Desmond v. Chi. Boxed Beef Distribs., Inc.

• Decision Date: 29 January 2013
• Docket Number: No. 11 C 3545.,11 C 3545.
• Citation: 921 F.Supp.2d 872
• Court: U.S. District Court — Northern District of Illinois
• Parties: Michael K. DESMOND, in his capacity as Chapter 7 Trustee of the bankruptcy estate of Moo & Oink, Inc., Plaintiff, v. CHICAGO BOXED BEEF DISTRIBUTORS, INC.; Sean Connolly; Dutch Farms, Inc., Tim Boonstra; Lou Donzelli; and Windy City Food Distributors, Inc., Defendants.

921 F.Supp.2d 872

Michael K. DESMOND, in his capacity as Chapter 7 Trustee of the bankruptcy estate of Moo & Oink, Inc., Plaintiff,

v.CHICAGO BOXED BEEF DISTRIBUTORS, INC.; Sean Connolly; Dutch Farms, Inc., Tim Boonstra; Lou Donzelli; and Windy City Food Distributors, Inc., Defendants.

No. 11 C 3545.

United States District Court,

N.D. Illinois,

Eastern Division.

Jan. 29, 2013.

Jeff Douglas Harris, Michael K. Desmond, Michael Thomas Graham, Figliulo & Silverman, Chicago, IL, for Plaintiff.

Michael Raymond Collins, Collins & Collins, William T. McGrath, Davis, Mannix & McGrath, Chicago, IL, for Defendants.

MEMORANDUM OPINION AND ORDER

RUBEN CASTILLO, District Judge.

Moo & Oink, Inc. (“Moo & Oink”) brings this suit against various individual and entity defendants alleging a myriad of federal and state law claims. (R. 93, Second Am. Compl.) Generally, Moo & Oink alleges that between January 2011 and May 2011, Chicago Boxed Beef, Inc. (“Chicago Boxed Beef”), Dutch Farms, Inc. (“Dutch Farms”), and Windy City Food Distributors, Inc. (“Windy City”) (collectively, “Entity Defendants”) purchased, sold, and offered to purchase and sell counterfeit meat products that infringed Moo & Oink's registered trademarks (the “Marks”) with the intent to confuse and mislead the public into believing the products were genuine Moo & Oink products or had been sponsored or approved by Moo & Oink. ( Id. ¶ 4.) Moo & Oink also alleges that Sean Connolly, Tim Boonstra, and Lou Donzelli (collectively, the “Individual Defendants”) willfully and knowingly directed, controlled, or participated in the purchases, sales, and offers for purchase and sale of the counterfeit meat products. ( Id.) Presently before the Court is a motion to dismiss the second amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(6), filed by Dutch Farms, Boonstra, and Windy City (collectively, “Dutch Farm Defendants”). (R. 102, Defs.' Mot. to Dismiss.) For the reasons discussed below, the motion is denied.

PROCEDURAL HISTORY

On May 26, 2011, Moo & Oink filed a seven-count complaint against Chicago Boxed Beef, Connolly, and Dutch Farms (collectively, “Initial Defendants”) alleging violations of federal and Illinois trademark laws, deceptive trade practices, and unfair competition. (R. 3, Compl. ¶ 6.) Contemporaneous with the filing of the initial complaint, Moo & Oink moved for an ex parte temporary restraining order, an order to show cause why a preliminary injunction should not issue, and an order permitting expedited discovery. (R. 12, Application for Ex Parte Order.) On May 27, 2011, the Court ordered Initial Defendants to show cause why a preliminary injunction should not issue. (R. 17, Ex Parte Seizure Order at 3.) Pending the order to show cause hearing, Initial Defendants were temporarily restrained from (i) using the Marks in connection with the importation, sale, offer, or distribution of any meat products that were not genuine Moo & Oink meat products; (ii) using the Marks in any manner likely to cause others to believe that Initial Defendants' products were connected with Moo & Oink or were genuine Moo & Oink products; (iii) selling and/or otherwise distributing, passing off, inducing, or enabling others to sell, distribute or pass off any merchandise which was not genuine Moo & Oink merchandise as genuine Moo & Oink merchandise; (iv) making false or misleading statements regarding Moo & Oink or its goods, or the relationship between Moo & Oink and Defendants; (v) committing other acts calculated to cause purchasers to believe that Initial Defendants' products were genuine Moo & Oink products; (vi) shipping, delivering, holding for sale, importing, distributing, returning, transferring, or otherwise moving, disposing of or destroying in any manner meat products or packaging falsely bearing Moo & Oink Marks, and any and all discoverable material, and (vii) assisting, aiding, or abetting other persons or entities in engaging in or performing the previously described activities. (R. 17, Ex Parte Seizure Order at 4–5.) The Court also ordered (1) the seizure of all items bearing counterfeits of Moo & Oink's Marks remaining in Initial Defendants' control; (2) Initial Defendants to immediately allow Moo & Oink to inspect their facilities; and (3) Initial Defendants to engage in expedited discovery with Moo & Oink. ( Id. at 5.) A show cause hearing was held on June 9, 2011, (R. 23, Min. Entry), and the Court entered a preliminary injunction order that same day, which was to remain in effect until the disposition of the case, unless otherwise ordered by the Court. (R. 25, Prelim. Inj. Order.) The Preliminary Injunction barred Initial Defendants from committing the actions outlined in items (i)-(iv) of the ex parte temporary restraining order. ( Id.)

On June 6, 2011, Dutch Farms filed its answer to Moo & Oink's complaint and included a counterclaim alleging that Moo & Oink breached its obligation to pay Dutch Farms for goods purchased on account. (R. 41, Answer to Compl.) Plaintiff filed its first amended complaint on July 13, 2011. (R. 38, First Am. Compl.) The first amended complaint asserted the same claims as the original complaint, but added three additional defendants: Boonstra, a Dutch Farms employee; Donzelli, a Chicago Boxed Beef employee; and Windy City, a Dutch Farms affiliate and/or subsidiary. (R. 38, First Am. Compl.) Dutch Farms Defendants filed their answer to the amended complaint on July 26, 2011, asserting various affirmative defenses including setoff, acquiescence, estoppel, naked license doctrine, and laches. (R. 47, Dutch Farms Defs.' Answer to First Am. Compl. at 26.) Additionally, Dutch Farms and Boonstra filed cross-claims against Chicago Boxed Beef, Connolly, and Donzelli. ( Id. at 29–31.) Dutch Farms also maintained its breach of contractual obligations counterclaim. ( Id. at 27–29.) On August 5, 2011, Connolly moved to dismiss the first amended complaint, (R. 53, Connolly's Mot.), and on August 31, 2011, Donzelli also moved to dismiss the first amended complaint and Dutch Farms' cross-claim, (R. 61, Donzelli's Mot.).

On or about August 24, 2011, certain creditors of Moo & Oink filed an involuntary petition for relief under Chapter 7 of the United States Bankruptcy Code, 11 U.S.C. § 101 et seq. ( See R. 88, Pl.'s Mot. to Substitute ¶ 2.) On September 30, 2011, the United States Bankruptcy Court for the Northern District of Illinois entered an Order for Relief ¹ and appointed Michael K. Desmond (“Plaintiff”) to serve as the Chapter 7 Trustee for the estate of Moo & Oink. ( Id. ¶¶ 3, 4.) Moo & Oink subsequently moved to substitute Desmond as the Plaintiff. ( Id.) Moo & Oink's motion was granted on May 1, 2012. (R. 91, Min.Entry.)

On March 1, 2012, the Court granted Connolly's and Donzelli's motions to dismiss. ( Id.) The Court also granted Plaintiff leave to file a second amended complaint, ( id.), which Plaintiff filed on April 2, 2012, (R. 93, Second Am. Compl.). The second amended complaint asserts the same claims as the first amended complaint and again names Connolly and Donzelli as defendants. ( Id.)

In Count I, Plaintiff alleges that Defendants engaged in trademark counterfeiting and infringement in violation of the Lanham Act, 15 U.S.C. § 1114(1), by using Moo & Oink's Marks on Defendants' spare rib tip products, and that Defendants sold such products without the approval or consent of Moo & Oink. ( Id. ¶ 131.) In Counts II and III, Plaintiff alleges that Defendants' acts constituted unfair competition, false designation of origin, false and misleading representations, and trademark dilution in violation of the Lanham Act, 15 U.S.C. § 1125(a) and (c). ( Id. ¶¶ 40, 44.) In Count IV, Plaintiff alleges that Defendants violated the Illinois Trademark Registration and Protection Act (“TRPA”), 765 Ill. Comp. Stat. 1036/1 et seq., by selling and distributing goods bearing counterfeit Marks. ( Id. ¶ 50.) In Count V, Plaintiff alleges that Defendants violated the TRPA by engaging in acts that created a likelihood of injury to Moo & Oink's business reputation and by diluting and tarnishing of the distinctive quality of Moo & Oink's famous Mark. ( Id. ¶ 59.) In Count VI, Plaintiff alleges that Defendants' use of Moo & Oink's Marks on meat products such as spare rib tips constituted deceptive trade practices in violation of the Illinois Uniform Deceptive Trade Practices Act, 815 Ill. Comp. Stat. 510/2 et seq. ( Id. ¶ 64.) Specifically, Plaintiff alleges that such use (1) passed off Defendants' products as those of Moo & Oink; (2) created a likelihood of confusion or misunderstanding as to the source, sponsorship, approval,or certification of Defendants' goods; (3) created a likelihood of confusion or misunderstanding as to the source of, and affiliation, connection or association with, or certification by Moo & Oink; and (4) represented that Defendants' products have sponsorship and approval that they do not. ( Id.) Finally, in Count VII, Plaintiff alleges that Defendants engaged in the common law tort of unfair competition by using the Marks with the intent to palm off Defendants' counterfeit meat products as originating from or having sponsorship, affiliation, or approval of Moo & Oink in order to trade on the goodwill created by Moo & Oink. ( Id. ¶ 73.)

On May 25, 2012, Dutch Farms Defendants moved to dismiss Plaintiff's second amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). (R. 102, Defs.' Mot. to Dismiss.) That same day, Dutch Farms also moved for summary judgment pursuant to Federal Rule of Civil Procedure 56 on its affirmative defense of setoff and its counterclaim for unpaid goods sold and delivered to Moo & Oink in the amount of $143,458.60. (R. 103, Dutch Farms' Mot. at 1.) The Court addresses Dutch Farms' motion for summary judgment in a separate order issued concurrently with this memorandum opinion and order.

RELEVANT FACTS

Established in the 1940's as Calumet Meat Company, Moo &...