City of Leavenworth v. Projekt Bayern Ass'n

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CITY OF LEAVENWORTH, a Washington municipal corporation, Plaintiff, v. PROJEKT BAYERN ASSOCIATION, a Washington nonprofit corporation, Defendant.

No. 2:22-CV-0174-TOR

United States District Court, E.D. Washington

September 28, 2022

ORDER DENYING PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION AND MOTION TO DISMISS DEFENDANT'S COUNTERCLAIM

THOMAS O. RICE, United States District Judge.

BEFORE THE COURT are Plaintiff's Motion for Preliminary Injunction (ECF No. 9) and Plaintiff's Motion to Dismiss Defendant's Counterclaim (ECF No. 14). Plaintiff's Motion for Preliminary Injunction was submitted for consideration with oral argument. Robert J. Carlson appeared on behalf of Plaintiff. James Breitenbucher appeared on behalf of Defendant. The Court has reviewed the record and files herein, considered the parties' oral arguments, and is fully informed. For the reasons discussed below Plaintiff's Motion for Preliminary Injunction (ECF No. 9) is DENIED and Plaintiff's Motion to Dismiss Defendant's Counterclaim (ECF No. 14) is DENIED as moot.

BACKGROUND

This matter relates to two Oktoberfest celebrations occurring in the Fall of 2022, one being organized by Plaintiff City of Leavenworth (“Plaintiff”) in Leavenworth Washington, and the other being organized by Defendant Projekt Bayern Association (“Defendant”) in Wenatchee, Washington. ECF No. 1. Prior to this litigation Plaintiff and Defendant had a contractual relationship to host and organize an annual Oktoberfest celebration in Leavenworth, Washington. Id. at 3, ¶ 8, at 4, ¶¶ 15-16. Although the annual Leavenworth celebration itself dates back to approximately 1998, the parties' contractual relationship dates back only to 2012. Id. at ¶ 15.

In September 2012, the parties entered a lease agreement wherein Plaintiff leased a warehouse in Leavenworth to Defendant for the annual Oktoberfest celebration. Id. at ¶ 16. The original contract was enforceable for five years, with automatic renewals of the five-year term, unless either party gave notice of termination at least one year prior to the expiration of the original contract or subsequent renewal term. Id. at ¶ 18. At the end of the first five-year period, the contract was renewed. Id. at ¶ 19. On March 23, 2021, Plaintiff sent Defendant written notice that it was terminating the contract, such that Defendant's last use of the warehouse for the Oktoberfest celebration in Leavenworth would occur in the Fall of 2021. ECF No. 9 at 6.

Shortly thereafter, Plaintiff issued a public request for proposals to look for a new vendor to help organize future Oktoberfest celebrations in Leavenworth. ECF No. 1 at 8, ¶ 40. Defendant submitted two proposals but was not selected. Id. at 9, ¶ 43. Plaintiff selected a different Washington-based vendor and announced the partnership in a press release dated October 7, 2021. ECF No. 10-6. The October 2021 press release referred to the upcoming October 2022 event as a “yet unnamed October 2022 festival” and included statements that the festival would feature beer but stopped short of titling the event an Oktoberfest for reasons that are unclear. Id. The new vendor later withdrew its bid to organize the event, citing a cease-and-desist letter it received from Defendant in April 2022. ECF No. 1 at 9-10, ¶¶ 49-51. Defendant sent Plaintiff a similar letter. Id. at 9, ¶ 50.

The cease-and-desist letters related to Defendant's federally registered trademark, “LEAVENWORTH OKTOBERFEST.” Id. at 10, ¶ 53. The letters stated Defendant owned the exclusive rights to use LEAVENWORTH OKTOBERFEST and was prepared to take legal action against those using the mark unlawfully, including Plaintiff and the third-party vendor. ECF Nos. 10-7; 10-8. Defendant applied for the mark in April 2016, without Plaintiff's knowledge. ECF No. 1 at 5, ¶ 20. The registration was ultimately approved for use in association with goods and services on July 11, 2017. Id. at 6, ¶ 27. The parties are involved in litigation before the U.S. Patent and Trademark Office regarding the validity of Defendant's mark, but the matter is stayed pending resolution of this litigation.^[1] ECF No. 27.

On July 6, 2022, Defendant made a post to its Facebook page used for advertising its Oktoberfest event, stating “[t]here is no Oktoberfest in leavenworth [sic]. I repeat there is no Oktoberfest in Leavenworth this year.” ECF No. 1 at 10, ¶ 54. On July 11, 2022, Plaintiff issued another press release announcing details for its October 2022 event, this time referring to the event as “Oktoberfest 2022” and specifying it was a separate event from the Oktoberfest taking place in Wenatchee. ECF No. 11-9. Plaintiff filed the Complaint instituting this litigation on July 20, 2022. ECF No. 1. The present motion was filed on August 26, 2022. ECF No. 9. While negotiating a court hearing date for this motion, Plaintiff requested Defendant remove the July 6, 2022 Facebook post and any other references made by Defendant that was Plaintiff “lying” to consumers. ECF No. 19 at 10-11. Defendant agreed to and did remove the posts. Id. at 11.

DISCUSSION

I. Preliminary Injunction

Although Plaintiff's Complaint alleges several state and federal causes of action, three are relevant for the present motion: false advertising in violation of the Lanham Act, false association/designation in violation of the Lanham Act, and unfair or deceptive practices in violation of the Washington Consumer Protection Act. ECF No. 1 at 13-15, ¶¶ 73-86, at 17-19, ¶¶ 104-114, at 19-21, ¶¶ 120-131.

To obtain preliminary injunctive relief, a plaintiff must demonstrate: (1) a likelihood of success on the merits; (2) a likelihood of irreparable injury in the absence of preliminary relief; (3) that a balancing of the hardships weighs in plaintiff's favor; and (4) that a preliminary injunction will advance the public interest. Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7, 20 (2008); M.R. v. Dreyfus, 697 F.3d 706, 725 (9th Cir. 2012). Under the Winter test, a plaintiff must satisfy each element for injunctive relief.

Alternatively, the Ninth Circuit also permits a “sliding scale” approach under which an injunction may be issued if there are “serious questions going to the merits” and “the balance of hardships tips sharply in the plaintiff's favor,” assuming the plaintiff also satisfies the two other Winter factors. All. for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131 (9th Cir. 2011) (“[A] stronger showing of one element may offset a weaker showing of another.”); see also Farris v. Seabrook, 677 F.3d 858, 864 (9th Cir. 2012) (“We have also articulated an alternate formulation of the Winter test, under which serious questions going to the merits and a balance of hardships that tips sharply towards the plaintiff can support issuance of a preliminary injunction, so long as the plaintiff also shows that there is a likelihood of irreparable injury and that the injunction is in the public interest.” (internal quotation marks and citation omitted)).

A. Likelihood of Success on the Merits

To obtain injunctive relief, Plaintiff must show that there are “serious questions going to the merits” of its claims or that it is likely to succeed on the merits. Cottrell, 632 F.3d at 1131; Farris, 677 F.3d at 865.

1. False Advertising

Plaintiff alleges Defendant falsely stated on its Facebook page used for advertising that there would be no Oktoberfest celebration in Leavenworth in 2022 and that Plaintiff was lying to visitors about holding an Oktoberfest celebration. ECF No. 9 at 9. Defendant argues Plaintiff cannot succeed on its false advertising claim because the allegedly false statements appeared to be true at the time Defendant made them and have since been deleted. ECF No. 15 at 11.

To succeed on a false advertising claim, a plaintiff must show (1) the defendant made a false statement of fact in commercial advertising about its own or another's product, (2) the statement actually deceived or has the tendency to deceive a substantial segment of its audience, (3) the falsity is material in that it is likely to influence a consumer's purchasing decision, (4) the defendant caused the false statement to enter interstate commerce, and (5) the plaintiff has been or is likely to be injured by the false statement, either by diversion of sales from itself to the defendant or by reducing the goodwill associated with the plaintiff's products. Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1139 (9th Cir. 1997).

The false statements at issue here were made by Defendant on July 6, 2022, and appeared on Defendant's Facebook page, which is used to promote its 2022 Oktoberfest celebration in Wenatchee. ECF No. 9 at 9. Defendant removed the posting sometime in late August at Plaintiff's request. ECF No. 18 at 13. It does not appear from the parties' briefing that Plaintiff requested the posting be removed prior to August 2022. See ECF No. 19 at 10-14. At oral argument, Plaintiff asserted the false statements still appear on Facebook because a consumer has repeated Defendant's original comments verbatim. Defendant responded that it removed the original comment as requested by Plaintiff, and it should not be held responsible for all consumers' posts that appear on Facebook.

The Court agrees. To be held liable for making false statements the statements must be made by the defendant. See Southland Sod Farms, 108 F.3d at 1139. Defendant removed the offending statements, and it does not appear there are any other allegedly false statements at issue. Accordingly, the Court need not reach the Southland factors as applied to the July 6, 2022 Facebook post, as there are no longer any false statements made by Defendant to enjoin. The Court finds Plaintiff unlikely to succeed on the merits of...