Ariel Investments, LLC v. Ariel Capital Advisors LLC

Filing 217

ORDER ON DEFENDANT'S MOTION TO STAY PENDING APPEAL, signed by the Honorable Matthew F. Kennelly on 3/20/2017: For the reasons stated in the accompanying order, the Court denies defendant Ariel Capital's motion for stay pending appeal but, at its own instance, extends the date for compliance with the injunction (aside from the disclaimer requirement) to April 18, 2017 to take account of the period the Court had the motion for stay under advisement. (mk)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

ARIEL INVESTMENTS, LLC,
Plaintiff,
vs.
ARIEL CAPITAL ADVISORS LLC,
Defendant.

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Case No. 15 C 3717

ORDER ON DEFENDANT'S MOTION TO STAY PENDING APPEAL
After a bench trial, the Court found in favor of plaintiff Ariel Investments, LLC on
its trademark infringement claims. The Court denied Ariel Investments' request for
disgorgement of defendant Ariel Capital Advisors LLC's alleged profits but issued an
injunction that, among other things, requires Ariel Capital to cease using the infringing
term "Ariel" within 30 days of entry of the order and required it to use a disclaimer of
association in the interim. Ariel Capital has filed a notice of appeal and has moved for a
stay of the injunction pending appeal.
The purpose of a stay pending appeal is to minimize the costs of error and
mitigate the damage that may be done before a legal issue is finally resolved. In re A&F
Enters., Inc. II, 742 F.3d 763, 766 (7th Cir. 2014). But a stay is "not a matter of right,
even if irreparable injury might otherwise result." Nken v. Holder, 556 U.S. 418, 433
(2009). In determining whether to grant a stay, a court considers the moving party's
likelihood of success on appeal, any irreparable harm that will result to either side if a
stay is granted or denied in error, and whether the public interest favors one side or the

other. In re A&F Enters., 742 F.3d at 766. The court applies a sliding scale under
which "the greater the moving party's likelihood of success on the merits, the less
heavily the balance of harms must weigh in its favor, and vice versa." Id. As the party
requesting a stay, Ariel Capital has the burden to show that the circumstances justify
the Court's exercise of its discretion to grant a stay.
1.

Likelihood of success
Ariel Capital's contention that it is likely to succeed on appeal focuses on three

points. The first concerns the Court's finding that Ariel Investments established a
likelihood of confusion. Ariel Capital notes that the Court did not find that each of the
seven factors considered in determining this issue were in Ariel Investments' favor.
That may be so, but it does not mean the evidence was close. Starting with the seven
factors, the Court concluded that five of them weighed in Ariel Investments' favor and
that one was neutral. There was just one factor that weighed in Ariel Capital's favor—
intent to pass off one's product as that of another—and even there, the evidence was
somewhat equivocal. Specifically, the Court found that Ariel Capital's founder
Christopher Bray did not adopt the name Ariel to try to lure customers from Ariel
Investments but rather that he named the firm after his daughter and a ministry in which
he had been involved. But the Court also found that, contrary to Bray's contention, he
"knew of Ariel Investments prior to founding Ariel Capital" and "was aware that he was
adopting a name similar to the one Ariel Investments was already using in the same
general field." Decision at 28. Thus the single factor among the seven that weighed in
Ariel Capital's favor did so "only weakly." Id.
More generally, the evidence on the question of likelihood of confusion was not

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close. 1 The summary in the Court's decision illustrates this:
[T]he two marks are similar, using the same identifying term to refer to
financial services and products. Both companies offer individualized
investment services to individuals, with a wide range in the total dollars
invested per client. Further, Ariel Investments has been operating in the
financial market for over thirty years and has repeatedly policed use of its
marks by other financial companies. Finally, there is evidence of actual
confusion: at least one client of Ariel Capital as well as two others in the
financial industry have shown confusion as to the relationship between the
two companies.
Id. at 29. The requirements for issuance of a permanent injunction were also clearly
established; the evidence was not close on this either. See id. at 31-32.
The second point raised by Ariel Capital on the question of likelihood of success
concerns the denial of its motion to dismiss for lack of personal jurisdiction. The motion
likewise did not present a close question in the Court's view. And as noted above, the
Court found, after considering the evidence at trial (including Bray's testimony) that Bray
was aware of Ariel Investments and its business before he named Ariel Capital and
knew he was adopting a mark similar to the one Ariel Investments had long used. Ariel
Capital's knowing adoption of a mark confusingly similar to the one long used by an
Illinois entity in the same field is more than sufficient to establish the minimum contacts
with Illinois needed to make personal jurisdiction appropriate. Again, this is not a close
question in the Court's view.
Ariel Capital's third point concerns the Court's decision to allow Ariel Investments
to withdraw its jury demand shortly before trial and to overrule Ariel Capital's ensuing
request for a jury trial. Ariel Investments dropped its claim for damages and pursued

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The Court notes that its denial of summary judgment does not suggest otherwise but
rather meant only that there was a genuine factual dispute to be determined at trial.
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only its request for an injunction and for disgorgement. The Court, relying on
established authority (albeit not from this circuit), concluded that the request for
disgorgement of profits in a Lanham Act case is a claim for equitable relief that did not
entitle Ariel Capital to a jury trial. See Ferrari S.P.A. v. Roberts, 944 F.2d 1235, 1248
(6th Cir. 1991); see also, e.g., Fifty-Six Hope Rd. Music, Ltd. v. A.V.E.L.A., Inc., 778
F.3d 1059, 1074 (9th Cir. 2015). The Supreme Court "ha[s] characterized damages as
equitable where they are restitutionary, such as in 'action[s] for disgorgement of
improper profits.'" Chauffeurs, Teamsters & Helpers, Local No. 391 v. Terry, 494 U.S.
558, 570 (1990) (quoting Tull v. United States, 421 U.S. 412, 424 (1987)). This legal
issue likewise is not close.
Ariel Capital also contends that it was unfairly prejudiced by the timing of the
withdrawal of Ariel Investments' damages claim and jury demand shortly before trial.
The claim of prejudice was and is completely conclusory and unsupported. Even now,
Ariel Capital does not identify anything it would have done differently if it had had more
time to adjust. And as virtually any experienced trial lawyer will tell you, a bench trial is
far simpler than a jury trial—all else being equal, as in this situation—largely due to the
absence of the need to educate laypersons on matters that are outside their usual
frame of reference.
In conclusion, though Ariel, like any appellant, has some likelihood of success on
appeal, this cannot fairly be characterized as a significant likelihood of success or even
a reasonable likelihood of success.
2.

Irreparable injury
Ariel Capital has also failed to establish any irreparable harm. First of all, it did

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not do so at trial, as the Court concluded in its decision granting Ariel Investments'
request for an injunction:
Ariel Capital offered no evidence regarding any hardship an injunction
would impose. And an appropriate injunction in this case would require
only that Ariel Capital change its name, a process that, though perhaps
not simple, will not drive the company out of business. This is particularly
true given that most of Ariel Capital's clients have been with Bray through
at least two firms and likely will be unaffected by a change in the
company's name.
Decision at 32.
In its motion for a stay, Ariel Capital contends that the timing of the injunction is
unfair because it comes during tax season, a busy time for the company. But as with
Ariel Capital's contentions about irreparable harm at trial, the claim that this will cause
hardship, let alone irreparable harm, is entirely unsupported. To be sure, the injunction
requires Ariel to, among other things, adopt a new name (along with stationery,
business cards, and so on), transfer its current domain (www.arielcapitaladvisors.com)
to Ariel Investments, and thus, presumably, establish a new domain name and website.
But on the record before the Court, the amount of time, effort, and money this would
require is entirely speculative, and Ariel Capital offers no evidence that doing this
work—or, more likely, engaging the services of others to do it—would detract from its
ability to perform whatever services it must perform for its clients during this period
(which Ariel Capital likewise does not describe or detail). In short, Ariel Capital has
offered no evidence that transitioning the business to operation under a different name
will pose significant difficulty, let alone irreparable harm. Ariel Capital has effectively
forfeited the point by failing to support it with any evidence.
Furthermore, the evidence at trial undermines any contention that Ariel Capital

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will lose any business advantage from giving up the name Ariel. Bray testified that all of
Ariel Capital's clients followed him from when he left his previous firm, Willow Street
Advisors. There is no evidence, and Ariel Capital does not claim, that any of them did
so because of the new firm's name. And if Bray is to be believed, Ariel Capital has not
and does not advertise but instead relies on word of mouth. Thus there is no basis to
believe that the name change will adversely impact Ariel Capital's marketing.
The harm to Ariel Investments if Ariel Capital is permitted to continue to use the
name Ariel is intangible but real nonetheless. Indeed, "trademark violations are
irreparable, primarily because injuries to reputation and goodwill are nearly impossible
to measure." In re A&F Enters., 742 F.3d at 769. Ariel Investments may not have
suffered any quantifiable harm to date, but its reputation is at risk as long as Ariel
Capital is operating under that name.
The Court concludes that the balance of harms does not favor granting a stay.
3.

Public interest
The public interest is not a terribly significant factor in this particular case. That

said, as Ariel Investments argues, the public interest is served by preventing trademark
infringement. Thus to the extent it is a factor, it does not favor granting a stay.
Conclusion
The Court is cognizant that the purpose of a stay pending appeal is to minimize
the costs of an error in a district court's ruling. But in this case Ariel Capital has not
offered—either at trial or in connection with its motion for stay—any evidence supporting
a claim of irreparable harm absent a stay. Thus on the record before the Court, though
Ariel Capital will no doubt incur some costs based on compliance with an injunction, it

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will incur no irreparable harm. On the other hand, the harm to Ariel Investments from
continued infringement of its trademark is the type of injury that the law defines as
irreparable. Finally, Ariel Capital has shown only a minimal likelihood of success on the
merits. The Court concludes that Ariel Capital has failed to carry its burden of showing
that a stay is appropriate. The Court therefore denies Ariel Capital's motion but, at its
own instance, extends the date for compliance with the injunction (aside from the
disclaimer requirement) to April 18, 2017 to take account of the period the Court had the
motion for stay under advisement.

Date: March 20, 2017

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MATTHEW F. KENNELLY
United States District Judge

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