Iowa Health System v. Trinity Health Corp., C 00-3078-MWB.
| Court | United States District Courts. 8th Circuit. Northern District of Iowa |
| Writing for the Court | Bennett |
| Citation | 177 F.Supp.2d 897 |
| Parties | IOWA HEALTH SYSTEM; Trinity Health Systems, Inc.; and Trinity Regional Health System, Plaintiffs, v. TRINITY HEALTH CORPORATION, f/k/a Holy Cross Health System; Trinity Health-Michigan, f/k/a Mercy Health Services; Mercy Health Network; and Catholic Health Initiatives, Defendants. |
| Docket Number | No. C 00-3078-MWB.,C 00-3078-MWB. |
| Decision Date | 18 December 2001 |
v.
TRINITY HEALTH CORPORATION, f/k/a Holy Cross Health System; Trinity Health-Michigan, f/k/a Mercy Health Services; Mercy Health Network; and Catholic Health Initiatives, Defendants.
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COPYRIGHT MATERIAL OMITTED
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MEMORANDUM OPINION AND ORDER REGARDING DEFENDANTS' MOTION TO DISMISS PLAINTIFFS' COUNTERCLAIMS TO DEFENDANT THC'S COUNTERCLAIM
BENNETT, Chief Judge.
TABLE OF CONTENTS
I. INTRODUCTION ............................................................. 901
Page 900
A. Factual Background .................................................... 901
B. Procedural Background ................................................. 903
II. LEGAL ANALYSIS ........................................................... 904
A. Technical Insufficiencies ............................................. 904
1. The parties' arguments ............................................. 904
2. Applicable standards ............................................... 905
3. Analysis ........................................................... 907
B. Substantive Insufficiencies ........................................... 909
1. Applicable standards ............................................... 909
2. Improper parties ................................................... 910
a. Arguments of the parties ........................................ 910
b. Analysis ........................................................ 911
3. Failure to plead fraud with particularity .......................... 913
a. Arguments of the parties ........................................ 913
b. Analysis ........................................................ 914
i. Rule 9(b) requirements for pleading fraud .................. 914
ii. Pleading of "circumstances" of the fraud ................... 915
iii. Pleading "on information and belief" ....................... 915
4. Failure to state a claim based on "improper tacking" ............... 917
a. "Redundancy" of the claim ....................................... 918
b. "Abandonment" and "tacking" ..................................... 918
i. "Abandonment" .............................................. 918
ii. "Tacking" and "improper tacking" ........................... 920
iii. "Improper tacking" as "abandonment" ........................ 921
5. "Unclean hands" .................................................... 923
a. Arguments of the parties ........................................ 923
b. The "unclean hands" cause of action ............................. 924
c. Sufficiency of the allegations of "unclean hands" ............... 926
i. Conduct contrary to assurances .............................. 926
ii. Wrongful assertion of trademark rights ...................... 927
6. Unfair competition ................................................. 928
a. Arguments of the parties ........................................ 928
b. Unfair competition under the Lanham Act and state law ........... 929
c. Sufficiency of the allegations to state a claim ................. 932
7. Declaratory judgment ............................................... 932
III. CONCLUSION ............................................................... 932
The motion to dismiss presently before the court puts the court in the rather unusual position of considering the sufficiency of claims asserted in the third round of the parties' pleadings. This is an action initiated by the plaintiffs to protect their common-law and state-registered trademarks, which are used in connection with their provision of health care services in Iowa and western Illinois. After this litigation was commenced, one of the defendants acquired the rights to a federally-registered trademark, and then asserted a counterclaim of infringement of that trademark. The counterclaim in the second round of pleadings prompted "counterclaims to the counterclaim" in the third round, as the original plaintiffs asserted various challenges to the defendant's federally-registered mark, conduct related to the acquisition of the federally-registered mark, and the assertion of rights pursuant to the newly-acquired mark. The original defendants now assert that the original plaintiffs' "counterclaims to counterclaim" fail to state claims upon which relief can be granted.
Page 901
This matter is before the court on a motion to dismiss certain claims, so that the factual background here is necessarily drawn from the parties' pleadings, and is intended only to put in context the motion presently pending before the court. The plaintiffs in this action identify themselves as Iowa Health System (IHS), an Iowa corporation with its principal place of business in this state; Trinity Health Systems, Inc. (THS), an Iowa corporation, also with its principal place of business in Iowa; and Trinity Regional Health System (TRHS), an Illinois corporation with its principal place of business in Illinois. The plaintiffs allege that they are affiliated to provide healthcare services and products in Iowa and western Illinois under common-law and state-registered trademarks "Trinity" and "Trinity Health." The plaintiffs will be referred to collectively herein as "the Trinity Iowa Plaintiffs."
In their responsive pleadings, the defendants identify themselves as the following: Trinity Health Corporation (THC), formerly Holy Cross Health System, an Indiana corporation with its principal place of business in Indiana; Trinity Health-Michigan (THM), formerly Mercy Health Services (MHS), a Michigan corporation with its principal place of business in Michigan; Mercy Health Network, Inc. (MHN), a Delaware non-stock corporation with two members, Catholic Health Initiatives and THM; and Catholic Health Initiatives (CHI), a Colorado corporation with its principal place of business in that state.1 The defendants operate hospitals and provide other healthcare services in Michigan, Indiana, Ohio, Maryland, Iowa, Idaho, and California, and have recently acquired by assignment rights in a federally-registered service mark for "Trinity Healthcare Services," including a triangle-shaped logo. The defendants are described collectively herein as "the Trinity Michigan Defendants."
A dispute has arisen between the parties concerning the use of the term "Trinity" in connection with the provision of healthcare services, primarily in Iowa. In early 2000, the Trinity Iowa Plaintiffs, and more particularly IHS, learned that the Trinity Michigan Defendants allegedly intended to provide health services, in Iowa and elsewhere, under the name Trinity Health. Because use of the name Trinity Health by the Trinity Michigan Defendants might be confused with use of Trinity or Trinity Health by the Trinity Iowa Plaintiffs, IHS sent notice of its established common-law trademark rights in "Trinity" and "Trinity Health" to the Trinity Michigan Defendants. The parties then entered into negotiations concerning use of the terms "Trinity" and "Trinity Health."
In the course of those negotiations, on February 25, 2000, counsel for THM (still known as MHS at that time), wrote counsel for IHS a letter, which, in pertinent part, indicated the limited use that the Trinity Michigan Defendants intended to make of "Trinity Health":
Page 902
MHS intends that the Trinity Health name will have a limited, corporate level use in Iowa. MHN was formed as a joint operating organization (incorporated in Delaware), sponsored by Catholic Health Initiatives and MHS. As a result of the Holy Cross affiliation, Trinity Health [i.e., Trinity Health-Michigan or THM] would be substituted for MHS as a member of MHN. MHN then intends to use the TRINITY HEALTH name as part of a tag line for its corporate entity as follows: MERCY HEALTH NETWORK, SPONSORED BY CATHOLIC HEALTH INITIATIVES AND TRINITY HEALTH. The TRINITY HEALTH name (along with the rest of the mark) will only appear at the corporate level in the Iowa operations of MHN, on such things as the corporate stationery and signs at the West Des Moines corporate office.
Defendants' Memorandum In Support Of Their Motion To Dismiss Counterclaims, Exhibit 1, at 1.2
While negotiations were continuing, on June 14, 2000, IHS obtained Iowa state registrations for the marks "Trinity" and "Trinity Health." See Complaint, Exhibits 1 (state registration, pursuant to IOWA CODE CH. 548, of "mark described as ... TRINITY" by IHS, indicating that "[t]he mark was first used in the state of Iowa on January 1, 1973") & 2 (state registration, pursuant to IOWA CODE CH. 548, of "mark described as ... TRINITY HEALTH" by IHS, indicating that "[t]he mark was first used in the state of Iowa on January 1, 1973"). The Trinity Iowa Plaintiffs contend that these state registrations supplement their common-law trademark rights in Iowa.
Somewhat later, on March 5, 2001, after this litigation was initiated and after the Trinity Michigan Defendants had answered the Complaint, THC alleges that it obtained an assignment of rights to an incontestable federally-registered trademark for "Trinity Healthcare Services," including a triangular design, U.S. Registration No. 1,783,669 (the '669 mark). The mark, as it appears in the registration, is the following:
NOTE: OPINION CONTAINING TABLE OR OTHER DATA THAT IS NOT VIEWABLE
THC's Amended Answer, Affirmative Defenses, Counterclaim And Jury Demand, Exhibit 1. The registration indicates that the mark was registered on July 20, 1993, in the SERVICE MARK PRINCIPAL REGISTER by UHCS Management, Inc., a Tennessee Corporation, for "HEALTH CARE SERVICES, IN CLASS 42 (U.S.CL.100)," with a first use on May 12, 1991, and first use in commerce also on May 12, 1991. Id. The registration bears the following limitations:
NO CLAIM IS MADE TO THE...
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