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Singer Management Consultants, Inc.; Live Gold Operations, Inc v. Anne Milgram

August 5, 2010

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

The opinion of the court was delivered by: Roth, Circuit Judge

PRECEDENTIAL

Before: AMBRO, ALDISERT and ROTH, Circuit Judges

OPINION

I. Introduction

This appeal requires us to determine whether Appellant Live Gold Operations, Inc. was a "prevailing party" entitled to 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.

II. Factual Background and Procedural History

Live Gold*fn1 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 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. *fn2

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 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.

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 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 [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 ...


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