871 F. Supp. 2d 607

CLEARLINE TECHNOLOGIES LTD., Plaintiff, v. COOPER B-LINE, INC., et al., Defendants.

Civil Action No. H-11-1420.

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

May 9, 2012.

Order Denying Reconsideration July 20, 2012.

*608Martin E. Rose, John P. Pinkerton, Michael Ross Cunningham, Robert D. Katz, Katz PLLC, Jon Bentley Hyland, Munsch Hardt Kopf and Harr, Dallas, TX, for Plaintiff.

John Lee Dagley, Robín L. Harrison, Campbell Harrison et al., Houston, TX, Mitchell Craig Chaney, Brownsville, TX, for Defendants.

MEMORANDUM AND ORDER

KEITH P. ELLISON, District Judge.

Pending before the Court are Cooper B-Line Inc.’s Motion for Partial Summary Judgment on Plaintiffs Fraud Claim (“Motion for Partial Summary Judgment”) (Doc. No. 47) and Cooper Industries pic’s Motion to Dismiss for Failure to State a Claim in Plaintiffs Second Amended Complaint (“Motion to Dismiss”) (Doc. No. 59). After considering the parties’ arguments and the applicable law, the Court finds that Defendants’ Motions must be granted.

I. BACKGROUND1

Plaintiff Clearline Technologies Ltd. (“Plaintiff’ or “Clearline”)2 brings this action against Defendants Cooper B-Line, Inc. (“Cooper B-Line”)3 and Cooper Industries pic (“Cooper pic”)4 (collectively, “Defendants”)5 for claims arising out of Defendants’ alleged misrepresentations and infringement of Plaintiffs trademark and trade dress. Clearline’s trademark and trade dress claims arise out of its C-PORT® trademark, which is used in connection with the sale of its rooftop support *609products. (Am. Compl. ¶ 9.) Clearline filed an application to register this mark in November 2005, and it was registered on the United States Patent and Trademark Office’s (USPTO) principal register on April 17, 2007. (Id.) Clearline also has acquired protectable rights in the trade dress of the distinctive C-PORT® products, which includes “their non-functional shape, dimensions, color, and yellow striping.” (Id. ¶ 11.)'

In April 2003, Clearline entered into a Proprietary Information Agreement with Cooper B-Line, which provided that Clearline and Cooper B-Line “would evaluate and negotiate the prospect of Clear-line supplying strut supports, bridge supports, and other related rooftop support products to Cooper B-Line.” (Id. ¶ 8.) They also reached an oral agreement that granted Cooper B-Line exclusive rights to sell Clearline’s products within the United States-. (Id.) Clearline first sold its C-PORT® products to Cooper B-Line for distribution in the United States in December 2005, and over 70% of its C-PORT® sales were made to Cooper B-Line in 2006 and 2007. (Id. ¶ 10.)

In July 2007, Dave Rice and Chris Peeler of Cooper B-Line represented to Clear-line founder Neil Krovats that Cooper B-Line wished to enter into a contract to distribute 700,000 units of C-PORT® products over the next year; however, Clearline would need to increase its capacity first. (Id. ¶ 12.) Based on that request, Clearline increased its capacity by moving to a larger facility, and expended $10,000 in legal fees to prepare a new contract for Cooper B-Line. (Id.) Without warning, Dave Rice, Dave Cibula, and Chris Peeler of Cooper B-Line informed Neil Krovats in April 2008 that, effective immediately, Cooper B-Line would no longer distribute C-PORT® products for Clearline in the United States. (Id. ¶ 13.)

Clearline became aware that Defendants were selling confusingly similar roof-top support products under the trademark DURA-BLOKtm in July 2008. (Id. ¶ 14.) Cooper Technologies Company filed the application to register the trademark on December 15, 2008, and it was registered on the USPTO’s principal register on September 14, 2010. (Id. ¶ 15.) The DURA-BLOKtm products have the same nonfunctional shape, dimensions, color, and yellow striping as the C-PORT® products. (Id. ¶ 14.) They are sold through a catalogue that is virtually identical to the catalogue developed and used by Clearline, and they bear product identifiers and specifications that are very similar to those of Clearline. (Id.) The websites of both Cooper BLine and Cooper pic advertise the DURA-BLOKtm products. (Id. ¶¶ 16-17.) Clearline asserts that, because of Cooper pic’s indirect ownership of Cooper B-Line, Cooper pic exerts control over Cooper B-Line, and such control extends to the operation of Cooper B-Line’s website. (Id. ¶ 19.) Furthermore, together with former defendant Cooper Technologies, Plaintiff believes that Defendants exercise joint control over the use of the DURA-BLOKtm mark, including the advertisements and operation of the websites. (Id. ¶ 20.) Cooper B-Line and Cooper pic also continue to use Clearline’s C-PORT® mark in meta-tags6 associated with their *610websites, with intent to trade on the reputation and goodwill of Clearline. (Id. ¶ 21.)

Clearline’s Amended Complaint contains various claims for relief labeled as Counts 1-5: (1) false designation of origin or sponsorship and trade dress infringement under 15 U.S.C. § 1125(a); (2) common law trade dress infringement; (3) violations of the Illinois Deceptive Trade Practices Act (815 ILCS 510/1 et seq.)7; (4) trademark infringement under 15 U.S.C. § 1114(l)(a); and (5) fraud, against Cooper B-Line only.

Defendant Cooper B-Line, Inc. (“Cooper B-Line”) moves for summary judgment on Clearline’s fraud claim against it. (Mot. Partial Summ. J.) Defendant Cooper Industries pic (“Cooper pic”) moves to dismiss Counts 1-3 against it, to the extent the claims are based on vicarious liability. (Mot. Dismiss ¶¶ 12-14.)8

II. MOTION FOR PARTIAL A. Legal Standard

A motion for summary judgment requires the Court to determine whether the moving party is entitled to judgment as a matter of law based on the evidence thus far presented. Fed.R.Civ.P. 56(c). Summary judgment is proper “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Kee v. City of Rowlett, 247 F.3d 206, 210 (5th Cir.2001) (quotations omitted). A genuine issue of material fact exists if a reasonable jury could enter a verdict for the non-moving party. Crawford v. Formosa Plastics Corp., 234 F.3d 899, 902 (5th Cir.2000).

The Court views all evidence in the light most favorable to the non-moving party and draws all reasonable inferences in that party’s favor. Id. “[T]he court should give credence to the evidence favoring the nonmovant as well as that ‘evidence supporting the moving party that is uncontradicted and unimpeached, at least to the extent that that evidence comes from disinterested witnesses.’ ” Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 151, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000). The Court may not make credibility determinations or weigh the evidence. Harvill v. Westward Communications, L.L.C., 433 F.3d 428, 436 (5th Cir.2005). Hearsay, conclusory allegations, unsubstantiated assertions, and unsupported speculation are not competent summary judgment evidence. Fed.R.Civ.P. 56(e)(1); see, e.g., McIntosh v. Partridge, 540 F.3d 315, 322 (5th Cir.2008); Eason v. Thaler, 73 F.3d 1322, 1325 (5th Cir.1996); see also Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994) (noting that a non-movant’s burden is “not satisfied with ‘some metaphysical doubt as to the material facts’ ”) (citing *611Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)). Additionally, any “affidavit or declaration used to support or oppose a motion must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant or declarant is competent to testify on the matters stated.” Fed.R.Civ.P. 56(c)(4).

B. Analysis

Under Illinois law, a plaintiff asserting a claim for fraud must show “that defendants, with the intent to induce plaintiffs to act, made a false statement of material fact which defendants knew or believed to be false. Plaintiffs must also show they justifiably relied on the statement and suffered damages resulting from that reliance.” Association Benefit Svcs., Inc. v. Caremark RX, Inc., 493 F.3d 841, 852-53 (7th Cir.2007) (quoting Williams v. Chicago Osteopathic Health Sys., 274 Ill.App.3d 1039, 211 Ill.Dec. 151, 654 N.E.2d 613, 619 (1995)).

“The general standard for fraud refers to a false statement of material fact; promissory fraud, involving a false statement of intent regarding future conduct, is generally not actionable under Illinois law unless the plaintiff also proves that the act was a part of a scheme to defraud.” Id. at 853 (citing Bradley Real Estate Trust v. Dolan Assocs. Ltd., 266 Ill.App.3d 709, 203 Ill.Dec. 582, 640 N.E.2d 9, 12-13 (1994); Gen. Elec. Credit Auto Lease v. Jankuski, 177 Ill.App.3d 380, 126 Ill.Dec. 676, 532 N.E.2d 361, 363-64 (1988)). Such a scheme is actionable where a defendant either “(1) lied repeatedly to a single promisee, or (2) lied at least once to multiple promisees.” In re Polo Builders, Inc., 388 B.R. 338, 380 (Bankr.N.D.Ill.2008) (citing Calvin v. The Leitner Thomas Group, No. 00-C-8055, 2003 WL 1720008, at *4 (N.D.Ill. Mar. 31, 2003)). “The distinction between a mere promissory fraud and a scheme of promissory fraud is elusive, and has caused, to say the least, considerable uncertainty.” Desnick v. Am. Broad. Companies, Inc., 44 F.3d 1345, 1354 (7th Cir.1995)

Clearline alleges that “Dave Rice and Chris Peeler of Cooper B-Line represented to Neil Krovats of Clearline that Cooper B-Line wished to enter into a contract to distribute 700,000 units of C-PORT® products over the next year, but that Clearline would need to increase its capacity in order for that to occur.” (Am. Compl. ¶ 45; Plaintiff Clearline Technoligies [sic] LTD.’s First Amended Answers to Defendant Cooper B-Line, Inc.’s First Set of Interrogatories (“Interrogatory Responses”), Doc. No. 47-1, at 13.) Clearline also asserts that, on the same day and at the same location, Bob Houlhouser asked whether Clearline would be able to produce enough to meet Cooper’s sales projections. (Interrogatory Resp. at 13.)

Cooper B-Line contends that Mr. Rice’s and Mr. Peeler’s representations of a “wish [ ] to enter into a contract” are nothing more than statements of desire, and do not rise to the level of a promise that would satisfy the promissory fraud exception. Additionally, Mr. Houhouser’s statement was only a question rather than a promise or misrepresentation.

In its previous Memorandum and Order in this case (Doc. No. 48), the Court did not consider whether these statements were proper expressions of promises under Illinois law, as the Court raised the scheme exception sua sponte. Upon closer examination of Clearline’s recitation of the statements made by Cooper B-Line representatives, and with the benefit of Clearline’s sworn interrogatory answers as summary judgment evidence, the Court must grant summary judgment on this claim.

As the Seventh Circuit has stated:

*612A great many promises belong to the realm of puffery, bragging, “mere words,” and casual bonhomie, rather than to that of serious commitment. They are not intended to and ordinarily do not induce reliance; a healthy skepticism is a better protection against being fooled by them than the costly remedies of the law. In any event it is not our proper role as a federal court in a diversity suit to read “scheme” out of Illinois law; we must give it some meaning. Our best interpretation is that promissory fraud is actionable only if it either is particularly egregious or, what may amount to the same thing, it is embedded in a larger pattern of deceptions or enticements that reasonably induces reliance and against which the law ought to provide a remedy.

Desnick, 44 F.3d at 1354. See also Bower v. Jones, 978 F.2d 1004, 1012 (7th Cir.1992) (stating that “a claimant must be able to point to specific, objective manifestations of fraudulent intent — a scheme or device”) (quoting Hollymatic Corp. v. Holly Systems, Inc., 620 F.Supp. 1366, 1369 (N.D.Ill.1985)). “The disfavor that Illinois courts have expressed toward promissory fraud leads us to conclude that a claimant must allege at least explicit promises of future performance and cannot rely on implied promises to bring the action within the scheme or device exception to otherwise nonactionable promissory fraud.” Hindley v. Seltel, Inc., 672 F.Supp. 1093, 1096 (N.D.Ill.1987).

The fraud alleged here was not based on explicit promises, nor were the statements expressions of a “serious commitment.” Desnick, 44 F.3d at 1354. The allegations of fraud consist of only two statements, in one day, about Clearline increasing its capacity. These statements are insufficient to satisfy the scheme exception. Cooper B-Line is entitled to summary judgment on this claim.

III. MOTION TO DISMISS

A. Legal Standard

A court may dismiss a complaint for “failure to state a claim upon which relief can be granted.” Fed.R.CivJP. 12(b)(6). “To survive a Rule 12(b)(6) motion to dismiss, a complaint ‘does not need detailed factual allegations,’ but must provide the plaintiffs grounds for entitlement to reliefineluding factual allegations that when assumed to be true ‘raise a right to relief above the speculative level.’ ” Cuvillier v. Taylor, 503 F.3d 397, 401 (5th Cir.2007) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). That is, a complaint must “contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955). 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. (citing Twombly, 550 U.S. at 556, 127 S.Ct. 1955). The plausibility standard is not akin to a “probability requirement,” but asks for more than a sheer possibility that a defendant has acted unlawfully. Id. A pleading need not contain detailed factual allegations, but must set forth more than “labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555, 127 S.Ct. 1955 (citation omitted).

Ultimately, the question for the court to decide is whether the complaint states a valid claim when viewed in the light most favorable to the plaintiff. The court must accept well-pleaded facts as true, but legal conclusions are not entitled to the same assumption of truth. Iqbal, 129 S.Ct. at 1950 (citation omitted). The court should *613not “ ‘strain to find inferences favorable to the plaintiffs’ ” or “accept ‘conclusory allegations, unwarranted deductions, or legal conclusions.’ ” R2 Investments LDC v. Phillips, 401 F.3d 638, 642 (5th Cir.2005) (quoting Southland Sec. Corp. v. INSpire Ins. Solutions, Inc., 365 F.3d 353, 362 (5th Cir.2004)). A district court can consider the contents of the pleadings, including attachments thereto, as well as documents attached to the motion, if they are referenced in the plaintiffs complaint and are central to the claims. Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 499 (5th Cir.2000). Importantly, the court should not evaluate the merits of the allegation, but must satisfy itself only that plaintiff has adequately pled a legally cognizable claim. United States ex rel. Riley v. St. Luke’s Episcopal Hosp., 355 F.3d 370, 376 (5th Cir.2004). “Motions to dismiss under Rule 12(b)(6) are viewed with disfavor and are rarely granted.” Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 232 (5th Cir.2009) (citation omitted); Duke Energy Intern., L.L.C. v. Napoli, 748 F.Supp.2d 656 (S.D.Tex.2010). The Court should generally “afford plaintiffs at least one opportunity to cure pleading deficiencies before dismissing a case, unless it is clear that the defects are incurable or the plaintiffs advise the court that they are unwilling or unable to amend in a manner that will avoid dismissal.” Great Plains Trust Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d 305, 329 (5th Cir.2002).

Under Federal Rule of Civil Procedure 12(d), a motion to dismiss must be treated as a Rule 56 motion for summary judgment if the court considers matters outside the pleadings in deciding the motion. Before a Rule 12(b)(6) motion may be converted to a Rule 56 motion, a court must be satisfied that “the nonmoving party has ... had the opportunity to discover information that is essential to [its] opposition.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 n. 5, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (citing Fed.R.Civ.P. 56(f)).

B. Analysis

Cooper pic moves to dismiss Counts 1-3 to the extent they are based on vicarious liability.9 Liability for trademark infringement extends beyond those who actually sell infringing goods. Courts have found defendants liable on indirect liability theories, including contributory trademark infringement and vicarious liability.

Courts have imported common law concepts of agency, including vicarious liability, into the § 1125(a) analysis. See, e.g., Am. Tel. and Tel. Co. v. Winback and Conserve Program, Inc., 42 F.3d 1421, 1441 n. 22 (3d Cir.1994) (“AT & T”); Proctor & Gamble Co. v. Haugen, 222 F.3d 1262, 1277 (10th Cir.2000). Both parties agreed, in the briefings on Cooper pic’s original motion to dismiss, that the test for vicarious liability requires “a finding that the defendant and the infringer have an apparent or actual partnership, have authority to bind one another in transactions with third parties or exercise joint ownership or control over the infringing product.” Hard Rock Cafe Licensing Corp. v. Concession Servs., Inc., 955 F.2d 1143, 1150 (7th Cir.1992); see also Perfect 10, Inc. v. Visa Int’l Serv. Ass’n, 494 F.3d 788, 807 (9th Cir.2007). Courts have strictly applied the test for vicarious trademark liability based on agency principles, and, *614unlike vicarious copyright liability, “courts do not recognize vicarious liability in the trademark context based on ability to supervise in combination with a financial interest.” United States v. Washington Mint, LLC, 115 F.Supp.2d 1089, 1106 (D.Minn.2000).

In its previous Memorandum and Order in this case (Doc. No. 48), the Court dismissed this claim because it “cannot infer, solely on the basis that Cooper pic ‘indirectly owns’ Cooper B-Line, that an actual or apparent partnership exists.” (Doc. No. 48 at 15.) A partnership is distinct from an ownership relationship. See Coach, Inc. v. Asia Pacific Trading Co., 676 F.Supp.2d 914, 926 (C.D.Cal.2009) (“Plaintiffs cite no authority — and the Court is unaware of any — to support their contention that such evidence, by itself, tends to establish that two companies who otherwise maintain separate corporate identities nevertheless share a single identity for purposes of imposing liability for trademark rights violations.”) The Court directed Clearline to provide additional allegations supporting their assertion that Defendants’ relationship was like a partnership. See Gucci America, Inc. v. Frontline Processing Corp., 721 F.Supp.2d 228, 247 (S.D.N.Y.2010) (“Though Gucci has raised a number of factual allegations that indicate that Defendants’ services were crucial to a website like TheBagAddiction.com’s sale of infringing goods, there is insufficient evidence to plausibly infer an actual or apparent partnership. The vague, puffery-like references to a “partnership” between these companies and website merchants are not enough to support vicarious liability.”); Broadvision Inc. v. Gen. Elec. Co., No. 08 Civ. 1478(WHP), 2009 WL 1392059, at *4 (S.D.N.Y. May 5, 2009) (for copyright infringement,10 plaintiff “must show more than just a legal relationship between the parent and the subsidiary” to “state a claim for vicarious liability against [the] parent for the actions of its subsidiary.”); see also Caligiuri v. First Colony Life Ins. Co., 318 Ill.App.3d 793, 252 Ill.Dec. 212, 742 N.E.2d 750, 756 (2000) (“[S]tock ownership alone in one corporation by another is common in a parent-subsidiary relationship and does not create the relation of principal and agent.”).

Clearline’s Third Amended Complaint adds allegations regarding Cooper pie’s relationship with Cooper B-Line and its control over the allegedly infringing products. Clearline asserts that Cooper pic’s Electronic Data Interchange (“EDI”) facility allows customers to buy DURA-BLOK™ products, and its Cooper Customer Care (“C3”) web portal provides real-time product availability, net pricing, order status, tracking, and other services to buyers of products offered by Cooper pic subsidiaries. (Am. Compl. ¶ 23.) Clearline alleges that “the EDI and C3 facilities provided by Cooper pic have the authority to bind its subsidiary Cooper B-Line in transactions with third parties.” (Id.)11 Rather than describing an “actual or apparent partnership,” however, these allegations show only that Cooper pic is authorized to advertise and sell the Cooper *615B-Line products at issue in this case. There is no indication that Cooper pic has any broader authority to bind Cooper B-Line in transactions with third parties, or that Cooper B-Line has such an authority with respect to Clearline. Moreover, Clearline fails to show that Cooper pic had joint control over the products at issue, as the only allegations relate to Cooper pic’s sale of Cooper B-Line products. See Rosetta Stone Ltd. v. Google, Inc., 730 F.Supp.2d 531, 550 (E.D.Va.2010) (finding Google was not hable under a vicarious liability theory because the plaintiff failed to show that Google “controls the appearance and content” of the infringing products or the use of the marks in those products), rev’d in part on other grounds, 676 F.3d 144 (4th Cir.2012).12 The additional allegations linking Cooper pic to the products at issue may provide support for Clearline’s claim of direct infringement against Cooper pic, but do not support a theory of vicarious liability for the actions of Cooper B-Line.

Clearline also alleges that counsel for Cooper Industries13 responded to a letter sent to Cooper B-Line, using letterhead with the address for Cooper pic’s administrative headquarters. (Am. Compl. ¶24.) However, this shows nothing more than the parent-subsidiary relationship that the Court found insufficient in the previous Memorandum and Order. Clearline has failed to add the allegations necessary to find that Defendants’ relationship was an actual or apparent partnership, and thus Counts 1-3 against Cooper pic must be dismissed to the extent they are based on vicarious liability.

IV. CONCLUSION

Based on the foregoing, Cooper B-Line’s Motion for Partial Summary Judgment is GRANTED. Cooper pic’s Motion to Dismiss is also GRANTED.

IT IS SO ORDERED.

MEMORANDUM AND ORDER

Pending before the Court is Plaintiff Clearline Technologies Ltd.’s Motion for Reconsideration of the Court’s Order of May 9, 2012 (“Motion”) (Doc. No. 93). After considering the parties’ arguments and the applicable law, the Court finds that Plaintiffs Motion must be denied.

I. BACKGROUND

Plaintiff Clearline Technologies Ltd. (“Clearline”)1 brings this action against Defendant Cooper B-Line, Inc. (“Cooper B-Line”)2, 3 for claims arising out of Defendants’ alleged misrepresentations and infringement of Plaintiffs trademark and trade dress. Clearline’s trademark and trade dress claims arise out of its C-PORT® trademark, which is used in connection with the sale of its rooftop support products. (Plaintiffs Third Amended Complaint (“Amended Complaint”), Doc. *616No. 67, ¶ 9.) Clearline filed an application to register this mark in November 2005, and it was registered on the United States Patent and Trademark Office’s (USPTO) principal register on April 17, 2007. (Id.) Clearline also contends that it has acquired protectable rights in the trade dress of the distinctive C-PORT® products, which includes “their non-functional shape, dimensions, color, and yellow striping.” (Id. ¶ 11.)

In April 2003, Clearline entered into a Proprietary Information Agreement with Cooper B-Line, which provided that Clearline and Cooper B-Line “would evaluate and negotiate the prospect of Clear-line supplying strut supports, bridge supports, and other related rooftop support products to Cooper B-Line.” (Id. ¶ 8.) They also reached an oral agreement that granted Cooper B-Line exclusive rights to sell Clearline’s products within the United States. (Id.) Clearline first sold its C-PORT® products to Cooper B-Line for distribution in the United States in December 2005, and over 70% of its C-PORT® sales were made to Cooper B-Line in 2006 and 2007. (Id. ¶ 10.)

In July 2007, Clearline contends that Dave Rice and Chris Peeler of Cooper B-Line represented to Clearline founder Neil Krovats that Cooper B-Line wished to enter into a contract to distribute 700,000 units of C-PORT® products over the next year; however, Clearline would need to increase its capacity first. (Id. ¶ 12.) Based on that request, Clearline increased its capacity by moving to a larger facility, and expended $10,000 in legal fees to prepare a new contract for Cooper B-Line. (Id.) Without warning, Dave Rice, Dave Cibula, and Chris Peeler of Cooper B-Line informed Neil Krovats in April 2008 that, effective immediately, Cooper B-Line would no longer distribute C-PORT® products for Clearline in the United States. (Id. ¶ 13.)

Clearline became aware that Cooper B-Line was selling confusingly similar rooftop support products under the trademark DURA-BLOKtm in July 2008. (Id. ¶ 14.) Cooper Technologies Company filed the application to register the trademark on December 15, 2008, and it was registered on the USPTO’s principal register on September 14, 2010. (Id. ¶ 15.) Clearline asserts that the DURA-BLOKtm products have the same non-functional shape, dimensions, color, and yellow striping as the C-PORT® products, are sold through a catalogue that is virtually identical to the catalogue developed and used by Clearline, and bear product identifiers and specifications that are very similar to those of Clearline. (Id. ¶ 14.) Cooper B-Line’s website advertises the DURA-BLOKtm products. (Id. ¶¶ 16-17.) Clearline also asserts that Cooper B-Line continues to use Clearline’s C-PORT® mark in meta-tags4 associated with its websites, with intent to trade on the reputation and goodwill of Clearline. (Id. ¶ 21.)

Clearline’s Amended Complaint contains various claims for relief labeled as Counts 1-5: (1) false designation of origin or sponsorship and trade dress infringement under 15 U.S.C. § 1125(a); (2) common law trade dress infringement; (3) violations of the Illinois Deceptive Trade Practices Act (815 ILCS 510/1 et seq.); (4) trademark *617infringement under 15 U.S.C. § 1114(l)(a); and (5) fraud. The first four claims are still pending, although they were narrowed in the Court’s last Order of July 2, 2012 (Doc. No. 108). The Court granted summary judgment on the fraud claim (Doc. No. 77), but, with this Motion, Clearline asks the Court to reconsider this ruling based on newly-discovered evidence.

II. LEGAL STANDARD

Because the Federal Rules of Civil Procedure do not specifically provide for motions for reconsideration, Shepherd v. Int’l Paper Co., 372 F.3d 326, 328 (5th Cir.2004), such motions are generally analyzed under the standards for a motion to alter or amend judgment under Rule 59(e) or a motion for relief from a judgment or order under Rule 60(b). Hamilton Plaintiffs v. Williams Plaintiffs, 147 F.3d 367, 371 n. 10 (5th Cir.1998). Rule 59(e) governs when the reconsideration motion is filed within 28 days of the challenged order. Amegy Bank Nat. Ass’n v. Monarch Flight II, LLC, 2011 WL 6091807, at *5 (S.D.Tex. Dec. 7, 2011); In re BP Shareholder Derivative Litig., 2011 WL 5880946, at *2 (S.D.Tex. Nov. 23, 2011). Because less than 28 days passed between the Court’s decision to grant summary judgment for Defendant and Plaintiffs motion, Rule 59(e) applies in this case.

A motion to alter or amend under Rule 59(e) “ ‘must clearly establish either a manifest error of law or fact or must present newly discovered evidence’ and ‘cannot be used to raise arguments which could, and should, have been made before the judgment issued.’ ” Rosenzweig v. Azurix Corp., 332 F.3d 854, 863-64 (5th Cir.2003) (quoting Simon v. United States, 891 F.2d 1154, 1159 (5th Cir.1990)). A district court has “considerable discretion” to grant or deny a motion under Rule 59(e). Edward H. Bohlin Co. v. Banning Co., 6 F.3d 350, 355 (5th Cir.1993). However, the Fifth Circuit cautions that reconsideration under Rule 59(e) is an extraordinary remedy that courts should use sparingly. Templet v. HydroChem Inc., 367 F.3d 473, 479 (5th Cir.2004).

III. ANALYSIS

A. Additional Evidence

The additional evidence presented by Clearline in support of its Motion may be summarized as follows:

• Timing of Cooper B-Line’s Replacement of Clearline: Cooper B-Line employees testified that they had been in contact with another company that would replace Clear-line and make Cooper B-Line’s own product since 2007, many months before Cooper B-Line informed Neil Krovats in April 2008 that Cooper B-Line would no longer distribute C-PORT® products. (Price Depo., Doc. No. 93-1, at 42 (APP 000004) (communications with the manufacturing company began around December 2007); Rice Depo., Doc. No. 93-1, at 112-13, 117-18,118-20 (APP 000011-13) (Cooper B-Line began to look for another manufacturing company in about April 2007); Peeler Depo., Doc. No. 93-1, at 123, 127 (APP 000025-26) (Cooper B-Line began finding another manufacturer in the general time frame of May or June 2007).)
• Las Vegas Dinner: Cooper B-Line employees went to dinner with Mr. Krovats in Las Vegas in March 2008. Before the dinner, it was revealed to Alan Price, a regional sales manager for Cooper B-Line (Price Depo. at 45 (APP 000005)), that “this would be the last meeting we [would] have with Mr. Krovats where we would be buying product from Clearline, that we were going to be moving to another company for supply of our *618rooftop supports.” (Id. at 40 (APP 000003).) He was told that Mr. Krovats was unaware of the change, and would not be made aware of it until April of 2008. (Id. at 42 (APP 000004).) At the meeting, Mr. Krovats indicated that he was spending millions of dollars “to answer some of the supply issues that were a constant complaint from all of us that were attempting to sell the product.” (Id. at 44 (APP 000004).) This was a five- to ten-minute portion of the conversation. (Id. at 43 (APP 000004).) Nobody informed Mr. Krovats at the meeting that Cooper B-Line was planning to stop selling Clearline’s products. (Id. at 44 (APP 000004).)
• Conversations about Long-Term Agreement: Dave Rice, a sourcing manager for Cooper B-Line (Rice Depo. at 111 (APP 000011)), testified that he did not have any conversation with Clearline about their continued supply of products to Cooper B-Line; rather, “it was status quo, status quo.” (Id. at 171 (APP 000015).) He recalled that Neil Krovats called in September 2007 to “express[ ] interest to sign the longterm agreement,” but Mr. Rice “reminded him of the two sticking points” — a marketing issue and a liability issue. (Id. at 171-72 (APP 000015).)

Clearline presents additional evidence as well, but does not explain how this evidence is relevant to the fraud claim or this Motion for Reconsideration. (See Mot. at 4 (discussing 7,346 pages of documents delivered on February 2, 2012 and 27,352 pages delivered on February 14, 2012); Mot. at 5 (discussing the incorporation of C-PORT® product numbers and code into the DURA-BLOK™ webpage).)

B. Whether the Evidence is “Newly Discovered”

A Rule 59(e) motion should not be granted based on newly-discovered evidence unless the facts are (1) of such a nature that they would probably change the outcome; (2) actually newly discovered and could not have been discovered earlier by proper diligence; and (3) not merely cumulative or impeaching. Infusion Resources, Inc. v. Minimed, Inc., 351 F.3d 688, 696-97 (5th Cir.2003) (citing English v. Mattson, 214 F.2d 406, 409 (5th Cir.1954)). The Fifth Circuit has explained that the unexcused failure to present evidence available at the time of summary judgment is a valid basis for denying a motion to reconsider. Russ v. Int’l Paper Co., 943 F.2d 589, 593 (5th Cir.1991). See also Knight v. Kellogg Brown & Root, Inc., 333 Fed.Appx. 1, 8 (5th Cir.2009) (“[T]he plaintiffs fail to adequately explain why they did not obtain these documents before summary judgment, and ‘[a]n unexcused failure to present evidence available at the time of summary judgment provides a valid basis for denying a subsequent motion for reconsideration.’ ” (quoting ICEE Distribs. v. J & J Snack Foods Corp., 445 F.3d 841, 847-48 (5th Cir.2006))).

1. Actually Newly Discovered

Clearline received every document and took every deposition upon which it relied before the Court’s Order was entered on May 9, 2012. At no point, either in its Response to the Motion for Summary Judgment or when it allegedly discovered these facts, did Clearline ask the Court to defer consideration or deny the motion because of ongoing discovery, or for leave to amend its response.5 See Fed. R. Civ. *619P. 56(d); see also Thermacor Process, L.P. v. BASF Corp., 567 F.3d 736, 744 (5th Cir.2009); Molina v. Equistar Chemicals LP, 261 Fed.Appx. 729, 734 (5th Cir.2008).

Clearline states that it did not present the evidence earlier because it was preparing its evidence to be filed with its response to Cooper B-Line’s second motion for summary judgment. However, the fact that this motion was pending did not moot the first motion. Clearline knew the first motion for summary judgment was pending, and should have moved for an extension of time or otherwise alerted the Court that it wished to present additional evidence to support its fraud claim. Thus, the Court finds that the evidence was not newly discovered.

2. Cumulative or Impeaching

Moreover, the facts presented in the Motion for reconsideration were previously available to Clearline in other forms even before Clearline filed its response to the motion for summary judgment. On January 18, 2012, Clearline obtained documents from RB Rubber, the manufacturer of DURA-BLOKtm products, which show that Cooper B-Line was communicating about the products with RB Rubber in April 2007, and sent drawings and samples of the C-PORT® products in July 2007. (App. A-5, Doc. No. 100 (DASH001485, 1454).) Furthermore, any details about communications between Mr. Krovats and Cooper B-Line employees at the Las Vegas dinner or over email about the contract should have been known to Mr. Krovats, and thus Clearline. The evidence was thus cumulative of other evidence available to Clearline.

3. Effect on the Outcome

In any event, the new evidence does not affect the Court’s May 9, 2012 Order. In that Order, the Court noted that Clear-line’s fraud claim was based on two statements, on the same day in July 2007 and at the same location. First, “Dave Rice and Chris Peeler of Cooper B-Line represented to Neil Krovats of Clearline that Cooper B-Line wished to enter into a contract to distribute 700,000 units of C-PORT® products over the next year, but that Clearline would need to increase its capacity in order for that to occur.” (Am. Compl. ¶ 45; Plaintiff Clearline Technoligies [sic] LTD.’s First Amended Answers to Defendant Cooper B-Line, Inc.’s First Set of Interrogatories (“Interrogatory Responses”), Doc. No. 47-1, at 13.) Second, Bob Houlhouser asked whether Clearline would be able to produce enough to meet Cooper’s sales projections. (Interrogatory Resp. at 13.)

The Court found:

The fraud alleged here was not based on explicit promises, nor were the statements expressions of a serious commitment. The allegations of fraud consist of only two statements, in one day, about Clearline increasing its capacity. These statements are insufficient to satisfy the scheme exception.

(Memorandum and Order, Doc. No. 77, at 7-8 (internal quotations and citation omitted).) Mr. Rice’s and Mr. Peeler’s representations of a “wish[] to enter into a contract” are nothing more than statements of desire, and do not rise to the level of a promise that would satisfy the promissory fraud exception. Mr. Houhouser’s statement was only a question rather than a promise or misrepresentation. As the Court noted in its Order, “[t]he disfavor that Illinois courts have expressed toward promissory fraud leads us to conclude that a claimant must allege *620at least explicit promises of future performance and cannot rely on implied promises to bring the action within the scheme or device exception to otherwise nonactionable promissory fraud.” Hindley v. Seltel, Inc., 672 F.Supp. 1093, 1096 (N.D.Ill.1987).

Clearline has provided no new evidence of explicit promises, either from the testimony of Cooper B-Line employees or from sworn statements made by Mr. Krovats based on his recollection of these conversations. Clearline presents no additional evidence or testimony about the statements by Mr. Rice and Mr. Peeler in July 2007 to show that they made any promise more concrete than a “wish” to enter into a contract.

Additionally, the depositions cited show that Cooper B-Line employees did not admit to making any representations to Mr. Krovats about whether the relationship would continue in the future. At the Las Vegas dinner, Cooper B-Line employees allowed him to talk about his plans to increase production, but there is no indication that they made any representations about continuing to do business with Clearline. In the conversations between Mr. Krovats and Mr. Rice about the long-term contract, there is no indication that Mr. Rice represented that Cooper B-Line was interested in signing the contract; rather, he just reminded Mr. Krovats of two sticking points.

Clearline also states that “Cooper represented to Clearline that the status quo would be maintained” (Mot. at 8), and “that the ‘status quo’ of a continued exclusive distributorship business relationship with Clearline would continue” (id. at 14). However, the cited portion of the deposition clearly indicates no such “representation.” Rather, Clearline asked Mr. Rice if he had “any conversation with [Clearline] about their continued supply to you, you’re going to keep buying from them, that the relationship was going to keep going?” (Rice Depo. at 170 (APP 000015).) Mr. Rice responded, “No. I mean, it was status quo, status quo.” (Id. at 171 (APP 000015) (emphasis added).)

Accordingly, Clearline still has failed to provide this Court with any explicit promises or misstatements from Cooper B-Line, but rather has provided evidence that shows only that Cooper B-Line was concealing its plans to manufacture its own product from Clearline. Clearline cites no authority to support the idea that Cooper B-Line had an affirmative duty to share these plans with Clearline earlier.6

IV. CONCLUSION

Based on the foregoing, Clearline’s Motion for Reconsideration is DENIED.

IT IS SO ORDERED.

Clearline Technologies Ltd. v. Cooper B-Line, Inc.
871 F. Supp. 2d 607

Case Details

Name
Clearline Technologies Ltd. v. Cooper B-Line, Inc.
Decision Date
May 9, 2012
Citations

871 F. Supp. 2d 607

Jurisdiction
United States

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