Otr Wheel Engineering, Inc. v. West Worldwide Services, Inc.

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS AUG 14 2020
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
OTR WHEEL ENGINEERING, INC.; No. 19-35292
Blacksmith OTR, LLC; F.B.T. Enterprises,
Inc., D.C. No.
2:14-cv-00085-LRS
Plaintiffs-Appellants,
v. MEMORANDUM*
WEST WORLDWIDE SERVICES, INC.;
Samuel J. West, individually, and his marital
community; SSL Holdings, Inc.; SSL China,
LLC; and Qingdao STW Tire Co., Ltd.,
Defendants-Appellees.
Appeal from the United States District Court
for the Eastern District of Washington
Lonny Suko, District Judge, Presiding
Submitted August 10, 2020**
Anchorage, Alaska
Before: RAWLINSON, MURGUIA, and R. NELSON, Circuit Judges.
OTR Wheel Engineering, Inc. (“OTR”) appeals the district court’s denial of
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
its request for a permanent injunction against West Worldwide Services, Inc.
(“West”). We will not reverse the district court’s determination unless it abused its
discretion. See Or. Coast Scenic R.R., LLC v. Or. Dep’t of State Lands, 841 F.3d
1069, 1072 (9th Cir. 2016). We have jurisdiction under 28 U.S.C. § 1292.
Because the district court’s decision was not based “on an erroneous legal standard
or clearly erroneous finding of fact,” id. (citation omitted), we affirm.
The district court did not abuse its discretion in finding that OTR has not
shown irreparable injury that cannot be redressed with damages. See eBay Inc. v.
MercExchange, LLC, 547 U.S. 388, 391 (2006) (plaintiffs seeking a permanent
injunction must satisfy a four-factor test, the first two factors being: (1) “that it has
suffered an irreparable injury”; and (2) “that remedies available at law, such as
monetary damages, are inadequate to compensate for that injury”); see also City
and County of San Francisco v. Trump, 897 F.3d 1225, 1243 (9th Cir. 2018)
(combining the first and second eBay factors into one analysis, inquiring whether
the plaintiff “is likely to suffer irreparable injury that cannot be redressed by an
award of damages”).
First, the district court did not err in finding that West’s “Extremelift”-
branded production tires were not tortiously obtained. Unlike the initial tires
sought by West for testing by Genie Industries (“Genie”) for purposes of obtaining
Genie’s business, the Extremelift tires were not made in OTR’s “Outrigger” mold.
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Any non-competition agreement between Superhawk, the tire manufacturer, and
Solideal, OTR’s business partner, only prevented Superhawk from manufacturing
the Outrigger tire for anyone else. Accordingly, while the test tires were clearly
tortiously obtained, the Extremelift tires were not.
Second, the district court did not err in determining that West’s reverse
passing off OTR’s tires, in violation of the Lanham Act, was fully remedied by the
jury’s damages award, and that there was no continuing injury to OTR from
West’s Extremelift tires still in inventory. In making this finding, the district court
correctly noted that the tortious interference and Washington Consumer Protection
Act (“WCPA”) verdicts did not stem from an injury to OTR independent of the
reverse passing off. Indeed, we previously noted that the reverse passing off could
have supported the jury’s verdict in favor of OTR on its WCPA claim, OTR Wheel
Eng’g, Inc. v. West Worldwide Servs., Inc., 743 F. App’x 771, 775 (9th Cir. 2018),
and the tortious interference claims related to the non-compete agreement, which
only prohibited Superhawk from making the Outrigger tire for anyone but Solideal.
Because of this, “[w]hat was tortiously obtained by West . . . were not the
‘Extremelift’ production tires themselves, but Genie’s business for a period of
time.” That period of time has ended, as evidenced by the jury’s award of only
partial damages for the sales of Extremelift tires before the preliminary injunction
was entered. See OTR Wheel Eng’g, 743 F. App’x at 776 (“[B]y awarding only
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part of the damages calculated by the OTR expert, the jury indicated that further
damages are not being suffered.”). Furthermore, Genie now knows of West’s
reverse passing off, and any future purchases of the Extremelift production tires by
Genie will be “despite, not because of, the reverse passing off.” Accordingly, the
district court did not err in determining that OTR was fully remedied by the jury’s
damages award, and that there is no continuing injury to OTR resulting from
West’s reverse passing off.
Third, there is no “cognizable danger of recurrent violation” such that the
requested injunctive relief is warranted. United States v. Laerdal Mfg. Corp., 73
F.3d 852, 854 (9th Cir. 1995) (citation omitted). Importantly, the district court
correctly found that OTR has “not proven a real and immediate threat of future
false designation of origin by West.” Cf. City of Los Angeles v. Lyons, 461 U.S.
95, 102 (1983) (“Past exposure to illegal conduct does not in itself show a present
case or controversy regarding injunctive relief . . . if unaccompanied by any
continuing, present adverse effects.” (alteration omitted) (internal quotation marks
and citation omitted)). Any scienter on West’s part does not outweigh this finding,
because despite the “egregiousness” of West’s misconduct, the fact remains that
West did not tortiously obtain the production tires at the center of OTR’s requested
permanent injunction. See Laerdal Mfg. Corp., 73 F.3d at 855 (courts may
consider “the degree of scienter involved” in determining whether there is a
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“cognizable danger of recurrent violations” (citations omitted)). Moreover, an
injunction is not warranted to protect OTR from having to file hypothetical future
lawsuits, especially in light of the fact that OTR has not shown a real danger of
future misconduct by West.
In sum, the district court correctly found that OTR has not been irreparably
injured by West’s misconduct, and that any injuries OTR suffered were adequately
remedied by the jury’s damages award. To be sure, the district court’s findings are
not “beyond the pale of reasonable justification[.]” Harman v. Apfel, 211 F.3d
1172, 1175 (9th Cir. 2000). Because the district court did not abuse its discretion,
we affirm the district court’s denial of OTR’s request for a permanent injunction.1
AFFIRMED
1
Because the district court determined that OTR did not suffer irreparable
injury and was adequately compensated with damages, it noted there was no need
to discuss the remaining eBay factors. We also need not reach the remaining
injunctive factors. See American-Arab Anti-Discrimination Comm. v. Reno, 70
F.3d 1045, 1066–67 (9th Cir. 1995) (noting that a “likelihood of substantial and
immediate irreparable injury” that is inadequately compensated with remedies at
law is required for a permanent injunction (citation omitted)).
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