Storm Team Constr. v. Stormz U.S., LLC

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STORM TEAM CONSTRUCTION, INC., Plaintiff/Counter-Defendant, v. STORMZ USA, LLC, Defendant/Counter-Plaintiff.

No. 2:23-cv-256-JES-KCD

United States District Court, M.D. Florida, Fort Myers Division

October 26, 2023

OPINION AND ORDER

JOHN E. STEELE, SENIOR UNITED STATES DISTRICT JUDGE

This matter comes before the Court on review of counter-defendant Storm Team Construction, Inc.'s (Storm Team) Motion to Dismiss Counterclaims (Doc. #36) filed on August 18, 2023. Counterplaintiff Stormz USA, LLC (Stormz) filed a Response in Opposition (Doc. #37) on September 1, 2023 and, with permission from the Court, Storm Team filed a Reply (Doc #42) on September 20, 2023. For the reasons set forth below the motion is granted.

I.

This action involves Storm Team's two registered trademarks with the U.S. Patent and Trademark Office (PTO), identified by Registration Numbers 4,291,436 (the Word Mark) and 4,300,455 (the Design Mark).

The former trademarked ‘Storm Team Construction,' while the latter trademarked Storm Team's logo.^[1]

The PTO initially refused the trademarks under Section 2(e) of the Lanham Act, finding the marks “merely descriptive because it immediately conveys that applicant's services pertain to a group organized to work together in the art trade, or work of building relating to atmospheric disturbances manifested in strong winds accompanied by rain, snow, or other precipitation and often by thunder and lightning.” (Doc. #22, Ex. 3, p. 2); (Doc. #22, Ex. 9, p. 2.)^[2]

Storm Team filed a memorandum in response (the memo) in 2012, arguing that the words ‘storm', ‘team' or collectively ‘storm team' were not merely descriptive, but that even if they were, the trademarks should still be granted because ‘storm' and ‘storm team' are double entendres. (See id., Ex. 10.) The PTO subsequently issued the trademarks and their accompanying certificates in early 2013.

In April 2023, Storm Team filed a five-count Complaint against Stormz asserting claims for federal trademark infringement, unfair competition, dilution, violation of Florida's Deceptive and Unfair Trade Practices Act (FDUTPA), and Florida common law trademark infringement. (See Doc. #2.)

Stormz filed an Answer generally denying the allegations, and three Counterclaims: (1) Cancellation of the Word Mark for fraud; (2) Cancellation of the Design Mark for fraud; and (3) Violation of FDUTPA. The cancellation Counterclaims assert that the following statement from Storm Team's 2012 memo was fraudulent:

It is unlikely that the mark would immediately convey that Applicant's services were somehow related to storms [as in atmospheric disturbances with strong winds, rain, thunder, lightning, etc.]. Even if it did, the evidence does not show that Applicant's services have anything to do with storms, or that ‘storms' ‘teams' or ‘storm teams' are significant features of the services.

(Doc. #22, pp. 11, 14, ¶¶ 25, 45)(quoting id., Ex. 10, pp. 14, 38.) The cancellation Counterclaims are based on Stormz's theory that Storm Team's “Work Mark” and “Design Mark must be cancelled” because Storm Team's 2012 memo “fraudulently represented to the []PTO that storms are not a significant feature of its services in an effort to obtain a federal trademark registration.” (Id., pp. 13, 15, ¶¶ 39, 48.) The FDUPTA Counterclaim alleges Storm Team “is merely attempting to block competition within a similar field of work by improperly asserting rights to the term ‘STORM' and baselessly accusing STORMZ of trademark infringement.” (Id., p. 16, ¶ 55.)

Storm Team now moves “to dismiss all three Counterclaims [with prejudice] . . . under Federal Rule of Civil Procedure 12(b)(6) because they fail to state a claim upon which relief can be granted.” (Doc. #36, p. 1.) Stormz disagrees, asserting that the motion should be denied, but seeks the opportunity to amend in the alternative. (Doc. #37, p. 8.)

II.

Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). As previously noted by the undersigned in Pk Studios, Inc.,

In evaluating a Rule 12(b)(6) motion seeking to dismiss a counterclaim for failing to comply with Rule 8(a), the Court must accept as true all factual allegations in the counterclaim complaint and “construe them in the light most favorable to the [counterclaim-]plaintiff.” Baloco ex rel. Tapia v. Drummond Co., 640 F.3d 1338, 1345 (11th Cir. 2011). However, mere “[l]egal conclusions without adequate factual support are entitled to no assumption of truth.” Mamani v. Berzain, 654 F.3d 1148, 1153 (11th Cir. 2011) (citations omitted).

By extension, “[a] motion to dismiss a counterclaim pursuant to Federal Rule of Civil Procedure 12(b)(6) is evaluated in the same manner as a motion to dismiss a complaint.” Sticky Holsters, Inc. v. Ace Case Mfg., LLC, No. 2:15-CV-648-FTM-29CM, 2016 WL 1436602, at *6 (M.D. Fla. Apr. 12, 2016) (quoting Geter v. Galardi S. Enters., Inc., 43 F.Supp.3d 1322, 1325 (S.D. Fla. 2014)). Thus, to avoid dismissal under Rule 12(b)(6), each counterclaim must contain sufficient factual allegations to “raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). To do so requires “enough facts to state a claim to relief that is plausible on its face.” Id. at 570.

This plausibility pleading obligation demands “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Id. at 555 (citation omitted); see also Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (“Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.”); Chaparro v. Carnival Corp., 693 F.3d 1333, 1337 (11th Cir. 2012) (“Factual allegations that are merely consistent with a defendant's liability fall short of being facially plausible.” (citation omitted)). Instead, the counterclaim complaint must contain enough factual allegations as to the material elements of each claim to raise the plausible inference that those elements are satisfied, or, in layman's terms, that the counterclaim-plaintiff has suffered a redressable harm for which the counterclaimdefendant may be liable.

Pk Studios, Inc. v. R.L.R. Invs., LLC, No. 2:15-CV-389-FTM-99CM, 2016 WL 4529323, at *8 (M.D. Fla. Aug. 30, 2016).

Federal Rule of Civil Procedure 9(b) imposes a heightened pleading requirement for a fraud claim. A plaintiff “must state with particularity the circumstances constituting fraud or mistake.” Fed.R.Civ.P. 9(b). That “means identifying the who, what, when, where, and how of the fraud alleged.” Omnipol, A.S. v. Multinational Def. Servs., LLC, 32 F.4th 1298, 1307 (11th Cir. 2022)(citing Mizzaro v. Home Depot, Inc., 544 F.3d 1230, 1237 (11^th Cir. 2008)). More specifically, the complaint must allege: “(1) the precise statements, documents, or misrepresentations made; (2) the time and place of and person responsible for the statement; (3) the content and manner in which the statements misled the Plaintiffs; and (4) what the Defendants gained by the alleged fraud.” Ambrosia Coal & Const. Co. v. Pages Morales, 482 F.3d 1309, 1316-17 (11th Cir. 2007) (citing Brooks v. Blue Cross & Blue Shield of Florida, Inc., 116 F.3d 1364, 1380-81 (11th Cir. 1997)).

III.

Storm Team presents two arguments for dismissal of the cancellation Counterclaims, asserting (1) they are barred by the statute of limitations, and (2) the elements are not sufficiently pled. Storm Team also argues that the FDUTPA claim should be dismissed for failure to state a claim.

A. The cancellation Counterclaims are not barred by the statute of limitations

Storm Team argues that federal law is silent as to a statute of limitations for cancellation of trademarks for fraud, so the Court should look to Florida law and impose its four-year-statute of limitations for fraud claims. (Doc. #36, pp. 12-13)(citing Fla. Stat. §95.11(3)(j)).

Stormz counters that federal law is not silent, since 15 U.S.C. § 1064(3) expressly states a fraudulently obtained trademark can be cancelled at any time. (Doc. #37, p. 6.) The Court agrees with Stormz.

“A Rule 12(b)(6) motion to dismiss for failure to state a claim is an appropriate method for raising a statute of limitations defense,” Mann v. Adams Realty Co., 556 F.2d 288, 293 (5th Cir. 1977)^[3], but a district court can dismiss the claim “only if it is apparent from the face of the complaint that the claim is time-barred.” United States ex rel. Hunt v. Cochise Consultancy, Inc., 887 F.3d 1081, 1085 (11th Cir. 2018), aff'd, 139 S.Ct. 1507 (2019)(quoting La Grasta v. First Union Sec., Inc., 358 F.3d 840, 845 (11th Cir. 2004)). The Eleventh Circuit has held that “[a]t any time, a party may petition to cancel a registered mark on the ground that the registration was procured by fraud, even if that mark has become incontestable.” Sovereign Mil. Hosp. Order of St. John v. Florida Priory of the Knights Hosp., 702 F.3d 1279, 1289 (11th Cir. 2012)(citing 15 U.S.C. §§ 1064(3), 1119); see also Park 'N Fly, Inc. v. Dollar Park & Fly, Inc., 469 U.S. 189, 202 (1985)(“A mark may be canceled at any time for certain specified grounds, including that it was obtained fraudulently or has become generic.” (citing 15 U.S.C. § 1064)). Therefore, Stormz's Counterclaims seeking the cancellation of Storm Team's trademarks because they were allegedly procured by fraud are not time-barred.

B. The cancellation Counterclaims are not sufficiently pled

“The Lanham Act gives federal courts the authority to cancel trademarks that the PTO has registered.” Royal Palm Properties, LLC v. Pink Palm Properties, LLC, 950 F.3d 776, 782 (11th Cir. 2020)(citing 15 U.S.C. § 1119). “In order to...