Court Opinion

ID: 4222671
Source: CourtListenerOpinion
Date Created: 2017-11-21 21:00:41.93577+00
Date Added: 2024-06-11T07:47:50.918398
License: Public Domain

FILED
                           NOT FOR PUBLICATION
                                                                            NOV 21 2017
                    UNITED STATES COURT OF APPEALS                       MOLLY C. DWYER, CLERK
                                                                          U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

ARIZONA SKYDIVING HOLDINGS,                      No.   15-16286
LLC, and SKYDIVE ARIZONA, INC.
                                                 D.C. No.     2:14-cv-00756-DLR
              Plaintiffs-Appellees,

 v.
                                                 MEMORANDUM*
SKYDIVE PHOENIX, INC.,

              Defendant-Appellant,

                    Appeal from the United States District Court
                             for the District of Arizona
                    Douglas L. Rayes, District Judge, Presiding

                       Argued and Submitted April 19, 2017
                            San Francisco, California

Before: SCHROEDER and RAWLINSON, Circuit Judges, and STAFFORD,**
District Judge.

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
             The Honorable William Henry Stafford, Jr., Senior United States
District Judge for the Northern District of Florida, sitting by designation.
      Defendant-Appellant Skydive Phoenix, Inc. appeals the decision of the

district court denying its motion for attorneys’ fees. Skydive Phoenix contends

that the district court abused its discretion by failing to adequately consider the

factors established in Octane Fitness1 to determine whether a case is “exceptional”

for purposes of awarding attorneys’ fees under the Lanham Act.2 Skydive Phoenix

asserts that the district court additionally abused its discretion by failing to award

fees under A.R.S. § 12-341.013 because the underlying case involved an agreement

(contract) entered into by the owners of the entities involved.

      We review a district court’s determination whether a case was “exceptional”

for abuse of discretion. SunEarth, Inc. v. Sun Earth Solar Power Co., 839 F.3d

1179, 1180-81 (9th Cir. 2016) (en banc). Similarly, “[a] district court’s decision to

deny attorney's fees under state law is reviewed for abuse of discretion. . . .” Med.

Protective Co. v. Pang, 740 F.3d 1279, 1282 (9th Cir. 2013) (citation omitted).

      1
          Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749,
(2014).
      2
          15 U.S.C. § 1051 et seq.
      3
          A.R.S. § 12-341.01 states, in pertinent part:

      (A) In any contested action arising out of a contract, express or
      implied, the court may award the successful party reasonable attorney
      fees . . .
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       At the time of the district court’s order, our standard for exceptional cases

under the Lanham Act was more restrictive. See, e.g., Classic Media, Inc. v.

Mewborn, 532 F.3d 978, 990 (9th Cir. 2008) (“We construe the exceptional

circumstances requirement narrowly. . . .”) (citation and internal quotation marks

omitted). We have since clarified that courts must weigh the factors articulated by

the Supreme Court in Octane Fitness, using a “totality of the circumstances”

approach to determine if a case is “exceptional” for the purpose of awarding fees

under the Lanham Act. SunEarth, 839 F.3d at 1181.

       Although the district court did not have the benefit of our decision in

SunEarth when it denied the requested fees, it nevertheless acted within its

discretion when denying the fees, because this case was not “exceptional” under

the Lanham Act. “[A]n exceptional case is simply one that stands out from others

with respect to the substantive strength of a party's litigating position . . . or the

unreasonable manner in which the case was litigated. . . .” Octane Fitness, 134 S.

Ct. at 1756 (internal quotation marks omitted).

       The burden of proof remains with the party seeking attorneys’ fees to

demonstrate that the case is exceptional. See SunEarth, 839 F.3d at 1180. Among

the “nonexclusive list of factors” to consider are “frivolousness, motivation,

objective unreasonableness (both in the factual and legal components of the case)

                                             3
and the need in particular circumstances to advance considerations of

compensation and deterrence.” Id. at 1181 (citation and internal quotation marks

omitted). The record does not reflect the existence of any of these factors.

      Neither did the district court abuse its discretion in denying attorneys’ fees

under A.R.S. § 12-341.01. Under this statute, “[t]he proper inquiry for

determining whether a claim arises out of a contract is whether the claim could not

exist but for the breach or avoidance of contract.” Harris v. Maricopa Cty.

Superior Court, 631 F.3d 963, 974 (9th Cir. 2011) (citations, alteration, and

internal quotation marks omitted). The complaint sufficiently alleged a cause of

action for unfair competition independent of any contractual obligations. See

Joshua David Mellberg LLC v. Will, 96 F. Supp. 3d 953, 983 (D. Ariz. 2015)

(setting forth the elements of an unfair competition claim); see also Perry v.

Ronan, 234 P.3d 617, 622 (Az. Ct. App. 2010) (“[A]n action does not arise out of

contract if the contract is only a factual predicate to the action but not the essential

basis of it. . . .”) (citations and internal quotation marks omitted).

      AFFIRMED.

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