USLife Corp. v. US Life Ins. Co.

• Decision Date: 05 April 1983
• Docket Number: Civ. A. No. CA3-82-1456D.
• Citation: 560 F. Supp. 1302
• Parties: USLIFE CORPORATION, et al., Plaintiffs, v. U.S. LIFE INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Northern District of Texas

560 F. Supp. 1302

USLIFE CORPORATION, et al., Plaintiffs, v. U.S. LIFE INSURANCE COMPANY, Defendant.

Civ. A. No. CA3-82-1456D.

United States District Court, N.D. Texas, Dallas Division.

April 5, 1983.

Dudley R. Dobie, Jr., Larry C. Jones, Houston, Tex., Curtis L. Frisbie, Jr., William G. Whitehill, Dallas, Tex., for plaintiffs.

Michael Lowenberg, Michael P. Lynn, Raymond E. White, Robert B. Luther, Dallas, Tex., for defendant.

ORDER

ROBERT M. HILL, District Judge.

This matter comes before the Court upon the defendant U.S. Life Insurance Company's motions to dismiss and to preclude testimony. In this action, plaintiffs USLIFE Corporation et al. have alleged claims of service mark infringement and unfair competition under the Lanham Act, 15 U.S.C. § 1051 et seq., and under state common law. The defendant has presented three grounds upon which it has asserted that some or all of the claims against it should be dismissed. First, defendant contends that plaintiffs are judicially estopped from maintaining the position that there is a likelihood of confusion between its service mark and the name of the defendant, because it previously maintained a contrary position in a separate litigation before the Texas Board of Insurance and the Texas courts. Second, defendant argues that the McCarran-Ferguson Act, 15 U.S.C. § 1011 et seq., precludes the application of plaintiffs' Lanham Act claims. Third, defendants asks this Court, as a matter of sound equitable discretion, to dismiss this action under the abstention doctrine announced in Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943). For the reasons set forth below, this Court concludes that defendant's motions should be denied.

I. Background

For the purpose of considering these motions, the parties have stipulated to many of the facts involved in this matter. In addition, a number of documents has been submitted for the Court's consideration. The facts may be summarized as follows.

The defendant is the third in a succession of Texas corporations bearing the name "U.S. Life Insurance Company." The parties have referred to them as U.S. Life I, U.S. Life II, and U.S. Life III, and this Court will do the same. The defendant in this action is U.S. Life III.

U.S. Life I was incorporated under the laws of Texas in 1947, and began doing business in 1948. It became a subsidiary of American Life Insurance Co. in 1958, and, following a merger, it became a subsidiary of American Amicable Life Insurance Co. in 1965. In 1979, U.S. Life I's name was changed to Amicable Life Insurance Co. Throughout its existence from 1947 to 1979, U.S. Life I was licensed and authorized to conduct life insurance business in Texas only. U.S. Life I did not sell any new insurance policies, however, from 1969 to the date of its name change in 1979.

In April 1980, Amicable Life Insurance Co. (formerly U.S. Life I), executed articles of incorporation of a new subsidiary to be formed under the name "U.S. Life Insurance Company" (U.S. Life II). The Texas Commissioner of Insurance granted the new company a certificate of authority in November of that year. In March 1981, U.S. Life II's parent company (now named American-Amicable Life Insurance Co.) sold U.S. Life II to another insurance company. That company agreed to reserve a name other than "U.S. Life," and consequently U.S. Life II's name was changed. During its brief existence, U.S. Life II sold no insurance, nor did it obtain approval for the sale of policies from the Texas Commissioner of Insurance.

In June 1981, American-Amicable Life Insurance Co. executed articles of incorporation for a new subsidiary named "U.S. Life Insurance Company of Texas" (U.S. Life III). The new company was granted a certificate of authority in February 1982. In July 1982, its name was changed to "U.S. Life Insurance Co.," and an amended certificate of authority was obtained. U.S. Life III is licensed to do business in Texas only; it has not sold any insurance to date.

USLIFE Corporation is an insurance holding company and sells no life or other insurance itself. The other plaintiff insurance companies are all wholly-owned subsidiaries of USLIFE Corp., and they all use the tag "a USLIFE Company" in conjunction with their root name.

In 1973, plaintiff Great National Life Insurance Co. sought approval from the Texas Commissioner of Insurance to do business under the name USLIFE Life Insurance Company of Texas. USLIFE initially obtained approval, but then U.S. Life I filed objections, and adversary proceedings were held before the State Insurance Board. At those proceedings, USLIFE presented sworn testimony in which it maintained the position that its name was not likely to mislead or confuse the public in comparison with the U.S. Life Insurance Company. Their argument was based chiefly upon the difference in the logos and the difference in the size of the companies. The board and the Texas Commissioner of Insurance rejected USLIFE's position, concluding instead that its name was likely to mislead the public. The Commissioner issued an order on November 21, 1973, in which he revoked the prior approval of USLIFE's name and enjoined USLIFE from use of the name USLIFE Life Insurance Company of Texas after January 15, 1974.

USLIFE pursued the litigation to the state District Court of Travis County, Texas, 126th Judicial District, and thence to the Texas Court of Civil Appeals, Third Supreme Judicial District. The district court entered a judgment affirming the Commissioner's order and it issued a permanent injunction against USLIFE; the court of civil appeals affirmed the district court's judgment.

In December 1973, USLIFE filed an application for federal registration of its service mark. Its service mark was registered by the U.S. Patent and Trademark Office in November 1975.

In the present action, USLIFE contends that there is a likelihood of confusion between its service mark and the name U.S. Life Insurance Co., and it seeks to enjoin U.S. Life III from the use of that name.

II. Judicial Estoppel

U.S. Life contends that plaintiffs should be "judicially estopped" from maintaining its present position that there is a likelihood of confusion between their respective names, because it asserted the contrary position in the prior state administrative and judicial proceedings. Plaintiffs argue in response that they should not be estopped because they were not successful with their position in the prior proceedings.¹ The issue for this Court to consider is whether prior success is a requirement for the application of judicial estoppel.

The doctrine of judicial estoppel is an equitable principle which generally operates to preclude a party from asserting a position in a legal proceeding inconsistent with a position taken by that party in the same or a prior litigation. See generally 1B Moore's Federal Practice ¶ 0.4058 (1982). Judicial estoppel is distinct from equitable estoppel, which may also be applied to prevent a party from contradicting a position taken in a prior judicial proceeding. See Davis v. Wakelee, 156 U.S. 680, 15 S.Ct. 555, 39 L.Ed. 578 (1895). Equitable estoppel focuses on the relationship between the parties to the prior litigation, and it applies where one of the parties has detrimentally relied upon the position taken by the other party in the earlier proceeding. See Edwards v. Aetna Life Ins. Co., 690 F.2d 595, 598 (6th Cir.1982). Where prejudicial reliance upon the factual assertions of the opposing party has occurred, that party will be estopped from subsequently arguing a contrary position.

By contrast, the judicial estoppel doctrine looks to the relationship between the litigant and the judicial system and "is intended to protect the integrity of the judicial process." Edwards, 690 F.2d at 598. As a general matter, judicial estoppel applies in cases where a party attempts to contradict his own sworn statements in the prior litigation. The policy here is at least in part to preserve the "sanctity of the oath." Moore's, supra. More broadly speaking, courts seek to prevent parties from "playing fast and loose" with them to suit the exigencies of self interest. See Scarano v. Central Ry. Co. of New Jersey, 203 F.2d 510, 513 (3d Cir.1953). Because the doctrine focuses on the relationship between the party to be estopped and the judicial system, courts generally find that it may be invoked by a person who was not party to the first suit. See, e.g., Gottesman v. General Motors Corp., 222 F.Supp. 342, 344 (S.D.N.Y.1963).

The contours of the doctrine vary in certain respects from one jurisdiction to another. Relevant here is the variation according to whether or not judicial estoppel can only be applied when the prior position was successfully maintained. The more expansive approach, sometimes referred to as the Tennessee rule, holds that any prior position maintained in a judicial proceeding may be used to estop a subsequent inconsistent position. See Moore's, supra. Under the more widely accepted approach, however, success in the prior proceeding is considered necessary for the estoppel to apply. See, e.g., Edwards, 690 F.2d at 598 (6th Cir. 1982); Konstantinidis v. Chen, 626 F.2d 933, 937 (D.C.Cir.1980) (applying District of Columbia law); United States v. Webber, 396 F.2d 381, 386 (3d Cir.1968); Moore v. Neff, 629 S.W.2d 827, 829 (Tex.Civ.App.—Houston 14th Dist. 1982, no writ); cf. Allen v. Zurich Ins. Co., 667 F.2d 1162, 1167 (4th Cir.1982) (judicial estoppel "obviously more appropriate where party asserting contrary position previously prevailed).

The rationale for the requirement of prior success lies in the risk of inconsistent results. See Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction § 4477 (1983). As the Sixth Circuit recently observed, if the second court were to adopt a party's position where that party was successful in asserting the contrary position in a prior proceeding, then "at...