Helpful Hound, L.L.C. v. New Orleans Building Corp., et al., No. 2:2018cv03500 - Document 59 (E.D. La. 2018)

Court Description: ORDER AND REASONS regarding 37 Motion to Dismiss. For the foregoing reasons, the Court GRANTS IN PART and DENIES IN PART defendants' motion to dismiss. Count Five of the City's complaint is DISMISSED. Signed by Judge Sarah S. Vance on 8/9/2018. (Reference: All cases)(cg)

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Helpful Hound, L.L.C. v. New Orleans Building Corp., et al. Doc. 59 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA HELPFUL HOUND, L.L.C. VERSUS CIVIL ACTION NO. 18-350 0 c/ w 18-3594 NEW ORLEANS BUILDING CORPORATION AND CITY OF NEW ORLEANS SECTION “R” (2) ORD ER AN D REASON S Before the Court is defendants’ motion to dism iss. 1 For the following reasons, the m otion is granted in part and denied in part. I. BACKGROU N D This case arises out of a dispute over use of the name “St. Roch Market.”2 The original St. Roch Market is located at 2381 St. Claude Avenue, on the neutral ground of St. Roch Avenue. It is one of the few rem nants of the once-extensive network of public m arkets in New Orleans. 3 The City leased stalls in St. Roch Market to various food vendors from the 180 0 s until 1 R. Doc. 37. For a m ore extensive discussion of the facts of this case, see the Court’s Prelim inary Injunction Order and Reasons. R. Doc. 58. 3 Case No. 18-3594, R. Doc. 1 at 6 ¶ 17. 2 Dockets.Justia.com 1945. 4 From 1945 until the 1990 s, the City leased the m arket to the Lama fam ily, who first operated a seafood m arket and po-boy restaurant at the site before converting the space to a superm arket in 1954. 5 The City then leased the space to a different tenant, which operated a seafood m arket, po-boy restaurant, and Chinese food restaurant until the space was dam aged by Hurricane Katrina in 20 0 5. 6 The City later renovated the building. 7 On February 25, 20 14, the City turned over m anagement and operation of St. Roch Market to New Orleans Building Corporation (NOBC), a public benefit corporation created by the City of New Orleans. 8 NOBC leased the building to Bayou Secret, LLC on Septem ber 29, 20 14. 9 The lease requires Bayou Secret to operate “a full service neighborhood restaurant” and “fresh foods m arket using m ultiple vendors in a ‘stalls’ concept.”10 Exhibit D to the lease provides that Bayou Secret “m ay utilize existing typeface logo for the St. Roch Market as is presently posted on the building and replicate this logo in additional locations of the building.”11 In February 20 18, Bayou Secret 4 5 6 7 8 9 10 11 Id. at 7 ¶ 19. Id. at 8 ¶ 24. Id. at 8-9 ¶¶ 27-28. Id. at 11 ¶ 36. Id. at 12 ¶ 38; see also id. at 3 ¶ 3. Id. at 13 ¶ 43. R. Doc. 21-1 at 5. Id. at 42. 2 and related entities opened a food hall called “St. Roch Market” in Miam i. 12 Other locations of “St. Roch Market,” such as in Chicago and Nashville, Tennessee, are also planned. 13 Helpful Hound, L.L.C. (allegedly a mem ber of Bayou Secret) applied for registration of “St. Roch Market” on April 6, 20 17. 14 Although the U.S. Patent and Tradem ark Office (PTO) refused registration on the Principal Register, 15 the PTO allowed registration on the Supplem ental Register on September 19, 20 17. 16 The City and Helpful Hound have since filed com peting applications for registration of “St. Roch Market” on the Principal Register. 17 Both applications rem ain pending. On April 3, 20 18, Helpful Hound brought a declaratory judgm ent action against the City and NOBC. 18 Helpful Hound’s com plaint seeks a declaration of noninfringem ent and a declaration that the registration of its service m ark was proper. 19 The City and NOBC (collectively, plaintiffs) filed suit the next day against Bayou Secret; St. Roch F&B, LLC; Helpful Hound; 12 13 14 15 16 17 18 19 Case No. 18-3594, R. Doc. 1 at 18 ¶ 70 . Id. at 20 ¶¶ 78-79. Case No. 18-3594, R. Doc. 1-5 at 51. R. Doc. 21-2 at 2. Case No. 18-3594, R. Doc. 1-5 at 1. R. Doc. 18-7; R. Doc. 18-13. R. Doc. 1. Id. at 6 ¶¶ 37-38. 3 St. Roch Design District, LLC; Will Donaldson; Barre Tanguis; and David Donaldson (collectively, defendants). 20 According to plaintiffs’ com plaint, Bayou Secret changed its nam e to St. Roch F&B in J une 20 16; St. Roch Design District operates “St. Roch Market” in Miam i; Will Donaldson is a m anager of Helpful Hound and St. Roch Design District; Tanguis is a m ember of Helpful Hound and a m anager of St. Roch Design District; and David Donaldson is a m ember of Helpful Hound. 21 Plaintiffs’ com plaint asserts a number of claim s under both federal and state law, including tradem ark cancellation, tradem ark infringement, tradem ark dilution, unfair com petition, breach of tradem ark license or im plied tradem ark license, breach of contract, and unauthorized use of assumed nam e of a governm ental entity. Defendants now m ove to dism iss plaintiffs’ claim s against St. Roch Design District for lack of personal jurisdiction; plaintiffs’ Lanham Act claim s under Federal Rule of Civil Procedure 12(b)(6); and plaintiffs’ claim s against the individual defendants under Rule 12(b)(6). 22 20 21 22 Case No. 18-3594, R. Doc. 1. Id. at 4-5 ¶¶ 5, 8-11. R. Doc. 37. 4 II. D ISCU SSION A. Pe rs o n al Ju ris d ictio n o ve r St. Ro ch D e s ign D is trict Defendants first contest whether St. Roch Design District is subject to personal jurisdiction in Louisiana. 23 Personal jurisdiction is “an essential element of the jurisdiction of a district court, without which the court is powerless to proceed to an adjudication.” Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 584 (1999) (internal quotation m arks and citation om itted). A district court m ay exercise personal jurisdiction over a defendant if “(1) the long-arm statute of the forum state creates personal jurisdiction over the defendant; and (2) the exercise of personal jurisdiction is consistent with the due process guarantees of the United States Constitution.” Revell v. Lidov, 317 F.3d 467, 469 (5th Cir. 20 0 2). Because Louisiana’s long-arm statute, La. R.S. § 13:320 1, extends jurisdiction to the lim its of due process, the Court need only consider whether the exercise of jurisdiction in this case satisfies federal due process requirements. Dickson Mar. Inc. v. Panalpina, Inc., 179 F.3d 331, 336 (5th Cir. 1999). Personal jurisdiction m ay be either general or specific. Seiferth v. Helicopteros Atuneros, Inc., 472 F.3d 266, 271 (5th Cir. 20 0 6). General 23 R. Doc. 37-1 at 5. Relatedly, defendants argue that plaintiffs failed to serve St. Roch Design District’s registered agent for service of process. Plaintiffs have since properly served the com pany. See R. Doc. 44. 5 jurisdiction over a foreign defendant exists if the defendant’s “affiliations with the State are so ‘continuous and system atic’ as to render them essentially at hom e in the forum State.” Goody ear Dunlop Tires Operations, S.A. v. Brow n, 564 U.S. 915, 919 (20 11). The Fifth Circuit has articulated a three-step inquiry to determ ine whether specific jurisdiction exists. Seiferth, 472 F.3d at 271. First, the plaintiff m ust show that “the defendant has m inim um contacts with the forum state, i.e., . . . it purposely directed its activities toward the forum state or purposefully availed itself of the privileges of conducting activities there.” Id. Second, the plaintiff m ust show that his “cause of action arises out of or results from the defendant’s forum related contacts.” Id. If the plaintiff m akes these showings, “the burden shifts to the defendant to defeat jurisdiction by showing that its exercise would be unfair or unreasonable.” Id. When the district court rules on a m otion to dism iss for lack of personal jurisdiction without an evidentiary hearing, the “uncontroverted allegations in the plaintiff’s com plaint m ust be taken as true, and conflicts between the facts contained in the parties’ affidavits m ust be resolved in the plaintiff’s favor.” Johnston v. Multidata Sy s. Int’l Corp., 523 F.3d 60 2, 60 9 (5th Cir. 20 0 8). But the district court is not required “to credit conclusory allegations, 6 even if uncontroverted.” Panda Brandy w ine Corp. v. Potom ac Elec. Pow er Co., 253 F.3d 865, 869 (5th Cir. 20 0 1). St. Roch Design District is a lim ited liability com pany registered in Florida. 24 Its principal place of business is also located in Florida. 25 Thus, there is no showing that St. Roch Design District is subject to general personal jurisdiction in Louisiana. See Monkton Ins. Servs., Ltd. v. Ritter, 768 F.3d 429, 432 (5th Cir. 20 14) (noting that for a corporation, “[i]t is . . . incredibly difficult to establish general jurisdiction in a forum other than the place of incorporation or principal place of business”). Plaintiffs argue that St. Roch Design District is subject to specific jurisdiction in this state because its mem bers and managers, as well as its m ailing address, are located in New Orleans. 26 “In order for a court to exercise specific jurisdiction over a claim , there m ust be an ‘affiliation between the forum and the underlying controversy, principally, [an] activity or an occurrence that takes place in the forum State.’” Bristol-My ers Squibb Co. v. Superior Court, 137 S. Ct. 1773, 1781 (20 17) (alteration in original) (quoting Goody ear Dunlop Tires Operations, S.A. v. Brow n, 564 U.S. 915, 919 (20 11)). A defendant’s business activities in a state out of which the 24 25 26 See R. Doc. 37-2. Case No. 18-3594, R. Doc. 1 at 4 ¶ 8. R. Doc. 45 at 9. 7 dispute arises m ay provide the necessary connection. When a defendant avails itself of the privilege of conducting business in a state by deliberately engaging in significant activities there, its “activities are shielded by the benefits and protections of the forum ’s laws [and] it is presumptively not unreasonable to require [it] to subm it to the burdens of litigation in that forum as well” for disputes arising out of its activities there. Burger King Corp. v. Rudzew icz, 471 U.S. 462, 475-76 (1985) (internal quotation m arks and citations om itted). In Rudzew icz, the Supreme Court addressed whether a Florida federal court had specific jurisdiction over a contract claim against a Michigan-based Burger King franchise. The Court held that there was specific jurisdiction in light of the franchisee’s “voluntary acceptance of the long-term and exacting regulation of his business from Burger King’s Miam i headquarters.” Id. at 480 . The Court also em phasized that the Miam i headquarters of the franchisor “m ade the key negotiating decisions out of which the instant litigation arose.” Id. at 481. The Court concluded that “the quality and nature of [the franchisee’s] relationship to the com pany in Florida can in no sense be viewed as random , fortuitous, or attenuated.” Id. at 480 (internal quotation m arks and citations om itted). Plaintiffs’ allegations suffice to show m inim um contacts between St. Roch Design District and Louisiana. According to plaintiffs’ com plaint, “St. 8 Roch Design District is the entity that, through its m embers and m anagers located in Orleans Parish, Louisiana, operates St. Roch Market Miam i.”27 Plaintiffs allege that Will Donaldson and Tanguis are St. Roch Design District’s m anagers. 28 Both individuals allegedly reside in Louisiana, where they also m anage the original St. Roch Market. 29 Moreover, the com pany’s address on file with the Florida Division of Corporations is 2381 St. Claude Avenue, New Orleans—the location of the original St. Roch Market. 30 These facts suggest that Donaldson and Tanguis control the operations of St. Roch Design District—including the continued use of the nam e “St. Roch Market”—from Louisiana. See Rudzew icz, 471 U.S. at 481. Additionally, the key decision to use the name “St. Roch Market,” which gave rise to this litigation, arose out of these forum -related contacts. See Seiferth, 472 F.3d at 271. Plaintiffs have therefore alleged sufficient facts to support personal jurisdiction over their claim s against St. Roch Design District. Defendants do not argue, and the Court does not find, that the exercise of personal jurisdiction “would ‘offend traditional notions of fair play and substantial justice.’” Luv N’ care, Ltd. v. Insta-Mix, Inc., 438 F.3d 465, 473 27 28 29 30 Case No. 18-3594, R. Doc. 1 at 4 ¶ 8. Id. ¶¶ 9-10 . Id. R. Doc. 37-2. 9 (5th Cir. 20 0 6) (quoting Int’l Shoe Co. v. W ashington, 326 U.S. 310 , 316 (1945)). Five factors bear on this inquiry: “(1) the burden on the nonresident defendant, (2) the forum state’s interests, (3) the plaintiff’s interest in securing relief, (4) the interest of the interstate judicial system in the efficient adm inistration of justice, and (5) the shared interest of the several states in furthering fundamental social policies.” Id. The burden on St. Roch Design District is low in light of its m anagers’ residing in Louisiana, and Louisiana has a significant interest in protecting the intellectual property of its m unicipal entities. See, e.g., La. R.S. § 51:281.2(A) (“[N]o person shall transact any business under an assumed nam e which contains the nam e of any . . . public facility without the written consent of the governing authority of the governm ental entity which owns or operates the . . . public facility.”). Additionally, the efficient adm inistration of justice weighs in favor of keeping St. Roch Design District in this lawsuit, rather than requiring plaintiffs to file a separate suit in Florida. The other factors are at m ost neutral. Together, these factors do not suggest that the exercise of personal jurisdiction over plaintiffs’ claims against St. Roch Design District would be unfair or unreasonable. 10 B. Lan h am Act Claim s Defendants next argue that plaintiffs fail to state a claim under the Lanham Act. 31 See 15 U.S.C. §§ 10 51, et seq. To survive a Rule 12(b)(6) m otion to dism iss, a plaintiff m ust plead enough facts to “state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (20 0 9) (quoting Bell Atl. Corp. v. Tw om bly , 550 U.S. 544, 547 (20 0 7)). A claim is facially plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the m isconduct alleged.” Id. at 678. A court m ust accept all well-pleaded facts as true and m ust draw all reasonable inferences in favor of the plaintiff. Lorm and v. U.S. Unw ired, Inc., 565 F.3d 228, 239, 244 (5th Cir. 20 0 9). But the Court is not bound to accept as true legal conclusions couched as factual allegations. Iqbal, 556 U.S. at 678. A legally sufficient com plaint m ust establish m ore than a “sheer possibility” that the plaintiff’s claim is true. Id. It need not contain detailed factual allegations, but it m ust go beyond labels, legal conclusions, or form ulaic recitations of the elements of a cause of action. Tw om bly , 550 U.S. at 555. In other words, the face of the com plaint m ust contain enough factual m atter to raise a reasonable expectation that discovery will reveal evidence 31 R. Doc. 37-1 at 6. 11 of each elem ent of the plaintiff’s claim. Lorm and, 565 F.3d at 257. If there are insufficient factual allegations to raise a right to relief above the speculative level, Tw om bly , 550 U.S. at 555, or if it is apparent from the face of the com plaint that there is an insuperable bar to relief, Jones v. Bock, 549 U.S. 199, 215 (20 0 7); Carbe v. Lappin, 492 F.3d 325, 328 n.9 (5th Cir. 20 0 7), the claim m ust be dism issed. Plaintiffs’ com plaint contains several Lanham Act claim s. Count Three seeks cancellation of Helpful Hound’s registration on the Supplem ental Register because of fraud. 32 See 15 U.S.C. §§ 10 92(2), 1119. Plaintiffs allege that Helpful Hound falsely represented that “St. Roch Market” had not been used in com merce before 20 15. 33 Defendants seek dism issal of this count based on the affirmative defense of good faith. 34 See Maids to Order of Ohio, Inc. v. Maid-to-Order, Inc., 78 U.S.P.Q.2d 1899 (T.T.A.B. 20 0 6) (“Fraud . . . will not lie if it can be proven that the statem ent, though false, was made with a reasonable and honest belief that it was true or that the false statem ent is not m aterial to the issuance or m aintenance of the registration.” (citation om itted)). Dism issal based on an affirm ative defense is proper only when the “defense appears on the face of the pleadings.” Miller v. BAC Hom e 32 33 34 Case No. 18-3594, R. Doc. 1 at 27. Id.; see also id. at 17 ¶¶ 64-65. R. Doc. 37-1 at 18. 12 Loans Servicing, L.P., 726 F.3d 717, 726 (5th Cir. 20 13) (quoting Kansa Reins. Co. v. Cong. Mortg. Corp. of Tex., 20 F.3d 1362, 1366 (5th Cir. 1994)). In support of their good faith defense, defendants point only to the lack of any language in the lease restricting Bayou Secret’s use of the m ark. But this fact does not bear on whether defendants in good faith represented that the m ark had not been used in com m erce before 20 15. Thus, defendants’ good faith defense does not appear on the face of the pleadings. Count Four asserts tradem ark infringem ent under 15 U.S.C. § 1114(1). 35 For the reasons discussed in the Court’s Prelim inary Injunction Order and Reasons, plaintiffs state a claim for tradem ark infringement. Count Four also asserts a claim for false designation of origin under § 1125(a). 36 Defendants argue that plaintiffs fail to allege facts supporting a likelihood of confusion between plaintiffs’ and defendants’ marks. 37 Again, for the reasons discussed in the Court’s earlier order, plaintiffs have alleged sufficient facts in support of a likelihood of confusion. Count Five alleges tradem ark dilution under § 1125(c). 38 Section 1125(c) protects fam ous marks. “[A] m ark is fam ous if it is widely recognized 35 36 37 38 Case No. 18-3594, R. Doc. 1 at 28. Id. at 30 . R. Doc. 37-1 at 20 . Case No. 18-3594, R. Doc. 1 at 31. 13 by the general consum ing public of the United States as a designation of source of the goods or services of the mark’s owner.” § 1125(c)(2)(A). Several factors bear on whether a m ark is widely recognized, including: (i) The duration, extent, and geographic reach of advertising and publicity of the m ark, whether advertised or publicized by the owner or third parties. (ii) The am ount, volum e, and geographic extent of sales of goods or services offered under the mark. (iii) The extent of actual recognition of the m ark. (iv) Whether the m ark was registered . . . on the principal register. Id. Plaintiffs do not allege any advertising of St. Roch Market. Nor do they allege the am ount, volum e, or geographic extent of sales. The only allegation bearing on the m ark’s recognition is that the m ark is “fam ous and wellknown throughout the New Orleans area.”39 This conclusory allegation does not suffice to raise the plausible inference that the mark is “is widely recognized by the general consum ing public of the United States.” Id. Count Five of plaintiffs’ com plaint therefore fails to state a tradem ark dilution claim . Defendants also assert two affirmative defenses that do not appear to be tied to any particular count: detrim ental reliance and estoppel. 40 39 40 Case No. 18-3594, R. Doc. 1 at 31 ¶ 140 . R. Doc. 37-1 at 18-19. 14 Detrimental reliance is a stand-alone claim under Louisiana law. See La. Civ. Code art. 1967; In re Ark-La-Tex Tim ber Co., 482 F.3d 319, 334 (5th Cir. 20 0 7). But defendants cite no authority recognizing detrim ental reliance as an affirm ative defense to Lanham Act claim s. Estoppel, also known as acquiescence, is a recognized defense in the tradem ark infringem ent context. See, e.g., Conan Props., Inc. v. Conans Pizza, Inc., 752 F.2d 145, 153 (5th Cir. 1985); A.C. Aukerm an Co. v. R.L. Chaides Constr. Co., 960 F.2d 10 20 , 10 42 (Fed. Cir. 1992) (en banc), abrogated on other grounds by SCA Hy giene Prod. Aktiebolag v. First Quality Baby Prods., LLC, 137 S. Ct. 954 (20 17). There are three elements of estoppel by acquiescence: (1) the plaintiff m ade assurances to the defendant that it would not enforce its tradem ark rights; (2) the defendant relied on these assurances; and (3) enforcement of the plaintiff’s rights would substantially prejudice the defendant. See Conan Props., 752 F.2d at 153; A.C. Aukerm an, 960 F.2d at 10 41-43; Minn. Mining & Mfg. Co. v. Beautone Specialties, Co., 82 F. Supp. 2d 997, 10 0 5 (D. Minn. 20 0 0 ). Defendants argue that plaintiffs m isled them into believing that the City would not enforce its tradem ark rights in two ways. First, the City learned about defendants’ m erchandise bearing the name “St. Roch Market” in 20 15, and Helpful Hound filed its first tradem ark application in April 15 20 17, but plaintiffs did not send a cease-and-desist letter until J anuary 20 18. This argument is not supported by the pleadings. Plaintiffs’ com plaint asserts that NOBC CEO Cynthia Connick expressed “concern about the use of the St. Roch Market nam e” on merchandise sold by defendants “[w]hen NOBC learned that the m erchandise was being sold.”41 The com plaint further alleges that plaintiffs learned about Helpful Hound’s tradem ark application and plans to open the Miam i food hall in Decem ber 20 17, 42 only one m onth before sending the cease-and-desist letter. These allegations in no way suggest that the City actively consented to defendants’ infringing use of the m ark. See Reservoir, Inc. v. Truesdell, 1 F. Supp. 3d 598, 613 (S.D. Tex. 20 14) (“Acquiescence involves active consent by the senior user.”) (citing Sara Lee Corp. v. Kay ser Roth Corp., 81 F.3d 455, 462 (4th Cir. 1996)). Defendants also argue that the City has failed to enforce its tradem ark rights against an earlier tenant of St. Roch Market. But this allegation does not appear in the pleadings. Thus, defendants are not entitled to dism issal based on their estoppel defense. 41 42 Case No. 18-3594, R. Doc. 1 at 16 ¶ 60 . Id. at 22 ¶ 83. 16 C. In d ivid u al D e fe n d an ts Defendants’ final argument is that plaintiffs’ claims against the individual defendants—Will Donaldson, Tanguis, and David Donaldson— should be dism issed. 43 Defendants cite Louisiana Revised Statutes § 12:1320 (B), which generally shields m embers and m anagers of a lim ited liability com pany from the com pany’s liabilities. The statute includes an exception for “any breach of professional duty or other negligent or wrongful act by such person.” La. R.S. § 12:1320 (D). The Louisiana Suprem e Court has interpreted this exception as covering traditional torts. See Ogea v. Merritt, 130 So. 3d 888, 90 1 (La. 20 13) (“[I]f a traditional tort has been com m itted against any cognizable victim (s), that situation weighs in favor of the ‘negligent or wrongful act’ exception and in favor of allowing the victim (s) to recover against the individual tortfeasor(s).”). Thus, if a defendant’s actions breached a duty he personally owed to a plaintiff and thereby caused injury, the defendant is not im m une from liability m erely because he acted as a member or m anager of a lim ited liability com pany. See id. Tradem ark infringement, unfair com petition, and related torts fall under this wrongful act exception. See, e.g., Bd. of Com m ’rs of Port of N ew Orleans v. Stern, No. 15-6527, 20 16 WL 6833632, at *4 (E.D. La. Nov. 21, 20 16); Audubon Real 43 R. Doc. 37-1 at 21. 17 Estate Assocs., L.L.C. v. Audubon Realty , L.L.C., Civil Action No. 15-115, 20 16 WL 740 467, at *3-5 (M.D. La. Feb. 24, 20 16). Therefore, plaintiffs m ay m aintain their tort claim s against the individual defendants. 44 III. CON CLU SION For the foregoing reasons, the Court GRANTS IN PART and DENIES IN PART defendants’ m otion to dism iss. Count Five of the City’s com plaint is DISMISSED. New Orleans, Louisiana, this _ _ _ _ _ day of August, 20 18. _____________________ SARAH S. VANCE UNITED STATES DISTRICT J UDGE 44 Plaintiffs do not assert their contract claim s—Counts Ten and Eleven— against the individual defendants. Case No. 18-3594, R. Doc. 1 at 36-40 . 18

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