Royal Palm Props., LLC v. Pink Palm Props., LLC

• Decision Date: 07 July 2022
• Docket Number: 21-10872
• Citation: 38 F.4th 1372
• Parties: ROYAL PALM PROPERTIES, LLC, a Florida limited liability company, Plaintiff-Counter Defendant-Appellee, v. PINK PALM PROPERTIES, LLC, a Florida limited liability company, Defendant-Counter Claimant-Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

38 F.4th 1372

ROYAL PALM PROPERTIES, LLC, a Florida limited liability company, Plaintiff-Counter Defendant-Appellee,

v.PINK PALM PROPERTIES, LLC, a Florida limited liability company, Defendant-Counter Claimant-Appellant.

No. 21-10872

United States Court of Appeals, Eleventh Circuit.

Filed: July 7, 2022

Robert J. Hauser, Pankauski Hauser Lazarus, PLLC, W. Palm Beach, FL, Meredith Chaiken, Whitelock & Associates, PA, Fort Lauderdale, FL,Thomas U. Graner, Graner Platzek & Allison, PA, Boca Raton, FL, Raymond J. Rafool, II, Rafool, LLC, Miami, FL, Tracy White, Law Office of Tracy White, Jupiter, FL, for Plaintiff-Counter Defendant-Appellee.

Jerold I. Schneider, Schneider IP Law, Boynton Beach, FL, Alexander Charles Cohen, Robbins Geller Rudman & Dowd, LLP, Boca Raton, FL, Joel Benjamin Rothman, SRiplaw, Boca Raton, FL, for Defendant-Counter Claimant-Appellant.

Before Wilson, Rosenbaum, Circuit Judges, and Covington,^* District Judge.

Wilson, Circuit Judge:

Today we decide if civil lawsuits are more like regular or postseason National Football League (NFL) games. That is, can they end in a tie or must a winner always be named?

We think they are more like regular season games. Courts, unlike the NFL, are not in the business of declaring winners; they are in the business of settling legal disputes. And, sometimes, legal disputes do not have a clear winner (in legalese, a "prevailing party"). As such, courts are not required to declare a winner—or a "prevailing party"—in every case.

The answer to this question—whether legal cases can end in a tie or if a prevailing party must be named—is significant because the prevailing party of a lawsuit is ordinarily entitled to recover its costs, see Fed. R. Civ. P. 54(d)(1), and also can be eligible for fee awards under various fee-shifting statutes. In the case at hand, Royal Palm Properties, LLC (Royal Palm) sued Pink Palm Properties, LLC (Pink Palm) for trademark infringement and Pink Palm countersued. Both parties ultimately lost on their claims. Pink Palm asserted that it was the prevailing party, and thereby entitled to costs under Rule 54 and "exceptional case" fees under the Lanham Act, because it successfully defended the initial infringement claim. Because there was a split judgment and both parties lost on their claims, however, the district court ruled that there was "no clear winner" and, thus, no prevailing party. After careful review we agree that there was no prevailing party in this case and affirm the judgment of the district court.

I. BACKGROUND

To understand the legal issues on appeal, it is helpful to delve into the case's procedural history.

Royal Palm initiated this action against Pink Palm in April 2017, alleging that Pink Palm infringed its registered service mark "Royal Palm Properties" (the Trademark)¹ in violation of the Lanham Act, 15 U.S.C. § 1114. Pink Palm responded by filing five counterclaims, four seeking cancellation of the Trademark for various reasons and one seeking a declaratory judgment of non-infringement. In March 2018, at the motion-to-dismiss stage, three of Pink Palm's counterclaims were dismissed with prejudice. The surviving cancellation counterclaim sought a declaratory judgment of invalidation and cancellation of the Trademark on the grounds that it is not distinctive and is confusingly similar to previously registered trademarks.

Royal Palm's infringement claim and Pink Palm's surviving counterclaims of noninfringement and cancellation proceeded to trial. Following a three-day trial, the jury unanimously found that Pink Palm did not infringe the Trademark and that the Trademark was not invalid on the grounds asserted by Pink Palm. Pink Palm subsequently moved for judgment as a matter of law (JMOL), asking the district court to overrule the jury's determination that the Trademark was valid. The district court agreed with Pink Palm and entered an order and final judgment granting it JMOL, thereby overruling the jury verdict and invalidating the Trademark. Pink Palm subsequently filed a motion for bill of costs, which the district court granted as Pink Palm was the prevailing party in light of its order granting JMOL.²

Not happy with the Trademark being invalidated, Royal Palm timely appealed. This brings us to Royal Palm I . There, after hearing oral argument, we reversed the district court's grant of JMOL, reinstating the jury's verdict and the Trademark's validity. See Royal Palm Props., LLC v. Pink Palm Props., LLC , 950 F.3d 776, 780 (11th Cir. 2020) ( Royal Palm I ).

Back in the district court after Royal Palm I , as relevant here, Pink Palm sought costs under Rule 54(d)(1) and "exceptional case" fees under the Lanham Act, both of which would require a finding that Pink Palm was the prevailing party. See Fed. R. Civ. P. 54(d)(1) ("[C]osts ... should be allowed to the prevailing party."); 15 U.S.C. § 1117(a) ("The court in exceptional cases may award reasonable attorney fees to the prevailing party."). As a result of the appellate mandate, the district court ruled that Pink Palm was (1) no longer the prevailing party for purposes of costs, and (2) not entitled to an award of attorney fees under the Lanham Act's exceptional case doctrine. In light of the jury's split decision on the parties’ competing claims, the district court held that neither party would recover fees or costs. The court reasoned that neither Pink Palm nor Royal Palm could be viewed as the prevailing party since each party brought significant claims that were ultimately unsuccessful:

There are two central issues in this case. The first is whether [Pink Palm] had infringed [Royal Palm's] Trademark, and the second is whether [Royal Palm's] Trademark is invalid for the reasons asserted by [Pink Palm]. The Jury found that [Pink Palm] had not infringed the Trademark but that the Trademark is not invalid on the grounds asserted by [Pink Palm]. Thus, in the Eleventh Circuit's words, "the jury split the baby[.]" .... In light of the Jury's Verdict, it is clear that each Party prevailed on a central issue and that each Party lost on a central issue in this case.

Considering the entire record, including [Royal Palm's] successful appeal of the Order Granting Renewed Motion for [JMOL], I find that neither Party so clearly prevailed as to be considered the prevailing party under the applicable law. "[T]he ‘touchstone of the prevailing party inquiry must be the material alteration of the legal relationship of the parties.’ " CRST , 136 S. Ct. at 1646 (citation omitted).^[3] No such material alteration exists here, as [Royal Palm] has maintained the Trademark and it was found that [Pink Palm's] prior conduct did not infringe that Trademark. Even construing the resolution of the Parties’ disputes as a material alteration of their legal relationship, each Party prevailed and lost on one of the two central issues in this case—leaving no clear winner.

Although this outcome is unusual, the unusual facts of this case warrant it. The Parties point to no precedent requiring a court to declare a prevailing party in every case. In sum, having carefully considered the record, the Parties’ respective arguments, and the applicable law, I am simply not persuaded that either Party can be declared prevailing.

Because it found that neither party could be characterized as the prevailing party, the district court declined to award costs or fees to Pink Palm. This is Pink Palm's appeal of the district court's fee order.

II. STANDARDS OF REVIEW

In reviewing a district court's prevailing party determination, we review the court's underlying factual findings for clear error but review de novo the legal question of whether those facts suffice to render a party a "prevailing party." Beach Blitz Co. v. City of Miami Beach , 13 F.4th 1289, 1297 (11th Cir. 2021).

Before we can decide whether the district court erred by failing to name Pink Palm the prevailing party, however, we must address a threshold issue: Are courts required to name a prevailing party in every case, or can there be no prevailing party? This is a pure legal question that we review de novo. See Sargeant v. Hall , 951 F.3d 1280, 1282 (11th Cir. 2020).

III. THE PREVAILING PARTY STANDARD

While the question of whether there can be no prevailing party is an issue of first impression for our court, the term "prevailing party" "is no stranger to the law." Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep't of Health & Hum. Res. , 532 U.S. 598, 611, 121 S.Ct. 1835, 149 L.Ed.2d 855 (2001) (Scalia, J., concurring). The concept of awarding costs to the prevailing party appears in Supreme Court opinions dating as far back as the mid-1800s. See, e.g. , Pennsylvania v. Wheeling & Belmont Bridge Co. , 59 U.S. 460, 461, 18 How. 460, 15 L.Ed. 449 (1855) (noting "the repeated recognition by acts of congress of the right of the prevailing party to costs"); The Baltimore , 75 U.S. 377, 388, 8 Wall. 377, 19 L.Ed. 463 (1869) ("Costs have usually been allowed to the prevailing party ....").

Today numerous federal statutes and rules allow courts to award costs to the "prevailing party." At issue here is the designation of prevailing party status and the awarding of costs under Federal Rule of Civil Procedure 54. Rule 54(d)(1) provides that, "[u]nless a federal statute, these rules, or a court order provides otherwise, costs—other than attorney's fees—should be allowed to the prevailing party."

"Prevailing party" is a legal term of art. Black's Law Dictionary defines the term as: "A party in whose favor a judgment is rendered, regardless of the amount of damages awarded cases, the court will award attorney's fees to the prevailing party>. — Also termed successful party ." Prevailing party , Black's Law Dictionary (11th ed. 2019) (emphasis in original). The Supreme Court has said that "a prevailing party" is "one who has been awarded some relief by the court." Buckhannon , 532 U.S. at 603, 121 S.Ct. 1835 ; see also Hewitt v. Helms , 482 U.S. 755, 760, 107 S.Ct. 2672, 96 L.Ed.2d...