Court Opinion

ID: 4523180
Source: CourtListenerOpinion
Date Created: 2020-04-07 16:00:48.551224+00
Date Added: 2024-06-11T12:08:22.330223
License: Public Domain

Case: 19-1136    Document: 40    Page: 1    Filed: 04/07/2020

   United States Court of Appeals
       for the Federal Circuit
                  ______________________

            KEITH MANUFACTURING CO.,
                  Plaintiff-Appellee

                            v.

                LARRY D. BUTTERFIELD,
                   Defendant-Appellant
                  ______________________

                        2019-1136
                  ______________________

     Appeal from the United States District Court for the
 District of Oregon in No. 3:15-cv-02008-SI, Judge Michael
 H. Simon.
                  ______________________

                   Decided: April 7, 2020
                  ______________________

    BRUCE KASER, Vantage Law PLLC, Seattle, WA, ar-
 gued for plaintiff-appellee.

    SHAWN KOLITCH, Kolitch Romano LLP, Portland, OR,
 argued for defendant-appellant.
                  ______________________

     Before TARANTO, CLEVENGER, and HUGHES, Circuit
                        Judges.
 HUGHES, Circuit Judge.
Case: 19-1136    Document: 40      Page: 2    Filed: 04/07/2020

 2                  KEITH MANUFACTURING CO. v. BUTTERFIELD

      Keith Manufacturing Co. brought this lawsuit against
 Larry D. Butterfield in the United States District Court for
 the District of Oregon. Eighteen months after the litiga-
 tion began, the parties filed a stipulation to dismiss all
 claims with prejudice under Rule 41(a)(1)(A)(ii) of the Fed-
 eral Rules of Civil Procedure. Shortly after, Mr. Butterfield
 filed a motion for attorney’s fees under Rule 54 of the Fed-
 eral Rules of Civil Procedure. The district court denied the
 motion because there was no judgment sufficient for a Rule
 54 motion. In particular, the district court reasoned that
 under the Supreme Court’s decision in Microsoft Corp. v.
 Baker, 137 S. Ct. 1702 (2017), a voluntary dismissal with
 prejudice is not a “judgment” as required by Rule 54(d).
 But in our view, Microsoft is inapplicable because judg-
 ment in the context of Rule 54 does not raise the same con-
 cerns about finality and piecemeal litigation that animated
 the Supreme Court’s opinion in Microsoft. Therefore, we
 vacate the district court’s decision and remand for further
 proceedings. 1
                               I
      In October 2015, Keith Manufacturing Co. filed this
 lawsuit against its former employee, Mr. Butterfield, after
 he filed a patent application for what eventually issued as
 U.S. Patent No. 9,126,520. Keith alleged that the ’520 pa-
 tent was based on inventions made during Mr. Butter-
 field’s employment. Keith asserted five claims against Mr.
 Butterfield related to the ’520 patent: (1) declaratory judg-
 ment of noninfringement; (2) declaratory judgment of inva-
 lidity; (3) state-law breach of contract; (4) state-law
 misappropriation of trade secrets; and (5) correction of in-
 ventorship to add Keith employees as named inventors.

     1  Keith has filed a motion for sanctions arguing that
 Mr. Butterfield’s appeal is frivolous. The motion is denied.
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 KEITH MANUFACTURING CO. v. BUTTERFIELD                       3

     In May 2016, Mr. Butterfield sent Keith a covenant not
 to sue and then filed a motion to dismiss the first four
 claims. Mr. Butterfield argued that the covenant not to sue
 mooted the declaratory judgment claims. He also argued
 that both the applicable statutes of limitation and the doc-
 trine of laches barred the state-law claims. The district
 court granted the motion in part, dismissing the declara-
 tory judgment claims but allowing the state-law claims to
 proceed.
     In April 2017, the parties filed a stipulation of dismis-
 sal with prejudice pursuant to Rule 41(a)(1)(A)(ii). Such a
 dismissal requires no court order. See Fed. R. Civ. P.
 41(a)(1)(A)(ii). The stipulation was silent as to costs and
 attorney’s fees. Twelve days later, Mr. Butterfield moved
 for attorney’s fees under Fed. R. Civ. P. 54(d), Or. Rev.
 Stat. § 20.096, Or. Rev. Stat. § 646.467, and 35 U.S.C.
 § 285.
     In its order denying attorney’s fees, the district court
 held that Rule 54 requires a judgment, which the Rule de-
 fines as “a decree and any order from which an appeal lies.”
 Keith Mfg., Co. v. Butterfield, 256 F. Supp. 3d 1123, 1127
 (D. Or. 2017) (quoting Fed. R. Civ. P. 54(a)). The district
 court then held that the parties’ stipulation to dismiss with
 prejudice did not satisfy Rule 54’s judgment requirement
 because under Microsoft, a stipulation to dismiss with prej-
 udice is not an appealable order. Id. at 1130.
     Mr. Butterfield now appeals. We have jurisdiction un-
 der 28 U.S.C. § 1295(a)(1).
                               II
     In cases involving questions of law not assigned to the
 Federal Circuit, we apply the law of the regional circuit.
 Panduit Corp. v. All States Plastic Mfg. Co., 744 F.2d 1564,
 1574−75 (Fed. Cir. 1984). Though the Ninth Circuit re-
 views a district court’s decision to deny a motion for attor-
 ney’s fees for abuse of discretion, it reviews questions of law
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 4                   KEITH MANUFACTURING CO. v. BUTTERFIELD

 underlying the district court’s decision de novo. Skaff v.
 Meridien N. Am. Beverly Hills, LLC, 506 F.3d 832, 837
 (9th Cir. 2007) (reviewing the district court’s decision on
 standing de novo); see also Easley v. Collection Serv. of Ne-
 vada, 910 F.3d 1286, 1289 (9th Cir. 2018) (“[W]hen the
 principal issue raised on appeal is legal in nature, [the
 Ninth Circuit] review[s] the district court’s award de
 novo.”). Therefore, here we review the district court’s ap-
 plication of Microsoft de novo.
                                 III
     We begin our analysis with the requirements of
 Rule 54. A claim for attorney’s fees “must be made by mo-
 tion unless the substantive law requires those fees to be
 proved at trial as an element of damages.” Fed. R. Civ. P.
 54(d)(2)(A). Rule 54 motions must: “(i) be filed no later
 than 14 days after the entry of judgment; [and] (ii) specify
 the judgment and the statute, rule, or other grounds enti-
 tling the movant to the award.”          Fed. R. Civ. P.
 54(d)(2)(B)(i)–(ii). “‘Judgment’ as used in these rules in-
 cludes a decree and any order from which an appeal lies.”
 Fed. R. Civ. P. 54(a).
      The issue the district court considered here is whether
 the stipulated dismissal with prejudice constitutes a judg-
 ment for the purposes of Rule 54. Although Rule 54(d)
 “posits a relationship between a judgment and its appeala-
 bility,” Castro Cty., Tex. v. Crespin, 101 F.3d 121, 128
 (D.C. Cir. 1996), this relationship exists for the prudential
 purpose of minimizing piecemeal appellate litigation, not
 because a shared technical construction mandates the re-
 lationship. Rule 54(d)(2)(B) was promulgated to “enable[]
 the court . . . to make its ruling on a fee request in time for
 any appellate review of a dispute over fees to proceed at the
 same time as review on the merits of the case,” Fed. R. Civ.
 P. 54 advisory committee’s note to 1993 amendment, in ser-
 vice of “minimiz[ing] the need for piecemeal appeals,” see
 Weyant v. Okst, 198 F.3d 311, 314 (2d Cir. 1999).
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 KEITH MANUFACTURING CO. v. BUTTERFIELD                    5

     Similarly, the finality requirement of 28 U.S.C. §§ 1291
 and 1295 is “designed to guard against piecemeal appeals.”
 Microsoft, 137 S. Ct. at 1707. “[F]inality is to be given a
 practical rather than a technical construction.” Eisen v.
 Carlisle & Jacquelin, 417 U.S. 156, 171 (1974) (internal
 quotation omitted). The “final decision” inquiry of §§ 1291
 and 1295 “requires some evaluation of the competing con-
 siderations underlying all questions of finality—the incon-
 venience and costs of piecemeal review on the one hand and
 the danger of denying justice by delay on the other.” Id.
 (internal quotation omitted).
     In Microsoft, the Supreme Court reasoned that allow-
 ing a class-action plaintiff to manufacture finality using a
 voluntary dismissal with prejudice would allow her to cir-
 cumvent § 1291 by “stopping and starting the district court
 proceedings with repeated interlocutory appeals.”
 137 S. Ct. at 1713. It would also contravene the reasoned
 decision-making behind, and “careful calibration” of,
 Rule 23(f). Id. at 1714. Finally, it would discriminate
 against defendants, who may want to immediately appeal
 an adverse certification ruling as much as any plaintiff but
 would be unable to do so. Id. at 1715.
      Given their common purpose, it is unsurprising that
 “judgment” in the context of Rule 54 is often congruent to
 a “final decision” under § 1291. See Crespin, 101 F.3d at
 128. They are not, however, equivalent. The definition of
 judgment in Rule 54 indicates that some non-appealable
 orders can still constitute a judgment. Rule 54(a) states
 that judgment “includes . . . any order from which an ap-
 peal lies,” (emphasis added), not that judgment is any order
 from which an appeal lies. This inclusive language reveals
 that Rule 54 “judgment” includes more than just appeala-
 ble orders.
     Although the scope of Rule 54 “judgment” is broader
 than a § 1291 final decision, their shared purpose and gen-
 eral congruity mean that § 1291 can still inform the proper
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 6                  KEITH MANUFACTURING CO. v. BUTTERFIELD

 scope of Rule 54. But the district court’s reliance on Mi-
 crosoft’s § 1291 analysis went too far because the concerns
 that animated the Supreme Court’s Microsoft decision are
 not present here. First, treating a voluntary stipulation
 with prejudice as a judgment for purposes of attorney’s fees
 under Rule 54 will not invite parties to engage in piecemeal
 appellate litigation. The joint stipulation means that, ex-
 cept under rare circumstances, there will not be an appeal
 on the merits; only the attorney’s fees issue remains. Sec-
 ond, because this case is not a class action, it will not un-
 dermine class action procedure. And because both parties
 can move for attorney’s fees, permitting a Rule 54(d) mo-
 tion for attorney’s fees after a stipulated dismissal will not
 affect the overall balance of litigation.
     The Tenth Circuit reached a similar conclusion in
 Xlear, Inc. v. Focus Nutrition, LLC, 893 F.3d 1227,
 1235−36 (10th Cir. 2018), when it considered whether Mi-
 crosoft should be extended to preclude attorney’s fees after
 a Rule 41(a)(1)(A)(ii) stipulation of dismissal. The Tenth
 Circuit also found Microsoft inapplicable, reasoning that it
 “address[es] the narrow situation where a hopeful class ac-
 tion plaintiff uses a stipulation of dismissal as a tactic to
 overcome the limitations placed on appellate jurisdiction
 by 28 U.S.C. § 1291.” Id. at 1236.
      Keith raises additional grounds for affirming the dis-
 trict court’s decision, including the propriety of awarding
 fees in this case and whether a self-executing stipulation
 that the court plays no role in entering constitutes a judg-
 ment. We decline to address these grounds at this time
 because they were not part of the district court’s holding.
     We have considered Keith’s remaining arguments and
 find them unpersuasive. We vacate the judgment of the
 District Court for the District of Oregon and remand for
 further proceedings consistent with this opinion.
                VACATED AND REMANDED