Sizzler Family Steak Houses v. Western Sizzlin Steak House, Inc.

• Decision Date: 26 June 1986
• Docket Number: No. 85-8908,85-8908
• Citation: 793 F.2d 1529
• Parties: SIZZLER FAMILY STEAK HOUSES, a California Corporation, Plaintiff-Appellee, Cross-Appellant, v. WESTERN SIZZLIN STEAK HOUSE, INC., a Georgia Corporation; Western Sizzlin Steak House Franchises, Inc., a Georgia Corporation, and Western Sizzlin, Inc., a Georgia Corporation, Defendants-Appellants, Cross-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1529

793 F.2d 1529

230 U.S.P.Q. 332

SIZZLER FAMILY STEAK HOUSES, a California Corporation, Plaintiff-Appellee, Cross-Appellant, v. WESTERN SIZZLIN STEAK HOUSE, INC., a Georgia Corporation;

Western Sizzlin Steak House Franchises, Inc., a Georgia

Corporation, and Western Sizzlin, Inc., a Georgia

Corporation, Defendants-Appellants, Cross-Appellees.

No. 85-8908.

United States Court of Appeals, Eleventh Circuit.

June 26, 1986.

William J. Cooney, Augusta, Ga., Michael T. Platt, Samuel D. Littlepage, Washington, D.C., for defendants-appellants, cross-appellees.

Patrick J. Rice, Augusta, Ga., William Poms, M. Michael Carpenter, Bernard R. Gans, Los Angeles, Cal., for plaintiff-appellee, cross-appellant.

Appeals from the United States District Court for the Southern District of Georgia.

Before VANCE and JOHNSON, Circuit Judges, and ALLGOOD, ^* Senior District Judge.

VANCE, Circuit Judge:

This is the latest skirmish in a trademark battle which has been raging between two steak house chains since 1967. On a motion by plaintiff Sizzler Restaurants International, Inc. ("Sizzler"), the district court held defendant Western Sizzlin, Inc. ("Western") in civil contempt for violating an order restricting Western's use of the word "Sizzlin." It also imposed sanctions for the contemptuous conduct, and placed what Western claims are additional restrictions on its use of "Sizzlin." Both parties now appeal. We affirm with respect to Western's appeal and dismiss Sizzler's cross-appeal for lack of jurisdiction.

I.

Sizzler and Western are both operators and franchisors of budget steak restaurants. Both chains, as well as several others in the same business, have expanded rapidly across the country in recent years, catering to family business by offering inexpensive steaks, potatoes, salad bars and desserts.

In 1967, Sizzler filed suit against Western, then known as "Sizzler's," for trademark and service mark infringement. The suit resulted in a 1968 judgment prohibiting Western from using the "Sizzler" mark or any confusingly similar mark. The judgment specifically permitted Western to use its current name.

The two companies apparently coexisted peacefully for the next few years. In 1980, however, Sizzler once again sued Western. It was troubled by the fact that Western had obtained federal trademark and service mark registration of the word "Sizzlin" standing alone. Western and its franchisees were using "Sizzlin" by itself as a service mark for their restaurants on some signs, and as a trademark to describe one of their steak offerings. In addition, even when "Sizzlin" appeared in tandem with "Western," the former word was often much more prominent. Sizzler contended that "Sizzlin" was confusingly similar to "Sizzler," and hence that Western should be barred from using the mark.

In 1984, after a full bench trial, the district court called the two companies together for what it termed a "final settlement conference." Although the conference did not result in an official settlement agreement, it apparently was not a complete failure. The parties agreed to waive the usual findings of fact and conclusions of law, and the court was able to fashion a judgment from which neither party took an appeal. The 1984 judgment required that Western cancel its service mark registration for "Sizzlin," though it was permitted to keep the trademark registration. Western and its franchisees were also required to modify exterior wall and pole signs at their restaurants so that any use of "Sizzlin" on such signs was accompanied by the word "Western" displayed in an equally prominent fashion. The court imposed a timetable for the conversion of signs to meet requirements, and retained jurisdiction for enforcement purposes.

Skeptical of Western's ability or commitment to ensure compliance with the judgment--it seems Western ran a rather loose franchise operation--Sizzler went to considerable expense to determine whether Western's restaurants were complying with the court's requirements. It found that many were not. Close to half had not complied with the court's order that "Sizzlin" wall signs at certain restaurants be permanently disconnected from electricity by October 1, 1984. In addition, some restaurants were violating the 1984 judgment by using pole signs on which "Sizzlin" was unduly prominent, and two were found to be violating the 1968 judgment by using the term "Sizzler." Consequently, Sizzler filed a motion for contempt. In January 1985, the district court granted the motion, and in July the court entered an order awarding Sizzler $25,000. The July order also modified the 1984 judgment by prohibiting use of the "Sizzlin" trademark outside Western's restaurants. This modification was apparently in response to a special master's report that the parties disagreed as to whether Western could use the "Sizzlin" mark to advertise its "# 1 Sizzlin Steak."

In September, however, the court determined that the 1984 judgment should not have been amended. It thus vacated the July order. In its place, the court issued three separate orders in early November. In an order of November 7, it reimposed the $25,000 contempt sanction. On November 8, it reimposed the prohibition on outside use of the "Sizzlin" trademark, but this time did so in the guise of interpreting the 1984 judgment. On November 12, it entered an order establishing a schedule of prospective sanctions for future violations.

Western filed a notice of appeal from the orders of November 7 and 8 on November 12. ¹ It filed an amended notice on November 14 to include the November 12 order, ² and a second amended notice on December 9 to clarify that it intended also to appeal the underlying finding of contempt. ³ Sizzler filed a notice of cross-appeal on December 19 from the November 7 order, claiming that the $25,000 award was too small.

II.

A. The Contempt Order

Western first argues that the district court abused its discretion ⁴ in holding Western in contempt. The company acknowledges that contempt may serve two purposes. It "can be either coercive, which is intended to make the recalcitrant party comply, or compensatory, which 'reimburses the injured party for the losses and expenses incurred because of his adversary's noncompliance....' " Rickard v. Auto Publisher, Inc., 735 F.2d 450, 458 (11th Cir.1984) (quoting Norman Bridge Drug Co. v. Banner, 529 F.2d 822, 827 (5th Cir.1976)). Western suggests, however, that the contempt judgment in this case served neither purpose. It could not have been coercive, Western argues, because Western had cured or had taken steps to cure all the violations reported by Sizzler by the time the contempt judgment was entered. It could not have been compensatory, the company continues, because Sizzler submitted no proof of damage caused by Western's allegedly contemptuous conduct. Although the district court stated that the sanction of $25,000 was intended to compensate Sizzler for expenses it incurred in policing Western's compliance, Western argues that these expenses were not actually brought about by Western's failure to comply. Since Sizzler would have incurred the expenses whether or not it found any violations, Western contends, it cannot be said that Sizzler incurred the expenses because of the violations.

We believe that the district court's judgment of contempt and the accompanying sanction served a valid compensatory purpose. ⁵ Western's argument that Sizzler's expenses were not incurred "because of" the violations, while ingenious, cuts so broadly that accepting it would require us to ignore both binding precedent and common sense. Under Western's theory, no expenses incurred by the moving party in an effort to enforce compliance by the party's opponent could ever be reimbursed in a contempt action. Attorney fees, for instance, could not be awarded to a prevailing movant. It would not be precisely accurate to say that the fees were incurred "because of" the contemnor's contemptuous conduct, since the attorney would have put in the time even if the court had found no contempt. Under our precedents, however, an award of attorney fees to the injured party in a civil contempt case is within the district court's discretion. See, e.g., Northside Realty Associates v. United States, 605 F.2d 1348, 1356 n. 23 (5th Cir.1979). Indeed, reimbursement to a prevailing movant may include "expenses reasonably and necessarily incurred in the attempt to enforce compliance." Rickard, 735 F.2d at 458 (quoting Banner, 529 F.2d at 827). This rule is sensible as well as binding. It provides parties with an added incentive to monitor and enforce an opponent's compliance with a court order by allowing them to recover their expenses in exposing noncompliance. Yet by conditioning reimbursement on enforcement success, it discourages parties from wasting resources on scavenging for nonexistent violations.

Each party to a court order is responsible for ensuring its own compliance with that order and for shouldering the cost of compliance. Western did not fulfill this responsibility. It admits to numerous violations which it did not discover or correct until after Sizzler moved for contempt. That Western may have acted to correct the violations after learning of them does not change the fact that Western failed to mount and pay for its own effective enforcement efforts. Rather than let Western freeload off the efforts of Sizzler, the district court found Western in contempt and imposed a modest sanction. ⁶ While it may be true in a technical sense that Sizzler was reimbursed for expenses which it would have incurred even if Western had been in complete compliance, it is certainly more equitable for Western to absorb the cost of policing its franchisees than for Sizzler to do so. We find no abuse of discretion in the court's finding of contempt or its decision to impose a sanction.

B. Attorney Fees

Western next argues that the district court erred in awarding...