PANDA APPAREL, LLC v. SPIRIT CLOTHING COMPANY, INC.
OPINION. Signed by Judge Jose L. Linares on 9/8/15. (DD, )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
PANDA APPAREL, LLC,
Civil Action No.: 14-5514 (JLL)
SPIRIT CLOTHING COMPANY, INC.,
LINARES, District Judge.
This matter comes before the Court by way of Plaintiff Panda Apparel, LLC ("Panda")' s
Motion for Reconsideration of this Court's Order dated July 21, 2015 ("Dismissal Order"), in
which the Court found that it lacked subject matter jurisdiction over Panda's declaratory
judgment action against Defendant Spirit Clothing Company, Inc. ("Spirit").
(ECF No. 36
(seeking reconsideration of ECF No. 30).) The Court has considered the parties' submissions
and decides this matter without oral argument pursuant to Rule 78 of the Federal Rules of Civil
Procedure. For the reasons set forth below, the Court grants Panda's Motion for Reconsideration
and holds that it has subject matter jurisdiction over Panda's Complaint.
Panda commenced this action on September 3, 2014, seeking a declaratory judgment that
its "BF Jersey" does not infringe trademark rights owned by Spirit. (ECF No. 1 ("NJ Action").) 1
Panda seeks the following relief in its Complaint: ( 1) Declaratory Judgment of Failure of Design to Function as
Trademark - Merely Ornamental; (2) Declaratory Judgment of Failure of Design to Function as Trademark Aesthetically Functional; (3) Declaratory Judgment of Failure of Design to Function as Trademark - Lack of
Secondary Meaning; (4) Declaratory Judgment of No Trademark Infringement; (5) Declaratory Judgment of No
Spirit was served with the Complaint on December 29, 2014. (ECF No. 7.) Then, on February
17, 2015, Spirit filed an action in the Central District of California ("CA Action") asserting
countervailing claims against Panda that were virtually identical to those set forth in the NJ
On February 18, 2015, Spirit filed a motion to dismiss the NJ Action. (ECF No. 13.)
Spirit sought the dismissal of the NJ Action based on its allegations that ( 1) absent an overt act
by Spirit toward Panda related to the purported infringement (i.e., Spirit never sent Panda an
intent to sue letter or even acknowledged Panda's existence), Panda failed to allege an
appropriate basis for seeking declaratory relief; and (2) that the NJ Action must be dismissed by
virtue of Panda's filing of the CA Action. (See id.) In opposition to Spirit's motion, Panda
argued that an overt act towards Panda was no longer required by controlling case law and that
jurisdiction in the District of New Jersey was appropriate, as the NJ Action was first-filed. (ECF
No. 24.) In the alternative, Panda requested a stay pending similar motions filed in the CA
Action. (ECF No. 25.)
On April 24, 2015, Panda filed a motion to dismiss the CA Action. (See ECF No. 36-3.)
Panda sought dismissal of the CA Action on the basis that: (1) the CA Action was barred by the
first-to-file rule because Panda had filed the NJ Action first; (2) in the alternative, the CA Action
should be transferred and consolidated with the NJ Action. (See id.)
On June 4, 2015, the Central District of California ruled that the first-to-file rule barred
False Designation of Origin; ( 6) Declaratory Judgment of No Unfair Competition; (7) Declaratory Judgment of No
Tortious Activity in Violation of Any Federal, State, or Common Law; (8) Declaratory Judgment of No Trademark
Dilution or Tarnishment; (9) Declaration of Invalidity of Defendant's Alleged Trademark Design; and (10)
Cancellation of Supplemental Registration No. 4,280,977. (ECF No. 1).
2 Specifically, Spirit sought relief against Panda for: (1) federal trademark infringement; (2) false designation of
origin pursuant to 15 U.S.C. l 125(a); and (3) Unfair Competition. (See 15-4022, ECF No. 1.)
the CA Action from proceeding in the Central District of California, noting that "Spirit has failed
to demonstrate that any of the exceptions to the first to file rule are clearly applicable." (See id.)
In accordance with Ninth Circuit precedent, the Central District of California stayed the
dismissal or transfer of the CA Action pending a disposition on the motion to dismiss pending in
the NJ Action. (Id.)
On June 9, 2015, this Court entered an Order staying the NJ Action, pending resolution of
the motions before the Central District of California. (ECF No. 27.) In particular, this Court
noted that "this matter will only be stayed until the Central District of California determines
where jurisdiction is appropriate in that district or whether the entire matter should proceed in the
District of New Jersey." (ECF No. 27.)
On June 12, 2015, the Central District of California transferred the CA Action to the
District of New Jersey, for the same reasons as set forth in its earlier decision. (ECF No. 36-5.)
Thereafter, on July 21, 2015, this Court dismissed the NJ Action for lack of subject
matter jurisdiction on the basis that "there was no affirmative and overt on Defendant Spirit's
behalf alleging infringement [against Panda] in this case .... " (Dismissal Order if 5.) However,
the Court retained jurisdiction over the CA Action and noted that it was "tasked with fashioning
a flexible response to the issue of concurrent jurisdiction." (Id.) To that end, the Court permitted
a realignment of the parties and allowed Panda to assert counter-claims in the CA Action in order
to pursue the declaratory relief it sought by filing the NJ Action. (Id.)
However, before Panda could assert its counterclaims, on July 23, 2015, Spirit voluntarily
dismissed the CA Action that was then pending before this Court. (Spirit Clothing Company v.
Panda Apparel LLC, No. 15-4022, ECF No. 33.) Simultaneous with its voluntary dismissal,
Spirit filed another, practically identical, action in the Central District of California, despite the
Central District of California's ruling that the case should be litigated in the District of New
Pursuant to an Order from United States Magistrate Judge Joseph A. Dickson (ECF No.
34), Panda filed the instant motion for reconsideration on August 11, 2015. (ECF No. 36; see
also ECF No. 36-1 ("Mov. Br.").) Spirit filed opposition on August 25, 2015. (ECF No. 37
("Opp. Br.").) In contravention of Local Civil Rules 7. l(d)(3), Panda filed a reply brief without
first seeking leave of the Court, which will not be considered for purposes of determining this
motion. (ECF No. 38.) The matter is now ripe for resolution.
Local Civil Rule 7.1 (i) governs motions for reconsideration in this District. It requires a
movant to set forth "the matter or controlling decisions which the party believes the Judge or
Magistrate Judge has overlooked." L.Civ.R. 7 .1 (i). To prevail on a motion for reconsideration,
the movant must show at least one of the following grounds: (1) an intervening change in
controlling law; (2) the availability of new evidence; or (3) the need to correct a clear error of
law or fact or to prevent manifest injustice. Wiest v. Lynch, 710 F.3d 121, 128 (3d Cir. 2013)
"To prevail under the third prong, the movant must show that 'dispositive factual matters
or controlling decisions oflaw were brought to the court's attention but not considered.'" Mason
v. Sebelius, No. 11-2370, 2012 WL 3133801, at *2 (D.N.J. July 31, 2012) (quoting P. Schoenfeld
Asset Mgmt. LLC v. Cendant Corp., 161 F. Supp. 2d 349, 353 (D.N.J. 2001)). In other words,
reconsideration is not warranted where "(1) the movant simply repeats the cases and arguments
previously analyzed by the court; or (2) the movant has filed the motion merely to disagree with
or relitigate the court's initial decision." CPS MedManagement LLC v. Bergen Reg'l Med. Ctr.,
L.P., 940 F. Supp. 2d 141, 167-68 (D.N.J. 2013) (internal citations omitted). "Unless a court has
truly failed to consider pertinent authorities or evidence that could not with reasonable diligence
have been presented earlier, a motion to reconsider a decision (even one that may contain an
error) is generally futile." Id. at 168. Indeed, reconsideration of a decision is an "extraordinary
remedy," which should be granted "very sparingly." Friedman v. Bank of Am., NA., No. 092214, 2012 WL 3146875, at *2 (D.N.J. Aug. 1, 2012).
Panda argues that the analysis in the Court's Dismissal Order was based on the older and
more stringent "reasonable apprehension of litigation" standard, as opposed to the newer and
more lenient "totality of the circumstances" standard, and that the Court thereby committed clear
error oflaw. (Mov. Br. at 15-20.) Panda contends that under the "totality of the circumstances"
test, Panda's Complaint provides a clear basis for this Court's exercise of subject matter
jurisdiction. (Id. at 20-23.) In the alternative, Panda asserts that it would be a manifest injustice
to permit Spirit to proceed with the very same action in the Central District of California that had
already been transferred to this Court. (Id. at 23-25.)
Spirit argues that the Dismissal Order was appropriate and not erroneous. In particular,
Spirit asserts that the Court applied the correct legal standard and that under the "totality of the
circumstances test" Panda's Complaint is insufficient to demonstrate subject matter jurisdiction
because it merely alleges that Spirit owns certain trademarks relating to certain ornamental
features and that Panda sells a "BF Jersey" that has similar ornamental features. (Opp. Br. at 37.) Spirit stresses that fact that the Complaint contains no facts whatsoever relating to Spirit's
litigation history and/or Panda's fear of suit.
(Id. at 3.) Additionally, Spirit contends that
manifest injustice does not exist here because the Central District of California never concluded
that this Court had subject matter jurisdiction over the claims. (Id. at 7-8.)
The Court agrees with Panda and concedes that it neglected to properly recognize and
apply the totality of the circumstances test in the Dismissal Order. Instead, the Court exclusively
analyzed Panda's claims based on Panda's reasonable apprehension of suit, and applied that
standard in a manner that was overly stringent and inconsistent with precedent.
reconsideration, the Court concludes that under the totality of the circumstances it was error to
find that it lacked subject matter jurisdiction over Panda's Complaint.
Panda's Complaint was filed pursuant to the Declaratory Judgment Act. (ECF No. 1if1.)
The Declaratory Judgment Act provides:
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
legal relations of any interested party seeking such declaration, whether or not
further relief is or could be sought.
28 U.S.C. § 2201. To satisfy the "actual controversy" requirement of the Declaratory Judgment
Act, the dispute must be '"definite and concrete, touching the legal relations of parties having
adverse legal interests'; and [must] be 'real and substantial' and 'admi[t] of specific relief
through a decree of a conclusive character, as distinguished from an opinion advising what the
law would be upon a hypothetical state of facts."' Medlmmune, Inc. v. Genentech, Inc., 549 U.S.
(2007) (quoting Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 240-41 (1937)). There is
no bright-line rule for determining whether the case-or-controversy requirement is satisfied. Id.
'"Basically, the question in each case is whether the facts alleged, under all the circumstances,
show that there is a substantial controversy, between parties having adverse legal interests, of
sufficient immediacy and reality to warrant the issuance of a declaratory judgment."'
(quoting Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273 (1941)).
Medimmune is significant because it established a "totality of the circumstances test" and
found that requiring a plaintiff to demonstrate a reasonable apprehension of suit conflicted with
the Court's precedent. 3 Id. at 132 n.11. Under the "totality of the circumstances" test, courts
have "unique and substantial discretion in deciding whether to declare the rights of litigants." Id.
at 136. And although Medimmune "did not change the bedrock rule that a case or controversy
must be based on a real and immediate injury or threat of future injury that is caused by the
defendants-an objective standard that cannot be met by a purely subjective or speculative fear
of future hann," Prasco, 537 F.3d at 1339, the totality of the circumstances it established
"significantly lowers the bar for showing an actual controversy."
Telebrands Corp. v.
Exceptional Prods., 2011 U.S. Dist. LEXIS 139308, at *6 n.2 (D.N.J. 2011).
Here, the Complaint sufficiently establishes a justiciable Article III controversy under the
totality of the circumstances test forth in Medlmmune. First, the Court takes judicial notice of
the numerous litigations Spirit has filed against clothing companies similar to Panda, which
demonstrates the adversity of the parties. 4 (See Mov. Br. at 12-13 (listing seven lawsuits)). The
While the Supreme Court rejected the reasonable apprehension of suit test as the sole test for jurisdiction, it did not
completely do away with the relevance of a reasonable apprehension of suit. Prasco, LLC v. Medicis Phann. Corp.,
537 F.3d 1329, 1336 (Fed. Cir. 2008) ("[F]ollowing Medlmmune, proving a reasonable apprehension of suit is one
of multiple ways that a declaratory judgment plaintiff can satisfy the more general all-the-circumstances test to
establish that an action presents a justiciable Article III controversy.").
A district court may take judicial notice of the existence of other litigations when ruling on a motion to dismiss.
See In re Congoleum Corp., 426 F.3d 675, 679 n.2 (3d Cir. 2005) (taking judicial notice of proceedings before other
court, noting that "judicial notice can be taken of certain facts such as that a document was filed") (citing In re
Indian Palms Assocs., Ltd., 61 F.3d 197, 205 (3d Cir. 1995); see also S. Cross Overseas Agencies, Inc. v. Wah
Court further emphasizes that shortly after Panda filed its Complaint seeking declaratory
judgment, Spirit filed a lawsuit alleging trademark infringement against Panda relating to the
same set of facts. (See CA Action.) Indeed, the Court finds that it would be unjust to ignore the
procedural maneuvering that has taken place between the parties subsequent to Panda initiating
this action. To that end, the Court also notes that after fashioning a pragmatic remedy in the
Dismissal Order by consolidating the two actions before this Court, Spirit voluntarily dismissed
the case and refilled an essentially identical complaint in the Central District of California,
despite the fact that the Central District of California had indicated that jurisdiction was proper
before this Court.
Furthermore, the sole case relied on in the Dismissal Order is distinguishable. As Panda
correctly points out, in Frasco the court held that "one prior suit concerning different products
covered by unrelated patents is not the type of pattern of prior conduct that makes reasonable an
assumption that [the patent holder] will also take action against [the plaintiff] regarding its new
Frasco, 537 F.3d at 1341.
By contrast, Spirit's multiple litigations concerning
substantially similar products covered by trademark shows that Frasco is clearly distinguishable
and that this Court's exclusive reliance on it in the Dismissal Order was misplaced. In fact,
caselaw from this district further demonstrates that Panda has sufficiently shown that a case-orcontroversy existed at the time Panda filed the Complaint. See FharmaNet, Inc. v. DataSci Liab.
Co., No. 08-2965, 2009 WL 396180, at *7 (D.N.J. Feb. 17, 2009) (holding that a defendant's
"history of extensive prior litigation must be viewed in the context of its other actions, and thus
supports a finding that there is an Article III case or controversy between the parties.").
Kwong Shipping Grp. Ltd., 181F.3d410, 426 (3d Cir. 1999) ("[O]n a motion to dismiss, [a court] may take judicial
notice of another court's opinion-not for the truth of the facts recited therein, but for the existence of the opinion,
In light of this, the Court agrees with Panda that the controversy is substantial and
immediate because it affects Panda's continued ability to sell its product and that the case-orcontroversy requirement of Article III is satisfied. (See ECF No. 1, Compl. iii! 27, 33, 41, 45, 49,
Accordingly, the Court finds that it has subject matter jurisdiction over
Plaintiff's Complaint. Furthermore, for the reasons set forth by the Central District of California
in its June 4, 2015 Opinion (see ECF No. 36-3), the first-to-file rule applies.
Having reconsidered the facts of this case under the appropriate standard, the Court
concludes that it has subject matter jurisdiction over the Panda's complaint for declaratory relief.
Accordingly, the Court grants Panda's motion for reconsideration.
(ECF No. 36.)
appropriate Order accompanies this Opinion.
~~ L. ylNARES
ucI~~IiSTATES DISTRICT JUDGE
which is not subject to reasonable dispute over its authenticity.").
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