The Turfgrass Group Inc et al v. Carolina Fresh Farms Inc et al

Filing 172

ORDER AND OPINION denying 148 Motion for Partial Summary Judgment as to Liability against Defendant Carolina Fresh Farm. Signed by Honorable J Michelle Childs on 3/11/2013.(asni, )

THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
ORANGEBURG DIVISION
The Turfgrass Group, Inc. and University of
Georgia Research Foundation, Inc.,

)
)
)
Plaintiffs,
)
)
v.
)
)
Carolina Fresh Farms, Inc. and Carolina
)
Fresh Farms, LLC f/k/a Carolina Fresh
)
Farms, Inc., and John A. Fogle, Sr.,
)
)
Defendants/
)
Third-Party Plaintiffs, )
)
v.
)
)
Zelotis Wofford and Billy Self,
)
)
Third-Party Defendants.)
____________________________________ )

Civil Action No. 5:10-cv-00849-JMC
OPINION AND ORDER

This matter is before the court on Plaintiffs The Turfgrass Group, Inc. (“Turfgrass”) and
University of Georgia Research Foundation, Inc.’s (“UGARF,” and collectively “Plaintiffs”)
Motion for Partial Summary Judgment as to Liability Against Defendant Carolina Fresh Farm
[Dkt. No. 148]. For the following reasons, the court denies Plaintiffs’ motion.
FACTUAL AND PROCEDURAL BACKGROUND
This case concerns Plaintiffs’ claims against Defendants Carolina Fresh Farms, LLC f/k/a
Carolina Fresh Farms, Inc.( “Carolina Fresh”) and John A. Fogle, Sr. for violation of the Plant
Variety Protection Act (the “PVPA”), 7 U.S.C. § 2541, et seq.; the Lanham Act, 15 U.S.C.
§1125; and for state law breach of contract arising from Turfgrass and Carolina Fresh’s
agreement for the sale of a certified variety of centipede grass called TifBlair. TifBlair is
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certified under the PVPA as a distinct variety of centipede grass by the United States Department
of Agriculture, Agricultural Research Service (the “USDA”).

The USDA issued Plaintiff

UGARF a license for TifBlair, which it sublicensed to Turfgrass. Pursuant to the sublicense
between UGARF and Turfgrass, Turfgrass is allowed to enter into third-party agreements for the
marketing, sale, and use of TifBlair.
In the late 1990s, Turfgrass entered into an agreement with Carolina Fresh that allowed
Carolina Fresh to grow, market, and sale TifBlair grass under certain conditions.

Those

conditions included, inter alia, the maintenance of certain certification standards and the
payment of royalties. The agreement remained in place until it was terminated by Turfgrass in
November 2006.
Plaintiffs contend that, after Turfgrass terminated the agreement, Carolina Fresh sold
TifBlair grass in violation of the PVPA, the Lanham Act, and in breach of the provisions
governing the termination of the parties’ agreement. Currently before the court is Plaintiffs’
motion for partial summary judgment1 as to Carolina Fresh’s liability on these causes of action.
LEGAL STANDARD
Summary judgment is appropriate when the pleadings, depositions, answers to
interrogatories, and admissions on file, together with affidavits, if any, show 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 determining whether a genuine issue has been raised, the court
must construe all inferences and ambiguities against the movant and in favor of the non-moving
party. See United States v. Diebold, Inc., 369 U.S. 654, 655 (1962).
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Defendants have also filed a Motion for Summary Judgment and a motion seeking to exclude
Plaintiffs’ expert witness, Donald Davis. This order only disposes of the issues raised in
Plaintiffs’ motion. The court will address Defendants’ motions by separate order.
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The party seeking summary judgment shoulders the initial burden of demonstrating to the
district court that there is no genuine issue of material fact. See Celotex Corp. v. Catrett, 477
U.S. 317, 323 (1986). Once the movant has made this threshold demonstration, the non-moving
party, to survive the motion for summary judgment, may not rest on the allegations averred in his
pleadings. Rather, the non-moving party must demonstrate that specific, material facts exist
which give rise to a genuine issue. See id. at 324. Under this standard, the existence of a mere
scintilla of evidence in support of the plaintiff's position is insufficient to withstand the summary
judgment motion. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). Likewise,
conclusory allegations or denials, without more, are insufficient to preclude the granting of the
summary judgment motion. See Ross v. Commc'ns Satellite Corp., 759 F.2d 355, 365 (4th Cir.
1985). “Only disputes over facts that might affect the outcome of the suit under the governing
law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant
or unnecessary will not be counted.” Anderson, 477 U.S. at 248.
DISCUSSION
PLANT VARIETY PROTECTION ACT
The PVPA provides patent like protections to developers of certain new and distinct
asexually reproduced plant varieties. See 35 U.S.C.A. § 161 et seq. The owner of a PVPA may
prevail on a cause of action for infringement by demonstrating that the alleged infringer (1) sold
or marketed the protected variety; (2) imported or exported it; (3) multiplied or propagated it “for
growing purposes”; (4) used it to produce “a hybrid or different variety”; (5) used its specifically
marked seed “or progeny thereof to propagate the variety”; (6) dispensed it “to another, in a form
which can be propagated, without notice as to being a protected variety under which it was

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received”; (7) conditioned it “for the purpose of propagation,” except as to certain activities
permitted under the Act; or (8) stocked it for an impermissible purpose under the Act. 7 U.S.C. §
2541(a).
Viewing the facts in the light most favorable to the non-moving party, Carolina Fresh, the
court finds that Plaintiffs have failed to demonstrate that there are no genuine issues of material
fact as to their PVPA claim, and Plaintiffs are not entitled to judgment as a matter of law.
Among other issues, the court notes that there is a genuine issue of material fact as to whether
the remaining inventory sold by Carolina Fresh after the termination of the agreement was the
“protected variety” given that the agreement was terminated, at least in part, for Carolina Fresh’s
alleged failure to maintain certified TifBlair fields. Additionally, even assuming the remaining
inventory qualified as the “protected variety,” there is a genuine dispute of material fact as to
whether and how Carolina Fresh was authorized to dispose of it under the agreement posttermination.

Therefore, the court may not grant summary judgment in favor of Plaintiffs on

their PVPA claim.
LANHAM ACT
In this case, Plaintiffs’ Lanham Act claim rests on the false advertising provisions of the
Lanham Act. See Plaintiffs’ Memorandum Brief in Support of Motion for Partial Summary
Judgment, at 15 [Dkt. No. 148-3].
[A] plaintiff asserting a false advertising claim under the Lanham Act must
establish that: (1) the defendant made a false or misleading description of fact or
representation of fact in a commercial advertisement about his own or another's
product; (2) the misrepresentation is material, in that it is likely to influence the
purchasing decision; (3) the misrepresentation actually deceives or has the
tendency to deceive a substantial segment of its audience; (4) the defendant
placed the false or misleading statement in interstate commerce; and (5) the
plaintiff has been or is likely to be injured as a result of the misrepresentation,
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either by direct diversion of sales or by a lessening of goodwill associated with its
products.
PBM Products, LLC v. Mead Johnson & Co., 639 F.3d 111, 120 (4th Cir. 2011) (internal
citations and quotation marks omitted).

“For liability to arise under the false advertising

provisions of the Lanham Act, ‘the contested statement or representation must be either false on
its face or, although literally true, likely to mislead and to confuse consumers given the
merchandising context.’” Id.
The court finds that Plaintiffs have failed to demonstrate that there are no genuine issues
of material fact as to their Lanham Act claim, and Plaintiffs are not entitled to judgment as a
matter of law. Plaintiffs’ claims are centered on Carolina Fresh’s continued use of marketing
materials describing TifBlair grass after termination of the agreement to promote Carolina
Fresh’s Carolina Green grass simply by changing the name of the grass in the marketing
materials. Plaintiffs contend that the descriptions used in the marketing materials for TifBlair
through 2006 are particular to the properties of TifBlair grass and, by using the exact language
and marketing materials for Carolina Green, Carolina Fresh violated the Lanham Act causing
confusion in the marketplace regarding the attributes and quality of TifBlair versus Carolina
Green grasses.

Through the Rule 30(b)(6) deposition testimony of Carolina Fresh’s

representative, Plaintiffs presented an admission that Carolina Fresh did not develop any new
variety of centipede grass and that Carolina Green was merely Carolina Fresh’s branding name
for common centipede. While this testimony arguably eliminates any factual dispute as to the
falsity of the statement in Carolina Fresh’s brochures that “In 2007 Carolina Fresh is proud to
introduce Carolina Green centipede, a new variety developed for improved . . .” [Dkt 148-5, at
19] (emphasis added), many of the other elements required to establish a Lanham Act violation
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remain disputed when viewed in the light most favorable to Carolina Fresh. For example, there
are genuine disputes of fact regarding the materiality of the representations, whether the
representations were actually deceptive or tended to be deceptive, and whether Plaintiffs’ injuries
resulted from the representations. Particularly, the record reflects a genuine dispute concerning
whether the language used in the marketing materials were unique to the properties of TifBlair
such that the use of those terms would create confusion in the marketplace as compared to
common centipede. Accordingly, Plaintiffs are not entitled to partial summary judgment on this
claim.
BREACH OF CONTRACT
To recover for a breach of contract a plaintiff must demonstrate: (1) the existence of a
binding contract entered into by the parties; 2) breach of the contract; and 3) damages directly
and proximately caused by the breach. Fuller v. Eastern Fire & Casualty Ins. Co., 240 S.C. 75,
89, 124 S.E.2d 602, 610 (1962).
The court cannot grant Plaintiffs’ request for partial summary judgment on their breach
of contract claim because there is a genuine dispute of material fact as to whether Carolina Fresh
breached the sub-license agreement at issue. Plaintiffs contend that Carolina Fresh violated ¶
12.3 of the agreement, which provides:
In the event this Agreement is terminated, Sublicensee shall destroy all production
fields of Sublicensed Product and notify Sublicensor of such action. Sublicensee
may continue to Sell in the ordinary course of business for a period of one (1)
year after the termination date Sublicensed Product provided that royalties on
such Sales and all other sums due hereunder are timely paid in the amounts and
manner provided in this Agreement. Following such one (1) year period, all
remaining production and Inventory of Sublicensed Product must be destroyed
and verified by Sublicensor. In the event this Agreement is terminated for reason
12(1)(c), Sublicensee may sell existing inventory only into the generic trade as
variety not stated and all Sublicensed Product material must be destroyed and
verified by Sublicensor within one (1) year of termination. Notwithstanding
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anything herein to the contrary, upon termination of this Agreement for any
reason, Sublicensee must pay all sums due to Sublicensor hereunder upon
demand.
Plaintiffs assert that Carolina Fresh violated the agreement by failing to pay required royalties on
sales of TifBlair made after the expiration of the agreement. Carolina Fresh admits that it did not
pay royalties but asserts that it was not required to pay royalties because Plaintiffs terminated the
sublicense agreement pursuant to provision 12(1)(c), which allows termination of the agreement
for failure to meet certain certification requirements. Carolina Fresh contends that because it
was not selling the grass as TifBlair, and therefore not as a “Sublicensed Product” as defined in
the contract, it was not required to pay royalties. On this claim, the court notes that there is a
genuine dispute of fact concerning whether Carolina Fresh complied with the terms of the
agreement post-termination in the manner in which but harvested and sold the remaining
inventory. Furthermore, there is a material dispute regarding the sales records as related to the
remaining inventory and whether Plaintiffs may recover for sales recorded as “TifBlair” only, or
also for sales recorded as “centipede” and “Carolina Green” based on Carolina Fresh’s record
keeping practices. Additionally, the court finds that there is an ambiguity in the language of the
agreement as to the requirement for the payment of royalties. Therefore, summary judgment in
favor of Plaintiffs is not appropriate on the breach of contract claim. See Duncan v. Little, 384
S.C. 420, 245, 682 S.E.2d 788, 790 (2009) (“where a contract is ambiguous, the fact finder must
ascertain the parties' intentions from the evidence presented.”).

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CONCLUSION
For the foregoing reasons,2 the court DENIES Plaintiffs The Turfgrass Group, Inc. and
University of Georgia Research Foundation, Inc.’s Motion for Partial Summary Judgment as to
Liability Against Defendant Carolina Fresh Farm [Dkt. No. 148].
IT IS SO ORDERED.

United States District Judge
March 11, 2013
Orangeburg, South Carolina

2

This order does not reflect all genuine issues of material fact which may support its ruling.
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