EST Inc. v. Royal-Grow Prods., LLC
| Decision Date | 16 March 2021 |
| Docket Number | Case No. 19-cv-02376-TC |
| Citation | 526 F.Supp.3d 943 |
| Parties | EST INC. d/b/a Enviro Science Techs., Plaintiff/Counterclaim Defendant v. ROYAL-GROW PRODS., LLC, Defendant/Counterclaim Plaintiff v. Vinay Patel, Counterclaim Defendant |
| Court | U.S. District Court — District of Kansas |
Brett C. Randol, Joel Henry Driskell, Christopher L. Kurtz, Rouse Frets White Goss Gentile Rhodes, PC, Leawood, KS, for Plaintiff/Counterclaim Defendant.
Erin D. Lawrence, Brandon J.B. Boulware, Boulware Law, LLC, Kansas City, MO, for Defendant/Counterclaim Plaintiff.
Royal-Grow Products, LLC, has asserted several claims, including breach of contract, Lanham Act violations, and other equitable claims against EST, Inc., and Vinay Patel. Doc. 94. EST and Patel have filed a Motion for Partial Summary Judgment, arguing they are entitled to judgment as a matter of law with respect to certain counterclaims and Royal-Grow's request for punitive damages. Docs. 95–96. For the following reasons, the Motion is granted in part and denied in part.
Summary judgment is proper under the Federal Rules of Civil Procedure when the moving party demonstrates "that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A fact is "material" when it is essential to the claim's resolution. Adler v. Wal-Mart Stores, Inc. , 144 F.3d 664, 670 (10th Cir. 1998). And disputes over those material facts are "genuine" if the competing evidence would permit a reasonable jury to decide the issue in either party's favor. Id. Disputes—even hotly contested ones—over facts that are not essential to the claims are irrelevant. Indeed, belaboring such disputes undermines the efficiency Rule 56 seeks to promote.
At the summary judgment stage, material facts "must be identified by reference to affidavits, deposition transcripts, or specific exhibits incorporated therein." Adler , 144 F.3d at 671 ; see also D. Kan. R. 56.1(d). To determine whether a genuine issue of fact exists, the Court views all evidence, and draws all reasonable inferences, in the light most favorable to the nonmoving party. See Allen v. Muskogee , 119 F.3d 837, 839–40 (10th Cir. 1997). That said, the nonmoving party cannot create a genuine factual dispute by making allegations that are purely conclusory, Adler , 144 F.3d at 671–72, 674, or unsupported by the record as a whole, see Scott v. Harris , 550 U.S. 372, 378–81, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007).
1. Generally speaking, this case arises from a longstanding business relationship between EST and Royal-Grow. Royal-Grow markets and distributes agricultural products but relied on EST to manufacture the products at issue in this litigation. See Doc. 105 at 3–6, ¶¶ 3–6. EST, led by Patel, is a specialty chemical company that manufactures agricultural products in Kansas and sells those products primarily to distributors. Doc. 105 at 3–5, ¶¶ 2–5; 2–3, ¶ 1.
In 2012, Royal-Grow and/or its parent company entered into a written license and distribution agreement with EST. See Doc. 105 at 4–6, ¶ 5–6. Under that agreement, Royal-Grow obtained an exclusive license to market and sell certain EST-developed and -manufactured agricultural products. See Doc. 102-6. At some point, EST began manufacturing the following liquid products for Royal-Grow: 0-0-50, Enzyme Max, and Transcend. Doc. 105 at 6–7, ¶¶ 7–8. The parties agreed on the product formulas EST was to make for Royal-Grow and that EST would place Royal-Grow labels on those finished products. Doc. 105 at 7–12, ¶¶ 9–12. Royal-Grow then purchased these EST-manufactured products and sold them to its ultimate customers in bottles, jugs, pails, drums, and totes. Doc. 105 at 7, ¶ 8. EST did not sell or ship any of the Royal-Grow products at issue directly to Royal-Grow's customers. Doc. 105 at 60–66, ¶¶ 54–58.
Much of this dispute concerns Royal-Grow's Enzyme Max product. The labels Royal-Grow approved for this product bore the words "Enzyme Max" or "Enzyme Max®." See Doc. 105 at 12–13, ¶ 13. Royal-Grow has sold this product to customers since February 2015. Doc. 105 at 73–74, ¶ 17. But it was not until July 2017 that Royal-Grow filed a trademark application—for both "Enzyme Max" and the shortened product name "E Max." Doc. 105 at 38, ¶¶ 34, 37. Although the U.S. Patent and Trademark Office granted registration of both marks, Doc. 105 at 70–71, ¶¶ 9–10, Royal-Grow's actual product never bore an "E Max" label. Doc. 105 at 12–13, ¶¶ 13–14. Royal-Grow did, however, use the name "E Max" on bills of lading, emails, purchase orders, receipts, and advertisements. Doc. 105 at 75, ¶ 20; 81–83, ¶¶ 26–30.
In addition to manufacturing products for Royal-Grow, EST also manufactures and sells other agricultural products with similar or identical chemical compositions. Doc. 105 at 105–07, ¶¶ 61–62. This suit concerns two lines of EST products, the full names of which have varied: (1) the "E-Max Soil Zyme with Microbes" and (2) "NanoZyme" product lines. Doc. 105 at 19–32, ¶¶ 19–30. EST has advertised the E-Max line since July 2014, Doc. 105 at 19–21, ¶ 19, though it is less clear when its first sale occurred. It has sold NanoZyme products since April 12, 2016, but sells this product only to another distributor and not directly to consumers. Doc. 105 at 30–32, ¶¶ 28–30.
2. Two major disagreements give rise to the remaining claims in this lawsuit. The parties, not surprisingly, have differing views on them.
a. One concerns the original formulation of Royal-Grow's Enzyme Max and EST's E-Max products. Royal-Grow has submitted evidence to support its claim that it created the formula for Enzyme Max in spring 2014 and independently decided on the Enzyme Max name—and E Max shorthand—at that time. Doc. 105 at 72–73, ¶¶ 14–16. In contrast, the EST Defendants claim that EST formulated the product and voluntarily supplied its product data—labeled "E-Max Soil Zyme with Microbes"—to Royal-Grow in summer 2014, in order to forge a manufacturing relationship. Doc. 105 at 23–25, ¶¶ 21–22. For purposes of summary judgment, Royal-Grow's view of the facts are accepted as true.
b. The other centers on the identification and protection of commercial names for the parties' products. Royal-Grow has submitted evidence that it informed the EST Defendants in April 2017 that Royal-Grow was seeking to register trademarks in both the Enzyme Max and E Max names. Doc. 105 at 109–113, ¶ 68. Additionally, Royal-Grow has submitted evidence supporting its claim that the EST Defendants agreed, during a conversation in 2015, to cease using EST's own "E-Max" product name. Doc. 105 at 108–09, ¶ 67.
The EST Defendants deny that these conversations occurred. Doc. 105 at 108–09. Moreover, they ask the Court to disregard Royal-Grow's declaration supporting the 2017 conversation because it conflicts with Royal-Grow's deposition testimony and is, therefore, a "sham affidavit." Doc. 105. at 109–13, ¶ 68; see Franks v. Nimmo , 796 F.2d 1230, 1237 (10th Cir. 1986) ().
For purposes of summary judgment, Royal-Grow's view must prevail, as the two pieces of evidence EST identifies are not in direct conflict. The declaration speaks to discussions that allegedly occurred before Royal-Grow applied for a trademark, while the identified deposition testimony concerns whether Royal-Grow informed EST after it had already applied for or obtained a trademark. See Doc. 105 at 109–13, ¶ 68. This may create a question of credibility for the jury, but it does not necessarily make Royal-Grow's declaration "an attempt to create a sham fact issue" that should be ignored at the summary judgment stage. See Franks , 796 F.2d at 1237.
3. EST initially filed this action against Royal-Grow for alleged nonpayment of amounts due under the parties' contracts. See Doc 1. In response, Royal-Grow filed counterclaims against both EST and Patel. See Doc. 8.
EST and Royal-Grow have settled EST's original contract claims. Doc. 91. As a result, only Royal-Grow's counterclaims remain. Doc. 91. Specifically, Royal-Grow pled claims against both EST Defendants for unjust enrichment, tortious interference, conversion, Lanham Act violations, and civil conspiracy. Docs. 8 & 94 at ¶ 4. It also has a claim against EST (but not Patel) for breach of contract. Docs. 8 & 94 at ¶ 4.
The EST Defendants seek summary judgment on fewer than all of Royal-Grow's claims.1 In their Motion for Partial Summary Judgment, they seek judgment on the unjust enrichment, Lanham Act, and civil conspiracy claims. See generally Doc. 96. They also seek a ruling that Royal-Grow may not pursue punitive damages at trial. Id. at 32–33. They do not, however, seek judgment on the contract, tortious interference, or conversion claims. See generally Doc. 96. As a result, this case will proceed to trial; the question is which claims will be presented to a jury.
The EST Defendants' motion for partial summary judgment is granted in part and denied in part. The EST Defendants are entitled to judgment on Royal-Grow's unjust enrichment claim, civil conspiracy claim, and Lanham Act Section 43 false advertising claims. They are also granted judgment on the Section 32 claim related to Royal-Grow's E Max mark, the Section 32 and 43 claims related to EST's NanoZyme mark, and the Section 43 false association claim related to Royal-Grow's chemical formula. Finally, the EST Defendants are granted judgment on any punitive damages request related to Royal-Grow's breach of contract claim. But summary judgment is denied as to the remaining counterclaims (i.e. , the Lanham Act Section 32 and 43(a) false association claims related to EST's E-Max mark) and the request for punitive damages for non-contract claims.
Royal-Grow asserts a claim for unjust enrichment, arguing that EST benefitted by accepting payment from Royal-Grow while impermissibly using...
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