Opinion
Case No. 21-cv-1300
2022-08-26
DIRECT SUPPLY, INC., Plaintiff, v. PARK SUPPLY OF AMERICA, INC., Defendant.
Michael R. Laing, Perkins Coie LLP, Madison, WI, for Plaintiff. Austen Zuege, Westman Champlin & Koehler PA, Minneapolis, MN, Laura M. Konkel, Shane A. Brunner, Michael Best & Friedrich LLP, Madison, WI, for Defendant.
Michael R. Laing, Perkins Coie LLP, Madison, WI, for Plaintiff. Austen Zuege, Westman Champlin & Koehler PA, Minneapolis, MN, Laura M. Konkel, Shane A. Brunner, Michael Best & Friedrich LLP, Madison, WI, for Defendant. DECISION AND ORDER LYNN ADELMAN, United States District Judge
Plaintiff Direct Supply, Inc. ("DSI") brings this action against Park Supply of America, Inc. ("Park") alleging trademark infringement and several related claims. Before me now is defendant's motion to dismiss three of the eight counts in plaintiff's first amended complaint.
I. BACKGROUND
Plaintiff brings a number of claims against defendant, all of which stem from defendant's use of tradenames and trademarks which plaintiff contends are confusingly similar to its own. As relevant to this motion, plaintiff alleges that defendant conducted business in Minnesota using the assumed name "DIY Direct Supply" and failed to register name with the Office of the Secretary of State as required by Minnesota law. Plaintiff does business under the name "Direct Supply" and alleges defendant's failure to register its assumed name led to customer confusion about which entity was doing business under the "DIY Direct Supply" name and resulted in a loss of sales and dilution of goodwill for plaintiff.
Plaintiff's first amended complaint lists eight counts, but only three are relevant to this motion: Count V, which alleges common law trademark infringement under Wisconsin law; Count VI, which alleges common law unfair competition under Wisconsin Law; and Count VIII, which alleges damages stemming from a failure to file a certificate of assumed name in violation of Minn. Stat. § 333.01.
II. DISCUSSION
To avoid dismissal under Rule 12(b)(6), a complaint must "state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). The complaint must, at a minimum, "give the defendant fair notice of what the claim is and the grounds upon which it rests." Twombly, 550 U.S. at 555, 127 S.Ct. 1955. In construing a plaintiff's complaint, I assume that all factual allegations are true but disregard statements that are conclusory. Iqbal, 556 U.S. at 678, 129 S.Ct. 1937.
A. Counts V and VI - Unfair Competition and Trademark Infringement
Defendant argues that Count VI should be dismissed because it is not materially different from Count V. In the alternative, defendant moves to strike or clarify Count VI under Federal Rules of Civil Procedure 12(e) and 12(f).
Defendant argues that Count VI fails to establish any grounds for relief other than those already addressed by Count V. Essentially, defendant is arguing that common law trademark infringement and common law unfair competition, as alleged by plaintiff, are identical legal theories advanced to support the same claim and are therefore redundant. But under Rule 12(b)(6), I may dismiss claims, not legal theories. A "claim for relief" constitutes a right "to a legal remedy for injuries arising from a single set of operative facts." Mannes v. Ford Motor Co., Inc., No. 13-c-07381, 2014 WL 7332616, at *2 (N.D. Ill. Dec. 22, 2014) (citing Sojka v. Bovis Lend Lease, Inc., 686 F.3d 394, 399 (7th Cir. 2012)). Defendant does not dispute that plaintiff's first amended complaint includes a set of operative facts that state a plausible claim for relief. Instead, defendant argues that two of plaintiff's legal theories are identical, but this is not grounds for dismissal. Even assuming defendant is correct and the two counts address the same claim, plaintiffs may bring multiple legal theories to support a single claim. Sojka, 686 F.3d at 399. At this stage of the proceeding, "the question . . . is simply whether the complaint includes factual allegations that state a plausible claim for relief." BBL, Inc. v. City of Angola, 809 F.3d 317, 325 (7th Cir. 2015). Defendant does not dispute the first amended complaint states a plausible claim for relief under either theory. Accordingly, I will deny defendant's motion to dismiss Count VII under 12(b)(6).
I will also deny defendant's motion strike Count VI under Rule 12(f). Federal Rule of Civil Procedure 12(f) provides that a district court "may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." Fed.R.Civ.P. 12(f). Motions to strike are generally disfavored because they are seen as tools to delay litigation. See, e.g., Heller Fin., Inc. v. Midwhey Powder Co., 883 F.2d 1286, 1294 (7th Cir. 1989). Mere redundancy or immateriality is not enough to trigger the drastic measure of striking parts of a pleading, the pleading must also be prejudicial to the moving party. See Talbot v. Robert Matthews Distrib. Co., 961 F.2d 654, 664 (7th Cir. 1992).
Defendant argues that it is prejudiced because it has not been "put on notice about what Count VI pertains to that is different than Count V." ECF no. 24 p.9. I disagree. Defendant has been put on notice of the plaintiff's claims by plaintiff's factual allegations which underpin both counts. A defendant is not prejudiced by entering discovery unsure of what legal theories the plaintiff will ultimately pursue. See Alioto v. Town of Lisbon, 651 F.3d 715, 721 (7th Cir. 2011) ("[W]e have stated repeatedly (and frequently) that a complaint need not plead legal theories, which can be learned during discovery."). Additionally, because a plaintiff is not required to plead legal theories, it would make no difference if I struck Count VI from the complaint; a plaintiff may pursue discovery based on legal theories not articulated in the complaint so long as they are grounded in the complaint's factual allegations. See Id. Accordingly, I find no prejudice and I will deny defendant's motion to strike under Rule 12(f).
Finally, defendant moves for a more definitive statement setting forth the basis for Count VI under Rule 12(e). Rule 12(e) provides a "party may move for a more definite statement of a pleading to which a responsive pleading is allowed but which is so vague or ambiguous that the party cannot reasonably prepare a response." Fed.R.Civ.P. 12(e). Defendant's argument on this issue is limited to a single sentence which does not address vagueness or ambiguity: "To the extent that the court finds that Counts V and VI are not redundant, defendant believes that, in the alternative, a more definitive statement setting forth the basis of Count VI is necessary under Rule 12(e)." ECF no. 22 p. 11. This argument is perfunctory and undeveloped and is therefore waived. See Crespo v. Colvin, 824 F.3d 667, 673 (7th Cir. 2016). I will deny defendant's motion for a more definitive statement under Rule 12(e)
B. Count VIII - Failure to File a Certificate of an Assumed Name
Plaintiff alleges injuries caused by defendant's failure to file a certificate of an assumed name under Minn. Stat. §§ 333.01. Under Minnesota law, a person is prohibited from conducting business under an assumed name unless the person files a certificate in the Office of the Secretary of State stating both the assumed name and the true name of each person conducting business. Minn. Stat. § 333.01. The certificate must then be published in a qualified newspaper in the county in which the person has a registered office for two successive issues. Id. A person who violates this requirement is subject to penalties and remedies provided by Minn. Stat. § 8.31. Minn. Stat. 333.065. Minn. Stat. § 8.31, subd. 3(a) provides that any person who is injured by a failure to file a certificate of an assumed name "may bring a civil action and recover damages, together with costs and disbursements . . . and receive other equitable relief as determined by the court." Minn. Stat. § 8.31, subd. 3(a); See Also Northland Temporaries, Inc. v. Turpin, 744 N.W.2d 398, 404 (Minn. App. 2008). Although caselaw addressing § 333.01 is sparse, the Minnesota Court of Appeals has said that "[t]he purpose of Minnesota tradename law is to protect the integrity of tradenames and to protect corporate creditors." Watson v. Stonewings on the Lake, 393 N.W.2d 518, 520 (Minn. App. 1986).
Defendant argues that the only type of injury cognizable under § 333.01 is an injury caused by a creditor's inability to recover from a defendant due to the defendant's use of an unregistered name. Because plaintiff has not alleged such an injury, defendant argues plaintiff's claim fails for lack of standing under 12(b)(1) and failure to state a claim under 12(b)(6). But nothing in the text of the statutes limits the cause of action to injuries caused by a creditor's inability to recover due to the unregistered use of an assumed name; the statutes provide a cause of action to "any person injured" by a failure to file a certificate of an assumed name. Minn. Stat. 8.31, subd. 3a; Minn. Stat. 333.065. And although defendant cites to a number of cases to support its argument, none of them hold or suggest that injuries under § 333.01 are limited to such a narrow category. For instance, defendant relies on Watson v. Stonewings on the Lake for the proposition that § 333.01 is only concerned with creditor protection. But Watson states that the statute has two purposes: "to protect the integrity of tradenames and to protect corporate creditors." Id. (emphasis added). Here, plaintiff's alleged injury concerns the integrity of tradenames, Watson does not help defendant. Additionally, the facts of Watson differ significantly from this case. In Watson, the court considered whether a defendant was estopped from asserting a statute of limitations defense for failing to comply with § 333.01; the court did not address the types of injuries that were cognizable when a plaintiff brought a claim alleging a violation of the statute.
Defendant also argues that plaintiff's injury is not cognizable because plaintiff alleges "trademark-like injuries" and the Minnesota Supreme Court distinguished § 333.01 from trademark law in Minneapple Co. v. Normandin, 338 N.W.2d 18 (Minn. 1983). But Minneapple did not hold that § 333.01 and trademark law were entirely separate. Rather, it addressed the specific question of whether a plaintiff who was in violation of § 333.01 was estopped from bringing a trademark claim by its failure to register an assumed name. See Minneapple, 338 N.W.2d at 20 n.2. It reasoned that, due to equity considerations, the plaintiff would not be estopped from bringing the trademark claim. Id. The Court did not address the types of injuries that were cognizable when a defendant allegedly violated the statute and did not hold that plaintiffs may not bring claims for "trademark-like injuries" under §§ 333.01 and 8.31. Other cases cited by defendant are similarly inapposite: Northland Temporaries, Inc. v. Turpin, 744 N.W.2d 398 (Minn. Ct. App. 2008) and Hovelson v. U.S. Swim & Fitness, Inc., 450 N.W.2d 137 (Minn. Ct. App. 1990) neither address or discuss what types of injury are cognizable under §§ 333.01 and 8.31.
Next, defendant argues that similar assumed name registration statutes in other jurisdictions have been construed narrowly and have not been extended to private tort actions. Again, most of these cases concern whether a plaintiff in violation of a registration statute may bring a tort action, not whether tort actions may be brough against defendants who violated the statute. See, e.g., Caruso v. Local Union no. 690 of Intern. Broth. Of Teamsters, Chauffers, Warehousemen and Helpers of America, 33 Wash.App. 201, 653 P.2d 638 (Wash. App. 1982). But regardless of whether other states have allowed private tort actions based on assumed name statutes, the Minnesota statutes explicitly provide a cause of action to anyone who is injured by a violation of the name registration statute. Minn. Stat. §§ 333.01, 333.065, 8.31. Accordingly, these cases are not persuasive.
Plaintiffs have alleged they were injured by defendant's failure to file a certificate of an assumed name because it led to customer confusion and a loss of sales and dilution of goodwill. This injury is consistent with the text of §§ 333.01 and 8.31. It is also consistent with the protection of the integrity of trade names, which the Minnesota Court of Appeals has recognized is a purpose of § 333.01. Watson, 393 at 520. Accordingly, I find that plaintiff has alleged an injury that is cognizable under § 333.01 and I will deny defendant's motion to dismiss Count VIII for lack of standing and failure to state a claim.
Defendant also argues that plaintiff has not alleged a public benefit as required when bringing a claim under Minn. Stat. § 8.31. Because defendant did not raise this argument until its reply brief, however, it is waived. See, e.g., Carroll v. Lynch, 698 F.3d 561, 564 n.1 (7th Cir. 2012).
III. CONCLUSION
For the reasons stated, IT IS ORDERED that defendant's motion to dismiss at ECF no. 21 is DENIED.