Beach Mart, Inc. v. L&L Wings, Inc.

Filing 430

ORDER denying 413 Motion for Attorney Fees. Signed by US District Judge Terrence W. Boyle on 7/19/2018. (Stouch, L.)

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IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
NORTHERN DIVISION
BEACH MART, INC.,
Plaintiff,
v.
L&L WINGS, INC.,
Defendant
L&L WINGS, INC.,
Counterclaimant,
v.
BEACH MART, INC.,
Counter Defendant
L&L WINGS, INC.,
Plaintiff,
v.
SHEPARD MORROW, SUPER WINGS,
LLC, and BEACH MART, INC.
Defendants.

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No. 2:11-CV-44-BO

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No. 2:14-CV-52-BO

ORDER
Beach Mart, Inc; has moved for an award of attorneys' fees as a prevailing party on
trademark infringement claims under the Lanham Act. 15 U.S.C. § 1117(a); Fed. R. Civ. P.
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54(d). By order entered October 3, 2014, the Court, inter alia, dismissed counterclaims for
trademark infringement and unfair competition brought by L&L Wings, Inc. against Beach Mart.

Beach Mart contends that this successful disposition of the counterclaims means that it is the
prevailing party for purposes of the Lanham Act's fee-shifting provisions, and that attorneys'
fees should be awarded to it as this is an exceptional case. 15 U.S.C. § 1117(a). L&L Wings has
opposed the motion for attorneys' fees, Beach Mart has filed a reply in support, and the matter is
ripe for ruling.
DISCUSSION
The Court dispenses with a recitation of the procedural and factual background of this
matter and incorporates as if fully set forth herein its prior orders. The Lanham Act, in 15 U.S.C.
§ 1117(a), provides that court may in exceptional cases award reasonable attorney fees to the
prevailing party. A
court may find a case "exceptional" and therefore award attorneys fees to the
prevailing party under § 1117(a) when it determines, in light of the totality of the
circumstances, that (1) there is an unusual discrepancy in the merits of the
positions taken by the parties, based on the non-prevailing party's position as
either frivolous or objectively unreasonable, (2) the non-prevailing party has
litigated the case in an unreasonable manner, or (3) there is otherwise the need in
particular circumstances to advance considerations of compensation and
deterrence.

Georgia-Pac. Consumer Prod LP v. von Drehle Corp., 781 F.3d 710, 721 (4th Cir. 2015), as
amended (Apr. 15, 2015) (internal quotations and citations omitted). Additionally, "the losing
party's conduct need not have been independently sanctionable or taken in bad faith in order to
merit an award of attorney fees to the prevailing party under the Lanham Act." Verisign, Inc. v.

XYZCOM LLC, 891 F.3d 481, 487 (4th Cir. 2018). The party seeking attorney fees must prove
by a preponderance of the evidence that the case is an exceptional one. Id. at 485. "Awards of
attorneys fees under [] the Lanham Act ... are not to be made as a matter of course, but rather as
a matter of the court's considered discretion." Ale House Mgmt., Inc. v. Raleigh Ale House, Inc.,
205 F.3d 137, 144 (4th Cir. 2000).

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In light of the totality of the circumstances present in this protracted litigation, the Court .
does not find that Beach Mart has satisfied its burden to show that this is an exceptional case
such that attorney fees should be awarded. Beach Mart appears to focus on the second factor,
that the non-prevailing party litigated.the case unreasonably, and contends that L&L Wings acted
in bad faith in pursuit of its Lanham Act infringement claims. Beach Mart relies on the Court's
order awarding sanctions against L&L Wings for discovery violations under Fed. R. Civ. P. 37.
[DE 233]. However, Beach Mart has already been awarded sanctions for L&L Wings' discovery
violations, and Beach Mart has failed to persuade the Court that L&L' s conduct in discovery
should form the basis of attorney fees related to the case as a whole. See, e.g., Monster Daddy v.

Monster Cable Prod., Inc., No. CIV.A. 6:10-1170-MGL, 2014 WL 2780331, at *5 (D.S.C. June
19, 2014) ("Although the Court has made a finding as to the bad faith nature of Monster Daddy's
conduct relative to discovery, the Court declines to use that order and those proceedings as
further proof of any bad faith or unreasonable conduct on the part of Monster Daddy as to the
case in its entirety and for the purpose of awarding fees under the Lanham Act."). This is
particularly true where at least some of sanctioned conduct, withholding the Morrow Agreement,
proved to be "much ado about nothing," as the Court later held that the Morrow Agreement
terminated in 1994, and Beach Mart's claims premised thereon were dismissed. Selee Corp. v.

McDanel Advanced Ceramic Techs., LLC, No. 1:15-CV-00129-MR, 2017 WL 3122565, at *5
(W.D.N.C. July 21, 2017).
The Court does not find that L&L Wings' position in the case was frivolous or
objectively unreasonable, nor that L&L Wings was unreasonable in its manner of litigation.
Finally, no consideration of compensation and deterrence would be advanced by awarding

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attorney fees to Beach Mart under these circumstances. As this Court has previously stated,
what began as a seemingly benign contract dispute turned acrimonious and swelled to include
multiple claims, counterclaims, and cross-claims. [DE 301]. Although Beach Mart technically
prevailed on L&L Wings' counterclaims that were dismissed as a sanction, it by no means was
the clear winner in this case. Moreover, Beach Mart has not demonstrated a "high degree of
culpability," Ga.-Pac., 781 F.3d at 720 (citing Tex. Pg. Stands, Inc. v. Hard Rock Cafe Int'!, Inc.
951 F.2d 684-696-7 (5th Cir. 1992)), on the part of L&L Wings or that this case "stands out from
others with respect to the substantive strength of a party's litigation position .

" Octane

Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749, 1756 (2014).

CONCLUSION
Accordingly, having considered the motion under the appropriate standard, the Court in
its discretion finds that Beach Mart has failed to demonstrate by a preponderance of the evidence
that this is an exceptional case which would warrant an award of attorneys' fees. Beach Mart's
motion [DE 413] is therefore DENIED. L&L Wings' request for attorneys' fees in connection
with opposing the motion for attorneys' fees [DE 421 at 2 n.1] is also DENIED.

SO ORDERED, this

J.!l

day of July, 2018.

~LWt

UNITED STATES DISTRICT JUDGE

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