Court Opinion

ID: 9943287
Source: CourtListenerOpinion
Date Created: 2024-02-23 05:00:26.40299+00
Date Added: 2024-06-11T13:46:45.947019
License: Public Domain

RECOMMENDED FOR PUBLICATION
                                   Pursuant to Sixth Circuit I.O.P. 32.1(b)
                                          File Name: 24a0036p.06

                     UNITED STATES COURT OF APPEALS
                                     FOR THE SIXTH CIRCUIT

                                                                ┐
  MARKETING DISPLAYS INTERNATIONAL,
                                                                │
                               Plaintiff-Appellee,              │
                                                                 >        No. 23-1028
                                                                │
          v.                                                    │
                                                                │
  BRIANNA SHAW,                                                 │
                                   Defendant-Appellant.         │
                                                                ┘

  Appeal from the United States District Court for the Eastern District of Michigan at Detroit.
                  No. 2:22-cv-12287—Gershwin A. Drain, District Judge.

                               Decided and Filed: February 22, 2024

                Before: GILMAN, McKEAGUE, and THAPAR, Circuit Judges.

                                         _________________

                                               COUNSEL

ON BRIEF: Brian J. Farrar, STERLING ATTORNEYS AT LAW, P.C., Bloomfield Hills,
Michigan, for Appellant. Mark Granzotto, MARK GRANZOTTO, P.C., Berkley, Michigan, for
Appellee.
                                         _________________

                                                OPINION
                                         _________________

       THAPAR, Circuit Judge. In life, sometimes it’s better to show up late than not at all. But
in law, tardiness can be costly. Here, the parties’ counsel received several extensions of this court’s
briefing deadlines. In the meantime, the clock struck midnight on the underlying issue. As a
result, this appeal is now moot.
  No. 23-1028                   Marketing Displays Int’l v. Shaw                           Page 2

                                                 I.

       Brianna Shaw left her job at Marketing Displays International (MDI) and began working
for another company.      But MDI thought Shaw’s new employment violated her one-year
noncompete agreement, so it sued. During the litigation, MDI sought a preliminary injunction,
which the district court granted on December 14, 2022. Mktg. Displays Int’l v. Shaw, 646 F. Supp.
3d 897, 900 (E.D. Mich. 2022). Relevant here, the injunction prevented Shaw from working for
her new employer for one year. Id. at 908.

       Shaw appealed in January 2023. After several months of mediation, the parties began filing
their appellate briefs in June. But because of six deadline extensions—three requested by each
party—the parties didn’t finish their briefing until January 2024.

       On appeal, Shaw challenges only the part of the injunction that prevented her from working
for her new employer. But that part expired on December 14, 2023, so this appeal is moot. See,
e.g., Radiant Glob. Logistics, Inc. v. Furstenau, 951 F.3d 393, 395–96 (6th Cir. 2020) (per curiam).

                                                II.

       Shaw argues otherwise. She posits that a ruling in this appeal would impact (1) her ability
to recover from MDI any damages, including reputational harms, caused by the preliminary
injunction and (2) MDI’s ability to recover attorney fees from her.          See Coal. for Gov’t
Procurement v. Fed. Prison Indus., Inc., 365 F.3d 435, 458 (6th Cir. 2004) (“The test for mootness
is whether the relief sought would, if granted, make a difference to the legal interests of the
parties.” (internal quotation marks omitted)). But this appeal doesn’t impact either of those
interests. So neither saves this appeal from mootness.

       Shaw’s Recovery Against MDI. When a preliminary injunction is wrongfully issued,
defendants may recover damages that they incurred by complying with it. See, e.g., Fed. R. Civ.
P. 65(c). This prospect of recovery keeps a case from becoming moot, even after the preliminary
injunction expires—and even if, as here, the plaintiff didn’t post an injunction bond. See Int’l
Union, UAW v. LaSalle Mach. Tool, Inc., 696 F.2d 452, 459 (6th Cir. 1982). Indeed, as the district
  No. 23-1028                      Marketing Displays Int’l v. Shaw                         Page 3

court noted when it granted the preliminary injunction, MDI might be subject to “collection” if it
doesn’t prevail on the merits. Mktg. Displays Int’l, 646 F. Supp. 3d at 908.

        That said, Shaw can’t collect these damages until she acquires a final judgment in her favor.
See Univ. of Tex. v. Camenisch, 451 U.S. 390, 396–97 (1981). And here, the district court hasn’t
issued a final judgment on MDI’s breach-of-contract claim. To be sure, the court found that MDI
was likely to succeed on the merits. Mktg. Display Int’l, 646 F. Supp. 3d at 902–06. But that’s
not a final judgment. So anything we might say about it on appeal wouldn’t affect Shaw’s ability
to recover damages. See Camenisch, 451 U.S. at 394. Thus, her possible recovery at the end of
the case doesn’t save this appeal from mootness.

        Attorney Fees. Under Shaw’s noncompete agreement, she agreed “to pay all costs incurred
by MDI in enforcing the provisions of this Agreement, including reasonable attorney fees.” R. 3-
3, Pg. ID 102. At the outset, there are at least two ways to read this provision. As written, it
suggests MDI can recover any reasonable legal fees it incurs in enforcing the agreement—whether
or not MDI prevails. See Kelly Servs., Inc. v. De Steno, 760 F. App’x 379, 383–84 (6th Cir. 2019)
(endorsing this interpretation). On the other hand, under Michigan law, contractual attorney fees
are a form of damages, not costs. E.g., Fleet Bus. Credit, LLC v. Krapohl Ford Lincoln Mercury
Co., 735 N.W.2d 644, 648 (Mich. Ct. App. 2007) (per curiam); see also R. 3-3, Pg. ID 102
(stipulating Michigan law controls). And to recover damages on a contract, a party must first prove
a breach. Miller-Davis Co. v. Ahrens Constr., Inc., 848 N.W.2d 95, 104 (Mich. 2014); see also
Kelly, 760 F. App’x at 386 (Gibbons, J., concurring). In other words, under this interpretation,
MDI wouldn’t be able to recover attorney fees unless it first succeeds on its breach-of-contract
claim. It hasn’t yet.

        We need not pick between these competing interpretations. Under either, MDI’s right to
attorney fees doesn’t hinge on the validity of the preliminary injunction. Thus, attorney fees can’t
resuscitate this appeal, either.

        Neither Shaw’s ability to recover damages nor MDI’s right to attorney fees can save this
appeal from mootness. They do, however, prevent this case from being moot. See Ohio v. EPA,
969 F.3d 306, 309 (6th Cir. 2020); Camenisch, 451 U.S. at 396. So while we dismiss this appeal,
  No. 23-1028                       Marketing Displays Int’l v. Shaw                         Page 4

we remand the case for further proceedings on the merits. The outcome of MDI’s breach-of-
contract claim will determine whether Shaw can recover from MDI. And it might impact MDI’s
ability to recover attorney fees.

                                                  III.

       Lastly, Shaw asks us to vacate the moot portion of the preliminary injunction. The decision
to vacate a lower court’s moot order is left to our equitable discretion. See Coal. for Gov’t
Procurement, 365 F.3d at 484; United States v. Munsingwear, Inc., 340 U.S. 36, 39–40 (1950).
Three criteria guide our exercise of that discretion. First, a party must ask for vacatur. See
Munsingwear, 340 U.S. at 40; Radiant, 951 F.3d at 397. Second, and most importantly, we’ll
vacate an order only if leaving it in place would have a preclusive effect on subsequent litigation.
See Radiant, 951 F.3d at 397; see also Fialka-Feldman v. Oakland Univ. Bd. of Trs., 639 F.3d 711,
716 (6th Cir. 2011). And third, we’re unlikely to grant vacatur when the party seeking it played a
role in causing the order’s mootness. U.S. Bancorp Mortg. Co. v. Bonner Mall P’ship, 513 U.S.
18, 24–25 (1994). As the party requesting relief, Shaw carries the burden of showing that she
meets these criteria. Id. at 26. Since Shaw fails to satisfy the second and third prongs, vacatur is
unwarranted.

       Preclusive Effect. A district court’s order sometimes precludes parties from relitigating the
issues underlying that order. See Munsingwear, 340 U.S. at 40. But it wouldn’t be fair to “compel
[a] losing party to live with the . . . preclusive effects of [an] adverse ruling without having had a
chance to appeal it.” Fialka-Feldman, 639 F.3d at 716. Thus, to “clear[] the path for future
relitigation,” we typically vacate final orders that become moot pending appeal. Munsingwear,
340 U.S. at 40.

       A moot preliminary injunction doesn’t present these same issues. Moot preliminary-
injunction orders usually have “no preclusive effect.” Radiant, 951 F.3d at 397 (quoting Gjertsen
v. Bd. of Election Comm’rs, 751 F.2d 199, 202 (7th Cir. 1984) (Posner, J.)). Indeed, a court’s
resolution of issues in a preliminary-injunction order is never binding on a case’s underlying
merits. Camenisch, 451 U.S. at 395. Thus, our circuit usually doesn’t vacate them. See, e.g.,
Radiant, 951 F.3d at 396–97.
  No. 23-1028                   Marketing Displays Int’l v. Shaw                           Page 5

       There are exceptions to this rule because, in some extraordinary cases, a moot preliminary
injunction can have a preclusive effect on future litigation. See, e.g., Ohio, 969 F.3d at 310; cf.
Lummus Co. v. Commonwealth Oil Refin. Co., 297 F.2d 80, 89 (2d Cir. 1961) (Friendly, J.). For
example, consider our decision in Ohio v. Environmental Protection Agency. There, a district
court denied the plaintiffs’ motion to preliminarily enjoin a 2015 EPA regulation. Ohio, 969 F.3d
at 308. While the appeal of that denial was pending, the EPA repealed and replaced the challenged
regulation. Id. We therefore dismissed the appeal as moot. Id. at 310. Contrary to the general
rule, however, we also vacated the district court’s preliminary-injunction order. Id. That’s
because, at the time, it was “reasonably likely” the new regulation would be enjoined nationwide,
causing the 2015 regulation to take effect again. Id. And if that happened, the district court’s
original order might have precluded plaintiffs from resuming their quest for a preliminary
injunction. Because that wouldn’t have been fair—the plaintiffs might have been estopped by an
order they couldn’t challenge on appeal—we vacated the order. See id.

       Here, there’s no chance that the challenged portion of the district court’s order will have a
preclusive effect on Shaw. The order’s factual findings and legal conclusions do not bind the final
resolution of MDI’s breach-of-contract claim. And there’s no possibility that the order will have
a preclusive effect on a future preliminary injunction, either. Shaw challenges only the portion of
the order that enforced the one-year noncompete clause in her contract. That clause has since
expired, so MDI can’t seek a similar preliminary injunction in the future. Thus, the now-moot
portion of the court’s order won’t have any preclusive effect.

       Shaw’s Role in Causing Mootness. As an equitable remedy, vacatur is subject to equity’s
“clean-hands” requirement. See U.S. Bancorp, 513 U.S. at 25. So we’re unlikely to vacate a moot
order when the losing party contributed to the appeal’s mootness.            See Coal. for Gov’t
Procurement, 365 F.3d at 485; Radiant, 951 F.3d at 397. Here, Shaw requested three deadline
extensions while the injunction’s one-year timer was ticking down—albeit two in the pursuit of a
settlement. Thus, Shaw contributed to this appeal’s mootness.

       To be sure, MDI also bears its fair share of the blame. After all, MDI requested three
extensions of its own. But absent any indication that MDI was seeking to run out the clock, we
can’t say that Shaw was “frustrated by the vagaries of circumstance” or that “mootness result[ed]
  No. 23-1028                         Marketing Displays Int’l v. Shaw                                     Page 6

from unilateral action of the party who prevailed below.” U.S. Bancorp, 513 U.S. at 25 (“The
denial of vacatur is merely one application of the principle that ‘[a] suitor’s conduct in relation to
the matter at hand may disentitle him to the relief he seeks.’” (quoting Sanders v. United States,
373 U.S. 1, 17 (1963))).

        In sum, courts must consider three factors when determining whether to vacate a moot
order. The most significant consideration is whether the order has preclusive effect. Here, it does
not. Therefore, even though Shaw’s role in causing this appeal’s mootness stemmed from her
laudable settlement efforts, vacatur is inappropriate here.1

                                                *        *        *

        We dismiss this appeal as moot and remand the case for further proceedings.

        1Of course, nothing here should discourage parties from discussing settlement while an appeal is pending.
Courts “historically have counted on the resolution of disputes to conserve limited judicial resources.” Borror Prop.
Mgmt., LLC v. Oro Karric North, LLC, 979 F.3d 491, 496 (6th Cir. 2020); see also Aro Corp. v. Allied Witan Co., 531
F.2d 1368, 1372 (6th Cir. 1976) (“Public policy strongly favors settlement of disputes without litigation.”).