Alpha and Omega Financial Services, Inc. vs. Kesler et al.,
Filing
84
MEMORANDUM AND ORDER denying 3 Motion for Preliminary Injunction. Signed by District Judge Daniel D. Crabtree on 11/01/2018. (mig)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
ALPHA AND OMEGA FINANCIAL
SERVICES, INC., d/b/a LIVING
WEALTH,
Plaintiff,
v.
Case No. 18-4015-DDC-KGS
BRENT KESLER, SCOTT
SCHLESENER, AND BRANDY
BRIMHALL,
Defendants.
____________________________________
MEMORANDUM AND ORDER
The case comes before the court on plaintiff Living Wealth’s Motion for Preliminary
Injunction (Doc. 3) against defendants for alleged violations of the Copyright Act and Lanham
Act. Defendants Scott Schlesener and Brandy Brimhall jointly submitted a Memorandum in
Opposition. Doc. 51. Defendant Brent Kesler filed a Memorandum in Opposition separately.
Doc. 47. Plaintiff then filed a Reply. Doc. 61.
On September 17, 2018, the court conducted an evidentiary hearing on plaintiff’s motion.
At the hearing, each party had the opportunity to present evidence and cross-examine witnesses.
Also, the parties stipulated to admit exhibits presented or discussed at the hearing. Doc. 80.
Last, the court allowed the parties to submit post-hearing briefs. Docs. 76, 77, 78.
Having considered the evidence presented, the briefs and arguments of counsel, and the
governing law, the court denies plaintiff’s motion for a preliminary injunction. The court finds
that plaintiff has not carried its burden to show irreparable harm.
I.
Facts
Plaintiff Living Wealth serves as a general agent for life insurance companies and earns
commissions selling life insurance and other financial products to consumers. Defendants Brent
Kesler, Brandy Brimhall, and Scott Schlesener are plaintiff’s former sales agents. Mr.
Schlesener and Ms. Brimhall left the company sometime between June 15–19, 2017; Mr. Kesler
left the company on August 31, 2017.
Plaintiff gives presentations to small and medium-sized groups in the company’s target
market, consisting of doctors, dentists, chiropractors, and multi-level marketing organizations.
The parties dispute ownership of specific sales materials used for these presentations. Relevant
here are the following: (1) the Infinite Banking for Beginners (“IBB”) PowerPoint sales
presentation, which, plaintiff asserts, it created without “material” assistance from defendants,
and (2) the Velocity of Money visual materials. Plaintiff also asserts it created the Velocity
materials without any material assistance from defendants. Defendants Ms. Brimhall and Mr.
Schlesener contend that they created the IBB PowerPoint. The IBB PowerPoint contains a slide
developed from the Velocity of Money materials.
Plaintiff applied for and received registration from the United States Copyright Office for
the IBB PowerPoint and the Velocity of Money visual materials on March 1, 2018, and June 7,
2018, respectively.
Plaintiff asserts that during the time it employed defendants, they had access to the IBB
PowerPoint sales presentation. Plaintiff also claims that Mr. Kesler, after leaving the company,
posted a sales presentation on YouTube, which is almost identical to plaintiff’s IBB PowerPoint
sales presentation. Mr. Kesler’s presentation also includes a slide that, plaintiff contends, is
nearly identical to plaintiff’s Velocity of Money visual material.
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Mr. Kesler’s presentation includes a photograph of David Pietsch, a multi-level
marketing professional and one of plaintiff’s prominent clients. The presentation indicates that
Mr. Pietsch gave Mr. Kesler a favorable testimonial; but, plaintiff asserts that Mr. Pietsch never
authorized Mr. Kesler to use his name or likeness. Instead, plaintiff alleges that Mr. Pietsch
hasn’t spoken to Mr. Kesler in more than three years. In response, Mr. Kesler states that he
removed this testimonial from his presentation immediately after becoming aware of Mr.
Pietsch’s affidavit in this case.
For Ms. Brimhall and Mr. Schlesener, plaintiff alleges that Ms. Brimhall accessed
plaintiff’s files, including a nearly identical, derivative version of the IBB PowerPoint from an
online, cloud-based server without plaintiff’s permission. Plaintiff also asserts that Ms. Brimhall
changed the presentation to make it seem like Mr. Schlesener had prepared it for Wealth Kinetix,
Ms. Brimhall’s new firm. Ms. Brimhall also changed the title of the presentation—from
“Infinite Banking for Beginners” to “Infinite Banking Basics”—but, otherwise, she did not
change the presentation.
Last, plaintiff allege that Mr. Kesler, in affiliation with Ms. Brimhall and Mr. Schlesener,
started and continues to operate “The Money Multiplier” website. The site includes a “Member
Success Stories” section, featuring a photograph and purported testimonial from Dr. Michael
Strangherlin, another one of plaintiff’s clients. Much like Mr. Pietsch, plaintiff alleges that Dr.
Strangherlin is not defendants’ client and that he never authorized defendants to reference him or
use his words or likeness in marketing materials. Mr. Kesler claims that Dr. Strangherlin both
provided the favorable testimonial and gave his permission to use it. But, Mr. Kesler states that
he removed this testimonial immediately from his website after learning of Mr. Strangherlin’s
affidavit.
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Plaintiff seeks to enjoin defendants’ use of its allegedly copyrighted materials under the
Copyright Act and Lanham Act.
II.
Legal Standard
A.
Preliminary Injunctions
Both the Copyright Act and the Lanham Act permit the court to issue an injunction.
Copyright Act, 17 U.S.C. §502(a); Lanham Act, 15 U.S.C. § 1116(a). The limited purpose of a
preliminary injunction under Fed. R. Civ. P. 65 is “merely to preserve the relative positions of
the parties until a trial on the merits can be held.” Univ. of Tex. v. Camenisch, 451 U.S. 390, 395
(1981). A party seeking a preliminary injunction must show a clear and unequivocal right to
relief. Schrier v. Univ. of Colo., 427 F.3d 1253, 1258 (10th Cir. 2005) (citations omitted). The
moving party must establish:
(1) [he or she] will suffer irreparable injury unless the injunction
issues; (2) the threatened injury . . . outweighs whatever damage the
proposed injunction may cause the opposing party; (3) the
injunction, if issued, would not be adverse to the public interest; and
(4) there is a substantial likelihood [of success] on the merits.
Id. (citations omitted).
Whether to issue a preliminary injunction rests within the court’s sound discretion.
Beltronics USA, Inc. v. Midwest Inventory Distrib., LLC, 562 F.3d 1067, 1070 (10th Cir. 2009).
A preliminary injunction is an extraordinary remedy, so the right to relief must be “clear and
unequivocal.” Id. “In general, ‘a preliminary injunction . . . is the exception rather than the
rule.’” Gen. Motors Corp. v. Urban Gorilla, LLC, 500 F.3d 1222, 1226 (10th Cir. 2007)
(quoting GTE Corp. v. Williams, 731 F.2d 676, 678 (10th Cir. 1984)).
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III.
Irreparable Harm
The court begins with the irreparable harm prong of the preliminary injunction standard.
Finding this requirement unmet, the court denies plaintiff’s motion. “[C]ourts have consistently
noted that ‘[b]ecause a showing of probable irreparable harm is the single most important
prerequisite for the issuance of a preliminary injunction, the moving party must first demonstrate
that such injury is likely before the other requirements for the issuance of an injunction will be
considered.’” Dominion Video Satellite, Inc. v. Echostar Satellite Corp., 356 F.3d 1256, 1260–
61 (10th Cir. 2004) (quoting Reuters Ltd. v. United Press Int’l, Inc., 903 F.2d 904, 907 (2d Cir.
1990)).
Irreparable harm “‘does not readily lend itself to definition.’” Id. at 1262 (quoting
Prairie Band of Potawatomi Indians v. Pierce, 253 F.3d 1234, 1250 (10th Cir. 2001)). And
proving irreparable harm is not “‘an easy burden to fulfill.’” Id. (quoting Greater Yellowstone
Coal. v. Flowers, 321 F.3d 1250, 1258 (10th Cir. 2003)). “To constitute irreparable harm, an
injury must be certain, great, actual ‘and not theoretical.’” Heideman v. S. Salt Lake City, 348
F.3d 1182, 1189 (10th Cir. 2003) (quoting Wisc. Gas Co. v. FERC, 758 F.2d 669, 674 (D.C. Cir.
1985)). “Irreparable harm is not harm that is merely serious or substantial.” Id. (citations and
internal quotation marks omitted).
The court finds that plaintiff has failed to shoulder its burden to establish irreparable
harm if the injunction does not issue. The court first addresses whether a presumption of
irreparable harm is warranted under the Copyright Act and Lanham Act. Finding that no
presumption is warranted, the court then assesses whether the evidence establishes irreparable
harm. The court ultimately concludes it does not.
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A.
No Presumption of Irreparable Harm
Plaintiff contends that—upon a showing of likely success on the merits1—it is entitled to
a presumption of irreparable harm under both the Copyright Act and the Lanham Act. See Doc.
33 at 14–16, 21–22. But, plaintiff acknowledges that the Supreme Court called this presumption
into question in eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006). In eBay, the Supreme
Court rejected the Federal Circuit’s “general rule that courts will issue permanent inunctions
against patent infringement absent exceptional circumstances” under the Patent Act. Id. (citation
omitted). Instead, the Court held that, under well-established principles of equity, plaintiffs must
satisfy the four-factor injunctive relief test. Id. at 392. Thus, a plaintiff suing under the Patent
Act is not entitled to a presumption of irreparable harm.
But, plaintiff argues that eBay does not preclude the court from applying a presumption
of irreparable harm under the Copyright Act. And, plaintiff contends that the court should rely
on a Tenth Circuit precedent decided 10 years before eBay. See Country Kids ‘N City Slicks, Inc.
v. Sheen, 77 F.3d 1280, 1288–89 (10th Cir. 1996) (“Because the financial impact of copyright
infringement is hard to measure and often involves intangible qualities such as customer
goodwill, we join the overwhelming majority of our sister circuits and recognize a presumption
of injury at the preliminary injunction stage once a copyright infringement plaintiff has
demonstrated a likelihood of success on the merits.”).
The court doesn’t agree with plaintiff’s proposition. In eBay, the Court noted that its
interpretation of a court’s ability to grant injunctive relief under the Patent Act was consistent
with the Court’s treatment of injunctions under the Copyright Act. Id. at 392–93 (“And as in our
decision today, this Court has consistently rejected invitations to replace traditional equitable
1
The court assumes, without deciding, that plaintiff could show a likelihood of success on the merits under
both the Copyright Act and Lanham Act.
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considerations with a rule that an injunction automatically follows a determination that a
copyright has been infringed.” (citations omitted)). The court reads eBay to support the
unremarkable conclusion that courts cannot forego the irreparable harm analysis before granting
injunctive relief under the Copyright Act. And, the court also concludes, an independent
evaluation of irreparable injury is consistent with the Lanham Act. Beltronics USA, Inc. v.
Midwest Inventory Distribution LLC, 522 F. Supp. 2d 1318, 1325 (D. Kan. 2007) (“Under the
Lanham Act, the court may grant an injunction ‘according to the principles of equity and upon
such terms as the court may deem reasonable.’” (quoting 15 U.S.C. § 1116(a))). In sum, the
court declines to presume irreparable harm without assessing the underlying facts of this case.
1. Copyright Act
Plaintiff asserts that defendants’ copyright infringement has caused and will cause
plaintiff to sustain irreparable harm. More specifically, plaintiff contends that the materials it
claims a copyright in are “critical to [plaintiff’s] business.” Doc. 78 at 14. These materials,
plaintiff asserts, are a “unique method of advertising its product in a niche market, a method that
has proven successful over [plaintiff’s] existence[.]” Id. Defendants respond by noting that
more than a year has passed since they stopped working with plaintiff as independent
contractors, and plaintiff has not identified even one instance where plaintiff purportedly has
suffered a concrete financial loss because of any actions by defendants.
Defendants’ argument is a persuasive one. Plaintiff presented no evidence at the hearing
that it has lost any customers because of defendants’ conduct; in fact, testimony from one of
plaintiff’s witnesses established that plaintiff has not used the IBB PowerPoint including the
Velocity of Money graphic since this lawsuit began. Thus, the court finds speculative plaintiff’s
assertion that these materials are so critical that plaintiff requires a preliminary injunction.
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Plaintiff also contends that defendants have infringed on its copyrights for more than a
year. But it fails to show how this alleged infringement has affected its sales or business
opportunities. See, e.g., Cy Wakeman, Inc. v. Nicole Price Consulting, LLC, 284 F. Supp. 3d
985, 994 (D. Neb. 2018) (“Wakeman presented no evidence that her book sales or speaking
engagements had been affected by Price’s alleged appropriation of Wakeman’s copyright
materials—and, even if such evidence had been presented, there is no reason that the injury of
lost customers or lost sales could not be remediated with money damages.” (citations omitted)).
And, plaintiff asserts, it faces a “serious risk that defendants’ wrongful conduct will
continue, eroding [plaintiff’s] market share and damaging [plaintiff’s] goodwill.” Doc. 61 at 15
(citing Advisors Excel, LLC v. Zagula Kaye Consulting, LLC, No. 15-4010-DDC-KGS, 2015 WL
736344, at *3 (D. Kan. Feb. 20, 2015) (further citation omitted)). But plaintiff never supports its
conclusory allegations of damage to its goodwill or business reputation. Cf. Digital Ally, Inc. v.
Corum, No. 17-CV-02026-DDC-GLR, 2017 WL 1545671, at *4 (D. Kan. Apr. 28, 2017) (“By
citing examples, the Zagula plaintiff demonstrated that the snowballing threat [i.e., losing
employee through recruitment] was real, ‘not just a theoretical or speculative possibility.’”
(citing Zagula, 2015 WL 736344, at *4) (further citation omitted)). Without a more substantial
showing, the court is unpersuaded that use of these allegedly copyrighted slide materials amounts
to harm that is irreparable.
2. Lanham Act
Plaintiff also contends that it will suffer irreparable harm based on defendants’ Lanham
Act violation. Plaintiff asserts that Mr. Kesler used the testimonials of two of plaintiff’s clients
without their permission. According to plaintiff, these clients will be less likely to refer
colleagues in plaintiff’s target market if plaintiff fails to stop defendants from using their names
8
and likenesses, and these two clients may be less likely to use plaintiff’s products and services in
the future. Docs. 7–8.
The court finds that—in large measure due to defendants’ self-corrective behavior
actions— little risk of future injury exists. See Schrier v. Univ. of Colo., 427 F.3d 1253, 1267
(10th Cir. 2005) (“The purpose of a preliminary injunction is not to remedy past harm but to
protect plaintiffs from irreparable injury that will surely result without their issuance.”). Here,
Mr. Kesler removed both testimonials from his website immediately after reading the affidavits
of these clients. See Greenway Univ., Inc. v. Greenway of Ariz., L.L.C., No. 11-CV-01055CMA-KLM, 2011 WL 2669174, at *6 (D. Colo. July 7, 2011) (“Defendant’s efforts to
disassociate itself with the Greenway name and remove the copied text from the website lessens
the likelihood that Plaintiff will suffer irreparable harm absent an injunction.” (citation omitted)).
The relief plaintiff seeks under the Lanham Act—i.e., removal of the contested testimonials—
already has been achieved, and granting a preliminary injunction thus is unnecessary. The court
is careful to note that defendants’ voluntary cessation does not moot plaintiff’s Lanham Act
claim, nor does it give Mr. Kesler license to use these testimonials. But, based on the current
record, the court finds that plaintiff has not discharged its burden to establish irreparable harm.
IV.
Conclusion
For the foregoing reasons, the court holds that plaintiff has failed to establish that it
would suffer irreparable harm absent an injunction. Because plaintiff has failed to meet its
burden, the court finds it unnecessary to address the other preliminary injunction factors. See
Dominion Video Satellite, 356 F.3d 1266 n.8. And, exercising its discretion, the court denies
plaintiff’s Motion for Preliminary Injunction.
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IT IS THEREFORE ORDERED BY THE COURT THAT plaintiff’s Motion for
Preliminary Injunction (Doc. 3) is denied.
IT IS SO ORDERED.
Dated this 1st day of November, 2018, at Kansas City, Kansas.
s/ Daniel D. Crabtree
Daniel D. Crabtree
United States District Judge
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