Sarkis Cafe, Inc. v. Sarks in the Park, LLC

Filing 100

MEMORANDUM Opinion and Order Signed by the Honorable John Z. Lee on 12/16/13Mailed notice(ca, ).

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
SARKIS’ CAFE, INC., an Illinois corporation,
Plaintiff,
v.
SARKS IN THE PARK, LLC, an Illinois
limited liability company,
Defendant.

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Case No. 12 C 9686
Hon. Judge John Z. Lee

MEMORANDUM OPINION AND ORDER
Plaintiff Sarkis’ Cafe, Inc., an Illinois corporation (“Sarkis”), has sued Defendant Sarks
in the Park, LLC, an Illinois limited liability company (“Sarks”), for false designation of origin,
trademark infringement, dilution, unfair competition, consumer fraud, deceptive trade practices,
and injunctive relief. Plaintiff asserts these claims pursuant to the Lanham Act, 15 U.S.C. §§
1114, 1125(a), 1125(c), Illinois common law, the Illinois Consumer Fraud and Deceptive
Business Practices Act, 815 ILCS 505/1, and the Illinois Uniform Deceptive Trade Practices Act,
815 ILCS 510/1. Defendant now moves to dismiss Plaintiff’s Second Amended Complaint (the
“Complaint”) pursuant to Federal Rule of Civil Procedure (“Rule”) 12(b)(6). For the reasons set
forth herein, Defendant’s motion is denied.
Factual Background
The following facts alleged in Plaintiff’s Complaint are assumed to be true for purposes
of this motion. See Murphy v. Walker, 51 F.3d 714, 717 (7th Cir. 1995).
Plaintiff Sarkis opened its business in or around 1965 in Evanston, Illinois. (2d Am.
Compl. ¶ 5.) Sarkis is a restaurant that serves breakfast and lunch and offers unique meals
bearing such names as the “Loretta,” “Disaster,” and “Animal.” (Id.) Jeff Cramin purchased

Sarkis from its original owner in November 2000, and incorporated Sarkis as an Illinois
corporation on February 26, 2001. (Id. ¶ 6.) Cramin died on May 9, 2002, whereupon his wife,
Marla Cramin (“Ms. Cramin”), took over as the owner of Sarkis. (Id.) On November 9, 2010,
Ms. Cramin registered the word “Sarkis” with the United States Patent and Trademark Office as
USPTO Reg. No. 3872829, Serial No. 77968293. (Id. ¶ 7.) The Sarkis name has developed
valuable good will through the restaurant’s more than 40 years of business. (Id. ¶ 8.)
On May 5, 2009, Defendant Sarks in the Park was formed as an Illinois limited liability
company. (Id. ¶ 9.) Defendant thereafter opened its restaurant, called Sarks in the Park, at 444
W. Fullerton Parkway, Chicago, Illinois, in or around July 2009. (Id. ¶ 10.) From the time the
restaurant opened, Sarks in the Park has offered and continues to offer the identical unique menu
items offered by Sarkis, including, but not limited to, the “Loretta,” “Disaster,” and “Animal.”
(Id. ¶ 11.) Sarks in the Park describes the aforementioned sandwiches as “Original Sarks
Sandwiches,” with full knowledge of Plaintiff’s restaurant, its name, and its longtime use of
these same sandwich names. (Id. ¶ 11.)
Defendant also created a website, www.sarksinthepark.com, which features on the front
page a logo that is nearly identical to Plaintiff’s logo. (Id. ¶ 12.) Furthermore, Defendant’s
website contains a section that mentions Plaintiff’s restaurant and calls Sarks in the Park the
Lincoln Park equivalent of the Evanston Sarkis. (Id. ¶ 13.) Defendant also launched a Facebook
page that identified Sarks in the Park as the “second location” of Sarkis. (Id. ¶ 14.) Plaintiff
never gave its consent or authorization to Defendant to use the “Sarks” or “Sarkis” names. (Id. ¶
15.)
As a result of Defendant’s logo, name, menu, website, and Facebook page, consumers
and media outlets, including a website run by the Chicago Tribune, have concluded that Plaintiff

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and Defendant’s restaurants are one and the same. (Id. ¶ 16.) Additionally, Defendant made
direct misrepresentations to the media about its affiliation with Plaintiff’s restaurant. (Id. ¶ 17.)
To illustrate the harm caused by Defendant to Plaintiff, Plaintiff asserts that the ratings of the
two restaurants on the popular food review websites yelp.com and grubhub.com indicate that
Defendant’s restaurant is inferior to Plaintiff’s restaurant. (Id. ¶¶ 18-19.)
On July 18, 2009, Plaintiff’s counsel sent a letter to Defendant’s counsel informing
Defendant that its planned use of the Sarks name, mark, menu, and logo would violate Plaintiff’s
rights. (Id. ¶ 20.) Defendant disregarded the letter and proceeded to open and operate its
restaurant. (Id. ¶ 21.) Plaintiff alleges that the similarity between the two restaurants has
resulted in a very high likelihood of confusion among the public as to the affiliation between
Sarks and Sarks in the Park. (Id. ¶ 22.) Moreover, many customers have expressed confusion to
Ms. Cramin as to the ownership of Defendant’s restaurant, assuming that the two restaurants are
connected. (Id.)
Defendant moves to dismiss the Complaint pursuant to Rule 12(b)(6) on two grounds.
First, Defendant contends that the Complaint is time-barred by the applicable statutes of
limitations.

Alternatively, Defendant argues that Plaintiff’s Lanham Act claims (Counts I

through III) are barred by the doctrine of laches. In addition, Defendant also seeks sanctions
against Plaintiff in the form of attorneys’ fees and costs pursuant to 28 U.S.C. § 1927 and 15
U.S.C. § 1117(a). The Court will address each issue in turn.
Discussion
I.

Statute of Limitations
Defendant first urges the Court to dismiss the Complaint pursuant to Rule 12(b)(6),

arguing that each of Plaintiff’s six claims is governed by a three-year statute of limitations and

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the allegations of the Complaint admit that Plaintiff failed to file this lawsuit within the threeyear period. Plaintiff retorts that its Lanham Act claims (Counts I through III) need not comply
with a three-year limitations period and that, in any event, the claims are nonetheless preserved
by the continuing violation doctrine. For the reasons stated below, the Court finds that all six
counts of the Complaint are subject to a limitations period of three years. The Court also holds,
however, that Plaintiff’s allegations are insufficient to establish that its claims should be
precluded by the statute of limitations.
To survive a motion to dismiss pursuant to Rule 12(b)(6), a complaint must “state a claim
to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A
claim has facial plausibility when the plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009). A complaint, however, need not anticipate nor overcome
affirmative defenses. See Xechem, Inc. v. Bristol-Myers Squibb Co., 372 F.3d 899, 901 (7th Cir.
2004). As such, a court cannot dismiss a plaintiff’s complaint under Rule 12(b)(6) simply
because it fails to plead around an affirmative defense. See Richards v. Mitcheff, 696 F.3d 635,
637 (7th Cir. 2012); United States v. N. Trust Co., 372 F.3d 886, 888 (7th Cir. 2004)
(Easterbrook, J.) (reversing dismissal of plaintiff’s complaint under 12(b)(6) because it was
irrelevant that complaint failed to plead around defendant’s assertion that suit was untimely).
That said, dismissal of a claim under Rule 12(b)(6) may be appropriate where a plaintiff
affirmatively “pleads itself out of court” by alleging facts in the complaint that are sufficient to
establish an affirmative defense. Xechem, 372 F.3d at 901 (Easterbrook, J.).
A defendant’s invocation of a statute of limitations constitutes an affirmative defense.
See Indep. Trust Corp. v. Stewart Info. Servs. Corp., 665 F.3d 930, 935 (7th Cir. 2012). As such,

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the Court may only grant this motion if the Complaint plainly establishes that Plaintiff did not
comply with the limitations period. Therefore, as a threshold matter, the Court must determine
the appropriate statute of limitations for Plaintiff’s claims.
Turning first to Plaintiff’s Lanham Act claims (Counts I through III), Plaintiff is correct
that the Lanham Act does not provide a specific statute of limitations. See Hot Wax, Inc. v.
Warsaw Chem. Co., 45 F. Supp. 2d 635, 647 (N.D. Ill. 1999). In such instances, however, the
Supreme Court has indicated that courts should apply the statute of limitations from the most
analogous state statute, rather than simply imposing an indefinite limitations period, as Plaintiff
suggests. See Wilson v. Garcia, 471 U.S. 261, 266 (1985). Where a plaintiff alleges trademark
infringement as well as unfair competition under the Lanham Act, courts have “found that most
analogous Illinois limitation period [is] the three-year-statute of limitations found in the Illinois
Consumer Fraud and Deceptive Business Practices Act.” S&A Futures, LLC – Series 2 v. Sysco
Chicago, Inc., No. 11-C-7629, 2012 WL 851556, at *3 (N.D. Ill. Mar. 13, 2012) (quoting
Chattanoga Mfg., Inc. v. Nike, Inc., 301 F.3d 789, 793 (7th Cir. 2002)). See also Clever Ideas,
Inc. v. Citicorp Diners Club, Inc., No. 02 C 5096, 2003 WL 21982141, at *13 (N.D. Ill. Aug. 20,
2003) (“That [three-year] statute of limitations is thus applicable to Clever Ideas’ trademark and
unfair competition claims.”). The Court therefore applies a three-year statute of limitations to
Plaintiff’s Lanham Act claims.
With this three-year limitations period in mind, Defendant contends that the Complaint
should be dismissed because Plaintiff filed its first Complaint at least six months after the threeyear window had expired. Defendant points out that, as alleged in the Complaint, Plaintiff was
aware of Defendant’s challenged conduct as early as July 2009, but failed to sue the Defendant
until January 2013. But this does not end the inquiry. According to Plaintiff, its Lanham Act

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claims are still timely because Defendant’s conduct continues to this day (Compl. ¶ 11) and,
therefore, constitutes a “continuing wrong” under Taylor v. Meirick, 712 F.2d 1112 (7th Cir.
1983).
In Taylor, plaintiff Taylor created and copyrighted maps for use by fishermen in three
Illinois lakes.

Defendant Meirick copied the maps in 1976 and 1977 without plaintiff’s

permission and sold them to dealers, who in turn sold them to customers. As a result, Taylor
sued for copyright infringement in May 1980, and Meirick sought to dismiss the action based
upon the three-year statute of limitations contained in the Copyright Act. Id. at 1117.
Citing “the general principle that the statute of limitations does not begin to run on a
continuing wrong till the wrong is over and done with,” id. at 1118, the Seventh Circuit found
that “Meirick’s infringement was a continuing wrong.” Id. at 1119. “He copied Taylor’s maps
in 1976 and 1977 and either sold copies till 1979, which was well within the three years of the
bringing of this suit, or at least became party to infringements by his dealers which continued till
after the suit was filed.” Id. In so holding, the Seventh Circuit concluded that “[t]he initial
copying was not a separate and completed wrong, but simply the first step in a course of
wrongful conduct that continued till the last copy of the infringing map was sold by Meirick or
with his connivance.” Id.
This Court recognizes that the reasoning in Taylor has been the subject of recent scrutiny.
Indeed, several district courts within this Circuit have noted the Seventh Circuit’s subsequent
elaboration (and seeming limitation) of the continuing violation theory in Dasgupta v. Univ. of
Wis. Bd. of Regents, 121 F.3d 1138, 1139 (7th Cir. 1997) (holding in a Title VII discrimination
case that “a continuing violation is one that could not reasonably have been expected to be made
the subject of a lawsuit when it first occurred because its character as a violation did not become

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clear until it was repeated during the limitations period”), as well as the apparent inconsistency
between the reasoning in Taylor and CSC Holdings, Inc. v. Redisi, 309 F.3d 988, 992 (7th Cir.
2002) (finding that each sale of illegal cable decoder was an independent violation of the Cable
Communications Policy Act and not a continuing violation). See, e.g., Persis Int’l. Inc. v.
Burgett, Inc., No. 09 C 7451, 2012 WL 4176877, at *4 (N.D. Ill. Sept. 18, 2012); Peterson v.
Harley Davidson, Inc., Case No. 12-CV-00381, 2012 WL 3113184, at *3 (E.D. Wis. Jul. 31,
2013).

Be that as it may, Taylor remains binding law, and the circumstances and claims

presented in Taylor more closely resemble those at issue here as compared to those in Dasgupta
and CSC Holdings. Because Plaintiff has alleged that Defendant is continuing to infringe upon
the subject trademarks and violating the Lanham Act (which allegations are accepted as true for
the purposes of this motion), Plaintiff’s Lanham Act claims are not precluded by the statute of
limitations at this stage of the litigation.
As for Plaintiff’s state law claims, it is undisputed that the Illinois Consumer Fraud and
Deceptive Business Practices Act (Count V) contains a three-year statute of limitations. See 815
Ill. Comp. Stat. § 505/10(a)(e). Furthermore, this three-year limitations period has been held to
govern claims for common law unfair competition as well as claims asserted under the Illinois
Uniform Deceptive Trade Practices Act. See Persis, 2012 WL 4176877, at *3 (“For both the
unfair competition and Illinois Deceptive Trade Practices Act claims, it appears the limitations
period is three years”) (citing Clever Ideas, 2003 WL 21982141, at *13 and Reinke & Assocs.
Architects Inc. v. Cluxton, No. 02 C 0275, 2002 WL 31817982, at *1 (N.D. Ill. Dec. 16, 2002)).
As such, the Court applies a three-year limitations period to Plaintiff’s state law claims. And, as
with Plaintiff’s Lanham Act claims, the continuing violations doctrine also applies to these
claims. See Grove Fresh Distrib., Inc. v. Everfresh, Inc., Case No. 89-C-1113, 1990 WL

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250416, at *2 (N.D. Ill. Dec. 17, 1990) (“As long as the plaintiff can prove damages from the
defendants' continuous course of [unfair competition], including some wrongful conduct within
the statutory period, the plaintiff can recover for the entire period.”). See also Badgon v.
Firestone Tire & Rubber Co., No. 87-C-4698, 1989 WL 24492, at *6 (N.D. Ill. Mar. 10, 1989)
(holding that Plaintiff’s Illinois Consumer Fraud and Deceptive Business Practices Act claim not
time-barred because Defendant unable to prove wrongful conduct was “over and done with”
prior to commencement of three-year limitations period); Persis Int’l, 2012 WL 4176877, at *4
(finding that Plaintiff’s Illinois Uniform Deceptive Trade Practices Act claim not time-barred
because Defendant’s last act of infringement occurred within three-year limitations window).
Accordingly, Defendant’s motion to dismiss Counts I through VI based upon the statute
of limitations is denied.
II.

Laches
Next, Defendant contends that Plaintiff’s Lanham Act claims are barred by the doctrine

of laches. Because Plaintiff’s Complaint does not establish the elements of laches necessary to
plead itself out of court, this argument also is not well-taken.
In order to establish laches within the context of a trademark infringement claim, a
defendant must demonstrate: that “the plaintiff had knowledge of the defendant's use of an
allegedly infringing mark . . . that the plaintiff inexcusably delayed in taking action with respect
to the defendant's use, and that the defendant would be prejudiced by allowing the plaintiff to
assert its rights at this time.” Chattanoga, 301 F.3d at 792-93. Because laches is an affirmative
defense, see Whittington v. Indianapolis Motor Speedway Found., Inc., 601 F.3d 728, 732 (7th
Cir. 2010), a defendant can only prevail on a laches defense at this early stage of the proceedings
if a complaint plainly establishes each of the above three elements. This standard is difficult to

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meet, and even Defendant admits that laches is not typically an appropriate basis for dismissal at
the pleading stage. (See Def.’s Mem. Supp. Mot. Dismiss 9.)
In this case, although the Complaint establishes that Plaintiff was aware of the challenged
conduct in July 2009, it does not provide sufficient facts to demonstrate that the doctrine of
laches would preclude Plaintiff’s claims. For example, assuming, as we must, that Defendant
received notice of Plaintiff’s objections in July 2009 (Compl. ¶ 20) and proceeded to open and
operate its restaurant “with full knowledge” of Plaintiff’s trademark (Id. ¶ 11), it is unclear
whether Defendant would be able to invoke laches as a defense. See Abraham v. Alpha Chi
Omega, 708 F.3d 614, 620 (5th Cir. 2013) (“A defendant who intentionally infringes a trademark
with the bad faith intent to capitalize on the markholder’s good will lacks the clean hands
necessary to assert the equitable defense.”). The cases upon which Defendant relies are
distinguishable. For instance, the plaintiff in Hot Wax waited for over 20 years to file its claim,
while the plaintiff in Chattanoga waited nine years. See Hot Wax, 45 F. Supp. 2d at 647;
Chattanoga, 301 F.3d at 793. The periods of delay in these cases far exceeded the six-month
period at issue here.
For these reasons, the Court denies Defendant’s Rule 12(b)(6) motion to dismiss Counts I
through III of the Complaint under the doctrine of laches.
III.

Defendant’s Request for Sanctions
Defendant urges the Court to award it reasonable fees and costs pursuant to 28 U.S.C. §

1927 and 15 U.S.C. § 1117(a) for having to move to dismiss Plaintiff’s First and Second
Amended Complaints. This request is premised upon the assumption that Defendant’s motion to
dismiss would be granted.

Because the Court denies the motion, Defendant’s request for

reasonable fees and costs is denied.

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Conclusion
For the reasons provided in this Memorandum Opinion and Order, the Court denies
Defendants’ motion to dismiss Plaintiff’s Second Amended Complaint pursuant to Fed. R. Civ.
P. 12(b)(6). [Dkt. 53.]

SO ORDERED

ENTER: 12/16/13

________________________________________
JOHN Z. LEE
United States District Judge

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