Emerald City Management, L.L.C v. Jordan Ka

Case: 15-40446 Document: 00513410503 Page: 1 Date Filed: 03/08/2016
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
March 8, 2016
No. 15-40446
Lyle W. Cayce
Clerk
EMERALD CITY MANAGEMENT, L.L.C.; EMERALD CITY BAND, INC.,
Plaintiffs–Appellees,
v.
JORDAN KAHN; JORDAN KAHN MUSIC COMPANY, L.L.C.,
Defendants–Appellants.
Appeal from the United States District Court
for the Eastern District of Texas
USDC No. 4:14-CV-358
Before DENNIS, ELROD, and GRAVES, Circuit Judges.
PER CURIAM: *
In this dispute about the use of the name “Downtown Fever” for a party
band in Texas, Appellants Jordan Kahn and Jordan Kahn Music Company,
L.L.C., (collectively, “Kahn”) appeal the district court’s order issuing a
preliminary injunction ordering them to transfer control of a Facebook account
to Plaintiffs Emerald City Management, L.L.C., and Emerald City Band, Inc.
(collectively, “Emerald City”). Because the requirements for a preliminary
injunction were not satisfied here, we VACATE the preliminary injunction.
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
Case: 15-40446 Document: 00513410503 Page: 2 Date Filed: 03/08/2016
No. 15-40446
I.
Plaintiffs Emerald City, which operate party bands in the Dallas, Texas
area, are owned by Dean Taglioli. Defendant Jordan Kahn is a musician from
Plano, Texas, and the owner of Defendant Jordan Kahn Music Company,
L.L.C. While in high school, Jordan allegedly met Taglioli and played with an
Emerald City party band called the Emerald City Band in 2004 and 2005. In
2006, while Jordan was in college at Berklee College of Music in Boston,
Massachusetts, Jordan formed a party band he named Downtown Fever. The
band grew in popularity, playing in various northeast states as well as in
Nashville and New Orleans. Taglioli allegedly took notice of the band’s success
and contacted Jordan in an effort to recruit him to move to Dallas and work for
Emerald City as a bandleader for a new band managed by Emerald City, which
was ultimately also given the name Downtown Fever. 1 Jordan eventually
agreed to move to Dallas and work for Emerald City in 2009. In Dallas, Jordan
auditioned and hired new musicians for the new Downtown Fever band.
Jordan worked as the bandleader of the Downtown Fever band and also
worked for Emerald City as the Director of Operations, overseeing Emerald
City’s other bands. Allegedly unbeknownst to Jordan, Emerald City obtained
a trademark registration for the mark “Downtown Fever” from the State of
Texas in 2011. 2
1 It is disputed whether Taglioli offered Jordan mere employment or a partnership
interest in Emerald City. Taglioli asserts that Jordan agreed to be an employee, while Kahn
asserts that Taglioli agreed to a partnership deal. Kahn asserts that Jordan resigned from
Emerald City in 2014 because of Taglioli’s continued refusal to memorialize the partnership
deal.
2 Emerald City asserts that Jordan agreed to allow Emerald City to own the
Downtown Fever mark when Jordan agreed to move to Dallas and work for Emerald City.
Kahn denies this allegation and asserts that Jordan at all times owned the Downtown Fever
mark and gave Emerald City only a license to use the mark while he worked for them.
2
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In 2014, Jordan resigned from Emerald City. Soon thereafter, Emerald
City filed suit against Kahn for claims of state and federal trademark
infringement and other business torts. Emerald City asserts, among other
things, that Kahn is infringing on Emerald City’s “Downtown Fever” mark.
Emerald City sought a preliminary injunction and temporary restraining order
to prevent Kahn from operating under the Downtown Fever mark, recover
alleged Emerald City data from Kahn, and gain access to the Downtown Fever
website and social media accounts. The district court granted injunctive relief
but did not order, among other things, that Kahn turn over control of the
Downtown Fever Facebook account.
After the order granting injunctive relief issued, Jordan voluntarily
inactivated the Downtown Fever Facebook account such that no one can
currently view the Downtown Fever Facebook page. Based upon this change
to the status quo, 3 Emerald City filed a second application for injunctive relief,
which requested, among other things, an order forcing Kahn to give Emerald
City control over the Downtown Fever Facebook account. The second
application was stricken but was replaced by an amended second application
requesting the same. The district court transferred the matter to the
magistrate judge, who held a hearing on the Application.
At the hearing, Emerald City’s witness—a web designer who had
designed Emerald City’s website—testified that an Emerald City employee
named Phillip Nestreda had created the Downtown Fever Facebook account
and had given Jordan administrator access to the account. The witness
testified that the Downtown Fever Facebook page was no longer viewable and
3 Emerald City was previously blocked from controlling the Downtown Fever Facebook
account whereas now the Facebook page has been “shut down” such that customers and
potential customers can no longer access the page and may be under the impression that the
Downtown Fever band has disbanded.
3
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that Emerald City had been “locked out” of accessing the administrator
functions for the page. At the conclusion of the evidence, the magistrate judge
announced that Kahn would have to re-activate the Downtown Fever Facebook
page so that it could be viewed and would have to transfer control of the
Facebook page to Emerald City.
After the hearing, the magistrate judge issued its Report and
Recommendation (“R&R”). The R&R recommended that the district court
issue a preliminary injunction ordering Kahn to “transfer to Plaintiffs complete
control of Downtown Fever’s account on Facebook” and prohibit Kahn from
“making any alterations to or accessing (for any purpose other than to transfer
the control to Plaintiffs) Downtown Fever’s Facebook account.” The district
court adopted the R&R in full and without further analysis, ordered Kahn to
“transfer to Plaintiffs complete control of Downtown Fever’s account on
Facebook by providing Plaintiffs’ counsel with the password and any other
required materials to access and assume control of the account under an
administrator status within five (5) days of the entry of this order” and
enjoined Kahn “from making any alterations to or accessing (for any purpose
other than to transfer the control of the administrator status to Plaintiffs)
Downtown Fever’s Facebook account.”
Kahn appeals the order, arguing that Emerald City failed to carry its
burden to show that each requirement for a preliminary injunction was
satisfied. Specifically, Kahn argues that Emerald City never showed how they
were likely to succeed on the merits for any of their claims—either in their
Amended Second Application for injunctive relief or at the hearing—and the
R&R and district court order also fail to discuss likelihood of success on the
merits. Kahn points out that the district court, which adopted the R&R in full,
based its decision to issue the preliminary injunction on the “Lanham Act,”
4
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which requires a plaintiff to show “use in commerce” of a mark. Kahn argues
that neither shutting down a Facebook page nor blocking Emerald City from
administrator access to a Facebook page is “use” of a mark “in commerce.”
Kahn notes that the Downtown Fever Facebook page, because it is inactivated,
cannot be viewed by anyone and thus Kahn’s activity cannot constitute “use in
commerce” of a mark.
II.
We review a district court’s grant of a preliminary injunction for abuse
of discretion. 4 Paulsson Geophysical Servs., Inc. v. Sigmar, 529 F.3d 303, 306
(5th Cir. 2008). A preliminary injunction “is an extraordinary equitable
remedy that may be granted only if the plaintiff establishes four elements: (1)
a substantial likelihood of success on the merits; (2) a substantial threat that
the movant will suffer irreparable injury if the injunction is denied; (3) that
the threatened injury outweighs any damage that the injunction might cause
the defendant; and (4) that the injunction will not disserve the public interest.”
Brennan’s, Inc. v. Brennan, 289 F. App’x 706, 707 (5th Cir. 2008) (emphasis
added) (citing Speaks v. Kruse, 445 F.3d 396, 399–400 (5th Cir. 2006)).
Here, we cannot find in any party filing, hearing transcript, or court
filing an analysis of the four elements that must be satisfied before the
“extraordinary remedy” of a preliminary injunction can be granted. 5 As Kahn
notes, Emerald City nowhere in its Amended Second Application for injunctive
4 “As to each element of the district court’s preliminary-injunction analysis, the
district court’s findings of fact are subject to a clearly-erroneous standard of review, while
conclusions of law are subject to [de novo] review and will be reversed if incorrect.” Sell v.
Livingston, 561 F. App’x 342, 343 (5th Cir. 2014) (quoting Janvey v. Alguire, 647 F.3d 585,
591–92 (5th Cir. 2011)).
5 See Petrello v. Nath, 350 F. App’x 887, 890 (5th Cir. 2009) (“When granting a
preliminary injunction, the district court . . . ‘must . . . state the findings and conclusions that
support its action.’” (citing Fed. R. Civ. P. 52(a)(2) and Chandler v. City of Dallas, 958 F.2d
85, 88–89 (5th Cir. 1992)).
5
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relief, or at the hearing, tied Kahn’s actions related to the Facebook account to
any one of Emerald City’s sixteen causes of action.
The R&R cites only to the standard for “Lanham Act liability,” explaining
that such liability requires a “showing that the defendant ‘uses in commerce
any word, term, name, symbol, or device.’” Thereafter, the R&R states: “As
noted at the hearing and in the Court’s post-hearing order, . . . the Court finds
that Plaintiffs have offered sufficient evidence regarding Defendants’ control
of Downtown Fever’s Facebook account to warrant additional injunctive relief.”
The R&R reasons that because Kahn “has prevented Plaintiffs from accessing
their Downtown Fever Facebook account and will not make the password
available to them[,] . . . [s]uch . . . causes them irreparable harm in the Texas
marketplace.”
The implied conclusion in the R&R, and the basis upon which the
preliminary injunction was granted, is that Kahn’s Facebook-related actions
establish Emerald City’s likelihood of success on the merits for a Lanham Act
claim. Such a conclusion amounts to an abuse of discretion, for we agree with
Kahn that neither shutting down a Facebook account nor blocking
administrator access to a Facebook account constitutes “use in commerce” of a
trademark. 6 See Paulsson, 529 F.3d at 306, 309. As it is undisputed that the
Facebook page is not accessible to anyone, Kahn’s Facebook-related actions
cannot be characterized as “use in commerce” of a trademark. 7
6 Emerald City argues that its claims for tortious interference with business relations
and breach of fiduciary duty support the injunction. That may be so, but it is of no account
now because Emerald City failed to make any showing linking those claims to Kahn’s
Facebook-related actions prior to the issuance of the injunction. As such, we agree with Kahn
that Emerald City failed to satisfy its burden of proving that all four prerequisites for a
preliminary injunction were satisfied.
7 Moreover, upon review of the hearing transcript and post-hearing order referred to
in the R&R, we find nothing in either to justify the preliminary injunction. At the hearing,
the only “findings” related to the Facebook activity consisted of the magistrate judge stating
6
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III.
Because the requirements for a preliminary injunction were not satisfied
here, we VACATE the preliminary injunction.
that he was “troubled” and “concerned” by Kahn’s shutting down and locking Emerald City
out of the Facebook page and he believed those actions were “dirty pool.”
7