Ninth Circuit Holds that Abuse of Discretion Standard of Review Applies when District Court Grants Summary Judgment Based on Affirmative Defense of Unclean Hands

Case: Metal Jeans, Inc. v. Metal Sport, Inc., 2021 WL 562385 (9th Cir. Feb. 16, 2021)

Ninth Circuit Panel Composition: Wardlaw (Clinton), VanDyke (Trump), and district court judge Timothy Hillman (sitting by designation)

Summary

In a matter of first impression for the Ninth Circuit, the Court recently held that “the appropriate standard of review of a district court’s determination to grant summary judgment on the affirmative defense of unclean hands is abuse of discretion.”

The case concerned a trademark dispute between two apparel companies. Finding that the affirmative defense of unclean hands applied, the trial court granted summary judgment in favor of the defendants-appellees, Metal Sport, ruling that the plaintiff-appellant, Metal Jeans, “came before the court with unclean hands.”

To level set, the panel explained that the Ninth Circuit reviews de novo a district court’s grant of summary judgment in a trademark infringement claim. But given that the doctrine of unclean hands “arises in equity,” the panel observed that the Court “generally review[s] a district court’s grant of equitable relief for abuse of discretion.”

So which standard of review does the Court apply when the district court grants summary judgment based on the equitable defense of unclean hands?

The panel held that the proper standard of review in this situation is abuse of discretion—not de novo. The Court, however, emphasized that, despite applying an abuse of discretion standard in these specific instances—where the district court grants summary judgment on the basis of an affirmative defense, like unclean hands—the Court still “reviews certain aspects of the district court’s decision, such as whether the district court inappropriately resolved any disputed material facts in reaching its decision, under the de novo standard that traditionally governs summary judgment review.” (cleaned up).

After resolving this matter of first impression, the panel noted that it issued an accompanying memorandum disposition where it applied the de novo standard of review to the disputed facts and concluded that the district court “erroneously construed the evidence” and “inappropriately resolved disputed facts” in favor of the plaintiff-appellant, Metal Jeans.

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