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)

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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

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