First Premier Bank et al v. Odysseas Papadimitriou et al

Filing 51

ORDER denying 4 Motion for Preliminary Injunction; denying 27 Motion to Dismiss for Failure to State a Claim. Signed by U.S. District Judge Lawrence L. Piersol on 1/7/15. (DJP)

FILED

JAN 07 2015
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UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA
SOUTHERN DIVISION

FIRST PREMIER BANK, PREMIER
BANKCARD, LLC and PREMIER
NEVADA, LLC,
PlaintiffS,
vs.
ODYSSEAS PAPADIMITRIOU and
EVOLUTION FINANCE, INC.,
Defendants.

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CIV 14-4055

MEMORANDUM OPINION ON
MOTION FOR PRELIMINARY
INJUNCTION AND
MOTION TO DISMISS

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PlaintiffS, a bank and issuers of SUb-prime credit cards, brought this case against Evolution
Finance and its founder and CEO, Odysseas Papadimitriou, owners and operators o fan Internet credit
card review website called CardHub. The Complaint asserts three causes of action: (1) unfair
competition under section 43(a) ofthe Lanham Act, (2) state common law unfair competition and
(3) breach ofcontract. PlaintiffS First Premier Bank, Premier Banckcard, LLC and Premier Nevada,
LLC move for a preliminary injunction pursuant to Rule 65 ofthe Federal Rules of Civil Procedure.
Defendants move to dismiss the complaint under Federal Rule 0 f Civil Procedure 12(b)(6) for failure
to state a claim. Arguments on both motions were heard on October 30,2014, in Sioux Falls, South
Dakota. PlaintiffS asked the Court to permit evidence to be submitted in advance ofthe hearing by
affidavit in order to expedite the proceedings. For the reasons set forth below, both motions are
denied.

FINDINGS OF FACT
First Premier, which is based in Sioux Falls, South Dakota, is a provider offinancial services
and an issuer of credit cards. First Premier owns a registered trademark for its services. Using the
First Premier mark, Premier South Dakota markets First Premier's sub-prime credit cards to
consumers with bad credit through Internet marketers called "affiliates" that carry First Premier

banner advertisements. When an Internet user clicks on one ofPremier's affiliate's advertisements,
the user is directed to an application for First Premier's credit cards. Typically, Premier South
Dakota compensates its affiliates for each application submitted through the affiliate's ad. Premier
South Dakota reviews and approves all of its affiliates' advertising before it is used for marketing
purposes in order to ensure that it complies with all applicable federal regulations for banks.

Defendant Odysseas Papadimitriou is the founder and Chief Executive Officer of Evolution
Finance, the parent company of CardHub.com, a website that helps consumers learn about and
compare credit cards. CardHub's database ofover 1,200 credit cards includes information such as
the interest rate, fees, and rewards for each card. In addition, CardHub users are encouraged to
review and rate each credit card, and their input is presented on the website. CardHub does not issue
credit cards. During the relevant period, the "about" page ofthe website included a disclaimer that
"CardHub is not a credit-card company, nor are we the front for any credit-card company. We are,
however, committed to helping each and every CardHub customer make better financial decisions
regarding the cards in their wallets."

To pay for the expenses associated with maintaining the website, credit card companies that
become advertisers on CardHub pay a commission for each credit card application completed by an
individual who clicks on an "Apply Now" link on CardHub. In return, advertisers' cards are given
priority placement on certain pages throughout CardHub. Every card offered by paying advertisers
is clearly labeled "Sponsored Card" on the CardHub website. But ifa consumer clicks on a card that
happens to not be sponsored, such as First Premier, that lack of sponsorship is not indicated. The
details page for every card in the CardHub database includes a disclaimer which states, in relevant
part:
Regardless of advertiser status, none of the information on CardHub constitutes a
referral or endorsement ofthe respective issuer by us, or vice versa. Furthermore, it
is important to note that the inclusion ofnon-sponsored cards on CardHub does not
indicate that issuer's involvement with the site. Information is displayed first and
foremost fur helping consumers make better credit card decisions.

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Papadimitriou Decl.

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17. Every link from CardHub to a credit card's website brings users first to

a special page that infonns them they are leaving the CardHub site and are being redirected to the
credit-card company's site.

Plaintiffs claim this special page suggests a relationship between

Defendants and First Premier.

On June 15, 2008, First Premier and Evolution Finance entered into an Internet marketing
agreement (Agreement). First Premier provided CardHub with banner ads, credit-card images,
marketing bullet points and a special tracking hyperlink. When clicked, the hyperlink took the user
to an application for First Premier credit cards, which could then be completed and submitted. The
hyperlink also recorded on First Premier's servers that the visitor had come from CardHub. If the
user signed up for a card, CardHub would receive an $8.50 commission from First Premier.

On January 3, 2011, Premier South Dakota terminated the Agreement with CardHub.
CardHub claims that it removed all ofthe banner ads, credit-card images, marketing bullets, special
tracking link and other media that had been given to CardHub as part ofthe Agreement, and that the
CardHub pages for First Premier cards were restored to non-affiliate data like that kept about all
other major credit cards. The special hyperlink was replaced with a standard link to First Premier.

First Premier claims that Evolution continued to promote First Premier credit cards on
CardHub, sometimes using banner ads and unauthorized copies of First Premier's registered
trademark. Premier South Dakota sent letters to Defendants on July 8,2011, August 29, 2012 and
November 20,2012, accusing them ofinfringing First Premier's trademark on the CardHub website.
The parties were able to work through their disputes until early 2014 when CardHub updated its
website to make the site easier to view on handheld devices such as phones and tablets. In the
process, CardHub's engineers unintentionally discarded the special code that had been set up to hide
the special links directly to First Premier's credit card application. Thus, the CardHub website again

had "Apply Now" buttons which directed Internet users to an online application form for a First
Premier credit card. Plaintiffs claim that "Apply Now" or "Apply Here" buttons on CardHub's

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website that direct the consumer to the First Premier transactional or application page confuse
consumers, causing them to believe CardHub is affiliated with First Premier.

On April 10, 2014, Plaintiffs filed this lawsuit alleging breach of contract and unfair
competition under the Lanham Act and the common law. The same day the complaint was filed,
Plaintiffs filed a motion for preliminary injunction. Plaintiffs seek to enjoin Defendants from:
(a) Appropriating and using the FIRST PREMIER name and mark for commercial
purposes;

(b) Using the FIRST PREMIER mark or any colorable imitation thereofin connection
with offering, selling, advertising or promoting the sale of any goods or services or
from otherwise using any name or mark confusingly similar thereto;
(c) Infringing the FIRST PREMIER mark, and unfairly competing with PREMIER;
(d) Placing on the Accused Website or any other website that is directly or indirectly
owned, operated or controlled by Defendants graphic messages and any other
infonnation that appears in the screen when accessing that website, or a graphic
message that appears in a link, "pop-up" advertisement or exit console appearing on
such website that promotes First PREMIER's credit card products, directs Internet
users to web sites where persons can apply for First PREMIER's credit card products
or directs Internet traffic to PREMIER's websites;
(e) Using in connection with the sale of any goods or services or the dissemination
or distribution of advertising, promotional or marketing materials, a false or
misleading description or representation including words or other symbols tending to
deceive or cause confusion with PREMIER or the FIRST PREMIER mark; and

(t) Breaching Section 10.B of the June 15, 2008 agreement between PREMIER
South Dakota and defendant Evolution Finance, Inc.
(Doc. 4.)

Within days of learning of the lawsuit, Mr. Papadimitriou had the "Apply Now" links
removed. Plaintiffs do not object to CardHub's continued maintenance ofbasic information about
First Premier's credit cards. Plaintiffs' lawyer explained that the Amended Complaint was filed on
August 28,2014, to clarifY that Plaintiffs are not seeking to preclude any criticism or commentary
about First Premier on CardHub's website, or even the use ofPremier's mark; Plaintiffs seek solely
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to stop CardHub's use ofthe "Apply Now" buttons to link consumers directly to an application for
a First Premier credit card.' PlaintiffS frame their trademark infringement claim as follows:
The issue is whether Defendants' use ofthe First Premier mark in connection with the
Accused Links which link to First Premier's application page are likely to cause
consumers to believe that Defendants are affiliated with, connected with, or sponsored
by Premier. Given that (i) the Accused Links link to First Premier's application page,
i. e., the page where a transaction between the consumer and First Premier takes place,
and Defendants use the First Premier mark in connection with the Apply Now and
Apply Here buttons in the exact same way that they use those buttons and the marks
ofDefendants' advertisers, consumers are likely to believe that the parties and their
respective services are "affiliated in some way."
(Doc. 35, Reply Briefat 10.) PlaintiffS agree that no trademark infringement results from Defendants'
of use the First Premier mark to refer to or identifY Premier products, but PlaintiffS assert that the
"Apply Now" or "Apply Here" buttons suggest a relationship in which Premier compensates
Defendants for each consumer who submits an application to First Premier. According to Mr.
Papadimitriou, in the six years the company has been operating, no other credit-card company has
demanded that links to their site be removed. CardHub continues to link to the websites of,'virtually
every other major credit card in the United Sates." (Doc. 47-1, ~ 4.) In a supplemental declaration
of Mr. Papadimitriou filed the day before the hearing, he stated that "CardHub has never linked to
an 'application page' on First Premier's website. CardHub has only linked to purely informational
landing pages controlled entirely by First Premier." (Doc. 47-1, ~ 2.) Mr. Papadimitriou believes the
company has a right to provide a link to First Premier's website, but he has tried to accommodate
First Premiere's requests not to do so.

At the hearing on the motion for preliminary injunction on October 30, 2014, PlaintiffS
admitted that Defendants were no longer causing any confusion over the First Premier trademark

Paragraph 38 ofthe Amended Complaint explains that Premier South Dakota has created an
intermediary landing page for Internet users directed to a First Premier application from unauthorized
websites such as CardHub. The landing page encourages users to review the terms and conditions
ofthe First Premier credit card and provides a link to a First Premier card application, where the full
terms and conditions can be accessed. At oral argument, counsel for PlaintiffS stated that the
intermediary landing page was created due to Defendants' conduct.
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because the "Apply Now" and "Apply Here" buttons with direct links to a First Premier card
transaction page had been removed. Defendants agreed not to put the link back up while this lawsuit
is pending, but they did not promise to keep the links off the CardHub website after this case is
resolved. Plaintiffs still request injunctive relief, however, because they fear Defendants will reinstate
the "Apply Now" links in order to make the CardHub website more functionally attractive. Plaintiffs
admit that Defendants are not realizing any direct monetary gains by through their conduct but allege
that Defendants benefit from a more functionally attractive website ifthe "Apply Now" links are used.
According to Plaintiffs, Defendants' conduct damages the good will of Plaintiffs' customers, and it
might trigger scrutiny of First Premier by federal regulatory agencies.

At the conclusion ofthe hearing, the parties agreed that the pending motions can be decided
on the record submitted before the Court.

CONCLUSIONS OF LAW
I. Motion for Preliminary Injunction
In determining whether to grant a preliminary injunction a court considers (I) the probability
ofthe movant's success on the merits; (2) the threat ofirreparable harm to the movant; (3) the balance
between this harm and the injury that granting the injunction will inflict on other interested parties;
and (4) whether the issuance of the preliminary injunction is in the public interest. See Dataphase

Sys., Inc. v. C L Sys., Inc., 640 F.2d 109, 114 (8th Cir. 1981) (en banc). The plaintiff bears the
burden ofproofconcerning the four factors. Gelco Corp. v. Coniston Partners, 811 F.2d 414, 418
(8th Cir. 1987). The court balances the four factors to determine whether a preliminary injunction

is warranted. Dataphase, 640 F.3d at 113; West Pub. Co. v. Mead Data Cent., Inc., 799 F.2d 1219,
1222 (8th Cir. 1986). "A district court has broad discretion when ruling on preliminary injunction
requests[.]" Coca-Cola Co. v. Purdy, 382 F.3d 774, 782 (8th Cir. 2004) (citing United Indus. Corp.

v. CloroxCo., 140F.3d 1175, 1179 (8thCir. 1998».

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A. Lanham Act Claim
Plaintiffs assert a cause of action for unfair competition under 15 U.S.c. § 1125(a).2 The
Lanham Act "prohibits the use of a mark in connection with goods or services in a manner that is
likely to cause confusion as to the source or sponsorship of the goods or services." Davis v. Walt

Disney Co., 430 F.3d 901, 903 (8th Cir. 2005) (citing 15 U.S.C. § 1125(a)(I». This includes
confusion "as to whether there is an 'affiliation, connection, or association' with another person." ld.
at 905. "[T]he core element of trademark infringement law is whether an alleged trademark
infringer's use of a mark creates a likelihood that the consuming public will be confused as to who
makes what product." ld. (internal citations and quotation marks omitted).

1. Probability of Success on the Merits
A claim of trademark infringement under the Lanham Act requires a plaintiff to prove
ownership ofa protectable trademark and a likelihood ofconfusion caused by the defendant's use of
that mark. General Mills, Inc. v. Kellogg Co., 824 F.2d 622, 626 (8th Cir. 1987). Defendants do
not challenge the validity ofPlaintiffs' trademark. The Court will therefore address only the likelihood
of confusion.

In assessing the likelihood of confusion, the Eighth Circuit consistently considers the
following six factors: (1) the strength ofthe trademark; (2) the similarity between the mark at issue
and the alleged infringer's mark; (3) the degree to which the products compete with each other; (4)
the alleged infringer's intent in using the mark; (5) incidents ofactual confusion; and (6) whether the
degree of purchaser care can eliminate the likelihood of confusion which would otherwise exist.

2Section 1125(a)(l) creates a cause of action against

Any person who, on or in connection with any goods or services, or any container for

goods, uses in commerce any word, term, name, symbol, or device, or any

combination thereo ~ or any false designation oforigin, false or misleading description

of fact, or false or misleading representation of fact, which--(A) is likely to cause

confusion, or to cause mistake, or to deceive as to the affiliation, connection, or

association of such person with another person, or as to the origin, sponsorship, or

approval ofhis or her goods, services, or commercial activities by another person, ....

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General Mills, 824 F.2d at 626; see also SquirtCo v. Seven-Up Co., 628 F.2d 1086, 1091 (8th Cir.
1980). The test is not mechanical, but rather focuses on the ultimate question ofwhether, under all
the circumstances, consumers are likely to be confused between the plaintiff's trademark and the
allegedly infringing use. Mutual ofOmaha Ins. Co. v. Novak, 836 F.2d 397, 399 n. 3 (8th Cir. 1987).

There is no dispute that Plaintiffs' trademark is strong and distinctive. Moreover, there is no
dispute that Defendants used Plaintiffs' mark on the CardHub website and thus the marks being
compared are identical. Accordingly, the first two factors, the strength of Plaintiffs' mark and the
degree ofsimilarity between the marks, weigh in favor of Plaintiffs.

There also is no dispute that the Plaintiffs and Defendants do not compete with each other.
Plaintiffs descnbe First Premier as a bank specializing ''in issuing unsecured credit cards to persons
on the lowest end ofthe credit worthiness spectrum something in which, to the best ofits knowledge,
few other banks specialize." (Doc. 35, Reply Briefat 3.) Defendants are in the business ofusing an
Internet website to compare and contrast credit cards for consumers, and collecting revenue from
their affiliates and advertisers. This third factor weighs in favor of Defendants. 3

The Defendants purposely used an "Apply Now" button in conjunction with Plaintiffs'
trademark. PlaintiflS have not presented any evidence, however, that Defendants intended to cause
consumers to be confused about whether the two companies are affiliated. In fact, it appears from
the record that Defendants would prefer not to be affiliated with First Premier. Even though PlaintiflS
sent three letters to Defendants complaining about trademark infringement prior to filing this lawsuit,
there is no evidence that any other company has complained or that Defendants otherwise have been
put on notice that use of company trademarks in conjunction with "Apply Now" buttons on the
CardHub website causes consumer confusion as to affiliation.

Defendants insist that it is not a

trademark violation to use the "Apply Now" buttons on their website, and that the links simply make
3The Court is aware that direct competition is not necessary to a finding oflikelihood ofconfusion.
See Anheuser-Busch, Inc. v. Balducci Publ 'ns, 28 F.3d 769, 774 (8th Cir. 1994) (,'Confusion ... may
exist in the absence of direct competition."). Nonetheless, whether Premier and Defendants are
competitors is a factor to consider in assessing the likelihood of confusion.
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it easier for consumers to reach their desired credit card application. The fourth factor concerning the
alleged infringer's intent in using the mark favors Defendants.

Although Plaintiffs need not prove actual confusion to establish a likelihood ofconfusion, its
existence is positive proofofthe likelihood ofconfusion. See Squirtco, 628 F .2d at 1091. Plaintiffs
have not provided the Court with any evidence of confusion. Since Plaintiffs have been accusing
Defendants oftrademark infringement since July of20 11, they have had enough time to gather such
evidence. Thus the fifth factor regarding incidents ofactual confusion weighs in favor ofDefendants.
See, e.g., Data Concepts, Inc. v. Digital Consulting. Inc., 150 F.3d 620, 626 (6th Cir. 1998) ("[T]he
lack of evidence of actual confusion is not significant unless the circumstances indicated that such
evidence should have been available. "); cf Duluth News- Tribune. a Div. ofNorthwest Publ 'ns, Inc.
v. Mesabi Pub. Co., 84 F.3d 1093, 1098 (8th Cir. 1996) ("[E]ven several isolated incidents ofactual
confusion that occur initially upon the creation of a potentially confusing mark are insufficient to
establish a genuine issue ofmaterial fact as to the likelihood of confusion.").

""[T]he kind of product, its costs and the conditions of purchase are important factors in
considering whether the degree of care exercised by the purchaser can eliminate the likelihood of
confusion which would otherwise exist." SquirtCo, 628 F.2d at 1091. As noted by the Eighth Circuit,
this Court held in a previous trademark case that consumers tend to exercise a relatively high degree
ofcare in selecting banking services. See First Nat. Bank in Sioux Falls v. First Nat. Bank, S.D., 153
F.3d 885, 889 (8th Cir. 1998). Plaintiffs argue that their customers have bad credit and therefore
some ofthem may not be the most sophisticated of consumers, but Plaintiffs offered no information
regarding the sophistication ofthe potential or actual customers here, and the Court has no evidence
to indicate that customers for sub-prime credit cards are any less careful than consumers of other
banking services. Sub-prime credit card companies require their customers to pay very high fees and
interest rates, and the Court concludes that sub-prime credit cards are the type of product that

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requires a high degree of care by the consumer making a purchasing decision. This final factor
involving the degree ofpurchaser care weighs in favor of Defendants.4

Balancing all ofthe relevant factors under the circumstances ofthis case, the Court finds that
Plaintiffs have failed to show a likelihood of confusion as to affiliation. For this reason, Plaintiffs'
have not shown a probability of success on the merits of their Lanham Act claims.

2. Irreparable Harm
The second Dataphase factor is the threat of irreparable harm to the movant absent the
injunct ion. S In the Eighth Circuit, the lack of irreparable harm is a sufficient reason to deny a
preliminary injunction. Aswegan v. Henry, 981 F.2d 313, 314 (8th Cir. 1992) (citing Modem

Computer Sys., Inc. v. Modem Banking Sys., Inc., 871 F.2d 734, 738 (8th Cir. 1989) (en banc».
According to Plaintiffs, First Premier's good will is harmed if a customer has a bad experience on
Defendants' website or if a customer sees the wrong terms and conditions on Defendants' website
prior to seeing the correct terms on First Premier's site. But this is supposition by Plaintiffs, and the
record is devoid of evidence of harm to Plaintiffs.

Since this lawsuit was filed, Defendants have complied with Plaintiffs' demand that the
"Apply Here" and "Apply Now" buttons be removed, and they agreed to keep it that way until this
litigation is concluded. Plaintiffs admit that, at the present time, there is no likelihood of confusion
about Plaintiffs' affiliation with Defendants. There is nothing for the Court to enjoin with respect to

4Plaintiffs contend the Court should accept as fact Plaintiffs' claim that when one website redirects
consumers to a transaction page of another website, consumers believe that the second website
compensates the first website for consummated transactions. There is no evidence in the record to
support this presumption.
SThe Court is aware ofthe Eighth Circuit's holding that, in trademark infringement cases, it is not
necessary to prove actual damage or injury iflikelihood ofconfusion has been established. See Mutual
ofOmaha, 836 F.2d at 403 n. 11. Because Plaintiffs failed to establish likelihood ofconfusion in this
case, the Court is addressing the issue whether Plaintiffs face the threat of irreparable harm in the
absence of an injunction.

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Plaintiffs' trademark infringement claims. An adequate remedy in the form ofa permanent injunction
exists in the event Plaintiffs establish trademark infringement after full discovery and after the Court
has had an opportunity to fully adjudicate the issues involved. Accordingly, the second Dataphase
factor has not been established.

3. The Balance of Harm Between the Parties
The third Dataphase requirement is that the hann to the plaintiff in the absence of a
preliminary injunction outweighs the potential hann that granting a preliminary injunction may cause
to the defendant. Dataphase, 640 F.2d at 114. The essential inquiry in weighing the equities is
whether the balance tips decidedly toward the movant. General Mills, 824 F.2d at 624. The
evidence before the Court at this time shows that Defendants are not engaging in the allegedly
infringing conduct, and the balance ofharms to the parties is a neutral factor in this case.

4. The Public Interest
The final Dataphase factor requires the court to consider the public interest. Although
trademark infringement is contrary to the public interest, Plaintiffs have failed to show that confusion
among sub-prime credit card purchasers about First Premier's affiliation with Defendants is likely.
Since fact questions exist on the issue whether consumers are likely to be confused, the public interest
is better served by a full adjudication ofthe merits of Plaintiffs' Lanham Act claim.

After weighing all four Dataphase factors the Court finds that a motion for a preliminary
injunction is not warranted on Plaintiffs' Lanham Act Claim.

B. State Law Unfair Competition Claim
Under South Dakota law
[t]he tort ofunfair competition does not have specific elements. Instead, "it descnbes
a general category oftorts which courts recognize for the protection of commercial
interests." Therefore, damages for unfair competition result from satisfYing the
elements of an underlying tort.

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Setliffv. Akins, 616 N.W.2d 878,887-88 (S.D. 2000) (citation omitted). PlaintiffS assert that their
unfair competition claim is established by their showing of the underlying trademark infringement.
Thus, for the same reasons the Court denied PlaintiffS' request for a preliminary injunction on the
Lanham Act claim, no preliminary injunction will be issued on the common law unfair competition
claim

C. Breach of Contract Claim
The language ofthe termination clause ofthe contract on which PlaintiffS rely for their breach
ofcontract claim provides: "Upon the effective date oftermination ofhis Agreement, Operator shall
remove all Banners from all websites maintained by Operator and/or shall cease sending e-mails
promoting Bank's credit card products." "Banner" is defined by the contract as "a graphic message
and any other information that appears on the computer screen when accessing the Operator's
Website, or a graphic message that appears in a Link, 'pop-up' advertisement or exit console,
promoting the Bank's credit card products or directing Traffic to Premier's Website." PlaintiffS
allege that Defendant Evolution continues to promote First Premier credit cards on CardHub using
banners in violation ofthe contract. 6 Evolution denies using banners in violation ofthe Agreement.

1. Probability of Success on the Merits
Under South Dakota law, to prove a breach of contract a plaintiff must show by a
preponderance ofthe evidence that 1) an enforceable promise existed; 2) the defendant breached the
contract; and 3) damages resulted from defendant's breach of the contract. See, e.g., McKie v.

Huntley, 620 N. W.2d 599, 603 (S.D. 2000).

The meaning of"banner" in the Agreement is ofcentral importance to deciding ifEvolution
breached the contract. Under South Dakota law, a court must look "to the language that the parties
used in the contract to determine their intention." Pauley v. Simonson, 720 N.W.2d, 665, 667-68
(S.D. 2006) (citation omitted). In doing so, a court must "give effect to the language ofthe entire

6PlaintiffS do not assert its breach of contract claim against Mr. Papadirnitriou individually.
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contract and particular words and phrases are not interpreted in isolation." In re Dissolution of

Midnight Star Enterprises, L.P., 724 N.W.2d 334,337 (S.D. 2006). Ifthe parties' intention is made
clear by the language ofthe contract "it is the duty ofthis [C]ourt to declare and enforce it." Pauley,
720 N.W.2d at 668. "However, if the contract is uncertain or ambiguous, parol and extrinsic
evidence may be used for clarification." Id. (internal quotations and citation omitted). "A contract
is ambiguous only when it is capable of more than one meaning when viewed objectively by a
reasonably intelligent person who has examined the context ofthe entire integrated agreement." Id.
at 668 (citation omitted).

It is not clear from the language of the Agreement that "Banner" includes "links" and
Defendants' written argument that a link is not a banner is reasonable. 7 The Agreement, therefore,
appears to be ambiguous. As a result, the Court should consider extrinsic evidence to determine
which ofthe parties interpretations is the one on which they mutually agreed. At this juncture, there
is not such evidence in the record for the Court to consider. Accordingly, Plaintiffs have not
established, to the extent necessary to warrant a preliminary injunction, that Evolution breached the
Agreement by using banners as defined by the contract. Thus, Plaintiffs have failed to show a
probability of success on its breach of contract claim.

2. Threat of Irreparable Harm
Plaintiffs have not come forward with proofofthe damages they allegedly have incurred or
will incur as a result ofEvolution's alleged breach of contract. Thus, Plaintiffs have failed to show
a threat of irreparable harm.

7The Plaintiffs asked the Court to expedite the proceedings on the motion for a preliminary
injunction, and the Plaintiffs' arguments at the hearing related solely to the trademark infringement
claim.
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3. Balancing of Harms
PlaintiffS have failed to show the balance ofhardships tips decidedly in their favor. The Court
finds that a delay in resolving the breach ofcontract claim until discovery is completed will not hann
either party.

4. Public Interest Considerations
At this stage ofthe litigation, it is far from clear who will succeed on the merits ofthe breach
ofcontract claim. Denying the preliminary injunction on the breach of contract claim will not harm
the public interest.

For all ofthese reasons the Court will deny PlaintiffS' request for a preliminary injunction on
the breach of contract claim.

PlaintiffS' motion for a preliminary injunction is denied as to all three claims asserted in the
Complaint. This is without prejudice to Plaintiffs' right to seek a permanent injunction and damages
after the parties have had the benefit offull discovery. 8

II. Motion to Dismiss Pursuant to Rule 12(b)(6)
In 2007, the United States Supreme Court clarified the standard to be applied when deciding
a motion to dismiss under Rule 12(b)(6) ofthe Federal Rules of Civil Procedure. See Bell Atlantic

Corp. v. Twombly, 550 U.S. 544, 561-62 (2007). The Supreme Court held that a viable complaint
must now include "enough facts to state a claim to reliefthat is plausible on its face." Id. at 570. That
is, "[f]actual allegations must be enough to raise a right to relief above the speculative leveL .. " Id.
at 555. The new standard is not a "heightened fact pleading" requirement, but "simply calls for

8The Court's findings of fact and conclusions of law regarding the motion for a preliminary
injunction are not binding at a trial on the merits. See, e.g., University o/Texas v. Camenisch,451
U.S. 390, 395 (1981) (the general rule is that "the findings offact and conclusions oflaw made by
a court granting a preliminary injunction are not binding at trial on the merits," because courts must
customarily decide preliminary injunction motions "on the basis 0 f procedures that are less formal and
evidence that is less complete than in a trial on the merits"); accord Henderson v. Bodine Aluminum,
Inc., 70 F.3d 958,962 (8th Cir. 1995) (citing Camenisch for this general rule).
14

enough fact to raise a reasonable expectation that discovery will reveal evidence of [the claim]." ld.
at 556, 570. The complaint must be hberally construed in the light most favorable to the plaintiff and
should not be dismissed simply because the court is doubtful that the plaintiff will be able to prove
all of the necessary factual allegations. See id. at 555. Moreover, when considering a motion to
dismiss for failure to state a claim, a court must accept the facts alleged in the complaint as true, even
ifdoubtful. See id. Thus, a well-pled complaint may proceed even ifit appears ''that recovery is very
remote and unlikely." ld. at 556 (citations omitted).

In addressing the motion for a preliminary injunction, the Court descnbed PlaintiflS'
allegations in detail and those allegations will not be repeated here. Defendants offer several
arguments that PlaintiflS' claims fail as a matter oflaw, including that PlaintiflS' claims are barred by
the First Amendment. The question, however, at this early stage of the litigation is not whether
PlaintiflS ultimately will prevail, but whether PlaintiflS have alleged sufficient facts in the Amended
Complaint which, taken as true, create a plausible claim for relief. PlaintiflS' Amended Complaint
contains allegations which, assuming they are true, could demonstrate that Defendants breached the
Agreement and infringed on PlaintiflS' trademark, thereby causing harm. Thus, Defendants' motion
to dismiss will be denied. Accordingly,
IT IS ORDERED:

1. That PlaintiflS' Motion for a Preliminary Injunction, doc. 4, is denied; and
2. That Defendants' Motion to Dismiss, doc. 27, is denied.
Dated this 7th day ofJanuary, 2015.
BY THE COURT:

~..ww.l~StM-

ATTEST:
JOSEPH

HAA8

rence L. Pierso 1
United States District Judge
CLERK

BY:~~
DEPUTY

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