Smith & Wesson Brands, Inc. v. SW N. Am., Inc.

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SMITH & WESSON BRANDS, INC. SMITH & WESSON, INC., Plaintiff(s), v. SW NORTH AMERICA, INC., Defendant(s).

No. 2:22-CV-1773 JCM (EJY)

United States District Court, D. Nevada

July 5, 2023

ORDER

Presently before the court is plaintiffs Smith & Wesson Brands Inc. (“Brands”) and Smith & Wesson Inc.'s (“S&W”) (collectively “plaintiffs”) special motion to dismiss SW North America, Inc.'s (“defendant) counterclaims. (ECF No. 34). Defendant filed a response (ECF No. 41), to which plaintiffs replied (ECF No. 42).

Also before the court is defendant's motion for leave to supplement. (ECF No. 49). Plaintiffs filed a response. (ECF No. 51). Additionally, before the court is defendant's motion to dismiss. (ECF No. 52). Plaintiffs filed a response (ECF No. 53), to which defendant replied (ECF No. 52).

I. Background

This action arises out of alleged trademark infringement. (ECF No 50). Brands is the parent company of S&W. Id. As alleged in the complaint, S&W owns numerous federal trademark registrations in a stylized “S&W” logo for firearms, firearm accessories, handcuffs, clothing and accessories, sprays for personal defense, and knives. Id.

Defendant is a supplier of industrial machining equipment, specifically horizontal multi-and single- spindle CNC machining centers, automation, and complete system solutions. Id.

Defendant targets the automotive, agricultural, and aerospace industries, but it has allegedly expanded its business of providing machining tools and parts for the firearms industry. Id.

Plaintiffs contends that defendant is aware that “S&W” is synonymous with their firearms among the consuming public. Id. Plaintiffs further state that defendant used a “SW” mark to advertise, promote, and sell products and services for the manufacture of firearms and firearm parts. Id.

Thus, plaintiffs bring this lawsuit alleging that defendant's use of the “SW” is intentionally similar to their “S&W” mark, and that the use of “SW” is likely to damage their commercial interests. Id. Their complaint brings several claims under the Lanham Act and Nevada law related to this alleged similarity. Defendant also brings several counterclaims related to alleged interference with its business. The parties now cross-move for dismissal of each other's pleadings, albeit on different grounds.

II. Legal Standard

A. Anti-SLAPP special motion to dismiss

“A strategic lawsuit against public participation, SLAPP for short, is a meritless lawsuit that a plaintiff initiates to chill a defendant's freedom of speech and right to petition under the First Amendment.” Pope v. Fellhauer, 437 P.3d 171 (Nev. 2019) (citing Nev. Rev. Stat. § 41.637). Nevada's “anti-SLAPP” statute allows defendants to file “a special motion to dismiss-the anti-SLAPP motion-if he or she can show the plaintiff's claim targets ‘a good faith communication in furtherance of the right to petition or the right to free speech in direct connection with an issue of public concern.'” Id. (quoting Nev. Rev. Stat. § 41.660(1)).

Anti-SLAPP motions are adjudicated in two stages. First, the defendant must show “by a preponderance of the evidence, that the claim [was] based upon a good faith communication in furtherance of the right to petition or the right to free speech in direct connection with an issue of public concern.” Id. (citing Nev. Rev. Stat. § 41.660(3)(a)). If the defendant meets its burden, then the court must determine “whether the plaintiff has demonstrated with prima facie evidence a probability of prevailing on the claim.” Nev. Rev. Stat. § 41.660(3); see also Nev. Rev. Stat. § 41.665; Shapiro v. Welt, 389 P.3d 262, 266 (Nev. 2017) (“After 2013 . . . the plaintiffs burden increased to clear and convincing evidence.”).

When discussing how to conduct this analysis in Planned Parenthood Fed'n of Am., Inc. v. Ctr. for Med. Progress, the Ninth Circuit held:

“Once it is determined that an act in furtherance of protected expression is being challenged, the plaintiff must show a “reasonable probability” of prevailing in its claims for those claims to survive dismissal. To do this, the plaintiff must demonstrate that “the complaint is legally sufficient and supported by a prima facie showing of facts to sustain a favorable judgment if the evidence submitted by the plaintiff is credited.”

890 F.3d 828, 833 (9th Cir.), amended, 897 F.3d 1224 (9th Cir. 2018), and cert. denied sub nom. Ctr. for Med. Progress v. Planned Parenthood Fed'n of Am., 139 S.Ct. 1446 (2019) (citations omitted) (“Planned Parenthood').

Thus, the court applies two different standards depending on the basis of the anti-SLAPP motion. On one hand, “[i]f a defendant makes a special motion to strike based on alleged deficiencies in the plaintiff's complaint, the motion must be treated in the same manner as a motion under Rule 12(b)(6) . . . .” Id. at 834. On the other hand, “when an anti-SLAPP motion to strike challenges the factual sufficiency of a claim, then the Federal Rule of Civil Procedure 56 standard will apply.” Id.

B. Motion to dismiss

A court may dismiss a complaint for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). A properly pled complaint must provide “[a] short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). While Rule 8 does not require detailed factual allegations, it demands “more than labels and conclusions” or a “formulaic recitation of the elements of a cause of action.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation omitted).

“Factual allegations must be enough to rise above the speculative level.” Twombly, 550 U.S. at 555. Thus, to survive a motion to dismiss, a complaint must contain sufficient factual matter to “state a claim to relief that is plausible on its face.” Iqbal, 556 U.S. at 678 (citation omitted).

In Iqbal, the Supreme Court clarified the two-step approach district courts are to apply when considering motions to dismiss. First, the court must accept as true all well-pled factual allegations in the complaint; however, legal conclusions are not entitled to the assumption of truth. Id. at 678-79. Mere recitals of the elements of a cause of action, supported only by conclusory statements, do not suffice. Id. at 678.

Second, the court must consider whether the factual allegations in the complaint allege a plausible claim for relief. Id. at 679. A claim is facially plausible when the plaintiff's complaint alleges facts that allow the court to draw a reasonable inference that the defendant is liable for the alleged misconduct. Id. at 678.

Where the complaint does not permit the court to infer more than the mere possibility of misconduct, the complaint has “alleged-but not shown-that the pleader is entitled to relief.” Id. (internal quotation marks omitted). When the allegations in a complaint have not crossed the line from conceivable to plausible, plaintiff's claim must be dismissed. Twombly, 550 U.S. at 570.

The Ninth Circuit addressed post-Iqbal pleading standards in Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). The Starr court stated, in relevant part:

First, to be entitled to the presumption of truth, allegations in a complaint or counterclaim may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively. Second, the factual allegations that are taken as true must plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation.

Id.

If the court grants a Rule 12(b)(6) motion to dismiss, it should grant leave to amend unless the deficiencies cannot be cured by amendment. DeSoto v. Yellow Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992). Under Rule 15(a), the court should “freely” give leave to amend “when justice so requires,” and absent “undue delay, bad faith, or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments . . . undue prejudice to the opposing party . . . futility of the amendment, etc.” Foman v. Davis, 371 U.S. 178, 182 (1962). The court should grant leave to amend “even if no request to amend the pleading was made.” Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (en banc) (internal quotation marks omitted).

III. Discussion

A. Anti-SLAPP

1. Defendant cannot avoid the special motion to dismiss by amending its complaint

In October 2022, plaintiffs filed their complaint. (ECF No. 1). Defendant then filed its answer, which included three counterclaims. (ECF No. 24). A month after defendant's answer, plaintiff filed a special motion to dismiss the counterclaims under Nevada's anti-SLAPP statute. (ECF No. 34). Two months later, plaintiffs then amended their complaint. (ECF No. 50).

Defendant now claims that because plaintiffs amended their complaint, it is entitled to amend its answer, and because of that amendment, it can remove the offending counterclaims and moot the special motion to dismiss. But to allow that would be to circumvent the purpose of the anti-SLAPP statute entirely.

“Nevada's anti-SLAPP statutes aim to protect First Amendment rights by providing defendants with a procedural mechanism to dismiss ‘meritless lawsuit[s] that a party initiates primarily to chill a defendant's exercise of his or her First Amendment free speech rights' before incurring the costs of litigation” Coker v. Sassone, 432 P.3d 746 748 (Nev. 2019) (quoting Stubbs v. Strickland, 27 P.3d 326, 329 (Nev. 2013)) (alteration in original). Anti-SLAPP statues are designed “to compensate a defendant for the...