N O T FO R PUB L ICAT IO N UNITED STATES C OUR T OF APPEALS FOR THE NINTH C IR C UIT AVIVA USA C ORPOR

ATION, a

n Iowa c orporation; AVIVA B R

ANDS LIM ITED, a Unite d Kingdom lim ite d c om

pa ny , Plaintiffs-c ounte r-de fe nda n ts - Appe lle e s, v. ANIL VAZIR

ANI, a n individual; VAZIR ANI & ASSOC IATES FINANC IAL, LLC , a

n Ariz ona lim ite d lia bility c om pa ny ; SEC URED FINANC IAL SOLUTIONS, LLC , a n Ariz ona lim ite d lia

bility c om pa ny , De fe nda

nts-c ounte r-c la im ants - Appe lla nts. No. 13-16858 D.C . No. 2:11-c v-00369-JAT M EM O R ANDUM *

AVIVA USA C ORPOR

ATION, a

n Iowa c orporation; AVIVA B R

ANDS LIM ITED, a Unite d Kingdom lim ite d c om

pa ny , Plaintiffs-c ounte r-de fe nda n ts - Appe lla nts, v. No. 13-16869 D .C . No. 2:11-c v-00369-JAT



# FIL ED D EC 04 2015 M OLLY C. DW Y ER, CLERK U . S . CO URT O F APPEALS

* This disposition is not a ppropria te for public at ion a

nd is not pre c e de nt e xc e pt a s provide d

by 9th C ir. R . 36-3.JAM ES REGAN, a n individual; R

EGAN & ASSOC IATES LLC , an Ariz ona lim ite d lia bility c om pa ny , De fe nda

nts - Appe lle e s, ANIL VAZIR

ANI, a n individual; VAZIR ANI & ASSOC IATES FINANC IAL, LLC , a

n Ariz ona lim ite d lia bility c om pa ny ; SEC URED FINANC IAL SOLUTIONS, LLC , a n Ariz ona lim ite d lia

bility c om pa ny , De fe nda

nts-c ounte r-c la im ants - Appe lle e s. Appe a l from the Unite d

Stat e s Distric t C ourt for the Distric t of Ariz o na Jam e s A. Te ilborg, Se nior Distric t Judge , Pre siding Argue d a nd Subm itte d Oc tobe r 23, 2015 San Fran c isc o , C a lifornia B e fore : WALLAC E, B LAC K ** , a nd C LIFTON, C irc uit Judge s. Appe lla nts Anil Va

z irani, Va z iran i & Assoc iate s Fina nc ia l , LLC , a

nd Se c ure d Fina

n c ia l Solutions, LLC

(c olle c tive l y “ Appe lla

nts” ) a p pe a l from

the distric t c o urt’ s judgm e n t de ny ing the m attorne y fe e s unde r the La

nha m Ac t ’ s

“ e x c e ptiona l c a se ” provision. 15 U.S.C . § 1117(a ). C ross-Appe lla nts Aviva USA

** The Honora

ble Susa n H. B la c k, Se n ior C irc uit Judgefor the U.S. C ourt of Appe a ls for the Ele ve nth C i rc uit, sitting by de s igna tion. 2C orporation a n d Aviva B ran ds Lim ite d (c o lle c tive ly “ Aviva ” ) a

ppe a l se ve ra l of the distric t c o urt’ s orde rs, inc l uding (1) thedistric t c ourt’ s sum m ary judgm e nt in fa

vor of Appe lla

nts on Aviva ’ s tra de m ark, unfa i r c om pe tition, a n tic y be rsquatting, a

nd Ariz ona anti-ra c ke te e ring c la im s, (2) the distric t c ourt’ s judgm e nt on theple a dings in fa vor of Appe lla

nts on Aviva ’ s fe d e ra l a

nti-ra c ke te e ring c la im , and (3) the distric t c o urt’ s orde r granting Appe lla nts a ttorne y fe e s unde r Ariz ona ’ s a

ntira c k e te e ring sta

tute . 1 Aviva argue s tha

t the distric t

c ourt e rre d in gra

nting Appe lla

nts sum m ary judgm e nt on Aviva ’ s tra de m ark c la im s unde r the La nham Ac t. It a rgue s tha t Appe l la n ts’ use of Aviva ’ s m ark on a we bsite c ritic a l of Aviva ’ s busine ss pra c tic e s viola te s the La nha m Ac t. W e re vie w a

distric t c o urt’ s “ sum

m ary judgm e nt de novo, vie wing the e vide nc e in the light m ost fa vora ble to the non-m oving pa

rty .” Bosle y Me dic al Inst., Inc . v . K

re me r , 403 F.3d 672, 675–76 (9th C ir. 2005). To re c o ve r unde r tra de m ark la w, the a lle ge dly

unla wful use of a

tra d e m ark m

u st be

“ in c onne c t ion with a

c om m e rc ia l tra

nsa c tion in whic h the tra de m ark is be ing use d to c o nfuse pote ntia l c onsum e rs.” Id. at 676. Aviva ha s not shown tha

t the distric t c ourt e rre d in c onc luding tha t Appe lla nts’ use of Aviva ’ s m ark wa s “ in c onne c tion

1 Aviva a lso c ross-a

ppe a ls a ga inst De fe nda

nts Ja m e s R e ga n a nd R e ga n & Assoc iat e s, LLC , who join in the re sponse brie f file d

by Appe lla nts. 3with a

c o m m e rc ia l tra

nsa c tion.” Id. Appe lla

nts did not use

Aviva ’ s m ark to offe r

“ c o m pe ting se rvic e s to the public ,” suc h a s by offe ring for sa l e any

“ goods or se rvic e s.” Id. at 679. Additiona lly , both theLa

nha m Ac t a nd Ariz ona

c om m on la w re quire proof of like lihood of c onfusion to e sta blish lia bility . S e e 15 U.S.C . § 1114(1), 1125(a)(1)(A) (re quiring a showing tha

t a de fe nda nt’ s use of a

tra de m ark is “ like ly to c a use c onfusion” a s to the origin of goods or se rvic e s); Tay lor v . Que be de aux , 617 P.2d 23, 24 (Ariz . 1980) (re c o g niz ing tha t “ t he e sse nc e of unfa ir c om pe tition is c onfusion of the public ” ). The distric t c ourt c orre c tly he ld tha t nom inative use of Aviva ’ s tra de m ark and tra de dre ss is not like ly to c a use c onfusion whe n displa

y e d with a

nd im be dde d in obvious ne gative c o m m e nta ry . Se e Toy ota Motor Sale

s , U.S.A., Inc . v . Tabari , 610 F.3d 1171, 1176 (9th C ir. 2010) (e xpla ining tha

t the ultim a te purpose of the nom inative fa i r use doc t rine is to

“ a d dre ss the risk tha

t nom inative use of the m ark will inspire a m i sta ke n be lie f on the p art of c onsum e rs tha t the spe ake r is sponsore d or e ndorse d by the tra de m ark holde r” ). Ac c ordingly , we a ffirm the distric t c ourt’ s sum

m ary judgm e nt in fa

vor of Appe l la n ts on Aviva ’ s La

nha m Ac t a nd unfa ir c om

pe tition c la i m s. While we a ffirm

the distric t c ourt’ s sum

m ary judgm e nt a s to Aviva ’ s Lanha m Ac t c la im , we hold tha

t the distric t c o urt did not err in de ny ing Appe lla nts a ttorne y fe e s unde r the La

nha m Ac t’ s “ e xc e ptiona l c a se ” provision. 15 U.S.C . 4§ 1117(a ). “ Whe the r the c irc um sta nc e s a re ‘ e xc e ptiona l’

— a pre re quisiteto a n a ttorne y s’ fe e award pursua nt to theLa

nha m Ac t— is a

que stion of la

w tha t is re vie we d de novo.” C

lassic Me dia v . Me w born , 532 F.3d 978, 982 (9th C ir. 2008). W e hav e he ld tha

t a c a se is “ e xc e ptiona l ,” for purpose s of se c tion 1117(a ), if it is

“ e i the r groundle ss, unre a s ona

ble , ve xatious, or pursue d in ba d fa ith.” C

airns v . Frank lin Mint C

o. , 292 F.3d 1139, 1156 (9th C ir. 2002) (inte rna l quota tion m arks om i tte d). The distric t c ourt did not err in de te rm ining tha t Aviva ’ s tra de m ark c la im s we re not “ e xc e ptiona l” unde r that sta nda rd. Aviva ne xt a rgue s tha t Appe lla nts viola te d the Antic y

be rsquatting C o nsum e r Prote c tion Ac t

(AC PA) in re g iste ring fourte e n dom a in na m e s tha t use d Aviva ’ s m ark. W e a ffirm

the distric t c ourt’ s sum

m ary judgm e nt in fa

vor of Appe lla

n ts on Aviva ’ s AC PA c la im . The AC PA provide s tha t a pe rson is lia

ble to a tra de m ark owne r if the pe rson (1) “ ha s a ba d fa ith inte nt to profit from tha t m ark,” 15 U.S.C . § 1125(d)(1)(A)(i), a

nd (2) “ re giste rs, tra ffic s in, or use s a dom a in na m e [that is c onfusingly

sim ila r to a nothe r’ s m ark or dilute s a nothe r’ s fam ous m ark] .” Bosle y , 403 F.3d a

t 680, quoting 15 U.S.C . § 1125(d)(1)(A)(i) (a lte rations in origina l). Aviva c ha rge s tha t the distric t c ourt e rrone o usly im porte d the La nha m Ac t’ s c om m e rc ia l use re quire m e nt into the AC PA, c ontra

v e ning our c a se la

w. Id. (obse rving tha

t “ the AC PA doe s not c onta in a c o m m e rc ia l use re quire m e nt” ). Our 5re vie w of the re c ord le a ds us to c onc lude tha t the distric t

c ourt did no suc h thing. Inste a d, it a

na ly z e d whe the r Appe lla

nts a c te d in “ba d fa ith” using thenine none xha ustive fa c t ors provide d by the AC PA. 15 U.S.C . § 1125(d)(1)(B )(i). W e a gre e with thedistric t c ourt, a fte r a pply ing thosefa c t ors, tha t Aviva fa ile d to show tha t Appe l la n ts a c te d with “ ba d fa ith inte nt to profit”in re giste ring the dom a in na m e s. W e the re fore a ffirm . Aviva a lso a rgue s tha t the distric t c ourt e rre d

in its sum

m ary judgm e nt by fa iling to fa c tor in a de quate l y Appe lla nts’ e arlie r spolia

tion of e vide nc e . The distric t c o urt m a de a

finding tha

t Appe lla nts de s troy e d or hid re le va nt inform ation from Aviva . As a

re sult, it sa

nc tione d Appe lla

n ts by awarding Aviva

attorne y fe e s and by inviting Aviva

to “propose an a

ppropria te a dve rse infe re nc e in re sponse to any m otion for sum

m ary judgm e nt.” This wa s prope r be c a u s e a pa rty found guilty of this c h arge should not ben e fit from suc h c om

ple te ly im prope r c o nduc t whic h inte rfe re s with a

just a nd fa ir c o nside ra t ion of c la im s in our c ourt of la w. Howe ve r, Aviva fa ile d to propose a

ny a d ve rse infe re n c e instruc tions. W e do not in a ny wa y c ondone Appe lla

nts’ ba d be havior a

nd we urge litiga

nts to a void e nga ging in suc h unse e m ly be havior. B ut unde r our a dve rsaria l sy ste m , we do not ha v e fre e whe e ling a uthority to right e ve ry

wrong. Unfortuna

te l y for Aviva , it wa ive d

its opportunity to obta in a

n a dve rse infe re nc e instruc tion by fa iling to propose instruc tions in 6a c c orda

nc e with thedistric t c ourt’ s orde r. R o thman v . Hospital Serv . of S. C al. , 510 F.2d 956, 960 (9th C ir. 1975) (“ It is a we ll-e sta blishe d princ iple tha

t in m ost insta nc e s a n a ppe lla nt m ay not pre se nt a

rgum e nts in theC ourt of Appe a ls tha t it did not properly ra i se in the c ourt be low” ). W e re vie w tha

t distric t c ourt’ s judgm e nt on theple a dings a s to Aviva ’ s fe de ra l a n ti-ra c ke te e ring c la im

de novo. N

e lson v . C ity of Irv ine , 143 F.3d 1196, 1200 (9th C ir. 1998). Unde r the R a c ke te e r Influe nc e d a n d C orrupt Orga

niz ations Ac t (R IC O), a

pla intiff m

ust show “ (1) c onduc t

(2) of a n e nte rprise (3) through a patte rn (4) of ra c ke te e ring a c tivity .” Brady v . Dairy Fre sh Produc ts C

o. , 974 F.2d 1149, 1152 (9th C ir. 1992). Aviva argue s tha

t Appe lla nts e nga ge d in a

patte rn of e xtortion whe n

the y se nt e m a ils to Aviva

thre ate ning a

ne gative public re lations c la im , hire d a

public re lations firm , re giste re d dom a in na m e s using Aviva ’ s m ark to publish ne gative inform a tion a bout thec om

pa ny , distribute d ne g ative inform a t ion using ma ss e m a il, a nd de stroy e d e vide nc e during litiga tion. W i thout de c iding whe the r any

of the a lle ge d a c ts c onstitute “ ra c ke t e e ring a c tivity , ” Aviva ’ s c la im fa ils be c a

use it ha s not shown tha

t Appe lla nts e nga g e d in a

“ patte rn” of ra c k e te e ring a c tivity . Inste a d, a ll Aviva ha s shown is tha

t Appe lla nts e n ga ge d in se rie s of ste ps tha

t we re pa rt of a single pla

n to e xpose what the y

be lie ve to be unla wful busine ss pra c tic e s by Aviva . Se e Se v e r v . Alask a Pulp C orp. , 978 F.2d 71529, 1535–36 (9th C ir. 1992) (a ffirm ing dismissa l of a R IC O c la im

whe re

“ a l though [pla i ntiff] a lle ge s a num be r of ‘ a c ts,’ [de fe nda

nt’ s] c olle c tive c onduc t is in a se nse a

single e pisode having [a ] singula r purpose ” ). W e the re fore a ffirm the distric t c o urt’ s judgm e n t. Aviva ’ s sta

te -law a nti-ra c ke te e ring c la im

fa i ls for a

sim ila r re a son. Likethe fe de ra l RIC O sta

tute , Ariz ona

la w re quire s tha

t a pla intiff show tha

t the re ha s be e n a “ patte rn of ra c ke te e ring a c tivity .” A.R .S. § 13-2314.04(A). Ariz ona c ourts ha ve inte rpre te d this sta

te la w to m irror the fe de ra l RIC O sta tute . Life flite Me d. Air Transport, Inc . v . N

ativ e Am. Air Se rv

s., Inc . , 7 P.3d 158, 161 (Ariz . C t. App. 2000) (“ B e c a

use the Ariz ona

and fe de ra l sta

tute s a re ana logous . . . we

look to fe de ra l inte rpre tations [of the fe de ra l RIC O sta tute ] for guida

n c e ” ). Aviva ’ s c la im unde r the Ariz o n a

sta tute fa ils be c a

use Aviva ha s not ra i se d a

ny ge nuine disputeof m a te ria l fa c t a

b out whe the r Appe lla

nts e n ga ge d

in a “ patte rn” of ra c ke te e ring a c tivity . The re fore , we a ffirm the distric t c ourt’ s sum

m ary judgm e nt in fa

vor of Appe l la n ts on Aviva ’ s Ariz o n a

anti-ra c ke te e ring c la im . La st, the distric t c o urt did not a buse its disc re tion in a

warding Appe lla

nts a ttorne y fe e s unde r Ariz o na ’ s a

nti-ra c ke te e ring sta

tute , whic h provide s for a re c o ve ry of attorne y

fe e s “ [i] f the pe rson a ga inst whom a ra c ke te e ring c la i m

ha s be e n a s se rte d, inc luding a lie n, pre va ils on tha t c la i m .” A.R .S. § 13-2314.04(A). 8B ut it goe s on to prohibit a n a ward “ if the award would be unjust be c a use of spe c ia l c irc um s ta

nc e s , inc l uding the re le va nt dispa rate e c onom ic position of the pa rtie s or the disproportiona te am ount of thec o sts, inc luding a ttorne y fe e s, to the nature of the dam a ge or othe r re lie f obta ine d.” Id. § 13-2314.04(M ). Aviva c onte nds tha

t Appe lla nts’ e arlie r spolia

tion of e vide nc e c onstitute s “ spe c ia l c irc um s ta nc e s ” suc h tha

t it would be

“ unjust” to a

ward Appe lla

nts a ttorne y fe e s. W e unde rsta

nd Aviva ’ s a

rgum e nt to be tha

t the spe c ia l c irc um sta

nc e s he re we re the c om ple t e ly im prope r hiding or de stroy ing of e vide nc e by Appe l la nts, whic h pre j udic e d Aviva ’ s c a se and, the re fore , Appe lla nts should not profit by

suc h une thic a l a

n d im prope r c onduc t in a

c a se be fore c ourts of la

w. B ut the distric t c ourt ha d a lre a d

y sa nc tione d Appe lla

nts for tha

t m isc onduc t by

awarding Aviva

attorne y fe e s and inviting it to propose an a dve rse infe re nc e in re sponse to Appe lla nts’ m otion for sum

m a ry judgm e nt. It wa s not unre a sona ble for the c ourt to c onc lude that the se pre vious sa

nc tions we re suffic ie n t. Ac c ordingly , we hold tha t the distric t c ourt did not a

buse its disc re t ion in a

warding Appe lla

n ts a ttorne y fe e s . AFFIRM E D.

9