Rolex Watch U.S.A., Inc. v. Rainbow Jewelry, Inc.

Filing 23

ORDER granting 11 Motion to Dismiss Counterclaim for Failure to State a Claim. Please see Order for details. Signed by Judge Robin S. Rosenbaum on 9/19/2012. (RSR)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
Case No. 12-21437-CIV-ROSENBAUM/SELTZER

ROLEX WATCH U.S.A., INC.,
Plaintiff,
v.
RAINBOW JEWELRY, INC.,
Defendant.
___________________________/

ORDER GRANTING
PLAINTIFF’S MOTION TO DISMISS COUNTERCLAIM WITH PREJUDICE
This matter is before the Court on Plaintiff’s Motion to Dismiss Counterclaim [D.E. No. 11].
The Court has carefully reviewed Plaintiff’s Motion, all supporting and opposing filings and the
case file. For the reasons that follow, the Court GRANTS Plaintiff’s Motion to Dismiss with
prejudice.
I. Background
Plaintiff Rolex Watch U.S.A., Inc. (“Rolex”), is the exclusive United States distributor of
Rolex watches — a brand of watch that is famous for its quality and exclusivity. See Compl. ¶ 8
[D.E. No. 1], filed April 17, 2012. Like many other distributors of fine goods, Rolex goes to great
lengths to protect the value of the brand it distributes, and this sometimes includes filing suit against
those that use the Rolex trademark without Rolex’s permission. This case fits the familiar mold.
In its Complaint against Defendant Rainbow Jewelry, Inc. (“Rainbow”), Rolex contends that
Rainbow’s unauthorized use of the Rolex trademark on the awning of its jewelry store infringes the

Rolex trademark. See Compl. ¶ 25. Rainbow insists that it has done nothing improper and has
advanced a Counterclaim against Rolex under the Florida Deceptive and Unfair Trade Practices Act
(“FDUTPA”) to recover for the alleged injuries it has sustained in having to defend against Rolex’s
trademark infringement suit. See Def.’s Countercl. ¶¶ 5-9 [D.E. No. 7], filed June 7, 2012. Rolex,
in turn, has moved to dismiss Rainbow’s Counterclaim. See Pl.’s Mot. to Dismiss [D.E. No. 11].
Whether Rolex is correct on the merits of its trademark infringement suit is a question the Court will
consider on another day. Before the Court now is only the narrow issue of whether Rainbow’s
Counterclaim can survive Rolex’s Motion to Dismiss. The Court holds that it cannot.
II. Legal Standard
When entertaining a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil
Procedure, the Court assumes that all of the factual allegations in the complaint are true and
construes them in the light most favorable to the plaintiff. See Speaker v. U.S. Dep’t of Health &
Human Servs. Ctrs. for Disease Control & Prevention, 623 F.3d 1371, 1379 (11th Cir. 2010)
(citation omitted). A plaintiff must, however, present “enough facts to state a claim to relief that is
plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “[C]onclusory
allegations, unwarranted deductions of fact or legal conclusions masquerading as facts will not
prevent dismissal.” Bell v. J.B. Hunt Transp., Inc., 427 F. App’x 705, 707 (11th Cir. 2011) (per
curiam) (citing Jackson v. BellSouth Telecomms., 372 F.3d 1250, 1263 (11th Cir.2004)).

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III. Discussion
First, the Court considers whether Rolex is immune from having to defend against the
Counterclaim. Rolex contends that this is indeed the case and advances two alternative sources for
this immunity: Florida’s litigation privilege and the Noerr-Pennington doctrine.
Florida’s litigation privilege cloaks with absolute immunity “any act occurring during the
course of a judicial proceeding . . . so long as the act has some relation to the proceeding.”
Echevarria, McCalla, Raymer, Barrett & Frappier v. Cole, 950 So. 2d 380, 383 (Fla. 2007) (internal
quotation marks omitted) (quoting Levin, Middlebrooks, Mabie, Thomas, Mayes Mitchell, P.A. v.
United States Fire Ins. Co., 639 So. 2d 606, 608 (Fla. 1994)). Rolex maintains that the act of filing
a lawsuit is by definition an act that occurs during the course of a judicial proceeding and thus fits
comfortably within the category of conduct that the privilege is designed to protect. See Pl.’s Mot.
to Dimiss 3-4.
The Court agrees. The decision to file a lawsuit “clearly relates to a judicial proceeding and
therefore cannot form the basis for a state-law claim in federal court.” Atico Int’l USA, Inc. v. Luv
N’ Care, Ltd., No. 09-60397-CIV, 2009 WL 2589148, at *3 n.5 (S.D. Fla. Aug. 19, 2009) (citations
omitted); see also Echevarria, 950 So. 2d at 384 (“Just as participants in litigation must be free to
engage in unhindered communication, so too must those participants be free to use their best
judgment in prosecuting . . . a lawsuit without fear of having to defend their actions in a subsequent
civil action for misconduct.”) (citation & internal quotation marks omitted). This, of course, is not
to say that a litigant has no recourse against an opposing party who abuses the judicial process, as
a number of mechanisms exist to prevent baseless litigation --- for example, “the discipline of the
courts, the bar association, and the state.” LatAm Invs., LLC v. Holland & Knight, LLP, 88 So. 3d
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240, 243 (Fla. 3d DCA 2011) (internal quotation marks omitted) (quoting Levin, 639 So. 2d at 608).
Filing a lawsuit under the FDUTPA, however, is not one of them.
Rainbow, notably, does not disagree that Florida’s litigation privilege immunizes Rolex’s
decision to file its trademark infringement lawsuit. Instead, Rainbow posits that its Counterclaim
seeks to hold Rolex liable not just for its decision to file suit, but also for sending a flood of
“threatening” cease-and-desist letters in the years prior to filing suit. See Def.’s Mem. of Law in
Opp’n to Pl.’s Mot. to Dismiss 4-5 [D.E. No. 14], filed July 13, 2012 (“Response”). This distinction
— between litigation and pre-litigation conduct — Rainbow contends, removes this case from the
ambit of Florida’s litigation privilege. See Resp. 5. Rainbow’s argument is not without merit; and
indeed, the Middle District of Florida has accepted it. See Trent v. Mortg. Elec. Registration Sys.,
Inc., 618 F. Supp. 2d 1356, 1360 (M.D. Fla. 2007) (unpublished) (declining to extend the litigation
privilege to “pre-suit communications” where such communications were not required by law); cf.
Atico Int’l, 2009 WL 2589148, at *3 n.5 (noting that “[n]either the Florida Supreme Court, nor the
Eleventh Circuit Court of Appeals, has decided whether Florida’s litigation privilege bars actions
premised upon a pre-suit communication from counsel that asserts rights and threatens litigation”)
(citations omitted). But whether and to what extent the litigation privilege immunizes pre-litigation
conduct is relevant here only if Rainbow has in fact pled that it seeks to hold Rolex liable for its prelitigation communications. Here, Rainbow has not.
A fair reading of Rainbow’s Counterclaim demonstrates that the language it used to describe
the conduct for which it seeks to hold Rolex liable does not embrace Rolex’s pre-litigation
communications. The Counterclaim instead makes readily apparent that the conduct Rainbow
believes “constitutes an unfair business practice,” Countercl. ¶ 8, refers to Rolex’s having “brought
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this action,” id. at ¶ 7, rather than its having sent cease-and-desist letters — conduct that Rainbow’s
Counterclaim does not mention. Because the Counterclaim seeks to hold Rolex liable only for
making good on its threat to file a trademark infringement lawsuit, Florida’s litigation privilege
shields Rolex from having to defend against the Counterclaim.
Nor can Rainbow can successfully amend its Counterclaim to include Rolex’s pre-suit
conduct and thereby state a viable cause of action against Rolex under FDUTPA. Both the United
States Supreme Court and the Eleventh Circuit Court of Appeals have made clear that an entity is
immune from suit for taking — or even threatening — legal action that has an anticompetitive effect
under the Noerr-Pennington doctrine.1 The doctrine, which, in part, grows out of a concern to
protect the First Amendment right to petition, allows litigants to “use the channels and procedures
of state and federal . . . courts to advocate their causes and points of view respecting resolution of
their business and economic interests vis-à-vis their competitors” without fear of falling afoul of
federal or state anti-competition laws. McGuire Oil Co. v. Mapco, Inc., 958 F.2d 1552, 1559 (11th
Cir. 1992) (quoting Cal. Motor Transp. Co. v. Trucking Unlimited, 404 U.S. 508, 510-11 (1972)).
The Eleventh Circuit’s decision in McGuire Oil Co. v. Mapco, Inc., is illustrative of the doctrine’s
application.
There, a group of Alabama petroleum wholesalers threatened to sue — and ultimately did
sue — an out-of-state petroleum producer for selling gasoline below cost, in alleged violation of an
1
The Noerr-Pennington doctrine takes its name from United Mine Workers v.
Pennington, 381 U.S. 657 (1965), and Eastern R.R. Presidents Conference v. Noerr Motor
Freight, Inc., 365 U.S. 127 (1961). See Valley Drug Co. v. Geneva Pharms., Inc., 344 F.3d
1294, 1302 n.14 (11th Cir. 2003). California Motor Transp. Co. v. Trucking Unlimited, 404 U.S.
508 (1972), extended the Noerr-Pennington doctrine to attempts to petition administrative
agencies and the judiciary. See TEC Cogeneration, Inc. v. Fla. Power & Light Co., 76 F.3d
1560, 1571 n.28 (11th Cir. 1996).

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Alabama statute. See id. at 1554-55. The out-of-state producer counterclaimed and alleged that the
plaintiffs’ litigation and pre-litigation conduct “constituted an anticompetitive price-fixing
conspiracy” in violation of federal antitrust laws and Alabama’s Unfair Trade Practices Act. See id.
at 1557. The Eleventh Circuit disagreed, explaining that it would not construe Alabama’s Unfair
Trade Practices Act “to treat as unfair trade practices concerted activity that is constitutionally
protected.” Id. at 1562. In so doing, the panel reaffirmed that even litigation that is advanced with
the purpose of stifling competition cannot serve as the basis of an antitrust or unfair trade practices
lawsuit unless the suit is a sham. See id. at 1560 (“it is axiomatic that actions taken with an anticompetitive purpose or intent remain insulated from antitrust liability under the Noerr-Pennington
doctrine”).
As in McGuire, Rainbow seeks to hold Rolex liable for using the machinery of the courts to
advance an anti-competitive end. The Eleventh Circuit, however, has foreclosed that line of
argument unless Rainbow can carry its burden and demonstrate that Rolex’s suit is a sham. But to
do that, Rainbow needs to show that Rolex’s suit is “objectively baseless in the sense that no
reasonable litigant could realistically expect success on the merits.” Atico Int’l, 2009 WL 2589148,
at *3 (quoting Prof’l Real Estate Investors, Inc. v. Columbia Pictures Indust., 508 U.S. 49, 57, 60
(1993)). Thus, so long as Rolex brought “[its] lawsuit against [Rainbow] to win, or [] [its] goal [is]
. . . a favorable decision from the [C]ourt[],” McGuire, 958 F.2d at 1560 (citation & footnote call
number omitted), Rolex is immune from having to defend against Rainbow’s Counterclaim.
Viewing the Counterclaim in the light most favorable to Rainbow, the Court cannot conclude
that Rolex’s trademark infringement lawsuit is a sham. To the contrary, it seems readily apparent
that Rolex is advancing the underlying suit against Rainbow, at least in part, to protect its trademark,
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not merely to interfere with Rainbow’s business affairs. Cf. McGuire, 958 F.2d at 1559 (the “sham”
exception to the Noerr-Pennington doctrine extends to “situations in which a publicity campaign,
ostensibly directed toward influencing government action, is a mere sham to cover what is actually
nothing more than an attempt to interfere directly with the business relationships of a competitor”)
(quoting Eastern R.R. Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 144
(1961)). Rolex’s position is that Rainbow’s use of Rolex’s trademark on its awning will cause the
public to believe that Rolex is endorsing or is associated with Rainbow’s products, and thus
Rainbow is infringing on its trademark. See Compl. ¶¶ 41-43. Rainbow, in contrast, insists that its
use of Rolex’s trademark does not confuse customers as to the source of its products or whether
Rolex is affiliated with Rainbow’s jewelry store, and thus it cannot be liable for trademark
infringement. See Countercl. ¶ 6. Rainbow’s affirmative defense may prove to be a winner on the
merits, but that does not inexorably lead to the conclusion that Rolex’s lawsuit is a sham. Far from
it, it appears both parties have credible arguments as to why they will succeed on the merits, thus
rendering inapplicable the “sham” exception to the Noerr-Pennington doctrine.2
IV. Conclusion
For the foregoing reasons, Plaintiff’s Motion to Dismiss Counterclaim [D.E. No. 11] is
GRANTED. It is hereby ORDERED and ADJUDGED that the above-styled case is DISMISSED

2
Rolex also advances the contention that Rainbow has failed to state a claim under the
FDUTPA. See Pl.’s Mot. to Dismiss 5-8. The Court need not, however, reach that issue, as
Florida’s litigation privilege and the Noerr-Pennington doctrine immunize Rolex from having to
defend against Rainbow’s Counterclaim.

WITH PREJUDICE.

3

DONE and ORDERED at Fort Lauderdale, Florida, this 19th of September 2012.

____________________________
ROBIN S. ROSENBAUM
United States District Judge
Copies:

Honorable Barry S. Seltzer
Counsel of record

3

The Court reserves ruling on Rolex’s request for an award of attorneys’ fees, see Pl.’s
Mot. to Dismiss 7-8, for a later date.
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