Puerto Rico Coffee Roasters LLC v. Pan Am. Grain Mfg. Co.

• Decision Date: 11 December 2015
• Docket Number: Civil No. 3:15-CV-02099 (JAF)
• Court: U.S. District Court — District of Puerto Rico
• Parties: PUERTO RICO COFFEE ROASTERS LLC, Plaintiff, v. PAN AMERICAN GRAIN MANUFACTURING CO., INC., Defendant.

PUERTO RICO COFFEE ROASTERS LLC, Plaintiff, v. PAN AMERICAN GRAIN MANUFACTURING CO., INC., Defendant.

Civil No. 3:15-CV-02099 (JAF)

UNITED STATES DISTRICT COURT DISTRICT OF PUERTO RICO

December 11, 2015

OPINION AND ORDER

I.Introduction

On August 12, 2015, plaintiff Puerto Rico Coffee Roasters LLC ("P.R. Coffee Roasters") commenced this action by filing a complaint against defendant Pan American Grain Manufacturing Co., Inc. ("Pan American"), alleging a series of trademark, false advertising, and related claims under federal and Puerto Rico law stemming from Pan American's conduct in the coffee industry. (ECF No. 1.) On September 2, 2015, P.R. Coffee Roasters served the complaint on Pan American. (ECF No. 8 at 2.) On September 22, 2015, P.R. Coffee Roasters amended the complaint as a matter of course under Rule 15(a)(1)(A) of the Federal Rules of Civil Procedure. (ECF No. 31.) The amended complaint alleges eight causes of action against Pan American under the Lanham Act, 15 U.S.C. §§ 1051 et seq, the Declaratory Judgment Act, 28 U.S.C. §§ 2201 et seq., the Government of Puerto Rico Trademark Act, 10 L.P.R.A. §§ 223 et seq., the Puerto Rico Libel and Slander Act, 32 L.P.R.A. §§ 3141 et seq., and Article 1802 of the Puerto Rico Civil Code, 31 L.P.R.A. § 5141. (ECF No. 31 at 10-18.)

On September 28, 2015, Pan American moved the court to dismiss the amended complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim upon which relief can be granted. (ECF Nos. 38; 39.) On October 8, 2015, P.R. Coffee Roasters responded in opposition to the motion to dismiss. (ECF No. 60.) On October 20, 2015, Pan American replied to P.R. Coffee Roasters's opposition. (ECF No. 79.) The court now grants the motion in part and also denies it in part.

II.Jurisdiction and Pleadings Standard

As a general matter, "a court should first confirm the existence of rudiments such as jurisdiction . . . before tackling the merits of a controverted case." Katz v. Pershing, LLC, 672 F.3d 64, 78 (1st Cir. 2012) (quoting Berner v. Delahanty, 129 F.3d 20, 23 [1st Cir. 1997]). It is uncontested that P.R. Coffee Roasters and Pan American are citizens of the Commonwealth of Puerto Rico. (ECF No. 31 ¶¶ 4-5.) The court has original jurisdiction of the Lanham Act and Declaratory Judgment Act claims under 28 U.S.C. §§ 1331 and 1338. The court also has original and supplemental jurisdiction of the remaining claims, which allege unfair competition under several Puerto Rico statutes, pursuant to 28 U.S.C. §§ 1338 and 1367(a). See generally Purolator, Inc. v. Efra Distribs., 687 F.3d 554, 558-59 (1st Cir. 1982) (reviewing the jurisdictional scope of 28 U.S.C. § 1338). Thus, the court finds that it has jurisdiction over the entire action.

"Under the Federal Rules of Civil Procedure, a complaint must provide 'a short and plain statement of the claim showing that the pleader is entitled to relief.'" Cardigan Mt. Sch. v. N.H. Ins. Co., 787 F.3d 82, 84 (1st Cir. 2015) (quoting Fed. R. Civ.P. 8[a][2]). "To meet that standard, a plaintiff 'need not demonstrate that [it] is likely to prevail' on its claim." Id. (alteration in original) (quoting García-Catalán v. United States, 734 F.3d 100, 102 (1st Cir. 2013)). "Rather, the complaint need include only enough factual detail to make the asserted claim 'plausible on its face.'" Id. (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). "To evaluate the sufficiency of a complaint under Rule 8, we first must 'distinguish the complaint's factual allegations (which must be accepted as true) from its conclusory legal allegations (which need not be credited).'" Id. (internal quotations omitted) (quoting García-Catalán, 734 F.3d at 103). "[W]e must 'accept the truth of all well-pleaded facts and draw all reasonable inferences therefrom in the pleader's favor.'" Id. at 87 (quoting García-Catalán, 734 F.3d at 102). "We then must 'determine whether the factual allegations are sufficient to support the reasonable inference that the defendant is liable . . . .'" Id. (internal quotations omitted) (quoting García-Catalán, 734 F.3d at 103).

III.Legal Analysis

This case presents an interesting controversy. P.R. Coffee Roasters and Pan American are competitors in the market for Puerto Rican coffee. P.R. Coffee Roasters alleges that Pan American is infringing P.R. Coffee Roasters' trademarks in the longstanding "Café Rico" brand of coffee by marketing and selling, in the State of Florida, a new brand of coffee called "Rico Coffee."¹ (ECF No. 31 ¶¶ 18-21, 42-45, 51.)P.R. Coffee Roasters also alleges that the statement, on packages of Rico Coffee, that "it is no accident Puertorrican coffee is the prefered [sic] coffee of Popes and Kings" infringes P.R. Coffee Roasters' alleged trademark in the slogan "The Coffee of Popes & Kings," which appears on packages of "Alto Grande" coffee, another P.R. Coffee Roasters brand. (ECF Nos. 31 ¶¶ 22, 52-53; 31-12; 31-17.) P.R. Coffee Roasters claims that Pan American is engaging in this alleged infringement in an attempt to confuse consumers into believing that a package of Rico Coffee comes from the same "source" as, and thus has the same "quality" as, a package of Café Rico or Alto Grande, thereby trading on the "fame" and "goodwill" of P.R. Coffee Roasters' coffee brands. (ECF No. 31 ¶¶ 6, 22, 55.) At the same time, P.R. Coffee Roasters alleges that Pan American is also seeking to "damage" and "tarnish[]" that fame and goodwill by waging a "defamation campaign" that accuses P.R. Coffee Roasters of "using child labor," "selling imported coffee as local coffee," and "participating in efforts to undermine the Puerto Rico coffee industry," among other bad acts. (ECF No. 31 ¶¶ 54-55, 59, 75.) In sum, P.R. Coffee Roasters accuses Pan American of conduct that is not only wrongful, but also at cross-purposes with itself - namely, seeking to benefit from, but ultimately destroy, the reputation of P.R. Coffee Roasters' coffee brands. Some, but not all, of P.R. Coffee Roasters' claims are well-pleaded and thus survive Pan American's motion to dismiss.

A. Federal Trademark Claims

Under the Lanham Act, "[a] plaintiff alleging trademark infringement must prove two elements: (1) the trademarks are 'entitled to trademark protection,' and (2) 'the allegedly infringing use is likely to cause consumer confusion.'" Bose Corp. v. Ejaz, 732F.3d 17, 26 (1st Cir. 2013) (quoting Bos. Duck Tours, LP v. Super Duck Tours, LLC, 531 F.3d 1, 12 (1st Cir. 2008) (trademark action under 15 U.S.C. § 1114)); see also Oriental Fin. Group, Inc. v. Cooperativa De Ahorro Crédito Oriental, 698 F.3d 9, 16 (1st Cir. 2012) (same) (action under § 1125). "A mark is entitled to trademark protection if it is capable of functioning as a source-identifier of goods." Bos. Duck Tours, 531 F.3d at 12 (citing Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 769 (1992)). Under 15 U.S.C. § 1114(1), but not 15 U.S.C. § 1125(a)(1), trademark protection is afforded only to "a registered mark." 15 U.S.C. §§ 1114(1) (limiting cause of action to "a registered mark"), 1125(a)(1) (containing no such limitation).

In Count I, P.R. Coffee Roasters sufficiently pleads a trademark-infringement claim under 15 U.S.C. § 1114(1).² First, P.R. Coffee Roasters alleges that "[t]he Café Rico mark has been registered in the United States Patent and Trademark Office ("Patent & Trademark Office") since October 19, 2010 (Cert. Reg. No. 3862361)," and that the "registration is valid, subsisting, and unrevoked." (ECF No. 31 ¶ 7.) Next, P.R. Coffee Roasters alleges that "P.R. Coffee Roasters' ownership o[f] the Café Ricotrademark is notorious and known to Pan American" due to a series of deals and litigation by Pan American involving the mark. (ECF No. 31 ¶¶ 17, 23-27.) P.R. Coffee Roasters further alleges that, despite this knowledge, "Pan American is selling packaged coffee using the brand Rico Coffee in Florida, using the same name, packaging format, and color scheme as P.R. Coffee Roasters' Café Rico." (ECF No. 31 ¶ 19.) P.R. Coffee Roasters also alleges that "Pan American's Rico Coffee is marketed to the same type of consumers" as P.R. Coffee Roasters' brands, such as "the Puerto Rican community in Florida, who know and have been consuming Café Rico for more than 70 years," and is sold "through the same type of channels . . . in which P.R. Coffee Roasters sells its Café Rico and other coffee products." (ECF No. 31 ¶¶ 20-21, 44.) Based on these factual allegations, P.R. Coffee Roasters posits "a likelihood of confusion between Pan American's Rico Coffee and P.R. Coffee Roasters' Café Rico" - a likelihood that P.R. Coffee Roasters deems "intentional" on the part of Pan American. (ECF No. 31 ¶¶ 45-46.) These allegations adequately plead the claim.

Pan American's arguments to the contrary are unavailing. Pan American faults P.R. Coffee Roasters' amended complaint for "not present[ing] a single shred of admissible evidence to establish (i) the essential elements of its claims for relief, and (ii) to rebut the fact that Pan American has prior, exclusive and incontestable trademark rights over the Rico trademark and trade dress that are far superior to any rights P.R. Coffee Roasters may have over the Café Rico name, trade dress or color scheme."³ (ECFNo. 39 at 5.) But P.R. Coffee Roasters does not have to present any admissible evidence at the pleadings stage. "Rather, the complaint need include only enough factual detail to make the asserted claim 'plausible on its face.'" Cardigan Mt. Sch., 787 F.3d at 84 (quoting Iqbal, 556 U.S. at 678). Admissible proof is required only at the summary-judgment stage, where the "very mission" of the procedure "is to pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial." Henry v. United Bank, 686 F.3d 50, 54 (1st Cir. 2012) (quoting Hodgens v. General Dynamics Corp., 144 F.3d 151, 158 (1st Cir. 1998)); see also Fed. R. Civ. P. 56(c)(2). By contrast, the...