Knight-McDowell v. Rival Group, LLC et al

Filing 4

First AMENDED COMPLAINT against All Defendants with Jury Demand, filed by Gladys Knight-McDowell. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D, # 5 Exhibit E)(Bussert, Christopher) Please visit our website at http://www.gand.uscourts.gov/commonly-used-forms to obtain Pretrial Instructions which includes the Consent To Proceed Before U.S. Magistrate form.

Case 1:16-cv-03160-LMM Document 4 Filed 08/29/16 Page 1 of 18

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
GLADYS KNIGHT-MCDOWELL,
Plaintiff,
v.

Civil Action No.
1:16-cv-3160-LMM

RIVAL GROUP, LLC, CASCADE
FOODS, LLC, GRANITE FOODS,
LLC, and SHANGA HANKERSON,
Defendants.
FIRST AMENDED COMPLAINT FOR UNFAIR COMPETITION AND
FALSE ADVERTISING IN VIOLATION OF FEDERAL LAW
Plaintiff Gladys Knight-McDowell (née Knight) (“Knight”) brings this
action to vindicate her federal intellectual property rights, to prevent further
unfair competition and false advertising in violation of the federal Lanham
Act, codified as amended at 15 U.S.C. §§ 1051 et seq. (“Lanham Act”), and to
seek redress for past violations of federal intellectual property law by
Defendants Rival Group, LLC (“Rival”), Cascade Foods, LLC (“Cascade”),
Granite Foods, LLC (“Granite”), and Shanga Hankerson (“Hankerson”)
(collectively, “Defendants”).

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INTRODUCTION

1.

This action for injunctive relief and damages arises under federal

law and stems from Defendants’ continued use of Knight’s name and
likeness, as well as certain proprietary recipes and memorabilia, including
Knight’s dresses/costumes and photographs featuring Knight and other
celebrities (collectively “Intellectual Property”), in connection with the
operation of certain Gladys Knight Chicken and Waffles restaurants located
in the metro Atlanta area (collectively the “Restaurants”). Based on
Defendants’ conduct, Knight asserts claims for unfair competition and false
advertising in violation of the federal Lanham Act, codified as amended at 15
U.S.C. §§ 1051 et seq. (“Lanham Act”).
PARTIES

2.

Knight is a resident and citizen of the state of Nevada.

3.

Defendant Rival is a Georgia limited liability company

transacting business in Georgia. Rival’s principal place of business is located
at 8714 Ashton Road, Jonesboro, GA, 30238. Although Rival appears to have
been dissolved, it is being named in this action out of an abundance of
caution and to promote the utmost certainty regarding all parties’ rights and
obligations.

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4.

Defendant Cascade is a Georgia limited liability company

transacting business in Georgia. Cascade’s principal place of business is
located at 8714 Ashton Road, Jonesboro, GA, 30238.

5.

Defendant Granite is a Georgia limited liability company

transacting business in Georgia. Granite’s principal place of business is
located at 8714 Ashton Road, Jonesboro, GA, 30238.

6.

Defendant Hankerson is a resident and citizen of the state of

Georgia.
JURISDICTION AND VENUE

7.

This Court has subject matter jurisdiction over this action

pursuant to under Section 39 of the Lanham Act, 15 U.S.C. § 1121, and under
28 U.S.C. §§ 1331.

8.

This Court has personal jurisdiction over the Defendants because

Defendants regularly transact business in the State through the operation of
restaurants, the operation of which forms the basis for Knight’s claims.

9.

Venue is proper in this District pursuant to 28 U.S.C. § 1391(b)

because a substantial part of the events or omissions giving rise to the claim
occurred and are continuing to occur in this District and in this Division.

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FACTS
Knight’s Intellectual Property and The Letter Agreement
10.

Knight, an Atlanta native, has been called “the Empress of Soul”

and is among the best known American entertainers of the past half-century.
She is nationally famous and has been active as a recording artist,
songwriter, actress, businesswoman, humanitarian, and author since first
rising to fame in the 1950’s. She has been in near continuous performance
over the past 60 years, is a ten-time Grammy nominee and seven-time awardwinner, and is the voice of iconic songs such as “Midnight Train to Georgia,”
one of Rolling Stone magazine’s top 500 songs of all time. The music
television network VH1 ranked Knight number 18 on its list of the 100
Greatest Women of Rock, and Rolling Stone magazine included her on its list
of the greatest singers of all time. Knight has been inducted in the Georgia
Music Hall of Fame as well as the Rock and Roll Hall of Fame. She also has
a star on the Hollywood Walk of Fame. Knight has numerous fans all across
the United States, and indeed the world, as illustrated by her 296,000
Twitter followers. Knight is an Atlanta icon – e.g., a portion of West
Peachtree Street in Midtown was renamed in 2015 as “Gladys Knight
Highway.”

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11.

On or about March 4, 1999, Knight and her son Hankerson on

behalf of his business entity Rival entered into a written agreement in which
Knight granted Rival a license to use her Intellectual Property in connection
with a restaurant catering to visitors to Atlanta from across the country and
specializing in southern cuisine in exchange for monthly royalty payments
based on Rival’s annual adjusted gross revenue (the “Letter Agreement”). A
true and correct copy of the Letter Agreement is attached as Exhibit A and by
this reference is incorporated herein.
12.

The Letter Agreement made it clear that it was “intended merely

as a consent to the use of [Knight’s] name and likeness. It does not constitute
an assignment of, or a grant of a license to any trademarks or service marks
[Knight] now owns or later adopts.” Exhibit A, ¶ 4.
13.

The Letter Agreement was for a term of ten years with the

possibility of one subsequent ten-year renewal upon mutual agreement of the
parties. Exhibit A, ¶ 8. Knight had the right to terminate the Letter
Agreement sooner if Hankerson ceased to be affiliated with Rival. Exhibit A,
¶ 2.
14.

This case deals with three Gladys Knight Chicken and Waffles

Restaurants that were operating in the metro Atlanta area in 2016. Rival

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operated one location pursuant to the terms of the Letter Agreement before it
expired after which Rival operated pursuant to an oral license from Knight.
Similarly, Cascade and Granite (also owned by Hankerson) each operated a
Gladys Knight Chicken and Waffles Restaurant under an oral license from
Knight.
15.

The Restaurants represent an important tribute to Knight’s

storied career. As such, the Restaurants prominently have utilized Knight’s
Intellectual Property in promoting the Restaurants. Knight’s memorabilia
appears on display throughout the Restaurants.

16.

Additionally, Knight provided the inspiration for the presentation

of the menu, with for example the signature and best-selling item on the
menu being the “Midnight Train,” a reference and tribute to Knight’s hit song
“Midnight Train to Georgia.”

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17.

On March 4, 2009, the Letter Agreement expired and was not

renewed.
18.

After March 4, 2009, Knight continued an oral licensing

arrangement with Hankerson and his business entities, including Rival,
Granite, and Cascade pursuant to which they were permitted to continue
using Knight’s Intellectual Property in the operation of the Restaurants.
This continued license was contingent, among other things, upon the goods
and services provided in connection with the operation of the Restaurants
being at least equivalent to those required under the Letter Agreement. The
continued use was further contingent on Hankerson and his entities not

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engaging in any intentional or reckless activity which may harm Knight’s
name and reputation.
Termination of License
19.

Although Knight contemplated terminating Hankerson and his

entities’ license to use her Intellectual Property after 2009 due to what she
perceived as mismanagement of the Restaurants, initially she decided
against it.
20.

Knight ultimately decided to terminate the license arrangement

in 2016. At that time, she orally informed Hankerson that his and his
entities’ license to use her Intellectual Property, including her name and
likeness, as well as her proprietary recipes and memorabilia, was terminated.
21.

This termination was later memorialized in a formal letter from

Knight’s counsel to Hankerson, dated July 21, 2016 (the “Termination
Letter”). A true and correct copy of the Termination Letter is attached as
Exhibit B and by this reference is incorporated herein.
22.

As it turns out, Hankerson was being investigated by the Georgia

Department of Revenue, was ultimately arrested for criminal charges in
connection with his alleged tax debt, and is currently out on bail.

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23.

Hankerson’s arrest has been widely publicized, as has his

connection to Knight and the Gladys Knight Chicken and Waffles
Restaurants.
Defendants’ Unlawful Use of Knight’s Intellectual Property
24.

Around the time Knight terminated Hankerson and his business

entities’ license to use her Intellectual Property, the State of Georgia initiated
a civil action against Hankerson and his business entities in the Superior
Court of Clayton County under the Georgia Racketeer Influenced and
Corrupt Organizations Act and the Georgia Uniform Civil Forfeiture
Procedure Act. See State of Georgia ex rel. Tracy Graham Lawson, District
Attorney of the Clayton Judicial Circuit v. Shanga Hankerson, et al., Civil
Action File No. 2016-cv-02428-6 (the “Clayton County Action”).
25.

On July 22, 2016, a receiver was appointed in the Clayton County

Action (“Receiver”) with respect to the Restaurants’ continued operation.
26.

Although Knight has terminated Defendants’ license to use her

Intellectual Property, Defendants, through the Receiver, have continued to
use Knight’s Intellectual Property without authorization and in violation of
Knight’s rights under federal law.

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27.

On July 22, 2016, Knight demanded Defendants cease

immediately the use of her Intellectual Property in connection with the
operation of the Restaurants (the “Cease and Desist Letter”). A true and
correct copy of the Cease and Desist Letter is attached as Exhibit C and by
this reference incorporated herein. Additionally, Knight, through counsel,
informed both the Special Assistant District Attorney in the Clayton County
Action, and later the Receiver, that any license Defendants had to use
Knight’s Intellectual Property was terminated. Knight, through counsel,
even provided a notarized letter to both the Special Assistant District
Attorney and the Receiver in which Hankerson unambiguously renounced
any ownership interest in or current license to use Knight’s Intellectual
Property by himself or his business entities (the “Hankerson Letter”). A true
and correct copy of the Hankerson Letter is attached as Exhibit D and by this
reference is incorporated herein.
28.

Despite these communications, Defendants continue to use

Knight’s Intellectual Property in the operation and promotion of the
Restaurants.
29.

Those actions are unlawful because the Receiver has no rights

beyond those held by Defendants. Put differently, the Receiver cannot do

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what Defendants themselves lack authority to do. Defendants do not have
any rights in or to Knight’s Intellectual Property and therefore neither does
the Receiver.
30.

Knight has sought to avoid the need for legal proceedings. As

mentioned above, Knight has also cooperated in providing the Receiver and
Special Assistant District Attorney with (a) the Letter Agreement; (b) the
letter terminating Defendants’ rights; and (c) the letter in which Hankerson
has renounced on behalf of all Defendants any ownership interests in
Knight’s Intellectual Property. See Exhibits A, B, D.

Moreover,

Hankerson’s attorney has further affirmed expressly and in writing that
Hankerson and his entities hold no ownership interest in Knight’s
Intellectual Property. See email correspondence from Hankerson’s attorney,
attached as Exhibit E.
31.

The Receiver and Special Assistant District Attorney have

refused to recognize Knight’s Intellectual Property rights despite being
provided with incontrovertible and unambiguous evidence that Defendants
have no claim to that Intellectual Property. Exhibit C. They have instead
maintained that Hankerson or his attorneys previously made a statement
that could be construed as his having claimed a partial ownership interest in

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the Intellectual Property. Regardless of whether Hankerson or his attorneys
ever made such a statement, Hankerson has since unambiguously renounced
any possible claim to Knight’s Intellectual Property. Thus, Defendants’
continued use of the Intellectual Property (under the auspices of the
Receiver) is without legal justification and violates Knight’s rights under
federal law. Moreover, Defendants’ continued use of Intellectual Property is
damaging Knight, as explained below.
Defendants’ Ongoing Harm to Knight’s Intellectual Property
32.

Since the Receiver assumed operation, the Restaurants are

struggling and continue to decline. They often have insufficient food to serve
patrons and a number of menu items are often unavailable. They keep
irregular hours, often opening late and closing early. They have fewer
employees than normal and are operated in a disorderly manner. As a result,
the Restaurants’ sales are and have remained depressed. One of the
Restaurants closed recently.
33.

The Restaurants are in freefall and their decline necessarily has

the collateral effect of damaging Knight’s Intellectual Property and Knight’s
reputation. That Defendants (and the Receiver) have failed to pay any

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license fees to Knight only further highlights the unjust and unlawful nature
of Defendants’ continued unauthorized use of Knight’s Intellectual Property.
34.

Defendants’ unauthorized use of Knight’s Intellectual Property

further damages Knight by impeding her ability to license her Intellectual
Property, including for the operation of restaurants.
35.

All conditions precedent for bringing this lawsuit have been

performed or waived.
COUNT I
FEDERAL UNFAIR COMPETITION
AND FALSE ADVERTISING (15 U.S.C. § 1125(a))
36.

Knight repeats and incorporates by reference the allegations

contained in the preceding paragraphs.
37.

Defendants’ use of Knight’s Intellectual Property in promoting

and operating the Restaurants violates federal law in that it constitutes a
false designation of origin and a false description and representation that the
Restaurants are endorsed, approved, and/or sponsored by Knight.
38.

Defendants’ use of Knight’s Intellectual Property in promoting

and operating the Restaurants is causing and is likely to continue causing
confusion, deception, and mistake by creating the false and misleading
impression that Defendants and/or Defendants’ goods and services are

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affiliated, connected, or associated with Knight or have the sponsorship,
endorsement, or approval of Knight, in violation of federal law, specifically 15
U.S.C. § 1125(a).
39.

Defendants’ actions demonstrate an intentional, willful, and bad

faith intent to trade on Knight’s goodwill and to cause confusion, deception,
and mistake in the minds of customers and potential customers by implying a
nonexistent affiliation or relationship between Defendants and Knight, to the
great and irreparable injury of Knight.
40.

Defendants’ unlawful acts have caused a substantial injury to the

public and Knight, and Knight is entitled to permanent injunctive relief,
actual and treble damages, an accounting of profits, costs, and reasonable
attorneys’ fees pursuant to 15 U.S.C. §§ 1125(a), 1116, and 1117.
DEMAND FOR JURY TRIAL
41.

Pursuant to Fed. R. Civ. P. 38(b), Knight demands a trial by jury

on all issues so triable.
PRAYER FOR RELIEF
WHEREFORE, Knight prays that:
(a)

Defendants and all their agents, officers, employees,

representatives, successors, assigns, attorneys, and all other persons acting
for, with, by, through, or under authority from Defendants, or in concert or

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participation with Defendants, be preliminarily and permanently enjoined
and restrained from:
i.

using any of Knight’s Intellectual Property in connection
with the promotion and operation of the Restaurants;

ii.

engaging in any other conduct that will cause, or is likely to
cause, confusion, mistake, deception, or public
misunderstanding as to the affiliation, connection,
association, origin, sponsorship, or approval of Defendants’
services or goods with or by Knight;

iii.

otherwise infringing upon Ms. Knight’s Intellectual
Property.

(b)

Defendants be compelled to return immediately all memorabilia

items belonging to Knight.
(c)

Defendants be compelled immediately to de-brand, de-identify

and disassociate the Restaurants such that they reflect no affiliation or
association with, connection to, or endorsement by Knight.
(d)

Defendants be compelled to account to Knight for any and all

profits derived by Defendants, and for all damages caused to Knight, under
15 U.S.C. §1117(a).

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(e)

The award of damages and/or profits resulting from Defendants’

infringement, unfair competition, and false designation of origin of goods be
trebled.
(f)

Defendants be required to pay to Knight her reasonable litigation

expenses, including the costs of this action and her reasonable attorneys’ fees,
in accordance with 15 U.S.C. § 1117(a).
(g)

Knight be awarded prejudgment interest on her monetary

awards.
(h)

Defendants be required to deliver up for destruction all

advertising and promotional materials, labels, cartons, brochures, business
stationary, calling cards, information sheets, posters, menus, signs, and any
and all other printed, graphic, or electronic materials of any type, including
the plates, molds, or other means of producing the materials, which include
or bear references to Knight’s name or likeness.
(i)

Defendants be directed to file with the Court and serve on

Knight, within thirty (30) days after entry of a final injunction, a report in
writing under oath setting forth in detail the manner and form in which
Defendants have complied with the injunction.

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(j)

Knight have such other and further relief as the Court may deem

just and proper.
Respectfully submitted this 29th day of August, 2016.
/s/ Christopher P. Bussert
Christopher P. Bussert (GA Bar No. 099085)
John P. Jett (GA Bar No. 827033)
Ava J. Conger (GA Bar No. 676247)
KILPATRICK TOWNSEND
& STOCKTON LLP
1100 Peachtree Street, NE, Suite 2800
Atlanta, Georgia 30309
[phone] (telephone)
[phone] (facsimile)
[e-mail]
[e-mail]
[e-mail]
Counsel for Plaintiff

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LOCAL RULE 7.1 CERTIFICATE OF COMPLIANCE
I hereby certify that the foregoing pleading filed with the Clerk of
Court has been prepared in 13 point Century Schoolbook font in accordance
with Local Rule 5.1(C).
Dated: August 29, 2016.
/s/Christopher P. Bussert
Christopher P. Bussert

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