Ufo Chuting of Hawaii, Inc. v. Smith ( 2007 )


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  •                       FOR PUBLICATION
    UNITED STATES COURT OF APPEALS
    FOR THE NINTH CIRCUIT
    UFO CHUTING OF HAWAII, INC., a               
    Hawaii corporation; K.M.B.S.,
    INC., a Hawaii corporation d/b/a
    Kaanapali Tours,
    Plaintiffs-Appellants,
    v.
    ALLAN A. SMITH, in his capacity as
    Chair of the Board of Land and
    Natural Resources, State of
    Hawaii, and Acting Director of the                  No. 05-16545
    Department of Land and Natural
    Resources, State of Hawaii;                          D.C. No.
    CV-03-00651-SOM
    STEPHEN THOMPSON; ED
    UNDERWOOD, in his capacity as                         OPINION
    Administrator, Division of Boating
    and Ocean Recreation, Department
    of Land and Natural Resources,
    State of Hawaii,*
    Defendants-Appellees,
    UNITED STATES DEPARTMENT OF
    COMMERCE; NATIONAL MARINE
    FISHERIES SERVICE,
    Defendants-Intervenors-Appellees.
    
    *Pursuant to Fed. R. App. P. 43(c)(2), Allan A. Smith is substituted for
    Peter T. Young as Acting Chair of the Board of Land and Natural
    Resources and Director of the Department of Land and Natural Resources,
    State of Hawaii; Ed Underwood is substituted for Richard Rice as Admin-
    istrator, Division of Boating and Ocean Recreation, Department of Land
    and Natural Resources.
    15277
    15278          UFO CHUTING OF HAWAII v. SMITH
    Appeal from the United States District Court
    for the District of Hawaii
    Susan Oki Mollway, District Judge, Presiding
    Argued and Submitted
    June 6, 2007—Honolulu, Hawaii
    Filed November 28, 2007
    Before: David R. Thompson, Marsha S. Berzon, and
    Richard C. Tallman, Circuit Judges.
    Opinion by Judge Tallman
    15280         UFO CHUTING OF HAWAII v. SMITH
    COUNSEL
    Dennis Niles, Paul, Johnson, Park & Niles, Wailuku, Hawaii,
    for the plaintiffs-appellants.
    William J. Wynhoff, Deputy Attorney General, Department of
    the Attorney General, State of Hawaii, Honolulu, Hawaii, for
    the defendants-appellees.
    UFO CHUTING OF HAWAII v. SMITH              15281
    OPINION
    TALLMAN, Circuit Judge:
    UFO Chuting of Hawaii, Inc. and K.M.B.S., Inc. (collec-
    tively “UFO”) appeal the district court’s summary judgment
    in favor of Defendants, the State of Hawaii and the United
    States as Intervenor (collectively “State”). We have jurisdic-
    tion under 
    28 U.S.C. § 1291
    , and we affirm. We hold that
    UFO’s right to operate vessels under its federal maritime
    coasting licenses does not preempt Hawaii law prohibiting
    parasailing off the coast of Maui during limited portions of
    the year to protect mating humpback whales. Because UFO
    does not qualify as a “prevailing party,” the district court did
    not abuse its discretion in denying UFO’s motion for attor-
    ney’s fees.
    I
    UFO operates a commercial parasailing business offering
    parasailing excursions to adventure seekers off the coast of
    Maui and the Big Island of Hawaii. Parasailing is an “activity
    in which an individual is transported or carried aloft by a
    parachute, sail, or other material attached to a towline which
    is towed by a vessel.” 
    Haw. Code R. § 13-250-5
    . The United
    States Coast Guard inspects and licenses UFO’s two vessels
    —the M/V UFO and the M/V CASEY ANN—to carry up to
    twelve passengers in the “coastwise” trade between McGre-
    gor Point and Lipoa Point on the western coast of Maui. A
    portion of this area is located within the “Maui Humpback
    Whale Protected Waters.” See 
    Haw. Code R. § 13-256-112
    .
    Between December 15 and May 15 of each year, when
    humpback whales are mating, bearing calves, and caring for
    their young, Hawaii state law prohibits any person from “op-
    erat[ing] a thrill craft, or engag[ing] in parasailing, water sled-
    ding, or commercial high speed boating, or operat[ing] a
    motor vessel towing a person engaged in water sledding or
    15282             UFO CHUTING OF HAWAII v. SMITH
    parasailing on the west and south shore of Maui.” 
    Haw. Rev. Stat. § 200-37
    (i). Together with Hawaii Revised Statute
    § 200-38(c), state law, in effect, prohibits parasailing activity
    in all navigable waters surrounding Maui between December
    15 and May 15 of each year.
    On July 9, 2004, the United States District Court for the
    District of Hawaii granted UFO’s motion for summary judg-
    ment on the basis that the federal Marine Mammal Protection
    Act (“MMPA”) preempted Hawaii state law. See UFO Chut-
    ing of Haw., Inc. v. Young, 
    327 F. Supp. 2d 1220
     (D. Haw.
    2004).1 The district court granted UFO’s motion for a perma-
    nent injunction barring enforcement of the parasailing provi-
    sion on September 29, 2004. The State appealed.
    Subsequent to the district court’s published decision, Presi-
    dent George W. Bush signed into law the Fiscal Year 2005
    Omnibus Appropriations Bill, Pub. L. No. 108-447, § 213,
    
    118 Stat. 2809
     (2004) (“Omnibus Bill”). Section 213 of the
    Omnibus Bill provides:
    [N]othwithstanding any other Federal law related to
    the conservation and management of marine mam-
    mals, the State of Hawaii may enforce any State law
    or regulation with respect to the operation in State
    waters of recreational and commercial vessels, for
    the purpose of conservation and management of
    humpback whales, to the extent that such law or reg-
    ulation is no less restrictive than Federal law.
    1
    In its ruling, the district court reasoned that the MMPA expressly pre-
    empted the parasailing provision by prohibiting the State from enforcing,
    or attempting to enforce, any state law related to the taking of marine
    mammals within Hawaii. UFO Chuting of Haw., Inc., 
    327 F. Supp. 2d at 1222-23
     (discussing the implications of 
    16 U.S.C. § 1379
    (a)). As an alter-
    native holding, the district court concluded that the parasailing provision
    actually conflicted with a substantive right granted by the MMPA, allow-
    ing vessels to come within 100 yards of humpback whales. 
    Id. at 1229-30
    (discussing Pub. L. No. 103-238, 
    1994 Stat. 1636
    ).
    UFO CHUTING OF HAWAII v. SMITH              15283
    A day later, the State filed a motion to stay the permanent
    injunction and asked the district court to indicate whether it
    would entertain a motion under Federal Rule of Civil Proce-
    dure 60(b) should we issue a remand order. On December 13,
    2004, before the injunction went into effect, the district court
    indicated that it would grant a Rule 60(b) motion because of
    the intervening change in the law. The district court also
    granted the State’s motion to stay the permanent injunction.
    We issued a limited remand on January 10, 2005, and the dis-
    trict court granted the State’s Rule 60(b) motion on March 31,
    2005. The district court then vacated its prior judgment and
    entered summary judgment in favor of the State. However,
    because the district court failed to address UFO’s Commerce
    Clause arguments, it granted UFO’s motion for reconsidera-
    tion on May 5, 2005, and issued an amended order granting
    summary judgment in favor of the State, now rejecting UFO’s
    claim that the MMPA preempted state law. On July 7, 2005,
    the district court granted the State’s motion for summary
    judgment on all remaining issues, rejecting UFO’s last claim
    that its right to engage in coastwise trade under federal license
    preempts the parasailing restriction (as well as other Com-
    merce Clause claims). See UFO Chuting of Haw., Inc. v.
    Young, 
    380 F. Supp. 2d 1160
     (D. Haw. 2005).
    The district court then denied UFO’s motion for attorney’s
    fees, costs and expenses. The court reasoned that UFO was
    not the “prevailing party” because the permanent injunction
    never went into effect. Consequently, UFO never received a
    direct benefit from the temporary relief granted by the court.
    UFO timely appeals both rulings.
    II
    We review de novo the district court’s grant of summary
    judgment. Flint v. Dennison, 
    488 F.3d 816
    , 825 (9th Cir.
    2007). We view the facts in the light most favorable to UFO
    and draw all reasonable inferences in its favor. 
    Id. at 825-26
    .
    15284          UFO CHUTING OF HAWAII v. SMITH
    A
    [1] UFO contends that its Coast Guard license—
    authorizing it to carry up to twelve passengers in coastwise
    trade—preempts Hawaii’s ban on parasailing because the
    license grants UFO a federal right of maritime passage that
    actually conflicts with Hawaii’s seasonal ban. See Young v.
    Coloma-Agaran, 
    340 F.3d 1053
    , 1055 (9th Cir. 2003)
    (describing the three ways federal law may preempt state law,
    including when state law actually conflicts with federal law).
    An actual conflict “occurs ‘where it is impossible . . . to com-
    ply with both state and federal requirements, or where state
    law stands as an obstacle to the accomplishment and execu-
    tion of the full purposes and objectives of Congress.’ ” 
    Id. at 1055-56
     (alteration in original) (quoting Freightliner Corp. v.
    Myrick, 
    514 U.S. 280
    , 287 (1995)).
    [2] “[N]o State may completely exclude federally licensed
    commerce.” Fla. Lime & Avocado Growers, Inc. v. Paul, 
    373 U.S. 132
    , 142 (1963); Young, 
    340 F.3d at 1056
    . However, a
    state “ ‘may impose upon federal licensees reasonable, non-
    discriminatory conservation and environmental protection
    measures otherwise within their police power.’ ” Young, 
    340 F.3d at 1056
     (quoting Douglas v. Seacoast Prods., Inc., 
    431 U.S. 265
    , 277 (1977)); see also Huron Portland Cement Co.
    v. Detroit, 
    362 U.S. 440
    , 448 (1960) (stating that so long as
    the federal law does not preempt state action, a state or local
    regulation “requires no more than compliance with an orderly
    and reasonable scheme of community regulation” (emphasis
    added)); 
    id. at 443
     (“Evenhanded local regulation to effectu-
    ate a legitimate local public interest is valid unless pre-empted
    by federal action . . . .”).
    UFO argues that conflict preemption occurs “where state
    law has the effect of precluding employment of a vessel for
    the single purpose for which it was designed, constructed and
    licensed.” In other words, because its two vessels were
    designed for parasailing, UFO contends that Hawaii cannot
    UFO CHUTING OF HAWAII v. SMITH                   15285
    ban parasailing on the navigable waters in which its federal
    license authorizes it to engage in coastwise trade. For support,
    UFO cites Young, 
    340 F.3d 1053
    , and Waste Management
    Holdings, Inc. v. Gilmore, 
    252 F.3d 316
     (4th Cir. 2001).
    In Young, the state of Hawaii banned all commercial ves-
    sels from the Hanalei River or Hanalei Bay ocean waters at
    all times of the year. 
    340 F.3d at 1055
     (discussing 
    Haw. Code R. § 13-256-36
    ). The plaintiffs operated commercial tour
    boats and held a federal license from the Coast Guard autho-
    rizing them to engage in coastwise trade. 
    Id.
     The court agreed
    with the district court and concluded that the plaintiffs’ fed-
    eral license to engage in coastwise trade preempted the
    Hawaii rule. The plaintiffs’ coasting license authorized them
    to engage in coastwise trade, which “includes the transporta-
    tion of passengers.” 
    Id.
     (citing Gibbons v. Ogden, 22 U.S. (9
    Wheat.) 1,214-15 (1824); see also 
    id.
     (“[A] coasting license
    ‘entitles a vessel to employment in unrestricted coastwise
    trade.’ ” (quoting 
    46 C.F.R. § 67.19
    (a))). Therefore, because
    Hawaii law “completely exclude[d] the plaintiffs from con-
    ducting their federally-licensed tour boat business” at all
    times, it “effectively rendered it impossible for the plaintiffs
    to comply with both federal and state law in order to ply their
    trade.” 
    Id. at 1057
    .2 Thus, federal law preempted state law
    and, because there was an actual conflict, we declined to
    determine whether the State had properly exercised its con-
    current power to alleviate user conflicts. 
    Id.
    [3] Here, in contrast to Young, the ban on parasailing is
    only in effect for five months of the year. The Hawaii statute
    undoubtedly imposes a significant restriction on the ability of
    2
    The Hawaii Rule authorized two commercial use permits for kayaks to
    operate in the same area. 
    Id.
     Although the court did not address this por-
    tion of the regulation in Young, the small exception for kayaks does not
    undermine the court’s conclusion that this was a complete ban. The kayak
    exception did not apply to the plaintiffs—who operated commercial tour
    boats—and thus, as applied to their commercial tour boats, the Hawaii
    Rule resulted in a complete ban.
    15286              UFO CHUTING OF HAWAII v. SMITH
    UFO to ply its trade, but the State has not “completely exclud-
    ed” UFO from engaging in coastwise trade in the relevant
    waters as it did with the year-round ban in Young.3 Moreover,
    UFO has presented no evidence that it is wholly economically
    infeasible to operate its business with the five-month ban, and
    has therefore not shown that it cannot “comply with both fed-
    eral and state law in order to ply [its] trade.”4 
    Id. at 1057
    .
    [4] Nor can UFO show that the Hawaii regulation is in
    actual conflict with the federal law because it “stands as an
    obstacle to the accomplishment and execution of the full pur-
    poses and objectives of Congress.” Young, 
    340 F.3d at 1055-56
    . By enacting section 213 of the Omnibus Bill, Con-
    gress permitted the State of Hawaii to regulate the operation
    of commercial vessels for the purpose of protecting humpback
    whales. Although the Omnibus Bill does not address the pre-
    emptive effect of federal Coast Guard licenses, it nonetheless
    suggests that Congress meant the Hawaii legislation protect-
    3
    UFO relies heavily on a Fourth Circuit case, Waste Management Hold-
    ings, Inc. v. Gilmore, 
    252 F.3d 316
     (4th Cir. 2001), in which the court held
    that a Virginia law prohibiting “commercial transport of hazardous or non-
    hazardous solid waste . . . by ship, barge or other vessel upon” certain nav-
    igable waters was preempted by the plaintiffs’ federal licenses. 
    Id. at 323
    .
    The reasoning of Waste Management is, however, unclear. The court first
    mentions that the ban on “hazardous waste transport” constituted complete
    exclusion, but then goes on to state that the regulation was not reasonable.
    
    Id. at 348
    . It may be that the district court in this case was correct in con-
    cluding that the Fourth Circuit would not have conducted the reasonable-
    ness inquiry had it really thought there was a complete exclusion. Given
    that the case was decided at least in part on the ground that the regulation
    was unreasonable, we do not find its holding with regard to complete
    exclusion particularly illuminating.
    4
    We recognize that there may be a point at which a seasonal ban such
    as this makes it impossible for a federal licensee to ply its trade. In this
    instance, UFO cannot conduct its parasailing business for five months out
    of the year. A longer ban or a ban on a different type of maritime business
    could result in such an economic impact to the licensee as to make opera-
    tion of its business wholly infeasible. That is not the case here, and we
    save for another day the question whether such an impact would lead to
    preemption of a state regulation.
    UFO CHUTING OF HAWAII v. SMITH              15287
    ing humpback whales to continue in force, despite a known
    impact on parasailing and similar commercial boating activ-
    ity. We are thus especially reluctant to find a conflict with
    federal purposes here.
    [5] We therefore hold that Hawaii’s regulation does not
    completely exclude federal licenses or actually conflict with
    federal law.
    B
    1
    [6] In Douglas, the Supreme Court made clear that, so long
    as it is not in conflict with federal law, “[s]tates may impose
    upon federal licensees reasonable, nondiscriminatory conser-
    vation and environmental protection measures otherwise
    within their police power.” 
    431 U.S. at 277
    ; see also Huron
    Portland Cement Co., 
    362 U.S. at 447
     (stating that possessing
    a federal license does not immunize the licensee from lawful
    exercises of the state’s police power). Having examined the
    proffered reasons for the Hawaii law, we hold that the para-
    sailing ban is a reasonable regulation of federal licenses.
    The parties dispute the level of deference the court should
    give the legislature in reviewing a statute for reasonableness
    that is not in actual conflict with federal law. The State con-
    tends that we should apply rational basis review, while UFO
    argues for a higher level of scrutiny. UFO contends that it
    “[i]s the State’s burden to show [that] the [parasailing ban]
    sweeps no broader than necessary to achieve its putative pur-
    pose.” In support, UFO cites United States v. Locke, 
    529 U.S. 89
     (2000), for the proposition that, “[i]n the field of coastwise
    navigation, state legislation of this stripe is not presumed rea-
    sonable.”
    UFO misconstrues Locke. Although the Court did hold that
    there is no assumption of nonpreemption when there is a “his-
    15288             UFO CHUTING OF HAWAII v. SMITH
    tory of significant federal presence,” 
    id. at 108
    , the Court was
    referring to field preemption—in which Congress leaves no
    room for state regulation—not conflict preemption, in which
    the question is whether compliance with both state and federal
    law is possible, 
    id. at 108-110
    . In other words, when states
    have traditionally occupied the field, an assumption of non-
    preemption still exists. 
    Id. at 110
    .
    Neither Huron nor Douglas defines “reasonable” in the
    context of conflict preemption; nevertheless, it is clear that
    when an exercise of police power does not affect a fundamen-
    tal right, courts apply the same rational basis analysis
    employed in equal protection inquiries. Id. at 319-20; Mass.
    Bd. of Retirement v. Murgia, 
    427 U.S. 307
    , 312 (1976).
    Therefore, UFO had the burden to negate any conceivably
    legitimate reason the State may have had in enacting the para-
    sailing ban. See Heller, 509 U.S. at 319-20.5 UFO failed to
    meet its burden.
    To support the enactment of the parasailing ban, the Hawaii
    legislature found that “[t]he operation of thrill craft, parasail-
    ing vessels, and high-speed motorized vessels during certain
    times of the year poses an unacceptable risk of harm to endan-
    gered sea creatures such as migratory humpback whales and
    sea turtles.” H.B. 2994, 
    1990 Haw. Sess. Laws 972
    . The legis-
    lature elaborated further on the impact to humpback whales,
    stating:
    The legislature declares that the waters of the State
    should be safe from the dangers of thrill craft, para-
    sailing vessels, and high-speed motorized vessels
    during the annual migration of humpback whales to
    5
    Under this standard, the issue is not whether there is a viable alterna-
    tive use of UFO’s tow boats, but whether the ban is reasonably related to
    a legitimate government interest. Because UFO has failed to raise a genu-
    ine issue of material fact regarding the reasonableness of this statute, the
    district court properly granted summary judgment to the State.
    UFO CHUTING OF HAWAII v. SMITH                      15289
    Hawaii especially in Maui waters identified as criti-
    cal habitats for endangered humpback whales.
    Humpback whales are very acoustically oriented
    mammals. Continuous traffic and constant underwa-
    ter noise created by thrill craft, parasailing vessels,
    and high-speed motorized vessels in near shore, shal-
    low waters threaten humpback whale population
    recovery by displacing the whales from their favored
    habitat and further by disrupting the acoustic envi-
    ronment, creating an energetic cost to the whales in
    responses to these disturbances, disrupting the spe-
    cies’ mating system, and threatening the survival of
    calves.
    Id.6
    [7] UFO disputes this legislative finding, arguing that
    “[i]ntuitively, at least, a 28-foot vessel whose passengers are
    engaged in whale watching would seem to pose a greater risk
    of impacting a whale than an identical boat towing a para-
    sailor whose operator is intent on staying clear of the whales.”
    However, it is not our function to question the legislature’s
    intuition. See Heller, 509 U.S. at 319.7 Moreover, it is not the
    “whale watching” activity that poses a threat to the whale.
    Rather, high speed traffic causes underwater noise. This dis-
    6
    Marine biologists Mark Ferrari and Deborah Glockner testified before
    the Hawaii legislature in 1990 regarding the disturbance caused by para-
    sailing. They testified that “there is no question that the activities of para-
    sailing and thrill craft operations have definitely displaced resting mothers
    and their newborn calves away from their preferred nearshore habitat.”
    “Any high speed activity such as parasailing . . . and their related activi-
    ties, produce both a point disturbance at the surface of the water, as well
    as an acoustic disturbance (noise pollution) underwater.”
    7
    UFO’s argument that the district court had a duty to determine whether
    the evidence presented to the legislature met the standards set out in Dau-
    bert v. Merrell Dow Pharmaceuticals, Inc., 
    509 U.S. 579
     (1993), was
    rejected by this court in Gammoh v. City of La Habra, 
    395 F.3d 1114
    ,
    1126 & n.5 (9th Cir. 2005).
    15290          UFO CHUTING OF HAWAII v. SMITH
    turbance displaces whales from their favorite breeding
    grounds, disrupting mating behavior and threatening the sur-
    vival of calves. Because the parasailing ban furthers the legiti-
    mate governmental purpose of protecting humpback whales,
    we hold that the statute is reasonable.
    2
    As the State notes in its brief, the Supreme Court has not
    clearly defined what constitutes “nondiscriminatory” state
    regulation of a federal licensee or the standards a reviewing
    court should apply. However, given its statements in Douglas,
    we can infer that the Court sought to incorporate the same
    standards of “nondiscriminatory” as it has applied in the con-
    text of the Commerce Clause.
    [8] The Commerce Clause forbids discrimination against
    interstate commerce. Alaska Airlines, Inc. v. City of Long
    Beach, 
    951 F.2d 977
    , 983 (9th Cir. 1991) (per curiam). In
    Douglas—a case discussing when states can impose regula-
    tions on federal licensees—the Court discussed discrimination
    in the context of the Commerce Clause. See Douglas, 
    431 U.S. at 277
     (stating that, in Gibbons, the Court struck down
    a state statute that “allowed some steam vessels to ply their
    trade while excluding others that were federally licensed”); 
    id.
    (discussing Manchester v. Massachusetts, 
    139 U.S. 240
    (1981), in which the Court held that a state statute that “makes
    no discrimination in favor of citizens of Massachusetts and
    against citizens of other States . . . may well be considered as
    an impartial and reasonable regulation”).
    [9] A facially neutral statute may violate the Commerce
    Clause if “the burdens of the statute . . . so outweigh the puta-
    tive benefits as to make the statute unreasonable or irrational.”
    Alaska Airlines Inc., 951 F.2d at 983. A statute is unreason-
    able or irrational when “the asserted benefits of the statute are
    in fact illusory or relate to goals that evidence an impermissi-
    ble favoritism of in-state industry over out-of-state industry.”
    UFO CHUTING OF HAWAII v. SMITH              15291
    Id.; see, e.g., Hunt v. Wash. State Apple Adver. Comm’n, 
    432 U.S. 333
    , 353-54 (1977) (overturning a facially neutral statute
    that ultimately discriminated against out-of-state commerce);
    Pike v. Bruce Church, Inc., 
    397 U.S. 137
    , 144-46 (1970)
    (overturning an Arizona statute that prohibited local melon
    growers from shipping their produce to California for packing
    because the admitted purpose was to favor Arizona growers
    by requiring superior quality growers to have their produce
    packaged in Arizona).
    [10] The Hawaii ban on parasailing is facially neutral. It
    does not differentiate between residents and nonresidents, or
    residents and non-citizens. Moreover, the benefits of the stat-
    ute are not illusory, nor do they indicate favoritism to in-state
    industries. The purpose of the parasailing ban is to protect
    human safety and the environment. The legislature received
    evidence that noise caused by thrill craft and parasailing ves-
    sels disrupts the natural behavior of migratory humpback
    whales. By banning parasailing and thrill craft activity during
    the time of year in which humpback whales inhabit the waters
    off Maui, the legislature advanced its legitimate purpose of
    protecting the endangered species. Thus, we hold that the
    parasailing ban is nondiscriminatory and does not impose an
    unreasonable burden on interstate commerce.
    III
    [11] We review for an abuse of discretion a district court’s
    determination of attorney’s fees under 
    42 U.S.C. § 1988
    .
    Martinez v. Wilson, 
    32 F.3d 1415
    , 1421-22 (9th Cir. 1994). A
    party is a “prevailing party” when “(1) it wins on the merits
    of its claim, (2) the relief received materially alters the legal
    relationship between the parties by modifying the defendant’s
    behavior, and (3) that relief directly benefits the plaintiff.” 
    Id. at 1422
    .
    A final judgment on the merits is not a condition precedent
    to obtaining the status of a “prevailing party.” Hanrahan v.
    15292             UFO CHUTING OF HAWAII v. SMITH
    Hampton, 
    446 U.S. 754
    , 756-57 (1980) (per curiam) (“The
    legislative history of [
    42 U.S.C. § 1988
    ] indicates that a per-
    son may in some circumstances be a ‘prevailing party’ with-
    out having obtained a favorable ‘final judgment following a
    full trial on the merits.’ ” (quoting H.R. Rep. No. 94-1558, at
    7 (1976)). A party has “prevailed on the merits of at least
    some of (their) claims,” 
    id. at 758
    , when it has obtained a pre-
    liminary injunction that results in a direct and substantial ben-
    efit. Williams v. Alioto, 
    625 F.2d 845
    , 847 (9th Cir. 1980) (per
    curiam); see also Dahlem v. Bd. of Educ. of Denver Public
    Schs., 
    901 F.2d 1508
    , 1512 (10th Cir. 1990) (“Such relief on
    the merits may fall short of a formal judgment so long as it
    works a material alteration of the substantial rights of the par-
    ties.” (internal quotation marks and citations omitted)); Grano
    v. Barry, 
    783 F.2d 1104
    , 1109 (D.C. Cir. 1986). Therefore,
    when “a party . . . achieves the objective of its suit by means
    of an injunction issued by the district court[, it] is a prevailing
    party in that court, notwithstanding the fact that the case
    becomes moot, through no acquiescence by the defendant,
    while the order is on appeal.” Dahlem, 
    901 F.2d at 1512
    .8
    8
    This rationale is consistent with the Supreme Court’s decision in Lewis
    v. Continental Bank Corp., 
    494 U.S. 472
     (1990). There, the plaintiff
    sought declaratory and injunctive relief ordering the Florida Department
    of Banking and Finance to process its application to operate an industrial
    savings bank in Florida. 
    Id. at 475
    . After the district court granted the
    plaintiff’s motion for summary judgment, but before the Department of
    Banking and Finance processed the application or the Eleventh Circuit
    ruled on the merits of the appeal, the State of Florida amended its statutes,
    which mooted the litigation. 
    Id.
     The Court held that, “[s]ince the judgment
    below is vacated on the basis of an event that mooted the controversy
    before the Court of Appeals’ judgment issued, Continental was not, at that
    stage, a ‘prevailing party’ as it must be to recover fees under § 1988.” Id.
    at 483. In doing so, the Court did not hold that a party automatically loses
    its prevailing party status when the appeal becomes moot before a Court
    of Appeals reaches final judgment. See id. (“Whether [the plaintiff] can be
    deemed a ‘prevailing party’ in the district court, even though its judgment
    was mooted after being rendered but before the losing party could chal-
    lenge its validity on appeal, is a question of some difficulty, see, e.g.,
    Palmer v. Chicago, 
    806 F.2d 1316
    , 1321 (7th Cir. 1986)[,] . . . [that w]e
    UFO CHUTING OF HAWAII v. SMITH                     15293
    Having concluded that the subsequent statutory change did
    not undermine UFO’s status as a prevailing party, we turn
    now to the question of whether UFO received a direct and
    substantial benefit from its initial award of a permanent
    injunction. The entry of judgment in a party’s favor does not
    automatically render that party a “prevailing party” under
    § 1988. Rhodes v. Stewart, 
    488 U.S. 1
    , 3 (1988) (per curiam).
    The judgment is not the end but a means to receiving some
    redress from the defendant. 
    Id.
     To be considered a “prevailing
    party,” the plaintiff must show that the judgment somehow
    affected the behavior of the defendant towards the plaintiff.
    
    Id. at 4
    ; see also 
    id. at 3-4
     (“At the end of the rainbow lies
    not a judgment, but some action (or cessation of action) by the
    defendant that the judgment produces—the payment of dam-
    ages, or some specific performance, or the termination of
    some conduct.” (emphasis added)).
    For instance, in Williams, the plaintiffs obtained a prelimi-
    nary injunction against “pat-down” searches conducted via a
    special investigative procedure known as “Operation Zebra.”
    
    625 F.2d at 847
    . Before we could rule on the merits of the
    preliminary injunction, Operation Zebra ended, mooting the
    issue. We nonetheless upheld the plaintiffs’ status as a pre-
    vailing party, stating, “[o]ur previous dismissal of the appeal
    as moot and vacation of the district court judgment d[id] not
    affect the fact that for the pertinent time period appellees
    obtained the desired relief.” 
    Id. at 847-48
    . In other words,
    because the plaintiffs obtained the relief they sought—a pre-
    liminary injunction preventing the appellants from continued
    enforcement of “Operation Zebra”—they received a direct
    benefit and qualified as a “prevailing party.” 
    Id.
    decline to resolve . . . .”). Rather, the Court reaffirmed established case
    law requiring a prevailing party to obtain a direct and substantial benefit.
    Because the plaintiff in Lewis never received the benefit it sought—the
    right to apply to the Florida agency—it lost its status as the prevailing
    party.
    15294         UFO CHUTING OF HAWAII v. SMITH
    [12] In comparison to Williams, UFO did not receive a
    direct benefit. The permanent injunction was not the end;
    rather, it was a means to achieving the end. Rhodes, 
    488 U.S. at 3
    . Because the district court stayed the implementation of
    the permanent injunction before the State had to change its
    behavior—before Hawaii stopped enforcing its parasailing
    ban—UFO cannot be considered the “prevailing party.”
    IV
    Hawaii’s reasonable and nondiscriminatory seasonal ban on
    parasailing off the coast of Maui does not completely exclude
    UFO from using its federal license. Entry of summary judg-
    ment in favor of the State of Hawaii was proper. Because the
    district court stayed its permanent injunction before UFO
    received a direct benefit, UFO is not a “prevailing party”
    under 
    42 U.S.C. § 1988
    . The district court therefore did not
    abuse its discretion in denying UFO’s request for attorney’s
    fees.
    AFFIRMED.
    

Document Info

Docket Number: 05-16545

Filed Date: 11/28/2007

Precedential Status: Precedential

Modified Date: 10/14/2015

Authorities (19)

scott-dahlem-an-underage-male-by-his-mother-and-next-friend-nancy-dahlem , 901 F.2d 1508 ( 1990 )

UFO Chuting of Hawaii, Inc. v. Young , 380 F. Supp. 2d 1160 ( 2005 )

Huron Portland Cement Co. v. City of Detroit , 80 S. Ct. 813 ( 1960 )

Rhodes v. Stewart , 109 S. Ct. 202 ( 1988 )

Daubert v. Merrell Dow Pharmaceuticals, Inc. , 113 S. Ct. 2786 ( 1993 )

waste-management-holdings-incorporated-hale-intermodal-marine-company , 252 F.3d 316 ( 2001 )

UFO Chuting of Hawaii, Inc. v. Young , 327 F. Supp. 2d 1220 ( 2004 )

linda-martinez-gilbert-acosta-aurora-acosta-city-of-los-angeles-area-agency , 32 F.3d 1415 ( 1994 )

Lewis v. Continental Bank Corp. , 110 S. Ct. 1249 ( 1990 )

Hunt v. Washington State Apple Advertising Commission , 97 S. Ct. 2434 ( 1977 )

Joseph N. Grano, Jr. v. Marion S. Barry, Mayor, District of ... , 783 F.2d 1104 ( 1986 )

Florida Lime & Avocado Growers, Inc. v. Paul , 83 S. Ct. 1210 ( 1963 )

ralph-a-young-dba-hanalei-sport-fishing-tours-whiteys-boat-cruises , 340 F.3d 1053 ( 2003 )

Hanrahan v. Hampton , 100 S. Ct. 1987 ( 1980 )

Freightliner Corp. v. Myrick , 115 S. Ct. 1483 ( 1995 )

United States v. Locke , 120 S. Ct. 1135 ( 2000 )

aaron-flint-v-george-dennison-in-his-official-capacity-as-president-of , 488 F.3d 816 ( 2007 )

Pike v. Bruce Church, Inc. , 90 S. Ct. 844 ( 1970 )

Joseph B. Williams and Leo Bazile v. Joseph L. Alioto , 625 F.2d 845 ( 1980 )

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