United States District Court, D. Nebraska
JDR INDUSTRIES, INC., a Nebraska corporation, d/b/a Farmer's Choice, Plaintiff,
EDWIN K. McDOWELL, d/b/a LaGrange Supply Co., and LAGRANGE SUPPLY CO., L.L.C., a Nebraska limited liability company, d/b/a LaGrange Supply Co., Defendants
[Copyrighted Material Omitted]
[Copyrighted Material Omitted]
JDR Industries, Inc., a Nebraska corporation doing business
as Farmer's Choice, JDR Industries, Inc., a Nebraska
corporation, Plaintiffs: Dana C. Bradford, III, Justin D.
Eichmann, Bradford & Coenen LLC, Omaha, NE.
Edwin K. McDowell, doing business as LaGrange Supply Co.,
LaGrange Supply Co, L.L.C., a Nebraska limited liability
company, doing business as LaGrange Supply Co., Edwin K.
McDowell, LaGrange Supply Co, L.L.C., a Nebraska limited
liability company, Defendants: Michael F. Polk, SENA, POLK
LAW FIRM, Omaha, NE.
MEMORANDUM AND ORDER
Gerrard, United States District Judge.
matter is before the Court on plaintiff JDR Industries'
Motion for Preliminary Injunction (filing 8) and Motion for
Partial Summary Judgment (filing 34). The present dispute
concerns the right to
sell welding rod under the name " LaGrange." JDR
claims that, through its predecessors-in-interest, it has
been continuously using the LaGrange trademark in connection
with the sale of welding rod since as early as approximately
1970. Since the mid to late 1980s, defendant Edwin K.
McDowell, a former employee of one of those predecessors, has
also been selling welding rod under the name LaGrange. At
some point in 2014, McDowell incorporated his company,
defendant LaGrange Supply Co., LLC (" LG Supply" ),
and assigned to LG Supply his interest in the LaGrange name
(whatever that interest is).
parties dispute when JDR first became aware of McDowell's
sales--but the Court need not resolve that dispute at this
time. JDR maintains that it did not pursue any action against
McDowell for his infringing activities because his sales were
minimal enough that there was no real threat of confusion. In
December 2013, however, things changed. Around that time, JDR
terminated the employment of one of its salespersons, James
Vance. Vance, who is not a party to this case, approached
McDowell, and the two entered into a licensing agreement
whereby McDowell allowed Vance to sell welding rod under the
LaGrange name in exchange for royalties. In contrast to
McDowell, who had run an essentially passive sales
operation--generally relying on customers to call him--Vance
relied on telemarketing. Moreover, Vance specifically
targeted a number of JDR's customers. JDR asserts that
this has resulted in significant consumer confusion. This
prompted JDR to file suit against Vance in state court. That
suit remains pending. The present suit against McDowell and
LG Supply followed thereafter. For the reasons discussed
below, JDR's motion for partial summary judgment will be
granted, as to its claims, and denied, as to defendants'
counterclaims. JDR's motion for preliminary injunctive
relief will be denied as moot.
JDR's Claim to the LaGrange Mark
JDR is a Nebraska corporation. Its president is James J.
Braun. Filing 10-2 at ¶ 1. JDR traces its ownership in
the LaGrange mark through a chain of predecessors, beginning
with LaGrange Equipment Company (" LEC" ). LEC was,
until its dissolution in April 1986, a Nebraska corporation
with its principal place of business in Omaha, Nebraska. Its
founder and president was Dan LaGrange. Braun worked for LEC
from 1982 to 1985, eventually serving as its Vice President
of Marketing. Filing 25-2 at ¶ ¶ 3-4. At least as
early as 1970, and continuing through October 1985, LEC sold
welding rod using the LaGrange mark. Filing 10-2 at ¶
¶ 2-4. LEC did not produce the welding rod itself, but
purchased it from several suppliers. Filing 10-2 at ¶ 6.
Bank was a secured creditor of LEC. In August 1985, acting in
conjunction with its holding company, Ralston Bank foreclosed
on its loan to LEC, and
acquired all of LEC's assets, equipment, and property,
including the rights in the LaGrange name (collectively, the
" LEC Assets" ). However, Ralston Bank allowed LEC
to continue in its operations, and so LEC continued to sell
welding rod using the LaGrange mark. Between August 1985 and
October 17, 1985, Ralston Bank was the sole owner of the
rights to the LaGrange name. Filing 10-2 at ¶ ¶
7-8; filing 25-3 at ¶ ¶ 1-7; filing 25-2 at ¶
¶ 1-6; filing 35-2 at ¶ ¶ 1-8.
the 1985 foreclosure, Braun and Dan LaGrange, along with a
third partner, formed TGS Marketing, Inc., which was a
Nebraska corporation until its dissolution on July 3, 2003,
and which did business as " Farmer's Choice."
Filing 10-2 at ¶ ¶ 9-11. On October 17, 1985, TGS
entered into a purchase agreement with Ralston Bank, whereby
TGS purchased from Ralston Bank all of the LEC Assets,
including the rights to the LaGrange mark. Filing 10-2 at
¶ ¶ 9-11; filing 10-3 at pp. 1-3; filing 25-2 at
¶ ¶ 9-11; filing 25-3 at ¶ 8; filing 35-2 at
¶ 9. The transfer of the LEC assets to TGS was
essentially a " turnkey operation," whereby TGS
opened the following business day doing all of LEC's
business out of the same location and using the same office
and assets. Filing 25-2 at ¶ ¶ 11-15. Between
October 17, 1985, and June 23, 2003, TGS sold welding rod
using the LaGrange mark. Filing 10-2 at ¶ ¶ 12-13;
see also filing 10-2 at ¶ 15; filing 10-5.
23, 2003, plaintiff JDR, also doing business as Farmer's
Choice, purchased the LEC assets from TGS, including the
rights to the LaGrange mark. Filing 10-2 at 16-17; filing
10-6 at 1-2, 7-8, 11. From that point and continuing through
the present day, JDR has sold welding rod under the LaGrange
mark. Filing 10-2 at ¶ ¶ 19-20.
Use and Registration of the LaGrange Trademark
its predecessors-in-interest (TGS and LEC) have sold welding
rod using the LaGrange mark since 1970, in over 42 states and
Canada. JDR asserts that the LaGrange line of welding rod has
become " extremely well known throughout the United
States." Filing 10-2 at ¶ ¶ 22, 25. JDR
further asserts that it and its predecessors have spent much
time and substantial resources in promoting the LaGrange
brand. JDR claims that, as a result, the LaGrange mark has a
strong reputation and has built up substantial goodwill, such
that the relevant public identifies and associated the
LaGrange line of welding rod with JDR and its predecessors.
See filing 10-2 at ¶ ¶ 23-32.
March 20, 2012, the United States Patent and Trademark Office
issued JDR a Registration Certificate for the LaGrange mark,
for use in the sale of metal welding rods. The certificate
identified JDR's first use of the mark in commerce as
occurring on December 31, 1969. Filing 10-2 at ¶ 21;
filing 10-7 at 1-3.
1981 to 1985, McDowell worked for LEC as its national sales
recruiter. Filing 10-8 at 2-3. McDowell was responsible for
selling distributorships for LEC and training and managing
four or five other LEC employees involved in such sales. The
distributorships that McDowell sold were composed of counties
wherein each distributor could exclusively sell LEC's
products. Filing 10-8 at 2-3. After LEC closed in 1985,
McDowell partnered with various former regional managers of
LEC and continued to sell distributorships on their behalf.
Essentially, McDowell continued in his previous capacity
as a sales recruiter, but instead of working for LEC, he
worked for LEC's former managers. For their part, the
former regional managers would then train the new exclusive
distributors in the sale of welding rod branded as LaGrange.
point in the 1980s, McDowell also began selling welding rod
on his own, out of his garage, using the LaGrange mark.
McDowell has continued these sales through the present day.
Filing 10-8 at 4-6, 14-15, 19, 37; filing 23-1 at ¶
¶ 4, 13-15, 23, 28, 35-36. And since 1985, McDowell has
conducted his business under the name " LaGrange Supply
Co." See, filing 23-1 at ¶ ¶ 4-9, 15;
filings 23-2, 23-3, 23-4, and 23-5. In July 1997, McDowell
registered the trade name " LaGrange Supply Co."
with the Nebraska Secretary of State for use in the "
[d]istribution of shop equipment and supplies." Filing
10-8 at 7-8; filing 23-9 at 1-3. McDowell renewed the
registration in 2007. Filing 10-8 at 7-8; filing 23-9 at 4.
Vance later became involved, McDowell's sales of welding
rod were, as JDR terms it, " passive." See
filing 9 at 9-11. Although McDowell made perhaps 3 to 4 sales
calls a week, he was not really running a telemarketing
operation, and he primarily relied on customers making calls
to him. Filing 10-8 at 11-12. At some point, McDowell had
obtained the telephone number formerly used by LEC in its
sales of LaGrange welding rod. McDowell would get calls from
LEC's former customers whose orders he would then fill.
Additionally, McDowell contacted the family who was assigned
the telephone number TGS had formerly used to sell LaGrange
welding rod and placed a message on their answering machine
directing customers to call him to purchase LaGrange welding
rod. Filing 10-8 at 12. And in approximately 2006, McDowell
developed a website (at http://lagrangesupplycompany.com /)
from which he sells welding rod branded as "
LaGrange" under the LaGrange Supply Co. name, using a
logo formerly used by LEC. Filing 10-8 at 15-16, 47-50. At
some point in 2014, McDowell formed defendant LG Supply, a
Nebraska limited liability corporation which he owns with his
son. McDowell then assigned his interest in the LaGrange
Supply Co. trade name to LG Supply. Filing 10-8 at 15, 46.
testified that he has long been aware that Farmer's
Choice (i.e., TGS, and then JDR) was selling LaGrange welding
rod, and that Braun was involved in selling LaGrange welding
rod since before TGS existed. Filing 10-8 at 9, 19. McDowell
also admitted that he had learned that JDR had applied for a
federal trademark registration for LaGrange, but did not
taken any action to challenge the registration. Filing 10-8
at 18. The parties dispute when Braun, JDR, or JDR's
predecessors became aware of McDowell's activities.
See, filing 49 at 6-8, 10-15; filing 52 at 8-13,
17-24. But as the Court explains below,
that dispute is not material to the pending motions.
Vance's Expansion of McDowell's Business
1992 to 2013, James Vance was employed as a telemarketing
salesperson for TGS and then JDR. In December 2013, JDR
terminated his employment. Filing 10-8 at 9-11. Shortly
thereafter, Vance arranged a meeting with McDowell, and the
two reached an agreement. Specifically, McDowell purported to
authorize Vance to sell, through telemarketing, welding rod
branded as LaGrange and to use the LaGrange Supply Co. name.
Filing 10-8 at 9-11. The record contains a copy of this
" Tradename & Trademark License Agreement." Filing
10-8 at 25-36. In the agreement, McDowell, as "
licensor," granted Vance (or more accurately,
Vance's LLC) a license to use various permutations of the
LaGrange name in connection with the sale of welding rod.
Filing 10-8 at 25. In return, Vance agreed (among other
things) to pay a percentage of his proceeds as a royalty and
to be subject to certain quality control standards.
See filing 10-8 at 26. Unlike McDowell, who had
relied primarily upon people calling him, Vance commenced
telemarketing operations, including making sales calls to
JDR's clients. See filing 10-2 at ¶ 36.
avers that, within approximately 1 month following
Vance's termination, JDR learned, from contacts with its
own customers, that defendants and their "
agents/licensees" (i.e., Vance) were directly contacting
JDR's customers, including those customers Vance had
previously serviced while employed with JDR. Filing 10-2 at
¶ ¶ 36(a). Since then, JDR has begun tracking
instances of confusion by its customers and others, and JDR
has documented numerous instances in which a customer has
expressed confusion concerning defendants (and Vance's)
use of the LaGrange name.
See generally, filing 25-4; filing 40-1 at ¶
¶ 6-11; see also filings 10-10 through 10-20.
Motion for Summary Judgment
Court may grant summary judgment on all or part of a
party's claim or defense. Fed.R.Civ.P. 56(a). Summary
judgment is proper if the movant shows that there is no
genuine dispute as to any material fact and that the movant
is entitled to judgment as a matter of law. See
Fed.R.Civ.P. 56(a). The movant bears the initial
responsibility of informing the Court of the basis for the
motion, and must identify those portions of the record which
the movant believes demonstrate the absence of a genuine
issue of material fact. Torgerson v. City of
Rochester, 643 F.3d 1031, 1042 (8th Cir. 2011) (en
banc). If the movant does so, the nonmovant must respond by
submitting evidentiary materials that set out specific facts
showing that there is a genuine issue for trial. Id.
motion for summary judgment, facts must be viewed in the
light most favorable to the nonmoving party only if there is
a genuine dispute as to those facts. Id. Credibility
determinations, the weighing of the evidence, and the drawing
of legitimate inferences from the evidence are jury
functions, not those of a judge. Id. But the
nonmovant must do more than simply show that there is some
metaphysical doubt as to the material facts. Id. In
order to show that disputed facts are material, the party
opposing summary judgment must cite to the relevant
substantive law in identifying facts that might affect the
outcome of the suit. Quinn v. St. Louis Cnty., 653
F.3d 745, 751 (8th Cir. 2011). The mere existence of a
scintilla of evidence in support of the nonmovant's
position will be insufficient; there must be evidence on
which the jury could conceivably
find for the nonmovant. Barber v. C1 Truck Driver
Training, LLC, 656 F.3d 782, 791-92 (8th Cir. 2011).
Where the record taken as a whole could not lead a rational
trier of fact to find for the nonmoving party, there is no
genuine issue for trial. Torgerson, 643 F.3d at
deciding whether to issue a preliminary injunction, the Court
weighs the four Dataphase factors: (1) the threat of
irreparable harm to the movant; (2) the state of the balance
between this harm and the injury that granting the injunction
will inflict on other parties; (3) the probability that the
movant will succeed on the merits; and (4) the public
interest. Johnson v. Minneapolis Park & Recreation
Bd., 729 F.3d 1094, 1098 (8th Cir. 2013); (citing
Dataphase Sys., Inc. v. C L Sys., Inc., 640 F.2d
109, 114 (8th Cir. 1981) (en banc)). A preliminary injunction
is an extraordinary remedy, and the movant bears the burden
of establishing its propriety. Roudachevski v. All-Am.
Care Centers, Inc., 648 F.3d 701, 705 (8th Cir. 2011);
see also Winter v. Natural Res. Def. Council,
Inc., 555 U.S. 7, 129 S.Ct. 365, 376, 172 L.Ed.2d 249
complaint, JDR asserts that defendants' conduct
constitutes (1) trademark infringement in violation of the
Lanham Act, 15 U.S.C. § 1114(1); (2) unfair competition
in violation of the Lanham Act, 15 U.S.C. § 1125(a); and
(3) a violation of the Nebraska Uniform Deceptive Trade
Practices Act (" NUDTPA" ), Neb. Rev. Stat. §
87-301 et seq. JDR has asserted various other
theories of recovery in its complaint, but only these claims
are before the Court at this time.
have filed a counterclaim, seeking cancellation of JDR's
federal registration and alleging violations of the Nebraska
Consumer Protection Act, Neb. Rev. Stat. § 59-1601
et seq., and the NUDTPA. Defendants have since moved
to dismiss their claim under the Nebraska Consumer Protection
Act (filing 50), and that claim will be dismissed.
motion for preliminary injunctive relief, JDR asks the Court
to enjoin defendants from using the LaGrange name in
connection with the sale of welding rod. And in its motion
for partial summary judgment, JDR asks the Court to enter
judgment for JDR as to several portions of its claims noted
above: for trademark infringement, unfair competition, and
under the Nebraska Deceptive Trade Practices Act. JDR also
asks the Court to dismiss defendants' counterclaim under
reasons that will become clear, the Court will proceed in
reverse of the usual order, and will begin by examining
JDR's motion for partial summary judgment. The Court will
grant JDR's motion as to its own claims. But the Court
will deny JDR's motion as to defendants'
counterclaims, which will be allowed to proceed. Finally,
JDR's motion for a preliminary injunction will be denied
JDR's Motion for Partial Summary Judgment (on ...