Progressive EMU Inc v. Nutrition & Fitness Inc

Filing 45

MEMORANDUM OPINION AND ORDER re: briefs doc 45 and 46 ; Georgia law applies to the breach contract claims; Alabama law applies to Pro Emus declaratory judgment claims regarding intellectual property rights; and North Carolina law applies to NFIs unfair and deceptive trade practices claim and to its tortious interference claim. Signed by Judge William M Acker, Jr on 11/5/12. Associated Cases: 2:12-cv-02805-WMA, 2:12-cv-01079-WMA(KGE, )

FILED
2012 Nov-05 PM 02:56
U.S. DISTRICT COURT
N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
PROGRESSIVE EMU, INC., f/k/a
JOHNSON EMU, INC.,
Plaintiff and
Counterclaim Defendant,
v.
NUTRITION & FITNESS, INC.,
Defendant and
Counterclaim Plaintiff.

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CIVIL ACTION NO.
2:12-CV-02805-WMA

MEMORANDUM OPINION AND ORDER
The

court

has

before

it

briefs

filed

by

plaintiff

and

counterclaim defendant, Progressive Emu, Inc. (“Pro Emu”), and
defendant and counterclaim plaintiff, Nutrition & Fitness, Inc.
(“NFI”) (Docs. 45 and 46), each responding to this court’s request
that the parties address the question of what state law applies.
BACKGROUND
On March 28, 2012, Pro Emu filed a complaint against NFI in
the Circuit Court of Jefferson County, Alabama. On April 10, 2012,
NFI removed the action to this court (the “Alabama Action”).

In

its complaint Pro Emu asserts claims for breach of contract and
seeks declaratory judgment regarding Pro Emu’s ability to sell oil
under the terms of the contract and regarding Pro Emu’s common law
property rights in the Blue Emu trademark.1
1

(See 12-1079, Doc. 1-

Pro Em’s original complain contained a claim for an
accounting. That claim has been abandoned and is no longer

1).

The next day, on April 11, 2012, NFI filed a practically

mirror-image complaint in the United States District Court for the
Eastern District of North Carolina (the “North Carolina Action”).
On August 24, 2012, the North Carolina Action was transferred to
this court and consolidated with the Alabama Action.

As a result,

NFI had both counterclaims from the Alabama Action and claims from
the

North

Carolina

Action

pending

before

this

court.

To

consolidate its claims and counterclaims, on October 19, 2012, NFI
filed an amended answer and counterclaims.

NFI counterclaims

include breach of contract, unfair and deceptive trade practices,
tortious interference with business relations, and a declaratory
judgment regarding common law intellectual property rights.2

(See

Doc. 44).
DISCUSSION
When a federal court exercises jurisdiction based on diversity
of citizenship (28 U.S.C. § 1332) the court must apply the choice
of

law

rules

of

the

forum

substantive law applies.

state

to

determine

which

state’s

Grupo Televisa, S.A. v. Telemundo Comms.

Group, Inc., 485 F.3d 1233, 1240 (11th Cir. 2007) (citing Klaxon
Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S. Ct. 1020
(1941)).

This court must therefore apply Alabama’s choice of law

before this court.
2

NFI is no longer asserting a claim for breach of covenant
of good faith and fair dealing or a claim for an accounting.
2

rules.

“As a preliminary matter, the court must characterize the

legal issue and determine whether it sounds in torts, contracts,
property law, etc.”

Id.

For example, Alabama’s choice of law rule

with regard to tort claims is lex loci delici.

Fitts v. Minn.

Mining & Mfg. Co., 581 So. 2d 819, 820 (Ala. 1991).

Under this

principle,

party

are

determined by the law of the state where the injury occurred.

Id.

the

substantive

rights

of

an

injured

However, if a party sues under a specific statute, there is no true
choice of law issue, and the party cannot attempt to apply the law
of a state other than the state in which the statute was enacted.
See

Houston

v.

Whittier,

216

P.3d

1272,

1279

(Idaho

2009);

Memorandum Opinion of Judge Abdul Kallon, Case No. 08-cv-01423 AKK, Doc. 294 at 8.

A court may apply the laws of different states

to different legal issues in a single case.

See e.g., Velten v.

Regis B. Lippert, Intercat, Inc., 985 F.2d 1515 (11th Cir. 1993).
Unfair and Deceptive Trade Practices Claims
The parties dispute whether Alabama or North Carolina law
applies to NFI’s claim for unfair and deceptive trade practices.
Pro Emu argues that Alabama law applies to this claim because NFI’s
claim for unfair and deceptive trade practices cites an Alabama
statute, Ala. Code § 18-19-1 et seq., and therefore arises solely
under Alabama law.

(See 12-1079, Doc. 24).

fails to address two key points.
case.

Pro Emu’s argument

First, this is a consolidated

NFI’s counterclaim in the Alabama Action was not the only
3

unfair and deceptive trade practices claim NFI asserted.

In its

complaint filed in the North Carolina Action, NFI asserted a claim
for unfair and deceptive trade practices and specifically cited the
relevant North Carolina statute, N.C. Gen. Stat. § 75-1.1, et seq.
Second, NFI’s amended answer and counterclaims includes a claim for
unfair and deceptive trade practices under the North Carolina
statute.

(See Doc. 44).

Therefore, Pro Emu’s argument based on

the Alabama language of NFI’s counterclaim in its initial answer in
the Alabama action is not determinative of the choice of law
question.
Because NFI asserted a claim under the North Carolina Unfair
and Deceptive Trade Practices Act in its complaint in the North
Carolina Action and in its amended answer and counterclaims, there
is no true choice of law issue.

Just as FNI could not argue that

North Carolina law applied to its counterclaim under the Alabama
Act, Pro Emu cannot argue that Alabama law applies to NFI’s claim
under the North Carolina Act.

Additionally, because the North

Carolina action was transferred pursuant 28 U.S.C. § 1404(a), this
court must apply the same state law that the North Carolina court
would have applied to that claim - North Carolina law.

See Roofing

& Sheet Metal Servs., Inc. v. La Quinta Motor Inns., Inc., 689 F.2d
982, 991 (11th Cir. 1982).
Furthermore, the application of Alabama’s choice of law rules
would render the same result.

Claims under the North Carolina

4

Unfair and Deceptive Trade Practices Act are considered tort
claims.

New Bar P’Ship v. Martin, 729 S.E.2d 675, 680 n.1 (N.C.

App. Ct. 2012)(“The tort commonly referred to as ‘unfair and
deceptive trade practices’ in our case law is actually ‘unfair or
deceptive acts or practices in or affecting commerce’ in our
General Statutes.”).

Thus, under the doctrine of lex loci delicti

North Carolina law would apply if the injury occurred in North
Carolina.

NFI has alleged the following injuries that occurred in

North Carolina: (1) receiving invoices for emu oil with overcharges
in North Carolina; (2) having to pay for additional emu oil
purchased in the open market from North Carolina bank accounts; (3)
NFI, a North Carolina company, being denied the right to purchase
emu oil when available; (4) misrepresentations about Pro Emu’s
ability to ship emu oil into North Carolina; (5) interfering with
business relationships that NFI coordinates from its North Carolina
headquarters; and (6) refusing to fill NFI’s orders for emu oil it
received from North Carolina. Pro Emu has offered no argument that
the alleged injuries did not occur in North Carolina.3

As such,

North Carolina law applies to NFI’s claim for unfair and deceptive
trade practices under Alabama’s choice of law rules.
Beach of Contract Claims

3

Additionally, Pro Emu’s arguments regarding the application
of North Carolina law to the tortious interference claim lend
further support to this conclusion.
5

The parties agree that Georgia law governs the Sales and
Marketing Agreement and therefore applies to the breach of contract
claims.

The court also agrees that Georgia law applies here.

Tortious Interference with Business Relations Claim
Pro Emu contends that North Carolina law applies to NFI’s
tortious interference claim because the alleged injury occurred in
North Carolina.

NFI does not address this claim in its brief.

The

court agrees that under the theory of lex loci delici, North
Carolina law applies to NFI’s tortious interference claims.
Declaratory Judgment Claim - Intellectual Property
Pro Emu also contends that Alabama law governs its declaratory
judgment action regarding its common law trademark rights.
does not address this issue in its brief.

NFI

Pro Emu’s argument that

Alabama law governs its declaratory judgment claim regarding common
law intellectual property because personal property rights of
Alabama residents are governed by Alabama substantive law is well
taken.

Alabama law governs Pro Emu’s declaratory judgment claim

regarding its common law intellectual property rights.
CONCLUSION
For the reasons stated above, Georgia law applies to the
breach

contract

claims;

Alabama

law

applies

to

Pro

Emu’s

declaratory judgment claims regarding intellectual property rights;
and North Carolina law applies to NFI’s unfair and deceptive trade
6

practices claim and to its tortious interference claim.

It is so

ORDERED.
DONE this 5th day of November 2012.

_____________________________
WILLIAM M. ACKER, JR.
UNITED STATES DISTRICT JUDGE

7