Marshall Tucker Band Inc, The et al v. M T Industries Inc et al

Filing 111

OPINION AND ORDER denying 77 Motion for Attorney Fees Signed by Honorable Mary Geiger Lewis on 7/12/2017.(abuc)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
SPARTANBURG DIVISION
'
'
'
'
vs.
'
'
M T INDUSTRIES, INC. and RON RAINEY, '
Defendants.
'
THE MARSHALL TUCKER BAND, INC.
and DOUG GRAY,
Plaintiffs,

CIVIL ACTION NO. 7:16-00420-MGL

MEMORANDUM OPINION AND ORDER DENYING
DEFENDANTS’ MOTION FOR ATTORNEYS’ FEES AND COSTS
I.

INTRODUCTION
Pending before the Court is Defendants’ Motion for Attorneys’ Fees and Costs

(Defendants’ Motion) pursuant to 15 U.S.C. § 1117(a) and Rule 54(d)(2)(B) of the Federal Rules
of Civil Procedure. The Court has jurisdiction over the matter under 28 U.S.C. '' 1331 and
1367(a).

Having carefully considered Defendants’ Motion, the response, the reply, the

supplemental briefing, the record, and the applicable law, the Court will deny Defendants’ Motion.

II.

FACTUAL AND PROCEDURAL HISTORY
The following facts are relevant for purposes of Defendants’ Motion. Plaintiffs filed this

case alleging claims against Defendants for trademark infringement, trademark dilution,
declaratory judgment, and trademark cancellation under federal law and for trademark
infringement, breach of contract, conversion, violation of the South Carolina Unfair Trade

Practices Act, declaratory judgment, and breach of contract accompanied by a fraudulent act under
state law. Defendants initially filed a motion to dismiss on May 9, 2016. Because Plaintiffs
relied on the Declaration signed by Defendant M T Industries, Inc. (MTI) when it filed its
applications to register the trademark at issue with the United States Patent and Trademark Office
(USPTO), which was neither contained in nor attached to Plaintiffs’ amended complaint, the Court
dismissed without prejudice Defendants’ motion to dismiss so the parties could conduct discovery
on that limited matter.
Fifteen days later, Plaintiffs requested entry of default as to Defendants, and the Clerk of
Court entered default as to Defendants on July 29, 2016. In Plaintiffs’ request for entry of default,
they asserted the Court denied Defendants’ motion to dismiss, which purportedly entitled them to
an entry of default given Defendants’ failure to file an answer within fourteen days. The parties
subsequently resolved the issue of default, and the Court set aside the entry of default as to
Defendants.
Following the period of limited discovery, Plaintiffs filed a Second Amended Complaint
(SAC), to which Defendants filed another motion to dismiss. On March 1, 2017, the Court
entered an Order granting Defendants’ motion to dismiss. The Court first dismissed Plaintiffs’
federal trademark infringement claim because Plaintiffs failed to establish MTI’s use of The
Marshall Tucker Band mark (Mark or Marks) in commerce. The Court likewise held Plaintiffs’
federal trademark dilution claim failed as a matter of law because Plaintiffs’ allegations in their
SAC were insufficient to plead a use in commerce as required under 15 U.S.C. § 1125(c). In light
of the fact the Court dismissed the only claims providing independent jurisdiction over the action,
the Court dismissed Plaintiffs’ federal declaratory judgment and federal trademark cancellation

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claims for lack of subject matter jurisdiction. Finally, the Court declined to exercise supplemental
jurisdiction over Plaintiffs’ remaining state law claims.
Plaintiffs subsequently filed a Rule 59(e) motion to alter or amend the Court’s Order
granting Defendants’ motion to dismiss. On April 25, 2017, the Court amended the conclusion
of its prior Order to state the Court dismissed with prejudice Plaintiffs’ federal trademark
infringement and trademark dilution claims and dismissed without prejudice Plaintiffs’ federal
declaratory judgment and trademark cancellation claims and state law claims. The Court denied
the remainder of Plaintiffs’ 59(e) motion, which alleged the Court erred in dismissing their federal
trademark dilution claim.
Meanwhile, Defendants filed Defendants’ Motion on March 14, 2017, seeking their
reasonable attorneys’ fees and costs as the prevailing parties under the Lanham Act, to which
Plaintiffs filed a response and Defendants filed a reply. The Court subsequently directed the
parties to file supplemental briefs on Defendants’ Motion, which the parties did. The Court,
having been exhaustively briefed on the relevant issues, is now prepared to discuss the merits of
Defendants’ Motion.

III.

STANDARD OF REVIEW
Section 1117(a) of the Lanham Act permits the Court to “award reasonable attorney fees

to the prevailing party” in “exceptional cases.” 15 U.S.C. § 1117(a). The United States Court of
Appeals for the Fourth Circuit has held a court may find a case “exceptional” under the Lanham
Act—and, consequently, award attorneys’ fees to the prevailing party—where it determines, in
light of the totality of the circumstances,

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(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-Pacific Consumer Prods. LP v. von Drehle Corp., 781 F.3d 710, 721 (4th Cir. 2015)
(internal citations and quotation marks omitted).
Should the Court find a case to be exceptional, warranting an award of attorneys’ fees to
the prevailing party, the Court must calculate an appropriate attorneys’ fee award. Grissom v.
The Mills Corp., 549 F.3d 313, 320 (4th Cir. 2008). In doing so, the Court must determine “the
lodestar amount,” defined as a “reasonable hourly rate multiplied by hours reasonably expended.”
Id. To identify the reasonable number of hours and reasonable rate to use in calculating the
lodestar amount, the Court is guided by the twelve non-exclusive factors set forth in Barber v.
Kimbrell’s, Inc., 577 F.2d 216, 226 (4th Cir. 1978). Id. at 320-21 (citing Barber, 577 F.2d at
226). Those factors are:
(1) the time and labor expended; (2) the novelty and difficulty of the questions
raised; (3) the skill required to properly perform the legal services rendered; (4) the
attorney’s opportunity costs in pressing the instant litigation; (5) the customary fee
for like work; (6) the attorney’s expectations at the outset of the litigation; (7) the
time limitations imposed by the client or circumstances; (8) the amount in
controversy and the results obtained; (9) the experience, reputation and ability of
the attorney; (10) the undesirability of the case within the legal community in which
the suit arose; (11) the nature and length of the professional relationship between
attorney and client; and (12) attorneys’ fees awards in similar cases.
Id. at 321 (internal quotation marks omitted).
Rule 54 of the Federal Rules of Civil Procedure provides in relevant part:
Unless a statute or court order provides otherwise, the motion [for attorneys’
fees] 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,
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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).

IV.

CONTENTIONS OF THE PARTIES
In Defendants’ Motion, they contend they are prevailing parties in this case and this case

is an exceptional one falling under the Georgia-Pacific standard, warranting an award of attorneys’
fees. First, Defendants aver Plaintiffs took a frivolous or objectively unreasonable position in
pursuing this lawsuit in that they failed to allege Defendants’ unlawful commercial use of the Mark
and refused to work with Defendants to resolve their issues with registration of the Mark before
the USPTO.

Second, Defendants maintain Plaintiffs litigated in an unreasonable manner,

pointing in part to their improperly requesting entry of default as to Defendants after the Court
dismissed without prejudice Defendants’ initial motion to dismiss. Third, Defendants insist there
is a need in this case to advance considerations of compensation and deterrence. Defendants
asseverate because Plaintiffs’ main goal was to cancel Defendants’ trademark registrations, they
unreasonably pursued this case when they purportedly should have proceeded before the USPTO.
Using the Barber factors, Defendants urge a reasonable attorneys’ fee award, given the facts and
circumstances of this case, would be $173,595.00, plus $556.37 in costs.
Plaintiffs take issue with each of Defendants’ positions.

V.

DISCUSSION AND ANALYSIS
A.

Whether Defendants Are Prevailing Parties under the Lanham Act

Applying the above standards to the instant matter, the Court initially considers whether
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Defendants are prevailing parties under the Lanham Act. A “prevailing party” is “[a] party in
whose favor a judgment is rendered, regardless of the amount of damages awarded.” Buckhannon
Bd. & Care Home, Inc. v. W. Va. Dep’t of Health & Human Res., 532 U.S. 598, 603 (2001)
(internal quotation marks omitted). Consequently, the touchstone of prevailing is whether the
defendant obtained “some relief,” even if not all the relief the defendant sought. Id.
“Common sense undermines the notion that a defendant cannot ‘prevail’ unless the relevant
disposition is on the merits.” CRST Van Expedited, Inc. v. EEOC, 136 S. Ct. 1642, 1651 (2016).
“A plaintiff seeks a material alteration in the legal relationship between the parties. A defendant
seeks to prevent this alteration to the extent it is in the plaintiff’s favor.” Id. “The defendant
[fulfills] its primary objective whenever the plaintiff’s challenge is rebuffed, irrespective of the
precise reason for the court’s decision. The defendant may prevail even if the court’s final
judgment rejects the plaintiff’s claim for a nonmerits reason.” Id.
Accordingly, “dismissal of the action, whether on the merits or not, generally means [the]
defendant is the prevailing party,” and “[a] party who is only partially successful also can be
deemed a prevailing party.” 10 Wright, Miller & Kane, Federal Practice and Procedure § 2667
(3d ed.). Therefore, the contention to be a prevailing party a litigant “must win on all issues is
clearly without merit.” Lytle v. Comm’rs of Election of Union Cty., 541 F.2d 421, 425 n.6 (4th
Cir. 1976).
Here, the Court granted Defendants’ motion to dismiss, dismissing Plaintiffs’ federal
trademark infringement and trademark dilution claims with prejudice. In that those were the only
claims establishing independent federal jurisdiction over the action, the Court dismissed without
prejudice Plaintiffs’ federal trademark cancellation and declaratory judgment claims for lack of

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subject matter jurisdiction. The Court also declined to exercise supplemental jurisdiction over
Plaintiffs’ state law claims, dismissing them without prejudice as well.
In light of the standard set forth above, Defendants unquestionably received at least “some
relief” by succeeding in having Plaintiffs’ entire case against them in this Court dismissed.
Therefore, the Court holds Defendants are prevailing parties under the Lanham Act.
B.

Whether This Case Is Exceptional under the Georgia-Pacific Standard

A holding Defendants are prevailing parties, standing alone, is unable to entitle them to the
award of attorneys’ fees they seek, however. The Court must next determine whether this case
constitutes an “exceptional” one under the Georgia-Pacific standard. To do so, only one of the
three Georgia-Pacific factors must be met.
1.

Whether the position taken by Plaintiffs in this case was frivolous or
objectively unreasonable

First, the Court must examine whether the position taken by Plaintiffs in this case was
frivolous or objectively unreasonable. See Georgia-Pacific, 781 F.3d at 721. Defendants proffer
several reasons why Plaintiffs’ position in this case was ostensibly frivolous or objectively
unreasonable.
Defendants argue Plaintiffs’ claims MTI infringed and diluted the Marks were frivolous
and objectively unreasonable because Plaintiffs failed to cite any actual unlawful use of the Marks.
Defendants state they pointed out this deficiency in their initial motion to dismiss, but Plaintiffs
failed to substantiate their allegations when they amended their complaint, even after the limited
period of discovery allowed by the Court. Defendants asseverate the law on this issue is clear and
Plaintiffs’ continued pressing of their claim mere registration of the Marks constituted
infringement and dilution was unreasonable.

Additionally, Defendants contend Plaintiffs
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improperly brought their lawsuit in this Court, as the proper venue for the dispute was before the
USPTO, given Plaintiffs’ ultimate goal was to obtain cancellation of the Marks.
A determination a position is frivolous or objectively unreasonable is to be based on “an
objective assessment of the merits of the challenged claims and defenses.” See Old Reliable
Wholesale, Inc. v. Cornell Corp., 635 F.3d 539, 544 (Fed. Cir. 2011) (internal quotation marks
omitted). Moreover, “[u]nless an argument or claim asserted in the course of litigation is so
unreasonable that no reasonable litigant could believe it would succeed, it cannot be deemed
objectively baseless for purposes of awarding attorney fees.”

Id. (internal quotation marks

omitted).
In this case, the Court is unwilling to hold Plaintiffs’ position was frivolous or objectively
unreasonable.

Although the Court ultimately determined Plaintiffs’ federal trademark

infringement and trademark dilution claims to be without merit, the Court is unable to hold it was
“so unreasonable that no reasonable litigant could believe” those claims would succeed. See id.
Furthermore, the fact Plaintiffs could have—and perhaps should have—proceeded before the
USPTO fails to meet this frivolous or objectively unreasonable standard as well. As Plaintiffs
observe, they brought a variety of claims under federal and state law, and it was reasonable for
them to proceed in this Court on that basis. Thus, the Court holds the first Georgia-Pacific factor
to be unmet.
2.

Whether Plaintiffs litigated this case in an unreasonable manner

Second, the Court must decide whether Plaintiffs litigated this case in an unreasonable
manner.

See Georgia-Pacific, 781 F.3d at 721.

Defendants insist Plaintiffs unreasonably

litigated their claims in this matter on several occasions. Defendants urge Plaintiffs filed an

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excessively long SAC and oppositions to Defendants’ motions to dismiss and sought discovery far
beyond the scope of the limited discovery authorized by the Court. Defendants likewise maintain
Plaintiffs’ motion to alter or amend the Court’s Order improperly attempted to re-litigate issues
previously decided. Defendants also claim Plaintiffs’ actions seeking to hold Defendants in
default was patently unreasonable.
To hold a party has litigated in an unreasonable manner, the non-prevailing party typically
must have engaged in some form of egregious conduct. See, e.g., Octane Fitness, LLC v. ICON
Health & Fitness, Inc., 134 S. Ct. 1749, 1757 (2014). Plaintiffs’ lengthy SAC and responses in
opposition to Defendants’ motions to dismiss fail to constitute unreasonable or egregious litigation
conduct, nor does the fact Plaintiffs sought discovery beyond the scope authorized by the Court.
The Court holds the same to be true regarding Plaintiffs’ conduct regarding the issue of default.
Further, Plaintiffs’ motion to alter or amend was not entirely without merit in that the Court granted
it in part to clarify Plaintiffs’ federal trademark cancellation and declaratory judgment claims were
dismissed without prejudice.
Therefore, in light of all the foregoing, the Court also holds Defendants have failed to
satisfy the second Georgia-Pacific factor.
3.

Whether there is otherwise the need in this case to advance considerations
of compensation and deterrence

Third, the Court must determine whether there is otherwise the need in this case to advance
considerations of compensation and deterrence.

See Georgia-Pacific, 781 F.3d at 721.

Defendants advance this case involved a narrow and limited dispute that should have been pursued
before the USPTO.

Defendants further assert Plaintiffs unreasonably rejected Defendants’

assistance to obtain concurrent use registrations from the USPTO.
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Defendants proclaim

Plaintiffs’ litigation tactics, as set forth above, harassed them needlessly, and avouch this case is
one where advancing considerations of compensation and deterrence through an award of
attorneys’ fees would be appropriate.
Nonetheless, the Court holds there is no special need for compensation or deterrence in this
case. As observed above, Plaintiffs chose to proceed in this Court as opposed to before the
USPTO; however unwise that determination proved to be, it was entirely within their discretion to
choose this venue.

And, the Court has already held Plaintiffs’ litigation tactics were not

unreasonable. In light of all the facts and circumstances surrounding this case, the Court holds
the third and final factor of the Georgia-Pacific test is unsatisfied. Accordingly, the Court will
deny Defendants’ Motion, as they are unentitled to attorneys’ fees under the Lanham Act.

VI.

CONCLUSION
Wherefore, based on the foregoing discussion and analysis, it is the judgment of the Court

Defendants’ Motion is DENIED.
IT IS SO ORDERED.
Signed this 12th day of July, 2017, in Columbia, South Carolina.
s/Mary Geiger Lewis
MARY GEIGER LEWIS
UNITED STATES DISTRICT JUDGE

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