Anitas New Mexico v. Anitas Mexican Foods ( 2000 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
ANITA'S NEW MEXICO STYLE
MEXICAN FOOD, INCORPORATED,
Plaintiff-Appellee,
v.
ANITA'S MEXICAN FOODS
CORPORATION, No. 97-1942
Defendant-Appellant,
and
QUEEN INTERNATIONAL FOODS,
INCORPORATED,
Defendant.
Appeal from the United States District Court
for the Eastern District of Virginia, at Alexandria.
Claude M. Hilton, Chief District Judge.
(CA-97-510-A)
Argued: December 3, 1997
Decided: January 7, 2000
Before WIDENER, Circuit Judge, HAMILTON, Senior Circuit
Judge, and James H. MICHAEL, Jr., Senior United States District
Judge for the Western District of Virginia, sitting by designation.
_________________________________________________________________
Affirmed by published opinion. Judge Widener wrote the opinion, in
which Senior Judge Hamilton and Senior Judge Michael concurred.
_________________________________________________________________
COUNSEL
ARGUED: Thomas Joseph Moore, BACON & THOMAS, Alexan-
dria, Virginia, for Appellant. Mark Peyser Friedlander, Jr., FRIED-
LANDER & FRIEDLANDER, P.C., Arlington, Virginia, for
Appellee.
_________________________________________________________________
OPINION
WIDENER, Circuit Judge:
This case arises from an alleged breach of a stipulated judgment
previously entered in a case of a trademark appeal between Anita's
New Mexican Style Mexican Food, Inc. (Anita's Virginia) and
Anita's Mexican Foods Corp. (Anita's California) in the United States
District Court for the Central District of California. Anita's California
contends that the United States District Court for the Eastern District
of Virginia erred in denying its motion to dismiss by holding that the
district court had jurisdiction over the case and that the complaint
stated a claim upon which relief could be granted. In addition, it
appeals the district court's entry of an injunction that is duplicative of
the injunction entered by the United States District Court for the Cen-
tral District of California. We affirm.
I.
When reviewing a district court's denial of a motion to dismiss, we
consider that the facts alleged in the complaint are true, McNair v.
Lend Lease Trucks, Inc., 95 F.3d 325, 327 (4th Cir. 1996), and we
construe the allegations in the light most favorable to the pleader.
Scheuer v. Rhodes, 416 U.S. 232, 236 (1974).
In 1987, after an adversarial hearing, the United States Patent and
Trademark Office decided that Anita's California had superior rights
to the trademark ANITA's. Anita's Virginia appealed this decision in
the United States District Court for the Central District of California
pursuant to 15 U.S.C. § 1071(b). The parties settled that civil action
by entering a detailed stipulated judgment which was entered as an
2
order by that district court on October 17, 1988. Relevant for our pur-
poses, the stipulated judgment prohibited Anita's California from sell-
ing prepared Mexican food products under the trademark ANITA's
outside of California. Furthermore, Anita's California agreed that it
would ensure compliance of its licensee, Queen International Foods,
Inc. (Queen International), and any other future licensee, with the
terms of that judgment. Anita's California agreed in the stipulated
judgment that it "controls the nature and quality of the goods and ser-
vices sold in association with any trade name, trademark or service
mark comprising ANITA'S, by Queen International Foods, Inc."
In December 1996, Anita's Virginia discovered that prepared Mex-
ican food products, under the trademark ANITA'S, labeled "Manu-
factured by Queen International Foods, Monterey Park, CA," were
being sold in Virginia. On December 20, 1996, Anita's Virginia sent
a letter to Anita's California requesting immediate compliance with
the stipulated judgment. Anita's California subsequently terminated
its license of the ANITA's trademark to Queen International in a Feb-
ruary 11, 1997 letter. Anita's California then advised Anita's Virginia
of this termination on February 12, 1997.
On April 9, 1997, Anita's Virginia filed a civil action against
Anita's California and Queen International in the district court for the
Eastern District of Virginia, alleging that both defendants were in
breach of the order of the district court for the Central District of Cali-
fornia and the Stipulated Judgment. Anita's Virginia, in that suit,
requested a preliminary injunction, and Anita's California filed a
motion to dismiss, on which the court held a hearing. The court heard
the motion on May 23, 1997. Queen International defaulted, and the
court continued the case against it pending a hearing on the issue of
damages.* In a June 10, 1997 order, the court denied the motion to
dismiss and granted the preliminary injunction, from which order
Anita's California appeals.
II.
Anita's California first challenges the district court's jurisdiction.
_________________________________________________________________
*Queen International is not a party to this appeal.
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Whether the district court had subject matter jurisdiction is a question
of law that we review de novo. Jordahl v. Democratic Party of
Virginia, 122 F.3d 192, 197 (4th Cir. 1997). We review the district
court's finding of personal jurisdiction de novo , while reviewing the
district court's findings of fact for clear error. Young v. F.D.I.C., 103
F.3d 1180, 1190 (4th Cir. 1997).
A.
Considering subject matter jurisdiction first, we observe that the
parties do not dispute that they are completely diverse and that the
amount in controversy is satisfied. Accordingly, this case is squarely
within the language of 28 U.S.C. § 1332 (1997). Nevertheless,
Anita's California contends that the district court lacks subject matter
jurisdiction because the United States District Court for the Central
District of California has exclusive jurisdiction to remedy any viola-
tion of the stipulated judgment. We disagree.
It is widely accepted that institution of a second action on a judg-
ment is a valid method of enforcing that judgment. See In re Profes-
sional Air Traffic Controllers Org. (PATCO), 699 F.2d 539, 544
(D.C. Cir. 1983); Urban Indus., Inc. of Kentucky v. Thevis, 670 F.2d
981, 985 (11th Cir. 1982); Stiller v. Hardman , 324 F.2d 626, 628 (2d
Cir. 1963); 18 Moore's Federal Practice 3d § 130.33 (1997). More-
over, the second action does not have to be filed in the same district
court that rendered the judgment in the first action. Therefore, the dis-
trict court that rendered the judgment in the first action does not have
exclusive jurisdiction over the enforcement of that judgment. If the
district court hearing the second action has subject matter and per-
sonal jurisdiction, the action is properly before the second court. The
only instance in which a subject matter jurisdiction problem arises in
the second action is where the first action was based on federal ques-
tion jurisdiction. See Stiller, 324 F.2d at 628 (discussing problem of
second action jurisdiction when first action based on federal question
jurisdiction); 18 James Wm. Moore, et al., Moore's Federal Practice,
§ 130.33 (3d 1997) ("[I]f the judgment sought to be enforced was
from an action in which federal question jurisdiction was the basis of
federal court jurisdiction, an action solely to enforce the judgment
would lack the federal question jurisdiction and therefore could not
be maintained in federal court."). In the present case, the problem that
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arises when the first action is based on federal question jurisdiction
is not present because in the case at hand there is diversity jurisdiction
for the instant case filed in the Eastern District of Virginia. Therefore,
the district court in the present case had subject matter diversity of cit-
izenship jurisdiction.
B.
Turning to personal jurisdiction, a district court sitting in diversity
utilizes a dual analysis when jurisdiction is sought through a long-arm
statute. World-Wide Volkswagen v. Woodson, 444 U.S. 286, 290
(1980). First, the court must determine whether the defendant falls
within the meaning of the statute involved. Peanut Corp. of Am. v.
Hollywood Brands, Inc., 696 F.2d 311, 313 (4th Cir. 1982). If so, the
district court must determine that its exercise of jurisdiction does not
overstep the bounds of the Constitution. Peanut Corp., 696 F.2d at
313.
The Virginia long-arm statute provides jurisdiction over any person
who acts directly or by agent as to a cause of action arising from busi-
ness activity transacted in the State. Va. Code§ 8.01-328.1(A)(1)
(Michie 1992). The Virginia Supreme Court has interpreted the stat-
ute to require only a single transaction in Virginia. Kolbe, Inc. v.
Chromodern Chair Co., 180 S.E.2d 664, 667 (Va. 1971). In the pres-
ent case, we conclude Queen International was an agent of Anita's
California under the terms of the STIPULATED JUDGMENT. Con-
sequently, the multiple transactions of selling Mexican food products
in Virginia fulfills the requirements of Virginia's long-arm statute that
the defendant be "transacting any business in this Commonwealth."
Va. Code § 8.01-328.1(A)(1) (Michie 1992).
Under the law of agency in Virginia, the power of control is ordi-
narily a determinative factor in ascertaining the alleged agent's status.
Texas Co. v. Zeigler, 14 S.E.2d 704, 706 (Va. 1941). The Supreme
Court of Virginia, in a context similar to that present here, examined
whether a principal-agent relationship existed under Va. Code § 8.01-
328.1 in Kolbe, Inc. v. Chromodern Chair Co., 180 S.E.2d 664, 667
(Va. 1971). In determining whether a company fell within the reach
of the long-arm statute, the court held that an agency relationship
exists when the agent acts "under the authority and direction of" the
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principal. Kolbe, 180 S.E.2d at 667. Thus, the court held that the man-
ufacturer fell within the long-arm statute when a manufacturer's local
representative, acting under the authority and direction of the com-
pany, secured the signature of a distributor in Virginia. Kolbe, 180
S.E.2d at 667. In denying Anita's California's motion to dismiss, the
district court in the case before us implicitly found that Anita's Cali-
fornia acted in Virginia. Queen International sold Mexican food prod-
ucts in Virginia under the authority and direction of Anita's
California. Queen International was the production facility for the
foods sold by Anita's California. In the stipulated judgment, Anita's
California admits that Queen International is its trademark licensee
and that it controlled the goods sold by Queen International under the
ANITA'S trademark. In light of the evidence that Queen International
acted under the authority and direction of Anita's California, the dis-
trict court properly held that Anita's California fell within the reach
of Va. Code § 8.01-328.1(A)(1).
Finding that Anita's California falls within the meaning of the Vir-
ginia long-arm statute, we now consider whether the jurisdictional
requirements of the United States Constitution also are met. We note
from the outset that the requirements of the Due Process Clause may
be more stringent than those of the Virginia statute. See Peanut Corp.,
696 F.2d at 313.
Personal jurisdiction is an offspring of due process and protects a
defendant from being subject to in personam judgments in a forum
with which it lacks meaningful contacts. Chung v. NANA Develop-
ment Corp., 783 F.2d 1124, 1126 (4th Cir. 1986) (citations omitted).
International Shoe Co. v. Washington, 326 U.S. 310, 316-17 (1945),
requires certain minimum contacts before a defendant is subject to the
jurisdiction of a forum in which it is not physically present so that
jurisdiction does not violate "traditional notions of fair play and sub-
stantial justice." These contacts with the forum must be such "as to
make it reasonable . . . to require the corporation to defend the partic-
ular suit which is brought there." International Shoe, 326 U.S. at 316-
17.
In order for the contacts to be sufficient for jurisdiction, "there
[must] be some act by which the defendant purposefully avails itself
of the privilege of conducting activities within the forum State, thus
6
invoking the benefits and protections of its laws." Hanson v. Denckla,
357 U.S. 235, 253 (1958). Indeed, "the defendant's conduct and con-
nection with the forum State [must be] . . . such that [it] should rea-
sonably anticipate being haled into court there." World-Wide
Volkswagen, 444 U.S. at 297.
In the case before us, Anita's California had contacts with the
forum state, Virginia, sufficient to fulfill the constitutional require-
ments for personal jurisdiction. Anita's California contends that it
lacks sufficient contacts with the forum because it has no office in
Virginia, has no sales representatives in Virginia and does not ship
products in Virginia. Anita's California, however, sold Mexican food
products in Virginia through its licensee Queen International in viola-
tion of the stipulated judgment. As previously mentioned, Anita's
California represented in the stipulated judgment that Queen Interna-
tional was its licensee and that it would ensure Queen International's
compliance with the stipulated judgment. Anita's California utilized
Queen International to place its goods in the stream of commerce so
that the goods would be purchased in Virginia in violation of the geo-
graphic provisions of the stipulated judgment. These sales were pur-
poseful and availed Anita's California of the benefits of doing
business in Virginia under Virginia law. Consequently, it was reason-
able for Anita's California to reasonably anticipate being haled into
court in Virginia so that the district court's exercise of personal juris-
diction does not offend traditional notions of fair play and substantial
justice. We thus conclude that the service of process was valid.
III.
Anita's California further alleges that the district court violated
federal trademark law by exercising jurisdiction in this case. Specifi-
cally, it claims that, pursuant to 15 U.S.C. § 1071, Anita's Virginia,
as a losing party before the Trademark Trial and Appeal Board of the
United States Patent and Trademark Office, must file its claim in the
federal court for the forum in which the defendant resides. Section
1071 of Title 15 does not apply by its own terms. That section applies
to appeals of decisions from the Trademark Trial and Appeal Board.
15 U.S.C. § 1071 (1997). Anita's Virginia complied with this statute
when, in 1987, it exercised its option and appealed the Trademark
Trial and Appeal Board to the United States District Court for the
7
Central District of California, the action that resulted in the stipulated
judgment at issue in the present case. Thus, the present action is not
an appeal of decision from the Trademark Trial and Appeal Board,
and a sought-for prohibition under 15 U.S.C. § 1071 is not well taken.
IV.
Anita's California also challenges the district court's denial of its
F.R.C.P. 12 (b)(6) motion for failure to state a claim upon which
relief can be granted. The district court, it alleges, implicitly held that
the stipulated judgment was a contract when it permitted Anita's Vir-
ginia to maintain its action because the only cause of action in the
complaint was for breach of contract. We review de novo the district
court's decision to deny a motion to dismiss for failure to state claim
upon which relief may be granted. Flood v. New Hanover County,
125 F.3d 249, 251 (4th Cir. 1997).
In United States v. Armour & Co., 402 U.S. 673 (1971), and United
States v. ITT Continental Baking Co., 420 U.S. 223 (1975), the
Supreme Court indicated that rules of contract construction applied
when determining the scope of a consent decree. Thus, the Court rea-
soned in ITT Continental Baking Co., "since consent decrees and
orders have many of the attributes of ordinary contracts, they should
be construed basically as contracts . . . ." 420 U.S. at 236-37. Because
a stipulated judgment is analogous to a consent order or decree, it is
also treated as a contract for the purposes of enforcement sought here.
Therefore, the district court properly denied Anita's California's
12(b)(6) motion because Anita's Virginia correctly plead its enforce-
ment action as a breach of contract.
At this point, we should add that the action brought by Anita's Vir-
ginia in this case is not different from the action of debt on a judg-
ment, whether so designated for the purpose of describing the nature
of the action or the purposes of diversity jurisdiction. See T. Munford
Boyd & William W. Koontz, Burk's Pleading and Practice § 77 (4th
ed. 1952); 4 Minor's Institute, pt. I, at 631 (2d ed. 1883). So whether
the matter should be treated as one which the courts would treat as
a violation of a contract in a common law cause of action of assump-
sit, or whether the matter should be treated as one which the courts
8
would treat as a cause of action of debt on a judgment, the district
court had diversity jurisdiction.
V.
Finally, Anita's California claims that the district court erred by
entering its injunction which duplicates the order entered by the
United States District Court for the Central District of California. The
argument apparently is that because the order of the court in the Cen-
tral District of California could be enforced against this defendant for
a violation of the injunction without reference to where the violation
took place, see Leamon v. Krentler-Arnold Co. , 284 U.S. 448 (1932),
that implies an implicit limitation of the power of a federal court to
enforce the injunction elsewhere.
We think this position is not well taken. In the first place, Leamon
does not so hold. That case does not speak to the enforcement of an
injunction by separate suit as here. In this respect, we note that even
28 U.S.C. § 1963, providing for the registration of judgments in other
federal courts than the court which entered the judgment, does not
prevent an action in the nature of debt on a judgment to enforce the
judgment first entered. See In Re Professional Air Traffic Controllers
Org., 699 F.2d 539, 544 (D.C. Cir. 1983); Urban Indus., Inc. of Ken-
tucky v. Thevis, 670 F.2d 981, 985 (11th Cir. 1982); Meridian Invest-
ment and Development Corp. v. Suncoast Highlands Corp., 628 F.2d
370, 373 n.5 (5th Cir. 1980); 18 James Wm. Moore, et al., Moore's
Federal Practice, § 130.33 (3d ed. 1999).
The fact that it has been held in Stiller that merely recording a
judgment under 28 U.S.C. § 1963 does not of itself authorize injunc-
tive relief in the district in which the earlier judgment is recorded
under that statute, see 11 Wright, Miller & Kane, Federal Practice &
Procedure: Civil 2d § 2787 (2d ed. 1995), does not prohibit the bring-
ing of a separate suit, as here, to enforce the earlier judgment of
another federal court. Here, Anita's Virginia does not proceed under
28 U.S.C. § 1963. In the case at hand, a separate suit was filed under
the diversity jurisdiction to enforce the stipulated judgment of the
Central District Court of California. The papers were executed with
formality that would have pleased Sir Edward Coke, and we are of
opinion the case should be allowed to proceed.
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The order of the district court appealed from is accordingly
AFFIRMED.
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