Baltimore Luggage Co. v. Samsonite Corp.
| Decision Date | 02 March 1992 |
| Docket Number | 91-2190,No. 91-2171,91-2171 |
| Citation | 977 F.2d 571,1992 WL 296368 |
| Parties | , 1992-2 Trade Cases P 69,998, 24 U.S.P.Q.2d 1851 NOTICE: Fourth Circuit I.O.P. 36.6 states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Fourth Circuit. The BALTIMORE LUGGAGE COMPANY, Plaintiff-Appellant, v. SAMSONITE CORPORATION, Defendant-Appellee. The BALTIMORE LUGGAGE COMPANY, Plaintiff-Appellee, v. SAMSONITE CORPORATION, Defendant-Appellant. . Argued: |
| Court | U.S. Court of Appeals — Fourth Circuit |
Patrick Grady Burns, Welsh & Katz, LTD., Chicago, Illinois, for Appellee.
ON BRIEF: Alfred W. Breiner, Breiner & Breiner, Alexandria, Virginia, for Appellant.
A. Sidney Katz, Welsh & Katz, LTD., Chicago, Illinois; Paul N. Sameth, Adelberg, Rudow, Dorf, Hendler & Sameth, Baltimore, Maryland, for Appellee.
Before HALL, Circuit Judge, KISER, United States District Judge for the Western District of Virginia, sitting by designation, and BLATT, Senior United States District Judge for the District of South Carolina, sitting by designation.
Baltimore Luggage appeals the district court's denial of attorneys' fees it sought under that provision of the Lanham Act providing for recovery of attorneys' fees to prevailing parties in"exceptional cases." 15 U.S.C. § 1117. The district court found that Baltimore's claim for attorneys' fees, as well as Baltimore's antitrust and unfair competition claims, were barred by the doctrines of collateral estoppel and res judicata, respectively, arising out of an earlier International Trade Commission ("ITC") determination by an administrative law judge ("ALJ") on the same claims.
We find that the district court correctly applied both doctrines in finding that Baltimore had an opportunity to litigate fully those matters before the ITC. We find that Baltimore's failure to litigate fully its affirmative defenses in the action Samsonite brought before the ITC, and Baltimore's failure to seek a stay of the ITC proceeding or an expedited jury trial on relevant factual matters in Baltimore's parallel proceeding then pending in the district court, does not preclude application by the district court of the doctrines of collateral estoppel and res judicata-more modernly, "issue preclusion" and "claim preclusion." Further, we find that the district court properly determined that Baltimore was not entitled to attorneys' fees on the ground of bad faith during the period subsequent to the Federal Circuit's decision, because the parties' failure to settle after the Federal Circuit's decision turned solely on Baltimore's demand for, and Samsonite's refusal to pay, attorney's fees. With the issue of attorney's fees remaining in dispute, Samsonite cannot be said to have acted in bad faith. Our review of questions of law decided by the District Court is de novo. Pierce v. Underwood, 487 U.S. 552, 559 (1987).
The facts giving rise to this appeal are not in dispute. In 1985 Baltimore introduced a new line of molded luggage called"Amelia Earhart Starfrost." In 1986, Samsonite notified Baltimore that Starfrost luggage infringed upon Samsonite's common law trademark rights and demanded that Baltimore cease the sale of the Starfrost line and pay damages therefrom after an accounting.
Baltimore initiated a three-count complaint in district court on February 13, 1986. Count I requested a declaration that Samsonite had no trademark rights in Starfrost luggage and that Baltimore was not infringing. Count II alleged antitrust violations by Samsonite, and Count III alleged unfair competition.
When Samsonite's motion to dismiss was denied by the district court, Samsonite filed an answer and included four-counter claims against Baltimore for: (1) patent infringement, (2) false designation of source or origin in violation of the Lanham Act, 15 U.S.C. § 1125(a), (3) common law trademark infringement and unfair competition, and (4) violation of the Maryland Consumer Protection Act, Com. Law Art., § 13-101 et seq., Md. Code (1983). Samsonite later amended its counter-claims to add (5) "passing off" under 15 U.S.C. § 1125(a). During the pendency of the district court action, Samsonite commenced a parallel action before the ITC on December 31, 1986 against Baltimore and seven other respondents alleging the same claims it had brought as counter claims against Baltimore in Baltimore's original action.
Baltimore raised twenty-one affirmative defenses in its response to Samsonite's ITC complaint, including (1) that Samsonite had unclean hands and (2) that Samsonite had committed antitrust violations. A hearing was held before an ALJ in September 1987. At the end of the nine-day hearing, Baltimore submitted its findings of fact, one of which proposed bad faith on the part of Samsonite for pursuing unfair competition and restraint of trade actions against Baltimore. Baltimore also presented an affirmative defense of unclean hands in its Prehearing Statement before the ITC.
The ALJ found that Samsonite had no trademark rights because its design was de jure functional, non-distinctive and had not acquired secondary meaning. The ALJ found that Samsonite failed to prove injury from Baltimore's importation and sale of luggage in the United States. The ALJ further determined that the record did not support Baltimore's affirmative defenses of bad faith or other conduct on the part of Samsonite to warrant a finding of trademark misuse, unclean hands and/or antitrust violation. Samsonite petitioned the ITC for review of the Initial Determination, which petition was declined on December 21, 1987. Samsonite then appealed the ITC judgment to the Court of Appeals for the Federal Circuit which, on October 13, 1988, affirmed the ALJ's decision on Samsonite's claims and vacated as moot that part of the ALJ's decision which denied the validity of Baltimore's affirmative defenses relating to unfair competition, holding that Baltimore's claims were not before the Federal Circuit in Samsonite's appeal. Although Baltimore was present, it did not appeal the ITC's findings adverse to it on its antitrust, unclean hands or bad faith affirmative defenses to the Federal Circuit.
Samsonite then proceeded to district court and moved for summary judgment on Baltimore's claims of antitrust and unfair competition violations, on the ground that Baltimore's claims were barred by the ALJ's decision under the doctrine of res judicata. Samsonite also moved to dismiss Baltimore's declaratory action on the ground that no actual case or controversy existed. The district court held that because the ALJ's determinations adverse to Baltimore had not come before the Federal Circuit on appeal, the Federal Circuit could not vacate as moot that part of the ALJ's decision denying the validity of Baltimore's affirmative defenses, and that therefore the ALJ's rulings on Baltimore's affirmative defenses were capable of having preclusive effect. The district court also found, pursuant to the ALJ's rulings against Samsonite, that no actual case or controversy existed between Baltimore and Samsonite and granted Samsonite's motion to dismiss Baltimore's declaratory action. However, the district court reserved the issue of whether Baltimore might recover attorneys' fees under 15 U.S.C. § 1117, that section of the Lanham Act which provides that in exceptional cases the court "may award reasonable attorney fees to the prevailing party."
Upon review of the pleadings submitted, the district court then ruled that Baltimore's Motion and Proffer of Evidence for Attorney Fees was barred under the doctrine of collateral estoppel arising out of the ALJ's finding of "no bad faith" and upon Baltimore's inadequate proffer of evidence showing bad faith or other evidence warranting an award of attorney fees. The district court also barred further hearing of Baltimore's antitrust and unfair competition counts, holding that the ITC's determinations against Baltimore on its affirmative defenses of unclean hands and antitrust were res judicata. Baltimore now appeals the district court's applications of collateral estoppel to its motion for attorney fees and res judicata to its antitrust and unfair competition claims. Samsonite cross-appeals on the ground that the district court improperly denied Samsonite's motion to dismiss Baltimore's causes of action for antitrust violation and unfair competition.
The doctrine of res judicata precludes relitigation not only of issues that were actually decided but also issues which could have been presented for determination. Watkins v. M & M Tank Lines, Inc., 694 F.2d 309, 311 (4th Cir. 1982). When an administrative agency acts in a judicial capacity and "resolves disputed issues of fact properly before it which the parties have had an adequate opportunity to litigate," courts "have not hesitated to apply res judicata to enforce repose." United States v. Utah Construction Co., 384 U.S. 394, 42122 (1966).
In this appeal, Baltimore asserts that although it had an opportunity to litigate before the ITC, it did not have an adequate opportunity, and argues on two grounds that the district court improperly gave preclusive effect to the ITC proceeding: (1) that the ITC lacked jurisdiction to grant relief to Baltimore on its affirmative defenses of antitrust and unclean hands and consequently the ITC findings against Baltimore on those defenses were nonessential to the determinations the ITC properly made against Samsonite; and (2) that because the ITC proceeding could afford Baltimore no relief in the form of damages or...
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