MANCHESTER FARMS INC v. Quail International Inc et al
Filing
60
ORDER granting in part and denying in part 48 Motion for Summary Judgment. Ordered by US DISTRICT JUDGE CLAY D LAND on 2/22/2016. (VACP)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
ATHENS DIVISION
MANCHESTER FARMS, INC.,
*
Plaintiff,
*
vs.
*
SUPREMAS, INC. f/d/b/a CAL
WESTERN BEEF,
*
CASE NO. 3:14-CV-44 (CDL)
*
Defendant.
*
O R D E R
Supremas, Inc. sells quail to grocery stores.
At one time,
Manchester Farms, Inc. supplied Supremas with its quail.
But
that relationship fell apart and Supremas began getting quail
from another supplier.
Supremas continued to mark its quail
with a Manchester Farms Universal Purchasing Code (“UPC”), even
though it purchased quail from another supplier.
Manchester
Farms accuses Supremas of falsely representing to consumers that
Supremas’s quail came from Manchester Farms.
Manchester Farms
sues Supremas for false designation of origin under the Lanham
Act, 15 U.S.C. § 1125(a).
law
claims
Presently
for
pending
summary judgment.
unjust
before
Manchester Farms also brings state
enrichment,
the
Court
conspiracy,
is
Supremas’s
and
libel.
motion
for
For the reasons discussed in the remainder of
this order, the Court denies Supremas’s motion as to the Lanham
Act
claim
and
unjust
enrichment
judgment as to the remaining claims.
claim
and
grants
summary
(ECF No. 48).
SUMMARY JUDGMENT STANDARD
Summary judgment may be granted only “if the movant shows
that there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.”
Civ. P. 56(a).
In determining whether a
genuine
Fed. R.
dispute of
material fact exists to defeat a motion for summary judgment,
the evidence is viewed in the light most favorable to the party
opposing summary judgment, drawing all justifiable inferences in
the opposing party’s favor.
477 U.S. 242, 255 (1986).
Anderson v. Liberty Lobby, Inc.,
A fact is material if it is relevant
or necessary to the outcome of the suit.
Id. at 248.
A factual
dispute is genuine if the evidence would allow a reasonable jury
to return a verdict for the nonmoving party.
Id.
FACTUAL BACKGROUND
Viewed in the light most favorable to Manchester Farms, the
record reveals the following.
Supremas is a California company that sells meat to grocery
stores.
Supremas started selling quail in the mid-1990s, and it
purchased its quail from Manchester Farms.
Supremas sold four-
packs of Manchester Farms’ quail under a private label, which
means that the quail was sold in a package labeled “Supremas”
rather than “Manchester Farms.”
Supremas sells most of its meat
2
using
a
private
label
because
its
brand
name
is
widely
recognized by the Hispanic population in southern California.
To sell the quail under a private label, Supremas and Manchester
Farms created a UPC to put on the quail packaging.
string
of
numbers
that
source of the product.
identifies,
among
other
A UPC is a
things,
the
Therefore, the UPC that Manchester Farms
created for Supremas identifies Manchester Farms as the supplier
of the quail.
For the next year or two, Supremas sold quail
from Manchester Farms under Supremas’s private label.
The
relationship
eventually soured.
breakup.
between
Supremas
and
Manchester
Farms
The parties disagree about the cause of the
Manchester Farms contends that Supremas stopped buying
quail from Manchester Farms because Manchester Farms increased
its
prices.
But
according
to
Supremas,
Manchester
Farms
abruptly stopped delivering quail to Supremas for no reason.
Supremas co-founder Bill Hall testified that he was “stunned” by
Manchester Farms’ behavior.
Def.’s Mot. For Summ. J. Ex. 4,
Hall Dep. 30:23-31:3, ECF No. 48-4.
Supremas
began
looking
for
a
new
quail
supplier.
It
entered into an agreement to buy quail from Quail International,
a
Georgia
Georgia.
and
company
with
its
principal
place
of
business
in
Quail International’s birds are slaughtered in Georgia
inspected
by
Georgia
agricultural
authorities.
Supremas
sold Quail International’s birds under Supremas’s private label,
3
just
like
it
had
done
with
Manchester
Farms.
Supremas
co-
founder Bill Hall testified that he told grocery stores about
the
change
fact.
in
suppliers,
but
Manchester
Id. at 42:21-43:10, 61:20-62:3.
Farms
disputes
this
Importantly, Supremas
continued to label the quail with Manchester Farms’ UPC, even
though it was now selling quail from Quail International.
Thus,
the packaging continued to represent that the birds came from
Manchester Farms long after Manchester Farms stopped supplying
Supremas
with
birds.
Manchester
Farms
never
gave
Supremas
permission to continue using the UPC bearing its name.
Supremas used it anyway.
But
Hall testified that he and his co-
founder Joe Dempsey had “no idea what bar codes did,” and that
they thought they had the right to continue using the UPC.
Id.
at 54:2-6.
In
2003,
Supremas
began
selling
Kroger (also d/b/a “Food 4 Less”).
four-packs
of
quail
to
At the time, Manchester
Farms was also selling quail to Kroger.
Supremas completed a
new item form when it began selling to Kroger.
On that form,
Supremas described its product as “Manchester Farms GS Quail
Tray”—even
quail
for
though
more
representation,
Supremas
than
had
five
Kroger’s
not
years.
database
carried
Based
reflected
Manchester
on
that
this
Farms’
false
Supremas’s
quail came from “MFRM,” which is an abbreviation for Manchester
Farms.
Every purchase order that Kroger sent to Supremas from
4
2003 until 2014 specifically requested Manchester Farms’ quail.
And every package of quail that Supremas sent Kroger was marked
with
a
UPC
that
wrongly
supplier of the birds.
identified
Manchester
Farms
as
the
Manchester Farms contends that Supremas
was intentionally passing off its quail as if the quail came
from Manchester Farms.
Manchester
Farms
also
contends
that
about the source of Supremas’s quail.
Kroger
was
confused
Jill Needom, a buyer for
Kroger, testified that she thought Kroger was ordering quail
from Manchester Farms.
Supremas, however, contends that Kroger
did not care about the source of the quail.
Kroger’s meat
merchandiser, Kirk Hayhurst, testified that Kroger never asked
Supremas about the source of its quail.
Def.’s Mot. For Summ.
J. Ex. 7, Hayhurst Dep. 10:16-25, ECF No. 48-7.
Hayhurst also
said that he did not care about the source of Supremas’s quail.
Id.
Manchester Farms realized that Supremas was misusing the
UPC in April 2014—approximately fifteen years after Manchester
Farms
had
stopped
misrepresentation
came
selling
to
quail
light
when
to
Supremas.
Kroger
did
a
This
database
overhaul and informed Manchester Farms that Supremas was using a
Manchester Farms UPC in connection with selling quail.
Shortly
thereafter, Manchester Farms sent Supremas a cease and desist
letter.
Hall,
a
co-founder
of
5
Supremas,
testified
that
he
thought the letter was “absolutely frivolous” because Supremas
“did
not
knowingly
or
intentionally
thought it was our bar code.”
Supremas
then
took
use
that
bar
code.
We
Hall Dep. 89:6-11.
some
steps
to
correct
the
error.
Supremas created a new UPC indicating that the quail came from
Quail International.
misrepresentation
It also notified grocery stores about the
and
destroyed
all
quail
marked
with
the
incorrect UPC.
Supremas also contends that it took back any
wrongly
quail
marked
Manchester
things.
Farms,
remaining
however,
on
disputes
grocery
that
store
Supremas
shelves.
did
these
Manchester Farms asserts that Supremas made more than
three hundred shipments of quail
labeled with
after it received a cease and desist letter.
the wrong UPC
Manchester Farms
also contends that Supremas did not take back mismarked quail
remaining
on
grocery
store
shelves
until
after
this
Court
entered a preliminary injunction.
Manchester Farms asserts that its birds are better than
Quail International’s birds.
Manchester Farms gives its quail
high-quality starter feed, does not use antibiotics or growth
hormones,
and
slaughter
them.
practices.
been
injured
waits
until
Quail
the
birds
International
are
forty
days
does
not
follow
old
to
these
According to Manchester Farms, its reputation has
by
Supremas’s
representation
that
the
quail
purchased from Quail International came from Manchester Farms.
6
it
DISCUSSION
I.
Personal Jurisdiction
Supremas
contends
that
jurisdiction in this Court.
it
is
not
subject
to
personal
The Court finds that Supremas has
waived its personal jurisdiction defense.
And even if Supremas
had not waived its defense, Supremas would still be subject to
the
jurisdiction
of
this
Court
based
on
Georgia’s
long-arm
statute.
A.
Supremas Has Waived the Defense of Lack of Personal
Jurisdiction
A defendant may waive personal jurisdiction.
Great
W.
United
Corp.,
443
U.S.
173,
180
See Leroy v.
(1979)
(“[B]oth
[personal jurisdiction and venue] are personal privileges of the
defendant . . . and
both
may
be
waived
by
the
parties.”).
Supremas raised the defense of lack of personal jurisdiction in
its answer.
But it then consented to a preliminary injunction
that
Supremas
barred
from
using
conjunction with selling quail.
Manchester
Farms’
UPC
in
When Supremas consented to the
injunction, it “voluntarily acknowledged and acquiesced to the
district court’s authority to control [its] conduct.”
Aeration
Sols. Inc. v. Dickman, 85 F. App’x 772, 774-75 (Fed. Cir. 2004).
Supremas did not reserve its right to contest jurisdiction when
it consented to the injunction.
make
any
sense—without
Nor would such a reservation
jurisdiction
7
over
Supremas,
the
Court
would be powerless to enforce the injunction and the injunction
would be effectively meaningless.
[can]
more
clearly
signal
For that reason, “few actions
an
acceptance
of
a
court’s
jurisdiction than [consenting to an] injunction order.”
Id. at
775.
B.
Even Without Waiver, the Court Has Jurisdiction over
Supremas
Even
if
Supremas’s
actions
do
not
amount
to
waiver,
Supremas may nonetheless be haled into court in Georgia.
To
determine whether Supremas is subject to personal jurisdiction
in Georgia, the Court engages in a two-step analysis.
Diamond
Crystal Brands, Inc. v. Food Movers Int’l, Inc., 593 F.3d 1249,
1257 (11th Cir. 2010).
permit
the
Horizon
Aggressive
F.3d
1162,
Court
1166
to
First, the Georgia long-arm statute must
exercise
Growth,
(11th
L.P.
Cir.
jurisdiction
v.
2005).
over
Rothstein-Kass,
If
the
Supremas.
P.A.,
long-arm
421
statute
confers jurisdiction, then the Court must evaluate whether the
exercise of jurisdiction comports with the Due Process Clause of
the Fourteenth Amendment.
Diamond Crystal Brands, 593 F.3d at
1258-59 (explaining that the Georgia long-arm statute is not
coextensive with the Due Process Clause).
1.
Georgia’s Long Arm Statute
Manchester Farms relies on subsection (1) of the Georgia
long-arm statute for jurisdiction.
8
Subsection (1) provides that
a Georgia court may exercise jurisdiction over an out-of-state
defendant that “[t]ransacts any business” in Georgia.
§ 9-10-91(1).
O.C.G.A.
The Georgia Supreme Court has instructed courts
applying the long-arm statute to interpret the term “transacts
any
business”
literally.
Innovative
Clinical
&
Consulting
Servs., LLC v. First Nat’l Bank of Ames, 279 Ga. 672, 675, 620
S.E.2d 352, 355 (2005); see also Diamond Crystal Brands, 593
F.3d
at
1263.
The
Eleventh
Circuit
defines
“transacts
any
business” as “the doing of some act or consummation of some
transaction.”
Supremas
Diamond
“need
not
business in Georgia.
Crystal
physically
Brands,
enter
the
593
F.3d
state”
to
at
1260.
transact
Id. at 1264.
Supremas purchased over $9 million worth of Georgia quail
from a Georgia company (Quail International) for over fifteen
years.
Supremas also hired Quail International to create a
private label for Supremas’s products, and Quail International
created that label in Georgia.
The Court finds that Supremas
has transacted business in Georgia.
jurisdiction
over
Supremas
The Court therefore has
pursuant
to
subsection
(1)
of
assertion
of
Georgia’s long-arm statute.
2.
Next,
jurisdiction
rights.
Constitutional Due Process
the
Court
over
considers
Supremas
whether
offends
its
Supremas’s
due
process
To comply with due process, Supremas must have “certain
9
minimum contacts with the forum such that the maintenance of the
suit
does
not
offend
traditional
substantial justice.”
558
F.3d
1210,
1220
notions
of
fair
play
and
Oldfield v. Pueblo De Bahia Lora, S.A.,
(11th
Cir.
2009)
(quoting
Helicopteros
Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 (1984)).
“Once this showing is made, a defendant must make a ‘compelling
case’
that
traditional
the
exercise
notions
of
of
fair
jurisdiction
play
and
would
substantial
violate
justice.”
Diamond Crystal Brands, 593 F.3d at 1267 (quoting Burger King
Corp. v. Rudzewicz, 471 U.S. 462, 477 (1985)).
The Court finds that Supremas maintains sufficient contacts
with Georgia.
Supremas has purposefully reached out to Georgia
by buying a substantial amount of Georgia quail from a Georgia
company.
See id. at 1270 (concluding that defendant’s fourteen
transactions with a
Georgia company were sufficient minimum
contacts for personal jurisdiction).
Additionally, this lawsuit
relates to Supremas’s contacts with Georgia.
Manchester Farms
sues Supremas for misrepresenting that the Quail International
birds (which were
Manchester
Farms.
raised and prepared
Supremas
gave
in Georgia)
Quail
came from
International
a
Manchester Farms UPC to mark its products, and Manchester Farms
is suing for the misuse of that UPC.
Thus, Supremas “should
reasonably anticipate being haled into court []here.”
10
Oldfield,
558
F.3d
at
1221
(quoting
World-Wide
Volkswagen
Corp.
v.
Woodson, 444 U.S. 286, 297 (1980)).
Because
Supremas
maintains
sufficient
contacts
with
Georgia, the burden shifts to Supremas to “present a compelling
case that the presence of some other considerations would render
jurisdiction unreasonable.”
Burger King Corp., 471 U.S. at 477.
Supremas fails to carry that burden.
Supremas’s brief, which
devotes only two short paragraphs to its personal jurisdiction
defense, does not argue that the exercise of jurisdiction would
violate principles of fair play or substantial justice.
Based on the foregoing, it is clear that this Court may
exercise personal jurisdiction over Supremas even if Supremas
has not waived its personal jurisdiction defense.
motion
for
summary
judgment
based
on
lack
Supremas’s
of
personal
jurisdiction is denied.
II.
False Designation of Origin
Manchester Farms brings a claim under the Lanham Act for
false designation of origin.
from
using
in
interstate
The Lanham Act prohibits a person
commerce
“any
false
designation
of
origin . . . which is likely to cause confusion . . . as to the
origin, sponsorship, or approval of his or her goods . . . by
another person.”
false
15 U.S.C. § 1125(a)(1)(A).
designation
plaintiff
must
of
show:
origin
claim
(1) that
11
under
that
the
To prevail on a
the
Lanham
defendant
Act,
a
falsely
designated
the
origin
of
its
product
using
the
plaintiff’s
designation of origin, and (2) that the defendant’s use of the
designation of origin was likely to cause consumer confusion.
See Tana v. Dantanna’s, 611 F.3d 767, 773 (11th Cir. 2010).
first element is not at issue here.
The
The parties agree that
Supremas used a UPC designating Manchester Farms as the supplier
of
its
quail.1
Supremas’s
Thus,
the
only
contested
issue
is
whether
use of Manchester Farms’ UPC was likely to cause
consumer confusion regarding the origin of Supremas’s quail.
To determine whether Supremas’s alleged false designation
of origin created a likelihood of confusion, the Court looks at
the following factors: (1) similarity between the goods that use
the same designation of origin; (2) similarity of the actual
sales methods used by plaintiff and defendant with regard to the
goods that have allegedly been falsely designated as to their
origin; (3) “intent of the alleged infringer to misappropriate
the proprietor's good will;” and (4) “the existence and extent
of actual confusion in the consuming public.”
Id. at 774-75.2
1
A claim for false designation of origin arises under the Lanham Act
whenever a person uses “any word, term, name, symbol,” device, “or any
false designation of origin” that is likely to cause consumer
confusion.
15 U.S.C. § 1125(a)(1).
Here, Manchester Farms alleges
that Supremas violated the Lanham Act by using a UPC code, which
indicated that Supremas’s birds came from Manchester Farms.
2
“The factors relevant to establishing [a likelihood of confusion
with respect to false designation of origin under 15 U.S.C. § 1125(a)]
are identical to the factors relevant to establishing a likelihood of
confusion with respect to trademark infringement under 15 U.S.C. §
12
A
district
court
cannot
determine
that
there
is
a
likelihood of confusion by “merely analyzing whether a majority
of
the
subsidiary
exists.
factors
indicates
that
such
a
likelihood
Rather, a court must evaluate the weight to be accorded
the individual factors and then make its ultimate decision.”
AmBrit, Inc. v. Kraft, Inc., 812 F.2d 1531, 1538 (11th Cir.
1986).
Manchester Farms’ main contention in support of its Lanham
Act claim is that Supremas used Manchester Farms’ UPC to deceive
customers
into
believing
Manchester Farms.
that
they
were
buying
birds
from
For the following reasons, the Court finds
that a genuine factual dispute exists regarding the likelihood
of consumer confusion.
summary
judgment
on
Therefore, Supremas is not entitled to
Manchester
Farms’
false
designation
of
origin claim.
A.
Similarity of the Products
If the products sold by the competing companies are very
similar, then that is evidence tending to prove a likelihood of
consumer confusion.
Ambrit, 812 F.2d at 1541.
The Court finds
1114.” Id. at 773 n.5 (alteration in original) (quoting Ross Bicycles
Inc. v. Cycles USA, Inc., 765 F.2d 1502, 1503-04 (11th Cir. 1985)).
Not all of the “likelihood of confusion factors” for a trademark
infringement action apply to this dispute. For example, the “strength
of the mark” and “similarity of the mark” factors would apply in a
traditional trademark infringement action. But they are inapplicable
here since this dispute does not involve two competing marks.
Therefore, the Court only applies those factors that are relevant
under the circumstances presented here.
13
that the products sold by Supremas and
Manchester Farms are
nearly identical: both sell quail.
Thus, this factor weighs in
favor
confusion
of
finding
a
likelihood
of
for
purposes
of
summary judgment.
B.
Similarity of Sales Methods
“Likelihood of confusion is more probable if the products
are sold through the same channels to the same purchasers.”
Id.
“This factor takes into consideration where, how, and to whom
the parties' products are sold.”
Frehling
Enters., Inc. v.
Int’l Select Grp., Inc., 192 F.3d 1330, 1339 (11th Cir. 1999).
Both Supremas and Manchester Farms sell products through the
same channels: grocery stores.
In fact, both companies have
sold to Kroger at the same time.
Thus, this factor weighs in
favor of finding a likelihood of confusion.
C.
Intent of the Alleged Infringer
“If
it
plaintiff's
deriving
a
can
be
shown
designation
benefit
that
of
from
the
a
defendant
origin]
with
plaintiff's
[falsely
the
used
intention
business
a
of
reputation,
this fact alone may be enough to justify the inference that
there is confusing similarity.”
Id. at 1340.
Manchester Farms
contends that Supremas intentionally represented that its birds
came
from
Manchester
Farms.
To
support
this
assertion,
Manchester Farms presents evidence that after Manchester Farms
stopped supplying quail to Supremas, Supremas created a new UPC
14
identifying
Manchester
Farms
as
the
supplier
of
the
birds.
Supremas gave the new UPC to Quail International to use on its
master cases of quail.
Manchester Farms also presents evidence
that Supremas described its product to Kroger as “Manchester
Farms GS Quail Tray”—even though more than five years had passed
since Supremas had purchased quail from Manchester Farms.
And
Supremas filled purchase orders from Kroger that specifically
requested Manchester Farms’ quail for over ten years.
Finally,
Manchester Farms presents evidence of Supremas sending over 300
shipments of quail marked with the Manchester Farms UPC after
Manchester
According
Farms
to
sent
Supremas
Manchester
a
Farms,
cease
this
and
desist
evidence
letter.
proves
that
Supremas did not innocently fail to update its UPC after it
switched
suppliers,
but
intentionally
misrepresented
that
Manchester Farms supplied its birds.
Supremas, however, insists that its use of the Manchester
Farms UPC was an innocent mistake.
Supremas co-founders Dempsey
and Hall testified that they had no understanding of how UPCs
worked.
The co-founders also had no idea that Manchester Farms’
UPC identified Manchester Farms as the source of
Finally,
according
to
Supremas
CEO
Dempsey,
the quail.
Supremas
quickly
corrected its error—it changed its UPC, notified its customers
of the error, and discarded quail labeled with the wrong UPC.
15
The Court finds that a genuine factual dispute exists as to
whether
Supremas
intentionally
designation of origin.
misused
Manchester
Farms’
Thus, this factor weighs in favor of
denying summary judgment.
D.
Actual Confusion
“The last factor, actual confusion in the consuming public,
is
the
most
persuasive
confusion.”
Tana,
prerequisite.”
presents
evidence
611
F.3d
at
in
assessing
779.
But
Frehling, 192 F.3d at 1340.
evidence
that
Kroger
believed
quail from Manchester Farms.
likelihood
it
“is
of
not
a
Manchester Farms
Supremas
was
selling
According to the testimony of
Kroger’s buyer, Jill Needom, Kroger was under the impression
that Supremas’s quail came from Manchester Farms.
Kroger did
not realize that Supremas’s quail came from another source until
it overhauled its database approximately eleven years later.
In response, Supremas argues that Kroger did not care about
the
source
testimony
testified
of
of
Supremas’s
Hayhurst,
that
the
significant to him.
a
quail.
meat
source
Supremas
merchandiser
of
Supremas’s
points
for
to
the
Kroger,
who
quail
was
not
But someone could still be confused about a
product’s origin even if that origin was insignificant.
The
Court
finds
that
sufficient
evidence
exist
for
a
reasonable juror to find that a consumer (Kroger) was actually
confused
about
the
origin
of
Supremas’s
16
quail.
Thus,
this
factor weighs in favor of finding a likelihood of confusion for
purposes of summary judgment.
E.
Summary
“The role of the court in reviewing a motion for summary
judgment is to determine the ultimate question of whether, in
light of the evidence as a whole, there is sufficient proof of a
likelihood of confusion to warrant a trial of the issue.”
611 F.3d at 775 n.7.
Court
finds
that
Tana,
After weighing the relevant factors, the
Manchester
Farms
has
presented
sufficient
evidence to allow a reasonable juror to conclude that consumers
are likely to be confused about the origin of Supremas’s quail.
Other reasonable jurors may find that there is not a likelihood
of
confusion.
Thus,
there
is
a
conflict
in
the
evidence.
Summary judgment is not appropriate given the existence of this
genuine factual dispute.
III. Unjust Enrichment
Manchester Farms seeks an accounting of Supremas’s profits
under a theory of unjust enrichment.
Supremas argues that it is
entitled to summary judgment on this claim because there is “no
evidence that any customer bought quail from Supremas under the
belief that the quail was sourced from Manchester Farms.”
Mem.
of Law in Supp. of Def.’s Mot. for Summ. J. 16, ECF No. 48-1.
As
discussed
above,
Manchester
Farms
presents
evidence
that
Kroger (a customer of both Supremas and Manchester Farms) bought
17
quail from Supremas under the belief that the quail came from
Manchester Farms.
Thus, Supremas is not entitled to summary
judgment on the unjust enrichment claim.
IV.
Civil Conspiracy and Libel
Manchester
Farms
conspiracy and libel.
has
abandoned
its
claims
for
civil
Therefore, the Court grants Supremas’s
motion for summary judgment on the civil conspiracy and libel
claims.
CONCLUSION
As
discussed
above,
the
Court
finds
that
Supremas
is
subject to the jurisdiction of this Court and denies Supremas’s
motion
for
summary
enrichment claims.
judgment
on
the
Lanham
Act
and
unjust
The Court grants the motion as to the civil
conspiracy and libel claims.
(ECF No. 48).
IT IS SO ORDERED, this 22nd day of February, 2016.
S/Clay D. Land
CLAY D. LAND
CHIEF U.S. DISTRICT COURT JUDGE
MIDDLE DISTRICT OF GEORGIA
18
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