Sonoma Foods, Inc. v. Sonoma Cheese Factory, LLC, C 07-00554 JSW.
| Decision Date | 23 July 2007 |
| Docket Number | No. C 07-00554 JSW.,C 07-00554 JSW. |
| Citation | 634 F.Supp.2d 1009 |
| Parties | SONOMA FOODS, INC., Plaintiff, v. SONOMA CHEESE FACTORY, LLC, et al., Defendants. and Related Counterclaims. |
| Court | U.S. District Court — Northern District of California |
John Harvey Patton, Kathryn Jane Allen, Robert W. Shapiro, Shapior Buchman Provine & Patton LLP, Walnut Creek, CA, for Plaintiff.
Curtis Jackson Morris, Law Offices of Curtis J. Morris, Xavier Adrien Marie La-voipierre, Law Office of Xavier A.M. La-voipierre, Sonoma, CA, Michael J. Ioannou, Lita M. Verrier, Ropers, Majeski, Kohn & Bentley, Bobbie N. Eftekar, Daniel S. Mount, Kathryn Grace Murray, On Lu, Daniel Harlan Fingerman, Mount & Stoelker, P.C., San Jose, CA, Elise R. Vasquez, Ropers Majeski Kohn & Bently, Redwood City, CA, for Defendants/Counter-claimant.
ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S SPECIAL MOTION TO STRIKE AND PLAINTIFF'S MOTION TO DISMISS
Now before the Court are plaintiff and counter-defendant Sonoma Foods, Inc.'s ("Sonoma Foods") special motion to strike pursuant to California Code of Civil Procedure § 425.16 and motion to dismiss the counter-claims filed by defendant and counter claimants Sonoma Cheese Factory, LLC ("Sonoma Cheese Factory") and counter claimant L. Peter Viviani ("Peter Viviani") (collectively, "Counter-claimants").1 Having considered the parties' arguments, relevant legal authority, and having had the benefit of oral argument, the Court hereby grants in part and denies in part the special motion to strike and the motion to dismiss the counter-claims.
Sonoma Foods filed this trademark infringement action against Sonoma Cheese Factory. Sonoma Cheese Factory and Peter Viviani, Sonoma Cheese Factory's owner, then asserted counter-claims against Sonoma Foods.
The following facts are taken from the counter-complaint: Peter Viviani's father started a family business under the name Sonoma Cheese Factory in 1931 through which they sold "Sonoma Jack" brand cheese products. (Counter-compl., ¶ 8.) Peter Viviani started working for the family business in 1946 and Peter Viviani's son, C. David Viviani ("David Viviani") joined the business in 1969. (Id.) The family business includes a local storefront on 2 Sprain Street. (Id.)
In 1959, Peter Viviani formed Galaxy Products, Inc. as a successor-in-interest to the original Sonoma Cheese Factory and added manufacturing and wholesale distribution to the family business. (Id., ¶ 9.) In 1991, Galaxy Products, Inc. was renamed Sonoma Foods, Inc. (Id.) Peter Viviani served as the Vice President, Chief Financial Officer and Secretary of Sonoma Foods and owned 51 percent of the corporation's stock, while David Viviani served as President and owned the remaining 49 percent of the stock. (Id.)
In 2001, Peter and David Viviani decided to divide the family business. They agreed that Peter Viviani would own and operate the retail operations and that David Viviani would own and operate the manufacturing and wholesale distribution operations. (Id., ¶ 10.) Pursuant to this agreement, the directors of Sonoma Foods held a special meeting on December 31, 2001 to restructure the business. At this meeting, Sonoma Foods formed Sonoma Cheese Factory to own and run the retail operations. (Id.) Sonoma Foods was to manufacture cheese products and Sonoma Cheese Factory was to market, advertise and sell the cheese products under its applicable trademarks and trade names. Accordingly, all of the assets and liabilities relating to Sonoma Foods' ownership and operation of the retail operations, including trademarks, were supposed to be transferred to Sonoma Cheese Factory. (Id.) In exchange, Peter Viviani's transferred his shares of Sonoma Foods to David Viviani. (Id.) The corporate officers were directed to prepare all the documents needed to execute this agreed-upon restructuring of the family business. (Id.)
The trademarks that Counter-claimants allege should have been transferred to Sonoma Cheese Factory pursuant to the agreement reached on December 31, 2001 ("December 2001 Agreement") include: (1) Sonoma Cheese Factory & design (Reg. No. 1111024) in class 29 for use in association with cheese; (2) Sonoma Cheese Factory (Reg. No. 1386303), a service mark in class 42 for restaurant services; (3) Sonoma Deli (Reg. No. 1748715) in class 30 for sandwiches; (4) Sonoma (Reg. No. 1,334,539) in class 29 for use in association with cheese; (5) Sonoma Blue (Reg. No. 2610926) in class 29 for use in association with cheese; (6) Sonoma Jack & design (Reg. No. 1099709) in class 29 for use in association with cheese; and (7) "Sonoma Jack (stylized)" (Reg. No. 1099707) in class 29 for use in association with cheese (collectively, "Retail Trademarks"). (Id., ¶ 12.) In violation of the December 2001 Agreement, Sonoma Foods failed to transfer these Retail Trademarks to Sonoma Cheese Factory. (Id., ¶ 13.)
Sonoma Foods also registered three additional trademarks that are derived from the activities of, and are necessary to, the operation of Sonoma Cheese Factory, and thus, should have been registered for the benefit of Sonoma Cheese Factory. (Id., ¶ 14.)
Counter-claimants assert the following counter-claims against Sonoma Foods based on its alleged failure to transfer the Retail Trademarks: (1) breach of contract; (2) negligence; (3) common law fraud; (4) constructive fraud under California Civil Code § 1573; (5) breach of fiduciary duty; (6) rescission; and (7) financial elder abuse.
Counter-claimants also bring a claim for false or fraudulent registration of trademarks. Under this claim, they allege that pursuant to the December 2001 Agreement, Sonoma Cheese Factory was entitled to all trademarks relating to the retail operations and that Sonoma Foods filed for and received such trademarks. (Id., ¶ 39.) Sonoma Foods obtained registered trademarks from the United States Patent and Trademark Office ("PTO") by false or fraudulent declaration or representation. (Id., ¶ 40.) Counter-claimants also allege that the above conduct constitutes unfair trade practices and unfair competition pursuant to 15 U.S.C. § 1125(a).
Incorporating the above allegations, Counter-claimants bring a claim for unfair competition under California Business and Professions Code § 17200 (Section 17200). (Counter-compl., ¶¶ 45, 46.) Counter-claimants also bring a claim entitled common law injury to business reputation based on Sonoma Foods' alleged assertion of ownership of the Retail Trademarks and its assertion that Sonoma Cheese Factory does not enjoy rights in the Retail Trademarks. (Id., ¶ 49.) Similarly, Counter-claimants bring a claim entitled unjust enrichment, alleging that Sonoma Foods would be unjustly enriched if the Court were to compel Sonoma Cheese Factory to stop using the Retail Trademarks and pay to Sonoma Foods all its profits derived from its sales under the Retail Trademarks. (Id., ¶¶ 53, 54.)
Finally, Counter-claimants bring an action for declaratory relief. Under this claim, they allege that Sonoma Foods failed transfer all trademarks related and necessary to the retail operations, including the Retail Trademarks, improperly filed for and registered trademarks related and necessary to the retail operations, and is infringing Sonoma Cheese Factory's trademarks, including the Retail Trademarks. (Id., ¶ 61.)
Sonoma Foods now moves to strike these counter-claims pursuant to California Code of Civil Procedure § 425.16 ("Section 425.16") and to dismiss them pursuant to Federal Rule of Civil Procedure 12(b) (6) ("Rule 12(b)(6)").
California's anti-SLAPP ("Strategic Lawsuit Against Public Participation") statute provides a mechanism for a defendant to strike civil actions brought primarily to chill the exercise of free speech. Cal.Code Civil Proc. § 425.16(b)(1); see also Metabolife International, Inc. v. Wornick, 213 F.Supp.2d 1220, 1221 (S.D.Cal. 2002). The California Legislature passed the statute and explicitly recognized "the public interest to encourage continued participation in matters of public significance . . . and [found] that this participation should not be chilled through abuse of the judicial process." Metabolife, 213 F.Supp.2d at 1221 (citations omitted). Thus, to deter such chilling, a prevailing defendant on a special motion to strike shall be entitled to recover his or her reasonable attorney's fees and costs. Id., citing Cal.Code Civ. Proc. § 425.16(c).
Section 425.16 provides, in relevant part, that
A cause of action against a person arising from any act of that person in furtherance of the person's right of petition or free speech under the United States or California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim.
As used in this section, `act in furtherance of a person's right of petition or free speech under the United States or California Constitution in connection with a public issue' includes: (1) any written or oral statement or writing made before a . . . judicial proceeding, or any other official proceeding authorized by law. . . .
Cal.Code Civ. Proc. §§ 425.16(b)(1); 425.16(e).
A special motion to strike a SLAPP suit involves a two-step analysis. First, the court must decide whether the defendant has made a threshold showing that the challenged cause of action is one "arising from" protected activity. See, e.g., City of Cotati v. Cashman, 29 Cal.4th 69, 76, 124 Cal.Rptr.2d 519, 52 P.3d 695 (2002). The defendant may meet this threshold burden by showing that the act which forms the basis for the plaintiff's cause of action was a written or oral statement made before a judicial proceeding. See Church of Scientology of California v. Wollersheim, 42 Cal.App.4th...
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