Noxell Corp. v. Firehouse No. 1 Bar-B-Que Restaurant

771 F.2d 521, 248 U.S. App. D.C. 329, 227 U.S.P.Q. (BNA) 115, 1985 U.S. App. LEXIS 21394

Opinions

Opinion for the Court filed by Circuit Judge GINSBURG.

Dissenting opinion filed by Circuit Judge WALD.

GINSBURG, Circuit Judge:

We here rule on a motion for attorney fees invoking section 35 of the Lanham Act, 15 U.S.C.A. § 1117(a) (West Supp. 1985). The provision in question, applicable to trademark infringement litigation, authorizes court-awarded fees “to the prevailing party” in cases found “exceptional.” The attorney fees request was filed following our decision in Noxell Corp. v. Firehouse No. 1 Bar-B-Que Restaurant, 760 F.2d 312 (D.C.Cir.1985) (Noxell I); in that decision, we ordered the district court to dismiss a trademark infringement action, pursuant to 28 U.S.C. § 1406(a) (1982), because venue had been laid in the wrong district. Location of the action in the District of Columbia, we held in Noxell I, was “unreasonable,” contrary to “established law,” and, in view of the Supreme Court’s definitive pronouncement in Leroy v. Great Western United Corp., 443 U.S. 173, 185, 99 S.Ct. 2710, 2717, 61 L.Ed.2d 464 (1979), unsupported by “even a wisp” of tenable argument. 760 F.2d at 313, 317. We now grant the attorney fees application in the amount requested.

I. Background

To explain why we regard this case as “exceptional” and the fee applicants as “prevailing parties,” we first recapitulate Noxell I.

Noxell Corporation (Noxell), incorporated in Maryland, is a food, cosmetics, and household-products conglomerate. Together with its wholly-owned Texas subsidiary, Caliente Chili, Inc. (Caliente), Noxell commenced a trademark infringement action in the District Court for the District of Columbia against two defendants: Firehouse No. 1 Bar-B-Que Restaurant (Firehouse) and its sole proprietor, Carl T. English, Jr., a full-time San Francisco firefighter. The Firehouse enterprise consisted of two modest barbeque restaurants, both in San Francisco; in addition, Firehouse markets one product, a barbeque sauce derived from a recipe of English’s grandparents. Noxell charged that Firehouse’s use of ALARM terms at the bottom portion of Firehouse labels to denote the “hotness” of the barbeque infringed upon Caliente’s registered ALARM marks placed conspicuously on chili mixes and other spicy products marketed by Caliente.

Firehouse, we observed,

has no office or employees outside the San Francisco area. At the time Noxell lodged its complaint [in the District of Columbia], no more than 200 cases of Firehouse’s product had been sold in the District. This number of cases amounted to less than 1.5% of Firehouse’s total barbeque sauce sales. By contrast, 40% of Firehouse’s total barbeque sauce sales occur in California.

Noxell I, 760 F.2d at 314.

Less than a month after Noxell filed the trademark infringement complaint, Firehouse (and its proprietor, firefighter English) moved to dismiss the action or to transfer it (pursuant to 28 U.S.C. § 1406(a) (wrong venue — dismissal or transfer) or, alternatively, 28 U.S.C. § 1404(a) (inconvenient forum — transfer)) to the Northern District of California. Promising an opinion that never followed, the district court issued a spare order denying the motion. After rejecting Firehouse’s venue objection, the district court heard and then denied Noxell’s motion for a preliminary injunction. Noxell appealed from the denial of its preliminary injunction motion, and Firehouse challenged by cross appeal the district court’s unexplained rejection of Firehouse’s objection to venue in the District of Columbia.

Noxell argued first that the venue ruling was not appealable. Although tendering an extra, unauthorized brief on the point, see Noxell I, 760 F.2d at 315 n. 5, Noxell overlooked the dispositive decision in this circuit, Lee v. Ply*Gem Industries, Inc., 593 F.2d 1266, 1270 (D.C.Cir.), cert. denied, 441 U.S. 967, 99 S.Ct. 2417, 60 L.Ed.2d 1073 (1979). We found Noxell’s endeavor to stop the cross appeal wholly unworthy— lacking support “in statute law, this circuit’s decisions, or good sense.” Noxell I, 760 F.2d at 315.

Turning to the merits of Firehouse’s venue objection, we found Noxell’s presentation “remarkable,” id. at 316, because it was totally at odds with the Supreme Court’s unambiguous instruction in Leroy v. Great Western United Corp., supra. Defendants’ San Francisco residence meant that the action could be maintained in the District of Columbia only if “the claim arose” here within the meaning of 28 U.S.C. § 1391(b). Leroy crisply explained that the “claim arose” language, in cases of the kind brought by Noxell, must be interpreted with a view to the convenience of defendants (not plaintiffs):

[I]t is absolutely clear that Congress did not intend to provide for venue at the residence of the plaintiff or to give that party an unfettered choice among a host of different districts____ In our view, ... the broadest interpretation of the [“claim arose”] language of § 1391(b) that is even arguably acceptable is that in the unusual case in which it is not clear that the claim arose in only one specific district, a plaintiff may choose between those two (or conceivably even more) districts that with approximately equal plausibility — in terms of the availability of witnesses, the accessibility of other relevant evidence, and the convenience of the defendant (but not of the plaintiff) — may be assigned as the locus of the claim.

443 U.S. at 185, 99 S.Ct. at 2717.

In light of Leroy, we determined:

Noxell has chosen the District of Columbia simply to suit its own convenience. The forum Noxell has selected is barely plausible in terms of the accessibility of relevant evidence; certainly the District of Columbia is a far less plausible choice from that vantage point than is the Northern District of California. While trial in the District of Columbia would serve plaintiffs’ convenience, it would in no way serve the convenience of the defendants.

Noxell I, 760 F.2d at 317. We found it “inescapable” that “the District of Columbia may not be assigned as the locus of the claim in this case.” Id. “Because we regarded] Noxell’s attempt to lay venue in the District of Columbia as unreasonable, we d[id] not find it ‘in the interest of justice’ to order a transfer.” Id. (quoting 28 U.S.C. § 1406(a)), Instead, we vacated the order denying Noxell’s preliminary-injunction motion and remanded the case to the district court with instructions to dismiss the action because Noxell had so unjustifiably laid venue in the wrong district. Id.1

II. Attorney Fees

Section 35 of the Lanham Act provides in relevant part: “The court in exceptional cases may award reasonable attorney fees to the prevailing party.” 15 U.S. C.A. § 1117(a) (West Supp.1985). Firehouse’s application presents the question whether an appellate court may award fees under this section to a litigant who demonstrates that the trademark infringement action instituted against him warrants dismissal on the ground that plaintiff’s venue selection was improper and unreasonably imposed hardship on the fee applicant. Noxell I, 760 F.2d at 317. We answer yes.

Congress had two classes of litigants in mind when it enacted the fee provision of section 35. First, the legislature envisioned “make whole” compensation for certain victims of infringement; second, Congress endeavored to afford protection to defendants “against unfounded suits brought by trademark owners for harassment and the like.” S.Rep. No. 1400, 93d Cong., 2d Sess. 5, 6 (1974), U.S.Code Cong. & Admin.News 1974, pp. 7132, 7136.

Noxell interposes no challenge to the reasonableness of the hourly rates or the hours expended on the litigation as detailed by Firehouse. Instead, Noxell assails the fee request in four respects. Noxell first asserts that Firehouse, because it achieved dismissal of the action on . a procedural ground not preclusive of a second action elsewhere, fails to qualify as a “prevailing party.” Further, Noxell maintains that this case is not “exceptional.” Additionally, Noxell contends that if fees are not denied to Firehouse here and now, the matter should be remitted to the district court for initial consideration; and that, in any event, no recovery should be allowed for time Firehouse spent resisting Noxell’s effort to obtain a preliminary injunction. We address and reject each of these protests.

A.

In rejecting Noxell’s argument that a defendant qualifies as a “prevailing party” within the compass of section 35 of the Lanham Act only when he obtains a judgment on the merits, we align our court with the position taken by the Ninth Circuit under a Copyright Act provision for attorney fees. In Corcoran v. Columbia Broadcasting System, 121 F.2d 575 (9th Cir.1941), the Ninth Circuit considered defendants “prevailing parties” entitled to a fee award when their successful motion for a more definite statement led to a voluntary dismissal by the plaintiff:

[Plaintiff] claims that in view of his voluntary dismissal without prejudice, [defendants] were not “the prevailing party” within the meaning of the statute____ We think this is too narrow an interpretation of the statute. The authority given is not in terms limited to the allowance of fees to a party who prevails only after a trial on the merits. Where, as here, a defendant has been put to the expense of making an appearance and of obtaining an order for the clarification of the complaint, and the plaintiff then voluntarily dismisses without amending his pleading, the party sued is the prevailing party within the spirit and intent of the statute even though he may, at the whim of the plaintiff, again be sued on the same cause of action.

Id. at 576. The legislative history of the Equal Access to Justice Act, 28 U.S.C. § 2412(b) (1982), indicates that the identical phrase “prevailing party” in that legislation “should not be limited to a victor only after entry of a final judgment following a full trial on the merits,” but applies even “if the plaintiff has sought a voluntary dismissal of a groundless complaint.” H.R. Rep. 1418, 96th Cong., 2d Sess. 11 (1980). The House Report containing these statements bases them upon the expectation that the phrase in the new statute will be interpreted to be “consistent with the law that has developed under existing statutes,” id., including specifically the Lanham Act provision here at issue, and specifically citing Corcoran.

We note that the situation of a defendant who achieves a dismissal short of an adjudication on the merits is unlike that of a plaintiff who wins an interlocutory ruling allowing litigation to continue. Hanrahan v. Hampton, 446 U.S. 754, 100 S.Ct. 1987, 64 L.Ed.2d 670 (1980) (per curiam), involved the latter situation. In Hanrahan, the Supreme Court held that plaintiffs who succeeded on appeal in overturning directed verdicts “were not ... ‘prevailing’ parties in the sense intended by 42 U.S.C. § 1988.” Id. at 756, 100 S.Ct. at 1988. “As a practical matter,” the Court reasoned, the plaintiffs were “in a position no different from that they would have occupied if they had simply defeated the defendants’ motion for a directed verdict in the trial court.... If the jury should [decide against the plaintiffs] on remand ..., it could not seriously be contended that the [plaintiffs] had prevailed.” Id. at 758-59, 100 S.Ct. at 1989-90. See also Grubbs v. Butz, 548 F.2d 973, 976 (D.C.Cir.1976) (holding that Title VII plaintiff who successfully appealed dismissal for failure to exhaust administrative remedies was not a “prevailing party”; “[f]or all we know, the defendants in this case may be entirely blameless”).

In contrast to a plaintiff who establishes only a right to proceed further, defendant Firehouse has here achieved an enduring victory. Noxell’s suit stands dismissed, and Noxell is forever barred from reinstituting the action in the District of Columbia.

Congress intended to authorize fees for defendants subjected to “harassment” by trademark owners. See S.Rep. No. 1400, 93d Cong., 2d Sess. 6 (1974). We are persuaded that Firehouse and its proprietor English, haled before a court some 3000 miles from the place of their activity, have encountered “harassment” of the kind Congress meant to deter and that, in obtaining dismissal of the proceeding in the distant forum, Firehouse and English qualify as “prevailing parties” under the Lanham Act fee award provision.

B.

Congress did not essay in the Lanham Act’s text or related commentary precise definition of cases qualifying as “exceptional” for fee award purposes. The barely two pages of legislative history in point indicate, with respect to recovery of fees by defendants, a concern to discourage suits designed to harass. See supra p. 525. Furthermore, we think it fair to assume that Congress did not intend rigidly to limit recovery of fees by a defendant to the rare case in which a court finds that the plaintiff “acted in bad faith, vexatiously, wantonly, or for oppressive reasons”; that exception to the “American rule,” the Supreme Court has clarified, is always available unless Congress expressly forbids its operation. See Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 258-59, 95 S.Ct. 1612, 1622, 44 L.Ed.2d 141 (1975). Something less than “bad faith,” we believe, suffices to mark a case as “exceptional.” Cf. Hodge Chile Co. v. KNA Food Distributors, 575 F.Supp. 210, 214 (E.D.Mo.1983) (fees awardable to defendant under 15 U.S.C. § 1117(a) when plaintiff’s action is unreasonable or pursued in bad faith), aff'd, 741 F.2d 1086 (8th Cir.1984).

The dissent appears to recognize, albeit haltingly, that the terse legislative history of the Lanham Act’s fee provision is ambivalent on the point. Nonetheless, the dissent divines that Congress really wanted to do no more (on second thought, perhaps “marginally” more) than disapprove Fleischmann Distilling Corp. v. Maier Brewing Co., 386 U.S. 714, 87 S.Ct. 1404, 18 L.Ed.2d 475 (1967), and thereby restore the bad faith exception to the American rule in trademark cases. Dissent at 529 & n. 1. While the legislative history, thin as it is, supplies no clearly right answer to the question at hand, we do not find in its brief compass warrant for the severe constraint the dissent would impose. In our judgment, when Congress “limit[ed] attorney fees to ‘exceptional case’ and [placed] the award of attorney fees ... within the discretion of the court,” S.Rep. No. 1400, 93d Cong., 2d Sess. 5 (1974), U.S.Code Cong. & Admin.News 1974, p. 7136, the legislature did not intend to harness judges to a “hardly ever” rule.² Instead of the niggardly reading the dissent proffers (only “overt bad faith,” possibly a smidgen less, Dissent at 529 n. 1), we think “exceptional,” as Congress used the word in section 35 of the Lanham Act, is most reasonably read to mean what the word is generally understood to indicate— uncommon, not run-of-the-mine. On that familiar construction, we regard as “exceptional” Noxell’s decision to locate in the District of Columbia its suit against San Francisco firefighter English and the fledgling San Francisco barbeque business English organized and operated.

We find in this case more than a hint of “economic coercion,” see Comidas Exquisitos, Inc. v. Carlos McGee’s Mexican Cafe, Inc., 602 F.Supp. 191, 199 (S.D.Iowa 1985), in Noxell’s choice of a distant forum and its mode of proceeding. As earlier recounted, see supra p. 523, Noxell, in groundless argument, sought to block our consideration of the venue question. We- do not know what motive occasioned its failure to cite and address in its briefs Lee v. Ply*Gem Industries, Inc., supra, the controlling decision of this court on appealability, see Noxell I, 760 F.2d at 315 n. 5; but “none that [is] laudable come[s] readily to mind.” Viola Sportswear, Inc. v. Mimun, 574 F.Supp. 619, 621 (E.D.N.Y.1983) (awarding attorney fees and intimating, inter alia, that plaintiffs initial lodging of trademark infringement action in Texas was indefensible). Most critically, we observed in Noxell I that litigating in the District of Columbia entailed not merely inconvenience but hardship for firefighter English and his barbeque business. 760 F.2d at 317.

We think it altogether “exceptional,” indeed, we called it “remarkable,” id. at 316, for Noxell to launch litigation against Firehouse and English at a place far removed from California when a Supreme Court decision precisely in point, Leroy v. Great Western United Corp., supra, plainly declared the impropriety of that course. See supra pp. 523-524.

In response, Noxell cites a post-Leroy decision as justifying its action. Gold Eagle Co. v. Li, 486 F.Supp. 201 (N.D.Ill. 1980), Noxell asserts, upheld venue on facts indistinguishable from those present here. But that district court disposition was apparently made in ignorance of Leroy. Gold Eagle does not cite Leroy and thus cannot be reckoned an application of, much less a substitute for, the Supreme Court’s pronouncement.³

In sum, we are fully satisfied that Noxell brought to the District of Columbia an “exceptional” case.

C.

A prevailing plaintiff may not obtain fees for work on claims unrelated to those on which the plaintiff prevailed. Hensley v. Eckerhart, 461 U.S. 424, 435, 103 S.Ct. 1933, 1940, 76 L.Ed.2d 40 (1983); Laffey v. Northwest Airlines, Inc., 746 F.2d 4, 27 (D.C.Cir.1984). Noxell urges that we apply this precedent to exclude fees attributable to Firehouse’s defense against the trademark infringement charge on the merits. But it was Noxell’s institution of litigation in the District of Columbia and its motion for a preliminary injunction that compelled Firehouse to defend on the merits. Moreover, to the extent that the merits were considered in the district court, Firehouse was the victor. We vacated the ruling on the preliminary injunction motion not because we found merit in Noxell’s claim, but because we determined Firehouse should not have been put to the burden of defending against the complaint in the District. Under the circumstances, we think it appropriate to award fees covering the full burden Noxell imposed on Firehouse.

We distinguish the case at hand from GAF Corp. v. Transamerica Insurance Co., 665 F.2d 364 (D.C.Cir.1981), in which it was clear that part of the litigation expense incurred in District proceedings yielded work product that would be useful in ongoing litigation elsewhere. Id. at 369; see also McLaughlin v. Cheshire, 676 F.2d 855, 857 (D.C.Cir.1982) (per curiam). Noxell has not informed us of any renewal of the infringement charge against Firehouse. Moreover, even if Noxell refiles the suit in the forum that can most plausibly be assigned as the locus of the claim — the Northern District of California — much of the work relating to the merits undertaken in the District of Columbia would provide scant, if any, assistance, for it involved gathering and rebutting -testimony of District of Columbia shopkeepers on the issue of “confusion.” See, e.g., Noxell I, 760 F.2d at 317; Brief for Defendants-Appellees/Cross-Appellants at 15-16, Noxell I. A case presented in the California forum would not center on grocers in the District of Columbia who had received, at most, 200 cases of Firehouse’s product. Instead, evidence relating to the core market for the Firehouse barbeque would be readily at hand.

Noxell also questioned the propriety of awarding compensation for time spent in preparing the fee petition. But that matter is settled in this circuit. Hours reasonably devoted to a request for fees are compensable. See, e.g., Sierra Club v. EPA, 769 F.2d 796, 811 (D.C.Cir.1985); Laffey, 746 F.2d at 29.

Finally, there is no reason to remit the request for fees to the district court, thereby precipitating “a second major litigation.” Hensley, 463 U.S. at 437, 103 S.Ct. at 1941. The full course of the litigation is immediately within our view. Noxell has not contested the reasonableness of the attorney hours Firehouse claimed or the rates charged. See supra p. 524. Thus, we need not enlist the district court’s considerable expertise on that subject. Under the circumstances of this case, Firehouse’s fee petition was appropriately addressed to our court, and we therefore act upon it. See, e.g., Moten v. Bricklayers, Masons & Plasterers International Union, 543 F.2d 224, 239-40 (D.C.Cir.1976).

Conclusion

Firehouse and English are the prevailing parties in an exceptional case under the Lanham Act. We grant their reasonable request for attorney fees of $34,157.87.

It is so ordered.

1

. The dissent, particularly in Part II, insists that a decision to dismiss, not transfer, is an act of "broad discretion," which “may be based on factors wholly unrelated to the blameworthiness of the plaintiffs conduct." Dissent at 534. But we could not have stated more plainly our reasons for finding it not “in the interest of justice" to transfer in Noxell I. We determined that Noxell's venue choice was not a decision reflecting mere "carelessness," a “lapse," or “blunders," see Dissent at 534 n. 8, 538, 539; we held the choice downright "unreasonable," inescapably spelling hardship for English and Firehouse. Noxell I, 760 F.2d at 317.

2

. While the Senate Report criticized the Supreme Court's Fleischmann decision, the Report never indicated that Congress meant to limit fee recovery to such extreme cases; the Report merely tells us that at least such cases should be covered. The dissent, moreover, indiscriminately reads language Congress used in relation to recovery by plaintiffs into the separate statement the Report makes regarding fees for defendants. We think the dissent homogenizes inappropriately the protections Congress separately stated for prosecuting parties, on the one hand, and defending parties, on the other. As the Senate Report suggested, the evil feared regarding plaintiffs was malicious infringement of plaintiffs' trademarks facilitated by the size of the national market. The Report's reference to "malicious” conduct thus indicated principally the infringement itself, not the mode of proceeding in court. On the defendants' side, however, the fear is litigation conduct — suits imposing hardship brought to harass, whether descending to the rock bottom rung of "bad faith” or not.

3

. The dissent, in Part III, finds support in a few other district court decisions that, like Gold Eagle, appeared to hold trademark plaintiffs to a lesser standard than the one unambiguously announced in Leroy. Leroy, however, indicates no exception for trademark cases, and none of the district court decisions the dissent cites attempts to reconcile the court's disposition with Leroy. We are puzzled, moreover, by the dissent’s apparent belief that trademark actions are "special" because they “characteristically involve many discrete sales of allegedly infringing products” that are "often spread fairly evenly over a number of jurisdictions." Dissent at 535, 536. We can say with assurance that a very sizable portion of federal court civil litigation bears similar description, including the interstate sale of stock at issue in Leroy itself.

The dissent additionally raises "an alternative theory of venue" never tendered in Noxell's extensive briefing, but offered by Noxell at oral argument. Dissent at 536. Respected authority, the dissent suggests, might find the District of Columbia a place of proper venue for Firehouse under 28 U.S.C. § 1391(c) (1982), because that small San Francisco enterprise can be said to be "doing business," and therefore to reside, here for venue purposes. That position, urged in this case as an afterthought, leads to a troublesome terminus; if embraced as a correct reading of § 1391, it would mean that for corporations, venue based on residence through "doing business” would totally eclipse the limited reading the Supreme Court gave to the § 1391(b) “claim arose" language in Leroy. At any event, we can detect no reason why Noxell would deliberately sue two defendants in the District of Columbia, only to turn around and ask to dismiss one, a "fallback” strategy the dissent attributes to Noxell so as to find this midnight-hour alternative theory reasonable. Dissent at 537 n. 11.