Clearline Techs. Ltd. v. Cooper B–Line, Inc.

• Decision Date: 20 July 2012
• Docket Number: Civil Action No. H–11–1420.
• Citation: 871 F.Supp.2d 607
• Parties: CLEARLINE TECHNOLOGIES LTD., Plaintiff, v. COOPER B–LINE, INC., et al., Defendants.
• Court: U.S. District Court — Southern District of Texas

871 F.Supp.2d 607

CLEARLINE TECHNOLOGIES LTD., Plaintiff,

v.COOPER B–LINE, INC., et al., Defendants.

Civil Action No. H–11–1420.

United States District Court,

S.D. Texas,

Houston Division.

May 9, 2012.

Order Denying Reconsideration July 20, 2012.

Martin E. Rose, John P. Pinkerton, Michael Ross Cunningham, Robert D. Katz, Katz PLLC, Jon Bentley Hyland, Munsch Hardt Kopf and Harr, Dallas, TX, for Plaintiff.

John Lee Dagley, Robin L. Harrison, Campbell Harrison et al., Houston, TX, Mitchell Craig Chaney, Brownsville, TX, for Defendants.

MEMORANDUM AND ORDER

KEITH P. ELLISON, District Judge.

Pending before the Court are Cooper B–Line Inc.'s Motion for Partial Summary Judgment on Plaintiff's Fraud Claim (“Motion for Partial Summary Judgment”) (Doc. No. 47) and Cooper Industries plc's Motion to Dismiss for Failure to State a Claim in Plaintiff's Second Amended Complaint (“Motion to Dismiss”) (Doc. No. 59). After considering the parties' arguments and the applicable law, the Court finds that Defendants' Motions must be granted.

I. BACKGROUND¹

Plaintiff Clearline Technologies Ltd. (“Plaintiff” or “Clearline”) ² brings this action against Defendants Cooper B–Line, Inc. (“Cooper B–Line”) ³ and Cooper Industries plc (“Cooper plc”) ⁴ (collectively, “Defendants”) ⁵ for claims arising out of Defendants' alleged misrepresentations and infringement of Plaintiff's trademark and trade dress. Clearline's trademark and trade dress claims arise out of its C–PORT® trademark, which is used in connection with the sale of its rooftop support products. (Am. Compl. ¶ 9.) Clearline filed an application to register this mark in November 2005, and it was registered on the United States Patent and Trademark Office's (USPTO) principal register on April 17, 2007. ( Id.) Clearline also has acquired protectable rights in the trade dress of the distinctive C–PORT® products, which includes “their non-functional shape, dimensions, color, and yellow striping.” ( Id. ¶ 11.)

In April 2003, Clearline entered into a Proprietary Information Agreement with Cooper B–Line, which provided that Clearline and Cooper B–Line “would evaluate and negotiate the prospect of Clearline supplying strut supports, bridge supports, and other related rooftop support products to Cooper B–Line.” ( Id. ¶ 8.) They also reached an oral agreement that granted Cooper B–Line exclusive rights to sell Clearline's products within the United States. ( Id.) Clearline first sold its C–PORT® products to Cooper B–Line for distribution in the United States in December 2005, and over 70% of its C–PORT® sales were made to Cooper B–Line in 2006 and 2007. ( Id. ¶ 10.)

In July 2007, Dave Rice and Chris Peeler of Cooper B–Line represented to Clearline founder Neil Krovats that Cooper B–Line wished to enter into a contract to distribute 700,000 units of C–PORT® products over the next year; however, Clearline would need to increase its capacity first. ( Id. ¶ 12.) Based on that request, Clearline increased its capacity by moving to a larger facility, and expended $10,000 in legal fees to prepare a new contract for Cooper B–Line. ( Id.) Without warning, Dave Rice, Dave Cibula, and Chris Peeler of Cooper B–Line informed Neil Krovats in April 2008 that, effective immediately, Cooper B–Line would no longer distribute C–PORT® products for Clearline in the United States. ( Id. ¶ 13.)

Clearline became aware that Defendants were selling confusingly similar roof-top support products under the trademark DURA–BLOK™ in July 2008. ( Id. ¶ 14.) Cooper Technologies Company filed the application to register the trademark on December 15, 2008, and it was registered on the USPTO's principal register on September 14, 2010. ( Id. ¶ 15.) The DURA–BLOK™ products have the same non-functional shape, dimensions, color, and yellow striping as the C–PORT® products. ( Id. ¶ 14.) They are sold through a catalogue that is virtually identical to the catalogue developed and used by Clearline, and they bear product identifiers and specifications that are very similar to those of Clearline. ( Id.) The websites of both Cooper BLine and Cooper plc advertise the DURA–BLOK™ products. ( Id. ¶¶ 16–17.) Clearline asserts that, because of Cooper plc's indirect ownership of Cooper B–Line, Cooper plc exerts control over Cooper B–Line, and such control extends to the operation of Cooper B–Line's website. ( Id. ¶ 19.) Furthermore, together with former defendant Cooper Technologies, Plaintiff believes that Defendants exercise joint control over the use of the DURA–BLOK™ mark, including the advertisements and operation of the websites. ( Id. ¶ 20.) Cooper B–Line and Cooper plc also continue to use Clearline's C–PORT® mark in meta-tags ⁶ associated with their websites, with intent to trade on the reputation and goodwill of Clearline. ( Id. ¶ 21.)

Clearline's Amended Complaint contains various claims for relief labeled as Counts 1–5: (1) false designation of origin or sponsorship and trade dress infringement under 15 U.S.C. § 1125(a); (2) common law trade dress infringement; (3) violations of the Illinois Deceptive Trade Practices Act (815 ILCS 510/1 et seq.) ⁷; (4) trademark infringement under 15 U.S.C. § 1114(1)(a); and (5) fraud, against Cooper B–Line only.

Defendant Cooper B–Line, Inc. (“Cooper B–Line”) moves for summary judgment on Clearline's fraud claim against it. (Mot. Partial Summ. J.) Defendant Cooper Industries plc (“Cooper plc”) moves to dismiss Counts 1–3 against it, to the extent the claims are based on vicarious liability. (Mot. Dismiss ¶¶ 12–14.) ⁸

II. MOTION FOR PARTIAL

A. Legal Standard

A motion for summary judgment requires the Court to determine whether the moving party is entitled to judgment as a matter of law based on the evidence thus far presented. Fed.R.Civ.P. 56(c). Summary judgment is proper “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, 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.” Kee v. City of Rowlett, 247 F.3d 206, 210 (5th Cir.2001) (quotations omitted). A genuine issue of material fact exists if a reasonable jury could enter a verdict for the non-moving party. Crawford v. Formosa Plastics Corp., 234 F.3d 899, 902 (5th Cir.2000).

The Court views all evidence in the light most favorable to the non-moving party and draws all reasonable inferences in that party's favor. Id. “[T]he court should give credence to the evidence favoring the nonmovant as well as that ‘evidence supporting the moving party that is uncontradicted and unimpeached, at least to the extent that that evidence comes from disinterested witnesses.’ ” Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 151, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000). The Court may not make credibility determinations or weigh the evidence. Harvill v. Westward Communications, L.L.C., 433 F.3d 428, 436 (5th Cir.2005). Hearsay, conclusory allegations, unsubstantiated assertions, and unsupported speculation are not competent summary judgment evidence. Fed.R.Civ.P. 56(e)(1); see, e.g., McIntosh v. Partridge, 540 F.3d 315, 322 (5th Cir.2008); Eason v. Thaler, 73 F.3d 1322, 1325 (5th Cir.1996); see also Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994) (noting that a non-movant's burden is “not satisfied with ‘some metaphysical doubt as to the material facts' ”) (citing Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)). Additionally, any “affidavit or declaration used to support or oppose a motion must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant or declarant is competent to testify on the matters stated.” Fed.R.Civ.P. 56(c)(4).

B. Analysis

Under Illinois law, a plaintiff asserting a claim for fraud must show “that defendants, with the intent to induce plaintiffs to act, made a false statement of material fact which defendants knew or believed to be false. Plaintiffs must also show they justifiably relied on the statement and suffered damages resulting from that reliance.” Association Benefit Svcs., Inc. v. Caremark RX, Inc., 493 F.3d 841, 852–53 (7th Cir.2007) (quoting Williams v. Chicago Osteopathic Health Sys., 274 Ill.App.3d 1039, 211 Ill.Dec. 151, 654 N.E.2d 613, 619 (1995)).

“The general standard for fraud refers to a false statement of material fact; promissory fraud, involving a false statement of intent regarding future conduct, is generally not actionable under Illinois law unless the plaintiff also proves that the act was a part of a scheme to defraud.” Id. at 853 (citing Bradley Real Estate Trust v. Dolan Assocs. Ltd., 266 Ill.App.3d 709, 203 Ill.Dec. 582, 640 N.E.2d 9, 12–13 (1994); Gen. Elec. Credit Auto Lease v. Jankuski, 177 Ill.App.3d 380, 126 Ill.Dec. 676, 532 N.E.2d 361, 363–64 (1988)). Such a scheme is actionable where a defendant either “(1) lied repeatedly to a single promisee, or (2) lied at least once to multiple promisees.” In re Polo Builders, Inc., 388 B.R. 338, 380 (Bankr.N.D.Ill.2008) (citing Calvin v. The Leitner Thomas Group, No. 00–C–8055, 2003 WL 1720008, at *4 (N.D.Ill. Mar. 31, 2003)). “The distinction between a mere promissory fraud and a scheme of promissory fraud is elusive, and has caused, to say the least, considerable uncertainty.” Desnick v. Am. Broad. Companies, Inc., 44 F.3d 1345, 1354 (7th Cir.1995)

Clearline alleges that “Dave Rice and Chris Peeler of Cooper B–Line represented to Neil Krovats of Clearline that Cooper B–Line wished to enter into a contract to distribute 700,000 units of C–PORT® products over the next year, but that Clearline would need to increase its capacity in order for that to occur.” (Am. Compl. ¶ 45; Plaintiff Clearline Technoligies [sic] LTD.'s First Amended Answers to Defendant Cooper B–Line, Inc.'s First Set of Interrogatories (“Interrogatory Responses”), Doc. No. 47–1, at 13.) Clearline...