Salba Corp., N.A. et al v. X Factor Holdings, LLC et al

Filing 134

ORDER denying 52 Motion to Enforce Settlement Agreement. By Judge Robert E. Blackburn on 9/10/2014.(alowe )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Robert E. Blackburn
Civil Action No. 12-cv-01306-REB-KLM
SALBA CORP., N.A., a Canadian corporation,
SALBA SMART NATURALS PRODUCTS, a Colorado limited liabilty company,
WILLIAM A. RALSTON, and
RICHARD L. RALSTON,
Plaintiffs,
v.
X FACTOR HOLDINGS, LLC, an inactive Florida limited liability company, and
ANCIENT NATURALS, LLC, a Florida limited liability company,
MITCHELL A. PROPSTER, a resident of the State of Florida,
CORE NATURALS, LLC, a Florida limited liability company, and
NATURAL GUIDANCE, LLC, a Florida limited liability company,
Defendants and Counter-Claimants.

ORDER DENYING MOTION TO ENFORCE SETTLEMENT AGREEMENT
Blackburn, J.
This matter is before me on the Defendants’ Motion and Memorandum To
Enforce Settlement Agreement [#52]1 filed December 23, 2013. The plaintiffs filed a
response [#71], and the defendants filed a reply [#82]. In addition to these filings and
the evidence submitted therewith, I have considered also the evidence and argument
submitted by the parties in relation to the Plaintiffs’ Motion for Temporary
Restraining Order / Preliminary Injunction [#45] filed December 13, 2013. I deny the
motion to enforce the settlement agreement without prejudice.

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“[#52]” is an example of the convention I use to identify the docket number assigned to a
specific paper by the court’s case management and electronic case filing system (CM/ECF). I use this
convention throughout this order.

I. BACKGROUND
This case concerns disputes about the use by the defendants of trademarks
and other materials related to the Salba trademark used by the plaintiffs. In the
past, both the plaintiffs and the defendants have used the Salba name and
associated artwork in the sale of chia seeds and related products. In the original
complaint [#1], the plaintiffs asserted claims for (1) trademark counterfeiting and
infringement; (2) federal unfair competition and false advertising; (3) deceptive trade
practices; (4) cyber-squatting; and (5) common law trademark infringement and
unfair competition. These claims were brought against defendants X Factor
Holdings, LLC and Ancient Naturals, LLC. The parties reached a settlement and, in
early March 2013, executed a Settlement Agreement and Release (Settlement
Agreement) [#45-9], pp. 2 - 67.
Now, the plaintiffs contend that X Factor Holdings, LLC and Ancient Naturals,
LLC have violated the settlement agreement by continuing to use the Salba
trademarks owned by the defendants and by using packaging that is illicitly similar to
packaging used by the plaintiffs to sell products under the Salba name. As named
defendants, X Factor Holdings, LLC and Ancient Naturals, LLC signed the
settlement agreement. In addition, the settlement agreement was signed by Mitchell
Propster, an individual closely related to these two defendant entities, and two other
entities tied to Mr. Propster, Core Naturals, LLC and Natural Guidance, LLC. Mr.
Propster, Core Naturals, LLC, and Natural Guidance, LLC are named as defendants
in the amended complaint [#62]. The plaintiffs now contend that X Factor Holdings,
LLC, Ancient Naturals, LLC, Mr. Propster, Core Naturals, LLC, and Natural
Guidance, LLC have violated the settlement agreement.
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II. ANALYSIS
In their motion [#52] to enforce the Settlement Agreement, the defendants
contend, in essence, that there is no evidence that any of the defendants have
breached the settlement agreement in any material fashion. Absent a material
breach by any of the defendants, the defendants contend they are entitled to an
order of this court enforcing the provisions of the settlement agreement against the
plaintiffs. Among other things, the settlement agreement requires the plaintiffs to
dismiss this lawsuit, assuming certain conditions have been met by the defendants.
The plaintiffs contend the defendants have breached the Settlement Agreement in a
material fashion. According to the plaintiffs, the material breaches of the defendants
excuse the plaintiffs from further performance under the Settlement Agreement.
A determination of whether or not the Settlement Agreement should be
enforced against the plaintiffs is dependent on whether the plaintiffs can prove that
any of the defendants have breached the Settlement Agreement in a material
fashion. Evidence submitted in relation to the motion for temporary restraining order
and preliminary inunction [#45] and the motion to enforce settlement agreement
[#52] indicates that there is a material dispute of fact about whether the plaintiffs or
any of them continue to market products, especially chia seeds, using label graphics
that are similar to the label graphics used by the defendants to market chia seeds.
This factual dispute is relevant primarily to paragraph 3(D) of the Settlement
Agreement, which prohibits the defendants from using any trademark, symbol, or
imagery likely to cause confusion between the products of the defendants and the
SALBA products of the plaintiffs. Given this material factual dispute, I cannot, on the
current record, determine if the defendants are entitled to an order enforcing the
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Settlement Agreement or not. That determination must await the presentation of
evidence at trial.
Because the issue raised in the motion to enforce [#52] cannot be resolved on
the current record, I deny the motion without prejudice. After evidence is presented
at trial addressing the conflicting claims of the parties concerning alleged breaches
of the Settlement Agreement and enforcement of the Settlement Agreement, either
party may seek relief which includes enforcement of the Settlement Agreement.
THEREFORE, IT IS ORDERED that the Defendants’ Motion and
Memorandum To Enforce Settlement Agreement [#52] filed December 23, 2013, is
DENIED without prejudice.
Dated September 10, 2014, at Denver, Colorado.
BY THE COURT:

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