Tranquil Blue Corporation et al v. Shuhart et al
Filing
41
ORDER: Plaintiffs' Motion for Summary Judgment 30 is granted in part and denied in part. Plaintiffs are entitled to a limited grant of summary judgment on their unjust enrichment and conversion claims. The Court finds the following: (1) D efendant was unjustly enriched by taking 104 units of Sex Panther cologne; and (2) Defendant unlawfully converted 104 units of Sex Panther cologne. The Parties will need to proceed to trial on the remainder of Plaintiffs' unjust enrichment and c onversion claims. Defendant's Motion for Partial Summary Judgment 33 is granted in part and denied in part. Defendant is entitled to summary judgment on Plaintiffs' "Party with Sluts" trademark claims. Signed by Judge James S. Moody, Jr. on 6/29/2017. (LN)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
TRANQUIL BLUE CORPORATION
and BAM LAUNCHER, INC.,
Plaintiffs,
v.
Case No: 8:16-cv-1217-T-30TBM
MICHAEL RYAN SHUHART,
Defendant.
ORDER
THIS CAUSE comes before the Court upon Plaintiffs’ Motion for Summary
Judgment (Doc. 30), Defendant’s Response in Opposition (Doc. 35), Defendant’s Motion
for Partial Summary Judgment (Doc. 33), and Plaintiffs’ Response in Opposition (Doc.
36). Upon review, the Court concludes that both motions should be granted in part and
denied in part.
BACKGROUND
Plaintiffs Tranquil Blue Corporation and Bam Launcher, Inc. filed this lawsuit
against Defendant Shuhart, who worked as an independent contractor for Plaintiffs from
2010 to 2015. Generally speaking, Plaintiffs allege that Defendant stole their products and
sold them without Plaintiffs’ authorization. Plaintiffs contend that Defendant is liable for
trademark infringement and false designation of origin under the Lanham Act (Counts I
and II), similar violations of the Florida Deceptive and Unfair Trade Practices Act
(“FDUTPA”) (Count III), unjust enrichment (Count IV), and conversion (Count V).
Plaintiffs argue that they are entitled to summary judgment on Counts I through V, whereas
Defendant argues that he is entitled to summary judgment on Counts I, II, and III.
RELEVANT FACTS
John Siebert is the sole owner of Tranquil Blue Corporation (“TBC”) and Bam
Launcher, Inc (“BLI”). TBC owns the registered trademark “Party with Sluts,” which it
uses to designate apparel. BLI owns the registered trademark “Bam Launcher” for water
balloon launchers. Beginning in 2012, Plaintiffs have continuously used the “Bam
Launcher” mark to market and sell Bam Launchers. Plaintiffs also sell other products,
including the “Official ‘Anchorman’ Sex Panther Cologne,” neon fanny packs, and water
balloons, but they do not have any intellectual property rights related to these products.
Plaintiffs primarily sell their products online on websites like Amazon.com
(“Amazon”), eBay.com (“eBay”), FratToys.com, and Frattanks.com. In addition, Plaintiffs
operate a website, Bamwholesale.com, where they sell their products at their wholesale
price. Anyone can buy Plaintiffs’ products from the wholesale website, and Plaintiffs do
not impose any restrictions on the resale of their products.
In July 2010, Siebert hired Defendant as an independent contractor for Plaintiffs.
Defendant worked for Plaintiffs until September 2015, when he resigned. 1 As part of
Defendant’s job duties, he managed Plaintiffs’ inventory of products and sold those
products on the internet.
1
Defendant has since started his own, competing business. Defendant did not have a noncompete agreement with Plaintiffs.
2
In 2011, Amazon banned Plaintiffs from selling their products on its website. As a
result, in late 2011, Siebert authorized and/or encouraged Defendant to create an Amazon
webstore called “Water Balloon Buffoonery” and to sell Plaintiffs’ products on it.
Defendant registered the webstore under his name and linked it to his personal bank
account. Defendant managed this webstore until early 2013, when he passed the account
over to Plaintiffs.
Apart from these details, the Parties’ narratives differ significantly. According to
Plaintiffs, Defendant was supposed to remit all proceeds from the webstore’s sales to
Plaintiffs but instead kept them for himself. Plaintiffs contend that Defendant sold the
products from Plaintiffs’ inventory but did not pay Plaintiffs for those products. In contrast,
Defendant states that he and Siebert agreed that he would buy Plaintiffs’ products at their
wholesale price, sell the products on Amazon at their retail price, and then he could keep
the difference between the two prices as a kind of commission for selling the products.
Defendant says he did as they agreed—he bought Plaintiffs’ products from their wholesale
website and kept any profit he made from selling them on Amazon. Siebert encouraged
this arrangement because it increased Plaintiffs’ profits while supplementing Defendant’s
income.
Plaintiffs assert that the “Water Balloon Buffoonery” webstore was the only online
platform in which Siebert authorized Defendant to sell their products. Defendant disagrees,
stating that Siebert encouraged him to sell Plaintiffs’ products on other webstores,
including a second Amazon webstore called “Mi/New Party Foundation.” Between April
and May of 2013, Defendant sold 57 Bam Launchers (worth approximately $1,200) and a
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few of the Sex Panther colognes (worth approximately $35) on the “Mi/New Party
Foundation” webstore. Plaintiffs believe that Defendant stole those products; Defendant
states that he bought them wholesale like he and Siebert had discussed. Defendant kept the
profits from those sales.
After opening the “Mi/New Party Foundation” webstore, Defendant created several
other webstores—one on Amazon called “Super Man/Super Magic Market” and a few on
eBay. Between December 2014 and May 2015, Defendant sold 29 Bam Launchers for
approximately $750 on eBay. In addition, between December 2014 and October 2016,
Defendant sold Sex Panther cologne, fanny packs, and water balloons on the “Super
Man/Super Magic Market” and eBay webstores. He kept all profits from these sales.
Plaintiffs contend that Defendant stole all of these products from their inventory.
Defendant admits that he took 104 units of Sex Panther cologne from Plaintiffs “in a
moment of weakness.” He also admits that he took 29 Bam Launchers from Plaintiffs
because he thought they owed him money. 2 Plaintiffs had stored inventory in Defendant’s
garage for two years and never paid him rent for the storage space, so he took these items
as compensation for the unpaid rent. Defendant otherwise denies taking Plaintiffs’
inventory. He states he bought the fanny packs and water balloons he sold from third party
vendors including Gift Joint Promo and Yongkang Newwin Plastic & Metal Co., Limited.
2
Although Defendant initially testified that he took “roughly 24 [or] 25” of Plaintiffs’ Bam
Launchers (Doc. 30-2 at 134:16-17), he later admitted that he sold 29 of them (Doc. 35, ¶ 36).
4
For obvious reasons, the Parties dispute how much money Defendant made selling
Plaintiffs’ stolen inventory. Plaintiffs estimate the monetary value to be around $150,000,
whereas Defendant attests that it is closer to $5,000.
SUMMARY JUDGMENT STANDARD
Motions for summary judgment should be granted only when the pleadings,
depositions, answers to interrogatories, admissions, and affidavits show there is no genuine
issue as to any material fact and that the moving party is entitled to judgment as a matter
of law. Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The
existence of some factual disputes between the litigants will not defeat an otherwise
properly supported summary judgment motion; “the requirement is that there be no genuine
issue of material fact.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)
(emphasis in original). The substantive law applicable to the claimed causes of action will
identify which facts are material. Id. Throughout this analysis, the court must examine the
evidence in the light most favorable to the nonmovant and draw all justifiable inferences
in its favor. Id. at 255.
Once a party properly makes a summary judgment motion by demonstrating the
absence of a genuine issue of material fact, the nonmoving party must go beyond the
pleadings through the use of affidavits, depositions, answers to interrogatories, and
admissions and designate specific facts showing that there is a genuine issue for trial.
Celotex, 477 U.S. at 324. The evidence must be significantly probative to support the
claims. Anderson, 477 U.S. at 248-49 (1986).
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This Court may not decide a genuine factual dispute at the summary judgment stage.
Fernandez v. Bankers Nat’l Life Ins. Co., 906 F.2d 559, 564 (11th Cir. 1990). “[I]f factual
issues are present, the Court must deny the motion and proceed to trial.” Warrior
Tombigbee Transp. Co. v. M/V Nan Fung, 695 F.2d 1294, 1296 (11th Cir. 1983). A dispute
about a material fact is genuine and summary judgment is inappropriate if the evidence is
such that a reasonable jury could return a verdict for the nonmoving party. Anderson, 477
U.S. at 248; Hoffman v. Allied Corp., 912 F.2d 1379 (11th Cir. 1990). However, there must
exist a conflict in substantial evidence to pose a jury question. Verbraeken v. Westinghouse
Elec. Corp., 881 F.2d 1041, 1045 (11th Cir. 1989).
DISCUSSION
I.
Counts I, II, and III (Violations of the Lanham Act and the FDUTPA)
The Lanham Act makes actionable “the deceptive and misleading use of
[trade]marks” (i.e., the names or symbols used to identify a person’s goods or services). 15
U.S.C. § 1127; Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23, 28 (2003).
In order to succeed on a trademark infringement claim, a plaintiff must show that: (1) it
owns the trademark at issue; (2) the defendant used the mark in commerce without
authorization; and (3) the defendant’s use of the mark is likely to cause confusion, mistake,
or deception as to the source, affiliation, or sponsorship of the defendant’s goods. See, e.g.,
Ford Motor Co. v. O.E. Wheel Distributors, LLC, 868 F. Supp. 2d 1350, 1361 (M.D. Fla.
2012) (internal citations omitted). A plaintiff must make a similar showing to succeed on a
false designation of origin claim or an FDUTPA claim. See Crystal Entm’t Filmworks, Inc.
v. Jurado, 643 F.3d 1313, 1323 (11th Cir. 2011) (applying the legal standard for a Lanham
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Act claim to an FDUTPA claim); Custom Mfg. & Eng'g, Inc. v. Midway Servs., Inc., 508
F.3d 641, 647 (11th Cir. 2007) (plaintiff with a false designation of origin claim must
demonstrate that it has a valid trademark and that the defendant made unauthorized use of
it such that consumers were likely to confuse the two).
a) “Party with Sluts” Trademark Claims
Defendant argues that he is entitled to summary judgment on Plaintiffs’ “Party with
Sluts” trademark claims. In their Complaint, Plaintiffs alleged that Defendant infringed
their “Party with Sluts” trademark by selling “Party with Sluts” apparel. However,
Plaintiffs have not produced any evidence that Defendant used the “Party with Sluts” mark
in commerce, nor did they make any arguments regarding this mark in their motion for
summary judgment or their response to Defendant’s motion. Accordingly, Defendant is
entitled to summary judgment on these claims.
b) “Bam Launcher” Trademark Claims
Both Parties argue that they are entitled to summary judgment on the issue of
whether Defendant infringed Plaintiffs’ “Bam Launcher” trademark and falsely designated
the origin of the water balloon launchers he sold. The Parties do not dispute that Plaintiffs’
“Bam Launcher” trademark is valid. Instead, their dispute turns upon the following issues:
(1) whether Defendant had authorization to sell Plaintiffs’ products; and (2) whether
Defendant’s use of the “Bam Launcher” mark was likely to cause consumer confusion.
Summary judgment is inappropriate for the following reasons.
First, there are significant factual disputes regarding whether Defendant had
Plaintiffs’ authorization to sell their Bam Launchers online. Plaintiffs contend that they
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permitted Defendant to sell their products on just the “Water Balloon Buffoonery”
webstore, and they did not know he was selling them on other sites. Defendant states the
opposite—that Siebert not only knew that he was selling Plaintiffs’ products on other sites,
but that he encouraged him to do so in order to increase Plaintiffs’ profits. Without
resolving this factual dispute, the Court cannot determine whether Defendant had
authorization to sell Plaintiffs’ products, either via their express consent, an implied
license, or due to Plaintiffs’ acquiescence.
Second, although the Parties do not dispute the facts relevant to the likelihood of
confusion analysis, those facts are not so one-sided that a reasonable jury could arrive at
only one conclusion. See Anderson, 477 U.S. at 250. “Although it may be decided as a
matter of law, ‘likelihood of confusion generally is a question of fact.’” Caliber Auto.
Liquidators, Inc. v. Premier Chrysler, Jeep, Dodge, LLC, 605 F.3d 931, 941 (11th Cir.
2010) (internal citation omitted). In determining whether there is a likelihood of consumer
confusion, courts should generally evaluate seven factors:
(1) the strength of the plaintiff's mark; (2) the similarity between the
plaintiff's mark and the allegedly infringing mark; (3) the similarity between
the products and services offered by the plaintiff and defendant; (4) the
similarity of the sales methods; (5) the similarity of advertising methods; (6)
the defendant's intent, e.g., does the defendant hope to gain competitive
advantage by associating his product with the plaintiff's established mark;
and (7) actual confusion.
All. Metals, Inc., of Atlanta v. Hinely Indus., Inc., 222 F.3d 895, 907 (11th Cir. 2000)
(internal citation omitted). That said, the court “does not have to consider all of these
factors in every case and in some cases, ‘new’ factors may merit consideration.” Swatch
Watch, S.A. v. Taxor, Inc., 785 F.2d 956, 958 (11th Cir. 1986).
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In this case, several of the factors weigh in favor of Plaintiffs. Defendant used
Plaintiffs’ same trademark on Plaintiffs’ same products and sold them on the same websites
as Plaintiffs. On the other hand, the application of this seven-factor test seems inapt because
Defendant was using Plaintiffs’ mark to sell Plaintiffs’ own inventory and not a competing
product.
Defendant argues that he cannot be liable for trademark infringement because “the
purpose of trademark law is . . . to guarantee that every item sold under a trademark is the
genuine trademarked product, and not a substitute.” Gen. Elec. Co. v. Speicher, 877 F.2d
531, 534 (7th Cir. 1989). “A trademark only gives the right to prohibit the use of it so far
as to protect the owner’s good will against the sale of another’s products as his.”
Prestonettes, Inc. v. Coty, 264 U.S. 359, 367-68 (1924). Because Defendant sold only
Plaintiffs’ genuine trademarked products, he argues that his actions did not create any
consumer confusion, or at least any that is legally actionable.
Defendant is correct that the resale of genuine trademarked goods generally does
not constitute infringement. Davidoff & CIE, S.A. v. PLD Int'l Corp., 263 F.3d 1297, 1301
(11th Cir. 2001). “This is for the simple reason that the consumer is not confused as to the
origin of the goods: the origin has not changed as a result of the resale.” Id. However,
“identical goods sold in an unauthorized manner are not necessarily genuine for purposes
of the Lanham Act.” Babbit Elecs., Inc. v. Dynascan Corp., 38 F.3d 1161, 1180 (11th Cir.
1994). If, for example, Defendant bypassed any quality control measures that Plaintiffs
utilized, his consumers did not receive the same product that Plaintiffs’ consumers would
have. In addition, even if Defendant’s consumers were not confused about the origin of his
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goods, they may reasonably have been confused about whether Defendant was sponsored
by or affiliated with Plaintiffs, particularly if Defendant did not disclaim any association
with Plaintiffs or indicate that he was reselling (as opposed to completing the initial sale
of) Plaintiffs’ products. Because it is possible that a reasonable jury could find that
Defendant’s actions created a likelihood of confusion, this issue is better for left for trial.
Lastly, the Court notes that it would not matter if Defendant’s conduct caused a
likelihood of confusion if the “first sale” doctrine applies, as Defendant argues. However,
Defendant did not raise this affirmative defense in his answer (Doc. 19), and Defendant
has not sought the Court’s leave to amend its pleading. The Parties did not brief whether
this omission caused any prejudice to Plaintiffs. Thus, the Court cannot consider this
argument at this juncture. See Miranda de Villalba v. Coutts & Co. (USA) Int'l, 250 F.3d
1351, 1353 (11th Cir. 2001).
II.
Counts IV and V (Unjust Enrichment and Conversion)
A claim for unjust enrichment is an equitable claim in which “the law will, in
essence, ‘create’ an agreement in situations where it is deemed unjust for one party to have
received a benefit without having to pay compensation for it.” Tooltrend, Inc. v. CMT
Utensili, SRL, 198 F.3d 802, 805 (11th Cir. 1999). “To succeed in a suit
for unjust enrichment[,] a plaintiff must prove that: (1) the plaintiff has conferred a benefit
on the defendant, who has knowledge thereof; (2) the defendant has voluntarily accepted
and retained the benefit conferred; and (3) the circumstances are such that it would be
inequitable for the defendant to retain the benefit without paying the value thereof to the
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plaintiff.” Id. (citing Greenfield v. Manor Care, Inc., 705 So.2d 926, 930-31 (Fla. Dist. Ct.
App. 1997)).
“[C]onversion is an unauthorized act which deprives another of his property
permanently or for an indefinite time.” Nat'l Union Fire Ins. Co. of Pa. v. Carib. Aviation,
Inc., 759 F.2d 873, 878 (11th Cir. 1985) (quoting Senfeld v. Bank of N.S. Trust Co.
(Cayman), 450 So.2d 1157, 1160-61 (Fla. 3d DCA 1984)). To prevail on a conversion
claim under Florida law, the claimant must have “possession or an immediate right to
possession of the converted property at the time of conversion.” Tambourine Comercio
Internacional SA v. Solowsky, 312 F. App'x 263, 271–72 (11th Cir. 2009) (internal citation
omitted).
Plaintiffs have demonstrated that Defendant is liable for both unjust enrichment and
conversion because Defendant admitted to taking 104 units of Sex Panther cologne and
selling them for his exclusive gain. Nevertheless, the Court can only grant summary
judgment on the issue of liability for this limited portion of Plaintiffs’ unjust enrichment
and conversion claims. Although Defendant also admitted to taking 29 of Plaintiffs’ Bam
Launchers, there is a question of fact as to whether he was justified in doing so due to
Plaintiffs’ failure to pay him rent. 3 In addition, the Parties have much larger factual
disputes regarding the extent of Defendant’s liability. While Plaintiffs contend that
Defendant stole close to $150,000 worth of their products, Defendant flatly denies this. As
3
Defendant has implied that Siebert agreed to pay him rent for use of his garage as a
storage space, and Plaintiffs have supplied no evidence to refute this.
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a result, the Parties will need to litigate the remainder of Plaintiffs’ unjust enrichment and
conversion claims.
It is therefore ORDERED AND ADJUDGED that:
1.
Plaintiffs’ Motion for Summary Judgment (Doc. 30) is granted in part and
denied in part. Plaintiffs are entitled to a limited grant of summary judgment
on their unjust enrichment and conversion claims. The Court finds the
following: (1) Defendant was unjustly enriched by taking 104 units of Sex
Panther cologne; and (2) Defendant unlawfully converted 104 units of Sex
Panther cologne. The Parties will need to proceed to trial on the remainder
of Plaintiffs’ unjust enrichment and conversion claims.
2.
Defendant’s Motion for Partial Summary Judgment (Doc. 33) is granted in
part and denied in part. Defendant is entitled to summary judgment on
Plaintiffs’ “Party with Sluts” trademark claims.
DONE and ORDERED in Tampa, Florida, on June 29th, 2017.
Copies furnished to:
Counsel/Parties of Record
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