Freedom Servs. v. Freedom Servs.

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FREEDOM SERVICES, INC., Plaintiff, v. FREEDOM SERVICES, LLC, et al., Defendant.

Civ. No. MJM-23-1625

United States District Court, D. Maryland

June 21, 2024

MEMORANDUM OPINION

Matthew J. Maddox United States District Judge

Plaintiff Freedom Services, Inc. (“Plaintiff”) filed this civil action asserting claims for trademark infringement and unfair competition under the Lanham Act. The Court has subjectmatter jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1338.

This matter is before the Court on Defendant Jennifer Steadman's (“Defendant Steadman”) Motion to Dismiss Plaintiff's First Amended Complaint, and Plaintiff's Motion to Dismiss Defendant Freedom Services LLC's (“Defendant LLC”) Amended Counterclaims and Strike its Affirmative Defenses. Both motions are ripe for disposition, and no hearing is necessary. See Local Rule 105.6 (D. Md. 2023). For the reasons set forth below, the Court shall deny Defendant Steadman's motion and grant in part and deny in part Plaintiff's motion.

I. PROCEDURAL BACKGROUND

On June 20, 2023, Plaintiff filed an initial Complaint against Defendant LLC and Defendant Steadman (collectively, “Defendants”) (ECF 1). Defendant Steadman filed an initial Motion to Dismiss (ECF 9), which attached a declaration by Defendant Steadman. Defendant LLC filed its initial Answer with Affirmative Defenses and Counterclaims (ECF 10).

On September 22, 2023, Plaintiff filed an Amended Complaint (“Am. Compl.,” ECF 12) contemporaneously with an initial Motion to Dismiss Defendant LLC's Counterclaims and Strike its Affirmative Defenses (ECF 13). On October 6, 2023, Defendant Steadman filed a Motion to Dismiss Plaintiff's Amended Complaint (ECF 14), which attached a second declaration by Defendant Steadman. On the same date, Defendant LLC filed an Answer to the Amended Complaint with Amended Affirmative Defenses and Counterclaims (“Am. Answer,” ECF 15). On October 19, 2023, Plaintiff filed its Response in Opposition to Defendant Steadman's second Motion to Dismiss (ECF 16), and on October 20, 2023, Plaintiff filed a Motion to Dismiss Defendant LLC's Amended Counterclaims and Strike its Amended Affirmative Defenses (ECF 17). On November 2, 2023, Defendant Steadman filed her Reply in Support of her second Motion to Dismiss (ECF 18), and on November 3, 2023, Defendant LLC filed its Response in Opposition to Plaintiff's second Motion to Dismiss and Strike (ECF 19). On November 17, 2023, Plaintiff filed its Reply in Support of its second Motion to Dismiss and Strike (ECF 21).

Currently pending are Defendant Steadman's second Motion to Dismiss (ECF 14) and Plaintiff's second Motion to Dismiss and Strike (ECF 17).

II. FACTUAL BACKGROUND

A. Plaintiff's Amended Complaint

Plaintiff is a Maryland corporation that has been providing private transportation services in and around Maryland since 1991. Am. Compl., ¶ 1. Plaintiff has used the terms “FREEDOM SERVICES” and “FREEDOMCAR” in interstate commerce in connection with its transportation services continuously since April 1, 1991. Id. ¶ 10. Further, Plaintiff registered its trademark for “FREEDOMCAR (AND DESIGN)” on April 5, 2011, alleging that it is a valid and incontestable mark. Id. ¶ 12. Plaintiff states that it “has invested significant resources into building the FREEDOMCAR brand for transportation and related business services, and it is entitled to benefit from the recognition and goodwill associated with the exclusive use of its mark in connection with these services.” Id. ¶ 11.

According to Plaintiff, on May 2, 2019, Defendant Steadman, in her individual capacity, “filed articles of organization for Defendant Freedom Services, LLC to create a name confusing [sic] similar to Plaintiffs FREEDOM, FREEDOM SERVICES, and FREEDOMCAR trademarks with the intent and purpose of unfairly competing with Plaintiff's business.” Id. ¶¶ 4, 14. Further, Plaintiff contends that Defendants' use of the terms “Freedom” and “Freedom Services” in connection with similar offerings of Plaintiff “has caused and is likely to continue to cause confusion, mistake, or deception as to the affiliation, connection, or association of Defendants” with Plaintiff. Id. ¶ 17. Plaintiff claims that “[i]n early 2023, Freedom Services began to experience repeated incidences of actual consumer confusion with Defendants' business” that led to a loss of revenue and goodwill. Id. ¶ 15.

Further, Plaintiff states that it contacted Defendants twice upon learning that they were using the terms “Freedom” and “Freedom Services” in connection with transportation services. Id. ¶ 13. On September 5, 2019, and again on April 5, 2023, Plaintiff sent a letter to Defendants notifying them of Plaintiff's exclusive right to use its trademarks and requested that they cease and desist from using Freedom-related terms in connection with transportation services. Id. ¶¶ 13, 16. Finally, Plaintiff alleges that despite its repeated efforts to remedy the matter, Defendants have continued using “Freedom” and “Freedom Services” in connection with transportation services. Id. ¶ 18.

B. Defendant LLC's Amended Answer, Affirmative Defenses, and Counterclaims

Defendant LLC is a taxi association registered in Maryland. Am. Answer, at 2.^[1] Defendant Steadman is the sole member of Defendant LLC and that she handles corporate affairs. Id. Defendant LLC notes that on February 1, 2010, Plaintiff changed its name from Freedom Services, Inc. to FreedomCar. Id. It contends that Plaintiff stopped using the name Freedom Services, Inc. in commerce following the name change and has not used the term Freedom Services, Inc. in its promotional materials or advertising for at least five years. Id. Defendant LLC denies that it competes with or takes business from Plaintiff. Id. at 4.

Defendant LLC raises the affirmative defenses of unclean hands, estoppel, laches, and acquiescence. Id. at 5. Defendant LLC also raises as affirmative defenses denial of Plaintiff's allegations, lack of a likelihood of confusion, Plaintiff's failure to state a claim upon which relief can be granted, lack of infringement, lack of an enforceable trademark in FREEDOM or FREEDOM SERVICES, and lack of damages. Id.

Finally, Defendant LLC raises three counterclaims: (1) a declaratory judgment that it did not infringe upon Plaintiff's trademark; (2) a declaratory judgment that there is no enforceable trademark in FREEDOM or FREEDOM SERVICES; and (3) a declaratory judgment that it did not commit unfair competition. Id. at 7.

III. STANDARD OF REVIEW

Under Rule 8(a)(2) of Federal Rules of Civil Procedure, a complaint must contain “a short and plain statement of the claim showing the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). This rule is to “give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal quotation marks and citation omitted).

To survive a Rule 12(b)(6) motion to dismiss, a plaintiff must plead enough factual allegations “to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570. Counterclaims are also held to this plausibility standard. E.I. Du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 440 (4th Cir. 2011). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009). A complaint need not include “detailed factual allegations,” but it must set forth “enough factual matter (taken as true) to suggest” a cognizable cause of action, “even if . . . [the] actual proof of those facts is improbable and . . . recovery is very remote and unlikely.” Twombly, 550 U.S. at 555-56 (internal quotation marks omitted). Documents attached to the complaint as exhibits may be considered by the court so long as they are “integral to the complaint and authentic.” Philips v. Pitt Cnty. Mem'l Hosp., 572 F.3d 176, 180 (4th Cir. 2009).

Furthermore, federal pleading rules “do not countenance dismissal of a complaint for imperfect statement of the legal theory supporting the claim asserted.” Johnson v. City of Shelby, 574 U.S. 10, 10 (2014) (per curiam). However, “a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action's elements will not do.” Twombly, 550 U.S. at 555 (cleaned up). When considering a motion to dismiss, a court must take the factual allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiff. King v. Rubenstein, 825 F.3d 206, 212 (4th Cir. 2016). At the same time, “a court is not required to accept legal conclusions drawn from the facts.” Retfalvi v. United States, 930 F.3d 600, 605 (4th Cir. 2019) (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)).

Ordinarily a court “is not to consider matters outside the pleadings or to resolve factual disputes when ruling on a motion to dismiss.” Bosiger v. U.S. Airways, Inc., 510 F.3d 442, 450 (4th Cir. 2007). A court may “take judicial notice of matters of public record” and consider documents attached or incorporated into the complaint by reference or attached to the motion to dismiss, “so long as they are integral to the complaint and authentic.” Sec'y of State For Defence v. Trimble Navigation Ltd., 484 F.3d 700, 705 (4th Cir. 2007) (citations omitted). Consideration of such matters does not require converting the motion to dismiss to one for summary judgment. Mua v. Maryland, Civ. No. ELH-16-01435, 2017 WL 633392, at *7 (D. Md. Feb. 15, 2017) (citation omitted). If a court otherwise considers matters outside the pleadings...