Northern Hospitality Group, Inc. et al v. Poynter

Filing 25

ORDER granting 23 Motion to Dismiss. Defendant's counterclaim is DISMISSED WITHOUT PREJUDICE and with LEAVE TO AMEND. Defendant shall have until 9/2/2022 to file a Second Amended Answer with amended counterclaims or Notice. Signed by Judge Joshua M. Kindred on 8/1/22. (JLH, COURT STAFF)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ALASKA
NORTHERN HOSPITALITY GROUP,
INC., an Alaska corporation, d/b/a 49th
State Brewing Company; and DENALI
VISIONS 3000 CORPORATION, an
Alaska corporation, d/b/a 49th State
Brewing Company,
Plaintiffs,

Case No. 3:22-cv-00012-JMK
ORDER GRANTING PLAINTIFFS’
MOTION TO DISMISS
COUNTERCLAIM

vs.
DON POYNTER,
Defendant.

Pending before the Court is Plaintiffs’ Northern Hospitality Group, Inc., and
Denali Visions 3000 Corporation Motion to Dismiss Counterclaim (the “Motion”) at
Docket 23. Defendant Don Poynter responded in opposition at Docket 24. A reply was
not filed. For the foregoing reasons, Plaintiffs’ Motion is GRANTED. Defendant’s
counterclaim is DISMISSED WITHOUT PREJUDICE and with LEAVE TO AMEND.
I.

BACKGROUND

Plaintiffs filed this action on January 19, 2022, alleging a violation of the
Anticybersquatting Consumer Protection Act (the “ACPA”) and invoking this Court’s

federal question jurisdiction. 1 On April 29, 2022, Defendant filed an Answer. 2 Plaintiffs
subsequently moved to strike Defendant’s Answer under Federal Rule of Civil
Procedure 12(f). 3 The Court granted Defendant’s Motion to Strike at Docket 21 and
directed Defendant to file an amended Answer. Defendant filed his Amended Answer on
May 23, 2022. 4 Defendant’s Amended Answer includes affirmative defenses, as well as
what appears to be a counterclaim for damages associated with emotional distress and lost
revenue from having to defend himself in this lawsuit. 5 Specifically, Defendant seeks “[a]n
award paid by Plaintiff [sic] to Defendant equal to the value of Defendant’s billable hourly
rate in the amount of an estimated 80+ hours spent researching and preparing
documentation for this case . . . and any other costs incurred in connection with this
action.” 6

On May 27, 2022, Plaintiffs moved to dismiss Defendant’s counterclaim

pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). 7 On June 10, 2020,
Defendant filed an opposition which reads:

“Defendant respectfully asks that the

judgement on the Motion to Dismiss Counterclaim be withheld until trial whereas all
contextual facts, evidence, and arguments will be available at that time, allowing for a more
informed approach to such matters.” 8

1
2
3
4
5
6
7
8

Docket 1 at 2, 4–6.
See Docket 21.
Docket 20.
Docket 22.
Id. at 7.
Id.
Docket 23.
Docket 24.

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II.
A.

LEGAL STANDARDS

Rule 12(b)(1) and Supplemental Jurisdiction
Federal Rule of Civil Procedure 12(b)(1) authorizes the Court to dismiss

claims for lack of subject-matter jurisdiction. Jurisdictional attacks under Rule 12(b)(1)
can be either facial or factual. 9 “In a facial attack, the challenger asserts that the allegations
contained in a complaint are insufficient on their face to invoke federal jurisdiction,”
whereas “in a factual attack, the challenger disputes the truth of the allegations that, by
themselves, would otherwise invoke federal jurisdiction.” 10 Here, Plaintiffs mount a facial
attack because they claim that the allegations in Defendant’s counterclaim are facially
insufficient to invoke the Court’s supplemental jurisdiction. 11 Defendant bears the burden
of demonstrating that the Court has subject-matter jurisdiction over his counterclaim. 12
While original jurisdiction exists over Plaintiffs’ claim under the ACPA—a
federal statute—original jurisdiction is lacking over Defendant’s counterclaim because it
arises under state law and the Parties do not appear to be diverse. 13 Accordingly, the only
potential basis for this Court’s jurisdiction over Defendant’s counterclaim is the
supplemental jurisdiction statute, 28 U.S.C. § 1367(a). Pursuant to 28 U.S.C. § 1367(a),
“in any civil action of which the district courts have original jurisdiction, the district courts
shall have supplemental jurisdiction over all other claims that are so related to claims in

9
10
11
12
13

Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004).
Id.
Docket 23 at 2–3.
See Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994).
See Docket 1 at 2; Docket 22 at 7.

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the action within such original jurisdiction that they form part of the same case or
controversy under Article III of the United States Constitution.”

Under 28 U.S.C.

§ 1367(a), state law claims “form part of the same case or controversy” as a federal claim
when they derive from a “common nucleus of operative fact” and “would ordinarily be
expected to be resolved in one judicial proceeding.” 14
“Closely linked to the Court’s jurisdictional limit under § 1367 is Rule 13,” 15
which categorizes counterclaims into two types:

compulsory and permissive. 16

Compulsory counterclaims are those that “arise[] out of the transaction or occurrence that
is the subject matter of the opposing party’s claims.” 17 To determine whether a claim arises
out of the same transaction or occurrence as the opposing party’s claims, the Ninth Circuit
applies the “logical relationship” test. 18 Under this test, “[a] logical relationship exists
when the counterclaim arises from the same aggregate set of operative facts as the initial
claim, in that the same operative facts serve as the basis of both claims . . . .”19
Supplemental jurisdiction automatically exists over compulsory counterclaims “because a
counterclaim ‘which arises out of the same transaction or occurrence’ as the plaintiff's
claim also necessarily arises from the same ‘common nucleus of operative fact.’” 20

14

In re Pegasus Gold Corp., 394 F.3d 1189, 1195 (9th Cir. 2005) (citing United Mine
Workers v. Gibbs, 383 U.S. 715, 725 (1966)).
15
Corner Edge Interactive LLC v. Johnson, No. CV-19-05404-PHX-SRB, 2020 WL
3121191, at *2 (D. Ariz. Apr. 20, 2020).
16
Fed. R. Civ. P. 13(a)–(b).
17
Fed. R. Civ. P. 13(a)(1)(A).
18
In re Pegasus Gold Corp., 394 F.3d at 1196.
19
Id. (quoting In re Lazar, 237 F.3d 967 (9th Cir.2001)).
20
Ader v. SimonMed Imaging Inc., 324 F. Supp. 3d 1045, 1051 (D. Ariz. 2018) (citing
Sparrow v. Mazda Am. Credit, 385 F. Supp. 2d 1063, 1066 (E.D. Cal. 2005)).
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Counterclaims that are not compulsory are permissive. 21 District courts in
the Ninth Circuit have acknowledged that the 28 U.S.C. § 1367(a) standard for
supplemental jurisdiction is broader than the standard for compulsory counterclaims, such
that supplemental jurisdiction may be exercised over permissive counterclaims that form
part of the same constitutional case or controversy as the plaintiff’s claims. 22 Lastly, even
if supplemental jurisdiction exists, districts courts have discretion to decline to exercise
supplemental jurisdiction over a counterclaim if (1) it “raises a novel or complex issue of
State law”; (2) it “substantially predominates” over the claim over which the court has
original jurisdiction; (3) the court “has dismissed all claims over which it has original
jurisdiction”; or (4) “there are other compelling reasons for declining jurisdiction.” 23 This
analysis must be guided by “the values of economy, convenience, fairness, and comity. 24
B. Rule 12(b)(6)
Plaintiffs also move to dismiss Defendant’s counterclaim under
Rule 12(b)(6) for failure to state a claim upon which relief can be granted. 25 Rule 12(b)(6)
is read in conjunction with Rule 8(a), which requires a “short and plain statement of the
claim showing that the pleader is entitled to relief.” 26 Rule 8(a) does not demand “detailed
21

See Fed. R. Civ. P 13(b).
See Byton N. Am. Corp. v. Breitfeld, No. CV-19-10563-DMG (JEMx), 2021 WL
1152895, at *5 (C.D. Cal. Jan. 5, 2021) (quoting Grupo Salinas Inc. v. JR Salinas Wheels & Tires
Inc., No. SACV 16-1923-JVS (KESx), 2017 WL 2972339, at *2 (C.D. Cal. Jan. 30, 2017)); see
also Ali v. USAA Fed. Sav. Bank, No. CV-16-00420-PHX-JAT, 2016 WL 5464602, at *4 (D. Ariz.
Sept. 29, 2016); Sparrow v. Mazda Am. Credit, 385 F. Supp. 2d 1063, 1067 (E.D. Cal. 2005).
23
28 U.S.C. § 1367(c).
24
Abrams v. Blackburne & Sons Realty Cap. Corp., No. 2:19-CV-06947-CAS(ASx), 2020
WL 509394, at *3 (C.D. Cal. Jan. 31, 2020).
25
Docket 23 at 7–8.
26
Zixiang Li v. Kerry, 710 F.3d 995, 998 (9th Cir. 2013); Fed. R. Civ. P. 8(a)(2).
22

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factual allegations” but it demands, at a minimum, that a counterclaim allege specific facts
that “allows the court to draw the reasonable inference that the defendant is liable” for the
specific harm alleged. 27 “A complaint [or counterclaim] may be dismissed for failure to
state a claim only when it fails to state a cognizable legal theory or fails to allege sufficient
factual support for its legal theories.” 28
III.
A.

DISCUSSION

Rule 12(b)(1)
Generally, federal courts should not proceed to the merits without first

determining that it has jurisdiction over a claim. 29 The Court thus addresses Plaintiffs’
jurisdictional arguments first.

Plaintiffs argue that Defendant’s counterclaim is not

compulsory and does not fall under the Court’s supplemental jurisdiction. 30 Even if
supplemental jurisdiction is proper, Plaintiffs urge the Court to use its discretion to decline
to exercise supplemental jurisdiction over Defendant’s counterclaim. 31

The Court’s

original jurisdiction is based on Plaintiffs’ trademark infringement claim under the federal
ACPA. 32 By contrast, although the precise cause of action for Defendant’s counterclaim
is somewhat unclear, it appears to arise under state law and requests damages in connection
with Defendant’s participation in this suit. 33 Although there is some link between the two

27

See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Bell Atl. Corp. v. Twombly, 550 U.S.
544, 555 (2007).
28
Caltex Plastics, Inc. v. Lockheed Martin Corp., 824 F.3d 1156, 1159 (9th Cir. 2016).
29
Sinochem Int’l Co. v. Malaysia Int’l Shipping Corp., 549 U.S. 422, 431 (2007).
30
Docket 23 at 2–6.
31
Id. at 6–7.
32
Docket 1 at 2.
33
See Docket 22 at 7.
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claims—Defendant’s counterclaim for damages related to defending this trademark
infringement lawsuit necessarily arose out of the alleged trademark infringement and
subsequent filing of this lawsuit—the evidence required to prove Plaintiffs’ claim is
entirely distinct, temporally and factually, from the evidence required to prove Defendant’s
counterclaim. 34 The facts underlying the alleged trademark infringement have little to do
with the costs Defendant has incurred in this lawsuit. 35 The mere fact that Plaintiffs sued
Defendant and Defendant allegedly incurred damages as a result of the litigation is not a
sufficient factual nexus to satisfy the logical relationship test and render Defendant’s
counterclaim compulsory. 36 Therefore, Defendant’s counterclaim is permissive and the
Court has jurisdiction over Defendant’s counterclaim only if supplemental jurisdiction
exists under 28 U.S.C. § 1367(a).
Defendant’s counterclaim also fails to allege sufficient facts to satisfy the
broader standard for supplemental jurisdiction. Even construing Defendant’s counterclaim
liberally, Defendant has not alleged facts indicating how the counterclaim for damages
incurred in defending the lawsuit is factually related to the underlying claim of trademark
infringement. 37 Because Defendant’s counterclaim is largely devoid of factual allegations,

34

See Pochiro v. Prudential Ins. Co. of Am., 827 F.2d 1246, 1251 (9th Cir. 1987) (finding
a counterclaim compulsory when the facts necessary to prove the two claims “substantially
overlap.”); Koumarian v. Chase Bank USA, N.A., No. C-08-4033 MMC, 2008 WL 5120053, at *2
(N.D. Cal. Dec. 3, 2008).
35
See Byton N. Am. Corp. v. Breitfeld, No. CV-1910563-DMG (JEMx), 2021 WL
1152895, at *4 (C.D. Cal. Jan. 5, 2021).
36
Mattel, Inc v. MGA Ent., Inc., 705 F.3d 1108, 1110 (9th Cir. 2013).
37
Blaisdell v. Frappiea, 729 F.3d 1237, 1241 (9th Cir. 2013) (“Courts in this circuit have
an obligation to give a liberal construction to the filings of pro se litigants . . . .); see also Sparrow
v. Mazda Am. Credit, 385 F. Supp. 2d 1063, 1070 (E.D. Cal. 2005) (exercising supplemental
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it is difficult for the Court to discern any factual basis for Defendant’s counterclaim, much
less if there exists a common nucleus of operative fact with Plaintiffs’ trademark
infringement claim. 38

Defendant’s opposition does not supply the missing factual

allegations and instead requests that the Court defer ruling on Plaintiffs’ Motion until
trial. 39 Defendant is a pro se litigant and therefore is entitled to a liberal treatment in
pleading. 40 However, this liberality does not mean that the Court may exercise jurisdiction
over a claim over which none exists or that Defendant is entitled to “unlock the doors of
discovery” with a factually and legally deficient counterclaim. 41 As Defendant has the
burden of establishing jurisdiction over his counterclaim, 42 the Court finds that
supplemental jurisdiction is lacking here and therefore GRANTS Plaintiffs’ Motion to
Dismiss under Rule 12(b)(1).
B.

Rule 12(b)(6)
The Court finds that dismissal of Defendant’s counterclaim is appropriate

under Rule 12(b)(1) and therefore does not reach Plaintiffs’ arguments under Rule 12(b)(6).
However, although the Court does not take up this issue, Defendant is advised that his
counterclaim, as currently pled, is unlikely to survive a Rule 12(b)(6) motion to dismiss.
Although the precise cause of action of Defendant’s counterclaim is unclear, the legal
theories that the Court can discern appear to be nonstarters. To the extent Defendant is
jurisdiction when Defendant’s counterclaims “bear[ed] a logical and factual relationship to
Plaintiff’s claims”).
38
See Docket 22 at 7.
39
Docket 24.
40
See Litmon v. Harris, 768 F.3d 1237, 1241 (9th Cir. 2014).
41
See Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009).
42
See Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994).
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seeking damages akin to attorney’s fees, this claim is not cognizable. Under both federal
and Alaska law, pro se litigants such as Defendant are not eligible to receive attorney’s
fees. 43 To the extent Defendant is requesting damages for emotional distress, anxiety, and
stress due to his participation in this lawsuit, “Alaska law does not allow recovery for
emotional distress caused solely by being a party to a lawsuit and having to participate in
discovery and trial.” 44
C.

Leave to Amend
When dismissing a counterclaim, a court must determine whether a

defendant should be granted leave to amend. Federal Rule of Civil Procedure 15(a)(2)
provides that a court “should freely give leave [to amend a pleading] when justice so
requires.” “[A] district court should grant leave to amend even if no request to amend the
pleading was made, unless it determines that the pleading could not possibly be cured by
the allegation of other facts.” 45 Further, “the rule favoring liberality in amendments to
pleadings is particularly important for the pro se litigant” who is “far more prone to making
errors in pleading than the person who benefits from the representation of counsel.” 46 The
Court finds that it is possible that Defendant may sufficiently state a factual, legal, and

43

See Kay v. Ehrler, 499 U.S. 432, 435 (1991); Ahtna Tene Nene v. State, Dep't of Fish &
Game, 288 P.3d 452, 463 (Alaska 2012).
44
Lindfors v. State Farm Mut. Auto. Ins. Co., No. 3:20-cv-00178-SLG, 2021 WL 6125771,
at *2 (D. Alaska Dec. 28, 2021) (noting that “[a] survey of federal and state cases that discuss
litigation-induced stress supports [the] determination that such emotional distress is generally not
compensable.”).
45
Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000) (quoting Doe v. United States, 58
F.3d 494, 497 (9th Cir. 1995)).
46
Id. (quoting Noll v. Carlson, 809 F.2d 1446, 1448 (9th Cir. 1987)).
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jurisdictional basis for his counterclaim if he follows the Court’s guidance below.
Defendant therefore is entitled to leave to amend.
With his opportunity to amend, Defendant must allege facts that establish the
Court’s subject-matter jurisdiction over his counterclaim. Defendant may allege that this
Court has independent jurisdiction over his counterclaim or that his counterclaim is
factually and logically linked to Plaintiffs’ claim, such that the Court has supplemental
jurisdiction. Defendant also must identify specific causes of action against Plaintiffs and
allege concrete facts that plausibly support a claim under the elements of those causes of
action. In other words, each counterclaim must allege (i) a cognizable legal theory and
(ii) facts that support that cognizable legal theory. 47

Failure to comply with these

instructions may result in the dismissal of Defendant’s counterclaims.
Alternatively, if Defendant does not wish to pursue counterclaims, or never
intended to assert a counterclaim in the first instance, he may file a notice with the Court
indicating as such.
III.

CONCLUSION

Defendant’s counterclaim is DISMISSED WITHOUT PREJUDICE and
with LEAVE TO AMEND. Defendant shall have until September 2, 2022, to correct the
pleading deficiencies identified herein and file a Second Amended Answer with amended
counterclaims. In the alternative, if Defendant does not wish to pursue counterclaims
against Plaintiffs, Defendant may file a Notice with this Court indicating as such.

47

Parker v. Sea-Mar Cmty. Health Ctr., 853 F. App’x 197 (9th Cir. 2021).

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IT IS SO ORDERED this 1st day of August, 2022, at Anchorage, Alaska.
/s/ Joshua M. Kindred
JOSHUA M. KINDRED
United States District Judge

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