Eagle Forum, an Ill. Not-For-Profit Corp. v. Phyllis Schlafly's Am. Eagles, Not-For-Profit Corp.

• Decision Date: 01 April 2020
• Docket Number: Case No. 16-CV-00946-NJR
• Citation: 451 F.Supp.3d 910
• Parties: EAGLE FORUM, an Illinois Not-for-Profit Corporation, Plaintiff, v. PHYLLIS SCHLAFLY'S AMERICAN EAGLES, a Virginia Not-for-Profit Corporation, Defendant.
• Court: U.S. District Court — Southern District of Illinois

451 F.Supp.3d 910

EAGLE FORUM, an Illinois Not-for-Profit Corporation, Plaintiff,

v.PHYLLIS SCHLAFLY'S AMERICAN EAGLES, a Virginia Not-for-Profit Corporation, Defendant.

Case No. 16-CV-00946-NJR

United States District Court, S.D. Illinois.

Signed April 1, 2020

Brian M. Wacker, James P. Sanders, Jessica A. Powers, John T. Walsh, Zachary R. McMichael, SmithAmundsen LLC, St. Louis, MO, for Plaintiff.

Henry Elster, Bick & Kistner, Nelson L. Mitten, P. Tyler Connor, Randall D. Grady, Riezman Berger, P.C., St. Louis, MO, John D. Stobbs, II, Stobbs Law Offices, Alton, IL, for Defendant.

MEMORANDUM AND ORDER

ROSENSTENGEL, Chief Judge:

Pending before the Court is a Motion for Summary Judgment ("MSJ") filed by Phyllis Schlafly's American Eagles ("PSAE") (Doc. 202). For the reasons set forth below, the Court grants the motion.

FACTUAL & PROCEDURAL BACKGROUND

Plaintiff Eagle Forum ("EF") is an Illinois not-for-profit 26 U.S.C. § 501(c)(4) corporation formed by Phyllis Schlafly in 1975 to support causes related to the modern conservative political ideology (Doc. 43, p. 6; Doc. 203-2, p. 2). Schlafly had earlier created the Eagle Trust Fund ("ETF") in 1967 (Doc. 203-2, p. 2). By all accounts, Schlafly was an adept fundraiser (Doc. 203-4, p. 23-24; 203-6, p. 218). In the decades since formation, EF achieved a relative measure of political and financial success, with a war chest of approximately $4,000,000 in assets as of 2016 (Doc. 203-2, p. 3). Schlafly subsequently created the non-profit corporation Eagle Forum Education and Legal Defense Fund ("EFELDF") in 1981 to educate and further elevate her political causes (Id. , p. 2). In 2001, EF registered the service mark "EAGLE FORUM," Registration Number 2475317, with the United States Patent and Trademark Office (Doc. 43, p. 5; Doc. 203, p. 3). In 2015, another 501(c)(4), Citizen Empowerment League, was created (Doc. 43, p. 9).

In a year fraught with contentious battles across the political spectrum, 2016 saw divisions appear in EF amongst the board of directors. During the Republican presidential primary, one group of the board of directors of EF supported Senator Ted Cruz while the other group, including Schlafly, supported Donald J. Trump as the nominee (Doc. 203, p. 5; Doc. 203-2, p. 4; Doc. 203-5, p. 12; Doc. 203-9, p. 26). In April 2016, three members of the board called for a board meeting, citing the bylaws of EF (Doc. 203-12, p. 49). Schlafly, questioning their intent, allegedly responded by requesting six members' resignations, including the three members who requested the meeting (Doc. 203-8, p. 2). The meeting was conducted the next day over the objections of Schlafly and one of her sons, who was also a board member (Doc. 203-12, 50). When the dust settled, the board voted to change leadership and make three of the six directors that Schlafly asked to resign signatories on EF's accounts (Id. at 51).

Doubtfully by coincidence, in May 2016, the newest 501(c)(4), Citizen Empowerment League, changed its name to PSAE (Doc. 43, p. 9). PSAE was comprised mostly of the minority board members, including Schlafly, and ex-leadership from EF (Id. at 10). PSAE allegedly focuses on educating the public on Schlafly's positions "related to the Trump agenda" (Doc. 203-6, p. 96).

This action arises out of claims originally brought derivatively by the six majority directors of EF against PSAE seeking injunctive relief for alleged violations of state and federal laws relating to intellectual property and commercial competition (Doc. 40). The individual plaintiffs in the original derivative action were subsequently joined by EF, formerly listed as a defendant, and the individual plaintiffs were subsequently dismissed (Docs. 36, 187). EF alleged claims for state law conversion; federal and state law trademark and service mark infringement, unfair competition, and dilution; and federal cybersquatting (Doc. 40).

EF claims that after the name change, PSAE solicited support and funds from supporters and donors of EF without permission, using EF's assets and resources including EF's money; intellectual, real, and personal property; mailing lists; and P.O. Box (Doc. 43, p. 11). PSAE denied the allegation but admitted to using Schlafly's name and image along with employing phrases like "Our Eagle Leaders," "my American Eagles," and "loyal supporters" who have been fighting "for decades" (Id. at p. 11). EF also alleges that PSAE registered two unauthorized websites, http://www.psamericaneagles.org or http://www.psamericaneagles.com, using EF's e-mail address (Id. at p. 10-11). PSAE admits registering the websites, but it states that it never intended to sell, transfer, or assign the websites to a third-party for gain (Doc. 203, p. 5).

On August 14, 2019, PSAE filed the instant MSJ and memorandum in support (Docs. 202, 203). EF then filed a Rule 56(d) motion, seeking to deny or defer consideration of the MSJ (Doc. 206), and subsequently filed its response to the MSJ on September 16, 2019 (Doc. 209). PSAE filed a reply to EF's response on September 18, 2019 (Doc. 210). EF next filed its motion to strike PSAE's reply, citing this Court's local rules (Doc. 211). The Court denied both of those related motions and now brings its attention to the underlying MSJ (Doc. 228).

LEGAL STANDARD

Summary judgment is "the put up or shut up moment in a lawsuit" where a party lays its proverbial cards on the table, showing what evidence it possesses to convince a trier of fact to agree with its version of the events. Steen v. Myers , 486 F.3d 1017, 1022 (7th Cir. 2007) (quoting Hammel v. Eau Galle Cheese Factory , 407 F.3d 852, 859 (7th Cir. 2005) (other citations omitted)). Summary judgment is only appropriate if the movant "shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Spurling v. C & M Fine Pack, Inc. , 739 F.3d 1055, 1060 (7th Cir. 2014) (quoting FED. R. CIV. P. 56(a) ). That "burden on the moving party may be discharged by ‘showing’—that is, pointing out to the district court—that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett , 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

Once the moving party has set forth the basis for summary judgment, the burden then shifts to the nonmoving party who must go beyond mere conclusory allegations and offer specific facts showing that there is a genuine issue of fact for trial. FED. R. CIV. P. 56(e) ; see Lujan v. Nat'l Wildlife Fed'n , 497 U.S. 871, 888, 110 S.Ct. 3177, 111 L.Ed.2d 695 (1990) ; see also Celotex , 477 U.S. at 324, 106 S.Ct. 2548. While the Court must view the evidence and draw all reasonable inferences in favor of the opposing party, "[i]nferences and opinions must be grounded on more than flights of fancy, speculations, hunches, intuitions, or rumors[.]" Bennington v. Caterpillar Inc. , 275 F.3d 654, 658 (7th Cir. 2001) ; Rand v. CF Industries, Inc. , 42 F.3d 1139, 1146 (7th Cir. 1994) ; Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A "court may not assess the credibility of witnesses, choose between competing inferences or balance the relative weight of conflicting evidence[.]" Reid v. Neighborhood Assistance Corp. of America , 749 F.3d 581, 586 (7th Cir. 2014) (quoting Abdullahi v. City of Madison , 423 F.3d 763, 769 (7th Cir. 2005) ). A merely cognizable issue of fact is insufficient to deny summary judgment, and an opposing party must present sufficient evidence to enable a reasonable jury to render a verdict in its favor. Anderson , 477 U.S. at 251–52, 106 S.Ct. 2505 ; Hobgood v. Illinois Gaming Board , 731 F.3d 635, 643 (7th Cir. 2013). "[A] complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Celotex, 477 U.S. at 323, 106 S.Ct. 2548.

ANALYSIS

I. Conversion

A. Applicable Law

"The essence of conversion is the wrongful deprivation of one who has a right to the immediate possession of the object unlawfully held." Horbach v. Kaczmarek , 288 F.3d 969, 978 (7th Cir. 2002) (quotation omitted). "To prove conversion under Illinois law, a plaintiff must show that: (1) he has a right to the property at issue; (2) he has an absolute and unconditional right to the immediate possession of the property; (3) he made a demand for possession; and (4) the defendant wrongfully and without authorization assumed control, dominion, or ownership over the property." Stevens v. Interactive Fin. Advisors, Inc. , 830 F.3d 735, 738 (7th Cir. 2016). Illinois law limits the circumstances in which a plaintiff may maintain an action for conversion.

For money, the general rule is that conversion will not lie if the value is represented by a general debt or obligation. Sutherland v. O'Malley , 882 F.2d 1196, 1200 (7th Cir. 1989) (citations omitted). "Only if the money at issue can be described as ‘specific chattel’ -- in other words, ‘a specific fund or specific money in coin or bills’ -- will conversion lie." United BizJet Holdings, Inc. v. Gulfstream Aerospace Corp. , 318 F. Supp. 2d 680, 681 (N.D. Ill. 2004). The plaintiff's right to the property must be absolute. In the case of money, a plaintiff must show that the money claimed at all times belonged to him and that the defendant converted it to his own use. Horbach , 288 F.3d at 978.

"Illinois courts do not recognize an action for conversion of intangible rights." American Nat. Ins. Co. v. Citibank, N.A., 543 F.3d 907, 910 (7th Cir. 2008). But negotiable instruments like checks are considered identifiable objects of property. See McNichols v. Weiss , 2018 WL 5778413, at *7 (N.D. Ill. 2018) (quoting Great Lakes Higher Educ. Corp. v. Austin Bank of Chicago , 837 F. Supp. 892, 897 (N.D. Ill. 1993) ("Illinois courts do recognize a cause of action for conversion of commercial paper, such as a check, on the theory that the intangible right is merged into the specific...