Aviva USA Corp v. Anil Vazirani

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FILED
FOR THE NINTH CIRCUIT
DEC 04 2015
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
AVIVA USA CORPORATION, an Iowa No. 13-16858
corporation; AVIVA BRANDS LIMITED,
a United Kingdom limited company, D.C. No. 2:11-cv-00369-JAT
Plaintiffs-counter-defendants
- Appellees, MEMORANDUM*
v.
ANIL VAZIRANI, an individual;
VAZIRANI & ASSOCIATES
FINANCIAL, LLC, an Arizona limited
liability company; SECURED
FINANCIAL SOLUTIONS, LLC, an
Arizona limited liability company,
Defendants-counter-claimants
- Appellants.
AVIVA USA CORPORATION, an Iowa No. 13-16869
corporation; AVIVA BRANDS LIMITED,
a United Kingdom limited company, D
.C. No. 2:11-cv-00369-JAT
Plaintiffs-counter-defendants
- Appellants,
v.
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
JAMES REGAN, an individual; REGAN
& ASSOCIATES LLC, an Arizona limited
liability company,
Defendants - Appellees,
ANIL VAZIRANI, an individual;
VAZIRANI & ASSOCIATES
FINANCIAL, LLC, an Arizona limited
liability company; SECURED
FINANCIAL SOLUTIONS, LLC, an
Arizona limited liability company,
Defendants-counter-claimants
- Appellees.
Appeal from the United States District Court
for the District of Arizona
James A. Teilborg, Senior District Judge, Presiding
Argued and Submitted October 23, 2015
San Francisco, California
Before: WALLACE, BLACK**, and CLIFTON, Circuit Judges.
Appellants Anil Vazirani, Vazirani & Associates Financial, LLC, and
Secured Financial Solutions, LLC (collectively “Appellants”) appeal from the
district court’s judgment denying them attorney fees under the Lanham Act’s
“exceptional case” provision. 15 U.S.C. § 1117(a). Cross-Appellants Aviva USA
**
The Honorable Susan H. Black, Senior Circuit Judge for the U.S.
Court of Appeals for the Eleventh Circuit, sitting by designation.
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Corporation and Aviva Brands Limited (collectively “Aviva”) appeal several of the
district court’s orders, including (1) the district court’s summary judgment in favor
of Appellants on Aviva’s trademark, unfair competition, anticybersquatting, and
Arizona anti-racketeering claims, (2) the district court’s judgment on the pleadings
in favor of Appellants on Aviva’s federal anti-racketeering claim, and (3) the
district court’s order granting Appellants attorney fees under Arizona’s anti-
racketeering statute.1
Aviva argues that the district court erred in granting Appellants summary
judgment on Aviva’s trademark claims under the Lanham Act. It argues that
Appellants’ use of Aviva’s mark on a website critical of Aviva’s business practices
violates the Lanham Act. We review a district court’s “summary judgment de
novo, viewing the evidence in the light most favorable to the non-moving party.”
Bosley Medical Inst., Inc. v. Kremer, 403 F.3d 672, 675–76 (9th Cir. 2005). To
recover under trademark law, the allegedly unlawful use of a trademark must be
“in connection with a commercial transaction in which the trademark is being used
to confuse potential consumers.” Id. at 676. Aviva has not shown that the district
court erred in concluding that Appellants’ use of Aviva’s mark was “in connection
1
Aviva also cross-appeals against Defendants James Regan and Regan &
Associates, LLC, who join in the response brief filed by Appellants.
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with a commercial transaction.” Id. Appellants did not use Aviva’s mark to offer
“competing services to the public,” such as by offering for sale any “goods or
services.” Id. at 679. Additionally, both the Lanham Act and Arizona common law
require proof of likelihood of confusion to establish liability. See 15 U.S.C. §
1114(1), 1125(a)(1)(A) (requiring a showing that a defendant’s use of a trademark
is “likely to cause confusion” as to the origin of goods or services); Taylor v.
Quebedeaux, 617 P.2d 23, 24 (Ariz. 1980) (recognizing that “the essence of unfair
competition is confusion of the public”). The district court correctly held that
nominative use of Aviva’s trademark and trade dress is not likely to cause
confusion when displayed with and imbedded in obvious negative commentary.
See Toyota Motor Sales, U.S.A., Inc. v. Tabari, 610 F.3d 1171, 1176 (9th Cir.
2010) (explaining that the ultimate purpose of the nominative fair use doctrine is to
“address the risk that nominative use of the mark will inspire a mistaken belief on
the part of consumers that the speaker is sponsored or endorsed by the trademark
holder”). Accordingly, we affirm the district court’s summary judgment in favor of
Appellants on Aviva’s Lanham Act and unfair competition claims.
While we affirm the district court’s summary judgment as to Aviva’s
Lanham Act claim, we hold that the district court did not err in denying Appellants
attorney fees under the Lanham Act’s “exceptional case” provision. 15 U.S.C.
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§ 1117(a). “Whether the circumstances are ‘exceptional’—a prerequisite to an
attorneys’ fee award pursuant to the Lanham Act—is a question of law that is
reviewed de novo.” Classic Media v. Mewborn, 532 F.3d 978, 982 (9th Cir. 2008).
We have held that a case is “exceptional,” for purposes of section 1117(a), if it is
“either groundless, unreasonable, vexatious, or pursued in bad faith.” Cairns v.
Franklin Mint Co., 292 F.3d 1139, 1156 (9th Cir. 2002) (internal quotation marks
omitted). The district court did not err in determining that Aviva’s trademark
claims were not “exceptional” under that standard.
Aviva next argues that Appellants violated the Anticybersquatting Consumer
Protection Act (ACPA) in registering fourteen domain names that used Aviva’s
mark. We affirm the district court’s summary judgment in favor of Appellants on
Aviva’s ACPA claim. The ACPA provides that a person is liable to a trademark
owner if the person (1) “has a bad faith intent to profit from that mark,” 15 U.S.C.
§ 1125(d)(1)(A)(i), and (2) “registers, traffics in, or uses a domain name [that is
confusingly similar to another’s mark or dilutes another’s famous mark].” Bosley,
403 F.3d at 680, quoting 15 U.S.C. § 1125(d)(1)(A)(i) (alterations in original).
Aviva charges that the district court erroneously imported the Lanham Act’s
commercial use requirement into the ACPA, contravening our case law. Id.(observing that “the ACPA does not contain a commercial use requirement”). Our
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review of the record leads us to conclude that the district court did no such thing.
Instead, it analyzed whether Appellants acted in “bad faith” using the nine non-
exhaustive factors provided by the ACPA. 15 U.S.C. § 1125(d)(1)(B)(i). We agree
with the district court, after applying those factors, that Aviva failed to show that
Appellants acted with “bad faith intent to profit” in registering the domain names.
We therefore affirm.
Aviva also argues that the district court erred in its summary judgment by
failing to factor in adequately Appellants’ earlier spoliation of evidence. The
district court made a finding that Appellants destroyed or hid relevant information
from Aviva. As a result, it sanctioned Appellants by awarding Aviva attorney fees
and by inviting Aviva to “propose an appropriate adverse inference in response to
any motion for summary judgment.” This was proper because a party found guilty
of this charge should not benefit from such completely improper conduct which
interferes with a just and fair consideration of claims in our court of law. However,
Aviva failed to propose any adverse inference instructions. We do not in any way
condone Appellants’ bad behavior and we urge litigants to avoid engaging in such
unseemly behavior. But under our adversarial system, we do not have freewheeling
authority to right every wrong. Unfortunately for Aviva, it waived its opportunity
to obtain an adverse inference instruction by failing to propose instructions in
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accordance with the district court’s order. Rothman v. Hospital Serv. of S. Cal., 510
F.2d 956, 960 (9th Cir. 1975) (“It is a well-established principle that in most
instances an appellant may not present arguments in the Court of Appeals that it
did not properly raise in the court below”).
We review that district court’s judgment on the pleadings as to Aviva’s
federal anti-racketeering claim de novo. Nelson v. City of Irvine, 143 F.3d 1196,
1200 (9th Cir. 1998). Under the Racketeer Influenced and Corrupt Organizations
Act (RICO), a plaintiff must show “(1) conduct (2) of an enterprise (3) through a
pattern (4) of racketeering activity.” Brady v. Dairy Fresh Products Co., 974 F.2d
1149, 1152 (9th Cir. 1992). Aviva argues that Appellants engaged in a pattern of
extortion when they sent emails to Aviva threatening a negative public relations
claim, hired a public relations firm, registered domain names using Aviva’s mark
to publish negative information about the company, distributed negative
information using mass email, and destroyed evidence during litigation. Without
deciding whether any of the alleged acts constitute “racketeering activity,” Aviva’s
claim fails because it has not shown that Appellants engaged in a “pattern” of
racketeering activity. Instead, all Aviva has shown is that Appellants engaged in
series of steps that were part of a single plan to expose what they believe to be
unlawful business practices by Aviva. See Sever v. Alaska Pulp Corp., 978 F.2d
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1529, 1535–36 (9th Cir. 1992) (affirming dismissal of a RICO claim where
“although [plaintiff] alleges a number of ‘acts,’ [defendant’s] collective conduct is
in a sense a single episode having [a] singular purpose”). We therefore affirm the
district court’s judgment.
Aviva’s state-law anti-racketeering claim fails for a similar reason. Like the
federal RICO statute, Arizona law requires that a plaintiff show that there has been
a “pattern of racketeering activity.” A.R.S. § 13-2314.04(A). Arizona courts have
interpreted this state law to mirror the federal RICO statute. Lifeflite Med. Air
Transport, Inc. v. Native Am. Air Servs., Inc., 7 P.3d 158, 161 (Ariz. Ct. App.
2000) (“Because the Arizona and federal statutes are analogous . . . we look to
federal interpretations [of the federal RICO statute] for guidance”). Aviva’s claim
under the Arizona statute fails because Aviva has not raised any genuine dispute of
material fact about whether Appellants engaged in a “pattern” of racketeering
activity. Therefore, we affirm the district court’s summary judgment in favor of
Appellants on Aviva’s Arizona anti-racketeering claim.
Last, the district court did not abuse its discretion in awarding Appellants
attorney fees under Arizona’s anti-racketeering statute, which provides for a
recovery of attorney fees “[i]f the person against whom a racketeering claim has
been asserted, including a lien, prevails on that claim.” A.R.S. § 13-2314.04(A).
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But it goes on to prohibit an award “if the award would be unjust because of
special circumstances, including the relevant disparate economic position of the
parties or the disproportionate amount of the costs, including attorney fees, to the
nature of the damage or other relief obtained.” Id. § 13-2314.04(M). Aviva
contends that Appellants’ earlier spoliation of evidence constitutes “special
circumstances” such that it would be “unjust” to award Appellants attorney fees.
We understand Aviva’s argument to be that the special circumstances here were
the completely improper hiding or destroying of evidence by Appellants, which
prejudiced Aviva’s case and, therefore, Appellants should not profit by such
unethical and improper conduct in a case before courts of law. But the district court
had already sanctioned Appellants for that misconduct by awarding Aviva attorney
fees and inviting it to propose an adverse inference in response to Appellants’
motion for summary judgment. It was not unreasonable for the court to conclude
that these previous sanctions were sufficient. Accordingly, we hold that the district
court did not abuse its discretion in awarding Appellants attorney fees.
AFFIRMED.
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