Sturgis Motorcycle Rally, Inc. v. Rushmore Photo & Gifts, Inc., CIV. 11-5052-JLV

• Decision Date: 29 March 2021
• Docket Number: CIV. 11-5052-JLV
• Parties: STURGIS MOTORCYCLE RALLY, INC., Plaintiff, v. RUSHMORE PHOTO & GIFTS, INC.; CAROL NIEMANN; PAUL A. NIEMANN; BRIAN M. NIEMANN, and WAL-MART STORES, INC., Defendants, -AND- RUSHMORE PHOTO & GIFTS, INC.; CAROL NIEMANN; PAUL A. NIEMANN; and BRIAN M. NIEMANN, Counterclaimants, v. STURGIS MOTORCYCLE RALLY, INC., Counterclaim Defendant.
• Court: U.S. District Court — District of South Dakota

STURGIS MOTORCYCLE RALLY, INC., Plaintiff,
v.
RUSHMORE PHOTO & GIFTS, INC.; CAROL NIEMANN; PAUL A. NIEMANN;
BRIAN M. NIEMANN, and WAL-MART STORES, INC., Defendants,
-AND-
RUSHMORE PHOTO & GIFTS, INC.; CAROL NIEMANN;
PAUL A. NIEMANN; and BRIAN M. NIEMANN, Counterclaimants,
v.
STURGIS MOTORCYCLE RALLY, INC., Counterclaim Defendant.

CIV. 11-5052-JLV

UNITED STATES DISTRICT COURT DISTRICT OF SOUTH DAKOTA WESTERN DIVISION

March 29, 2021

ORDER

TABLE OF CONTENTS

I. INTRODUCTION .................................................................................... 2

II. PROCEDURAL HISTORY ........................................................................ 3

III. ISSUES TO BE RESOLVED .................................................................... 8

A. SMRI's Motion to Extend Deadlines .............................................. 8

B. SMRI's Motion to Dismiss ACPA Claim ....................................... 12

1. Defendants' efforts and expense involved in preparing for trial ............................................................................. 14
2. Excessive delay and lack of diligence by the plaintiff in prosecuting the action .................................................. 16
3. Insufficient explanation of the need for dismissal .............. 17
4. The status of the lawsuit ................................................... 19

C. Defendants' Motion for Judicial Notice ........................................ 21

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D. Defendants' Motion for Summary Judgment ............................... 22

1. Standard of review ............................................................ 22
2. Undisputed material facts ................................................. 23
3. Analysis ............................................................................ 27

E. Defendants' Motion to Strike ACPA Jury Demand ....................... 30

F. Defendants' Motion for Damages for Improvidently Issued Preliminary Injunction ................................................................ 30

1. Amended preliminary injunction ....................................... 31

A. RP&G's claims ......................................................... 35
B. Analysis .................................................................. 38

2. Contempt of court ............................................................. 43
3. Attorneys' Fees ................................................................. 44

G. Defendants' Motion for Application of Equitable Defenses ........... 46

1. Relevant facts .................................................................. 46
2. Legal background ............................................................. 50

A. Acquiescence ........................................................... 51

1. Analysis ......................................................... 52
2. Conclusion ..................................................... 55

B. Laches ..................................................................... 55

1. Analysis ......................................................... 58
2. Conclusion ..................................................... 60

C. State claims ............................................................. 61

1. Deceptive trade practices ................................ 61
2. Laches ........................................................... 61
3. Conclusion ..................................................... 61

D. Unclean hands ........................................................ 62

1. Defendants' Conduct ...................................... 64

A. RP&G Defendants ................................. 65
B. Wal-Mart .............................................. 67

2. SMRI conduct ................................................ 67

A. 2001-2015 ............................................ 68
B. 2018-2020 ............................................ 73

3. Defendants entitled to equitable defenses .......................... 79

A. Rushmore Photo & Gifts .......................................... 79
B. Carol Niemann ........................................................ 80
C. Paul Niemann .......................................................... 82
D. Brian Niemann ........................................................ 83
E. Wal-Mart ................................................................. 84

IV. ORDER ................................................................................................ 85

I. INTRODUCTION

Following remand from the United States Court of Appeals for the Eighth Circuit, Sturgis Motorcycle Rally, Inc. v. Rushmore Photo and Gifts, Inc., et al,

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908 F.3d 313 (8th Cir. 2018) ("SMRI v. RP&G"), another barrage of motions was filed. As detailed in this order:

1. SMRI's motion to extend the discovery deadline is denied;

2. SMRI's motion to dismiss its anti-cybersquatting consumer protection act ("ACPA") claim is denied;

3. Defendants' motion for judicial notice is granted;

4. Defendants' motion for summary judgment on SMRI's ACPA claim is granted;

5. Defendants' motion to strike SMRI's jury demand on its ACPA claim is denied as moot;

6. Defendants' motion for money damages based on an improvidently issued preliminary injunction is granted;

7. Defendants' motion for an order to show cause premised on SMRI's failure to pay previously awarded attorneys' fees is granted;

8. Defendants' motion for application of equitable defenses is granted; and

9. SRMI's money judgment is vacated.

II. PROCEDURAL HISTORY

On April 24, 2012, plaintiff Sturgis Motorcycle Rally, Inc., ("SMRI") filed an amended complaint alleging trademark infringement and other claims. (Docket 52). On May 4, 2012, defendants Rushmore Photo & Gifts, Inc., JRE, Inc., Carol Niemann, Paul Niemann, and Brian Niemann (jointly referred to as the "RP&G Defendants") filed their answer and counterclaim. (Docket 55). On May 16, 2012, SMRI filed its reply to the RP&G Defendants' counterclaim.

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(Docket 58). On May 18, 2012, defendant Wal-Mart, Stores, Inc. ("Wal-Mart") filed its answer.¹ (Docket 60).

On October 30, 2015, after a ten-day trial, the jury returned a unanimous verdict in SMRI's favor on the following counts: (1) registered trademark infringement; (2) unregistered trademark infringement; (3) trademark dilution; (4) deceptive trade practices; (5) violations of the Anti-Cybersquatting Consumer Protection Act; (6) false advertising; and (7) unfair competition. (Docket 264). The jury unanimously found in favor of SMRI on its claims of infringement of the registered STURGIS®, STURGIS BIKE WEEK®, and Composite Design marks and of the unregistered STURGIS MOTORCYCLE RALLY™ and STURGIS RALLY & RACES™ marks (jointly referred to as "SMRI's Marks"). (Docket 264). The jury also unanimously found in favor of SMRI on its claim of dilution of the famous STURGIS® mark. Id. The court entered judgment on those claims in favor of SMRI on December 2, 2015. (Docket 269).

Consistent with the jury's verdict, the court entered judgment in favor of SMRI "and against the defendants as follows: Rushmore Photo & Gifts, Inc., for the sum of $158,750; . . . Carol Niemann for the sum of $156,250; Paul A. Niemann for the sum of $156,250; Brian M. Niemann for the sum of $158,750; and Wal-Mart Stores, Inc., for the sum of $230,000." (Docket 269 at pp. 1-2).

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On February 11, 2016, while defendants' post-trial motions were pending, the court entered a preliminary injunction in favor of SMRI and against the defendants. (Docket 299). On March 10, 2017, the court denied defendants' motions for judgment as a matter of law and for a new trial. (Docket 420 at p. 63). The order granted in part and denied in part "defendants' motion . . . for the application of equitable defenses . . . . [And held] that SMRI is barred from recovering damages and profits from the defendants for the time period prior to October 30, 2015, the date of the jury verdict." Id.

On July 21, 2017, the court entered a permanent injunction in favor of SMRI and against the defendants. (Docket 451). Among other things, the permanent injunction required the defendants to "impound and destroy" certain products and advertisements, to "transfer to SMRI [defendants'] domain name registrations . . . . and South Dakota trademark registrations[.]" Id. at p. 3. The provisions of the permanent injunction were "stayed until 60 days after all appeals are resolved." Id.

On November 2, 2018, the Eighth Circuit issued a decision affirming in part, reversing in part and remanding for further proceedings consistent with the court's decision. (Docket 468); see SMRI v. RP&G, 908 F.3d 313. Based on the directive of the Eighth Circuit and the district court's analysis of the positions of the parties, this court held, among other things:

[T]hat the STURGIS mark is invalid. (Docket 489 at p. 8);

[T]hat the jury finding the defendants infringed on the STURGIS mark . . . is vacated. Id.;

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[T]hat the jury finding the defendants did not infringe on the TAKE THE RIDE TO STURGIS mark . . . is affirmed. Id.;

[T]hat the jury finding the STURGIS BIKE WEEK mark not invalid . . . is affirmed. Id.

[T]hat the jury verdict in favor of SMRI on the STURGIS BIKE WEEK mark . . . is affirmed. Id. at p. 9;

[T]hat the jury verdict in favor of SMRI on the BLACK HILLS MOTOR CLASSIC STURGIS RALLY & RACES BLACK HILLS S.D. mark ("Composite Design mark" or the "Monahan mark") . . . is affirmed. Id.;

[T]hat the jury finding the defendants' Sturgis Designations are counterfeits of the Composite Design mark . . . is vacated. Id.;

[T]hat the STURGIS MOTORCYCLE RALLY mark is invalid. Id.;

[T]hat the jury finding the defendants infringed on the STURGIS MOTORCYCLE RALLY mark . . . is vacated. Id.;

[T]hat the STURGIS RALLY & RACES mark is invalid. Id. at p. 10;

[T]hat the jury finding the defendants infringed on the STURGIS RALLY & RACES mark . . . is vacated. Id.;

[T]hat the jury verdict in favor of SMRI on the trademark dilution claim . . . is vacated. Id.;

[T]hat the jury verdict in favor of SMRI on the deceptive trade practices claim . . . is

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