Killer Burger, Inc. v. Rock and Roll Chili Pit, Inc. et al
Filing
45
OPINION AND ORDER: I DENY Defendants' Motion for Attorney Fees 39 , with leave to refile a Motion for Mark McCrary's fees and costs based only on the breach of contract claim, within 14 days of the date of this order. Signed on 3/5/18 by Judge Michael W. Mosman. (dls)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
PORTLAND DIVISION
KILLER BURGER,
No. 3:17-cv-01219-MO
Plaintiff,
OPINION AND ORDER
v.
ROCK AND ROLL CHILI PIT, INC.,
et al.,
Defendants.
MOSMAN, J.,
This matter comes before me on Defendants’ Motion for Attorney Fees [39]. For the
reasons below, I DENY the Motion, with leave to refile for fees associated with Killer Burger’s
contract claim.
BACKGROUND
This case involves two former business partners’ competing burger joints. Killer Burger,
founded by TJ Southard and Defendant Mark McCrary, opened in 2010. In 2016, McCrary and
his wife, Defendant Robin McCrary, left Killer Burger to open their own restaurant, Rock and
Roll Chili Pit (RRCP). RRCP opened in March 2017 in downtown Portland, several blocks from
Killer Burger’s downtown location. In connection with its opening, RRCP posted
announcements in its Facebook group about its “Epic” and “Black Molly” burger, both of which
were burgers that had previously been available at Killer Burger.
1 – OPINION AND ORDER
Killer Burger brought suit against RRCP in August 2017, claiming: (1) violations of the
Lanham Act, 15 U.S.C. § 1125(a), specifically for RRCP’s use of the Epic and Black Molly
hamburgers; (2) violations of state trademark law, O.R.S. § 647.107; (3) violations of common
law rights; and (4) breach of contract against Mark McCrary for his disclosure of the Epic, Black
Molly, and peanut sauce recipes. Compl. [1] ¶¶ 16–26. Killer Burger also sought a TRO and a
Preliminary Injunction, requesting injunctive relief prohibiting RRCP from producing and
advertising the Epic or Black Molly burgers. Mot. for TRO [2].
After I denied Killer Burger’s request for a TRO, Tr. [28] at 29–30, Killer Burger filed an
Amended Motion for Preliminary Injunction [19] and sought broader relief than in the Motion
for TRO or the first Motion for Preliminary Injunction. In the Amended Motion, Killer Burger
sought injunctive relief prohibiting RRCP from: (1) advertising or selling the Epic or Black
Molly burgers; (2) using Killer Burger’s peanut butter sauce recipe; (3) selling any menu items,
including tater tots, with the term “Peanut Butter Pickle Bacon” in the title; (4) advertising or
selling any Killer Burger hamburgers, including those not yet created; and (5) referring to any
Killer Burger trademarks in advertising, social media, or otherwise. Am. Mot. [19]. Killer Burger
never filed an amended complaint detailing these allegations, although Killer Burger asserts it
circulated an amended version to RRCP and never received a response. Immediately before the
hearing on the preliminary injunction, the parties filed a stipulation for dismissal pursuant to Fed.
R. Civ. P. 41(a)(1), although Defendants argue that Killer Burger decided to voluntarily dismiss
the case essentially on its own.
The parties stipulated to dismissal with prejudice [36] pursuant to Fed. R. Civ. P.
41(a)(1)(A)(ii), which allows a plaintiff to “dismiss an action without a court order by filing a
stipulation of dismissal signed by all parties who have appeared.” Fed. R. Civ. P. 41(a)(1)(A)(ii).
2 – OPINION AND ORDER
Unlike most Rule 41(a)(1) stipulations, the parties requested the Court sign off on the stipulation,
which I did [38]. The stipulation included the following provision: “The parties reserve the right
to submit petitions for attorney fees, costs and disbursements.” [36].
Defendants now seek attorney fees pursuant to Fed. R. Civ. P. 54(d) under (1) the
Lanham Act, 15 U.S.C. § 1117(a); (2) O.R.S. § 647.105(2); and (3) the confidential Stock
Redemption Agreement, which contains an attorney fees clause.
DISCUSSION
Defendants ask for $27,245.00 in attorney fees and $188.03 in costs. Killer Burger argues
Defendants are not entitled to fees or costs in this case, because: (1) a voluntary dismissal does
not constitute a “judgment” after which fees may be sought; and (2) Defendants are not the
prevailing party and do not meet other standards for fees under federal or state law. I address
each of these arguments in turn.
I.
Whether a voluntary dismissal constitutes a “judgment” under Fed. R. Civ. P. 54(d)
Fed. R. Civ. P. 54(d)(2)(B) addresses claims for attorney fees and reads:
Timing and Contents of the Motion. Unless a statute or a court order provides
otherwise, the motion must: (i) be filed no later than 14 days after the entry of
judgment; (ii) specify the judgment and the statute, rule, or other grounds entitling
the movant to the award; (iii) state the amount sought or provide a fair estimate of
it; and (iv) disclose, if the court so orders, the terms of any agreement about fees
for the services for which the claim is made.
Fed. R. Civ. P. 54(d)(2)(B). Killer Burger argues that Defendants cannot obtain attorney fees
under Fed. R. Civ. P. 54(d) because their stipulated dismissal does not constitute a final
appealable judgment. In support of its argument, Killer Burger relies on Keith Mfg., Co. v.
Butterfield, 256 F. Supp. 3d 1123, 1132–33 (D. Or. 2017). In Keith, the parties stipulated to a
dismissal of all claims with prejudice and then each moved for attorney fees. This Court held that
neither party could receive attorney fees, concluding that a stipulated dismissal is not a judgment
3 – OPINION AND ORDER
under Fed. R. Civ. P. 54(d). Keith, 256 F. Supp. 3d at 1130. In so ruling, the Court relied on the
Supreme Court’s recent decision in Microsoft v. Baker, 137 S. Ct. 1702 (2017), in which the
Supreme Court held that “Plaintiffs in putative class actions cannot transform a tentative
interlocutory order, into a final judgment within the meaning of § 1291 simply by dismissing
their claims with prejudice—subject, no less, to the right to ‘revive’ those claims if the denial of
class certification is reversed on appeal.” Id. at 1715 (internal citation omitted).
It appears to be an open question whether Baker affects the Ninth Circuit’s prior holdings
“that voluntary dismissals with prejudice that produce an adverse final judgment may be
appealed,” Ward v. Apple Inc., 791 F.3d 1041, 1045 (9th Cir. 2015). In Keith, this Court
concluded that Baker’s holding abrogated these holdings and held that “a stipulated judgment of
dismissal, even with prejudice, is not an appealable order” for the purposes of Rule 54. 256 F.
Supp. 3d at 1130. But there is a critical difference in this case such that Keith’s holding is
inapplicable here. In Keith, the stipulated dismissal was silent as to the issue of attorney fees, but
here the stipulation included the following provision: “The parties reserve the right to submit
petitions for attorney fees, costs and disbursements.” [36]. See Keith, 256 F. Supp. 3d at 1130
n.4. By agreeing to this provision, Killer Burger has waived any argument that Defendants are
now precluded from seeking fees and costs. Cf. Nemeroff v. Abelson, 620 F.2d 339, 350 (2d Cir.
1980) (holding that where a “stipulation and order of dismissal expressly reserved to defendants
the right to move for ‘costs and disbursements of this action,’” plaintiffs could not later object
that defendants were not the prevailing party for the purposes of costs). Alternatively, this
Court’s Order [38] authorizing the parties’ stipulated dismissal serves as a court order under Rule
41(a)(2), which allows the Court to dismiss the case “on terms that the court considers proper.” I
therefore conclude that Defendants may seek fees pursuant to the stipulated dismissal.
4 – OPINION AND ORDER
II.
Whether Defendants are entitled to fees
Fed. R. Civ. P. 54(d)(1) provides that fees and costs should generally be allowed to the
“prevailing party.” Fed. R. Civ. P. 54(d)(1). Courts look to federal law for the definition of
“prevailing party” on federal claims, and to state law for state claims. Keith, 256 F. Supp. 3d at
1130–31. Thus, I analyze Defendants’ claim to fees under the Lanham Act under federal law,
and Defendants’ other claims under state law.
A. Lanham Act
Killer Burger argues that Defendants may not recuperate attorney fees under the Lanham
Act, because they are not a “prevailing party” under federal law. In Buckhannon Board & Care
Home, Inc. v. West Virginia Dep’t of Health & Human Resources, the Supreme Court addressed
the definition of “prevailing party,” citing the Black’s Law Dictionary definition of “[a] party in
whose favor a judgment is rendered.” 532 U.S. 598, 603 (2001) (alteration in original). The
Court concluded that a prevailing party must achieve a “judicially sanctioned change in the legal
relationship of the parties,” such as a “judgment [or] consent decree.” See id. at 605. “The key
inquiry is whether some court action has created a ‘material alteration of the legal relationship of
the parties.’” Cadkin v. Loose, 569 F.3d 1142, 1148 (9th Cir. 2009) (quoting Buckhannon, 532
U.S. at 604). The Ninth Circuit has applied Buckhannon’s test to circumstances other than
judgments or consent decrees, concluding, for example, that “when a court incorporates the
terms of a voluntary settlement agreement into an order, that order is stamped with sufficient
‘judicial imprimatur’ for the litigant to qualify as a prevailing party.” See Carbonell v. I.N.S., 429
F.3d 894, 901 (9th Cir. 2005). But it is not clear whether the Supreme Court or Ninth Circuit
would hold that a stipulated dismissal, absent a settlement agreement, confers prevailing party
5 – OPINION AND ORDER
status on either party.1 Compare Klamath Siskiyou Wildlands Ctr. v. U.S. Bureau of Land Mgmt.,
589 F.3d 1027, 1035 (9th Cir. 2009) (holding that a plaintiff was not a prevailing party “because
neither the stipulated order, the magistrate judge's F & R, nor the binding ruling in Boody, a
separate case, amounts to a ‘material alteration of the legal relationship of the parties’ that is
‘judicially sanctioned,’ as required in Buckhannon”); with Cadkin, 569 F.3d at 1150
(“[A] defendant is a prevailing party following dismissal of a claim if the plaintiff is judicially
precluded from refiling the claim against the defendant in federal court.”).
I conclude that I need not resolve this issue, because even if I considered Defendants to
be the prevailing party following the stipulated dismissal, I would not grant Defendants fees
under the Lanham Act. 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 exceptional
case is “simply one that stands out from others with respect to the substantive strength of a
party's litigating position (considering both the governing law and the facts of the case) or the
unreasonable manner in which the case was litigated.” Octane Fitness, LLC v. ICON Health &
Fitness, Inc., 134 S. Ct. 1749, 1756 (2014). This Court must “determine whether a case is
‘exceptional’ in the case-by-case exercise of their discretion, considering the totality of the
circumstances” by using a “nonexclusive list of factors, including ‘frivolousness, motivation,
objective unreasonableness (both in the factual and legal components of the case) and the need in
particular circumstances to advance considerations of compensation and deterrence.’” Id.; id. n.6
(quoting Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 n.19 (1994)).
Considering the totality of the circumstances, I conclude this was not an exceptional case.
Killer Burger’s case was not frivolous, given the strength of some of their trademark
1
Killer Burger argues that Keith is dispositive of this issue, but in Keith, a patent case, this Court applied Federal
Circuit precedent, which is not binding on this trademark case.
6 – OPINION AND ORDER
infringement claims against a competitor selling identically named products. Defendants’
litigating position was not so substantively strong as to merit fees in this case. And although
Killer Burger’s arguments changed during the course of this suit, Defendants’ actions affected
these arguments. RRCP started and stopped selling some of the key products implicated in this
case several times during the few months this case remained active, thus raising and then
negating certain of Killer Burger’s arguments. I conclude this case is not exceptional and no fees
are warranted under the Lanham Act.
B. O.R.S. § 647.105(2)
Unlike the federal legal standard applicable to the Lanham Act, there is no question that
Defendants are the prevailing party under Oregon state law. “For the purposes of making an
award of attorney fees on a claim, the prevailing party is the party who receives a favorable
judgment or arbitration award on the claim.” O.R.S. § 20.077(2). Oregon Rule of Civil Procedure
54(A)(3) provides that in the context of a voluntary dismissal, “[u]nless the circumstances
indicate otherwise, the dismissed party shall be considered the prevailing party.” ORCP
54(A)(3): see Goodsell v. Eagle-Air Estates Homeowners Ass’n, 383 P.3d 365, 373 (Or. Ct. App.
2016), review denied, 388 P.3d 728 (Or. 2017) (“That plaintiffs chose, after years of affirmative
litigation, to voluntarily dismiss their action before it could be resolved on its merits is relevant
to the entitlement determination only insofar as it establishes defendants’ prevailing party
status.”). Because Killer Burger chose to dismiss this case, Defendants are the prevailing party
here.
But I conclude Defendants are not entitled to attorney fees under Oregon trademark law.
O.R.S. § 647.105 provides that, “’[i]f the court finds that the plaintiff acted in bad faith,
vexatiously, wantonly or for oppressive reasons, the court in the court's discretion may award
reasonable attorney fees to the defendant.” O.R.S. § 647.105(2). As discussed above, I do not
7 – OPINION AND ORDER
conclude that Killer Burger acted unreasonably or in bad faith. Defendants are not entitled to fees
under O.R.S. § 647.105(2).
C. Contract
Finally, Defendants argue they are entitled to attorney fees and costs under the
confidential Stock Redemption Agreement, arguing it incorporates the fee provision under the
January 2015 Shareholders Agreement, which reads:
Attorney’s Fees. If any arbitration, action, suit, or proceeding is instituted to
interpret, enforce, or rescind this Agreement, or otherwise in connection with the
subject matter of this Agreement, * * * the prevailing party on a claim will be
entitled to recover with respect to the claim, in addition to any other relief
awarded, the prevailing party’s reasonable attorney’s fees and other fee, costs, and
expenses of every kind, including but not limited to the costs and disbursements
specified in ORCP 68A(2), incurred in connection with the * * * proceeding.
Haraguchi Decl. [40] ¶ 9. Defendants correctly note that Killer Burger alleged a breach of
contract claim against Mark McCrary based on the Stock Redemption Agreement, arguing he
violated the agreement by disclosing the recipes for the Epic, Black Molly, and peanut sauce.
Compl. ¶ 25. In Oregon, “[t]he awarding of attorney fees pursuant to contractual provisions is
made mandatory by statute, ORS 20.096.” U.S. Nat. Res., Inc. v. Gray, 676 P.2d 912, 914 (Or.
Ct. App. 1984) (alteration in original) (citation omitted). And it appears that Mark McCrary is
the prevailing party under Oregon state law on this claim, given Oregon case law on the matter.
Rosekrans v. Class Harbor Ass’n, Inc., 209 P.3d 411, 424 (Or. Ct. App. 2009) (“In the absence
of a contrary intention, it is presumed that the parties intended the reference to ‘prevailing party’
in a contractual attorney fee provision to have the meaning set out in ORS 20.077(2).”).
But I decline to award fees or costs to Mark McCrary under the contract at this time for
two reasons. First, Defendants did not submit the Shareholders’ Agreement or Stock Redemption
Agreement. It is therefore unclear whether the documents actually entitle Mark McCrary to
attorney fees. For example, if either document defines “prevailing party” differently than Oregon
8 – OPINION AND ORDER
law does, fees may not be warranted in this case. Second, Mark McCrary is the only defendant
who may recover fees and costs, and only for time spent on the breach of contract claim. See
O.R.S.§ 20.077(2)(b) (“If more than one claim is made in an action or suit for which an award of
attorney fees is either authorized or required, the court or arbitrator shall . . . [d]ecide whether to
award attorney fees on claims for which the court or arbitrator is authorized to award attorney
fees, and the amount of the award.”). Defendants do not sufficiently detail their fees and costs on
the contract claim such that I may properly award only those fees and costs. I therefore deny
Defendants’ Motion. But Defendants may refile a Motion for Mark McCrary’s fees and costs,
based only on the breach of contract claim.
CONCLUSION
For the reasons stated above, I DENY Defendants’ Motion for Attorney Fees [39], with
leave to refile a Motion for Mark McCrary’s fees and costs based only on the breach of contract
claim, within 14 days of the date of this order.
IT IS SO ORDERED.
5th
DATED this ____ day of March, 2018.
/s/ Michael W. Mosman
________________________
MICHAEL W. MOSMAN
Chief United States District Judge
9 – OPINION AND ORDER
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