Spectrum Ass'n Mgmt. of Tex., L.L.C. v. Lifetime Hoa Mgmt. L.L.C.

• Decision Date: 13 July 2021
• Docket Number: No. 20-50604,20-50604
• Citation: 5 F.4th 560
• Parties: SPECTRUM ASSOCIATION MANAGEMENT OF TEXAS, L.L.C., Plaintiff—Appellee/Cross-Appellant, v. LIFETIME HOA MANAGEMENT L.L.C.; Jay Tuttle, Defendants—Appellants/Cross-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

5 F.4th 560

SPECTRUM ASSOCIATION MANAGEMENT OF TEXAS, L.L.C., Plaintiff—Appellee/Cross-Appellant,

v.LIFETIME HOA MANAGEMENT L.L.C.; Jay Tuttle, Defendants—Appellants/Cross-Appellees.

No. 20-50604

United States Court of Appeals, Fifth Circuit.

FILED July 13, 2021

Andrew J. Schumacher, Winstead, P.C., Austin, TX, for Plaintiff-Appellee/Cross-Appellant.

Gerrit Schulze, Shumway Van, San Antonio, TX, for Defendants-Appellants/Cross-Appellees.

Before Dennis and Engelhardt, Circuit Judges, and Hicks,^* Chief District Judge.

Kurt D. Engelhardt, Circuit Judge:

Spectrum Association Management of Texas, L.L.C. ("Spectrum") sued Lifetime HOA Management, L.L.C. ("Lifetime") and Jay Tuttle (collectively the "Lifetime Defendants") for trademark violations under the Lanham Act. Spectrum was awarded statutory damages following a bench trial. The district court declined to award Spectrum attorneys’ fees.

The Lifetime Defendants now appeal the damages award and the district court's admission of a witness's deposition testimony at trial. Spectrum cross-appeals the district court's decision not to award attorneys’ fees. For the following reasons, we AFFIRM IN PART and REVERSE AND REMAND IN PART.

I.

Spectrum provides management services to homeowners’ associations in San Antonio, marketing these services under its federally registered trademarks—all of which include the words "Spectrum Association Management"—and under its internet domain name "spectrumam.com." Tuttle served as Spectrum's Director of Business Development until April 2015, when he left the company. Pursuant to his employment contract with Spectrum, Tuttle was prohibited from competing with Spectrum for one year after his departure.

In February 2016, Tuttle assisted in forming Lifetime, a company that offers the same type of homeowners’ association management services in San Antonio as those provided by Spectrum. In May 2016, Tuttle registered the internet domain "Spectrumhoamanagement.com" (the "Infringing Domain") on behalf of Lifetime. Internet users who entered the Infringing Domain into a web browser were automatically forwarded to "www.lifetimehoamanagement.com," Lifetime's marketing website for its services. The Lifetime Defendants chose the Infringing Domain and set up the forwarding mechanism with the intent to confuse internet users looking for Spectrum's services and divert those individuals to Lifetime's website, which offered substantially similar services.

After Spectrum discovered the Infringing Domain in 2018, it filed the underlying lawsuit, alleging that the Lifetime Defendants violated the Anti-Cybersquatting Consumer Protection Act ("ACPA") section of the Lanham Act and requesting damages and permanent injunctive relief. Spectrum ultimately elected to seek statutory damages pursuant to 15 U.S.C. § 1117(d).

The lawsuit originally was assigned to a district judge sitting in the San Antonio Division of the Western District of Texas; however, the case was later reassigned to a district judge sitting in the Waco Division of that same district. Despite the reassignment, the case remained docketed in the San Antonio Division for the duration of the lawsuit. On October 20, 2019, all counsel were notified that trial would take place in Waco, not San Antonio. On January 2, 2020, Spectrum's pretrial filings identified Spencer Powell, a former Lifetime partner, as a witness whose testimony was expected to be presented at trial by means of his deposition transcript.

The district court conducted a bench trial in Waco on February 4, 2020. When Spectrum moved to admit Powell's deposition testimony, the Lifetime Defendants objected, arguing that there was no permissible use for this testimony under Rule 32(a). Spectrum responded that because Powell resided in San Antonio, a city located more than 100 miles from the place of trial, he was an unavailable witness whose deposition testimony was admissible under Rule 32(a)(4)(B). The district court agreed with Spectrum, overruled the objection, and admitted Powell's deposition testimony.

Following trial, the district court found that the Lifetime Defendants violated the ACPA by registering and using the Infringing Domain, which was confusingly similar to Spectrum's trademarks. The district court issued a final judgment that awarded Spectrum $100,000 in statutory damages and permanently enjoined the Lifetime Defendants’ infringement of Spectrum's trademarks. The district court declined to award Spectrum attorneys’ fees. The Lifetime Defendants challenged the damages award and the admission of Powell's deposition testimony in a motion to alter or amend the judgment, or alternatively, for new trial, which the district court denied. This appeal and cross-appeal followed.

The Lifetime Defendants argue that the district court erred in admitting Powell's deposition testimony at trial and further erred in imposing an excessive statutory damages award. Spectrum, in turn, contends that the district court erred in declining to award attorneys’ fees.

II.

A district court's damages award is a finding of fact, which we review for clear error. Jauch v. Nautical Servs., Inc. , 470 F.3d 207, 213 (5th Cir. 2006). We review de novo the conclusions of law underlying a damages award. Id .

A district court's evidentiary findings are reviewed under an abuse of discretion standard. Curtis v. M&S Petroleum, Inc. , 174 F.3d 661, 667 (5th Cir. 1999). Evidentiary rulings are additionally subject to harmless error review, "so even if a district court has abused its discretion, we will not reverse unless the error affected the substantial rights of the parties" Mahmoud v. De Moss Owners Ass'n, Inc. , 865 F.3d 322, 327 (5th Cir. 2017) (citation omitted).

We review all aspects of a district court's fee determination under the Lanham Act—including its conclusion on whether a case is "exceptional"—for abuse of discretion. All. for Good Gov't v. Coal. for Better Gov't , 919 F.3d 291, 295 (5th Cir. 2019).

III.

A. Admission of Spencer Powell's Deposition Testimony

The Federal Rules of Civil Procedure permit a party to use a witness's deposition testimony "for any purpose" if the court finds that the witness is unavailable by reason of residing "more than 100 miles from the place of hearing or trial or is outside the United States, unless it appears that the witness's absence was procured by the party offering the deposition." FED. R. CIV. P. 32(a)(4)(B) (emphasis added).

The Lifetime Defendants do not dispute that Powell, a San Antonio resident, lived more than 100 miles from Waco, the physical location of trial. Instead, they argue that we should interpret "the place of hearing or trial" under Rule 32(a)(4)(B) as the location of the division governing the lawsuit. Under this reading, they contend that Powell was not an unavailable trial witness, because he resided within 100 miles of the San Antonio Division, which governed the trial proceedings in this case. The Lifetime Defendants cite no authority to support their proposed interpretation of Rule 32(a)(4)(B).

We do not agree that "the place of trial" under Rule 32(a)(4)(B) refers to the division governing the lawsuit. Although there is no Fifth Circuit decision directly on point, we are persuaded by the reasoning of a Fourth Circuit decision that squarely addressed the issue. See Tatman v. Collins , 938 F.2d 509 (4th Cir. 1991).¹ In Tatman , the district court refused to admit a witness's deposition testimony at trial, in part, because the witness resided within 100 miles of the border of the district governing the case—even though the witness resided more than 100 miles from the courthouse where trial was taking place. Id . at 510. The Fourth Circuit reversed the district court's decision, finding that "the place of trial is the courthouse where the trial takes place." Id. at 511. It reasoned that measuring distance from the borders of the district rather than from the courthouse would provide a variable standard of convenience dependent on the size of the district, the location of the trial, and the location of the witness. Id . The Fourth Circuit further noted that the drafters of Rule 32 specifically used the language "place of trial," rather than "the district" or other location descriptors found in the Federal Rules of Civil Procedure. Id . We agree with the Fourth Circuit that the plain text of Rule 32(a)(4)(B) is clear that "the place of trial" is the courthouse where trial takes place.

The Lifetime Defendants further argue that they purposefully and strategically declined to cross-examine Powell at his deposition under the assumption that they would have the opportunity to cross-examine him as a live witness at a San Antonio trial. They contend that they were prejudiced when the district court relocated trial from San Antonio to Waco, which disrupted their original litigation strategy and prevented them from cross-examining Powell.

We disagree that the Lifetime Defendants were prejudiced by the transfer of trial venue from San Antonio to Waco. On October 20, 2019—3.5 months before trial—the Lifetime Defendants were notified that trial would take place in Waco. At no point during this period did the Lifetime Defendants request leave to depose Powell a second time to conduct the cross-examination they had originally reserved for trial. See FED. R. CIV. P. 30(a)(2)(A)(ii). Further, the Lifetime Defendants were notified of Spectrum's intent to introduce Powell's deposition testimony on January 2, 2020—approximately one month before trial—and failed to timely object to use of that testimony on Rule 32(a) grounds, thus waiving any such objection. See W.D. TEX. CIV. R. 16(f). Nor is there anything in the record indicating that the Lifetime Defendants sought to commit their cross-examination to a deposition after Spectrum's January 2 disclosure.

For the foregoing reasons, the district court did not abuse its discretion in admitting Powell's deposition testimony at trial, and we affirm that decision. Curtis , 174...