Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-alnd-2_13-cv-01578/USCOURTS-alnd-2_13-cv-01578-0/pdf.json

Nature of Suit Code: 840
Nature of Suit: Trademark
Cause of Action: 15:1114 Trademark Infringement

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ALABAMA

SOUTHERN DIVISION

DONUT JOE’S, INC.,

Plaintiff,

v.

BEIERSDOERFER, WERNER, et

al,

Defendants.

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Case No.: 2:13-CV-1578-VEH

 

MEMORANDUM OPINION AND ORDER

INTRODUCTION

There are three motions before the court. Three defendants – Werner

Beiersdoerfer, Michael Kenneth Flowers, and Interveston Food Services, LLC 

(Interveston) – have filed a Motion to Dismiss the plaintiff’s fraud claim against

them. Doc. 8. The remaining defendants – Brock and Kimberly Beiersdoerfer – have

filed a Motion to Dismiss all of the plaintiff’s claims against them. Doc. 10. Finally,

the plaintiff (Donut Joe’s) has filed a Motion to Dismiss the counterclaims asserted

by Werner Beiersdoerfer, Mr. Flowers, and Interveston. Doc. 14. After considering

these motions, the referenced pleadings, and the accompanying memoranda, the court

finds that it lacks supplemental jurisdiction over the state-law claims in this action.

FILED

 2013 Dec-18 AM 11:40

U.S. DISTRICT COURT

N.D. OF ALABAMA

Case 2:13-cv-01578-VEH Document 27 Filed 12/18/13 Page 1 of 12
The court will thus DISMISS WITHOUT PREJUDICE any and all such claims

filed by the respective parties. Accordingly, the court will TERM AS MOOT the

competing Motions to Dismiss in this case.

STATEMENT OF THE CASE

Donut Joe’s commenced this action by filing a Complaint with this court on

August 27, 2013. Doc. 1. Although the Complaint does not lay out formal counts, the

document variably alleges the following:

• Werner Beiersdoerfer and Mr. Flowers unlawfully infringed on the

plaintiff’s registered trademark by opening a competing “Donut Chef”

establishment and adopting a donut character as its logo.

• Werner Beiersdoerfer and Mr. Flowers’s ownership and operation ofthe

Donut Chef establishment – through their company, Interveston –

amounted (and continually amounts) to unfair competition.

• Werner Beiersdoerfer and Mr. Flowers’s ownership and operation of

Donut Chef violated the “Confidentiality and Non-disclosure

Agreement” (the Confidentiality Agreement) signed between Mr.

Beiersdoerfer, Mr. Flowers, and Richard Byrd, the President of Donut

Joe’s, on November 12, 2010.

• After signing the Confidentiality Agreement, Werner Beiersdoerfer

illicitly provided confidential information obtained through his

relationship with DonutJoe’s to his son and daughter-in-law, Brock and

Kimberly Beiersdoerfer.

• Brock and Kimberly Beiersdoerfer later opened their own retail donut

establishment, Heavenly Donut Co. (Heavenly Donut), offering goods

and services nearly identical to both Donut Joe’s and Donut Chef.

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Case 2:13-cv-01578-VEH Document 27 Filed 12/18/13 Page 2 of 12
• Brock and KimberlyBeiersdoerfer are currently using illegally-obtained

information to unfairly compete with Donut Joe’s.

• Werner Beiersdoerfer intentionally induced Donut Joe’s to provide him

confidential information under the guise of the Confidentiality

Agreement. He never intended to obey the Agreement terms and instead

unlawfully used the confidential information therein to open his own

retail donut business and to aid his son and daughter-in-law to do the

same.

Doc. 1 at 2-4. 

Werner Beiersdoerfer, Mr. Flowers, and Interveston answered the Complaint

on September 27, 2013. Doc. 7. The Answer generally denied Donut Joe’s material

allegations and raised several affirmative defenses. Id. at 2-8. Attached to the Answer

was a counterclaim charging Donut Joe’s with breach of contract and fraud. Id. at 8-

17. Werner Beiersdoerfer, Mr. Flowers, and Interveston claimed that Donut Joe’s

breached a Letter of Understanding signed between them and Mr. Byrd on February

25, 2011. Id. at 13-14. They asserted that Donut Joe’s did so by refusing to honor

these defendants’ alleged exclusive rights to develop Donut Joe’s shops in Alabama

(excluding certain cities). Id. These defendants also alleged that Mr. Byrd 1

fraudulently induced them into signing the Letter by intentionally making false oral

representations promising them exclusive Alabama rights. Id. at 14-16.

Donut Joe’s argues that no exclusive rights were given. This court takes no position, 1

given its finding that it lacks supplemental jurisdiction over any of the state law claims asserted

by any party.

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Case 2:13-cv-01578-VEH Document 27 Filed 12/18/13 Page 3 of 12
Werner Beiersdoerfer, Mr. Flowers, and Interveston also filed their Motion to

Dismiss on September 27, 2013. Doc. 8. On that day, Brock and Kimberly

Beiersdoerfer filed their Motion to Dismiss. Doc. 10. On October 11, 2013, Donut

Joe’s filed the following documents:

• An Answer to the defendants’ counterclaim;

• Responses to the two Motions to Dismiss; and

• A Motion to Dismiss the counterclaims.

Docs. 11-14. On October 18, 2013, the defendants separately replied to the plaintiff’s

Responses. Docs. 16-17. On October 25, 2013, Werner Beiersdoerfer, Mr. Flowers,

and Interveston filed a response to the plaintiff’s Motion to Dismiss. Doc. 18. Donut

Joe’s replied on November 1, 2013. Doc. 19. On November 8, 2013, with the court’s

permission, Werner Beiersdoerfer, Mr. Flowers, and Interveston filed a surreply.Doc.

21.

STANDARD OF REVIEW

Generally, the FederalRules of Civil Procedure require only that the complaint

provide “a short and plain statement of the claim showing that the pleader is entitled

to relief.” Fed. R. Civ. P. 8(a). However, to survive a motion to dismiss brought under

Rule 12(b)(6), a complaint must “state a claim to relief that is plausible on its face.” 

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007) (“Twombly”). “A claim has

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Case 2:13-cv-01578-VEH Document 27 Filed 12/18/13 Page 4 of 12
facial plausibility when the plaintiff pleads factual content that allows the court to

draw the reasonable inference that the defendant isliable for the misconduct alleged.”

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556)

(“Iqbal”). That is, the complaint must include enough facts “to raise a right to relief

above the speculative level.” Twombly, 550 U.S. at 555 (citation and footnote

omitted). Pleadings that contain nothing more than “a formulaic recitation of the

elements of a cause of action” do not meet Rule 8 standards, nor do pleadings suffice

that are based merely upon “labels or conclusions” or “naked assertion[s]” without

supporting factual allegations. Id. at 555, 557 (citation omitted). “[O]nce a claim has

been stated adequately, it may be supported by showing any set of facts consistent

with the allegations in the complaint.” Id. at 563 (citation omitted). When ruling on

a motion to dismiss, a court must “take the factual allegations in the complaint astrue

and construe them in the light most favorable to the plaintiff.” Pielage v. McConnell,

516 F.3d 1282, 1284 (11th Cir. 2008) (citing Glover v. Liggett Group, Inc., 459 F.3d

1304, 1308 (11th Cir. 2006)). 

DISCUSSION

Before the court may examine the sufficiency of any claims in this case,

however, it must firstsatisfy itself that it has subject matter jurisdiction over each and

every one of them. See Morrison v. Allstate Indem. Co., 228 F.3d 1255, 1261 (11th

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Case 2:13-cv-01578-VEH Document 27 Filed 12/18/13 Page 5 of 12
Cir. 2000) (“[A] federal court must inquire sua sponte into the issue whenever it

appears that jurisdiction may be lacking.”) (citation omitted). The court finds that it

lacks jurisdiction over the state-law claims marshaled by both sides in this action.

Donut Joe’s – on the one hand – and Werner Beiersdoerfer, Mr. Flowers, and

Interveston – on the other – respectively allege fraud and breach of contract claims

against each other. However, these claims are legally and factually distinct from the

plaintiff’s federal claims – over which the court clearly has subject matter

jurisdiction. Because ofthisfact, the court may not exercise supplemental jurisdiction

over the state claims, and theymust be dismissed. This dismissal mootsthe competing

Motions currently before the court.

I. The Court Lacks Supplemental JurisdictionOver the Plaintiff’s State-Law

Claims.

In its Complaint, DonutJoe’s asserts claims for trademark infringement, unfair

competition, breach of contract, and fraud. See Doc. 1. It correctly maintainsthat this

court has original jurisdiction over its trademark infringement and unfair competition

claims. Id. at 1 (citing 28 U.S.C. §§ 1338(a)-(b)). Donut Joe’s then argues that this

court has supplemental jurisdiction over the other asserted claims because they all

“arise out of the same transaction or occurrence.” Id. This is incorrect. 28 U.S.C. §

1367(a) providesfederal district courts with supplemental jurisdiction “over all other

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Case 2:13-cv-01578-VEH Document 27 Filed 12/18/13 Page 6 of 12
claims that are so related to claims in the action within such original jurisdiction that

they form part of the same case or controversy under Article III of the United States

Constitution.” Id. In deciding whether a state law claim is part of the “same case or

controversy” as a federal issue, this court must “look to whether the claims arise from

the same facts, or involve similar occurrences, witnesses or evidence.” Hudson v.

Delta Air Lines, Inc., 90 F.3d 451, 455 (11th Cir. 1996) (citing Palmer v. Hosp. Auth.

of Randolph County, 22 F.3d 1559, 1566 (11th Cir. 1994)).

The connection between the plaintiff’s federal and state-law claims does not

meet this standard. First, the evidence required to establish the respective claims is

markedly different. Trademarks are “any word, name, symbol, or device, or any

combination thereof [used] to identify and distinguish [one's] goods . . . from those

manufactured or sold by others and to indicate the source of the goods . . .” 15 U.S.C.

§ 1127. BecauseDonutJoe’s alleges infringement of a federally-registered trademark,

Doc. 1 at 1, the claim is covered by § 32(a) of the Lanham Act. Tana v. Dantanna's,

611 F.3d 767, 773 n.5 (11th Cir. 2010) (citing 15 U.S.C. § 1114(1)). Section 32(a)

creates a federal cause of action for unfair competition by prohibiting the

unauthorized use in interstate commerce of “any reproduction, counterfeit, copy, or

colorable imitation of a registered mark in connection with the sale, offering for sale,

distribution, or advertising of any goods or services on or in connection with which

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Case 2:13-cv-01578-VEH Document 27 Filed 12/18/13 Page 7 of 12
such use islikely to cause confusion, or to cause mistake, or to deceive . . .” 15 U.S.C.

§ 1114(1). “[T]he critical question in most actions under [this provision] is whether

there is a likelihood of confusion, mistake, or deception between the registered mark

and the allegedly infringing mark.” John H. Harland Co. v. Clarke Checks, Inc., 711

F.2d 966, 972 (11th Cir. 1983) (citation and footnote omitted). Courts examining §

32(a) claims must consider several factors, including “the type of trademark, the

similarity of design, the similarity of the product, the identity of retail outlets and

purchasers, the similarity of advertising media used, defendant's intent, and actual

confusion.” Id. (quoting Exxon Corp. v. Texas Motor Exch., Inc., 628 F.2d 500, 504

(5th Cir. 1980)).

These considerations differsignificantly fromthose involved in fraud or breach

of contract claims. Under Alabama law, a plaintiff must prove the following elements

to establish fraud:

• a false representation; 

• of a material existing fact; 

• reasonably relied upon by the plaintiff;

• who suffered damage as a proximate consequence of the

misrepresentation.

Mantiply v. Mantiply, 951 So. 2d 638, 653 (Ala. 2006) (quoting Waddell &Reed, Inc.

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v. United Investors Life Ins. Co., 875 So. 2d 1143, 1160 (Ala. 2003)). Conversely, a

plaintiff claiming breach of contract must show the following elements:

• the existence of a valid contract between the plaintiff and the defendant;

• the plaintiff’s performance under the contract;

• the defendant’s nonperformance; and

• damage to the plaintiff.

Capmark Bank v. RGR, LLC, 81 So. 3d 1258, 1267 (Ala. 2011) (citing Reynolds

Metals Co. v. Hill, 825 So. 2d 100, 105 (Ala. 2002)). Evaluating these state-law

claims, then, will require noticeably different evidence and different analysis from

that needed to examine federal trademark infringement and unlawful competition

arising out of that infringement. 

Donut Joe’s also has not shown a sufficient factual nexus between the federal

and state claims. The fraud and contract breach claims arise out of the Confidentiality

Agreement signed between Mr. Byrd, Werner Beiersdoerfer, and Mr. Flowers on

November 12, 2010. See Doc. 1 at 2-4. Donut Joe’s argues that these defendants

breached the Agreement in the following respects:

• by opening a competing donut establishment before the termination of

the five-year maximum term in the Agreement; and 

• by disclosing confidential information to Brock and Kimberly

Beiersdoerfer. 

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Case 2:13-cv-01578-VEH Document 27 Filed 12/18/13 Page 9 of 12
Id. Donut Joe’s further asserts that these defendants fraudulently induced it to sign

the agreement with these unlawful purposes in mind. Id. at 4.

On the other hand, Donut Joe’s argues that Werner Beiersdoerfer and Mr.

Flowers unlawfully infringed on its registered trademark by using the name “Donut

Chef” for its competing donut establishment and by adopting a donut character as its

logo that was a “colorable imitation” of the one created by Donut Joe’s. Id. at 3.

According to Donut Joe’s, these defendants unfairly competed with it by deploying

these unlawful trademarks and by “marketing products and services almost identical

to [Donut Joe’s], using similar vendors, marketing, and locations.” Id. at 2-4.

The relationship between these federal and state-law claims does not trigger

supplemental jurisdiction. The alleged breach ofthe ConfidentialityAgreement – and

the alleged fraud underlying it – involved events and occurrences that were separate

and distinct from the later alleged trademark infringement and unfair competition.

They also involved different interested parties – the contract breach claim involves

Brock and Kimberly Beiersdoerfer, whereas the federal claims do not. The fact that

all the claims somehow concern Donut Joe’s, on the one hand, and Donut Chef, on

the other, is not sufficient. 28 U.S.C. § 1367(a) mandates a greater proximity than that

found here. 

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Case 2:13-cv-01578-VEH Document 27 Filed 12/18/13 Page 10 of 12
II. The Court Also Does Not Have Supplemental Jurisdiction Over the

Defendants’ Counterclaims.

The court also lacks supplemental jurisdiction over the state-law counterclaims

asserted by Werner Beiersdoerfer, Mr. Flowers, and Interveston. In its Counterclaim,

these defendants claim that Donut Joe’s breached a Letter of Understanding signed

between them and Mr. Byrd on February 25, 2011. Doc. 7 at 13-14. Donut Joe’s

allegedly did so by refusing to honor the (allegedly) exclusive development rights it

promised them in the Letter. Id. Werner Beiersdoerer, Mr. Flowers, and Interveston

also allege that Mr. Byrd fraudulently induced them into signing the Letter by

intentionally making false oral representations promising them such exclusive

development rights. Id. at 14-16. Finally, they argue that this court has supplemental

jurisdiction over these counterclaims under 28 U.S.C § 1367 because the claims arise

“out of the same transaction or occurrence that is the subject-matter of the

Complaint.” Id. at 9.

This is incorrect for reasons similar to those outlined above. The defendants’

fraud and contract breach counterclaims are legally distinct from the plaintiff’s

trademark infringement and unlawful competition claims. Moreover, the defendants’

counterclaims arise out of an alleged agreement that is factually separate from the

eventssurrounding the plaintiff’s federal allegations. The only factorthe claims share

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in common is – once again – that they all somehow involve two competing businesses

– Donut Joe’s and Donut Chef. This connection “does not provide a sufficient nexus

between the federal and state causes to support supplemental jurisdiction.” Hudson,

90 F.3d at 456.

CONCLUSION

For the foregoing reasons, the court hereby DISMISSES WITHOUT

PREJUDICE the state-law claims filed by Donut Joe’s and the state-law

counterclaims filed by Werner Beiersdoerfer, Michael Kenneth Flowers, and

Interveston Food Services, LLC. Further, the court accordinglyTERMS AS MOOT

the Motions to Dismiss filed by:

• Mr. Beiersdoerfer, Mr. Flowers, and Interveston;

• Brock and Kimberly Beiersdoerfer; and

• Donut Joe’s.

There being no remaining claims against Brock and Kimberly Beiersdoerfer, the

Clerk is DIRECTED to show them as dismissed from this action.

DONE this the 18th day of December, 2013.

 

 VIRGINIA EMERSON HOPKINS

United States District Judge

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