Paleteria La Michoacana, Inc. v. Productos Lacteos Tocumbo S.A. De C.V. , 247 F. Supp. 3d 76 ( 2017 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
PALETERIA LA MICHOACANA, INC. et al., :
:
Plaintiffs & Counter-Defendants, : Civil Action No.: 11-1623 (RC)
:
v. : Re Document Nos.: 336, 340, 345,
: 346, 350, 351,
PRODUCTOS LACTEOS TOCUMBO S.A. : 358
DE C.V., :
:
Defendant & Counter-Claimant. :
MEMORANDUM OPINION
GRANTING PLAINTIFFS’ MOTION TO SUBSTITUTE AND JOIN SUCCESSOR IN INTEREST;
DENYING PLAINTIFFS’ MOTION TO AMEND THE JUDGMENT; DENYING DEFENDANT’S MOTION
FOR NEW TRIAL; DENYING DEFENDANT’S MOTION TO AMEND FINDINGS AND TO AMEND THE
JUDGMENT; GRANTING PLAINTIFFS’ OPPOSITION AND OBJECTIONS TO DEFENDANT’S BILL OF
COSTS, CONSTRUED AS A MOTION; GRANTING IN PART AND DENYING IN PART DEFENDANT’S
MOTION FOR LEAVE TO FILE SURREPLY; DENYING DEFENDANT’S REQUEST FOR HEARING
I. INTRODUCTION
This case arises from the long-running dispute between Plaintiffs/Counter-Defendants
Paleteria La Michoacana, Inc. and Paleteria La Michoacana (Sub), Inc. (collectively, “PLM”)1
and Defendant/Counter-Claimant Productos Lacteos Tocumbo S.A. De C.V. (“PROLACTO”).
Specifically, this litigation concerns the parties’ rights to use various registered and unregistered
trademarks when selling frozen confections in the United States.
1
For the reasons explained below, the Court will grant PLM’s motion to substitute an
additional PLM-related entity as the sole Plaintiff in this action and join that same entity as an
additional Counter-Defendant. See infra Part III. The Court’s references to “PLM” refer to all
PLM entities, collectively. The Court will refer to specific PLM entities where the distinction is
relevant.
After resolving a number of preliminary issues, the Court conducted a bench trial over
the course of thirteen days beginning on September 14, 2015 and ending on October 1, 2015.
On May 27, 2016, the Court issued extensive Findings of Facts and Conclusions of Law resolving
the remaining issues in the case. After trial, the parties filed a number of post-trial motions.
For the reasons explained more fully below, the Court will grant PLM’s motion to
substitute another PLM-related entity as the sole Plaintiff in this action and join that same entity
as an additional Counter-Defendant. The Court will also deny each parties’ request to amend the
findings and judgment and deny PROLACTO’s motion for a new trial. Finally, upon
consideration of PROLACTO’s bill of costs and PLM’s opposition, the Court will order both
parties to bear their own costs.
II. FACTUAL AND PROCEDURAL BACKGROUND
The Court’s previous Findings of Fact and Conclusions of Law set for the factual and
procedural history of this case in detail. See generally Paleteria La Michoacana, Inc. v.
Productos Lacteos Tocumbo S.A. DE C.V. (PLM VI), 188 F. Supp. 3d 22 (D.D.C. 2016).2
The Court assumes the parties’ familiarity with the background set forth in its earlier opinion.
Nevertheless, the Court will briefly summarize the facts and procedural posture of this case, as
described in the Court’s previous opinion. See id. For clarity, the Court will address the facts
relevant to the pending post-trial motions in the context of each of the specific motions.
2
Where the Court cites prior reported dispositions in this matter, those citations use
chronological numbering for ease of reference. These numbers do not correspond to the similar
references found in the Court’s Findings of Fact and Conclusions of Law, which included
citations to a different set of prior dispositions. See PLM VI, 188 F. Supp. 3d at 30 (referring to
prior dispositions in this case as PLM I, PLM II, and PLM III).
2
A. Brief Factual Overview
PLM and PROLACTO are in the business of manufacturing and selling “paletas” and
other frozen treats. Paletas are a style of ice cream bars and popsicles originating in Mexico that
are traditionally made from fruit, spices, and nuts.
PROLACTO is a Mexican company that the Andrade Malfavon family founded in 1992.
The Andrade Malfavon family continues to own PROLACTO. The company traces its history to
Tocumbo, a city in the Mexican state of Michoacán, in the 1940s, which is the purported origin
of the paleta and the shops, known as “paleterias,” that make and sell them.3 PROLACTO
primarily does business in the United States through licensing agreements with various members
of the Andrade Malfavon family who own and operate individual paleterias in certain markets,
namely, Florida, Texas, Northern California, and North Carolina. Until relatively recently,
PROLACTO did not directly own any paleterias in the United States or otherwise directly sell its
products to any consumers in the United States.
PLM traces its history to at least as early as 1991, when two brothers, Mexican
immigrants Ignacio Gutierrez and Ruben Gutierrez, began selling paletas out of pushcarts in
Northern California using the name “La Michoacana.” That name literally means “the woman
from the state of Michoacán” in Spanish. The partnership dissolved in 1999, and Ignacio
Gutierrez operated the business as a sole proprietorship for several years before incorporating in
California. PLM’s business has grown significantly since its beginnings as a pushcart operation
in Northern California. PLM currently manufactures its products in a factory in Modesto,
3
Michoacán one of the thirty-one states that, along with the Federal District, comprise
the thirty-two Federal Entities of Mexico. It is located along the coast in western Mexico.
Michoacán is home to a sizeable population of Purépecha people, whose women’s traditional
folkloric dress commonly consists of hair braids on each side, a white blouse, a pink skirt, and
sandals. The “Indian Girl” designs at issue in this matter reflect that traditional dress.
3
California and distributes its products throughout various parts of the United States. PLM
distributes its products to large-scale retailers such as Costco, Wal-Mart, and Walgreens, as well
as Hispanic grocery stores such as El Super and Vallarta and a variety of other retail outlets.
Both PLM and PROLACTO use a variety of trademarks when selling their products in
the United States. This litigation concerns the dispute between PLM and PROLACTO over the
right to use those marks. The parties sharply dispute, among many other things, which of them
first used those marks in the United States, and each party accuses the other of engaging in bad
faith in a variety of different ways.
B. Brief Procedural History
The procedural history of this matter spans roughly a decade. The Court briefly restates
that history here. See also PLM VI, 188 F. Supp. 3d at 28 (setting forth procedural history).
1. TTAB Proceedings
This dispute began in earnest in 2007 when PROLACTO filed a petition with the
Trademark Trial and Appeal Board (“TTAB”), a body of the United States Patent and Trademark
Office (“USPTO”), to cancel PLM’s U.S. Registration No. 3,210,304 for the mark titled “LA
INDITA MICHOACANA.” See Pet. Cancellation, TTAB Dkt. 1.4 On May 20, 2011, the TTAB
granted PROLACTO’s petition for cancellation of PLM’s LA INDITA MICHOACANA mark,
concluding that PROLACTO had established priority of use and likelihood of confusion with
respect to several of its asserted, unregistered marks. See generally Productos Lacteos Tocumbo
S.A. De C.V. v. Paleteria La Michoacana, Inc., 98 U.S.P.Q.2d 1921 (T.T.A.B. 2011). The
TTAB denied PLM’s motion for reconsideration on July 13, 2011. See TTAB Dkt. 115.
4
Pursuant to 15 U.S.C. § 1071(b)(3), the Court admitted the record of the underlying
proceeding before the TTAB in this case at the joint request of the parties. See Min. Order (Nov.
18, 2013); Joint Status Report at 3–5, ECF No. 98.
4
2. The Present Action
PLM brought this action pursuant to the Lanham Act, 15 U.S.C. § 1071(b), on
September 8, 2011. See Compl., ECF No. 1. The operative Complaint is now the Second
Amended Complaint, which was filed on June 11, 2012.5 See 2d Am. Compl., ECF No. 40.
PLM’s Second Amended Complaint alleges four causes of action: Count I seeks reversal of the
TTAB’s decision to cancel the registration of PLM’s LA INDITA MICHOACANA mark and
denial of PROLACTO’s cancellation petition; Count II seeks a declaration that there is no
likelihood of confusion between PLM’s LA INDITA MICHOACANA mark and various marks
asserted by PROLACTO on the basis of their common usage of the word “MICHOACANA”;
Count III alleges that PROLACTO’s use of its Indian Girl mark infringes three of PLM’s
registered marks under 15 U.S.C. § 1114, including its LA INDITA MICHOACANA mark; and
Count IV seeks to cancel PROLACTO’s registration of certain marks containing the name
“LA FLOR DE MICHOACAN” if a likelihood of confusion is found between those marks and
PLM’s marks. See 2d Am. Compl. ¶¶ 42–61.
PROLACTO, in turn, filed seven counterclaims. Specifically, Counterclaim Count I
alleges that PLM infringed PROLACTO’s registered LA FLOR DE MICHOACAN and design
5
Earlier in the litigation, the Court denied PROLACTO’s motion for a temporary
restraining order to prevent PLM from infringing on PROLACTO’s trademarks during a
convention for ice cream distributors and vendors. See Paleteria La Michoacana, Inc. v.
Productos Lacteos Tocumbo S.A. de C.V. (PLM I), 901 F. Supp. 2d 54 (D.D.C. 2012). The Court
also denied PROLACTO’s motion to strike PLM’s defenses to PROLACTO’s counterclaims.
See Paleteria La Michoacana v. Productos Lacteos (PLM II), 905 F. Supp. 2d 189 (D.D.C.
2012). In a later opinion, the Court denied PROLACTO’s motion seeking a protective order
requiring that the deposition of its corporate designees take place in or near Mexico City. See
Paleteria La Michoacana, Inc. v. Productos Lacteos Tocumbo S.A. de C.V. (PLM III), 292
F.R.D. 19, 21 (D.D.C. 2013).
5
mark under 15 U.S.C. § 1114(1);6 Counterclaim Count II alleges trademark infringement, unfair
competition, passing off, false advertising, false association, and false designation in violation of
15 U.S.C. § 1125(a); Counterclaim Count III alleges trademark infringement of the District of
Columbia’s common law; Counterclaim Count IV alleges trademark dilution under 15 U.S.C.
§ 1125(c); and Counterclaim Counts V, VI, and VII seek cancellation of two of PLM’s registered
marks due to fraud and abandonment. See Ans. 2d Am. Compl. & Countercls. ¶¶ 39–87, ECF
No. 41.
The parties filed cross-motions for summary judgment after the close of discovery and
the Court granted in part and denied in part both motions. See generally Paleteria La
Michoacana, Inc. v. Productos Lacteos Tocumbo S.A. De C.V. (PLM IV), 69 F. Supp. 3d 175
(D.D.C. 2014). The Court then granted in part and denied in part PLM’s motion to revise that
Memorandum Opinion and Order, see Mem. & Order, ECF No. 174, and denied PROLACTO’s
motion for reconsideration, see Paleteria La Michoacana, Inc. v. Productos Lacteos Tocumbo
S.A. De C.V. (PLM V), 79 F. Supp. 3d 60 (D.D.C. 2015). The Court issued a First Revised Order
on February 3, 2015. See First Revised Order, ECF No. 175.
The Court’s Findings of Fact and Conclusions of law set forth in detail which claims and
counterclaims survived summary judgment. See PLM VI, 188 F. Supp. 3d at 30. In brief, the
Court denied summary judgment to both parties on Count I of PLM’s Second Amended
Complaint and neither party sought summary judgment on Counts II, III, and IV. Id. Turning to
PROLACTO’s counterclaims, the Court granted summary judgment in favor of PLM on
Counterclaim Counts I, III, IV, V, VI, and VII. Id. at 30–31. With regard to the claims under
6
The relevant mark is PROLACTO’s U.S. Registration No. 3,249,113. See PLM IV,
69 F. Supp. 3d at 196–97 (discussing Counterclaim I and the including an image of the relevant
marks).
6
trademark infringement, false designation of origin, passing off, and unfair competition in
Counterclaim Count II, the Court entered partial judgment in favor of PLM limiting this claim to
the Houston, Texas market and denied summary judgment to both parties as to whether
PROLACTO has established secondary meaning for its marks. Id. at 30. The Court also
resolved a number of issues related to the false advertising claims found in Counterclaim Count II,
but left others to be resolved at trial. Id. at 30–31.
After the Court narrowed the issues through summary judgment, the case proceeded to
trial. The bench trial took place over thirteen days between September 14, 2015 and October 1,
2015. After considering the parties proposed findings of fact and conclusions of law, as well as
other motions filed during or after the trial, the Court issued its extensive Findings of Fact and
Conclusions of Law. See generally PLM VI, 188 F. Supp. 3d 22. In brief, the Court entered
judgment in favor of PROLACTO as to Count I of PLM’s Second Amended Complaint and
entered judgment in favor of PLM as to Counts II and III. The Court dismissed Count VI as
moot. Finally, the Court entered judgment in favor of PLM as to PROLACTO’s Counterclaim
Count II.
3. Motions Pending Before the Court
After the trial, but shortly before the Court issued its Findings of Fact and Conclusions of
Law, PLM filed a motion to substitute a PLM-related entity as the sole Plaintiff and to add that
entity as an additional Counter-Defendant because of the transfer of the marks at issue in this
case. See generally Pls.’ Mot. Sub. & Join Successor in Interest (“PLM Mot. Sub.”), ECF No.
336. After the Court issued its Findings of Fact and Conclusions of Law, PLM filed a motion to
alter or amend the Court’s judgment on Complaint Count I that affirmed the cancellation of
PLM’s U.S. Registration No. 3,210,304. See generally Pls.’ Mot. Amend J. (“PLM’s Mot.
7
Amend”), ECF No. 340. After briefing on that motion, PROLACTO filed a motion seeking
leave to file a surreply to address issues raised in PLM’s reply brief. See Def.’s Mot. Leave File
Surreply or, in the Alternative, Mot. Strike (“PROLACTO’s Mot. Surreply”), ECF No. 351.
PROLACTO filed a motion for a new trial based on the discovery of PLM’s registration and
ownership of the domain name “laflordemichoacan.com,” see generally Def.’s Mot. New Trial
(“PROLACTO’s Mot. New Trial”), ECF No. 345, and a motion to amend the Court’s findings
and legal conclusions with regard to the incontestability of PLM’s Indian Girl Design marks, see
generally Def.’s Mot. Amend Findings & Amend J. (“PROLACTO’s Mot. Amend”), ECF No.
346. PROLACTO also filed a bill of costs, see generally PROLACTO’s Bill of Costs, ECF No.
343, which PLM objected to, see generally Pls.’ Opp’n & Objs. Def.’s Bill of Costs (“PLM’s
Opp’n Bill of Costs”), ECF No. 350.
After the close of briefing on its motion for a new trial and its motion to amend,
PROLACTO requested a hearing to address the pending motions. See Def.’s Req. Hr’g, ECF
No. 358. PROLACTO argues that “oral argument may assist the Court in evaluating
PROLACTO’s” motions. Def.’s Req. Hr’g ¶ 9. PLM responds that it “do[es] not believe that a
hearing is necessary.” See Pls.’ Resp. Def.’s Req. Hr’g at 1–2, ECF No. 359. Nevertheless,
PLM requests that the Court also hear oral argument on PLM’s motion to amend if it decides to
grant a hearing. See Pls.’ Resp. Def.’s Req. Hr’g at 1–2. The allowance of oral argument is
“within the discretion of the Court.” See LCvR 7(f). The Court finds that there is no need for
oral argument on the motions. The parties have briefed the pending motions extensively and the
written arguments provide a sufficient basis for the Court to rule. The Court therefore denies
PROLACTO’s request for a hearing.
8
III. PLM’S MOTION TO SUBSTITUTE PARTIES
The Court first turns to PLM’s motion pursuant to Federal Rule of Civil Procedure 25(c)
to substitute PLM Operations, LLC (“PLM Operations”) as the sole Plaintiff and to join that
entity as an additional Counter-Defendant. See generally PLM Mot. Sub. PROLACTO opposes
the motion to substitute and join PLM Operations. See generally Def.’s Opp’n Pls.’ Mot. Sub. &
Join Successor in Interest (“PROLACTO’s Opp’n Mot. Sub.”), ECF No. 341. For the reasons
set forth below, the Court will grant PLM’s motion, substitute PLM Operations as the sole
Plaintiff, and join the same entity as an additional Counter-Defendant.
A. Legal Standard
Federal Rule of Civil Procedure 25(c) provides that, “[i]f an interest is transferred, the
action may be continued by or against the original party unless the court, on motion, orders the
transferee to be substituted in the action or joined with the original party.” Fed. R. Civ. P. 25(c).
The decision to grant or deny a Rule 25(c) motion is a matter within the district court’s
discretion. See Burka v. Aetna Life Ins. Co., 87 F.3d 478, 482 (D.C. Cir. 1996); see also Bauer v.
Commerce Union Bank, 859 F.2d 438, 441 (6th Cir. 1988) (“[O]rders [granting Rule 25(c)
substitution] are reviewed only for abuse of discretion.”), cert. denied, 489 U.S. 1079 (1989);
Prop-Jets, Inc. v. Chandler, 575 F.2d 1322, 1324 (10th Cir. 1978) (“Substitution of a successor
in interest or its joinder as an additional party under Rule 25(c) is generally within the sound
discretion of the trial court.”).
The primary basis for deciding the motion is whether substitution would “facilitate the
conduct of the litigation.” Comm’ns Imp. Exp., S.A. v. Republic of Congo, 118 F. Supp. 3d 220,
231 (D.D.C. 2015) (quoting Citibank v. Grupo Cupey, Inc., 382 F.3d 29, 32 (1st Cir. 2004)); see
also 7C Charles Wright & Arthur Miller, Federal Practice & Procedure § 1958 (3d ed. 2016)
9
(noting the trial court’s discretion). This focus on “considerations of convenience and
economy . . . prevails because Rule 25(c) has no bearing on the substantive relationship between
the parties.” Comm’ns Imp. Exp., 118 F. Supp. 3d at 231. Regardless of the transfer in interest
and subsequent substitution, “[t]he merits of the case . . . are still determined vis-à-vis the
originally named parties.” Minn. Mining & Mfg. Co. v. Eco Chem, Inc., 757 F.2d 1256, 1263
(Fed. Cir. 1985); see also In re Covington Grain Co., Inc., 638 F.2d 1362, 1364 (5th Cir. 1981)
(“Rule 25(c) is not designed to create new relationships among parties to a suit but is designed to
allow the action to continue unabated when an interest in the lawsuit changes hands.”).
Rule 25(c) places no time limit on a party seeking substitution or joinder. See Fed. R.
Civ. P. 25(c); see also Luxliner P.L. Exp., Co. v. RDI/Luxliner, Inc., 13 F.3d 69, 71 (3d Cir. 1993);
7C Charles Wright & Arthur Miller, Federal Practice & Procedure § 1958 (3d ed. 2016) (“Since
Rule 25(c) is wholly permissive there is no time limit on moving to substitute under its
provisions.”).
B. Analysis
Pursuant to Federal Rule of Civil Procedure 25(c), PLM has moved to substitute PLM
Operations as the sole Plaintiff and to join that entity as an additional Counter-Defendant. See
generally PLM Mot. Sub. PLM argues that PLM (Sub) transferred the marks at issue in this case
to PLM Operations on April 1, 2016. PLM Mot. Sub at 2. Thus, PLM argues, PLM Operations
became the real party in interest and the Court should substitute PLM Operations as the sole
Plaintiff. PLM Mot. Sub at 2. To avoid any prejudice to PROLACTO, PLM states that PLM
Operations volunteers to join the case as an additional Counter-Defendant. PLM Mot. Sub at 2.
PROLACTO opposes the motion to substitute and join PLM Operations. See generally
PROLACTO’s Opp’n Mot. Sub. PROLACTO argues that a purported successor in interest must
10
show, not only a valid transfer of interest, but also “that the successor will be liable for any
wrongs of its predecessor.” PROLACTO’s Opp’n Mot. Sub at 1. PROLACTO argues that PLM
has not shown that “PLM Operations has acquired the liabilities of PLM (Sub).” PROLACTO’s
Opp’n Mot. Sub at 2. PROLACTO states that the Court should permit limited discovery on the
purported transfer of the relevant marks and hold an evidentiary hearing. PROLACTO’s Opp’n
Mot. Sub at 2. In the alternative, PROLACTO argues that the Court should deny the motion.
PROLACTO’s Opp’n Mot. Sub at 2.
1. The Transfer of the Relevant Marks
Before trial, PLM filed a motion pursuant to Rule 15 of the Federal Rules of Civil
Procedure seeking leave to correct the caption in this case. Specifically, PLM requested leave to
correct the case caption to replace “Paleteria La Michoacana, LLC” as a Plaintiff and Counter-
Defendant with “Paleteria La Michoacana (Sub), Inc.” in order to reflect a change in its
corporate form. See Pls.’ Mot. Leave Correct Case Caption, ECF No. 210. The Court granted
that motion on March 31, 2016. See Mem. & Order, ECF No. 333.
The following day, PLM (Sub) sold “substantially all of its assets” to PLM Operations,
which is a limited liability company organized under the laws of the state of Delaware. See PLM
Mot. Sub. at 3; see also PLM Mot. Sub., Decl. of Robert J. Spigner (“Spigner Decl.”) ¶¶ 2–3,
ECF No. 336-1; Spigner Decl., Ex. A (providing the State of Delaware Certificate of Formation
and a copy of the Delaware Secretary of State’s website listing relevant details of PLM
Operations). PLM has provided the Bill of Sale, General Assignment and Conveyance, which
sets forth the details of the transaction. See Spigner Decl., Ex. B. The transferred assets
included the marks at issue in this case, including U.S. Registration Numbers 2,905,172,
2,968,652, and 3,210,304. See Spigner Decl. ¶ 3; see also Spigner Decl., Ex. B, schd. 1, annex D.
11
Also on April 1, 2016, PLM (Sub) and PLM Operations executed a Trademark
Assignment Agreement memorializing the transfer of the marks. See Spigner Decl. ¶ 4; see also
Spigner Decl., Ex. C (Trademark Assignment Agreement). PLM has recorded that agreement
with the USPTO. See Spigner Decl. ¶ 4. According to the terms of the agreement, PLM (Sub)
assigned and transferred to PLM Operations “all of Assignor’s right, title and interest in and to
the Trademarks, together with all goodwill associated with said Trademarks, and the right to sue
and recover for, and the right to profits or damages due or accrued, arising out of or in
connection with any and all past, present or future infringements or dilution of or damage to the
Trademarks or the associated goodwill.” Spigner Ex. C at 20.7 PLM has also provided copies of
entries on the USPTO’s website that reflect PLM Operations as the listed owner of the relevant
marks. See Spigner Decl. ¶ 5; see also Spigner Decl., Ex. D.
As PLM correctly states, federal registration of a trademark is prima facie evidence that
the registrant is the proper owner of that trademark. See 15 U.S.C. § 1057(b) (“A certificate of
registration of a mark . . . shall be prima facie evidence . . . of the owner’s ownership of the
mark.”); see also id. § 1057(d) (noting that a certificate of registration may be issued to the
assignee of the application, “but the assignment must first be recorded in the [USPTO]”).
PROLACTO has not presented any evidence undermining the Spigner affidavit or the
documentary evidence put forth by PLM. In fact, PROLACTO appears to acknowledge that
PLM “may have shown that certain of the relevant interests have been transferred.”
PROLACTO’s Opp’n Mot. Sub. at 10. In light of the extensive documentary evidence of a
7
Because Exhibit C does not include separate pagination, the Court will refer to the page
numbers created by the Court’s Electronic Case Filing system.
12
transfer and the prima facie validity of the registration in the name of PLM Operations, the Court
finds that PLM (Sub) transferred the marks at issue in this case to PLM Operations.
2. PROLACTO’s Reliance on the Doctrine of Successor Liability
Instead of focusing on the transfer of assets, including the relevant marks, PROLACTO
argues that PLM has “not provided any, much less sufficient, evidence that PLM Operations has
acquired the liabilities of PLM (Sub).” PROLACTO’s Opp’n Mot. Sub. at 2 (emphasis added);
see also PROLACTO’s Opp’n Mot. Sub. at 1 (“[T]he Court must determine that the successor
will be liable for any wrongs of its predecessor.”). PROLACTO urges the Court to rely on the
doctrine of successor liability to determine whether PLM (Sub) has transferred a valid interest to
PLM Operations for the purposes of Rule 25. PROLACTO’s Opp’n Mot. Sub. at 7. Successor
liability is an exception to the general rule that “a successor corporation is not liable for the
wrongs of its predecessor.” Material Supply Int’l, Inc. v. Sunmatch Indus. Co., Ltd., 62 F. Supp.
2d 13, 23 (D.D.C. 1999).8 Under the four traditional exceptions, a successor corporation will be
liable where: “(1) there is an express or implied agreement to assume the liabilities; (2) the
transaction amounts to a consolidation or merger; (3) the successor entity is a mere continuation
or reincarnation of the predecessor entity; or (4) the transaction was fraudulent, not made in good
faith, or made without sufficient consideration.” Id. (quoting Bingham v. Goldberg, Marchesano,
637 A.2d 81, 89–90 (D.C. 1994)).
PROLACTO’s reliance on successor liability is misplaced. Rule 25(c) asks simply
whether an “interest is transferred.” Fed. R. Civ. P. 25(c). PROLACTO’s confusion appears to
8
PROLACTO argues that Delaware law should govern the analysis of successor liability,
but states that “the substantive law is essentially the same in the District of Columbia and
Delaware.” PROLACTO’s Opp’n Mot. Sub. at 8 n.5. Because the Court finds that the doctrine
of successor liability is not relevant to this case, there is no need to decide with state law applies.
13
arise from cases where a party seeks to use Rule 25(c) to force an unwilling entity into the
litigation. For instance, PROLACTO cites Select Creations, Inc. v. Paliafito America, Inc., 852
F. Supp. 740 (E.D. Wis. 1994) and Panther Pumps & Equipment Co. v. Hydrocraft, Inc., 566
F.2d 8 (7th Cir. 1977) for the principle that the court must consider the substantive law of
successor liability before approving a substitution. See PROLACTO’s Opp’n Mot. Sub. at 7.
In both cases, however, the court considered successor liability only because a party was
attempting to bring an unwilling successor before the court. See Select Creations, 852 F. Supp.
at 766 (granting a motion to substitute unwilling non-parties); Panther Pumps, 566 F.2d at 28
(approving substitution of unwilling party).
This case does not fit that pattern. Instead, PLM Operations is volunteering to join the
case, both as the sole Plaintiff and as an additional Counter-Defendant. See PLM Mot. Sub. at 6.
This distinction is longstanding. For instance, in McComb v. Row River Lumber Co., which
PROLACTO cites in its brief, the Ninth Circuit refused to bring an unwilling defendant into the
case. 177 F.2d 129, 130 (9th Cir. 1949). The court explained that it had allowed substitutions
“in cases where the plaintiff below has transferred his interest in the subject matter of the
action,” but that, “where substitution is sought in this court for a defendant below . . . we have
declined to allow a substitution.” Id.
This distinction, found in other cases, reflects the due process concerns raised by forcing
a party to step into the shoes of another against their will, perhaps even after a court has entered a
judgment. See, e.g., Luxliner P.L. Exp., Co. v. RDI/Luxliner, Inc., 13 F.3d 69, 72 (3d Cir. 1993)
(considering third party’s due process interests); Panther Pumps, 566 F.2d at 24 (same). Those
fairness concerns are not at issue in a case like this, where a plaintiff has transferred an interest in
the case and voluntarily seeks substitution. See, e.g., Burka v. Aetna Life Ins. Co., 87 F.3d 478,
14
480 (D.C. Cir. 1996) (making no mention of successor liability or due process where all parties
agreed that a third party should be a party to the suit). Because PLM Operations seeks to join
this action voluntarily, the Court’s analysis must focus on whether “an interest is transferred,”
Fed. R. Civ. P. 25(c), not whether that interest comes with liabilities attached.
3. Substitution and Joinder Will Facilitate Litigation
The proper criteria for deciding a motion under Rule 25(c) is whether substitution would
“facilitate the conduct of the litigation.”9 Comm’ns Imp. Exp., S.A. v. Republic of Congo, 118 F.
Supp. 3d 220, 231 (D.D.C. 2015) (quoting Citibank v. Grupo Cupey, Inc., 382 F.3d 29, 32 (1st
Cir. 2004)); see also 7C Charles Wright & Arthur Miller, Federal Practice & Procedure § 1958
(3d ed. 2016) (“An order of joinder is merely a discretionary determination by the trial court that
the transferee’s presence would facilitate the conduct of the litigation.”). Any substitution or
joinder under Rule 25(c) does not change the substance of the litigation, but simply allows the
case to go forward when an interest changes hands.10 See In re Covington Grain Co., Inc., 638
F.2d 1362, 1364 (5th Cir. 1981). The Court finds that substitution is appropriate here.
9
Substitution is not mandatory under Rule 25(c). PLM argues that refusing to substitute
PLM Operations would be an abuse of discretion. See Pl.’s Reply Supp. Mot. Sub. (“PLM’s
Reply Mot. Sub.”) at 13, ECF No. 342. PLM’s interpretations of the cases it cites are overbroad.
For instance, in ELCA Enterprises, Inc. v. Sisco Equipment Rental & Sales, Inc., the Eighth
Circuit found an abuse of discretion where “the district court both refused substitution for the
new party, and refused to let the old party continue.” 53 F.3d 186, 191 (8th Cir. 1995) (emphasis
added). Another case cited by PLM states that substitution should “be freely granted,” but the
case is discussing Rule 25(a)(1), which governs substitution following the death of a party. See
Natale v. Country Ford Ltd., 287 F.R.D. 135, 137 (E.D.N.Y. 2012). Courts in this circuit
consistently hold that the district court has broad discretion when considering a motion under
Rule 25(c). See, e.g., Burka v. Aetna Life Ins. Co., 87 F.3d 478, 482 (D.C. Cir. 1996) (reviewing
substitution under Rule 25(c) for abuse of discretion after citing cases from other circuits);
Comm’ns Imp. Exp., S.A. v. Republic of Congo, 118 F. Supp. 3d 220, 231 (D.D.C. 2015) (“Rule
25(c) is wholly permissive . . . .”); see also 7C Charles Wright & Arthur Miller, Federal Practice
& Procedure § 1958 (3d ed. 2016) (“Rule 25(c) is wholly permissive . . . .”).
10
PLM seeks to rely on the “real party in interest” requirement found in Rule 17(a)(1).
That is not the proper test for a motion under Rule 25(c). In fact, Rule 25(c) “expressly permits
15
The relevant marks are undoubtedly at the core of this long-running litigation. For
example, Count I of PLM’s Second Amended Complaint seeks reversal of the TTAB decision
cancelling one of the transferred marks. See 2d Am. Compl. ¶¶ 42–48. Similarly, Counts II and
III seek a declaratory judgment of noninfringement and injunctive relief to stop ongoing
infringement, respectively, related to the transferred marks. See 2d Am. Compl. ¶¶ 49–51,
52–56. The Court has found that uncontested evidence shows that PLM (Sub) transferred the
relevant marks to PLM Operations. See supra Part. III.B.1. Although the rights of PLM
Operations, if substituted, are the same as the original Plaintiffs, it now owns the relevant marks
and has the sole interest in the outcome of this litigation. See Crown Point Partners LLC v.
Crown Point Plan Comm’n, 275 F.R.D. 279, 282 (N.D. Ind. 2011) (“First Financial, as a creditor
and transferee in interest to the property, has a protectable interest in the outcome of this
litigation and should be substituted, although its rights do not exceed those of Lauth and CPP in
this litigation.”). Therefore, the Court finds that substituting the owner of the relevant marks as
the sole Plaintiff will best facilitate any ongoing litigation.
PLM also volunteered to join PLM Operations as an additional Counter-Defendant to
address any possible prejudice to PROLACTO. See PLM Mot. Sub. at 2. Following
PROLACTO’s opposition to PLM’s motion for substitution, PLM “withdr[ew] that portion of its
Motion seeking to add PLM Operations as an additional counter-defendant,” but nevertheless
“does not object if the Court joins PLM operations as an additional counter-defendant.” Pl.’s
Reply Supp. Mot. Sub. (“PLM’s Reply Mot. Sub.”) at 15–16, ECF No. 342 (emphasis added).
Rule 25(c) permits the Court to substitute or join a party. See Fed. R. Civ. P. 25(c). In order to
parties to continue in an action, even if they do not remain the real party in interest, as long as the
cause of action itself survives the transfer to the new party.” ELCA Enters., 53 F.3d at 191.
16
avoid any possibility of prejudice, the Court will therefore exercise its discretion to join PLM
Operations as an additional Counter-Defendant, as well as substituting it as the sole Plaintiff.
4. PROLACTO’s Request for Discovery and a Hearing
Finally, the Court turns to PROLACTO’s request for discovery and a formal hearing on
PLM’s motion to substitute PLM Operations. PROLACTO argues that “[l]imited discovery may
better enable the Court to make an informed determination of whether PLM (Sub) has made a
valid transfer of interest to PLM Operations and to avoid an inequitable outcome to PROLACTO.”
PROLACTO’s Opp’n Mot. Sub. at 11. PROLACTO also requests a hearing on this issue.
PROLACTO’s Opp’n Mot. Sub. at 11
First, the Court has found that the uncontested evidence is sufficient to show that PLM
(Sub) transferred the relevant trademarks to PLM Operations. See supra Part III.B.1. Second,
the Court’s decision to join PLM Operations as an additional Counter-Defendant ensures that the
substitution will avoid inequitable outcomes for PROLACTO. See supra Part III.B.3. Finally,
the Court notes that there is no requirement to grant limited discovery or a hearing in this
context. The Seventh Circuit recently noted that there is no rule “that an evidentiary hearing is
mandatory to resolve every Rule 25(c) substitution.” Sullivan v. Running Waters Irrigation, Inc.,
739 F.3d 354, 359 (7th Cir. 2014). In fact, courts that have required an evidentiary hearing often
point to the due process concerns raised by hailing an unwilling party into the action, particularly
where substitution effectively imposes liability. See Luxliner P.L. Exp., 13 F.3d at 72. That is
not the case here, and the Court therefore denies PROLACTO’s request for limited discovery
and a hearing.
17
IV. THE PARTIES’ MOTIONS TO AMEND THE FINDINGS AND JUDGMENT
Following the bench trial, post-trial briefing, and the Court’s release of its Findings of
Fact and Conclusions of Law, both parties have filed motions to amend the Court’s judgment.
Each of the motions raises legal arguments for the first time in this litigation. Therefore, the
Court will deny both motions.
A. Legal Standards
1. Federal Rule of Civil Procedure 52(b)
Pursuant to Federal Rule of Civil Procedure 52(b), a party may file a motion requesting
that the Court “amend its findings—or make additional findings—and . . . amend the judgment
accordingly.” Fed. R. Civ. P 52(b). This Rule “permits the trial court to correct manifest errors
of law or fact, make additional findings or take other action that is in the interests of justice.”
Ashraf-Hassan v. Embassy of France, 185 F. Supp. 3d 94, 108 (D.D.C. 2016) (quoting Bigwood
v. Def. Intelligence Agency, 770 F. Supp. 2d 315, 318 n.2 (D.D.C. 2011)). The decision to
amend findings or the judgment is committed “to the sound discretion of the trial judge.” See
Material Supply Int’l, Inc. v. Sunmatch Indus. Co., No. 94-1184, 1997 WL 243223, at *2
(D.D.C. May 7, 1997); see also Ashraf-Hassan, 185 F. Supp. 3d at 108. And a party bringing a
Rule 52(b) motion “bears a heavy burden.” Ashraf-Hassan, 185 F. Supp. 3d at 108 (quoting
Material Supply Int’l, 1997 WL 243223, at *2).
A motion under Rule 52(b) “is not an avenue for relitigating issues upon which the
moving party did not prevail at trial.” Material Supply Int’l, 1997 WL 243223, at *2. Instead, a
movant “who failed to prove his [or her] strongest case is not entitled to a second opportunity to
litigate a point, to present evidence that was available but not previously offered, or to advance
new theories by moving to amend a particular finding of fact or conclusion of law.” Salazar v.
18
District of Columbia, 685 F. Supp. 2d 72, 75 (D.D.C. 2010) (quoting 9C Charles Wright &
Arthur Miller, Federal Practice & Procedure § 2582 (3d ed. 2009)); see also Diocese of Winona
v. Interstate Fire & Cas. Co., 89 F.3d 1386, 1397 (8th Cir. 1996) (finding that a party could not
use a 52(b) motion to raise an argument that could have been raised prior to the entry of a
judgment); Fontenot v. Mesa Petroleum Co., 791 F.2d 1207, 1219 (5th Cir. 1986) (explaining
that a Rule 52(b) motion should not be employed “to advance new theories”).
2. Federal Rule of Civil Procedure 59(e)
Federal Rule of Civil Procedure 59(e) permits a party to file “[a] motion to alter or amend
a judgment” within “28 days after the entry of the judgment.” Fed. R. Civ. P. 59(e).
“Reconsideration of a judgment after its entry is an extraordinary remedy which should be used
sparingly,” Mohammadi v. Islamic Republic of Iran, 782 F.3d 9, 17 (D.C. Cir. 2015) (quoting 11
Charles Wright & Arthur Miller, Federal Practice & Procedure § 2810.1 (3d ed. 2012)), and the
moving party bears the burden of establishing “extraordinary circumstances” warranting relief
from judgment, Niedermeier v. Office of Baucus, 153 F. Supp. 2d 23, 28 (D.D.C. 2001).
Ultimately, “[a] Rule 59(e) motion is discretionary and need not be granted unless the
district court finds that there is an intervening change of controlling law, the availability of new
evidence, or the need to correct a clear error or prevent manifest injustice.” Ciralsky v. CIA, 355
F.3d 661, 671 (D.C. Cir. 2004) (quoting Firestone v. Firestone, 76 F.3d 1205, 1208 (D.C. Cir.
1996)). “New evidence” is evidence that “was not previously available,” not simply evidence
that a party had not previously presented. See Messina v. Krakower, 439 F.3d 755, 759 (D.C.
Cir. 2006). And in the Rule 59(e) context, “clear error” is “a very exacting standard,” Bond v.
U.S. Dep’t of Justice, 286 F.R.D. 16, 22 (D.D.C. 2012) (quoting Lightfoot v. District of
Columbia, 355 F. Supp. 2d 414, 422 (D.D.C. 2005)), tantamount to a requirement that the
19
judgment be “dead wrong,” Lardner v. FBI, 875 F. Supp. 2d 49, 53 (D.D.C. 2012) (quoting
Parts & Elec. Motors, Inc. v. Sterling Elec., Inc., 866 F.2d 228, 233 (7th Cir. 1988)). “Manifest
injustice,” on the other hand, requires a demonstration not only of “clear and certain prejudice to
the moving party, but also a result that is fundamentally unfair in light of governing law.” Slate
v. Am. Broad. Cos., Inc., 12 F. Supp. 3d 30, 35–36 (D.D.C. 2013).
Crucially, Rule 59(e) does not permit a dissatisfied party “to relitigate old matters, or to
raise arguments or present evidence that could have been raised prior to the entry of judgment.”
Exxon Shipping Co. v. Baker, 554 U.S. 471, 485 n.5 (2008) (quoting 11 Charles Wright & Arthur
Miller, Federal Practice & Procedure § 2810.1 (2d ed. 1995)). The rationale for this rule is that
“Rule 59(e) motions are aimed at reconsideration, not initial consideration.” GSS Grp. Ltd v.
Nat’l Port Auth., 680 F.3d 805, 812 (D.C. Cir. 2012) (quoting District of Columbia v. Doe, 611
F.3d 888, 896 (D.C. Cir. 2010)). “It is well settled that an issue presented for the first time in a
motion pursuant to Federal Rule of Civil Procedure 59(e) generally is not timely raised.” Doe,
611 F.3d at 896 (quoting Holland v. Big River Minerals Corp., 181 F.3d 597, 605 (4th Cir. 1999));
see also Patton Boggs LLP v. Chevron Corp., 683 F.3d 397, 403 (D.C. Cir. 2012) (“Rule 59(e) is
not a vehicle to present a new legal theory that was available prior to judgment . . . .”). “The
strictness with which such motions are viewed is justified by the need to protect both the integrity
of the adversarial process in which parties are expected to bring all arguments before the court,
and the ability of the parties and others to rely on the finality of judgments.” U.S. Commodity
Futures Trading Comm’n v. McGraw–Hill Cos., 403 F. Supp. 2d 34, 36 (D.D.C. 2005).
B. PLM’s Motion to Amend the Judgment
PLM has moved to amend the judgment, arguing that PLM’s U.S. Registration No.
3,210,304 for LA INDITA MICHOACANA should not be cancelled. See generally PLM’s Mot.
20
Amend. Specifically, PLM refers to the Court’s finding that PLM owns two prior incontestable
registered marks incorporating an Indian Girl design and argues that “a registered mark cannot
be cancelled if the registrant, PLM, has prior use of a mark that is likely to cause confusion with
the mark asserted by the challenger, PROLACTO.”11 PLM’s Mot. Amend at 4. In its reply,
PLM clarifies that it believes PROLACTO does not have standing to challenge the LA INDITA
MICHOACANA mark because “PROLACTO cannot show that it would be damaged where . . .
the registrant, PLM, has one or more valid registrations for similar marks on similar goods that
were in existence before PROLACTO sought cancellation.” See Pls.’ Reply Supp. Mot. Amend
J. (“PLM’s Reply Supp. Mot. Amend”) at 1, ECF No. 349. PROLACTO raises a number of
responses, including arguments that PLM has not established the extraordinary circumstances
that are necessary to amend a judgment, that PLM’s understanding of the law is flawed, and that
PLM’s prior marks are not incontestable. See id. at 3–14.
The Court first turns to PROLACTO’s motion seeking leave to file a surreply. See
generally PROLACTO’s Mot. Surreply; see also Def.’s Surreply or, in the Alternative, Mot.
Strike (“PROLACTO’s Surreply”), ECF No. 351-1. For the reasons stated below, the Court will
grant the motion in part and deny it in part. The Court will consider PROLACTO’s surreply
only on the question of standing. Upon consideration of the parties’ arguments, the Court will
11
The purportedly incontestable marks are U.S. Registration No. 2,905,172 for the
“Indian Girl with Paleta” design and U.S. Registration No. 2,968,652 for the “Indian Girl with
Cone” design. See PLM’s Mot. Amend at 2; see also PLM VI, 188 F. Supp. 3d 22, 48 (D.D.C.
2016). PROLACTO argues that the marks are not incontestable. See Def.’s Opp’n Pls.’ Mot.
Amend Judgment (“PROLACTO’s Opp’n Mot. Amend.”) at 9–14, ECF No. 344; see also
PROLACTO’s Mot. Amend at 5–9. The Court does not reach that issue for the purposes of
deciding PLM’s motion to amend. But the Court does address this issue in the context of
PROLACTO’s motion to amend. See infra Part IV.C.
21
deny PLM’s motion to amend the judgment because a party cannot raise new theories for the
first time in a motion to amend a judgment.
1. PROLACTO’s Motion for Leave to File a Surreply
PROLACTO argues that it should be permitted to file a surreply because PLM
impermissibly introduced facts and arguments related to two new arguments in its reply. See
PROLACTO’s Mot. Surreply at 4, 6–7. After setting forth the standard for granting leave to file
a surreply, the Court will address the issues in turn.
Under the Local Rules of this Court, at most three briefs should be associated with a
motion: “(i) the movant’s opening memorandum; (ii) the non-movant’s opposition; and (iii) the
movant’s reply.” Banner Health v. Sebelius, 905 F. Supp. 2d 174, 187 (D.D.C. 2012) (citing
LCvR 7). However, the non-movant may seek leave to file a surreply when deprived of the
opportunity to contest matters raised for the first time in the movant’s reply. See Ben–Kotel v.
Howard Univ., 319 F.3d 532, 536 (D.C. Cir. 2003). The determination as to whether to grant or
deny leave is entrusted to the discretion of the district court, see Akers v. Beal Bank, 760 F. Supp.
2d 1, 2 (D.D.C. 2011), but surreplies are generally disfavored, see Kifafi v. Hilton Hotels
Retirement Plan, 736 F. Supp. 2d 64, 69 (D.D.C. 2010). The court’s discretion is guided by
“whether the movant’s reply in fact raises arguments or issues for the first time; whether the
nonmovant’s proposed surreply would be helpful to the resolution of the pending motion; and
whether the movant would be unduly prejudiced were leave to be granted.” Glass v. Lahood,
786 F. Supp. 2d 189, 231 (D.D.C. 2011), aff’d, No. 11-5144, 2011 WL 6759550 (D.C. Cir. Dec.
8, 2011).
22
First, PROLACTO argues that, “[f]or the first time in its Reply, PLM introduced facts
and exhibits related to a blog post by Professor Rebecca Tushnet.”12 PROLACTO’s Mot.
Surreply at 6. In its reply in support of the motion to amend, PLM argues that the blog post’s
analysis “supports granting PLM’s Motion to amend the judgment on Count I of the Complaint
in favor of PLM.” PLM’s Reply Supp. Mot. Amend at 8. PROLACTO argues that a surreply is
particularly warranted “in response to newly-introduced factual material.” PROLACTO’s Mot.
Surreply at 7.
The Court notes that a growing number of legal scholars are turning to blogs and other
online media to publish their work and to consider important legal questions. See, e.g., Eugene
Volokh, Who are we?, Volokh Conspiracy (Jan. 16, 2014), https://www.washingtonpost.com/
news/volokh-conspiracy/who-are-we/ (listing law professors who write for the Volokh
Conspiracy); About Us, RegBlog, http://www.regblog.org/about-us/ (last visited Mar. 30, 2017)
(“RegBlog features work contributed by staff members, scholars, judges, attorneys, and others
interested in regulatory developments.”). PLM makes clear that it “does not seek to admit the
blog into the evidentiary record, or seek to admit any testimony from Professor Tushnet, whether
as a lay or expert witness.” Pl.’s Opp’n Def.’s Mot. Leave File Surreply or, in the Alternative,
Mot. Strike at 4 (“PLM’s Opp’n Mot. Surreply”), ECF No. 355. Therefore, the Court will treat
the reference to the blog post the same way it would treat a citation to a law review article. The
blog post is not new factual material. Instead, the reference to the blog post simply supports
12
Professor Tushnet teaches at Georgetown University Law Center. See PLM’s Reply
Supp. Mot. Amend at 8 n.6.
23
arguments originally raised in the motion, and there is no need for PROLACTO to have another
chance to respond.13 See Glass, 786 F. Supp. 2d at 231.
Second, PROLACTO argues that PLM raised arguments related to standing for the first
time in its reply brief. See PROLACTO’s Mot. Surreply at 7. In response, PLM asserts that its
original motion briefed the question of standing. See PLM’s Opp’n Mot. Surreply at 5. PLM
argues that it “cited to a number of cases on the issue of standing in its motion to amend the
judgment, and . . . devoted almost half of its motion to argue that PROLACTO’s cancellation
claim should be dismissed for lack of standing.” PLM’s Opp’n Mot. Surreply at 5. PLM’s
characterization is misleading. In fact, while PLM’s motion to amend argues that “PROLACTO
cannot meet its burden of proof to cancel its registration,” the motion never mentions the term
“standing.” See PLM’s Mot. Amend at 5. In contrast, nearly five of the eleven pages of
argument in PLM’s reply focus specifically on the question of standing. See PLM’s Reply Supp.
Mot. Amend 2–6. The Court finds that the standing argument is “truly new,” United States v.
Baroid Corp., 346 F. Supp. 2d 138, 143 (D.D.C. 2004), and that PROLACTO’s “proposed
surreply would be helpful to the resolution of the pending motion,” Glass, 786 F. Supp. 2d at
231. Therefore, the Court will grant PROLACTO’s motion in part and consider the surreply to
the extent it addresses the issue of standing.
2. The Morehouse Defense
The thrust of the litigation related to Count I has turned on two crucial issues. First, the
parties dispute the relative priority of PLM’s LA INDITA MICHOACANA mark and
13
Furthermore, the Court does not rely on the blog post in reaching a decision, so there is
no need to consider PROLACTO’s additional briefing. See United States v. All Assets Held at
Bank Julius Baer & Co., 772 F. Supp. 2d 191, 205 (D.D.C. 2011) (“[S]ince the Court does not
rely upon any of the arguments of the United States to which UTICo wishes to respond by filing
a surreply, UTICo’s motion for leave to file a surreply will also be denied.”).
24
PROLACTO’s unregistered Indian Girl mark. The Court decided that PROLACTO had the
better side of that argument, finding that “PROLACTO has demonstrated that it used its Indian
Girl mark before PLM used its LA INDITA MICHOACANA mark.” PLM VI, 188 F. Supp. 3d
22, 101 (D.D.C. 2016). The parties also dispute whether the tacking doctrine applies and
therefore the priority date of PLM’s LA INDITA MICHOACANA mark can be advanced to the
date that PLM first used any Indian Girl mark. Again, PROLACTO prevailed after the Court
found that, “particularly without any evidence of consumers’ perceptions, the Court cannot find
that PLM’s LA INDITA MICHOACANA mark meets the ‘exceedingly strict’ standard for
tacking.” Id. at 60 (quoting Brookfield Commc’ns, Inc. v. W. Coast Entm’t Corp., 174 F.3d
1036, 1048 (9th Cir. 1999)).
The ultimate result is that PROLACTO’s unregistered Indian Girl design is confusingly
similar to, and thus infringes, PLM’s earlier, registered Indian Girl marks, see id. at 107, but,
because tacking does not apply, PROLACTO’s mark has priority over LA INDITA
MICHOACANA and the registration of LA INDITA MICHOACANA must be cancelled. Id. at
101. The Court’s Findings of Fact and Conclusions of Law noted:
In its proposed findings of fact and conclusions of law, PLM argues that “even
without applying the tacking doctrine,” it has priority of use for an Indian Girl
design, citing its Indian Girl with Paleta mark. Pls.’ Br. at 85 ¶ 90; see also id. at
59 ¶ 19 (“PLM has priority in both the Indian Girl Design and in ‘Michoacana.’
Thefore [sic], the registration for LA INDITA MICHOACANA + Design should
not be cancelled and PLM should prevail on its First Claim for Relief.”). The
Court has indeed found that PLM used its Indian Girl with Paleta and Indian Girl
with Cone marks before PROLACTO used its Indian Girl mark in the United
States, and the Court considers those findings with respect to the infringement
claims in this action. With respect to [Count I], however, PLM does not provide
the Court with any legal basis to deny PROLACTO’s cancellation petition on the
basis of PLM’s earlier use of other marks in the absence of tacking—even if
PLM’s earlier marks are confusingly similar to PROLACTO’s asserted mark.
Instead, PLM offers only the conclusive statements quoted above without any
citations or further explanation. In the absence of any substantive legal argument,
25
the Court cannot find grounds on its own to consider PLM’s earlier use of other
marks outside the context of the tacking doctrine.
Id. at 100 n.54 (first alteration in original). PLM is now attempting to provide the legal basis to
deny PROLACTO’s cancellation petition that it failed to raise before.
In its motion to amend the judgment, PLM asserts that the Court “correctly recited” the
legal standard when it found that “a mark cannot be registered if another owner has prior use of a
mark or trade name that is likely to cause confusion with the asserted mark.” PLM’s Mot.
Amend at 4 (quoting PLM VI, 188 F. Supp. 3d at 99). In the next sentence, PLM reformulates
the standard to state that “a registered mark cannot be cancelled if the registrant . . . has prior use
of a mark that is likely to cause confusion with the mark asserted by the challenger.” PLM’s
Mot. Amend at 4. PLM seems to assert that its version of the rule is a direct and accurate
translation of the proper cancellation standard the Court articulated. That is not correct. Instead,
as PLM’s citations and subsequent reply make clear, PLM is relying on an equitable defense
known as the “Morehouse defense” or the “prior registration” defense.”14
Under the Morehouse defense, the party seeking cancellation of a mark cannot be
damaged if the registrant already “owns an existing registration for the same or substantially
identically mark for the same or substantially identical goods.” 3 J. Thomas McCarthy,
McCarthy on Trademarks & Unfair Competition (“McCarthy on Trademarks”) § 20:38 (4th ed.
2016). The Morehouse defense “is related to the equitable defenses of laches or acquiescence.”
Coach/Braunsdorf Affinity, Inc. v. 12 Interactive, LLC, 110 U.S.P.Q.2d 1458, 2014 WL
1390528, at *13 (T.T.A.B. 2014). Summarizing the rule, the Federal Circuit has explained that
“[t]he prior registration or Morehouse defense is an equitable defense, to the effect that if the
14
The Morehouse defense is named for Morehouse Manufacturing Corp. v. J. Strickland
& Co., 407 F.2d 881 (C.C.P.A. 1969).
26
opposer can not be further injured because there already exists an injurious registration, the
opposer can not object to an additional registration that does not add to the injury.” O-M Bread,
Inc. v. U.S. Olympic Comm., 65 F.3d 933, 938 (Fed. Cir. 1995). The defense is available in both
cancellation and opposition proceedings. See McCarthy on Trademarks §§ 20:38, 20:78. PLM
has now raised the Morehouse defense in its motion to amend the judgment. See PLM’s Mot.
Amend at 5; see also PLM’s Reply Supp. Mot. Amend at 3.
3. Waiver
The question before the Court is whether PLM can rely on the Morehouse defense at this
stage of the litigation. As the Court has explained, Rule 59 does not permit a dissatisfied party
“to raise arguments . . . that could have been raised prior to the entry of judgment.” Exxon
Shipping Co. v. Baker, 554 U.S. 471, 485 n.5 (2008) (quoting 11 Charles Wright & Arthur
Miller, Federal Practice & Procedure § 2810.1 (2d ed. 1995)). Furthermore, “[i]t is well settled
that an issue presented for the first time in a motion pursuant to Federal Rule of Civil Procedure
59(e) generally is not timely raised.” District of Columbia v. Doe, 611 F.3d 888, 896 (D.C. Cir.
2010) (quoting Holland v. Big River Minerals Corp., 181 F.3d 597, 605 (4th Cir. 1999)). The
strictness of this rule is not arbitrary. The rule “is justified by the need to protect both the
integrity of the adversarial process in which parties are expected to bring all arguments before
the court, and the ability of the parties and others to rely on the finality of judgments.” U.S.
Commodity Futures Trading Comm’n v. McGraw–Hill Cos., 403 F. Supp. 2d 34, 36 (D.D.C.
2005).
PLM makes two arguments on this point. First, PLM argues that PROLACTO lacks
standing to challenge PLM’s registration and that standing arguments are not waivable. See
PLM’s Reply Supp. Mot. Amend at 2–6. Second, PLM argues that it has “pleaded and argued
27
standing since inception.” PLM’s Reply Supp. Mot. Amend at 6 n.5. The Court will address
these arguments in turn.
a. PLM Conflates Constitutional Standing and Statutory Standing Under the Lanham Act
PLM’s standing argument relies on the Morehouse defense. PLM begins with the correct
proposition that a “party must have standing to challenge a trademark registration.” PLM’s
Reply Supp. Mot. Amend at 2 (citing Nobelle.com, LLC v. Qwest Commc’ns Int’l, Inc., 66
U.S.P.Q.2d 1300, 1303 (T.T.A.B. 2003)). The Lanham Act provides that “petition to cancel a
registration of a mark . . . may . . . be filed . . . by any person who believes that he is or will be
damaged . . . by the registration of the mark.”15 15 U.S.C. § 1064 (emphasis added). Next, PLM
incorporates the Morehouse defense, which states that “the opposer cannot be damaged . . . by
the issuance to the applicant of a second registration where applicant already has an existing
registration of the same mark for the same goods.” Morehouse Mfg. Corp. v. J. Strickland &
Co., 407 F.2d 881, 884 (C.C.P.A. 1969) (emphasis added). Up to this point, PLM’s argument is
that PROLACTO cannot be damaged by the registration of the LA INDITA MICHOACANA
mark, and thus PROLACTO lacks standing. See PLM’s Reply Supp. Mot. Amend at 2–5.
Next, PLM argues that this argument cannot be waived, because “standing is not subject
to waiver.” PLM’s Reply Supp. Mot. Amend at 5. As courts of limited jurisdiction, federal
courts are “under an independent obligation to examine their own jurisdiction, and standing ‘is
perhaps the most important of [the jurisdictional] doctrines.’” United States v. Hays, 515 U.S.
737, 742 (1995) (alteration in original) (quoting FW/PBS, Inc. v. Dallas, 493 U.S. 215, 230–231
(1990)). Furthermore, as PLM correctly points out, because standing is a jurisdictional
15
The Lanham Act’s threshold for standing is the same in a context of a petition to cancel
or an opposition to a registration. See Lipton Indus., Inc. v. Ralston Purina Co., 670 F.2d 1024,
1028–29 (C.C.P.A. 1982); McCarthy on Trademarks § 20:46.
28
requirement, it “remains open to review at all stages of litigation.” PLM’s Reply Supp. Mot.
Amend at 6 (quoting Nat’l Org. for Women v. Scheidler, 510 U.S. 249 (1994)). Thus, PLM
concludes that—even at this late stage of the litigation—it can raise the Morehouse defense
through the trapdoor of standing.
The problem with PLM’s clever argument is that it incorrectly conflates the constitutional
“case or controversy” requirement with the standing requirement found in the Lanham Act.
Article III of the United States Constitution requires the plaintiff to make out a “case or
controversy” in order to have standing to sue in federal court. See Warth v. Seldin, 422 U.S. 490,
498 (1975). PLM relies on this constitutional form of standing when it argues that a court must
consider standing arguments at all stages of the litigation and those arguments cannot be waived.
See PLM’s Reply Supp. Mot. Amend at 5–6. But the standing requirements to proceed before an
administrative agency are not the same. See Ritchie v. Simpson, 170 F.3d 1092, 1094 (Fed. Cir.
1999); Guantanamera Cigar Co. v. Corporacion Habanos, S.A., 729 F. Supp. 2d 246, 251
(D.D.C. 2010). Statutory law, not the “case or controversy” requirement, determines the
standing requirements for matters brought before an agency. See Ritchie, 170 F.3d at 1095
(collecting cases). A federal court must always be alert to constitutional standing problems
because they implicate the court’s jurisdiction. See Hays, 515 U.S. at 742. But PLM has
presented no authority that the Lanham Act’s statutory standing requirement implicates similar
jurisdictional concerns.
At any rate, the Court finds that PROLACTO has standing under the generous standard
of the Lanham Act. The relevant provision grants standing to any party that “believes that he
would be damaged by the registration of a mark.” 15 U.S.C. § 1063. The party must only show
a “real interest” in the proceedings and a “reasonable basis” for his belief of damage. See
29
Ritchie, 170 F.3d at 1095. The requirement for standing is “fairly easy to satisfy in the vast
majority of cases.” McCarthy on Trademarks § 20:46. The TTAB had no doubt that PROLACTO
had standing. See Productos Lacteos Tocumbo S.A. De C.V. v. Paleteria La Michoacana, Inc.,
98 U.S.P.Q.2d 1921, 2011 WL 2161071, at *8–9 (T.T.A.B. 2011). This Court agrees.
For the purposes of evaluating standing under the Lanham Act, a “real interest” is a
“direct and personal stake in the outcome of the” opposition or cancellation. Ritchie, 170 F.3d at
1095. A party must also have a “reasonable basis in fact” for its belief in damages, although a
purely subjective belief is insufficient. Id. at 1098 (quoting Universal Oil Prods., Co. v. Rexall
Drug & Chem. Co., 463 F.2d 1122 (C.C.P.A. 1972)). In light of the competing, confusing marks
at issue and the fact that PLM and PROLACTO are direct competitors, PROLACTO has a
“direct and personal stake” in the outcome of the cancellation and a “reasonable basis in fact”
that it could be damaged.16 Cf. Guantanamera Cigar Co., 729 F. Supp. 2d at 252 (“Given the
16
PLM is correct that one of the TTAB decisions it relies on seems to conflate standing
and the Morehouse defense. See Place for Vision, Inc. v. Pearle Vision Ctr., Inc., 218 U.S.P.Q.
1022, 1983 WL 51990, at *1 (T.T.A.B. 1983) (“An opposer cannot suffer damage, within the
meaning of Section 13 of the Trademark Act, by the issuance of a registration if the applicant for
such registration already owns an unchallenged registration of that mark for the same goods.”
(citing Morehouse Mfg. Corp. v. J. Strickland & Co., 407 F.2d 881 (C.C.P.A. 1969)). Notably,
the Place for Vision decision does not use the term “standing.” Recent decisions, before both
federal courts and the TTAB, consistently evaluate the Morehouse defense as an affirmative
defense, not an obstacle to standing. See, e.g., O-M Bread, 65 F.3d at 938 (“The prior
registration or Morehouse defense is an equitable defense . . . .”); Tillamook Country Smoker,
Inc. v. Tillamook Cty. Creamery Ass’n., 333 F. Supp. 2d 975, 986 (D. Or. 2004) (“[T]he prior-
registration or Morehouse doctrine has been described as ‘an equitable defense in the nature of
laches or acquiescence.’” (quoting McCarthy on Trademarks § 20:38)), aff’d 465 F.3d 1102 (9th
Cir. 2006). A recent TTAB decision considering consolidated opposition proceedings, for
instance, noted that, “[i]n none of the proceedings has standing been contested,” and then
separately considered the application of the Morehouse defense to one of the oppositions. See
Mag Instrument, Inc. v. Brinkmann Corp., 96 U.S.P.Q.2d 1701, 2010 WL 3253200, at *7–8
(T.T.A.B. 2010); see also Blackhorse v. Pro Football, Inc., 98 U.S.P.Q.2d 1633, 2011 WL
1886402, at *6 (T.T.A.B. 2011) (“Lack of standing is not an affirmative defense. Standing is an
element of petitioners’ claim.”).
30
global economy, it seems fairly obvious that Habanos’ mark is more valuable if no one owns the
GUANTANAMERA mark in the U.S., even if Habanos does not.”).
Furthermore, to the extent constitutional standing is relevant here, the analysis turns on
PLM’s standing, not PROLACTO’s. The Supreme Court has made clear that the plaintiff bears
the burden of establishing standing. See DaimlerChrysler Corporation v. Cuno, 547 U.S. 332,
342 n.3 (2006). The constitutional standing analysis considers whether the plaintiff has
experienced an injury that is fairly traceable to the defendant and redressable by the court. See
Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61 (1992). Furthermore, the plaintiff must
demonstrate standing for each separate claim. See Monsanto Co. v. Geertson Seed Farms, 561
U.S. 139, 153 (2010). As the Plaintiff in this action, PLM, not PROLACTO, brought Count I
seeking reversal of the TTAB decision. See 2d Am. Compl. ¶¶ 42–48. Therefore, any
constitutional standing inquiry would examine PLM, not PROLACTO.17
Thus, the Court concludes that the Morehouse defense does not implicate constitutional
standing in this case. Therefore, the Court rejects PLM’s argument that the Morehouse defense
cannot be waived because it raises standing concerns. To the contrary, a party’s litigation
conduct can generally waive affirmative defenses, including equitable defenses. See Jones v.
D.C. Dep’t of Corr., 429 F.3d 276, 280 (D.C. Cir. 2005) (“We conclude the district court erred in
17
Because PLM is the Plaintiff, the Court does not need to address the complicated
question of whether statutory standing in an administrative proceeding necessarily gives the
party constitutional standing to appeal the outcome of that proceeding in federal court. See 13B
Charles Wright & Arthur Miller, Federal Practice & Procedure § 3531.13 (3d ed. 2016)
(asserting that “there are strong reasons to extend . . . administrative standing into standing for
judicial review,” but noting that “many cases adhere to the view that recognition of standing to
appear in agency proceedings does not of itself establish Article III standing to seek judicial
review”). Cf. Fund Democracy, LLC v. SEC, 278 F.3d 21, 27 (D.C. Cir. 2002) (“Because
agencies are not constrained by Article III, they may permit persons to intervene in the agency
proceedings who would not have standing to seek judicial review of the agency action.”).
31
granting summary judgment based on the Faragher–Ellerth defense in a case in which the
defense had not been raised in the pleadings.”); Dole v. Williams Enterprises, Inc., 876 F.2d 186,
189 (D.C. Cir. 1989) (footnote omitted) (“[O]ur understanding of affirmative defenses,
buttressed by years of experience under Rule 8(c) . . . , is that these defenses place the burden on
the party raising them to affirmatively plead the claim . . . .”); Ruffin v. New Destination, 800 F.
Supp. 2d 262, 268 (D.D.C. 2011) (“Defendants did not raise this affirmative defense in their
answer, and therefore it is waived.”); see also Fed. R. Civ. P. 8(c) (requiring the pleading of
affirmative defenses). For PLM to rely on the Morehouse defense at this late stage in the
litigation, it must demonstrate that it has preserved the issue by raising the argument at the
proper time.
b. PLM has not Preserved an Argument Relying on the Morehouse Defense
PLM argues that it “never waived any argument as to standing; rather, PLM has pleaded
and argued standing since inception.” PLM’s Reply Supp. Mot. Amend at 6 n.5. This again
misstates the argument that is subject to waiver. As the Court has previously explained, PLM is
now seeking to rely on the Morehouse defense, an equitable defense, not standing, which is an
element of a petitioner’s claim that guarantees that the party has a minimum, threshold interest in
cancelling or opposing a registration. See supra Part IV.B.2–3.a. Thus, the Court will review
the extensive record in this litigation, as well as consider instances where PLM claims it
“pleaded and argued” standing, to determine whether PLM raised the Morehouse defense at
those times.
The parties’ briefs related to a motion in limine contain the most significant discussion of
the Morehouse defense in this litigation. Before trial, PROLACTO filed a motion to prevent
PLM from raising tacking arguments. See Def.’s Mot. In Limine & Supp. Mem. Exclude Any
32
“Tacking” Arguments (“PROLACTO’s Tacking MIL”), ECF No. 185. PROLACTO’s motion
incorrectly conflated tracking with the Morehouse defense. PROLACTO’s Tacking MIL at 7.
In response, PLM more accurately laid out the parameters of the Morehouse defense, as well as
its differences from tacking. See Pls.’ Opp’n Def.’s Mot. In Limine Exclude Any “Tacking”
Arguments (“PLM’s Opp’n Tacking MIL”) at 5, ECF No. 192.
At that time, PLM also argued that the “Morehouse defense is entirely irrelevant to
PROLACTO’s counterclaims and therefore, PLM did not have any obligation to plead it in its
Answer in this district court action.” PLM’s Opp’n Tacking MIL at 6. However, PLM also
argued that it did raise the Morehouse defense at the TTAB and contended that the TTAB
reached the wrong result when it determined that PLM had not pleaded the defense. See PLM’s
Opp’n Tacking MIL at 6; see also Productos Lacteos Tocumbo, 98 U.S.P.Q.2d 1921, 2011 WL
2161071, at *5 (finding that PLM did not plead the Morehouse defense). In support of that
conclusion, PLM points to its Answer in the TTAB proceedings, which states that “[PLM]
alleges [PROLACTO] is not likely to be damaged by Registrant’s mark, and therefore, lacks
standing to cancel the registration of the same.” PLM’s Opp’n Tacking MIL, Ex. A at 5, ECF
No. 192-1.
The Court is not convinced that this discussion preserves PLM’s ability to rely on the
Morehouse defense. First, PLM explicitly argued that it “had no obligation or opportunity to
plead the Morehouse ‘prior registration’ in this district court action.” PLM’s Opp’n Tacking
MIL at 5. Second, the Court notes that the Answer PLM filed in the TTAB action contains a
general defense that does not reference PLM’s prior registration of its two Indian Girl marks or
the Morehouse defense in general. Third, the discussion appears in the context of PLM’s
opposition to one of PROLACTO’s motions in limine. PLM had many opportunities to raise this
33
issue in its motion for summary judgment, at trial, or in its post-trial briefing. But PLM never
raised the issue in any developed way.
For instance, PLM contends that it preserved this argument by raising it in one of the
footnotes in its post-trial brief. See PLM’s Reply Supp. Mot. Amend at 6 n.5. The relevant
portion of that footnote states:
After receiving the Office Action [refusing registration of its Indian Girl design],
PROLACTO did not oppose or otherwise seek to prevent registration of PLM’s
then-pending application for LA INDITA MICHOACANA and Design, or seek to
cancel PLM’s two registered marks. This fact weighs in favor of concluding that
PROLACTO acquiesced to the registration of PLM’s “LA INDITA
MICHOACANA + Design” mark, and also demonstrates PROLACTO’s delay in
asserting its rights such that PROLACTO’s claims should be barred under the
doctrine of laches, as explained further below.
See Pl.’s [Proposed] Findings of Fact and Conclusions of Law (“PLM’s Post-Trial Brief”) ¶ 112
n.39, ECF No. 309. The footnote mentions acquiescence and PLM’s two registered marks, but it
provides no citation to authority or structured legal argument. The footnote appears in a section
of the brief dedicated to the separate issue of estoppel. See PLM’s Post-Trial Brief ¶¶ 111–26.
In fact, PLM’s proposed findings of fact and conclusions of law total more than 120 pages, but
PLM can only point to a single, unsupported sentence in a footnote.18 That reference is not
sufficient to preserve the right to raise this issue.
The D.C. Circuit has made clear that “[i]t is not enough merely to mention a possible
argument in the most skeletal way, leaving the court to do counsel’s work.” New York Rehab.
Care Mgmt., LLC v. NLRB, 506 F.3d 1070, 1076 (D.C. Cir. 2007); see also Armstrong v.
18
PLM also points to another footnote in its post-trial brief, see PLM’s Reply Supp. Mot.
Amend at 6 n.5, but the Court fails to understand how that footnote raises the Morehouse
defense, even if generously construed, see PLM’s Post-Trial Brief at ¶ 148 & n.46. Instead, the
relevant paragraph discusses laches, see id., which is a distinct equitable defense, see McCarthy
on Trademarks § 20:74. The cases cited in the paragraph that contains the footnote all
specifically address the doctrine of laches. See PLM’s Post-Trial Brief at ¶ 148.
34
Geithner, 608 F.3d 854, 858 n.** (D.C. Cir. 2010) (a court is not required to “address an
argument raised only cursorily in a footnote.”). Another court in this district refused to consider
an argument on reconsideration, where the party originally “gestured at the issue in a two-
sentence footnote” and “made no attempt to explain how [the relevant] standard applie[d] in
[that] case.” GSS Grp. Ltd. v. Nat’l Port Auth., No. 09-1322, 2011 WL 13121428, at *5 (D.D.C.
Aug. 10, 2011).
In a similar vein, the D.C. Circuit upheld a decision denying a motion for reconsideration
on the question of duress where the party “mention[ed] duress only in passing and le[ft] any
possible duress ‘argument’ entirely undeveloped.” See Keyes v. District of Columbia, 372 F.3d
434, 437, 439 (D.C. Cir. 2004) (alterations in original). Other circuits have reached similar
conclusions. See, e.g., Muskrat v. Deer Creek Pub. Sch., 715 F.3d 775, 790–91 (10th Cir. 2013)
(finding that “the district court correctly concluded that the Muskrats had never raised a Fourth
Amendment argument before their post-summary judgment Rule 59(e) motion” where they
included only a “single reference to the Fourth Amendment”); Lekas v. Briley, 405 F.3d 602,
614 n.8 (7th Cir. 2005) (“These statements alone—made without any reference to relevant legal
authority, and strewn about in his brief in the context of defending other, well-articulated
claims—do not suffice to mount a legal argument . . . .”); see also United States v. Dunkel, 927
F.2d 955, 956 (7th Cir. 1991) (explaining in a different context that “[j]udges are not like pigs,
hunting for truffles buried in briefs”). The Court finds that this footnote fails to preserve the
issue of the Morehouse defense because it alludes to the issue only opaquely—if at all—and it
does not provide any legal argument or authority.
The remainder of PLM’s purported instances of preserving the Morehouse defense are
also unavailing. First, PLM argues that its Answer to PROLACTO’s Counterclaims “pleaded
35
lack of standing or likelihood of damage.” PLM’s Reply Supp. Mot. Amend at 6 n.5. The
defense simply states that PROLACTO “has not been damaged in any amount, manner, or at all
by reason of any act alleged against PLM.” Pls.’ Answer to Cross-Action & Counterclaims
(“PLM’s Answer”) at 15, ECF No. 42. The general language in that affirmative defense does not
specifically refer to the Morehouse defense, and without subsequent argument, fails to preserve
the issue after the Court has issued a judgment.
Second, PLM argues that it also pleaded laches and acquiescence in its Answer. See
PLM’s Reply Supp. Mot. Amend at 6 n.5 (citing PLM’s Answer at 15). It is true that the
Morehouse defense is “an equitable defense in the nature of laches or acquiescence.” Tillamook
Country Smoker, Inc. v. Tillamook Cty. Creamery Ass’n., 333 F. Supp. 2d 975, 986 (D. Or. 2004)
(quoting McCarthy on Trademarks § 20:38), aff’d 465 F.3d 1102 (9th Cir. 2006). But simply
referring to the defenses of laches and acquiesce is not the same as raising the Morehouse
defense. Although these doctrines are surely related, they are not identical. PLM’s briefing, in
fact, specifically addresses laches and acquiescence, without raising the Morehouse defense.
See, e.g., Pls.’ Mot. Partial Summ. J. at 37, ECF No. 114 (arguing that PROLACTO should not
be awarded monetary relief because of the doctrines of acquiesce and laches); Pls.’ Opp’n to
Def.’s Mot. Summ. J. at 42, ECF No. 120 (arguing that laches bars all of PROLACTO’s claims).
The Court finds that those references to equitable doctrines generally do not preserve an
argument under the Morehouse defense.
The Court has reviewed the instances where PLM argues it previously raised the
Morehouse defense. The Court finds that PLM has not previously raised this argument, and
therefore cannot raise it here for the first time on reconsideration. See District of Columbia v.
Doe, 611 F.3d 888, 896 (D.C. Cir. 2010). Enforcing this rule “protect[s] both the integrity of the
36
adversarial process in which parties are expected to bring all arguments before the court, and the
ability of the parties and others to rely on the finality of judgments.” U.S. Commodity Futures
Trading Comm’n v. McGraw–Hill Cos., 403 F. Supp. 2d 34, 36 (D.D.C. 2005). This result also
accords with the fact that amendment of a judgment under Rule 59(e) is an “extraordinary
remedy which should be used sparingly.” Mohammadi v. Islamic Republic of Iran, 782 F.3d 9,
17 (D.C. Cir. 2015) (quoting 11 7C Charles Wright & Arthur Miller, Federal Practice &
Procedure § 2810.1 (3d ed. 2012)). In light of this standard, the Court denies PLM’s motion to
amend the judgment because PLM has not preserved any argument based on the Morehouse
defense.19
C. PROLACTO’s Motion to Amend Findings and to Amend the Judgment
PROLACTO has also moved to amend the Court’s findings and to amend the judgment.
See generally PROLACTO’s Mot. Amend. PROLACTO argues that the Court should amend its
finding that two of PLM’s Indian Girl marks are incontestable, which in turn requires
amendment of the Court’s judgment on Count III. Specifically, PROLACTO argues that “Count
III should be dismissed and the permanent injunction vacated.” PROLACTO’s Mot. Amend at 3.
In response, PLM contends that PROLACTO waived the argument by failing to raise it at the
proper time, that PROLACTO’s incontestability argument is incorrect, and that PROLACTO’s
argument is irrelevant because the marks in question are presumptively valid, even if they are not
incontestable. See Pls.’ Opp’n Def.’s Mot. Amend Findings & Amend the Judgment (“PLM’s
Opp’n Mot. Amend”) at 1–2, ECF No. 353. For the reasons explained below, the Court will
19
Because the Court finds that PLM has waived any argument based on the Morehouse
defense, the Court does not reach the merits of that argument.
37
deny PROLACTO’s motion because it has waived the incontestability argument by failing to
raise it in a timely manner.
1. The Court’s Findings and Judgment
The Court addressed the incontestability of two of PLM’s Indian Girl marks in its
findings of facts. See PLM VI, 188 F. Supp. 3d 22, 48 (D.D.C. 2016). The Court found that:
PLM, Inc., which owned the marks as the successor to Ignacio Gutierrez’s sole
proprietorship, filed applications to register both the Indian Girl with Paleta and
Indian Girl with Cone marks on November 19, 2003. The USPTO issued
Registration No. 2,905,172 for the Indian Girl with Paleta on November 23, 2004
and issued Registration No. 2,968,652 for the Indian Girl with Cone on July 12,
2005. See Pls.’ Exs. 35 and 36. Both registrations became “incontestable”
pursuant to 15 U.S.C. § 1065 on December 12, 2014 upon PLM’s filing of
Section 15 affidavits with the USPTO.
Id.
In its consideration of PLM’s Count III, the Court concluded that “PLM’s registrations
for its Indian Girl with Paleta and Indian Girl with Cone have become incontestable pursuant to
§ 1065,” and rejected “PROLACTO’s various arguments contesting the validity of the marks and
PLM’s ownership of them.” Id. at 105. In a footnote, the Court also noted that PROLACTO had
not “attempt[ed] to belatedly assert or cite any of the enumerated defenses to incontestability in
its proposed findings of fact and conclusions of law, though it ‘disputes’ the incontestability of
PLM’s marks without providing any explanation.” Id. at 105 n.58.
Ultimately, the Court held that “PROLACTO’s use of PLM’s registered, incontestable
trademarks constitutes infringement under 15 U.S.C. § 1114(1)(a)” and the Court “enter[ed]
judgment on Count III for PLM accordingly.” Id. at 107. Now, PROLACTO moves to amend
the Court’s findings and judgment on this issue. See generally PROLACTO’s Mot. Amend.
38
2. PROLACTO’s Incontestability Argument
PROLACTO’s argument turns on the validity of PLM’s Section 15 affidavits. Section 15
of the Lanham Act sets forth the conditions that allow a registered mark to become “incontestable”
after it has been in continuous use for five consecutive years. See 15 U.S.C. § 1065. A mark can
only become incontestable if: “(1) there has been no final decision adverse to the owner’s claim
of ownership of such mark for such goods or services, or to the owner’s right to register the same
or to keep the same on the register; and (2) there is no proceeding involving said rights pending
in the United States Patent and Trademark Office or in a court and not finally disposed of.” Id. §
1065(1)–(2). A Section 15 affidavit filed with the USPTO must state that the mark meets these
requirements, among others. See § 1065(3); 37 C.F.R. § 2.167.
PROLACTO argues that PLM “could not meet that standard when it filed the two Section
15 affidavits on November 21, 2014.” PROLACTO’s Mot. Amend. at 6. Each of the affidavits,
which PLM’s counsel in this litigation filed with the USPTO, states:
There has been no final decision adverse to the owner’s claim of ownership of
such mark for such goods/services, or to the owner’s right to register the same or
to keep the same on the register; and there is no proceeding involving said rights
pending and not disposed of either in the United States Patent and Trademark
Office or in a court.
PROLACTO’s Mot. Amend, Decl. of Stephen L. Anderson (“1st Anderson Decl.”), Exs. A & C.
PROLACTO notes that PLM filed the affidavits on the same day that the parties participated in a
teleconference in this case. See PROLACTO’s Mot. Amend at 8 (citing Min. Entry (Nov. 21,
2014)). PROLACTO argues that the affidavits were “knowingly false” because the “validity and
ownership of PLM’s asserted Indian Girl Design registrations were still pending.” PROLACTO’s
Mot. Amend at 8.
In this action, PROLACTO sought the cancellation of the two Indian Girl registrations
because of fraud and abandonment. See Ans. 2d Am. Compl. & Countercls. ¶¶ 64–87 (setting
39
forth Counterclaim Counts V-VII). The Court’s ruling on the parties’ cross-motions for partial
summary judgment ruled in favor of PLM on those Counterclaims. See PLM IV, 69 F. Supp. 3d
175, 223–27 (D.D.C. 2014). PROLACTO correctly notes that the Court subsequently stated that
the summary judgment ruling was an interlocutory order. See Mem. & Order at 3, ECF No. 174;
see also Fed. R. Civ. P. 54(b) (“[A]ny order or other decision . . . that adjudicates fewer than all
the claims . . . does not end the action as to any of the claims or parties and may be revised at
any time before the entry of a judgment adjudicating all the claims . . . .”). Thus, PROLACTO
concludes that—contrary to both Section 15 and PLM’s affidavits—the validity of PLM’s Indian
Girl designs was still the subject of a pending proceeding.20
PROLACTO also addresses the Notices of Acknowledgement of the declarations issued
by the USPTO, which state that “[t]he affidavit of incontestability filed in connection with the
registration identified below meets the requirements of Section 15 of the Trademark Act, 15
U.S.C. § 1065. The affidavit is acknowledged.” See 1st Anderson Decl., Exs. B & D. The
acknowledgment process requires verification that the affidavit contains all of the necessary
information. See 37 C.F.R. § 2.167(i). When USPTO acknowledges a Section 15 affidavit, it
does not “accept” it, but instead the “function . . . is the ministerial one of receiving said
affidavits and noting their receipt.” Arman’s Systems, Inc. v. Armand’s Subway, Inc., 215
U.S.P.Q. 1048, 1982 WL 54195, at *2 n.2 (T.T.A.B. 1982). The Trademark Manual of
Examining Procedure states that “[t]he question of whether the registration is incontestable arises
20
PLM argues “that at the time PLM filed the affidavits of incontestability, there was
no pending counterclaim challenging PLM’s Indian Girl With Paleta and Indian Girl
With Cone
registrations because this Court had entered summary judgment on those claims in PLM’s
favor.” PLM’s Opp’n Mot. Amend at 11. For the reasons explained below, the Court does not
reach the merits of the parties’ arguments on this point.
40
and is determined by a court if there is a proceeding involving the mark.” Trademark Manual of
Examining Procedure § 1605 (Jan. 2017 ed.), https://tmep.uspto.gov/RDMS/TMEP/current#/
current/TMEP-1600d1e1463.html.
After raising these issues, PROLACTO argues that the Court should amend its findings to
remove any reference to the incontestability of PLM’s Indian Girl registrations. See
PROLACTO’s Mot. Amend at 9. PROLACTO also makes a related argument that “no evidence
regarding the purported incontestability of the Indian Girl Designs was timely or properly
introduced into evidence into this case.” PROLACTO’s Mot. Amend at 5. In light of its
suggested factual amendment, PROLACTO asserts that the Court must also amend its judgment
to dismiss Count III and vacate the permanent injunction. PROLACTO’s Mot. Amend at 14.
3. Waiver
The question before the Court is whether PROLACTO can rely on its incontestability
argument at this stage of the litigation. A Rule 52(b) motion to amend factual findings does not
provide a “second opportunity . . . to advance new theories by moving to amend a particular
finding of fact or conclusion of law.” Salazar v. District of Columbia, 685 F. Supp. 2d 72, 75
(D.D.C. 2010) (quoting 9C Charles Wright & Arthur Miller, Federal Practice & Procedure
§ 2582 (3d ed. 2009)); see also Diocese of Winona v. Interstate Fire & Cas. Co., 89 F.3d 1386,
1397 (8th Cir. 1996) (finding that a party could not use a 52(b) motion to raise an argument that
could have been raised prior to the entry of a judgment); Fontenot v. Mesa Petroleum Co., 791
F.2d 1207, 1219 (5th Cir. 1986) (explaining that a Rule 52(b) motion should not be employed “to
advance new theories”).
Similarly, as the Court noted in the context of PLM’s motion to amend, a Rule 59(e)
motion to amend a judgment is not an escape hatch “to raise arguments . . . that could have been
41
raised prior to the entry of judgment.” Exxon Shipping Co. v. Baker, 554 U.S. 471, 485 n.5
(2008) (quoting 11 Charles Wright & Arthur Miller, Federal Practice & Procedure § 2810.1 (2d
ed. 1995)). And, “[i]t is well settled that an issue presented for the first time in a motion
pursuant to Federal Rule of Civil Procedure 59(e) generally is not timely raised.” District of
Columbia v. Doe, 611 F.3d 888, 896 (D.C. Cir. 2010) (quoting Holland v. Big River Minerals
Corp., 181 F.3d 597, 605 (4th Cir. 1999)). In fact, several courts have noted that the standard for
a 52(b) motion is nearly identical to the standard under Rule 59(e). See, e.g., Covertech
Fabricating, Inc. v. TVM Bldg. Prod., Inc., No. 13-0150, 2015 WL 6743948, at *2 (W.D. Pa.
Nov. 4, 2015); Kline v. Archuleta, 309 F.R.D. 91, 93 (D.D.C. 2015), aff’d sub nom. Kline v.
Cobert, No. 15-5248, 2016 WL 1272945 (D.C. Cir. Feb. 10, 2016); Power Integrations, Inc. v.
Fairchild Semiconductor Int’l, Inc., 762 F. Supp. 2d 710, 717 n.4 (D. Del. 2011), vacated on
other grounds, 711 F.3d 1348 (Fed. Cir. 2013); FINOVA Capital Corp. v. Richard A. Arledge,
Inc., 2007 WL 1965335, at *2 (D. Ariz. July 2, 2007).
PROLACTO has certainly had many opportunities to raise the incontestability issue.
PLM filed the Section 15 affidavits on November 21, 2014 and the USPTO issued
acknowledgments on December 12, 2014. See 1st Anderson Decl., Exs. A–D. Since those
dates, the relevant documents have been publicly available on the USPTO website. Furthermore,
PLM repeatedly raised the incontestability of the marks. First, PLM indicated in the parties’
joint pretrial statement that its Indian Girl with Cone design registration was incontestable.21 See
Parties’ Joint Pretrial Statement at 14, ECF No. 182.
21
The Court notes that the chart in the pretrial statement indicates that PLM’s Indian Girl
with Cone mark is incontestable, but, confusingly, it does not include the same information for
PLM’s Indian Girl with Paleta mark. See Parties’ Joint Pretrial Statement at 14, ECF No. 182.
42
Second, PLM’s proposed findings of fact and conclusions of law also make multiple
references to incontestability. The very first page of PLM’s post-trial brief states that LA
INDITA MICHOACANA “was the third U.S. Trademark Registration that PLM obtained: the
USPTO issued the first two several years before, which have since become incontestable.”
PLM’s Post-Trial Brief at 1. A table depicts both of the purportedly incontestable marks, as well
as the date that USPTO acknowledged the Section 15 affidavits. PLM’s Post-Trial Brief at 1.
Later in the same brief, PLM again includes a chart depicting the two marks and labeling them
“[i]ncontestable as of 12/12/2014.” PLM’s Post-Trial Brief ¶ 155. The next paragraph states in
full: “PLM (Sub), Inc. is the current owner and registrant of PLM’s three registered marks shown
above, two of which, namely Reg. Nos. 2,905,172, and 2,968,652, became incontestable on
December 12, 2014.” PLM’s Post-Trial Brief ¶ 156. PROLACTO’s reply brief states that it
“does not dispute” the conclusions of either paragraph 155 or 156. See Def.’s Reply & Opp’n
Pls.’ [Proposed] Findings of Fact & Conclusions of Law (“PROLACTO’s Post-Trial Reply”)
¶¶ 155–56, ECF No. 315 (emphasis added).
PLM’s post trial brief also includes legal argument on the effect of the purportedly
incontestable registered marks. See PLM’s Post-Trial Brief ¶¶ 167–71. In the midst of several
paragraphs of argument, PLM asserts that “[b]oth of these Indian Girl Design marks are
conclusively presumed to be distinctive, and thus, cannot be challenged as being merely
descriptive or lacking secondary meaning.” PLM’s Post-Trial Brief ¶ 169. PROLACTO
responds simply that it “disputes Plaintiff’s Conclusion Nos. 167–170” and “Conclusion Nos.
171–172.” PROLACTO’s Post-Trial Reply ¶¶ 167–68. That threadbare assertion certainly did
not raise the incontestability argument that PROLACTO brings forward now. In fact,
PROLACTO does not point to anywhere in this drawn-out litigation where it challenged the
43
incontestability of PLM’s Indian Girl marks on the grounds it relies on now. A search of
PROLACTO’s post-trial briefing reveals a lone paragraph that uses the terms “incontestable” or
“incontestability,” and that paragraph addresses the incontestability of one of PROLACTO’s
own marks. See Def.’s Proposed Findings of Fact and Conclusions of Law ¶ 19, ECF No. 311.
In response to PLM’s waiver argument, PROLACTO cites only Rule 52(a)(5) and a
single D.C. Circuit decision, In re Sealed Case, 552 F.3d 841, 850 (D.C. Cir. 2009).22 Rule
52(a)(5) states that a party “may later question the sufficiency of the evidence supporting the
findings, whether or not the party requested findings, objected to them, moved to amend them, or
moved for partial findings.” Fed R. Civ. P. 52(a)(5). The problem with PROLACTO’s
argument is that it is not truly attacking the sufficiency of the evidence. Instead, PROLACTO is
making a legal argument about whether PLM met the standards required for a Section 15 affidavit.
Furthermore, PROLACTO’s argument that “no evidence regarding the purported
incontestability of the Indian Girl Designs was timely or properly introduced into evidence”
misses the mark. See PROLACTO’s Mot. Amend at 5. The Court made clear that it took
“judicial notice throughout [its Findings of Fact and Conclusions of Law] of information
regarding federal trademark registrations that is publicly available through the USPTO’s
Trademark Status & Document Retrieval Database.”23 PLM VI, 188 F. Supp. 3d 22, 43 n.13
22
PROLACTO argues that this case stands for the proposition that Rule 52(a)(5) “allows
a party to make [a sufficiency of the evidence] challenge as an initial matter in the appellate
court without ever having raised the issue in the trial court.” Def.’s Reply Supp. Mot. Amend
Findings & Amend the Judgment at 4, ECF No. 356. That may be true, but it does not follow
that PROLACTO can raise its incontestability argument on reconsideration despite numerous
decisions stating that a motion under Rule 52(b) or 59(e) is not an avenue to advancing new
theories or arguments for the first time.
23
PROLACTO takes issues with the Court’s taking judicial notice of these records. See
PROLACTO’s Mot. Amend. 5 n.1. PROLACTO also made a slightly more developed, but
substantially identical argument in its opposition to PLM’s motion to amend. See PROLACTO’s
Opp’n Mot. Amend at 12. PROLACTO relies on two cases from the Fifth Circuit and one from
44
(D.D.C. 2016). The public records show that PLM filed a Section 15 incontestability affidavit
for each of the Indian Girl marks at issue and that USPTO acknowledged those affidavits.
At this late stage in the litigation, PROLACTO cannot raise a new legal argument
attacking the validity of those affidavits. Aside from its reference to Rule 52(a)(5) and In re
Sealed Case, PROLACTO has not put forward any other authority confronting the rule that a
Rule 52(b) motion is not a “second opportunity . . . to advance new theories by moving to amend
a particular finding of fact or conclusion of law.” Salazar, 685 F. Supp. 2d at 75 (quoting 9C
Charles Wright & Arthur Miller, Federal Practice & Procedure § 2582 (3d ed. 2009)). Nor has
PROLACTO explained why its motions should avoid the rule that “an issue presented for the
first time in a motion pursuant to Federal Rule of Civil Procedure 59(e) generally is not timely
raised.” Doe, 611 F.3d at 896 (quoting Holland, 181 F.3d at 605).
The Court finds that PROLACTO has waived its argument regarding the purported
incontestability of PLM’s two Indian Girl marks. Therefore, the Court will deny PROLACTO’s
motion.24
the Second Circuit, but none of the cases involves documents publicly filed with and maintained
by the USPTO. See PROLACTO’s Mot. Amend. 5 n.1 (citing Int’l Star Class Yacht Racing
Ass’n v. Tommy Hilfiger U.S.A., Inc., 146 F.3d 66, 70–71 (2d Cir. 1998); Colonial Leasing Co.
of New England v. Logistics Control Grp. Int’l, 762 F.2d 454, 461 (5th Cir. 1985), on reh’g sub
nom. Colonial Leasing of New England, Inc. v. Logistics Control Int’l, 770 F.2d 479 (5th Cir.
1985); Fireman’s Fund Ins. Co. v. Wilburn Boat Co., 259 F.2d 662, 664 (5th Cir. 1958)).
The Second Circuit decision in International Star Class Yacht Racing, for instance, involved a
district court that “relied on statements of fact contained in its 1992 . . . opinion to establish
prevailing trademark search practices.” 146 F.3d at 70. In truth, many courts have applied the
standard of Federal Rule of Evidence 201(b)(2) and determined that it would be appropriate to
take judicial notice of publicly-available records maintained by the USPTO. See, e.g., Kaempe v.
Myers, 367 F.3d 958, 965 (D.C. Cir. 2004); Kos Pharm., Inc. v. Andrx Corp., 369 F.3d 700, 705
n.5 (3d Cir. 2004); Hoganas AB v. Dresser Indus., Inc., 9 F.3d 948, 954 n.27 (Fed. Cir. 1993);
Standard Havens Prods., Inc. v. Gencor Indus., Inc., 897 F.2d 511, 514 n.3 (Fed. Cir. 1990);
Vitek Sys., Inc. v. Abbott Labs., 675 F.2d 190, 192 n.4 (8th Cir. 1982).
24
Because the Court finds that PROLACTO has waived its objection to the incontestability
of PLM’s Indian Girl registrations, the Court does not reach the merits of that argument.
45
V. PROLACTO’S MOTION FOR A NEW TRIAL
Next, the Court turns to PROLACTO’s motion for a new trial pursuant to Federal Rule of
Civil Procedure 59(b). See generally PROLACTO’s Mot. New Trial. PROLACTO argues that
PLM’s registration and use of the domain name “laflordemichoacan.com” constitutes “newly
discovered evidence of PLM’s bad faith, unfair competition, and infringement.” PROLACTO’s
Mot. New Trial at 2. PLM responds that the Court should not grant a new trial because
PROLACTO could have found the evidence before trial, because PROLACTO presents the
domain name only as impeachment evidence, and because the new evidence would not change
the outcome of this case. See Pls.’ Opp’n Def.’s Mot. for New Trial (“PLM’s Opp’n Mot. New
Trial”) at 1–2, ECF No. 354. Because the Court finds that the newly presented evidence would
not change the outcome of the case, the Court will deny PROLACTO’s motion for a new trial.
A. Legal Standard
Federal Rule of Civil Procedure 59(a)(2) permits a court, on a motion for a new trial after
a nonjury trial, to “open the judgment if one has been entered, take additional testimony, amend
findings of fact and conclusions of law or make new ones, and direct the entry of a new
judgment.” Fed. R. Civ. P. 59(a)(2). A parties’ motion Under Rule 59(a) to “reopen the trial
record to submit additional proof ‘is addressed to [the court’s] sound discretion.’” Ashraf-
Hassan v. Embassy of France, 185 F. Supp. 3d 94, 112 (D.D.C. 2016) (alteration in original)
(quoting Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 331 (1971)).
The purpose of Rule 59 is not “relitigating old issues . . . or otherwise taking a ‘second
bite at the apple.” Ashraf-Hassan, 185 F. Supp. 3d at 112 (quoting Barnes v. Alves, 304 F.R.D.
363, 366–67 (W.D.N.Y. 2015)). Furthermore, “[m]otions for a new trial are generally
46
disfavored, and should only be granted with great caution.” Ashraf-Hassan, 185 F. Supp. 3d at
113 (quoting Chavez v. City of Albuquerque, 640 F. Supp. 2d 1340, 1343 (D.N.M. 2008)).
Rule 59(a)(1)(B) makes clear that a court may grant a new trial, “after a nonjury trial, for
any reason for which a rehearing has heretofore been granted in a suit in equity in federal court.”
Fed. R. Civ. P. 59(a)(1)(B). Among other reasons, a court may grant a new trial following “the
discovery of important new evidence.” Ashraf-Hassan, 185 F. Supp. 3d at 112 (quoting Azevedo
v. Hous. Auth. of City of Sarasota, 147 F.R.D. 255, 257 (M.D. Fla. 1993)); see also Nyman v.
FDIC, 967 F. Supp. 1562, 1569 (D.D.C. 1997) (“Motions for a new trial ‘must clearly establish
either a manifest error of law or fact or must present newly discovered evidence.’” (quoting
FDIC v. Meyer, 781 F.2d 1260, 1268 (7th Cir. 1986))).
To show that newly discovered evidence requires a new trial, the moving party must
establish that:
(1) the newly discovered evidence [is] of facts that existed at the time of trial or
other dispositive proceeding, (2) the [party seeking relief] must have been
justifiably ignorant of [the evidence] despite due diligence, (3) the evidence must
be admissible and of such importance that it probably would have changed the
outcome, and (4) the evidence must not be merely cumulative or impeaching.
Lightfoot v. District of Columbia, 555 F. Supp. 2d 61, 68 (D.D.C. 2008) (alterations in original)
(quoting United States v. Int’l Bhd. of Teamsters, 247 F.3d 370, 392 (2d Cir. 2001)).25
25
Lightfoot describes the standard under Rule 60(b) for vacating a judgment due to newly
discovered evidence. See 555 F. Supp. 2d at 68. But the standards for relief under Rules 60(b)
and 59(a) are the same. See Compass Technology, Inc. v. Tseng Laboratories, Inc., 71 F.3d
1125, 1130 (3d Cir. 1995); see also 11 Charles Wright & Arthur Miller, Federal Practice &
Procedure § 2808 (3d ed. 2016).
47
B. Analysis
1. The “laflordemichoacan.com” Domain Name
The Court has previously found that PROLACTO owns two registered trademarks that
include the phrase “La Flor De Michoacan.” PLM VI, 188 F. Supp. 3d 22, 66 (D.D.C. 2016)
(identifying U.S. Reg. Nos. 2,830,401 and 3,249,113). PROLACTO filed its application for the
first of the two marks (U.S. Registration No. 2,830,401) with the USPTO on April 18, 2001, and
the mark was registered on April 6, 2004 and became “incontestable” pursuant to 15 U.S.C.
§ 1065 on July 30, 2009. Id. PROLACTO filed its application for the second mark (U.S.
Registration No. 3,249,113) on December 8, 2005, and the mark was registered on June 5, 2007. Id.
During the TTAB proceedings that preceded this action, both marks that included the
words “La Flor De Michoacan,” were placed on the record. See Productos Lacteos Tocumbo
S.A. De C.V. v. Paleteria La Michoacana, Inc., 98 U.S.P.Q.2d 1921, 2011 WL 2161071, at *2,
*8 (T.T.A.B. 2011). On May 20, 2011, the TTAB found that PROLACTO “has priority of use
with respect to . . . the mark[] . . . LA FLOR DE MICHOACAN.” Id. at *11. PROLACTO has
produced a commercial report showing that, less than two months later, Ignacio Gutierrez
registered the domain name “laflordemichoacan.com” on behalf of Paleteria La Michoacana, Inc.
See PROLACTO’s Mot. New Trial, Decl. of Stephen Anderson (“2d Anderson Decl.”) ¶¶ 5–6,
ECF No. 345-1; 2d Anderson Decl., Ex. B at 3–4. The same report shows that the domain name
was redirecting internet users to “ytupaleta.com,” which is the homepage for PLM’s website.
See 2d Anderson Decl. ¶ 7; 2d Anderson Decl., Ex. B at 43. PROLACTO has also presented
evidence from the Internet Archive’s WayBack Machine that appears to show that
“laflordemichoacan.com” redirected to “ytupaleta.com” from at least June 3, 2013 through
March 4, 2016. See 2d Anderson Decl. ¶ 8; 2d Anderson Decl., Ex. C.
48
PROLACTO states that it became aware of the domain name after reviewing PLM’s
motion to substitute PLM Operations as the sole Plaintiff in this case. See PROLACTO’s Mot.
New Trial at 5–6 (citing PLM Mot. Sub.). The declaration of Mr. Robert Spigner accompanying
PLM’s motion for substitution stated that PLM (Sub) “sold substantially all of its assets” to PLM
Operations, and that the transaction was memorialized “in the Bill of Sale, General Assignment
and Conveyance” attached to Mr. Spigner’s declaration. See Spigner Decl. ¶ 3. Schedule 1 to
the Bill of Sale, General Assignment and Conveyance sets forth the assets being transferred, and
Annex D to that list includes various domain names including “laflordemichoacan.com.” See
Spigner Decl., Ex. B, schd. 1, annex D.
After PROLACTO raised this issue with PLM, PROLACTO states that it found the
domain name had been “parked” and that it no longer transferred users to “ytupaleta.com.” See
2d Anderson Decl. ¶ 12. On June 23, 2016, counsel for PLM informed PROLACTO that PLM
would transfer the domain name to PROLACTO.26 See 2d Anderson Decl. ¶ 12; see also PLM’s
Opp’n Mot. New Trial, Decl. of Laura L. Chapman (“Chapman Decl.”) ¶ 2, ECF No. 354-1;
Chapman Decl., Ex. A, ECF No. 354-2.
2. Bad Faith
PROLACTO’s core contention is that PLM’s registration of the “laflordemichoacan.com”
domain name is evidence of bad faith. PROLACTO relies on two cases from New York to
26
In its opposition to PROLACTO’s motion for a new trial, PLM does not dispute these
basic facts. See PLM’s Opp’n Mot. New Trial at 2–5. PLM’s recitation of the relevant facts
focuses on other issues, such as whether PROLACTO investigated the domain name, whether
the internet plays a role in PROLACTO’s advertising, whether PROLACTO asked PLM to stop
using the domain name, and whether consumers accessed the domain name or PLM’s
“ytupaleta.com” website. PLM’s Opp’n Mot. New Trial at 2–5. Because the Court will deny
PROLACTO’s motion for a new trial on the basis that the newly discovered evidence would not
change the outcome of the case, the additional facts put forth by PLM are irrelevant.
49
support its argument. First, PROLACTO cites De Beers LV Trademark Ltd. v. DeBeers
Diamond Syndicate, Inc. for the principle that an “inquiry into . . . bad faith ‘considers whether
the defendant adopted its mark with the intention of capitalizing on the plaintiff’s reputation and
goodwill and on any confusion between his and the senior user’s product.” 440 F. Supp. 2d 249,
278 (S.D.N.Y. 2006) (quoting Savin Corp. v. Savin Group, 391 F.3d 439, 60 (2d Cir. 2004)).
De Beers specifically states that “the choice of Internet domain names” seeking to capitalize on
name recognition and goodwill may be evidence of bad faith. Id. Second, PROLACTO cites
Aztar Corp. v. NY Entertainment, LLC, for the principle that use of an infringing name after the
party has notice of a trademark owner’s use of the original mark “evidence[s] bad faith.’”
15 F. Supp. 2d 252, 260 (E.D.N.Y. 1998), aff’d sub nom. Collins v. Aztar Corp., 210 F.3d 354
(2d Cir. 2000).
PROLACTO argues that PLM was well aware of PROLACTO’s two marks that included
the words “La Flor De Michoacan” because of the TTAB proceeding, but that PLM nevertheless
registered the domain name “laflordemichoacan.com” and diverted internet traffic to its own
website. See PROLACTO’s Mot. New Trial at 8. PROLACTO reasons that it would be
“difficult to envision a scenario in which PLM acquired this domain name for any reason other
than bad faith.” PROLACTO’s Mot. New Trial at 8. In response, PLM briefly argues that the
cases PROLACTO relies upon “do not apply,” because the cases concerned a junior user,
meaning “the party who was second-in-time to use the disputed mark.” PLM’s Opp’n Mot. New
Trial at 11. PLM argues that the Court’s previous consideration of this issue means the issue of
bad faith is inapplicable and that the existence of the domain name “does not change the outcome
of the case.” PLM’s Opp’n Mot. New Trial at 11. At this stage of the litigation, the relevant
50
question is not whether the domain name is evidence of bad faith, but whether the domain name
entitles PROLACTO to a new trial under the standards of Federal Rule of Civil Procedure 59(a).
3. The Newly Discovered Evidence Cannot be Used for Impeachment Purposes
PROLACTO appears to argue that PLM’s purported bad faith requires a new trial
because it calls into question testimony presented by PLM. See PROLACTO’s Mot. New Trial
at 8. For instance, PROLACTO suggests that the new evidence “shines a more discriminating
light on the credibility of PLM and the Gutierrez brothers, whose testimony led the Court to
believe that the Gutierrez brothers did not exhibit bad faith.” PROLACTO’s Mot. New Trial at
8. In other words, PROLACTO believes that “the Court decided to view all of the Gutierrez
brothers’ actions as innocent and taken in good faith,” but that this evidence could cause the
Court to reconsider its evaluation. PROLACTO’s Mot. New Trial at 9.
As PLM correctly points out, a court should not grant a new trial because of new
evidence that is “merely cumulative or impeaching.” Lightfoot v. District of Columbia, 555 F.
Supp. 2d 61, 68 (D.D.C. 2008) (quoting United States v. Int’l Bhd. of Teamsters, 247 F.3d 370,
392 (2d Cir. 2001)); see also Freedom Watch, Inc. v. U.S. Dep’t of State, No. 14-1832, 2016 WL
6155928, at *2 (D.D.C. Oct. 21, 2016) (quoting Lightfoot and using same standard); Shafiiq v.
Obama, 951 F. Supp. 2d 13, 17 (D.D.C. 2013) (same). PROLACTO does not dispute this
longstanding rule, arguing instead that the credibility of witness testimony “is not the focus of
PROLACTO’s request for a new trial.” See Def.’s Reply to Pls.’ Opp’n to Def.’s Mot. for New
Trial (“PROLACTO Reply Supp. Mot. New Trial”) at 13, ECF No. 357.
Nevertheless, an element of PROLACTO’s argument for a new trial appears to rely on
undermining the testimony of the Gutierrez brothers. For instance, PROLACTO argues that the
domain name “shines a more discriminating light on the credibility of PLM and the Gutierrez
51
brothers” and consideration of the new evidence could cause the court to reconsider its decision
to “view all of the Gutierrez brothers’ actions as innocent and taken in good faith.”
PROLACTO’s Mot. New Trial at 8–9. Using the domain name for that purpose would fall under
the classic definition of impeachment. See Impeachment, Black’s Law Dictionary (10th ed.
2014) (defining impeachment in this context to mean “[t]he act of discrediting a witness”).
Newly discovered evidence does not entitle a party to a new trial when it is merely cumulative or
impeaching, and the Court will not grant a new trial for evidence of the domain name to be used
for that purpose.
4. The Newly Discovered Evidence Would Not Change the Outcome
But PROLACTO’s argument is broader than simply calling into question the credibility
of particular witnesses. PROLACTO posits that PLM’s registration and use of the domain name
“further highlights PLM’s wide-spread pattern of bad faith with respect to PROLACTO’s
marks.” PROLACTO’s Mot. New Trial at 8. In other words, PROLACTO believes that the
additional evidence would cause the Court to reevaluate its entire analysis of the evidence and
arguments on the bad faith issue. PROLACTO concludes that the domain name “goes to the
issue of bad faith, a core issue in multiple claims in this litigation, and such a finding of bad faith
would alter the outcome in this case.” PROLACTO Reply Supp. Mot. New Trial at 13.
The parties’ arguments both attempt to parse the Court’s prior decision on the issue of
bad faith. PLM argues briefly that the Court previously decided that “the issue of bad faith is
‘entirely inapplicable to PLM’s adoption of its marks’ because PLM is the national senior user of
‘La Michoacana’ and an Indian Girl, and PROLACTO is the junior user.” PLM’s Opp’n Mot.
New Trial at 11 (quoting PLM VI, 188 F. Supp. 3d 22, 88 (D.D.C. 2016)). PROLACTO argues
that PLM “has blatantly mischaracterized” the Court’s reasoning, and that the Court “did not
52
broadly determine that PLM’s bad faith could not be considered and impactful in this case.”
PROLACTO Reply Supp. Mot. New Trial at 9–10. Thus, the Court will begin by restating its
prior holding on the bad faith issue.
After examining the parties’ arguments and the relevant case law in detail, the Court
determined that, if it was “to hold that PLM was not entitled to any rights in its marks on the
basis of bad faith, despite the fact that it was first to use its marks in the United States, it would
appear that the Court would be the first to do so in the history of American trademark law.”
PLM VI, 188 F. Supp. 3d at 91. The Court noted that it was “dubious of the legal validity” of
PROLACTO’s argument. Id. Nevertheless, the court assumed—without deciding—that the
theory was valid, and found that PROLACTO failed to show that the legal theory was applicable
to the facts on the record. Id. The Court articulated the novel theory of bad faith in the
following way:
[I]f a party adopts a mark in the United States that has been previously used in a
foreign country and engages in various forms of advertising with the intention of
benefitting from the foreign user’s goodwill and reputation by deceiving
consumers as to the true origin of its products—even if the foreign user has never
used the mark in commerce in the United States and even if the foreign mark does
not meet the requisite level of “fame” under the famous mark doctrine—then the
party cannot obtain rights to the mark.
Id. Based on the evidence on the record, the Court found that the assumed theory was
inapplicable. Specifically, the Court reached the following conclusion:
The Court has found that although the Gutierrez brothers adopted the name “La
Michoacana” because they had seen the name in Mexico, they did not believe that
the term denoted a single source of product in Mexico. The Court has also found
that, in the United States, the name does not, in fact, denote a single source of
product. The Court has found that although Ignacio Gutierrez copied PLM’s
Indian Girl mark from similar marks that he had seen in Mexico and adopted it
because he thought PLM’s target consumers would recognize the mark, he did not
believe that, in Mexico, the mark denoted a single source of product, but, rather,
believed that the mark was used indiscriminately by a variety of paleterias in
Mexico. The Court has also found that although Ignacio Gutierrez adopted the
Tocumbo Statement because he had seen similar, if not identical, language on
53
packaging in Mexico, he believed that various, separately-owned paleterias in
Mexico used the language on their product packaging even though it was not
literally true as applied to each of them. Finally, the Court also found the absence
of any credible evidence that any of PLM’s advertising statements at issue
influenced consumers’ decisions to purchase or not purchase PLM’s products or
caused consumers to falsely believe that PLM’s products were actually
PROLACTO’s products.
Id.
The Court now finds that PROLACTO’s legal theory would be inapplicable, even with
the addition of the newly discovered domain name evidence. Crucially, PLM did not register the
domain name “laflordemichoacan.com” until after the TTAB proceeding that preceded this
action. See 2d Anderson Decl. ¶¶ 5–6; 2d Anderson Decl., Ex. B at 3–4. The Court’s prior
analysis, which was based on comprehensive findings of fact following the review of extensive
testimony and documentary evidence, turned on the fact that the Gutierrez brothers did not
believe that the marks in question denoted any particular source of product in Mexico at the time
they adopted the marks in the United States. See PLM VI, 188 F. Supp. 3d at 91. The
registration of the domain name occurred long after those decisions were made and would have
no impact on the Court’s factual findings with regard to the Gutierrez brothers’ earlier
knowledge or intentions. Nor can the evidence be used to suggest that the Gutierrez brothers are
generally untrustworthy or unethical. As the Court has previously noted, a new trial should not
be granted where the use of newly discovered evidence is to impeach or undermine the
credibility of a witness. See supra Part V.B.3. Thus, because the Court finds that the newly
discovered evidence of the “laflordemichoacan.com” domain name would not change the
outcome of the case, the Court will deny PROLACTO’s motion for a new trial.27 See Lightfoot,
555 F. Supp. 2d at 68.
27
Because the Court finds that evidence of the domain name would not change the
outcome of the case, the Court need not address the parties arguments regarding whether
54
VI. PROLACTO’S BILL OF COSTS
Finally, the Court turns to the bill of costs that PROLACTO filed on June 17, 2016. See
generally PROLACTO’s Bill of Costs. PLM presents several reasons why the Court should
deny PROLACTO’s request for costs.28 See generally PLM’s Opp’n Bill of Costs. Because of
the mixed nature of the judgment in this case, the Court will exercise its discretion to require
each party to bear its own costs.
A. Legal Standard
Federal Rule of Civil Procedure 54 governs the allocation of costs in federal court. See
Fed. R. Civ. P. 54(d)(1). Under Rule 54(d), “[u]nless a federal statute, these rules, or a court
order provides otherwise, costs—other than attorney’s fees—should be allowed to the prevailing
party.” Id. The Lanham Act explicitly contemplates an award of costs. See 15 U.S.C. § 1117(a).
A prevailing party is “one who has been awarded some relief by a court.” Buckhannon
Bd. & Care Home, Inc. v. W. Va. Dep’t of Health & Human Res., 532 U.S. 598, 603 (2001). The
D.C. Circuit has articulated a three-part test for determining prevailing-party status: “(1) there
must be a ‘court-ordered change in the legal relationship’ of the parties; (2) the judgment must be
in favor of the party seeking the fees; and (3) the judicial pronouncement must be accompanied
by judicial relief.” District of Columbia v. Straus, 590 F.3d 898, 901 (D.C. Cir. 2010) (quoting
PROLACTO was “justifiably ignorant of [the evidence] despite due diligence.” Lightfoot, 555
F. Supp. 2d at 68 (alteration in original) (quoting United States v. Int’l Bhd. of Teamsters, 247
F.3d 370, 392 (2d Cir. 2001)). Nor does the Court reach PLM’s alternative arguments that
evidence of the domain name would not change the outcome because PROLACTO has not
sought injunctive relief and the “issue of monetary damages was adjudicated on summary
judgment in favor of PLM.” PLM’s Opp’n Mot. New Trial at 12.
28
Under Federal Rule of Civil Procedure 54(d)(1), the “clerk may tax costs on 14 days’
notice.” Fed. R. Civ. P. 54(d)(1). A party may file a motion to review the clerk’s action. Id.
The Court will construe PLM’s opposition and objections to PROLACTO’s bill of costs as a
motion under that rule.
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Thomas v. Nat’l Sci. Found., 330 F.3d 486, 492–93 (D.C. Cir. 2003)). A party need not prevail
on every claim to be the prevailing party for the purposes of allocating costs. A party who is
only partially successful can be deemed the prevailing party. See 10 Charles Wright & Arthur
Miller, Federal Practice & Procedure § 2667 (3d ed. 2016). In fact, the prevailing party is “one
who succeeds ‘on any significant issue in litigation which achieves some of the benefits [they]
sought in bringing suit.’” Stanley v. Proctor, 591 F. Supp. 2d 12, 14–15 (D.D.C. 2008)
(emphasis added) (alteration in original) (quoting Hensley v. Eckerhart, 461 U.S. 424, 433
(1983)); see also Texas State Teachers Ass’n v. Garland Independent School Dist., 489 U.S. 782,
791–92 (1989); Lopez v. District of Columbia, 383 F. Supp. 2d 18, 22 (D.D.C. 2005).
Rule 54 imposes a presumption in favor of awarding costs to the prevailing party. See
Moore v. Nat’l Ass’n of Sec. Dealers, Inc., 762 F.2d 1093, 1107–08 (D.C. Cir. 1985). The D.C.
Circuit has held that a district court must articulate a good reason for deviating from that general
rule. See Baez v. U.S. Dep’t of Justice, 684 F.2d 999, 1004 (D.C. Cir. 1982) (en banc) (per
curiam). Nevertheless, the apportionment of costs is in the discretion of the district court, and
the “award of costs to the prevailing party is not automatic.” Moore, 762 F.2d at 1107; see also
C & E Servs., Inc. v. Ashland Inc., 601 F. Supp. 2d 262, 279 (D.D.C. 2009) (noting discretion).
B. Analysis
PROLACTO filed its bill of costs on June 17, 2016. See PROLACTO’s Bill of Costs at
1. PROLACTO seeks a total of $75,177.02 in costs. See PROLACTO’s Bill of Costs at 1.
Among other categories of purported costs, PROLACTO seeks $32,225.23 for transcript fees,
$29,352.02 in witness fees, and $7,000 in interpreters’ fees. PROLACTO’s Bill of Costs at 1.
PROLACTO states that, because of “the intertwined nature of the counts and counterclaims,” it
is submitting all costs that it incurred, but that it “recognizes there is likely to be an
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apportionment based on the Court’s findings on the claims at issue.” PROLACTO’s Bill of
Costs at 3. PLM raises a number of arguments in response. See generally PLM’s Opp’n Bill of
Costs. PLM argues that PROLACTO’s bill of costs is premature, that PLM—not
PROLACTO—is the prevailing party, that PROLACTO is not entitled to the specific costs it
seeks, and that the Court should exercise its discretion to deny any costs to PROLACTO. See
generally PLM’s Opp’n Bill of Costs. Because of the mixed nature of the judgment in this case,
the Court will exercise its discretion to require each party to bear its own costs.
In short, both PROLACTO and PLM argue that they are the prevailing party in this
litigation. Both arguments have merit. PROLACTO argues that it “has prevailed on the central
issue in this litigation.” Def.’s Reply to Pls.’ Opp’n & Objections to Bill of Costs
(“PROLACTO’s Reply Supp. Bill of Costs”) at 7, ECF No. 352. Specifically, PROLACTO
states that PLM brought this suit for the sole purpose of overturning the TTAB’s cancellation of
PLM’s trademark, but the Court affirmed the TTAB decision. See PROLACTO’s Reply Supp.
Bill of Costs at 7; see also PLM VI, 188 F. Supp. 3d 22, 101 (D.D.C. 2016); Order ¶ 1, ECF No.
338 (entering judgment in favor of PROLACTO on Count I). Certainly, a district court may
exercise its discretion to award costs to a defendant that “los[es] on a counterclaim, [but]
succeeds in warding off a predominant claim.” Ira Green, Inc. v. Military Sales & Serv. Co., 775
F.3d 12, 28 (1st Cir. 2014); see also Sci. Holding Co. v. Plessey Inc., 510 F.2d 15, 28 (2d Cir.
1974) (Friendly, C.J.) (“District courts have held that a defendant who successfully fends off a
large claim may be awarded costs despite failure to prevail on a counterclaim.”).
On the other hand, PLM argues that it prevailed on “every issue on summary judgment
on which a claim for relief was completely adjudicated” and that, following trial, “judgment has
been entered in favor of PLM on every remaining count” except for Count I of the Complaint.
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See PLM’s Opp’n Bill of Costs at 1–2. PLM also correctly notes that the Court granted
permanent injunctive relief enjoining PROLACTO from using the Indian Girl design in Northern
California and Houston, Texas. See PLM’s Opp’n Bill of Costs at 2; see also PLM VI, 188 F.
Supp. 3d at 120 (“[T]he Court will limit the geographic scope of its injunction to the specific
markets in which it has found infringement: Northern California . . . and the Houston, Texas
area . . . .”); Order at 2–3. The Court has no doubt that the permanent injunction is a form of
judicial relief in PLM’s favor that alters the legal relationship between the parties. See District
of Columbia v. Straus, 590 F.3d 898, 901 (D.C. Cir. 2010) (setting forth the three-part test to
determine the prevailing party).
The mixed nature of the judgment in this case raises a problem for the Court in
determining the prevailing party. Both parties have at least some claim that they are the winner.
Faced with similar facts, other courts in this district have taken a Solomonic approach and
exercised their discretion to order that each party should bear its own costs. See Bell Helicopter
Textron Inc. v. Airbus Helicopters, No. 10-0789, 2015 WL 1395894, at *2 (D.D.C. Mar. 25,
2015) (“[T]he mixed nature of the judgment here provides grounds for requiring each party to
bear its own costs.”); C & E Servs., 601 F. Supp. 2d at 280 (declining to determine a prevailing
party or award costs because the parties were “nearly in equipoise”).
One of those decisions noted that the D.C. Circuit does not appear to have considered this
practice. See Bell Helicopter, 2015 WL 1395894, at *2. But several other circuits have
approved of the idea that a district court may decline to award costs where the parties each
prevailed on different elements of a mixed judgment. See, e.g., Barber v. T.D. Williamson, Inc.,
254 F.3d 1223, 1234–35 (10th Cir. 2001) (collecting cases where courts declined to award costs
because neither side prevailed or because both sides prevailed); Ruiz v. A.B. Chance Co., 234
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F.3d 654, 670 (Fed. Cir. 2000) (affirming a decision not to award costs where one side
“prevailed on the patent invalidity issue, but [the other] prevailed on all of the other issues,
including the non-patent issues”); Testa v. Village of Mundelein, 89 F.3d 443, 447 (7th Cir.
1996) (“Considering the mixed outcome of the civil rights and malicious prosecution claims, the
decision requiring each party to bear its own costs is within that discretion.”); Amarel v. Connell,
102 F.3d 1494, 1523 (9th Cir. 1996) (“In the event of a mixed judgment . . . it is within the
discretion of a district court to require each party to bear its own costs.”); see also 10 Charles
Wright & Arthur Miller, Federal Practice & Procedure § 2668 (3d ed. 2016) (noting that the
denial of costs to both sides “has been considered appropriate when neither side entirely
prevailed or when both sides prevailed”). In light of the mixed judgment, the Court will deny
costs to both parties. PLM and PROLACTO will bear their own costs in this litigation.29
VII. CONCLUSION
For the foregoing reasons, PLM’s Motion to Substitute and Join Successor in Interest
(ECF No. 336) is GRANTED; PLM’s Motion to Amend the Judgment (ECF No. 340) is
DENIED; PROLACTO’s Motion for a New Trial (ECF No. 345) is DENIED; PROLACTO’s
Motion to Amend Findings and to Amend the Judgment (ECF No. 346) is DENIED; PLM’s
Opposition and Objections to PROLACTO’s Bill of Costs (ECF No. 350), construed as a motion
29
In its response to PROLACTO’s bill of costs, PLM argues that it has the right to file its
own bill of costs “within 21 days after the Court rules on all of the post-trial motions currently
pending.” PLM’s Opp’n Bill of Costs at 2 n.3. PROLACTO argues that its bill of costs was
timely, but that any bill of costs filed by PLM would be untimely. See PROLACTO’s Reply
Supp. Bill of Costs at 8–10. The Court does not need to address this timeliness question. Both
parties have had a sufficient opportunity to argue that they are the prevailing party in this
litigation. See PLM’s Opp’n Bill of Costs at 1–2; PROLACTO’s Reply Supp. Bill of Costs
at 6–8. Because the Court has determined that it will exercise its discretion to require each party
to bear its own costs based on the mixed judgment, there is no need to consider PLM’s potential
bill of costs or the arguments raised in connection to the specific costs claimed by PROLACTO.
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under Federal Rule of Civil Procedure 54(d)(1), is GRANTED; PROLACTO’s Motion for
Leave to File Surreply (ECF No. 351) is GRANTED IN PART and DENIED IN PART; and
PROLACTO’s Request for Hearing (ECF No. 358) is DENIED. An order consistent with this
Memorandum Opinion is separately and contemporaneously issued.
Dated: March 30, 2017 RUDOLPH CONTRERAS
United States District Judge
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