World Chess Museum, Inc. v. World Chess Federation, Inc. et al

Filing 23

ORDER Denying 14 Defendant's Motion to Dismiss. Signed by Chief Judge Robert C. Jones on 10/15/2013. (Copies have been distributed pursuant to the NEF - SLD)

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UNITED STATES DISTRICT COURT DISTRICT OF NEVADA 1 2 3 4 WORLD CHESS MUSEUM, INC. d/b/a WORLD CHESS HALL OF FAME 5 Plaintiff, 6 vs. 7 8 WORLD CHESS FEDERATION, INC., 9 and 10 STAN VAUGHAN, Individually, 11 Defendants. 12 ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) 2:13-cv-00345-RCJ-GWF ORDER 13 This case arises out of an alleged infringing use of, and claim of ownership in, a registered 14 service mark. Pending before the Court is a motion to dismiss the claims against Defendant Stan 15 Vaughan (ECF No. 14). For the reasons given herein, the Court denies the motion. 16 17 18 19 20 I. BACKGROUND Plaintiff World Chess Hall of Fame (“Plaintiff” or “WCHOF”) brings this action, asserting claims of trademark infringement, unfair competition, and false designation of origin under the Lanham Trademark Act of 1946, 15 U.S.C. §§ 1051–1127, as amended (the “Lanham 21 22 Act”). (Compl. ¶¶ 52–102, Feb. 28, 2013, ECF No. 1). Plaintiff also asserts claims of statutory 23 and common law trademark infringement, unfair competition, and trademark dilution under state 24 law. (Id.). The dispute concerns the defendants’ use of the WORLD CHESS HALL OF FAME® 25 mark, of which Plaintiff claims exclusive ownership. (Id. ¶ 8). Defendant World Chess 26 Federation (“WCF”) is a non-profit corporation organized under the laws of the State of Nevada, 27 28 offering services such as chess tournaments and chess instruction. (Id. ¶ 16). Defendant Stan 1 1 Vaughan (“Vaughan”) is allegedly “the founder of, an officer of, and the principal actor behind” 2 Defendant WCF. (Id.). Plaintiff claims that Vaughan, both individually and through WCF, 3 knowingly and willfully engaged in various infringing or otherwise tortious activities. (Id. ¶¶ 16– 4 5 51). Vaughan has moved to dismiss, arguing that he is immune from liability under the Volunteer Protection Act, codified at 42 U.S.C § 14501 et seq. (ECF No. 14, at 4).1 6 II. 7 When considering a Rule 12(b)(6) motion to dismiss for failure to state a claim, the court 8 9 10 LEGAL STANDARDS must accept as true all factual allegations in the complaint as well as all reasonable inferences that may be drawn from such allegations. LSO, Ltd. v. Stroh, 205 F.3d 1146, 1150 n.2 (9th Cir. 11 12 2000). Such allegations must be construed in the light most favorable to the nonmoving party. 13 Shwarz v. United States, 234 F.3d 428, 435 (9th Cir. 2000). In general, the court should only 14 look to the contents of the complaint during its review of a Rule 12(b)(6) motion to dismiss. 15 However, the court may consider documents attached to the complaint or referred to in the 16 complaint whose authenticity no party questions. Id.; see Durning v. First Boston Corp., 815 17 18 F.2d 1265, 1267 (9th Cir. 1987). The analysis and purpose of a Rule 12(b)(6) motion to dismiss for failure to state a claim 19 20 21 is to test the legal sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). The issue is not whether a plaintiff will ultimately prevail but whether the claimant is 22 entitled to offer evidence to support the claims. Gilligan v. Jamco Dev. Corp., 108 F.3d 246, 249 23 24 (9th Cir. 1997) (quotations omitted). To avoid a Rule 12(b)(6) dismissal, a complaint does not 25 need detailed factual allegations; rather, it must plead “enough facts to state a claim to relief that 26 1 27 28 Although Defendant has repeatedly asserted that he “presents [his] Motion to Dismiss pursuant to FRCP 12(b)(5),” (Mot. to Dismiss, ECF No. 14, at 1; Reply, ECF No. 20, at 1), he has alleged nothing with respect to the service of process, and has instead established and argued under the Rule 12(b)(6) standard for failure to state a claim upon which relief can be granted. Therefore, the Court will treat this Motion as a motion to dismiss for failure to state a claim. 2 1 is plausible on its face.” Clemens v. Daimler Chrysler Corp., 534 F.3d 1017, 1022 (9th Cir. 2 2008) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 1964, 167 3 L.Ed.2d 929 (2007)); Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 4 868 (2009) (stating that a “claim has facial plausibility when the plaintiff pleads factual content 5 that allows the court to draw the reasonable inference that the defendant is liable for the 6 7 misconduct alleged”). Even though a complaint does not need “detailed factual allegations” to 8 pass muster under 12(b)(6) consideration, the factual allegations “must be enough to raise a right 9 to relief above the speculative level . . . on the assumption that all the allegations in the 10 complaint are true (even if doubtful in fact).” Twombly, 550 U.S. at 555, 127 S.Ct. at 1965. “A 11 12 pleading that offers ‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause 13 of action will not do.” Iqbal, 556 U.S. at 678, 129 S.Ct. at 1949. “Nor does a complaint suffice 14 if it tenders ‘naked assertion[s]’ devoid of ‘further factual enhancements.’” Id. (quoting 15 Twombly, 550 U.S. at 557, 127 S.Ct. at 1966). 16 Generally a court will not dismiss a complaint for failure to state a claim under Rule 17 18 12(b)(6) when a defendant merely pleads affirmative defenses. This is because a plaintiff does 19 not need to anticipate and attempt to plead around all potential defenses. See Gomez v. Toledo, 20 446 U.S. 635 (1980); Xechem, Inc. v. Bristol–Myers Squibb Co., 372 F.3d 899, 901 (7th Cir. 21 2004). “Only when the plaintiff pleads itself out of court—that is, admits all the ingredients of an 22 impenetrable defense—may a complaint that otherwise states a claim be dismissed under Rule 23 24 12(b)(6).” Xechem, 372 F.3d at 901. Similarly, a motion to dismiss under Rule 12(b)(6) cannot 25 be granted based upon an affirmative defense unless that “defense raises no disputed issues of 26 fact.” Scott v. Kuhlmann, 746 F.2d 1377, 1378 (9th Cir. 1984). However, a motion to dismiss 27 may be granted based on an affirmative defense where the allegations in a complaint are 28 3 1 contradicted by matters properly subject to judicial notice. Daniels–Hall v. Nat’l Educ. Ass’n, 2 629 F.3d 992, 998 (9th Cir. 2010). 3 III. 4 ANALYSIS Vaughan asserts that he is entitled to dismissal under Rule 12(b)(6) because he has an 5 affirmative defense under the Volunteer Protection Act (“VPA”), which, he claims, immunizes 6 7 8 9 10 him from liability for the corporate acts of WCF. (See Mot. to Dismiss, ECF No. 14, at 4). This argument fails. The VPA provides, in relevant part, that “no volunteer of a nonprofit organization . . . shall be liable for harm caused by an act or omission of the volunteer” if several elements are 11 12 satisfied. See 42 U.S.C §14503(a). These elements include, inter alia, showing that (1) the 13 volunteer was acting within the scope of his or her responsibilities at the time of the act or 14 omission; (2) the volunteer was properly authorized by the appropriate authorities to serve in the 15 position held; and (3) the harm was not caused by willful or criminal misconduct, gross 16 negligence, reckless misconduct, or a conscious, flagrant indifference to the rights or safety of 17 18 19 20 21 22 the individual harmed. § 14503(a)(1)-(3). The few courts to address the VPA’s protections appear to treat it as an affirmative defense akin to immunity. Armendarez v. Glendale Youth Ctr., Inc., 265 F. Supp. 2d 1136, 1141 (D. Ariz. 2003) (granting a motion to dismiss where the plaintiff stipulated that the defendants were volunteers within the meaning of the VPA, and noting that “dismissal may be appropriate 23 24 when the plaintiff has included sufficient allegations disclosing some absolute defense”); 25 Lomando v. United States, 667 F.3d 363, 370 (3d Cir. 2011) (“[T]he VPA . . . grants immunity 26 only to volunteers of nonprofit organizations.”). As an affirmative defense, the VPA does not 27 entitle Defendants to dismissal under Rule 12(b)(6) unless that “defense raises no disputed issues 28 4 1 of fact.” Scott v. Kuhlmann, 746 F.2d 1377, 1378 (9th Cir. 1984); cf. Gomez v. Toledo, 446 U.S. 2 635 (1980) (holding that qualified immunity is an affirmative defense and thus plaintiff has no 3 “obligation to anticipate such a defense by stating in his complaint” any facts to avoid the 4 defense). 5 Vaughan himself acknowledges that “[a]s an affirmative defense, the VPA does not 6 7 entitle [him] to dismissal under Rule 12(b)(6), unless ‘that defense raises no disputed issues of 8 fact.’” (Mot. to Dismiss, ECF No. 14, at 4–5 (quoting Scott, 746 F.2d at 1378)). However, 9 Vaughan has pointed to nothing in the Complaint that even remotely discloses any of the 10 elements of his VPA defense, and therefore, he has failed to demonstrate that the elements of his 11 12 defense are not subject to dispute. Moreover, he has failed to allege any facts showing that he 13 engaged in the disputed conduct as a volunteer acting within the scope of his responsibilities as a 14 volunteer. Instead, he merely asserts that it is “undisputed” that he is the treasurer of Defendant 15 WCF. (Id. at 2).2 In contrast, Plaintiff alleges that Vaughn, while in this position, engaged in acts 16 constituting knowing and willful trademark infringement and unfair competition. (Compl. ¶¶ 52– 17 18 102, ECF No. 1). At a minimum, this shows the existence of a disputed issue of fact as to 19 whether Vaughan was acting within the scope of his responsibilities as a volunteer treasurer at 20 the time of the alleged harm. Further, because Plaintiff alleges that Vaughan knowingly and 21 willfully violated various federal and state intellectual property laws, Vaughan’s assertion of the 22 VPA defense, which implies that the conduct was neither knowing nor willful, necessarily raises 23 24 25 a disputed issue of fact. Therefore, Vaughn cannot rely on the VPA as a basis for dismissal under Rule 12(b)(6). Accordingly, Vaughn’s Motion to Dismiss (ECF No. 14) is denied. 26 2 27 28 While Vaughan alleges that it is “undisputed that [he] is Treasurer for World Chess Federation,” the exhibit he has attached in support of this allegation lists “Stan Banghan” as World Chess Federation’s current treasurer. (Mot. to Dismiss, ECF No. 14-1, at 2). 5 1 CONCLUSION 2 3 4 IT IS HEREBY ORDERED that Defendant’s Motion to Dismiss (ECF No. 14) is Denied. IT IS SO ORDERED. 5 6 Dated: This 2nd day of of October, 2013. This 15th day October, 2013. 7 8 9 _____________________________________ ROBERT C. JONES United States District Judge 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6

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