Bruce-Terminix Co v. The Terminix Int'l Co. P'ship

• Decision Date: 01 March 2023
• Docket Number: 1:20-CV-962
• Parties: BRUCE-TERMINIX COMPANY, Plaintiff, v. THE TERMINIX INTERNATIONAL COMPANY LIMITED PARTNERSHIP and TERMINIX GLOBAL HOLDINGS, INC., Defendants.
• Court: U.S. District Court — Middle District of North Carolina

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BRUCE-TERMINIX COMPANY, Plaintiff, v. THE TERMINIX INTERNATIONAL COMPANY LIMITED PARTNERSHIP and TERMINIX GLOBAL HOLDINGS, INC., Defendants.

No. 1:20-CV-962

United States District Court, M.D. North Carolina

March 1, 2023

MEMORANDUM OPINION AND ORDER

Catherine C. Eagles, District Judge

The matter is before the Court on cross-motions for summary judgment in this business dispute arising from an alleged breach of contract.There are no undisputed material facts and a trial is not necessary.

I.The Undisputed Facts

The record shows the following undisputed facts.

In 1975, Terminix International, Inc.(TII) held all rights to the Terminix name, brand, and pest control system known as the Terminix System.No other entity at that time or at any later time through the present had or has any rights to use the Terminix name, brand, or system other than through TII.All parties to this litigation and their subsidiaries and related entities acquired their rights to use or license the Terminix name, brand, and system through TII.

Also in 1975, Bruce and TII entered into a valid contract that gives Bruce an exclusive license to use the Terminix name, brand and system in 17 counties in North Carolina.SeeDoc. 1-1at 4-5, 9, 20;Doc. 86 at ¶¶ 3-4.The License Agreement allowed TII to assign its rights, Doc. 1-1 at 13 § XII/A, and the defendantTerminix International Company Limited Partnership(Terminix) is the successor in interest to TII's rights and obligations under the 1975 License Agreement.SeeDoc. 60-1at 3.Terminix is bound by this contract, and in material part so are all its successors, assignees, and related entities: none of them have any rights to the Terminix name, brand, or system except through TII and Terminix.

Under the License Agreement, Terminix agreed that it “will not itself establish, nor will it license another to establish, within [Bruce's service area], a location from which to operate a Terminix System,”Doc. 1-1 at 9 § VII/A, and that it “will not license another to establish, nor will [Terminix] itself establish, within [Bruce's service area], a location from which to operate a business similar to the Terminix System, under a name other than TERMINIX.”Id.at 9 § VII/B.^[1] The License Agreement defines the Terminix System to include the “experience, skill and special techniques and know-how in a business . . . of rendering termite and other pest control and related services.”Id. at 4.Throughout the License Agreement, the parties explicitly and implicitly recognize the value of the Terminix trademark, tradename, reputation, and good will along with the value of the Terminix System and instructional materials for providing termite and pest control services.See, e.g., Doc. 1-1 at 4, 6 § III/C.

In 1986, ServiceMaster acquired Terminix.Doc. 89-1 at ¶ 2.Later, it reorganized into the following corporate structure: ServiceMaster is now known as Terminix Global Holdings, Inc.(TGH), id.at ¶ 13; TGH is the ultimate parent company of The Terminix Company, LLC; The Terminix Company, LLC wholly owns TMX Holdco, Inc.; and The Terminix Company, LLC and TMX Holdco, Inc. are the corporate partners of Terminix.Doc. 90-5;Doc. 88-2at 4.

Between 1975 and 2018, neither Terminix nor any related entity owned by its parent company operated another pest control business in Bruce's exclusive territory.In 2018 and 2019, ServiceMaster, acting through subsidiaries, acquired two entities involved in pest control: Copesan and Gregory Pest Solutions.Doc. 89-1 at ¶¶ 3-5;seeDoc. 90-5.Gregory and Copesan are now wholly owned by TMX Holdco, Inc. Doc. 88-2at 4;seeDoc. 90-5.

Copesan is a management company that contracts with local pest control providers to provide pest control services to Copesan's customers.Doc. 89-1 at ¶ 8.It targets customers within Bruce's service area, Doc. 88-18 at 13,^[2] and neither TGH nor Terminix has told Copesan's salespeople that there are sales restrictions within Bruce's service area.Id. at 13-14.To some extent, Copesan works with “national accounts” on behalf of Terminix, id. at 6-7, 17-18; these are Terminix accounts for commercial customers with properties in multiple locations like chain stores.Doc. 88-17at 12-13;Doc. 86 at ¶ 16.At least one Terminix employee who works with national accounts lists “Terminix/Copesan” in her email signature block.SeeDoc. 88-12at 2(showing email from National Account Executive of Terminix with co-branded signature block);Doc. 88-18at 8(noting the National Account Executive manages national accounts).Other Copesan salespeople have cobranded email signature blocks, seeDoc. 88-18at 17, but there is no evidence that they have used the cobranded signature blocks in Bruce's exclusive territory to service non-national account customers.

Copesan has, however, used the Terminix brand in Bruce's territory at least once by copying and modifying the terms of a proposal by Bruce to a potential non-national account customer and resubmitting it to that customer under the name of “Copesan/Terminix.”Doc. 86 at ¶ 27;seeDoc. 86-11at 5-19(comparing the two proposals).Bruce notified Terminix that Copesan used the Terminix name within Bruce's exclusive territory, Doc. 86 at ¶ 28, seeDoc. 86-11at 2-3, but Terminix refused to make Copesan withdraw the bid.Doc. 86 at ¶ 28;seeDoc. 86-12at 2.

Before it was acquired by ServiceMaster, Gregory provided pest control services to customers throughout the southeastern United States.Doc. 89-1 at ¶ 4.Gregory no longer exists outside of the Carolinas; it has become part of the Terminix brand.SeeDoc. 88-19at 13-14.While Gregory does not own or lease a physical location within Bruce's exclusive territory, Doc. 89-1 at ¶ 11, Gregory employs technicians who provide services to customers within Bruce's exclusive territory.Doc. 88-2at 6-9;seeDoc. 89-1 at ¶ 4.

And when Copesan makes a sale in Bruce's service area, Gregory provides the services.Doc. 88-18at 14.

Terminix handles Gregory's recruiting needs and screens applicants for employment.Doc. 88-19at 19-20.Gregory has used the Terminix name in job postings at least twice within Bruce's exclusive territory.Doc. 86 at ¶¶ 23-24;Doc. 88-16at 40, 43-44;Doc. 88-19at 20;seeDoc. 86-6(July 2022 post advertising that Gregory employees will “be the face of Terminix to [the] local community”);Doc. 98-1 at ¶¶ 4-8(discussing similar post in January 2023).^[3]

Once hired, Gregory employees have access to Aspire, which is Terminix's confidential training program, seeDoc. 88-19 at 11, 26, Doc. 88-16 at 27, Doc. 86 at ¶¶ 6-9, and to Terminix Nation which is the “intranet site for Terminix” and contains sales, marketing, and other training materials.Doc. 88-16at 16-17, 35-36.Gregory also has access to the benefits of “Terminix fleet deals and services.”Doc. 88-19at 12.Gregory uses Terminix's four-step tick treatment method, the Tick Defend System, with “Gregory-branded marketing materials.”Doc. 88-16at 32-35, 37-38;compareDoc. 88-10at 15(Terminix's Tick Defend System), withDoc. 88-11at 3(Gregory's Tick Defend System).All of these materials, methods, and information are part of the Terminix System.

Some Gregory employees have used the Terminix name in internal emails.SeeDoc. 88-18at 20, 23;Doc. 88-19at 5, 8(notingBen Walker, an executive of Terminix and president of Gregory, has a cobranded signature block);seeDoc. 88-8at 2;Doc. 88-9at 2.But there is no evidence that they have used the cobranded signature blocks in communications with customers or potential customers in Bruce's exclusive territory.

In January 2020, Terminix told Bruce that “Bruce would no longer service national accounts” for Terminix.Doc. 86 at ¶ 18.Terminix relies on local providers when national account customers have locations in areas where Terminix does not have a location.Doc. 89-1 at ¶ 12.National accounts are not addressed in the License Agreement, Doc. 86 at ¶ 17, but Terminix historically asked Bruce to service its national accounts in Bruce's territory.Doc. 89-1 at ¶ 12;Doc. 86 at ¶ 16.Bruce consented to the transition while reserving its other rights under the Agreement.Doc. 86 at ¶¶ 20-21;Doc. 86-5.Now, Gregory services Terminix's national accounts within Bruce's exclusive territory.Doc. 60-2at 5;seeDoc. 89-5(email notifying national account customer of the change).^[4] And when it does, it uses the Terminix name.SeeDoc. 60-3(Gregory service inspection report for a national account using Terminix and Copesan branding).

In October 2020, ServiceMaster changed its name to TGH. Doc. 89-1 at ¶ 13.

In December 2021, TGH announced that it would merge with Rentokil Initial PLC(Rentokil).^[5]Doc. 58 at ¶ 2.^[6]“Rentokil is a worldwide pest control company headquartered in the United Kingdom” and has “a significant presence in the United States” through its subsidiaries.Id.at ¶ 5.Rentokil owns Rentokil North America, Doc. 89-1 at ¶ 1, which runs Rentokil's operations in the United States.Before the merger, Rentokil Initial acquired other pest control companies that compete with Bruce in the service area: McNeely, Ehrlich Pest Control, and Bug Out.Seeid.at ¶ 20;Doc. 58 at ¶¶ 8-11;Doc. 86 at ¶ 34.

Rentokil and TGH finalized the merger in October 2022, Doc. 89-1 at ¶ 1, after discovery closed.SeeDoc. 79(modifying the scheduling order and setting discovery deadlines).Rentokil Initial now owns McNeely, Ehrlich, Bug Out, Terminix, Gregory, and Copesan.SeeDoc. 89-1 at ¶¶ 6, 20.The Rentokil companies “have rebranded themselves as ‘Rentokil Terminix.'”Doc. 86 at ¶ 33;see alsoDoc. 89-1 at ¶ 23;Doc. 86-14at 2(announcing that the “Rentokil and Terminix family of brands are coming together to form the...