Sustainable Low Maintenance Grass, LLC v. Cutting Edge Solutions, LLC

Filing 25

Judge Indira Talwani: MEMORANDUM AND ORDER entered granting 11 Motion to Dismiss; finding as moot 11 Motion to Change Venue. (MacDonald, Gail)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
SUSTAINABLE LOW MAINTENANCE
GRASS, LLC,
Plaintiff,
v.
CUTTING EDGE SOLUTIONS, LLC,
Defendant.

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Civil Action No. 14-cv-11894-IT

MEMORANDUM & ORDER
September 15, 2014
TALWANI, D.J.
I.

Introduction
This action for declaratory relief filed by Plaintiff Sustainable Low Maintenance Grass,

LLC (“Sustainable”) against Defendant Cutting Edge Solutions, LLC (“Cutting Edge”) arises out
of Cutting Edge’s claim that Sustainable is infringing its trademark. Before the court is Cutting
Edge’s Motion to Dismiss Complaint, or, in the Alternative, to Transfer Venue [#11], in which it
asks the court to exercise its discretion under the Declaratory Judgment Act, 28 U.S.C. § 2201, to
dismiss this action.1 For the reasons set forth below, this motion is ALLOWED.

1

In its motion, Cutting Edge also argues that the court should dismiss, or alternatively transfer
this action to the Northern District of California, because (1) Sustainable lacked capacity to sue
at the time this action was filed, and (2) change of venue is warranted under 28 U.S.C. § 1404(a).
Because the court finds it proper to exercise its discretion to dismiss this case under the
Declaratory Judgment Act, it need not reach these arguments.

II.

Facts2
On March 17, 2014, Cutting Edge, by and through its attorney, Michelle D. Kahn, sent a

cease-and-desist letter to Sustainable, asserting that Sustainable’s use of the designation “Cutting
Edge” in connection with Sustainable’s fertilizers, herbicides, and related plant and garden care
products (the “SLMG Mark”) infringed on Cutting Edge’s trademark CUTTING EDGE
SOLUTIONS used in connection with fertilizers for agricultural use and related products (the
“CES Mark”). Decl. Kenneth R. Berman Opp’n Defs.’ Mot. Dismiss Compl., Altern. Transfer
Venue Ex. A [hereinafter Berman Decl.]. In its letter, Cutting Edge also claimed that
Sustainable’s use of the CES Mark created a false designation of origin in violation of federal
and state unfair competition laws. Id. Cutting Edge’s letter stated further that Cutting Edge was
“prepared to seek legal remedies to the full extent permitted by law, [but that] it would prefer to
resolve this matter amicably,” and that “[f]urther action may be averted if” Sustainable, within
ten days, agreed in writing to stop using the CES Mark and abandon Sustainable’s application to
use the designation, which was currently pending before the United States Patent and Trademark
Office. Id.
Ten days later, on March 27, 2014, Kenneth Berman, an attorney for Sustainable, emailed
Ms. Kahn, asking for an extension of time to respond until “sometime during the week of April
6.” Id. Ex. B. In his e-mail, Mr. Berman stated that, like Ms. Kahn, he hoped that the parties
could resolve this matter amicably. Id. Ms. Kahn granted this request. Id.
2

The following facts are derived from the complaint and the parties’ affidavits and declarations
submitted in connection with this motion. See Biogen, Inc. v. Schering AG, 954 F.Supp. 391,
395 (D. Mass. 1996) (determining whether to exercise its discretion under the Declaratory
Judgment Act to allow the case to proceed by looking beyond the pleadings to the affidavits).
Because the issues analyzed here arise in the context of a motion to dismiss, the court construes
these facts in the light most favorable to the non-movant, see Pettengill v. Curtis, 584 F. Supp. 2d
348, 362 (D. Mass. 2008) (quoting Rodríguez-Ortiz v. Margo Caribe, Inc., 490 F.3d 92, 96 (1st
Cir. 2007)).
2

On April 11, 2014, Mr. Berman emailed Ms. Kahn, informing her that the evidence that
Sustainable had reviewed had not persuaded it that Cutting Edge’s claims were valid. Id. Ex. D.
Mr. Berman noted that Cutting Edge had filed an application to register the CES Mark in August
2012, more than one year after Sustainable had filed an application to register its SLMG Mark in
July 2011, and that Cutting Edge’s application was filed on the basis of intent-to-use. Id.; see id.
Ex. C. Mr. Berman noted that Cutting Edge’s filing of an Amendment to Allege Use cited a first
date of use of January 2001 and asserted that Sustainable’s investigation did not yield any
evidence to support this fact. Id. Ex. D. Mr. Berman wrote finally that “[w]e believe this matter
should and can be resolved to the parties’ mutual satisfaction without litigation” and that “[w]e
hope you and Cutting Edge agree.” Id.
On April 15, 2014, Ms. Kahn replied to Mr. Berman’s e-mail, asking Mr. Berman what
evidence he would find sufficiently compelling and asserting that “the Amendment to Allege
Use under penalty of perjury filed with the USPTO is evidence.” Id. Ms. Kahn further stated
that she would not support her client in perpetrating fraud on the USPTO, and that, “as we are
not yet in litigation, we do not wish to engage in informal discovery so please let us know what
sort of proof you would be moved by.” Id.
On April 17, 2014, Ms. Kahn emailed Mr. Berman, asking if she could expect a reply to
her April 15, 2014 e-mail or if Cutting Edge should simply send Mr. Berman evidence of its use
of the CES Mark. Id. Ex. E. Mr. Berman responded to Ms. Kahn’s e-mail that day, inviting her
to send Sustainable evidence that would verify Cutting Edge’s use of the CES Mark and
establish the time period and geographic location for which the CES Mark was used, Id. The
next day, on April 18, 2014, Sustainable filed this action for a declaratory judgment, but, as
described below, did not immediately serve it upon Cutting Edge. Id. ¶ 13-14.

3

On April 21, 2014, Ms. Kahn responded to Mr. Berman’s April 17, 2014 e-mail,
attaching evidence that Cutting Edge contended reflected its use of the CES Mark commencing
in 2001 and continuing to the present. Id. Ex. F. Mr. Berman responded to this e-mail on April
23, 2014, asserting that the evidence provided by Cutting Edge was not evidence of trademark
use and asking if it made more sense for the parties to be discussing co-existence. Id. On that
same day, Ms. Kahn responded by stating that Cutting Edge does not need to engage in prelitigation discovery and that the packaging label provided to Sustainable evidenced Cutting
Edge’s use of the CES Mark. Id. Ex. G. Ms. Kahn further stated that if Sustainable “wishes to
remain in denial” of Cutting Edge’s seniority in the CES Mark, it will have to resolve the conflict
“in a court of competent jurisdiction should that become necessary.” Id.
Thereafter, the parties unsuccessfully continued their attempts to resolve the issue
without litigation. On June 16, 2014, Cutting Edge filed suit against Sustainable and its business
partner, Turf and Landscape Solutions, LLC, in the Northern District of California, seeking
injunctive and monetary relief for unfair competition, common law trademark infringement,
cancellation of Sustainable’s federal trademark registration, and cybersquatting. Aff. Michelle
D. Kahn Supp. Mot. Dismiss, Altern. Transfer Venue ¶ 24 [hereinafter Kahn Aff.]. Two days
later, on June 18, 2014, Sustainable served Cutting Edge with the complaint filed in this court.3
III.

Discussion

A.

Declaratory Judgment Act
(1)

Law

The Declaratory Judgment Act provides, in relevant part:
In a case of actual controversy within its jurisdiction . . . any court of the United
States, upon the filing of an appropriate pleading, may declare the rights and other
3

Any additional facts relevant to the court’s analysis will be included below.
4

legal relations of any interested party seeking such declaration, whether or not
further relief is or could be sought. Any such declaration shall have the force and
effect of a final judgment or decree and shall be reviewable as such.
28 U.S.C. § 2201. Under the Act, “a court ‘may’ provide declaratory relief, but the decision to
award such relief rests within the court’s discretion.” EMC Corp. v. Roland, 916 F. Supp. 51, 53
(D. Mass. 1996) (citing El Dia, Inc. v. Hernandez Colon, 963 F.2d 488, 493 (1st Cir. 1992)). A
district court’s discretion in declining to enter relief is broad. See Wilton v. Seven Falls Co., 515
U.S. 277 (1995) (“The statute’s textual commitment to discretion, and the breadth of leeway we
have always understood it to suggest, distinguish the declaratory judgment context from other
areas of the law in which concepts of discretion surface.”).
In deciding whether to dismiss an action because a similar one is pending in a different
court, “the first-filed suit is ordinarily given priority, but in particular cases there may be good
reasons for making an exception to this general rule.” Roland, 916 F. Supp. at 53. “[T]he firstto-file rule is not to be applied in a mechanical way,” EMC Corp. v. Parallel Iron, LLC, 914 F.
Supp. 2d 125, 127 (D. Mass. 2012), and exceptions “are not rare, and are made when justice or
expediency requires,” Biogen, 954 F. Supp. at 398. One widely recognized exception to the
first-filed rule is where “there are ‘special circumstances’ justifying a transfer, such as where a
party engages in misleading conduct to win a ‘race to the courthouse.’” Parallel Iron, 914 F.
Supp. 2d at 127.
“Courts take a dim view of declaratory plaintiffs who file their suits mere days or weeks
before the coercive suits filed by a ‘natural plaintiff’ and who seem to have done so for the
purpose of acquiring a favorable forum.” AmSouth Bank v. Dale, 386 F.3d 763, 788 (6th Cir.
2004). As a policy matter, courts do not want to “deter settlement negotiations and encourage
races to the courthouse, as potential plaintiffs must file before approaching defendants for

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settlement negotiations, under pain of a declaratory suit.” Id.; see also Davox Corp. v. Digital
Systems Int’l, Inc., 846 F. Supp. 144, 148 (D. Mass. 1993) (“Here, Davox should not be
permitted to take advantage of the fact that DSI responsibly deferred filing potentially protracted
and expensive litigation and, indeed, was perhaps misled into believing it would not be
prejudiced by doing so by Davox's responses to its letters.”).
Moreover, “transfer may be appropriate where a party has won the race to the courthouse
by misleading his opponent into staying his hand in anticipation of negotiation” and “[t]he firstfiled suit is particularly suspect where a party . . . has brought a declaratory judgment action for
non-infringement.” Veryfine Products, Inc. v. Phlo Corp., 124 F. Supp.2d 16, 22 (D. Mass.
2000); cf. Biogen, 954 F. Supp. 391 (D. Mass. 1996) (allowing plaintiff’s declaratory judgment
action where it had a proper basis for bringing suit at the time it filed its complaint).
(2)

Analysis

The instant circumstances warrant applying an exception to the first-filed rule. Cutting
Edge’s cease-and-desist letter in March 2014 advised Sustainable of Cutting Edge’s infringement
claims and its interest in resolving the matter out-of-court. See Berman Decl. Ex. A. It also
expressed its desire to act promptly by setting a ten-day deadline for Sustainable to respond in
order to avert further action. Id. Sustainable stretched this period by waiting until the tenth day
to request an extension of time until “sometime during the week of April 6” to look into the
matter and by waiting until Friday, April 11, 2014—the last day of that week—to respond to
Cutting Edge’s claims and ask that Cutting Edge provide evidence of its alleged use. Id. Ex. B,
D. At the same time, Sustainable represented that it would like to resolve the issue without
litigation, i.e., that it would like to negotiate the issues out-of-court, and that it “intend[ed] to
reciprocate” to Cutting Edge the same courtesy that Cutting Edge had shown it in extending the

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ten-day deadline. Id. Ex. D.
On April 15, 2014, Ms. Kahn replied to Sustainable’s response, in which Ms. Kahn asked
Mr. Berman what evidence Sustainable would find sufficiently compelling to substantiate
Cutting Edge’s position, asserted that the Amendment to Allege Use constituted evidence, and
expressed Cutting Edge’s desire to not engage in informal discovery. Id. Mr. Berman contends
that he found Ms. Kahn’s stance troubling, id. ¶ 11, but he did not advise her of this view.
Instead, Sustainable abruptly filed the instant action in this court, its preferred forum. See id. ¶
13.
In its opposition memorandum and at oral argument, Sustainable relies on Biogen to
support its argument that Cutting Edge has not established special circumstances to except
application of the first-filed rule. Biogen involved a patent dispute between two pharmaceutical
companies, Biogen, Inc. and Schering Aktiengesellschaft (“Schering AG”). 954 F. Supp. at
392–94. In December 1994, Schering AG retained the rights to a patent which, according to the
company, allowed it to block Biogen from making its version of beta interferon for the treatment
of multiple sclerosis. Id. at 393. Over the next 12-16 months, the dispute played out before the
United Stated Food and Drug Administration (FDA) while the parties discussed cross-licensing
of their respective products and shared access to clinical data. Id. at 393–94. On April 26, 1996,
Schering AG’s subsidiary, Berlex Laboratories, Inc., sued the FDA to enjoin approval of
Biogen’s product. Id. at 394. On May 3, 1996, Biogen filed an action for a declaratory
judgment. Id.
The present case differs markedly from Biogen. First, unlike the circumstances in
Biogen, Sustainable’s representations that the parties would engage in a negotiation in an attempt
to resolve the matter without litigation caused Cutting Edge to forego the filing of its lawsuit

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pending the outcome of the negotiation. At no time prior to filing this action did Sustainable
inform Cutting Edge that it had been troubled by Ms. Kahn’s April 15, 2014 e-mail or that it saw
litigation a likely outcome of the discussions. Instead, Sustainable allowed Cutting Edge to
believe that they were engaged in an exchange of information that would resolve the matter to
the parties’ mutual satisfaction without litigation. Second, this case does not involve a longrunning, public dispute akin to the circumstances in Biogen, during which the parties’ rights visà-vis each other remained in a state of limbo. Rather, Cutting Edge responsibly deferred filing
litigation before approaching Sustainable and gave Sustainable ten days to cease using the
SLMG Mark and abandon its application to use the designation in order to avert further action by
Cutting Edge, see Berman Decl. Ex. A, while Sustainable rushed to file its complaint a mere
seven days after its first substantive response to Cutting Edge’s letter, a response in which
Sustainable represented its desire to resolve the matter without litigation, id. Ex. D.
In light of these facts, maintaining the instant action would cut against promoting
settlement negotiations and avoiding races to the courthouse. Even when construing all the facts
in the light most favorable to Sustainable, it would be inequitable to reward Sustainable by
maintaining this action in its preferred forum. See Davox Corp., 846 F. Supp. at 148–49; cf.
Holmes Group, Inc. v. Hamilton Beach/Proctor Silex, Inc., 249 F. Supp. 2d 12, 16–17 (D. Mass.
2002) (maintaining declaratory judgment action where plaintiff “made no promise or implication
that it would enter into negotiations with [the defendant]”).4

4

As noted above, Cutting Edge also challenges Sustainable’s capacity to sue under Federal Rule
of Civil Procedure 17(b) and Massachusetts law. See Mem. Reasons Supp. Def. Mot. Dismiss
Compl., Altern. Transfer Venue 9-13. At oral argument, Sustainable’s attorneys represented to
the court that Cutting Edge notified them at the meet and confer required by District of
Massachusetts Local Rule 7.1 that Cutting Edge was going to file the instant motion and that
Sustainable was not registered to do business in Massachusetts. Because the court finds that
maintenance of this action in Sustainable’s preferred forum is inequitable and exercises its
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IV.

Conclusion
For the foregoing reasons, Cutting Edge’s Motion to Dismiss Complaint, or, in the

Alternative, to Transfer Venue [#11] is ALLOWED. This case is CLOSED.
IT IS SO ORDERED.
Date: September 15, 2014

/s/ Indira Talwani
United States District Judge

discretion under the Declaratory Judgment Act to dismiss the case, the court need not decide
whether Sustainable’s failure to register before filing this complaint should impact the first-filed
rule.
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