# United Stat es Court of Appeals For the First C ircuit

Nos. 04-1054; 04-1209

JOHN G. ALDEN, INC. OF MASSACHUSETTS; JOHN G. ALDEN INSURANCE AGENCY, INC., Plaintiffs-Appellants\Cross-Appellees,

v. JOHN G. ALDEN INSURANCE AGENCY OF FLORIDA, INC.;

JOHN G. ALDEN SPECIAL RISKS, INC., Defendants-Appellees\Cross-Appellants.

APPEALS FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS [Hon. Patti B. Saris, U.S. District Judge ]

Before Lynch, Circuit Judge , Campbell, Senior Circuit Judge , and Stahl, Senior Circuit Judge .

Michael A. Albert , with whom John L. S trand , Lawrence M. Green , and Wolf, Greenfield & Sacks, P.C. , were on brief, for appellants. Kevin J. D'Espies , with whom Rutherford Mulhall, P.A. , was on brief, for appellees.

November 10, 20041 Alden Florida and Special Risks filed a cross-appeal from the

district cour t's de nial of attorneys' fees under Federal Rule of Civil Procedure 68 and Section 35 of the Lanham Act, 15 U.S.C. § 1117. We do not reach this issue i n light of our disposition of the case.

2 These marks include: U.S. Service Mark Registration Nos. 2,308,835 and 2,307,288 for ALDEN ® ; No. 2,290,215 fo r J OHN G. ALDEN ® ; and Nos. 2,292,686, 2,291,150, 2,294,400, and 2,291,119 for variations of a rope logo. -2-

STAHL, Senior Circuit Judge . Plaintiffs-Appellants John G. Alden, Inc. of Massachusetts and John G. Alden Insurance Agency, Inc. (collectively "Alden Mass") brou ght this breach of contract and trademark infringement action under the Lanham Act, 15 U.S.C. § 1117(a), against Defendants-Appellees John G. Alde n Insurance Agencyof Florida, Inc. ("Alden Florida") and John G. Alden Special Risks, Inc. ("Special Risks") (collecti v ely, "Appellees"). The district court granted summary judgment to Appellees, and Alden Mass now appeals. 1 Becaus e th e district court failed to comply with Federal Rule of Civil Procedure 56(c), and failed to address at least one significant legal issue, we vacate the judgment and remand for further proceedings. I. BACKGROUND Plaintiff-Appellant John G. Alden, Inc. of Massachusetts

owns several federal registrations for trademarks related t o th e Alden name. 2 On December 9 , 1981, Alden Mass and Alden Florida enteredinto a license agreement (the " Lice nse Agreement") which granted Alden Florida, as licensee:-3- The exclusive right and l icen se in the State of Florida to operate an insuran[c]e, excluding life insurance, brokerage and agency business under the name "John G. Alden Insurance Agency of Florida, Inc." together with the right to use [Alden Mas s'] commonly known logo on advertising matters and stationery. In exchange, Alden Flor ida agreed "to pay [Alden Mass] three percent (3%) of gross commissions paid to [Alden Florida] and its salespersons for sale of insurance." The Licen se Agr eement also provi dedthat Alden Florida could not assign or transfer the license without prior written approval of Alden Mass, and that Alden Mass could terminate the license if Alden Florida failed to make the payments required by the License Agreement.

Alden Florida made payments under the License Agreement fromits execution in 1981 until approximately 1987, at which time Alden Florida stopped making payments. Although Alden Mass made an ini tia l effort to collect from Alden Florida, it stopped all collection efforts no later than 1993.

On September 30, 2002, pursuant to the termination clause in the License Agreement, Alden Mass gave written notice to Alden Florida, purporting to terminat e th e License Agreement. Alden Florida did not respond, and continuedto use Alden Mass' registered marks until 2003.

Frank Atlass, the founder, Chairman, and CEO of Alden Florida, incorp oratedSpecial Risks on November 18, 1999. There

was never any license agreement between Alden Mass and Special-4-

Risks. Nonetheless, at all times from its incorporation until a few months after Alden Mass filed this suit, Special Risks used Alden Mass' registered marks to promote its business.

On November 1, 2002, Alden Mass filed suit against Alden Florida and Special Risks. In a scheduling order, the district judge set a July 10 , 2003 dea dline for discovery, an August 10, 2003 deadline for the filing of summary judgment motions, and a September 10, 2003 deadline for the filing of oppositions to any summaryjudgment motions. After Alden Florida a nd Spe cial Risks filedtheir answer, Alden Mass filed a timely motion for summary judgment. On August 7, 2003, the parties filed a joint motion for the entry of an injunction, which the court allowed. Pursuant to that injunction, Appellees ceased using the Alden name, the Alden Mass registered marks, and the website domain name of

www .aldeninsurance.com. On August 11, 2003, Alden Florida a n d Special Risks filed an opposition to Alden Mass' motion for summary judgment and, for the first time, advanced the theory that Alden Florida had repudiated the License Agreement at least fifteen years earlier by " not m aking any payments." On August 15, 2003, Alden Mass filed a reply, contending that as a matter of law, a contract cannot be repudiated by mere inaction.

Then, Alden Florida and Special Risks, w ith the permission of the court, took a late deposition of Nancy G. Ronan,

a former employee of Plaintiff-Appellant John G. Alden Ins uran ce-5-

Agency, Inc. As a result of information learned during that deposition, on Septemb er 3 0, 2003, over a month-and-a-half after the deadline for filing summ ary judgment motions had passed, Ap pel lees filed a motion for leave to file a late motion for

s ummary judgment. For the first time, Appellees advanced the theorythat they had repudiated the contract not only by nonpayment, but also by affirmatively "informing [Alden Mass] that future payments would not be made." On October 3, 2003, the court denied Appellees' motion to file late.

On October 15, 2003, the district judge held a hearing on Alden Mass' motion fo r summary judgment ("Hearing"). That same day, Appellees filed a motion for reconsideration of the district court's order denying their motion for leave to file late ("Motion for Reconsideration").

During the He ari ng, the district judge noted that Appellees' new affirmative repudiation theory was being presented to the court for the first time. In lig ht of this new argument, andthe fact that discovery was already closed, the district judge invitedAlden Mass to submit a "letter" to the court, alerting the judge to anything "else in the [Ronan] deposition [she should] look at . . . . Or, [to point to any other] piece of evidence that makes [the statements in the Ronan deposition] a disputed issue of fact." The district judge was clear, however, that "discovery is-6-

closed" and "there's no more briefing." In response, Alden Mass submitted a letter to the court on October 23, 2003.

On November 26, 2003, the district judge granted Appellees' Motion for Reconsideration, and on the same day, entered

an order denying Alden Mass' motion for summary judgment and granting summary judgment to Alden Florida and Special Risks. The district judge determined that Alden Florida had repudiated the contract approximately fifteen years prior to suit, and therefore, Alden Mass' contract claims wer e barred by the statute of limitations , and its Lanham Act claims were barred by the equitable doctrine of laches . The district judge's decision made no mention of Special Risks' use of Alden Mass' marks. II. DISCUSSION Federal Rule of Civil Procedure 56(c) provides that a summaryjudgment motion "shall be served at least 10 days before the time fixed for the hearing." Fed. R. Civ. P. 56(c). "We have interpretedRule 56(c) to allow an adverse party at least ten days to respond to a motion for summary judgment." Delgado-Biaggi v. Air Transp. Local 501 , 112 F.3d 565, 567 (1st Cir. 1997); see Stella v. Town of Tewksb ur y , 4 F.3d 53, 55 (1st Cir. 1993) ("[S]ummaryjudgment targets shouldbe secure in the knowledge that3 We note that , "while Rule 56(c) refers to a 'hearing' in

relation to the ten d ay proviso, the rule does not require oral argument in connection with the motion." Delgado-Biaggi , 112 F.3d at 567 n.4.

4 Part of this ambiguity stems from the wording in the district court's order. The order states: "[Alden Mass'] motion is DENIED andthe Court orders entry of judgment in favor of defendant [sic] pursuant to Fed. R. Civ. P. 56(b)," instead of, for example, "[Alden Mass'] motion is DENIED , [Alden Florida's and Special Risks'] motion is ALLOWED , and the Court orders entry of judgment in favor of defendants pursuant to Fed. R. Civ. P. 56(b)." -7- theywill have at least ten days in which to formulate and prepare their best opposition to an impending motion."). 3

Here, it is unclear whether the di stri ct judge granted Appellees' motion for summary judgment or whether the judge raised the summary judgment motion sua sponte (and coincidentally granted Appellees' Motion for Reconsideration the same day as the judgment

was entered). 4 For purposes of Rule 56(c), however, this determination is irrelevan t. S ee Stella , 4 F.3d at 56 ("[I]t is well settled in this circuit that all summary judgment proceedings, including those initiated by the district judge, will be held to the standards enunciated in Rule 56 itself.").

Moreover, appellate review is "equally unaffected" by whether summary judgment was raised on motion of one of the parties

or by the court sua sponte . See Berkovitz v. Home Box Office, Inc. , 89 F.3d 24, 30 (1st Cir. 1996). We engage in plenary review of the district court's grant of summary judgment. See id.-8- Here, Alden Mass learned for the first time that it was the target of a motion for summary judgment on November 26, 2003, when the dis trict judge granted Appellees' Motion for Reconsideration. That very same da y, the court entered summary judgment in favor of Appellees. Clearly, Alden Mass was not affordedthe ten days to reply as required by Rule 56(c). See Fed. R. Civ. P. 56(c).

It could be argued that the district court's failure to complywith the strictures of Rule 56(c) was harmless. See, e.g. , Am. In t'l Ins. Co. of P.R. v. Am. Nat'l Fire Ins. Co. (In re San Juan Dupont Plaza Hotel Fire Liti g.) , 45 F.3d 564, 568 (1st Cir. 1995) ("If we were completely certain that the merits of the

summa ry judgment issue had been fullypresented to the district court, it might be reasonable to conclude either that the essence of the [] notice requirement had been satisfiedor that the failure to satisfy it was harmless.") (emphasis in original). We need not determine, however, whether our harmless error jurisprudence applies to the requirements of Rule 56, because the error here was not harmless.

First, we have held that "[w]hen a court announces that it will follow a procedural course, the parties are entitled to relyon that announcement unless and until the court signals an impending change and affords a reasonable opportunity to regroup." Leyva v. On The Beach, Inc. , 171 F.3d 717, 720 (1st Cir. 1999); see-9-

Berkovitz , 89 F.3d at 30 ("A court cannot alter its bearings midcourse without signalling the impending change to the parties."). Here, the district judge gave Alden Mass every indication that it wouldnot grant Appellees' Motion for Reconsideration. At one p oint, when Alden Mass requested an opportunity to respond to Appellees' newly raised affirmative repudiation theory, the district judge stated: "[I]t's too late. I didn't let [Alden Florida and Special Risks] file a late motion. I'm not going to let you file a late motion." Furthermore, the district judge made clear at the Hearing that there would be "no more briefing." Moreover, the district judge infor med the parties that after the Hearing, "we will set up the damages hearing. Because [Alden Mass] will be getting something." Plainly, Alden Mass hadno notice that the district court was about to change its "procedural course" and not only accept Appellees' late motion, but also grant summary judgment in Appellees' favor. See Berkovitz , 89 F.3d at 31 (finding no notice where , in ter alia , the court's pre-ruling statements pointed in the opposite direction).

Se cond , although it is true the district judge invited Alden Mass to submit a "letter" regarding the Ronan deposition, and to use that letter to point to any other piece of "evidence that makes [the statements in the Ronan deposition] a disputed issue of fact," Rule 56(c) requires more. At a minimum, the party preparing the response must have the m otivation of knowing that it is the-10-

target of a summary judgment motion. See In re San Juan Dupont Plaza Hotel Fire Litig . , 45 F.3d at 568 (finding no notice where the only issue pending was whether the court would grant permission to file a summary judgment motion). Here, Alden Mass did not know it had become the target of a summary judgment motion. Also, the district court had made it clear that it would not accept any further evidentiary submissions or further legal argument. Theref ore , Alden Mass did not have a "meaningful opportunity to cull the best evidence supporting [its] position , and to present that evidence, together with developed legal argu mentation, in opposition to the entry of summary judgment." Berkovitz , 89 F.3d at 31. In addition to the district court's failure to follow the requirements of Rule 56(c), we also note that remand here is necessary because there is at least one "significant legal issue, not squarely addressed b y th e district court" that remains unresolved. See In re San Juan Dupont Plaza Hotel Fire Litig. , 45 F. 3dat 568. The district court's decision is devoid of a n y reference to Speci al Risks' use of Alden Mass' registered marks. Special Risks is a separate legal entity from Alden Florida, formed merelythree years prior to the filing of this suit. We are unsure how any allegedrepudiation of the License Agreement between Alden Mass and A lden Flor ida in the late 1980s or early 1990s could justify Special Risks' use of Alden Mass' registered marks. That-11-

said, "[g]iven the case's posture," we decline to "leapfrog[] to the merits." Stella , 4 F.3d at 55. This issue is more appropriately addressed on remand. Furthermore, the district judge didnot squarely address Alden Mass' argument that laches does not applyto damages for Alden Florida's (andSpecial Risks') continued use of its registered marks after the date Alden Mass filed suit. See In re San Juan Dupont Plaza Hotel Fire Litig. , 45 F.3dat 568. Again, this issue is more appropriately addressed on remand.

We recognize that in the end, Alden Mass may not be able to "muster enough evidence to ward off a properly advertised summaryjudgment." Berkovitz , 89 F.3d at 31. That possibility, however, does not affect our decision today: "The issu e here is

one o f p rocess and fundamental fairness, not one of substance." Rogan v. Menino , 175 F.3d 75, 80 n.4 (1st Cir. 1999). III. CONCLUSION For the foregoing reasons, we vacate the judgment of the district court and remand the case for proceedings consistent with this opinion. Costs to appellants.