Winestore Holdings v. Justin Vineyards & Winery LLC

WINESTORE HOLDINGS LLC, Plaintiff, v. JUSTIN VINEYARDS & WINERY LLC and THE WONDERFUL COMPANY LLC, Defendants.

3:18-cv-467-RJC-DCK

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF NORTH CAROLINA CHARLOTTE DIVISION

September 18, 2019

ORDER

THIS MATTER comes before the Court on Defendants' Motion to Dismiss, or in the Alternative, Stay, (Doc. No. 5); the Magistrate Judge's Memorandum and Recommendation ("M&R"), (Doc. No. 19); Plaintiff's Objections, (Doc. No. 20); Defendants' Response to Plaintiff's Objections, (Doc. No. 22); and Plaintiff's Reply in Support of Objections, (Doc. No. 21).

I. BACKGROUND

Plaintiff Winestore Holdings LLC ("Plaintiff" or "Winestore") is a wine retailer based in North Carolina. (Doc. No. 1, ¶ 10.) Plaintiff has five stores located throughout North Carolina and also offers its products online through its website. (Doc. No. 1, ¶ 10.) Defendant Justin Vineyards & Winery LLC ("Justin") is a wine retailer based in California. (Doc. No. 1, ¶ 11.) Justin offers its products in stores throughout the United States and online through its website. (Doc. No. 1, ¶ 11.) Justin is a subsidiary of Defendant The Wonderful Company LLC ("Wonderful" and collectively with Justin, "Defendants"). (Doc. No. 1, ¶ 11.)

Plaintiff filed U.S. Trademark Application Serial No. 86/851,094 for the mark OVERBROOK on December 16, 2015. (Doc. No. 1, ¶ 14.) Plaintiff's application was approved by the U.S. Patent and Trademark Office ("USPTO") for publication and published in the Official Gazette on May 23, 2017. (Doc. No. 1, ¶ 15.) Plaintiff has been using the OVERBROOK mark in connection with wine since at least April 4, 2016. (Doc. No. 1, ¶ 16.)

Defendants own the OVERLOOK® trademark, which is the subject of U.S. Trademark Registration No. 3,158,532. (Doc. No. 1, ¶ 17.) On April 25, 2017, Defendants' counsel sent an email to Plaintiff's counsel stating, in relevant part:

We have learned that your client has filed a trademark application for "overbrook," US Serial No. 86851094, for use with wine in International Class 33.

Our client believes that this trademark is too similar to its OVERLOOK® trademark and its use could be interpreted as intending to trade off of the goodwill of our client's distinctive trademarks, creating a likelihood of confusion, mistake, and deception as to your client's affiliation, connection, or association with JUSTIN among consumers and the trade. Such unauthorized uses may also dilute our client's trademarks by, among other things, blurring the distinction between JUSTIN and your client's company. These unauthorized actions, therefore, may constitute trademark infringement, false designation of origin and unfair competition under the laws of the United States and state law.

JUSTIN prefers to settle matters amicably where possible. Therefore, please contact me at your earliest convenience . . . .

(Doc. No. 1-2.)

On June 14, 2017, Plaintiff filed an action in this Court seeking a declaratory judgment that use of its OVERBROOK mark does not violate any law or any purported trademark rights of Defendants (the "First Action"). See WinestoreHoldings LLC v. Justin Vineyards & Winery LLC, No. 3:17-cv-00326, 2018 U.S. Dist. LEXIS 133669 (W.D.N.C. Aug. 8, 2018). Plaintiff's sole basis for filing the First Action was Defendants' April 25, 2017 email. See id.

On June 15, 2017, Justin filed a Notice of Opposition with the USPTO's Trademark Trial and Appeal Board ("TTAB"). (Doc. No. 1-3.) In its opposition, Justin contends that Plaintiff's registration and use of the OVERBROOK mark "is likely to cause confusion, mistake, or deception[.]" (Doc. No. 1-3, ¶ 13.) Justin alleges that "[t]he purchasing public is likely to be led to believe that wine or related goods bearing the OVERBROOK Mark emanate from or are . . . legitimately connected with or affiliated with [Justin], or that [Plaintiff] and its business are owned by or are affiliated with [Justin] and its OVERLOOK® branded products." (Doc. No. 1-3, ¶ 14.) Justin further states that it would be damaged from the resulting confusion if Plaintiff were permitted to use the OVERBROOK mark. (Doc. No. 1-3, ¶ 15.) Justin requests that the TTAB deny Plaintiff's application for registration of the OVERBROOK mark. (Doc. No. 1-3, ¶ 16.)

Defendants filed a motion to dismiss the First Action for lack of subject matter jurisdiction, alleging that their April 25, 2017 email was insufficient to meet the case or controversy requirement for a declaratory judgment action. Winestore Holdings LLC, 2018 U.S. Dist. LEXIS 133669, at *4. This Court granted Defendants' motion on August 8, 2018, concluding:

At the time of Plaintiff's complaint, only Defendants' email had been exchanged, and this support is insufficient to support a controversy that is substantial, "definite and concrete" and of "sufficient immediacy and reality" to require court involvement. For these reasons, the Court findsDefendants' email insufficient to meet the actual controversy requirement for a Declaratory Judgment action, and therefore GRANTS Defendants' Motion to Dismiss. The Court acknowledges the alleged dispute may later rise to meet the standards for Declaratory Judgment action, so the Plaintiff's Complaint is DISMISSED WITHOUT PREJUDICE.

Id. at *15-16.

On August 27, 2018—less than three weeks after this Court dismissed Plaintiff's First Action—Plaintiff initiated the instant declaratory judgment action. (Doc. No. 1.) Plaintiff again seeks a declaratory judgment that use of its OVERBROOK mark does not violate any law or any purported trademark rights of Defendants. (Doc. No. 1, ¶ 60.)

On October 2, 2018, Defendants moved to dismiss this action, contending that Defendants' April 25, 2017 email and TTAB opposition are insufficient to meet the case or controversy requirement for a declaratory judgment action. (Doc. No. 5.) Defendants alternatively request that the Court stay this action pending the outcome of the TTAB proceeding. In the M&R, the Magistrate Judge recommended that the Court grant Defendants' motion and dismiss this case. (Doc. No. 19, at 10.)

II. STANDARD OF REVIEW

A district court may assign dispositive pretrial matters, including motions to dismiss, to a magistrate judge for "proposed findings of fact and recommendations." 28 U.S.C. § 636(b)(1)(A)-(B). The Federal Magistrate Act provides that a district court "shall make a de novo determination of those portions of the report or specific proposed findings or recommendations to which objection is made." Id. at § 636(b)(1)(C); Camby v. Davis, 718 F.2d 198, 199 (4th Cir. 1983).

A motion to dismiss under Rule 12(b)(1) seeks to dismiss a complaint for lack of subject matter jurisdiction. Fed. R. Civ. P. 12(b)(1). The existence of subject matter jurisdiction is a threshold issue the court must address before considering the merits of the case. Jones v. Am. Postal Workers Union, 192 F.3d 417, 422 (4th Cir. 1999). "The subject matter jurisdiction of federal courts is limited and the federal courts may exercise only that jurisdiction which Congress has prescribed." Chris v. Tenet, 221 F.3d 648, 655 (4th Cir. 2000) (citing Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994)). Subject matter jurisdiction is so limited that federal "[c]ourts have an independent obligation to determine whether subject-matter jurisdiction exists, even when no party challenges it." Hertz Corp. v. Friend, 559 U.S. 77, 94 (2010). "No party can waive the defect, or consent to [subject matter] jurisdiction. No court can ignore the defect; rather a court, noticing the defect, must raise the matter on its own." Wisconsin Dep't of Corr. v. Schacht, 524 U.S. 381, 389 (1998) (citations omitted).

III. DISCUSSION

The Declaratory Judgment Act provides that "[i]n a case of actual controversy within its jurisdiction . . . any court of the United States . . . may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." 28 U.S.C. § 2201. For there to be a case or controversy justiciable for the Court, plaintiff must present a dispute that is "definite and concrete, touching the legal relations of parties having adverse legal interests." MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007). Thedispute must also be "real and substantial," admitting "of specific relief through a decree of a conclusive character, as distinguished from what the law would be upon a hypothetical state of facts." Id. The question for the Court is thus "whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment." Id.

Defendants argue that the April 25, 2017 email and TTAB opposition to Plaintiff's registration application are insufficient to meet the case or controversy requirement for a declaratory judgment action. Defendants cite several cases in which courts held that a dispute before the TTAB is insufficient, on its own, to establish an actual case or controversy for purposes of a declaratory judgment action. In response, Plaintiff argues that Justin's TTAB opposition objects not only to Plaintiff's registration, but also to Plaintiff's use of the OVERBROOK mark. According to Plaintiff, because the TTAB opposition objects to Plaintiff's use of the mark, the TTAB opposition and Defendants' email establish a sufficient case or controversy. The Magistrate Judge agreed with Defendants, concluding that "the existence of a dispute before the TTAB is not enough to establish a declaratory judgment action, and this Court has already decided that the underlying email from Defendants is not enough." (Doc. No. 19, at 10.)

Plaintiff makes three objections to the M&R. First, Plaintiff argues that the Magistrate Judge omitted material facts from the analysis. (Doc. No. 20, at 4.) Second, Plaintiff argues that the Magistrate Judge...