IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF OREGON

TRAILERS INTL, LLC, a Nevada 3:15-cv-00171-BR (Lead Case)

corporation, and VINCENT L. 3:15-cv-00767-BR

WEBB, (Consolidated Cases)

Plaintiffs, OPINION AND ORDER

v.

MASTERCRAFT TOOLS FLORIDA, 

INC., a Florida corporation;

GLOBAL EQUIPMENT COMPANY, INC.,

a New York corporation; HOME 

DEPOT USA, INC., a Delaware

corporation; K-MART CORPORATION,

a Michigan corporation; POWER

EQUIPMENT DIRECT, INC., a

Delaware corporation; SEARS, 

ROEBUCK AND COMPANY, a New York

corporation; SKY DISTRIBUTORS OF

AMERICA, INC., a Florida 

corporation; STEVEN F. RESCH; 

XUEFENG ZHANG; ZHUHAI 

SHARP-GROUP ENTERPRISE CO, LTD.,

a foreign corporation; and XIAOFEI 

YANG,

Defendants.

1 - OPINION AND ORDER

Case 3:15-cv-00171-MO Document 126 Filed 01/06/16 Page 1 of 23
STEPHEN J. JONCUS

Joncus Law, LLC

P.O. Box 838

Clackamas, OR 97015

(971) 236-1200

Attorney for Plaintiffs

J. PETER STAPLES

Chernoff Vilhauer McClung & Stenzel, LLP

601 S.W. Second Avenue, Suite 1600

Portland, OR 97204

(503) 227-5631

Attorneys for Defendants Mastercraft Tools

Florida, Inc.; Global Equipment Company, Inc.; 

K-Mart Corporation; Sears, Roebuck and Company;

and Xuefeng Zhang.

MAYA CHOKSI

NICHOLAS POPASTAVROS

DL Piper LLP (US)

33 Arch Street, 26th Floor

Boston, MA 02110-1447

(617) 406-6000

TAMAR DUVDEVANI

DLA Piper LLP (US)

1251 Avenue of the Americas, 27th Floor

New York, NY 10020-1104

(212) 335-4500

STELLMAN KEEHNEL

DLA Piper LLP (US)

701 Fifth Avenue, Suite 7000

Seattle, WA 98104-7044

(206) 839-4888

Attorneys for Defendant Home Depot USA, Inc.

EDWARD CHOI

JULIA E. MARKLEY

Perkins Coie, LLP

1120 N.W. Couch Street, 10th Floor

Portland, OR 97209-4128

(503) 727-2053

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Case 3:15-cv-00171-MO Document 126 Filed 01/06/16 Page 2 of 23
MELISE BLAKESLEE

Sequel Technology & IP Law, PLLC

1000 Potomac Street, N.W., Suite 150-A

Washington, DC 20007

(202) 470-4815

Attorneys for Defendants Power Equipment Direct,

Inc.

BAOLIN CHEN

Chen & Mu

1000 S.W. Broadway, Suite 2150

Portland, OR 97205

(503) 222-3384

Attorneys for Defendants Zhuhai Sharp-Group

Enterprise Co., Ltd. and Xiaofei Yang

BROWN, Judge.

These consolidated matters come before the Court on the

following Motions:

1. The Motion (#93) to Dismiss Plaintiff’s First Amended

Complaint or, in the Alternative, Compel Arbitration and Stay

Litigation filed by Defendants Mastercraft Tools Florida, Inc.;

Global Equipment Company, Inc.; K-Mart Corporation; Sears,

Roebuck and Company; and Xuefeng Zhang (collectively referred to

herein as the Altocraft Defendants);

2. The Motion (#95) to Dismiss Plaintiff’s First Amended

Complaint or, in the Alternative, to Compel Arbitration and Stay

Litigation filed by Defendants Zhuhai Sharp-Group Enterprise Co.,

Ltd., and Xiaofei Yang (collectively referred to herein as the

Jumbo Defendants);

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3. The Motion (#98) to Dismiss Claims 1-5 of the First

Amended Complaint filed by Defendant Power Equipment Direct, Inc.

(PED); and 

4. The Motion (#110) for Stay Pending Arbitration filed by

Defendant Home Depot USA, Inc.

For the reasons that follow, the Court DENIES the Altocraft

Defendants’ Motion (#93), the Jumbo Defendants’ Motion (#95), and

Defendant Home Depot’s Motion (#110); GRANTS PED’s Motion (#98)

to Dismiss; DISMISSES Plaintiffs’ Claims 1-5 as to PED without

prejudice; and grants Plaintiffs leave to amend their Complaint

as to PED no later than February 5, 2016.

MOTIONS TO DISMISS FILED BY ALTOCRAFT DEFENDANTS (#93) AND JUMBO

DEFENDANTS (#95), AND HOME DEPOT’S MOTION (#110) FOR STAY

The Altocraft and Jumbo Defendants move to dismiss this

action pursuant to Federal Rule of Civil Procedure 12(b)(1) on

the basis that the Court lacks jurisdiction or, in the

alternative, these Defendants move to compel arbitration and to

stay this matter. Home Depot similarly moves to stay this matter

pending the completion of arbitration.

I. Background

The following facts are undisputed and taken from the record

on the Motions to Stay filed by the Altocraft and Jumbo

Defendants and Home Depot:

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On December 1, 2009, Plaintiffs and the Jumbo Defendants

entered into a Memorandum of Understanding (MOU) whereby

Plaintiffs granted Jumbo an exclusive license to use Plaintiffs'

trailer technology; to manufacture the trailers; and to be the

worldwide distributor of Plaintiffs’ trailers in exchange for,

among other things, a $150,000.00 advance on proceeds from

trailer sales. The MOU provided the Jumbo Defendants were to

submit to Plaintiffs a monthly accounting of all trailers that

the Jumbo Defendants sold. The MOU also provided the Jumbo

Defendants were to pay Plaintiffs 20% of the actual cost of

manufacturing goods associated with “Kit Trailer Sales” and 20%

of the selling price of “Cargo Management Products.” Under the

MOU Plaintiffs licensed the trademark and brand name

“UtilityMate” for use by the Jumbo Defendants and Plaintiffs

agreed to “extend use of any and all trademarks, patents,

copyrights” to the Jumbo Defendants that “assist in the

manufacturing and sales of all UtilityMate Products.”

The MOU provides in particular:

9. Term and Renewal

This Agreement shall become effective upon execution of

this Agreement by each of the Parties hereto, and shall

remain in full force and effect for a period of five

(5) consecutive years from the effective date. 

Thereafter, this agreement shall renew every 24 month

basis [sic] as the parties agree unless terminated by

either party with or without cause, with no less than

ninety (90) days notice prior to the anniversary date

of this agreement to the other party, unless terminated

for cause as outlines in section ten herein.

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10. Default, Cure and Termination

The parties shall give notice of default and provide

opportunity to cure any such default claimed under the

Agreement as follows:

(a) If default is claimed by either party, the

nature of the default or breach shall be

specified in writing by the party claiming

default, and may be cured by the party

receiving such notice by full performance and

cure of the specified default or breach,

within (30) days of receipt of written notice

of default therefore. If for some reason

default is not cured, binding Arbitration

will be initiated by the non defaulting [sic]

party.

The original term of the MOU ran through December 1, 2014. 

On January 25, 2011, Plaintiffs and the Jumbo Defendants agreed

to extend the MOU until December 1, 2015.

In May 2010 Plaintiffs, the Jumbo Defendants, and the

Altocraft Defendants entered into an oral agreement to permit the

Altocraft Defendants to act as the distributor of UtilityMate

trailers on the east coast of the United States and in South

America. Accordingly, on May 16, 2011, the Jumbo Defendants

entered into an agreement with the Altocraft Defendants to

“distribute Utilitymate Trailers in the east coast of US market

and Latin America Market.” That agreement stated the Jumbo

Defendants had a “signed contract with Vince Webb1

 from

[Utilitymate], LLC, and has all the rights to use Utilitymate

1

 Plaintiff Webb is the principal of Plaintiff Trailers

Intl.

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Brand, trademark, manuals, picture and all the materials from the

website,” and the Jumbo Defendants authorized the Altocraft

Defendants to use the same as the distributor.

Plaintiffs and the Jumbo Defendants amended the MOU on

September 12, 2010, to require Plaintiffs to “rework the

UtilityMate website and sales materials to include Jumbo.”

In early 2011 Plaintiffs sent to the Jumbo Defendants a

notice of default regarding the Jumbo Defendants’ alleged failure

to abide by specific terms in the MOU and alleged failure to

manufacture trailers to Plaintiffs’ standards. Thereafter

Plaintiffs sent second and third notices of default to the Jumbo

Defendants.

On October 2, 2011, Plaintiffs sent an email to the Jumbo

Defendants in which Plaintiffs offered to terminate the contract

for, among other things, a $150,000 payment to the Jumbo

Defendants. Webb stated he “spoke to [his] attorney at length

regarding this matter, he advised me that we should terminate the

agreement immediately and if you are unwilling to agree, I should

immediately move to arbitration as outlined in the agreement.” 

The Jumbo Defendants did not immediately respond.

On October 10, 2011, counsel for Plaintiffs sent the Jumbo

Defendants a letter notifying them that Plaintiffs were

terminating the MOU because the noticed defaults had gone uncured

for six months. In that letter Plaintiffs’ counsel stated:

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Per the agreement, in the event of a failure to cure,

binding arbitration may be demanded by the

non-defaulting party. You were noticed on different

occasions and refused to acknowledge or participate. 

Therefore my client is left with no other recourse than

to terminate the agreement between the parties

effective immediately.

Plaintiffs and the Jumbo Defendants continued to negotiate

termination of the MOU in February 2012, but they failed to reach

an agreement regarding contract termination. In an email to

Plaintiffs dated February 27, 2012, the Jumbo Defendants stated

they would “continue to perform [their] contractual duties under

said contracts and [would] resort to all means to protect [their]

contractual rights under those contracts.” Although the Jumbo

Defendants continued to manufacture and to distribute trailers

using Plaintiffs’ intellectual property, they did not report any

sales of trailers to Plaintiffs and have not paid Plaintiffs for

any trailers that they manufactured or sold. In addition, the

Altocraft Defendants continued to sell trailers supplied by the

Jumbo Defendants that were identical to those manufactured under

the MOU and that continued to bear the UtilityMate mark. The

trailers sold by the Altocraft Defendants (and supplied by the

Jumbo Defendants) also continued to bear VIN information that

included numbers associated with Plaintiffs.

On January 30, 2015, Plaintiffs filed a Complaint (#1)

against Defendants in this Court. On May 11, 2015, Plaintiffs

filed a First Amended Complaint (#68) (FAC) in which Plaintiffs

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raise the eight claims against Defendants that are now at issue

in the Motions before the Court:

In Claim One Plaintiffs bring a claim against all Defendants

for copyright infringement under 17 U.S.C. § 501 on the ground

that Defendants have used and continue to use Plaintiffs’

copyrighted images in owners’ manuals and on their websites.

In Claim Two Plaintiffs bring a claim against all Defendants

for trademark infringement under 15 U.S.C. § 1114(1) on the

ground that Defendants have used and continue to use Plaintiffs’

trademarks in connection with the manufacturing, distribution,

and sale of the trailers.

In Claim Three Plaintiffs bring a claim against all

Defendants for trademark counterfeiting under 15 U.S.C. § 1114(1)

and 1116(d) on the ground that Defendants have used and continue

to use trademarks on products that are identical to or

substantially indistinguishable from Plaintiffs’ trademarks.

In Claim Four Plaintiffs bring a claim against all

Defendants for false designation of origin under 15 U.S.C. 

§ 1125(a)(1) on the ground that Defendants have used names

identical to or confusingly similar to Plaintiffs’ names on

products that Defendants have sold.

In Claim Five Plaintiffs bring an unfair-competition claim

against all Defendants under 15 U.S.C. § 1125(a)(1) for passing

off products that were not manufactured by Plaintiffs as

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Plaintiffs’ products.

In Claim Seven Plaintiffs bring a common-law

commercial-disparagement claim against the Altocraft Defendants

on the ground that the Altocraft Defendants have represented they

make the same products and are the same company as Plaintiffs.

In Claim Nine Plaintiffs bring a common-law conversion claim

against the Jumbo Defendants for failure to return all

blueprints, tooling, and dies to Plaintiffs after termination of

the MOU.

Finally, in Claim Ten Plaintiffs bring a trade-secret

misappropriation claim against the Jumbo Defendants for failure

to return and continuing to use Plaintiffs' blueprints, tooling,

and dies.

II. Standards

Under the Federal Arbitration Act (FAA), 9 U.S.C. §§ 1-16,

written agreements to arbitrate disputes that arise out of

transactions involving interstate commerce “shall be valid,

irrevocable, and enforceable, save upon such grounds as exist at

law or in equity for the revocation of any contract.” 9 U.S.C. 

§ 2. If a court finds the issue involved in a federal action is

referable to arbitration under a written arbitration agreement,

the court shall, on application of one of the parties, stay the

trial of the action until such arbitration has been completed in

accordance with the terms of the agreement provided the applicant

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for the stay is not in default in proceeding with such

arbitration. 9 U.S.C. § 3. 

“By its terms, the [FAA] ‘leaves no place for the exercise

of discretion by a district court, but instead mandates that

district courts shall direct the parties to proceed to

arbitration on issues as to which an arbitration agreement has

been signed.’” Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207

F.3d 1126, 1130 (9th Cir. 2000)(quoting Dean Witter Reynolds,

Inc. v. Byrd, 470 U.S. 213, 218 (1985))(emphasis in original). 

“The court’s role under the Act is therefore limited to

determining (1) whether a valid agreement to arbitrate exists

and, if it does, (2) whether the agreement encompasses the

dispute at issue.” Id. See also Cox v. Ocean View Hotel Corp.,

533 F.3d 1114, 1119 (9th Cir. 2008).

III. Discussion

The Jumbo Defendants contend in their Motion and the

Altocraft Defendants and Home Depot agree that Plaintiffs must

arbitrate their claims against the Jumbo Defendants under the

terms of Section 10 of the MOU. Thus, each of these parties seek

to compel arbitration and to have this case either stayed or

dismissed pending the results of that arbitration.

Plaintiffs, on the other hand, contend they are not required

to arbitrate their claims under the terms of the MOU because 

(1) Plaintiffs terminated the MOU in October 2011 before the

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allegedly tortious conduct took place, (2) the arbitration

provision is unenforceable because it lacks material terms, 

(3) the Jumbo Defendants abandoned their rights under the

contract by failing to report sales and to make payments to

Plaintiffs, and (4) Plaintiffs’ claims do not fall within the

scope of the arbitration provision. In addition, Plaintiffs

contend the Altocraft Defendants cannot enforce the terms of the

MOU because they are not parties to the MOU.

A. Termination of the MOU

As noted, Sections 9 and 10 of the MOU provide:

9. Term and Renewal

This Agreement shall become effective upon execution of

this Agreement by each of the Parties hereto, and shall

remain in full force and effect for a period of five

(5) consecutive years from the effective date. 

Thereafter, this agreement shall renew every 24 month

basis [sic] as the parties agree unless terminated by

either party with or without cause, with no less than

ninety (90) days notice prior to the anniversary date

of this agreement to the other party, unless terminated

for cause as outlines in section ten herein.

10. Default, Cure and Termination

The parties shall give notice of default and provide

opportunity to cure any such default claimed under the

Agreement as follows:

(a) If default is claimed by either party, the

nature of the default or breach shall be

specified in writing by the party claiming

default, and may be cured by the party

receiving such notice by full performance and

cure of the specified default or breach,

within (30) days of receipt of written notice

of default therefore. If for some reason

default is not cured, binding Arbitration

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will be initiated by the non defaulting [sic]

party.

Sections 9 and 10 read together, therefore, provide two

mechanisms for termination of the MOU. First, a party may

terminate the MOU at the end of its natural term with or without

cause as long as the terminating party provides notice to the

nonterminating party at least 90 days before the end of the

natural term of the MOU. Second, a party may terminate the MOU

with cause before the end of its natural term if the terminating

party (1) provides notice of the alleged default to the nonterminating party, (2) provides the nonterminating party at least

30 days to cure the alleged default, and (3) initiates binding

arbitration if the default remains uncured.

As noted, although the original term of the MOU ran through

December 1, 2014 (five years after the parties entered into the

MOU), Plaintiffs and the Jumbo Defendants agreed on January 25,

2011, to extend the MOU for an additional year through 

December 1, 2015. Plaintiffs, however, contend their

communications to the Jumbo Defendants in October 2011 terminated

the MOU for cause as of that date, and, therefore, their claims

regarding all of the Defendants’ use of Plaintiffs’ intellectual

property after that date are not subject to the arbitration

clause. 

The Court notes, however, it is undisputed that Plaintiffs

never initiated arbitration as required by the MOU. On this

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record, therefore, the Court concludes Plaintiffs did not

terminate the MOU in October 2011.

B. Enforceability of the Arbitration Provision

Plaintiffs next contend the arbitration provision is

unenforceable because it lacks material terms as to the procedure

for arbitration. Specifically, it appears Plaintiffs contend the

arbitration clause is unenforceable because it did not set out

the scope of arbitration or when, how, where, and by whom

arbitration was to be conducted.

“Under the FAA . . . state law that ‘arose to govern issues

concerning the validity, revocability, and enforceability of

contracts generally’ remains applicable to arbitration

agreements.” Kilgore v. KeyBank, Nat’l Ass’n, 718 F.3d 1052,

1058 (9th Cir. 2013)(quoting Doctor's Assocs., Inc. v. Casarotto,

517 U.S. 681, 685–87 (1996)). Under Oregon law “[i]f the

parties’ communications and actions manifest assent to be bound

by promises, they will form a contract unless the promises are

‘so indefinite that a court cannot determine what the parties

intended.’” Wieck v. Hostetter, 274 Or. App. 457, 472

(2015)(quoting Logan v. D.W. Sivers Co., 343 Or. 339, 347

(2007)). To determine whether a contract is sufficiently

definite to be enforceable, the court must determine “whether the

agreement ‘contain[s] an exchange of promises that the parties

intended to be binding and that are sufficiently definite to

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allow a jury or court to determine what is required of each

party.’” Wieck, 274 Or. App. at 472 (quoting Logan, 343 Or. at

347).

Contrary to Plaintiffs’ contentions, the default, cure, and

termination provision is quite clear: To the extent that any

noticed default remains uncured after 30 days, the nondefaulting

party “will” initiate binding arbitration to resolve any

remaining conflict between the parties and, if necessary,

terminate the contract before the end of its natural term. 

Although the MOU did not contain terms regarding specific details

as to how an arbitration would proceed, the Court concludes the

lack of such detail is not sufficiently material to render the

arbitration clause unenforceable because the Court, nevertheless,

can “determine what is required of each party” on the face of the

contract. See Logan, 343 Or. at 347. 

Accordingly, on this record the Court concludes the

arbitration provision in Section 10 of the MOU is enforceable.

C. Rescission or Waiver of the Contract

Plaintiffs next contend the Jumbo Defendants waived

application of the arbitration provision or otherwise rescinded

the MOU when they failed to make any further payments and failed

to report sales to Plaintiffs after Plaintiffs stated their

intent to terminate the MOU.

A contractual provision may be waived by the unilateral

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conduct of one of the parties to the contract. Bennett v.

Farmers Ins. Co. of Oregon, 332 Or. 138, 156 (2001). Such a

waiver, however, “must be unequivocal.” Id. at 157. On the

other hand, “[r]escission of a contract must occur ‘by agreement

of the parties, whether expressed by words or manifested by

conduct.’” Matter of Marriage of Baxter, 139 Or. App. 32, 37

(1996)(quoting Edgley v. Jackson, 276 Or. 213, 218 (1976)). To

rescind a contract by conduct, however, the parties’ conduct must

demonstrate “mutual intent to no longer be bound by its terms.” 

Matter of Marriage of Baxter, 139 Or. App. at 37.

The record here does not permit the Court to conclude the

Jumbo Defendants waived the arbitration provision in the MOU or

otherwise acted in a way that demonstrated an intention not to be

bound any longer by the terms of the MOU. To the contrary, the

Jumbo Defendants stated on February 27, 2012, that they would

“continue to perform [their] contractual duties under said

contracts and . . . resort to all means to protect [their]

contractual rights under those contracts.” Moreover, the Jumbo

Defendants continued to manufacture and to distribute trailers

using the intellectual property that Plaintiffs provided to them

under the MOU. Although the Jumbo Defendants’ alleged failure to

report any further sales or to make any further payments to

Plaintiffs may, if true, constitute breaches of the MOU, the

Court cannot conclude as a matter of law at this stage of the

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proceedings that those alleged failures constitute a waiver or

rescission of the MOU or the arbitration provision especially in

light of the Jumbo Defendants’ unequivocal statement that they

would continue to avail themselves of the MOU terms and continue

to manufacture and to distribute trailers.

Accordingly, on this record the Court concludes Plaintiff

has not demonstrated the Jumbo Defendants waived or otherwise

demonstrated an intent not to be bound any longer by the terms of

the MOU. Because Plaintiffs did not successfully terminate the

MOU and because the Jumbo Defendants did not otherwise rescind or

waive the MOU, it follows that both Plaintiffs and the Jumbo

Defendants remained bound by the terms of the MOU at least until

December 1, 2015.

D. Scope of the Arbitration Clause

Finally, Plaintiffs contend their claims fall outside of the

scope of the arbitration agreement because these claims do not

implicate any breach of the MOU. The Court agrees. 

The Jumbo Defendants, the Altocraft Defendants, and Home

Depot, on the other hand, assert Plaintiffs’ claims fall squarely

within the arbitration clause. Specifically, these Defendants

emphasize that “‘any doubts concerning the scope of arbitrable

issues should be resolved in favor of arbitration, whether the

problem at hand is the construction of the contract language

itself or an allegation of waiver, delay, or a like defense to

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arbitrability.’” Cape Flattery Ltd. v. Titan Maritime, LLC, 647

F.3d 914, 922-23 (9th Cir. 2011)(quoting Moses H. Cone Mem’l

Hosp. v. Mercury Const. Corp., 460 U.S. 1, 24-25 (1983)). 

“Courts should thus ‘construe ambiguities concerning the scope of

arbitrability in favor of arbitration.’” Cape Flattery Ltd., 647

F.3d at 923 (quoting Mastrobuono v. Shearson Lehman Hutton, Inc.,

514 U.S. 52, 66 (1995)).

The arbitration clause in the MOU, however, is not ambiguous

and, as noted, it simply provides: “If for some reason default

is not cured, binding Arbitration will be initiated by the non

defaulting [sic] party.” By its terms, therefore, the

arbitration clause applies only to circumstances in which a party

to the MOU seeks to redress an uncured default of the other

party’s obligations and, if necessary, to terminate the MOU for

cause before the end of the MOU’s natural term. Plaintiffs’

claims, however, are not premised on any specific “default” as

described in the MOU. The arbitration provision, therefore, does

not apply to Plaintiffs’ claims in this action.2

Accordingly, on this record the Court concludes Plaintiffs’

claims against the Jumbo Defendants, the Altocraft Defendants,

and Home Depot do not fall within the scope of the arbitration

clause in the MOU, and, therefore, the Court denies the Motions

2

 The Court need not determine at this stage of the

proceedings whether Plaintiffs’ failure to terminate the MOU has

any effect on Plaintiffs’ claims.

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of these Defendants to dismiss or, alternatively, to stay pending

arbitration.

PED’S MOTION (#98) TO DISMISS PLAINTIFF’S CLAIMS 1-5

PED moves to dismiss Plaintiff’s Claims 1-5 against PED

pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure

to state a claim.

I. Background

The following facts regarding PED are taken from Plaintiffs’

FAC and are assumed to be true at this stage of the proceedings3

:

224. PED offers for sale and sells counterfeit utility

trailers that are nearly identical to genuine

Trailers Intl utility trailers.

225. PED advertises the infringing trailers using

photographs, brand names, descriptions, and model

numbers identical or confusingly similar to those

Webb and Trailers Intl use on their websites, and

that infringe Webb's registered copyrights and

trademarks. See Figures 31 and 32.

3 PED submits the Declaration of David M. Hoch (#99) in

support of its Motion. In his Declaration Hoch provides

additional information regarding the nature of PED’s business,

sets out the foundation for many of the arguments PED presents in

its Motion, and contradicts some of Plaintiff’s allegations

regarding PED. “As a general rule ‘a district court may not

consider any material beyond the pleadings in ruling on a Rule

12(b)(6) motion.’” Lee v. City of Los Angeles, 250 F.3d 668,

688-89 (9th Cir. 2001)(quoting Branch v. Tunnell, 14 F.3d 449,

453 (9th Cir. 1994)). See also Swartz v. KPMG LLP, 476 F.3d 756,

763 (9th Cir. 2007). In any event, the Court concludes PED’s

Motion cannot efficiently be converted to a motion for summary

judgment at this stage of the proceedings because Plaintiffs are

entitled to discovery before the Court considers any such Motion. 

Accordingly, the Court’s analysis on PED’s Motion is constrained

to those facts alleged in the FAC.

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226. PED has actual knowledge of Webb's registered

trademarks and copyrights.

227. PED is not authorized to manufacture, import,

offer for sale, sell, distribute, or otherwise

deal in trailers made from Webb's and Trailers

Intl's designs.

FAC (#68) ¶¶ 224-27. In addition, Plaintiffs included in their

FAC an image that contains a trailer with the Altocraft brand

name below it allegedly captured from PED’s website.4 The

following words are beside the image of the trailer: “Buy

Factory Direct & Save.”

II. Standard

To survive a motion to dismiss a complaint must contain

sufficient factual matter, accepted as true, to “state a claim to

relief that is plausible on its face.” Bell Atlantic v. Twombly,

550 U.S. 544, 545 (2007). 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. at 556. “The plausibility standard

is not akin to a ‘probability requirement,’ but it asks for more

than a sheer possibility that a defendant has acted unlawfully.” 

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

U.S. at 546). When a complaint is based on facts that are

4

 Plaintiffs also include in their FAC an image of one of

their own trailers. In their Reply Memorandum (#108), however,

Plaintiffs acknowledge that image is not relevant to this action.

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“merely consistent with” a defendant's liability, it “stops short

of the line between possibility and plausibility of entitlement

to relief.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at

557). See also Bell Atlantic, 550 U.S. at 555-56. The court,

nevertheless, must accept as true the allegations in the

complaint and construe them in favor of the plaintiff. Din v.

Kerry, 718 F.3d 856, 859 (9th Cir. 2013).

The pleading standard under Federal Rule of Civil Procedure

8 “does not require ‘detailed factual allegations,’ but it

demands more than an unadorned, the-defendant-unlawfully-harmedme accusation.” Iqbal, 556 U.S. at 678 (quoting Twombly, 550

U.S. at 555). See also Federal Rule of Civil Procedure 8(a)(2). 

“A pleading that offers ‘labels and conclusions’ or ‘a formulaic

recitation of the elements of a cause of action will not do.’” 

Id. (citing Twombly, 550 U.S. at 555). A complaint also does not

suffice if it tenders “naked assertion[s]” devoid of “further

factual enhancement.” Id. at 557.

III. Discussion

PED contends Plaintiffs’ allegations are insufficient to

state a claim for copyright infringement (Claim One), trademark

infringement (Claim Two), trademark counterfeiting (Claim Three),

false designation of origin (Claim Four), or unfair competition

as a result of passing off Plaintiffs’ marks as those of

Altocraft (Claim Five).

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The Court agrees Plaintiffs’ allegations with respect to PED

are sparse and constitute no more than labels and conclusions. 

It is consequently difficult to determine from the face of

Plaintiffs’ FAC which facts Plaintiffs rely on to establish the

elements of the five separate claims they bring against PED. 

Although Plaintiffs do not need to provide detailed factual

allegations, they cannot leave PED or the Court to guess about

the basis for Plaintiffs’ claims against PED. See Iqbal, 556

U.S. at 679 (“But where the well-pleaded facts do not permit the

court to infer more than the mere possibility of misconduct, the

complaint has alleged—but it has not ‘show[n]’ — ‘that the

pleader is entitled to relief.’”)(quoting Fed. R. Civ. P.

8(a)(2)).

On this record, therefore, the Court concludes Plaintiff’s

allegations do not state a claim against PED in Claims 1-5, and,

therefore, the Court grants PED’s Motion to Dismiss. In light of

the fact that this matter is still at the pleading stage, the

Court concludes justice requires Plaintiffs be allowed an

opportunity to replead their claims against PED. See Fed. R.

Civ. P. 15(a)(3).

CONCLUSION

For these reasons, the Court DENIES the Altocraft

Defendants’ Motion (#93), the Jumbo Defendants’ Motion (#95), and

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Case 3:15-cv-00171-MO Document 126 Filed 01/06/16 Page 22 of 23
Home Depot’s Motion (#110); GRANTS Defendant PED’s Motion (#98)

to Dismiss; DISMISSES Plaintiff’s Claims 1-5 as to PED without

prejudice; and grants Plaintiffs leave to amend their Complaint

as to PED no later than February 5, 2016. The Court also directs

the Altocraft Defendants, the Jumbo Defendants, and Home Depot to

file an responsive pleading to Plaintiffs’ next form of Complaint

no later than February 19, 2016.

IT IS SO ORDERED.

DATED this 6th day of January, 2016.

/s/ Anna J. Brown

 

ANNA J. BROWN

United States District Judge

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