Chemeon Surface Tech., LLC v. Metalast Int'l, Inc.
| Decision Date | 28 January 2019 |
| Docket Number | Case No. 3:15-cv-00294-MMD-CBC |
| Parties | CHEMEON SURFACE TECHNOLOGY, LLC, a Nevada limited liability company, Plaintiff, v. METALAST INTERNATIONAL, INC., a Nevada corporation, et al., Defendants. |
| Court | U.S. District Court — District of Nevada |
This dispute stems from the breakup of a business and disagreement over the terms of a subsequent settlement agreement, including who may use which trademarks and branding to advertise similar products. Before the Court is Defendant Greg Semas' renewed motion for summary judgment on Plaintiff Chemeon Surface Technology LLC's remaining claims against him ("Motion").1 (ECF No. 427.) Plaintiff's motion for leave to file supplemental briefing and related motion to seal are also before the Court, which relate to a larger question the Court also addresses herein—whether Plaintiff has standing to seek cancellation of a Metalast trademark.2 (ECF Nos. 451, 452.) Primarily because Greg has met his initial burden of showing Plaintiff has no evidence to support each of its remaining claims against him, and Plaintiff has generally failed to proffer any evidence inopposition to Greg's Motion—and as further explained below—the Court will grant Greg's Motion. In addition, the Court finds Plaintiff lacks standing to seek cancellation of the Metalast trademark because it does not have its own directly competing mark. And as further discussed below, the Court will deny Plaintiff's motion for leave to file supplemental briefing because Plaintiff has failed to establish the required good cause, and will therefore also deny the related motion to seal as moot.
The Court refers to some of its prior orders for this case's factual background. (ECF Nos. 411 at 2-4, 425 at 1 -2.) As relevant here, Greg was a member and officer of Metalast International, LLC ("the LLC"), which was governed by a 1994 operating agreement (the "Operating Agreement"). (ECF No. 348 at 3-6, 54-55.) The Court directed Greg to file his Motion after determining on Plaintiff's motion for reconsideration that the Court should not have sua sponte granted Greg summary judgment on certain of Plaintiff's claims when the Court ruled orally at a prior hearing. (ECF No. 425 at 8.) At that hearing, the Court granted summary judgment to Greg on all of the claims Plaintiff asserted against him, though he had not moved for summary judgment on all of them. (ECF No. 409 at 58-68.) Greg has now moved for summary judgment on all eight claims asserted against him. (ECF No. 427.) The Court addressed six of those claims—all except for conversion and common law trademark infringement—in its prior oral ruling. (ECF No. 409 at 58-68.)
In another of the Court's earlier orders in this case, the Court directed supplemental briefing on the question of whether Plaintiff has standing to seek cancellation of a Metalast trademark registered to David. (ECF No. 398 at 21, 21-24.) David and Plaintiff filed supplemental briefs. (ECF Nos. 404, 405.) Plaintiff now seeks to supplement its supplemental briefing because David and Metalast International, Inc. (the "Inc.") filed a lawsuit against some of Plaintiff's distributors in the Central District ofCalifornia, alleging that those distributors cannot note that their products were "formally Metalast" without infringing the Metalast trademark at issue here, and other related trademarks. (ECF No. 451 at 2.) Plaintiff argues that the Court should consider David and the Inc.'s filing of this lawsuit as additional evidence tending to show that Plaintiff has standing to seek cancellation of David's Metalast trademark. (Id.)
Plaintiff's related motion to seal (ECF No. 452) seeks to seal an exhibit to Plaintiff's proposed supplemental brief regarding the lawsuit, consisting of a contract between Plaintiff and one of its distributors, which Plaintiff represents contains confidential business information, and shows that Plaintiff is required to indemnify Plaintiff's distributor in David and the Inc.'s Central District of California lawsuit against it. Plaintiff states that a ruling on the motion to seal is only necessary if the Court grants its motion to supplement its supplemental brieifing. (Id. at 2 n.1.)
David opposes Plaintiff's request to supplement its supplemental brieifing. (ECF No. 457.) He argues Plaintiff has not shown good cause to further supplement its brieifing because the proposed brief does not address the type of damage required to establish standing to seek cancellation of a trademark, and because it relies on documents not produced in discovery. (ECF No. 457 at 1-2.)
The Court addresses herein the ultimate question of whether Plaintiff has standing to seek cancellation of the Metalast trademark (infra Section IV.B), along with the subsidiary questions raised by Plaintiff's motion seeking leave to file supplemental briefing and the related motion to seal (infra Sections IV.C and D).
"The purpose of summary judgment is to avoid unnecessary trials when there is no dispute as to the facts before the court." Nw. Motorcycle Ass'n v. U.S. Dep't of Agric., 18 F.3d 1468, 1471 (9th Cir. 1994). Summary judgment is appropriate when the pleadings, the discovery and disclosure materials on file, and any affidavits "show that there is no genuine issue as to any material fact and that the moving party is entitled to ajudgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). An issue is "genuine" if there is a sufficient evidentiary basis on which a reasonable fact-finder could find for the nonmoving party and a dispute is "material" if it could affect the outcome of the suit under the governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Where reasonable minds could differ on the material facts at issue, however, summary judgment is not appropriate. See id. at 250-51. "The amount of evidence necessary to raise a genuine issue of material fact is enough 'to require a jury or judge to resolve the parties' differing versions of the truth at trial.'" Aydin Corp. v. Loral Corp., 718 F.2d 897, 902 (9th Cir. 1983) (quoting First Nat'l Bank v. Cities Serv. Co., 391 U.S. 253, 288-89 (1968)). In evaluating a summary judgment motion, a court views all facts and draws all inferences in the light most favorable to the nonmoving party. See Kaiser Cement Corp. v. Fishbach & Moore, Inc., 793 F.2d 1100, 1103 (9th Cir. 1986).
The moving party bears the burden of showing that there are no genuine issues of material fact. See Zoslaw v. MCA Distrib. Corp., 693 F.2d 870, 883 (9th Cir. 1982). Once the moving party satisfies Rule 56's requirements, the burden shifts to the party resisting the motion to "set forth specific facts showing that there is a genuine issue for trial." Anderson, 477 U.S. at 256. The nonmoving party "may not rely on denials in the pleadings but must produce specific evidence, through affidavits or admissible discovery material, to show that the dispute exists," Bhan v. NME Hosps., Inc., 929 F.2d 1404, 1409 (9th Cir. 1991), and "must do more than simply show that there is some metaphysical doubt as to the material facts." Orr v. Bank of Am., NT & SA, 285 F.3d 764, 783 (9th Cir. 2002) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)). "The mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient." Anderson, 477 U.S. at 252.
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The Court first addresses below Greg's Motion, then whether Plaintiff has standing to seek cancellation of the Metalast trademark, and then Plaintiff's motion for leave to file a supplement to its supplemental briefing and related motion to seal.
Greg moved for summary judgment on the eight remaining claims Plaintiff brought against him. (ECF No. 427.) The Court addresses Greg's Motion with respect to each of these eight claims, in turn, below.
Plaintiff alleges that Greg breached his fiduciary duty to the LLC by: (1) redirecting a trademark registration to the LLC's managing entity, the Inc.; (2) selling his personal shares in the LLC while it reported losses; and (3) filing and accepting excessive expense reimbursements while the LLC was losing money. (ECF No. 441 at 14-15.) Greg argues he is entitled to summary judgment on this claim because Greg never had any accounting role or the power to expend the LLC's funds, and because there is no evidence that Greg ever caused the LLC to spend excessively via his reimbursement requests. (ECF No. 427 at 8.) The Court agrees with Greg.
A breach of fiduciary duty claim requires a plaintiff to show the existence of a fiduciary duty, the breach of that duty, and damages proximately caused by the breach. See Klein v. Freedoms Strategic Partners, LLC, 595 F. Supp 2d 1152, 1162 (D. Nev. 2009) (citation omitted). "[A] fiduciary relation exists between two persons when one of them is under a duty to act for the benefit of another upon matters within the scope of the relation." Stalk v. Mushkin, 199 P.3d 838, 843 (Nev. 2009) (internal quotation marks and citation omitted). Moreover, fiduciary relationships arise where the parties do not deal on equal terms, and there is special trust and confidence placed in the superior party. See Hoopes v. Hammargren, 725 P.2d 238, 242 (Nev. 1986).
Greg is entitled to summary judgment on Plaintiff's breach of fiduciary duty claim because he has met his burden of showing that there are no genuine issues of material fact, and Plaintiff has failed to "set forth specific facts showing that there is a genuine issue for trial" in response. Anderson, 477 U.S. at 256.
Plaintiff first argues that Greg violated his fiduciary duty by having the LLC pay for intellectual property on behalf of the Inc....
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