Liquid Manna, LLC v. GLN Global Light Network, LLC et al
Filing
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ORDER DENYING 26 Motion for Reconsideration. Signed by Judge David A. Ezra. (aej)
THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
LIQUID MANNA, LLC,
Plaintiff,
vs.
GLN GLOBAL LIGHT NETWORK,
LLC and DAVID DARTEZ,
Defendants.
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No. 5:14-CV-1123-DAE
ORDER DENYING MOTION FOR RECONSIDERATION
Before the Court is a Motion for Reconsideration filed by Defendant
David Dartez (“Dartez”) (Dkt. # 26). Pursuant to Local Rule CV-7(h), the Court
finds this matter suitable for disposition without a hearing. After careful
consideration of the Motion and the supporting memorandum, the Court, for the
reasons that follow, DENIES Dartez’s Motion for Reconsideration.
BACKGROUND
In approximately 2004, Fred Neal, Jr. (“Neal”) developed and began
selling a product described as “supersaturated oxygen” water. (“Compl.,” Dkt. # 1
¶ 10.) Neal marketed the water as having health benefits and sold it directly and
through distributors under the name “Liquid Manna.” (Id.) According to Plaintiff,
Neal also extensively used the terms “Royal” and “Regal” in marketing and selling
his product, which consumers often refer to as “Regal Liquid Manna.” (Id. ¶ 11.)
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On May 21, 2013, Neal obtained a trademark registered in his name for the
“Liquid Manna” mark. (Id. ¶ 13 & Ex. A.)
Defendant Global Light Networks, LLC (“GLN”), a company owned
and operated by Dartez (collectively, “Defendants”), was one of the largest
distributors of Liquid Manna products. (Id. ¶ 14.) In the course of their business
relationship, Neal and Dartez collaborated to develop and produce Liquid Manna
gel pads, which contain oxygen-enhanced gel made using Neal’s proprietary
technology. (Id. ¶ 16.) Plaintiff asserts that Neal did not share the proprietary
process with Dartez. (Id. ¶ 17.) The gel pads were sold by GLN using the “Liquid
Manna” mark. (Id. ¶ 19.)
Neal died on June 1, 2014. (Id. ¶ 22.) Neal’s estate assigned the
trademark registration for “Liquid Manna” to Plaintiff on December 15, 2014.
(Id., Ex. B.) Plaintiff has continued to manufacture and sell the water and gel pads
using Neal’s proprietary technology under the Liquid Manna mark. (Id. ¶ 24.)
Plaintiff alleges that after Neal’s death, Dartez and GLN circulated
newsletters containing false and disparaging information about the future
availability of Liquid Manna products. (Id. ¶ 25.) Specifically, Plaintiff alleges
that Defendants represented that Liquid Manna would no longer be sold by anyone,
that Neal had not shared the proprietary technology used to create the oxygenated
water, and that Defendants were capable of reproducing the gel pads. (Id. ¶ 26.)
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Defendants further claimed that there was a limited amount of Liquid Manna
product left to sell. (Id. ¶ 29.)
Plaintiff alleges that Defendants later began to assert that they could
produce Liquid Manna’s products using the same process and that Neal had taught
Dartez how to create the oxygenated water and gel pads. (Id. ¶¶ 30–31.)
According to Plaintiff, Defendants have continued to sell products they claim are
made using Plaintiff’s proprietary process and have continued to employ Plaintiff’s
“Liquid Manna” mark in connection with products manufactured by Defendants.
(Id. ¶¶ 33–34.) Additionally, Defendants have begun selling an “oxygen enhanced
water product” using the name “Regal” as its principal mark. (Id. ¶¶ 36–37.)
Finally, Plaintiff alleges that Defendants advertise a product called “Rad-D-Tox”
using unauthorized and misleading references to Neal and his proprietary process.
(Id. ¶¶ 38–42.)
Plaintiff filed suit against Defendants in this Court on December 22,
2014, alleging causes of action under the Lanham Act for false advertising, false
association, trademark dilution, and trademark infringement. (Id. ¶¶ 43–64,
84–97.) Plaintiff’s Complaint also alleges claims for injury to business reputation
under the Texas Business and Commerce Code, as well as common law business
disparagement, defamation, and unfair competition. (Id. ¶¶ 65–83.)
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On April 2, 2015, Dartez filed a Motion to Dismiss.1 (Dkt. # 10.)
Following a hearing, the Court issued an Order denying Dartez’s Motion to
Dismiss on July 2, 2015. (Dkt. # 23.) On July 30, 2015, Dartez filed the instant
Motion for Reconsideration. (Dkt. # 26.) Plaintiff has not filed a response.
LEGAL STANDARD
“While the Federal Rules of Civil Procedure do not provide for a
motion for reconsideration, such a motion may be considered either a Rule 59(e)
motion to alter or amend judgment or a Rule 60(b) motion for relief from judgment
or order.” Shepherd v. Int’l Paper Co., 372 F.3d 326, 328 n.1 (5th Cir. 2004).
Whether a motion is considered under Rule 59(e) or Rule 60(b) depends on when it
was filed. See id. A motion filed within 28 days of the judgment or order of
which the party complains is considered a motion brought under Rule 59(e).
Williams v. Thaler, 602 F.3d 291, 303 & n.7 (5th Cir. 2010); see also Fed. R. Civ.
P. 59(e). Here, Dartez filed his Motion for Reconsideration 28 days after entry of
the Court’s Order denying his Motion to Dismiss, and the Court will therefore
consider the Motion under Rule 59.
Federal Rule of Civil Procedure 59(e) permits a litigant to challenge
the correctness of a judgment. Three rationales can support a motion to alter or
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While Dartez has entered an appearance in this case, representing himself pro se,
GLN has not. On April 20, 2015, Plaintiff moved for an entry of default against
GLN, which was entered by the clerk on the same date. (Dkt. ## 13, 14.) As of
the date of this Order, GLN remains in default.
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amend under Rule 59(e): (1) the judgment exhibits “a manifest error of law or
fact”; (2) the litigant wishes to present newly discovered evidence; or (3) “there
has been an intervening change in the controlling law.” Schiller v. Physicians Res.
Grp. Inc., 342 F.3d 563, 567 (5th Cir. 2003) (quoting Rosenzweig v. Azurix Corp.,
332 F.3d 854, 863–64 (5th Cir. 2003)). “‘Manifest error’ is one that ‘is plain and
indisputable, and that amounts to a complete disregard of the controlling law.’”
Guy v. Crown Equip. Corp., 394 F.3d 320, 325 (5th Cir. 2004). Accordingly, a
Rule 59(e) motion “is not the proper vehicle for rehashing evidence, legal theories,
or arguments that could have been offered or raised before the entry of judgment,”
and instead is an “extraordinary remedy that should be used sparingly.” Templet v.
HydroChem Inc., 367 F.3d 476, 479 (5th Cir. 2004).
DISCUSSION
Dartez’s Motion for Reconsideration is not based on newly discovered
evidence or an intervening change in the controlling law. Dartez instead argues
that the Court erred in denying his Motion to Dismiss because (1) Defendants’ use
of “Regal+” and “Royal” does not infringe on Plaintiff’s “Liquid Manna” mark;
(2) Plaintiff has not specifically alleged that the products sold by Defendants using
the allegedly infringing marks were Defendants’ products; (3) the statements
allegedly made by Defendants are not actionable; (4) Plaintiff failed to allege that
Dartez, rather than GLN, committed any trademark violations; and (5) dismissal of
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Plaintiff’s federal claims requires dismissal of the Plaintiff’s state law claims. All
of these arguments were raised or could have been raised in Dartez’s Motion to
Dismiss, and thus are not a proper basis for his Motion for Reconsideration.
Templet, 367 F.3d at 479. The Court will nevertheless briefly address each.
First, Dartez’s argument that Plaintiff’s statutory trademark
infringement claims should be dismissed because “Regal+” and “Royal” do not
infringe on Plaintiff’s “Liquid Manna” mark is without merit. Plaintiff’s claims for
trademark dilution, trademark infringement, and trademark counterfeiting under
the Lanham Act are all based on Plaintiff’s allegations that Defendants used
Plaintiff’s “Liquid Manna” mark, not Plaintiff’s claimed common law marks.
(Compl. ¶¶ 84–98, 105–07.) Plaintiff’s allegations regarding Defendants’ alleged
use of the “Regal” and “Royal” marks support Plaintiff’s claim for common law
trademark infringement, not its statutory claims for trademark dilution,
infringement, and counterfeiting. (Compl. ¶¶ 99–102.) Dartez’s argument thus
provides no basis for dismissing Plaintiff’s statutory trademark claims.
Second, Plaintiff has adequately alleged its statutory trademark claims
against Defendants. Dartez argues that Plaintiff failed to allege that the infringing
use of Plaintiff’s marks was used in connection with Defendants’ products, rather
than with Defendants’ sale of Plaintiff’s own goods. This argument is frivolous.
Plaintiff alleges that “Defendants, without authorization or license, continue to use
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the trademarked term ‘Liquid Manna TM’ logo on their website in connection with
products that Defendants manufacture and that are deceptively similar to products
manufactured and distributed by (or authorized by) Plaintiff.” (Compl. ¶ 33.)
Plaintiff further alleges that Defendants’ use of the “Liquid Manna” mark “in its
online product descriptions, images, and advertisements” was “unauthorized,” and
provides two pictures of products containing allegedly infringing uses of the mark.
(Compl. ¶ 86.) These allegations are more than sufficient to plausibly allege that
Defendants used Plaintiff’s registered mark without Plaintiff’s authorization in
marketing and selling Defendants’ products.
Dartez’s third argument is that Defendants’ alleged statements
regarding Plaintiff’s products are not actionable. Plaintiff alleges that “[u]pon
Neal’s death Defendants circulated newsletters to the public (and specifically the
target consumer group) that contained false and disparaging information about the
future availability of Liquid Manna water and gel pad products.” (Compl. ¶ 25.)
Plaintiff alleges that Defendants specifically stated that (1) Neal had not shared the
technology used to create his products with anyone, (2) Liquid Manna would no
longer be sold by anyone, and (3) Neal taught Defendants how to manufacture the
products and Defendants were capable of reproducing them. (Id. ¶ 26.) Plaintiff
further alleges that after Defendants were informed that Plaintiff had the
technology to create Liquid Manna Products and intended to continue
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manufacturing and selling the products using the “Liquid Manna” mark,
“Defendants continued to publish false statements” and “claimed or implied there
was a limited amount of Liquid Manna stock left to sell in the world.” (Id. ¶¶ 28–
29.) Plaintiff alleges that Defendants subsequently “published a newsletter stating,
falsely, that Neal had, in fact, taught Dartez the proprietary technology” used to
create Plaintiff’s products. (Id. ¶ 31.) Dartez contends that these alleged
statements are not disparaging, and that Dartez did not know that they were
inaccurate.
The alleged statements form the basis for Plaintiff’s claims for false
advertising under 15 U.S.C. § 1125, business disparagement, and defamation. To
state a claim for false advertising under the Lanham Act, a plaintiff must allege:
(1) that the defendant made a false statement of fact about its product
in a commercial advertisement; (2) that the statement actually
deceived or has a tendency to deceive a substantial segment of its
audience; (3) the deception is likely to influence the purchasing
decision; (4) the defendant caused the false statement to enter
interstate commerce; and (5) the plaintiff has been or is likely to be
injured as a result.
Logan v. Burgers Ozark Country Cured Hams Inc., 263 F.3d 447, 462 (5th Cir.
2001). This cause of action does not require that the defendant knew the statement
was false. Additionally, the disparaging nature of the alleged statements is clear—
they imply that Plaintiff was going out of business and that Defendants were
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prepared to take Plaintiff’s place in the market. Dartez’s argument therefore
provides no basis for dismissing Plaintiff’s false advertising claim.
“To prevail on a business disparagement claim, a plaintiff must
establish that (1) the defendant published false and disparaging information about
it, (2) with malice, (3) without privilege, (4) that resulted in special damages to the
plaintiff.” Forbes Inc. v. Granada Biosciences, Inc., 124 S.W.3d 167, 170 (Tex.
2003). “[A] business disparagement defendant may be held liable ‘only if he knew
of the falsity or acted with reckless disregard concerning it, or if he acted with ill
will or intended to interfere in the economic interest of the plaintiff in an
unprivileged fashion.’” Id. (emphasis omitted) (quoting Restatement 2d of Torts
§ 623A, cmt. g (1977)).
The related claim of defamation requires that the plaintiff allege that
the defendant “(1) published a statement, (2) that was defamatory concerning the
plaintiff, (3) while acting with either actual malice, if the plaintiff is a public
official or a public figure, or negligence, if the plaintiff is a private individual,
regarding the truth of the statement.” In re Lipsky, 411 S.W.3d 530, 543 (Tex.
App. 2013). “A statement is defamatory if it tends to injure a person’s reputation
and thereby expose the person to public hatred, contempt, ridicule, or financial
injury or to impeach any person’s honesty, integrity, virtue, or reputation.” Id.
“The two torts differ in that defamation actions chiefly serve to protect the personal
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reputation of an injured party, while a business disparagement claim protects
economic interests.” Forbes Inc., 124 S.W.3d at 170.
Here, Plaintiff’s allegations are sufficient to state plausible claims for
business disparagement and defamation. Plaintiff alleges that Defendants
published on their website and in their newsletter information regarding Plaintiff’s
products that Defendants knew to be false—specifically, that Liquid Manna
products would be discontinued following Neal’s death, that Neal had not shared
the technology used to create the products, and that Defendants were capable of
reproducing the products. (Compl. ¶¶ 25–27, 70–80.) Plaintiff further alleges that
Defendants publicly asserted that there was a limited amount of Liquid Manna
products left in the world after being informed that Plaintiff would continue
manufacturing and selling the products, and that they falsely stated that Neal had
taught Dartez how to manufacture the products. (Id. ¶¶ 29, 31.) Plaintiff alleges
that Defendants’ statements disparaged Plaintiff “by implying that Plaintiff was no
longer producing its enhanced water products, and/or that Plaintiff was not
producing its enhanced water products to the same standard as before Neal’s
death.” (Id. ¶ 70.) Finally, Plaintiff alleges that Defendants compete with
Plaintiff, are familiar with Plaintiff’s business, and published the false statements
to unfairly gain a competitive advantage and with the intent to interfere with
Plaintiff’s business interests. (Id. ¶ 71.) These allegations, taken as true, establish
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plausible claims for business disparagement and defamation under Texas law, and
Dartez is therefore not entitled to dismissal of these claims.
Dartez’s fourth argument is that Plaintiff failed to allege the Dartez,
rather than GLN, committed any trademark infringement. This argument is also
without merit. As noted in the Court’s Order, Plaintiff’s Complaint, which refers
to Dartez and GLN collectively as “Defendants,” asserts that Dartez and GLN each
engaged in the conduct alleged, and are thus each liable on the stated causes of
action. (Dkt. # 23 at 6.) Plaintiff’s allegations throughout the Complaint are
asserted against both Dartez individually and GLN, and Dartez’s argument is
without basis.
Finally, because Plaintiff has alleged sufficient factual material to
state plausible claims for relief under the Lanham Act, the Court need not dismiss
Plaintiff’s state law claims under 28 U.S.C. § 1367(c). In sum, Dartez has not
identified any plain and indisputable error of law or fact in the Court’s Order
denying his Motion to Dismiss, and he is therefore not entitled to relief under Rule
59(e).
CONCLUSION
For the foregoing reasons, the Court DENIES Dartez’s Motion for
Reconsideration (Dkt. # 26.)
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IT IS SO ORDERED.
DATED: San Antonio, Texas, October 29, 2015.
_____________________________________
David Alan Ezra
Senior United States Distict Judge
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