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Burford v. Accounting Practice Sales, Inc.

United States District Court, S.D. Illinois

July 1, 2014

WILLIAM J. BURFORD, Plaintiff/Counter-defendant,
ACCOUNTING PRACTICE SALES, INC., Defendant/Counterclaimant and GARY L. HOLMES, Defendant.


J. PHIL GILBERT, District Judge.

This matter comes before the Court on a motion to award attorney's fees pursuant to 15 U.S.C. § 1117(a) brought by plaintiff/counter-defendant William J. Burford. (Doc. 59). Defendant/counterclaimant Accounting Practice Sales, Inc. ("APS") has responded to the motion. (Doc. 60). For the following reasons, the Court denies Burford's request for attorney's fees.

I. Facts and Procedural History

Initially, Burford filed suit in state court and alleged APS had breached written and oral employment contracts. (Doc. 8-1). APS removed Burford's action to federal court, and subsequently filed a counterclaim. (Doc. 19). While under contract with APS, Burford opened his own practice under a name strikingly similar to APS'-"American Accounting Practice Sales." (Doc. 23).

In their counterclaim, APS alleged that Burford misappropriated APS' trade name, by operating as "American Accounting Practice Sales, " in direct violation of the Federal Trademark (Lanham) Act of 1946, 15 U.S.C. § 1051, et seq. Id.

After the counterclaims had been filed, Burford moved for summary judgment on APS' Lanham Act claims. (Doc. 45). Before arriving at the merits of the counterclaims, the Court granted APS' motion for summary judgment on Burford's claims. (Doc. 50). The same day, APS moved to voluntarily dismiss their counterclaims against Burford. (Doc. 51). The Court granted APS' request for voluntary dismissal, with prejudice. (Doc. 56 & 57).

Following dismissal, Burford filed a request for attorney's fees pursuant to the fee-shifting section of the Lanham Act in § 1117(a). (Doc. 59). According to Burford, APS' pursuit of the "meritless" Lanham Act claim until the "eve of trial" constituted an abuse of process and was an exceptional circumstance as contemplated by § 1117 (a). Id. Particularly, Burford based his request on the fact that: APS' counterclaims were meritless; that the claim was originally filed to harass and intimidate; and APS pursued this claim for reasons unrelated to obtaining a favorable judgment. Id. In response, APS denied these allegations and countered that their pursuit of a legal remedy was within the bounds of reasonable advocacy. (Doc. 60). This dispute is now before the Court.

For the reasons stated below, the Court denies Burford's request for attorney's fees.

II. Standard for Award of Attorney's Fees

The "American Rule" of civil justice states "each side must bear its own attorney's fees absent a statute or contract provision to the contrary." Alyeska Pipeline Serv. Co. v. Wilderness Soc'y, 421 U.S. 240, 258-259 (1975).

The Lanham Act serves as one statutory exception to the American Rule. The Lanham Act provides the right of recovery for violation of this act by one party or the other. 15 U.S.C. §1117 (a). Specifically, "[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party." Id. Although Congress has never explicitly defined what is to be considered "exceptional, " the Seventh Circuit has tackled this complicated determination. See Door Sys., Inc. v. Pro-Line Door Sys., Inc., 126 F.3d 1028, 1031-32 (7th Cir. 1997); see also S Indus., Inc. v. Centra 2000, Inc., 249 F.3d 625, 627 (7th Cir. 2001); TE-TA-MA Truth Foundation-Family of URI, Inc. v. The World Church of the Creator, 392 F.3d 248, 263 (7th Cir. 2004).

Any decision to award attorneys' fees under § 1117(a) of the Lanham Act is "firmly committed to the district court's discretion...." BASF Corp v. Old World Trading Co., Inc., 41 F.3d 1081, 1099 (7th Cir. 1994); TE-TA-MA, 392 F.3d at 263("[A] district court has broad discretion under § 1117(a) to fashion an appropriate remedy...."). The rule, according to the Seventh Circuit, instructs trial courts to determine whether the Defendants/counterclaimant's action in filing the suit was "objectively unreasonable." Nightingale, 626 F.3d at 965. "Objectively unreasonable" actions, according to the Seventh Circuit, would constitute an abuse of process entitling the prevailing party to attorney's fees. Id. at 966. According to the Court, although a meritless claim is not to be the sole determination, it was considered demonstrative of an abuse of process. Nightingale, 626 F.3d at 963.

Arriving at their decision, the Seventh Circuit reviewed the initial dismissal of Nightingale's Lanham Act claims in Nightingale Home Healthcare Inc. v. Anodyne Therapy, LLC, 589 F.3d 881 (7th Cir. 2009).

Buyer, Nightingale, brought action against seller, Anodyne, alleging that Anodyne's representative told Nightingale that the lamps had been approved by the Food and Drug Administration for the treatment of peripheral neuropathy. Id. at 884. After being removed from state court, Nightingale filed an amended complaint adding an additional claim under the Lanham Act. Id. at 882-3. The Lanham Act claim was ...

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