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Mission Trading Company, Inc. v. Lewis

United States District Court, S.D. Texas, Houston Division

November 1, 2017

Mission Trading Company, Inc., Plaintiff,
v.
David Vincent Lewis, et al, Defendants.

          MEMORANDUM OPINION AND ORDER

          GRAY H. MILLER, UNITED STATES DISTRICT JUDGE.

         Pending before the court is a memorandum and recommendation ("M&R") filed by Magistrate Judge Nancy Johnson. Dkt. 95. The Magistrate Judge considered defendants Sandra Lewis and David Vincent Lewis's (collectively, "Lewises") motion to dismiss (Dkt. 89) and plaintiff Mission Trading Company's ("MTC") motion to strike (Dkt. 54). Id. The Lewises timely objected to the M&R. Dkt. 96. MTC did not object. Having considered the M&R, the motions, the Lewises' objections, and other relevant materials in the record, the court is of the opinion that the Lewises' objections should be OVERRULED and that the M&R should be ADOPTED IN FULL.

         I. Background

         In MTC's first amended complaint, MTC makes claims for: (1) trademark infringement under 15 U.S.C. §§ 1114 and 1125(a); (2) unfair competition and false designation under 15 U.S.C. § 1125(a); (3) trademark infringement under Texas Business and Commerce Code § 16.012; (4) common law trademark infringement; (5) common law unfair competition; (6) unjust enrichment; (7) negligent interference with contractual relations; (8) intentional interference with prospective economic advantage; and (9) misappropriation. Dkt. 88. The court accepts MTC's allegations as true for the purposes of the instant motion. Kaiser Aluminum & Chemical Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1050 (5th Cir. 1982). Those allegations are as follows:

MTC manufactures and sells aftermarket automotive parts throughout the United States and the world. Id. ¶ 8. To further its business, MTC possesses federal and common law rights to the following trademarks for the sale of automotive parts: "MTC, " "H.S, " "Ronak, " "Seerat, " "Sameer, " "Goldflex, " and "Vollig." Id. ¶ 11. MTC continuously and exclusively uses these trademarks to market and promote its products, including its o-rings. Id. ¶¶ 12, 15. Due to its continuous and exclusive use of trademarks, customers associate the trademarks with MTC and its goods and services. Id. ¶ 18. As a result, MTC has developed significant goodwill and a high reputation for quality. Id. ¶¶ 16, 18.

         The Lewises compete with MTC and sell products (including o-rings) through websites such as Amazon.com ("Amazon"). Id. ¶¶ 19, 21. The Lewises sell products under the name "Professor Foam." Id. ¶¶ 3, 4. To confuse customers, the Lewises utilize MTC's trademarks, Universal Product Codes ("UPC"), name, and images to sell products that are not affiliated with MTC. Id. ¶ 33. On Amazon and other websites, the Lewises use MTC's trademarks to sell Professor Foam products at lower prices than MTC. Id. ¶ 21. They also market Professor Foam as a supplier of MTC-trademarked products. Id. Specifically, MTC alleges that the Lewises infringe on its right by selling o-rings using MTC trademarks to coattail on its brand. Id. ¶¶ 32, 33. MTC also manufactures an o-ring kit under the Amazon Standard Identification Number B00BBNHGMA with a UPC of 8492900000075. Id. ¶ 32.

         MTC filed its complaint on March 4, 2016, in the Northern District of California. Dkt. 2. The case was transferred to the Southern District of Texas on November 14, 2016. Dkt. 56. The Lewises now move to dismiss the claims in MTC's first amended complaint. Dkt. 89. Additionally, MTC moves to strike the affirmative defenses in Sandra Lewis's answer. Dkt. 54.

         Judge Johnson's M&R recommends denying MTC's motion to strike. Dkt. 95 at 9. MTC does not object and the court adopts the recommendation as there is no clear error on the face of the record. Fed.R.Civ.P. 72(b), Advisory Comm. Note (1983) ("When no timely objection is filed, the court need only satisfy itself that there is no clear error on the face of the record in order to accept the recommendation.").

         Judge Johnson also recommends granting the Lewises' motion to dismiss in part and denying it in part. Id. at 22. Specifically, Judge Johnson recommends the following claims be dismissed: (1) trademark infringement under Texas Business and Commerce Code § 16.012; (2) unjust enrichment; and (3) negligent interference with contractual relations. Id. at 10-22. Judge Johnson recommends denying the motion with regards to the Lewises' claims for: (1) trademark infringement under 15 U.S.C. §§ 1114 and 1125(a); (2) unfair competition and false designation under 15 U.S.C. § 1125(a); (3) common law claim trademark infringement (4) common law unfair competition; (5) intentional interference with business relationships; and (6) unfair competition by misappropriation. Id. The Lewises timely objected to Judge Johnson's recommendation. Dkt. 96.

         II. Legal Standard

         A. Magistrate Judge

         For dispositive matters, the court "determine[s] de novo any part of the magistrate judge's disposition that has been properly objected to." Fed.R.Civ.P. 72(b)(3). "The district judge may accept, reject, or modify the recommended disposition; receive further evidence; or return the matter to the magistrate judge with instructions." Id. "When no timely objection is filed, the court need only satisfy itself that there is no clear error on the face of the record in order to accept the recommendation." Fed.R.Civ.P. 72(b), Advisory Comm. Note (1983). For non-dispositive matters, the court may set aside the magistrate judge's order only to the extent that it is "clearly erroneous or contrary to law." Fed.R.Civ.P. 72(a).

         B. Rule 12(b)(6) Motion to Dismiss

         Rule 8(a)(2) of the Federal Rules of Civil Procedure requires that the pleading contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). A party against whom claims are asserted may move to dismiss those claims when the nonmovant has failed "to ...


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