Cat Toy Company SnugglyCat Inc. wins appeal against Opfer Communication regarding dismissal of suit over lack of resource
Date Published: Jun 21, 2021
Snuggly Cat Inc. (“SnugglyCat”) a New-York based corporation owned by Fred and Natasha Ruckel invented and marketed a cat toy under the trademark and service mark of “Ripple Rug”. In March 2018 a lawsuit was filed by SnugglyCat in the United States District Court for the Western District of Missouri- Springfield (“District Court”) for claiming against the Defendants for the use of the trademarked cat toy in an infomercial which was an advertising campaign to sell the “Purr N’ Play”, a product similar and identical to the trademarked product “Ripple Rug” (SnugglyCat, Inc. V. Opfer Communications, Inc. 953 F.3d 522). It was alleged by SnugglyCat that “Purr N’ Play” was non-existent and the Defendants were marketing and advertising “Ripple Rug” in the name of “Purr N’ Play”. Even the tag of “Ripple Rug” was visible in the infomercial. Later, SnugglyCat filed a motion to voluntarily dismiss the case without prejudice according to Rule 41(a)(2) on the ground that SnugglyCat is a small company and does not have resources to bear the cost of further proceeding. Additionally, the corporation also pointed out that they were at early stage of discovery and so no such statements or depositions were recorded. The Defendants in district court opposed the act of SnugglyCat on which they would be in prejudicial position if such suit is dismissed without prejudice. They stated that if such an action is taken then they would no longer get the benefit of recovering the attorney’s fees and so would be prejudicial. The district court pronounced its order in favour of SnugglyCat and granted the motion to voluntarily dismiss the case without prejudice. Aggrieved by such ruling, the Defendants appealed at the US Court of Appeals for the Eighth Circuit. (SnugglyCat, Inc. V. Opfer Communications, Inc. 953 F.3d 522 (2020)) and pleaded to invalidate motion of voluntary dismissal without prejudice. The US Court of Appeals dismissed the appeal and upheld the order passed by the district court.
The Opfer Communications, Inc., Lori Robertson, The Bargain Show, LLC, and Scott Opfer (collectively “Appellants”) preferred an appeal against the order of the district court on the ground that the district court has abused its discretionary powers in allowing SnugglyCat to voluntarily dismiss the action without prejudice. It was alleged by the Appellants that the district court went beyond its powers to pronounce an order in favour of the Appellant while citing the cases of Mullen v. Heinkel Filtering Sys., Inc., 770 F.3d 724, 727 (8th Cir. 2014). While citing the case of United States v.Thirty-Two Thousand Eight Hundred Twenty Dollars and Fifty-Six Cents($32,820.56) in United States Currency ($32,820.56 in U.S. Currency), 838 F.3d 930,937 (8th Cir. 2016)the Appellants contended that while determining if voluntary dismissal without prejudice should have been granted or not, the court should look into the claims and the explanation that is provided for such dismissal. Few of the factors that are kept in consideration are if such dismissal has costed wastage of judicial time or will such dismissal prejudicially affect the other parties or not. The Appellants have appealed and challenged the lower court’s order on the following grounds:
- That the lower court ignored the Appellants argument regarding Legal Prejudice that is caused to them due to voluntary dismissal of the suit without prejudice.
- That the lower court had committed an error of law.
- That the lower court had committed error of judgement.
The court indulged itself in dealing with each ground in detail and finally rejected to uphold the order passed by the lower court.
With respect to the first ground, it was contended by the Appellants that according to Lanham Act the court has discretion to award reasonable attorney fees to the prevailing party only in exceptional situation. They contended that if the suit is dismissed without prejudice, then there would not be in the position of “prevailing party” status and hence, they would be prejudiced to not be able to claim and recover attorney fees. The Appellant Court disapproved this contention of the Appellant and stated that it would be wrong to say that the lower court ignored this argument of legal prejudice. In fact, it was pointed out by the appellant court that the order specifically mentions about legal prejudice and states that such an order will not prejudicially affect the appellants. Hence, the court was of the opinion that the lower court has appropriately entertained the argument of legal prejudice as well as rightly adjudicated it.
With respect to the second ground, it was contended by the Appellants that the lower court had erred in implementing the law in cases of fee-shifting statute. They contended that it would be wrong to say that even after voluntary dismissal of SnugglyCat’s suit, they would be the prevailing party. This is because, the case was at a very early stage of discovery and no proper depositions or statements were recorded. Hence, at this stage, it was contended that it would be very difficult to ascertain as to who would prevail had the action continued. Therefore, in appellant’s view the case should not have dismissed. Had it not been dismissed; they would have been the prevailing party and could have recovered the attorney fees. The appellant Court rejected this argument and stated that the district court had rightly dismissed the case without prejudice. It further stated that if any court is convinced that there would be prejudice, then such action would not be granted. However, it was observed by the appellant court that there was no case of establishing any rule that would bar dismissal without prejudice in all cases in which a Plaintiff has sued under a fee-shifting statute.
With respect to the third ground, the Appellants contended that the lower court has erred in pronouncing judgement by abusing its powers. The Appellant court rejected this argument and observed that having all factors placed before the district would, the district court was right in favouring SnugglyCat’s stance of it being a small company which lacked financial resources to continue a lawsuit and also considering the fact that the case was in its very initial stage of discovery and no improvements had taken place. Being mindful of such consideration of documents and factors upon which the order was pronounced , it could not have been said to have abused its powers. Thus, it was observed that no error of judgement had been committed.
Therefore, the Appellant Court dismissed the appeal presented before it and affirmed the order passed by the district court in favour of SnugglyCat Inc.
SnugglyCat Inc. v. Opfer Communications Inc. Case number: No. 18-3500