3M Company v. Ugly Juice, LLC dba Good Use et al, No. 5:2021cv02338 - Document 19 (N.D. Cal. 2021)
Court Description: Order Granting 10 Motion for Temporary Restraining Order and For Order to Show Cause Regarding Preliminary Injunction. Signed by Judge Edward J. Davila on 04/23/2021. (ejdlc2S, COURT STAFF) (Filed on 4/23/2021)
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3M Company v. Ugly Juice, LLC dba Good Use et al Doc. 19 Case 5:21-cv-02338-EJD Document 19 Filed 04/23/21 Page 1 of 7 1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 SAN JOSE DIVISION 7 8 3M COMPANY, Case No. 5:21-cv-02338-EJD Plaintiff, 9 v. United States District Court Northern District of California 10 11 UGLY JUICE, LLC DBA GOOD USE, et al., 12 Defendants. ORDER GRANTING PLAINTIFF’S MOTION FOR TEMPORARY RESTRAINING ORDER AND FOR ORDER TO SHOW CAUSE RE PRELIMINARY INJUNCTION Re: Dkt. No. 10 13 Plaintiff 3M Company (3M) brings this action against Defendants Ugly Juice, LLC dba 14 Good Use, RDGIV Holdings LLC, Grant Carlson, Slava Chupryna, Sabrina Corpus, and Ralph 15 Dewar Gaines (collectively, “Defendants”) for violations of the Lanham Act including trademark 16 counterfeiting, trademark infringement, unfair competition, false endorsement, false designation of 17 origin, trademark dilution, as well as other California statutory and common law violations. 3M’s 18 claims arise from Defendants’ alleged ongoing misconduct and use of 3M’s name and “3M” 19 trademarks to perpetrate false and deceptive offers for sale and sales of counterfeit personal 20 protective equipment (“PPE”) to customers, during the COVID-19 pandemic—without 21 authorization and for inappropriate commercial benefit. Complaint (“Compl.”), Dkt. No. 1 ¶ 1. 22 3M now seeks a temporary restraining order and preliminary injunction to halt Defendants, and 23 their agents from selling or offering to sell counterfeit 3M-brand N95 respirators. For the reasons 24 below, the Court will grant the temporary restraining order. 25 26 27 28 I. BACKGROUND 3M is a Delaware corporation that manufactures healthcare and safety products for Case No.: 5:21-cv-02338-EJD ORDER GRANTING PLAINTIFF’S MOTION FOR TEMPORARY RESTRAINING ORDER AND FOR ORDER TO SHOW CAUSE RE PRELIMINARY INJUNCTION 1 Dockets.Justia.com Case 5:21-cv-02338-EJD Document 19 Filed 04/23/21 Page 2 of 7 1 industries and consumers worldwide. Compl. ¶ 27. As a result of the COVID-19 pandemic, a 2 high demand exists for 3M’s N95 respirator products (N95 masks). To keep them safe while 3 working to mitigate the effects of the pandemic, first responders, healthcare professionals, and 4 other frontline workers depend on 3M’s N95 masks. Id. ¶ 37. In order to meet the rising demand 5 for N95 masks, 3M has increased its annual production of N95 masks to approximately 2 billion. 6 Id. United States District Court Northern District of California 7 As demand for PPE and in particular N95 masks has increased however, 3M has seen 8 individuals and companies trying to exploit the situation. Id. ¶ 41. To help protect the public and 9 healthcare professionals on the front lines of the COVID-19 pandemic from counterfeiting, 10 misleading and substantially inferior PPE products, to help reduce time and money wasted by 11 government and other procurement officials on scams, and to protect 3M’s goodwill and 12 reputation in its 3M brand, 3M has worked with law enforcement authorities, online e-commerce 13 retailers, and others to combat unethical and unlawful business practices related to 3M-brand N95 14 masks. Id. ¶ 42. 3M’s efforts are seen on its website, which lists the single case price for the most 15 common models of its 3M-brand N95 masks so that the public can identify and avoid inflated 16 pricing. Id. ¶ 43. In addition, customers of 3M can help identify and report fraud and 17 counterfeiting on its website, which provides several identifiers of counterfeit goods as well as lot 18 numbers known to be associated with counterfeit goods. Id. 19 3M commenced this trademark-infringement action against Defendants on March 31, 20 2021. 3M’s complaint alleges that the Defendants are using 3M’s registered trademarks to 21 advertise and sell counterfeit 3M-branded N95 masks. Most notably, 3M alleges that in August 22 2020, Defendants contacted a Salt Lake City, Utah based elder care group to sell counterfeit 3M 23 Model 1860 and 1860S N95 masks. Id. ¶ 45. In October 2020, the elder care group purchased 24 over 37,000 3M Model 1860 N95 masks for $155,874.00, which were shipped to their facilities. 25 Id. ¶ 46. In February 2021, the elder care group realized that the N95 masks it purchased were not 26 like others that they had previously purchased and contacted 3M’s COVID-19 Fraud Response 27 28 Case No.: 5:21-cv-02338-EJD ORDER GRANTING PLAINTIFF’S MOTION FOR TEMPORARY RESTRAINING ORDER AND FOR ORDER TO SHOW CAUSE RE PRELIMINARY INJUNCTION 2 Case 5:21-cv-02338-EJD Document 19 Filed 04/23/21 Page 3 of 7 1 Team. Id. ¶ 47. The elder care group provided photos of the products that they purchased, which 2 3M alleges exhibited signs of counterfeiting as described on 3M’s website. Id. ¶ 48. Specifically, 3 3M states that the lot numbers (B20522 and B20018) on the masks are known-counterfeit lot 4 numbers and the packaging was inauthentic. Id. ¶ 49; see also Declaration of Christine McCool 5 (“McCool Decl.”), Dkt. No. 10-1 ¶ 14; Exs. 4 and 6. Defendants also charged the elder care group 6 more than three times the single case list price for these counterfeit products. Compl. ¶ 50; 7 McCool Decl. ¶ 13. 8 United States District Court Northern District of California 9 In December 2020, Defendants also sold thousands of counterfeit 3M-brand N95 masks to a New York hospital. Compl. ¶ 51. The hospital spent $11,741.80 for the counterfeit 3M Model 10 1860 and 1860S N95 masks. Id. After suspecting the 3M-brand N95 masks they had received 11 were inauthentic, the hospital contacted 3M and provided photographic evidence that 3M alleges 12 demonstrated the hospital had received counterfeit goods from Defendants. Id. ¶¶ 52-53. 13 Specifically, they exhibited several indicia of fraud described on 3M’s website, including the 14 inclusion of known counterfeit lot numbers and inauthentic packaging. Id. ¶ 54. 15 Further, Defendants attempted to sell hundreds of thousands of counterfeit 3M-brand N95 16 masks to a Seattle, Washington based health care system. Id. ¶ 55; McCool Decl. ¶ 17. 17 Defendants informed the healthcare system that their fulfillment partner on these products was 18 CovCare, Inc. (“CovCare”) and that CovCare was an approved 3M distributor. Id. 3M asserts 19 that CovCare is not an approved distributor and instead, is a Staten Island, New York based 20 company that sells counterfeit 3M-brand N95 masks. Compl. ¶ 56. 3M alleges that Defendants 21 contacted at least five other hospitals and health care systems located across the country, offering 22 to sell hundreds of thousands of counterfeit 3M-brand N95 masks. Id. ¶¶ 58, 61. The hospitals 23 and health care systems each contacted 3M and reported counterfeiting and fraud concerns after 24 the Defendants offered a “proof of life” video, to demonstrate the authenticity and availability of 25 the 3M-brand N95 masks. Id. ¶¶ 60-62. 26 27 28 3M brings nine claims for relief, including five federal claims under the Lanham Act. Case No.: 5:21-cv-02338-EJD ORDER GRANTING PLAINTIFF’S MOTION FOR TEMPORARY RESTRAINING ORDER AND FOR ORDER TO SHOW CAUSE RE PRELIMINARY INJUNCTION 3 United States District Court Northern District of California Case 5:21-cv-02338-EJD Document 19 Filed 04/23/21 Page 4 of 7 1 3M’s first and second claims allege that Defendants are engaging in trademark counterfeiting and 2 infringement, in violation of 15 U.S.C. § 1114(1), by using spurious designations on its products 3 that are identical to 3M’s federally registered trademarks. 3M’s third claim alleges that the 4 Defendants are engaging in unfair competition and false designation of origin, in violation of 15 5 U.S.C. § 1125(a)(1)(A), by creating the false impression that the products they purposed to offer 6 originate from, and/or are sponsored or approved by, and/or offered with authorization from 3M. 7 3M’s fourth claim alleges that Defendants are engaging in trademark dilution, in violation of 15 8 U.S.C. § 1125(c), by using 3M’s trademarks in the sale of counterfeit products. 3M’s fifth claim 9 alleges that Defendants are engaging in false advertising, in violation of 15 U.S.C. § 10 1125(a)(1)(B), by making statements to the general public and medical health professionals that 11 contain false, misleading, and/or deceptive statements about the nature and quality of the products 12 Defendants have for sale. 3M’s remaining four claims allege violations of California’s trademark 13 law and business and professional code. 14 On April 19, 2021, 3M filed the pending motion requesting the Court issue a temporary 15 restraining order, an order to show cause why a preliminary injunction should not issue, and for 16 the opportunity to conduct limited expedited discovery in advance of the hearing on the 17 preliminary injunction. Motion for Temporary Restraining Order and Preliminary Injunction 18 (“Mot.”), Dkt. No. 10. 3M seeks to enjoin the Defendants from selling or offering to sell 19 counterfeit 3M-brand N95 masks. 20 21 II. LEGAL STANDARD The Court applies a familiar four-factor test on both a motion for a temporary restraining 22 order and a motion for a preliminary injunction. See Stuhlbarg Int’l Sales Co. v. John D. Brush & 23 Co., 240 F.3d 832, 839 n.7 (9th Cir. 2001). A plaintiff seeking either remedy “must establish that 24 he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of 25 preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the 26 public interest.” Am. Trucking Associations, Inc. v. City of Los Angeles, 559 F.3d 1046, 1052 (9th 27 28 Case No.: 5:21-cv-02338-EJD ORDER GRANTING PLAINTIFF’S MOTION FOR TEMPORARY RESTRAINING ORDER AND FOR ORDER TO SHOW CAUSE RE PRELIMINARY INJUNCTION 4 Case 5:21-cv-02338-EJD Document 19 Filed 04/23/21 Page 5 of 7 1 Cir. 2009) (quoting Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 20 (2008)). Injunctive 2 relief is “an extraordinary remedy that may only be awarded upon a clear showing that the plaintiff 3 is entitled to such relief.” Winter, 555 U.S. at 22. To grant preliminary injunctive relief, a court must find that “a certain threshold showing United States District Court Northern District of California 4 5 [has been] made on each factor.” Leiva-Perez v. Holder, 640 F.3d 962, 966 (9th Cir. 2011) (per 6 curiam). Assuming that this threshold has been met, “serious questions going to the merits and a 7 balance of hardships that tips sharply towards the plaintiff can support issuance of a preliminary 8 injunction, so long as the plaintiff also shows that there is a likelihood of irreparable injury and 9 that the injunction is in the public interest.” All. for the Wild Rockies v. Cottrell, 632 F.3d 1127, 10 1135 (9th Cir. 2011) (internal quotation marks omitted). 11 III. ANALYSIS Having reviewed 3M’s motion, the Court finds that 3M has shown a likelihood of success 12 13 on the merits of its trademark related claims, and that it will suffer irreparable harm unless 14 Defendants’ violations are enjoined. The Court also finds that a temporary restraining order is 15 necessary to prevent immediate and irreparable injury to 3M before the hearing on the order to 16 show cause regarding the preliminary injunction can take place, and to preserve the status quo. 17 The Court further finds that the balance of equity and interests of justice support granting such 18 relief.1 Accordingly, this Court enters the following orders: 19 TEMPORARY RESTRAINING ORDER 20 IT IS HEREBY ORDERED that Defendants, as well as their agents, representatives, 21 22 23 24 25 26 27 28 1 As of the date and time of entry of this order, no defendant has filed an opposition to the pending motion or otherwise attempted to communicate with the Court directly. The Court finds that 3M has made reasonable attempts to provide Defendants notice of its motion for a temporary restraining order and this Court’s April 22, 2021 status conference. 3M indicates that all relevant documents (summons and complaint, initial case management order, and notice of motion for temporary restraining order and preliminary injunction) were served on defendants RDGIV Holdings LLC and Ralph Dewar Gaines and on the Ugly Juice defendants (Ugly Juice, Grant Carlson, Slava Chupryna, and Sabrina Corpus). See Declaration of Douglass Smurr, Dkt. No. 102. The Court also notes that 3M has been diligent in attempting to determine whether Defendants have retained counsel and whether Defendants would stipulate to a resolution of 3M’s motion. See id; see also Supplemental Declaration of Douglass Smurr, Dkt. No. 14. Case No.: 5:21-cv-02338-EJD ORDER GRANTING PLAINTIFF’S MOTION FOR TEMPORARY RESTRAINING ORDER AND FOR ORDER TO SHOW CAUSE RE PRELIMINARY INJUNCTION 5 Case 5:21-cv-02338-EJD Document 19 Filed 04/23/21 Page 6 of 7 1 employees, assigns, and all persons acting in concert or privity with them, are immediately 2 temporarily restrained from: 3 1. Maintaining, disseminating, reproducing, promoting, distributing, advertising, or 4 otherwise using any of the 3M Marks, or any mark confusingly similar thereto; 5 2. Using any of the 3M Marks, or any mark confusingly similar thereto, as all or part of any mark, product configuration, or design; 6 United States District Court Northern District of California 7 3. Concealing, destroying, transferring, selling, donating, or otherwise disposing of 8 any evidence of Defendants’ manufacture, marketing, sale, or receipt of things 9 related to Defendants’ sale of counterfeit 3M-brand products bearing the 3M Marks 10 4. Using the 3M Marks and any other word, name, symbol, device, or combination 11 thereof that is confusingly similar to the 3M Marks, for, on, and/or in connection 12 with the manufacture, distribution, advertising, promoting, offering for sale, and/or 13 sale of any good or services, including, without limitation, Plaintiff’s 3M-brand 14 N95 masks; and 15 5. Engaging in any false, misleading, and/or deceptive conduct in connection with 3M 16 and its products, including, without limitation, representing itself as being an 17 authorized distributor, vendor, agent, representative, retailer, and/or licensee of 3M 18 and/or any of 3M’s products, including, without limitation, 3M-brand N95 masks. 19 EXPEDITED DISCOVERY ORDER 20 IT IS HEREBY ORDERED that Defendants, as well as their agents, representatives, 21 employees, assigns, and all persons acting in concert or privity with them, are required to comply 22 with the following limited expedited discovery in advance of the hearing on the preliminary 23 injunction by: 24 25 26 27 28 1. Allowing and cooperating with 3M’s inspections of all warehouses and storage sites where Defendants may store counterfeit 3M-brand N95 masks; and 2. Producing to 3M all records, including but not limited to emails, texts, social media Case No.: 5:21-cv-02338-EJD ORDER GRANTING PLAINTIFF’S MOTION FOR TEMPORARY RESTRAINING ORDER AND FOR ORDER TO SHOW CAUSE RE PRELIMINARY INJUNCTION 6 Case 5:21-cv-02338-EJD Document 19 Filed 04/23/21 Page 7 of 7 1 posts, videos, invoices, memoranda, and other documents related to their purchase, 2 marketing, and sale of purported 3M-brand N95 masks. 3 United States District Court Northern District of California 4 ORDER TO SHOW CAUSE RE: PRELIMINARY INJUNCTION IT IS ORDERED that Defendants shall show cause, unless Defendants waive the right to 5 do so, before the Honorable Edward J. Davila at 9:00 a.m. on May 13, 2021, why a preliminary 6 injunction should not issue restraining and enjoining Defendants, as well as their agents, 7 representatives, employees, assigns, and all persons acting in concert or privity with them, from 8 selling or offering to sell 3M-brand N95 respirators as more specifically set forth herein, pending 9 the final disposition of this action. Unless the parties stipulate to an alternate briefing schedule, 10 including an extension of the temporary restraining order, the schedule on 3M’s motion for a 11 preliminary injunction will be as follows. Defendants’ opposition to the motion for preliminary 12 injunction is due May 4, 2021 by the close of business. 3M may file a reply no later than May 7, 13 2021 by the close of business. 14 Rule 65(c) of the Federal Rules of Civil Procedure provides that a district court may grant 15 a preliminary injunction “only if the movant gives security in an amount that the court considers 16 proper to pay the costs and damages sustained by any party found to have been wrongfully 17 enjoined or restrained.” Fed. R. Civ. P. 65(c). The district court retains discretion “as to the 18 amount of security required, if any.” Johnson v. Couturier, 572 F.3d 1067, 1086 (9th Cir. 2009) 19 (internal quotation marks and citations omitted) (emphasis in original). In this case, the Court 20 dispenses with the bond requirement but may revisit the issue should the circumstances so require. 21 3M shall be responsible for serving this Order on all Defendants. 22 IT IS SO ORDERED. 23 24 25 Dated: April 23, 2021 ______________________________________ EDWARD J. DAVILA United States District Judge 26 27 28 Case No.: 5:21-cv-02338-EJD ORDER GRANTING PLAINTIFF’S MOTION FOR TEMPORARY RESTRAINING ORDER AND FOR ORDER TO SHOW CAUSE RE PRELIMINARY INJUNCTION 7
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