United States District Court, W.D. Texas, Austin Division
SUSAN OGDEN and ROBERT L. AND MARY D. OGDEN LIMITED PARTNERSHIP, Plaintiffs,
COZUMEL, INC. D/B/A EL ARROYO, Defendant.
REPORT AND RECOMMENDATION OF THE UNITED STATES
HIGHTOWER UNITED STATES MAGISTRATE JUDGE.
HONORABLE LEE YEAKEL UNITED STATES DISTRICT JUDGE
the Court are three motions filed by Defendant Cozumel, Inc.:
Motion to Dismiss against Plaintiffs Susan Ogden and Robert
L. and Mary D. Ogden Limited Partnership, filed April 29,
2019 (Dkt. No. 42) (“Motion to
Dismiss”); Motion for Partial Summary Judgment on
Plaintiffs' claims of breach of contract under Texas law
and fraudulent registration of the EL ARROYO service mark
under Section 38 of the Lanham Act, 15 U.S.C. § 1120,
also filed April 29, 2019 (Dkt. No. 43); and Motion for
Partial Summary Judgment alleging that Plaintiffs abandoned
the EL ARROYO mark, filed May 31, 2019 (Dkt. No. 48).
18, 2019, the District Court referred the above Motions to
the undersigned for Report and Recommendation pursuant to 28
U.S.C. § 636(b)(1)(B), Federal Rule of Civil Procedure
72, and Rule 1(d) of Appendix C of the Local Rules of the
U.S. District Court for the Western District of Texas. A
hearing on the pending motions was held before the
undersigned on August 29, 2019.
suit concerns ownership of the mark EL ARROYO (“the
Mark”), which has been used in association with a
restaurant on West Fifth Street in Austin for more than 40
years. Robert and Mary Ogden, the parents of Plaintiff Susan
Ogden, opened the restaurant in 1975. In 1987, Mr. Ogden
entered into a lease agreement with Defendant, which has
operated the restaurant ever since.
1989, a Texas registration for the stylized mark EL ARROYO
for restaurant services issued to Mr. Ogden. In 1997, a
federal registration of the EL ARROYO mark in standard
characters for restaurant services issued to
Defendant. Both registrations have been renewed.
Mr. Ogden died in 2008, the restaurant property passed by
will to Mary Ogden and the Texas state trademark registration
was transferred to her. In 2010, Mrs. Ogden created the
Robert L. and Mary D. Ogden Limited Partnership and
contributed the property on West Fifth Street to it. On April
1, 2016, the parties entered into a release and lease
agreement. Mrs. Ogden died in 2017.
filed this lawsuit on October 2, 2018, seeking a declaratory
judgment “that they are the rightful and sole owner of
the EL ARROYO mark in Texas and under Federal common law 15
U.S.C. § 1125” and transfer or cancellation of
Defendant's federal registration. Dkt. No. 17, Second
Amended Complaint (the “Complaint”) at ¶ 68.
Plaintiffs also assert claims for breach of contract under
Texas law and false or fraudulent registration of the Mark
under Section 38 of the Lanham Act.
contends in its counterclaims that Plaintiffs are attempting
to gain additional rent and other lease concessions by
falsely claiming ownership in the Mark. Defendant asserts
counterclaims of breach of contract; fraud; fraud in a real
estate transaction; and fraud in the procurement, renewal,
and assignment of the Texas registration. Among other relief,
Defendant seeks cancellation of the Texas trademark
registration and a judgment “[d]eclaring that Cozumel
has superior rights to the Mark than Plaintiffs' rights
in the Mark.” Dkt. No. 19, Answer to Second Amended
Complaint (“Answer”) at 28.
Motion to Dismiss under Rule 12(b)(1)
brings its Motion to Dismiss under Fed.R.Civ.P. 12(b)(1). The
motion applies only to Plaintiffs' first two claims: (1)
declaratory judgment of ownership of the EL ARROYO mark
“in Texas and under Federal common law 15 U.S.C. §
1125, ” and (2) false or fraudulent registration of the
EL ARROYO mark by Defendant under Section 38 of the Lanham
Act. Defendant argues that “Plaintiffs fail to clearly
allege, much less establish through evidence, either actually
owns any rights to the Mark today to bring these claims
against Cozumel.” Dkt. No. 42, Motion to Dismiss at 2.
motion to dismiss under Rule 12(b)(1) brings into question
the federal court's subject matter jurisdiction. A case
is properly dismissed for lack of subject matter jurisdiction
when the court lacks the statutory or constitutional power to
adjudicate the case. Smith v. Regional Transit
Auth., 756 F.3d 340, 347 (5th Cir. 2014). When the
court's subject matter jurisdiction is challenged, the
party asserting jurisdiction bears the burden of establishing
it. See Alabama-Coushatta Tribe of Tex. v. United
States, 757 F.3d 484, 487 (5th Cir. 2014); Gilbert
v. Donahoe, 751 F.3d 303, 307 (5th Cir. 2014). “In
considering a challenge to subject matter jurisdiction, the
district court is ‘free to weigh the evidence and
resolve factual disputes in order to satisfy itself that it
has the power to hear the case.'” Smith,
756 F.3d at 347 (quoting Krim v. pcOrder.com, Inc.,
402 F.3d 489, 494 (5th Cir. 2005)).
motion to dismiss for lack of subject matter jurisdiction
should be granted if it appears certain that the plaintiff
cannot prove a plausible set of facts that establish subject
matter jurisdiction. Venable v. La. Workers' Comp.
Corp., 740 F.3d 937, 941 (5th Cir. 2013).
“However, where issues of fact are central both to
subject matter jurisdiction and the claim on the merits, we
have held that the trial court must assume jurisdiction and
proceed to the merits.” Montez v. Dep 't of the
Navy, 392 F.3d 147, 150 (5th Cir. 2004). There are three
avenues for a movant to demonstrate a lack of jurisdiction:
(1) on the face of the complaint alone; (2) the complaint
supplemented by undisputed facts in the record; and (3) the
complaint supplemented by undisputed facts and the
court's resolution of disputed facts. Deutsch v.
Annis Enters., Inc., 882 F.3d 169, 173 n.1 (5th Cir.
2018); Montez, 392 F.3d at 149.
contends that because Plaintiffs failed to establish that
either Plaintiff actually owns rights to the EL ARROYO Mark,
they cannot establish standing to bring their claims to
adjudicate rights to the Mark directly against Defendant.
Therefore, Defendant argues, the Court lacks subject matter
jurisdiction to hear Plaintiffs' trademark claims.
Plaintiffs respond that they have not actually brought a
claim under Lanham Act Section 43, 15 U.S.C. § 1125, but
instead seek declaratory judgment of ownership under the
federal common law only. As for their second count,
Plaintiffs argue that claims under Lanham Act Section 38 are
not limited to mark owners and can be brought by any person
who would be damaged by a registration.
Plaintiffs' Standing to Bring a Claim under Lanham Act
Court addresses Plaintiffs' second claim first. Lanham
Act Section 38 provides:
Any person who shall procure registration in the Patent and
Trademark Office of a mark by a false or fraudulent
declaration or representation, oral or in writing, or by any
false means, shall be liable in a civil action by any person
injured thereby for any damages sustained in consequence
plain terms, Section 38 provides a cause of action to
“any person injured” by false or fraudulent
registration of a mark. Plaintiffs thus are correct that this
cause of action is not limited to the owner of a mark.
have asserted rights in the EL ARROYO mark through operation
of a restaurant under that name as purported licensors.
Whether or not Plaintiffs will succeed on the merits of this
claim at trial, the complaint alleges that Plaintiffs may be
injured by Defendant's allegedly false or fraudulent
registration of the Mark and therefore supports a finding of
subject matter jurisdiction under Rule 12(b)(1).
alleged, the parties' dispute is a substantial
controversy of sufficient immediacy and reality for purposes
of the present suit. The undersigned therefore recommends
that the District Court DENY the Motion to
Dismiss as to Plaintiffs' Claim II.
Plaintiffs' Standing to Bring a Claim under Lanham Act
now to Plaintiffs' first claim. Count I of the Complaint,
titled “Declaratory Judgment of ‘El Arroyo'
Trademark Ownership, ” alleges in part:
68. Plaintiffs are entitled to a declaration that they are
the rightful and sole owner of the EL ARROYO mark in Texas
and under Federal common law 15 U.S.C § 1125.
69. Plaintiffs are entitled to a declaration that Cozumel may
not use the “El Arroyo” mark if its lease to
Plaintiffs at 1624 W. 5th Street, Austin, ...