Coach Services, Inc. et al v. Source II, Inc. et al

Filing 37

OPINION AND ORDER denying as moot 30 Motion to Strike; denying as moot 33 Motion to Strike; denying 23 Defendants' Motion for Summary Judgment and granting in part 24 Plaintiff's Motion for Partial Summary Judgment. Signed by District Judge Robert H. Cleland. (LWag)

UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

COACH INC. and COACH SERVICES, INC.,
Plaintiffs,
Case No. 15-10740

v.
SOURCE II, INC. and CERHUE ANDRE
WAKLER, Individually and d/b/a SOURCE II,
INC.,
Defendants.
/

OPINION AND ORDER GRANTING PLAINTIFFS’ MOTION FOR PARTIAL
SUMMARY JUDGMENT, DENYING DEFENDANTS’ MOTION FOR SUMMARY
JUDGMENT, AND DENYING BOTH PARTIES’ MOTIONS TO STRIKE
Now before the court is a Motion for Partial Summary Judgment as to liability
(Dkt. # 24) filed by Plaintiffs Coach, Inc. and Coach Services, Inc. (collectively “Coach”)
and a Motion for Summary Judgment (Dkt. # 23) filed by Defendants Source II, Inc. and
Cerhue Andre Walker. The motions are fully briefed and the court finds that a hearing is
unnecessary. See E.D. LR 7.1(f)(2). For the reasons discussed below, the court will
grant Plaintiffs’ motion in part and deny Defendants’ motion. Also before the court are
the parties’ Motions to Strike. (Dkt. ## 31, 33.) Because the court will resolve the
underlying summary judgment motions, both motions to strike will be denied as moot.
I. BACKGROUND
Unless otherwise noted, the following facts are undisputed. Coach is an
American business that manufactures and sells fine leather products and other
accessories. (Dkt. # 24, Pg. ID 184). Coach owns an extensive portfolio of well-known,

easily recognized, and federally registered trademarks. (Id.) Coach has expended
substantial resources developing, advertising, and otherwise promoting these marks.
(Id.) As a result, consumers readily identify merchandise bearing Coach marks as being
of high quality and originating with Coach. (Id.)
Defendant Cerhue Andre Walker is the sole member and owner of Defendant
Source II, Inc., which operates the clothing and accessory store, The Source Apparel.
(Dkt. # 24, Pg. ID 192.) Defendants are not licensed or otherwise authorized to use
Coach’s marks. (Dkt. # 8, Pg. ID 55.)
Defendants’ showroom, while appearing legitimate, was in fact a “front” for a
hidden backroom where counterfeit apparel and accessories were sold. (Dkt. #31-5, Pg.
ID 544.) On December 4, 2014, law enforcement officials executed a search warrant at
The Source Apparel and seized thousands of counterfeit handbags, wallets, and
accessories worth approximately $1,671,040. (Dkt. # 23, Pg. ID 140; Dkt. # 24, Pg. ID
192-93.) Four counterfeit Coach purses were among the products seized. (Dkt. # 23-5,
Pg. ID 164). A Coach investigator working with law enforcement examined the purses
and concluded that they were counterfeit. (Dkt. #23-1, Pg. ID 147-48.) Defendant
Walker was indicted on felony counterfeiting charges, (Dkt. # 27-4, Pg. ID 292), and he
eventually plead “no contest” to attempted counterfeiting/willful possession with intent to
deliver counterfeit marks under Mich. Penal Code § 750.263(3). (Dkt. # 31-4.)
Plaintiffs now bring the present action against Defendants claiming trademark
infringement, counterfeiting, and false designation of origin under the Lanham Act, 15
U.S.C. § 1114 et seq., state common law trademark infringement and unfair competition
claims, a claim under the Michigan Consumer Protection Act (“MCPA”), Mich. Comp.
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Laws § 445.903(1), and unjust enrichment. Plaintiffs also claim Defendant Walker
should be held personally liable. (Dkt. # 1, Pg. ID 16-17.) Plaintiffs seek partial summary
judgment as to Defendants’ liability. (Dkt. # 24.) Defendants have also filed a Motion for
Summary Judgment. (Dkt. # 23.)
II. STANDARD
Summary judgment is proper “if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of
law.” Fed. R. Civ. P. 56(a). “In deciding a motion for summary judgment, the court must
view the evidence in the light most favorable to the non-moving party, drawing all
reasonable inferences in that party’s favor.” Sagan v. United States, 342 F.3d 493, 497
(6th Cir. 2003). The movant has the initial burden of showing the absence of a genuine
dispute as to a material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). “[T]hat
burden may be discharged by showing . . . that there is an absence of evidence to
support the nonmoving party’s case.” Bennett v. City of Eastpointe, 410 F.3d 810, 817
(6th Cir. 2005) (internal quotation marks omitted).
The burden then shifts to the nonmovant, who must put forth enough evidence to
show that there exists “a genuine issue for trial.” Horton v. Potter, 369 F.3d 906, 909
(6th Cir. 2004) (citation omitted). Summary judgment is not appropriate when “the
evidence presents a sufficient disagreement to require submission to a jury.” Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 243 (1986). In evaluating a summary judgment
motion, “the judge’s function is not himself to weigh the evidence and determine the
truth of the matter but to determine whether there is a genuine issue for trial . . .

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credibility judgments and weighing of the evidence are prohibited.” Moran v. Al Basit
LLC, 788 F.3d 201, 204 (6th Cir. 2015) (internal quotation marks and citations omitted).
III. DISCUSSION
A. Plaintiffs’ Motion for Partial Summary Judgment
Plaintiffs seek partial summary judgment holding Defendants liable for trademark
infringement, counterfeiting, and false designation of origin under the Lanham Act, 15
U.S.C. § 1114 et seq., state common law trademark infringement and unfair competition
claims, a claim under the Michigan Consumer Protection Act (“MCPA”), Mich. Comp.
Laws § 445.903(1), and unjust enrichment. Plaintiffs also seek to hold Defendant
Walker personally liable for these claims. (Dkt. # 24.) For the reasons that follow, the
court will grant Plaintiffs’ motion except as to unjust enrichment.
1. Plaintiffs’ Trademark, Unfair Competition, and MCPA Claims
The Lanham Act provides that a party is liable to a trademark registrant for
infringement when he or she “use[s] in commerce any reproduction, counterfeit, copy, or
colorable imitation of a registered mark in connection with the sale, offering for sale,
distribution, or advertising of any goods” and “such use is likely to cause confusion, or to
cause mistake, or to deceive.” 15 U.S.C. § 1114(1)(a). In effect, Plaintiffs must show (1)
a valid mark (2) use in commerce and (3) likelihood of confusion. Id. “The touchstone of
liability under § 1114 is whether the defendant’s use of the disputed mark is likely to
cause confusion among consumers regarding the origin of the goods . . . .” Vision Info.
Techs., Inc. v. Vision IT Servs. USA, Inc., 156 F. Supp. 3d 870, 879 (E.D. Mich. 2016)

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(Edmunds, J.) (quoting Leelanau Wine Cellars, Ltd. V. Black & Red, Inc., 502 F.3d 504,
512 (2007)).
Michigan’s common law unfair competition rule is codified in Mich. Comp. Law §
429.42(a), which provides:
“[a]ny person who shall:
(A) Use, without the consent of the registrant, any reproduction, counterfeit,
copy or colorable imitation of a mark registered under this act in connection
with the sale, offering for sale, or advertising of any goods or services on or
in connection with which such use is likely to cause confusion or mistake or
to deceive as to the source of origin of such goods or services . . . is liable to
a civil action by the owner of the registered mark for any or all of the
remedies provided in section 13 . . . .”
The MCPA prohibits “unfair, unconscionable, or deceptive methods, acts or practices in
the conduct of trade or commerce.” Mich. Comp. Law § 445.903(1).
The Sixth Circuit applies the same “likelihood of confusion” test to determine
liability for trademark infringement, unfair competition, and false designation of origin
under the Lanham Act. Audi AG v. D'Amato, 469 F.3d 534, 542 (6th Cir. 2006) (citing
Two Pesos v. Taco Cabana, 505 U.S. 763, 780 (1992)). Further, the same test applies
for Plaintiffs’ state law unfair competition claims and Michigan Consumer Protection Act
claims. Microsoft Corp. v. Compusource Distributors, Inc., 115 F. Supp. 2d 800, 807
(E.D. Mich. 2000) (“The applicable standard under the MCPA and under Michigan
common law is the same as the tests for federal trademark infringement and federal

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unfair competition under 15 U.S.C. §§ 1114(1) and 1125(a): whether confusion is
likely.”). Accordingly, the court will analyze all of these claims together.
In their responses to Defendants’ interrogatories, Plaintiffs have identified five
marks that the counterfeit goods allegedly infringed upon. (Dkt. # 31-2, Pg. ID 534-35
(identifying trademark registrations 4,105,636; 3,696,470; 3,338,048; 0,751,493; and
1,309,779).) Defendants have not disputed the validity of these marks, and point to
nothing in the record to suggest that these are not the marks at issue. Thus,
Defendants’ arguments that Plaintiffs have not specifically identified which trademarks
were counterfeited or shown that the marks were current and not “abandoned” are
unsupported. (Dkt. # 28, Pg. ID 449-51.) In any event, Defendants cite no case law for
the proposition that Plaintiffs must show precisely which marks were counterfeited when
there is no dispute that Defendants had counterfeit Coach products, bearing counterfeit
Coach marks. Defendants’ attempts to muddy the waters without citation to the record
or to the law must fail. Neither the identity nor the validity of the marks at issue are
genuinely in dispute.
Nor is there any dispute that the counterfeit Coach purses seized from
Defendants’ store in the December 4, 2014 raid were offered for sale. (Dkt. # 24-2, Pg.
ID 210 (“The investigator was asked to identify suspected counterfeit Coach Logo
apparel seized from the location on display and offered for sale.”).) Defendants’ briefs
vigorously deny that the purses were “on display,” and rely entirely on an affidavit from
Defendant Walker. (See, e.g., Dkt. # 23, Pg. ID 10). Walker’s affidavit denies that the
purses were “on display” but conspicuously does not deny the allegation that they were
offered for sale. (Compare Dkt. # 23-7, Pg. ID 177 ([A]t no time were there ever any
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Coach purses on display at the premises on December 4, 2014) with id. at Pg. ID 178
(“[N]o coach wallets were on display and/or for sale at that time either.”) (emphasis
added).)
There is “no clearer ‘use’ of goods ‘in commerce’ than offering them for sale.”
Lollard Tobacco Co. V. Amouri’s Grand Foods, Inc., 453 F.3d 377, 381 (6th Cir. 2006).
Because it is undisputed that the purses were offered for sale – and thus were “use[d] in
commerce” – whether they were displayed is not material. See Allstate Ins. Co. v. Icon
Health & Fitness, Inc., 361 F. Supp. 2d 673, 675 (E.D. Mich. 2005) (Gadola, J.) (citing
Kendal v. Hoover Co., 751 F.2d 171, 174 (6th Cir. 1984) (“A fact is ‘material’ for
purposes of summary judgment if proof of that fact would have the effect of establishing
or refuting an essential element of the cause of action or a defense advanced by the
parties.”). Thus, there is no dispute of fact material to whether the counterfeit marks
were used in commerce.
Ordinarily, the 6th Circuit considers several factors to determine whether an
allegedly infringing use is likely to cause confusion: (1) strength of the plaintiff’s mark,
(2) relatedness of the goods, (3) similarity of the marks, (4) evidence of actual
confusion, (5) marketing channels used, (6) likely degree of purchaser care, (7)
Defendants’ intent in selecting the mark, and (8) likelihood of expansion of the product
lines. Lollard, 453 F.3d at 380-81. However, where the defendant “has misappropriated
precise counterfeits of the plaintiff’s trademarks on goods that compete with the
trademark holder’s own goods” a likelihood of confusion is presumed. General Motors
Corp. V. Autovation Technologies, Inc., 317 F. Supp.2d 756, 761 (E. D. Mich. 2004)
(O’Meara, J.) (citing Ford Motor Co. v. Lloyd, 22 Fed.Appx. 464, 467 (6th Cir. 2001). As
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previously discussed, there is no genuine dispute that the four purses bore counterfeit
Coach marks. Thus, the likelihood of confusion is presumed. Even if likelihood of
confusion were not presumed, the strength of Coach’s marks, the relatedness of the
goods, the similarity of the marks, and Defendants’ intent to sell counterfeit Coach
merchandise all weigh heavily in favor of finding a likelihood of confusion.
It is not genuinely disputed that Defendants offered counterfeit Coach purses for
sale and those purses are presumed to have been likely to confuse consumers as to the
origin of the products. Id. As a result, there is no triable issue of fact material to
Defendants’ liability for the claims turning on likelihood of confusion, and Plaintiffs are
entitled to partial summary judgment on these claims.
2. Unjust Enrichment
The record does not support a grant of summary judgment as to Plaintiffs’ claim
for unjust enrichment. In Michigan, a claim for unjust enrichment consists of (1) the
receipt of a benefit by Defendants from Plaintiffs and (2) an inequity resulting to
Plaintiffs because of the retention of the benefit by Defendants. Erickson’s Flooring &
Supply Co., Inc. V. Tembec, Inc., 212 Fed. App’x. 558, 564 (6th Cir. 2007) (citing Barber
v. SMH (US), Inc., 202 Mich. App. 366, 375 (1993)). Despite Plaintiffs’ assertion that
Defendants have “unjustly retained a benefit from the sale of counterfeit products
bearing Coach Marks . . . ,” (Dkt. # 24, Pg. ID 202), Plaintiffs have failed to point to any
evidence to show that counterfeit Coach products have been sold. It is not enough, at
the summary judgment stage, to generally aver that “more than a million dollars’ worth
of counterfeit products of Defendants were seized by law enforcement.” Plaintiffs have

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failed to carry their burden to show they are entitled to judgment as a matter of law on
this claim.
3. Defendant Walker’s Personal Liability
Plaintiffs also seek to hold Defendant Walker personally liable for these claims.
Corporate officers may be held individually liable for Lanham Act claims “when the
employee or corporate officer personally takes part in the infringing activity or directs
others to do so.” Innovation Ventures, L.L.C. v. Aspen Fitness Prod., Inc., No. 11 CV
13537, 2015 WL 11071470, at *16 (E.D. Mich. Mar. 31, 2015) (Murphy, J.) (quoting
Days Inn Worldwide, Inc. V. Adrian Motel Co., No. 07-13523, 2009 WL 3199882, at *11
(E.D. Mich. Setp. 30, 2009) (Zatkoff, J.)). Corporate officers may similarly be held
individually liable for acts of unfair competition. Id.
Here, Defendant Walker was the sole owner and officer of Defendant Source II,
and Plaintiffs have pointed to evidence in the record suggesting that Defendant Walker
was directly involved in offering the counterfeit Coach products for sale, not to mention
managing the greater scheme to distribute counterfeit merchandise. (Dkt. # 24, Pg. ID
203.) Defendants have not addressed the issue of personal liability at all, either in
briefing their Motion for Summary Judgment (Dkt. # 23) or in their Response to
Plaintiffs’ Motion for Partial Summary Judgment (Dkt. # 28). Based on all the evidence
and Defendants’ complete failure to respond to Plaintiffs’ argument, the court will hold
Defendant Walker liable in his individual capacity.
B. Defendants’ Motion for Summary Judgment
In support of their Motion for Summary Judgment, Defendants rely entirely on a
minor quibble with the Complaint’s characterization of the investigation, a bare assertion
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that the “Investigative Report” offered by Plaintiffs should be excluded as hearsay, and
a brief affidavit from Defendant Walker stating that no Coach purses were on display.
(Dkt. # 23, Pg. ID 139-42). Defendants’ four-page brief in support cites no case law and
provides no logical connection between its arguments and Plaintiffs’ claims. (Dkt. # 23,
Pg. ID 139-42.) Neither does Defendants’ Reply. (Dkt. # 29.) In fact, Defendants’ briefs
do not discuss, or even identify, Plaintiffs’ claims at all.
In this circuit, “issues adverted to in a perfunctory manner, unaccompanied by
some effort at developed argumentation, are deemed waived.” Meridia Prod. Liab. Litig.
v. Abbott Laboratories, 447 F.3d 861, 868 (6th Cir. 2006) (“It is not sufficient for a party
to mention a possible argument in the most skeletal way, leaving the court to put flesh
on its bones.”) (quoting McPherson v. Kelsey, 125 F.3d 989, 995-96 (6th Cir. 1997).
Defendants’ arguments in support of their Motion for Summary Judgment are
inadequately developed, and are therefore deemed waived. Id.
Further, Defendant Source II has failed to respond to Plaintiffs’ Requests for
Admission, served in July of 2015. (Dkt # 27, Pg. ID 248-49.) Plaintiffs’ requests
included, “Admit that on or about December 4, 2014, products, including, but not limited
to, handbags and a wallet, bearing [the marks at issue] were on display and being
offered for sale in plain view at [The Source Apparel],” and a request to admit that the
products “were not authentic products manufactured by Coach.” (Dkt. # 27, Pg. ID 405.)
Ordinarily, the failure to timely respond would cause these requests to be deemed
admitted. Fed. R. Civ. P. 36(a)(3). Defendants argue that Defendant Walker responded
– though it is unclear whether his response was timely – and “it is clear that [Defendant
Source II’s responses] would be the same as those provided by Mr. Walker.” (Dkt. # 29,
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Pg. ID 485). Presumably, Defendants mean to argue that Defendant Walker’s response
retroactively counts for Defendant Source II despite no indication that it was meant to at
the time. However, Defendants neither advance that argument nor provide any authority
to support it. See id. Defendants’ single-sentence response is insufficient. See Meridia,
447 F.3d at 868. Defendant Source II failed to respond to the Requests for Admission
and therefore is deemed to have admitted that the products were not authentic and
were offered for sale. Thus, Defendants would not be entitled to summary judgment on
their claims for this alternative reason.
Even if they were to be considered, Defendants’ arguments lack merit. First,
Defendants insist that it was the Detroit Police Department, and not the Department of
Homeland Security Investigations Unit, that carried out the raid. (Dkt. # 23, Pg. ID 14041.) Defendants’ fixation on how the investigating agency should be characterized is
misguided, as the issue is immaterial. Defendants’ insistence that the counterfeit purses
were not “on display” is similarly misguided, as already discussed. Finally, even
assuming Defendants are correct that the investigative report prepared by Plaintiffs’
agent (Dkt. # 23-2) is inadmissible hearsay and that no hearsay exception applies, its
content could be established by live testimony of the agent. Bailey v. Floyd of Cnty. Bd.
Educ. By and Through Towler, 106 F.3d 135, 145 (6th Cir. 1997) (“The proffered
evidence need not be admissible in form, but its content must be admissible.”)
(emphasis in original). Finally, for all the above reasons that Plaintiffs are entitled to
partial summary judgment as to liability, Defendants are not entitled to summary
judgment.

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IV. CONCLUSION
IT IS ORDERED that Plaintiff’s Motion for Partial Summary Judgment (Dkt. # 24)
is GRANTED IN PART. Plaintiff’s Motion is DENIED with respect to Plaintiffs’ claim for
unjust enrichment, and GRANTED on all other counts. Defendants’ Motion for Summary
Judgment (Dkt. # 23) is DENIED.
IT IS FURTHER ORDERED that the parties’ respective Motions to Strike (Dkt. #
30 & Dkt. # 33) are DENIED as moot.

s/Robert H. Cleland
ROBERT H. CLELAND
UNITED STATES DISTRICT JUDGE
Dated: September 13, 2016

I hereby certify that a copy of the foregoing document was mailed to counsel of
record on this date, September 13, 2016, by electronic and/or ordinary mail.

s/Lisa Wagner
Case Manager and Deputy Clerk
[phone]

S:\Cleland\JUDGE'S DESK\C1 ORDERS\15-10740.COACH.summary.judgment.tlh.wpd

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