Bar's Products Inc v. Bars Products International Inc.

Filing 290

ORDER Regarding Various Motions; Granting 270 and Granting in Part and Denying in Part 280 Motion to Dismiss. Signed by District Judge Denise Page Hood. (LSau)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
BAR’S PRODUCTS, INC.,
Plaintiff/Counter-Defendant,
Case No. 10-14321
v.
HONORABLE DENISE PAGE HOOD
BAR’S PRODUCTS INT’L, INC.,
Defendant/Counter-Plaintiff.
___________________________________/
ORDER REGARDING VARIOUS MOTIONS
I.

BACKGROUND
This matter is on remand from the Sixth Circuit Court of Appeals on the sole

issue of the filing of Plaintiff Bar’s Products, Inc.’s (“Bar’s) Third Amended
Complaint. The Court held a status conference with the parties on February 21, 2017
where the hearing on pending motions were scheduled for this date.
The history of this litigation is long. On October 27, 2010, Plaintiff Bar’s
Products, Inc. (“Bar’s”) filed a Complaint against Bar’s Products International, Ltd.
(“BPI”) alleging: Trademark Infringement in violation of the Lanham Act, 15 U.S.C.
§ 1114 (Count I); Trademark Infringement in Violation of the Lanham Act, 15 U.S.C.
§ 1125(a) (Count II); in the alternative, Request for Declaratory Relief for Impending
Infringement in Violation of the Lanham Act, 15 U.S.C. §§ 114, 1125(a) (Count III);

and Common Law Unfair Competition (Count IV). Bar’s filed a First Amended
Complaint on March 31, 2011 and filed a Motion to file a Second Amended
Complaint on October 13, 2011, which the Court granted in part in a March 9, 2012
Order. The claims in Bar’s Second Amended Complaint as to the Lanham Act claims
in Counts I and II against Defendants BPI and Arthur Omoto, were eventually
dismissed by the Court.
On June 7, 2011, a second case was transferred to this District from the United
States District Court, Central District of California filed by Bar’s Products
International, Ltd. and Bar’s, Inc., a Nevada corporation, against Bar’s Products, Inc.,
a Michigan corporation (Plaintiff in the first action). This case alleged six counts:
Breach of Contract (Count I); Declaration of Non-Infringement under the Lanham
Act, 15 U.S.C. § 1114 (Count II); Declaration of Non-Liability under the Lanham Act,
15 U.S.C. § 15 U.S.C. § 1125(a); Declaration of No Liability for Common Law Unfair
Competition under Michigan law (Count IV); Common Law Unfair Competition
under California law (Count V); and, Unfair Competition under California Business
and Professional Code (Count VI). On April 11, 2013, the Court denied Bar’s
Products’ Motion for Partial Summary Judgment as to Counts I, II and III of the
Counterclaim.
After a Jury Trial in this matter, the jury rendered a verdict in favor BPI as to
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BPI’s Counterclaim, in the amount of $2,535,044.00 ($1,560,195 for the breach of
contract claim and $974,849 for unfair competition). Bar’s appealed the jury verdict
and the Court’s dismissal of its claims. On November 2, 2016, the Sixth Circuit
issued its opinion, affirmed the judgment in favor of BPI that denied Bar’s postverdict renewed motion in the breach of contract claim and reversed the judgment on
the denial of Bar’s post-verdict renewed motion on the unfair competition claim that
there was no separate damages to support BPI’s unfair competition claim. The Sixth
Circuit also reversed the Court’s denial of Bar’s motion for leave to file an amended
trademark claim and remanding the matter for further proceedings.
Before the Court on remand is BPI’s Request to Enter Final Judgment on the
remaining claim in its Counterclaim so that it may be able to enforce the Judgment.
(Doc. No. 269) Bar’s filed a Motion to Implement the Mandate that it be allowed to
file its Third Amended Complaint, with no objections from BPI. (Doc. No. 270)
Bar’s filed its Third Amended Complaint April 6, 2017. (Doc. No. 279) It is noted
that BPI filed a new Counterclaim on March 10, 2017. (Doc. No. 275) Bar’s also filed
a Motion to Dismiss BPI’s Counterclaim as to Count II (Breach of Contract) and
Count III (Tortious Interference of Business Relationships). (Doc. No. 280) Briefs
have been filed and hearings were held on the motions.

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II.

BPI Request to Enter Judgment on the remaining claim
in its Counterclaim (Doc. No. 270)
BPI seeks to be able to collect on its breach of contract claim judgment pursuant

to the jury verdict and affirmed by the Sixth Circuit. BPI argues that the counterclaim
is a separate and distinct issue that Bar’s claims in its Third Amended Complaint
under the Lanham Act.
Bar’s argues that because there are remaining claims left, specifically on
remand as to Bar’s Third Amended Complaint, final judgment on BPI’s counterclaim
should await until the resolution of the remanded matters. Bar’s also argues that it has
posted an interest bond for almost twice the full amount of the breach of contract
claim. Bar’s claims that a stay on the enforcement of the judgment should be granted
because it may well have a set off claim under Bar’s Third Amended Complaint.
Rule 54(b) of the Rules of Civil Procedure was a response to the need created
by the liberal joinder provisions of the Rules to review “what should be treated as a
judicial unit for purposes of appellate jurisdiction.” Sears, Roebuck & Co. v. Mackey,
351 U.S. 427, 432 (1956). A district court “may, by the exercise of its discretion in
the interest of sound judicial administration, release for appeal final decisions upon
one or more, but less than all, claims ... Id. at 437. Under Rule 54(b), “[t]he district
court acts as a ‘dispatcher’ and is permitted to determine, in the first instance, the
appropriate time when each final decision is ready for appeal.”
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Id. at 435;

Corrosioneering, Inc. v. The Continental Ins. Co., 807 F.2d 1279, 1282 (6th Cir.
1986).
Because an appeal has already occurred in this case and the matter has been
reviewed by the Sixth Circuit, the judgment as to the Counterclaim is final. The Sixth
Circuit did not remand the matter as to BPI’s remaining claim of breach of contract
set forth in its Counterclaim; the Sixth Circuit affirmed the jury’s verdict and the
Court’s judgment on this claim. There is nothing remaining on remand as to BPI’s
Counterclaim. As a reminder, more than one case was filed initially by the parties and
the cases were consolidated. “When a court consolidates two cases on its own, we
have concluded, the consolidated cases generally ‘remain separate actions;’ thus, a
district court’s disposal of one of the cases normally supports an immediate appeal,
even if the other consolidated case remains live.” See In re Refrigerant Compressors
Antitrust Litigation, 731 F.3d 586, 589 (6th Cir. 2013)(quoting Beil v. Lakewood
Eng’g & Mfg. Co., 15 F3d. 546, 551 (6th Cir.1994)).
Bar’s seeks a stay under Rule 62(h) in its response to BPI’s request to enforce
the judgment. It is noted that the CM/ECF Rules and Procedure provides that “a
response or reply to a motion must not be combined with a counter-motion.”
CM/ECF Rule 5. Rule 62(h) provides that a court may stay the enforcement of a final
judgment entered under Rule 54(b) until it enters a later judgment or judgments. Fed.
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R. Civ. P. 62(h). As noted in Rule 54(b) the court may enter final judgment on less
than all the claims before it “only if the court expressly determines that there is no just
reason for delay.” Fed. R. Civ. P. 54(b). The factors to be considered include
whether:
the claims finally adjudicated were [are] separate, distinct,
and independent of any of the other claims or counterclaims
involved; that review of these adjudicated claims would not
be mooted by any future developments in the case; and that
the nature of the claims was such that no appellate court
would have to decide the same issues more than once even
if there were subsequent appeals.
Curtiss-Wright Corp. v. General Electric Co., 446 U.S. 1, 5–6 (1980). The court
should consider the relative hardship and solvency of the litigants, as well as any other
equitable considerations which might be present. While potential recover on a claim
of set-off or a counterclaim is one such equitable consideration, the Supreme Court
has clearly held that it is by no means dispositive. Id. at 9.
BPI’s breach of contract Counterclaim has been finally adjudicated and is
separate, distinct and independent of Bar’s claims in its Third Amended Complaint.
Bar’s does not dispute this. No review in the future would moot BPI’s judgment since
it has already been reviewed by the Sixth Circuit and that part of the review was not
appealed to the Supreme Court by Bar’s.
As to the equities involved, BPI has indicated it does have some financial
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difficulty, which this Court may consider. Bar’s, on the other hand, has not indicated
it does not have the financial ability to pay the judgment. If Bar’s Third Amended
Complaint is ultimately resolved in its favor, there may be some set-off at that point
in time. However, as noted by the Supreme Court above, this is not a dispositive
issue. It is noted that in response to Bar’s Third Amended Complaint, BPI filed
another Counterclaim. Any set off in the future on Bar’s claims under the Third
Amended Complaint, could be raised in BPI’s new Counterclaim.
Having considered the factors noted above, the Court finds that BPI is entitled
to final judgment on its Counterclaim as to its breach of contract claim as affirmed by
the Sixth Circuit. BPI’s request to enforce its Judgment as to its breach of contract
claim in the Counterclaim is GRANTED. (Doc. No. 269)
III.

BAR’S PRODUCTS’ MOTION TO DISMISS COUNTS II (BREACH OF
CONTRACT) AND III (TORTIOUS INTERFERENCE WITH BUSINESS
RELATIONS AS ALLEGED IN BPI’S NEW COUNTERCLAIM (DOC.
NO. 280)
A.

Motion to Dismiss Standard of Review

Rule 12(b)(6) of the Rules of Civil Procedure provides for a motion to dismiss
based on failure to state a claim upon which relief can be granted. Fed. R. Civ. P.
12(b)(6). In Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), the Supreme Court
explained that “a plaintiff's obligation to provide the ‘grounds’ of his ‘entitle[ment]
to relief’ requires more than labels and conclusions, and a formulaic recitation of the
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elements of a cause of action will not do[.] Although not outright overruling the
“notice pleading” requirement under Rule 8(a)(2) entirely, Twombly concluded that
the “no set of facts” standard “is best forgotten as an incomplete negative gloss on an
accepted pleading standard.” Id. at 563. To survive a motion to dismiss, a complaint
must contain sufficient factual matter, accepted as true, to “state a claim to relief that
is plausible on its face.” Id. at 570. 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. Id. at 556. Such allegations are not to
be discounted because they are “unrealistic or nonsensical,” but rather because they
do nothing more than state a legal conclusion–even if that conclusion is cast in the
form of a factual allegation. Ashcroft v. Iqbal, 556 U.S. 662, 681 (2009). To survive
a motion to dismiss, the non-conclusory “factual content” and the reasonable
inferences from that content, must be “plausibly suggestive” of a claim entitling a
plaintiff to relief. Id. Where the well-pleaded facts do not permit the court to infer
more than the mere possibility of misconduct, the complaint has alleged, but it has not
shown, that the pleader is entitled to relief. Fed. R. Civ. P. 8(a)(2). The court
primarily considers the allegations in the complaint, although matters of public record,
orders, items appearing in the record of the case, and exhibits attached to the
complaint may also be taken into account. Amini v. Oberlin College, 259 F.3d 493,
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502 (6th Cir. 2001).
B.

Res Judicata (Claim Preclusion)
1.

Law

The doctrine of res judicata involves both “claim preclusion” and “issue
preclusion.” See Migra v. Warren City School District Bd. of Educ., 465 U.S. 75, 77
n. 1 (1984). Claim preclusion involves three elements: 1) there must be a final
judgment on the merits on the prior lawsuit; 2) the same claims are involved; and 3)
the same parties or their privies are involved. EEOC v. United States Steel Corp., 921
F.2d 489, 493 (3rd Cir. 1990); Montana v. United States, 440 U.S. 147, 153-54
(1979); James v. Gerber Products Co., 587 F.2d 324, 327-28 (6th Cir. 1978). Res
judicata requires that a plaintiff initially raise all claims in prior suits and therefore
bars those claims from being litigated at some future time. See Rivers v. Barberton
Board of Education, 143 F.3d 1029, 1031-32 (6th Cir. 1998).
2.

Breach of Contract (Count II)

The Court first addresses the breach of contract claim.
The first element, that there be a final judgment on the merits in a prior lawsuit,
has been met. As to BPI’s previous breach of contract claim, the jury entered a verdict
in BPI’s favor on May 9, 2014, affirmed by the Sixth Circuit, in the amount of
$22,536 (Sales of Bar’s Leaks outside the United States and Canada) and $1,537,659
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(for sales of items other than Bar’s Leaks outside the United States and Canada).
The second element, however, has not been met in that the claims of breach of
contract involved different dates. The breach of contract in the current March 10,
2017 Counterclaim alleges that “[s]ubsequent to the findings of the jury regarding
BPI’s exclusive International Rights to the sales and distribution of all Bar’s products,
or products manufactured or packaged by Bars, including, but not limited to, Bar’s
Leaks products and products packaged under the Rislone name, Bar’s has continued
and continues to sell, market and/or distribute, or permit the sales, marketing,
manufacturing and/or distribution of Bar’s products, including those packaged under
the Rislone brand, in international markets (excluding the United States and Canada
which was excluded by contract).” (Doc. No. 275, Pg ID 5936-37)
“To constitute a bar, there must be an identity of the causes of action that is, an
identity of the facts creating the right of action and of the evidence necessary to
sustain each action.” Westwood Chemical Co., Inc. v. Kulick, 656 F.2d 1224, 1227
(6th Cir. 1981). There may be identity of facts as to whether Bar’s breached the
agreements between the parties, but there is no identity of facts as to the dates of the
breach. The breach alleged in the March 2017 Counterclaim includes facts after the
jury rendered its verdict on May 9, 2014. Bar’s argument that BPI’s “future claims”
are barred because BPI sought future damages in the prior trial, is without merit since
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there was no finding of fact as to whether Bar’s breached the agreements after the jury
rendered its verdict. As instructed by the Court as to future lost profits, “you must not
award damages for future lost profits when it is uncertain that future damages will
occur. Nor should you aware(sic) future lost profit damages on the basis of
speculation and conjecture.” (Doc. No. 198, Pg ID 4857-58, Jury Instr.) Future lost
profits do not constitute findings of fact that Bar’s continued to breach the agreements
after the jury rendered its verdict. As this Court noted in denying BPI’s motion for
permanent injunction enjoining Bar’s from certain actions in the future, BPI had no
Lanham Act claim before the Court nor the jury and that BPI had adequate remedy at
law, which may include any future breach of contract claims. (Doc. No. 254, Pg ID
5644, 5649-50)
As to the third element, the same parties or their privies are involved, the Court
finds this element has also been met.
For the reasons stated above, res judicata or claim preclusion does not bar
BPI’s breach of contract claim because the dates of the alleged breach in the March
2017 Counterclaim are not the same dates as those previously tried before the jury.
3.

Tortious Interference of Business Relationships (Count III)

Regarding the Tortious Interference of Business Relationship claim, again, the
first element, that there be a final judgment on the merits in a prior lawsuit, has been
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met.
It is unclear whether the second element has also been met. As noted above,
“[t]o constitute a bar, there must be an identity of the causes of action that is, an
identity of the facts creating the right of action and of the evidence necessary to
sustain each action.” Westwood Chemical, 656 F.2d at 1227. BPI did not allege a
tortious interference claim in its prior Counterclaim. It is noted that the tortious
interference claim in the March 10, 2017 Counterclaim alleges that Bar’s made false
and disparaging remarks to attendees at the Automassen show in Sweden and the
Automechanika in Frankfurt, which BPI claims intentionally interfered with BPI’s
valid business expectancy to its rights to sell, market, distribute and/or manufacture
Bar’s products under its international rights. However, BPI does not identify the dates
when these remarks occurred. If these dates occurred after the jury’s verdict, then the
identity of facts creating the right of action are not the same as the facts alleged in the
previous Counterclaim.
Because BPI failed to set forth facts as when the tortious interference allegedly
occurred in Count III of the March 10, 2017 Counterclaim, the Court grants the
motion to dismiss for failure to state a claim upon which relief may be granted.
However, BPI in its response seeks to amend the Counterclaim. BPI may do so by
filing a separate motion with the proposed amended counterclaim attached, as required
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by the local rule. If the parties are able to agree that an amended counterclaim may
be filed, the parties may submit a stipulation and order to do so.
As to the third element, the same parties or their privies are involved, the Court
finds this element has also been met.
C.

“Noncompetition Twist”

Bar’s argues that BPI’s breach of contract claim is essentially a noncompetition
claim which has been litigated previously and that the time limit has lapsed on such
a claim. BPI responds that this is not a noncompetition contract claim, but a claim
involving a contract for the sale and rights to patented processes, formula and products
derived from same and the exclusive rights to the same. BPI asserts the sale of the
exclusive right was “final.” BPI claims that is what the jury found, which was upheld
by the Sixth Circuit.
The Court’s review of the jury verdict shows that the jury did not make any
specific findings as to whether any noncompetition agreement had lapsed or when the
date such noncompetition agreement would lapse. In any event, BPI asserts that the
instant breach of contract is not a noncompetition agreement breach of contract claim.
Bar’s motion to dismiss the breach of contract claim because the claim is essentially
a noncompetition agreement breach of contract claim is denied.
D.

Tortious Interference of Business Relationship
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Bar’s alternatively argues that BPI has failed to state a claim upon which relief
may be granted as to its tortious interference of business relationships. To establish
a claim for tortious interference of a business relationship in Michigan, a plaintiff
must show: 1) the existence of a valid business relationship or expectancy; 2)
knowledge of the relationship or expectancy on the part of the defendant; 3)
intentionally causing or inducing a breach or termination of the relationship or
expectancy; and 4) resultant actual damage. BPS Clinical Laboratories v. Blue Cross
& Blue Shield of Michigan, 217 Mich. App. 687, 698-99 (1997). A plaintiff is
required to allege that a defendant acted with malice and the actions were unjustified
in law for the purpose of invading the contractual rights or business relationship of
another.

Feldman v. Green, 138 Mich. App. 360 (1984). A plaintiff must

demonstrate, with specificity, affirmative acts by the defendant that corroborate the
improper motive or interference. BPS Clinical, 217 Mich. App. at 699. Where the
defendant’s actions were motivated by legitimate business reasons, its actions would
not constitute improper motive or interference. Id.
A review of the March 10, 2017 Counterclaim shows that BPI’s Count III does
not specifically cite the dates of the disparaging remarks as noted above. In addition,
BPI does not specifically state affirmative acts by Bar’s, other than alleging that Bar’s
mad “false and disparaging remarks” regarding BPI’s rights and the quality of goods
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BPI sells. BPI also does not allege any specific “valid business relationship” or
“expectancy” of such a relationship with another entity. General disparaging remarks
without identifying the entity BPI may have a valid relationship with or expectant
relationship with fails to meet the elements required for a tortious of interference of
a business relationship claim. However, as noted above, BPI has sought to amend this
claim, and may do so by filing the appropriate motion to amend with the proposed
amended counterclaim, unless the parties are able to submit a stipulation and order to
do so.
IV. CONCLUSION
For the reasons set forth above,
IT IS FURTHER ORDERED that BPI’s request to enforce its Judgment as to
its breach of contract claim in the Counterclaim (Doc. No. 269) is GRANTED.
IT IS FURTHER ORDERED that Bar’s Motion to Implement Mandate to File
its Third Amended Complaint (Doc. No. 270) is GRANTED.
IT IS FURTHER ORDERED that Bar’s Motion to Dismiss (Doc. No. 280) is
GRANTED IN PART and DENIED IN PART as set forth above. The Breach of
Contract Claim in Count II of the March 10, 2017 Counterclaim remains. The
Tortious Interference of Contract Claim in Count III of the March 10, 2017 is
DISMISSED. However, BPI may file a Motion to Amend the Tortious Interference
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of Contract Claim in Count III of the March 10, 2017 Counterclaim, but must do so
within 14 days from the date of this Order. If the parties are able to agree to any
proposed amendment, the parties may submit such a stipulation and order, without
filing a motion, within 14 days from the date of this Order.

S/Denise Page Hood
Denise Page Hood
Chief Judge, United States District Court
Dated: March 7, 2018
I hereby certify that a copy of the foregoing document was served upon counsel of
record on March 7, 2018, by electronic and/or ordinary mail.
S/LaShawn R. Saulsberry
Case Manager

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