Seattlehaunts, LLC v. Thomas Family Farm, LLC

SEATTLEHAUNTS, LLC, Plaintiff, v. THOMAS FAMILY FARM, LLC, et al., Defendants.

CASE NO. C19-1937JLR

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE

September 11, 2020

ORDER ON MOTIONS TO DISMISS AND TO STRIKE

I. INTRODUCTION

Before the court are (1) Plaintiff Seattlehaunts, LLC ("Seattlehaunts") motion to dismiss several of Defendant Thomas Family Farm, LLC's ("Thomas Family" or "Thomas Family Farm") counterclaims and strike Thomas Family's affirmative defenses (Seattlehaunts Mot. (Dkt. # 22)); and (2) Third-Party Defendant Joseph Wondell's motion to dismiss several of Thomas Family's claims against him (Wondell Mot. (Dkt.

// # 23)).¹ Thomas Family opposes both motions. (Resp. to Seattlehaunts Mot. (Dkt. # 24); Resp. to Wondell Mot. (Dkt. # 26).) The court has considered the motions, the parties' submissions in support of and in opposition to the motions, the relevant portions of the record, and the applicable law. Being fully advised,² the court GRANTS in part and DENIES in part Seattlehaunts' motion and GRANTS Mr. Wondell's motion.

II. BACKGROUND

A. Factual Background

This is an intellectual property dispute.³ Thomas Family owns and runs a commercial amusement park on farm property located on Highway 9 in Snohomish,Washington ("the Farm"). (Countercl. (Dkt. # 19) ¶¶ 8-9.)⁴ In April 2011, Thomas Family began to develop a commercial haunted house attraction on the Farm and created the name "Nightmare on 9" for the event. (Id. ¶¶ 10-11.) Thomas Family created the following graphic for "Nightmare on 9":

Image materials not available for display.

(Id. ¶ 12 ("Hook Graphic").) In 2012, Thomas Family and Seattlehaunts entered into an agreement to jointly put on the Nightmare on 9 event ("the Event" or "Nightmare on 9"). (Id. ¶ 15.)

Thomas Family alleges that it hired and paid a commercial designer, Mr. Wondell "to improve" the Hook Graphic created by Thomas Family. (Id. ¶ 16.) According to Thomas Family, Mr. Wondell created the following graphic:

//

//

Image materials not available for display.

(Id. ¶ 17 ("Original Wondell Graphic").)

In 2013, Thomas Family hired Seattlehaunts annually as an independent contractor to present, set up, and run the Nightmare on 9 event at the Farm. (Id. ¶ 19; see also Jacobowitz Decl. (Dkt. # 9) ¶ 2, Ex. 1 ("State Court Compl.") ¶ 16, Ex. H ("Contract").) The parties' contract for 2014 refers to "apparel . . . with Thomas Family Farm's trademarked 'Nightmare on 9' on them." (Countercl. ¶ 20.) The same contract states that Thomas Family and Seattlehaunts would "[a]t this time . . . share the copyright and trademark to 'Nightmare on 9.'" (Id. ¶ 21.) Seattlehaunts operated a "Nightmare on 9 Haunted House" Facebook page. (Id. ¶ 22.) On one occasion, Seattlehaunts posted on the Facebook page that the Nightmare 9 event is "also known as Thomas Family Farm." (Id. ¶ 25.)

In 2018, Thomas Family registered the name "Nightmare on 9" with the Hook Graphic in classifications 16 and 31 as a trademark with the Washington Secretary ofState's office. (Id. ¶ 28.) In 2019, Seattlehaunts asked for a greater share of the revenue from the Nightmare on 9 event. (Id. ¶ 30.) Subsequently, Thomas family decided not to work with Seattlehaunts on the Nightmare on 9 event. (Id. ¶ 31.) Also in 2019, Thomas Family discovered that Seattlehaunts was advertising through Facebook and its website that the Nightmare on 9 event would not be taking place in 2019 and was no longer associated with Thomas Family or the Farm. (Id. ¶ 32; Countercl. Ex. A.) Seattlehaunts advertised the Nightmare on 9 event using a revised version of the Original Wondell Graphic ("Revised Wondell Graphic"). (Id. ¶ 34.) According to Thomas Family, Seattlehaunts profited from the Nightmare on 9 event after advertising it using the Revised Wondell Graphic. (Id. ¶ 35.) On August 13, 2019, Thomas Family sent a cease and desist letter to Seattlehaunts including demands that Seattlehaunts rejected. (Id. ¶¶ 36, 38; Countercl. Ex. B.)

Seattlehaunts subsequently attempted to register the Revised Wondell Graphic as a trademark. (Id. ¶ 40.) Seattlehaunts also contacted Mr. Wondell to obtain copyright rights in the Revised Wondell Graphic, which Mr. Wondell purported to assign to Seattlehaunts on August 15, 2019. (Id. ¶¶ 41, 45.) On August 16, 2019, Seattlehaunts registered a copyright to the Revised Wondell Graphic with the United States Patent and Copyright Office ("the Copyright Office"). (Id. ¶ 50.) In its copyright application, Seattlehaunts listed Mr. Wondell as the sole author of the Revised Wondell Graphic. (Id. ¶ 51.) Seattlehaunts then demanded that Thomas Family rename or discontinue the Nightmare on 9 event (id. ¶ 56) and informed Thomas Family that it claimed copyright in the Revised Wondell Graphic (id. ¶ 57). According to Thomas Family, that was the firsttime Seattlehaunts had given Thomas Family notice that it claimed any intellectual property rights in the Revised Wondell Graphic. (Id. ¶ 59.) Seattlehaunts has also retained control of the Nightmare on 9 Haunted House Facebook page. (Id. ¶ 60.) On September 17, 2019, Seattlehaunts posted on the Facebook page that Thomas Family:

decided to go ahead and do it on their own, saying that they're Nightmare on 9. That's misleading the public. Instead of informing the public that they're going to start their own haunted attraction they have taken our logo and our name.

(Id. ¶ 63, Countercl. Ex. C.)

B. Procedural Background

On October 7, 2019, Thomas Family Farm filed a lawsuit against Seattlehaunts in Snohomish County Superior Court, Thomas Family Farm, LLC v. Seattlehaunts, LLC, Cause No. 19-2-09008-31 (the "State Court Action"). (See Am. Compl. ¶ 9; State Court Compl.) In that lawsuit, Thomas Family Farm brings claims for state trademark infringement and defamation against Seattlehaunts. (See FAC ¶ 9; State Court Compl. at 5-7.) Seattlehaunts filed this lawsuit against Thomas Family Farm on November 26, 2019 (see Compl. (Dkt. # 1) at 17) and amended the complaint on December 18, 2019 (see FAC at 21). Seattlehaunts brings claims for (1) unregistered trademark infringement and false designation or origin under the Lanham Act, 15 U.S.C § 1125; (2) Copyright Infringement under 17 U.S.C. § 101; (3) unfair competition under the Washington Consumer Protection Act, RCW ch. 19.86; (4) declaratory judgment of non-infringement; (5) declaratory judgment of abandonment; and (6) declaratory judgment of non-disparagement. (See FAC ¶¶ 50-79.)

Thomas Family moved to dismiss several of Seattlehaunts' claims. (See TFF MTF (Dkt. # 8).) The court denied that motion. (4/6/20 Order (Dkt. # 18).) Thomas Family Farm then filed an answer and counterclaim, alleging counterclaims against Seattlehaunts and third-party claims against Mr. Wondell. (See Countercl. ¶¶ 69-157.) Thomas Family's answer also includes the following description of its affirmative defenses:

80. Invalid copyright.

81. Fraud on Copyright Office.

82. Innocent infringement.

83. Common source.

84. Unclean hands.

85. Lack of originality.

86. Abandonment of copyright.

87. Laches, waiver, and/or estoppel.

88. Statute of limitations.

89. Setoff and/or recoupment.

90. All matters asserted herein as counterclaims are raised as defenses.

(Ans. ¶¶ 80-90.)

Seattlehaunts and Mr. Wondell separately filed the present motions. (See Seattlehaunts Mot.; Wondell Mot.) Seattlehaunts' motion asks the court to (1) dismiss Thomas Family's claims for tortious interference and civil conspiracy as preempted by 17 U.S.C. § 301(a) of the Copyright Act of 1976 (the "Copyright Act"); (2) dismiss Thomas Family's claims for fraud, negligent misrepresentation, and breach of fiduciary duty under Federal Rule of Civil Procedure 12(b)(6); and (3) strike each of Thomas Family's affirmative defenses. (Seattlehaunts Mot. at 5.) Mr. Wondell's motion asks the court to dismiss three of Thomas Family's third-party claims against him. (Wondell Mot. at 4.) The court now considers these motions.

III. ANALYSIS

A. Legal Standards

1. Motions to Dismiss

Rule 12(b)(6) provides for dismissal for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). When considering a motion to dismiss under Rule 12(b)(6), the court construes the complaint in the light most favorable to the nonmoving party. Livid Holdings Ltd. v. Salomon Smith Barney, Inc., 416 F.3d 940, 946 (9th Cir. 2005). The court must accept all well-pleaded facts as true and draw all reasonable inferences in favor of the plaintiff. Wyler Summit P'ship v. Turner Broad. Sys., Inc., 135 F.3d 658, 661 (9th Cir. 1998). The court, however, is not required "to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)); see also Telesaurus VPC, LLC v. Power, 623 F.3d 998, 1003 (9th Cir. 2010). "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." Iqbal, 556 U.S. at 677-78. "A pleading that offers 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action will not do.' . . . Nor does a complaint suffice if it tenders 'naked assertion[s]' devoid of 'further factual enhancement.'" Id. at 678 (quoting Twombly, 550 U.S. at 555, 557).

2. Motions to Strike

Federal Rule of Civil Procedure 8(c)(1) requires a party, in responding to a pleading, to "affirmatively state any avoidance or affirmative defense." Fed. R. Civ. P. 8(c)(1). A court may, on its own or on a motion, strike an affirmative defense under Federal Rule of Civil Procedure 12(f) if it is "insufficient" or presents "any...