Applied Underwriters, Inc., a Nebraska corporation, Plaintiff-Appellant,
Larry J. Lichtenegger; J. Dale Debber; Providence Publications, LLC, a California limited liability company, Defendants-Appellees.
and Submitted December 18, 2018 San Francisco, California
from the United States District Court No.
2:15-cv-02445-TLN-CKD for the Eastern District of California
Troy L. Nunley, District Judge, Presiding
Kimberly A. Jansen (argued), Hinshaw & Culbertson LLP,
Chicago, Illinois; Mark Suri, Peter Felsenfeld, Travis Wall,
and Spencer Y. Kook, Hinshaw & Culbertson LLP, Los
Angeles, California; for Plaintiff-Appellant.
Carolan (argued), Jassy Vick Carolan LLP, San Francisco,
California; Kevin L. Vick and Jean-Paul Jassy, Jassy Vick
Carolan LLP, Los Angeles, California; for
Before: MILAN D. SMITH, JR. and JACQUELINE H. NGUYEN, Circuit
Judges, and JANE A. RESTANI, [*] Judge.
Act / Civil Procedure
panel affirmed the district court's dismissal of an
action brought by a financial services company under the
panel held that the district court abused its discretion when
it sanctioned the plaintiff and dismissed the case pursuant
to Federal Rule of Civil Procedure 41(b) absent an order
requiring the plaintiff to file an amended complaint.
panel nonetheless affirmed the district court's earlier
dismissal for failure to state a claim under Rule 12(b)(6).
The panel concluded that defendants' use of
plaintiff's trademarks in the title of a webcast seminar
and in promotional materials was a nominative fair use
because plaintiff's service was not readily identifiable
without use of the trademarks, defendants used only so much
of the trademarks as was reasonably necessary, and use of the
trademarks did not suggest sponsorship or endorsement.
D. SMITH, JR. JUDGE
confronted with an appeal of a procedurally curious nature.
Plaintiff-Appellant Applied Underwriters, Inc. (Plaintiff)
appealed the district court's dismissal of its claims for
trademark infringement and unfair competition, on the
apparent belief that the court dismissed the complaint
pursuant to Federal Rule of Civil Procedure 12(b)(6). When we
asked the district court to clarify its grounds for
dismissal, however, it explained that it actually dismissed
Plaintiff's complaint as a sanction pursuant to Federal
Rule of Civil Procedure 41(b).
we conclude that the district court abused its discretion
when it sanctioned Plaintiff and dismissed the case pursuant
to Rule 41(b) absent an order requiring Plaintiff to file an
amended complaint, we nevertheless affirm the district
court's earlier Rule 12(b)(6) dismissal because the use
of Plaintiff's trademarks by Defendants-Appellees Larry
J. Lichtenegger, J. Dale Debber, and Providence Publications,
LLC (Defendants) constituted nominative fair use.
AND PROCEDURAL BACKGROUND
is "a financial services company that provides payroll
processing services and, through affiliated insurance
companies, offers programs through which workers'
compensation insurance is offered and provided to employers
throughout the United States." It began to use the
"Applied Underwriters" mark in October 2001, and
has continuously used the mark since. Beginning in October
2002, it also began to use the "EquityComp" mark in
connection with its workers' compensation insurance
services. The U.S. Patent and Trademark Office has issued
Plaintiff five relevant trademark registrations: for the
"Applied Underwriters" mark, the
"EquityComp" mark, and three stylized versions of
these marks, two of which appear to depict a St. Bernard:
complaint, Plaintiff asserted that these registrations are
currently in force and uncontestable, and that it
"aggressively advertises and promotes its marks and its
services," having "spent millions of dollars
Providence Publications, LLC publishes various online news
sources, including "Workers' Comp Executive"
(WCE). WCE features news reports and offers online seminars,
some of which feature Defendants Lichtenegger and Debber.
alleged that, beginning in November 2015, Defendants began
offering a seminar (both online and on DVD) that "uses
the Applied Underwriters and EquityComp marks in the title of
the webcast." The marks were also featured in various
promotional materials, including a widely distributed email
advertisement. Defendants used these marks "without
Applied Underwriters' authority or permission and in
reckless disregard of [its] federal trademark registrations
and its rights." Plaintiff also claimed that Defendants
"specifically and intentionally target[ed] their
marketing and advertising . . . to independent brokers and
the business organizations that they serve who use
Plaintiff's services." In its complaint, Plaintiff
averred that "[a]s a result of the likelihood of
confusion caused by Defendants' unauthorized use of"
the marks, "Defendants are able to attract customers who
mistakenly believe that they will attend a program sponsored
or affiliated with Applied Underwriters," leading to
dilution of the marks.
filed a complaint asserting causes of action for federal
trademark infringement and dilution, false designation of
origin under the Lanham Act, and federal and state unfair
competition. The next day, Plaintiff filed a motion for a
temporary restraining order, which the district court denied.
moved to dismiss under Rule 12(b)(6), arguing that their use
of Plaintiff's marks was protected under the First
Amendment, constituted nominal fair use, and satisfied the
statutory defenses to trademark dilution. Defendants also
filed a request for judicial notice that the district court
granted in part and denied in part, taking judicial notice
only of the DVD of the seminar. Plaintiff in turn filed an
opposition to Defendants' motion to dismiss, accompanied
by a declaration and additional evidence not included in its
6, 2017, the district court granted Defendants' motion to
dismiss, concluding that "Defendants' use of the
Trademarks is nominative fair use." At Plaintiff's
request, the court granted leave to amend the complaint
within 30 days. The district court docket confirms that
Plaintiff neither filed an amended complaint (timely or
otherwise) nor announced an intent not to do so.
Consequently, on August 10, 2017, the district court issued a
minute order that read: "In light of Plaintiff's
failure to file an Amended Complaint pursuant to the
Court's Order (ECF No. ), this case is hereby
DISMISSED. CASE CLOSED." The clerk of court subsequently
entered judgment "in accordance with the Court's
Order filed on 8/10/2017."
appeal followed. In their briefs, Plaintiff and Defendants
disputed whether the district court dismissed Plaintiff's
complaint pursuant to Rule 12(b)(6), in which case we would
review the sufficiency of the complaint de novo, Starr v.
Baca, 652 F.3d 1202, 1205 (9th Cir. 2011), or as a
sanction under Rule 41(b), which we would review for abuse of
discretion, Yourish v. Cal. Amplifier, 191 F.3d 983,
986 (9th Cir. 1999). To remedy this confusion, we remanded
this case for the limited purpose of allowing the district
court to clarify whether the complaint was dismissed as a
sanction under Federal Rule of Civil Procedure 41 or for
failure to state a claim under Rule 12(b)(6), and, if the
final dismissal was intended as a sanction under Rule 41(b),
to state the reasoning behind the selection of that sanction.
oral argument in this appeal, the district court responded
with a clarification order, in which it explained that it
dismissed Plaintiff's complaint as a sanction pursuant to
Rule 41(b), and analyzed the five pertinent factors as
enumerated in Yourish. It concluded that
"[t]hree of the five factors strongly favored dismissal,
and this Court dismissed ...