E Clampus Vitus v. Steiner et al
Filing
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ORDER signed by District Judge Troy L. Nunley on 8/15/2013 ORDERING 35 Motion to Dismiss for failure to state a claim is DENIED; Motion to strike the "Doe" defendants is GRANTED; Requests for sanctions and attorney's fees under Rule 11 and 28 USC 1927 are DENIED. (Waggoner, D)
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UNITED STATES DISTRICT COURT
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EASTERN DISTRICT OF CALIFORNIA
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E CLAMPUS VITUS,
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Plaintiff,
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No. 2:12-CV-01381-TLN-CKD
v.
ORDER
DAVID L. STEINER, THOMAS PEAK,
JOHN MOORE, KARL DODGE, JOSEPH
ZUMWALT CHAPTER 169 E CLAMPUS
VITUS, and DOES 1 through 50,
Defendants.
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This matter is before the Court on Defendants’ Motion to Dismiss the First Amended
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Complaint. (ECF No. 35.) Plaintiff opposes the motion. (Opp’n Mot. Dismiss, ECF No. 37.)
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For reasons set forth below, Defendants’ Motion is GRANTED in part and DENIED in part.1
BACKGROUND
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A. Parties
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Plaintiff E Clampus Vitus, Inc. (“Plaintiff”) is a corporation organized under California
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law. (First Am. Compl. (“FAC”), ECF No. 29 at ¶ 1.) Plaintiff alleges that it owns several
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This matter was submitted without oral argument on June 14, 2013. (Minute Order, ECF No.
43.); see also E.D. Cal. L.R. 230(g).
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federally registered trademarks that are incontestable under 15 U.S.C. § 1065 (ECF No. 29 at ¶¶
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15–16; Exhibit A to First Am. Compl., ECF No. 29-1.) Plaintiff states that it owns standard
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character marks that consist of words and letters, including: (1) “E Clampus Vitus”; (2)
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“Clampers”; and (3) “ECV.” (ECF No. 29 at ¶ 15; ECF No. 29-1.) Plaintiff also alleges that it
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owns design marks that incorporate both symbols and words, including: (1) a coat of arms with a
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credo; (2) an image of a man, donkey, and the text “E Clampus Vitus”; and (3) an image of a
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donkey and the text “E Clampus Vitus.” (ECF No. 29 at ¶ 15; ECF No. 29-1.) Plaintiff alleges
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that it uses these marks to identify members of its historical organization, to notify members of
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upcoming events via informational newsletters, and to sell goods consisting of, but not limited to,
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pins, headgear, and shirts. (ECF No. 29 at ¶¶ 15–16.)
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Defendant Joseph Zumwalt Chapter 169 E Clampus Vitus (“corporate Defendant”) is a
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corporation that was created in 2011 and organized under California law. (ECF No. 29 at ¶¶ 7,
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17.) Defendants David L. Steiner, Thomas Peak, John Moore, and Karl Dodge (“individual
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Defendants”) are former members of Plaintiff and allegedly created the corporate Defendant.
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(ECF No. 29 at ¶¶ 7, 17–18.) Defendants “DOES” 1 through 50 (“‘Doe’ Defendants”) are
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currently unascertained parties that Plaintiff may identify later as agents and employees of
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Defendants. (ECF No. 29 at ¶ 8.)
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B. Relevant Factual Allegations
Plaintiff alleges that Defendants used Plaintiff’s marks in violation of the Lanham Act and
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California Business and Professions Code on at least six occasions since 2011. (ECF No. 29 at ¶
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14.) Specifically, Plaintiff alleges that Defendants, in both their corporate and individual
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capacities, impermissibly used Plaintiff’s marks to associate with Plaintiff’s fraternal
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organization, to market and sell similar products, and to admit new members for their own
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personal profit. (ECF No. 29 at ¶ 18.)
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In March 2011, Defendants organized an event called “4-SKIN DOINS,” where they sold
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pins, hats and T-shirts with Plaintiff’s “E Clampus Vitus,” “ECV” and “Clampers” marks, and
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marched under a banner that read “E Clampus Vitus.” (ECF No. 29 at ¶ 21.)
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In December 2011, Defendants again sold similar goods with the aforementioned marks
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and marched under a banner that read “Joseph Zumwalt Chapter 169 of E Clampus Vitus” at the
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Woodland Christmas Parade. (ECF No. 29 at ¶ 20.)
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In September 2011, Defendants Moore, Dodge, and Peak organized the sale of food and
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other goods under a banner that read “Georgetown Clampers” during the Founder’s Day
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Celebration. (ECF No. 29 at ¶ 22.) Plaintiff claims that its local chapter was precluded from
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participating in the event because authorities mistakenly issued a permit to Defendants Moore,
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Dodge, and Peak, believing that they were affiliated with Plaintiff’s local chapter.2 (ECF No. 29
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at ¶ 22.)
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In June 2012, the corporate Defendant and Defendant Steiner raffled a motorcycle under
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the banner “Joseph Zumwalt ECV 169.” (ECF No. 29 at ¶¶ 23, 51; Exhibit B to First Am.
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Compl., ECF No. 29-2 at 8.) Plaintiff claims that Defendants used an online Facebook
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advertisement with Plaintiff’s “ECV” mark to promote this event. (ECF No. 29 at ¶¶ 23, 51; ECF
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No. 29-2 at 2–4.)
In July 2012, Defendants staged an event called “Candle Light Doins” and inappropriately
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used Plaintiff’s “ECV” and “E Clampus Vitus” marks. (ECF No. 29 at ¶ 25.) Plaintiff also
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alleges that the marketing flyers for the event improperly used the “E Clampus Vitus” mark as a
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header and improperly advertised the event as an “Official Northern Alliance of ECV” event.
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(ECF No. 29 at ¶ 25; ECF No. 29-2 at 7.)
In November 2012, Defendants created an online forum for “Joseph Zumwalt ECV 169”
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to sell products such as lighters bearing Plaintiff’s marks. (ECF No. 29 at ¶ 24.) Plaintiff
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conducts similar sales to raise funds for charitable purposes. (ECF No. 29 at ¶ 24.)
C. Plaintiff’s Claims for Relief
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Plaintiff claims Defendants’ uses of its marks has created a likelihood of confusion due to
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Defendants argue that Plaintiff’s allegations regarding infringing sales at the Christmas parade
and Founder’s Day event are not true. (ECF No. 35-1 at 7.) In support of this claim, Defendant
Steiner submitted a declaration stating that neither he nor the corporate Defendant make or sell
jewelry items or clothing. (Steiner Decl., ECF No. 6-1 at ¶ 5.) While the Court acknowledges
these arguments, the Court “accept[s] factual allegations in the complaint as true” for the
purposes of a 12(b)(6) motion to dismiss. Fayer v. Vaughn, 649 F.3d 1061, 1064 (9th Cir. 2011).
As a result, this Court does not consider these arguments for the disposition of this motion.
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the similarity of conduct between Plaintiff and Defendants. (ECF No. 29 at ¶¶ 28–29.) Plaintiff
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also alleges that since Defendants operate in the same geographic areas as Plaintiff, Defendants’
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conduct is likely to cause public confusion. (ECF No. 29 at ¶ 29.) Plaintiff further states that the
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individual Defendants specifically established the corporate Defendant to exploit Plaintiff’s rights
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with intent to deceive the public. (ECF No. 29 at ¶ 27.)
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Thus, Plaintiff alleges three claims for relief in the FAC. Plaintiff’s first claim alleges
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trademark infringement under Section 32(1) of the Lanham Act under 15 U.S.C. § 1114(1)(a).
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(ECF No. 29 at ¶ 35.) Plaintiff’s second claim alleges unfair competition under Section 42(a) of
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the Lanham Act under 15 U.S.C. § 1125(a). (ECF No. 29 at ¶ 41.) Plaintiff’s third claim alleges
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violations of California Business and Professions Code § 17200 for unfair competition and §
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17500 for false advertising. (ECF No. 29 at ¶¶ 48–49.)
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D. Relevant Procedural History
Plaintiff filed its original complaint in May 2012. (Compl., ECF No. 1.) Defendants
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moved to strike under California Civil Code § 425.16, which prohibits “strategic lawsuits against
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public participation” (“SLAPP”), and moved to dismiss for failure to state a claim. (Defs.’ Mot.
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Dismiss & Strike, ECF No. 6.) After non-opposition by Plaintiff, this Court denied the motion to
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strike, but granted the motion to dismiss with leave to amend. (Order Den. Defs.’ Anti-SLAPP
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Mot. Strike & Granting Defs.’ Mot. Dismiss, ECF No. 17.)
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With respect to the motion to dismiss, the Court held that Plaintiff failed to state sufficient
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facts regarding the “likelihood of confusion” from Defendants’ alleged use of Plaintiff’s marks.
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(ECF No. 17 at 11.) The Court thus dismissed Plaintiff’s claims for trademark infringement
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under 15 U.S.C. § 1114(1)(a), unfair competition under 15 U.S.C. § 1125(a), and unfair
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competition under California Business and Professions Code § 17200. (ECF No. 17 at 11–12.)
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The Court also dismissed Plaintiff’s false advertising claim under California Business and
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Professions Code § 17500 because Plaintiff’s allegations lacked specificity and failed to meet
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Rule 9(b)’s heightened pleading standards as required for this claim. (ECF No. 17 at 13.)
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Following the Court’s Order, Plaintiff filed its FAC in February 2013. (ECF No. 29.)
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Defendants move to dismiss and argue that Plaintiff still fails to plead facts sufficient to state
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plausible claims under Rule 12(b)(6) and the Court’s previous Order. (Defs.’ Re-Notice of Mot.
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Dismiss, ECF No. 35; Defs.’ Mem. Supp. Mot. Dismiss, ECF No. 35-1.) Defendants also argue
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that Plaintiff abandoned claims against “Doe” Defendants because Plaintiff failed to set forth any
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specific information regarding the time needed to identify these “Doe” Defendants as required in
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the Court’s previous Order Setting Status. (ECF No. 35-1 at 6 n.2.) Defendants also move for
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attorneys’ fees under Rule 11 and 28 U.S.C. § 1927 due to Plaintiff’s failure to defend the initial
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complaint, and failure to file a Notice of Non-Opposition to the original Motion to Dismiss and
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Strike under Local Rule 230(c) and the Court’s Order Setting Status. (ECF No. 35-1 at 13–14.)
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STANDARD
Federal Rule of Civil Procedure 8(a) requires that a pleading contain “a short and plain
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statement of the claim showing that the pleader is entitled to relief.” See Ashcroft v. Iqbal, 556
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U.S. 662, 678–79 (2009). Under notice pleading in federal court, the complaint must “give the
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defendant fair notice of what the claim is and the grounds upon which it rests.” Bell Atl. Corp. v.
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Twombly, 550 U.S. 544, 555 (2007) (internal quotations omitted). “This simplified notice
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pleading standard relies on liberal discovery rules and summary judgment motions to define
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disputed facts and issues and to dispose of unmeritorious claims.” Swierkiewicz v. Sorema N.A.,
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534 U.S. 506, 512 (2002).
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On a motion to dismiss, the factual allegations of the complaint must be accepted as true.
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Cruz v. Beto, 405 U.S. 319, 322 (1972); see also Fayer v. Vaughn, 649 F.3d 1061, 1064 (9th Cir.
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2011) (holding that courts “accept factual allegations in the complaint as true and construe the
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pleadings in the light most favorable to the non-moving party”). A court is bound to give plaintiff
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the benefit of every reasonable inference to be drawn from the “well-pleaded” allegations of the
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complaint. Retail Clerks Int’l Ass’n v. Schermerhorn, 373 U.S. 746, 753 n.6 (1963). A plaintiff
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need not allege “‘specific facts’ beyond those necessary to state his claim and the grounds
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showing entitlement to relief.” Twombly, 550 U.S. at 570. “A claim has facial plausibility when
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the plaintiff pleads factual content that allows the court to draw the reasonable inference that the
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defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S.
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at 556).
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Nevertheless, a court “need not assume the truth of legal conclusions cast in the form of
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factual allegations.” United States ex rel. Chunie v. Ringrose, 788 F.2d 638, 643 n.2 (9th Cir.
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1986); see also Fayer, 649 F.3d at 1064 (finding that conclusory allegations of law and
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unwarranted inferences are insufficient to defeat a motion to dismiss). While Rule 8(a) does not
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require detailed factual allegations, “it demands more than an unadorned, the defendant-
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unlawfully-harmed-me accusation.” Iqbal, 556 U.S. at 678. A pleading is insufficient if it offers
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mere “labels and conclusions” or “a formulaic recitation of the elements of a cause of action.”
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Twombly, 550 U.S. at 555; Iqbal, 556 U.S. at 678 (“Threadbare recitals of the elements of a cause
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of action, supported by mere conclusory statements, do not suffice.”). Moreover, it is
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inappropriate to assume that the plaintiff “can prove facts that it has not alleged or that the
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defendants have violated the . . . laws in ways that have not been alleged.” Associated Gen.
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Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983).
Ultimately, a court may not dismiss a complaint in which the plaintiff has alleged “enough
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facts to state a claim to relief that is plausible on its face.” Iqbal, 556 U.S. at 697 (quoting
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Twombly, 550 U.S. at 570). Only where a plaintiff has failed to nudge his or her claims “across
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the line from conceivable to plausible” is the complaint properly dismissed. Id. at 680 (quoting
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Twombly, 550 U.S. at 570). While the plausibility requirement is not akin to a probability
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requirement, it demands more than “a sheer possibility that a defendant has acted unlawfully.”
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Id. at 678. This plausibility inquiry is “a context-specific task that requires the reviewing court to
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draw on its judicial experience and common sense.” Id. at 679.
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In ruling upon a motion to dismiss, the court may consider only the complaint, any
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exhibits thereto, and matters which may be judicially noticed pursuant to Federal Rule of
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Evidence 201. See Mir v. Little Co. of Mary Hosp., 844 F.2d 646, 649 (9th Cir. 1988); Isuzu
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Motors Ltd. v. Consumers Union of United States, Inc., 12 F. Supp. 2d 1035, 1042 (C.D. Cal.
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1998).
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ANALYSIS
A. Claims Against Individual Defendants
Defendants argue that Plaintiff fails to allege sufficient facts to impose individual liability
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on the individual Defendants for the corporate Defendant’s actions. (ECF No. 35-1 at 3–5.)
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Defendants also argue that any uses of Plaintiff’s marks by the individual Defendants are
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permitted for identification or nominative purposes. (ECF No. 35-1 at 5–6.) For the reasons set
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forth below, this Court finds Plaintiff alleges sufficient facts to assert claims against the
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individual Defendants.
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1. Individual Liability for Individual Actions
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Defendants move to dismiss individual Defendants, arguing Plaintiff fails to allege
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sufficient facts to support claims against Defendants Steiner, Peak, Moore, and Dodge. Under the
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Lanham Act, natural persons can be held individually liable for trademark infringement. 15
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U.S.C. § 1125(a) (imposing liability on “[a]ny person who, on or in connection with any goods or
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services . . . uses in commerce any . . . name . . . which . . . is likely to cause confusion.”); 15
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U.S.C. § 1127 (defining “person” to include a natural person); see also Chanel, Inc. v. Italian
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Activewear of Fla., Inc., 931 F.2d 1472, 1477 (11th Cir. 1991).
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Defendants argue that Plaintiff only alleges that each defendant was a member acting on
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behalf of the corporation. (ECF No. 35-1 at 4.) This is incorrect. Plaintiff alleges that the
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individual Defendants violated Plaintiff’s marks not only through a corporate entity, but also
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through their individual capacities as well. (ECF No. 29 at ¶ 18 (“Plaintiffs are informed, believe
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and on that basis allege that it is via that newly created vehicle as well as in their individual
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capacity that the defendants and each of them have directly or indirectly used the marks owned
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by Plaintiff . . . .”) (emphasis added).) Plaintiff also states specific details regarding the
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individual Defendants’ particular roles in certain events. Plaintiff alleges that Defendants Moore,
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Dodge, and Peak infringed Plaintiff’s marks at the Founder’s Day Celebration in 2011 with their
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use of the “Clampers” mark. (ECF No. 29 at ¶ 22.) Plaintiff further alleges Defendant Steiner
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helped organize a motorcycle auction and advertised the event on Facebook. (ECF No. 29 at ¶
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23.) Thus, Plaintiff sufficiently states plausible claims against all of the individual Defendants.
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2. Individual Liability for Corporate Actions
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Defendants also argue that Plaintiff fails to allege sufficient facts to impose individual
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liability for the corporate Defendant’s actions. (ECF No. 35-1 at 3–5.) Relying on Wilden Pump
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& Eng’g Co. v. Pressed & Welded Prods. Co., 655 F.2d 984, 990 (9th Cir. 1981), Defendants
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argue that Plaintiff fails to establish individual liability for any infringement by the corporate
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Defendant because Plaintiff fails to allege that the individual defendants were corporate officers
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that actively and knowingly caused the alleged infringement. (ECF No. 35-1 at 4.) Defendants’
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reliance is misplaced because the standard set forth in Wilden allows liability to attach even when
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the individuals are not necessarily corporate officers.
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In Wilden, the court dismissed patent infringement claims against an individual who was
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only an administrative employee and was not a corporate officer, a sole shareholder, or an alter
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ego of the corporation. Wilden, 655 F.2d at 990. However, the court noted that other high-
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ranking individuals who personally controlled, supervised, and directed any infringement could
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also be held individually liable for infringement, including original incorporators of a corporation
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and major shareholders in a small family corporation. Id.
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Even though Plaintiff did not explicitly label the individual Defendants as corporate
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officers, Plaintiff alleges that the individual Defendants originally created the corporate
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Defendant to exploit Plaintiff’s marks. (ECF No. 29 at ¶¶ 17–18.) Defendants argue that
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permitting Plaintiff’s allegations would allow volunteer members of an organization to be held
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liable for infringement. (ECF No. 35-1 at 4–5; Defs.’ Reply to Pl.’s Opp’n, ECF No. 42 at 3.)
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These arguments mischaracterize Plaintiff’s allegations. Plaintiffs are not alleging that the
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individual Defendants are liable because they were simply volunteer members of an organization.
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Rather, Plaintiff argues that these specific individual Defendants had a unique role in creating the
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corporate Defendant and organizing the infringement of Plaintiff’s marks. (ECF No. 29 at ¶¶ 17–
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18.) Defendants further assert that Plaintiff’s claims against the “Doe” Defendants demonstrate
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that Plaintiff’s only basis for establishing claims against the individual Defendants is membership
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with the corporate Defendant. (ECF No. 35-1 at 4–5.) The Court finds this argument
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unpersuasive because even if Plaintiff wished to add parties previously identified as “Doe”
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Defendants, Plaintiff still must satisfy all relevant pleading requirements referenced above.
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Simply alleging that an individual was a volunteer member would not suffice. Thus, under
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Wilden’s framework, Plaintiff alleges sufficient facts to state a plausible claim for individual
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liability for the corporate defendant’s trademark infringement.
Following Wilden, courts have emphasized that an individual can be found liable for a
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corporation’s trademark infringement if he or she acted “knowingly, intentionally and
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deliberately.” Comm. for Idaho’s High Desert, Inc. v. Yost, 92 F.3d 814, 818 (9th Cir. 1996); see
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also Chanel, 931 F.2d at 1477–78 (finding that individuals must have acted “actively and
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knowingly” to impose individual liability for corporate action). Merely selling the infringing
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items cannot turn an individual defendant into a “moving, active, conscious force.” Chanel, 931
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F.2d at 1478 n.8. Rather, courts must consider whether the alleged infringer “actively
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participated as a moving force in the decision to engage in the infringing acts, or otherwise caused
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the infringement as a whole to occur.” Id.
In Yost, the three defendants were the only members of an organization and served as its
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corporate officers. In finding liability, the court noted how defendants created the corporate
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entity with the purpose of causing confusion in their use of plaintiff’s marks. Yost, 92 F.3d at
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818. The court found that this intent, along with defendant’s use of plaintiff’s marks in public
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events such as hearings on local environmental policy, demonstrated that the individuals acted
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“knowingly, intentionally and deliberately.” Id.
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On review of summary judgment, the court in Chanel similarly found that both a chief
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executive officer (“CEO”) and an individual defendant who was not a corporate officer could be
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held individually liable for a corporation’s trademark infringement. Chanel, 931 F.2d at 1478.
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The non-CEO defendant sold the infringing merchandise, looked after the showroom when the
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CEO was out of town, sent warning messages to the CEO, and removed the goods after becoming
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aware of possible litigation. Id. Even though the non-CEO defendant was not involved in the
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purchase or promotion of the infringing goods, the court found these facts, when taken together,
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may be enough to infer that he “actively and knowingly” caused the infringement. Id.
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In the instant case, Plaintiff alleges sufficient facts that demonstrate that the individual
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Defendants acted “knowingly, intentionally and deliberately” on behalf of the corporate
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Defendant. Like the defendants in Yost, the individual Defendants allegedly created the
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corporate Defendant and intended to exploit Plaintiff’s marks. (ECF No. 29 at ¶¶ 17–18, 27.)
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Similar to the non-CEO defendant in Chanel, the individual Defendants here allegedly organized
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the sales of goods bearing Plaintiff’s marks. (ECF No. 29 at ¶¶ 20–21.) This situation is even
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more compelling than in Chanel because Plaintiff alleges that the individual Defendants were
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directly involved in the online and print promotion of events that sold allegedly infringing goods.
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(ECF No. 29 at ¶¶ 24–25.) Taking the alleged facts together, the Court finds that Plaintiff alleges
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sufficient facts to state plausible claims against the individual Defendants for their actions
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performed under the corporate Defendant.
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3. Permitted Uses for Identification or Nominative Purposes
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Defendants also argue that their alleged uses of Plaintiff’s marks are only for permissible
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identification or nominative purposes. (ECF No. 35-1 at 5.) Courts permit identification or
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nominative use when a party: (1) uses marks only when no descriptive substitute exists; (2) uses
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no more of the mark than necessary; and (3) does nothing to suggest sponsorship or endorsement
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by the mark holder. Playboy Enter., Inc. v. Welles, 279 F.3d 796, 801 (9th Cir. 2002). Applying
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this three-part test, the court in Playboy permitted a model’s nominative use of “Playmate of the
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Year” on her website’s headlines and banner advertisements because she had no substitute to
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describe her title, limited her use of the mark, and actively disclaimed any sponsorship. Id. at
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802–03. The court found that she could not otherwise properly identify herself as a “Playmate of
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the Year” without “venturing into absurd descriptive phrases.” Id. at 802 (internal citations
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omitted). On the other hand, the court found that her repeated and stylized use of “PMOY ’81”
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on her website’s background was not necessary to describe herself (i.e., “Playmate of the Year”
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was sufficient), and therefore she could not demonstrate her need to use the “PMOY ’81” mark
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for descriptive purposes. Id. at 804.
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At this stage of the pleadings, Defendants have not satisfied Playboy’s three-part test for
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permitting nominative use. Under the first part, Defendants fail to identify any need to use
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Plaintiff’s marks due to a lack of a descriptive substitute. Rather, Plaintiff alleges that Defendants
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could simply identify themselves as “Joseph Zumwalt Chapter 169” without infringing upon
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Plaintiff’s marks. (See ECF No. 29 at ¶ 24.) Defendants similarly fail to identify limits on their
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use of Plaintiff’s marks. Unlike the defendant in Playboy, Defendants fail to identify how they
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actively disclaimed any sponsorship or endorsement. To the contrary, Plaintiff alleges that
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Defendants claim their events are “official” to confuse the public into thinking that Defendants
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are an authorized chapter. (ECF No. 29 at ¶ 25.) Thus, Plaintiff alleges sufficient facts that
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Defendants used the marks beyond any permissible identification or nominative uses.
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B. Trademark Infringement and Unfair Competition Claims
Defendants argue that Plaintiff fails to allege certain required elements of trademark
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infringement and unfair competition claims brought under the Lanham Act and the California
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Business and Professions Code. (ECF No. 35-1 at 6–12.) Specifically, Defendants argue that
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Plaintiff fails to state sufficient facts to satisfy the “likelihood of confusion” test and to show that
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Defendants sold “non-genuine” goods with the infringing marks. (ECF No. 35-1 at 6–9.)
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Additionally, Defendants argue that Plaintiff fails to specify the type of unfair competition
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alleged under the Lanham Act and to allege a tangible, economic injury under California unfair
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competition law. (ECF No. 35-1 at 9–12.) However, an examination of FAC reveals that
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Plaintiff alleges sufficient facts to state plausible claims for trademark infringement and unfair
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competition.
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1. Likelihood of Confusion under Sleekcraft
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Defendants move to dismiss Plaintiff’s trademark infringement and unfair competition
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claims because the FAC fails to plead facts sufficiently alleging a likelihood of confusion. (ECF
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No. 35-1 at 8–9.) “To plead a prima facie case of trademark infringement, the plaintiff must
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allege that a mark is confusingly similar to a valid and protectable mark of the plaintiff.” Herb
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Reed Enters., Inc. v. Bennett, No. 2:10-CV-01981 (JCM), 2011 WL 2607079, at *2 (D. Nev. June
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30, 2011) (citing Brookfield Commc’ns, Inc. v. W. Coast Entm’t Corp., 174 F.3d 1036, 1046 (9th
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Cir. 1999)). “The ‘ultimate test’ . . . [is] whether the public is likely to be deceived or confused
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by the similarity of the marks.” Century 21 Real Estate Corp. v. Sandlin, 846 F.2d 1175, 1178
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(9th Cir. 1988) (internal citations omitted). The same test applies to unfair competition claims
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under both federal and California law. Century 21 Real Estate LLC v. All Prof’l Realty, Inc., No.
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2:10-CV-02751 (WBS), 2011 WL 221651, at *10 (E.D. Cal. Jan. 24, 2011); see also Murray v.
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Cable Nat’l Broad. Co., 86 F.3d 858, 860 (9th Cir. 1996).
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“The ‘likelihood of confusion’ inquiry generally considers whether a reasonably prudent
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consumer in the marketplace is likely to be confused as to the origin or source of the goods or
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services bearing one of the marks or names at issue in the case.” Rearden LLC v. Rearden
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Commerce, Inc., 683 F.3d 1190, 1209 (9th Cir. 2012). “Eight factors, sometimes referred to as
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the Sleekcraft factors, guide the inquiry into whether a defendant’s use of a mark is likely to
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confuse consumers.” Fortune Dynamic, Inc. v. Victoria’s Secret Stores Brand Mgmt., 618 F.3d
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1025, 1030 (9th Cir. 2010) (citing AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 348–49 (9th Cir.
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1979)).
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These eight factors are: (1) strength of the mark; (2) proximity of
the goods; (3) similarity of the marks; (4) evidence of actual
confusion; (5) marketing channels used; (6) type of goods and the
degree of care likely to be exercised by the purchaser; (7)
defendant's intent in selecting the mark; and (8) likelihood of
expansion of the product lines.
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Rearden, 683 F.3d at 1209 (citing Sleekcraft, 599 F.2d at 348–49). “This eight-factor analysis is
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pliant, illustrative rather than exhaustive, and best understood as simply providing helpful
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guideposts.” Fortune Dynamic, 618 F.3d at 1030 (internal quotation marks omitted).
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Courts interpret the test as a sliding scale rather than a scorecard or checklist. See id. at
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1031 (citing Thane Int’l, Inc. v. Trek Bicycle Corp., 305 F.3d 894, 901 (9th Cir. 2002)).
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“Although some factors—such as the similarity of the marks and whether the two companies are
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direct competitors—will always be important, it is often possible to reach a conclusion with
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respect to likelihood of confusion after considering only a subset of the factors.” Brookfield, 174
20
F.3d at 1054 (citing Dreamwerks Prod. Grp. v. SKG Studio, 142 F.3d 1127, 1130–32 (9th Cir.
21
1998)).
22
An analysis of the Sleekcraft factors demonstrates that Plaintiff has sufficiently alleged a
23
plausible “likelihood of confusion.” Under the first factor, stronger marks are typically those that
24
are “inherently distinctive” and likely to confuse consumers when used similarly by another.
25
Entrepreneur Media, Inc. v. Smith, 279 F.3d 1135, 1141 (9th Cir. 2002) (quoting Sleekcraft, 599
26
F.2d at 349). Trademark registration of a particular mark supports the distinctiveness of a mark.
27
Lahoti v. VeriCheck, Inc., 586 F.3d 1190, 1199 (9th Cir. 2009). Plaintiff here alleges that it has
28
federally registered “E Clampus Vitus,” “ECV,” “Clampers,” and other marks that have become
12
1
incontestable under 15 U.S.C. § 1065. (ECF No. 29 at ¶¶ 15–16, ECF No. 29-1.) Because these
2
marks are alleged to be both registered and incontestable, the Court finds Plaintiff has sufficiently
3
alleged the marks are valid and distinctive. See Lahoti, 586 F.3d at 1199.
4
Under the second factor, the Court examines whether the consuming public is likely to
5
associate Defendants’ goods and services with those sold by Plaintiff. Fortune Dynamic, 618
6
F.3d at 1035 (citing Brookfield, 174 F.3d at 1056). Throughout the FAC, Plaintiff alleges that
7
Defendants’ activities are similar, if not identical, to Plaintiff’s activities. Plaintiff’s marks are
8
used to indicate membership in a fraternal historical organization and in conjunction with the sale
9
of hats, shirts, and pins, and other related goods at various community events. (ECF No. 29 at ¶¶
10
15–16.) Plaintiff alleges that Defendants are selling the same types of merchandise at similar
11
events where Plaintiff or its chapters also participate. (ECF No. 29 at ¶¶ 20–22.) Plaintiff
12
additionally alleges that Defendants’ online raffles are similar to those conducted by Plaintiff to
13
raise funds. (ECF No. 29 at ¶ 24.) Thus, this Court finds that Plaintiff has sufficiently alleged
14
that Defendants’ activities are proximate to those of Plaintiff.
15
Under the third factor evaluating similarity of the marks, Defendants argue that Plaintiff
16
fails to specify which of the registered trademarks for goods were allegedly used on Defendants’
17
goods or services. (ECF No. 35-1 at 7.) Plaintiff however alleges that Defendants exactly used:
18
(1) the “E Clampus Vitus,” “ECV,” and “Clampers” marks on hats, shirts, and pins sold at the
19
Woodland Christmas Parade and “4-SKIN DOINS” events; (2) the “Clampers” trademark on a
20
banner while marching at the Founder’s Day parade; (3) the “ECV” marks through online
21
advertising and an online forum; and (4) the “ECV” and “E Clampus Vitus” marks on
22
advertisements for the “Candle Light Doins” event. (ECF No. 29 at ¶¶ 20–25; ECF No. 29-2 at
23
7.) As Plaintiff states, “[t]his is not a case of a different name which closely approximates that of
24
the Plaintiff, it is the same.” (ECF No. 29 at ¶ 19 (emphasis added).)
25
Defendants also contend that Plaintiff fails to state a claim for the sale of goods using the
26
“E Clampus Vitus” mark because it is a “collective membership” mark and not a “registered
27
trademark for goods.” (ECF No. 35-1 at 8.) Defendants similarly argue that Plaintiff fails to state
28
a claim for Defendants’ use of “Clampers” on a banner while marching at the Founder’s Day
13
1
Parade because the “Clampers” mark is only for registered goods. (ECF No. 35-1 at 9.) Both of
2
these arguments ignore factual allegations made in the FAC. Plaintiff alleges that “E Clampus
3
Vitus” is not only registered as a collective membership mark, but is also registered for use in
4
commerce on pins and hats. (ECF No. 29 at ¶ 15; ECF No. 29-1 at 12–13.) Additionally,
5
Plaintiff alleges that it uses the “Clampers” mark to indicate membership in a fraternal historical
6
organization and to inform the public of Plaintiff’s causes and gatherings. (ECF No. 29 at ¶ 16.)
7
Thus, the Court finds that Plaintiff sufficiently alleges the third factor of the Sleekcraft test.
8
Under the fourth factor, Defendants argue that Plaintiff only alleges that unidentified
9
“local authorities” were allegedly confused at the Founder’s Day Celebration. (ECF No. 35-1 at
10
9.) Defendants contend that Plaintiff fails to allege any other facts that indicate actual consumer
11
confusion. (ECF No. 35-1 at 9.) These assertions overstate the emphasis on presenting actual
12
confusion instead of the likelihood of confusion and misstate the FAC’s factual allegations.
13
“[T]he failure to prove instances of actual confusion is not dispositive against a trademark
14
plaintiff, because actual confusion is hard to prove; difficulties in gathering evidence of actual
15
confusion make its absence generally unnoteworthy.” Au-Tomotive Gold, Inc. v. Volkswagen of
16
America, Inc., 457 F.3d 1062, 1075 (9th Cir. 2006) (quoting Brookfield, 174 F.3d at 1050).
17
“Where the marks are identical, the likelihood that a knowledgeable consumer would be confused
18
as to the mark’s origin is great.” Herb Reed, 2011 WL 2607079, at *3. Regardless, Plaintiff still
19
alleges specific facts regarding the presence of actual confusion. Plaintiff states that Defendants’
20
uses of its marks while conducting sales were designed to be confusing since they implied
21
association with Plaintiff’s organization. (ECF No. 29 at ¶ 37.) Plaintiff additionally alleges that
22
new members mistakenly enrolled with Defendants’ organization because of the use of Plaintiff’s
23
marks. (ECF No. 29 at ¶ 25.) Thus, Plaintiff pleads sufficient facts that plausibly allege that
24
Defendants’ uses of Plaintiff’s marks led to actual confusion by consumers, potential members,
25
and the general public.
26
Plaintiff also pleads facts demonstrating the fifth and seventh Sleekcraft factors on
27
marketing channels and intent. Plaintiff alleges that Defendants employed similar marketing
28
channels on Facebook and online forums to promote the sale of goods bearing “ECV” marks.
14
1
(ECF No. 29 at ¶¶ 23–24; ECF No. 29-2 at 2–6.) Plaintiff further alleges that Defendants operate
2
and advertise in the same geographic areas as Plaintiff does in Georgetown and Woodland. (ECF
3
No. 29 at ¶ 29.) In terms of intent, Plaintiff repeatedly alleges that Defendants are attempting to
4
use the “long standing history” of Plaintiff and its marks to cause confusion in the marketplace
5
for personal gain. (ECF No. 29 at ¶¶ 18–20, 27.) Thus, the Court finds that Plaintiff alleges
6
sufficient facts regarding the fifth and seventh factors.
7
This Court, considering the Sleekcraft factors as a whole, determines that Plaintiff has
8
plausibly alleged that a “likelihood of confusion” results from Defendants’ uses of Plaintiff’s
9
marks. Even though Plaintiff does not discuss the sixth and eighth factors, Plaintiff sufficiently
10
alleges a “likelihood of confusion” because it has made a strong showing of facts supporting a
11
majority of the Sleekcraft factors. Au-Tomotive Gold, 457 F.3d at 1078. Throughout the FAC,
12
Plaintiff alleges that Defendants infringed upon its registered marks at similar events by exactly
13
copying Plaintiff’s marks and intentionally confusing the public in areas where Plaintiff operates.
14
Thus, unlike the original complaint, Plaintiff’s FAC alleges sufficient facts to demonstrate a
15
“likelihood of confusion.”
16
2. Genuineness of Goods
17
Defendants also argue that the FAC fails to state a claim under Section 32(1) of the
18
Lanham Act because Plaintiff does not allege that Defendant sold “non-genuine” goods bearing
19
Plaintiff’s marks. (ECF No. 35-1 at 7–8.) Relying on NEC Elecs. v. CAL Circuit Abco, 810
20
F.2d 1506 (9th Cir. 1987), Defendants argue that if goods being sold are genuine paraphernalia
21
then there cannot be any infringement. (ECF No. 35-1 at 8.)
22
The Lanham Act prohibits the unpermitted “reproduction, counterfeit, copy, or colorable
23
imitation” of a mark. 15 U.S.C. § 1114(1)(a). Defendant is correct in stating that the authorized
24
resale of a lawfully purchased good bearing a trademark typically does not establish liability
25
under the Lanham Act. NEC, 810 F.2d at 1509.
26
However, Defendants’ reliance on NEC is misplaced. In NEC, the parties stipulated that
27
the defendant’s goods were genuine products purchased from the plaintiff manufacturer’s foreign
28
parent company. Id. at 1508. Such is not the case here. Plaintiff does not allege or stipulate that
15
1
Defendants are re-selling genuine goods originally manufactured by Plaintiff. Rather, Plaintiff
2
alleges that Defendants “have directly or indirectly used the marks owned by Plaintiff . . . to
3
market similar products in competition with Plaintiff or its recognized chapters . . . .” (ECF No.
4
29 at ¶ 18 (emphasis added).) Defendants ignore this distinction when they argue that Plaintiff
5
fails to state a plausible claim. Moreover, unlike in NEC, Plaintiff here alleges that Defendants
6
were unlawfully selling goods “of one make under the trade mark of another.” NEC, 810 F.2d at
7
1510. While the Court acknowledges Defendants’ argument that they are merely re-selling goods
8
with Plaintiff’s marks, the Court “accept[s] factual allegations in the complaint as true” for the
9
purposes of a 12(b)(6) motion to dismiss. Fayer, 649 F.3d at 1064. As a result, this Court does
10
not consider this specific argument for the disposition of this motion. Thus, while Plaintiff does
11
not explicitly label these goods as “non-genuine,” the FAC pleads sufficient facts alleging that
12
Defendants are marketing potentially infringing goods within the meaning of § 1114(1)(a).
13
Additionally, § 1114(a)(1) not only covers the actual sales of goods, but also extends to
14
“offering for sale, distribution, or advertising of any goods or services on or in connection with
15
which such use is likely to cause confusion, or to cause mistake, or to deceive.” 15 U.S.C. §
16
1114(1)(a) (emphasis added). Throughout the FAC, Plaintiff states that it uses its marks when
17
advertising at parades, fundraisers, and other community events. (ECF No. 29 at ¶¶ 20–24.)
18
Plaintiff alleges that Defendants organized similar community events that unlawfully used
19
Plaintiff’s marks in advertisements to confuse or deceive consumers. (ECF No. 29 at ¶¶ 22–24.)
20
Regardless of how Defendants obtained their goods, allegations that Defendants inappropriately
21
used Plaintiff’s marks in advertising serve as independent basis of infringement under Section
22
32(1). Thus, Plaintiff’s factual allegations state a plausible claim pursuant to Section 32(1) of the
23
Lanham Act.
24
3. Federal Unfair Competition under Section 43(a) of the Lanham Act
25
Defendants additionally move to dismiss Plaintiff’s federal unfair competition claim
26
because of Plaintiff’s failure to allege the specific types of unfair competition embodied in
27
Section 43(a) of the Lanham Act. (ECF No. 35-1 at 9–10.) Section 43(a) prohibits “any false
28
designation of origin, false or misleading description of fact, or false or misleading representation
16
1
of fact” that is likely “to cause confusion,” “to deceive as to the affiliation,” or “[to]
2
misrepresent[] the nature, characteristics, qualities, or geographic origin of his or her or another
3
person’s goods, services, or commercial activities.” 15 U.S.C. § 1125(a)(1). “Section 43(a) of
4
the Lanham Act prohibits actions like trademark infringement that deceive consumers and impair
5
a producer’s goodwill.” Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23, 32
6
(2003). Despite Defendants’ claims, Plaintiff alleges several false or misleading representations
7
of fact that fall within the scope of Section 43(a). Plaintiff states that Defendants use of “E
8
Clampus Vitus,” “ECV,” and “Clampers” marks on hats, shirts, and pins sold at various events
9
lead to confusion regarding the origin of these goods. (ECF No. 29 at ¶¶ 20–22.) Plaintiff further
10
alleges that the use of its marks inappropriately suggest affiliation or sponsorship of Defendants’
11
sales. (ECF No. 29 at ¶¶ 20–22.) Plaintiff states Defendants’ misleading descriptions have
12
deceived the public, impaired the Plaintiff’s established goodwill, and led to lost sales. (ECF No.
13
29 at ¶¶ 42, 44.) Thus, Plaintiff alleges a plausible claim under Section 43(a) of the Lanham Act.
14
4. Requirements under California Unfair Competition Law
15
Defendants also argue that the FAC fails to state a plausible claim for unfair competition
16
under California law because Plaintiff does not allege a tangible, economic injury. (ECF No. 35-
17
1 at 11–12.) Under California Business and Professions Code § 17200, “the ‘lost money or
18
property’ requirement [] requires a plaintiff to demonstrate ‘some form of economic injury.’”
19
Hinojos v. Kohl’s Corp., 718 F.3d 1098, 1104 (9th Cir. 2013) (citing Kwikset Corp. v. Superior
20
Court of Orange Cnty., 51 Cal. 4th 310, 323 (2011)). Plaintiff alleges that Defendants’ actions
21
have decreased Plaintiff’s income and profits from sales of merchandise bearing their protected
22
marks.3 (ECF No. 29 at ¶ 51.) Therefore, Plaintiff states a plausible claim pursuant to California
23
24
25
26
27
28
3
Plaintiff further alleges that because of Defendants’ acts, its authorized Growlersberg chapter
was unable to participate in the Founder’s Day Celebration and was unable to obtain any revenue
from sales. (ECF No. 29 at ¶ 22.) Defendants argue that the Plaintiff’s Growlersberg chapter is a
separate legal entity from Plaintiff and therefore, even if that chapter was injured, Plaintiff has no
standing to assert claims on behalf of a separate legal entity. (ECF No. 35-1 at 12.) Because the
Court finds that Plaintiff has stated plausible facts to state a tangible, economic injury without this
allegation, the Court need not resolve the issue of whether the chapter is a separate legal entity in
deciding this motion. Furthermore, Defendants did not move to strike Plaintiff’s allegation
regarding the authorized Growlersberg chapter and the Founder’s Day Celebration.
17
1
Business and Professions Code § 17200 because the pleaded facts allege a plausible, tangible
2
economic injury upon which Plaintiff can recover.
3
Defendants also argue that Plaintiff fails to state sufficient facts to state a claim for unfair
4
competition based on an alleged illegal raffle under California law. (ECF No. 35-1 at 12.)
5
Plaintiff alleges that Defendants conducted the raffle without obtaining approval of the Attorney
6
General of the State of California as required by California Penal Code § 320.5(b) and California
7
Code of Regulations, title 11, § 410, et seq. (ECF No. 29 at ¶ 51.) As Defendants point out, these
8
code provisions impose certain specific requirements on non-profits that conduct raffles.
9
Plaintiff, however, does not allege additional facts regarding this raffle and how Defendants
10
allegedly failed to meet the requirements of California Penal Code § 320.5(b) or California Code
11
of Regulations, title 11, § 410, et seq. (ECF No. 35-1 at 14.) While by itself this statement may
12
have been insufficient to state a plausible claim for relief under § 17200, as set forth above,
13
Plaintiff alleges sufficient facts regarding other acts that satisfy the pleading requirements for a
14
claim brought under § 17200. Thus, this Court finds that the FAC states sufficient facts to state
15
an unfair competition claim pursuant to § 17200.4
16
C. Heightened Pleading Requirements for California False Advertising Claim
17
Defendants also move to dismiss the false advertising claims made under California
18
Business and Professions Code § 17500 based on Plaintiff’s continued use of conclusory
19
language and failure to plead fraud with sufficient particularity under Rule 9(b). (ECF No. 35-1
20
at 13.) “False advertising under section 17500 . . . is a claim sounding in fraud.” Sensible Foods,
21
LLC v. World Gourmet, Inc., No. 11-2819 (SC), 2011 WL 5244716, at *7 (N.D. Cal. Nov. 3,
22
2011) (citing In re Tobacco II Cases, 46 Cal. 4th 298, 312 n.8 (2009)). Because these claims are
23
subject to heightened pleading requirements under Rule 9(b), “Plaintiff must allege facts
24
identifying specific allegedly false statements, including facts showing how the statements were
25
misleading.” Id. Pleadings alleging fraud must “articulate the who, what, when, where, and how
26
of the misconduct alleged.” Kearns v. Ford Motor Co., 567 F.3d 1120, 1126 (9th Cir. 2009).
27
28
4
Defendants did not move to strike these factual allegations regarding the raffle.
18
1
Circumstances constituting the alleged fraud must “be specific enough to give defendants notice
2
of the particular misconduct . . . so that they can defend against the charge and not just deny that
3
they have done anything wrong.” Id. at 1124 (citing Bly-Magee v. California, 236 F.3d 1014,
4
1019 (9th Cir. 2001)) (internal quotation marks omitted).
5
Plaintiff pleads particularity sufficiently in the FAC because it identifies Defendants as the
6
infringers, names specific events, and describes how Defendants allegedly engaged in false
7
advertising. For instance, Plaintiff alleges that at the Woodland Candle Light Doins event in June
8
2012, Defendants misrepresented themselves by using the “E Clampus Vitus” marks and claiming
9
to be an “official” event. (ECF No. 29 at ¶ 25; ECF No. 29-2 at 7.) Plaintiff states that at this
10
event, Defendants signed up new members who believed they were enrolling in Plaintiff’s
11
organization. (ECF No. 29 at ¶ 25.) Rather than using conclusory language, the FAC specifically
12
alleges that this use of terms such as “official” along with Plaintiff’s marks could be misleading
13
because potential members may think Plaintiff is hosting or sponsoring the event. (ECF No. 29 at
14
¶ 25.) Additionally, Plaintiff states that at the Woodland Christmas Parade in December 2011,
15
Defendants misrepresented themselves as a chapter of E Clampus Vitus through signs and sold
16
hats, shirts, and jewelry pins with the “E Clampus Vitus,” “ECV,” and “Clampers” marks. (ECF
17
No. 29 at ¶ 20.) Plaintiff alleges that Defendants performed these acts in order to exploit the
18
established rights and goodwill of Plaintiff for personal gain and aggrandizement. (ECF No. 29 at
19
¶ 27.) Unlike the original complaint, the FAC identifies false statements of fact in a sufficient
20
manner to provide Defendants with notice of the particular misconduct alleged. Thus, Plaintiff
21
pleads sufficient facts with particularity to meet the heightened pleading requirements to allege a
22
false advertising claim under California law.
23
D. Abandonment of the “Doe” Defendants
24
Defendants move to strike the “Doe” Defendants because Plaintiff failed to specify the
25
time needed to identify them in the Joint Status Report as required by the Order Setting Status.
26
(ECF No. 35-1 at 6 n.2.) The Court has discretion to dismiss claims against “Doe” defendants for
27
failure to timely identify or serve them within the time-period prescribed by Rule 4(m). Mozzer
28
v. Prison Health Svc., 250 Fed App’x 786, 787 (9th Cir. 2007); West v. Fed. Bureau of Prisons,
19
1
1:09-CV-01277 (LJO), 2012 WL 1391938, at *1 (E.D. Cal. Apr. 20, 2012). Under Rule 4(m),
2
“[i]f a defendant is not served within 120 days after the complaint is filed, the court—on motion
3
or on its own after notice to the plaintiff—must dismiss the action without prejudice against that
4
defendant or order that service be made within a specified time.” Fed. R. Civ. P. 4(m).
Plaintiff has still not identified or served any of “Doe” Defendants, despite originally
5
6
filing this action more than one year ago. Even though Rule 4(m) allows the court to extend time
7
for service if plaintiff shows good cause, this Court has already notified Plaintiff that “[f]ailure to
8
set forth specific information regarding the time Plaintiff(s) needs to identify any ‘Doe’
9
defendants will be deemed an abandonment of any claims against such defendants.” (Order
10
Setting Status, ECF No. 4 at 2 n.2.) Plaintiff failed to include any specific information regarding
11
the time needed to identify “Doe” defendants in the Joint Status Report and in its Opposition to
12
Defendant’s Motion to Dismiss. Plaintiff has also not requested additional time or preliminary
13
discovery to identify the alleged “Doe” Defendants listed in the FAC. Thus, the Court dismisses
14
Plaintiff’s claims against the “Doe” Defendants without prejudice.5
15
E. Requests for Sanctions
16
Defendants argue that the Court should sanction Plaintiff under Rule 11 and 28 U.S.C. §
17
1927 for Plaintiff’s failure to defend the initial Complaint and failure to file a Notice of Non-
18
Opposition to the original Motion to Dismiss and Strike in accordance with Local Rule 230(c)
19
and the Court’s Order Setting Status. (ECF No. 35-1 at 13.) Under its discretion, this Court
20
denies Defendants’ requests for sanctions, finding that Plaintiff did not “unreasonably and
21
vexatiously” multiply proceedings within the meaning of 28 U.S.C. § 1927. However, this Court
22
admonishes Plaintiff for failing to submit a Notice of Non-Opposition as required under Local
23
Rules and the Court’s Order. Future non-compliance with Local Rules or this Court’s orders may
24
result in sanctions as appropriate. E.D. Cal. L.R. 110 (“Failure of counsel or of a party to comply
25
with these Rules or with any order of the Court may be grounds for imposition by the Court of
26
5
27
28
This does not imply that Plaintiff can simply file another amended complaint to specify the time
needed to identify any “Doe” Defendants. Rather, should Plaintiff wish to amend its pleadings
and bring additional named parties into this matter, it must satisfy procedural standards set forth
in the Federal Rules of Civil Procedure, Local Rules, and Orders of this Court.
20
1
any and all sanctions authorized by statute or Rule or within the inherent power of the Court.”).
2
CONCLUSION
3
For the stated reasons, Defendants’ motion to dismiss for failure to state a claim is
4
DENIED. Defendants’ motion to strike the “Doe” Defendants is GRANTED. Defendants’
5
requests for sanctions and attorney’s fees under Rule 11 and 28 U.S.C. § 1927 are DENIED.
6
7
IT IS SO ORDERED.
Dated: August 15, 2013
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