Off Lease Only, Inc. v. Lakeland Motors, LLC

• Court: Court of Appeals for the Eleventh Circuit
• Decided: February 10, 2021
• Docket: 20-12877
• Status: Unpublished

Opinion

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[DO NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT ________________________

No. 20-12877 Non-Argument Calendar ________________________

D.C. Docket No. 6:18-cv-01555-RBD-DCI

OFF LEASE ONLY, INC., a Florida Corporation,

Plaintiff-Appellant,

versus

LAKELAND MOTORS, LLC, a Florida Limited Liability Company d.b.a. Lakeland Chrysler Dodge, Jeep, Ram,

Defendant-Appellee. ________________________

Appeal from the United States District Court for the Middle District of Florida ________________________

(February 10, 2021)

Before MARTIN, LAGOA, and BRASHER, Circuit Judges.

PER CURIAM: USCA11 Case: 20-12877 Date Filed: 02/10/2021 Page: 2 of 9

Off Lease Only, Inc., appeals the district court’s order granting Lakeland

Motors, LLC’s Motion for Attorneys’ Fees and Costs. Off Lease argues that the

district court abused its discretion in two ways: first, by deciding that this was an

“exceptional” case warranting a fee award; and second, by conditioning the

voluntary dismissal of Count IV on Off Lease reimbursing Lakeland for certain

expert witness costs incurred defending that count. Upon consideration, we conclude

that the district court did not abuse its discretion and affirm the district court’s order.

I.

We presume familiarity with the factual and procedural history of this case.

We describe it below only to the extent necessary to address the issues raised in this

appeal.

This appeal arises from a copyright and trademark case involving Lakeland’s

billboards for its car dealerships which allegedly infringed Off Lease’s intellectual

property rights. Off Lease sued Lakeland for injunctive relief and damages under

both federal and state copyright law. Lakeland has contended since this litigation

began that Off Lease’s claims lacked merit. About two months after Off Lease filed

its initial complaint, Lakeland wrote to Off Lease that Off Lease’s allegations were

meritless and possibly sanctionable. Several months after the initial complaint,

Lakeland filed a motion for judgment on the pleadings as to Count III—a claim for

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federal trademark infringement. The district court granted the motion and set a

deadline for Off Lease to file an amended complaint.

Prior to Off Lease filing an amended complaint, Lakeland recommended over

email that Off Lease drop Count IV—its federal trademark dilution claim. Lakeland

pointed out that Off Lease’s representatives had conceded that its marks were not

widely known outside of Florida, rendering the claim meritless. Off Lease refused,

forcing Lakeland to defend Count IV of the amended complaint. This required

additional discovery, motions practice, and an expert witness to prepare a nationwide

survey. Only after briefing was complete on Lakeland’s motion for summary

judgment did Off Lease move to voluntarily dismiss Count IV. The district court

found that Off Lease knew it lacked the requisite national fame to pursue a federal

trademark dilution claim but had proceeded anyway and that Lakeland had incurred

substantial costs defending the count. Accordingly, the court dismissed Count IV

without prejudice but conditioned dismissal on Off Lease paying Lakeland all

“reasonable costs and attorney’s fees incurred in defending against Count IV.” The

district court then granted Lakeland’s motion for summary judgment on all

remaining counts with prejudice. We affirmed the district court’s grant of summary

judgment. See Off Lease Only, Inc. v. Lakeland Motors, LLC, No. 20-10825, 825 F.

App’x 722 (11th Cir. Sept. 17, 2020).

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After winning summary judgment, Lakeland filed a motion requesting

reimbursement for its remaining attorneys’ fees and costs. Lakeland argued that it

was entitled to a total of $114,803.97—$77,267.00 in attorneys’ fees; $4,629.55 in

taxable costs; $29,287.50 in costs related to retaining an expert witness to prepare a

nationwide survey; $1,851.02 in legal research costs; $624.00 in costs for a certified

copy of the copyright deposit; $1,125.00 in mediation costs; and $19.90 in other

evidence costs. Off Lease did not respond to the motion.

The magistrate judge recommended awarding Lakeland $77,267.00 in

attorneys’ fees; $3,890.65 in taxable costs; and prejudgment interest. He

recommended the district court deny Lakeland’s request for other litigation costs—

including the cost of retaining an expert witness—because they were not recoverable

under the Lanham Act or Rule 54. Thus, recovery of additional costs was limited to

categories listed in 28 U.S.C. §§ 1821, 1920.

Lakeland objected to the magistrate judge’s report only as it pertained to the

costs of retaining an expert witness to prepare the survey. Off Lease filed its own

objection to the report, arguing that the case was not “exceptional” under the Lanham

Act; that its claims were not brought in bad faith or for improper purpose, nor were

they frivolous; and the amount of attorneys’ fees calculated by Lakeland was

unreasonable. Lakeland responded to Off Lease’s objection, but Off Lease did not

respond to Lakeland’s. Shortly thereafter, the district court entered an order

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sustaining Lakeland’s objection to the magistrate judge’s report. The district court

rejected the report’s finding regarding the expert witness costs, awarding the

$29,287.50 cost of preparing the nationwide survey to Lakeland. The report was

adopted in all other respects. Off Lease appealed.

II.

Off Lease makes two arguments on appeal. First, it argues that the district

court abused its discretion by “circumventing” the standard for exceptionality

established in Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545,

554 (2014) and “created its own reasoning” by relying on Lakeland’s

communication with Off Lease to determine this case was exceptional. Second, it

argues that the district court abused its discretion by awarding Lakeland costs related

to preparation of the expert witness survey in violation of 28 U.S.C. §§ 1821 and

1920. Upon consideration, we conclude that the district court did not abuse its

discretion in granting Lakeland’s motion for attorneys’ fees and costs.

This Court reviews a district court’s decision to award fees, and the amount

of fees to award, for abuse of discretion. See Tobinick v. Novella, 884 F.3d 1110,

1116 (11th Cir. 2018) (citing Tire Kingdom, Inc. v. Morgan Tire & Auto, Inc., 253

F.3d 1332, 1335 (11th Cir. 2001)). Likewise, we review an award of costs for abuse

of discretion. Chapman v. AI Transp., 229 F.3d 1012, 1023 (11th Cir. 2000) (en

banc). “A district court abuses its discretion if it applies an incorrect legal standard,

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applies the law in an unreasonable or incorrect manner, follows improper procedures

in making a determination, or makes findings of fact that are clearly erroneous.”

Tobinick, 884 F.3d at 1116 (quoting United States v. Toll, 804 F.3d 1344, 1353 (11th

Cir. 2015)).

First, the district court did not abuse its discretion by awarding attorneys’ fees.

The Lanham Act provides that “in exceptional cases” a district court “may award

reasonable attorney fees to the prevailing party.” 15 U.S.C. § 1117. In defining

“exceptional” we apply the standard articulated by the Supreme Court in Octane

Fitness. See Tobinick v. Novella, 884 F.3d 1110, 1117 (11th Cir. 2018). Under that

standard, an exceptional case is “one that stands out from others with respect to the

substantive strength of a party’s litigating position” or “the unreasonable manner in

which the case was litigated.” Octane Fitness, 572 U.S. at 554. District courts

“determine whether a case is ‘exceptional’ in the case-by-case exercise of their

discretion, considering the totality of the circumstances.” Id.

The district court did not abuse its discretion in finding this case was

exceptional. In weighing the totality of the circumstances, the district court expressly

considered a variety of factors, including: (1) Off Lease’s failure to respond to

Lakeland’s motion for attorneys’ fees and costs; (2) Lakeland’s “repeated warnings

to Plaintiff about the shortcomings of the claims”; (3) the fact that, when weighing

the trademark infringement claim, four of the seven factors used to test likelihood-

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of-confusion “weighed heavily” against Off Lease, and the commercial context

“revealed the source of the goods such that ‘no reasonable consumer likely would

be (or has been) confused’”; (4) the fact that the trademark dilution claims failed due

to the mark’s “lack of distinctiveness and fame in Florida” and Off Lease’s “failure

to provide evidence of a loss of commercial value”; and finally (5) “Plaintiff’s

arguments and lack of evidence in support” at the summary judgment stage. The

district court’s consideration of these factors, including its consideration of

Lakeland’s repeated warnings to Off Lease, was appropriate under the totality-of-

the-circumstances test.

Second, the district court did not abuse its discretion by awarding costs related

to preparation of the expert witness survey as a condition of dismissing Count IV

without prejudice under Rule 41(a)(2). In both its initial and reply briefs, Off Lease

cites authorities about cost awards to litigants as prevailing parties. See, e.g., Kivi v.

Nationwide Mut. Ins. Co., 695 F.2d 1285, 1289 (11th Cir. 1983). But none of those

authorities address the situation here, where expert witness costs were awarded as a

curative condition of a Rule 41(a)(2) dismissal.

Rule 41(a)(2) states that “[e]xcept as provided in Rule 41(a)(1), an action may

be dismissed at the plaintiff’s request only by court order, on terms that the court

considers proper.” FED. R. CIV. P. 41(a)(2). “The purpose of Rule 41(a)(2) ‘is

primarily to prevent voluntary dismissals which unfairly affect the other side, and to

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permit the imposition of curative conditions.’” Arias v. Cameron, 776 F.3d 1262,

1268 (11th Cir. 2015) (quoting McCants v. Ford Motor Co., Inc., 781 F.2d 855, 856

(11th Cir.1986)). In dismissing under Rule 41(a)(2), courts should “weigh the

relevant equities and do justice between the parties in each case, imposing such costs

and attaching such conditions to the dismissal as are deemed appropriate.” Id. at

1269. We have held that “[c]osts [under Rule 41] may include all litigation-related

expenses incurred by the defendant[.]” McCants, 781 F.2d at 860.

Here, the district court concluded that awarding expert witness costs was

necessary to mitigate harm to Lakeland. In its order awarding fees and costs, the

district court identified multiple reasons to impose expert witness costs as a curative

condition of dismissing Count IV, including “that [Lakeland] repeatedly advised

[Off Lease’s] counsel of the frivolity of the claim and [Off Lease] waited more than

a year after the case was filed and months after [Lakeland] moved for summary

judgment before moving to voluntarily dismiss it.” The court noted that Lakeland

had incurred substantial costs defending Count IV, and that imposing the curative

condition on dismissal was “necessary to do justice between the parties[.]” The court

then determined that the expert witness survey was a reasonable expense since it was

necessary to defend against Count IV. These considerations were well within the

court’s “broad equitable discretion under Rule 41(a)(2)[.]” Id. at 857.

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III.

For these reasons, we conclude that the district court did not abuse its

discretion when it awarded attorneys’ fees and expert witness costs to Lakeland.

Accordingly, the district court is AFFIRMED.