Paleteria La Michoacana, Inc. v. Productos Lacteos Tocumbo S.A. De C.V., Civil Action No.: 11–1623 (RC)

• Court: U.S. District Court — District of Columbia
• Writing for the Court: RUDOLPH CONTRERAS, United States District Judge
• Citation: 247 F.Supp.3d 76
• Parties: PALETERIA LA MICHOACANA, INC. et al., Plaintiffs & Counter–Defendants, v. PRODUCTOS LACTEOS TOCUMBO S.A. DE C.V., Defendant & Counter–Claimant.
• Docket Number: Civil Action No.: 11–1623 (RC)
• Decision Date: 30 March 2017

247 F.Supp.3d 76

PALETERIA LA MICHOACANA, INC. et al., Plaintiffs & Counter–Defendants,
v.
PRODUCTOS LACTEOS TOCUMBO S.A. DE C.V., Defendant & Counter–Claimant.

Civil Action No.: 11–1623 (RC)

United States District Court, District of Columbia.

Signed March 30, 2017

Laura L. Chapman, Toni Qiu, Sheppard, Mullin, Richter & Hampton, LLP, San Francisco, CA, Karin H. Johnson, Sheppard Mullin Richter & Hampton LLP, Washington, DC, Paul Bost, Sheppard

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Mullin Richter & Hampton, LLP, Los Angeles, CA, for Plaintiffs & Counter–Defendants.

Stephanie D. Scruggs, Smith, Gambrell & Russell, LLP, Washington, DC, Stephen L. Anderson, Anderson & Associates, Temecula, CA, for Defendant & Counter–Claimant.

MEMORANDUM OPINION

GRANTING PLAINTIFFS' MOTION TO SUBSTITUTE AND JOIN SUCCESSOR IN INTEREST; DENYING PLAINTIFFS' MOTION TO AMEND THE JUDGMENT; DENYING DEFENDANT'S MOTION FOR NEW TRIAL; DENYING DEFENDANT'S MOTION TO AMEND FINDINGS AND TO AMEND THE JUDGMENT; GRANTING PLAINTIFFS' OPPOSITION AND OBJECTIONS TO DEFENDANT'S BILL OF COSTS, CONSTRUED AS A MOTION; GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR LEAVE TO FILE SURREPLY; DENYING DEFENDANT'S REQUEST FOR HEARING

RUDOLPH CONTRERAS, United States District Judge

I. INTRODUCTION

This case arises from the long-running dispute between Plaintiffs/Counter–Defendants Paleteria La Michoacana, Inc. and Paleteria La Michoacana (Sub), Inc. (collectively, "PLM")¹ and Defendant/Counter–Claimant Productos Lacteos Tocumbo S.A. De C.V. ("PROLACTO"). Specifically, this litigation concerns the parties' rights to use various registered and unregistered trademarks when selling frozen confections in the United States.

After resolving a number of preliminary issues, the Court conducted a bench trial over the course of thirteen days beginning on September 14, 2015 and ending on October 1, 2015. On May 27, 2016, the Court issued extensive Findings of Facts and Conclusions of Law resolving the remaining issues in the case. After trial, the parties filed a number of post-trial motions.

For the reasons explained more fully below, the Court will grant PLM's motion to substitute another PLM-related entity as the sole Plaintiff in this action and join that same entity as an additional Counter–Defendant. The Court will also deny each parties' request to amend the findings and judgment and deny PROLACTO's motion for a new trial. Finally, upon consideration of PROLACTO's bill of costs and PLM's opposition, the Court will order both parties to bear their own costs.

II. FACTUAL AND PROCEDURAL BACKGROUND

The Court's previous Findings of Fact and Conclusions of Law set for the factual and procedural history of this case in detail. See generally Paleteria La Michoacana, Inc. v. Productos Lacteos Tocumbo S.A. DE C.V. (PLM VI ), 188 F.Supp.3d 22 (D.D.C. 2016).² The Court assumes the parties' familiarity with the background set forth in its earlier opinion. Nevertheless, the Court will briefly summarize the

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facts and procedural posture of this case, as described in the Court's previous opinion. See id. For clarity, the Court will address the facts relevant to the pending post-trial motions in the context of each of the specific motions.

A. Brief Factual Overview

PLM and PROLACTO are in the business of manufacturing and selling "paletas" and other frozen treats. Paletas are a style of ice cream bars and popsicles originating in Mexico that are traditionally made from fruit, spices, and nuts.

PROLACTO is a Mexican company that the Andrade Malfavon family founded in 1992. The Andrade Malfavon family continues to own PROLACTO. The company traces its history to Tocumbo, a city in the Mexican state of Michoacán, in the 1940s, which is the purported origin of the paleta and the shops, known as "paleterias," that make and sell them.³ PROLACTO primarily does business in the United States through licensing agreements with various members of the Andrade Malfavon family who own and operate individual paleterias in certain markets, namely, Florida, Texas, Northern California, and North Carolina. Until relatively recently, PROLACTO did not directly own any paleterias in the United States or otherwise directly sell its products to any consumers in the United States.

PLM traces its history to at least as early as 1991, when two brothers, Mexican immigrants Ignacio Gutierrez and Ruben Gutierrez, began selling paletas out of pushcarts in Northern California using the name "La Michoacana." That name literally means "the woman from the state of Michoacán" in Spanish. The partnership dissolved in 1999, and Ignacio Gutierrez operated the business as a sole proprietorship for several years before incorporating in California. PLM's business has grown significantly since its beginnings as a pushcart operation in Northern California. PLM currently manufactures its products in a factory in Modesto, California and distributes its products throughout various parts of the United States. PLM distributes its products to large-scale retailers such as Costco, Wal–Mart, and Walgreens, as well as Hispanic grocery stores such as El Super and Vallarta and a variety of other retail outlets.

Both PLM and PROLACTO use a variety of trademarks when selling their products in the United States. This litigation concerns the dispute between PLM and PROLACTO over the right to use those marks. The parties sharply dispute, among many other things, which of them first used those marks in the United States, and each party accuses the other of engaging in bad faith in a variety of different ways.

B. Brief Procedural History

The procedural history of this matter spans roughly a decade. The Court briefly restates that history here. See also PLM VI , 188 F.Supp.3d at 28 (setting forth procedural history).

1. TTAB Proceedings

This dispute began in earnest in 2007 when PROLACTO filed a petition with the Trademark Trial and Appeal Board ("TTAB"), a body of the United States Patent and Trademark Office ("USPTO"), to cancel PLM's U.S. Registration No. 3,210,304 for the mark titled "LA INDITA

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MICHOACANA." See Pet. Cancellation, TTAB Dkt. 1.⁴ On May 20, 2011, the TTAB granted PROLACTO's petition for cancellation of PLM's LA INDITA MICHOACANA mark, concluding that PROLACTO had established priority of use and likelihood of confusion with respect to several of its asserted, unregistered marks. See generally Productos Lacteos Tocumbo S.A. De C.V. v. Paleteria La Michoacana, Inc. , 98 U.S.P.Q.2d 1921 (T.T.A.B. 2011). The TTAB denied PLM's motion for reconsideration on July 13, 2011. See TTAB Dkt. 115.

2. The Present Action

PLM brought this action pursuant to the Lanham Act, 15 U.S.C. § 1071(b), on September 8, 2011. See Compl., ECF No. 1. The operative Complaint is now the Second Amended Complaint, which was filed on June 11, 2012.⁵ See 2d Am. Compl., ECF No. 40. PLM's Second Amended Complaint alleges four causes of action: Count I seeks reversal of the TTAB's decision to cancel the registration of PLM's LA INDITA MICHOACANA mark and denial of PROLACTO's cancellation petition; Count II seeks a declaration that there is no likelihood of confusion between PLM's LA INDITA MICHOACANA mark and various marks asserted by PROLACTO on the basis of their common usage of the word "MICHOACANA"; Count III alleges that PROLACTO's use of its Indian Girl mark infringes three of PLM's registered marks under 15 U.S.C. § 1114, including its LA INDITA MICHOACANA mark; and Count IV seeks to cancel PROLACTO's registration of certain marks containing the name "LA FLOR DE MICHOACAN" if a likelihood of confusion is found between those marks and PLM's marks. See 2d Am. Compl. ¶¶ 42–61.

PROLACTO, in turn, filed seven counterclaims. Specifically, Counterclaim Count I alleges that PLM infringed PROLACTO's registered LA FLOR DE MICHOACAN and design mark under 15 U.S.C. § 1114(1) ;⁶ Counterclaim Count II alleges trademark infringement, unfair competition, passing off, false advertising, false association, and false designation in violation of 15 U.S.C. § 1125(a) ; Counterclaim Count III alleges trademark infringement of the District of Columbia's common law; Counterclaim Count IV alleges trademark dilution under 15 U.S.C. § 1125(c) ; and Counterclaim Counts V, VI, and VII seek cancellation of two of PLM's registered marks due to fraud and abandonment. See Ans. 2d Am. Compl. & Countercls. ¶¶ 39–87, ECF No. 41.

The parties filed cross-motions for summary judgment after the close of discovery and the Court granted in part and denied in part both motions. See generally

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Palete ria La Michoacana, Inc. v. Productos Lacteos Tocumbo S.A. De C.V. (PLM IV ), 69 F.Supp.3d 175 (D.D.C. 2014). The Court then granted in part and denied in part PLM's motion to revise that Memorandum Opinion and Order, see Mem. & Order, ECF No. 174, and denied PROLACTO's motion for reconsideration, see Paleteria La...