LeFebure Corporation v. Lefebure, Incorporated
| Decision Date | 26 April 1968 |
| Docket Number | Civ. A. No. 68-58. |
| Citation | 284 F. Supp. 617 |
| Parties | LeFEBURE CORPORATION, Plaintiff, v. LEFEBURE, INCORPORATED, Defendant. |
| Court | U.S. District Court — Eastern District of Louisiana |
COPYRIGHT MATERIAL OMITTED
Gibbons Burke, New Orleans, La., for plaintiff.
Neville M. Landry, New Orleans, La., for defendant.
We have for decision two motions, one urged by plaintiff, LeFEBURE Corporation,1 for a preliminary injunction, and the other urged by defendant, LEFEBURE, Incorporated, for dismissal of the complaint and/or summary judgment.
These motions were argued on February 14, 1968 and submitted to the Court on the pleadings, affidavits, answers to interrogatories and the various exhibits filed into the record.
The record as thus constituted reveals that in 1892 the Lefebure family commenced business in Iowa. In 1897 the business was incorporated under the laws of the State of Iowa and took the style "The Lefebure Ledger Company." In 1926 that corporation changed its corporate style to "LEFEBURE CORPORATION." The business remained an Iowa corporation until 1956 when it was incorporated in Delaware under the same name, "LEFEBURE CORPORATION." Then in 1965 the business was reincorporated under the laws of Iowa, again under the style of "LEFEBURE CORPORATION."
Plaintiff is, and for many years was, engaged in the business of manufacturing, selling, and distributing metal bank and office equipment, business forms, encoding of business accounts, safes, locks, safety deposit boxes, prefabricated bank buildings and related items. Plaintiff has registered the name "LeFebure" with the U. S. Patent Office as a trademark in two classes and as a service mark in two classes.2
The defendant, LEFEBURE, Incorporated, was organized under the laws of the State of Louisiana on August 18, 1967. Its articles of incorporation provide that the purposes for which it is organized, among others, are "to purchase or otherwise acquire, order, contract for, lease, sell or in any manner dispose of, lease, trade, exchange or take in trade all kinds and types of office and bank equipment and fixtures, including bank vault doors, fire resistive doors, drive up and walk up windows, night depositories, safe deposit boxes, vault ventilators, steel partitions and vault linings * * * and all kinds of office and bank equipment which may now or hereafter be in use * * * *"
After its incorporation in Louisiana, the defendant qualified to do business as a foreign corporation in twenty other States3 in furtherance of its charter authority to conduct its business and "promote its objects within or without the State of Louisiana."
The plaintiff has filed this suit seeking in substance to enjoin the use by defendant in its corporate name or otherwise plaintiff's name and trademark "LeFEBURE" or any other name which is deceptively similar thereto or a colorable imitation thereof.
The affidavit of defendant's president and majority stockholder, Samuel A. Miceli, Jr.,4 candidly reveals the purpose for which it was incorporated. In substance, that affidavit relates a course of negotiation between plaintiff's representatives and Miceli on behalf of Samson Safe Company, Inc. (which company was and is engaged in the same type of business as the plaintiff) and the plaintiff corporation concerning the possibility of the plaintiff purchasing Samson Safe Company, Inc. (referred to hereinafter as "Samson"). When these negotiations failed to terminate in the purchase of Samson and because Miceli felt that he had in good faith revealed to the management of the plaintiff during the course of those negotiations certain claimed trade secrets which would now be helpful to the plaintiff as a competitor, the defendant corporation was formed in an attempt to increase the bargaining power of Samson in that the new "LEFEBURE, Incorporated" would then be offered for sale together with Samson.
It is clear to us from the affidavit of Miceli, dated February 6, 1968 and that of Kenneth W. Watts, President of the Plaintiff, that Miceli's action in incorporating the defendant in Louisiana under a name practically identical to plaintiff's corporate style and qualifying to do business in twenty other States, in all of which and more the plaintiff does business, was nothing more than an attempt to force the plaintiff to buy Samson Safe Company, Inc. Thus, there is no question but that the formation of "LEFEBURE, Incorporated" was retaliatory by design. However, it is clearly reflected by the record as now constituted that the defendant has not yet engaged in any business whatsoever, its sole activity thus far being its qualification to do business as a foreign corporation in a significant number of States as aforementioned.
It is against the factual setting above described that the Court must determine the merit of the two motions now before it. Since the motion for a preliminary injunction would fall if the motion to dismiss and/or for summary judgment was granted, the latter motion will be considered and disposed of first, although some considerations are pertinent to both motions.
The defendant urges that the suit should be dismissed on the grounds that this Court lacks jurisdiction, that the complaint fails to state a claim due to prematurity, and, finally, that the plaintiff has been guilty of laches.
The complaint asserts jurisdiction based upon diversity of citizenship and also under the trademark laws of the United States. The Court finds that jurisdiction exists whether viewing the complaint as asserting a cause of action for trademark infringement, unfair competition, or both.
The defendant urges that the plaintiff is foreclosed from bringing suit in a United States District Court sitting in diversity in the State of Louisiana since, having failed to qualify to do business in this State, it lacks capacity to bring suit in the courts of Louisiana by virtue of the provisions of La.R.S. 12:211(A).5
This reasoning was sanctioned by the United States Supreme Court in Woods v. Interstate Realty Co., 337 U.S. 535, 69 S.Ct. 1235, 93 L.Ed. 1524 (1949) wherein a Mississippi statute similar to La.R.S. 12:211(A) was involved. However, this contention is without merit here since the facts of this case bring the plaintiff within the clearly defined exception to the application of La.R.S. 12:211(A), namely, that this statute does not apply to corporations engaged in interstate rather than intrastate commerce, regardless of the failure of such corporation to qualify to do business in Louisiana.
The circumstances which bring the plaintiff within this exception include the fact that the plaintiff corporation does not maintain any stock of merchandise, has no office, and owns no property within the State of Louisiana. Plaintiff does have three resident representatives in Louisiana and a representative residing in the State of Mississippi who take orders from customers in Louisiana and transmit those orders to Cedar Rapids, Iowa, for acceptance or rejection. These representatives have no authority to bind the plaintiff and the company bills the consumer directly. Plaintiff's representatives are compensated solely on a commission basis and must themselves bear the expenses incident to procuring orders.6 The company does not control the sales solicitations of its representatives, but does furnish some advertising material and does hold infrequent training meetings in Iowa. The company has for many years advertised its products, and has expended $371,000 for advertising in various "trade" publications during the past three years. Approximately twenty-five percent of the plaintiff's representatives are required to submit a weekly "Order Register" setting forth the contacts made during the week and the results thereof. The plaintiff does provide group insurance, a hospitalization plan, and income disability insurance for its representatives, but they participate in no bonus or retirement program.
The total sales of plaintiff in Louisiana for the last three years approximates $750,000, which amount constitutes only a small fraction of plaintiff's total interstate sales volume. In addition to Louisiana, the plaintiff sells equipment and merchandise to banks and other financial institutions throughout the United States. Most of the equipment sold by the plaintiff does not require installation by the company. However, certain highly technical equipment does require expert installation, which service the company provides as a part of the cost of the equipment. These installation charges amount to approximately two and one-half percent of the sales price of the item requiring installation. In addition, most of the equipment sold by the plaintiff requires no maintenance by the company. However, in the rare instances involving highly technical equipment, the company does provide maintenance service pursuant to an agreement between the company and the customer. The total of fees accruing to the company in payment for such services is approximately two-tenths of one percent of the total sales.
It is the opinion of this Court that the above described activity on the part of the plaintiff does not prevent its inclusion within the judicially recognized exception to La.R.S. 12:211(A).7 Therefore, this Court does have diversity jurisdiction in this case.
Even if jurisdiction could not be supported by diversity of citizenship, it would nonetheless exist by virtue of Title 15 U.S.C. § 11218 and Title 28 U. S.C. § 1338.9 It is clear that insofar as the complaint seeks relief for alleged infringement of trademarks (and service marks) registered in the United States Patent Office, there is jurisdiction under 15 U.S.C. § 1121 and 28 U.S.C. § 1338(a). That being so, this Court has pendent jurisdiction over the related claim of unfair competition under 28 U.S.C. § 1338(b).10
Having determined that this Court has diversity as well as Federal question...
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...does not apply, Nevada still would afford relief under a deceptively similar theory of unfair competition. In LeFebure Corp. v. Lefebure, Inc., 284 F.Supp. 617 (D.C.E.D.La.1968), the Court interpreted a Louisiana statute identical to NRS 78.035 and said, "It is clear that a foreign corporat......
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