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Bama Icee LLC v. J & J Snack Foods Corp.

United States District Court, N.D. Alabama, Western Division

May 8, 2019

BAMA ICEE LLC, et al., Plaintiffs,
v.
J & J SNACK FOODS CORP., et al., Defendants.

          MEMORANDUM OF OPINION

          L. Scott Coogler United States District Judge

         Before this Court are Defendants, J & J Snack Foods Corp., The ICEE Company Inc., and ICEE of America ICEE of America, Inc. (collectively “Defendants'”), Amended Motions to Dismiss. (Docs. 35 & 36). Plaintiffs have timely filed their opposition. The motions are fully briefed and ripe for review. For the reasons stated below, Defendants' Amended Motions to Dismiss (docs. 35 & 36) are due to be granted in part and denied in part.

         I. Background[1]

         The claims before this Court represent another episode in a saga of litigation surrounding the use of the ICEE trademark in the southeast. While the plaintiffs have varied, the claims before this Court are certainly not novel. See ICEE Distributors, Inc. v. J&J Snack Foods, 325 F.3d 586 (5th Cir. 2003) (“ICEE Distributors I”); ICEE Distributors, Inc. v. J&J Snack Foods, 445 F.3d 841 (5th Cir. 2006) (“ICEE Distributors II”) (collectively the “Louisiana” cases) (enjoining J & J Snack Foods Corp.'s sale of ICEE branded squeeze up pops in a competitor's exclusive sales territory); ICEE of Atlanta Inc. v. J & J Snack Foods Corp, No. 1:02-cv-00214-HTC, 2005 WL 8154314, at * 1 (N.D.Ga. Jan. 21, 2005) (the “Georgia” case) (entering an Agreed Final Judgment regarding J & J Snack Foods Corp's sale of ICEE branded products in a competitor's exclusive sales territory); ICEE of America, Inc. v. Mid-American ICEE Corporation, et al., No. 3:02-cv-364-L, 2005 WL 2415940, at *6 (N.D. Tex. Sept. 29, 2005) (the “Texas” case) (action by ICEE of America, Inc. seeking a declaratory judgment concerning the rights and responsibilities under ICEEQUIP licensing agreements).

         The ICEE trademark was developed in the 1960s when the owner of Dairy Queen discovered that his refrigerator had partially frozen some soda bottles. After this discovery, the ICEE trademark was registered by John E. Mitchell Company and its wholly owned subsidiary, ICEEQUIP Corporation. Initially, the ICEEQUIP Corporation held the ICEE trademark in its entirety. In the 1970s, ICEEQUIP Corporation began to issue substantially similar ICEE trademark licenses to various regional distributors for the exclusive use of the ICEE trademark in specific sales territories, referred to as marketing areas. These licenses gave each distributor an exclusive right to sell products using the ICEE mark in certain marketing areas for the life of the mark. Pursuant to these licensing agreements, ICEEQUIP Corporation agreed to not license the use of the ICEE trademark in the marketing areas of the licensee to any other distributor.

         In 1983, ICEEQUIP Corporation went out of business. The existing ICEE regional distributors, who had licenses pursuant to these trademark agreements, formed Defendant ICEE of America, Inc. (“ IOA”) and acquired legal title to the ICEE mark in order to maintain and protect it. Although IOA continued the prior licensing agreements between ICEEQUIP and the existing regional distributors, it became the record owner of the ICEE trademark.

         Plaintiffs, Bama ICEE and Bama ICEE Southern LLC (collectively “Plaintiffs” or “Bama ICEE”), have the exclusive right to sell ICEE branded products in several counties in Alabama and Georgia through one of these licensing agreements with IOA.[2] Defendant The ICEE Company Inc. (“TIC”), a wholly owned subsidiary of Defendant J & J Snack Foods Corp (“J & J”), also has the exclusive right to sell ICEE trademarked products in certain marketing areas through a substantially similar trademark license agreement with IOA. Collectively, J & J and TIC own the exclusive right to sell ICEE branded products in a majority of territories across the United States.

         This ICEE trademark litigation centers on J & J's sale, pursuant to TIC's license, of products bearing the ICEE trademark, including an alleged imitation frozen carbonated beverage (“FCB”) Artic Blast, within Plaintiffs' exclusive territory. Specifically, Plaintiffs allege that J & J is selling ICEE branded products such as popsicles, squeeze candies, and “slush” pouches both directly and through third parties to retailers like Sam's Club, Target, Walmart, Publix, Winn-Dixie, and Piggly Wiggly located in Plaintiffs' exclusive sales territory. Plaintiffs contend that IOA, for its part, is approving and supporting J & J's sales of both trademarked ICEE products and the imitation Artic Blast FCB under the ICEE trademark in Plaintiffs' exclusive sales territory.

         Plaintiffs contend that J & J employees are driving delivery trucks marked with the ICEE trademark and wearing uniforms with the ICEE trademark while selling and delivering ICEE branded and the alleged imitation Artic Blast FCB products in Plaintiffs' exclusive sales territory. Plaintiffs also allege that J & J is delivering the imitation Artic Blast FCB syrup in boxes bearing the ICEE trademark along with cups and other signage for the seller's use that bear the ICEE trademark. Finally, J &J's website, http://www.icee.com/store-locator-page/, is alleged to have a store locator that allows customers to find locations in Plaintiffs' exclusive sales territory where they can buy “ICCE or Artic Blast” from J & J.

         II. Standard

         In general, a pleading must include “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). However, in order to withstand a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6), a complaint “must plead enough facts to state a claim to relief that is plausible on its face.” Ray v. Spirit Airlines, Inc., 836 F.3d 1340, 1347-48 (11th Cir. 2016) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)) (internal quotation marks omitted). “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.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Stated another way, the factual allegations in the complaint must be sufficient to “raise a right to relief above the speculative level.” Edwards v. Prime, Inc., 602 F.3d 1276, 1291 (11th Cir. 2010). A complaint that succeeds in “identifying facts that are suggestive enough to render [the necessary elements of a claim] plausible” will survive a motion to dismiss. Watts v. Fla. Int'l Univ., 495 F.3d 1289, 1296 (11th Cir. 2007) (quoting Twombly, 550 U.S. at 556) (internal quotation marks omitted).

         In evaluating the sufficiency of a complaint, this Court first “identif[ies] pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth.” Iqbal, 556 U.S. at 679. This Court then “assume[s] the[] veracity” of the complaint's “well-pleaded factual allegations” and “determine[s] whether they plausibly give rise to an entitlement to relief.” Id. Review of the complaint is “a context-specific task that requires [this Court] to draw on its judicial experience and common sense.” Id. If the pleading “contain[s] enough information regarding the material elements of a cause of action to support recovery under some ‘viable legal theory, '” it satisfies the notice pleading standard. Am. Fed'n of Labor & Cong. of Indus. Orgs. v. City of Miami, 637 F.3d 1178, 1186 (11th Cir. 2011) (quoting Roe v. Aware Woman Ctr. for Choice, Inc., 253 F.3d 678, 683-84 (11th Cir. 2001)).

         III. Discussion

         Plaintiffs bring claims against Defendants for (1) Trademark Infringement, (2) Trademark Dilution, (3) Breach of Contract, (4) Tortious Interference with Existing Contracts and Business Relationships, (5) Civil Conspiracy, (6) Breach of Duty of Good Faith and Fair Dealing, (7) Negligence/Wantonness, and (8) Trademark Cyberpiracy. Defendants have moved to dismiss all claims except for breach of contract. (Docs. 35 & 36.)[3]

         a. Trademark Infringement

         “To prevail on a trademark infringement claim under the Lanham Act, a party must prove that (1) it owns a valid and protectable mark, and (2) the opposing party's use of an identical or similar mark is likely to cause confusion.” FN Herstal SA v. Clyde Armory Inc., 838 F.3d 1071, 1080 (11th Cir. 2016) (citing Gift of Learning Found., Inc. v. TGC, Inc., No. 01-08069-CV-DTKH, 2001 WL 34718642, at *1 (S.D. Fla. 2001), aff'd, 329 F.3d 792, 797 (11th Cir. 2003) (per curiam)); 15 U.S.C. § 1114(1)(a).

         Prior cases within the Eleventh Circuit have found cognizable trademark infringement claims when “identical goods [are] sold in an unauthorized manner” because they are not considered “genuine” for the purposes of the Lanham Act. Caterpillar, Inc. v. Nationwide Equip.,877 F.Supp. 611, 615 (M.D. Fla. 1994) (internal quotation marks omitted); See Hibbett Sporting Goods, Inc. v. Socks & Accessory Brands Global Inc., No. 2:17-cv-01029-RDP, 2018 WL 582436, at *2-3 (N.D. Ala. 29, 2018)(“[G]oods manufactured by agreement with the holder ...


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