Seidman et al v. Chobani LLC et al

Filing 68

MEMORANDUM OPINION & ORDER: For the reasons stated above, Plaintiffs' motion to dismiss their Federal law claims (Cmplt. (Dkt. No. 1) First, Second and Third Claims of Relief) with prejudice is granted. The Clerk of the Court is directed to terminate the motion (Dkt. No. 45). It is further ORDERED that the following briefing schedule will apply to Plaintiffs' motion to amend the Complaint: 1. Plaintiffs' moving papers are due April 5, 2016; 2. Defendants' opposition pap ers are due April 15, 2016; and 3. Plaintiffs reply, if any, is due on April 21, 2016. (As further set forth in this Opinion) (Motions due by 4/5/2016., Responses due by 4/15/2016, Replies due by 4/21/2016.) (Signed by Judge Paul G. Gardephe on 3/29/2016) (kl)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC#:
DATEF-IL_E_D_:-3~)z~1~,~)~~-

DOV SEIDMAN and LRN
CORPORATION,
Plaintiffs,

MEMORANDUM
OPINION & ORDER

- against 14 Civ. 4050 (PGG)
CHOBANI, LLC and DROGA5, LLC,
Defendants.

PAUL G. GARDEPHE, U.S.D.J.:
In this action, Plaintiffs Dov Seidman and LRN Corporation have alleged federal

trademark claims and related state law causes of action against Chobani, LLC, and its advertising
agency, Droga5, LLC. (Cmplt. (Dkt. No. 1)) These claims relate to Chobani's "How Matters"
advertising campaign. (Id.) Defendants have filed counterclaims under the Lanham Act and 28
U.S.C. §§ 2201 and 2202, seeking a declaration that (1) Plaintiffs' trademark registrations are
invalid and subject to cancellation; and (2) Defendants have not infringed on Plaintiffs' alleged
rights. (Droga5 Answer (Dkt. No. 9) ~~ 150-165; Chobani Answer (Dkt. No. 12) ~~ 58-67)
On July 22, 2015, this Court issued an order setting a briefing schedule for
Defendants' motion for summary judgment on Plaintiffs' federal law claims. (Dkt. No. 44) On
August 4, 2015, Plaintiffs moved to voluntarily dismiss their federal law claims with prejudice,
pursuant to Fed. R. Civ. P. 41. (Dkt. No. 45)

Defendants oppose Plaintiffs' motion, contending that it is a strategic gambit
designed to deprive this Court of jurisdiction. (Def. Br. (Dkt. No. 48) at 4-5; see also Mar. 21,
2016 Def. Ltr. (Dkt. No. 65) at 2) 1

DISCUSSION
I.

APPLICABLE LAW
Rule 41(a) provides that "the plaintiff may dismiss an action without a court order

by filing (i) a notice of dismissal before the opposing party serves either an answer or a motion
for summary judgment; or (ii) a stipulation of dismissal signed by all parties who have
appeared." Fed. R. Civ. P. 41(a)(l)(A). "Except as provided in Rule 41(a)(l), an action may be
dismissed at the plaintiffs request only by court order, on terms that the court considers proper."
Fed. R. Civ. P. 41(a)(2). As noted above, however, Plaintiffs do not seek dismissal of this action
in its entirety; instead, they seek to voluntarily dismiss only their federal law claims.
Accordingly, this Court must consider whether Rule 41(a) applies where a plaintiff seeks to
dismiss less than all of plaintiffs claims.
"[D]istrict courts within the Second Circuit have ... adopted the approach of the
majority of courts in other circuits - that is, that Rule 41(a) does not require dismissal of the
action in its entirety." Blaize-Sampeur v. McDowell, No. 05 Civ. 4275 (JFB) (ARL), 2007 WL
195 8909, at *2 (E.D .N. Y. June 29, 2007) (citing cases); see Mut. Ben. Life Ins. Co. in Rehab. v.
Carol Mgmt. Com., No. 93 Civ. 7991(LAP),1994 WL 570154, at *1 (S.D.N.Y. Oct. 13, 1994)
(noting that Harvey Aluminum, Inc. v. Am. Cyanamid Co., 203 F.2d 105, 108 (2d Cir. 1953), in
which the "Court of Appeals ... h[ e ]ld that Rule 41 allows for dismissal of entire actions, rather
than claims or parties[,]" is "no longer persuasive authority on the issue."); see also Wakefield v.

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Citations in this Order reflect page numbers assigned by this District's Electronic Case Filing

(ECF) system.
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N. Telecom, Inc., 769 F.2d 109, 114 n.4 (2d Cir. 1985) (acknowledging that Harvey Aluminum
"has been criticized and is now against the weight of the authority"). The question remains,
however, whether a plaintiff can seek voluntary dismissal of only some of its claims against a
defendant - while proceeding on other claims against that same defendant - and, if so, whether
such a request is considered under Rule 41 or Rule 15.
"Several courts in other circuits have held that Fed. R. Civ. P. 15, rather than Rule
41 (a)(I ), is the appropriate device through which a plaintiff can dismiss particular claims against
a defendant where it does not seek to dismiss the action against that defendant entirely." Morron
v. City of Middletown, No. 05 Civ. 1705 (JCH), 2006 WL 1455607, at *2 (D. Conn. May 23,
2006) (citing Gobbo Farms & Orchards v. Poole Chemical Co., Inc., 81 F.3d 122, 123 (10th Cir.
1996); Ethridge v. Harbor House Rest., 861F.2d1389, 1392 (9th Cir. 1988); 9 Wright & Miller,
Federal Practice and Procedure § 2362 (2005 Supplement) ("[W]hen multiple claims are filed
against a single defendant, Rule 4l(a) applies only to the dismissal of all claims in an action. A
plaintiff who wished to drop some claims but not others should do so by amending his complaint
pursuant to Rule 15.")).
The Second Circuit has not resolved the issue of whether the proper vehicle is
Rule 15 or Rule 41 (a), but has stated that "the district court may permit withdrawal of a claim
under Rule 15 ... subject to the same standard ofreview as a withdrawal under Rule 41(a)."
Wakefield, 769 F.2d at 114 n.4 (citing 5 Moore's Federal Practice ii 41.06-1 at 41-83;
Mechmetals Coro. v. Telex Computer Products, Inc., 709 F.2d 1287, 1294 (9th Cir. 1983)).
Accordingly, "[a]lthough a motion to eliminate only certain claims [may] actually [be] a motion
to amend the complaint (under Rule 15) rather than one for dismissal, there is no substantive
difference between the two." Machne Menachem, Inc. v. Hershkop, No. 97 Civ. 2550 (ILG),

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2003 WL 1193528, at *2 (E.D.N.Y. Jan. 31, 2003) (citing Wakefield, 769 F.2d at 114 n.4); see
also Coultrip v.. Pfizer, Inc., No. 06 Civ. 15200 (JCF), 2011 WL 1219365, at *6 (S.D.N.Y. Mar.
24, 2011) ("The standard for permitting an amendment withdrawing a claim is the same as for
voluntarily dismissing an action under Rule 41(a) of the Federal Rules of Civil Procedure."
(citing Wakefield, 769 F.2d at 114 n.4; Chambers v. Time Warner, Inc., No. 00 Civ. 2839, 2003
WL 1107790, at *2 (S.D.N.Y. March 12, 2003))). "In general, [a] court may allow such a
dismissal ifthe defendant will not be prejudiced thereby[.]" Wakefield, 769 F.2d at 114 (citing
Hoffman v. Alside, Inc., 596 F.2d 822, 823 (8th Cir. 1979)). Accordingly, this Court next
considers whether Defendants will be prejudiced if Plaintiffs' application to dismiss their federal
law claims is granted.
II.

WHETHER DEFENDANTS WILL BE PREJUDICED BY THE
DISMISSAL OF PLAINTIFFS' FEDERAL LAW CLAIMS
Defendants argue that they will be prejudiced if Plaintiffs are permitted to
withdraw their federal claims, because Plaintiffs' request is part of a strategic gambit to deprive
this Court of jurisdiction. (Def. Br. (Dkt. No. 48) at 10-11) Defendants assert that once
Plaintiffs' federal claims are dismissed, Plaintiffs will contend that this Court lacks jurisdiction
and move to dismiss their state law claims without prejudice.
file those claims in state court.

ilih at 10)

Plaintiffs will then re-

ilib) Given that litigation has proceeded before this Court for

more than a year, Defendants complain that a state court proceeding on similar issues will
unfairly and unreasonably subject them to additional expense.

ilih at 11)

Defendants also argue, however, that their federal law counterclaims provide an
independent basis for this Court's jurisdiction, and that "Plaintiffs' dismissal of their [:f]ederal
claims with prejudice [-if granted-] does not moot Defendants' counterclaims.

ilih at 7-8)

(emphasis in original) Plaintiffs contend "that the Defendants' declaratory judgment

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counterclaims will [not], upon dismissal of Plaintiffs' federal claims, provide a basis for federal
jurisdiction." (Pltf. Reply Br. (Dkt. No. 50) at 5 n.4)
Because Defendants' unfair prejudice arguments turn on whether this Court will
retain jurisdiction after dismissing Plaintiffs' federal claims, this Court next addresses the impact
of such a dismissal on its jurisdiction.

A.

The "Case or Controversy" Requirement
The Declaratory Judgment Act provides that "[i]n a case of actual controversy

within its jurisdiction ... any court of the United States ... may declare the rights and other
legal relations of any interested party seeking such declaration .... " 28 U.S.C. § 2201(a). The
Act thus "confers on federal courts 'unique and substantial discretion in deciding whether to
declare the rights oflitigants. "' Peconic Baykeeper, Inc. v. Suffolk County, 600 F.3d 180, 187
(2d Cir. 2010) (quoting Wilton v. Seven Falls Co., 515 U.S. 277, 286 (1995)).
"By its very language, the Declaratory Judgment Act makes clear that a court
must have subject matter jurisdiction over a case on some other basis before it may grant
declaratory or injunctive relief." Fraternal Order of Police, Nat. Labor Council, USPS No. 2 v.
U.S. Postal Serv., 988 F. Supp. 701, 705 (S.D.N.Y. 1997) (citing Skelly Oil Co. v. Phillips
Petroleum Co., 339 U.S. 667, 671-72 (1950); POK Labs, Inc. v. Friedlander, 103 F.3d 1105,
1110 (2d Cir. 1997)). "The Declaratory Judgment Act is not an independent source of federal
subject matter jurisdiction." Id.
Accordingly, '"in [a trademark] infringement action [such as this], a counterclaim
seeking a declaration of non-infringement will be viable only when it presents an independent
case or controversy that would survive a dismissal of the plaintiff's infringement claim.'"
Orientview Technologies LLC v. Seven For All Mankind, LLC, No. 13 Civ. 0538 (PAE), 2013

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WL 4016302, at *4 (S.D.N.Y. Aug. 7, 2013) (quoting Maverick Recording Co. v. Chowdhury,
No. 07 Civ. 640 (DGT), 2008 WL 3884350, at *2 (E.D.N.Y. Aug. 19, 2008)). Stated another
way, "the Court lacks authority to grant any declaratory relief unless both a federal question and
an actual controversy exist" even after Plaintiffs' federal infringement claims are dismissed.
Nike, Inc. v. Already, LLC, No. 09 Civ. 6366 (RJS), 2011WL310321, at *3 (S.D.N.Y. Jan. 20,
2011), affd, 663 F.3d 89 (2d Cir. 2011), affd, 133 S. Ct. 721 (2013). "The party seeking the
declaratory judgment maintains the burden of proving the existence of such a controversy
throughout the course of the litigation." Small v. Nobel Biocare USA, LLC, No. 06 Civ. 683
(NRB), 2012 WL 4017305, at *1 (S.D.N.Y. Sept. 7, 2012) (citing Dow Jones & Co. v. Ablaise
Ltd., 606 F.3d 1338, 1345 (Fed. Cir. 2010)).

B.

Defendants' Counterclaims
In its first counterclaim, Defendant Chobani contends that it is "entitled to a

declaratory judgment that Chobani's use of the HOW MATTERS trademark, and the words
"How Matters" and "How," does not infringe any valid rights [Plaintiffs] may have." (Chobani
Answer (Dkt. No. 12) ~ 62) Chobani's second counterclaim seeks a declaratory judgment that
Plaintiffs' '"331 Registration be cancelled in whole or in part pursuant to 15 U.S.C. § 1119."
(Id. (Prayer for Relief); see also

id.~~

63-67)

In its first counterclaim, Defendant Droga5 seeks,

pursuant to 28 U.S.C. §§ 2201 and 2202, a judgment from this Court that (1)
Plaintiffs do not own protectable rights at common law or otherwise in the phrase
"how matters" and (2) to the extent Plaintiffs have any rights in the term "how,"
such rights are extremely narrow and do not bar third parties as a general matter
from using the term "how" as a mark or a component of a mark for unrelated
products, but instead are limited to Plaintiffs' specific federal trademark
registrations for "how."

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(Droga5 Answer (Dkt. No. 9) ~ 157) In the alternative, "Droga5 seeks ... a judgment from this
Court that Droga5 has not infringed, under federal or state law, any of Plaintiffs' alleged rights in
and to 'how,' or any 'how'-formative marks."

ilih ~ 158) In its second counterclaim, Droga5

requests that this Court order the cancellation of Plaintiffs' U.S. Trademark Registration Nos.
4,210,276 and 4,388,331, and direct Plaintiffs "to withdraw their pending applications for other
'how'-formative marks.
C.

(Id.~

165)

Analysis
According to Defendants, "[a]s long as Plaintiffs continue to pursue any claims

against Defendants (even in the form of a mere genuine threat of enforcement) the Declaratory
Judgment Act and the Lanham Act confer federal standing upon Defendants." (Def. Br. (Dkt.
No. 48) at 8) (emphasis in original) (citing Medimmune, Inc. v. Genentech, Inc., 549 U.S. 118,
126-137 (2007); 15 u.s.c. § 1119)
In Medimmune, Inc., the Supreme Court held that - for purposes of satisfying the
"case or controversy" requirement - a patent licensee is not required to terminate or be in breach
of its licensing agreement before seeking a declaratory judgment that the underlying patent is
invalid, unenforceable, or not infringed. Medimmune, Inc., 549 U.S. at 137. In that case,
Genentech - acting on behalf of the patent holder - sent a letter to Medlmmune - the licensee claiming that one ofMedimmune's drugs was covered by Genentech's patent, and that
Medlmmune owed Genentech royalties under the parties' licensing agreement. Id. at 121.
Medlmmune believed that the patent was invalid and unenforceable, and that it had not, in any
event, infringed on the patent. Id. at 121-22. However, Medlmmune "considered the letter to be
a clear threat to enforce to enforce the ... patent, terminate the ... license agreement, and sue
for patent infringement if [Medlmmune] did not make royalty payments as demanded." Id. at

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122. "Unwilling to risk ... serious consequences, [Medlmmune] paid the demanded royalties
'under protest,"' but then filed a declaratory judgment action challenging the patent. Id.
The district court dismissed the action, relying on Federal Circuit law holding
that a patent licensee in good standing cannot establish an Article III case or controversy
with regard to validity, enforceability, or scope of the patent, because the license
agreement "obliterate[s] any reasonable apprehension" that the licensee will be sued for
infringement.
Id. (alteration in Medimmune, Inc.) (quoting Gen-Probe Inc. v. Vysis, Inc., 359 F.3d 1376, 1381
(Fed. Cir. 2004)). The Federal Circuit affirmed llit), and the Supreme Court reversed. Id. at
137.
In holding that Medimmune was not required to expose itself to liability in order
to have standing, the court explained that declaratory judgment actions satisfy the "case or
controversy" requirement where "'the facts alleged ... 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.'" Id. at 127 (footnote omitted) (quoting
Maryland Cas. Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 273 (1941)). In sum, although
"[Medlmmune] could only be sued for possible future conduct, ... the [Supreme] Court held that
this future conduct was of sufficient immediacy to warrant declaratory relief." Russian Standard
Vodka (USA), Inc. v. Allied Domecg Spirits & Wine USA, Inc., 523 F. Supp. 2d 376, 383
(S.D.N.Y. 2007).
Here, Defendants contend that, "while Chobani has launched a new campaign
centered around a new tagline, Cho bani has not, in fact, discontinued all use of its HOW
MATTERS mark, which continues to appear on Chobani' s website and on its Greek Yogurt
packaging." (Def. Br. (Dkt. No. 48) at 7) Moreover, Defendants assert that "Plaintiffs [have
not J retreated from their position that such use constitutes infringement[.]" CM) Defendants'

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argument on this point is supported by the fact that Plaintiffs intend to proceed on five state law
claims challenging Defendants' use of the "How" mark (Cmplt. (Dkt. No. I)~~ 70-90)- and
wish to amend the Complaint to add several more state law claims addressing Defendants' use of
this mark (see Dkt. No. 35, Ex. A~~ 108-147). Under these circumstances, the Court concludes
that the standard set forth in Medimmune is satisfied. Indeed, courts routinely find an actual
"case or controversy" on much less substantial grounds, such as cease and desist letters. See,
~'

Venugopal v. Sharadha Terry Products, Ltd., No. 07 Civ. 00484C (JTC), 2009 WL

1468462, at *I (W.D.N.Y. May 22, 2009) (denying motion to dismiss for lack of jurisdiction
where defendants sent plaintiffs a cease and desist letter alleging trademark infringement);
Russian Standard Vodka (USA), Inc., 523 F. Supp. 2d at 383 ("actual controversy" existed
where defendants sent a cease and desist letter to plaintiffs claiming that plaintiffs' advertising
campaign constituted trademark infringement).
In arguing that Defendants' declaratory judgment counterclaims do not provide an
independent basis for federal jurisdiction, Plaintiffs rely on Already, LLC v. Nike, Inc., 133 S.
Ct. 721 (2013). (See Pltf. Br. (Dkt. No. 50) at 5 n.4) In Already, the Supreme Court considered
whether defendant's counterclaim alleging trademark invalidity was moot, given that plaintiff
had entered into a covenant not to sue and had moved to dismiss (1) its claims with prejudice;
and (2) defendant's counterclaims without prejudice. Already LLC., 133 S. Ct. at 725-26. The
Supreme Court acknowledged that - because plaintiff had "demonstrat[ed] that the covenant
encompasses all of [defendant's] allegedly unlawful conduct" - "it was incumbent on
[defendant] to indicate that it engages in or has sufficiently concrete plans to engage in activities
not covered by the covenant." Id. at 728. Because defendant "did not assert any intent to
[engage in activity] that would expose it to any prospect of infringement liability[,]" the court

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was "satisfied that it [was] 'absolutely clear' that the allegedly unlawful activity cannot
reasonably be expected to recur." Id. at 728-29. Accordingly, the Supreme Court found that no
justiciable issue remained. Id. at 732.
Here, in contrast to Already, Plaintiffs have not entered into a covenant not to sue,
and Chobani has not "discontinued all use of its HOW MATTERS mark[.]" (Def. Br. (Dkt. No.
48) at 7) Moreover, given Plaintiffs' intention to proceed on its state law claims, it is obvious
that Plaintiffs have not abandoned their view that Defendants' use of the marks in question
constitute infringement. (See Dkt. No. 35, Ex. A fl~ 87-147; Dkt. No. 65, Ex.

A~~

86-87)

Accordingly, it is not "absolutely clear'' that Plaintiffs will not make any claims or demands
against Defendants in the future regarding the "How Matters" mark, and therefore Defendants'
counterclaims present an actual "case or controversy" that provides an independent basis for the
exercise of federal jurisdiction.
Because granting Plaintiffs' application to voluntarily dismiss their federal claims
will not deprive this Court of jurisdiction, Defendants have no basis to argue unfair prejudice.
CONCLUSION
For the reasons stated above, Plaintiffs' motion to dismiss their Federal law
claims (Cmplt. (Dkt. No. 1) First, Second and Third Claims of Relief) with prejudice is granted.
The Clerk of the Court is directed to terminate the motion (Dkt. No. 45).

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It is further ORDERED that the following briefing schedule will apply to

Plaintiffs' motion to amend the Complaint:
I. Plaintiffs' moving papers are due April 5, 2016;
2. Defendants' opposition papers are due April 15, 2016; and
3. Plaintiffs reply, if any, is due on April 21, 2016.
Dated: New York, New York
March.21, 2016
SO ORDERED.

United States District Judge

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