AuSable River Trading Post, LLC v. Dovetail Solutions, Inc., 102317 FED6, 17-1283

Docket Nº:17-1283
Opinion Judge:BERNICE BOUIE DONALD, Circuit Judge.
Party Name:AuSable River Trading Post, LLC, Plaintiff-Appellant, v. Dovetail Solutions, Inc.; Tawas Area Chamber of Commerce, Defendants-Appellees.
Attorney:Ronald Tyler, TYLER & TYLER, P.C., East Tawas, Michigan, for Appellant. Robert G. Kamenec, PLUNKETT COONEY, Bloomfield Hills, Michigan, for Appellee Tawas Area Chamber of Commerce. Ronald Tyler, TYLER & TYLER, P.C., East Tawas, Michigan, for Appellant. Robert G. Kamenec, Michael J. Barton, PLUNKE...
Judge Panel:Before: SUTTON, DONALD, and THAPAR, Circuit Judges.
Case Date:October 23, 2017
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit

AuSable River Trading Post, LLC, Plaintiff-Appellant,

v.

Dovetail Solutions, Inc.; Tawas Area Chamber of Commerce, Defendants-Appellees.

No. 17-1283

United States Court of Appeals, Sixth Circuit

October 23, 2017

Argued: October 5, 2017

Appeal from the United States District Court for the Eastern District of Michigan at Bay City. No. 1:16-cv-11207-Thomas L. Ludington, District Judge.

ARGUED:

Ronald Tyler, TYLER & TYLER, P.C., East Tawas, Michigan, for Appellant.

Robert G. Kamenec, PLUNKETT COONEY, Bloomfield Hills, Michigan, for Appellee Tawas Area Chamber of Commerce.

ON BRIEF:

Ronald Tyler, TYLER & TYLER, P.C., East Tawas, Michigan, for Appellant.

Robert G. Kamenec, Michael J. Barton, PLUNKETT COONEY, Bloomfield Hills, Michigan, for Appellee Tawas Area Chamber of Commerce.

Before: SUTTON, DONALD, and THAPAR, Circuit Judges.

OPINION

BERNICE BOUIE DONALD, Circuit Judge.

Plaintiff-Appellant AuSable River Trading Post, LLC (the "Trading Post") filed this action against Defendants-Appellees Dovetail Solutions, Inc. ("Dovetail") and Tawas Area Chamber of Commerce (the "Chamber") for a declaratory judgment as to whether Defendants hold a valid, enforceable trademark for the term "Perchville, " and for damages under Michigan state law claims. The district court granted summary judgment in favor of the Defendants, finding that Plaintiff's trademark challenge is barred by the doctrine of res judicata and remanding the state court claims. In reaching its conclusion, the district court determined that Plaintiff was in privity with an hourly employee who had previously consented to a permanent injunction barring his use of the "Perchville" mark. Plaintiff challenges the district court's finding that it is in privity with its employee for purposes of res judicata. We REVERSE.

I.

Yearly, the city of Tawas, Michigan hosts a winter festival known as "Perchville." The Chamber is a non-profit Michigan corporation dedicated to promoting local business, and Dovetail is a for-profit corporation that oversees and manages the Chamber. In March 2002, the Chamber applied for federal trademark registration for the term "Perchville, " which was then registered in May 2003. The trademark was temporarily cancelled in December 2013 for failure to renew the application, but within three weeks the Chamber reapplied for re-registration, which it received just over one year later. The Trading Post is a wholesale provider of miscellaneous products, including mugs, banners, t-shirts, and sweatshirts. It is alleged that the Trading Post had an order to sell or was actively selling merchandise depicting the term "Perchville."

On January 29, 2016, the Chamber filed suit in Michigan state court against Salvatore Agnello, an employee of the Trading Post, seeking to obtain an injunction against his unauthorized use of the term "Perchville" on t-shirts. The Chamber did not include the Trading Post in their lawsuit, as it was initially unaware that Agnello was selling the shirts on behalf of the Trading Post. The state court granted the Chamber an ex parte injunctive order. The language of the order included, "this order shall be binding upon the parties to this action, their officers, agents, servants, employees, and attorneys and on those persons in active concert or participation with them who receive actual notice of this order by personal service [or] otherwise."

A hearing was set for February 2, 2016. Agnello appeared without an attorney. He indicated that he had spoken to a partial owner of the Trading Post about the lawsuit, but repeatedly stated that he was unsure why the injunction was issued against him, rather than the Trading Post. He noted that he had only received notice the Sunday before the hearing date. The judge indicated that a hearing was unnecessary and concluded that anyone that had notice and acted in concert would be bound by the injunction. The judge then asked Agnello if he had any objection to the permanent injunction being entered, to which Angello initially objected, stating that he did not know exactly what it meant. Specifically, Agnello indicated, "[a]gain, I'm sort of lost at this time. I would ask that the lawsuit itself be thrown out. Again, there was no harm, no foul. And the fact of the matter is, why are you - why are they coming after me? It's not my company." Agnello then consented to the permanent injunction. The judge informed Agnello that the order would be binding on anyone acting in concert with Agnello, stating "just so you understand, you and everybody in your chain is on the hook. So if there's - if there is a violation, you know, then we're talking about contempt of Court . . . ."

Since the entry of the injunction, Agnello and the Trading Post have complied with the injunction. The Trading Post filed this suit on March 4, 2016, challenging the Chamber's trademark of "Perchville, " among other claims for damages under Michigan law.1 The parties filed cross-motions for summary judgment. Defendants argued that Plaintiff's trademark challenge was barred by the doctrine of res judicata because a final determination on the merits occurred in the state court with parties in privity and that the claims before the district court could have been brought in the original state court action. The district court granted the Chamber's motion as to the...

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