Source: http://wv.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20170331_0000512.SWV.htm/qx
Timestamp: 2019-04-26 14:51:35+00:00

Document:
PAUL D. WARNER, et al., Defendants.
Before the Court is Plaintiff Gerald R. Mollohan's Amended Complaint, Defendants' Counterclaim, and the parties' cross-Motions for Summary Judgment. As discussed below, the Court finds that the doctrines of res judicata and collateral estoppel bar many of Plaintiff's claims. The Court dismisses these claims in order to protect the validity of the Court's judgment in Case No. 2:11-cv-00104. The Court grants summary judgment in favor of Defendants on the claims that remain. The Court further dismisses Defendants' counterclaim sua sponte, after providing notice of the pleading's inadequacies and an opportunity for response.
This case centers on a long-simmering trademark dispute between a motorcycle club and its disaffected ex-member. Plaintiff Gerald Mollohan left Defendant Brothers of the Wheel M.C. Executive Council, Inc.'s (“BOTW”) motorcycle club in 2000. He started his own motorcycle club shortly thereafter. Although Mollohan could have given his new club virtually any name, he chose “Brothers of the Wheel Nomads.” Mollohan also began using the logo of his former club to represent his own. Not surprisingly, BOTW sued Mollohan for trademark infringement and won judgment in its favor in a case that has now been resolved for several years. (See Final J. Order, ECF No. 139, Case No. 2:11-cv-00104 (Feb. 19, 2014).) An overview of that acrimonious legal battle is necessary to place the current litigation, which Mollohan initiated, in proper context.
BOTW began in 1977 and operates chapters in West Virginia, Ohio, and Kentucky. On February 15, 2011, BOTW filed a complaint against Mollohan in this Court. (See Case No. 2:11-cv-00104.) BOTW's complaint alleged Mollohan violated federal and state trademark laws by developing and using in commerce a mark confusingly similar to a collective mark BOTW uses to identify its own motorcycle club. BOTW alleged that Mollohan was using a substantially similar mark to publicize his own motorcycle club.
BOTW applied for the trademark mentioned above on August 7, 2003. On February 15, 2005, the United States Patent and Trademark Office (“USPTO”) issued the trademark and assigned Registration Number 2926222. The trademark protects the name “Brothers of the Wheel M.C.” and the logo of the organization. According to its by-laws, BOTW retains ownership over its trademark-protected name and logo but grants a license to members and retirees to use the protected items. As a retiree, Mollohan received a limited license to use BOTW's protected items upon his retirement, again in accordance with the by-laws of the club. By starting his own rival club using a name and logo nearly identical to its own, BOTW claimed that Mollohan violated the terms of his license as well as laws protecting trademarks. Mollohan made a pro se appearance in the case and has continued to represent himself pro se in the present case.
Mollohan vigorously contested the Court's final judgment order. In addition to noticing his appeal to the Fourth Circuit, Mollohan filed no less than nine motions to stay, reconsider, or amend the judgment order in the two months following its entry. Though the case had never proceeded to trial, Mollohan requested a new one. Then Mollohan changed course slightly to renew his substantive attacks against BOTW's trademarks. In April and May of 2014, Mollohan filed at least ten motions seeking the cancellation of BOTW's trademarks, the judicial dissolution of BOTW's West Virginia chapters, and injunctive relief against BOTW for alleged copyright infringement. He also attempted to assert causes of action against BOTW for violations of the Racketeer Influenced and Corrupt Organizations (“RICO”) and Lanham Acts, as well as for tortious interference and defamation. (ECF No. 164 at 3, 172 at 3, 174 at 3, 175, 176.) The Court resolved Mollohan's post-trial motions by Memorandum Opinion and Order entered August 11, 2014. (ECF No. 183.) The Court found no merit in Mollohan's varied bases for relief from the judgment order. It also reviewed Mollohan's motions related to the disputed word mark, but found his claims for relief were not appropriately presented at such a late stage in the litigation. The United States Court of Appeals for the Fourth Circuit affirmed the Court's summary judgment findings and subsequent judgment order. Brothers of the Wheel M.C. Exec. Council v. Mollohan, 609 F. App'x 149 (4th Cir. 2015).
The Amended Complaint re-alleges the preceding complaint's five counts and adds three counts directed at BOTW's attorney, Richard Lindroth. BOTW and the other defendants answered with a counterclaim against Mollohan and Frank Visconi, a resident of Tennessee allegedly assisting Mollohan in evading the Court's injunction by filing Mollohan's trademark application and administering the affairs of Mollohan's motorcycle club out-of-state. Due to Mollohan's continued appearance pro se, the instant civil action was referred to Magistrate Judge Dwayne L. Tinsley for submission of proposed findings and recommendations for disposition. At a status conference held on March 17, 2016, Mollohan voluntarily dismissed Counts 6, 8, and 10 of the Amended Complaint. (See ECF No. 138 (memorializing dismissal).) On March 17, 2016, the magistrate judge entered an Order and Notice establishing a schedule for discovery and the filing of dispositive motions. (ECF No. 138.) The parties were directed to complete discovery by June 15, 2016 and to file dispositive motions by July 1, 2016.
The parties immediately peppered the docket with filings. To be exact, the parties filed 124 docket entries in a little over three months between the entry of the Order and Notice and the deadline it established for dispositive motions. A copy of the docket in this case is attached hereto as Appendix A to illustrate this flood of filings, as well as the parties' general tendency to file huge numbers of matters on the docket. A perusal of the docket reveals that few of these entries bear any relevance to discovery. Mollohan filed untimely motions to supplement his claims and premature motions for dispositive relief against his adversary. And in a case where the parties already seem prone to litigate on impulse, the bitterness apparent between them has complicated matters further. On July 13, 2016, the magistrate judge ordered a cessation of all activity while he considered the parties' filings.
On August 2, 2016, Defendants filed a motion for summary judgment based, in part, on res judicata. (ECF No. 269.) Mollohan elected not to respond to this or any of Defendants' substantive arguments, but instead filed several documents maligning their counsel for not complying with the Court's local rules and the scheduling order in this case in filing its motion. The magistrate judge held a status conference on January 26, 2017, at which time he suggested Defendants withdraw the motion for summary judgment and refile the motion after resolution of certain discovery disputes that remained pending regarding Mollohan's RICO claim. The Court withdrew the referral on February 6, 2017 out of frustration over the continuing abuse of the court system presented by this case. Mindful of the Court's scarce resources and the need to promote respect for final judgments, the Court now considers the question of preclusion. Afterward, the Court evaluates the parties' cross-motions for summary judgment and the sufficiency of Defendants' counterclaim.
The doctrines of res judicata and collateral estoppel serve “the dual purpose of protecting litigants from the burden of relitigating an identical issue with the same party or his privy and of promoting judicial economy by preventing needless litigation.” Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 (1979) (citing Blonder-Tongue Laboratories, Inc. v. Univ. of Illinois Foundation, 402 U.S. 313, 328-29 (1971)). Res judicata has been described as a “rule of fundamental and substantial justice, ” Peugeot Motors of Am., Inc. v. E. Auto Distributors, Inc., 892 F.2d 355, 359 (4th Cir. 1989), whereby “a final judgment on the merits bars further claims by parties or their privies based on the same causes of action.” Young-Henderson v. Spartanburg Area Mental Health Ctr., 945 F.2d 770, 773 (4th Cir. 1991) (quoting Montana v. United States, 440 U.S. 147, 153 (1979)). Collateral estoppel, on the other hand, works to preclude “relitigation of issues actually litigated and necessary to the outcome of the first action.” Parklane Hosiery, 439 U.S. at 356 n. 5.
As a threshold matter, the Court explains its decision to consider the res judicata and collateral estoppel defenses sua sponte. Collateral estoppel and res judicata are affirmative defenses that typically must be raised by an opposing party. Fed.R.Civ.P. 12. Nevertheless, a court may sua sponte raise issues of preclusion in “special circumstances, ” even though the defense has not been raised. Arizona v. California, 530 U.S. 392, 412 (2000) (quoting United States v. Sioux Nation, 448 U.S. 371, 432 (1980) (Rehnquist, J., dissenting) (internal quotation marks omitted)). “This result is fully consistent with the policies underlying res judicata: it is not based solely on the defendant's interest in avoiding the burdens of twice defending a suit, but is also based on the avoidance of unnecessary judicial waste.” Id.; see also Eriline Co. S.A. v. Johnson, 440 F.3d 648, 655 (4th Cir. 2006) (determining res judicata may be raised and considered sua sponte because it implicates important institutional interests of the judiciary); Doe v. Pfrommer, 148 F.3d 73, 80 (2d Cir. 1998) (finding that district court did not err by raising the issue of collateral estoppel on its own because of the “strong public policy in economizing the use of judicial resources of avoiding relitigation”).
Such “special circumstances” exist where “a court is on notice that it has previously decided the issue presented.” Arizona, 530 U.S. at 412; see also Saudi v. V. Ship Switz. S.A., 93 F. App'x 516, 520-21 (4th Cir. 2004) (“[G]iven the indisputable privity of the parties and the identity of the issues between the instant case and the case upon which the res judicata holding rested, we believe that sua sponte invocation of the bar was permissible.”). Similarly, the court may invoke res judicata on its own where “all relevant data and legal records are before the court and the demands of comity, continuity in the law, and essential justice mandate judicial invocation of the principles of res judicata.” Carbonell v. La. Dep't of Health and Human Res., 772 F.2d 185, 189 (5th Cir. 1985). Here, the 2011 litigation was litigated in the same court, before the same judge, between identical parties. Given the substantial factual overlap between the cases, the Court finds that the interests of justice and concerns for judicial efficiency support the Court's sua sponte consideration of res judicata and collateral estoppel.
The status of the parties' trademark cancellation proceedings only make this course of action further advisable. The parties have pursued their rights before the USPTO as vigilantly as they have here, and they have competing petitions to cancel the other's trademark pending before the Trademark Trial and Appeal Board (“TTAB”). (Cancellation No. 92056674 (seeking cancellation of Registration No. 2926222); Cancellation No. 92059164 (seeking the cancellation of Registration No. 4299480).) Mollohan filed the pending cancellation request on January 14, 2013. The TTAB suspended the proceeding on August 12, 2013 pending the outcome of the 2011 litigation before the district court, and again on August 14, 2014 to await the resolution of the appeal in that case. Nearly two years later, on May 12, 2016, the TTAB again suspended the proceeding after being alerted of the present litigation in which Mollohan also sought the cancellation of BOTW's trademark. BOTW's petition to cancel Mollohan's trademark, Cancellation No. 92059164, was consolidated with Mollohan's cancellation proceeding on September 5, 2014. That proceeding has also been stayed by the TTAB.
Mollohan's petition to cancel was filed before the initiation of the above-styled case. Given the Court's finding that the instant proceedings are barred by res judicata and estoppel, sua sponte treatment of these issues allows the TTAB to continue its adjudication of the long-pending petition in an area falling squarely within the TTAB's area of expertise.
“The application of res judicata turns on the existence of three factors: ‘(1) a final judgment on the merits in a prior suit; (2) an identity of the cause of action in both the earlier and the later suit; and (3) an identity of parties or their privies in the two suits.'” Clodfelter v. Rep. of Sudan, 720 F.3d 199, 210 (4th Cir. 2013) (quoting Pueschel v. United States, 369 F.3d 345, 354-55 (4th Cir. 2004)). The factors are given broad application with an aim to “eliminate vexation and expense to the parties, wasted use of judicial machinery and the possibility of inconsistent results.” Thomas v. Consolidation Coal Co., 380 F.2d 69, 77 (4th Cir. 1967). To that end, the Fourth Circuit has made clear that “[t]he preclusive affect of a prior judgment extends beyond claims or defenses actually presented in previous litigation.” Meekins v. United Transp. Union, 946 F.2d 1054, 1057 (4th Cir. 1991). “Not only does res judicata bar claims that were raised and fully litigated, it ‘prevents litigation of all grounds for, or defenses to, recovery that were previously available to the parties, regardless of whether they were asserted or determined in the prior proceeding.'” Peugeot Motors of Am., Inc. v. E. Auto Distributors, Inc., 892 F.2d 355, 359 (4th Cir. 1989) (quoting Brown v. Felsen, 442 U.S. 127, 131 (4th Cir. 1979)). “By precluding parties in a subsequent proceeding from raising claims that were or could have been raised in a prior proceeding, ‘res judicata . . . encourages reliance on judicial decisions, bars vexatious litigation, and frees the courts to resolve other disputes.'” Pueschel, 369 F.3d at 354 (quoting Brown, 442 U.S. at 131)). Here, there is no question that BOTW's trademark infringement action culminated in a final decision on the merits and that there is an identity of the parties. The principal issue is whether the identity of the causes of action requirement is satisfied.
“There is no simple test to determine what constitutes the same cause of action for res judicata purposes, ” Aliff v. Joy Manufacturing Co., 914 F.2d 39, 43 (4th Cir. 1990). Courts look primarily to whether the claims arise from the same factual basis. See Id. This broad “transactional approach” requires the Court to decide whether Mollohan's claims “arise out of the same transaction or series of transactions or the same core of operative facts” at issue in the 2011 case. Pueschel, 369 F.3d at 355 (quoting In re Varat Enters., Inc., 81 F.3d 1310, 1316 (4th Cir. 1996) (internal quotation marks omitted)); see also Meekins, 946 F.2d at 1058 (describing the transactional approach). The Court must “presume that a litigant has ‘done his legal and factual homework, ' and raised all grounds arising out of the same factual context to support his claims.” Peugeot Motors, 892 F.2d at 359 (citing Car Carriers, Inc. v. Ford Motor Co., 789 F.2d 589, 596 (7th Cir. 1986)).
Eastern raises several factual allegations which were either fully litigated or in existence at the time of the 1981 litigation. These include allegations that: Peugeot in 1981 wrongfully removed the state of Delaware from Eastern's area, Peugeot in 1974 attempted to terminate the distributorship, Peugeot in 1975 attempted to force Eastern to accept changes in the contract, Peugeot in 1977 and 1978 attempted to purchase Eastern, and that Peugeot filed baseless counterclaims in the 1981 case. Such claims or claims based on such facts are forever extinguished by the final judgment in the 1981 case.
The logic applies equally here. The Court begins with Mollohan's defamation claim. Mollohan's defamation claim plainly arises from the same operative facts as BOTW's trademark infringement claim. Mollohan alleges that BOTW published a false statement about Mollohan on its website, namely: “Anyone claiming to be in a nomad chapter is just using our name and playing biker.” (Am. Compl. ¶ 76.) In other words, Mollohan complains that BOTW falsely accused him of misappropriating BOTW's trademark-protected name and logo for use in identifying his “Nomads” club. These allegations constituted the same essential facts at issue in BOTW's trademark dispute, and the Court's determination that Mollohan had used BOTW's trademarks without permission precludes his defamation claim here.
Next, the Court turns to the civil RICO claim alleged in Count V. The elements of a civil RICO claim are “(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity.” Sedima v. Imrex Co., Inc., 473 U.S. 479, 496 (1985) (citing 18 U.S.C. § 1962). The plaintiff must also allege an injury to his business or property as a result of such conduct. Id. “A ‘pattern of racketeering activity' requires ‘at least two acts of racketeering activity.'” 18 U.S.C. § 1961(5). The statute defines racketeering activity to include a wide array of criminal conduct, including mail fraud and threats involving bribery and extortion. Id. § 1961(1).

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