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KS Cayton, LLC v. Hobby Lobby Stores, Inc.

United States District Court, E.D. Texas, Tyler Division

May 23, 2017

KS CAYTON, LLC
v.
HOBBY LOBBY STORES, INC.

          ORDER ADOPTING REPORT AND RECOMMENDATION OF UNITED STATES MAGISRTATE JUDGE

          ROBERT W. SCHROEDER III UNITED STATES DISTRICT JUDGE

         The above entitled and numbered civil action was referred to United States Magistrate Judge K. Nicole Mitchell pursuant to 28 U.S.C. § 636. The Magistrate Judge's Report and Recommendation (the “Report”), which contains her findings, conclusions and recommendation regarding Defendant Hobby Lobby Stores, Inc.'s (“Hobby Lobby”) Motion to Dismiss for Failure to State a Plausible Claim (Docket No. 12), has been presented for consideration. The Report (Docket No. 23), filed on September 12, 2016, recommended that Hobby Lobby's motion be denied.

         On October 10, 2016, Hobby Lobby filed objections to the Report on three grounds: (1) that Twombly and Iqbal require a practical analysis of the complaint's plausibility, which Hobby Lobby claims the Magistrate Judge did not conduct; (2) that KS Cayton's claims for relief are not plausible; and (3) that policy concerns warrant dismissal. Docket No. 26.

         Having made a de novo review of the written objections filed by Hobby Lobby, the Court concludes that the findings and conclusions of the Magistrate Judge are correct. For the reasons below, Hobby Lobby's objections are OVERRULED.

         I. The Magistrate Judge conducted a proper plausibility analysis of KS Cayton's complaint.

         Hobby Lobby argues that the Magistrate Judge did not conduct a “practical analysis” of the plausibility of Plaintiff's complaint as required by Twombly and Iqbal. Docket. No. 26 at 14 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007); Ashcroft v. Iqbal, 566 U.S. 662 (2009)). Hobby Lobby contends that the Court need only apply “basic trademark law, ” and its “judicial experience and common sense, ” to find that KS Cayton's claims for relief are not plausible. Docket No. 26 at 8 (citing Iqbal, 556 U.S. at 679).

         The Court addresses Hobby Lobby's specific plausibility objections in the forthcoming section. See Part II, infra. However, the crux of Hobby Lobby's “practical analysis” and “common sense” objection is that it finds implausible Plaintiff's allegation that customers who saw a “GET PINSPIRED” poster in a Hobby Lobby store would likely confuse the poster as suggesting a connection between Hobby Lobby and Plaintiff's do-it-yourself workshop operating under the name “PINSPIRED” in Lubbock, Texas. Docket No. 26 at 15, 20.

         Hobby Lobby's argument lacks merit because it conflates “practicality” with the “plausibility” standard. See id. at 8 (“Twombly and Iqbal require district judges to weed out implausible claims by applying their practical sensibilities.”). Hobby Lobby argues that a complaint must cross two distinct thresholds: from “conclusory to factual, ” and from “factually neutral to factually suggestive.” Id. at 14 (citing Twombly, 550 U.S. at 557 n.5).

         The Supreme Court does not require a complaint to be viewed through a lens of practicality or probability. See Iqbal, 566 U.S. at 678 (“The plausibility standard is not akin to a ‘probability requirement.' ”); see also Twombly, 550 U.S. at 546 (stating that the requirement of factual allegations “serves the practical purpose of preventing a plaintiff with ‘a largely groundless claim' from ‘taking up the time of a number of other people. . .” but does not impose a separate practicality requirement in stating a claim) (internal citations omitted) (emphasis added). In fact, the Supreme Court has clarified that “a well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and ‘that a recovery is remote and unlikely.' ” Twombly, 550 U.S. at 556.

         While probability or practicality is not required to state a sufficient claim, a “sheer possibility that a defendant has acted unlawfully” is not enough either. Iqbal, 566 U.S. at 678. Rather, “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.” Id. at 679.

         The Report considers that KS Cayton states that it first became aware of Hobby Lobby's alleged infringement when individuals contacted Plaintiff inquiring about its affiliation with Hobby Lobby after seeing the “GET PINSPIRED” posters in a Hobby Lobby store. Docket No. 23 at 8. The Report further considers the similarity between Plaintiff's mark and the “GET PINSPIRED” phrase, the federal registration of the mark, and the allegation that Hobby Lobby used the PINSPIRED mark in connection with the sale, offering for sale, distribution, or advertisement of goods similar to the goods sold by Plaintiff. Docket No. 23 at 7-8.

         The Magistrate Judge found these factual allegations sufficient to state a claim to relief that is plausible on its face, and the Court agrees that “common sense” and “judicial experience” would lend themselves to such a finding. The allegations are sufficiently factually suggestive to permit the Court to infer that Hobby Lobby is liable for trademark infringement. Hobby Lobby's first objection is therefore overruled.

         II. KS Cayton's claims for relief are plausible.

         Hobby Lobby next objects that KS Cayton's claims for relief are not plausible because: (1) the complaint fails to plausibly allege a likelihood of confusion; (2) the complaint fails to plausibly allege that Hobby Lobby used “GET PINSPIRED” as a trademark; and (3) the complaint ...


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