NIGHTINGALE HOME HEALTHCARE v. ANODYNE THERAPY (November 23, 2010)
Late last year, the Seventh Circuit affirmed summary judgment in favor of Anodyne Therapy and against Nightingale Home Healthcare (opinion and intheiropinion). The case involved Nightingale's purchase and later return of infrared lamps purchased from Anodyne. The Court affirmed on the grounds that Nightingale suffered no damages. After the affirmance, Judge Barker (S.D. Ind.) awarded $72,000 in attorneys' fees pursuant the Lanham Act’s allowance of such awards in "exceptional cases." Nightingale appeals.
In their opinion, Seventh Circuit Judges Posner, Kanne, and Rovner affirmed. The Court first described the surprisingly varied definitions courts apply to "exceptional cases." It found at least seven different interpretations in the different circuits, although it admitted that a closer analysis of the facts of individual cases would be required to determine if the different interpretations resulted in different outcomes. In the face of these different approaches, the Court looked to for the principle behind this exception to the general rule against awards of attorneys' fees. It concluded that the purpose of the exception was to prevent plaintiffs and defendants from using the Act for strategic purposes, especially when the other party was economically disadvantaged. The Court adopted an "abuse of process" test (i.e., the use of the legal system to accomplish a goal for which it was not designed) to reflect the concerns addressed by the Act. Applying that test in the procedural context of a fee motion, the Court concluded that an "exceptional case" is one in which a claim or defense was objectively unreasonable. Here, the Court had no difficulty finding that Nightingale met the test. The claim was not only without merit but was made for the specific purpose of getting a price concession from Anodyne. In addition to affirming the award below, the Court awarded fees for the appeal.