Obesity Research Institute, LLC v. Fiber Research International, LLC et al

Filing 445

ORDER denying Plaintiff's 442 Motion to Certify Portions of the Summary Judgment Order for Interlocutory Review. Signed by Judge Cynthia Bashant on 4/16/2018. (jah)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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OBESITY RESEARCH INSTITUTE,
LLC,

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Plaintiff,

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Case No. 15-cv-00595-BAS-MDD

v.
FIBER RESEARCH
INTERNATIONAL, LLC, et al.,

ORDER DENYING MOTION TO
CERTIFY PORTION OF
SUMMARY JUDGMENT
ORDER FOR
INTERLOCUTORY REVIEW
[ECF No. 442]

Defendants.

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AND RELATED COUNTERCLAIM.

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Presently before the Court is Plaintiff/Counterdefendant Obesity Research

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Institute, LLC’s (“ORI”) motion to certify a portion of the Court’s summary

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judgment order (ECF No. 439) for interlocutory review. (Mot., ECF No. 442.)

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Specifically, ORI requests the Court to certify portions of its Order that relate to Fiber

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Research International, LLC’s (“FRI”) standing to assert its counterclaims on behalf

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of itself and non-party Shimizu Chemical Corporation (“Shimizu”).
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For the foregoing reasons, the Court DENIES ORI’s motion. (ECF No. 442.)

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I.

LEGAL STANDARD

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Under 28 U.S.C. § 1292(b), a district court must certify an order for

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interlocutory appeal if it (1) “involves a controlling question of law,” (2) “to which

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there is substantial ground for difference of opinion,” and (3) “that an immediate

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appeal from the order may materially advance the ultimate termination of the

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litigation.” Id.; Stanwood v. Mary Kay, Inc., 941 F. Supp. 2d 1212, 1224 (C.D. Cal.

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2012). By congressional directive, “section 1292(b) is to be applied sparingly and

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only in exceptional cases.” In Cement Antitrust Litigation, 673 F.2d 1020, 1027 (9th

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Cir. 1981); see also United States v. Woodbury, 263 F.2d 784, 787-88 (9th Cir. 1959)

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(“Section 1292(b) was intended primarily as a means of expediting litigation by

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permitting appellate consideration during the early stages of litigation of legal

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questions which, if decided in favor of the appellant, would end the lawsuit.”).

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Because Section 1292(b) is only applied in “rare circumstances,” it “must be

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construed narrowly.” James v. Price Stern Sloan, Inc., 283 F.3d 1064, 1067 n.6 (9th

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Cir. 2002).

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“The mere fact that a party strongly disagrees with a court’s ruling is not a

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substantial ground for difference of opinion warranting certification.” Stanwood, 941

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F. Supp. 2d at 1224. “Such a dispute exists, for example, if the circuits are in

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disagreement and the court of appeals in which the district court sits has not decided

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the issue, the issue involves complicated questions of foreign law, or the issue is a

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novel and difficult one of first impression.” Cooper v. Tokyo Elec. Power Co., Inc.,

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166 F. Supp. 3d 1103, 1142 (S.D. Cal. 2015), aff’d, 860 F.3d 1193 (9th Cir. 2017).

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“However, just because a court is the first to rule on a particular question or just

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because counsel contends that one precedent rather than another is controlling does

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not mean” that such substantial grounds exist. Couch v. Telescope Inc., 611 F.3d 629,

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633 (9th Cir. 2010). Additionally, a question of law is controlling if its resolution
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would materially affect the outcome of the case. See In Cement Antitrust Litigation,

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673 F.2d at 1026 (providing examples such as “the determination of who are

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necessary and proper parties, whether a court to which a cause has been transferred

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has jurisdiction, or whether state or federal law should be applied.” (quoting

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Woodbury, 263 F.2d at 787-88)).

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II.

ANALYSIS

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The genesis of ORI’s motion to certify is that ORI disagrees with outcomes

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stated in the Court’s summary judgment order. ORI’s motion for certification

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reargues the same legal theories that the Court previously rejected, and does not

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present any new changes in law. ORI seeks specifically to appeal the Court’s rulings

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on four of its arguments relating to standing. In rejecting these arguments, the Court

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found: (1) Shimizu’s assignment of its legal claims in this case to FRI was sufficient;

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(2) Shimizu does not lack statutory standing under the Lanham Act; (3) FRI does not

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lack statutory standing under the Lanham Act; and (4) FRI’s representative claims

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do not fail because of a lack of Article III standing. The Court addresses each

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argument in turn.

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A.

Assignment of Shimizu’s Claims to FRI
a. Shimizu’s “Bare” Assignment to FRI

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ORI spends a significant amount of its motion rearguing its theory regarding

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the assignment of the legal claims at issue in this case from Shimizu to FRI. (Mot. at

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5-7.) ORI attempts to frame the issue ripe for appeal as a “bare” assignment of

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trademark infringement claims. However, that was not the issue in front of the Court,

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or at issue in this case. Here, at issue was whether Shimizu assigned its false

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advertising legal claims under section 43(a) of the Lanham Act to FRI. The Court did

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not address the basic legal principle of prohibiting the “bare” assignment of

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trademark and copyright infringement claims, and did not rule on this issue.1 The

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Court may have been the first federal court in the United States to apply the existing

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law to the specific facts of this case (as many district courts do), but this alone does

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not show a substantial ground for difference of opinion. See Couch v. Telescope Inc.,

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611 F.3d 629, 634 (9th Cir. 2010) (“It is well settled that ‘the mere presence of a

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disputed issue that is a question of first impression, standing alone, is insufficient to

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demonstrate a substantial ground for difference of opinion.’” (quoting In re Flor, 79

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F.3d 281, 284 (2d Cir. 1996)). It does not appear that the legal issues in this case were

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so novel or so complex to warrant interlocutory review. Cf. Cooper, 166 F. Supp. 3d

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at 1142 (finding the application of the political question doctrine and the

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“firefighter’s rule” was a novel and complex issue).

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What the Court did find was that Shimizu assigned a limited set of legal claims

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to FRI that encompassed the section 43(a) false advertising claims under the Lanham

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Act along with a non-exclusive license to distribute Shimizu’s products. (ECF No.

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439 at 14 (“[T]he Court finds that, through the February 2015 [Distribution and

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Claims] Agreement, Shimizu assigned FRI the legal claims asserted in this case. To

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the extent it is relevant, Shimizu also assigned FRI a non-exclusive license to

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distribute Shimizu’s products in the United States.”) Thus, even accepting ORI’s

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arguments that an underlying commercial interest is required for assignment and

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standing in section 43(a) claims, FRI received both. (ECF No. 439 at n.14.) This

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finding is supported by case law holding that non-exclusive licensees have the

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requisite commercial interest, and thus have standing, under section 43(a) of the

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Lanham Act:

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Courts have found that a nonexclusive license is a
commercial interest sufficient for a claim under section

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ORI attempts to cite to an inadvertent reference to “Lanham Act copyright .
. . infringement claims” to “underscore the Court’s misapplication of the proper
governing authority.” (ECF No. 442 at 7.) But this lone, insignificant typographical
error is not dispositive, nor representative, of the Court’s otherwise proper
application of the governing authority.
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43(a). See Quabaug Rubber Co. v. Fabiano Shoe Co., 567
F.2d 154, 159-60 (1st Cir. 1977) (dismissing plaintiff’s
claims under § 32 because plaintiff was not a “registrant” or
“exclusive licensee” but allowing plaintiff’s claim to
proceed under § 43); Shell Co. v. Los Frailes Serv. Station,
Inc., 596 F. Supp. 2d 193, 203 (D.P.R. 2008), aff’d sub nom.
The Shell Co. (Puerto Rico) v. Los Frailes Serv. Station,
Inc., 605 F.3d 10 (1st Cir. 2010) (“Courts have allowed
licensees (exclusive or nonexclusive) . . . to bring claims
pursuant to section 1125(1).”); Adidas Am., Inc. v. Athletic
Propulsion Labs, LLC, No. 16-CV-00415-HZ, 2016 WL
3896826, at *4 (D. Or. July 18, 2016) (“[Defendant] fails to
cite any authority for the proposition that a non-exclusive
licensee necessarily lacks standing under § 43(a)); OTR
Wheel Eng’g, Inc. v. W. Worldwide Servs., Inc., No. CV-14085-LRS, 2015 WL 11117169, at *2 (E.D. Wash. Nov. 30,
2015) (limiting a non-exclusive license holder “to pursuing
a trademark claim under 15 U.S.C. § 1125(a)”).

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(Id.) Thus, the Court applied the existing law regarding section 43(a) specifically,

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along with generally accepted principles of assignments, to reach its decision.

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Accordingly, the Court finds ORI has failed to demonstrate that a substantial

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ground for difference of opinion exists. Accordingly, immediate appeal on this issue

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is not warranted.

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ii.

Validity of Assignment Under Nevada Law

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ORI raises another issue with the assignment of Shimizu’s Lanham Act claims.

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(Mot. at 7-8.) ORI argues that Shimizu’s assignment of its legal claims was invalid

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under Nevada law. (Id.) In its Order, the Court recognized that the cases cited by ORI

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related to Nevada’s prohibition on assignment of personally injury tort claims, rather

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than tort claims generally. (ECF No. 439 at 16.) The Court found that the limitation

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of these claims (along with fraud claims when an individual is personally defrauded)

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is rooted in the Nevada’s public policy, and cited to a variety of state and federal

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cases. (Id.) Specifically, the Court included in in its analysis two District of Nevada

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cases, and quoted one that stated “[t]hough the Nevada Supreme [Court] has never

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expressly held that property damage claims may be assigned, the policy reasons for

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prohibiting the assignment of personal injury claims are premised upon the personal
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nature of the claims themselves and a desire to limit unscrupulous people trafficking

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in pain and suffering.” (ECF No. 439 at 16-17 (quoting Platinum UnitOwners’ Ass’n

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v. Residential Constructors, LLC, No. 2:14-CV-01076-GMN-GW, 2015 WL

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1186530, at *5 (D. Nev. Mar. 16, 2015) (internal citations and quotations omitted)).)

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In its instant motion, ORI points to another unpublished federal case out of

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Nevada to argue that this Court’s Order “diverges” from this “arguably better

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situated” district court. (Mot. at 7-8 (citing Hansen v. State Farm Mut. Auto. Ins. Co.,

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2015 U.S. Dist. LEXIS 143061, at *17 (D. Nev. 2015)).) However, Hansen is

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distinguishable because the facts of the case address a claim that is personal in nature.

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Id. at *12. The Hansen court analyzed the remaining claim of whether State Farm

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Fire & Casualty Company “misrepresented the provisions of the Policy” to the

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individual covered under an insurance policy. Id. (“Plaintiffs’ [or assignees’] claim

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that such misrepresentation constituted misrepresenting to insureds or claimants

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pertinent facts or insurance policy provisions relating to any coverage at

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issue.”(internal quotations omitted)). Thus, the claim is more akin to whether an

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individual was personally defrauded, rather than a property damage tort claim, and is

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consistent with the analysis in the Court’s Order. (ECF No. 439 at 18 (“Thus, though

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Nevada’s law and public policy prevents the assignment of personal injury tort claims

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and fraud claims where a party is personally defrauded, neither of those claims are at

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issue here.”)

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Additionally, Hansen relies on a Nevada Supreme Court case that provides a

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discussion regarding the assignment of tort law actions in Nevada, which the Court

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also cited in its previous Order. 2015 U.S. Dist. LEXIS 143061, at *16-17 (quoting

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Edward J. Achrem v. Expressway Plaza Ltd. P’ship, 917 P.2d 447, 449 (Nev. 1996));

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(ECF No. 439 at 16.) Achrem addresses the assignability of proceeds for a personal

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injury tort claim, and begins its analysis by stating that “[a]t common law, an

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assignment of the right to a personal injury action was prohibited.” 917 P.2d at 448.

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The Nevada Supreme Court went on to detail the legislative history regarding the

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assignability of tort actions generally in Nevada by stating:

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This court first addressed the assignability of the rights to a
tort action in Davenport v. State Farm Mutual, 81 Nev. 361,
404 P.2d 10 (1965), by expressly allowing the assignment of
tort actions. Id. In 1967, the Nevada Legislature specifically
prohibited the assignment of a cause of action by
passing NRS 41.100(3). 1967 Nev. Stat., ch 190, § 3 at 408.
However, in 1979, the Nevada Legislature amended NRS
41.100(3) and deleted any statutory prohibition against
assigning tort actions. 1979 Nev. Stat., ch 305, § 2 at 45859. See also Maxwell v. Allstate Ins. Co., 102 Nev. 502, 50405, 728 P.2d 812, 814 (1986).

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Id. at 449. The Nevada Supreme Court continued its analysis, including the quote

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relied on by Hansen, to determine a distinction between assigning a personal injury

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tort action and the proceeds of such action. Nowhere in this case does the Nevada

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Supreme Court state that non-personal injury tort claims are prohibited by common

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law. See Platinum UnitOwners’ Ass’n, 2015 WL 1186530, at *5 (recognizing that no

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Nevada Supreme Court has held this prohibition).

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Therefore, the Court does not find that Hansen is “clear, on-point authority,”

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and is rather distinguishable from the case at hand. ORI has not shown a significant

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split in federal (or state) case law relating to the assignment of federal Lanham Act

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false advertising claims under Nevada law. Accordingly, the Court does not find that

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a substantial ground of difference opinion exist, and an appeal on this issue is not

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warranted.

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B.

Standing Under the Lanham Act

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ORI’s arguments that FRI and Shimizu lack standing under the Lanham Act

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are anchored in rejecting FRI’s and Shimizu’s evidence, which was presented

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through sworn declarations. (Mot. at 8-10.) ORI does not disagree with the law
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applied by the Court, but disputes that the Court did not adopt ORI’s charge that FRI

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is a “shell company” and that Shimizu was not, and could not be, damaged, and thus

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both parties do not meet the “zone of interests” test. (Id.) However, as discussed in

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its Order, the Court is prohibited from making these credibility determinations or

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drawing other inferences at summary judgment. (ECF No. 439 at 27-28.) Instead, the

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Court could only analyze whether FRI and Shimizu presented specific, rather than

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conclusory, statements and whether those evidentiary statements were sufficient to

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establish standing. (Id.) To the extent ORI believes that FRI’s and Shimizu’s

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statements are not genuine, and that other nefarious inferences should be drawn, ORI

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can make these arguments to a jury. See Anderson v. Liberty Lobby, Inc., 477 U.S.

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242, 255 (1986) (“Credibility determinations, the weighing of the evidence, and the

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drawing of legitimate inferences from the facts are jury functions, not those of a

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judge, [when] he [or she] is ruling on a motion for summary judgment.”)

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Therefore, the Court does not find that a substantial ground of difference
opinion exist, and an appeal on this issue is not warranted.

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Shimizu’s Article III Standing

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C.

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ORI’s misreading of the Court’s previous March 29, 2017 Order (ECF No.

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335) manifests into its argument regarding Shimizu’s Article III standing. (Mot. at

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10-11.) The Court’s ruling on this issue is clear, and it is not in conflict with its more

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recent summary judgment Order, or established Article III jurisprudence, as ORI

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contends. (Id.) Though ORI continues to disagree with the Court on the determination

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of Shimizu’s Article III standing, this disagreement is not a substantial ground for

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difference of opinion on the issue of law here. ORI simply misunderstands the

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Court’s rulings, as well as its burden relating to this issue.

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Therefore, the Court does not find that substantial grounds of difference
opinion exist, and an appeal on this issue is not warranted.

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III.

CONCLUSION & ORDER
For the foregoing reasons, the Court DENIES ORI’s motion to certify a

portion of the summary judgment order for interlocutory review. (ECF No. 442.)
IT IS SO ORDERED.

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DATED: April 16, 2018

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