WBS, Inc. v. Stephen Pearcy et al

Filing 115

ORDER by Judge Dean D. Pregerson: GRANTING Defendants Motion for Summary Judgment 89 . Based on the Courts ruling the following motion and requests are resolved and deemed moot. Plaintiffs Motion for Leave to Amend Complaint 100 , Joint Request for Ruling on Defendants Motion for Summary Judgment 109 , and Joint Request for Ruling Plaintiffs Motion to Strike and Defendants Motion for Summary Judgment 114 . (shb)

1
2

O

3
4
5
6
7
8

UNITED STATES DISTRICT COURT

9

CENTRAL DISTRICT OF CALIFORNIA

10
11

WBS, INC.,
Plaintiff,

12

v.

13

Stephen Pearcy; Artists
Worldwide; top Fuel
15 National, Strong
Marketing Group, d/b/a
16 Watercraz Marketing
Group; Kjirsten Strong,
17 et al.
14

18

Defendants.

19

________________________

)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)

Case No. CV16-03495 DDP(JC)
ORDER GRANTING DEFENDANT’S
MOTION FOR SUMMARY JUDGMENT
[Dkt. 89, 90, 100, 109 and
114]

20
21

Presently before the court is Defendant Stephen Pearcy’s

22

Motion for Summary Judgment.

23

the parties and heard oral argument, the court grants the motion

24

and adopts the following Order.

25

I.

26

Having considered the submissions of

Background
In 1987, Defendant Stephen Pearcy (“Pearcy”) formed the band now

27

commonly known as “RATT.”

(Decl. Stephen Pearcy ¶3.)

28

initially named the band “MICKEY RATT,” and started out by playing in
local bars and clubs in southern California and Nevada.

Pearcy

(Id. at ¶5.)

1

On January 1, 1980, the band relocated to Los Angeles. (Decl. Turner

2

¶¶4–5.) At that time, the band consisted of Pearcy, Chris Hager, John

3

Turner, and Tim Garcia.

4

exception of Tim Garcia, relocated to Los Angeles.

5

to Turner, upon relocating to Los Angeles, Pearcy decided the band

6

would drop the word “Mickey” from its name and would be renamed

7

“RATT.”

8

designed a new logo for the band to be featured on singles.

9

personally

(Id.)

All the band members, with the
(Id.)

According

(Id. at ¶6.) As part of the rebranding process, Pearcy

paid

for

“several

hundred

pressings

(Id. at ¶10; Decl. Pearcy ¶11.)

of

Pearcy

each

10

recording.”

11

designed, adopted, and commercially used the RATT logo.

12

such

By 1981, Pearcy had

Turner ¶17; Decl. Pearcy ¶11.)

(Decl.

13
During 1981 and 1982, several members joined and departed the
14
band.

(Decl. Pearcy ¶14,16.)

By 1983, none of the musicians

15
performing with RATT prior to 1982 remained in the band, with the
16
exception of Pearcy himself. (Decl. Turner ¶21.) By 1983, RATT was
17
comprised

of

Pearcy,

Robbinson

DeMartini

(“DeMartini”),

Lantz

Crosby

(“Crosby”),

Warren

18
Juan

Carlos

Croucier

(“Croucier”), and

19
Robbert Blotzer (“Blotzer”).

(Decl. Pearcy ¶15.)

In early 1984,

20
RATT become nationally known when they released the album “Out of the
21
Cellar.”

(Decl. Majors ¶6.)

The album was certified as triple

22
platinum by the Recording Industry Association of America and reached
23
number seven on the Billboard 200.

(Id.)

The RATT logo was featured

24
on the front cover of the multi-platinum release.

(Id. at ¶17.)

25
26

On June 11, 1985, all five members of the band established the

27

RATT General Partnership (“the Partnership”) and memorialized the

28

terms of the partnership in a Partnership Agreement (“the Partnership
2

1

Agreement”.)

(Decl. Percy ¶19; Ex. B-10.)

Around 1991 or 1992,

2

Crosby was expelled from the Partnership, leaving Pearcy, Croucier,

3

Demartini, and Blotzer as remaining partners.

(Decl. Pearcy ¶20.)

4
Under Section 7.1 of the Partnership Agreement, no partner had
5
the right to “sell, transfer, assign, mortgage, hypothecate, encumber
6
or

otherwise

dispose

of

all

or

part

of

his

interest

in

the

7
Partnership without prior unanimous written consent of all of the
8
Partners.”

(Decl.

Pearcy,

Ex.

B-10

at

7.1.)

The

Partnership

9
Agreement provided that, in the event the partnership dissolved,
10
“each of the Partners shall be entitled to receive his Proportionate
11
Share of the revenues received on account of the Partnership from all
12
other sources.”

(Id. at 10.6.)

Section 11.1 of the Partnership

13
Agreement further provided that “[i]n the event of death, permanent
14
disability, [v]oluntary or [i]nvoluntary [w]ithdrawal of a Partner.
15
. ., the Partnership shall not dissolve or terminate but shall
16
continue without interruption and without any break in continuity.”
17
(Id. at 11.1.)
18
19

Around May 1997, Plaintiff WBS, Inc. (“WBS”) was formed by three

20

of the four remaining partners: DeMartini, Blotzer, and Pearcy.

21

Croucier did not participate in the formation of WBS.

22

¶¶17–21.)

23

the then newly-revived RATT band’s touring business, separate and

24

apart from the Partnership.

25

WBS

26

Corporation as consideration for his participation in WBS.

27

¶23.)

was

(Decl. Pearcy

According to Pearcy, WBS was formed to handle aspects of

required

to

(Id. at ¶¶21–25.)

tender

1,000

shares

of

According to Pearcy,
stock

in

the

WBS

(Id. at

Pearcy never received the shares, despite numerous requests.

28
3

1

(Id.)

Instead, Pearcy states, Demartini and Blotzer expelled him

2

from WBS.

(Id.)

3
Around February 2001, Pearcy brought an action against WBS,
4
Blotzer, DeMartini and others in Los Angeles County Superior Court
5

(“Pearcy State Court Case”).1

Pearcy alleged he was wrongfully

6
removed as a corporate officer of WBS after being defrauded of his
7
stock interest in the company.

(Id. at ¶24.) In the Pearcy State

8
Court Case, the answering defendants filed a counterclaim, which
9
Pearcy “materially lost.”

(Motion at 15.)

Pearcy has appealed the

10
outcome, alleging ineffective assistance of legal counsel.

(Id.)

11
The state trial court’s judgment did not make any determination
12
regarding

the

composition

of

the

Partnership

or

the

purported

13
trademark assignment.

(RJN, Ex. A-8 at 8.)

14
15

In 2015, WBS sued Croucier after he began using several RATT

16

trademarks (the “Croucier action”).2 (Decl. Pearcy ¶25.) WBS claimed

17

that four RATT-related trademarks, such as the band name, logo and

18

associated

19

Trademark and Patent Office (“USTPO”) in 1985 and 1986 by the RATT

20

partnership.3

21

[trademarks] were assigned through a sale of a partnership along with

22

all assets owned thereby to [WBS],” and that WBS recorded the

23

assignment with the USTPO in 2015. (RJN, Ex. A-3 at ¶4.) WBS

24

maintained that Croucier had been expelled from the Partnership prior

trademarks

were

WBS further

registered

with

the

United

States

alleged that on June 2, 1997, “the

25
26
2

27
28

Pearcy v. WBS, Inc., Case No. BC245356.
The trademarks at issue were registration numbers 1368245,
1368246, 1383344 and 1383345. The same trademarks are at issue in
this case.
3

4

1

to June 1997, and that his authorization to transfer the marks to WBS

2

was therefore not necessary.4

(RJN, EX. A-4 at 10.)

3
In the Croucier lawsuit, this Court concluded, on cross motions
4
for summary judgment, that there was no evidence that Croucier had
5
been formally expelled from the Partnership prior to the purported
6
assignment of the marks to WBS.

Because Croucier never consented to

7
the

assignment,

as

required

by

the

Partnership

Agreement,

the

8
assignment was invalid.

( Id.)

Thus, this Court determined, WBS

9
could not show that it had an ownership interest in the marks.
10

(RJN,

Ex. A-4 at 12:10-14.)5

11
12

This case, brought by WBS against Pearcy, is a close analogue of

13

the Croucier action.

14

RATT trademarks,

15

Partnership. WBS alleges that Pearcy is infringing upon those marks,

16

and brings claims for trademark infringement and dilution, unfair

17

competition,

18

negligent interference of economic relations.

19
20

WBS again alleges that it is the owner of the

which

false

it

obtained

designation

of

via

an

origin,

assignment

and

from the

intentional

and

(Id. at 6–19.)

Pearcy now moves for summary judgment on all claims.

WBS has

not substantively opposed Pearcy’s motion.6

21
4

22
23
24

Also in 2015, DeMartini initiated a shareholder derivative suit
(“Derivative Suit”) in state court. (RJN, Ex. A-5.) DeMartini sued as
an individual/officer and as a shareholder of WBS and named WBS and
Blotzer, as an individual/officer, as Defendants. (Id.) DeMartini
alleged Blotzer improperly usurped his corporate authority over WBS.
(Id.)
5

25
26
27
28

WBS subsequently filed a motion for reconsideration,
asserting that Croucier should be estopped from challenging the
validity of the assignment because the Pearcy State Court Case
judgment. This Court denied WBS’ motion.
6
Although WBS did file an opposition to Pearcy’s motion, WBS
essentially duplicates the argument in its own Motion to Strike
that this court should strike the motion for failure to meet and
(continued...)
5

1

II.

Legal Standard

2
Summary

judgment

is

appropriate

where

the

pleadings,

3
depositions, answers to interrogatories, and admissions on file,
4
together with the affidavits, if any, show “that there is no genuine
5
dispute as to any material fact and the movant is entitled to
6
judgment as a matter of law.” Fed. R. Civ. P. 56(a).

A party seeking

7
summary judgment bears the initial burden of informing the court of
8
the basis for its motion and of identifying those portions of the
9
pleadings and discovery responses that demonstrate the absence of a
10
genuine issue of material fact.

See Celotex Corp. v. Catrett, 477

11
U.S. 317, 323 (1986).

All reasonable inferences from the evidence

12
must be drawn in favor of the nonmoving party. See Anderson v.
13
Liberty Lobby, Inc., 477 U.S. 242, 242 (1986).

If the moving party

14
does not bear the burden of proof at trial, it is entitled to summary
15
judgment if it can demonstrate that “there is an absence of evidence
16
to support the nonmoving party’s case.” Celotex, 477 U.S. at 323.
17
18

Once the moving party meets its burden, the burden shifts to the

19

nonmoving party opposing the motion, who must “set forth specific

20

facts showing that there is a genuine issue for trial.” Anderson, 477

21

U.S. at 256.

22

a

23

essential to that party’s case, and on which that party will bear the

24

burden of proof at trial.”

25

issue exists if “the evidence is such that a reasonable jury could

26
27
28

showing

Summary judgment is warranted if a party “fails to make

sufficient

to

establish

the

existence

of

Celotex, 477 U.S. at 322.

6

an

element

A genuine

(...continued)
confer prior to filing. That motion is denied. Pearcy bears the
burden of demonstrating the absence of any genuine issue material
fact. See Cristobal v. Siegel, 26 F.3d 1488, 1494-95 (9th Cir.
1994).
6

1

return a verdict for the nonmoving party,” and material facts are

2

those “that might affect the outcome of the suit under the governing

3

law.”

4

“[w]here the record taken as a whole could not lead a rational trier

5

of fact to find for the nonmoving party.”

6

Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).

Anderson, 477 U.S. at 248.

There is no genuine issue of fact

Matsushita Elec. Indus.

7
It is not the court’s task “to scour the record in search of a
8
genuine issue of triable fact.”

Keenan v. Allan, 91 F.3d 1275, 1278

9
(9th Cir.1996).

Counsel have an obligation to lay out their support

10
clearly.

Carmen v. San Francisco Sch. Dist., 237 F.3d 1026, 1031

11
(9th Cir.2001).

The court “need not examine the entire file for

12
evidence establishing a genuine issue of fact, where the evidence is
13
not set forth in the opposition papers with adequate references so
14
that it could conveniently be found.”

Id.

15
16
17
18
19
20
21
22
23
24

III.

Discussion
Pearcy has adequately demonstrated the absence of any genuine

issues of material fact.

Plaintiff cannot prevail on its trademark

infringement-based causes of action without proving that it has an
ownership interest in the RATT trademarks.

See Rearden LLC v.

Rearden Commerce, Inc., 683 F.3d 1190, 1202-3 (9th Cir. 2012).

An

invalid assignment of a trademark conveys no rights to that mark.
See Mr. Donut of America v. Mr. Donut, Inc., 418 F.2d 838, 842 (9th
Cir. 1969).

25
26
27
28

Plaintiff alleges that it obtained an ownership interest in the
trademarks in 1997 when the RATT Partnership assigned the marks to
WBS. Pearcy has presented uncontroverted evidence, however, that the
7

1

members of the RATT Partnership did not unanimously consent, either

2

in writing or otherwise, to the assignment of the RATT marks to WBS.7

3

Thus, any purported assignment of the marks to WBS was invalid, and

4

conveyed no rights.

5

conclude that WBS had an ownership interest in the RATT marks,

6

Pearcy’s motion for summary judgment must be granted.8

Because no reasonable trier of fact could

9

7
IV.

Conclusion

8
For the reasons stated above, Defendant’s Motion for Summary

9
10
11

Judgment is GRANTED.
//

12
13
14

//
//

15
//
16
17
18
19
20
21
22
23
24
25
26
27
28

//
7

According to Pearcy, he, Croucier, and DeMartini expelled
Blotzer from the Partnership in November, 2016. (Decl. Pearcy ¶
28.)
Pearcy asserts the Partnership authorized him and Defendant
Artists Worldwide, Inc. to use the marks. (Id. at ¶29:4–9.)
8
As noted above, Plaintiff has not filed a substantive
opposition to Pearcy’s motion, which argued not only that the
assignment of the marks to WBS was invalid, but also that any
argument to the contrary would be barred by the doctrine of
collateral estoppel and this Court’s judgment in the Croucier case.
See Hydranautics v. FilmTec Corp., 204 F.3d 880, 885 (9th Cir.
2000) (explaining that collateral estoppel may apply 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 collateral estoppel is asserted was a party or
in privity with a party at the first proceeding.”)
9
The court need not address Pearcy’s contention that he has
obtained the Partnership’s authorization to use the marks, nor does
the court take any position on any question of ownership between
Pearcy and the Partnership or any dispute between the shareholders
of WBS.
8

1

Based on the Court’s ruling the following motion and requests

2

are resolved and deemed moot. Plaintiff’s Motion for Leave to Amend

3

Complaint [100], Joint Request for Ruling on Defendants Motion for

4

Summary Judgment [109], and Joint Request for Ruling Plaintiff’s

5

Motion to Strike and Defendants’ Motion for Summary Judgment [114].

6
7
8

DATED: March 6, 2018

9

_________________________

10

Hon. Dean D. Pregerson

11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
9