Singer Management Consultants, Inc. v. Milgram , 650 F.3d 223 ( 2010 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 09-2238
SINGER MANAGEMENT CONSULTANTS, INC.;
LIVE GOLD OPERATIONS, INC.,
Appellants.
v.
ANNE MILGRAM,
Attorney General of the State of New Jersey
On Appeal from the United State District Court
for the District of New Jersey
(D. C. No. 2-07-cv-03929)
District Judge: Honorable Dickinson R. Debevoise
Argued on November 17, 2009
Before: AMBRO, ALDISERT and ROTH, Circuit Judges
(Opinion filed: August 5, 2010)
William L. Charron, Esquire (Argued)
Pryor Cashman
7 Times Square
New York, NY 10036
Counsel for Appellants
Anne Milgram, Esquire
Attorney General of the State of New Jersey
Andrea M. Silkowitz, Esquire
Assistant Attorney General
Jeffrey Koziar, Esquire (Argued)
Deputy Attorney General
Division of Law
124 Haley Street, 5 th Floor
P. O. Box 45029
Newark, NJ 07101
Counsel for Appellee
OPINION
ROTH, Circuit Judge:
I. Introduction
This appeal requires us to determine whether Appellant
Live Gold Operations, Inc. was a “prevailing party” entitled to
2
recover its reasonable attorney’s fees, pursuant to 42 U.S.C. §
1988(b), in view of the relief it obtained in its lawsuit to restrain
the Attorney General of the State of New Jersey from her
allegedly unconstitutional enforcement of the New Jersey
Deceptive Practices in Musical Performances Statute (Truth in
Music Act), N.J. Stat. Ann. § 2A:32B-1 to -3. At the TRO
hearing, the District Court determined that Live Gold was likely
to succeed on the merits of its constitutional claims and issued
a temporary restraining order against the State. At the
subsequent preliminary injunction hearing, the District Court
persuaded the State to adopt Live Gold’s interpretation, “bound”
the State to its new position, and vacated the then-expired TRO
without granting further relief. Later, the Court granted the
State’s motion to dismiss, concluding that Live Gold’s
constitutional claims were moot in view of the parties agreement
that “[t]he constitutional disagreements in this case were
resolved” at the preliminary injunction hearing.
For the reasons that follow, we conclude that the District
Court erred in holding that Live Gold was not a prevailing party
because it “voluntar[ily]” changed its interpretation of the Truth
in Music Act. Accordingly, we will vacate the judgment of the
District Court and remand this case for an order awarding
reasonable attorney’s fees and costs and for the calculation
thereof.
3
II. Factual Background and Procedural History
Live Gold 1 manages and promotes the music recording
and performing groups known as “The Platters” and “The
Cornell Gunter Coasters,” pursuant to licenses of unregistered
trademarks by the same names. In August 2007, the State
learned that Live Gold had scheduled a two-week concert of the
Platters and Coasters groups at the Hilton Hotel in Atlantic City,
to begin on August 18. The State contacted Live Gold and
informed it that its use of the trademarks “The Platters” and
“The Cornell Gunter Coasters” might violate the Truth in Music
Act, which provides:
A person shall not advertise or conduct a live
musical performance or production through the
use of an affiliation, connection or association
between the performing group and the recording
group unless:
(a) The performing group is the authorized
registrant and owner of a federal service mark for
the group registered in the United States Patent
and Trademark Office; or
(b) At least one member of the performing group
was a member of the recording group and has a
legal right by virtue of use or operation under the
1
Plaintiff Singer Management was voluntarily dismissed
from this case on July 15, 2009.
4
group name without having abandoned the name
or affiliation of the group; or
(c) The live musical performance or production
is identified in all advertising and promotion as a
salute or tribute; or
(d) The advertising does not relate to a live musical
performance or production taking place in this State; or
(e) The performance or production is expressly
authorized by the recording group.
N.J. Stat. Ann. § 2A:32B-2.2
Live Gold responded by providing the State with
evidence of its ownership of common law unregistered
trademarks in the groups’ names, asserting that the unregistered
trademarks should be considered “express authorizations” under
2
The Act defines the term “performing group” as “a vocal
or instrumental group seeking to use the name of another group
that has previously released a commercial sound recording under
that name.” N.J. Stat. Ann. § 2A:32B-1. “Recording group” is
defined under the Act as “a vocal or instrumental group, at least
one of whose members has previously released a commercial
sound recording under that group’s name and in which the
member or members have a legal right by virtue of use or
operation under the group name without having abandoned the
name or affiliation with the group.” Id.
5
subsection (e) of the Truth in Music Act. Not satisfied that
ownership of an unregistered trademark could comply with the
Truth in Music Act, the State advised the Hilton that it could
avoid liability under the Truth in Music Act by ticketing and
advertising the concert as a “tribute” or “salute” to the Platters
and Coasters groups. The Hilton complied.
On August 17, 2007, the day before the first Hilton
concert, Live Gold sued the State, seeking a TRO and injunctive
relief against its enforcement of the Truth in Music Act. Live
Gold argued, inter alia, that the State’s enforcement of the Truth
in Music Act conflicted with the Lanham Act, 15 U.S.C. § 1125,
and violated Live Gold’s civil rights.
At the TRO hearing, Live Gold explained that it had the
right to conduct performances using its unregistered trademarks,
and objected that the State’s actions caused the Hilton to label
their groups inaccurately as “tributes” or “salutes.” In response,
the State argued that, because Live Gold’s unregistered
trademarks did not constitute “express authorizations” under the
Act, the Hilton concert must be billed as a tribute or salute. The
District Court found the State’s position to present “a very
serious problem,” and explained:
That is not what [Live Gold’s groups] want to do.
That is not what they say accurately describes
them. So, in effect, the State is telling the Hilton
to advertise or publicize this event in a way which
is not in accordance with the description which
these promoters of the events say is accurate.
6
...
I think there is sufficient problem with the State’s
position so that I – there is a likelihood of success
on the merits in this particular case.
...
[T]here may be substantial federal rights being
impaired by the action of the State in this case,
generally, under the statute . . . important federal
rights are at issue, both freedom of speech rights
under the Lanham Act and private rights to
nonregistered trademark – trade name.
Consequently, the Temporary Restraining Order
will issue.
That TRO “temporarily restrained and enjoined [the State] from
interfering in any way with [the Hilton concert], and the
marketing and promotion thereof.” The Hilton then resumed
advertising and ticket sales without identifying the concert as a
tribute.
On September 7, 2007, the parties returned to the District
Court for a hearing on the preliminary injunction. In its written
submission prior to the hearing, the State argued that an
unregistered trademark satisfied the Truth in Music Act only if
the performing group obtained express authorization from an
original group member, included an original member, or
denominated itself as a “tribute” or “salute.” The State
contended that its interpretation of the Act was consistent with
7
the Lanham Act, the First Amendment, and the Equal Protection
Clause of the Fourteenth Amendment. It also objected to Live
Gold’s suit on jurisdictional grounds.
The District Court began the preliminary injunction
hearing by asking the State why it insisted on distinguishing
between registered and unregistered trademarks: “Why
shouldn’t they proceed on an equal basis, two valid
trademarks?” In response, the State argued that because the
Lanham Act accorded a rebuttable presumption of validity to
registered trademarks, the State’s discrimination against
unregistered trademarks was consistent with federal law. The
District Court repeatedly rejected this argument, explaining that
the differences under federal law between registered and
unregistered trademarks for purposes of validity did not
authorize the State to discriminate against an unregistered
trademark, once proven valid. “There’s no reason for it,” the
Court declared. Nevertheless, the State continued to press its
interpretation of the Truth in Music Act. The District Court
again rejected the State’s position, stating, “[w]ell, I fail to see
it.”
After rejecting the State’s arguments, the District Court
suggested that the State reconcile the Truth in Music Act with
the Lanham Act by interpreting subsection (e) to permit
unregistered trademark holders to perform under their group
names, without any additional requirements. The State
capitulated, effectively adopting Live Gold’s interpretation of
the Act. Incredulous, Live Gold objected that the State had
made “a 180 degree shift in position.” The Court agreed, telling
the State that the position in its brief was “contrary to what I
8
[just] understood you to say.” In response, the State explained
that its previous position “was inadvertently put into the brief.”
The Court then declared that the State would be “bound by” its
new interpretation of the Act.
Live Gold then moved for summary disposition,
contending that it “should win” because the State had
“admitt[ed] the allegations” in the complaint. The Court
demurred, observing that the State’s new position resolved the
“basic legal problem, which was an equal protection problem,
a First Amendment problem, [and] a due process problem.” The
Court again took note of the State’s “evolved” position, but saw
no need to “go any further.” The Court then announced:
We have a statement by the State of New Jersey
as to what the meaning of this statute is insofar as
it relates to common law trademarks, and I think
we’ve stated it. If there’s a valid common law
trademark under the Lanham Act, and if whoever
has possession of it can establish a right to that
possession, he is to be treated – or she is to be
treated in the same way as the holder of a
registered trademark. Now, no necessity of – to
say or give any tribute to anybody. So we have an
agreement on that.
The Court then vacated the TRO, which had already expired “by
its own term[s] [after] 10 days, and . . . was directed primarily
to the August performance at the Hilton.” Having secured the
State’s position going forward, the District Court left open the
option of continuing the consideration of the preliminary
injunction but found no need to convert the TRO to a
preliminary injunction at that time.
9
By letter dated September 25, 2008, Pryor Cashman LLP
sought leave to move for an award of its attorney’s fees and
costs incurred in representing Live Gold. The application was
referred to a Magistrate Judge, who converted it to a letter
motion. On December 29, 2008, the Magistrate Judge denied
Pryor Cashman’s application, concluding that Live Gold was not
a “prevailing party” under 42 U.S.C. § 1988(b) because the State
had voluntarily changed its position on the meaning of the Truth
in Music Act.
On January 13, 2009, Plaintiffs appealed the Magistrate
Judge’s order to the District Court. On January 16, 2009, the
State filed a motion to dismiss. The Court addressed both issues
in a hearing on March 16, 2009.
At the March 16 hearing, the Court first addressed the
State’s motion to dismiss. Seeking to identify any unresolved
constitutional issues, the District Court asked the State to
confirm that “[e]ven though literally, [the Truth in Music Act]
might be interpreted to exclude [performing groups holding
unregistered trademarks], it doesn’t really do so and you’re not
interpreting it to do so.” The State concurred, stating, “[t]he
position we took on September 7, 2007, in this courtroom, is the
position we’re taking now.” The Court then obtained the
agreement of all parties that the preliminary injunction hearing
resolved Live Gold’s constitutional claims, and asked “[w]hy
shouldn’t [Live Gold’s complaint] be dismissed, other than
[Pryor Cashman’s] application for attorney’s fees?” After
hearing Live Gold’s arguments, the Court remained
unpersuaded, explaining “I just don’t know what else there is to
address. . . . In effect, [Live Gold] won the case.”
The Court then turned to Pryor Cashman’s application for
attorney’s fees. After hearing from Live Gold, the Court asked,
“State, why shouldn’t you be responsible for attorney’s fees[?]”
10
In response, the State contended that a fee award was
inappropriate because “there was no past enforcement action”
and because it had never taken any position on the Truth in
Music Act. The Court disagreed with the latter contention,
reminding the State that it made a “180 degree change in
position because [it] came in negating everything that [Live
Gold] [was] urging, and in effect conceded [Live Gold] [was]
right, and permitted everything to go forward.” The State again
distanced itself from its initial arguments, explaining that they
were “not . . . as clear as they could have been” because the
State was rushed in responding to the TRO application. The
Court took the matter under advisement.
On April 7, 2009, the District Court entered an order
affirming the Magistrate’s order denying Live Gold’s attorney’s
fees and granting the State’s motion to dismiss. In its order, the
District Court held that Live Gold was not a prevailing party
because the District Court “did not enter a preliminary
injunction or any other order on the merits of the case.” The
District Court also concluded that the State voluntarily changed
its position, stating that, “[w]hile it may be true that this court’s
involvement aided in the resolution of the constitutional issues
between the parties, the fact remains that the issues were not
resolved as the result of a court order.” The Court additionally
granted the State’s motion to dismiss, concluding that Live
Gold’s claims were moot in light of the parties’ agreement that
the preliminary injunction hearing had resolved all of Live
Gold’s constitutional claims. In this appeal, Live Gold
challenges only the District Court’s denial of attorney’s fees.
III. Discussion
Pursuant to § 1988(b), courts “may allow the prevailing
party . . . a reasonable attorney’s fee as part of the costs” in civil
rights cases. Notwithstanding the permissive language of the
11
statute, this Court has held that a prevailing party “should”
recover an award of attorney’s fees, absent special
circumstances. Truesdell v. Phila. Hous. Auth., 290 F.3d 159,
163 (3d Cir. 2002). We “exercise plenary review over . . . the
question of whether [a party] was a ‘prevailing party.’” Id.Plaintiffs who “succeed on any significant issue in
litigation which achieves some of the benefit the parties sought
in bringing suit” may be considered “prevailing parties.”
Hensley v. Eckerhart, 461 U.S. 424, 433 (1983) (quoting
Nadeau v. Helgemoe, 581 F.2d 275, 278-79 (1st Cir. 1978)).
Although the litigation need not progress to a final judgment on
the merits, a party seeking “prevailing party” status must
demonstrate a “judicially sanctioned change in the legal
relationship of the parties.” Buckhannon Bd. & Care Home v.
W. Va. Dep’t of Health & Human Res., 532 U.S. 598, 605
(2001). A “voluntary change in conduct . . . lacks the necessary
judicial imprimatur on the change.” Id. In other words, “a
plaintiff does not become a ‘prevailing party’ solely because his
lawsuit causes a voluntary change in the defendant’s conduct.”
People Against Police Violence v. City of Pittsburgh, 520 F.3d
226, 232 (3d Cir. 2008). Rather, the change in the parties’ legal
relationship must be the product of judicial action. See
Buckhannon, 532 U.S. at 605-06.
The crux of this appeal is whether the change in the legal
relationship of the parties was brought about through action of
the District Court or through the voluntary conduct of the State.
The State argues, and the District Court agreed, that its change
in position was voluntary. We conclude that the District Court
erred in reaching this determination.
At the TRO hearing, the District Court heard argument
with respect to Live Gold’s claim that the State was enforcing
the Truth in Music Act in violation of its constitutional rights.
12
The District Court saw a “very serious problem” with the State’s
interpretation of the Act, which required holders of unregistered
trademarks to identify their performing groups as “tributes” or
“salutes,” and noted that the State’s position threatened to
impair Live Gold’s “substantial federal rights.” After hearing
argument from both sides, the District Court found a likelihood
of success on the merits and entered the TRO.
At the subsequent preliminary injunction hearing, the
State held fast to its original position that the Truth in Music Act
required holders of unregistered trademarks to obtain some form
of “express authorization” to perform under their trademarked
names. It was not until after the District Court had rejected all
of the State’s arguments and a preliminary injunction was
imminent that the State made an about-face in position, adopted
Live Gold’s position, and was declared by the Court to be
“bound” by it.
In light of these facts, we hold that Live Gold obtained
“judicially sanctioned” relief “on the merits” so that it was a
prevailing party within the meaning of Buckhannon, 532 U.S. at
603, 605. By virtue of the TRO, the State was prohibited from
enforcing its interpretation of the Truth in Music Act, and Live
Gold’s groups were able to perform without having to identify
themselves as tribute groups. This alone may have been enough
to confer prevailing party status, as the TRO did more than
preserve the status quo and arguably afforded Live Gold all the
relief it sought. See LSO, Ltd. v. Stroh, 205 F.3d 1146, 1161
(9th Cir. 2000) (plaintiff became a prevailing party by obtaining
a TRO that did more than preserve the status quo by allowing
the plaintiff’s convention and art exhibition to take place); cf.
John T. v. Del. Cnty. Intermediate Unit, 318 F.3d 545, 558-59
(3d Cir. 2003) (a preliminary injunction to maintain the status
quo during the course of IDEA proceedings did not make the
plaintiff a prevailing party).
13
Yet the Court’s involvement went far beyond its issuance
of the TRO. At the preliminary injunction hearing, the State
initially persisted in its view that an unregistered trademark was
insufficient to satisfy the Truth in Music Act, absent additional
authorization.3 The Court candidly disagreed, repeatedly
rejecting the State’s argument that the Act could constitutionally
distinguish between registered and unregistered trademarks.
Against the Court’s inimical questioning, and after spending
several transcript pages defending its position, the State
eventually acquiesced in Live Gold’s interpretation of the Act.
At the Court’s request, the State agreed for the first time that a
valid unregistered trademark constituted “express authorization”
under subsection (e), without any further requirement. The
Court then declared that the State would be “bound” by its new
interpretation, which resolved “the basic legal problem.” Later,
when considering the State’s motion to dismiss, the Court
commented that Live Gold “[i]n effect, . . . won the case,” as a
result of the events at the preliminary injunction hearing.
Here, Live Gold did not obtain relief solely because it
filed a lawsuit, Buckhannon, 532 U.S. at 605, 610, nor because
the District Court entered a TRO that merely preserved the
status quo, see John T., 318 F.3d at 558-59. In our view, the
Court effected a “judicially sanctioned change in the legal
relationship of the parties,” Buckhannon, 532 U.S. at 605, by
entering the TRO, and later rejecting the State’s position on the
3
The State’s representation that it never “engaged in any
enforcement action or even offered an interpretation of the Truth
in Music Act when [Live Gold] filed suit,” is misleading in light
of its acknowledgment at oral argument that it expressly advised
the Hilton that “to avoid any problems . . . [it] can bill this
concert as a tribute.” Recording of Oral Argument at 21:25-
22:16.
14
merits, persuading the State to abandon that position, and
declaring that the State was “bound” by its new interpretation of
the Act. The Court’s active involvement impelled the State to
make, in the Court’s words, a “180 degree change in position
because [it] came in negating everything that [Live Gold was]
urging, and in effect conceded they were right.” In our view, the
State’s change in position was a direct “result[] of the legal
process,” People Against Police Violence, 520 F.3d at 234,
wherein the District Court examined both parties’ arguments
and placed its “judicial imprimatur” on Live Gold’s
interpretation of the Act, Buckhannon, 532 U.S. at 605. See also
Palmetto Props., Inc. v. Cnty. of Dupage, 375 F.3d 542, 550 (7th
Cir. 2004) (where the defendant county repealed an ordinance
“only after . . . and presumably because of” the district court’s
determination that the ordinance was unconstitutional, that
repeal was “involuntary – indeed exhibiting judicial
imprimatur”). Based on these circumstances, we must reject the
District Court’s conclusion that the State’s change of heart was
“voluntary.”
We also reject the District Court’s conclusion that Live
Gold obtained no relief “on the merits.” The District Court
issued the TRO after determining that Live Gold had a
likelihood of success on its underlying constitutional claims.
Live Gold’s success was all but assured when the District Court
rejected the State’s interpretation of the Truth in Music Act as
inconsistent with federal law. Only then did the State change its
position, mooting Live Gold’s claim for a preliminary injunction
by agreeing for the first time that an unregistered trademark
could satisfy the Act. Given this sequence of events, we must
reject the District Court’s conclusion that Live Gold is not a
prevailing party simply because a preliminary injunction never
issued. See People Against Police Violence, 520 F.3d at 234(“The fact that plaintiffs achieved their success by litigating and
enforcing a preliminary injunction rather than by proceeding to
15
final judgment on the merits does not diminish the substance of
their litigated victories.”); Palmetto, 375 F.3d at 549-50 (“It
would defy reason and contradict the definition of ‘prevailing
party’ under Buckhannon . . . to hold that simply because the
district court abstained from entering a final order . . . [plaintiff]
somehow did not obtain a ‘judicially sanctioned change.’”);
Walker v. City of Mesquite, Tex., 313 F.3d 246, 250 (5th Cir.
2002) (plaintiffs received “judicial relief” entitling them to
prevailing party status because, “[a]lthough the permanent
injunction sought by the [plaintiffs] was never granted,” the
appellate court ruled “as a matter of law, that the remedial order
was unconstitutional for precisely the reasons argued by the
[plaintiffs]”). Although Live Gold did not obtain a preliminary
injunction, it undeniably “receive[d] at least some relief on the
merits,” Buckhannon, 532 U.S. at 603, when the District Court
sustained its interpretation of the Act and “bound” the State to
that interpretation. To conclude otherwise would profoundly
elevate form over substance.
Finally, we observe that, as a practical matter, the State’s
unilateral actions mooted Live Gold’s claims just when it
appeared that the District Court would enter an order in Live
Gold’s favor. However, even without such an order, in view of
the concession that the District Court finally obtained from the
State on its interpretation of the Truth in Music Act, we find it
very clear that in the future the State will not treat holders of
unregistered trade marks differently than it treats holders of
registered trademarks. Thus, even without the order, the court’s
actions memorialized on the record the interpretation that the
State will give to the Act – the complete relief that Live Gold
sought. On these facts, we deem the State’s belated change of
position insufficient to prevent an award of prevailing party
attorney’s fees to Live Gold.
16
IV. Conclusion
For the reasons stated above, we conclude that
Buckhannon permits us to award § 1988(b) attorney’s fees under
the circumstances of this case. Accordingly, we will vacate the
order of the District Court and remand for entry of an order
awarding fees and costs to Pryor Cashman and for the
calculation of these fees and costs in a reasonable amount.
17
AMBRO, Circuit Judge, dissenting
The issue in this case is whether a party has “prevailed”
within the meaning of 42 U.S.C. § 1988 if that party obtains a
temporary restraining order the day after it files suit (after a
hearing but before briefing from the opposing side), but 22 days
later is denied a preliminary injunction because the opposing
party’s voluntary change of position moots the case. My
colleagues say yes. Because I believe that Supreme Court
precedent requires us to answer no, I respectfully dissent.1
I. Governing Precedent
To be eligible to make a prevailing-party claim under
§ 1988, the plaintiff must, “at a minimum, . . . be able to point
to a resolution of the dispute which changes the legal
relationship between itself and the defendant.” Texas State
Teachers Ass’n v. Garland Indep. Sch. Dist., 489 U.S. 782, 792
(1989).2 The Supreme Court so far has identified two such
1
However, my heart is with the majority. Were the
attorneys’ fees determination based solely on equitable
considerations, I would readily conclude that Live Gold was a
“prevailing party.”
2
Of course, the resolution must “achieve[] some of the
benefit the part[y] sought in bringing suit.” Hensley v.
Eckerhart, 461 U.S. 424, 433 (1983) (internal quotation marks
and citation omitted).
resolutions: (1) judgments on the merits, and (2) court-ordered
consent decrees (including settlement agreements enforced
through consent decrees). Buckhannon Bd. & Care Home, Inc.
v. W.V. Dep’t of Health & Human Res., 532 U.S. 598, 604
(2001).
The first resolution contains two independent
requirements: (1) a judgment (2) that was on the merits.3
A. The Judgment Requirement
A grant of summary judgment or a trial verdict in favor
of the plaintiff is no doubt a “judgment.” In contrast, a court’s
“judicial pronouncement that the defendant has violated the
Constitution” does not create the requisite “material alteration
of the legal relationship between the parties . . . until the
plaintiff becomes entitled to enforce a judgment.” Farrar v.
Hobby, 506 U.S. 103, 112–13 (1992).
Thus, when an appellate court, in reversing the district
court’s dismissal of the plaintiff’s claim, ruled that the plaintiff’s
constitutional rights were violated, the Supreme Court held that
the plaintiff had not “prevailed” because there was no
enforceable judgment. Hewitt v. Helms, 482 U.S. 755, 760
3
Live Gold does not argue that the second resolution, “court-
ordered consent decree,” is in play here, nor could it, for the
reasons discussed below. See infra note 8.
2
(1987). The only “relief” to the plaintiff from this appellate
victory was “the moral satisfaction of knowing that a federal
court concluded that his rights had been violated.” Id. at 762.
B. The Merits Requirement
Any judgment must also be “on the merits.” As
recognized by the Supreme Court shortly after § 1988 was
amended to allow attorney’s fees, “Congress intended to permit
the interim award of counsel fees only when a party has
prevailed on the merits of at least some of his claims.”
Hanrahan v. Hampton, 446 U.S. 754, 758 (1980) (per curiam)
(emphases added); see also id. at 757 (“[I]t seems clearly to
have been the intent of Congress to permit such an interlocutory
award only to a party who has established his entitlement to
some relief on the merits of his claims, either in the trial court or
on appeal.”). Similarly, the Supreme Court has observed that
“[r]espect for ordinary language requires that a plaintiff receive
at least some relief on the merits of his claim before he can be
said to prevail.” Hewitt, 482 U.S. at 760 (citing Hanrahan, 446
U.S. at 757).
Indeed, in an area of the law that “has been framed in
various ways,” Hensley, 461 U.S. at 433, the merits-based
requirement established in Hanrahan and Hewitt has been
consistently repeated throughout the Court’s “prevailing party”
jurisprudence. See Sole v. Wyner, 551 U.S. 74, 82 (2007);
Buckhannon, 532 U.S. at 603–04, 608; Farrar, 506 U.S. at
3
110–12; Garland, 489 U.S. at 790, 792. We thus have followed
suit to hold that, to be entitled to prevailing party fees based on
interim relief, relief must be “derived from some determination
on the merits.” J.O. v. Orange Twp. Bd. of Educ., 287 F.3d 267,
274 (3d Cir. 2002).
II. Live Gold did not receive a “judgment on the merits,”
and therefore was not a prevailing party
A. The temporary restraining order was not
issued on the merits
In this case, we have one judgment—a temporary
restraining order. In People Against Police Violence v. City of
Pittsburgh, 520 F.3d 226 (3d Cir. 2008) (“PAPV”), we held that
injunctive relief “can, under appropriate circumstances, render
a party ‘prevailing.’” Id. at 233.
However, the “merits” requirement is difficult to meet in
the context of TROs and injunctions, as the plaintiff needs only
to show a likelihood of success on the merits to be granted
relief. Because of this, we have held that a court’s finding of
“reasonable probability of success on the merits” is not a
resolution of “any merit-based issue.” John T. v. Del. County,
318 F.3d 545, 559 (3d Cir. 2003) (internal quotation marks and
citation omitted). As this “probability” ruling is usually the only
merits-related legal determination made when courts grant
4
TROs and preliminary injunctions, it follows that parties will not
often “prevail” based solely on those judgments.
Our decision in PAPV provides an example of that rare
situation where a merits-based determination is made at the
injunction stage. There, a rally organizer challenged the
constitutionality of an ordinance that required groups to prepay
police protection costs before they could receive a permit for
parades and rallies. PAPV, 520 F.3d at 229. At the first hearing
in the case, the District Court granted the requested TRO after
“ c o n c lu d in g th a t [ th e o rd in a n c e ] ‘w a s f a c ially
unconstitutional,’” and that, even if the City voluntarily did not
enforce the ordinance (as it had offered to do), “a permit regime
devoid of any prescribed process would also be
unconstitutional.” Id. Therefore, the Court enjoined the City
from enforcing the law, imposed its own temporary procedures
governing permits, and directed the parties to meet and confer
concerning a new proposal. Id. at 229–30. The City later
proposed a revised ordinance, but the Court found it
problematic, converted the TRO to a preliminary injunction, and
requested further briefing. Id. at 230.
The City submitted a second revised ordinance, and in the
meantime formally repealed the unconstitutional provision. Id.After this repeal, the City moved to dismiss the suit. Id. The
Court denied the motion because no new procedures had taken
the now-repealed ordinance’s place, and a lack of guidelines
was itself unconstitutional. Id. The injunction remained in
5
effect for over two years until a new ordinance that satisfied the
plaintiffs’ concerns was enacted. Id. Only at that point did the
Court lift the injunction and close the case with the parties’
agreement. Id.As this summary makes clear, the legal victories in PAPV
are far from the events in the current case. The District Court
here never ruled, as did the PAPV Court, that the challenged law
(or application of the law) was unconstitutional. Id. at 234.
Instead, the TRO was based only on a “likelihood of success on
the merits.” 4 App. 187. In PAPV, the TRO prohibited
enforcement of the challenged ordinance and affirmatively
created new procedures to govern the city in the meantime. The
TRO in our case merely enjoined the State of New Jersey “from
interfering in any way with live performances by Plaintiffs’
respective groups at the Hilton Hotel in Atlantic City, New
4
While the Court suggested at the TRO hearing that the
State’s interpretation of the law posed “a very serious problem,”
App. 186, and recognized “a significant risk there may be
substantial federal rights being impaired by the action of the
State,” App. 187, that will be true in almost all of these
cases—§ 1988 deals with civil rights cases, which invariably
involve “very serious” and “substantial federal rights.” The
Court merely acknowledged that “the State maybe has some
merit to its position,” and stated it could resolve the merits “at
a later date upon the return day of the Order to Show Cause.”
App. 187 (emphasis added).
6
Jersey, and the marketing and promotion thereof.” App. 190.5
The State remained free to enforce the Truth in Music Act (so
long as it did not interfere with the Hilton performances).
Therefore, the TRO here was not merits-based. As such,
it does not confer eligibility for prevailing party status. We must
determine if anything occurred after the TRO to resolve the
controversy on the merits and render Live Gold the prevailing
party under § 1988.
B. The State’s actions after the TRO issued were
voluntary, and no judgment was issued
There was no judgment in this case (except the TRO)
because the State mooted the case at the preliminary injunction
hearing by agreeing with Live Gold’s position. As noted, the
Supreme Court has identified two formal resolutions that make
a winning attorney eligible for a fee award: (1) enforceable
judgments on the merits, and (2) court-ordered consent decrees.
Buckhannon, 532 U.S. at 604. Buckhannon characterized these
5
The majority states that, after the TRO was entered, the
Hilton “resumed advertising and ticket sales without identifying
the concert as a tribute.” Maj. Op. at 7. According to the
record, this is incorrect. While the groups were introduced by
their proper names at the concert, the Hilton did not resume
advertising (despite the TRO’s protection), and the tickets
identified the groups as “tribute” groups. App. 265, 280.
7
two resolutions as “examples” of decisions that create the
necessary material alteration of the legal relationship of the
parties. Id. at 604–05. Thus, there may be resolutions other
than the two identified in Buckhannon that warrant prevailing
party status (although the Supreme Court has yet to identify
any). But even if they are merely examples, Buckhannon
precludes the events in this case from qualifying as a third form
of resolution that can support prevailing party status.
1. Under Buckhannon, the State’s voluntary
change of position does not make Live Gold a
prevailing party
Some background is useful to understand the sea change
caused by Buckhannon in this area of the law. Prior to that
decision, the rule in most circuits was that a plaintiff was a
“prevailing party” if it “achieve[d] the desired result because the
lawsuit brought about a voluntary change in the defendant’s
conduct.” Id. at 601–02. This became known as the “catalyst
theory.” Id.For example, we held pre-Buckhannon that a plaintiff
who could “prove that the existence of the lawsuit accomplished
the original objectives of the lawsuit without a formal judgment
c[ould] be a ‘prevailing party.’” Baumgartner v. Harrisburg
Hous. Auth., 21 F.3d 541, 544 (3d Cir. 1994), overruled by
Buckhannon, 532 U.S. at 602–05. We applied the “well-
8
established” catalyst theory to allow attorney’s fees when
defendants “voluntarily changed their behavior to eliminate the
complained-of conduct.” Id. at 544–45. To support this theory,
we relied in part on the policy consideration that “if defendants
could deprive plaintiffs of attorney’s fees by unilaterally
mooting the underlying case by conceding to plaintiffs’
demands, attorneys might be more hesitant about bringing these
civil rights suits, a result inconsistent with Congress’ intent in
enacting section 1988.” Id. at 548. Thus, we held that plaintiffs
could be prevailing parties “notwithstanding the absence of a
judgment or consent decree” so long as they “accomplished the
original objectives of the lawsuit.” Id. at 544, 551.
Were this the law governing us today, I would join my
colleagues, as Live Gold accomplished its objectives by filing
a lawsuit that catalyzed the State to change its position
voluntarily. That there was no judgment or consent decree did
not matter under Baumgarter, and because the “existence of the
lawsuit accomplished the original objectives of the lawsuit,”
attorney’s fees would be warranted. Id. at 544.
But Buckhannon overruled Baumgartner, and the latter
is no longer the law. In Buckhannon, the Supreme Court
reiterated that theretofore it had “only awarded attorney’s fees”
when the plaintiff obtained a “judgment on the merits” or a
“court-ordered consent decree.” 532 U.S. at 605. It had not
awarded attorney’s fees under the following circumstances:
where the plaintiff acquired a “judicial pronouncement that the
9
defendant has violated the Constitution unaccompanied by
‘judicial relief,’” id. at 606 (quoting Hewitt, 482 U.S. at 760)
(emphasis in original); where the plaintiff “secured the reversal
of a directed verdict,” id. at 605–06 (citing Hanrahan, 446 U.S.
at 759); or where there was a “nonjudicial alteration of actual
circumstances,” id. at 606 (internal quotation marks and citation
omitted). The “catalyst theory” was added to this list, as there
is no “judicially sanctioned change” in the parties’ “legal
relationship.” Id. at 605. “A defendant’s voluntary change in
conduct, although perhaps accomplishing what the plaintiff
sought to achieve by the lawsuit, lacks the necessary judicial
imprimatur on the change.” Id.
In so holding, the Court considered the same policy
argument we raised in Baumgartner—that without the catalyst
theory “defendants [could] unilaterally moot[] an action before
judgment in an effort to avoid an award of attorney’s fees”—but
was not swayed. Buckhannon, 532 U.S. at 608–09. Thus,
however persuasive that argument may seem, it cannot influence
our decision here.
To repeat, Live Gold obtained no “judgment” other than
the initial TRO, which was plainly not “on the merits.” At the
preliminary injunction hearing, the State faced a highly skeptical
District Court. Partway through that hearing, the State chose to
agree with the position pressed by the plaintiff (and, it appears,
favored by the District Court). As that agreement resolved the
constitutional issues, the case was mooted. Even if there are
10
circumstances where a “judgment on the merits” or a “court-
ordered consent decree” is not required for prevailing-party
status, Buckhannon prevents the events in this case from
qualifying. Were I writing for the majority, my analysis would
stop here.
2. The Majority’s Attempt to Circumvent
Buckhannon
My colleagues recognize that “the State’s unilateral
actions mooted Live Gold’s claims.” Maj. Op. at 16. This
should end the analysis: Buckhannon holds that if the plaintiff
“achieves the desired result because the lawsuit brought about
a voluntary change in the defendant's conduct,” it does not
“prevail.” 532 U.S. at 601. To hold that Live Gold prevailed
because the State changed its legal position, my colleagues
resurrect the “catalyst theory” that was laid to rest in
Buckhannon. In an attempt to disguise the true nature of its
analysis, they point to three ways in which Live Gold received
“relief on the merits”: the District Court (1) “rejected” the
State’s arguments, Maj. Op. at 8, 13, 14, 15; (2) “persuaded” the
State to change its position, id. at 3, 15; and (3) “declar[ed]” the
State “bound” by its new position, id. at 3, 9, 13, 14, 15, 16.
These three observations, even if one accepts the guesswork
required to make the first two, do not overcome the fact that the
State changed its position without a court order (in other words,
“voluntar[il]y change[d] [its] conduct,” Buckhannon, 532 U.S.
at 605), and no enforceable judgment was issued on the merits.
11
Turning to the first of these observations, a court’s
statements during a motions hearing cannot turn into a
“judicially sanctioned change” if no order or enforceable
judgment results. The District Court’s rejection of the State’s
argument during the preliminary injunction hearing (whatever
“rejection” in this context means 6 ) is not “judicial relief.” If it
were, enforceable rulings could result from mere banter between
a judge and a litigant during a court hearing. Judges would need
to be careful with their words and questions during oral
argument, as playing devil’s advocate with one side (even if the
judge agrees with that side) could turn into an award of
attorney’s fees for the other. Does whether a party “prevails”
turn on how “hot” the bench is, or how definitively the court
indicates its inclinations? The absurd results that would arise if
a judge’s comments during oral arguments constituted
enforceable “judicial relief” exemplify the rationale for
requiring courts to make actual rulings.
Second, the majority relies on the District Court’s
persuasion of the State during oral argument to change its
position. But even if the State’s change were court-encouraged
or court-prompted, it was not court-ordered. As the District
Court put it in denying attorney’s fees to Live Gold, “[w]hile it
may be true that [its] involvement aided in the resolution of the
6
To state that the District Court “rejected” the State’s
position implies the Court did something other than express its
doubts about the legality of that position. It did not.
12
constitutional issues between the parties, the fact remains that
the issues were not resolved as the result of a court order.” App.
14. That the change came after intense questioning by the
District Court does not overcome that the State altered its
position without a court order. In other words, no matter the
motivation for the State’s change in position, it remains that the
State voluntarily changed its position.
To repeat, under Buckhannon voluntary conduct by the
defendant cannot support an award of attorney’s fees. There is
no exception for voluntary conduct that results from judicial
pressure. The majority today creates this apparent exception to
Buckhannon with no support in Supreme Court precedent or our
own precedent.7
7
The majority’s analysis has no logical conclusion. Suppose
the District Court had remained silent during the preliminary
injunction hearing, but the State changed its position because it
had researched the District Court’s prior opinions and
anticipated the way the Court would rule. Would that change
warrant attorney’s fees? Or suppose the District Court
announces at the beginning of the hearing its tentative views,
subject to the argument at the hearing. If the State immediately
accepts that the District Court’s tentative views are correct,
without questioning or prodding by that Court, would this
change satisfy the majority’s test?
13
Our decision in PAPV is instructive in this context. The
City of Pittsburgh did not voluntarily pass the new ordinance
that ended the case. PAPV, 520 F.3d at 233. Instead, the City
enacted a new ordinance because it was ordered to do so by the
Court in the preliminary injunction. Id. at 233–34 (“It was
precisely because the Court believed voluntary change was not
to be expected that it ordered the City not to engage in the
practices of which plaintiffs complained. There was nothing
voluntary about the City’s giving up those practices. . . . The
District Court . . . directed the City to submit its proposed
revis[ed ordinance] to the Court and to confer with plaintiffs
regarding the constitutionality of its proposal.”). If the City had
not been required by a court order to pass a new ordinance, but
had instead passed it voluntarily, allowing attorney’s fees would
have violated Buckhannon. Indeed, such was the case in
Buckhannon: the state legislature voluntarily enacted two bills
that mooted the plaintiffs’ suit, and the Supreme Court held that
the plaintiff had not “prevailed” under those circumstances. 532
U.S. at 601.
As applied here, had the State of New Jersey changed its
interpretation of the Truth in Music Act pursuant to an order that
its current interpretation was unconstitutional, this case would
be governed by PAPV, and attorney’s fees would be warranted.
But the State was not required to change its view, or ordered to
do so by the Court. It changed its interpretation of the statute in
the middle of a legal debate at a motions hearing. Whereas the
success in PAPV was “a result of plaintiffs’ efforts and court-
14
enforced victories rather than defendant’s voluntary actions,”
520 F.3d at 236, the plaintiff’s success in this case was a result
of the State’s voluntary decision to change its legal position.
Under Buckhannon, this success does not render the plaintiff a
prevailing party.
Finally, my colleagues find great meaning in the Court’s
statement that the State was “bound” to the new interpretation,
which “memorialized on the record” the State’s new position.
See Maj. Op. at 3, 9, 13, 14, 15, 16. Their reliance falls short for
two reasons.
First, this was merely a “judicial pronouncement . . .
unaccompanied by judicial relief.” Buckhannon, 532 U.S. at
606 (internal quotation marks and citation omitted). Following
the hearing, the Court issued no order or other judicial relief
requiring the State to maintain this position. “[T]he fact is that
[Live Gold]’s counsel never took the steps necessary to have a
declaratory judgment . . . properly entered. Consequently, [Live
Gold] received no judicial relief.” Hewitt, 482 U.S. at 760.
Second (and even more fundamentally), the State was not
actually “bound” to its new interpretation by any court order.
The State could have gone back on its word without violating
any order or being in contempt of court. For example, assume
that, after the preliminary injunction hearing, the State reverted
to its initial interpretation of the Act. Could Live Gold have
15
argued that the State was in violation of a court order, such as an
injunction or a declaratory judgment? Of course not.8
8
For this reason, the State’s actions at the preliminary
injunction hearing cannot be analogized to a “court-ordered
consent decree.” Consent decrees can support a fee award
because they require “judicial approval and oversight,” and there
is “federal jurisdiction to enforce” them. Buckhannon, 532 U.S.
at 604 n.7; see also Aronov v. Napolitano, 562 F.3d 84, 91 (1st
Cir. 2009) (en banc) (“[A]n obligation to comply and the
provision of judicial oversight to enforce that obligation are the
sine qua non for a consent decree.”); Smyth v. Rivero, 282 F.3d
268, 280–81 (4th Cir. 2002) (“The parties to a consent decree
expect and achieve a continuing basis of jurisdiction to enforce
the terms of the resolution of their case in the court entering the
order.”). They “contemplate[] a court’s continuing involvement
in a matter” and “may ultimately be enforceable by contempt.”
Aronov, 562 F.3d at 91–92; see also Truesdell v. Philadelphia
Hous. Auth., 290 F.3d 159, 165 (3d Cir. 2002) (holding that a
court order that “gave [the plaintiff] the right to request judicial
enforcement of the settlement” rendered the plaintiff a
“prevailing party”).
While there may be functional equivalents of consent
decrees that can support an award of attorney’s fees (for
example, when “a settlement agreement is embodied in a court
order such that the obligation to comply with its terms is
court-ordered,” Smyth, 282 F.3d at 281; see also Truesdell, 290
F.3d at 165), this is not such a case. Here, unlike with a consent
decree, the State’s agreement in this case to maintain a certain
legal position was not made part of any court order. Therefore,
16
However, Live Gold would not be without recourse. The
District Court’s statement that the State was now “bound” was
merely a recognition of the rule of judicial estoppel, also known
as the “doctrine against the assertion of inconsistent positions.”
Ryan Operations G.P. v. Santiam-Midwest Lumber Co., 81 F.3d
355, 358 (3d Cir. 1996). This rule, designed to prevent parties
from “playing fast and loose with the courts,” “seeks to prevent
a litigant from asserting a position inconsistent with one that she
has previously asserted in the same or in a previous proceeding.”
Id. (internal quotation marks and citation omitted); see also New
Hampshire v. Maine, 532 U.S. 742, 749 (2001). Therefore, Live
Gold could argue that the State, based on the interpretation it
gave during the preliminary injunction hearing (which the
District Court relied upon in declining to enter an injunction),
was judicially estopped from reverting to its initial
it was not enforceable and did not change the legal relationship
between the parties. Rather than provide “judicial relief,” the
Court merely made a “judicial observation” that the State had
changed its position. See Buckhannon, 532 U.S. at 606 (a
“judicial pronouncement” without judicial relief cannot support
a fee award). And while “consent” may sound a lot like
“voluntary,” the key to a consent decree is the decree—an
enforceable order. To conclude that the State’s voluntary
change in position amounts to a “consent decree” would
overrule Buckhannon’s holding that a “defendant’s voluntary
change in conduct, although perhaps accomplishing what the
plaintiff sought to achieve by the lawsuit, lacks the necessary
judicial imprimatur on the change.” Id. at 605.
17
interpretation. See G-I Holdings, Inc. v. Reliance Ins. Co., 586
F.3d 247, 262 (3d Cir. 2009) (noting that judicial estoppel can
apply if the party asserting a new position previously
“convince[ed] the District Court to accept its earlier position”).
My point is this: the District Court’s observation that the
State was “bound” by its new interpretation of the Truth in
Music Act was, at most, an oral acknowledgment that judicial
estoppel could preclude it from changing its position again. Put
another way, the State’s voluntary statements at the injunction
hearing bound it, not the Judge’s statements. Without a court
order requiring the State to maintain that interpretation, the
“legal” relationship between the parties has not changed.
3. The Majority’s Mode of Analysis Was
Rejected by Buckhannon
The Supreme Court, as it noted in Buckhannon, has
consistently “avoided an interpretation of the fee-shifting
statutes that would have spawned a second litigation of
significant dimension.” 532 U.S. at 609 (internal quotation
marks, citation, and brackets omitted). One of the problems
with the “catalyst theory” was that it “would require analysis of
the defendant’s subjective motivations in changing its conduct.”
Id. Courts would need to engage in a “highly factbound
inquiry” that “may turn on reasonable inferences from the nature
and timing of the defendant’s change in conduct.” Id. (internal
quotation marks and citation omitted). This was not a “formula
18
for ready administrability,” and violated the principle that a
“request for attorney’s fees should not result in a second major
litigation.” Id. at 609–10 (internal quotation marks and citations
omitted).
The analysis by my colleagues today does exactly that:
they analyze “the defendant’s subjective motivations in
changing its conduct.” Id. at 609. They conclude that the State
was “persuad[ed]” and “impelled” by the District Court to
change its position. Maj. Op. at 3, 15. As the State itself has
never revealed its subjective motivations, my colleagues must
rely on “reasonable inferences from the nature and timing of the
defe ndant’s change in conduct” to reach these
conclusions—precisely the mode of analysis Buckhannon
rejected. Buckhannon, 532 U.S. at 609.
Speculation is required not only as to the State’s
intentions and motives, but also as to the District Court’s. The
majority posits that success for Live Gold was “all but assured”
before the State’s change in position, and that a preliminary
injunction was “imminent.” Maj. Op. at 13, 15. Other than
making “reasonable inferences” from the hearing transcript,
there is no way to determine that these were indeed the Court’s
intentions.9
9
Judge Debevoise, in denying attorney’s fees, made no
indication a preliminary injunction was imminent at that hearing.
He simply stated that the “basic legal problems” in the case were
19
Under the majority’s analysis, then, courts will need to
divine the defendant’s subjective reasons for altering its
behavior and the trial court’s subjective intentions. While the
Supreme Court has been careful to “avoid[] an interpretation of
the fee-shifting statutes” that would “result in a second major
litigation,” the inquiry required by the majority results in exactly
that. Buckhannon, 532 U.S. at 609 (internal quotation marks
and citation omitted).
In sum, to conclude that the State changed its position
because the District Court pressured it to do so “would require
analysis of the defendant’s subjective motives in changing its
conduct”—the very analysis the Supreme Court held
impermissible in Buckhannon. Id. To be sure, Live Gold
“achieve[d], by instituting litigation, the practical relief sought
in [its] complaint.” Id. at 634 (Ginsburg, J., dissenting). But an
analysis that focuses on the “practical impact of the
lawsuit,”—as urged by the Buckhannon dissent, id. at 641
(Ginsburg, J., dissenting)—was rejected by the Buckhannon
majority, and is not the governing law. Even if I could say for
certain the State voluntarily changed its position because it knew
the District Court was about to rule against it, that subjective
reason cannot render the State’s decision to do so involuntary.
resolved by “the State’s agreement” with Live Gold’s legal
position, and that he had not “enter[ed] a preliminary injunction
or any other order on the merits of the case.” App. 9, 13.
20
Live Gold thus cannot be considered a “prevailing party” in this
case.
* * * * *
Because no enforceable judgment on the merits was
issued in this case, and the State’s actions that mooted the case
were voluntary, I believe Buckhannon tells us that Live Gold
was not a prevailing party. Given that precedent, I respectfully
dissent.
21