Game, Set, ...tie? the Eleventh Circuit Gives Courts Discretion to Refrain from Choosing a Prevailing Party
| Publication year | 2023 |
Game, Set, ...Tie? The Eleventh Circuit Gives Courts Discretion to Refrain from Choosing a Prevailing Party
Tessa Sizemore
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During the National Football League's (NFL) 2022 opening week, the Houston Texans game versus the Indianapolis Colts ended in a tie after an impressive fourth-quarter comeback by the Colts.1 This is only the nineteenth opening week tie in NFL history. Much like that Texans-Colts game, the United States Court of Appeals for the Eleventh Circuit hosted a legal dispute which ended in a tie this year. While the American legal system is no game, it is certainly a surprise when our adversarial system produces a legal result with no winner.
Dating back to the thirteenth century, statutory provisions awarding costs to the prevailing party of a lawsuit have been common practice.2 The Supreme Court of the United States, recognizing the importance of prevailing party awards, has established a two-part test for courts to implement when selecting the prevailing party.3 Applying this test is
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simple in a lawsuit where there is one claim brought by a plaintiff, but the waters are muddied when there are several unsuccessful claims brought by each party. In such mixed-judgment cases, choosing the prevailing party is often a difficult inquiry. A circuit split exists on how to choose the prevailing party in these mixed-judgment cases. Some federal circuit courts have found a solution by opting not to name a prevailing party.4 Other circuit courts have held in the contrary, requiring its courts to name a prevailing party in each case.5 Adding to the circuit split, The United States Court of Appeals for the Eleventh Circuit considered this question for the first time in Royal Palm Properties v. Pink Palm Properties.6
In this case, Royal Palm Properties sued for trademark infringement, and Pink Palm Properties brought a counterclaim, alleging that the trademark in question was invalid.7 Ultimately, each party lost on their claims. Nonetheless, Pink Palms moved for costs under the Federal Rules of Civil Procedure as well as attorney's fees under the Lanham Act.8 Applying the Supreme Court of the United States's two-part test to choose the prevailing party, the Eleventh Circuit reasoned that neither party crossed the threshold into prevailing party status.9 Thus, as an issue of first impression, the Eleventh Circuit held that the court does not have to name a prevailing party for the purpose of awarding costs in a mixed judgment case where no party clearly prevailed.10
The appellee, Royal Palm Properties (Royal Palm), is a real estate company located in Boca Raton, Palm Beach, Florida.11 Royal Palm buys and sells multimillion-dollar real estate exclusively at the Royal Palm Yacht and Country Club. In the 2000s, Royal Palm launched an extensive marketing campaign that involved distributing brochures, magazines, and mailers at a cost of over one million dollars. The purpose of these advertisements was to retain Royal Palm's position as the top selling real
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estate broker within Royal Palm Yacht & Country Club.12 Additionally, Royal Palm registered a trademark with the United States Patent and Trademark Office under "Royal Palm Properties" in 2012.13 Royal Palm subsequently registered its trademark under Section 2 of the Lanham Act, which gives federal protection to any mark that may not be "inherently distinctive" but has "acquired distinctiveness" over time.14
The appellant, Pink Palm Properties (Pink Palm), is also a luxury real estate company.15 Pink Palm sells real estate in several residential communities in and around Boca Raton. A portion of Pink Palm's business comes from selling real estate in the Royal Palm Yacht and Country club, putting Pink Palm in direct competition with Royal Palm. As such, Royal Palm kept close watch on Pink Palm's activities.16
This dispute arose in 2017 when Pink Palm listed a link on its website labeled "Royal Palm Properties," which directed customers to Pink Palm's listings of the Royal Yacht and Country Club properties.17 Although Pink Palm eventually removed its link from the website, Royal Palm filed suit against Pink Palm in the United States District Court for the Southern District of Florida for trademark infringement.18 Pink Palm responded with a counterclaim,19 alleging that the "Royal Palm Properties" trademark was invalid.20 The parties proceeded to a jury trial in the Southern District of Florida.21
At trial, the jury "split the baby"22 by finding that Pink Palm's use of "Royal Palm Properties" on its website did not constitute trademark infringement while also finding that Royal Palm Properties 's trademark
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was valid under the Lanham Act.23 After the verdict, Pink Palm moved for Judgment Notwithstanding the Verdict (JNOV), which the district court granted. The court found that the "Royal Palm Properties" trademark was invalid. As a result, the district court awarded Pink Palm costs as a prevailing party under the Federal Rules of Civil Procedure. Royal Palm appealed this decision to the Eleventh Circuit, which gave rise to the United States Court of Appeals for the Eleventh Circuit hearing this case for the first time in 2020.24
The Eleventh Circuit ordered the district court to enter a judgment consistent with the jury's original verdict.25 On remand, the district court reinstated the jury's verdict as to both claims.26 Consequently, the district court found that the "Royal Palm Properties" trademark was valid, and that Pink Palm did not infringe the trademark.27
Addressing Pink Palm's status as the prevailing party, the district court found that because neither Pink Palm nor Royal Palm satisfied the prevailing party requirements of the Supreme Court of the United States, no prevailing party could be named.28 Thus, neither party was awarded prevailing party costs under Rule 54 of the Federal Rules of Civil Procedure or attorney's fees under the Lanham Act.29 After remand, Pink Palm filed yet another appeal, claiming that the district court erred when it determined that there was no prevailing party.30 As a matter of first impression, the Eleventh Circuit affirmed the district court's decision, holding that there does not have to be a prevailing party in situations where there is a mixed judgment and no party satisfies the Supreme Court of the United States's requirements for a prevailing party.31
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A. Prevailing Party Requirements
The practice of awarding costs to the prevailing party is a common law principle that dates back to the thirteenth century.32 The first statutory provision awarding costs to the prevailing party was the Statute of Gloucester, which was enacted by the Parliament of England in 1278.33 Early American jurisprudence also enforced prevailing party costs.34 Aside from a few exceptions, most early American courts would require the losing party to pay costs to the prevailing party.35 The limited exceptions included instances where the court had no jurisdiction to hear the case, where the case had to be dismissed, and where the court could not render a judgment for either party.36 Though less common than costs awards, statutory awards of attorney's fees have been prevalent in federal and state statutes since the mid-twentieth century.37
Today, under the Federal Rules of civil Procedure, a party is entitled to receive costs if it is the prevailing party.38 Several federal statutes also award costs and/or attorney's fees to the prevailing party.39 In fact, the Supreme court of the united States has created a two-part test for lower courts to consider when selecting the prevailing party: (1) the party must
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have been awarded relief on the merits, and (2) there must be a material change in the legal relationship of the parties.40
The first prong of the test, that a party must be awarded some relief on the merits, was established in Buckhannon Board and Care Home, Inc. v. West Virginia Department of Health and Human Resources.41 In that case, Buckhanon Board and Care Home sued the West Virginia Department of Health and Human Resources, alleging that a fire code requiring that residents be capable of self-preservation violated the Fair Housing Amendments Act of 1988.42 During the discovery phase of the lawsuit, the West Virginia legislature enacted two bills that eliminated the self-preservation requirement, rendering the legal dispute moot.43
Despite its legal dispute being moot, the Buckhannon Board and Care Home moved for prevailing party fees under a "catalyst theory."44 The catalyst theory is that a plaintiff is the prevailing party when they achieve their desired result because their lawsuit prompted a voluntary change in the defendant's actions.45 The inquiry under the catalyst theory is whether the plaintiff's "'complaint had sufficient merit to withstand a motion to dismiss for lack of jurisdiction or failure to state a claim on which relief may be granted.'"46 Under that theory, Buckhannon argued that even though the dispute did not proceed to trial, it was the prevailing party because it received its desired result in the lawsuit.47 Chief Justice William H. Rehnquist, writing for the majority, rejected the use of the catalyst theory, pointing to the legislative intent underlying an award of prevailing party costs in 42 U.S.C. § 1988.48 The Court reasoned that the legislative history of that statute indicated that "'Congress intended to permit the interim award of counsel fees only when a party has prevailed on the merits on at least some of his claims.'"49 Accordingly, the Court held that the petitioners were not the prevailing party because their case did not proceed to trial and there was no relief on the merits.50 The Court
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clarified that even nominal relief would be...
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