Nat'l Grange of the Order of Patrons of Husbandry & the Cal. State Grange v. Guild

• Decision Date: 13 August 2018
• Docket Number: CIV. NO. 2:16-201 WBS DB
• Citation: 334 F.Supp.3d 1057
• Court: U.S. District Court — Eastern District of California
• Parties: The NATIONAL GRANGE OF THE ORDER OF PATRONS OF HUSBANDRY and The California State Grange, Plaintiffs, v. CALIFORNIA GUILD, formerly doing business as "California State Grange," and Robert McFarland, Defendants.

334 F.Supp.3d 1057

The NATIONAL GRANGE OF THE ORDER OF PATRONS OF HUSBANDRY and The California State Grange, Plaintiffs,

v.CALIFORNIA GUILD, formerly doing business as "California State Grange," and Robert McFarland, Defendants.

CIV. NO. 2:16-201 WBS DB

United States District Court, E.D. California.

Signed August 13, 2018

Bruce A. McDonald, Pro Hac Vice, Smith, Holly B. Lance, Pro Hac Vice, James L. Bikoff, Pro Hac Vice, Smith, Gambrell & Russell LLP, Washington, DC, Martin Niels Jensen, Thomas L. Riordan, Porter Scott, Sacramento, CA, for Plaintiffs.

Nicole Mae Threlkel, Anthony J. Ellrod, Jenifer C. Wallis, Manning & Kass Ellord, Ramirez, Trester LLP, Los Angeles, CA, Mark E. Ellis, David Elias Castro, Ellis Law Group, LLP, Sacramento, CA, for Defendants.

ORDER RE: MOTIONS FOR SUMMARY JUDGMENT

WILLIAM B. SHUBB, UNITED STATES DISTRICT JUDGE

Plaintiffs the National Grange of the Order of Patrons of Husbandry (the "National Grange") and California State Grange brought this action against defendants California Guild and Robert McFarland ("McFarland"), alleging that defendants continue to violate plaintiffs' trademark, copyright, and tangible property rights after the conclusion of Nat'l Grange v. Cal. State Grange, No. 2:14-cv-676 WBS DAD (E.D. Cal. filed Mar. 12, 2014) ("Grange I"). (Compl. (Docket No. 1).) Presently before the court are plaintiffs' and defendants' cross Motions for Summary Judgment (Docket Nos. 208, 210).

I. Factual and Procedural Background

On July 15, 1873, the National Grange created the California State Grange as its affiliated state-level chapter. (Decl. of Betsy Huber ("Huber Decl.") (Docket No. 54-6) ¶ 15.) As a chartered affiliate, the California State Grange collects dues from local Granges across California and turns over a portion of those dues to the National Grange. (Id. ¶ 18.) In 1946, the California State Grange registered as a corporation with the California Secretary of State. (Id. ¶ 15.) The California State Grange elected McFarland as its leader in 2009. (Id. ¶ 19.)

In 2012, a dispute arose between the National Grange and the California State Grange, leading to the suspension of the California State Grange's charter. (Id. )

The National Grange revoked the California State Grange's membership and the two disaffiliated in 2013. (Id. ¶ 21.) Members of the disaffiliated chapter, led by McFarland, continued to exist as a separate entity under the corporate charter filed in 1946. (Id. ¶ 22.) The National Grange chartered a new California State Grange in 2014. (d. ¶ 23.) What resulted after the split, then, were two California entities: a newly chartered California State Grange (i.e., along with the National Grange, plaintiffs to this action) and a disaffiliated entity led by McFarland (i.e., defendants).

The National Grange initiated a lawsuit in the Sacramento Superior Court, Nat'l Grange of the Order of Patrons of Husbandry v. California State Grange, No. 34-cv-2002-120439 CU MC GDS (Sacramento Super. Ct.)(filed Oct. 1, 2012)("the State Action") seeking a declaration regarding the ownership of Grange property. The National Grange and the reorganized California State Grange succeeded in the State Action, although post-judgment proceedings continue to be ongoing.

In March 2014 the National Grange filed an action in this court against defendants for federal trademark infringement, trademark dilution, trademark counterfeiting, and false advertisement under the Lanham Act ("Grange I"). No. 2:14-cv-676 WBS DB (E.D. Cal.). On September 30, 2015, the court issued a final judgment and permanent injunction prohibiting the revoked entity's continued use of the "Grange" trademarks. (See Nat'l Grange of the Order of Patrons of Husbandry v. Cal. State Grange, No. 2:14-cv-676 WBS DAD, 2015 WL 5813681, at *2-*3 (E.D. Cal. Sept. 30, 2015), modified, No. 2:14-cv-676 WBS AC, 182 F.Supp.3d 1065, 2016 WL 1587193 (E.D. Cal. Apr. 20, 2016).) This holding has since been affirmed by the Ninth Circuit. See National Grange of Order of Patrons of Husbandry v. California State Grange, 715 Fed. Appx. 747 (9th Cir. 2018).

Plaintiffs argue that despite the Grange I ruling, defendants have continued to cause division and confusion among the California Granges by publicly referring to itself as "CSG" and "[f]ormerly the California State Grange." (Decl. of Ed Komski ("Komski Decl.") Ex. 2 (Docket No. 54-3).) Accordingly, plaintiffs filed this action in February 2016. (Compl. (Docket No. 1).) Plaintiffs asserted ten causes of action: (1) false designation of origin under the Lanham Act, 15 U.S.C. § 1125(a)(1)(A) ; (2) false advertisement under the Lanham Act, id. § 1125(a)(1)(B) ; (3) false advertisement under the California Business and Professional Code, Cal. Bus. & Prof. Code § 17500 ; (4) trademark infringement under the Lanham Act, 15 U.S.C. § 1114 ; (5) infringement of unregistered logo and trade dress under the Lanham Act, 15 U.S.C. § 1125(a) ; (6) copyright infringement under the Copyright Act, 17 U.S.C. § 106 ; (7) trade libel under California common law; (8) intentional interference with contractual relations under California common law; (9) trespass under California common law; and (10) conversion under California common law. (First Amended Complaint ("FAC")(Docket No. 75) at 38-51.)

Defendants moved to dismiss plaintiffs' amended Complaint in its entirety in August 2016. (Docket No. 77.) The court granted defendants' motion as to plaintiffs' infringement of unregistered logo and trade dress claim and intentional interference with contractual relations claim, and denied the motion in all other respects. (Nov. 15, 2016 Order at 23 (Docket No. 106).)

Defendants then moved for summary judgment on plaintiffs' remaining claims (Docket No. 138), which the court denied (Docket No. 153). Plaintiffs filed a cross-motion for partial summary judgment on July 23, 2017. (Docket No. 142.) Plaintiffs' motion for partial summary judgment was withdrawn in order to provide defendants an opportunity for further discovery. (Docket No. 166.) Defendants have now completed that discovery, and both parties have again filed motions for summary judgment.

II. Legal Standard

Summary judgment is proper "if the movant shows 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 material fact is one that could affect the outcome of the suit, and a genuine issue is one that could permit a reasonable jury to enter a verdict in the non-moving party's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

The party moving for summary judgment bears the initial burden of establishing the absence of a genuine issue of material fact and can satisfy this burden by presenting evidence that negates an essential element of the non-moving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 322–23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Alternatively, the movant can demonstrate that the non-moving party cannot provide evidence to support an essential element upon which it will bear the burden of proof at trial. Id. Any inferences drawn from the underlying facts must, however, be viewed in the light most favorable to the party opposing the motion. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

III. Plaintiffs' Motion for Summary Judgment

Plaintiffs move the court for summary judgment on all eight of their remaining claims.

A. Defendants' Global Objections

Before separately addressing each claim, the court will discuss defendants' global arguments against plaintiffs' Motion for Summary Judgment.

1. Claims are Improperly Split

Defendants argue that plaintiffs' federal and state claims are improperly split. According to defendants, "the federal doctrine against claim-splitting precludes plaintiffs from suing based on the same controversy as the State Action and Grange I." (Defs.' Opp'n (Docket No. 214) at 11.) However, as the Ninth Circuit has explained, "overlapping or even identical federal and state court litigation may proceed simultaneously, limited only by doctrines of abstention and comity." Noel v. Hall, 341 F.3d 1148, 1159 (9th Cir. 2003). Thus, the existence of a pending parallel action in the state court system will not bar proceedings regarding the same matter in federal court. Accordingly, defendants' request for dismissal of plaintiffs' federal action based on this claim-splitting theory is denied.

2. Res Judicata and Collateral Estoppel

Defendants argue, as they have twice before, that plaintiffs' claims are subject to collateral estoppel and res judicata. The court rejected this argument in 2016 and again in 2017. (See Nov. 15, 2016 Order Re Mot. to Dismiss (Docket No. 106); Aug. 4, 2017 Order Re Mot. for Summ. J. (Docket No. 153).) With respect to plaintiffs' Lanham Act and California false advertisement claims, the court stated:

Grange I decided ownership of the word "Grange," and enjoined defendants from the use of that term ... The conduct alleged to support plaintiff's Lanham Act [and California false advertisement] claims in this action is different from the conduct enjoined in Grange I. It involves more than merely the use of the word "Grange." To the extent that the complaint here alleges that defendants are representing they are the same organization as the California State Grange, that they are responsible for the history and achievements of the California State Grange, or making other false or misleading representations causing confusion among local granges, it goes beyond the complaint in Grange I and seeks to enjoin different conduct. Accordingly, the court will not dismiss plaintiffs' Lanham Act [and California false advertisement] claims on res judicata grounds.

(Nov. 15, 2016 Order at 16-17.) The court wishes to express its frustration with defendants for presenting this argument a third time. For the same reasoning described in the court's...