Court Opinion

ID: 6352644
Source: CourtListenerOpinion
Date Created: 2022-06-22 20:00:53.391464+00
Date Added: 2024-06-11T12:49:23.446599
License: Public Domain

NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                        JUN 22 2022
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

OCM GROUP USA, INC.,                            No.    21-55651
                                                       21-55954
                Plaintiff-Appellant,
                                                D.C. No.
 v.                                             2:19-cv-08917-SB-KS

LIN’S WAHA INTERNATIONAL CORP.,
a New York corporation; DOES, 1-10,             MEMORANDUM*

                Defendants-Appellees.

                   Appeal from the United States District Court
                       for the Central District of California
                 Stanley Blumenfeld, Jr., District Judge, Presiding

                        Argued and Submitted June 9, 2022
                              Pasadena, California

Before: M. SMITH, BADE, and VANDYKE, Circuit Judges.

      Plaintiff OCM Group USA, Inc. appeals from the district court’s grant of

summary judgment and award of attorney fees in favor of defendant Lin’s Waha

International Group (LWI). We have jurisdiction pursuant to 28 U.S.C. § 1291, and

we affirm.

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
1.    At the threshold, we deny OCM’s request for judicial notice. Case No. 21-

55651, Dkt. No. 17. OCM never presented the relevant document to the district

court, and it has failed to explain why it could not have done so. See Am. Unites for

Kids v. Rousseau, 985 F.3d 1075, 1099 (9th Cir. 2021) (denying request to judicially

notice copy of website because it “was never presented to the district court, and the

relevant record on appeal is the record before the district court”); Kohn Law Grp. v.

Auto Parts Mfg. Miss., Inc., 787 F.3d 1237, 1241 (9th Cir. 2015) (“It is rarely

appropriate for an appellate court to take judicial notice of facts that were not before

the district court.” (citation omitted)).

2.    Even with this evidence, OCM’s argument that its goods differed materially

from LWI’s gray-market goods cannot get off the ground. See Hokto Kinoko Co. v.

Concord Farms, Inc., 738 F.3d 1085, 1092-93 (9th Cir. 2013) (citing McCarthy on

Trademarks and Unfair Competition § 29:51.75 (5th ed.)) (a defendant is not liable

for trademark infringement if its gray-market goods are “genuine,” meaning that

they do “not materially differ from the U.S. trademark owner’s product” from the

standpoint of a consumer). The uncontradicted evidence in the record shows that

the parties’ goods were virtually identical in terms of packaging, taste, quality, and

safety. While the milk in the parties’ tea products was sourced from different

countries, even OCM’s own evidence indicates that “there [was] no concern [about]

the safety and quality” of the products containing milk from China. Further, it is

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undisputed that some of the products at issue in this case did not contain any milk or

dairy components.

      For the products that do contain milk, OCM claims that the difference in

where the milk is sourced from is material to consumers because the United States

Department of Agriculture (USDA) has designated Australia and New Zealand, but

not China, as free of foot-and-mouth disease. But OCM has failed to support this

assertion with evidence sufficient to meet its summary-judgment burden. See, e.g.,

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986). Although there is a

cursory declaration in the record from the manufacturer’s business manager

suggesting that milk from China was subject to a different regulatory regime than

milk from Australia or New Zealand at relevant times, the district court correctly

noted that the declaration lays no “proper foundation” indicating that the business

manager had the knowledge necessary to give such a “legal opinion.” See, e.g., Hill

v. Walmart Inc., 32 F.4th 811, 822 (9th Cir. 2022) (explaining that inadmissible

evidence may not be considered at summary judgment).

      OCM argues that there is evidence that LWI’s products failed to comply with

USDA safety regulations regarding foot-and-mouth disease because, in August and

September 2019, two shipments of LWI’s products were seized and destroyed by

the USDA. The only reason given for the seizures in the “emergency action

notifications” prepared by the agency was that the beverages “did not meet entry

                                          3
requirements as per 9 CFR 94.” 9 C.F.R. part 94 is a detailed, lengthy regulation

with 34 separate sections, and the USDA provided no details on which section was

violated. At bottom, there is no way of determining which part of the regulation—

if any1—was violated in light of the extremely limited facts in the record. Because

it is undisputed that most of LWI’s goods were imported without incident, it is

possible that there was a problem specific to these two shipments, or that the goods

were flagged for a simple technical violation, see, e.g., 9 C.F.R. § 94.27 (2016)2

(containing technical requirements for imports, such as “serial numbers” on

packaging and notifications to the government about the time, place, and manner of

arrival of the goods). While we must view the evidence favorably to OCM and draw

inferences from that evidence in OCM’s favor, the record here permits us to do no

more than speculate as to what the true reasons for the seizures were. See Anderson,

477 U.S. at 255; see also T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass’n, 809

F.2d 626, 631 (9th Cir. 1987) (“there must be some limit on the extent of the

inferences that may be drawn in the nonmoving party’s favor”). That will not do at

the summary judgment stage. See Hill, 32 F.4th at 818.

1
  LWI contends that the seizure was erroneous, and that it chose not to contest the
seizure only because it had already decided to discontinue sales of the products at
issue.
2
  Reserved by 86 Fed. Reg. 68834, 68862 (effective Jan. 3, 2022).

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      Finally, to the extent OCM argues that a regulatory violation in itself is

presumptively material to consumers—even in the absence of direct evidence of

consumer preferences, evidence that the relevant goods are made using different

techniques, or evidence that the goods differ nutritionally in any way—its argument

is not supported by case law. Cf. Hokto, 738 F.3d at 1094 (holding that Japanese

mushroom products differed materially where only one set of mushrooms was grown

to meet “U.S. Certified Organic standards,” and the plaintiffs had “submitted

uncontradicted evidence that certified organic status is more important to American

consumers than to Japanese consumers”).

3.    The district court also did not abuse its discretion in concluding that this was

an “exceptional case” warranting an award of attorney fees in LWI’s favor. See 15

U.S.C. § 1117(a); SunEarth, Inc. v. Sun Earth Solar Power Co., 839 F.3d 1179,

1180-81 (9th Cir. 2016) (en banc) (per curiam). The district court awarded fees to

LWI based on its finding that, even at the summary judgment stage, OCM’s claims

were supported by a “near total lack of material evidence or substantive legal

authority.” The district court was permitted to consider the objective reasonableness

of OCM’s claim, and its finding that the claim is factually and legally unreasonable

is not irrational or unsupported by the record. See id. (citing Octane Fitness, LLC v.

ICON Health & Fitness, Inc., 572 U.S. 545, 554 (2014)); United States v. Hinkson,

585 F.3d 1247, 1261 (9th Cir. 2009) (en banc). As the district court explained, OCM

                                          5
has offered almost no meaningful evidence that its products differed from LWI’s.

What little evidence OCM did provide regarding the different sources of milk was

severely deficient, and was unsupported by any relevant evidence showing that this

difference was material to consumers. Contrary to OCM’s assertions, the relatively

low amount in controversy in this case does not excuse OCM’s failure to meet its

summary-judgment burden.

      AFFIRMED

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