Background
ThermoLife International and its licensee, Muscle Beach Nutrition, accused sports-nutrition distributor BPI Sports of misbranding and falsely advertising products that competed for the same customers. ThermoLife first sued BPI in Arizona in 2018, alleging false advertising under the Lanham Act and related state-law claims. After the district court dismissed the complaint without prejudice, ThermoLife amended it but later voluntarily dismissed the action while another dismissal motion was pending.
In 2020, ThermoLife filed substantially similar claims against BPI in Florida. That action was transferred to Arizona and dismissed with prejudice, and the Ninth Circuit affirmed the merits dismissal because ThermoLife had not adequately alleged direct competition or a competitive or commercial injury. The district court subsequently found the litigation exceptional under the Lanham Act and awarded BPI $486,207 in fees incurred in both the 2018 and 2020 actions.
The Court’s Holding
The Ninth Circuit affirmed the determination that the litigation was exceptional under the Lanham Act. The majority held that the district court reasonably viewed ThermoLife’s voluntary dismissal and refiling in Florida as suggestive of forum shopping and found that ThermoLife had persisted with materially deficient claims despite repeated dismissals of similar lawsuits for failure to allege direct competition or commercial injury.
Addressing an issue of first impression in the circuit, the majority held that attorney’s fees may qualify as “costs” under Federal Rule of Civil Procedure 41(d) when the statute underlying the litigation authorizes a fee award. Because the Lanham Act permits reasonable fees to a prevailing party in exceptional cases, Rule 41(d) allowed BPI to recover fees from the voluntarily dismissed 2018 action as well as fees from the 2020 litigation. Judge Miller dissented from that portion of the ruling, reasoning that neither the Lanham Act nor Rule 41(d) authorized fees incurred in the separate 2018 case.
The panel otherwise upheld the amount awarded but agreed that the district court had omitted a $31,868 reduction when completing its calculation. It therefore remanded solely to reduce the award from $486,207 to $454,339.
Key Takeaways
- A Lanham Act case may be deemed exceptional when a party persists with claims it knows are deficient and uses litigation tactics suggestive of forum shopping.
- In the Ninth Circuit, Rule 41(d) permits attorney’s fees as costs when the plaintiff refiles the same claim against the same defendant and the underlying statute authorizes attorney’s fees.
- The remand was limited to correcting a computational error and reducing BPI’s fee award to $454,339.
Why It Matters
The decision establishes a Ninth Circuit rule for fee awards after voluntary dismissal and refiling: Rule 41(d) can shift fees from the earlier action when the substantive statute authorizes attorney’s fees. That interpretation gives defendants a potentially significant remedy when plaintiffs dismiss and refile substantially the same statutory claims.
The ruling also underscores that repetitive litigation of claims already rejected for the same substantive deficiency can support an exceptional-case finding under the Lanham Act, particularly when accompanied by procedural maneuvering that suggests forum shopping.