Design Ideas Ltd v. Meijer, Inc. et al

Filing 12

OPINION entered by Judge Richard Mills on 6/1/2015. The Motion of Plaintiff Design Ideas, Ltd. to enjoin the Defendants from prosecuting this action in the Western District of Michigan, d/e 5 is ALLOWED. Defendants Meijer, Inc., The TJX Companies , Inc., and Whitmor, Inc. are enjoined from prosecuting this action in the Western District of Michigan. The Motion of Defendants Meijer, Inc., Whitmor, Inc., and The TJX Companies, Inc. to Dismiss, Stay or Transfer to the Western District of Michigan, d/e 9 is DENIED. This action is referred to U. S. Magistrate Judge Jonathan Hawley for the purpose of entering a scheduling order. (MAS, ilcd)

E-FILED

Thursday, 04 June, 2015 10:04:34 AM
Clerk, U.S. District Court, ILCD

IN THE UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF ILLINOIS
SPRINGFIELD DIVISION
DESIGN IDEAS, LTD., an Illinois
Corporation,
Plaintiff,
v.
MEIJER, INC., a Michigan
Corporation, WHITMOR, INC., a
Delaware Corporation, and THE TJX
COMPANIES, INC., a Delaware
Corporation,
Defendants.

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NO. 15-3093

OPINION
RICHARD MILLS, U.S. District Judge:
This is an action wherein the Plaintiff has filed claims asserting
copyright infringement under the Copyright Act of 1976, 17 U.S.C. §§ 101,
et seq., unfair competition under the U.S. Trademark Act, 15 U.S.C. §§
1051, et seq. and violations of the Digital Millennium Copyright Act, 17
U.S.C. §§ 1201 et seq. The Complaint also includes state law claims
asserting unfair competition, violations of the Illinois Deceptive Trade
Practices Act, 815 ILCS 510/2 and Illinois Consumer Fraud and Deceptive

Business Practices Act, 815 ILCS 505/2. Pending before the Court are the
Plaintiff’s Motion to enjoin the Defendants from prosecuting this action in
the United States District Court for the Western District of Michigan and
the Defendants’ Motion to dismiss, stay or transfer the Plaintiff’s claims to
the Western District of Michigan.
I.
The Plaintiff’s Complaint in this case was filed on March 19, 2015.
According to the Complaint, Plaintiff Design Ideas is engaged in the
business of creating, manufacturing and distributing a range of unique
decorative housewares, including those that incorporate original designs
protected by copyright. Defendant Meijer, Inc., does business online and
through its brick-and-mortar stores throughout the Midwest, including in
the Central District of Illinois. Defendant Whitmor, Inc. sells its products
to unrelated retailers, including T.J. Maxx, Marshalls, HomeGoods and
Meijer through their brick-and-mortar stores throughout the United States,
including some in the Central District of Illinois. Defendant The TJX
Companies, Inc. does business under the names “Marshalls,” “T.J. Maxx,”

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and “HomeGoods” via brick-and-mortar stores throughout the United
States, including some in the Central District of Illinois.
On February 27, 2015, approximately three weeks before the Plaintiff
filed its Complaint here, the Defendants in this case filed a declaratory
judgment action against the Plaintiff in the Western District of Michigan.
See Meijer, Inc., Whitmor, Inc., and The TJX Companies, Inc. v. Design
Ideas, Ltd., Case Number 1:15-cv-00219-PLM. That case is assigned to
Chief Judge Paul L. Maloney. In the action in the Western District of
Michigan, the Defendants seek the following relief:
(A)

Declaring that the use of the CANARY CLIPS mark does
not violate any rights of Design Ideas under the Lanham
Act or any other laws;
(B) Declaring the Canary Clips do not infringe any valid
copyright owned by Design Ideas;
(C) Declaring Design Ideas’ copyright registration No. VA 1867-185 is invalid;
(D) Declaring the Defendants did not remove or alter any
copyright management information from their Canary
Clips or from Design Ideas’ Sparrow Clips in violation of
17 U.S.C. § 1202;
(E) Declaring the Defendants did not otherwise violate the
Copyright Act in any manner.
The Defendants claim that the Plaintiff’s action is duplicative of the

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Defendants’ first-filed Michigan action and, for the convenience of the
parties and witnesses, the Court should dismiss, stay or transfer this case.
The Plaintiff asserts that Defendants’ Michigan case is a bad-faith,
anticipatory, parallel suit that is disfavored by the Seventh Circuit.
Accordingly, the Plaintiff contends this Court should deny the Defendants’
Motion and allow this case to proceed.
II.
Design Ideas has a copyright registration for its clothes pin design sold
under the mark SPARROW CLIPS. Design Ideas began offering the design
for sale nationwide in 2009, using the SPARROW CLIPS trademark.
Defendant Whitmor ordered clothes pins from a Chinese manufacturer
under the mark CANARY CLIPS. Whitmor manufactured and sold Canary
Clips to other Defendants.
In 2014, Design Ideas purchased Canary Clips from the T.J. Maxx
store at 2801 Veterans Parkway in Springfield, Illinois, and the Meijer store
at 4200 Conestoga Drive in Springfield, Illinois. Subsequently, Design
Ideas sent “cease and desist” letters to the Defendants. In the ensuing

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months, the parties engaged in communications purportedly to amicably
resolve the dispute.
Attached to the Plaintiff’s memorandum in support of its motion to
enjoin the Defendants from prosecuting the action in the Western District
of Michigan is the Declaration of Andy Van Meter, the President of Design
Ideas. Mr. Van Meter states that on February 26, 2015, he was contacted
by Shawn Sinicrope, Meijer’s Vice President of Merchandising,
Indoor/Outdoor Home, who requested a face-to-face meeting.

Mr.

Sinicrope stated it was his policy not to do business with suppliers who
sued his company and Meijer could be terminating $2.5 million worth of
business if Design Ideas persisted.

Mr. Van Meter states he did not

understand the statement because he believed they were in settlement
negotiations.
Mr. Van Meter cut short a business trip in Milan, Italy and traveled
to Grand Rapids, Michigan to meet with Mr. Sinicrope. The meeting was
scheduled for March 5, 2015. Mr. Van Meter states that, during the
telephone conversation, Mr. Sinicrope did not mention that a lawsuit

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(which would be filed the next day) was imminent.
In addition to Mr. Sinicrope, Mr. Van Meter met with Amanda
McVay, Meijer’s Divisional Merchandise Manager, Hard Home. Mr. Van
Meter reiterated that Design Ideas preferred to settle the matter.
Additionally, he informed the Meijer officials that Whitmor’s settlement
offer was so low that it could not be taken seriously.

Mr. Sinicrope

reminded Mr. Van Meter of the value of Meijer’s business to Design Ideas
and stated that the business relationship was at risk.
According to Mr. Van Meter, Mr. Sinicrope then informed him for
the first time that Whitmor had filed a lawsuit against Design Ideas. He
did not mention that Meijer and TJX were also plaintiffs in the lawsuit.
Although Mr. Sinicrope apparently believed that Design Ideas had filed a
lawsuit against Meijer, Mr. Van Meter assured him that was not the case.
Mr. Van Meter states that he showed Mr. Sinicrope a timeline
prepared by Design Ideas’s attorney in advance of the meeting. He told
Mr. Sinicrope he thought the parties were still conducting informal
discovery in furtherance of settlement.

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The brief meeting concluded

without any settlement offer.
According to Mr. Van Meter, he traveled from Milan, Italy to Grand
Rapids, Michigan at Meijer’s request in the hope of resolving the parties’
dispute. The meeting lasted 30 minutes and concluded with Mr. Van
Meter urging the Meijer officials to revisit the matter with their own
lawyers.
The attorney for Design Ideas, Garfield B. Goodrum, submitted a
Declaration, which discusses the chronology of events related to this
litigation. Mr. Goodrum states that he had settlement communications
with Whitmor’s counsel on March 2, 2015–after Whitmor had filed suit in
the Western District of Michigan. However, counsel did not inform Mr.
Goodrum that the declaratory judgment action had been filed. Based on
the correspondence from Whitmor’s counsel, Mr. Goodrum reasonably
believed the parties were engaged in settlement negotiations.

The

Defendants contend that Plaintiff never provided an explanation as to how
it calculated the Defendants’ profits. Following his meeting with Meijer
officials, Mr. Van Meter informed Mr. Goodrum that Defendants had filed

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suit.
In their response to the Plaintiff’s motion, the Defendants do not
dispute the accounts of Mr. Van Meter or Mr. Goodrum, except to say,
“Through self-serving affidavits, DI attempts to paint a vast conspiracy by
Defendants to ruin the travel plans of DI’s president and race to the
courthouse to catch them off guard. There was no conspiracy or race to the
courthouse.” See Doc. No. 10, at 8. They do not include an affidavit or
declaration responding to the statements of Mr. Van Meter or Mr.
Goodrum.
Of course, there is nothing unusual about a party (or attorney)
submitting an affidavit that is “self-serving.” Accordingly, an otherwise
admissible affidavit should not be rejected because it is “self-serving.” See
Widmar v. Sun Chemical Corp., 772 F.3d 457, 460 (7th Cir. 2014); Hill
v. Tangherlini, 724 F.3d 965, 967-68 n.1 (7th Cir. 2013). Regardless of
whether the Defendants intended to ruin Mr. Van Meter’s travel plans or
catch the Plaintiff off guard in a race to the courthouse, the Defendants do
not dispute the substantive statements in either Declaration.

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III.
More than half a century ago, the United States Court of Appeals for
the Seventh Circuit stated the general rule that if two lawsuits are pending
in different courts which involve identical issues and are between the same
parties, the “party filing later in time should be enjoined from further
prosecution of his suit.” See Martin v. Graybar Electric Co., 266 F.2d 202,
204 (7th Cir. 1959).
The rule announced in Graybar Electric is not a rigid requirement.
Additionally, this case is not analogous to Graybar Electric. Here, the firstfiled case (by the Defendants) in the Western District of Michigan seeks
declaratory relief. The Plaintiff seeks coercive relief in this action. In
Graybar Electric, the first-filed case sought coercive relief and the
subsequent action was for a declaratory judgment. See Graybar Electric,
266 F.2d at 203. As the Seventh Circuit stated in Research Automation,
Inc. v. Schrader-Bridgeport Intern., Inc., 626 F.3d 973 (7th Cir. 2010), the
nature of the type of relief sought is important:
Since Graybar Electric, we have made clear that where the
facts of that case are replicated–that is, where the parallel cases
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involve a declaratory judgment action and a mirror-image action
seeking coercive relief–we ordinarily give priority to the coercive
action, regardless of which case was filed first. In those cases,
we have repeatedly taught that this circuit does not rigidly
adhere to a first-to-file rule.
Id. at 980 (citations omitted). The court further noted that the practice of
filing a lawsuit in anticipation of an impending suit by the opposing party
“exacerbates the risk of wasteful litigation” and, in such circumstances, it
may be appropriate to depart from the first-to-file rule. See id.
The Seventh Circuit has never announced an inflexible rule that the
first filing controls. See id. Although such a rule would be certain and easy
to apply, it would encourage a race to the courthouse, which is not
desirable. See id. Given these competing interests, the court has stated
that the intent of such a rule is that “the first-filed case may proceed where
the principles that govern requests for transfer do not indicate otherwise.”
Id.
Accordingly, “there is ‘no precise rule’ for resolving the problem
created by mirror-image lawsuits in two different federal courts.” Id. at 982
(quoting Colorado River Water Conservation District v. United States, 424

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U.S. 800, 817 (1976)). The Seventh Circuit held, therefore, that when a
“district court faces one of two identical lawsuits and one party moves to
transfer to the other forum, the court should do no more than consider the
order in which the suits were filed among the factors it evaluates under 28
U.S.C. § 1404(a).” Id.
Section 1404(a) specifies factors to be considered, stating, “For the
convenience of parties and witnesses, in the interest of justice, a district
court may transfer any civil action to any other district or division where
it might have been brought or to any district or division to which all parties
have consented.” 28 U.S.C. § 1404(a).
Although the convenience of the parties and witnesses do not strongly
favor either venue, the Court finds that this district is a more appropriate
forum than the Western District of Michigan. The Plaintiff’s principal
place of business is in the Central District of Illinois. Although each of the
Defendants conducts business in the Central District of Illinois, their
principal places of business are elsewhere. It was in the Central District of
Illinois that Plaintiff discovered the alleged infringing products being sold

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by Defendants Meijer and TJX. Most of the Plaintiff’s witnesses are in
Illinois. Most of Meijer’s witnesses are located in Michigan. The other
Defendants intend to call witnesses primarily from their home
districts–neither the Western District of Michigan nor the Central District
of Illinois. The Plaintiff’s Complaint includes Illinois state law claims. The
creator of the work at issue is located in Thailand.
The Court has reviewed the Public Access to Court Electronic Records
docket report for the declaratory judgment action pending in the Western
District of Michigan. See Meijer, Inc., et al. v. Design Ideas, Ltd., Case
Number 1:15-cv-00219-PLM. On April 27, 2015, Design Ideas filed a
motion to dismiss, stay or transfer to the Central District of Illinois. See
Doc. No. 11. The Defendants responded to the motion on May 28, 2015.
See Doc. No. 13. Because similar motions are pending in both districts,
therefore, the interest of judicial economy does not strongly favor
proceeding in one district over the other.
In considering the factors under § 1404(a), the Court concludes that
the interests of justice favor the Central District of Illinois as the

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appropriate venue. The fact that Defendants filed first in another district
is entitled to little weight because, when there are parallel cases such as
these, it is generally appropriate to give priority to the coercive action. See
Research Automation, 676 F.3d at 980.

Additionally, based on the

Declarations of Andy Van Meter and Garfield B. Goodrum, there is a
strong suggestion that Defendants filed the action in Michigan in
anticipation of the Plaintiff filing suit, which is another reason to depart
from the first-to-file rule. See id. Accordingly, the Court declines to
transfer this action to the Western District of Michigan.
Significantly, the statements in the declarations are not contested by
the Defendants. It is certainly possible to infer bad faith on the part of one
or more Defendants. Accordingly, the interests of justice do not favor this
action proceeding in the Defendants’ chosen forum.
Ergo, the Motion of Plaintiff Design Ideas, Ltd. to enjoin the
Defendants from prosecuting this action in the Western District of
Michigan [d/e 5] is ALLOWED.
Defendants Meijer, Inc, The TJX Companies, Inc., and Whitmor, Inc.

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are enjoined from prosecuting this action in the Western District of
Michigan.
The Court concludes that a security bond is not necessary in this case
and, therefore, declines to order the Plaintiff to post a bond under Rule
65(c). See Scherr v. Volpe, 466 F.2d 1027, 1035 (7th Cir. 1972).
The Motion of Defendants Meijer, Inc., Whitmor, Inc., and The TJX
Companies, Inc. to Dismiss, Stay or Transfer to the Western District of
Michigan [d/e 9] is DENIED.
This action is referred to United States Magistrate Judge Jonathan
Hawley for the purpose of entering a scheduling order.
The Clerk will forward a copy of this Opinion and Order to the
United States District Court for the Western District of Michigan,
Southern Division.
ENTER: June 1, 2015
FOR THE COURT:
s/Richard Mills
Richard Mills
United States District Judge

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