38 F.4th 1372
11th Cir.2022Background
- Royal Palm Properties, LLC sued Pink Palm Properties, LLC (Apr. 2017) for trademark infringement of the registered service mark "Royal Palm Properties." Pink Palm answered with five counterclaims (including cancellation and declaratory noninfringement).
- At trial the jury found Pink Palm did not infringe and also found the Trademark was not invalid on the grounds tried (a split verdict).
- The district court granted Pink Palm JMOL on the Trademark-invalidity counterclaim, overruling the jury and invalidating the mark; it awarded costs to Pink Palm. Royal Palm appealed and this court (Eleventh Circuit) reversed the JMOL, reinstating the jury verdict and the Trademark (Royal Palm I).
- On remand Pink Palm sought costs under Fed. R. Civ. P. 54(d)(1) and Lanham Act "exceptional case" fees. The district court concluded the jury produced a split judgment that left the parties with no material alteration of their legal relationship and therefore found no prevailing party; it denied costs and fees.
- Pink Palm appealed the fee/cost denial. The Eleventh Circuit considered whether Rule 54(d) requires naming a prevailing party in every case and whether Pink Palm had prevailed. The court affirmed the district court: neither party prevailed because there was no material alteration of the parties’ legal relationship.
Issues
| Issue | Plaintiff's Argument (Royal Palm) | Defendant's Argument (Pink Palm) | Held |
|---|---|---|---|
| Whether Rule 54(d) requires a court to name a prevailing party in every case | District court may decline to name a prevailing party in mixed-results cases; no automatic winner | Rule 54(d) should result in naming a prevailing party (Pink Palm seeks recognition as prevailing) | A court need not name a prevailing party in every case; Rule 54(d) allows at most one but does not require one when no material alteration occurs |
| Whether Pink Palm was the prevailing party because it successfully defended the infringement claim | Royal Palm: consider the whole litigation and counterclaims; split result produced no material alteration | Pink Palm: successfully defended infringement and therefore is the prevailing party entitled to costs/fees | Neither party prevailed; split judgment restored essentially the status quo ante and produced no material alteration of legal relations |
| Whether the "central issue" test (Sherry) controls prevailing-party determinations | Royal Palm: district court permissibly considered all claims | Pink Palm: district court relied on wrong precedent; central-issue test is too narrow | The Supreme Court rejected the central-issue test; courts must apply the material-alteration test (Garland/Buckhannon line) |
| Whether the prevailing-party standard for costs under Rule 54 is the same as for fee-shifting statutes | Royal Palm: prevailing-party meaning is consistent across contexts; material alteration governs | Pink Palm: seeks application in its favor based on defense outcome | The prevailing-party definition is the same across Rule 54 and fee statutes; the party must obtain relief that materially alters the parties' legal relationship |
Key Cases Cited
- Buckhannon Bd. & Care Home, Inc. v. West Virginia Dep’t of Health & Hum. Res., 532 U.S. 598 (2001) (a prevailing party must obtain judicially conferred relief; rejects "catalyst" theory)
- Texas State Teachers Ass’n v. Garland Indep. Sch. Dist., 489 U.S. 782 (1989) (touchstone is material alteration of legal relationship)
- CRST Van Expedited, Inc. v. E.E.O.C., 578 U.S. 419 (2016) (defendants succeed by preventing a plaintiff’s requested alteration; clarifies prevailing-party analysis)
- Hewitt v. Helms, 482 U.S. 755 (1987) (a party must receive some relief on the merits to be a prevailing party)
- Farrar v. Hobby, 506 U.S. 103 (1992) (prevailing-party principles in fee contexts and consistency across statutes)
- Shum v. Intel Corp., 629 F.3d 1360 (Fed. Cir. 2010) (held a court must choose one prevailing party in every case; discussed and distinguished)
- E. Iowa Plastics, Inc. v. PI, Inc., 832 F.3d 899 (8th Cir. 2016) (no prevailing party where litigation results in a "dead heat" and status quo ante is restored)
- Schlobohm v. Pepperidge Farm, Inc., 806 F.2d 578 (5th Cir. 1986) (no prevailing party where neither side prevails on its claims)