Ninth Circuit Holds That Filing of Fee Petition Under Lanham Act Does Not Toll Period for Filing Notice of Appeal, Splitting with the Seventh Circuit

In Nutrition Distribution LLC V. IronMag Labs, LLC, No. 19-55251 (9th Cir. Aug. 25, 2020), the Ninth Circuit decides – as a matter of first impression for that court – that the filing of a fee petition under Fed. R. Civ. P. 54(d) in a Lanham Act case does not extend the 30-day limitations period for filing a notice of appeal provided by Fed. R. App. P. 4(a)(1)(A). This creates a split with the Seventh Circuit, which held to the contrary in Hairline Creations, Inc. v. Kefalas, 664 F.2d 652 (7th Cir. 1981).

Plaintiff “Nutrition Distribution alleged that [defendant] Appellee IronMag Labs, LLC violated the Lanham Act, 15 U.S.C. §§ 1051–1141n, by falsely advertising IronMag’s nutritional supplements as having ‘no toxicity’ or ‘unwanted side effects.’” The district court awarded judgment to plaintiff and ordered injunctive relief, but no damages or attorney’s fees, on November 16, 2018. Judgment was entered December 13, 2018. Two weeks later, plaintiff filed a motion for attorney’s fees under Fed. R. Civ. P. 54(d) that reargued the initial denial of fees, arguing that the case qualified as “exceptional” under the Lanham Act attorney’s fee section, 15 U.S.C. § 1117(a). This motion was denied on January 30, 2019, and plaintiff filed its notice of appeal 30 days later, on March 1, 2019.

The Ninth Circuit holds that the notice of appeal was timely only for the second denial of fees, and not for the underlying final judgment entered in 2018.

Fed. R. App. P. 4(a)(4)(A) provides that the filing of certain post-judgment motions will extend the time for filing a notice of appeal. Plaintiff cited two subsections of the rule: “for attorney’s fees under Rule 54 if the district court extends the time to appeal under Rule 58; [or] to alter or amend the judgment under Rule 59.” Here, the plaintiff neither filed a notice of appeal within 30 days of the final judgment, nor sought relief from the district court under Fed. R. Civ. P. 58 to enlarge the time for appeal. “This leaves Nutrition Distribution in the unenviable position of asking that its motion for attorneys’ fees—which was clearly styled as such and requested fees under Rule 54(d)—be recharacterized as a motion to alter or amend the judgment under Rule 59.”

Unfortunately for plaintiff, the panel sees any attempt to recharacterize the Rule 54(d) petition as a Rule 59 as an end-run around Rule 58. “The whole point of Rule 58(e) is to allow—but not require—district courts to treat attorneys’ fees motions as having ‘the same effect’ as a Rule 59 motion for purposes of filing a notice of appeal …. Nutrition Distribution would instead make Rule 58(e)’s procedure advisory.” The panel notes that the background law (before Rule 58 was amended in 1993) “ma[d]e clear that attorneys’ fees motions cannot be recharacterized as Rule 59 motions to alter or amend the judgment (citing White v. New Hampshire Dep’t of Empl. Sec’y, 455 U.S. 445 (1982); Buchanan v. Stanships, Inc., 485 U.S. 265 (1988) (per curiam); and Budinich v. Becton Dickinson & Co., 486 U.S. 196 (1988)).

Plaintiff’s attempts to work around these rules fail. It cited two 1980s era cases from the Ninth Circuit “for the proposition that a fees motion is a motion under Rule 59 when it substantively challenges whether fees should be awarded ‘at all,’” but these cases predated the relevant 1993 amendment to Rule 58. The panel also holds that the situation did not change in this case just because there was “an initial decision denying fees and a post-judgment motion renewing the request for fees.”

Finally, the plaintiff argued that under the Lanham Act, the decision on fees is intertwined with the merits because the district court must decide whether the case was “exceptional” to award fees. It cited the Seventh Circuit Hairline case, but the panel remains unconvinced. “Hairline is not easily reconciled with the Supreme Court’s later decisions,” and even the “Seventh Circuit has itself questioned whether Hairline survives the Supreme Court’s decisions in this area.” Moreover, “Hairline’s endeavor to identify attorneys’ fees provisions that touch on the ‘substance’ or ‘merits’ of a case is inconsistent with the ‘bright-line’ rule [by the Supreme Court] that attorneys’ fees issues are not part of the judgment.” The panel instead follows the Sixth Circuit’s decision in Gnesys, Inc. v. Greene, 437 F.3d 482 (6th Cir. 2005), another Lanham Act case involving a fee petition, in which the court held that the fee petition did not extend the period for challenging a prior contempt order.

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