White v. LA Pilates Carlsbad

[7] 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA [10] 11 DANIEL WHITE, Case No.: 20cv2054 DMS (MSB) 12 Plaintiff, ORDER DENYING DEFENDANTS’ 13 v. MOTION TO DISMISS 14 LA PILATES CARLSBAD, an entity of unknown form, JLC MANAGEMENT, [15] LLC, a Nevada limited liability 16 corporation, JEFF CLARK, an individual, RAY CHUNG, an individual, and DOES [17] 1-15, [18] Defendants. [20] 21 This case comes before the Court on the motion to dismiss filed by Defendants 22 Carlsbad Fitness Investment Group LLC, JLC Management, LLC, Jeff Clark, and Ray 23 Chung. Plaintiff filed an opposition to the motion, and Defendants filed a reply. For the 24 reasons set out below, the Court denies the motion. 25 I. 26 BACKGROUND 27 Plaintiff Daniel White filed the present case on October 19, 2020. In his original 28 Complaint, White alleged claims for trademark infringement, false designation of origin, 1 common law trademark infringement, common law unfair competition, unfair competition 2 under California Business and Professions Code § 17200 et seq., aiding and abetting 3 trademark infringement, and aiding and abetting false designation of origin against 4 Defendants LA Pilates Carlsbad (“LAPC”), JLC Management LLC (“JLC”), Jeff Clark, 5 and Ray Chung. 6 After a status conference with the Court, Plaintiff filed a First Amended Complaint 7 (“FAC”) in which he realleged the claims from his Original Complaint, but with slightly 8 different facts. For instance, in the Original Complaint, Plaintiff alleged he was the owner 9 of a trademark registered on the Principal Register, but in the FAC Plaintiff alleged the 10 trademark was registered on the Supplemental Register. (Compare Orig. Compl. ¶11 with 11 FAC ¶11.) Plaintiff also alleged in the FAC that he had used the trademark since February 12 2017, whereas in the Original Complaint he alleged he had used the trademark since April 13 2018. (Compare Orig. Comp. ¶12 with FAC ¶12.) The FAC also included new allegations 14 about secondary meaning, (FAC ¶24), including an allegation that Plaintiff had used the 15 trademark for each of his four business locations “for almost four years[.]” (Id.) 16 Following the filing of the FAC, Plaintiff filed a motion for preliminary injunction 17 supported by his own Declaration. (See ECF No. 12.) In that Declaration, Plaintiff set out 18 a more complete recitation of the facts giving rise to the present case. He stated he began 19 using the name “LA Pilates” in February 2017 in connection with his Norwalk studio, and 20 that he applied for the trademark in March 2017. (Decl. of Daniel White in Supp. of Mot. 21 For Preliminary Injunction 3.) Plaintiff stated he opened a second studio in Norwalk in 22 July 2018, a third studio in Downey in August 2018, a fourth studio in Long Beach in July 23 2020, and a fifth studio in La Habra in August 2020, and that all of the studios used the 24 name “LA Pilates.” (Id. ¶4.) Plaintiff went on to state that in late 2017, he entered into 25 discussions with Defendants Clark and Chung about “possibly becoming a minority partner 26 in what eventually became LAPC.” (Id. ¶9.) During those discussions, Plaintiff stated that 27 he “orally agreed” the new studio could use the name “LA Pilates” as consideration for his 28 expected minority interest in the studio. (Id. ¶10.) Plaintiff stated, 1 In the expectation that an agreement would be signed and that I would receive the promised minority interest in the new Carlsbad studio, I actually assisted [2] with providing to LAPC the same signage bearing the ‘LA Pilates’ name and 3 logo that I use for my businesses in Norwalk, Downey, La Habra, and Long Beach. [4] 5 (Id.) Plaintiff stated he also “assisted LAPC with its marketing”, including providing 6 “marketing services free of [charge] from May 2018 through January 2020[.]” (Id. ¶11.) 7 Plaintiff went on to state that when the parties’ discussions broke down, he instructed his 8 attorneys to give notice to Defendants “to cease and desist from using the Trademark.” (Id. 9 ¶13.) It appears Plaintiff’s counsel provided that notice in a letter dated September 4, 2020, 10 a little more than a month before the present case was filed. (See Decl. of Stuart Clark in 11 Supp. of Mot. For Preliminary Injunction, Ex. A.) 12 Plaintiff has since filed a Second Amended Complaint against Defendants JLC, 13 Clark, Chung and Carlsbad Fitness Investment Group, LLC (“CFIG”) realleging the claims 14 asserted in his previous Complaints. LAPC is no longer a named Defendant. In the SAC, 15 Plaintiff admits LAPC initially used the trademark with his approval. (SAC ¶14.) Plaintiff 16 goes on to allege that he later withdrew that approval, but LAPC continues to use the 17 trademark. (Id.) 18 II. 19 DISCUSSION 20 Defendants raises two primary arguments in support of their motion to dismiss. 21 First, they argue Plaintiff has failed to allege Defendants are infringing Plaintiff’s 22 trademark. Second, Defendants assert the trademark is not enforceable against them. The 23 Court addresses these arguments below. 24 A. Legal Standard 25 In Ashcroft v. Iqbal, 556 U.S. 662 (2009), and Bell Atlantic Corp. v. Twombly, 550 26 U.S. 544 (2007), the Supreme Court established a more stringent standard of review for 27 12(b)(6) motions. To survive a motion to dismiss under this new standard, “a complaint 28 must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is 1 plausible on its face.’” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 570). “A claim 2 has facial plausibility when the plaintiff pleads factual content that allows the court to draw 3 the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing 4 Twombly, 550 U.S. at 556). 5 “Determining whether a complaint states a plausible claim for relief will ... be a 6 context-specific task that requires the reviewing court to draw on its judicial experience 7 and common sense.” Id. at 679 (citing Iqbal v. Hasty, 490 F.3d 143, 157-58 (2d Cir. 2007)). 8 In Iqbal, the Court began this task “by identifying the allegations in the complaint that are 9 not entitled to the assumption of truth.” Id. at 680. It then considered “the factual 10 allegations in respondent’s complaint to determine if they plausibly suggest an entitlement 11 to relief.” Id. at 681. 12 B. Trademark Infringement 13 Plaintiff’s first claim alleges trademark infringement. “[A] claim for trademark 14 infringement requires only two elements: (1) ownership of a trademark, and (2) that the 15 plaintiff show a likelihood of confusion through the balancing of eight factors.” Wells 16 Fargo & Co. v. ABD Ins. & Financial Services, Inc., 758 F.3d 1069, 1072 (9th Cir. 2014) 17 (citing Rearden LLC v. Rearden Commerce, Inc., 683 F.3d 1190, 1202 (9th Cir. 2012)). 18 Defendants do not address either of these elements in their motion to dismiss. Instead, they 19 argue they had Plaintiff’s permission to use the trademark, and the mark is not otherwise 20 enforceable against them. 21 “Acquiescence or permission is an affirmative defense[ ]” to a claim of trademark 22 infringement. Grey v. Campbell Soup Co., 650 F.Supp. 1166, 1168 (C.D. Cal. 1986). 23 Generally, “affirmative defenses may not be raised on a motion to dismiss[.]” McShannock 24 v. JP Morgan Chase Bank NA, 976 F.3d 881 , 893 n.9 (9th Cir. 2020). Furthermore, 25 although Plaintiff alleges he initially gave Defendants permission to use his trademark, he 26 also alleges he withdrew that permission, but Defendants continue to use the trademark. 27 (SAC ¶14.) In light of those allegations, Defendants’ first argument does not warrant 28 dismissal of Plaintiff’s trademark infringement claim. 1 Defendants’ second argument is that the trademark is not enforceable against them. 2 Specifically, Defendants argue Plaintiff’s trademark is descriptive, and therefore only 3 enforceable if it has secondary meaning. Defendants assert Plaintiff has failed to allege 4 sufficient facts to support a showing of secondary meaning, therefore the claim should be 5 dismissed. Plaintiff disagrees that he has failed to allege sufficient facts to show secondary 6 meaning, and also argues the issue of secondary meaning is a factual one inappropriate for 7 resolution on a motion to dismiss. 8 The Court agrees with Plaintiff that the issue of secondary meaning is not appropriate 9 for resolution on the present motion. See Scott Griffith Collaborative Solutions, LLC v. 10 Falck Northern Cal. Corp., No. C 19-6104 SBA, 2020 WL 1548466 , at *5 (N.D. Cal. Jan. 11 6, 2020) (declining to resolve issue of secondary meaning “[g]iven the fact-specific nature 12 of this inquiry[ ]”); Fiji Water Co., LLC v. Fiji Mineral Water USA, LLC, No. SACV 0913 01148-CJC(MLGx), 2010 WL 11526800 , at *2 (C.D. Cal. July 28, 2010) (stating that 14 whether a trademark has acquired secondary meaning cannot be determined on a motion 15 to dismiss). Indeed, the same may be said for the threshold issue of whether Plaintiff’s 16 trademark is descriptive. See Zobmondo Entertainment, LLC v. Falls Media, LLC, 602 17 F.3d 1108, 1113 (9th Cir. 2010) (“Which category a mark belongs in is a question of fact.”); 18 Dahlia v. Rodriguez, 735 F.3d 1060, 1076 (9th Cir. 2013) (stating court’s task on 12(b)(6) 19 motion to dismiss is not to resolve factual disputes, but to determine whether allegations 20 support claim). Therefore, Defendants’ second argument also does not warrant dismissal 21 of Plaintiff’s trademark infringement claim. 22 C. Other Claims 23 Defendants’ motion to dismiss Plaintiff’s other claims depends primarily on the two 24 arguments set out above, which the Court has rejected. However, Defendants raise two 25 other arguments that deserve mention. 26 First, Defendants assert Plaintiff’s claim under § 17200 should be dismissed because 27 Plaintiff has failed to allege facts to support “what statement made by who (and to whom) 28 was false or misleading, and how [Plaintiff] was allegedly damaged by it[.]” (Mot. at 22.) 1 However, Plaintiff does not appear to be alleging a claim under the “fraudulent” prong of 2 § 17200. Rather, his § 17200 claim appears to be based on the “unlawful” and “unfair” 3 prongs only. (See Opp’n to Mot. at 19) (stating § 17200 claim alleges “unlawful and unfair 4 acts of trademark infringement and false designation of origin”). Thus, Defendants’ 5 argument does not warrant dismissal of Plaintiff’s § 17200 claim. 6 The only other argument Defendants raise is a general one, namely, that Plaintiff has 7 failed to allege sufficient facts to support the elements of damages or likelihood of 8 confusion. However, the Court disagrees with both of these assertions. Contrary to 9 Defendants’ arguments, Plaintiff has alleged facts to support the element of damages. 10 Specifically, Plaintiff alleges he has been “effectively precluded from using his own mark 11 for any business in the Carlsbad area because of the consumer confusion that this would 12 cause.” (SAC ¶16.) He also alleges that he “has been substantially injured in his 13 businesses, resulting in lost revenues and profits, and diminished goodwill and reputation,” 14 (id. ¶28), and that he has been unable “to make full use of the Trademark.” (Id. ¶29.) As 15 for likelihood of confusion, Plaintiff has also alleged facts to support that element. 16 Specifically, Plaintiff alleges Defendants have copied Plaintiff’s trademark and are using 17 it in “their advertising, marketing, and … fitness training related services,” which “is likely 18 to cause further confusion, to cause mistake, and/or to deceive consumers as to the origin, 19 source, sponsorship, or affiliation of LAPC’s services.” (Id. ¶25.) These allegations are 20 sufficient to allow Plaintiff’s claims to proceed. 21 / / / 22 / / / 23 / / / 24 / / / 25 / / / 26 / / / 27 / / / 28 / / / 1 III. 2 CONCLUSION AND ORDER 3 For the reasons discussed above, the Court denies Defendants’ motion to dismiss. 4 IT IS SO ORDERED. 5 ||Dated: July 9, 2021 em Dh 6 an Yn. Hon. Dana M. Sabraw, Chief Judge United States District Court [10] 1]