A Springfield company accused of conspiring to create a national advertising campaign to sell a knock-off cat toy has lost its appeal to reopen the lawsuit against it so it can seek attorneys’ fees.
A three-judge panel of the 8th U.S. Circuit Court of Appeals on March 17 unanimously affirmed a lower-court ruling granting dismissal without prejudice for plaintiff SnugglyCat, a New York company that manufactures the Ripple Rug, a best-selling cat toy.
In 2018, SnugglyCat sued Opfer Communications Inc. and its employees in the U.S. District Court for the Western District of Missouri. The company asserted claims under the Lanham Act, including that Opfer conspired with others to create a campaign to sell a competing product, the Purr N Play.
SnugglyCat later admitted in a filing that the knock-off was never produced, and Opfer moved to dismiss the case.
Before U.S. District Judge Stephen R. Bough took up the matter, SnugglyCat moved to voluntarily dismiss the case because it no longer had the resources to pursue litigation.
SnugglyCat then asked Bough to rule on its motion before Opfer’s motion to dismiss. Bough granted SnugglyCat’s motion, ruling that Opfer and its employees would not be prejudiced by dismissal without prejudice.
Opfer and its employees appealed. On appeal, they argued in part that Bough committed an error of law.
The panel, which comprised Judges Bobby E. Shepherd, L. Steven Grasz and Jonathan A. Kobes, disagreed.
Shepherd said the defendants’ argument is based on their belief that had SnugglyCat not voluntarily dismissed the case, the company and its employees would have prevailed in the action, potentially allowing them to recover attorneys’ fees under the Lanham Act.
At the time of dismissal, the lawsuit was still in its infancy, Shepherd said. The court has never held that a mere potential, speculative loss of opportunity amounts to legal prejudice, he said.
“To the extent Appellants ask us to hold that, as a matter of law, dismissal without prejudice of an action involving a fee-shifting statute necessarily causes the defendant to suffer such plain legal prejudice as to bar the plaintiff from obtaining the dismissal of the action without prejudice, we decline to do so,” Shepherd said.
Jonathan Sternberg, who represented SnugglyCat, was pleased with the ruling.
“I think it’s good that we now have law that says trial judges are not bound one way or another to order or not order a party dismissing a case brought under a fee-shifting statute to pay their opponent’s fees,” he said.
Opfer’s attorney, Bernard Rhodes of Lathrop GPM, said the decision creates a split between the federal appeals circuits, pointing to the 2012 9th U.S. Circuit Court of Appeals ruling in U.S. v. Ito, a similar case decided differently.
“This opinion creates a split, and it does so without affirmatively addressing the 9th Circuit’s opinion,” he said.
Rhodes said his client is considering its next steps.