Georgia–Pacific Consumer Prods. LP v. Von Drehle Corp.

• Decision Date: 27 March 2012
• Docket Number: No. 5:05–CV–478–BO.,5:05–CV–478–BO.
• Citation: 856 F.Supp.2d 750
• Court: U.S. District Court — Eastern District of North Carolina
• Parties: GEORGIA–PACIFIC CONSUMER PRODUCTS LP, Plaintiff, v. VON DREHLE CORPORATION, Defendant.

856 F.Supp.2d 750

GEORGIA–PACIFIC CONSUMER PRODUCTS LP, Plaintiff,

v.VON DREHLE CORPORATION, Defendant.

No. 5:05–CV–478–BO.

United States District Court,

E.D. North Carolina,

Western Division.

March 27, 2012.

Douglas W. Kenyon, R. Dennis Fairbanks, Hunton & Williams, LLP, Raleigh, NC, John G. Maynard, III, Hunton & Williams LLP, Richmond, VA, William Kyle Carpenter, Woolf, McClane, Bright, Allen & Carpenter, PLLC, Knoxville, TN, for Plaintiff.

Albert P. Allan, Allan Law Firm, PLLC, Charlotte, NC, David W. Hood, Michael P. Thomas, Patrick, Harper & Dixon, LLP, Hickory, NC, Stephen L. Curry, Attorney at Law, Little Rock, AK, for Defendant.

ORDER

TERRENCE WILLIAM BOYLE, District Judge.

This matter is before the Court on several motions filed by the parties following jury trial. For the reasons discussed below, Defendant von Drehle's Motion renewing its request for Judgment as a Matter of Law [DE 329] is granted. All other pending motions are denied as moot.

BACKGROUND

This matter has been before the Court in some manner for nearly seven years, and the Court has entered numerous orders recounting the specific facts and procedural posture of the case. The Court hereby incorporates by reference the background and facts of this case enumerated in its order entered March 21, 2011 [DE 238]. Commencing January 4, 2012, this matter proceeded to jury trial at Elizabeth City, North Carolina. The jury returned a verdict in favor of Plaintiff on January 6, 2012, awarding $791,431 in damages [DE 319]. Defendant filed a timely motion pursuant to Rule 50(b) of the Federal Rules of Civil Procedure, renewing its request for judgment as a matter of law made at trial.

DISCUSSION

Rule 50(b) provides that if a court does not grant a motion for judgment as a matter of law made at trial, the court is “considered to have submitted the action to the jury subject to the court's later deciding the legal questions raised by the motion.” F.R.Civ.P. 50(b). Judgment as a matter of law is appropriately entered when “a reasonable jury would not have a legally sufficient evidentiary basis to find for [a] party on [an] issue.” F.R.Civ.P. 50(a)(1); see also Int'l Ground Transp., Inc. v. Mayor & City Council of Ocean City, 475 F.3d 214, 218 (4th Cir.2007). A court applies the same standard when deciding a Rule 50(b) motion for judgment as a matter of law as it would when deciding a Rule 56 motion for summary judgment. Dennis v. Columbia Colleton Medical Ctr., Inc., 290 F.3d 639, 644 (4th Cir.2002). That is, a court must decide whether a jury, when viewing the evidence in the light most favorable to the nonmoving party and drawing all reasonable inferences in its favor, could have reached the conclusion that was reached by this jury. Id. at 645.

At the heart of Defendant's motion is its contention that Plaintiff has brought several lawsuits in different United States District Courts against various defendants, at least some of whom are distributors of Defendant, alleging trademark infringement with regard to Plaintiff's enMotion paper towel dispensers. Defendant contends that each of these lawsuits involves the same activity at issue in the instant matter—namely, the “stuffing” of Plaintiff's enMotion dispensers with paper towels made by paper towel manufacturers other than Plaintiff. The question submitted to the jury in this case was whether “plaintiff established by a preponderance of the evidence that the defendant infringed on plaintiff's valid trademark” [DE 319]. The jury responded to this question in the affirmative. However, because another court had previously decided this same question in the negative, this Court now holds that Defendant should be permitted to raise the affirmative defenses of claim and issue preclusion and that judgment as a matter of law is appropriate.

Arkansas and Ohio Cases

Prior to the commencement of trial, Defendant filed a second motion to amend its answer to include preclusion defenses and a renewed motion for summary judgment [DE 275 & 285]. The Court had earlier denied a similar request by Defendant that was based on a decision in the Western District of Arkansas. The Court's denial of Defendant's request was not on the merits of the underlying preclusion defense, but rather was due to Defendant's sixteen month delay in raising the issue of a preclusion defense and the potential for prejudice [DE 238]. The basis for Defendant's second motion to amend, however, is a decision from the Northern District of Ohio, entered just four days before Defendant moved again in this Court to amend its answer.

In a case involving Plaintiff and a distributor of Defendant, the Northern District of Ohio court held that Plaintiff had “fully and fairly litigated its claim in the Arkansas litigation that ‘stuffing’ its dispensers with competitors' replacement rolls violated its trademark and related and other claims” and that dismissal on the basis of issue preclusion was justified. Georgia–Pacific Consumer Prods. LP v. Four–U–Packaging, Inc., 821 F.Supp.2d 948 (N.D.Ohio 2011). The Northern District of Ohio decision is based on the Eighth Circuit's opinion affirming a Western District of Arkansas judgment that there is no likelihood of confusion, and therefore no trademark infringement, when Plaintiff's enMotion dispensers are stuffed with other manufacturer's paper towels. Georgia Pacific Consumer Prods. LP v. Myers Supply, Inc., 621 F.3d 771 (8th Cir.2010).¹

Claim and Issue Preclusion

“A fundamental precept of common-law adjudication, embodied in the related doctrines of collateral estoppel and res judicata, is that a right, question or fact distinctly put in issue and directly determined by a court of competent jurisdiction cannot be disputed in a subsequent suit between the same parties or their privies.” Montana v. United States, 440 U.S. 147, 153, 99 S.Ct. 970, 59 L.Ed.2d 210 (1979) (internal quotation and citation omitted). The doctrine of res judicata bars “ ‘repetitious suits involving the same cause of action’ once ‘a court of competent jurisdiction has entered a final judgment on the merits.’ ” United States v. Tohono O'odham Nation, ––– U.S. ––––, 131 S.Ct. 1723, 1730, 179 L.Ed.2d 723 (2011) (quoting Commissioner v. Sunnen, 333 U.S. 591, 597, 68 S.Ct. 715, 92 L.Ed. 898 (1948)). The doctrine of collateral estoppel provides that the actual and necessary determination of an issue by a court of competent jurisdiction is conclusive. Montana, 440 U.S. at 153, 99 S.Ct. 970. The doctrine of res judicata is an affirmative defense that is generally waived if not timely raised. F.R.Civ.P. 8(c); Arizona v. California, 530 U.S. 392, 410, 120 S.Ct. 2304, 147 L.Ed.2d 374 (2000).

Timeliness of Preclusion Defenses

As the Court has previously stated, the standard for allowing or denying amendments to pleadings under Rule 15 is clear: “[m]otions to amend are committed to the discretion of the trial court.” Keller v. Prince George's County, 923 F.2d 30, 33 (4th Cir.1991) (citing Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962)); F.R.Civ.P. 15. A court may deny a motion to amend for “undue delay, bad faith, or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc.” Davis v. Piper Aircraft Corp., 615 F.2d 606, 613 (4th Cir.1980).

Because Defendant promptly alerted the Court to the holding by the Northern District of Ohio, and because Defendant's actions do not evidence bad faith or dilatory motive, it is appropriately within the discretion of the Court to allow Defendant to amend its answer to include preclusion defenses. Alternatively, the Court recognizes that, under some circumstances, a court may raise a preclusion defense sua sponte and dismiss an action on its own motion. Arizona, 530 U.S. at 412, 120 S.Ct. 2304. “This result is fully consistent with the policies underlying res judicata: it is not based solely on the defendant's interest in avoiding the burdens of twice defending a suit, but is also based on the avoidance of unnecessary judicial waste.” United States v. Sioux Nation, 448 U.S. 371, 432, 100 S.Ct. 2716, 65 L.Ed.2d 844 (1980) (Rehnquist, J., dissenting).

In light of the circumstances present in this case, which include several lawsuits filed by Plaintiff attempting to litigate the same core question, the Court finds on its own motion that a preclusion defense is appropriate in this matter. Accordingly, Defendant's defense of preclusion based on the opinion of the Eighth Circuit Court of Appeals affirming the judgment entered in the Western District of Arkansas and the order issued in the Northern District of Ohio finding such judgments preclusive is properly before the Court for consideration.

Claims and Issues in the Instant Matter

As noted by the Fourth Circuit, all three of Plaintiff's claims in this matter, trademark infringement and unfair competition under the Lanham Act and unfair competition under North Carolina common law, are based on Defendant's conduct in expressly marketing its 810–B paper towels for the purpose of stuffing in Plaintiff's enMotion dispensers, and all three claims will rise and fall on whether Defendant is liable for contributory trademark infringement. Georgia Pacific Consumer Prods., LP v. Von Drehle Corp., 618 F.3d 441, 450 (4th Cir.2010). Defendant can only be liable for contributory trademark infringement if the stuffing of enMotion dispensers with 810–B paper towels by end-user customers constitutes direct trademark infringement. Id. at 451.

In order for Plaintiff to establish trademark infringement, Plaintiff must establish that (1) it possesses one or more trademarks; (2) that end-user customers used one or more of such trademarks; (3) in commerce; (4) in connection with the sale, offering for sale, distribution or advertising of goods; (5) in a manner likely to cause confusion to the...