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JDR Industries, Inc. v. Vance

United States District Court, D. Nebraska

April 18, 2017

JDR INDUSTRIES, INC., Plaintiff,
v.
JAMES L. VANCE, et al., Defendants.

          MEMORANDUM AND ORDER

          John M. Gerrard United States District Judge

         The plaintiff, JDR Industries, is suing the defendants, Michael E. McDowell, James L. Vance, LaGrange Supply Co., and J.L. Vance, LLC for various claims pertaining to the defendants' sale of LaGrange welding rod. Currently before the Court is JDR's motion to dismiss a party defendant (filing 158), which will be granted, and its renewed motion for summary judgment (filing 159), which will be granted in part and denied in part.

         BACKGROUND

         (a) Factual History[1]

         The plaintiff, JDR Industries, is a Nebraska corporation that produces and sells welding rod under the name "LaGrange." JDR traces its ownership of the LaGrange mark through a chain of predecessors in interest beginning with LaGrange Equipment Company ("LEC"). LEC sold LaGrange welding rod from 1970 to 1985, when its creditor-Ralston Bank-took ownership of its assets. Filing 162-8 at 2; filing 162-11 at 2. Those assets, including the rights in the LaGrange name, passed to TGS Marketing, Inc., and ultimately to JDR. Filing 162-11 at 4. Thus, together with its predecessors, JDR has used the mark in connection with the sale of welding rod since at least 1970.

         Defendant McDowell was a former employee of LEC. See filing 162-20 at 5. When LEC closed in 1985, he partnered with other LEC regional sales managers and continued to sell distributorships on their behalf-essentially continuing in his previous capacity, despite the company's closure. Filing 162-20 at 8-9. In or around 2007, McDowell began selling welding rod on his own, out of his garage, using the LaGrange mark. Filing 162-20 at 10. He continued in these sales under the business name "LaGrange Supply Co., " which he registered as a trade name with the Nebraska Secretary of State in July 1997, and renewed in 2007. See, filing 162-20 at 25; filing 163-9 at 1-5. At some point in 2014, McDowell formed defendant LaGrange Supply Co. (LG Supply), a Nebraska limited liability corporation. Filing 162-20 at 54. He then assigned his interest in the LaGrange Supply Co. trade name to his LLC. Filing 162-20 at 56.

         In 2013, McDowell was contacted by defendant James Vance, who was-until his December 2013 termination-employed by JDR as a telemarketing salesperson. See, filing 162-20 at 32; filing 162-21 at 8. Vance and McDowell had a meeting and eventually reached an agreement regarding the sale of LaGrange welding rod. Pursuant to that agreement, McDowell purported to authorize Vance (and his LLC, defendant J.L. Vance, LLC) to sell, through telemarketing, welding rod branded as LaGrange and to use the LaGrange Supply Co. name. Filing 162-20 at 35; filing 162-21 at 120. 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. Unlike McDowell, who had relied primarily upon people calling him, Vance commenced telemarketing operations, including making sales calls to JDR's clients. Seefiling 162-20 at 49-51.

         JDR's president 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 162-8 at 8. 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' use of the LaGrange name.

         (b) Procedural History

         JDR filed suit in September 2014, alleging, among other claims, trademark infringement, unfair competition, and deceptive trade practices. At that time, McDowell and LG Supply were the only two named defendants. Soon thereafter, JDR moved for partial summary judgment, arguing that it had satisfied certain elements of its claims. See filing 34. Specifically, JDR argued that (1) it owns a valid and legally protectable trademark (i.e., the LaGrange mark), and (2) that McDowell and LG Supply used the mark in commerce without JDR's consent. Filing 34 at 1. The Court, in an August 4, 2015 Memorandum and Order (M&O), granted JDR's motion as to both elements. See filing 55. Accordingly, those issues-at least as they pertain to McDowell and LG Supply-are no longer in dispute.

         Following the Court's M&O, JDR amended its complaint, adding as party defendants James L. Vance and J.L. Vance, LLC ("JLV"). See filing 63. It asserts the same claims against Vance and JLV as it does against McDowell and LG Supply-that is, trademark infringement, unfair competition, and deceptive trade practices. JDR now seeks summary judgment against Vance and JLV "on the same issues and on the same grounds as previously entered against Edwin K. McDowell and [LG Supply]." Filing 159 at 1. It also seeks judgment as to each defendant on the remaining element of its claims: whether there is a likelihood of confusion between JDR's mark and the defendants' use of that mark. Filing 159 at 2.

         It is also worth noting that both defendant entities (LG Supply and JLV) are in default, and that Vance, proceeding pro se, has not responded to JDR's present motion. See, filing 113; filing 130. Further, Edwin McDowell- the primary subject of JDR's suit-has died. See filing 109. Following his death, JDR substituted McDowell as a party defendant with his son, Michael McDowell, as the personal representative of his father's estate, and as trustee of the Edwin K. McDowell Revocable Trust. See filings 140-142. But the aforementioned trust has been terminated, so JDR now moves to dismiss Michael McDowell as a party defendant "in his capacity as trustee of said trust only." Filing 158. That motion will be granted. So, while the Court will refer to the actions of Edwin McDowell below, JDR's claims are actually against his son, Michael McDowell, in his capacity as personal representative of his father's estate.

         STANDARD OF REVIEW

         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. SeeFed. 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.

         On a 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 County, 653 F.3d 745, 751 (8th Cir. 2011). The existence of a mere 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 1042.

         ANALYSIS

         JDR has sued each of the defendants for (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) violations of the Nebraska Uniform Deceptive Trade Practices Act ("NUDTPA"), Neb. Rev. Stat. § 87-301 et seq. See filing 142 at 15-18. JDR has also sued McDowell and LG Supply under Nebraska's Trademark Registration Act ("NTRA"), Neb. Rev. Stat. § 87-126 et seq., seeking cancellation of McDowell's state-registered trade name. Given the procedural complexities and piecemeal nature of this case, the Court will-for clarity-address JDR's claims against the named defendants and their respective LLCs separately.

         1. Vance & JLV

         JDR claims that Vance's and JLV's use of the LaGrange name in its sale of welding rod constitutes trademark infringement, unfair ...


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