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Corp. v. Russell Brands, LLC

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

August 27, 2019

TRUE BELIEVERS INK 2, CORP. Plaintiff/Counterclaim-Defendant,
v.
RUSSELL BRANDS, LLC. Defendants/Counterclaim-Plaintiff

          MEMORANDUM OPINION AND ORDER

          AMOS L. MAZZANT UNITED STATES DISTRICT JUDGE

         Pending before the Court is Defendants' Motion to Voluntarily Dismiss Counterclaims Without Prejudice (Dkt. #43) and Plaintiff and Defendants' Joint Notice and Joint Motion for Leave to Submit Supplemental Briefing Regarding Russell's Motion to Voluntarily Dismiss Counterclaims Without Prejudice (Dkt. #95). Having considered the motions and the relevant pleadings, the Court holds that Plaintiff and Defendants' Joint Notice and Joint Motion for Leave to Submit Supplemental Briefing Regarding Russell's Motion to Voluntarily Dismiss Counterclaims Without Prejudice (Dkt. #95) is DENIED and Defendants' Motion to Voluntarily Dismiss Counterclaims Without Prejudice (Dkt. #43) is GRANTED.

         BACKGROUND

         True Believers Ink 2, Corp. (“True Believers”) filed this trademark infringement action against Russell Brands, LLC (“Russell”) for allegedly improper use of the phrase “TRUE BELIEVERS” on June 18, 2018 (Dkt. #1). True Believers alleges: (1) trademark infringement under 15 U.S.C. § 1114; (2) unfair competition under 15 U.S.C. § 1125(a); (3) trademark infringement under Texas common law; (4) unfair competition under Texas common law; and (5) dilution under the Texas Anti-Dilution Act, Tex. Bus. & Comm. Code. § 16.103 (Dkt. #1). On July 16, 2018, Russell filed its Answer, Affirmative Defenses, and Counterclaims (Dkt. #6). Russell asserted three counterclaims against True Believers: (1) Federal Trademark Infringement and Unfair Competition in Violation of 15 U.S.C. § 1125(a); (2) Declaratory Judgment (seeking a declaration that Russell has not infringed, diluted, or engaged in unfair competition with respect to the marks asserted in True Believers' Complaint); and (3) Cancellation of the ‘115 Registration (alleging that True Believers has abandoned this trademark) (Dkt. #6).

         Russell now moves to voluntarily dismiss its three counterclaims under Federal Rule of Civil Procedure 41(a)(2) (Dkt. #43). Citing the termination of its “#TrueBelievers” advertising campaign, Russell asserts that its counterclaims now have “little value” (Dkt. #43). True Believers opposes dismissal of Russell's counterclaims asserting that Russell made judicial admissions in its Answer, Affirmative Defenses, and Counterclaims (Dkt. #46). Accordingly, True Believers claims that the dismissal of these alleged judicial admissions would be legally prejudicial to their action (Dkt. #46). In its Reply, Russell counters that True Believers' characterization of its pleadings is inaccurate as Russell has made no judicial admissions (Dkt. #47). Thus, Russell contends that True Believers will suffer no legal prejudice should the Court dismiss Russell's counterclaims (Dkt. #47).

         The Court heard both parties regarding Russell's counterclaims on August 1, 2019 at the Final Pretrial Conference. After the parties were unable to resolve the matter amongst themselves at the Conference, the Court granted the parties an additional week to attempt to reach an agreement (Dkt. #100). On August 8, 2019, True Believers and Russell petitioned the Court again stating that they were still at an impasse. Consequently, the parties filed a Joint Notice and Joint Motion for Leave to Submit Supplemental Briefing Regarding Russell's Motion to Voluntarily Dismiss Counterclaims Without Prejudice (Dkt. #95). The Court concludes that no additional briefing is necessary and now considers Russell's Motion to Voluntarily Dismiss Counterclaims Without Prejudice.

         LEGAL STANDARD

         Rule 41(a)(2) of the Federal Rules of Civil Procedure provides that “an action may be dismissed at the plaintiff's request only by court order, on terms that the court considers proper.” Fed.R.Civ.P. 41(a)(2); accord Elbaor v. Tripath Imaging, Inc., 279 F.3d 314, 317 n.2 (5th Cir. 2002); Davis v. Huskipower Outdoor Equip. Corp., 936 F.2d 193, 198-99 (5th Cir. 1991). The same rule extends to the dismissal of counterclaims. See Fed. R. Civ. P. 41(c)(2). The primary purpose of Rule 41(a)(2) is to “prevent voluntary dismissals which unfairly affect the other side, and to permit the imposition of curative conditions.” Manshack v. Sw. Elec. Power Co., 915 F.2d 172, 174 (5th Cir. 1990) (citing 9 C. Wright & A. Miller, Federal Practice and Procedure § 2364, at 165 (1971)). When determining whether to dismiss a counterclaim, the Fifth Circuit has held that “[t]he decision to dismiss an action rests within the sound discretion of the trial court and may only be reversed for an abuse of that discretion.” Schwarz v. Folloder, 767 F.2d 125, 129 (5th Cir. 1985) (citing La-Tex Supply Co. v. Fruehauf Trailer Division, 444 F.2d 1366, 1368 (5th Cir. 1971); see United States ex rel. Doe v. Dow Chem. Co., 343 F.3d 325, 329 (5th Cir. 2003) (citation omitted); Templeton v. Nedlloyd Lines, 901 F.2d 1273, 1274-75 (5th Cir. 1990) (citing LeCompte v. Mr. Chip, Inc., 528 F.2d 601, 604 (5th Cir. 1976)). Generally, a motion for voluntary dismissal should be freely granted unless the non-moving party will suffer some plain legal prejudice other than the possibility of a second lawsuit. See Doe, 343 F.3d at 330 (citing Elbaor, 279 F.3d at 317); Davis, 936 F.2d at 199; Ikospentakis v. Thalassic S.S. Agency, 915 F.2d 176, 177 (5th Cir. 1990). Moreover, “[i]t is not a bar to dismissal that [the moving party] may obtain some tactical advantage thereby.” Manshack v. Sw. Elec. Power Co., 915 F.2d 172, 174 (5th Cir. 1990) (quoting 9 C. Wright & A. Miller, Federal Practice and Procedure § 2364, at 165 (1971)). If the Court finds that legal prejudice does not exist, then the motion should be granted. See Elbaor, 279 F.3d at 317. If, however, the Court finds that the motion will cause legal prejudice, then the Court may deny the motion or impose conditions that will cure the prejudice. Id. at 317- 18.

         ANALYSIS

         True Believers asserts that Russell's Answer, Affirmative Defenses, and First Amended Counterclaims (Dkt. #16) contain judicial admissions (Dkt. #46). Citing its intent to “utilize the judicial admissions at trial to simplify and streamline the presentation of evidence to the jury, ” True Believers claims that it would be “highly [prejudicial], both legally and practically, if Russell were permitted to dismiss its counterclaims at this late date . . .” (Dkt. #46). Russell, however, denies that any judicial admissions were made (Dkt. #43). Consequently, Russell asserts that there would be no legal prejudice to True Believers if the Court were to grant Russell's Motion to Voluntarily Dismiss Without Prejudice (Dkt. #43). To determine whether Russell's counterclaims should be dismissed, the Court must first determine whether Russell's Answer, Affirmative Defenses, and First Amended Counterclaims contain judicial admissions. The Court will then turn to whether True Believers would be legally prejudiced by a dismissal of the counterclaims.

         I. Judicial Admissions

         A judicial admission is “a formal concession in the pleadings or stipulations by a party or counsel that is binding on the party making them. Although a judicial admission is not itself evidence, it has the effect of withdrawing a fact from contention.” Martinez v. Bally's Louisiana, Inc., 244 F.3d 474, 476 (5th Cir. 2001). By withdrawing a fact from contention, a judicial admission “acts as a substitute for evidence in that it does away with the need for evidence in regard to the subject matter of the judicial admission.” Blue Spike, LLC v. Audible Magic Corp., No. 6:15-CV-584, 2016 WL 7636118, at *5 (E.D. Tex. June 21, 2016) (quoting State Farm Mut. Auto. Ins. Co. v. Worthington, 405 F.2d 683, 686 (8th Cir. 1968)).

         To qualify as a judicial admission, the Fifth Circuit has held that a statement must be: “(1) made in a judicial proceeding; (2) contrary to a fact essential to the theory of recovery; (3) deliberate, clear, and unequivocal; (4) such that giving it conclusive effect meets with public policy; and (5) about a fact on which a judgment for the opposing party can be based.” Heritage Bank v. Redcom Labs., Inc., 250 F.3d 319, 329 (5th Cir. 2001) (citing Griffin v. Superior Ins. Co., 161 Tex. 195, 338 S.W.2d 415, 419 (1960)). While it is true that “factual assertions in pleadings . . . are considered to be judicial admissions conclusively binding on the party who made them, ” that is not always the case. White v. ARCO/Polymers, Inc., 720 F.2d 1391, 1396 (5th Cir. 1983). Indeed, courts have generally recognized that pleadings made in the alternative do not constitute a judicial admission. See, e.g., Cont'l Ins. Co. of New York v. Sherman, 439 F.2d 1294 (5th Cir. 1971) (holding that “there is ample authority that one of two inconsistent pleas cannot be used as evidence in the trial of the other.”) (citing Giannone v. United States Steel Corporation, 238 F.2d 544, n. 4 (3rd Cir. 1956); McCormick on Evidence, § 242 at 509-510 (1954)); Wells Fargo Bank, N.A. v. Guevara, 2010 WL 5824040, at *3 (N.D. Tex. 2010) (“[Plaintiff] may not use allegations related to one claim as evidence to invalidate an alternative claim.”) (citation omitted); Boulle, Ltd. v. De Boulle Diamond & Jewelry, Inc., 2014 WL 4261994, at *7 (N.D. Tex. Aug. 29, 2014) (“Defendant should not be able to use Plaintiff's trademark infringement claims as an admission to Defendant's trademark infringement claim. Therefore, Plaintiffs' statements in the Amended Complaint and in the Joint Pretrial Order are not binding judicial admissions, given the inconsistent statements Plaintiffs provide in their answers.”). To be sure, where a party's pleadings are inconsistent-e.g., pled in the alternative-any “admission” cannot be unequivocal. See Gabarick v. Laurin Mar. (Am.), Inc., 406 Fed.Appx. 883, 889 (5th Cir. 2010) (quoting Sherman, 439 F.2d at 1298).

         Here, True Believers alleges that Russell's First Amended Counterclaim contains statements that constitute judicial admissions. Citing paragraphs 9-13, 15-18, 20-22, 52-56, and 60-63 of Russell's First Amended Counterclaim, True Believers contends that Russell has admitted: (1) that it used “TRUE BELIEVERS” as a mark; (2) that the parties' “respective use” of the mark is likely to cause confusion; (3) that it is using the mark “in connection with services that are identical to the services” True Believers offers; and (4) that “the parties use ‘TRUE BELIEVERS' in the same channels of trade” (Dkt. #46). Contrary to True Believers' assertions, however, Russell's statements cannot be characterized as judicial admissions. First, it is clear to the Court that several of the disputed statements merely contain general information about Russell, such as the brand names that Russel sells merchandise under, the history of Russell, and Russell's ownership of the “SPALDING” and “TRUE TO THE GAME” trademarks. It is readily apparent that these statements are not “contrary to a fact essential to the theory of recovery;” therefore, the Court finds that paragraphs 9-13, 15, and 16 do not qualify as judicial statements. Heritage Bank, 250 F.3d at 329 (citation omitted). Paragraphs 16, 17, 18, 20, and 22 appear to detail Russell's advertisement campaign revolving around the phrase “True Believers.” These statements fail to ...


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