E. & J. Gallo Winery v. Proximo Spirits, Inc. , 583 F. App'x 632 ( 2014 )

FILED
NOT FOR PUBLICATION JUL 14 2014
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
E.&J. GALLO WINERY, a California No. 12-15905
corporation,
D.C. No. 1:10-cv-00411-LJO-JLT
Plaintiff-counter-defendant -
Appellee,
MEMORANDUM*
v.
PROXIMO SPIRITS, INC., a Delaware
corporation and AGAVERA
CAMICHINES, S.A. DE C.V., a Mexican
corporation,
Defendants-counter-plaintiffs
- Appellants,
ECCO DOMANI USA, INC.,
Counter-defendant -
Appellee,
V.
TEQUILA SUPREMO, S.A. DE C.V.,
Cross-defendant - Appellee.
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
E.&J. GALLO WINERY, a California No. 12-17117
corporation,
D.C. No. 1:10-cv-00411-LJO-JLT
Plaintiff-counter-defendant -
Appellant,
v.
PROXIMO SPIRITS, INC., a Delaware
corporation and AGAVERA
CAMICHINES, S.A. DE C.V., a Mexican
corporation,
Defendants-counter-plaintiffs
- Appellees,
ECCO DOMANI USA, INC.,
Counter-defendant -
Appellant,
V.
TEQUILA SUPREMO, S.A. DE C.V.,
Cross-defendant - Appellant.
Appeal from the United States District Court
for the Eastern District of California
Lawrence J. O’Neill, District Judge, Presiding
Argued and Submitted May 16, 2014
San Francisco, California
Before: SILVERMAN and GOULD, Circuit Judges, and LEMELLE, District
Judge.**
E & J Gallo Winery, a large winemaker and distributer, recently entered the
spirits market and contracted with non-party Tequila Supremo, a Mexican tequila
producer, for the production and bottling of “Camarena Tequila,” which Gallo
planned to sell in the United States. Agavera Camichines, S.A. de C.V., holds
trademark and trade dress rights for the “1800 Tequila” brand in the United States.
Non-party Ex Hacienda Los Caminchines, S.A. de C.V., holds those rights in
Mexico. Proximo Spirits, Inc. imports and distributes 1800 Tequila in the United
States.
In February of 2010, after production and shipment of roughly one million
bottles of Camarena Tequila, and on the eve of that product's launch in American
markets, Agavera sent Tequila Supremo a cease-and-desist letter claiming that the
Camarena bottle was “similar to the point of causing confusion” with the 1800
bottle and threatening “pertinent legal action.” The following month Gallo initiated
suit against Agavera and Proximo (collectively, “Appellants”) alleging they made
a bad faith attempt to disrupt the launch of Camarena Tequila by sending Tequila
Supremo a cease-and-desist letter “through one of their Mexican affiliates” and
**
The Honorable Ivan L.R. Lemelle, District Judge for the U.S. District
Court for the Eastern District of Louisiana, sitting by designation.
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requested declaratory judgment under 28 U.S.C. § 2201 that Camarena Tequila’s
trade dress does not infringe on that of 1800 Tequila. Appellants promptly moved
to dismiss for lack of subject matter jurisdiction and, after that motion was denied,
asserted counterclaims for trade dress infringement and unfair competition under
the Lanham Act. The district court granted Gallo’s motion for summary judgment
against Appellants’ counterclaims and entered judgment thereon. Neither
Appellant moved for summary judgment against Gallo’s original declaratory relief
claim and, several months after prevailing against the Appellant’s counterclaims,
Gallo moved to “Certify Final Judgment on Counteraction and to Dismiss
Remaining Claims.” After Appellants filed a statement of non-opposition in
response to that motion, the court dismissed the remaining claims and certified
final judgment.
In case number 12-15905, Appellants challenge (i) denial of their motion to
dismiss for lack of subject matter jurisdiction; (ii) grant of summary judgment
against them on the merits of their Lanham Act claims; and (iii) entry of final
judgment on their counterclaims, which they claim was done in absence of
jurisdiction. In case number 12-17117, Gallo appeals denial of its motion for
attorneys fees under 15 U.S.C. § 1117(a). We affirm in all respects.
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I.
The Declaratory Judgment Act (the “DJA”) allows courts to “declare the
rights and other legal relations” of parties to “a case of actual controversy.” 28
U.S.C. § 2201. To create an “actual controversy,” a plaintiff must allege facts that,
“under all the circumstances, show that there is a substantial controversy, between
parties having adverse legal interests, of sufficient immediacy and reality to
warrant the issuance of a declaratory judgment.” MedImmune, Inc. v. Genentech,
Inc., 549 U.S. 118, 127 (2007) (citations and quotation marks omitted). An actual
controversy exists if the declaratory action “plaintiff has a real and reasonable
apprehension that he will be subject [to suit].” Societe de Conditionnement en
Aluminium v. Hunter Engineering Co., 655 F.2d 938, 944 (9th Cir. 1981). That
apprehension is considered from the plaintiff’s position; the court need not identify
“specific acts or intentions of the defendant that would automatically constitute a
threat of litigation.” Chesebrough-Pond’s, Inc. v. Faberge, Inc., 666 F.2d 393, 396
(9th Cir. 1982).
Here, jurisdictional discovery disclosed that Agavera, Hacienda, and
Proximo are part of a conglomerate of companies known internally as “Grupo
Cuervo” and are closely related through common management, operation, and
ownership. Discovery also disclosed that Agavera’s attorney-in-fact drafted the
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cease-and-desist letter received by Tequila Supremo. On these and other grounds
the district court found that the group “operates as a unified group of affiliated
companies” and denied the motion to dismiss, holding that Gallo alleged facts
showing a “substantial controversy between parties that have adverse legal
interests, and that the controversy is of sufficient immediacy and reality to warrant
the issuance declaratory judgment.”
We review a district court’s findings of fact relevant to subject matter
jurisdiction under the clearly erroneous standard and its determinations of law de
novo. Schnabel v. Lui, 302 F.3d 1023, 1029 (9th Cir. 2002).
In light of its findings, which are undisputed and supported by ample record
evidence, the court did not err in holding that an actual controversy exists under the
DJA. After significant time and investment in the Camarena brand, and on the eve
of distribution, Gallo learned that its sole supplier had received a demand that all
distribution of the Camarena bottle cease on the grounds that the Camarena and
1800 bottles were confusingly similar. Under such circumstances, Gallo’s
apprehension of suit in both Mexican and American forums was reasonable, the
parties’ interests were sufficiently adverse at the time of suit, and the controversy
was sufficiently immediate.
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II.
Appellants also argue that the district court deprived itself of jurisdiction to
enter final judgment when it granted Plaintiff’s motion to voluntarily dismiss under
Federal Rule of Civil Procedure 41(a)(2). This novel argument may be dismissed
almost out of hand. The cases on which Appellants rely for the proposition that
Rule 41(a) disposes of adjudicated counterclaims are inapposite. In Humphreys v.
United States, 272 F.2d 411 (9th Cir. 1959), for example, we merely held that a
plaintiff could not resuscitate an action voluntarily dismissed after the statute of
limitations period had run. Id. at 411-12. In Ethridge v. Harbor House Restaurant,
861 F.2d 1389 (9th Cir. 1988), we simply stated that a plaintiff cannot unilaterally
dismiss a single claim from a multi-claim complaint under Rule 41(a) rather than
amend under Rule 15. Id. at 1392. In this instance, the court had already entered
judgment on Appellants’ counterclaims and received Appellants’ statement of no
opposition when it granted Gallo’s motion to voluntarily dismiss the declaratory
action. The contention that the granting of that unopposed motion somehow
disposed of prior rulings on which judgment had already been entered is without
merit.
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III.
Appellants asserted two counterclaims for trade dress infringement: one
under § 32 of the Lanham Act for infringement of registered trade dress captured in
a three-dimensional drawing of an 1800 Tequila bottle and another under § 43(a)
for infringement of the unregistered 1800 Tequila trade dress. Although the
definition of the 1800 trade dress appeared to shift throughout the proceeding
below, the trade dress at issue for each claim is the trapezoidal bottle in which
1800 Tequila is sold.
Both claims require a showing (1) of ownership of a valid mark and (2) that
the alleged infringer’s use of the mark is likely to cause confusion. See, e.g., Reno
Air Racing Ass’n, Inc. v. McCord, 452 F.3d 1126, 1134 (9th Cir. 2006)(stating the
elements of § 32 claims); Vision Sports, Inc. v. Melville Corp., 888 F.2d 609, 613
(9th Cir. 1989)(stating the elements of § 43(a) claims).
Here, assuming the validity of the 1800 trade dress, we affirm because there
is no genuine issue of material fact that the Camarena bottle is likely to cause
confusion among purchasers. AMF Inc. v. Sleekcraft Boats, 599 F.2d 341 (9th Cir.
1979), provides factors for deciding likelihood of confusion, although the
similarity of the marks is often the “critical question.” GoTo.com, Inc. v. Walt
Disney Co., 202 F.3d 1199, 1205 (9th Cir. 2000). We recognize that “summary
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judgment is generally disfavored in the trademark arena[,]” Brother Records, Inc.
v. Jardine, 318 F.3d 900, 903 (9th Cir.2003) (citation omitted) overruled on other
grounds by Miller v. Gammie, 335 F.3d 889, 893 (9th Cir. 2003) (en banc), and we
are mindful that likelihood of confusion is typically a question for the jury, but we
do not find any factual dispute worthy of a jury here. After reviewing the bottles
and the record de novo, we conclude that the Camarena and 1800 trade dresses are
so dissimilar that no reasonable juror could conclude otherwise.
IV.
In consolidated case number 12-17117, Gallo appeals the district court’s
denial of its motion for attorney’s fees under 15 U.S.C. § 1117(a), contending that
the counteraction against it was “exceptional” because Appellants had failed to
present evidence supporting the distinctiveness of their trade dress, engaged in
deceptive conduct, and failed to produce evidence of misrepresentation in support
of their fraud claim. In denying that motion the district court emphasized that Gallo
initiated the suit by seeking declaratory judgment—which entailed a belief that
infringement issues were sufficiently concrete to establish actual controversy—and
noted that Appellants asserted compulsory counterclaims only reluctantly, after
moving to dismiss for lack of jurisdiction.
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Under § 35(a) of the Lanham Act, “[t]he court in exceptional cases may
award reasonable attorney fees to the prevailing party.” 15 U.S.C. § 1117(a)
(emphasis added). “Exceptional” cases are either “groundless, unreasonable,
vexatious, or pursued in bad faith.” Cairns v. Franklin Mint Co., 292 F.3d 1139,
1156 (9th Cir.2002)(emphasis, citations and quotation marks omitted). “The line
distinguishing exceptional cases from non-exceptional cases is far from clear. It is
especially fuzzy where the defendant prevails due to plaintiff’s failure of proof.”
Secalt S.A. v. Wuxi Shenxi Const. Mach. Co., 668 F.3d 677, 687 (9th Cir. 2012).
(emphasis omitted). In any event, parties challenging a district court’s denial of
attorneys’ fees under § 1117 face an uphill battle because, among other things, the
“Senate Report expressly commends this decision to the discretion of the [trial]
court.” Polo Fashions, Inc. v. Dick Bruhn, Inc., 793 F.2d 1132, 1134 (9th Cir.
1986)(citations and quotation marks omitted). While failure to bring forth evidence
of distinctiveness may often render a case exceptional and merit award of fees, in
present circumstances it does not. Considering that Gallo initiated this action to
begin with, and with due deference to the district court, we find no error.
AFFIRMED as to case numbers 12-17117 and 12-15905.
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