Me Renee LLC v. Elite World, S.A. ( 2016 )

NOT FOR PUBLICATION
FILED
UNITED STATES COURT OF APPEALS
DEC 29 2016
FOR THE NINTH CIRCUIT MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
ME RENEE LLC, a California limited No. 15-55182
liability company,
DC No. CV 14-03299 R
Plaintiff-Appellant,
v. MEMORANDUM*
ELITE WORLD, S.A., a Luxembourg
company; ELITE LICENSING
COMPANY, S.A., a Swiss company;
ELITE MODEL MANAGEMENT,
S.A.R.L., a French company; S.M.S.
FINANCE, S.A., a Luxembourg company;
PACIFIC GLOBAL MANAGEMENT,
S.A.R.L., a Luxembourg company;
PACIFIC CAPITAL, S.A.R.L., a
Luxembourg company,
Defendants-Appellees.
Appeal from the United States District Court
for the Central District of California
Manuel L. Real, District Judge, Presiding
Argued and Submitted December 9, 2016
Pasadena, California
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Before: TASHIMA and PAEZ, Circuit Judges, and FRIEDMAN,** District
Judge.
Me Renee appeals the dismissal of its breach of contract claim against Elite
Licensing Company, S.A. (“Elite”), as well as the dismissal with prejudice of its
fraud claim. We have jurisdiction under 28 U.S.C. § 1291, and we affirm in part,
reverse in part, and remand.
Elite is in the business of licensing the “Elite” trademarks for use in high-
fashion modeling and related goods and services. As part of a settlement, Elite
entered into a license agreement with LHG which “grants to LHG the right to act
as a so-called ‘Master Licensee’ of the trademarks registered by Elite solely for the
purpose of sub-licensing to third parties the right to create, open and operate Elite
Fashion Academies . . . .”
On October 12, 2010, the principals of LHG purportedly assigned all of their
rights in the license agreement with Elite to Me Renee, a company owned by
Renee Esebag. Neither LHG nor Me Renee informed Elite of the assignment or
sought its consent.
**
The Honorable Paul L. Friedman, United States District Judge for the
District of Columbia, sitting by designation.
2
Me Renee scouted several potential sublicensees to open Elite Fashion
Academies around the world, and submitted these proposed sublicenses to Elite for
approval. In her communications with Elite, Ms. Esebag initially represented
herself as an employee of LHG. Ms. Esebag apparently did not begin to sign her
correspondence as coming exclusively from Me Renee until early in 2012.
Elite rejected all sublicensees proposed by Me Renee. On October 23, 2013,
Me Renee filed a complaint against Elite and several related companies in
California state court, alleging breach of contract, breach of the covenant of good
faith and fair dealing, and fraud based on Elite’s continued rejection of Me Renee’s
proposed sublicensees. Before any of the defendants appeared, Me Renee
amended its complaint to add two new defendants. The First Amended Complaint
alleges the same claims as the original complaint.
The defendants removed the case to federal court. The district court
dismissed the claims against all defendants, except Elite, for lack of personal
jurisdiction.1 The district court also dismissed Me Renee’s claims for breach of the
covenant of good faith and fair dealing, and fraud as against Elite. The fraud claim
was dismissed with prejudice for failure to meet the heightened pleading
requirements of Federal Rule of Civil Procedure 9(b). The district court then
1
That ruling has not been appealed.
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granted summary judgment to Elite on the remaining breach of contract claim on
the ground that the license agreement is a trademark license; therefore, it could not
be assigned without Elite’s consent.
1. It is well established that a trademark license cannot be assigned
without the consent of the owner of the mark. See, e.g., In re N.C.P. Mkt’g Grp.,
Inc., 337 B.R. 230, 237 (Bankr. D. Nev. 2005), aff’d, 279 Fed. App’x 561 (9th Cir.
2008); 3 McCarthy on Trademarks and Unfair Competition § 18.43. The
agreement between Elite and LGH is a trademark license agreement. It grants the
“licensor” the right to sublicense trademarks to third parties. A license is required
to sublicense a trademark. Miller v. Glenn Miller Prods., Inc., 454 F.3d 975, 995
(9th Cir. 2006); 3 McCarthy on Trademarks and Unfair Competition § 18.43.
Because Elite never consented to the assignment of the license agreement to Me
Renee, the purported assignment is invalid. As Me Renee had no valid interest
under the agreement, the district court properly granted summary judgment to Elite
on Me Renee’s breach of contract claim.
2. Me Renee contends further that Elite effectively consented to the
assignment through some combination of estoppel and waiver. The evidence in the
record does not support either theory. A showing of knowledge of the assignment
by Elite is an essential element of both waiver and estoppel. Although there are
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scattered references to Me Renee in the record, these are insufficient to show that
Elite knew about the purported assignment.
3. Finally, Me Renee contends that the district court erred in dismissing
its fraud claim without leave to amend. “[D]ismissals for failure to comply with
Rule 9(b) should ordinarily be without prejudice.” Vess v. Ciba-Geigy Corp. USA,
317 F.3d 1097, 1108 (9th Cir. 2003). “[L]eave to amend should be granted if it
appears at all possible that the plaintiff can correct the defect.” Id. (internal
quotation marks omitted). Although Me Renee already had amended its complaint
once, that was before the case was removed to federal court and it has not had the
opportunity to amend its fraud claim under the Federal Rules.2 Under our
precedent, the district court is required to offer some reason or explanation why
amendment would be futile. See Sharkey v. O’Neal, 778 F.3d 767, 774 (9th Cir.
2015) (“A simple denial of leave to amend without any explanation . . . is subject
to reversal.” (citation and internal quotation marks omitted)). Here, the district
court offered no germane reason.
On remand, the district court shall grant Me Renee leave to amend its fraud
claim to comply with Rule 9(b).
2
At oral argument, counsel for Me Renee represented that it was able to
amend its fraud claim to comply with Rule 9(b).
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• ! •
For the foregoing reasons, the judgment of the district court is AFFIRMED
in part, REVERSED in part, and REMANDED for further proceedings
consistent with this disposition. Each party shall bear its own costs on appeal.
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