ruled that a reasonable person would not be confused about who sent the materials. Sept. 19, 2012 transcript ("Trans.") at 36. Having determined that Western did not demonstrate likelihood of success on the merits, the court denied the motion for TRO and for an order to show cause for a preliminary injunction concerning Savitr's use of the Western logo in proxy materials. Id. at 38. The court noted that Western was not precluded from filing a duly noticed motion for preliminary injunction if there were some other basis for doing so. Id. The court issued a written order denying the TRO application on the grounds that Western did not show that it was likely to succeed on the merits of its trademark infringement claim and that Western's request for relief appeared to be moot in light of the corrective actions taken by Savitr.
At the September 25, 2012 shareholder meeting, the Western board of directors, as proposed by Western management, was elected. On September 27, 2012, Savitr filed an anti-SLAPP motion to strike the state law claims in this action. On October 1, 2012, Western filed an amended complaint dismissing the state law claims. By letter to the court dated October 8, 2012, Savitr withdrew the motion to strike in light of the amended complaint. On October 9, 2012, Western filed a notice of voluntary dismissal of the action without prejudice. On October 12, 2012, the clerk of court filed a report on the filing or determination of a trademark action, noting that the notice of voluntary dismissal was filed on October 9, 2012.
Savitr filed the instant motion for attorney's fees on November 19, 2012. Savitr seeks an award of fees in the amount of $220,183.95, plus the amount of fees incurred in bringing the fee motion. The matter is fully briefed and submitted on the papers.
Section 35(a) of the Lanham Act provides that "[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party." 15 U.S.C. § 1117(a). "An action may be considered exceptional when a plaintiff's case is groundless, unreasonable, vexatious, or pursued in bad faith." Secalt S.A. v. Wuxi Shenxi Const. Mach. Co., Ltd., 668 F.3d 677, 687 (9th Cir. 2012) (citing Stephen W. Boney, Inc. v. Boney Servs., 127 F.3d 821, 827 (9th Cir. 1997) (internal quotation marks omitted)).
Once a determination is made that attorney's fees are appropriate, the standard to be applied in calculating an award of attorney's fees is that of "reasonableness." In setting a fee, the court must first determine the presumptive lodestar figure by multiplying the number of hours reasonably expended on the litigation by the reasonable hourly rate. Secalt, 668 F.3d at 689. See Hensley v. Eckerhart, 461 U.S. 424, 433 (1983). Next, in appropriate cases, the court "may adjust the `presumptively reasonable' lodestar figure based upon the factors listed in Kerr v. Screen Extras Guild, Inc., 526 F.2d 67, 69-70 (9th Cir. 1975), that have not been subsumed in the lodestar calculation." Secalt, 668 F.3d at 689.
The court may reduce a requested fee award, or deny one altogether, where a fee request appears unreasonably inflated. See Hensley, 461 U.S. at 434 (court may deny compensation for "hours that are excessive, redundant, or otherwise unnecessary").
As a threshold matter, Western contends that Savitr's fee motion, filed on November 19, 2012, is untimely pursuant to Federal Rule of Civil Procedure 54 which requires that a motion seeking attorney's fees be filed no later than 14 days after the entry of judgment. See also Civil L.R. 54-5 ("Unless otherwise ordered . . . motions for awards of attorney's fees by the Court must be served and filed within 14 days of entry of judgment . . . ."). Here, Western filed the notice of voluntary dismissal on October 9, 2012, and the court did not enter judgment on the voluntary dismissal. Savitr therefore argues that the 14-day limitations period did not begin to run with the notice of voluntary dismissal, but that a judgment would be deemed entered after 150 days have run from the entry of the voluntary dismissal. Reply at 11 (citing Fed. R. Civ. P. 58(c)(2)(B)). Savitr's argument mistakenly assumes that Western's voluntary dismissal required an entry of judgment for purposes of triggering the 150-day default period.
A similar argument was rejected by the court in Advance Capital, Inc. v. M/V ANGIE, Official No. 249544, 273 F.R.D. 660 (W.D. Wash. 2011). There, the district court granted the plaintiff's motion for voluntary dismissal pursuant to Rule 41(a)(2). In ordering the dismissal, the court considered the defendant's argument that it would be prejudiced by the duplicative costs of litigating the same action in state court and conditioned the dismissal upon the payment of appropriate costs and fees for work that could not be used in any future litigation. Id. at 661. The defendant did not file a motion for attorney's fees until more than three months after the dismissal order was filed, and two months after filing an appeal of order. The court denied the defendant's fee motion as untimely, rejecting the defendant's argument that pursuant to Rule 58(c), a party has 150 days to file a motion for attorney's fees if a separate document of judgment is required but not entered. The court in Advance Capital reasoned as follows:
Id. Similarly, here, Western's voluntary dismissal did not involve an adjudication by the court. "A voluntary dismissal without prejudice is not adverse to the plaintiff's interests. The plaintiff is free to seek an adjudication of the same issue at another time in the same or another forum." Concha v. London, 62 F.3d 1493, 1507 (9th Cir. 1995). Under Rule 41(a)(1), a plaintiff has an absolute right voluntarily to dismiss his action prior to service by the defendant of an answer or a motion for summary judgment. . . . The dismissal is effective on filing and no court order is required." Id. at 1506.
Neither party cites binding authority on the question whether a plaintiff's notice of voluntary dismissal without prejudice triggers the time to file a motion for attorney's fees pursuant to Rule 54 where, as here, no judgment would be entered. Under Ninth Circuit authority, "[a] voluntary dismissal without prejudice is ordinarily not a final judgment from which the plaintiff may appeal." Concha, 62 F.3d at 1507. Turning to the procedures governing the time to appeal, the Ninth Circuit has held that for purposes of filing a timely notice of appeal, "[a] judgment or order is not entered within the meaning of Fed. R. App. P. 4(a) unless it is entered in compliance with Rules 58 and 79(a) of the Federal Rules of Civil Procedure. Rule 58 requires that every judgment be set forth on a separate document, and Rule 79(a) details the civil docketing procedure to be followed by the district court clerk when entering the judgment." Beaudry Motor Co. v. Abko Properties, Inc., 780 F.2d 751, 754 (9th Cir. 1986) (citation and footnotes omitted). The purpose of the separate document requirement "is to avoid the inequity of a party being denied the opportunity to appeal because of a failure to recognize which of several documents or docket entries constituted `entry' of judgment." Id. at 755 n.3. In Beaudry, the Ninth Circuit held that a minute order constituted entry of judgment triggering the time to file the notice of appeal, noting that "plaintiff's counsel received a document, the sole contents of which informed him that his post-judgment motions had been ordered denied and which was file stamped. We have no trouble concluding that in these circumstances a reasonable person would realize that the court had entered an order finally disposing of the case." Id.
Here, because the voluntary dismissal became effective upon filing, without an order of the court or an entry of judgment, the court determines that the notice of voluntary dismissal triggered the time to file a motion for attorney's fees. See Advance Capital, 273 F.R.D. at 661. Savitr was served, through the court's electronic case filing system, with Western's notice of voluntary dismissal on October 9, 2012. Thus, the filing of the voluntary dismissal sufficiently put Savitr on notice that the action was dismissed without a court order pursuant to Rule 41(a)(1)(A)(i). Under these circumstances, it would be reasonable to expect that the 14-day time to file a motion for fees had started to run with the notice of voluntary dismissal because no judgment would be entered. If there had been any ambiguity about whether the voluntary dismissal would trigger the 14-day time to file a fee motion, or if the 14-day period was inadequate to prepare a fee motion, Savitr could have sought an extension of time to file its motion, as advised in the commentary to Civil Local Rule 54-5(a). Furthermore, the court notes an inconsistency in Savitr's argument that the voluntary dismissal should not trigger the running of time to file a fee motion, in light of Savitr's argument on the merits of its fee motion that the voluntary dismissal is a ground for conferring on it prevailing party status, even in the absence of an entry of judgment.
The court therefore DENIES Savitr's fee motion as untimely. Having determined that the fee motion is insufficient on procedural grounds, the court proceeds, in the alternative, to consider the substantive arguments presented in the motion.
Savitr seeks attorney's fees as the "prevailing party" under the Lanham Act. To seek an award of fees, Savitr must establish the following: (1) that it is the prevailing party; and (2) that the case is exceptional. See Secalt, 668 F.3d at 687.
To qualify as a prevailing party for the purpose of awarding fees, a litigant must achieve a "material alteration of the legal relationship of the parties," and that alteration must be "judicially sanctioned." Carbonell v. I.N.S., 429 F.3d 894, 898 (9th Cir. 2005) (citing Buckhannon Bd. & Care Home, Inc. v. West Virginia Dep't of Health & Human Res., 532 U.S. 598 (2001)) (internal quotation marks omitted). In Carbonell, the Ninth Circuit recognized that a litigant can "prevail" for the purposes of awarding attorney's fees as a result of judicial action other than a judgment on the merits or a consent decree (provided that such action has sufficient "judicial imprimatur"). Id. at 899.
The parties agree that this trademark dispute presented a nominative fair use defense. In nominative use cases, the court considers whether (1) the product was readily identifiable without use of the mark; (2) defendant used more of the mark than necessary; and (3) defendant falsely suggested he was sponsored or endorsed by the trademark holder. Toyota Motor Sales, U.S.A., Inc. v. Tabari, 610 F.3d 1171, 1175-76 (9th Cir. 2010) (citations omitted). "This test evaluates the likelihood of confusion in nominative use cases." Id. (citation and quotation marks omitted).
Savitr argues that where preliminary relief is decided on the merits, the victorious party may be deemed the prevailing party. Savitr relies on out-of-circuit authority for the proposition that fees for a "prevailing party" should be awarded to a defendant who successfully defends against a TRO application that was decided on the merits. Mot. at 5 (citing Maine School Administrative District No. 35 v. Mr. & Mrs. R., 321 F.3d 9 (1st Cir. 2003)). In Maine School, a school district sued the parents of a disabled child and sought a TRO and preliminary injunction prohibiting the parents from using the "stay put" provisions of the Individuals with Disabilities Education Act ("IDEA"), 20 U.S.C. § 1415(j), to keep their child in a mainstream school pending administrative review of his placement. Id. at 12-13. The school district invoked a statutory provision that permits temporary changes in a child's placement if a school district can demonstrate "by substantial evidence that maintaining the current placement of such child is substantially likely to result in injury to the child or to others." Id. at 16. When the district court denied the TRO, the school district moved to voluntarily dismiss its complaint. The parents did not object to the dismissal but sought attorney's fees and costs. The district court granted the school district's motion for voluntary dismissal but denied the parents' request for fees on the ground that they were not a prevailing party. Id. at 13. On appeal, the First Circuit reversed the district court and concluded that the parents' fee request should be granted because they were in fact prevailing parties who had defeated the school district's suit on the merits. Id. at 17 ("Because the district court denied injunctive relief on the basis that the School District had not adduced sufficient proof . . ., it is readily evident that the appellants successfully defended the [suit] on the merits."). The court held that the parents' victory was material, not purely technical or de minimis, reasoning that by defending against the school district's lawsuit, the parents "not only deprived the School District of the benefit that it sought in bringing suit but also blocked it from implementing a course of action inimical to [their child's] interests." Id. at 17.
Western fails to address or distinguish the holding of Maine School, which the Ninth Circuit has cited with approval for the principle that "a party may be accorded prevailing party status by being awarded `some relief by the court.'" Shapiro ex rel. Shapiro v. Paradise Valley Unified School Dist. No. 69, 374 F.3d 857, 865 (9th Cir. 2004). Rather, Western contends that the court did not adjudicate the merits of Western's underlying claim and that Savitr therefore cannot be deemed the prevailing party. Opp. at 8-9. Western argues that in denying the TRO application, the court limited its holding to denying Western's request for an order requiring Savitr to send another corrective letter to Western's shareholders. By so arguing, Western understates the extent of the court's ruling denying the TRO application after reviewing the proxy materials in dispute, including the Savitr flyer bearing the Western logo, and considering Western's argument that it showed likelihood of success under the Ninth Circuit's three-part test for nominative fair use, particularly the elements whether Savitr used more of the trademark than was necessary to refer to Western and whether the use of the trademark suggested sponsorship or endorsement by the trademark holder. Trans. at 5-7.
In a nominative use case, a defendant seeking to assert nominative fair use as a defense need only show that it used the mark to refer to the trademarked good, which Savitr showed here as to the presence of the Western logo on the flyer. Toyota Motor Sales, U.S.A., Inc. v. Tabari, 610 F.3d 1171, 1182 (9th Cir. 2010). The burden then reverts to the plaintiff to show a likelihood of confusion. Id. A finding of nominative fair use is a finding that the plaintiff has failed to show a likelihood of confusion as to sponsorship or endorsement. Id.
Upon submission of argument and presentation of evidence at the TRO hearing, the court ruled that Western had failed to demonstrate a likelihood of success on its trademark infringement claim. After reviewing the Savitr proxy materials at issue, the court held that a reasonable person would not be confused by the single use of the Western logo on the flyer as to whether the materials were sponsored or endorsed by Western's management, in light of the totality of the documents. Trans. at 36-38. Accordingly, the court denied Western's request for a TRO and for an order to show cause why a preliminary injunction should not issue. Applying the reasoning of Maine School here, the "quest for injunctive relief was the sole object — the raison d'être —" of Western's action against Savitr. Maine School, 321 F.3d at 16. Because Savitr successfully defended against Western's request for injunctive relief, resulting in the court's denial of the requested relief based on a determination of the merits of Western's claims, Savitr is the prevailing party for purposes of a fee motion under the Lanham Act. See also All American Distrib. Co., Inc. v. Miller Brewing Co., 736 F.2d 530, 533 (9th Cir. 1984) (affirming award of fees under a state statute to defendant who defeated a motion for preliminary injunction where the plaintiff subsequently dismissed the remaining claims in a case that was essentially "an action for an injunction pending arbitration").
Western also suggests that in the written order, the court improperly applied the eight-factor test for likelihood of confusion articulated in AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th Cir. 1979), which focuses on the similarity of the marks used by a plaintiff and a defendant, rather than the three-factor test applicable to nominative use cases where a defendant uses the mark to refer to the trademarked good itself. In considering whether consumers are likely to believe that use of a mark is sponsored or endorsed by a trademark holder when conducting a nominative fair use analysis, the court must focus on the "`reasonably prudent consumer' in the marketplace." Toyota, 610 F.3d at 1176 (citing Dreamwerks Prod. Grp., Inc. v. SKG Studio, 142 F.3d 1127, 1129 (9th Cir.1998) (describing the test for likelihood of confusion in analogous Sleekcraft context)). By citing Entrepreneur Media, Inc. v. Smith, 279 F.3d 1135, 1151 (9th Cir. 2002) for the principle that "use of a mark must be likely to confuse an appreciable number of people as to the source of the product," the court did not conduct a Sleekcraft analysis or improperly shift the burden of proof on the issue of likelihood of confusion. "[A]s the Supreme Court has unambiguously instructed, the Lanham Act always places the `burden of proving likelihood of confusion . . . on the party charging infringement.'" Toyota, 610 F.3d at 1183 (quoting KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 543 U.S. 111, 118 (2004)).
Savitr further argues that voluntary dismissal without prejudice may confer prevailing party status on a defendant, citing All American, 736 F.2d at 533. In All American, the plaintiff sued the defendant for terminating a beer distributorship agreement in violation of Arizona state law, seeking injunctive relief and damages. The plaintiff filed a motion for a preliminary injunction to enjoin the defendant from terminating the distributorship agreement pending arbitration, which the district court denied. After the court of appeals affirmed the denial of the preliminary injunction, the plaintiff moved to dismiss its remaining claim for injunctive relief. The district court ordered dismissal without prejudice, and the defendant sought to recover its attorney fees as a prevailing party under an Arizona statute. The district court awarded fees to the defendant, and the plaintiff appealed, arguing that the defendant was not a prevailing party because the adjudication only determined that the plaintiff had not met its burden for obtaining a preliminary injunction. The Ninth Circuit affirmed the fee award, finding that the Arizona statute made no reference to adjudication on the merits as a prerequisite to recovering attorney fees as a prevailing party. Applying state law, the court of appeals held that, in light of the totality of the litigation, the district court did not abuse its discretion by concluding that the defendant was the prevailing party where the case was essentially "an action for an injunction pending arbitration, with damages claims appended." Id. at 533. The All American court did not hold, however, that the mere voluntary dismissal of claims without prejudice confers prevailing party status on a defendant.
The question whether dismissal without prejudice confers prevailing party status upon the defendant was directly presented in Oscar v. Alaska Dep't of Educ. & Early Dev., 541 F.3d 978, 981 (9th Cir. 2008). There, the plaintiff filed a lawsuit under the IDEA against the state education department for refusing to accept his administrative complaint, which he neglected to sign. The state filed a motion to dismiss based on the plaintiff's failure to sign the administrative complaint, and the plaintiff subsequently filed a motion for voluntary dismissal, explaining that his claim was rendered moot after he filed a signed administrative complaint with the state. The district court granted the state's motion to dismiss for failure to state a claim, dismissed the action without prejudice, and awarded attorney's fees to the state. On appeal from the award of fees, the Ninth Circuit held that dismissal without prejudice neither constitutes a judgment on the merits, nor alters the legal relationship of the parties because the defendant remains subject to the risk of re-filing. Id. (citing, inter alia, Buckhannon, 532 U.S. at 600). Accordingly, the court of appeals held that the defendant was ineligible for an award of fees under the IDEA and vacated the fee award. Id.
Under the holding of Oscar, Savitr is not entitled to prevailing party status simply by virtue of Western's voluntary dismissal of its lawsuit. As discussed above, however, Savitr is the prevailing party for purposes of a fee motion under the Lanham Act based on the court's determination of the merits of Western's TRO application.
To succeed in its request for an award of fees, Savitr must also show that this case is exceptional under the Lanham Act, in other words, that Western had no reasonable or legal basis to believe in success on the merits. Secalt, 668 F.3d at 688 (citing Cairns v. Franklin Mint Co., 292 F.3d 1139, 1156 (9th Cir. 2002)). Savitr contends that Western filed this lawsuit for an improper purpose, namely, to make false representations to shareholders about the claims asserted in both this action and the lawsuit filed in Canada, for the purpose of influencing the outcome of the shareholder vote. The veracity of the alleged misrepresentations about the lawsuits made by Western in its communications with shareholders was also raised at the TRO hearing and is not at issue on the present fee motion. See Trans. at 22-23. The fact that Western sought to enjoin Savitr from allegedly infringing its trademark in further communications with Western shareholders to prevent confusion in the final days before the shareholder vote does not render the lawsuit improper. Further, the nature of the proxy contest was disclosed to the court in the filings addressing Western's request for injunctive relief and does not render the lawsuit exceptional. See Secalt, 668 F.3d at 689 ("Even if Tractel had an ulterior anti-competitive motive, had it made a colorable claim, that factor would weigh in our analysis."). The record does not support a finding of improper purpose or bad faith litigation.
Here, Western presented some evidence to support a colorable claim that Savitr's use of the Western logo on a flyer soliciting proxy votes was likely to cause confusion as to whether the materials were endorsed by Western. Western presented documentary evidence showing the use of its logo on Savitr's proxy materials and, at the hearing, proffered the declarations of two shareholders who claimed that they were confused by the materials but admittedly did not vote for the directors nominated by Savitr. Trans. at 19.
As Western argued in support of its TRO application, Savitr issued a flyer using the Western logo with no disclaimer on the face of the flyer to dispel a suggestion of sponsorship by Western. Trans. at 7. Further, as the court noted at the TRO hearing, the disclaimer that Savitr's solicitation of proxies was not made by Western management was not contained on the cover of the proxy circular, but on the first page of the substantive discussion. Trans. at 37. On this record, Western raised minimally "debatable issues of law and fact" in its trademark claim, unlike the plaintiff in Secalt, which continued to pursue its action for trade dress protection even after another district court denied the plaintiff's motion for a preliminary injunction in a separate action regarding the same claimed trade dress, citing "an utter failure of evidence" to support its trade dress claim. 668 F.3d at 688. Furthermore, after Western filed its complaint, Savitr issued a corrective letter to shareholders to clarify that the Savitr flyer showing the Western logo was not sent by Western and further represented to the court that it would not distribute any more materials using the Western logo. Trans. at 19, 29, 36. The court's decision to deny Western's TRO application, after weighing the evidence and considering the arguments, does not render the trademark infringement claim groundless or unreasonable.
Savitr has not demonstrated that this case is exceptional for purposes of awarding fees under the Lanham Act. The motion for attorney's fees is therefore DENIED. Having determined that an award of fees is not warranted under the Lanham Act, the court does not reach the issue whether the amount of fees requested by Savitr is reasonable.
For the foregoing reasons, Savitr's motion for attorney's fees is DENIED.
Morales v. City of San Rafael, 96 F.3d 359, 364 (9th Cir. 1996), opinion amended on denial of reh'g, 108 F.3d 981 (9th Cir. 1997). Among the Kerr factors presumably taken into account in the lodestar calculation are: "(1) the novelty and complexity of the issues, (2) the special skill and experience of counsel, (3) the quality of representation, (4) the results obtained, and (5) the contingent nature of the fee agreement." Id. at 364 fn. 9 (internal citation and quotation marks omitted).
