NOCO Company v. OJ Commerce, LLC

• Decision Date: 20 May 2022
• Docket Number: 21-3488
• Citation: 35 F.4th 475
• Parties: NOCO COMPANY, Plaintiff-Appellee, v. OJ COMMERCE, LLC, Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

35 F.4th 475

NOCO COMPANY, Plaintiff-Appellee,

v.OJ COMMERCE, LLC, Defendant-Appellant.

No. 21-3488

United States Court of Appeals, Sixth Circuit.

Decided and Filed: May 20, 2022

ON BRIEF: Aaron W. Davis, VALHALLA LEGAL, PLLC, Northfield, Minnesota, for Appellant. Jon J. Pinney, KOHRMAN JACKSON & KRANTZ, LLP, Cleveland, Ohio, for Appellee.

Before: CLAY, DONALD, and NALBANDIAN, Circuit Judges.

NALBANDIAN, Circuit Judge.

NOCO Company manufactures and sells battery chargers and related products. Although it sells these products itself, NOCO also authorizes resellers if they sign an agreement. This dispute began when NOCO discovered that OJ Commerce (OJC) was selling NOCO's products on Amazon without authorization. NOCO complained to Amazon that OJC was selling NOCO's products in violation of Amazon's policy. And around the same time, another company also complained to Amazon about OJC. Amazon asked OJC for proof that it was complying with its policy. But OJC didn't provide adequate documents and Amazon temporarily deactivated OJC's account. Now, OJC blames NOCO. It argues that NOCO submitted false complaints, and it brings three claims against NOCO: defamation, tortious interference with a business relationship, and a violation of the Ohio Deceptive Trade Practices Act.

To succeed on these claims, though, OJC must establish that NOCO was the proximate cause of its injury. But it can't do this because three intervening causes broke the causal chain, relieving NOCO of any liability. Thus, the district court rejected OJC's claims on summary judgment, and we AFFIRM .

I.

NOCO produces battery chargers and related products. It sells these products online and to authorized resellers, who must sign an agreement with NOCO. Under the agreement, the resellers can only sell to customers, not to retailers. And the resellers must abide by NOCO's minimum-advertised-price policy.

One reseller, CWR Electronics, broke the agreement and sold NOCO's products to OJC, an online retailer. And, in March 2016, OJC began selling the products on Amazon without a reseller agreement with NOCO. So NOCO complained to Amazon. And Amazon removed the items from its platform.

About two years later, NOCO again found that OJC was selling its products on Amazon. So it sent a letter to OJC demanding that it either sign the reseller agreement or stop selling NOCO's products. But its efforts were futile, so NOCO submitted multiple reports to Amazon.

NOCO submitted these reports under Amazon's anti-counterfeiting policy. That policy prohibits a seller from listing counterfeit products and products that infringe on another's intellectual property. It also permits Amazon to ask for proof of authenticity and authorization to sell. And even though OJC claims that the NOCO products it was selling were genuine, NOCO alleged that the policy covered OJC's listings because OJC sold NOCO's products without authorization.

NOCO was doing what Amazon encourages rights owners to do; namely, to notify it of any violations. But importantly, Amazon investigates and acts based on its own independent review. So any decision that a seller is violating Amazon's policy is based on Amazon's independent investigation.

And here Amazon investigated. From October 2, 2019, to January 6, 2020, NOCO filed six complaints. In response to each, Amazon sent a warning to OJC that it was violating NOCO's intellectual property rights. Amazon removed the products from the website and gave OJC ninety days to provide documents to the contrary.

In response to Amazon's first warning, OJC submitted a letter from CWR stating that OJC was allowed to buy (not sell) NOCO products. But Amazon was not satisfied and did not reinstate the listing. In response to another email, OJC told Amazon that it was an "authorized reseller" of NOCO's products. (R. 37-12, Gardner's Dec. 30, 2019, Email to Amazon, PageID 424.) But again, Amazon rejected this and asked for other documents.

Then on January 14, 2020, another party entered the scene. Emson, a manufacturer, filed a complaint with Amazon stating that OJC violated its patent. About two weeks later, on January 29, Amazon sent OJC a final warning. It gave OJC seventy-two hours to provide documentation or risk having its account deactivated. Three days later, Amazon deactivated the account. The reason? Amazon had "not received a valid plan of action addressing the listings" that OJC was warned about earlier. (R. 36-10, PageID 340-42.) One of the listings was for a NOCO product, the other was for an Emson product. Other than this, OJC has given no evidence for why Amazon deactivated its account.

Two days later, though, Amazon restored OJC's account. Amazon gave no reason why.

This diversity action began while these events were going on. NOCO sued OJC in October 2019 for selling its products without authorization. OJC countersued NOCO for (1) defamation, (2) tortious interference with a business relationship, and (3) a violation of the Ohio Deceptive Trade Practices Act.

After discovery and the filing of amended pleadings, both parties moved for summary judgment. The district court granted both motions. Relevant here, the court held that OJC failed to show that NOCO was the proximate cause of its injury. And because all three of OJC's claims require proximate cause, they all fail. Only OJC appealed.

II.

Before we get to the merits, we must be satisfied that we have jurisdiction. JPMorgan Chase Bank v. Winget , 920 F.3d 1103, 1105 (6th Cir. 2019). Neither party contests, or even addresses, the issue. But we must address it sua sponte if we have doubt. See Rote v. Zel Custom Mfg. LLC , 816 F.3d 383, 392 (6th Cir. 2016). And here, we do.

OJC, the appellant, is the original defendant. Its appeal is from the dismissal of its counterclaims brought in response to NOCO's amended complaint. NOCO brought its original complaint as a federal question case arising under trademark law. See 28 U.S.C. § 1338(a). It explicitly brought claims under 15 U.S.C. § 1114 for trademark infringement and 15 U.S.C. § 1125 for trademark dilution. From the face of that initial complaint, there was no reason to question jurisdiction.

But that original complaint is not the operative complaint here. The trial court dismissed much of NOCO's original complaint, including its claim for trademark infringement, under the "first sale exception" doctrine (though not the claim for trademark dilution). Following that dismissal, which is uncontested now, and some discovery, NOCO filed an amended complaint. The amended complaint, of course, supersedes the original complaint. And it must stand on its own jurisdictional basis. See Rockwell Int'l Corp. v. United States , 549 U.S. 457, 473, 127 S.Ct. 1397, 167 L.Ed.2d 190 (2007) ("[W]hen a plaintiff files a complaint in federal court and then voluntarily amends the complaint, courts look to the amended complaint to determine jurisdiction."). There is a question here whether it does. The amended complaint cited no federal statutes, even though NOCO again invoked only federal question jurisdiction. Instead, the amended complaint brought one count for relief under Ohio Revised Code § 2721.03, which is part of Ohio's Declaratory Judgment Act. And although state laws may "arise under" federal trademark law, see Gunn v. Minton , 568 U.S. 251, 258-59, 133 S.Ct. 1059, 185 L.Ed.2d 72 (2013), that's typically only where the resolution of the claim calls for interpreting federal law, see Christianson v. Colt Indus. Operating Corp. , 486 U.S. 800, 808, 108 S.Ct. 2166, 100 L.Ed.2d 811 (1988).

But the lack of federal jurisdiction over the initial complaint would not end our inquiry nor would it doom this appeal. NOCO has not appealed the court's rejection of its amended complaint on summary judgment. Instead, this appeal is about the court's rejection of OJC's counterclaims. And even when a court lacks subject matter jurisdiction over an initial complaint, it may resolve counterclaims where it has an independent basis for jurisdiction over those claims. Safeco Ins. Co. of Am. v. City of White House , 36 F.3d 540, 546 (6th Cir. 1994) ; see also 6 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1414 (3d ed. 2021) ("[I]f the court determines that there is no basis for federal jurisdiction over plaintiff's original claim, then it cannot proceed to adjudicate a compulsory counterclaim that does not have an independent jurisdictional basis."). OJC brought its counterclaims asserting diversity jurisdiction under 28 U.S.C. § 1332. And unlike NOCO, it made specific allegations about the diversity of citizenship between the parties and the amount in controversy. NOCO didn't move to dismiss on that jurisdictional ground and we have no reason to doubt it. So we can exercise jurisdiction over OJC's counterclaims here regardless of the status of the amended complaint.

And even if we may, in our discretion, refuse jurisdiction, we see no reason for doing so here. See, e.g. , Columbia Gas Transmission Corp., v. Drain , 191 F.3d 552, 559 (4th Cir. 1999) (recognizing the "usual rule" that a court "may exercise jurisdiction over a compulsory counterclaim after the original claim has been dismissed" if "the counterclaim has an independent basis for jurisdiction" but refusing to do so); see also Wright & Miller, supra , § 1414 ("If the counterclaim does present an independent basis of federal jurisdiction, however, the court may adjudicate it ... despite the dismissal of plaintiff's complaint" (emphasis added)).

III.

We review a grant of summary judgment de novo. Ohio State Univ. v. Redbubble, Inc. , 989 F.3d 435, 441 (6th Cir. 2021). Summary judgment is appropriate only if the movant, here NOCO, "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). We view the evidence in the light most favorable to the nonmoving party, here OJC. Mays v. LaRose , 951 F.3d 775, 783 (6th Cir. 2020).

IV.

OJC...