Fletcher's Original State Fair Corny Dogs, LLC v. Fletcher-Warner Holdings LLC

434 F.Supp.3d 473

FLETCHER'S ORIGINAL STATE FAIR CORNY DOGS, LLC

v.FLETCHER-WARNER HOLDINGS LLC, et al.

CIVIL ACTION NO. 4:19-cv-681-SDJ

United States District Court, E.D. Texas, Sherman Division.

Signed January 17, 2020

Christopher M. McDowell, McDowell Law PLLC, Coppell, TX, Steven E. Ross, Ross IP Group PLLC, Dallas, TX, for Fletcher's Original State Fair Corny Dogs, LLC.

Jason Aaron Wietjes, Michael David Pegues, Polsinelli PC, Dallas, TX, Brandon Francis Renken, Janet E Militello, Locke Lord LLP, Houston, TX, for Fletcher-Warner Holdings LLC, et al.

MEMORANDUM OPINION & ORDER

SEAN D. JORDAN, UNITED STATES DISTRICT JUDGE

This trademark infringement case concerns a long-standing tradition at the State Fair of Texas—Fletcher's corny dogs. Fletcher's is a family business that has sold corn dogs for nearly 80 years, primarily at the State Fair. Plaintiff Fletcher's Original State Fair Corny Dogs, LLC ("Fletcher's") is the modern corporate entity that operates the family business. Defendants are two estranged family members, Victoria Jace Fletcher Christensen ("Jace Christensen") and Victoria Warner Fletcher ("Victoria Fletcher"), and their limited liability company, Fletcher-Warner Holdings LLC ("FWH").

Fletcher's asserts its trademark rights in the standard character mark "Fletcher's" as well as other related marks used by Fletcher's to identify its corn dogs, snack bar services, and restaurant services. (Dkt. #1 at 6–7). Fletcher's alleges that, without its consent, Defendants began using trademarks and service marks featuring the similar word "Fletch" to promote Defendants' products and services, in direct competition with Fletcher's. Fletcher's further contends that Defendants' use of allegedly confusingly similar trademarks and service marks, such as "Fletch," "Eat Fletch," and "EatFletch" (collectively referenced as the "Fletch marks"), has caused a substantial and growing amount of actual confusion among consumers and the public as to the source, affiliation, and sponsorship of Defendants' goods and services. Based on these allegations, Fletcher's has asserted a claim against Defendants for trademark infringement and unfair competition under the Lanham Act, 15 U.S.C. § 1125, and a claim for trademark dilution under the Texas Anti-Dilution Act, TEX. BUS. & COM. CODE ANN. § 16.103. (Dkt. #1).

Before the Court is Fletcher's Motion for Preliminary Injunction (Dkt. #3) and Defendants' Motion to Dismiss (Dkt. #40). Fletcher's requests preliminary injunctive relief only as to the "Fletcher's" standard character mark, a word mark. Having considered the motions, the related briefing and evidence submitted by the parties, and the applicable law, the Court finds that the motion for preliminary injunction should be GRANTED and the motion to dismiss DENIED.

FACTUAL AND PROCEDURAL BACKGROUND

A. The Fletcher brothers create a State Fair tradition

The Fletcher family's corny dog story begins at the time of the Second World War. Brothers Neil "Fletch" Fletcher Sr. and Carl Fletcher were vaudeville performers in Dallas in the 1930s. State Fair officials approached the brothers with an offer for a food booth. There was a baker that served a dish of hot dogs and corn meal baked in the shape of an ear of corn that the Fletcher brothers enjoyed and considered serving. Although the brothers liked the taste and combination of this dish, they found the preparation process was too time-consuming. Following a period of experimentation with frying methods and recipe development, the Fletcher brothers invented corn dogs, served on a stick, and began selling them on the fairgrounds at Dallas's Fair Park in the summer of 1942.

The Fletcher brothers' "corny dogs" were a success, and every year since 1942 Fletcher's has been selling corn dogs at the State Fair of Texas. Fletcher's now sells between 500,000 and 600,000 corn dogs at the State Fair each year. Fletcher's has also sold their corn dogs outside the State Fair. For a number of years, Fletcher's corn dogs were sold at the Byron Nelson Golf Tournament, and for several years in the 1960s, a drive-in location existed in Dallas. More recently, Fletcher's has sold its corn dogs at the Terrell Jubilee, the Weatherford Peach Festival, and University of North Texas football games.

Fletcher's has also remained a family business. After Neil and Carl Fletcher passed away, Neil's sons, Neil "Skip" Fletcher Jr. and Bill Fletcher, ran the enterprise.¹ Skip Fletcher and Bill Fletcher's children, in turn, have participated in the business, as well as Skip's wife, Glenda "G.G." Fletcher. In 2011, Skip Fletcher formed the current corporate entity, Fletcher's Original State Fair Corny Dogs, LLC, to operate the family business. G.G. Fletcher has managed Fletcher's since Skip Fletcher passed away in 2017.

B. History of the Fletcher's trademarks and service marks

Over the years, Fletcher's has used the word mark "Fletcher's" and various other trademarks and service marks in conjunction with its corn dog business. For a time, Fletcher's lost ownership of its marks. Fletcher's encountered financial difficulties in the late 1980s and went through bankruptcy. In 1990, as a result of the bankruptcy, Fletcher's trademarks and service marks, including the "Fletcher's" word mark, were sold to Circle T Foods Co., Inc. d/b/a State Fair Foods, Inc. ("State Fair Foods").

In 1992, State Fair Foods granted Fletcher's a license to use the marks at the fairgrounds in Dallas, the Byron Nelson Golf Tournament in Dallas, and additional events and locations on written request. Since 2011, Fletcher's Original State Fair Corny Dogs, LLC has had the right to operate under the agreement. All of the marks made the basis of Fletcher's Complaint against Defendants, including the "Fletcher's" word mark, were part of the 1992 license agreement with State Fair Foods.

Through a series of corporate mergers between 1992 and 2014, the Fletcher's marks owned by State Fair Foods were acquired by Tyson's Foods, Inc. ("Tyson's"), which wholly owns Sara Lee Foods, L.L.C.² On May 24, 2019, Tyson's and Sara Lee Foods assigned all of their rights, title, and interest in the "Fletcher's" word mark, and all of the other marks at issue in this case, back to Fletcher's.

C. Defendants launch Fletch, a company that sells corn dogs in the Dallas area

In February 2019, Defendant Jace Christensen, owner of Defendant FWH, and Defendant Victoria Fletcher, CEO of FWH, launched Fletch, a company owned and operated by FWH. Fletch sells corn dogs at various events, festivals, and at Fair Park.

Victoria Fletcher was married to Skip Fletcher's son, Craig Fletcher. Victoria Fletcher divorced Craig Fletcher, who is now deceased, but she has retained the Fletcher surname. Although Victoria Fletcher worked for Fletcher's, she never had an ownership interest in the business. Defendant Jace Christensen is Victoria Fletcher's daughter. Ms. Christensen has never had an ownership interest in Fletcher's, and she also never participated in Fletcher's operations.

Since February 2019, Defendants have operated "pop-up" restaurants and offered catering and snack bar services at special events in the Dallas area. Defendants sell corn dogs and have used the following standard character marks for their business: "Fletch," "EatFletch," and "Eat Fletch," in addition to the following words-plus-design marks, see (Dkt. #1), incorporating the word "Fletch":

D. Fletcher's files suit and seeks injunctive relief

On July 26, 2019, Fletcher's, through counsel, sent a cease-and-desist demand letter to Defendants, alerting them to instances of actual confusion in the marketplace by event venues and consumers. Fletcher's demanded that Defendants cease using the confusing Fletch marks. (Dkt. #1-18).

On August 16, 2019, Defendants, through counsel, replied stating that due to discussions between G.G. Fletcher and Defendant Jace Christensen, Defendants believed that they were operating within parameters such that Fletcher's would not take action against them. (Dkt. #1-19).

On September 19, 2019, Fletcher's filed its Complaint alleging trademark infringement and unfair competition under 15 U.S.C. § 1125, and trademark dilution under the Texas Anti-Dilution Act, TEX. BUS. & COM. CODE ANN. § 16.103. (Dkt. #1). Fletcher's also sought a temporary restraining order and preliminary injunction. (Dkt. #3). On September 20, 2019, the magistrate court held a hearing regarding the temporary restraining order. The parties were able to reach an agreement and the motion for a temporary restraining order was denied as moot. (Dkt. #7). Beginning on October 1, 2019, this Court held a two-day hearing on the preliminary-injunction motion. At the hearing the parties presented witnesses and documentary evidence, as well as legal argument. After the hearing, the parties submitted supplemental briefing addressing the evidence and issues of law relevant to the requested injunction.

Following the preliminary-injunction hearing, Defendants also filed their Motion to Dismiss (Dkt. #40), arguing that Fletcher's Unlimited, Inc., is a required party and the case should be dismissed for lack of subject-matter jurisdiction because Fletcher's Unlimited cannot be joined.

FLETCHER'S MOTION FOR PRELIMINARY INJUNCTION

Fletcher's preliminary-injunction motion is limited to the "Fletcher's" word mark. Invoking Federal Rule of Civil Procedure 65 and section 34 of the Lanham Act, Fletcher's requests that the Court enter a preliminary injunction prohibiting Defendants from using the "Fletcher's" mark, the Fletch marks, and all variations of the foregoing in any form of interstate commerce related to the food and beverage industry.

Legal Standard

Section 34 of the Lanham Act provides that district courts "shall have power to grant injunctions, according to the principles of equity, and upon such terms as the court may deem reasonable, ... to prevent a violation under subsections (a), (c), or (d) of section 1125 of this title." 15 U.S.C. § 1116(a) ; ...