Opinion
20-cv-527-RSH-DEB
08-02-2024
PETCONNECT RESCUE, INC. et al., Plaintiffs, v. DAVID SALINAS et al., Defendants.
ORDER: (1) DENYING DEFENDANTS' RENEWED MOTION FOR JUDGMENT AS A MATTER OF LAW (2) DENYING DEFENDANTS' MOTION FOR A NEW TRIAL (3) DENYING DEFENDANTS' MOTION FOR ATTORNEY FEES (4) DENYING PLAINTIFFS' MOTION FOR ATTORNEY FEES AND TREBLE DAMAGES (5) DENYING PLAINTIFFS' MOTION FOR CATALYST FEES (6) GRANTING DEFENDANT SELECT PUPPIES, INC.'S MOTION FOR JUDGMENT ON CLAIMS FIVE AND SIX [ECF No. 377, 378, 379, 380, 382, 383]
Hon. Robert S. Huie, United States District Judge
Before the Court are defendant Select Puppies, Inc.'s motion for judgment on Plaintiffs' Fifth and Sixth Claims [ECF No. 377]; defendants Davis Salinas, National City Puppy, LLC, Ray Rothman, Alysia Rothman, and Pet Connect Rescue's (“Salinas Defendants'”) renewed motion for judgment as a matter of law [ECF No. 378], motion for a new trial [ECF No. 379], and motion for attorney fees [ECF No. 380]; and plaintiff PetConnect Rescue, Inc.'s (“Plaintiff's”) motion for attorney fees and treble damages [ECF No. 382] and catalyst attorney fees [ECF No. 383]. As set forth below, the Court denies the renewed motion for judgment as a matter of law, ECF No. 378, the motion for a new trial, ECF No. 379, and the motions for attorney fees, treble damages, and catalyst fees. ECF Nos. 380, 382, 383. The Court dismisses Plaintiffs' Fifth and Sixth Claims and grants Defendant Select Puppies, Inc.'s motion for judgment on these claims, ECF No. 377.
I. BACKGROUND
This case involves claims that Defendants infringed Plaintiffs' names and marks to disguise the sale of non-rescue dogs at California pet stores. This matter was tried before a jury in a five-day trial beginning on April 29, 2024. At trial, Plaintiffs called four witnesses: James Williams, an investigator; Lizette Chanock, the founder of plaintiff PetConnect Rescue, Inc.; Minh Doan, a damages expert; and Elizabeth Jacobelly, a volunteer for animal protection organizations. Plaintiffs also read into the record deposition testimony of defendant Ray Rothman.
At the close of Plaintiffs' case, Defendants moved for judgment as a matter of law pursuant to Federal Rule of Civil Procedure 50(a) as to all claims and all Defendants. Tr. at 680:13-18. The Court granted judgment as to Claim Four (trademark infringement brought by plaintiffs SCDR and Lucky Pup) and Claim Seven (common law fraud brought by plaintiff Sarah Gonzalez). Tr. at 745:14-22. On the trademark claims (One, Two, and Nine), the Court granted judgment as a matter of law to the following defendants: Veronica Salinas, Richard Pena; Virgo Zusa; Red Rock Enterprises of Utah, Inc.; Yellow Store Enterprises, LLC; The Puppy Store, LLC; The Fancy Puppy, LLC; SoCal Puppy Adoptions, Inc.; Brian Mohrfeld; and Select Puppies, Inc. Tr. at 745:1-4. The Court denied Defendants' Rule 50(a) motion as to defendants David Salinas, National City Puppy, LLC, The Puppy Store Las Vegas, LLC, Ray Rothman, Alysia Rothman, and Pet Connect Rescue, Inc. Tr. at 745:10-13. On the false advertising claim (Claim Ten), the Court denied the motion with regard to defendants Ray Rothman, Alysia Rothman, and Pet Connect Rescue, Inc., as to statements on Pet Connect Rescue Inc.'s website. Tr. at 746:6-9. On the same claim, the Court denied the motion with regard to David Salinas, National City Puppy, LLC, and The Puppy Store Las Vegas, LLC as to false statements on the cage cards. Tr. at 746:21-24.
“Tr.” refers to the trial transcript, filed at ECF Nos. 385, 386, 387, 388, and 389.
The Court granted judgment as a matter of law on Claim Nine to SoCal Puppy Adoptions, Inc., Brian Mohrfeld, and Select Puppies, Inc. The Court had previously granted summary judgment in favor of these Defendants on Claims One and Two. See ECF No. 238. After the Court's Rule 50(a) ruling, only Pet Connect remained as Plaintiff.
Defendants did not put on a case. Tr. at 847:2-5.
On May 3, 2024, the jury delivered a verdict in favor of Plaintiff and determined that both “PetConnect Rescue” and “PetConnect Rescue Where Animals are One Step Closer to Home” were valid, protectable trademarks owned by Plaintiff and that defendants David Salinas, National City Puppy, LLC, Ray Rothman, Alysia Rothman, and Pet Connect Rescue, Inc. had infringed on these marks. ECF No. 360 at 1-3. The jury also concluded these same defendants had engaged in false advertising. Id. at 4. The jury awarded damages of $383,000 against defendants David Salinas and National City Puppy, LLC and $3,500,000 against defendants Ray Rothman, Alysia Rothman, and Pet Connect Rescue, Inc. Id. at 5.
The jury found for defendant The Puppy Store Las Vegas, LLC on all claims tried.
The Court now considers the Parties' post-trial motions.
II. RENEWED MOTION FOR JUDGMENT AS A MATTER OF LAW
A. Legal Background
Under Federal Rule of Civil Procedure 50(b), a party that has moved for judgment as a matter of law (“JMOL”) at trial “may file a renewed motion for judgment as a matter of law and may include an alternative or joint request for a new trial under Rule 59.” Fed.R.Civ.P. 50(b). “A renewed motion for JMOL is properly granted ‘if the evidence, construed in the light most favorable to the nonmoving party, permits only one reasonable conclusion, and that conclusion is contrary to the jury's verdict.' A jury's verdict must be upheld if it is supported by substantial evidence that is adequate to support the jury's findings, even if contrary findings are also possible.” Escriba v. Foster Poultry Farms, Inc., 743 F.3d 1236, 1242 (9th Cir. 2014) (quoting Pavao v. Pagay, 307 F.3d 915, 918 (9th Cir. 2002)).
“In assessing the jury's verdict, [a court] may not weigh the evidence but simply ask[s] whether the plaintiff has presented sufficient evidence to support the jury's conclusion.” Castro v. Cnty. of Los Angeles, 833 F.3d 1060, 1066 (9th Cir. 2016). “Reviewing a renewed motion for JMOL requires scrutiny of the entire evidentiary record, but the court ‘must not weigh the evidence, [and instead] should simply ask whether the [nonmoving party] has presented sufficient evidence to support the jury's conclusion. In so doing, the court must draw all reasonable inferences in favor of the nonmoving party and ‘disregard all evidence favorable to the moving party that the jury is not required to believe.'” Escriba, 743 F.3d at 1242-43 (quoting Harper v. City of Los Angeles, 533 F.3d 1010, 1021 (9th Cir. 2008)).
A proper post-verdict Rule 50(b) motion is limited to the grounds asserted in the predeliberation Rule 50(a) motion and a party “cannot properly raise arguments in its posttrial motion for judgment as a matter of law under Rule 50(b) that it did not raise in its preverdict Rule 50(a) motion.” E.E.O.C. v. Go Daddy Software, Inc., 581 F.3d 951, 961 (9th Cir. 2009) (quotations omitted). “[I]n ruling on a Rule 50(b) motion based on grounds not previously asserted in a Rule 50(a) motion,” the court is “limited to reviewing the jury's verdict for plain error, and should reverse only if such plain error would result in a manifest miscarriage of justice.” Id. (citations omitted).
B. Analysis
Defendants raise four arguments, which they assert entitle them to judgment as a matter of law. The Court considers each in turn.
Defendants' motion repeatedly states that the Court should “consider each defendant separately one at a time” but provides no individual analysis as to the evidence against each defendant. See ECF No. 378-1 at 5, 7, 10. Defendants, as the moving party, bear the burden of making arguments as to each defendant with appropriate citations to the record. See Cotton ex rel. McClure v. City of Eureka, Cal., 860 F.Supp.2d 999, 1024 (N.D. Cal. 2012) (rejecting defendants' Rule 50(b) argument “based on their failure to provide any citations to the record to support their conclusory assertions”). Accordingly, the Court declines to address the separate evidence against each defendant where the Defendants themselves, as movants, have failed to do so.
1. Trademark Claims
First, Defendants seek judgment as to all trademark causes of action (Claims One, Two, and Nine) on the theory that there is “no legally sufficient evidentiary basis at trial” to support the jury's verdict that Plaintiff had a valid protectable trademark. ECF No. 3781 at 5-7. According to Defendants, there is no evidence to support the jury's finding that “PetConnect Rescue” and “PetConnect Rescue Where Animals Are One Step Closer to Home” are valid protectable trademarks because the evidence at trial was that they were service marks. See id. Defendants argue that because the jury instructions refer to trademarks and not service marks, the jury's verdict as to trademark infringement is unsupported by the evidence. Id.
Defendants did not raise this argument in their Rule 50(a) motion, and thus they failed to preserve it. During closing arguments, Defendants argued for the first time that because the registration certificates for the marks used the phrase “service mark,” Plaintiffs were not entitled to recover under federal trademark law. See Tr. at 948:22-25 (“Again, these are service marks. Not trademarks.”); 956:20-957:1 (“But this is a trademark case; not a service mark case.”); 957:14-15 (“But you have to show ‘PetConnect Rescue' is a valid protectable trademark, not a service mark.”); 958:1-2 (“And we don't even have a trademark; we have a service mark.”). As a result, the Court added a line to the jury instructions that stated, “A service mark is protectable like a trademark under U.S. trademark law.” Tr. at 975:16-17.
As it was at closing, Defendants' renewed argument on this issue is contrary to Ninth Circuit law. “Service marks and trademarks are governed by identical standards,” and “the only difference between a trademark and a service mark is that a trademark identifies goods while a service mark identifies services” Chance v. Pac-Tel Teletrac Inc., 242 F.3d 1151, 1156 (9th Cir. 2001). There was thus no error in the jury's application of the Lanham Act to Plaintiffs' registered service marks. The Court denies Defendants' motion for judgment as a matter of law on these grounds.
2. False Advertising
Defendants argue judgment as a matter of law should be granted as to the false advertising claim (Claim 10). ECF No. 378-1 at 7. Defendants cursorily submit that they are entitled to judgment because there was “no evidence of any amounts of any profits against any ‘Salinas Defendant.'” Id.
In their Rule 50(a) motion, Defendants argued that the false advertising claim should be dismissed because there was no evidence of actual damages. Tr. at 743:10-17. The Court denied the motion, explaining that Plaintiffs are seeking to recover Defendants' profits instead of actual damages and that Plaintiffs' expert had introduced evidence on these profits. Id. at 743:18-24. Defendants did not argue pre-verdict that there was insufficient evidence of Defendants' profits. Defendants have waived this argument by failing to preserve it in a Rule 50(a) motion. Freund v. Nycomed Amersham, 347 F.3d 752, 761 (9th Cir. 2003) (“A party cannot raise arguments in its post-trial motion for judgment as a matter of law under Rule 50(b) that it did not raise in its pre-verdict Rule 50(a) motion.”). Plaintiff's expert did testify about Defendants' profits, which was sufficient to support the jury's verdict.
3. Damages Award
Defendants relatedly argue that the damages award is not supported by the evidence because Plaintiffs did not prove the individual profits of each Salinas defendant. Defendants argue that although Plaintiffs' expert witness provided a calculation of total profits, she did not provide entity-level revenue figures so the jury could deduct from this number the profits of defendant stores that were dismissed from the case. ECF No. 379-1 at 10. Defendants argue the Court should have stricken the expert testimony. Id.
Again, Defendants waived this argument by failing to address it in a Rule 50(a) motion. See Freund, 347 F.3d at 761. Moreover, this issue was addressed and resolved by agreement of the Parties during trial. After this Court's ruling on the Rule 50(a) motions, which dismissed ten defendants from the case, the Parties agreed that Plaintiffs' expert should retake the stand to testify that the remaining Salinas Defendants' profits were $383,000, rather than the $4.3 million Plaintiffs originally sought. See Tr. at 807:15-21. The jury's award, which adopted the damages amount calculated by Plaintiffs' expert and was limited to the profits of the remaining defendants, was therefore supported by the evidence.
4. Plaintiff's Corporate Status
Finally, Defendants renew their Rule 50(a) argument that plaintiff PetConnect Rescue, Inc. has never been registered as a foreign corporation in California and therefore cannot maintain this action. ECF No. 378-1 at 10-11. The Court rejects this argument as contrary to California law.
Under California's Corporations Code § 2203, a foreign corporation conducting business in California that has not registered with the California Secretary of State “may not . . . maintain an action [in California courts] commenced prior to registering.” Debonne v. Debonne, No. E074972, 2022 WL 16847690, at *2 (Cal.Ct.App. Nov. 10, 2022) (quotations omitted). “A corollary of this rule is that a defendant challenging a foreign corporation's capacity to sue must do so at the earliest opportunity, either in its answer or in a demurrer.” Id.
Defendants' challenge fails on two grounds. First, Defendants have not established that plaintiff PetConnect Rescue, a Maryland corporation, conducts business in California such that the statute would be applicable. See Tr. at 465:9-22. Moreover, even if the statute were applicable, Defendants forfeited any challenge by failing to raise this argument at the earliest opportunity during the pleadings stage of the litigation. See Debonne, 2022 WL 16847690, at *2.
The Court denies Defendants' motion for judgment as of law under Rule 50(b). III. MOTION FOR NEW TRIAL
A. Legal Standard
Under Rule 59, “[t]he court may, on motion, grant a new trial on all or some of the issues-and to any party . . . after a jury trial, for any reason for which a new trial has heretofore been granted in an action at law in federal court.” Fed.R.Civ.P. 59(a). “Such reasons may include a ‘verdict [that] is contrary to the clear weight of the evidence,' a verdict ‘based upon false or perjurious evidence,' or ‘to prevent a miscarriage of justice.'” Crowley v. Epicept Corp., 883 F.3d 739, 751 (9th Cir. 2018) (quoting Passantino v. Johnson & Johnson Consumer Prods., Inc., 212 F.3d 493, 510 n.15 (9th Cir. 2000)). “[T]he authority to grant a new trial . . . is confided almost entirely to the exercise of discretion on the part of the trial court.” Dees v. Cnty. of San Diego, 960 F.3d 1145, 1151 (9th Cir. 2020) (quoting Allied Chemical Corp. v. Daiflon, Inc., 449 U.S. 33, 36 (1980)). “[T]he district court, in considering a Rule 59 motion for new trial, is not required to view the trial evidence in the light most favorable to the verdict. Instead, the district court can weigh the evidence and assess the credibility of the witnesses.” Experience Hendrix LLC v. Hendrixlicensing.com Ltd, 762 F.3d 829, 842 (9th Cir. 2014).
B. Analysis
Defendants' motion for a new trial raises three arguments: (1) Plaintiffs' counsel elicited testimony that prejudiced the jury; (2) Plaintiffs were improperly permitted to reopen their case; and (3) Defendants were prejudiced during closing arguments. ECF No. 379-1 at 1-13.
1. Improper Testimony
Defendants seek a new trial on the ground that counsel for Plaintiffs committed misconduct by introducing improper testimony during trial. ECF No. 379-1 at 10. Defendants argue that the jury “heard [] inadmissible and inappropriate evidence” and “became confused and misled,” which prejudiced Defendants. Id. To obtain a new trial based on attorney misconduct, Defendants must show that “opposing counsel's actions were intentionally improper and that the ‘flavor of misconduct sufficiently permeate[d] an entire proceeding to provide conviction that the jury was influenced by passion and prejudice in reaching its verdict.'” Langley v. Colegio, 854 Fed.Appx. 149, 152 (9th Cir. 2021) (quoting Hemmings v. Tidyman's Inc., 285 F.3d 1174, 1192 (9th Cir. 2002)).
Defendants do not establish that counsel's actions were intentionally improper, nor do they demonstrate that any objectionable testimony resulted in prejudice. Defendants' motion contains a laundry list of instances in which the Court sustained objections- including commonplace form objections-during the course of trial. It is not clear from their motion why Defendants believe they were prejudiced. As examples, Defendants state that there was improper testimony about preliminary injunctions in other cases, settlements with other parties, and state law violations. See ECF No. 379 at 8-9. Defendants appear to argue that they were prejudiced even though the Court sustained their objections, struck improper testimony, and instructed the jury to disregard such testimony. See id. at 8 (arguing “[s]everal objections were made and the court struck such improper action over and over and over. The conduct however continued over and over”).
For example, the Court sustained Defendants' objections regarding the existence of other lawsuits and preliminary injunctions involving Defendants. See Tr. at 57:18-20; Tr. at 494:2-7.
Defendants fail to demonstrate that a new trial is warranted based on attorney misconduct. Defendants' examples of instances where the Court sustained form objections include good faith attempts by Plaintiffs' counsel to elicit testimony, much of which was later admitted with proper foundation. On review of the record, the Court does not conclude counsel acted “with the sole purpose of bringing to the jury something it should not have heard.” Maricopa Cnty. of State of Ariz. v. Maberry, 555 F.2d 207, 219 (9th Cir. 1977). As for prejudice, the Court's preliminary jury instructions informed the jury that when the Court sustains an objection, “you must ignore the question and must not guess what the answer might have been.” ECF No. 351 at 9 (Instruction No. 1.13). When appropriate, the Court also offered curative instructions when a witness's answer was inadmissible. See Tr. at 494:2-7 (“The Court: I'm going to strike that testimony and ask the jury to disregard the answer.”). Reviewing the totality of the circumstances at trial, the Court concludes a new trial is not warranted based upon attorney misconduct.
2. Stipulated Reopening of Plaintiff's Case
Defendants argue they are entitled to a new trial because they were “severely prejudiced” when Plaintiffs' expert “was able to re-testify after Plaintiff[s] rested their case.” ECF No. 279-1 at 11.
As discussed above, after the close of Plaintiffs' case and the Court's resolution of Defendants' Rule 50(a) motion, the Parties agreed to the reopening of Plaintiffs' case to allow Plaintiffs' expert to testify to a lower profit calculation as to the Salinas Defendants to account for the fact that some defendants had been dismissed from the case. The Parties stated their unequivocal agreement on the record. See Tr. at 807:15-21 (“The Court: All right. So it sounds like - Mr. Aliberti, do we have agreement on this? Mr. Aliberti: Yes. Thank you, Your Honor. The Court: Mr. Pease? Mr. Pease: Yes, Your Honor.”). Plaintiffs' expert then testified briefly that she had revised her opinion now that certain defendants had been dismissed from the case. Tr. at 846:1-11. She testified that her new profits estimate for the Pups & Pets store is $383,000. Id. at 846:18-19.
Defendants argue that this evidence is also improper because Pups & Pets was “never a party to this litigation.” See ECF No. 379-1 at 10. As the Court explained in ruling on Defendants' Rule 50(a) motion, Pups & Pets is not a party, but there were exhibits admitted to evidence from which the jury could infer that Pups & Pets is managed by defendant National City Puppy, LLC, which in turn is managed by defendant David Salinas. Tr. at 715:18-22.
Defendants' contention that they were prejudiced by this testimony fails for the simple reason that they consented to it. Moreover, their argument that “[t]he Jury was clearly told these numbers were valid and that damages should be found against the remaining defendants,” see ECF No. 379-1 at 11, is contrary to the trial record. Defendants misstate the record and fail to identify any basis for granting a new trial on these grounds. See Crowley, 883 F.3d at 751.
3. Closing Arguments
Finally, Defendants argue that they were prejudiced because the Court “[a]llowed Plaintiff[s] to reopen their closing argument.” ECF No. 379-1 at 11. This argument again misstates the trial record.
As discussed above, during Defendants' closing argument, counsel argued for the first time that because the certificates of registration for Plaintiffs' marks described the marks as “service marks,” Plaintiffs were not entitled to recover under federal trademark law. See Tr. at 948:22-25. After Defendants' counsel concluded his closing, the Court held a sidebar, explained that this was an incorrect statement of Ninth Circuit law, and informed counsel that a line would be added to the jury instructions (which the Court had not yet read or provided to the jury) that stated, “[a] service mark is protectable like a trademark under U.S. trademark law.” Id. at 975:16-17. The Court offered Defendants' counsel an opportunity to make further argument to the jury before Plaintiffs' counsel began rebuttal; Defendants' counsel declined. Id. at 975:5-9. Plaintiffs' counsel then argued in rebuttal that a service mark is protectable like a trademark and stated that “defense counsel stood here and repeatedly attempted to mislead the jury on the law.” Id. at 978:10-11.
Defendants fail to identify any error that would justify ordering a new trial. The trial record is clear that the Court did not allow Plaintiffs to reopen their closing arguments, but merely allowed Plaintiffs to argue in rebuttal. Defendants' arguments regarding service marks remain contrary to Ninth Circuit law, and the Court's decision to supplement the jury instructions before giving the instructions to the jury did not prejudice either party. See Deck v. Jenkins, 814 F.3d 954, 981 (9th Cir. 2016) (“Arguments of counsel which misstate the law are subject to objection and to correction by the court.”).
Defendants have not met their burden to show the verdict is contrary to the clear weight of the evidence, or based upon false or perjurious evidence, or that the Court otherwise must order a new trial to prevent a miscarriage of justice. See Crowley, 883 F.3d at 751. Accordingly, the Court denies Defendants' motion for a new trial, ECF No. 379.
IV. CLAIMS FIVE AND SIX
Plaintiffs' Second Amended Complaint included claims for unfair business practices under California's Unfair Competition Law (Claim Five) and for violations of the Consumer Legal Remedies Act (Claim Six). These claims survived summary judgment but were not litigated at trial. Pursuant to the Pretrial Order, the Parties agreed that Claim Five would not be presented to the jury, but would instead “be argued to the Court after trial, based on the evidence presented at trial.” ECF No. 319 at 13. The Parties likewise agreed Claim Six would not go to the jury, but Plaintiffs indicated they would seek recovery of fees under the claim post-trial. Id.
On the final day of trial, the Court reminded Plaintiffs that if they wish to move forward with Claims Five and Six, they are required to assert them in post-trial motions or they would be subject to dismissal. Tr. at 1063:16-18. Plaintiffs do not make any arguments in their post-trial briefing as to why they would be entitled to judgment on these claims. Accordingly, the Court grants Defendant Select Puppies Inc.'s motion for judgment on these claims, ECF No. 377.
V. ATTORNEY FEES AND DAMAGES
Section 35(a) of the Lanham Act provides for the award of attorney fees to the prevailing party in “exceptional cases.” 15 U.S.C. § 1117(a). An exceptional case is “one that stands out from others with respect to the substantive strength of a party's litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated.” BillFloat Inc. v. Collins Cash Inc., No. 23-15405, 2024 WL 3242622, at *5 (9th Cir. July 1, 2024) (quoting Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545, 554 (2014)). In analyzing a fee request under the Act, the Court examines the “totality of the circumstances” and looks to a nonexclusive list of factors including “frivolousness, motivation, objective unreasonableness (both in the factual and legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence.” SunEarth, Inc. v. Sun Earth Solar Power Co., 839 F.3d 1179, 1181 (9th Cir. 2016) (en banc) (quoting Octane Fitness, 572 U.S. at 554). The moving party must prove their entitlement to fees by a preponderance of the evidence. SunEarth, 839 F.3d at 1181.
In addition to actual damages, the Lanham Act provides for recovery of treble damages in certain circumstances. Under the Act, “the court shall, unless the court finds extenuating circumstances, enter judgment for three times such profits or damages” if the violation consists of “intentionally using a mark or designation, knowing such mark or designation is a counterfeit mark.” 15 U.S.C. § 1117(b).
A. Plaintiff's Motion for Attorney Fees and Treble Damages
Plaintiff PetConnect Rescue, Inc. filed a motion for attorney fees and treble damages pursuant to the Lanham Act. See ECF No. 382. Based on the figures in its motion, Plaintiff appears to seek approximately $750,000 in attorney fees.
Plaintiff argues that this case qualifies as “exceptional” under the Lanham Act because of the severity of Defendants' infringement of Plaintiff's mark, the number of puppy-mill puppies that Defendants sold and transferred, and Defendants' “scorched earth litigation strategy.” ECF No. 282-3 at 2. Plaintiff argues that Defendants' expert witness submitted a frivolous report that unnecessarily prolonged the litigation. Id. at 14.
Plaintiff fails to show by a preponderance of the evidence that this is an exceptional case for which it is entitled to attorney fees. First, Plaintiff argues that attorney fees are justified because Defendants' actions were “fraudulent, deliberate, and willful.” ECF No. 382-3 at 7. Plaintiff cites the volume of puppies that Defendants transferred and sold, see id. at 4, but this does not establish fraudulent, deliberate, or willful infringement. Additionally, the procedural history of this case does not reflect that this lawsuit was “exceptional” in a manner favoring an award of fees to Plaintiff. Although the Second Amended Complaint contained ten claims brought by four plaintiffs against twenty-two defendants, only one plaintiff prevailed at trial on only four claims against five defendants. See Octane Fitness, 572 U.S. at 554 (explaining a case may be exceptional if it “stands out from others with respect to the substantive strength of a party's litigating position (considering both the governing law and the facts of the case)”).
Plaintiff's Reply seeks judicial notice of hundreds of pages of declarations, discovery, and transcripts from separate, state court litigation to prove Defendants' conduct was willful. See ECF No. 402-1 at 1-212. Plaintiff's attempt to introduce new arguments and evidence in a reply brief is improper. See Zamani v. Carnes, 491 F.3d 990, 997 (9th Cir. 2007) (“The district court need not consider arguments raised for the first time in a reply brief.”); Provenz v. Miller, 102 F.3d 1478, 1483 (9th Cir. 1996) (explaining a party may not submit new evidence in a reply without affording opposing counsel an opportunity to respond). The Court denies Plaintiff's request for judicial notice and considers only the evidence in this case in assessing whether this case qualifies as “exceptional” under the Lanham Act.
Second, Plaintiffs argue that fees are justified because of Defendants' litigation tactics. Plaintiffs complain that the expert report submitted by Defendants “plays semantic games with the issues at the heart of this proceeding.” ECF No. 382-3 at 9. Plaintiffs' disagreement with the methodology of an expert-whom the defense never called as a witness-is insufficient to establish this case as “exceptional” for purposes of attorney fees. Additionally, the docket reflects unreasonable conduct by Plaintiffs in the course of this litigation. See, e.g., ECF No. 318 (precluding witnesses and exhibits Plaintiffs failed to disclose during discovery); ECF Nos. 304, 310 (rejecting first and second proposed pretrial orders due to the Parties' dilatory filings and failure to follow Court instructions). The Court declines to find that this case is an exceptional one justifying an award of fees to Plaintiffs. See Octane Fitness, 572 U.S. at 555 (“[A] district court may award fees in the rare case in which a party's unreasonable conduct-while not necessarily independently sanctionable-is nonetheless so ‘exceptional' as to justify an award of fees.”).
Plaintiff also seeks treble damages of $1,149,000 against David Salinas and National City Puppy, LLC and $10,500,000 against Ray Rothman, Alyssa Rothman, and Pet Connect Rescue, Inc. ECF No 382-3 at 11. Plaintiff argues that Defendants' infringement of the PetConnect mark was “‘willful' in that it was deliberately undertaken as part of a scheme to illegally circumvent the California law banning the retail sale of puppy mill dogs.” ECF No. 382-3 at 13.
The jury did not find Defendants liable for participating in a scheme to circumvent California law, but rather for violating trademark law. More specifically, the jury verdict established that Defendants used “Pet Connect Rescue” in commerce without Plaintiff's consent “in a manner that is likely to cause confusion among ordinary consumers.” ECF No 360 at 2-3. The verdict did not require a showing that Defendants were aware of Plaintiff's trademark or intentionally injured Plaintiff. See ECF No. 363 at 20 (Jury Instruction No. 17) (“[E]ven in the absence of proof that the defendant acted knowingly, the use of plaintiff's trademark to identify similar goods may indicate a likelihood of confusion.”). Plaintiff's motion does not identify any trial evidence indicating that Defendants intentionally used a mark knowing it to be counterfeit. Indeed, Plaintiff offered relatively sparse evidence at trial, calling only four witnesses. The Court declines to order the trebling of damages, based on the lack of evidence of intentional infringement. See Lindy Pen Co. v. Bic Pen Corp., 982 F.2d 1400, 1409 (9th Cir. 1993) (abrogated on alternative grounds); Hem & Thread, Inc., v. Wholesalefashionsquare.com, Inc., No. CV190283CBMAFMX, 2021 WL 3868779, at *8 (C.D. Cal. July 28, 2021).
The Court denies Plaintiff's request for attorney fees and treble damages under the Lanham Act, ECF No. 382.
B. Defendants' Motion for Attorney Fees and Costs
The Salinas Defendants also move for $194,207.65 in attorney fees and costs, pursuant to 15 U.S.C. § 1117, as to the claims for which judgment was granted in Defendants' favor at summary judgment and during trial. See ECF No. 380. Other than asserting that they have prevailed on certain claims, Defendants' motion contains no legal analysis as to why this case is “exceptional” under the Lanham Act. Defendants have failed to meet their burden to show that they are entitled to the relief they seek. See SunEarth, 839 F.3d at 1181. The Court denies Defendants' motion for attorney fees and costs under 15 U.S.C. § 1117, ECF No. 380.
VI. CATALYST FEES
Plaintiffs seek catalyst attorney fees pursuant to California Code of Civil Procedure § 1021.5. ECF No. 383-3. Section 1021.5 of the California Code of Civil Procedure allows attorney fees to be granted under a “catalyst theory” in an action that has resulted in the enforcement “of an important right affecting the public interest.” See Tipton-Whittingham v. City of Los Angeles, 34 Cal.4th 604, 610 (2004). These fees may be awarded if “a significant benefit . . . has been conferred on the general public”; the award is appropriate based on the “necessity and financial burden of private enforcement”; and “such fees should not in the interest of justice be paid out of the recovery.” Cal. Civ. Proc. Code § 1021.5.
Where a defendant changes its behavior before a claim reaches judicial resolution, plaintiffs who wish to recover catalyst fees must show: “(1) the lawsuit was a catalyst motivating the defendants to provide the primary relief sought; (2) that the lawsuit had merit and achieved its catalytic effect by threat of victory, not by dint of nuisance and threat of expense . . .; and (3) that the plaintiffs reasonably attempted to settle the litigation prior to filing the lawsuit.” Ellis v. JPMorgan Chase & Co., 752 Fed.Appx. 380, 384 (9th Cir. 2018) (quoting Tipton-Whittingham, 34 Cal.4th at 608 (2004)). “To have a catalytic effect, the lawsuit must be a substantial causal factor contributing to the defendant's change in conduct.” Id. (quotations omitted). “At the very least, a plaintiff must establish ‘the precise factual/legal condition that [it] sought to change or affect' as a prerequisite for establishing the catalytic effect of its lawsuit.” Graham v. DaimlerChrysler Corp., 34 Cal.4th 553, 576 (2004), as modified (Jan. 12, 2005). “The catalyst theory is generally not invoked in cases where the merits have been fully litigated to a final judgment.” Skaff v. Rio Nido Roadhouse, 55 Cal.App. 5th 522, 540 (2020), as modified on denial of reh'g (Oct. 20, 2020).
Plaintiffs state they are entitled to catalyst attorney fees against (1) defendants David Salinas, Veronica Salinas, Richard Pena, Virgo Zusa, Red Rock Enterprises of Utah, Inc., The Puppy Store, LLC, Yellow Store Enterprises, LLC, National City Puppy, LLC, SoCal Puppy Adoptions, Inc., The Fancy Puppy, LLC, and The Puppy Store Las Vegas, LLC for stopping their plans to engage in unfair business practices with the fake SoCal Puppy Adoptions, Inc. entity; (2) defendants Select Puppies, Inc. and Brian Mohrfeld for stopping their sales of fraudulently labeled puppies; and (3) defaulted defendants Anita Chavira and Jason Duhammel for ending their fraudulent scheme. ECF No. 383-3 at 2. Plaintiffs' argument appears to relate to Claim Five-upon which Plaintiffs have not prevailed-by alleging that all Defendants engaged in an “unlawful, fraudulent, and unfair puppy laundering scheme” in violation of California Business and Professions Code § 17200. ECF No. 93 ¶¶ 122-151.
To the extent Plaintiffs are arguing for catalyst fees related to claims that did reach final judgment, they are foreclosed from doing so. See Skaff, 55 Cal.App. 5th at 540 (“The catalyst theory is generally not invoked in cases where the merits have been fully litigated to a final judgment.”).
Plaintiffs' motion for catalyst fees fails to establish that this litigation was the catalyst for the changes in Defendants' behavior. Plaintiffs assert that this action “resulted in stopping Select Puppies from continuing to ship puppies from breeders falsely labeled as being from ‘Pet Connect Rescue' . . . thereby achieving relief from the benchmark conditions challenged by the lawsuit.” ECF No. 383-3 at 6. At other times, however, Plaintiffs mention other lawsuits and injunctions in state court targeting the same conduct and fail to specify why the instant lawsuit was a “substantial causal factor,” see Graham 34 Cal.4th at 577, in stopping the shipment and sale of these puppies. Plaintiffs' motion also does not address whether Defendants' change in behavior was instead caused by changes in California law, including the repeal of Health & Safety Code § 122354.5 (effective January 1, 2019) and the enactment of Health & Safety Code § 122354.5 (effective January 1, 2021), which prohibited the sale of dogs in pet stores altogether. As Defendants point out, defendants Select Puppies, Inc. and Brian Morhfeld were not served until after the new law took effect. See ECF No. 390 at 2. Plaintiffs have failed to show that this lawsuit was a catalyst behind the change in Defendants' behavior. See Ellis v. JPMorgan Chase & Co., 752 Fed.Appx. 380, 384 (9th Cir. 2018) (affirming denial of catalyst fees where “the OCC consent judgment and the [National Mortgage Settlement], rather than this lawsuit, were the catalysts that caused Chase to reform its property inspection policies”).
The Court accordingly denies Plaintiffs' motion for catalyst fees, ECF No. 383.
VII. CONCLUSION
For the above reasons, the Court:
1. DENIES Defendants' renewed motion for judgment as a matter of law, ECF No. 378.
2. DENIES Defendants' motion for a new trial, ECF No. 379.
3. DENIES Defendants' motion for attorney fees and costs, ECF No. 380.
4. DENIES Plaintiff PetConnect Rescue Inc.'s motion for attorney fees and costs, ECF No. 382.
5. DENIES Plaintiffs' motion for catalyst fees, ECF No. 383.
6. GRANTS Defendant Select Puppies Inc.'s motion for judgment on Claims Five and Six, ECF No. 377.
IT IS SO ORDERED.