Am. Customer Satisfaction Index, LLC v. Genesys Telecomms. Labs., Inc., Case No. 17-cv-12554

• Decision Date: 20 February 2019
• Docket Number: Case No. 17-cv-12554
• Parties: AMERICAN CUSTOMER SATISFACTION INDEX, LLC, Plaintiff, v. GENESYS TELECOMMUNICATIONS LABORATORIES, INC., et al, Defendants/Third-Party Plaintiffs v. CFI GROUP U.S.A., LLC Third-Party Defendant.
• Court: U.S. District Court — Eastern District of Michigan

AMERICAN CUSTOMER SATISFACTION INDEX, LLC, Plaintiff, v. GENESYS TELECOMMUNICATIONS LABORATORIES,INC., et al, Defendants/Third-Party Plaintiffs v. CFI GROUP U.S.A., LLC Third-Party Defendant.

Case No. 17-cv-12554

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION

February 20, 2019

Hon. Matthew F. Leitman

OPINION AND ORDER GRANTING IN PART AND DENYING IN PART THIRD-PARTY DEFENDANT CFI GROUP U.S.A., LLC'S MOTION TO DISMISS THIRD-PARTY COMPLAINT (ECF #52)

Plaintiff American Customer Satisfaction Index, LLC ("ACSI") claims that Interactive Intelligence, Inc. ("Interactive") infringed certain of its trademarks. (See Am. Compl., ECF #28.) In this action, ACSI attempts to hold Defendant Genesys Telecommunications Laboratories, Inc. ("Genesys") liable for that infringement. (See id.) ACSI says that Genesys is liable because Genesys merged with Interactive and, through that merger, became Interactive's successor in interest. (See id.)

Genesys has filed a Third-Party Complaint against CFI Group, U.S.A., Inc. (See Third-Party Compl., ECF #47.) Genesys seeks indemnification from CFI Group for any alleged infringement committed by Interactive. (See id.) Genesys also asserts claims against CFI Group for negligent misrepresentation and fraudulent inducement. (See id.) CFI Group has now moved to dismiss Genesys' Third-Party Complaint. (See Mot. to Dismiss, ECF #52.) For the reasons that follow, the motion is GRANTED IN PART AND DENIED IN PART.

I¹

A

In 1994, Dr. Claes Fornell, a professor at the University of Michigan's Ross School of Business, created the American Customer Satisfaction Index (the "Index"). (See Third-Party Compl. at ¶¶ 12-13, ECF #47 at Pg. ID 393.) The Index "is a national cross-industry measure of customer satisfaction." (Id. at ¶13, Pg. ID 393.) Dr. Fornell developed the Index in partnership with, among others, CFI Group, a marketing and consumer-survey company that he founded and chairs. (See id. at ¶¶ 12, 14, Pg. ID 393-94.) In 2008, Dr. Fornell founded a second, related marketing company, ACSI. (See id. at ¶17, Pg. ID 394.)

"CFI Group works alongside ACSI [] to develop and publish benchmarks and scores for the [] Index." (Id. at ¶19, Pg. ID 394.) CFI Group also uses "ACSI technology" to "determine[] the precise questions, phrasing, and scales" that it uses to "accurately measure customer satisfaction." (Id. at ¶21, Pg. ID 395.)

B

Interactive "was a global provider of business communication solutions for the contact center market, including automation software, enterprise telephony, and enterprise messaging." (Id. at ¶23, Pg. ID 395.) "In early 2008, Interactive [] developed an automated post-call customer satisfaction survey application as an extension of its software suite. The survey application was designed to allow contact center managers to craft customized survey questions that would be included in automated post-call surveys." (Id.)

C

Shortly after Interactive created its survey application, CFI Group "contacted Interactive [] to explore whether it would be interested in adding CFI Group's survey questions and templates" to the application. (Id. at ¶24, Pg. ID 395.) CFI Group told Interactive that its survey questions and templates were from an "ACSI question library" and that if Interactive used those questions in its survey application, Interactive could market the application as "ACSI-compliant" and "ACSI-based." (Id. at ¶¶ 82-83, Pg. ID 404.) CFI Group further assured Interactive that"Interactive['s] future use and marketing of CFI Group's 'ACSI question library' and 'ACSI-ready' survey questions and templates would not infringe the rights of any third parties" (i.e., ACSI). (Id. at ¶82, Pg. ID 404)

Based on these representations by CFI Group, on April 29, 2008, Interactive entered into a five-year cooperative marketing and licensing agreement with CFI Group (the "License Agreement"). (See id. at ¶88, Pg. ID 405.) In the License Agreement, CFI Group warranted to Interactive that Interactive's "use of Marks ... and other Materials provided to [Interactive would] not infringe on the rights of any third party...." (License Agmt. at ¶8(a), ECF #52-1 at Pg. ID 446.²) CFI Group also "warrant[ed] that [it] own[ed] all rights in [its survey questions and templates] ... and Interactive's use of the [questions and templates] pursuant to [the License Agreement would] not infringe the rights of any third party." (Id.) Finally, CFI Group agreed to "indemnify, defend[,] and hold harmless [Interactive] against any loss, damage[,] or expense incurred by [Interactive] ... as a result of claims, actions, or proceedings brought by any third parties" arising from allegations that would constitute a breach of the agreement. (Id. at ¶9(a), ECF #52-1 at Pg. ID 447.)

After the parties executed the License Agreement, CFI Group and Interactive "worked together to prepare materials that would be provided to Interactive['s] customers and potential customers as part of [a] joint marketing effort[]." (Third-Party Compl. at ¶36, Pg. ID 397.) "When preparing [these] joint marketing materials, CFI Group represented to Interactive [] that it was appropriate to describe its survey questions and templates as, among other things, 'ACSI surveys' 'ACSI questions,' 'ACSI-complaint,' or 'ACSI-based.'" (See id. at ¶37, ECF #47 at Pg. ID 397.) Based on CFI Group's representations, Interactive used the terms "'ACSI surveys' "ACSI questions,' "ACSI-compliant,' and 'ACSI-based' to describe CFI Group['s] surveys and template" in its marketing materials. (Id. at ¶38, Pg. ID 397.) Interactive also used ACSI's logo based on CFI Group's '"authoriz[ation]" that it had permission to do so. (Id. at ¶38, Pg. ID 397-98.)

D

The License Agreement expired in April 2013. Nonetheless, "CFI Group and Interactive [] continued performing under the terms of the License Agreement as if the Agreement was still in effect." (Id. at ¶42, ECF #47 at Pg. ID 398.) "Among other things, after the end of the initial five-year contractual term, CFI Group provided updated survey questions and templates to [Interactive], .... the parties updated certain marketing materials and user guides, ... [and] CFI Group repeatedlyconfirmed that it was 'a partner' with Interactive." (Id. at ¶42, Pg. ID 399.) The parties' relationship ended in 2017. (See id. at ¶¶ 46-48, Pg. ID 399-400.)

At no time during the parties' relationship "did CFI Group inform Interactive [] that its marketing of CFI Group materials might potentially infringe on ACSI's or any other entity's intellectual property rights." (Id. at ¶46, Pg. ID 399.) Nor "did CFI Group object to Interactive['s] use of its survey questions and templates or Interactive['s] references to those materials as constituting 'ACSI surveys,' 'ACSI questions,' 'ACSI-compliant,' and 'ACSI-based.'" (Id. at ¶47, Pg. ID 400.)

E

In 2017, Genesys and Interactive merged. (See id. at ¶2, Pg. ID 392.) As a result of the merger, Genesys "succeeded to all rights [and] privileges .... of Interactive." (Id. at ¶3, Pg. ID 392.) Thus, "Genesys is now the real party in interest with respect to all assets owned by Interactive prior to the merger, including Interactive['s] contractual rights and any claims belonging to Interactive []." (Id. at ¶4, Pg. ID 392.)

F

On August 8, 2017, ACSI filed this action against Genesys and Interactive. (See Compl., ECF #1; Am. Compl., ECF #28.) ACSI alleges, among other things, that Interactive wrongfully "marketed and sold its products [as using] 'ACSI scores' and ... [used] a derivative of [t]he ACSI trademark in marketing and selling itsproducts and services." (Am. Compl. at ¶40, ECF #28 at Pg. ID 128.) ACSI further insists that because Genesys merged with Interactive, Genesys is liable for Interactive's wrongful acts as Interactive's successor-in-interest. (See id. at ¶¶ 6-7, Pg. ID 123.)

II

Genesys filed its Third-Party Complaint against CFI Group on June 11, 2018. (See Third Party Compl., ECF #47.) Genesys insists that "[t]o the extent that ACSI [] can prove that Genesys, in its capacity as successor in interest to Interactive [], is liable for trademark infringement or unfair competition, Genesys' liability will derive from the acts, omissions, breaches of warranties, and/or misrepresentations of CFI Group relating to the nature of its survey templates and questions, as opposed to any fault on the part of Genesys or its predecessor in interest Interactive." (Id. at ¶53, Pg. ID 400-01.)

Genesys' Third-Party Complaint includes five counts, all of which arise under Michigan law:

• In Count I, Genesys alleges that CFI Group breached certain warranties in the License Agreement, including the warranty that Interactive's use of ACSI's trademarks would not "infringe the rights of any third party." (Id. at ¶¶ 54-59, Pg. ID 401.)

• In Count II, Genesys asserts that that it is entitled to express contractual indemnity from CFI Group under the terms of the License Agreement. (See id. at ¶¶ 60-65, Pg. ID 401-02.)

• In Count III, Genesys claims that to the extent that it is not entitled to contractual indemnity, it is entitled to indemnity from CFI Group based on the doctrine of implied contractual indemnity and/or common law indemnity. (See id. at ¶¶ 66-72, Pg. ID 402-03.)

• In Count IV, Genesys alleges that CFI Group "misrepresented to Interactive [] the nature of CFI Groups products and services," such as CFI Group's ability to allow Interactive to use ACSI's trademarks. (Id. at ¶¶ 73-79, Pg. ID 403-04.)

• In Count V, Genesys claims that CFI Group fraudulently induced Interactive into executing the License Agreement by misrepresenting its rights to use ACSI's trademarks. (See id. at ¶¶ 80-89, Pg. ID 404-05.)

CFI Group moved to dismiss Genesys' Third-Party Complaint on July 13, 2018. (See Mot. to Dismiss, ECF #52.) The Court held a hearing on CFI Group's motion on December 12, 2018, and the parties thereafter submitted supplemental briefs. (See ECF ## 69, 72.)

III

CFI Group has moved to dismiss Genesys' Third-Par...