Ballero v. 727 Inc., et al

Filing 75

ORDER AND REASONS denying 69 Motion for Attorney's Fees. Signed by Judge Ivan L.R. Lemelle. (ijg)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
FRANK W. BALLERO

CIVIL ACTION

VERSUS

NO. 16-16098

727 INC., ET AL.

SECTION "B"(3)
ORDER AND REASONS

Defendants 727, Inc. and 721 Bourbon, Inc. prevailed in a
trademark infringement action and seek an award of attorney’s fees.
Rec. Doc. 69. Plaintiff timely filed an opposition. Rec. Doc. 70.
Defendants sought, and were granted, leave to file a reply. Rec.
Doc. 74.
For the reasons discussed below,
IT IS ORDERED that the motion (Rec. Doc. 69) is DENIED.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
Plaintiff

Frank

Ballero

sued

Defendants

727,

Inc.,

721

Bourbon, Inc., and Crescent Crown Distributing, LLC for trademark
infringement under the Lanham Act in November 2016. See Rec. Doc.
1. As discussed in more detail in previous Orders and Reasons,
Plaintiff brewed and sold a beer called Pirate’s Blood until March
2011, when he ceased production. See Rec. Docs. 41 at 1-2; 65 at
1-2. After Plaintiff stopped making Pirate’s Blood, Defendants
continued to use the Pirate’s Blood mark in their bars to sell
beer. See Rec. Docs. 41 at 2; 65 at 2. Defendants referred to a
beer as “Pirate’s Blood,” used a “Pirate’s Blood” tap to dispense

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the beer, and told customers that the beer was brewed locally. See
Rec. Docs. 41 at 2; 65 at 2.
Defendants moved to dismiss Plaintiff’s case for failure to
state a claim on the basis that Plaintiff had abandoned his
trademark. See Rec. Docs. 24; 30. The motions to dismiss were
denied because Plaintiff alleged in his amended complaint that he
had met with breweries from 2012 to 2015 to resume brewing Pirate’s
Blood. See Rec. Doc. 41 at 13-15. That being said, the Court did
note

that

Plaintiff’s

“vague

allegation

[about

meetings

with

breweries] . . . m[ight] not survive a subsequent motion for
summary judgment.” Id. at 14.
After conducting discovery, Defendants moved for summary
judgment,

again

arguing

that

Plaintiff

had

abandoned

his

trademark. See Rec. Docs. 54; 55. Defendants’ motions for summary
judgment

were

granted

because,

though

there

was

evidence

of

Plaintiff’s efforts to resume brewing Pirate’s Blood and otherwise
defend his trademark, Plaintiff’s use of the Pirate’s Blood mark
was insufficiently sustained and commercial to rebut a presumption
of abandonment. See Rec. Doc. 65 at 11-17. Defendants 727, Inc.
and 721 Bourbon, Inc. then moved for an award of the attorney’s
fees they incurred between March 2017, when the motions to dismiss
were denied, and September 2017, when the motions for summary
judgment were granted. See Rec. Doc. 69.

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LAW AND ANALYSIS
The Lanham Act allows an award of “reasonable attorney fees
to

the

prevailing

party”

“in

exceptional

cases.”

15

U.S.C.

§ 1117(a). “[A]n exceptional case is one where (1) in considering
both governing law and the facts of the case, the case stands out
from others with respect to the substantive strength of a party’s
litigating position; or (2) the unsuccessful party has litigated
the case in an unreasonable manner.” Baker v. DeShong, 821 F.3d
620, 625 (5th Cir. 2016) (citing Octane Fitness, LLC v. ICON Health
& Fitness, Inc., 134 S. Ct. 1749, 1756 (2014)). Defendants argue,
without citing a single case, that Plaintiff’s case was exceptional
because of its substantive weakness. See Rec. Doc. 69-1 at 7-10.
Specifically, Defendants argue that Plaintiff should have known
that his case could not survive summary judgment after the Court
questioned

the

viability

of

Plaintiff’s

argument

against

abandonment. See Rec. Doc. 69-1 at 7-8 (quoting Rec. Doc. 41 at
14).
The question of whether a case is exceptional is entrusted to
a district court’s “case-by-case exercise of [its] discretion,
considering the totality of the circumstances.” Baker, 821 F.3d at
625 (citing Octane Fitness, 134 S. Ct. at 1756). Factors that may
inform this analysis include “frivolousness, motivation, objective
unreasonableness

. . . [,]

circumstances

advance

to

and

the

considerations
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need
of

in

particular

compensation

and

deterrence.” Octane Fitness, 134 S. Ct. at 1756 n.6. The Supreme
Court further explained that “a case presenting either subjective
bad faith or exceptionally meritless claims may sufficiently set
itself apart from mine-run cases to warrant a fee award.” Id. at
1757. However, the Supreme Court cautioned that it will be “the
rare

case

necessarily

in

which

a

party’s

independently

unreasonable

conduct—while

not

sanctionable—is

nonetheless

so

‘exceptional’ as to justify an award of fees.” Id. at 1756-57.
In applying this standard, district courts have found cases
exceptional when there is a constellation of red flags that sets
the case apart. See Laerdal Med. Corp. v. Basic Med. Supply, LLC,
No. H-16-35, 2016 WL 6436557, at *4 (S.D. Tex. Oct. 31, 2016)
(holding that case was exceptional because Defendants defaulted
and continued to infringe on Plaintiff’s trademarks); Farouk Sys.,
Inc. v. AG Glob. Prods., LLC, No. H-15-0465, 2016 WL 6037231, at
*4 (S.D. Tex. Oct. 14, 2016) (holding that case was exceptional
because Plaintiff’s trade dress claim had substantive weaknesses
and Plaintiff initiated lawsuit to harass defendant); see also
Beastie Boys v. Monster Energy Co., 112 F. Supp. 3d 31, 45-47
(S.D.N.Y. 2015) (explaining that a case may be exceptional when
“the losing party’s litigation positions . . . were so devoid of
legal merit that one could only conclude that they were advanced
with an improper motive”).

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The

substantive

weakness

of

Plaintiff’s

case

was

not

remarkable; Plaintiff was able to develop some facts to support
his argument that he did not abandon the Pirate’s Blood trademark.
See Rec. Doc. 56 at 2-4, 6-10. During his deposition, Plaintiff
testified that he attempted to meet with five breweries about
restarting Pirate’s Blood. See Rec. Doc. 54-3 at 47-48, 51-58, 6769, 72. Documents produced by one of the breweries is consistent
with Plaintiff’s testimony. See Rec. Doc. 56-1 at 59-68. Plaintiff
also sought to register the Pirate’s Blood trademark and homebrewed
Pirate’s Blood for a beer festival. See Rec. Doc. 56 at 3-4. This
evidence was insufficient to create a genuine issue of material
fact with respect to Plaintiff’s abandonment of the Pirate’s Blood
trademark.

See

Rec.

Doc.

65

at

14-17.

But

the

evidence

is

sufficient to defeat Defendants’ motion for an award of attorney’s
fees, especially given Plaintiff’s otherwise proper engagement
with the proceedings. Cf. GeoDynamics, Inc. v. DynaEnergetics US,
Inc., No. 15-CV-01546-RSP, 2017 WL 6559170, at *4-5 (E.D. Tex.
Dec. 21, 2017) (holding that a case was exceptional for substantive
weakness because there was “overwhelming evidence that the mark
was generic,” plaintiff’s briefing did not seriously engage with
the law, plaintiff offered “no evidence” that it continued to use
the trademark in question, and the court believed plaintiff to
have no damages).

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Defendants

further

attempt

to

support

their

argument

by

faulting Plaintiff’s settlement position, see Rec. Doc. 69-1 at 9,
but this contention is similarly unavailing. Plaintiff rejected
Defendants’ April 2017 offer of judgment because he wanted to first
review Defendants’ sales data, which was not produced until August
2017—just days before Defendants filed their motion for summary
judgment and a month after Plaintiff’s deposition. See Rec. Doc.
70-1. Moreover, it does not appear that either party attempted to
reinitiate
Plaintiff

settlement
reached

discussions

out

to

until

Defendants.

September

2017,

See

Regardless,

id.

when

Defendant’s hesitation to engage in settlement discussions before
Defendants produced the sales data that would underpin any damages
figure is not unreasonable, nor does it rise to the level of
obstinance that would warrant an award of attorney’s fees. See
Off-White LLC v. Paige, LLC, No. 17-cv-2904, 2017 WL 3492006, at
*1-2 (S.D.N.Y. Aug. 14, 2017) (indicating that a plaintiff may,
without

becoming

liable

for

a

defendant’s

attorney’s

fees,

continue litigation after receiving settlement offers when there
is uncertainty about the scope of a potential settlement).
New Orleans, Louisiana, this 6th day of February, 2018.

___________________________________
SENIOR UNITED STATES DISTRICT JUDGE

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