BMW of N. Am., LLC v. Mini Works, LLC

• Decision Date: 08 March 2010
• Docket Number: No. CV–07–1936–PHX–SMM,CV–07–1936–PHX–SMM
• Citation: 166 F.Supp.3d 976
• Parties: BMW of North America, LLC, et al., Plaintiffs, v. Mini Works, LLC, et al., Defendants.
• Court: U.S. District Court — District of Arizona

166 F.Supp.3d 976

BMW of North America, LLC, et al., Plaintiffs,

v.Mini Works, LLC, et al., Defendants.

No. CV–07–1936–PHX–SMM

United States District Court, D. Arizona.

Signed March 8, 2010

Jay P. Rosenthal, Jones Skelton & Hochuli PLC, Phoenix, AZ, John Gilbert Froemming, Jessica D. Bradley, Howrey LLP, Washington, DC, Cory Leon Broadbent, Beus Gilbert PLLC, Scottsdale, AZ, for Plaintiffs.

David Geoffrey Bray, Mariscal Weeks McIntyre & Friedlander PA, Jay P. Rosenthal, Jones Skelton & Hochuli PLC, Phoenix, AZ, for Defendants.

MEMORANDUM OF DECISION AND ORDER

Stephen M. McNamee, United States District Judge

Before the Court are Plaintiffs BMW of North America, LLC and Bayerische Motoren Werke AG's (collectively, “Plaintiffs”) Motion for Summary Judgment (Dkt.91) and Defendant Mini Works, LLC's Motion for Partial Summary Judgment (Dkt.93) regarding the purported trademark settlement agreement between Plaintiffs and Defendant. Although the parties requested oral argument, the Court finds it unnecessary in reaching a decision on summary judgment. For the reasons discussed below, the Court grants Plaintiffs' motion in part and denies Defendant's motion in its entirety.

BACKGROUND

Plaintiffs own several United States trademark registrations of various MINI trademarks. (Dkt. 92, Pl.'s SOF ¶¶ 15–18.) Through their MINI division, Plaintiffs design, manufacture, distribute, service, and sell passenger cars throughout the world under their MINI trademarks. (Dkt. 88, Pl.'s Second Am. Compl. ¶ 3.) Plaintiffs also provide parts and accessories for passenger cars and offer promotional items, such as clothing, under their MINI trademarks. (Dkt. 92, Pl.'s SOF ¶¶ 17–18.) Defendant Mini Works, LLC, now known as Works Garage, LLC (hereinafter “Defendant”), caters exclusively to the sale, service, and restoration of preowned passenger cars bearing Plaintiffs' MINI trademarks. (Dkt. 88, Pl.'s Second Am. Compl. ¶ 3; Dkt.89, Def.'s Answer ¶ 4.) Defendant also sells parts for pre-owned passenger cars and accessories bearing Plaintiffs' MINI trademarks. (Dkt. 88, Pl.'s Second Am. Compl. ¶ 3.) Defendant provided these sales and services at its store located in Scottsdale, Arizona, under the mark and trade name Mini Works. (Id.) Plaintiffs allege that Defendant offered parts and accessories, including clothing items, using Plaintiffs' MINI trade name and trademark without their permission. (Id. at ¶ 21.)

Plaintiffs offered to refrain from filing a federal civil action if Defendant agreed in writing to cease and desist unauthorized uses of the mark MINI. (Id. at ¶ 25.) On February 16, 2007, Plaintiffs sent Defendant a cease and desist letter requesting, among other things, that Defendant eliminate “MINI” from its trade name and domain name. (Id. at ¶ 23.) On February 28, 2007, Plaintiffs filed with the Trademark Trial and Appeal Board a Notice of Opposition against Defendant's application to register the mark Mini Works & Design based on the likelihood of confusion. (Id. at ¶ 24.)

On June 14, 2007, Plaintiffs sent Defendant a second cease and desist letter, which stated in part the following:

It is our client's hope that this matter can be amicably resolved and that it will have your cooperation in discontinuing use of BMW's trademarks. Specifically, BMW requests that you:

(1) Promptly drop “MINI” from your trade name and domain names;

(2) Cease and desist any and all other trademark use of MINI marks on your websites or elsewhere;

(3) Countersign and return the acknowledgment on page 4 of this letter, by June 21, 2007; and

(4) File an express abandonment of U.S. Trademark Application Serial No. 78/840,179 for MINI WORKS & Design by June 28, 2007.

If your company meets BMW's request to cease and desist, hen [sic] BMW will consider the matter closed and will not seek monetary or other relief regarding this matter from you or your company.

(Dkt.94, Ex. A.) On July 3, 2007, Linda Sharaby signed and returned the acknowledgment on behalf of Defendant. The acknowledgment stated as follows:

Without admitting liability and expressly denying the same, we acknowledge that we will: (1) promptly drop “MINI” from our trade name and domain names, (2) cease and desist any and all other trademark uses of BMW's MINI marks, or colorable imitations thereof, on our websites or elsewhere, and (3) file an express abandonment of U.S. Trademark Application Serial No. 78/840,179 for MINI WORKS & Design, by June 28, 2007.

(Dkt. 92, Pl.'s SOF ¶ 2.) On October 24, 2007, Ms. Sharaby signed on behalf of Defendant the express abandonment of U.S. Trademark Application Serial No. 78/840,179. (Id. at ¶ 48.) The same day, Defendant communicated to Plaintiffs, “We are no longer operating under any domain name containing the word Mini, nor did we intend to purchase or operate any web domain with the word Mini in the future.” (Id.) However, Plaintiffs allege that Defendant continued its unauthorized use of Plaintiffs' MINI trade name and trademarks. (Id. at ¶¶ 11–13, 19–24, 52–53.)

On October 10, 2007, Plaintiffs filed a Complaint against Defendants alleging six counts under federal and state law. (Dkt.1.) Plaintiff alleged three counts under the federal Lanham Act: (1) trademark infringement; (2) unfair competition, false designation of origin, and trade name infringement; and (3) violation of the Anticybersquatting Consumer Protection Act. Plaintiff alleged three counts under the common law of Arizona: (4) unfair competition; (5) trademark infringement, and (6) breach of contract. (Id.) On March 9, 2009, the Court permitted Plaintiffs to amend their complaint in order to add a seventh count for breach of the implied covenant of good faith and fair dealing under Arizona law. (Dkts.87, 88.)

On April 3, 2009, Plaintiffs filed a Motion for Summary Judgment to enforce the trademark settlement agreement with Defendants. (Dkt.91.) On the same day, Defendant filed a Motion for Partial Summary Judgment on Plaintiffs' contract claims. (Dkt.93.) Both motions address whether Ms. Sharaby's signed acknowledgment of July 3, 2007 is an enforceable contract. Plaintiffs responded to Defendant's motion on May 4, 2009. (Dkt.96.) Defendant responded to Plaintiffs' motion and replied in support of its motion on May 15, 2009. (Dkt.102.) Plaintiffs then replied in support of their motion on June 1, 2009. (Dkt.106.) Accordingly, the matter is now fully briefed.

STANDARD OF REVIEW

Upon motion, at any time, a party defending against a claim may move for “partial summary judgment,” that is, “summary judgment in the party's favor as to ... any part thereof.” Fed. R. Civ. P. 56(b). A court must grant summary judgment if the pleadings and supporting documents, viewed in the light most favorable to the nonmoving party, “show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c) ; see Celotex Corp. v. Catrett, 477 U.S. 317, 322–23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ; Jesinger v. Nevada Fed. Credit Union, 24 F.3d 1127, 1130 (9th Cir.1994). Substantive law determines which facts are material. See Anderson v. Liberty Lobby, 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ; see also Jesinger, 24 F.3d at 1130. “Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” Anderson, 477 U.S. at 248, 106 S.Ct. 2505. The dispute must also be genuine, that is, the evidence must be “such that a reasonable jury could return a verdict for the nonmoving party.” Id. ; see Jesinger, 24 F.3d at 1130.

A principal purpose of summary judgment is “to isolate and dispose of factually unsupported claims.” Celotex, 477 U.S. at 323–24, 106 S.Ct. 2548. Summary judgment is appropriate against a party who “fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Id. at 322, 106 S.Ct. 2548 ; see also Citadel Holding Corp. v. Roven, 26 F.3d 960, 964 (9th Cir.1994). The moving party need not disprove matters on which the opponent has the burden of proof at trial. See Celotex, 477 U.S. at 317, 106 S.Ct. 2548. The party opposing summary judgment “may not rest upon the mere allegations or denials of [the party's] pleadings, but ... must set forth specific facts showing that there is a genuine issue for trial.” Fed. R. Civ. P. 56(e) ; see Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 585–88, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) ; Brinson v. Linda Rose Joint Venture, 53 F.3d 1044, 1049 (9th Cir.1995).

DISCUSSION

The parties move for summary judgment regarding the enforceability of Ms. Sharaby's July 3, 2007, signed acknowledgment. Plaintiffs assert that Defendant entered into a binding settlement agreement to drop Plaintiffs' MINI mark from its trade name, domain names, and trademarks, yet it has failed to abide by the agreement by continuing to use MINI in virtually every manner prohibited by the agreement. (Dkt. 91, Pl.'s Mem. Supp. Summ. J. 2:6–11.) Thus, Plaintiffs argue that the Court should grant summary judgment in their favor on their breach of contract claim in order to enforce the agreement. (Id . at 2:1.) Alternatively, Plaintiffs assert that Defendant breached its implied duty of good faith and fair dealing. (Id . at 2:18–19.) About a week before Ms. Sharaby signed the acknowledgment, Plaintiffs allege that Mr. Victor Barreira secretly transferred Defendant's principal domain name, miniworks.com, to his father in Portugal. (Id . at 2:20–24.) As Mr. Barreira continues to “orchestrate” Defendant's operations and websites under the Mini Works trade name, Plaintiffs argue that the Court should enforce the settlement agreement because of Defendant's breach of the implied duty of good faith and fair dealing. (Id . at 2:24–28.)

Defendant contends that no enforceable agreement exists between it and Plaintiffs. (Dkt. 93, Def.'s Mot. for ...