Star Markets, Ltd. v. Texaco, Inc.

• Decision Date: 02 October 1996
• Docket Number: Civil NO. 95-01018 BMK.
• Citation: 945 F.Supp. 1344
• Parties: STAR MARKETS, LTD., a Hawaii corporation, Plaintiff, v. TEXACO, INC., a Delaware corporation, and TEXACO REFINING AND MARKETING INC., a Delaware corporation, Defendants.
• Court: Hawaii Supreme Court

Page 1344

945 F.Supp. 1344

STAR MARKETS, LTD., a Hawaii corporation, Plaintiff, v. TEXACO, INC., a Delaware corporation, and TEXACO REFINING AND MARKETING INC., a Delaware corporation, Defendants.

Civil NO. 95-01018 BMK.

United States District Court, D. Hawai`i.

October 2, 1996.

Susan Oki Mollway, Milton M. Yasunaga, Martin E. Hsia, Cades Schutte Fleming & Wright, Honolulu, HI, for plaintiff.

Paul Maki, Elise Owens Thorn, Maki & Thorn, Honolulu, HI, and Mark D. Litvack, Texaco Inc. Legal Department, Universal City, CA, and William G. Pecau, Pennie & Edmonds, New York City, for defendants.

ORDER DENYING DEFENDANTS' MOTION TO DISMISS COUNT FOUR OF PLAINTIFF'S SECOND AMENDED COMPLAINT

KURREN, United States Magistrate Judge.

This case is a trademark infringement action brought by Star Markets, Ltd. ("Plaintiff") against Texaco, Inc. and Texaco Refining and Marketing, Inc. ("Defendants"). On August 16, 1996, Defendants filed a Motion to Dismiss Count Four of Plaintiff's Second Amended Complaint ("Motion"). Plaintiff filed a Memorandum in Opposition, to which Defendants filed a Reply. The Motion came on for hearing before this court on September 24, 1996. After careful consideration of the pleadings and arguments of counsel, the court DENIES Defendants' Motion.

STANDARD OF REVIEW

A motion to dismiss will be granted where the plaintiff fails to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). For the purposes of a 12(b)(6) motion, "[r]eview is limited to the contents of the complaint." Clegg v. Cult Awareness Network, 18 F.3d 752, 755 (9th Cir.1994).

A complaint should not be dismissed "unless it appears beyond doubt that plaintiff can prove no set of facts in support of [its] claim which would entitle [it] to relief." Buckey v. County of Los Angeles, 968 F.2d 791, 794 (9th Cir.1992) (quoting Love v. United States, 915 F.2d 1242, 1245 (9th Cir.1989) (further citations omitted). All allegations of material fact are taken as true and construed in the light most favorable to the plaintiff. Stender v. Lucky Stores, Inc., 766 F.Supp. 830, 831 (N.D.Cal.1991).

BACKGROUND

Plaintiff operates a supermarket business in Hawaii under the name "Star Markets." In this business, Plaintiff uses a red and white star logo. Defendants operate gasoline stations throughout the United States and Hawaii. In connection with its gasoline stations, Defendants use a red and white "Star-T" logo which consists of a star with a cut out letter "T" inside a circle. Defendants also operate convenience stores in connection with some gasoline stations on the mainland and in Hawaii. These stores have been named "Food Mart," but during the last few years, Defendants converted the name to "Star Mart" on the mainland. In 1995, Defendants began to use the name "Star Mart" for its convenience stores in Hawaii.

Plaintiff initiated this trademark infringement action on December 15, 1995, based on Defendants'¹ use of both the name "Star Mart" and the "Star-T" logo. On December 22, 1995, Plaintiff filed a Motion for Preliminary Injunction in which it sought to enjoin Defendant Texaco, Inc. from using the name "Star Mart" and the "Star-T" logo in connection with its convenience stores. On July 11, 1996, Chief Judge Alan C. Kay granted Plaintiff a limited preliminary injunction. On September 3, 1996, Judge Kay modified the July 11, 1996 order to, among other things, reflect that the injunction also applies to the newly added defendant, Texaco Refining and Marketing, Inc.

On July 23, 1996, Defendants moved for an order requiring Plaintiff to post a bond, and this court issued findings and a Recommendation that the motion be granted. On September 6, 1996, the parties consented to have this case heard by a Magistrate judge. Accordingly, the case and the instant Motion were transferred to this court. Additionally, on September 30, 1996, this court modified the July 11, 1996 injunction Order to include a requirement that a bond be posted.

DISCUSSION

Count four of Plaintiff's Second Amended Complaint claims that "[b]y its use of the name and mark `Star Mart' and signage including the words `Star Mart' in red and white with star designs or interior store decoration with star designs in red and white, TEXACO has engaged in unfair methods of competition in the conduct of trade or commerce." Second Amended Complaint at ¶ 72. Plaintiff claims that "TEXACO's actions and conduct were and are in violation of [Hawaii Revised Statutes ("HRS")] § 480-2." Id. at ¶ 74.

Section 480-2 provides as follows:

(a) Unfair methods of competition and unfair or deceptive trade acts or practices in the conduct of any trade or commerce are unlawful.

(b) In construing this section, the courts and the office of consumer protection shall give due consideration to the rules, regulations, and decisions of the Federal Trade Commission and the federal courts interpreting section 5(a)(1) of the Federal Trade Commission Act (15 U.S.C. 45(a)(1)), as from time to time amended.

....

(d) No person other than a consumer, the attorney general or the director of the office of consumer protection may bring an action based upon unfair or deceptive acts or practices declared unlawful by this section.

HRS § 480-2(a) (1993).

Defendants contend that Plaintiff has no standing to bring a trademark infringement claim based upon likelihood of confusion allegations under HRS § 480-2. This court disagrees.

I. HRS § 480-2 Generally

Section 480-2, Hawaii's antitrust and consumer protection law, is based in large part upon the Federal Trade Commission Act ("FTCA") § 5, 15 U.S.C. § 45(a)(1) (1994). Cieri v. Leticia Query Realty, Inc., 80 Hawai`i 54, 60, 905 P.2d 29, 35 (1995); Paulson, Inc. v. Bromar, Inc., 775 F.Supp. 1329, 1337 (D.Haw.1991); see HRS § 480-2(b). Both § 5 of the FTCA and HRS § 480-2 provide that unfair methods of competition and unfair or deceptive acts or practices in commerce are unlawful. 15 U.S.C. § 45(a)(1); HRS § 480-2(a); see Cieri, 80 Hawai`i at 60, 905 P.2d at 35.

A. Standing

Section 480-2 differs significantly from § 5 of the FTCA in the area of enforcement. Section 5 of the FTCA contains no private remedy, rather enforcement of its provisions is vested in the Federal Trade Commission ("FTC"). Paulson, 775 F.Supp. at 1338 (citing Island Tobacco Co. v. R.J. Reynolds Tobacco Co., 63 Haw. 289, 627 P.2d 260 (1981)). Hawaii's version, however, contains a blanket authorization for private actions for damages sustained under any provision of ch. 480. HRS § 480-13(a); Id. at 1338. Two distinct causes of action have emerged under § 480-2(a): 1) claims alleging unfair methods of competition; and 2) claims alleging unfair or deceptive acts or practices. HRS § 480-2(a); Paulson, 775 F.Supp. at 1337.

In 1987, the Hawaii legislature amended both §§ 480-2 and 480-13 to eliminate a prior requirement that a plaintiff show that the suit would be in the public interest. Sen.Conf.Comm.Rep. No. 105, in Senate Journal, at 872. These amendments allow for even broader enforcement of ch. 480. See Cieri, 80 Hawai`i at 61-62, 905 P.2d at 36-37. In conjunction with this expansion, however, the legislature also amended § 480-2 by adding subsection (d) which limits enforcement of the unfair or deceptive acts or practices clause to consumers, the attorney general or the director of the office of consumer protection. HRS § 480-2(d). The amendment denies businesses standing to sue under the "deceptive acts or practices" clause of § 480-2(a). However, no such limiting language was included for "unfair methods of competition" claims. This court concurs with the conclusion in Paulson, that consistent with the "broad enforcement spirit² enunciated by the Hawaii state courts" and absent any additional limiting language, the generic standing provisions of § 480-13(a) control. Paulson, 775 F.Supp. at 1329.

B. What Constitutes Unfair Methods of Competition

Defendants urge the court to find that conduct which constitutes deceptive acts or practices under HRS § 481A-3 necessarily constitutes only deceptive acts or practices under § 480-2, and not unfair methods of competition under § 480-2. To find otherwise, they contend, would render the limitation of subsection (d) meaningless, violating the intent of the state legislature.

Section 481A-3 provides, in part:

(a) A person engages in a deceptive trade practice when, in the course of the person's business, ... the person:

....

(2) Causes likelihood of confusion or of misunderstanding as to the source, sponsorship, approval, or certification of goods or services;

(3) Causes likelihood of confusion or of misunderstanding as to affiliation, connection, or association with, or certification by, another;

....

(c) This section does not affect unfair trade practices otherwise actionable to common law or under other statutes of this State.

HRS § 481A-3.

Defendants rely on Kukui Nuts of Hawaii, Inc. v. R. Baird & Co., Inc., 7 Haw.App. 598, 789 P.2d 501 (1990), in which the court stated that "[a] practice expressly designated an `unfair trade practice' by [HRS § 481A-3] could hardly be deemed otherwise for purposes of [HRS § 480-2]." Id. at 611-612, 789 P.2d at 511. While Kukui Nuts is helpful in determining a definition of trade practices applicable to § 480-2 claims, nowhere does it state that the same conduct could not also constitute unfair methods of competition. The court never specifically considered this question because the law applicable to that case allowed businesses to bring claims for both unfair methods of competition and deceptive acts or practices under § 480-2.

Defendants also rely on Lui Ciro, Inc. v. Ciro, Inc., 895 F.Supp. 1365 (D.Haw.1995), in which the district court used a related statute which defined unfair methods of competition in the context of franchise investment law to hold that the plaintiff had a § 480-2 cause of action for unfair methods of competition. Id. at 1388. The court dismissed the claim for...