Helpful Hound, L.L.C. v. New Orleans Building Corp., et al.

Filing 59

ORDER AND REASONS regarding 37 Motion to Dismiss. For the foregoing reasons, the Court GRANTS IN PART and DENIES IN PART defendants' motion to dismiss. Count Five of the City's complaint is DISMISSED. Signed by Judge Sarah S. Vance on 8/9/2018. (Reference: All cases)(cg)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
HELPFUL HOUND, L.L.C.
VERSUS

CIVIL ACTION
NO. 18-3500
c/w 18-3594

NEW ORLEANS BUILDING
CORPORATION AND CITY OF NEW
ORLEANS

SECTION “R” (2)

ORDER AND REASONS
Before the Court is defendants’ motion to dismiss. 1 For the following
reasons, the motion is granted in part and denied in part.

I.

BACKGROUND
This case arises out of a dispute over use of the name “St. Roch

Market.” 2 The original St. Roch Market is located at 2381 St. Claude Avenue,
on the neutral ground of St. Roch Avenue. It is one of the few remnants of
the once-extensive network of public markets in New Orleans. 3 The City
leased stalls in St. Roch Market to various food vendors from the 1800s until

R. Doc. 37.
For a more extensive discussion of the facts of this case, see the Court’s
Preliminary Injunction Order and Reasons. R. Doc. 58.
3
Case No. 18-3594, R. Doc. 1 at 6 ¶ 17.
1

2

1945.4 From 1945 until the 1990s, the City leased the market to the Lama
family, who first operated a seafood market and po-boy restaurant at the site
before converting the space to a supermarket in 1954. 5 The City then leased
the space to a different tenant, which operated a seafood market, po-boy
restaurant, and Chinese food restaurant until the space was damaged by
Hurricane Katrina in 2005.6 The City later renovated the building. 7
On February 25, 2014, the City turned over management and operation
of St. Roch Market to New Orleans Building Corporation (NOBC), a public
benefit corporation created by the City of New Orleans. 8 NOBC leased the
building to Bayou Secret, LLC on September 29, 2014.9 The lease requires
Bayou Secret to operate “a full service neighborhood restaurant” and “fresh
foods market using multiple vendors in a ‘stalls’ concept.”10 Exhibit D to the
lease provides that Bayou Secret “may utilize existing typeface logo for the
St. Roch Market as is presently posted on the building and replicate this logo
in additional locations of the building.” 11 In February 2018, Bayou Secret

4
5
6
7
8
9
10
11

Id. at 7 ¶ 19.
Id. at 8 ¶ 24.
Id. at 8-9 ¶¶ 27-28.
Id. at 11 ¶ 36.
Id. at 12 ¶ 38; see also id. at 3 ¶ 3.
Id. at 13 ¶ 43.
R. Doc. 21-1 at 5.
Id. at 42.
2

and related entities opened a food hall called “St. Roch Market” in Miami.12
Other locations of “St. Roch Market,” such as in Chicago and Nashville,
Tennessee, are also planned.13
Helpful Hound, L.L.C. (allegedly a member of Bayou Secret) applied
for registration of “St. Roch Market” on April 6, 2017. 14 Although the U.S.
Patent and Trademark Office (PTO) refused registration on the Principal
Register,15 the PTO allowed registration on the Supplemental Register on
September 19, 2017.16

The City and Helpful Hound have since filed

competing applications for registration of “St. Roch Market” on the Principal
Register.17 Both applications remain pending.
On April 3, 2018, Helpful Hound brought a declaratory judgment
action against the City and NOBC. 18 Helpful Hound’s complaint seeks a
declaration of noninfringement and a declaration that the registration of its
service mark was proper. 19 The City and NOBC (collectively, plaintiffs) filed
suit the next day against Bayou Secret; St. Roch F&B, LLC; Helpful Hound;

12
13
14
15
16
17
18
19

Case No. 18-3594, R. Doc. 1 at 18 ¶ 70.
Id. at 20 ¶¶ 78-79.
Case No. 18-3594, R. Doc. 1-5 at 51.
R. Doc. 21-2 at 2.
Case No. 18-3594, R. Doc. 1-5 at 1.
R. Doc. 18-7; R. Doc. 18-13.
R. Doc. 1.
Id. at 6 ¶¶ 37-38.
3

St. Roch Design District, LLC; Will Donaldson; Barre Tanguis; and David
Donaldson (collectively, defendants). 20 According to plaintiffs’ complaint,
Bayou Secret changed its name to St. Roch F&B in June 2016; St. Roch
Design District operates “St. Roch Market” in Miami; Will Donaldson is a
manager of Helpful Hound and St. Roch Design District; Tanguis is a
member of Helpful Hound and a manager of St. Roch Design District; and
David Donaldson is a member of Helpful Hound. 21 Plaintiffs’ complaint
asserts a number of claims under both federal and state law, including
trademark cancellation, trademark infringement, trademark dilution, unfair
competition, breach of trademark license or implied trademark license,
breach of contract, and unauthorized use of assumed name of a
governmental entity. Defendants now move to dismiss plaintiffs’ claims
against St. Roch Design District for lack of personal jurisdiction; plaintiffs’
Lanham Act claims under Federal Rule of Civil Procedure 12(b)(6); and
plaintiffs’ claims against the individual defendants under Rule 12(b)(6).22

20
21
22

Case No. 18-3594, R. Doc. 1.
Id. at 4-5 ¶¶ 5, 8-11.
R. Doc. 37.
4

II.

DISCUSSION
A.

Personal Jurisdiction over St. Roch Design District

Defendants first contest whether St. Roch Design District is subject to
personal jurisdiction in Louisiana.23 Personal jurisdiction is “an essential
element of the jurisdiction of a district court, without which the court is
powerless to proceed to an adjudication.” Ruhrgas AG v. Marathon Oil Co.,
526 U.S. 574, 584 (1999) (internal quotation marks and citation omitted). A
district court may exercise personal jurisdiction over a defendant if “(1) the
long-arm statute of the forum state creates personal jurisdiction over the
defendant; and (2) the exercise of personal jurisdiction is consistent with the
due process guarantees of the United States Constitution.” Revell v. Lidov,
317 F.3d 467, 469 (5th Cir. 2002). Because Louisiana’s long-arm statute, La.
R.S. § 13:3201, extends jurisdiction to the limits of due process, the Court
need only consider whether the exercise of jurisdiction in this case satisfies
federal due process requirements. Dickson Mar. Inc. v. Panalpina, Inc., 179
F.3d 331, 336 (5th Cir. 1999).
Personal jurisdiction may be either general or specific. Seiferth v.
Helicopteros Atuneros, Inc., 472 F.3d 266, 271 (5th Cir. 2006). General

R. Doc. 37-1 at 5. Relatedly, defendants argue that plaintiffs failed to
serve St. Roch Design District’s registered agent for service of process.
Plaintiffs have since properly served the company. See R. Doc. 44.
5
23

jurisdiction over a foreign defendant exists if the defendant’s “affiliations
with the State are so ‘continuous and systematic’ as to render them
essentially at home in the forum State.” Goodyear Dunlop Tires Operations,
S.A. v. Brown, 564 U.S. 915, 919 (2011). The Fifth Circuit has articulated a
three-step inquiry to determine whether specific jurisdiction exists. Seiferth,
472 F.3d at 271. First, the plaintiff must show that “the defendant has
minimum contacts with the forum state, i.e., . . . it purposely directed its
activities toward the forum state or purposefully availed itself of the
privileges of conducting activities there.” Id. Second, the plaintiff must show
that his “cause of action arises out of or results from the defendant’s forumrelated contacts.” Id. If the plaintiff makes these showings, “the burden
shifts to the defendant to defeat jurisdiction by showing that its exercise
would be unfair or unreasonable.” Id.
When the district court rules on a motion to dismiss for lack of personal
jurisdiction without an evidentiary hearing, the “uncontroverted allegations
in the plaintiff’s complaint must be taken as true, and conflicts between the
facts contained in the parties’ affidavits must be resolved in the plaintiff’s
favor.” Johnston v. Multidata Sys. Int’l Corp., 523 F.3d 602, 609 (5th Cir.
2008). But the district court is not required “to credit conclusory allegations,

6

even if uncontroverted.” Panda Brandywine Corp. v. Potomac Elec. Power
Co., 253 F.3d 865, 869 (5th Cir. 2001).
St. Roch Design District is a limited liability company registered in
Florida. 24

Its principal place of business is also located in Florida. 25

Thus, there is no showing that St. Roch Design District is subject to general
personal jurisdiction in Louisiana. See Monkton Ins. Servs., Ltd. v. Ritter,
768 F.3d 429, 432 (5th Cir. 2014) (noting that for a corporation, “[i]t is . . .
incredibly difficult to establish general jurisdiction in a forum other than the
place of incorporation or principal place of business”).
Plaintiffs argue that St. Roch Design District is subject to specific
jurisdiction in this state because its members and managers, as well as its
mailing address, are located in New Orleans.26 “In order for a court to
exercise specific jurisdiction over a claim, there must be an ‘affiliation
between the forum and the underlying controversy, principally, [an] activity
or an occurrence that takes place in the forum State.’” Bristol-Myers Squibb
Co. v. Superior Court, 137 S. Ct. 1773, 1781 (2017) (alteration in original)
(quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915,
919 (2011)). A defendant’s business activities in a state out of which the

24
25
26

See R. Doc. 37-2.
Case No. 18-3594, R. Doc. 1 at 4 ¶ 8.
R. Doc. 45 at 9.
7

dispute arises may provide the necessary connection. When a defendant
avails itself of the privilege of conducting business in a state by deliberately
engaging in significant activities there, its “activities are shielded by the
benefits and protections of the forum’s laws [and] it is presumptively not
unreasonable to require [it] to submit to the burdens of litigation in that
forum as well” for disputes arising out of its activities there. Burger King
Corp. v. Rudzewicz, 471 U.S. 462, 475-76 (1985) (internal quotation marks
and citations omitted). In Rudzewicz, the Supreme Court addressed whether
a Florida federal court had specific jurisdiction over a contract claim against
a Michigan-based Burger King franchise. The Court held that there was
specific jurisdiction in light of the franchisee’s “voluntary acceptance of the
long-term and exacting regulation of his business from Burger King’s Miami
headquarters.” Id. at 480. The Court also emphasized that the Miami
headquarters of the franchisor “made the key negotiating decisions out of
which the instant litigation arose.” Id. at 481. The Court concluded that “the
quality and nature of [the franchisee’s] relationship to the company in
Florida can in no sense be viewed as random, fortuitous, or attenuated.” Id.
at 480 (internal quotation marks and citations omitted).
Plaintiffs’ allegations suffice to show minimum contacts between St.
Roch Design District and Louisiana. According to plaintiffs’ complaint, “St.
8

Roch Design District is the entity that, through its members and managers
located in Orleans Parish, Louisiana, operates St. Roch Market Miami.”27
Plaintiffs allege that Will Donaldson and Tanguis are St. Roch Design
District’s managers. 28 Both individuals allegedly reside in Louisiana, where
they also manage the original St. Roch Market. 29 Moreover, the company’s
address on file with the Florida Division of Corporations is 2381 St. Claude
Avenue, New Orleans—the location of the original St. Roch Market.30 These
facts suggest that Donaldson and Tanguis control the operations of St. Roch
Design District—including the continued use of the name “St. Roch
Market”—from Louisiana. See Rudzewicz, 471 U.S. at 481. Additionally, the
key decision to use the name “St. Roch Market,” which gave rise to this
litigation, arose out of these forum-related contacts. See Seiferth, 472 F.3d
at 271. Plaintiffs have therefore alleged sufficient facts to support personal
jurisdiction over their claims against St. Roch Design District.
Defendants do not argue, and the Court does not find, that the exercise
of personal jurisdiction “would ‘offend traditional notions of fair play and
substantial justice.’” Luv N’ care, Ltd. v. Insta-Mix, Inc., 438 F.3d 465, 473

27
28
29
30

Case No. 18-3594, R. Doc. 1 at 4 ¶ 8.
Id. ¶¶ 9-10.
Id.
R. Doc. 37-2.
9

(5th Cir. 2006) (quoting Int’l Shoe Co. v. Washington, 326 U.S. 310, 316
(1945)). Five factors bear on this inquiry: “(1) the burden on the nonresident
defendant, (2) the forum state’s interests, (3) the plaintiff’s interest in
securing relief, (4) the interest of the interstate judicial system in the efficient
administration of justice, and (5) the shared interest of the several states in
furthering fundamental social policies.” Id. The burden on St. Roch Design
District is low in light of its managers’ residing in Louisiana, and Louisiana
has a significant interest in protecting the intellectual property of its
municipal entities. See, e.g., La. R.S. § 51:281.2(A) (“[N]o person shall
transact any business under an assumed name which contains the name of
any . . . public facility without the written consent of the governing authority
of the governmental entity which owns or operates the . . . public facility.”).
Additionally, the efficient administration of justice weighs in favor of keeping
St. Roch Design District in this lawsuit, rather than requiring plaintiffs to file
a separate suit in Florida. The other factors are at most neutral. Together,
these factors do not suggest that the exercise of personal jurisdiction over
plaintiffs’ claims against St. Roch Design District would be unfair or
unreasonable.

10

B.

Lanham Act Claims

Defendants next argue that plaintiffs fail to state a claim under the
Lanham Act.31 See 15 U.S.C. §§ 1051, et seq. To survive a Rule 12(b)(6)
motion to dismiss, a plaintiff must plead enough facts to “state a claim to
relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 547 (2007)). A
claim is facially plausible “when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Id. at 678. A court must accept all well-pleaded
facts as true and must draw all reasonable inferences in favor of the plaintiff.
Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 239, 244 (5th Cir. 2009). But
the Court is not bound to accept as true legal conclusions couched as factual
allegations. Iqbal, 556 U.S. at 678.
A legally sufficient complaint must establish more than a “sheer
possibility” that the plaintiff’s claim is true. Id. It need not contain detailed
factual allegations, but it must go beyond labels, legal conclusions, or
formulaic recitations of the elements of a cause of action. Twombly, 550 U.S.
at 555. In other words, the face of the complaint must contain enough factual
matter to raise a reasonable expectation that discovery will reveal evidence

31

R. Doc. 37-1 at 6.
11

of each element of the plaintiff’s claim. Lormand, 565 F.3d at 257. If there
are insufficient factual allegations to raise a right to relief above the
speculative level, Twombly, 550 U.S. at 555, or if it is apparent from the face
of the complaint that there is an insuperable bar to relief, Jones v. Bock, 549
U.S. 199, 215 (2007); Carbe v. Lappin, 492 F.3d 325, 328 n.9 (5th Cir. 2007),
the claim must be dismissed.
Plaintiffs’ complaint contains several Lanham Act claims. Count Three
seeks cancellation of Helpful Hound’s registration on the Supplemental
Register because of fraud.32 See 15 U.S.C. §§ 1092(2), 1119. Plaintiffs allege
that Helpful Hound falsely represented that “St. Roch Market” had not been
used in commerce before 2015.33 Defendants seek dismissal of this count
based on the affirmative defense of good faith. 34 See Maids to Order of Ohio,
Inc. v. Maid-to-Order, Inc., 78 U.S.P.Q.2d 1899 (T.T.A.B. 2006) (“Fraud . . .
will not lie if it can be proven that the statement, though false, was made with
a reasonable and honest belief that it was true or that the false statement is
not material to the issuance or maintenance of the registration.” (citation
omitted)). Dismissal based on an affirmative defense is proper only when
the “defense appears on the face of the pleadings.” Miller v. BAC Home

32
33
34

Case No. 18-3594, R. Doc. 1 at 27.
Id.; see also id. at 17 ¶¶ 64-65.
R. Doc. 37-1 at 18.
12

Loans Servicing, L.P., 726 F.3d 717, 726 (5th Cir. 2013) (quoting Kansa
Reins. Co. v. Cong. Mortg. Corp. of Tex., 20 F.3d 1362, 1366 (5th Cir. 1994)).
In support of their good faith defense, defendants point only to the lack of
any language in the lease restricting Bayou Secret’s use of the mark. But this
fact does not bear on whether defendants in good faith represented that the
mark had not been used in commerce before 2015. Thus, defendants’ good
faith defense does not appear on the face of the pleadings.
Count Four asserts trademark infringement under 15 U.S.C. § 1114(1). 35
For the reasons discussed in the Court’s Preliminary Injunction Order and
Reasons, plaintiffs state a claim for trademark infringement. Count Four
also asserts a claim for false designation of origin under § 1125(a). 36
Defendants argue that plaintiffs fail to allege facts supporting a likelihood of
confusion between plaintiffs’ and defendants’ marks.37

Again, for the

reasons discussed in the Court’s earlier order, plaintiffs have alleged
sufficient facts in support of a likelihood of confusion.
Count Five alleges trademark dilution under § 1125(c). 38

Section

1125(c) protects famous marks. “[A] mark is famous if it is widely recognized

35
36
37
38

Case No. 18-3594, R. Doc. 1 at 28.
Id. at 30.
R. Doc. 37-1 at 20.
Case No. 18-3594, R. Doc. 1 at 31.
13

by the general consuming public of the United States as a designation of
source of the goods or services of the mark’s owner.” § 1125(c)(2)(A). Several
factors bear on whether a mark is widely recognized, including:
(i)

The duration, extent, and geographic reach of advertising
and publicity of the mark, whether advertised or publicized
by the owner or third parties.

(ii)

The amount, volume, and geographic extent of sales of
goods or services offered under the mark.

(iii) The extent of actual recognition of the mark.
(iv)

Whether the mark was registered . . . on the principal
register.

Id. Plaintiffs do not allege any advertising of St. Roch Market. Nor do they
allege the amount, volume, or geographic extent of sales. The only allegation
bearing on the mark’s recognition is that the mark is “famous and wellknown throughout the New Orleans area.” 39 This conclusory allegation does
not suffice to raise the plausible inference that the mark is “is widely
recognized by the general consuming public of the United States.” Id. Count
Five of plaintiffs’ complaint therefore fails to state a trademark dilution
claim.
Defendants also assert two affirmative defenses that do not appear to
be tied to any particular count: detrimental reliance and estoppel. 40

39
40

Case No. 18-3594, R. Doc. 1 at 31 ¶ 140.
R. Doc. 37-1 at 18-19.
14

Detrimental reliance is a stand-alone claim under Louisiana law. See La. Civ.
Code art. 1967; In re Ark-La-Tex Timber Co., 482 F.3d 319, 334 (5th Cir.
2007). But defendants cite no authority recognizing detrimental reliance as
an affirmative defense to Lanham Act claims.
Estoppel, also known as acquiescence, is a recognized defense in the
trademark infringement context. See, e.g., Conan Props., Inc. v. Conans
Pizza, Inc., 752 F.2d 145, 153 (5th Cir. 1985); A.C. Aukerman Co. v. R.L.
Chaides Constr. Co., 960 F.2d 1020, 1042 (Fed. Cir. 1992) (en banc),
abrogated on other grounds by SCA Hygiene Prod. Aktiebolag v. First
Quality Baby Prods., LLC, 137 S. Ct. 954 (2017). There are three elements
of estoppel by acquiescence: (1) the plaintiff made assurances to the
defendant that it would not enforce its trademark rights; (2) the defendant
relied on these assurances; and (3) enforcement of the plaintiff’s rights would
substantially prejudice the defendant. See Conan Props., 752 F.2d at 153;
A.C. Aukerman, 960 F.2d at 1041-43; Minn. Mining & Mfg. Co. v. Beautone
Specialties, Co., 82 F. Supp. 2d 997, 1005 (D. Minn. 2000).
Defendants argue that plaintiffs misled them into believing that the
City would not enforce its trademark rights in two ways. First, the City
learned about defendants’ merchandise bearing the name “St. Roch Market”
in 2015, and Helpful Hound filed its first trademark application in April
15

2017, but plaintiffs did not send a cease-and-desist letter until January 2018.
This argument is not supported by the pleadings. Plaintiffs’ complaint
asserts that NOBC CEO Cynthia Connick expressed “concern about the use
of the St. Roch Market name” on merchandise sold by defendants “[w]hen
NOBC learned that the merchandise was being sold.” 41 The complaint
further alleges that plaintiffs learned about Helpful Hound’s trademark
application and plans to open the Miami food hall in December 2017,42 only
one month before sending the cease-and-desist letter. These allegations in
no way suggest that the City actively consented to defendants’ infringing use
of the mark. See Reservoir, Inc. v. Truesdell, 1 F. Supp. 3d 598, 613 (S.D.
Tex. 2014) (“Acquiescence involves active consent by the senior user.”)
(citing Sara Lee Corp. v. Kayser Roth Corp., 81 F.3d 455, 462 (4th Cir.
1996)).

Defendants also argue that the City has failed to enforce its

trademark rights against an earlier tenant of St. Roch Market. But this
allegation does not appear in the pleadings. Thus, defendants are not
entitled to dismissal based on their estoppel defense.

41
42

Case No. 18-3594, R. Doc. 1 at 16 ¶ 60.
Id. at 22 ¶ 83.
16

C.

Individual Defendants

Defendants’ final argument is that plaintiffs’ claims against the
individual defendants—Will Donaldson, Tanguis, and David Donaldson—
should be dismissed. 43

Defendants cite Louisiana Revised Statutes

§ 12:1320(B), which generally shields members and managers of a limited
liability company from the company’s liabilities. The statute includes an
exception for “any breach of professional duty or other negligent or wrongful
act by such person.” La. R.S. § 12:1320(D). The Louisiana Supreme Court
has interpreted this exception as covering traditional torts. See Ogea v.
Merritt, 130 So. 3d 888, 901 (La. 2013) (“[I]f a traditional tort has been
committed against any cognizable victim(s), that situation weighs in favor of
the ‘negligent or wrongful act’ exception and in favor of allowing the victim(s)
to recover against the individual tortfeasor(s).”). Thus, if a defendant’s
actions breached a duty he personally owed to a plaintiff and thereby caused
injury, the defendant is not immune from liability merely because he acted
as a member or manager of a limited liability company. See id. Trademark
infringement, unfair competition, and related torts fall under this wrongful
act exception. See, e.g., Bd. of Comm’rs of Port of New Orleans v. Stern, No.
15-6527, 2016 WL 6833632, at *4 (E.D. La. Nov. 21, 2016); Audubon Real

43

R. Doc. 37-1 at 21.
17

Estate Assocs., L.L.C. v. Audubon Realty, L.L.C., Civil Action No. 15-115,
2016 WL 740467, at *3-5 (M.D. La. Feb. 24, 2016). Therefore, plaintiffs may
maintain their tort claims against the individual defendants.44

III. CONCLUSION
For the foregoing reasons, the Court GRANTS IN PART and DENIES
IN PART defendants’ motion to dismiss. Count Five of the City’s complaint
is DISMISSED.

New Orleans, Louisiana, this _____ day of August, 2018.
_____________________
SARAH S. VANCE
UNITED STATES DISTRICT JUDGE

Plaintiffs do not assert their contract claims—Counts Ten and Eleven—
against the individual defendants. Case No. 18-3594, R. Doc. 1 at 36-40.
18
44