                             NOT FOR PUBLICATION

                      UNITED STATES COURT OF APPEALS
                                                                           FILED
                             FOR THE NINTH CIRCUIT
                                                                           DEC 04 2015
                                                                        MOLLY C. DWYER, CLERK
                                                                         U.S. COURT OF APPEALS
AVIVA USA CORPORATION, an Iowa                   No. 13-16858
corporation; AVIVA BRANDS LIMITED,
a United Kingdom limited company,                D.C. No. 2:11-cv-00369-JAT

                Plaintiffs-counter-defendants
- Appellees,                                     MEMORANDUM*

 v.

ANIL VAZIRANI, an individual;
VAZIRANI & ASSOCIATES
FINANCIAL, LLC, an Arizona limited
liability company; SECURED
FINANCIAL SOLUTIONS, LLC, an
Arizona limited liability company,

                Defendants-counter-claimants
- Appellants.



AVIVA USA CORPORATION, an Iowa                   No. 13-16869
corporation; AVIVA BRANDS LIMITED,
a United Kingdom limited company,                D
                                                 .C. No. 2:11-cv-00369-JAT
                Plaintiffs-counter-defendants
- Appellants,

 v.

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
JAMES REGAN, an individual; REGAN
& ASSOCIATES LLC, an Arizona limited
liability company,

               Defendants - Appellees,

ANIL VAZIRANI, an individual;
VAZIRANI & ASSOCIATES
FINANCIAL, LLC, an Arizona limited
liability company; SECURED
FINANCIAL SOLUTIONS, LLC, an
Arizona limited liability company,

               Defendants-counter-claimants
- Appellees.


                    Appeal from the United States District Court
                             for the District of Arizona
                 James A. Teilborg, Senior District Judge, Presiding

                      Argued and Submitted October 23, 2015
                            San Francisco, California

Before: WALLACE, BLACK**, and CLIFTON, Circuit Judges.

      Appellants Anil Vazirani, Vazirani & Associates Financial, LLC, and

Secured Financial Solutions, LLC (collectively “Appellants”) appeal from the

district court’s judgment denying them attorney fees under the Lanham Act’s

“exceptional case” provision. 15 U.S.C. § 1117(a). Cross-Appellants Aviva USA


       **
            The Honorable Susan H. Black, Senior Circuit Judge for the U.S.
Court of Appeals for the Eleventh Circuit, sitting by designation.

                                         2
Corporation and Aviva Brands Limited (collectively “Aviva”) appeal several of the

district court’s orders, including (1) the district court’s summary judgment in favor

of Appellants on Aviva’s trademark, unfair competition, anticybersquatting, and

Arizona anti-racketeering claims, (2) the district court’s judgment on the pleadings

in favor of Appellants on Aviva’s federal anti-racketeering claim, and (3) the

district court’s order granting Appellants attorney fees under Arizona’s anti-

racketeering statute.1

      Aviva argues that the district court erred in granting Appellants summary

judgment on Aviva’s trademark claims under the Lanham Act. It argues that

Appellants’ use of Aviva’s mark on a website critical of Aviva’s business practices

violates the Lanham Act. We review a district court’s “summary judgment de

novo, viewing the evidence in the light most favorable to the non-moving party.”

Bosley Medical Inst., Inc. v. Kremer, 403 F.3d 672, 675–76 (9th Cir. 2005). To

recover under trademark law, the allegedly unlawful use of a trademark must be

“in connection with a commercial transaction in which the trademark is being used

to confuse potential consumers.” Id. at 676. Aviva has not shown that the district

court erred in concluding that Appellants’ use of Aviva’s mark was “in connection



      1
      Aviva also cross-appeals against Defendants James Regan and Regan &
Associates, LLC, who join in the response brief filed by Appellants.

                                          3
with a commercial transaction.” Id. Appellants did not use Aviva’s mark to offer

“competing services to the public,” such as by offering for sale any “goods or

services.” Id. at 679. Additionally, both the Lanham Act and Arizona common law

require proof of likelihood of confusion to establish liability. See 15 U.S.C. §

1114(1), 1125(a)(1)(A) (requiring a showing that a defendant’s use of a trademark

is “likely to cause confusion” as to the origin of goods or services); Taylor v.

Quebedeaux, 617 P.2d 23, 24 (Ariz. 1980) (recognizing that “the essence of unfair

competition is confusion of the public”). The district court correctly held that

nominative use of Aviva’s trademark and trade dress is not likely to cause

confusion when displayed with and imbedded in obvious negative commentary.

See Toyota Motor Sales, U.S.A., Inc. v. Tabari, 610 F.3d 1171, 1176 (9th Cir.

2010) (explaining that the ultimate purpose of the nominative fair use doctrine is to

“address the risk that nominative use of the mark will inspire a mistaken belief on

the part of consumers that the speaker is sponsored or endorsed by the trademark

holder”). Accordingly, we affirm the district court’s summary judgment in favor of

Appellants on Aviva’s Lanham Act and unfair competition claims.

      While we affirm the district court’s summary judgment as to Aviva’s

Lanham Act claim, we hold that the district court did not err in denying Appellants

attorney fees under the Lanham Act’s “exceptional case” provision. 15 U.S.C.


                                           4
§ 1117(a). “Whether the circumstances are ‘exceptional’—a prerequisite to an

attorneys’ fee award pursuant to the Lanham Act—is a question of law that is

reviewed de novo.” Classic Media v. Mewborn, 532 F.3d 978, 982 (9th Cir. 2008).

We have held that a case is “exceptional,” for purposes of section 1117(a), if it is

“either groundless, unreasonable, vexatious, or pursued in bad faith.” Cairns v.

Franklin Mint Co., 292 F.3d 1139, 1156 (9th Cir. 2002) (internal quotation marks

omitted). The district court did not err in determining that Aviva’s trademark

claims were not “exceptional” under that standard.

      Aviva next argues that Appellants violated the Anticybersquatting Consumer

Protection Act (ACPA) in registering fourteen domain names that used Aviva’s

mark. We affirm the district court’s summary judgment in favor of Appellants on

Aviva’s ACPA claim. The ACPA provides that a person is liable to a trademark

owner if the person (1) “has a bad faith intent to profit from that mark,” 15 U.S.C.

§ 1125(d)(1)(A)(i), and (2) “registers, traffics in, or uses a domain name [that is

confusingly similar to another’s mark or dilutes another’s famous mark].” Bosley,

403 F.3d at 680, quoting 15 U.S.C. § 1125(d)(1)(A)(i) (alterations in original).

Aviva charges that the district court erroneously imported the Lanham Act’s

commercial use requirement into the ACPA, contravening our case law. Id.

(observing that “the ACPA does not contain a commercial use requirement”). Our


                                           5
review of the record leads us to conclude that the district court did no such thing.

Instead, it analyzed whether Appellants acted in “bad faith” using the nine non-

exhaustive factors provided by the ACPA. 15 U.S.C. § 1125(d)(1)(B)(i). We agree

with the district court, after applying those factors, that Aviva failed to show that

Appellants acted with “bad faith intent to profit” in registering the domain names.

We therefore affirm.

      Aviva also argues that the district court erred in its summary judgment by

failing to factor in adequately Appellants’ earlier spoliation of evidence. The

district court made a finding that Appellants destroyed or hid relevant information

from Aviva. As a result, it sanctioned Appellants by awarding Aviva attorney fees

and by inviting Aviva to “propose an appropriate adverse inference in response to

any motion for summary judgment.” This was proper because a party found guilty

of this charge should not benefit from such completely improper conduct which

interferes with a just and fair consideration of claims in our court of law. However,

Aviva failed to propose any adverse inference instructions. We do not in any way

condone Appellants’ bad behavior and we urge litigants to avoid engaging in such

unseemly behavior. But under our adversarial system, we do not have freewheeling

authority to right every wrong. Unfortunately for Aviva, it waived its opportunity

to obtain an adverse inference instruction by failing to propose instructions in


                                           6
accordance with the district court’s order. Rothman v. Hospital Serv. of S. Cal., 510

F.2d 956, 960 (9th Cir. 1975) (“It is a well-established principle that in most

instances an appellant may not present arguments in the Court of Appeals that it

did not properly raise in the court below”).

      We review that district court’s judgment on the pleadings as to Aviva’s

federal anti-racketeering claim de novo. Nelson v. City of Irvine, 143 F.3d 1196,

1200 (9th Cir. 1998). Under the Racketeer Influenced and Corrupt Organizations

Act (RICO), a plaintiff must show “(1) conduct (2) of an enterprise (3) through a

pattern (4) of racketeering activity.” Brady v. Dairy Fresh Products Co., 974 F.2d

1149, 1152 (9th Cir. 1992). Aviva argues that Appellants engaged in a pattern of

extortion when they sent emails to Aviva threatening a negative public relations

claim, hired a public relations firm, registered domain names using Aviva’s mark

to publish negative information about the company, distributed negative

information using mass email, and destroyed evidence during litigation. Without

deciding whether any of the alleged acts constitute “racketeering activity,” Aviva’s

claim fails because it has not shown that Appellants engaged in a “pattern” of

racketeering activity. Instead, all Aviva has shown is that Appellants engaged in

series of steps that were part of a single plan to expose what they believe to be

unlawful business practices by Aviva. See Sever v. Alaska Pulp Corp., 978 F.2d


                                          7
1529, 1535–36 (9th Cir. 1992) (affirming dismissal of a RICO claim where

“although [plaintiff] alleges a number of ‘acts,’ [defendant’s] collective conduct is

in a sense a single episode having [a] singular purpose”). We therefore affirm the

district court’s judgment.

      Aviva’s state-law anti-racketeering claim fails for a similar reason. Like the

federal RICO statute, Arizona law requires that a plaintiff show that there has been

a “pattern of racketeering activity.” A.R.S. § 13-2314.04(A). Arizona courts have

interpreted this state law to mirror the federal RICO statute. Lifeflite Med. Air

Transport, Inc. v. Native Am. Air Servs., Inc., 7 P.3d 158, 161 (Ariz. Ct. App.

2000) (“Because the Arizona and federal statutes are analogous . . . we look to

federal interpretations [of the federal RICO statute] for guidance”). Aviva’s claim

under the Arizona statute fails because Aviva has not raised any genuine dispute of

material fact about whether Appellants engaged in a “pattern” of racketeering

activity. Therefore, we affirm the district court’s summary judgment in favor of

Appellants on Aviva’s Arizona anti-racketeering claim.

      Last, the district court did not abuse its discretion in awarding Appellants

attorney fees under Arizona’s anti-racketeering statute, which provides for a

recovery of attorney fees “[i]f the person against whom a racketeering claim has

been asserted, including a lien, prevails on that claim.” A.R.S. § 13-2314.04(A).


                                           8
But it goes on to prohibit an award “if the award would be unjust because of

special circumstances, including the relevant disparate economic position of the

parties or the disproportionate amount of the costs, including attorney fees, to the

nature of the damage or other relief obtained.” Id. § 13-2314.04(M). Aviva

contends that Appellants’ earlier spoliation of evidence constitutes “special

circumstances” such that it would be “unjust” to award Appellants attorney fees.

We understand Aviva’s argument to be that the special circumstances here were

the completely improper hiding or destroying of evidence by Appellants, which

prejudiced Aviva’s case and, therefore, Appellants should not profit by such

unethical and improper conduct in a case before courts of law. But the district court

had already sanctioned Appellants for that misconduct by awarding Aviva attorney

fees and inviting it to propose an adverse inference in response to Appellants’

motion for summary judgment. It was not unreasonable for the court to conclude

that these previous sanctions were sufficient. Accordingly, we hold that the district

court did not abuse its discretion in awarding Appellants attorney fees.

      AFFIRMED.




                                          9
