Lawn Managers, Inc. v. Progressive Lawn Managers, Inc.

• Decision Date: 11 June 2018
• Docket Number: No. 4:16 CV 144 DDN,4:16 CV 144 DDN
• Citation: Lawn Managers, Inc. v. Progressive Lawn Managers, Inc., 390 F.Supp.3d 975 (E.D. Mo. 2018)
• Parties: LAWN MANAGERS, INC., Plaintiff, v. PROGRESSIVE LAWN MANAGERS, INC., Defendant.
• Court: U.S. District Court — Eastern District of Missouri

390 F.Supp.3d 975

LAWN MANAGERS, INC., Plaintiff,

v.PROGRESSIVE LAWN MANAGERS, INC., Defendant.

No. 4:16 CV 144 DDN

United States District Court, E.D. Missouri, Eastern Division.

Signed June 11, 2018

Norah J. Ryan, Law Office of Norah J. Ryan, Susan Nell Rowe, Rowe Law Office LLC, Annette P. Heller, St. Louis, MO, for Plaintiff.

Don V. Kelly, Evans and Dixon, St. Louis, MO, Kevin C. Roberts, Roberts and Wooten, LLC, Hillsboro, MO, Alexander M. Hurst, Evans and Dixon, LLC, Columbia, MO, for Defendant.

MEMORANDUM OPINION

David D. Noce, UNITED STATES MAGISTRATE JUDGE

This case arises from a trademark dispute between plaintiff Lawn Managers, Inc., ("Lawn Managers") and defendant Progressive Lawn Managers, Inc., ("Progressive") over the latter's use of the mark "Lawn Managers." Plaintiff alleges one count of trademark infringement under 15 U.S.C. § 1114, and defendant counterclaims for cancellation of trademark registration under 15 U.S.C. §§ 1115, 1119, and 1064.

The Court has subject matter jurisdiction over the action, pursuant to 28 U.S.C. §§ 1331 and 1338 and 15 U.S.C. § 1121. The parties have consented to the exercise of plenary authority by a United States Magistrate Judge pursuant to 28 U.S.C. § 636(c).

This action was tried to the Court sitting without a jury from October 30 to November 1, 2017. After carefully considering the pleadings, trial testimony, exhibits, and the parties' memoranda, the Court makes the following findings of fact and conclusions of law pursuant to Federal Rule of Civil Procedure 52.

FINDINGS OF FACT

1. Plaintiff Lawn Managers is a lawn care business, incorporated in Missouri since 1981. Its principal, holding 100% of its ownership, is Randall Zweifel.

2. Defendant Progressive is also a lawn care business, incorporated in Missouri since 2012. Its principal, holding 100% of its ownership, is Linda Smith.

3. Randall Zweifel and Linda Smith were previously married; they divorced in 2012. Prior to their divorce, Zweifel and Smith each owned 50% of Lawn Managers and its assets, including the trademark at issue in this case. They worked together in this business for 17 years.

4. Zweifel and Smith entered a marital settlement agreement, dated April 17, 2012, that was incorporated into the divorce decree issued by the Circuit Court of Jefferson County, Missouri, on May 1, 2012. This decree provided in pertinent part that Smith would relinquish her share in plaintiff and establish a new company named "Progressive Lawn Managers." In return, Smith would receive a license to use the name "Lawn Managers" for two years, as well as some of plaintiff's assets, including some vehicles and lawn equipment and the ability to temporarily use plaintiff's facilities and credit. All of plaintiff's assets not specifically named were reserved to Zweifel, who assumed sole ownership of plaintiff.

5. The May 2012 divorce decree also provided that plaintiff's residential customer lists were divided by ZIP Code areas and awarded to each party. Zweifel and Smith each agreed not to solicit residential or commercial account business in the areas awarded to the other for two years. Id.

6. In October 2013, Zweifel and Smith filed cross-motions for contempt for unrelated violations of the divorce decree. They reached a settlement agreement in July 2014, which was incorporated into a second judgment of the Jefferson County Circuit Court, issued July 25, 2014. Among its terms, the 2014 Judgment extended defendant's license to use plaintiff's trademark until December 31, 2014. It further replaced the ZIP Code area non-solicitation agreement with a two-year non-compete agreement for residential customers, to expire July 25, 2016.

7. The 2014 Judgment expressly provided that plaintiff and defendant were not enjoined from entering ZIP Code areas previously awarded to the other, so long as such entry was for purposes of signing up or servicing commercial customers, as opposed to residential ones. Thus, even as residential customers assigned to defendant watched plaintiff's vehicles driving through their neighborhoods, they were being told by plaintiff's staff that "we can't service your ZIP Code." The public was not immediately privy to the 2012 Decree or the 2014 Judgment and was not made aware of their terms in phone calls with plaintiff's staff.

8. Between 2012 and December 31, 2014, defendant variously made use of "Lawn Managers" and "Progressive Lawn Managers" in assorted forms of advertising, business materials, and representations to third parties.

9. From 2012 to 2015, there was constant and obvious consumer confusion, due to the post-divorce proceedings and the resulting two-year license agreement. The confusion manifested itself in phone calls to one party meant for the other party and checks that had to be hand-sorted to make sure they went to the correct company.

10. Immediately prior to December 31, 2014, defendant Progressive's signage and its website used a logo design containing the words "Progressive Lawn Managers," with the word "Progressive" larger than the words "Lawn Managers, Inc.":

11. From January 2015 onward, defendant used a visual logo that, while it still contained the words "Progressive Lawn Managers," used very small font size for the word "Progressive" to the left of the words "Lawn Managers." This small type was, moreover, superimposed on an image of grass underneath the St. Louis Gateway Arch and was difficult to distinguish from the image:

12. This logo was not devised solely for artistic or esthetic reasons. In this regard, "Progressive" is the one word responsible for distinguishing defendant's mark from plaintiff's, and the change was implemented simultaneously with the expiration of defendant's license to use plaintiff's mark. Defendant did not make a good-faith effort to dissipate confusion, but acted to deliberately exacerbate any consumer confusion with the intent of profiting from plaintiff's accrued consumer goodwill for as long as possible.

13. On February 17, 2015, plaintiff registered the word mark "Lawn Managers" with the United States Patent and Trademark Office ("USPTO"). Plaintiff has used the name "Lawn Managers" in commerce since its incorporation in 1981. Prior to the divorce, on November 14, 2011, plaintiff had registered the following logo:

14. In 2015, defendant advertised a $40 coupon that, except for the phone number listed, was identical to that used by plaintiff. The coupon used the name "Lawn Managers."

15. From 2015 onward, defendant used the logo at issue on yard signs, consisting of 11x14-inch cardboard signs posted on stakes in customers' yards after lawn treatments. These signs were visible to passersby on the street. However, given the signs' size and the distance from which passersby would view them, only the words "Lawn Managers" and not "Progressive" would be reasonably legible.

16. In a letter dated November 23, 2015, plaintiff's counsel notified defendant that it considered defendant's logo to infringe plaintiff's trademark of the words "Lawn Managers," stating that the small size of the font and the placement within the image would cause consumers to reasonably overlook the word "Progressive" and thus mistake "Progressive Lawn Managers" for "Lawn Managers."

17. In December 2015, defendant's counsel responded that it refused to change its logo, signage, or business practices.

18. In February 2016, defendant returned to customers checks intended for plaintiff that had been mistakenly sent to defendant. The returned checks were accompanied by company letterhead stationery that referred to defendant as the "Home Office" and to plaintiff as "the High Ridge location," rather than conveying the truth that plaintiff and defendant were separate, competing companies.

19. Plaintiff began this federal lawsuit action on February 4, 2016, alleging trademark infringement arising out of defendant's continued use of the aforementioned logo. Defendant Progressive counterclaimed for trademark cancellation.

20. Between January 2016 and October 2017, when this case was tried, plaintiff received more than 140 phone calls that indicated substantial consumer confusion. These calls included customers calling one company while trying to reach the other, calling the wrong company with questions about their accounts, and attempting to cancel service with the wrong company.

21. Until late 2017, defendant used an advertisement video on its website. This video used the visual logo at issue and represented defendant as employing more than 20 people, a number that did not reflect defendant's actual employee records but that was comparable to the number of people employed prior to the division of plaintiff and defendant. The video further represented defendant as having been in business for a number of years that was only possible if defendant was, in fact, plaintiff.

22. Linda Smith, defendant's principal, made no effort to tell customers that plaintiff and defendant were separate companies. Instead, she just told them that she changed her business name.

23. From 2012 until the time of trial in October 2017, when plaintiff's crews serviced commercial property in defendant's ZIP Code areas, they observed the work being done by defendant's crews and observed and reported that the work performed by defendant's crews was consistent with plaintiff's standards. The work crews employed by defendant had previously been employed by plaintiff and made use of the same procedures and equipment they had always used. They did not communicate their observations to defendant or make any effort to supervise defendant's work.

24. During the period between January 1, 2015, and the time of trial in October 2017, defendant's revenues were $2,036,830.00, with reasonably calculated profits of $322,753.00. However, for the purpose of determining the amount of plaintiff's damages, the evidence is insufficient to allow the Court to distinguish the effect of customer confusion occurring between 2012 and 2014 from that occurring after...