United States District Court, D. Maryland
Richard D. Bennett, Judge
February 6, 2018, this Court denied Plaintiffs Citi Trends,
Inc. and Kelly Martin's (collectively,
"Plaintiffs" or "Citi Trends") Motion to
Amend the Complaint for a Declarator}' Judgment against
Defendants Coach Inc. and Coach Services, Inc. (collectively,
"Defendants" or "Coach"), granted
Defendants' Motion to Dismiss Plaintiffs' Complaint,
and found Plaintiffs' Motion to Stay and Motion to Compel
moot. (ECF Nos. 29, 30.) Currently pending before this Court
is Defendants' Motion for Attorney Fees. (ECF No. 31.) The
parties' submissions have been reviewed, and no hearing
is necessary. See Local Rule 105.6 (D. Md. 2016).
For the reasons that follow, Defendants' Motion (ECF No.
31) is GRANTED in the amount of $154, 565 in attorney's
case stems from Coach, Inc., and Coach Sendees, Inc.'s
(collectively, "Coach" or "Defendants")
allegations that Citi Trends, Inc. and its buyer, Kelly
Martin (collectively, "Plaintiffs" or "Citi
Trends"), attempted to sell counterfeit handbags that
were seized by the United States Bureau of Customs and Border
Protection ("CBP") in the Port of Long Beach,
California. In April of 2017, Coach contacted Citi
Trends regarding its infringement on one or more of
Coach's trademarks and attached a draft complaint
asserting claims against Citi Trends and Martin. The draft
complaint indicated that it would be filed in the United
States District Court for the Central District of California.
After Citi Trends received the letter and draft complaint,
the parties engaged in a series of communications and
document exchanges. When it appeared such discussions were
fruitless, Coach made a financial demand and indicated that
if it did not receive the monetary demand by June 30, 2017,
it would file its suit against Plaintiffs in California.
days before that deadline, on June 27, 2017, Plaintiffs filed
a Complaint in this Court under the Declaratory Judgment Act,
seeking a declaratory judgment that the handbags were not
counterfeit and did not infringe on Defendants'
trademarks, and their actions had not subjected them to
liability under the Lanham Act, 15 U.S.C. §§ 1114,
1124, 1125(a); Section 526(a) of the Tariff Act, 19 U.S.C.
§ 1526(a); Unfair Competition in violation of Cal. Bus
& Prof. Code § 17200 et seq.\ or California
common law unfair competition. The next day, Coach filed its
complaint in the California court and also filed a Motion to
Dismiss Plaintiffs' Complaint in this Court, asserting
that this Court did not have jurisdiction over
Plaintiffs' claims on two grounds.
response to Coach's Motion to Dismiss, Plaintiffs filed a
Motion to Amend the Complaint related to Coach's first
ground for dismissal. In the Motions, the parties disagreed
with respect to the handbags asserted to be at issue in the
April 25, 2017 letter Coach sent Citi Trends, die draft
complaint Coach eventually filed in the California Court, and
Citi Trend's Complaint in this Court. The Plaintiffs
Original Complaint sought "a declaration that the
Subject Bags do not contain counterfeit marks and do
not infringe upon Defendant's trademarks." (Compl,,
ECF No. 1 at ¶ 37) (emphasis added). These "Subject
Bags" were bags that Citi Trends had purchased,
received, and sold, and for which it received approximately
$44, 839 in profits. (Id. at¶¶ 16-17.)
first ground for dismissal then drew a distinction between
two types of "Subject Bags, " and argued
that Coach's April 25, 2017 letter and its draft
complaint only threatened litigation for goods
seized by agents of CBP, while Plaintiffs'
Complaint solely related to goods that passed inspection and
were sold into U.S. commerce. Accordingly, because a
"real and substantial dispute" must exist to bring
a complaint under the Declaratory Judgment Act,
Coach argued that there was not a dispute as to the sold
goods upon which Plaintiffs' Complaint sought relief.
Therefore, the Plaintiffs sought to amend the complaint in
order to clearly seek a declaratory judgment relating to both
the sold and seized goods, which Coach opposed. (ECF No. 19
at 6.) Coach's second ground for dismissal argued that
regardless of whether this Court granted the Motion to Amend,
this Court should decline to exercise jurisdiction under the
Declaratory Judgment Act because Plaintiffs had engaged in
Court granted the Motion to Dismiss on Coach's second
ground, finding good reason to decline to exercise
jurisdiction under the Declaratory Judgment Act.
Specifically, based on the facts described above, this Court
found that Plaintiffs had waited until Coach's suit was
"so certain or imminent, " that filing suit in this
Court was "an improper act of forum shopping."
LWRC Intern., LLC v. Mindlab Media, LLC, 838
F.Supp.2d 330, 338 (D. Md. 2011) (quoting Learning
Network, Inc. v. Discovery Commc'ns, Inc., 11 Fed.
App'x. 297, 301 (4th Cir. 2001)). Upon this Court's
dismissal of Plaintiffs' suit, Plaintiffs withdrew a
motion to dismiss they had filed in the United States
District Court for the Central District of California on the
basis that they had been the
"first-to-file." Coach Inc., et al. v. Citi Trends,
Inc., et al., No. 2:17-cv-04775-DMG-KS, at ECF Nos. 19,
33. Plaintiffs then filed an answer to Coach's complaint,
which did not assert any counterclaims. Id. at ECF
No. 35. Samuel R. Watkins, Counsel for Coach, now seeks
compensation for the time that he spent defending this
Lanham Act provides that "[t]he court in exceptional
cases may award reasonable attorney fees to the prevailing
party." 15 U.S.C. § 1117(a); see also Retail
Services, Inc. v. Freebies Publishing, 364 F.3d 535, 553
(4th Cir. 2004). Coach asserts that it is entitled to
attorney's fees because it is a prevailing party in this
litigation and Plaintiffs' forum shopping made this case
exceptional. Citi Trends asserts both that Coach is not a
prevailing party and Coach has not shown that exceptional
circumstances warrant awarding attorney's fees. This
Court addresses these arguments in turn.
Coach is a prevailing party
argue that Coach is not a "prevailing party" under
the Lanham Act given that this Court dismissed
Plaintiffs' suit for lack of jurisdiction rather than on
the merits. In CRST Van Expedited, Inc. v. Equal
Employment Opportunity Commission, __U.S.__, 136 S.Ct.
1642 (2016), the United States Supreme Court held that
"a defendant need not obtain a favorable judgment on the
merits in order to be a 'prevailing party'"
under Tide VIFs attorneys fee provision. 136 S.Ct. at 1651.
The Court explained that "[c]ommon sense undermines the
notion that a defendant cannot 'prevail5 unless the
relevant disposition is on the merits." Id.
Rather, a defendant "fulfill[s] its primary objective
whenever the plaintiffs challenge is rebuffed, irrespective
of the precise reason for the court's decision. The
defendant may prevail even if the court's final judgment
rejects the plaintiffs claim for a nonmerits reason."
Id. Although the Court's opinion pertained to
Title VIFs fee-shifting provision, the Court noted that
"Congress has included the term 'prevailing
party' in various fee-shifting statutes, and it has been
the Court's approach to interpret the term in a
consistent manner." Id. at 1646.
in Raniere v. Microsoft Corporation, __F.3d__, 2018
WL 1832864 (Fed. Cir. Apr. 18, 2018), the United States Court
of Appeals for the Federal Circuit considered whether a
defendant was a "prevailing party" under the Patent
Act, 38 U.S.C. § 285, after successfully dismissing the
plaintiffs claims with prejudice for lack of standing. The
court rejected the plaintiffs argument that there needed to
be an adjudication on the merits in order to be a prevailing
party. Id. at *4. Rather, the court cited
CRSTs holding that "a favorable judgment on the
merits is not necessary for a defendant to be deemed
a prevailing party for purposes of statutory fee-shifting,
" id. (citing CRST, 136 S.Ct. 1642)
(emphasis added), and "[o]ur sister circuits have
interpreted CRST to mean that, if a defendant
succeeds on a jurisdictional issue, it may be a prevailing
party." Id. at *6 (citing Small
Justice LLC v. Xcentric Ventures LLC, 873 F.3d
313 (1st Cir. 2017) (holding that the defendant was a
prevailing party after obtaining dismissal for lack of
standing under the Copyright Act); Amphastar Pbarms. Inc.
p. Aventis Tharma SA, 856 F.3d 696 (9th Cir. 2017)
(holding that the defendant was a prevailing party after
obtaining dismissal for lack of subject matter jurisdiction
under the False Claims Act)). The court concluded by
The relevant inquiry post-CRST, then, is not limited to
whether a defendant prevailed on the merits, but also
considers whether the district court's decision-"a
judicially sanctioned change in the legal relationship of the
parties"-effects or rebuffs a plaintiffs attempt to
effect a "material alteration in the legal relationship
between the parties." CRST, 136 S.Ct. at 1646,
Id. at *7.
Court follows the reasoning of the First, Ninth, and Federal
Circuits and holds that the Court's "prevailing
party" analysis in CRST applies equally to the
fee-shifting provision of the Lanham Act. Raniere v.
Microsoft Corp., 2018 WL 1832864, at *6 (Fed. Cir. Apr.
18, 2018) ("Raniere has not persuasively
explained why we should make a distinction between § 285
and other statutory provisions that award attorney fees to
"prevailing parties, " and we see no reason to make
such a distinction in light of the Supreme Court's clear
command to construe the term "prevailing party"
consistently across fee-shifting regimes.");
Amphastar Tharms, 856 F.3d at 710
("[CRST] made clear that its reasoning applied
to other fee-shifting statutes, stating that 'Congress
has included the term 'prevailing party' in various
fee-shifting statutes, and it has been the Court's
approach to interpret the term in a consistent manner."