Andretti v. Borla Performance , 426 F.3d 824 ( 2005 )

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
File Name: 05a0421p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
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Plaintiffs-Appellants/ -
MARIO ANDRETTI; M.A. 500, INCORPORATED,
Cross-Appellees, -
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Nos. 04-1835/2404/2406
,
v. >
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BORLA PERFORMANCE INDUSTRIES, INCORPORATED, -
Defendant-Appellee/ -
Cross-Appellant. -
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Appeal from the United States District Court
for the Eastern District of Michigan at Detroit.
No. 03-71258—Robert H. Cleland, District Judge.
Argued: September 15, 2005
Decided and Filed: October 21, 2005
Before: GUY, BATCHELDER, and GILMAN, Circuit Judges.
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COUNSEL
ARGUED: Eric D. Scheible, WINEMAN & SCHEIBLE, Bloomfield Hills, Michigan, for
Appellants. Jeffrey P. Thennisch, DOBRUSIN & THENNISCH, Birmingham, Michigan, for
Appellee. ON BRIEF: Eric D. Scheible, WINEMAN & SCHEIBLE, Bloomfield Hills, Michigan,
for Appellants. Jeffrey P. Thennisch, DOBRUSIN & THENNISCH, Birmingham, Michigan,
Melvin M. Raznick, LAW OFFICES OF MELVIN RAZNICH, Southfield, Michigan, for Appellee.
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OPINION
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RALPH B. GUY, JR., Circuit Judge. This case involves a dispute over Mario Andretti’s
right of publicity. Mario Andretti and Car Sound Exhaust System, Inc. (Car Sound) entered into a
contract in which Andretti agreed to be Car Sound’s corporate spokesperson. During the contract
period, defendant Borla Performance Industries, Inc. (Borla) advertised a statement Andretti had
made about Borla’s product. Andretti had no prior knowledge and did not give Borla permission
to use his name or quotation. Andretti and M.A. 500, Inc. (collectively, “Andretti”) sued Borla,
seeking a permanent injunction and damages for violating Andretti’s right to publicity, tortiously
interfering with a business relationship, violating the Michigan Consumer Protection Act, quantum
meruit, violating the Lanham Act §§ 1125(a) and 1125(c), and unfair competition. The district court
1
Nos. 04-1835/2404/2406 Andretti, et al. v. Borla Performance Industries Page 2
granted summary judgment to Borla on all the damage claims, but issued the permanent injunction
against Borla sought by Andretti. The court then awarded Rule 11 sanctions against Andretti,
ordered Andretti to pay the costs incurred by Borla after it made an unsuccessful Rule 68 offer of
judgment, denied Borla’s other requests for costs and fees, and denied Andretti’s request for costs.
We affirm the district court’s rulings on every issue.
I.
The facts underlying this case are undisputed and uncomplicated. Mario Andretti was a
successful and well known race-car driver before he retired from automobile racing. Andretti is now
a corporate spokesman for companies that contract with Andretti for the exclusive right to utilize
his name, image, likeness, and personal services. On November 1, 2001, Andretti and Car Sound,
a manufacturer of after-market exhaust systems and catalytic converters, entered into a contract that
provided Car Sound with the exclusive right for four years to utilize Andretti’s rights of publicity
with regard to exhaust systems. Borla, Car Sound’s largest direct competitor, began an
advertisement campaign in the spring of 2003 that included a quote from Andretti in which he
praised a Borla product. Borla received permission to use the quotation from the publication in
which the quote originally appeared, but it did not seek or receive Andretti’s permission.
Andretti filed a five-count complaint and a motion for a preliminary injunction against Borla
in Oakland County Circuit Court, Michigan, on March 20, 2003. Borla removed the complaint to
federal court. To demonstrate that the amount in controversy exceeded the federal diversity
jurisdiction requirement of $75,000, Borla’s attorney attached his own declaration to the notice of
removal stating that Andretti’s pre-suit demands to Borla were about $200,000. The parties
stipulated to a preliminary injunction order on April 30, 2003. In June, Andretti filed an eight-count
First Amended Complaint, which included claims for violation of his right to publicity, tortious
interference with a business relationship, violation of the Michigan Consumer Protection Act,
quantum meruit, violation of the Lanham Act §§ 1125(a) and 1125(c), and unfair competition. Borla
made an offer of judgment pursuant to Federal Rule of Civil Procedure 68 on December 22, 2003.
Borla’s offer included $15,000 for costs, expenses, fees, and damages and a permanent injunction
“forever barring, enjoining, and restraining Defendant from using or disseminating any
advertisement or promotional material that contains the quotation given by Plaintiff, Mario Andretti,
on page 17 of the Summer 2001 edition of the C5 Registry.” Andretti rejected the Rule 68 offer of
judgment.
Borla then filed several motions for summary judgment, including a motion for summary
judgment on Count II, tortious interference with a business relationship, and a motion for summary
judgment on Count VIII, Unfair Competition. Borla also moved for summary judgment on the
remaining claims, arguing that since Andretti could not show any damages, his claims were moot
due to Borla’s offer to enter a permanent injunction. Andretti moved to strike this third motion on
procedural grounds. The district court granted the motion on Count II on April 2, 2004; granted the
motion on Count VIII on April 13, 2004;1 granted the motion for summary judgment on the
remaining claims on May 27, 2004; and denied Andretti’s motion to strike (the May 27, 2004
Order). Also on May 27, 2004, the district court issued the Order Entering Judgment and Granting
Injunction (the Judgment). The Judgment was in favor of Andretti and M.A. 500, Inc. and enjoined
Borla from using Andretti’s quotes or likeness or implying that Andretti endorsed Borla’s products.
The permanent injunction was worded identically to the preliminary injunction. Andretti appealed
from the May 27 Order but not the Judgment.
1
Andretti has not appealed the April 2 and April 13 orders.
Nos. 04-1835/2404/2406 Andretti, et al. v. Borla Performance Industries Page 3
Borla then moved for costs, sanctions, and attorney fees pursuant to Federal Rule of Civil
Procedure 54(d); Federal Rule of Civil Procedure 68; 15 U.S.C. § 1117(a) (the Lanham Trademark
Act); 15 U.S.C. § 505 (the Copyright Act); and Federal Rule of Civil Procedure 11. On August 27,
2004, the district court ruled that Andretti was a prevailing party and therefore that Borla was not
entitled to costs or attorney fees as provided in Rule 54(d) and the Lanham Act. The court also
determined that Borla was not entitled to attorney fees under the Copyright Act because, even
though Borla had argued that several of plaintiffs’ claims were preempted by the Copyright Act,
plaintiffs had not directly alleged any Copyright Act claims and the court had not ruled that any of
plaintiffs’ claims were preempted.2 The district court did award Rule 11 sanctions against plaintiffs
because plaintiffs failed to voluntarily dismiss Count VIII of the Amended Complaint, and ordered
plaintiffs to pay defendant the costs and attorney fees incurred in pursuing the motion for summary
judgment on that claim. Furthermore, the district court awarded Borla its costs incurred after
December 22, 2003, the date it made its Rule 68 offer of settlement, because the relief obtained by
plaintiffs was not more favorable than the Rule 68 offer. The costs totaled $5,393.35. Finally, the
district court rejected plaintiffs’ requests for costs as the prevailing party under Rule 54(d) because
their “judicially sanctioned victory was insignificant and the final disposition of this case amounted
to a victory for Defendant.” The parties cross-appealed.
II.
On appeal, plaintiffs argue that the district court erred by (1) denying its motion to strike
Borla’s motion for summary judgment, (2) granting Borla’s motion for summary judgment based
on the lack of evidence of damages, (3) awarding Borla costs under Rule 68, (4) sanctioning
plaintiffs under Rule 11, and (5) refusing to award Andretti costs under Rule 54(d). Defendant
argues that we lack jurisdiction to consider plaintiffs’ appeal because they appealed just the order
granting defendant’s motion for summary judgment but not the judgment itself. It also cross-appeals
the district court’s August 27, 2004 Order, arguing that the district court erred by (1) determining
that plaintiffs were the prevailing party, (2) denying its motion for fees under 15 U.S.C. § 1117, and3
(3) denying additional sanctions against plaintiffs for their refusal to voluntarily dismiss Count II.
We turn first to the jurisdiction issue.
A. Jurisdiction
Borla contests this court’s jurisdiction over Andretti’s appeal of the May 27, 2004 order
because Andretti has not appealed the judgment, and if we were to reverse the district court’s ruling
against Andretti, Borla contends the district court’s judgment predicated on mootness would
somehow remain in place with a hypothetically “live” damages claim, which is inconsistent with the
doctrine of mootness. Borla had previously moved to dismiss Andretti’s appeal, but another panel
of this court rejected Borla’s motion, stating simply: “The fact that the plaintiffs did not also appeal
the injunctive relief granted in their favor does not render moot their appeal of the dismissal of the
claims for damages.” (No. 04-1835 Order of 9/29/04). We agree.
We have appellate jurisdiction pursuant to 28 U.S.C. § 1291 because a final judgment has
been entered. Andretti was not required to appeal a judgment in his favor in order to bring his
appeal of a contemporaneously issued order adverse to his interests. If we were to decide that the
May 27, 2004 order was incorrect because there was an issue of fact as to Andretti’s damages, the
2
Borla does not appeal the ruling regarding fee shifting under the Copyright Act.
3
Borla also argues that we could affirm the district court’s grant of summary judgment for alternative reasons,
specifically that the state law claims were preempted by copyright law and Andretti had no standing to bring a Lanham
Act claim. We need not address these arguments since we agree with the district court that Andretti had no evidence
of damages.
Nos. 04-1835/2404/2406 Andretti, et al. v. Borla Performance Industries Page 4
order would be vacated and remanded to the district court for proceedings consistent with our
opinion. The judgment would still be valid and its injunction still in place. It would no longer be
a final judgment because the district court would be required to conduct further proceedings
consistent with our hypothetical decision, but the judgment would not be “wholly inconsistent” with
our decision regarding damages, as Borla argues. In any event, we explain immediately below why
the district court correctly decided that Andretti failed to produce evidence of damages, and
therefore the effect of a reversal is purely hypothetical.
B. Plaintiffs’ Motion to Strike Defendant’s Motion for Summary Judgment
The district court’s amended scheduling order set the discovery and dispositive motion
deadlines as January 23, 2004, and February 23, 2004, respectively. Borla filed a motion to compel
discovery on February 13, 2004, and the district court granted Borla’s motion at a hearing on
February 19, 2004, and in a written order dated February 26, 2004. The order required plaintiffs to
provide renewed discovery responses by February 27, 2004, and for Andretti to reappear for a
deposition by March 8, 2004. On March 8, 2004, Borla filed its motion for summary judgment
arguing that Andretti’s lack of evidence of damages combined with Borla’s Rule 68 offer rendered
the litigation moot. Borla did not seek leave of the court for permission to file the late motion.
Andretti filed a motion to strike Borla’s motion because it was filed after the February 23, 2004
deadline for dispositive motions.
The district court correctly analyzed the late motion as a request to modify the scheduling
order. “A [scheduling order] shall not be modified except upon a showing of good cause and by
leave of the district judge . . . .” FED. R. CIV. P. 16(b). “The primary measure of Rule 16’s ‘good
cause’ standard is the moving party’s diligence in attempting to meet the case management order’s
requirements.” Inge v. Rock Fin. Corp., 281 F.3d 613, 625 (6th Cir. 2002) (internal quotation marks
and citation omitted). A district court should also consider possible prejudice to the party opposing
the modification. Id. We review for abuse of discretion a district court’s decision to amend its
scheduling order to allow a late filing. Leary v. Daeschner, 349 F.3d 888, 909 (6th Cir. 2003). “A
district court abuses its discretion when it relies on clearly erroneous findings of fact, when it
improperly applies the law, or when it employs an erroneous legal standard.” United States v. Cline,
362 F.3d 343, 348 (6th Cir. 2004).
The district court found good cause for the late filing and no prejudice to plaintiffs and it
accordingly denied plaintiffs’ motion to strike Borla’s motion. The court correctly determined that
defendant had good cause because Andretti did not complete his compelled responses to Borla’s
discovery requests until after the scheduled dispositive motion deadline, the court had previously
granted Borla leave to file two still-pendng dispositive motions after the deadline, and Borla’s
motion raised an issue of justiciability. Moreover, Andretti has not shown that he suffered any
prejudice because the motion was filed two weeks late. His only claim of prejudice is that the
district court considered the motion and then ruled against him on the merits. There is no indication
of prejudice, however, because there is no indication that the outcome of the motion would have
been different had Borla filed it before the deadline.
C. Borla’s Motion for Summary Judgment
We review de novo the district court’s grant of summary judgment. Smith v. Ameritech, 129
F.3d 857, 863 (6th Cir. 1997). Summary judgment is appropriate when there are no issues of
material fact in dispute and the moving party is entitled to judgment as a matter of law. FED. R. CIV.
P. 56(c). In deciding a motion for summary judgment, the court must view the factual evidence and
draw all reasonable inferences in favor of the nonmoving party. Matsushita Elec. Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 587 (1986).
Nos. 04-1835/2404/2406 Andretti, et al. v. Borla Performance Industries Page 5
The district court decided that Andretti did not produce any evidence of damages and
therefore, in light of Borla’s offer to enter a permanent injunction, Andretti’s claims were moot.
Andretti argues that there was a genuine issue of material fact as to his damages because he had
submitted evidence of damages in his supplementation of document requests and in his interrogatory
responses, because Borla failed to elicit evidence concerning damages when it deposed Andretti, and
because Borla’s attorney admitted the fact of Andretti’s damages in his declaration supporting
removal from state court to federal court.4 Andretti’s arguments are without merit for the reasons
explained below.
1. Andretti did not present evidence of damages to the district court
Andretti argues that he did provide evidence of his damages to the district court because his
supplemental responses to Borla’s document requests were submitted as evidence. The
supplemental responses consisted of Andretti’s identification of documents that responded to each
document request. The documents were identified by Bates Stamp numbers. The actual documents
were not presented as evidence by either party. According to plaintiffs’ representations in the briefs,
some of the documents identified in the response were contracts between Andretti and various
corporations in which Andretti agreed to be a corporate spokesperson for considerable
compensation. One of the contracts was Andretti’s agreement with Car Sound, which revealed that
Car Sound paid Andretti $500,000 annually for the use of his rights of publicity. Plaintiffs argue
that the reference to certain Bates Stamp numbers that correlate with the contracts “demonstrates
there is a host of evidence as to both the nature and amount of Andretti’s damages in this case.” We
disagree. Even though plaintiffs had the documents when they responded to the motion, plaintiffs
admit that neither they nor Borla presented the documents to the district court. Moreover, the
supplemental response listed only Bates Stamp numbers, not a description of the documents that
were provided. The district court could not consider the evidentiary value of documents of which
it was not aware.5
2. The response to interrogatory did not create genuine issue of damages
Andretti claims that one of his interrogatory responses provides sufficient evidence of
damages. Interrogatory No. 22 asked: “Please describe in detail how Plaintiff alleges that his good
will and reputation has been damaged by Borla’s advertisement at issue in this litigation, including
but not limited to specific examples of how Borla’s advertisement has affected Plaintiff’s good will
and reputation.” Andretti replied:
Andretti objects to this interrogatory as overly broad, unduly burdensome,
requests confidential and proprietary information, and not reasonably calculated to
lead to the discovery of admissible evidence. Without waiving this objection,
Borla’s advertisement has damaged Andretti’s goodwill and reputation in the sense
that the automotive after-market industry is well aware of Andretti’s exclusive, long-
term engagement with Car Sound. Andretti’s occupation, now that his racing career
is over, is that of a corporate spokesperson. His rights of publicity are his largest and
greatest asset. It would be very easy for folks in the highly competitive automotive
industry, given Borla’s actions, to consider Andretti one who provides his services
purely for the money and without any allegiance or loyalty to the relationships he has
4
M.A. 500’s possible damages was not an issue before the district court, as Andretti declared: “M.A. 500, Inc.
has no interest, legally or otherwise, in the claim I have made in the . . . matter.”
5
Furthermore, Andretti has not presented the documents to this court on appeal. Even if he did, we would be
unable to review them because we generally decline to review evidence not presented to the district court. Inland Bulk
Transfer Co. v. Cummins Engine Co., 332 F.3d 1007, 1012 (6th Cir. 2003).
Nos. 04-1835/2404/2406 Andretti, et al. v. Borla Performance Industries Page 6
worked diligently to establish over the years. All of his hard work and dedication
could be erased by the one selfish move of a competitor like Borla.
This response merely states a category of damages that Andretti might incur, but he does not
claim that he has actually suffered any damages in this case. Possible damage to his reputation as
a corporate spokesperson is purely hypothetical and is far too speculative to create a genuine issue
of damages. See, e.g., Johnson v. Jones, 149 F.3d 494, 507 (6th Cir. 1998) (holding that a court
should not award damages that are “wholly speculative”).
3. Defendant’s failure to ask about damages is irrelevant
According to Andretti, Borla should be estopped from arguing that there is no evidence of
damages because Borla either knew of Andretti’s damages or failed to elicit evidence concerning
damages during discovery. This line of reasoning is without merit because once the movant of a
summary judgment motion satisfies its burden by demonstrating the absence of a genuine issue of
material fact, the nonmoving party “must produce specific facts demonstrating a genuine issue of
fact for trial if it is to withstand summary judgment.” Leadbetter v. Gilley, 385 F.3d 683, 690 (6th
Cir. 2004) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986)). It was not Borla’s
burden to discover or produce evidence of Andretti’s damages, especially when the evidence was
exclusively within Andretti’s control. Moreover, Andretti implies that Borla misled the district court
because the contracts demonstrated Andretti’s damages and Borla was familiar with the contracts,
but Borla represented to the district court that no evidence of damages existed. The contracts
standing alone did not provide evidence of Andretti’s damages. They helped establish the value of
corporate sponsorship contracts, but did not show that any current contract or future contract
opportunity was impaired. Therefore, Borla did not mislead the court by arguing that Andretti had
no evidence of actual damages.
4. Attorney’s declaration is not evidence of damages
Andretti contends that Borla’s attorney’s declaration contains an admission that Andretti
incurred damages. Borla’s attorney, Melvin Raznick, attached his own declaration to the notice of
removal of Andretti’s complaint to federal court based on diversity. Raznick declared that Andretti,
through his attorney, demanded $200,000 in monetary damages in addition to a retraction of Borla’s
advertisement and Borla’s promise not to run the ad in the future. Raznick also declared that
based upon the Plaintiff’s own claims of stated damages in the amount of
$200,000.00, plus the additional costs that would clearly be incurred by BORLA if
Plaintiff received his requested relief . . . it is my good faith belief that the amount
in controversy in the present action at the time of this Notice [o]f Removal exceeds
the $75,000.00 jurisdictional limit required under federal diversity jurisdiction.
Raznick’s recounting of Andretti’s demand for $200,000 is not the equivalent of declaring that he
believed Andretti had indeed incurred damages of $200,000. Raznik’s declaration necessarily
implied that the amount in controversy was $200,000 if proven. Andretti’s contention that the
declaration creates a question of fact as to his damages is unavailing.
D. Rule 11 Sanctions
Borla moved for sanctions against Andretti pursuant to Fed. R. Civ. P. 11 and 28 U.S.C.
§ 1927 arising out of Andretti’s refusal to voluntarily dismiss claims II and VIII from the Amended
Complaint. The district court awarded sanctions against Andretti for failing to voluntarily dismiss
Count VIII, but refused to award sanctions for his refusal to dismiss Count II. Borla and Andretti
both appealed.
Nos. 04-1835/2404/2406 Andretti, et al. v. Borla Performance Industries Page 7
Rule 11 states:
(b) Representations to the Court. By presenting to the court . . . a pleading,
written motion, or other paper, an attorney . . . is certifying that to the best of the
person’s knowledge, information, and belief, formed after an inquiry reasonable
under the circumstances, —
(1) it is not being presented for any improper purpose, such
as to harass or to cause unnecessary delay or needless increase in the
cost of litigation;
(2) the claims, defenses, and other legal contentions therein
are warranted by existing law or by a nonfrivolous argument for the
extension, modification, or reversal of existing law or the
establishment of new law;
(3) the allegations and other factual contentions have
evidentiary support or, if specifically so identified, are likely to have
evidentiary support after a reasonable opportunity for further
investigation or discovery[.]
FED. R. CIV. P. 11(b)(1)-(3).
Rule 11 sanctions are warranted if the attorney’s conduct was unreasonable under the
circumstances. Ridder v. City of Springfield, 109 F.3d 288, 293 (6th Cir. 1997). Additionally,
28 U.S.C. § 1927 provides: “Any attorney or other person admitted to conduct cases in any court
of the United States or any Territory thereof who so multiplies the proceedings in any case
unreasonably and vexatiously may be required by the court to satisfy personally the excess costs,
expenses, and attorneys’ fees reasonably incurred because of such conduct.”
We review a district court’s grant or denial of Rule 11 sanctions for abuse of discretion.
Tahfs v. Proctor, 316 F.3d 584 (6th Cir. 2003). “A court necessarily abuses its discretion if it bases
its ruling on an erroneous view of the law or a clearly erroneous assessment of the evidence.”
Ridder, 109 F.3d at 293.
1. Count II
Borla had moved for summary judgment on Count II, a claim for tortious interference with
a contract or business relationship, on January 10, 2004. Borla sought Andretti’s concurrence before
filing its motion, but Andretti refused to voluntarily dismiss the claim. Andretti offered to
voluntarily withdraw Count II after Borla prepared and filed the motion. Borla refused to accept the
voluntary dismissal because Andretti would not agree to pay Borla’s attorney fees and costs incurred
in filing the motion. Andretti’s response to Borla’s motion did not dispute the merits of the motion,
but instead asked the court to award it costs and attorney fees expended in responding to the motion
because Borla refused to accept their voluntary dismissal. The district court granted Borla’s motion
for summary judgment on Claim II, and deferred any decision regarding the award of costs and fees
until after the case concluded. The court also stated:
The court is perplexed and disappointed by counsel’s failure to stipulate to
an appropriate order which would have eliminated the need for extensive briefing on
this matter. The lawyers’ (or quite possible parties’) failure to stipulate to the relief
requested before and after the instant motion was filed is most troublesome because
it not only wastes judicial resources, but also creates unnecessary and avoidable
expenses for the parties, one an individual involved in business and two
corporations. . . .
Nos. 04-1835/2404/2406 Andretti, et al. v. Borla Performance Industries Page 8
Although Defendant might justifiably have concerns regarding Plaintiffs’
refusal to voluntarily dismiss Count II before February 26, 2004, it still refused to
agree to a voluntary dismissal without a condition that Plaintiffs pay Defendant’s
costs and legal fees. (Pls.’ Resp. Ex. 2, February 26 Letter from Defendant’s
Counsel.) The court recognizes that Defendant might have agreed to permit
Plaintiffs to voluntarily dismiss Count II and withdraw its motion for summary
judgment, but still seek to recover its costs and fees.
The district court eventually denied Borla’s motion for Rule 11 sanctions after issuing the
judgment because it decided that both parties were at fault for allowing the motion for summary
judgment on Count II to reach a judicial determination. Borla argues the district court should not
have considered its role in forcing judicial resolution of an essentially undisputed motion, but Borla
does not cite any case prohibiting the court’s consideration of the Rule 11 movant’s conduct when
deciding whether to award Rule 11 sanctions.6 Moreover, other courts have refused to award Rule
11 sanctions when both parties contributed to the waste of judicial resources. See Kassner v. Ashley
Plaza Mall Assocs., 758 F. Supp. 939, 941 (S.D.N.Y. 1991); St. Jarre v. Heidelberger
Druckmaschinen A.G., 816 F. Supp. 424, 427 (E.D. Va. 1993). We conclude that the district court
did not abuse its discretion when it considered Borla’s failure to accept Andretti’s offer of voluntary
dismissal. Borla’s refusal cost the court time and resources by forcing it to analyze the substance
of the motion, culminating in a nine-page opinion. Since both parties contributed to the unnecessary
expenditure of judicial resources, the district court was justified in letting the costs rest where they
originated.
2. Count VIII
Andretti argues that the district court erred when it awarded sanctions against him for
pursuing Count VIII. Count VIII of the Amended Complaint was titled “Unfair Competition.” Four
of the six substantive paragraphs making up the claim reference Michigan Compiled Laws §§ 429.42
- 429.43 of Michigan’s trademark infringement statute. Section 429.42(a) requires a plaintiff to have
a registered mark under that act, which Andretti did not. Andretti admitted that he did not have a
registered mark as required by the statute. Instead of voluntarily dismissing the claim, Andretti
moved to amend it so that he alleged a claim for common law unfair competition instead of statutory
trademark infringement.
The district court granted Borla’s motion for summary judgment on the claim and denied
Andretti’s motion to amend for three reasons. First, Andretti raised the motion to amend in his
response to Defendant’s motion for summary judgment—a practice prohibited by the local rules.
Second, Andretti failed to submit a proposed amended complaint as required by the local rules.
Third, Andretti’s motion to amend was untimely. The court had entered a scheduling order pursuant
to Rule 16, which set October 6, 2003, as the deadline for any amendments. Andretti filed its
response and motion to amend on February 27, 2004. In Leary v. Daeschner, 349 F.3d 888 (6th Cir.
2003), we held that when a plaintiff moves to amend a complaint after the deadline for amendments
in the scheduling order has passed, Rule 15(a)’s instruction for leave to be “freely given” must be
read in conjunction with Rule 16’s requirement that amendment of a scheduling order must only be
made upon a showing of good cause and leave of the court. The district court denied his motion to
6
Borla’s sole citation is to Price v. Pelka, 690 F.2d 98, 101 (6th Cir. 1982), which resolved an issue of awarding
attorney fees as provided for by the Civil Rights Act of 1964. We held that under that statute, the prevailing party should
ordinarily recover attorney fees, and that the plaintiff’s perjury of a nonrelevant fact would not qualify as a “special
circumstance” precluding her from recovering attorney fees. Id. Price does not support Borla’s position because it
evaluated the award of attorney fees under a different statute and standard than the one at issue here. Moreover, it does
not preclude us from considering the movant’s own actions. The Price court did consider the movant’s actions, but
considered them insufficient to negate the presumption that she should collect her attorney fees.
Nos. 04-1835/2404/2406 Andretti, et al. v. Borla Performance Industries Page 9
amend the complaint and dismissed Count VIII after determining that Andretti failed to show good
cause why he did not move to amend his complaint sooner. Andretti has not appealed that ruling,
but maintains that Rule 11 sanctions are inappropriate for what was, he contends, a drafting error
and that a reasonable attorney would have thought he had solid ground for moving to amend the
complaint to correct the error.
The district court did not abuse its discretion by imposing Rule 11 sanctions against Andretti.
In addition to failing to properly research Count VIII before filing his complaint, which would have
revealed that the statute required a registered mark and that his client did not have one, Andretti’s
attorney prolonged the inevitable at a cost to Borla by refusing to voluntarily dismiss the count and
forcing Borla to pursue a dispositive motion in order to have the claim dismissed. Furthermore,
Andretti has not explained before the district court or on appeal why he did not move to amend the
claim once Borla brought the original claim’s deficiency to Andretti’s counsel’s attention.
E. Rule 54(d) Costs
Rule 54(d) provides that the losing party should pay the prevailing party’s costs: “Except
when express provision therefore is made either in a statute of the United States or in these rules,
costs other than attorneys’ fees shall be allowed as of course to the prevailing party unless the court
otherwise directs . . . .” FED. R. CIV. P. 54(d)(1). After the district court issued the May 27, 2004
order and judgment, Andretti and Borla each argued that they were the prevailing party and entitled
to recover their costs from the other. The district court concluded that Andretti was the prevailing
party because judgment and a permanent injunction was entered in his favor. Accordingly, the court
denied Borla’s request for costs. The court also denied Andretti’s request for costs, however,
because its recovery was so insignificant in light of the fact that Borla voluntarily agreed to enter
the injunction that the disposition of the case amounted to a victory for Borla. Borla and Andretti
cross-appealed the district court’s refusal to shift any costs under Rule 54(d). We review the district
court’s determination of appropriate cost shifting under Rule 54(d) for abuse of discretion. Soberay
Mach. & Equip. Co. v. MRF Ltd., 181 F.3d 759, 770 (6th Cir. 1999).
1. The prevailing party
A party is the prevailing party under Rule 54(d) even when it is only partially successful.
Zackaroff v. Koch Transfer Co., 862 F.2d 1263, 1265-66 (6th Cir. 1988). In the context of fee-
shifting statutes, the Supreme Court has held that a plaintiff is a “prevailing party” when he receives
“at least some relief on the merits of his claim,” even nominal damages. Buckhannon Bd. & Care
Home, Inc. v. W. Virginia Dep’t of Health and Human Res., 532 U.S. 598, 603 (2001). The
Buckhannon court also decided that for a party to be “prevailing” there must be a “judicially
sanctioned change in the legal relationship of the parties.” Id. at 605. Buckhannon overruled the
“catalyst theory” that had been the caselaw in this and other circuits. See Chambers v. Ohio Dep’t
of Human Servs., 273 F.3d 690 (6th Cir. 2001). Under that theory, a plaintiff “prevailed” for the
purpose of fee shifting statutes if his lawsuit was causally related to voluntary actions taken by the
defendant. Id. at 692. The Buckhannon court reasoned that “settlement agreements enforced
through a consent decree” may serve as the basis for finding that a plaintiff prevailed because even
though it does not always include a finding of liability, “it nonetheless is a court-ordered ‘chang[e]
[in] the legal relationship between [the plaintiff] and the defendant.’” Id. at 604 (quoting Tex. State
Teachers Ass’n v. Garland Indep. Sch. Dist., 489 U.S. 782, 792 (1989)).
As a panel of this court explained shortly after Buckhannon was decided, “the Court noted
that an award of attorneys fees is appropriate where a plaintiff has obtained an ‘enforceable
judgment [] on the merits’ or a ‘court-ordered consent decree[],’ but not under the catalyst theory,
which ‘allows an award where there is no judicially sanctioned change in the legal relationship of
the parties.’ Thus, the Court concluded that ‘[a] defendant’s voluntary change in conduct, although
Nos. 04-1835/2404/2406 Andretti, et al. v. Borla Performance Industries Page 10
perhaps accomplishing what the plaintiff sought to achieve by the lawsuit, lacks the necessary
judicial imprimatur on the change.’” Chambers, 273 F.3d at 693 (quoting Buckhannon).
Borla argues that Andretti is not the prevailing party because the only relief it won was
volunteered by Borla and the district court ruled in its favor on the contested issue of damages.
Buckhannon and Chambers stand for the proposition that a voluntary change that is not judicially
sanctioned cannot support a finding of a prevailing party. The Supreme Court explicitly held that
consent decrees involving voluntary agreement can support a determination that a party prevailed.
Even though Borla volunteered to enter the court-ordered injunction, the injunction appears in a final
judgment, it was judicially sanctioned by the district court, and it changed the legal relationship
between the parties. Accordingly, the district court correctly concluded that Andretti is the
prevailing party.7
2. Discretion to deny the prevailing party its costs
A district court has the discretion to refuse to award costs to the prevailing party when “it
would be inequitable under all the circumstances in the case” to do so. White & White, Inc. v. Am.
Hosp. Supply Corp., 786 F.2d 728, 730 (6th Cir. 1986) (emphasis omitted). A district court does
not abuse its discretion to deny the shifting of costs when the prevailing party’s expenditures are
unreasonably large, when the prevailing party prolonged the litigation or injected unmeritorious
issues, in cases that are close and difficult, and where “the prevailing party’s recovery is so
insignificant that the judgment amounts to a victory for the defendant.” Id. (quoting Lichter Found.,
Inc. v. Welch, 269 F.2d 142, 146 (6th Cir. 1959). Borla agreed from the beginning of this litigation
to an injunction from using Andretti’s quotation in any future advertisements. It was only Andretti’s
demand for damages that prevented the parties from settling this dispute. The district court did not
abuse its discretion by concluding that Andretti’s loss on the issue of damages amounted to a victory
for Borla.
F. Attorneys Fees Under the Trademark Act
Borla moved for attorney fees under the Lanham Trademark Act. Andretti alleged several
trademark violations, and the Lanham Act provides: “The court in exceptional cases may award
reasonable attorney fees to the prevailing party.” 15 U.S.C. 1117(a)(3). The Buckhannon court
instructed that the term “prevailing party” is construed consistently among the several fee-shifting
statutes. 532 U.S. at 603 n.4. Borla is not the prevailing party for the reasons described above and
therefore is not entitled to attorney fees under the Lanham Act.
G. Rule 68 Costs
Rule 68 provides that anytime more than ten days before trial, a defendant may present a
plaintiff with an offer of judgment against the defendant “for the money or property or to the effect
specified in the offer.” If the plaintiff rejects the offer of judgment, and “the judgment finally
obtained by the offeree is not more favorable than the offer, the offeree must pay the costs incurred
after the making of the offer.” FED. R. CIV. P. 68. Although this circuit apparently has not set forth
the standard of review for Rule 68 rulings, we join the other circuits that review de novo the legal
interpretations of Rule 68, and review for clear error the factual findings concerning the
circumstances under which Rule 68 offers were made. See Champion Produce, Inc. v. Ruby
Robinson Co., 342 F.3d 1016, 1020 (9th Cir. 2003); Basha v. Mitsubishi Motor Credit of America,
Inc., 336 F.3d 451, 453 (5th Cir. 2003); Harbor Motor Co. v. Arnell Chevrolet-Geo, Inc., 265 F.3d
638, 645 (7th Cir. 2001); First Nat’l Bank of Turley v. Fidelity & Deposit Ins. Co., 196 F.3d 1186,
7
Even if we were to review the district court’s determination of which party was the prevailing party de novo,
we would reach the same result.
Nos. 04-1835/2404/2406 Andretti, et al. v. Borla Performance Industries Page 11
1189 (10th Cir. 1999); Jordan v. Time, Inc., 111 F.3d 102, 105 (11th Cir. 1997). But see Le v. Univ.
of Penn., 321 F.3d 403, 406 (3rd Cir. 2003) (“We have plenary review over both legal questions
regarding the interpretation of Rule 68 and the construction of the offer of judgment.”). Moreover,
we should apply general contract principles to interpret Rule 68 offers of judgment. Basha, 336 F.3d
at 453; Mallory v. Eyrich, 922 F.2d 1273, 1279 (6th Cir. 1991).
The district court awarded Borla its costs incurred after December 22, 2003, the date Andretti
rejected Borla’s Rule 68 offer of judgment. Andretti appeals that ruling, arguing that the final
judgment was more favorable than Borla’s Rule 68 offer of judgment for two reasons: the
permanent injunction is more valuable to Andretti than monetary damages, and the specific wording
of the Rule 68 offer’s injunction was less favorable than the wording of the permanent injunction.
In support of his argument that a judgment in his favor and an injunction is more valuable
than monetary damages, Andretti relies on Lish v. Harper’s Magazine Foundation, 148 F.R.D. 516(S.D.N.Y. 1993), which held that money damages are not the only measure of whether a plaintiff
has obtained a “more favorable” judgment under Rule 68. We agree with the Lish court that a
favorable judgment and an injunction can be more valuable to a plaintiff than damages.
Unfortunately for Andretti, Borla’s Rule 68 offer included damages and a permanent injunction, but
the final judgment awarded Andretti an injunction only. Even though comparing the value of
damages to an injunction is like comparing apples and oranges, in this case we must compare the
value of an apple plus an orange versus only an apple. Andretti’s argument that the injunction is
worth more than the offer of an injunction plus damages is unpersuasive.
Andretti also argues that the injunction in the judgment is more valuable than the injunction
in Borla’s Rule 68 offer because the judgment’s injunction is worded more favorably. Borla’s Rule
68 offer volunteered a permanent injunction “barring, enjoining, and restraining Defendant from
using or disseminating any advertisement or promotional material that contains the quotation given
by Plaintiff, Mario Andretti, on page 17 of the Summer 2001 edition of the C5 Registry.” In
contrast, the permanent injunction in the judgment includes the following:
1. Using a quote or statement attributed to Mario Andretti in the Summer 2001
edition of the C5 Registry, as set forth in Plaintiff’s Complaint, or any reproduction,
counterfeit, copy or colorable imitation of said quote or statement in connection with
the advertising, promotion, display, distributing, provision, sale, or offering for sale
of the Defendant’s goods or services to the public in the United States or
internationally, or in any manner likely to cause others to believe that any of the
Defendant’s goods or services are affiliated, sponsored by, or connected with
Plaintiff Mario Andretti;
2. Passing off, inducing, or enabling others to sell or pass off any good or service to
the public as genuine, authorized, or otherwise emanating from or sponsored by
Mario Andretti; and
3. Committing any other acts calculated to cause purchasers or consumers to believe
that the Defendant’s products or services are affiliated with Mario Andretti including
taking all available steps to refrain from any future uses of the quote or statement
attributed to Andretti in all advertisements, promotional publications, internet
websites, and other media wherein the public would encounter or view the quote or
statement.
Borla contends that at the time the parties were negotiating the Rule 68 offer, both parties
understood that Borla’s offer was to convert the preliminary injunction into a permanent injunction
and that the wording in the Rule 68 offer was just a shorthand expression of Borla’s willingness to
Nos. 04-1835/2404/2406 Andretti, et al. v. Borla Performance Industries Page 12
enter into a permanent injunction. Indeed, the letters negotiating a possible settlement between the
two attorneys representing Borla and Andretti indicate that the terms of a permanent injunction were
never at issue; the only matter of disagreement was the amount of monetary damages. See Basha,
336 F.3d at 454 (considering letters exchanged by attorneys to determine if a Rule 68 offer of
judgment included attorney fees even though the written offer did not explicitly include attorney
fees). Moreover, the terms of the proposed injunction are not so significantly broader than the terms
of the permanent injunction to render Andretti’s actual recovery greater than the Rule 68 offer. The
only offensive conduct ever at issue was Borla’s print ad that included Andretti’s quote. Both the
proposed injunction and the permanent injunction equally prohibited Borla from engaging in that
conduct.
AFFIRMED.