PW Stoelting, L.L.C. v. Levine, Case No. 16-C-381

• Decision Date: 17 December 2018
• Docket Number: Case No. 16-C-381
• Parties: PW STOELTING, L.L.C., Plaintiff, v. STEVEN J. LEVINE, et al., Defendants.
• Court: U.S. District Court — Eastern District of Wisconsin

PW STOELTING, L.L.C., Plaintiff, v. STEVEN J. LEVINE, et al., Defendants.

Case No. 16-C-381

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WISCONSIN

December 17, 2018

DECISION AND ORDER ON SUMMARY JUDGMENT

Plaintiff PW Stoelting, L.L.C. (PW Stoelting) filed this action against Defendants Advanced Frozen Treat Technology, Inc. (AFTT), a California company; Prism Marketing Corporation (Prism), a Washington company; and Steven J. Levine, a Washington resident and President who is Director of AFTT and Prism, alleging that Defendants breached their contract by not paying PW Stoelting for certain orders and infringed upon PW Stoelting's trademark in violation of Section 32(1) of the Lanham Act, 15 U.S.C. § 1114(1). This court has jurisdiction over the trademark claim pursuant to 15 U.S.C. § 1121, 28 U.S.C. § 1331, and 28 U.S.C. § 1338, and jurisdiction over the breach of contract claim under 28 U.S.C. § 1367 and 28 U.S.C. § 1332. Currently before the court are a number of motions: PW Stoelting's motion for partial summary judgment (ECF No. 86), Defendants' motion for summary judgment (ECF No. 94), PW Stoelting's motion to substitute (ECF No. 108), Defendants' motion to not expedite PW Stoelting's motion to substitute (ECF No. 116), PW Stoelting's motion to supplement the fact record (ECF No. 123), and Defendants' motion to strike PW Stoelting's motion to supplement (ECF No. 128). For the reasons that follow, PW Stoelting's motion for partial summary judgment, motion to substitute, and motion to supplement will be granted and Defendants' motion for summary judgment, motion to not expedite, and motion to strike will be denied.

BACKGROUND

A. Termination of Distributorship Agreement

PW Stoelting is a Wisconsin-based manufacturer of food service and cleaning equipment, including frozen confection equipment. PW Stoelting entered into separate distributorship agreements with Prism on February 15, 2011, and with AFTT on February 28, 2011—both of which are owned by Levine—to appoint them as authorized distributors of PW Stoelting's products. Each agreement contained a choice of law provision—California for AFTT and Washington for Prism. The agreements, among other things, established expectations regarding product and parts inventory, as well as yearly sales goals. The agreements also contained the following identical provisions, here taken from the agreement with AFTT, regarding termination of the distributorship agreements:

7.1 Unless sooner terminated as provided in Section 7.2 or Section 7.3 below, this Agreement shall remain in effect until terminated by either party, without cause, upon thirty (30) days prior written notice thereof to the other.

8.4 Notification required or permitted hereby shall be deemed given upon enclosure thereof in an adequately post-paid envelope, deposited in a U.S. mail box, and addressed to the party to be given notice at the address to which that party has previously requested, by notice hereunder, that notices be sent or, if no such request has been made, at the address listed for that party in this Agreement.

ECF No. 90-1 at 5-6.

At some point during the course of the next few years the parties' business relationship soured and on December 7, 2015, PW Stoelting sent a letter via UPS to Defendants' counsel, Attorney Raymond Schreck, that stated the following:

The purpose of this letter is to inform you of Stoelting's decision to terminate the distributorship agreement between Stoelting LCC and AFTT dated February 28, 2011, as well as the distributorship agreement between Stoelting LLC and Prism dated February 15, 2011 (the Agreements). This termination is pursuant to the provisions of Section 7.1 of each of the Agreements. That section gives either party the right to terminate the agreement, without cause, upon 30 days prior written notice to the other party. The effective date of the termination of the Agreements will be January 31, 2016.

ECF No. 91-2 at 1. Just prior to when PW Stoelting sent the letter, Schreck informed PW Stoelting that he was representing Defendants in their dealings with PW Stoelting and stated that all future communications related to Defendants should be directed to him: "[N]ow that I HAVE been identified as having been retained to represent my clients on legal and mixed legal-factual matters concerning Vollrath, PW Stoelting, and any other Vollrath Stoelting entity, from this point FORWARD, the communications NOW need to go through the attorneys—that is, through me, not my clients." Plaintiff's Proposed Findings of Fact (PPFOF), ECF No. 110 at ¶ 47. PW Stoelting's letter was received by Attorney Schreck more than 30 days before January 31, 2016.

On February 1, 2016, Schreck sent a letter to PW Stoelting's counsel advising them that Defendants were taking the position that the December 7, 2015 notice was ineffective and that the distributorship agreement was still in effect because it was sent to counsel rather than to AFTT and Prism directly and because it was not sent via USPS. The next day PW Stoelting's counsel sent AFTT and Prism copies of the notice of termination of the distributorship agreement via USPS.

On March 18, 2016, PW Stoelting sent a cease and desist letter to Defendants demanding that they change their websites and otherwise stop representing themselves to be authorized distributors of Stoelting-branded equipment.

PW Stoelting commenced this lawsuit on March 28, 2016. On December 31, 2016, The Vollrath Company, L.L.C. (Vollrath) merged with PW Stoelting, its wholly owned subsidiary. Vollrath was the survivor of this merger and PW Stoelting, the non-surviving entity, continued to operate as a division of Vollrath.

B. Renewal of the Stoelting Trademark

On January 31, 2016, Vollrath's intellectual property counsel received an email from the United States Patent and Trademark Office (USPTO) stating that the Stoelting trademark, U.S. Trademark RN0823348, was set to expire on January 31, 2017, absent the filing of a declaration of use and/or excusable non-use and an application for renewal under §§ 8 and 9 of the Trademark Act prior to that date. On January 13, 2017, after PW Stoelting merged with Vollrath, Vollrath's counsel filed the required declaration and application. In the application, the owner of the mark was identified as PW Stoelting, L.L.C. The Stoelting trademark was renewed by the USPTO on March 10, 2017.

LEGAL STANDARD

Summary judgment is appropriate when the movant shows there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). The fact that the parties filed cross-motions for summary judgment does not alter this standard. In evaluating each party's motion, the court must "'construe all inferences in favor of the party against whom the motion under consideration is made.'" Metro. Life Ins. Co. v. Johnson, 297 F.3d 558, 561-62 (7th Cir. 2002) (quoting Hendricks-Robinson v. Excel Corp., 154 F.3d 685, 692 (7th Cir. 1998)). The party opposing the motion for summary judgment must "submit evidentiary materials that set forth specific facts showing that there is a genuine issue for trial." Siegel v. Shell Oil Co., 612 F.3d 932, 937 (7th Cir. 2010) (citations omitted). "The nonmoving party must do more than simply show that there issome metaphysical doubt as to the material facts." Id. Summary judgment is properly entered against a party "who fails to make a showing to establish the existence of an element essential to the party's case, and on which that party will bear the burden of proof at trial." Austin v. Walgreen Co., 885 F.3d 1085, 1087-88 (7th Cir. 2018) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)).

ANALYSIS

A. PW Stoelting's Standing and Motion to Substitute Vollrath

Defendants argue that PW Stoelting lacks standing because it ceased to exist as a legal entity after it merged with Vollrath at the end of 2016. PW Stoelting, citing to Federal Rule of Civil Procedure 25, asserts that "even after a party's interests are transferred after litigation is underway, the original party may maintain the suit." Pl.'s Reply to Defs.' Motion for Summ. J., ECF No. 100 at 5. In addition, PW Stoelting filed a Civil L.R. 7(h) motion to substitute Vollrath for PW Stoelting as the plaintiff in this case that Defendants oppose.

Regarding Defendants' assertion that PW Stoelting does not have standing to maintain this case, Rule 25 is clear that "[i]f an interest is transferred, the action may be continued by or against the original party unless the court, on motion, orders the transferee to be substituted in the action or joined with the original party." Fed. R. Civ. P. 25(c).

"The most significant feature of Rule 25(c) is that it does not require that anything be done after an interest has been transferred. The action may be continued by or against the original party, and the judgment will be binding on his successor in interest even though he is not named."

Otis Clapp & Son, Inc. v. Filmore Vitamin Co., 754 F.2d 738, 743 (7th Cir. 1985) (quoting 7A WRIGHT & MILLER, FEDERAL PRACTICE AND PROCEDURE § 1958, at 664-65 (footnotes omitted)). "[I]f a plaintiff transfers an interest that is the subject of a lawsuit, the transferee stands in its shoes."

Schreiber Foods, Inc. v. Beatrice Cheese, Inc., 305 F. Supp. 2d 939, 956 (E.D. Wis. 2004), aff'd in part, rev'd in part, 402 F.3d 1198 (Fed. Cir. 2005) (citing Brook, Weiner, Sered, Kreger & Weinberg v. Coreq, Inc., 53 F.3d 851, 852 (7th Cir.1995)). Although, pursuant to Wis. Stat. § 183.1205, PW Stoelting ceased to exist and its interest transferred to Vollrath after the merger, Rule 25 permits PW Stoelting to continue the action.

Rule 25(c) likewise permits the court to allow substitution of the parent company for the original plaintiff where there is no prejudice or harm to the defendants. Otis Clapp & Son, Inc., 754 F.2d at 743. No harm or prejudice has been shown here. Substitution of Vollrath for PW Stoelting will not change the...