Urban Textile, Inc. v. Stage Stores, Inc. et al

Filing 80

ORDER GRANTING DEFENDANTS MOTION FOR PARTIAL SUMMARY JUDGMENT 52 ; SUA SPONTE ENTERING SUMMARY JUDGMENT AS TO PLAINTIFFS REMAINING CLAIMS; AND DENYING AS MOOT PLAINTIFFS MOTIONS FOR SUMMARY JUDGMENT 54 , FOR LEAVE TO AMEND 62 , AND FOR SANCTIONS 63 by Judge Otis D. Wright, II . (lc). Modified on 5/5/2017 (lc).

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United States District Court
Central District of California

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Plaintiff,

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Case № 2:15-cv-03456-ODW (FFM)

URBAN TEXTILE, INC.,
v.

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SPECIALTY RETAILERS, INC.;

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MARK-EDWARDS APPAREL INC.; and DEFENDANTS’ MOTION FOR

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DOES 1-10, inclusive,

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ORDER GRANTING
PARTIAL SUMMARY JUDGMENT

Defendants.

[52]; SUA SPONTE ENTERING

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SUMMARY JUDGMENT AS TO

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PLAINTIFF’S REMAINING

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CLAIMS; AND DENYING AS MOOT

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PLAINTIFF’S MOTIONS FOR

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SUMMARY JUDGMENT [54], FOR

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LEAVE TO AMEND [62], AND FOR

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SANCTIONS [63]

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I.

INTRODUCTION

Four motions are currently pending before the Court. Defendants Specialty

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Retailers, Inc. and Mark-Edwards Apparel Inc. (together, “Defendants”) have moved

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for partial summary judgment against Plaintiff Urban Textile, Inc. (“Urban”) (ECF

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No. 52), and Urban has moved for summary judgment (ECF No. 54), leave to amend

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the complaint (ECF No. 62), and sanctions against Defendants (ECF No. 63). After

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these motions were briefed but before their respective hearing dates, the Court entered

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partial summary judgment in a related case styled as Urban Textile, Inc. v. Mark-

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Edwards Apparel Inc. et al. (“Mark-Edwards”) (case number 2:14-cv-8285). In light

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of its decision in Mark-Edwards, the Court requested additional briefing from the

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parties on issues of collateral estoppel. (ECF No. 76.) The parties have now provided

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the Court with supplemental briefing, and the matters are ready for decision.1 For the

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reasons discussed below, the Court GRANTS Defendants’ motion for partial

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summary judgment, sua sponte ENTERS SUMMARY JUDGMENT as to Plaintiff’s

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remaining claims, and DENIES AS MOOT Plaintiff’s motions for summary

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judgment, for leave to amend the complaint, and for sanctions.

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II.

FACTUAL AND PROCEDURAL BACKGROUND

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In this copyright action, Urban alleges infringement of four of its fabric textile

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designs, numbered UB-4694; UB-4638; UB-4701; and UB-4672. (See generally First

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Am. Compl. (“FAC”).) This is not Urban’s only copyright action in the Central

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District of California. Other than Mark-Edwards and the instant case, Urban has also

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filed a case titled Urban Textile, Inc. v. Rue 21 Inc., et al. (“Rue 21”) (case number

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2:16-cv-9155). The defendants in these related actions overlap to varying degrees

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with the defendants in the instant case.

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On March 31, 2017, the Court entered partial summary judgment against Urban

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in Mark-Edwards as to eleven out of the twelve designs Urban asserted in that case.

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(See Order Granting Partial Summ. J., ECF No. 139 in Mark-Edwards.) The Court

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based its decision on a finding that Urban could not, as a matter of law, prove that it

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After carefully considering the papers filed in support of and in opposition to the Motions, the
Court deems them appropriate for decision without oral argument. Fed. R. Civ. P. 78; L.R. 7-15.

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owned valid copyright registrations for the designs at issue. (See id. at 5.) This

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finding was brought about by the imposition of discovery sanctions. When Urban

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refused to produce any information regarding publication, the Magistrate Judge

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determined as a matter of law that Urban had “published” its copyrighted designs

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prior to registration as part of an unpublished collection. (Id.; see also Recomm. of

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Magistrate Judge Mumm, ECF No. 136.)
The designs in Mark-Edwards overlap with all of the designs at issue in this

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case.2

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registration of the designs, the Court ordered the parties in this case to submit

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supplemental briefing on the possibility of collateral estoppel. In their supplemental

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briefing, Defendants argue convincingly that because the Court already determined in

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Mark-Edwards that Urban cannot demonstrate ownership of valid copyright

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registrations for the designs at issue, it should reach the same result in the present

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case. (Def. Supp. Br. 1, ECF No. 78.) Urban did not address the collateral estoppel

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issue but instead asked the Court to stay the instant case pending the resolution of

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Mark-Edwards on appeal to the Ninth Circuit. (Pl. Supp. Br. 1, ECF No. 77.)

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Because the basis for summary judgment in Mark-Edwards goes to the

III.

LEGAL STANDARD

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Federal courts will not relitigate issues in a second action that have already been

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litigated—and were necessary to the outcome—in a prior action. Parklane Hosiery

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Co., Inc. v. Shore, 439 U.S. 322, 326 n.5 (1979).

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preclusion,” applies when
(1) the issue necessarily decided at the previous proceeding is
identical to the one which is sought to be relitigated; (2) the first
proceeding ended with a final judgment on the merits; and (3) the
party against whom [issue preclusion] is asserted was a party or in
privity with a party at the first proceeding.

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This doctrine, called “issue

Paulo v. Holder, 669 F.3d 911, 917 (9th Cir. 2011) (brackets in original; quoting
Hydranautics v. FilmTec Corp., 204 F.3d 880, 885 (9th Cir. 2000).
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Moreover,

In Mark-Edwards, the Court also entered summary judgment as to seven of Urban’s designs not
asserted in this case.

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invocation of claim preclusion requires that the first adjudication offered a “full and

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fair opportunity to litigate.” Garity v. APWU Nat’l Labor Org., 828 F.3d 848, 859

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(9th Cir. 2016) (quoting Kremer v. Chem. Constr. Corp., 456 U.S. 461, 481 & n.22

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(1982)).

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IV.

DISCUSSION

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In their motion for partial summary judgment, Defendants request that the

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Court enter judgment as to designs UB-4701 and UB-4694. (Mot. for Partial Summ.

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J. 1.)

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appropriate not only for UB-4701 and UB-4694 but also as to Urban’s other two

However, as discussed below, the Court finds that summary judgment is

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claimed designs.

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A.

Collateral Estoppel as to the Overlapping Textile Designs

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Collateral estoppel based on the outcome in Mark-Edwards is proper in this

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case.First, the issue in Mark-Edwards is identical to the issue in the present action.

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The entry of partial summary judgment in Mark-Edwards was based on Urban’s

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failure to meet the first element required for a claim of copyright infringement—proof

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of valid copyright registration.

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Edwards.) Because as a matter of law Urban could not meet that requirement, its

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copyright infringement claims necessarily failed. Here, the same textile designs are at

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issue. Thus, the problems with the registration process described in Mark-Edwards

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are also relevant here. Further, the issue of the registrations’ validity was necessary to

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the decision in Mark-Edwards; indeed, it was the entire basis for that decision.

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Therefore, the issue here is identical to the issue in the previous proceeding, which

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was necessary to the outcome in that action. See Paulo, 669 F.3d at 917.

(See Order Granting Partial Summ. J. in Mark-

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Next, the circumstances here meet the second element required for collateral

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estoppel—that the original proceeding end with a final judgment on the merits. All

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that is needed to meet this standard is that the judgment on the particular issue is final

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and conclusive. Luben Indus., Inc. v. U.S., 707 F.2d 1037, 1040 (9th Cir. 1983); see

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also Lummus Co. v. Commonwealth Oil Refining Co., 297 F.2d 80, 89 (2d Cir. 1961).

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Therefore, because the entry of partial summary judgment in Mark-Edwards

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represents the Court’s final decision as to designs UB-4694, UB-4638, UB-4701, and

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UB-4672, the fact that Mark-Edwards remains pending as to one other design does

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not preclude the application of collateral estoppel. This element is also met.

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Third, the party against whom collateral estoppel is asserted was a party in the

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first action. Urban is the plaintiff in both the present case and Mark-Edwards. See

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Paulo, 669 F.3d at 917.

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Finally, the circumstances of the Court’s entry of partial summary judgment in

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Mark-Edwards are such that Urban was offered a full and fair opportunity to litigate.

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See Garity, 828 F.3d at 859. Although the decision in Mark-Edwards was based on a

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discovery sanction, this does not mean that Urban was not offered a full and fair

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opportunity to litigate. The discovery sanction in Mark-Edwards determined as a

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matter of law that Urban “published” the subject designs prior to registering them as

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part of an unpublished collection, and this sanction was entered only after Urban

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repeatedly failed to produce evidence on the topic of pre-publication. (See Order

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Granting Partial Summ. J. in Mark-Edwards.) Discovery is part of the litigation

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process.

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7769329, at *16 (S.D. Cal. July 7, 2011) (“Discovery is a crucial part of litigation and

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allows each party the opportunity to obtain information and evidence to prove its case

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or defend itself”). The standard in the Ninth Circuit is that a party must have been

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offered a full and fair opportunity to litigate. See Garity, 828 F.3d at 859. Here,

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Urban declined that opportunity and instead chose the unfair tactic of refusing to

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engage in the discovery process. It should not now be allowed to benefit from that

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refusal by avoiding collateral estoppel. Thus, the Court finds that Urban was offered a

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full and fair opportunity to litigate in the first proceeding.

See Lowry v. Heritage Sec., No. 09-CV-882-BTM (WVG), 2011 WL

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Because the Court finds that collateral estoppel applies, it enters the same

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judgment against Urban as it did in Mark-Edwards: Urban’s claims of copyright

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infringement as to designs UB-4694, UB-4638, UB-4701, and UB-4672 fail as a

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matter of law.

The Court GRANTS Defendants’ motion for partial summary

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judgment on this basis as to designs UB-4701 and UB-4694. In addition, the Court

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sua sponte ENTERS SUMMARY JUDGMENT as to Urban’s other two asserted

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designs, UB-4368 and UB-4672.

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B.

Urban’s Outstanding Motions

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As mentioned above, Urban’s response to the Court’s request for supplemental

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briefing was simply to ask that the Court stay this case pending the resolution of

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Urban’s appeal to the Ninth Circuit. (Pl. Supp. Br. 1.) However, Urban’s appeal of

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the Mark-Edwards decision is not based on a final appealable order. See Dannenberg

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v. Software Toolworks Inc., 16 F.3d 1073, 1074 (9th Cir. 1994) (“It is axiomatic that

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orders granting partial summary judgment, because they do not dispose of all claims,

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are not final appealable orders”). Though the Court of Appeals has not yet disposed

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of Urban’s claim, this Court determines that Urban’s chances of success are miniscule

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because the Court’s order is not ripe for appeal. This further demonstrates that a stay

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is not warranted. See Nken v. Holder, 556 U.S. 418, 426 (2009) (noting that one of

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the “traditional” factors in determining the prudence of a stay is “whether the stay

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applicant has made a strong showing that he is likely to succeed on the merits”).

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Here, Urban has made no showing whatsoever that it is likely to succeed on the

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merits. For several reasons, then, a stay is not warranted. As such, and because the

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Court now enters summary judgment in this case as to each of Urban’s asserted

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designs, the Court DENIES AS MOOT Urban’s pending motions for summary

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judgment, for leave to amend, and for sanctions.

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V.

CONCLUSION

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For the reasons discussed above, the Court GRANTS Defendants’ motion for

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partial summary judgment (ECF No. 52), sua sponte ENTERS SUMMARY

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JUDGMENT as to Plaintiff’s remaining two claims, and DENIES AS MOOT

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Plaintiff’s pending motions for summary judgment, for leave to amend, and for

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sanctions (ECF Nos. 54, 62, 63.)

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IT IS SO ORDERED.
May 5, 2017

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____________________________________
OTIS D. WRIGHT, II
UNITED STATES DISTRICT JUDGE

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