Last week, the U.S. Court of Appeals for the Eleventh Circuit issued an opinion in Royal Palm Properties LLC v. Pink Palm Properties LLC, Case No. 21-10872 (July 7, 2022), deciding as an issue of first impression that civil suits can end in a tie.
Royal Palm sued Pink Palm in 2017 for trademark infringement and Pink Palm countersued. The jury found that Pink Palm did not infringe Royal Palm’s trademark and that the trademark was not invalid. Pink Palm subsequently moved for judgment as a matter of law (JMOL), asking the district court to overrule the jury’s determination on trademark validity. The district court granted the motion and entered JMOL of invalidity in Pink Palm’s favor. Royal Palm appealed and the Eleventh Circuit reversed, reinstating the jury’s verdict. Back in the district court, Pink Palm sought costs and fees, arguing it was the prevailing party as it successfully defended against Royal Palm’s trademark infringement claim. The district court held that, in light of the jury’s split decision on the parties’ competing claims, “there was ‘no clear winner’ and, thus, no prevailing party.”
The Eleventh Circuit reviewed de novo (1) whether courts are required to name a prevailing party in every case and (2) whether the district court erred by failing to name Pink Palm the “prevailing party” in this case. On the first question, citing Supreme Court “prevailing party” precedent, the Eleventh Circuit held that “[w]hen the resolution of the parties’ legal dispute does not result in a material change in their legal relationship, there is . . . no prevailing party.” The Court further explained that the text of Rule 54(d) does not allow for multiple prevailing parties. In other words, “a district court may find (at most) one prevailing party, but it is not required to do so in every case.” On the second question, the Court reasoned that by re-instating the initial jury verdict, the district court had “restored the status quo ante” between the parties. The Court stated that the end result in this case was “precisely the kind of legal ‘tie’ where it would make no sense to force the district court to declare a prevailing party.” As neither party had “crossed the threshold to prevailing party status,” the Court affirmed the district court’s decision declining to award fees or costs to either party.
Coauthored by James Beard & Emma Cohen