Opinion
Civ. 21-00460 LEK-WRP
01-31-2024
HAWAII FOODSERVICE ALLIANCE, LLC, A HAWAII LIMITED LIABILITY COMPANY; Plaintiff, v. MEADOW GOLD DAIRIES HAWAII, LLC, A HAWAII LIMITED LIABILITY COMPANY; HOLLANDIA DAIRY, INC., A CALIFORNIA CORPORATION; HERITAGE DISTRIBUTING COMPANY, SAPUTO DAIRY FOODS USA, LLC, A DELAWARE CORPORATION; Defendants.
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION FOR SUMMARY JUDGMENT
LESLIE E. KOBAYASHI, UNITED STATES DISTRICT JUDGE.
On July 24, 2023, Defendants Meadow Gold Dairies Hawaii, LLC (“MGDH”), Hollandia Diary, Inc. (“Hollandia”), Heritage Distributing Company doing business as Ninth Avenue Foods (“Heritage” or “NAF”), and Saputo Dairy Foods USA, LLC (“Saputo” and collectively “Defendants”) filed a Motion for Summary Judgment (“Motion”). [Dkt. no. 123.] Plaintiff Hawaii Foodservice Alliance, LLC (“Plaintiff”) filed its memorandum in opposition on September 22, 2023, and Defendants filed their reply on September 29, 2023. [Dkt. nos. 147, 150.] This Court finds this matter suitable for disposition without a hearing pursuant to Rule LR7.1(c) of the Local Rules of Practice for the United States District Court for the District of Hawaii (“Local Rules”). Defendants' Motion is hereby granted in part and denied in part for the reasons set forth below. Summary judgment is granted in part in favor of MGDH, and the Motion is denied to the extent that it seeks summary judgment in favor of Hollandia, Heritage, and Saputo.
BACKGROUND
The crux of this case is that Plaintiff alleges MGDH's use of phrasing and imagery suggesting that Meadow Gold brand products are sourced in Hawai'i is misleading and deceptive because Meadow Gold products contain milk and other products, such as whipping cream, imported from the continental United States (“Mainland Milk Products”).
Plaintiff initiated this action on November 24, 2021. See Complaint, filed 11/24/21 (dkt. no. 1). The operative pleading is Plaintiff's Second Amended Complaint, filed on February 1, 2023. [Dkt. no. 83.] Plaintiff asserts the following claims: false designation of origin and advertising and unfair competition, in violation of the Lanham Act, Tile 15 United States Code Section 1125(a) (“Count I”); an unfair methods of competition claim, in violation of Hawai'i Revised Statutes Chapter 480 (“UMOC” and “Count II”); a false advertising claim, pursuant to Hawai'i Revised Statutes Section 708-871 and Section 603-23.5 (“Count III”); and a deceptive trade practices claim, pursuant to Hawai'i Revised Statutes Chapter 481A (“Count IV”).
Plaintiff filed its First Amended Complaint on April 18, 2022. [Dkt. no. 49.]
The parties agree that, “[f]rom at least 1986 to 2020, the Meadow Gold brand operated as a subsidiary of various successive mainland conglomerates,” the most recent of which was Southern Foods, which later became Dean Foods. [Defs.' Separate Concise Statement of Facts, filed 7/24/23 (dkt. no. 124) (“Defs.' CSOF”), at ¶¶ 4-5; Pltf.'s Concise Statement of Facts in Opp. to Defs.' Motion for Summary Judgment as a Matter of Law Filed July 24, 2023, filed 9/22/23 (dkt. no. 148) (“Pltf.'s CSOF”), at ¶¶ 4-5 (admitting Defs.' ¶¶ 4 and 5).] Dean Foods held Meadow Gold Dairies (“MGD”) for approximately twenty years, until its bankruptcy in 2020. [Defs.' CSOF at ¶ 5; Pltf.'s CSOF at ¶ 5.]
Plaintiff “is the largest milk distributor in Hawai'i, with about 65% of the wholesale milk distribution market,” and MGDH has “about 35% of the market.” [Defs.' CSOF at ¶¶ 26-27; Pltf.'s CSOF at ¶¶ 26-27 (admitting Defs.' ¶¶ 26-27, “to the extent ‘the wholesale milk distribution market' is defined as milk product sales to retailers and does not include other sales, such as MGDH's sales to schools”).]
Hollandia, Heritage, and Saputo (collectively “the Dairy Farmers”) supply products to MGDH. [Second Amended Complaint at ¶¶ 7-9; Defs.' Answer to Second Amended Complaint [Dkt. 83], filed 3/1/23 (dkt. no. 88) (“Answer”), at ¶ 5 (admitting those portions of Plaintiff's ¶¶ 7-9).] Specifically, “MGD[H] entered into transactions with Hollandia, Heritage, and Saputo to supply mainland milk.” [Defs.' CSOF at ¶ 33; Pltf.'s CSOF at ¶ 33 (admitting that portion of Defs.' ¶ 33).] MGDH also has agreements “with packaging vendors and advertising firms to supply Hawai'i-themed marketing.” [Defs.' CSOF at ¶ 32; Pltf.'s CSOF at ¶ 32 (admitting that portion of Defs.' ¶ 32).] The packaging and marketing at issue in this case include the use of the terms “Hawaii's Dairy” and “Made with Aloha” and the suggestion of a connection with the “Dairymen's Association,” [Second Amended Complaint at ¶ 1,] and the use of Meadow Gold's mascot “Lani Moo,” [id. at ¶ 28].
I. Defendant's Evidence
In 2020, Bahman Sadeghi (“Sadeghi”), through MGD Acquisition, LLC purchased certain Meadow Gold intellectual property (“IP”), a processing facility in Hilo, and distribution operations on the Island of Maui and the Island of Kaua'i from Dean Foods (“MGDH Acquisition”). Defs.' CSOF, Decl. of Bahman Sadeghi (“Sadeghi Decl.”) at ¶ 3; Further Concise Statement (“Defs.' Reply CSOF”), filed 9/29/23 (dkt. no. 151), Supplemental Declaration of Bahman Sadeghi (“Sadeghi Reply Decl.”) at ¶ 5; see also Sadeghi Decl., Exh. 1 (Intellectual Property Assignment Agreement between Dean Foods Company and MGD Acquisition, LLC, effective 4/30/20). MGD Acquisition, LLC obtained, inter alia, the registered trademarks for “Lani Moo,” “Dairymen's,” and “Hawaii's Dairy.” [Sadeghi Decl., Exh. 1, Exh. A (Assigned IP).]
MGD Acquisition, LLC was later re-named Meadow Gold Dairies Hawaii, LLC. [Sadeghi Decl. at ¶ 3.] The name change occurred after the Dairy Farmers of America (“DFA”), which bought the Meadow Gold assets outside of Hawai'i, licensed “Meadow Gold” to what became MGDH for use in Hawai'i. See Sadeghi Reply Decl. at ¶ 3. This Order will therefore use “MGDH” to refer to MGD Acquisition, LLC.
Sadeghi was the owner and operator of Island Dairy, a dairy farm on the Island of Hawai'i, from 1986 until he sold the farm in December 2011. During that time, Island Dairy sold milk to Meadow Gold Dairies. [Sadeghi Decl. at ¶ 2.] Based on his experience in the Hawai'i dairy industry, Sadeghi states:
Until the 1980s, Meadow Gold sourced nearly all of its milk from Hawai'i dairy farms. But in the 1980s and 1990s, milk production declined steeply, which led to an increase in mainland imports. Meadow Gold began importing milk in bulk from the mainland in the mid-1990s. Since then, Meadow Gold has sourced the majority of its milk from the mainland. Other distributors rely solely on mainland milk imports. By the 2000s, this was not only common industry knowledge, but was also widely reported to the public. Today, MGD[H] is the only dairy distributor in the islands that has a local source of milk. It is also the only
dairy distributor in the islands with an operating milk processing facility.[Id. at ¶ 5.] Defendants also cite articles and reports that corroborate Sadeghi's statements about the changes in the Hawai'i dairy industry. See Defs.' CSOF, Decl. of Erika L. Amatore (“Amatore Decl.”), Exh. 2 (Clare Gupta, Dairy's Decline and the Politics of “Local” Milk in Hawai'i, FOOD, CULTURE & SOCIETY (Vol. 19, Issue 3, Sept. 2016)) at 497); Motion, Mem. in Supp. at 4-5 (citing Haw. Dep't Ag. C.N. Lee, Issues Related to Hawai'i's Dairy Industry at 15, available at https://hdoa.hawaii.gov/wp-content/uploads/2013/01/Appendix-B-Dairy.pdf (last visited July 20, 2023); HoNoLuLu MAGAZINE, Milking It, Aug. 5, 2008, available at https://www.honolulumagazine.com/milking-it/ (last visited July 20, 2023)). As to the public's knowledge about the practice of using Mainland Milk Products, Defendants cite: KHoN2, Hawai'i Milk Producers Fight for Survival in Competitive Market, June 30, 2015, available at https://www.khon2.com/news/hawaii-milk-producers-fight-for-survival-incompetitive-market/ (last visited July 20, 2023); HAWAII NEWS NoW, Last Hawaii-Owned Large Dairy May Close, June 30, 2015, available at https://www.hawaiinewsnow.com/story/29448178/last-hawaii-owned-large-dairymay-close/ (last visited July 20, 2023)). [Motion, Mem. in Supp. at 5.]
Ms. Amatore states Exhibits 2 to 17 “are true and correct copies of newspaper articles and advertisements obtained by [her] office from the united States Library of Congress.” [Amatore Decl. at ¶ 2.]
Sadeghi “purchased Meadow Gold as part of an effort to preserve and restore Hawai'i's dairy farms and dairy industry,” and “[t]he Meadow Gold brand and IP was key to MGD[H]'s local dairy revitalization strategy[.]” [Sadeghi Decl. at ¶¶ 5-6.] Sadeghi relied on the fact that he would be able to continue to follow Dean Foods's practice of using Hawai'i-themed IP, without regard to the issue of whether Meadow Gold brand milk products came from a local source or from the mainland. [Id. at ¶ 7.] Sadeghi has spent over $625,000 to use and expand upon Meadow Gold's Hawai'i-themed marketing, including the “Made with Aloha” tagline. [Id. at ¶ 10.] According to Sadeghi, the Dairy Farmers did not have any role in the determination of the content on Meadow Gold packaging. [Id. at ¶ 11.]
Sadeghi states that, with one exception that is not relevant to the instant case, all of the current Meadow Gold brand products “are essentially identical to the products previously offered by Meadow Gold under Dean Foods.” [Id. at ¶ 8.] It is Defendants' position that the Hawai'i-themed taglines at issue in this case were in use long before MGDH acquired the brand. According to Sadeghi, “Meadow Gold . . . was founded in 1897 as the Oahu Dairymen's Association brand”; Meadow Gold's “beloved mascot, ‘Lani Moo,' . . . was introduced in 1949”; and Meadow Gold has sponsored the American Youth Soccer Association (“AYSO”) in Hawai'i for over fifty years. [Id. at ¶ 6.] Meadow Gold was using the tag-line “Made with Aloha” before Sadeghi purchased the brand, and he states that tagline was used by Dean Foods. Id. at ¶ 10; see also Defs.' CSOF, Decl. of Jerry Linville (“Linville Decl.”) at ¶ 4 (“During the entire time I worked for Meadow Gold under Dean Foods, the brand used the tagline ‘Hawaii's Dairy' in its advertising and marketing materials”).
Jerry Linville (“Linville”) is MGDH's Foodservice and Military Contracts Manager. [Linville Decl. at ¶ 2.] He “worked for the Meadow Gold brand under Dean Foods for sixteen years in various positions, including sales manager.” [Id. at ¶ 3.]
Defendants characterize Meadow Gold's marketing of Lani Moo as “aggressive[] and consistent[] since her introduction in 1949.” See Motion, Mem. in Supp. at 6 (citing Amatore Decl. ¶ 2, Ex. 3-12 (selection of newspaper articles and advertisements featuring Lani Moo dating from May 22, 1950 to June 30, 1991)); see also id. at 6 & n.3 (citing Amatore Decl. ¶ 2, Ex. 6 (Bob Krauss, In One Ear, THE HONOLULU ADVERTISER, Nov. 22, 1960 (“There is not one kid in the 50th state who is not on speaking terms with Lani Moo.”)); The Honolulu Zoo Bids Aloha to Beloved Lani Moo, HONOLULU MAGAZINE, April 26, 2022, Available at https://www.honolulumagazine.com/the-honolulu-zoo-bids-aloha-tobeloved-lani-moo/#:~:text=%E2%80%9CWe%20are%20deeply%20saddened%20by,She%20wi ll%20be%20dearly%20missed.%E2%80%9D (last visited July 20, 2023) (reporting the passing of the latest Meadow Gold Dairies ambassador, “Lani Moo” and noting that “she has been the ambassador of health and nutrition for Meadow Gold for more than 70 years”)).
The advertisements that Defendants' counsel obtained from the Library of Congress also show that Meadow Gold was using the tagline “Hawaii's Dairy” since at least 1990. See Amatore Decl., Exh. 11 (advertisement dated April 25, 1990), Exhs. 13-15 (advertisements dated 1992-1999). Meadow Gold's advertising also emphasized its origins as the Dairymen's brand. See id., Exhs. 16-17 (2000 and 2008 advertising materials referencing “Dairymen's” origins).
Defendants submit photographs from November 25, 2005, October 2007, and late 2010, showing Meadow Gold products bearing the “Hawaii's Dairy” label. [Linville Decl. at ¶¶ 5-7; id., Exhs. 21-23.] Linville states that all of the Meadow Gold products depicted in those photographs contained dairy from mainland sources. [Linville Decl. at ¶¶ 5-7.] Defendants also submit evidence that, in 2013, Meadow Gold and VIVA, a Meadow Gold “sister brand,” went through a graphics upgrade. [Id. at ¶ 8; id., Exh. 24 (Meadow Gold VIVA Branded Milk Graphics Upgrade information sheet circulated within Meadow Gold during the fourth quarter of 2013).] “After the graphics upgrade, all milk sold under the Meadow Gold brand, including milk sourced from the mainland, had labels that included ‘Hawaii's Dairy.'” Linville Decl. at ¶ 8; see also id., Exh. 25 (photograph taken by Linville in February 2014, showing milk cartons with the new graphics being sold at a commissary), Exh. 26 (approved product image proofs, dated March 2015).
Defendants also submit an email chain from April 2020, showing that Joni Marcello (“Marcello”) of Dean Foods, the Area Sales Director - Hawaii/Meadow Gold Dairies, included “Made with Aloha” and an image of Lani Moo within her email-signature. [Linville Decl., Exh. 27 (emails from Marcello to Linville and others, dated from 4/25/20 to 4/28/20).]
JB Brands, Inc., a Honolulu marketing company, has worked with the Meadow Gold brand since 1999. [Defs.' CSOF, Decl. of Jon Bryan (“Bryan Decl.”), at ¶¶ 2-3. Bryan states:
Jon Bryan (“Bryan”) is the founder of JB Brands, Inc. [Bryan Decl. at ¶ 2.]
Over the years, I have developed and delivered marketing strategies and advertising materials for Meadow Gold. During all of my time working with Meadow Gold, its branding has always been very locally-focused, and has always drawn on its Hawai'i roots. As far as I can recall, Meadow Gold has always used the tagline “Hawaii's Dairy.” Likewise, as far back as I can recall,
Meadow Gold has used romance copy referencing its origins as the Dairymen's Association.[Id. at ¶ 4.] Defendants submit examples of the advertising and marketing materials that Bryan created for Meadow Gold:
-a 2009 television commercial that “draws heavily on local imagery and verbiage, and emphasizes its local roots and long history in the islands”; [id. at ¶ 5; id., Exh. 18;]
-a banner created in 2013 for the Honolulu Zoo stating, “Welcome to the Home of Lani Moo!” and including the phrase “Hawaii's Dairy”; [Bryan Decl. at ¶ 6; id., Exh. 19;] and
-a flyer created in 2013 for an AYSO promotion at a University of Hawai'i women's soccer game, identifying Meadow Gold as a sponsor and including the phrase “Hawaii's Dairy”; [Bryan Decl. at ¶ 7; id., Exh. 20;].Bryan states these “are only a small sampling of the many advertisements and marketing materials [he has] developed for Meadow Gold, all of which have for decades invoked Meadow Gold's local origins. [Bryan Decl. at ¶ 8.]
II. Plaintiff's Evidence
Plaintiff raises evidentiary objections to many of the statements in the Sadeghi Declaration about the history of Meadow Gold's operations. Plaintiff argues his statements lack foundation and some of his statements are based upon an article that is not authenticated and are not accurate representations of the content of the article. See Pltf.'s CSOF at ¶¶ 7, 9-13 (citing FRE 602, 802, 901). It is not necessary for this Court to resolve Plaintiff's objections because the statements that Plaintiff objects to are not necessary to the resolution of the Motion. To the extent that any of the materials that Plaintiff objected to are cited in this Order, they are cited is for background purposes only, and they are not relied upon by this Court.
Plaintiff does “admit [that] Hawaii milk production began declining after 1982 and [that] certain imports began in 1984,” but Plaintiff disputes Defendants' statements about the degree of the decline and the import of Mainland Milk Products. See id. at ¶ 8; see also Defs.' CSOF at ¶ 8. Plaintiff admits that: -Meadow Gold “marketed Lani Moo in various forms since 1949”; [Pltf.'s CSOF at ¶ 14;]
-“Lani Moo has been featured in advertising for decades”; [id. at ¶ 17;] and
-Meadow Gold has used the phrase “Hawaii's Dairy” in its advertisements since 1990 (although Plaintiff disputes that the phrase began to appear on milk containers in 1990), [id. at ¶ 18].
Plaintiff distinguishes between Mainland Milk Products that are packaged in Hawai'i and Mainland Milk Products that are packaged on the mainland. See id. at ¶ 21 (“The majority of the MGDH products depicted do not reflect ‘Hawaii's Dairy' and those that do were packaged in Hawaii; no labels created for milk packaged on mainland reflected ‘Hawaii's Dairy' prior to MGD[H].”); id. at ¶ 22 (stating Plaintiff “admits some mainland tanker milk processed and packaged in Hawaii may have included ‘Hawaii's Dairy' but dispute that phrase was on labels created for milk packaged on mainland”).
Plaintiff also appears to contest only the degree to which contested images and phrases were used. See, e.g., Defs.' CSOF at ¶ 24 (“After the graphics upgrade, all milk sold under the Meadow Gold brand, whether sourced from the mainland or not, had labels that included ‘Hawaii's Dairy.'”); Pltf.'s CSOF at ¶ 24 (disputing Defs.' ¶ 24, but stating only that: “All milk did not contain ‘Hawaii's Dairy' after the graphics upgrade.”); Pltf.'s CSOF, Decl. of Joni Marcello (“Marcello Decl.”) at ¶ 7 (“To the best of my recollection, Dean Foods began importing into Hawaii fluid milk and dairy products containing milk from cows on the U.S. mainland that were processed, packaged, and labeled on the U.S. mainland with the ‘Meadow Gold' brand, such as extended shelf life (‘ESL') and other milk or dairy products (collectively, ‘Mainland Packaged Milk Products').” (emphases omitted)).
Joni Marcello was employed by Dean Foods Company or its predecessor Southern Foods Group, LLC (collectively in the Marcello Declaration “Dean Foods”) from November 1999 to April 2020. Her positions included, inter alia, Area Sales Director of Hawaii from 2008-2017 and 2018-2020. [Marcello Decl. at ¶ 1.] She was a MGDH Sales Manager from mid-2020 to May 2021, and she has been employed by Plaintiff since August 2021. [Id.]
According to Marcello:
3. It is my understanding based on information and materials I gathered during my time with Dean Foods that the “Meadow Gold” brand originated on the U.S. mainland and by the 1950s was owned by Beatrice Foods Co., which purchased the Dairymen's Association in 1953.
4. In or about 1959, I understand that the Dairymen's Association became known as “Meadow Gold Dairies Hawaii” ....[Marcello Decl. at pgs. 2-3.] Plaintiff also points out that Sadeghi acknowledged during his deposition that the Meadow Gold brand originated in the Continental United States. [Pltf.'s CSOF, Decl. of Kelly G. LaPorte (“LaPorte Decl.”), Exh. B (trans. excerpts of Sadeghi's 9/18/23 video conference deposition (“Sadeghi Depo.”)) at 68.] According to Meadow Gold Dairy's website, Meadow Gold started in 1901 as a creamery in Topeka, Kansas. [LaPorte Decl., Exh. L (screenshots of various pages on MGD's website (https://www.meadowgolddairy.com), taken by Mr. LaPorte on 6/29/23) at PageID.1353.]
When she was Dean Foods' Area Sales Director for Hawai'i, Marcello “was involved in the review and approval of labels used on Dean Foods' products sold in Hawaii that also included the Dean Foods corporate packaging and regulatory team.” [Marcello Decl. at ¶ 8.] According to Marcello, Dean Foods had a policy that Hawai'i-themed content would not be used in the labels for Mainland Packaged Milk Products because it might cause customer confusion. [Id. at ¶ 9.] She further states that,
labels created specifically for use on Mainland Packaged Milk Products never contained Hawaii-related content, including the phrases “Hawaii's Dairy,” “Made with Aloha” and “MOOhalo,” a depiction of Lani Moo, reference to “Dairymen's” or “Dairymen's Association,” or the following statement:
In 1897 seven O'ahu dairy farms united as the Dairymen's Association, Ltd, to manufacture fresh milk for the community. Through the support of Hawai'i families, we grew to become Meadow Gold Dairies in 1959. Today we operate statewide and continue to manufacture fresh milk, dairy, juice and nectar products in Hawai'i. Generations of loyal Island families enable us to maintain our tradition of giving back to the communities we serve.[Id. at ¶ 10.] The passage that Marcello quotes will be referred to as the “Dairymen's Text.” Marcello also states that these phrases and the Dairymen's Text were not used on labels for milk products that Dean Foods processed and packaged in Hawai'i. [Id. at ¶ 14.] Further,
[d]uring different periods of time, the phrase “Hawaii's Dairy” was used on labels for some products processed and packaged by Dean Foods in Hawaii that could contain milk that was imported in large tanks from dairies on the U.S. mainland (“Mainland Tanker Milk”). It was never used universally on all milk products processed and packaged by Dean Foods in Hawaii under the Meadow Gold brand.[Id. at ¶ 13.]
As to the graphics upgrade described in the Linville Declaration, Marcello denies that the purpose of upgrade was to add “Hawaii's Dairy” on all Meadow Gold product labels, and she states the upgrade was used to address milk purity issues. [Id. at ¶ 15.]
As to the MGDH Acquisition, Marcelo states MGDH did not purchase all of Dean Foods' assets in Hawai'i, and one of the things that MGD did not purchase was the dairy processing facility in Honolulu where Meadow Gold brand products, and other products for other brands, were packaged and distributed (“Honolulu Dairy Processing Facility”). [Id. at ¶ 5.] According to Marcelo, the Honolulu Dairy Processing Facility had been the largest dairy processing facility in the state and, because MGDH chose not to purchase it, MGDH “began obtaining a significant amount of milk products packaged and labeled . . . in San Marcos, California by Hollandia . . . .” [Id. at ¶¶ 5-6.]
The assets involved in the MGDH Acquisition did not constitute the majority of Dean Foods' assets. DFA purchased the majority of Dean Foods' assets, including Meadow Gold's operations in the continental United States and the Meadow Gold trademark. MGDH has a license from DFA to utilize the Meadow Gold brand. [LaPorte Decl., Exh. B (Sadeghi Depo.) at 70-71.]
In the MGDH Acquisition, MGDH refused to acquire Dean Foods' obligations to MGD employees in Hawai'i, including any obligations under the collective bargaining agreements that the Hawai'i employees had. MGDH also refused acquire the obligations to fund the Hawai'i employees' benefit plans or pension plans. [Id. at 75.] Plaintiff also asserts the MGDH Acquisition “was conditioned on [MGDH] not being deemed a ‘legal successor' or ‘alter ego' of Dean Foods.” [Pltf.'s CSOF at ¶ 35 (citing LaPorte Decl., Exh. C (4/28/20 Bankruptcy Order) at 26, ¶ 16) (emphasis in original); Defs.' Reply CSOF at ¶ 35 (stating Plaintiff's ¶ 35 is irrelevant but it is disputed in part on other grounds).] Paragraph 16 of the Bankruptcy Order states:
Exhibit C to the LaPorte Declaration is the Order (A) Authorizing Sale of Certain of the Debtors' Hawaii Assets to Logix Capital, LLC and Affiliates Free and Clear of All Claims, Liens, Interests, and Encumbrances, (B) Authorizing the Debtors to Enter into and Perform Their Obligations Under the Asset Purchase Agreement and Related Documents, (C) Vacating that Certain Order Authorizing Sale of the Debtors' Hawaii Assets to Industrial Realty Group, LLC, and (D) Granting Related Relief, filed on April 28, 2020 in In re Southern Foods Group, LLC, et al., Case No. 19-36313 (DRJ), in the United States Bankruptcy Court for the Southern District of Texas, Houston Division (“Bankruptcy Order”). [Dkt. no. 148-8.]
Paragraphs 1-34 of Plaintiff's CSOF respond to Defendants' CSOF, and paragraphs 35-41 are Plaintiff's Additional Material Facts.
16. The Buyer shall not be deemed, as a result of any action taken in connection with the [Asset Purchase Agreement (“APA”), the consummation of the Transaction contemplated by the APA, or the transfer or operation of the Acquired Assets, including the Assigned Contracts, to (a) be a legal successor or otherwise be deemed a successor to the Debtors for any purpose (other than, for the Buyer, with respect to any obligations as an assignee under the Assigned Contracts arising after the Closing), (b) have, de facto or otherwise, merged with or into the Debtors, (c) be an alter ego or a mere continuation or substantial continuation of the Debtors, including, without limitation, within the meaning of any foreign, federal, state, or local revenue law, pension law, MEPPA, ERISA, the Consolidated Omnibus Budget Reconciliation Act (COBRA), WARN (as defined below), CERCLA (as defined below), and any other environmental, health, and safety laws, the Fair Labor Standard Act, Title VII of the Civil Rights Act of 1964 (as amended), the Age Discrimination and Employment Act of 1967 (as amended), the Americans with Disabilities Act of 1990 (as amended), the Federal Rehabilitation Act of 1973 (as amended), and the National Labor Relations Act, 29 U.S.C. § 151, et seq....[LaPorte Decl., Exh. C (Bankruptcy Order) at 26 (dkt. no. 148-8 at PageID.1089).]
Attached to the Bankruptcy Order is a partial version of the Asset Purchase Agreement - Dated as of April 22, 2020 by and Among Dean Foods Company, Each of the Subsidiaries of Dean Foods Company Listed on the Signature Pages Hereto, MGD Acquisition, LLC and ARS Holding, LLC (“APA”). [Dkt. no. 148-8 at PageID.1106-228.] The Schedules to the APA are not included. See LaPorte Decl., Exh. C at PageID.1110 (list of Schedules). MGD Acquisition, LLC is identified as the “Operations Buyer” and ARS Holding, LLC is identified as the “Owned Real Property Buyer.” [Id. at PageID.1111 (APA at 1).] Sadeghi signed the APA as both the Manager of MGD Acquisition, LLC and the Manager of ARS Holding, LLC. [Id. at PageID.1178.]
According to Marcello, one of the first projects after the MGDH Acquisition was the development of new labels for Meadow Gold products sold in Hawai'i. She states the Dairy Farmers were consulted regarding the labels' content, and they had the opportunity to provide comments and objections to the elements of the design. [Marcello Decl. at ¶ 16.] Because MGDH was “focused on the concept of marketing MGD[H] as a ‘local brand,'” it decided to include Hawai'i-themed content -including, inter alia, “Hawaii's Dairy,” “Made with Aloha,” images of Lani Moo, and the Dairymen's Text - on all labels, including those for Mainland Packaged Milk Products. [Id. at ¶¶ 17-18.] Marcello states she “raised the question of whether MGD[H] should use Hawaii-themed content on Mainland Packaged Milk Products and, despite acknowledgement that there could be some risk of challenge, the decision was made to proceed.” Id. at ¶ 20; see also id., Exh. A (screenshots of May 22, 2020 email chain between Marcello, Sadeghi, and Glenn Muranaka (“Muranaka”)).
Plaintiff submits package label proofs for Meadow Gold brand products to be sold in Hawai'i that were produced by Defendants during discovery. [LaPorte Decl., Exh. D.] Plaintiff also submits photographs of Meadow Gold brand products purchased by Plaintiff in Hilo, Hawai'i. [Id., Exh. E (photographs compiled by Mr. LaPorte).] Plaintiff argues the labels that MGDH used after April 2020 “included, among other things, phrases, statements, and words that Dean Foods had never placed on similar milk products sold at retail in Hawaii and all of which suggested that the Mainland Milk Products originated in Hawaii.” [Mem. in Opp. at 5.]
Chad Buck (“Buck”) formed Plaintiff in May 1999, and he is currently Plaintiff's Manager. Plaintiff began its milk and dairy distribution in approximately 2008. [Pltf.'s CSOF, Decl. of Chad Buck (“Buck Decl.”) at ¶¶ 1-2.] Buck states that,
[p]rior to May 2020, I was aware that Dean Foods imported into Hawaii milk and dairy products containing milk from cows on the U.S. mainland that were processed, packaged, and labeled on the U.S. mainland with the “Meadow Gold” brand, such as extended shelf life (“ESL”) and other milk or dairy products (collectively, “Mainland Packaged Milk Products”).[Id. at ¶ 5.] “At some point,” Buck learned that Dean Foods could not meet its demand for milk and dairy products in Hawai'i because of the closure in approximately 2007 of the last major dairy farm on Island of O'ahu and that Dean Foods would start importing Mainland Tanker Milk to be processed in the Honolulu Dairy Processing Facility. [Id. at ¶ 12.] However, when he learned that, Buck did not know whether the milk would be sold as Meadow Gold brand milk or as another brand. [Id.] At some point prior to May 2020, Buck learned that Dean Foods was processing and packaging Mainland Tanker Milk at the Honolulu Dairy Processing Facility and selling it in Hawai'i under the Meadow Gold brand. [Id. at ¶ 13.] Buck was aware that some of products processed at the Honolulu Dairy Processing Facility “had the phrase ‘Hawaii's Dairy' on them, and other did not, and [he] did not know the reason why.” [Id.] However, he was not aware that any Meadow Gold brand products containing Mainland Tanker Milk had the phrases “Hawaii's Dairy” or “Made with Aloha” on them prior to the May 2020. [Id. at ¶ 14.]
In addition, Buck was never aware: of any Meadow Gold brand products that contained Mainland Packaged Milk Products for sale in Hawai'i being labeled with the phrase “Hawaii's Dairy”; or any Meadow Gold brand product sold in Hawai'i with the phrase “Made with Aloha,” with statement such as those in the Dairymen's Text, nor with the phrase “MOOhalo.” [Id. at ¶¶ 6-11.] He makes the same assertions regarding Meadow Gold brand milk or dairy products containing Mainland Tanker Milk, except that he also asserts the image of Lani Moo was not used on those products. See id. at ¶¶ 14-17.
III. The Instant Motion
In the instant Motion, Defendants argue the images and phrases at issue in this case have been used with the Meadow Gold brand in Hawai'i “for over a decade, if not longer,” even though Meadow Gold “was selling principally ‘mainland milk' ....” [Motion, Mem. in Supp. at 1-2.] Defendants contend Plaintiff's Lanham Act claim is barred by the doctrine of laches, and Plaintiff's state law claims are barred by either the laches doctrine or the applicable statute of limitations. [Id. at 1.] Defendants therefore ask this Court to grant summary judgment in its favor as to all of Plaintiff's claims. [Id. at 23.]
DISCUSSION
I. Waiver
At the outset, this Court must address Plaintiff's argument that Defendants waived any laches and statute of limitations defenses by failing to plead them in their Answer. [Mem. in Opp. at 6 (citing Fed.R.Civ.P. 8(c)(1), 10(b), 12(b)).] Defendants do not contest the fact that no laches defense is asserted in their Answer, but they argue that this does not constitute a waiver of the defense. [Reply at 11.]
The Ninth Circuit has “liberalized the requirement that defendants must raise affirmative defenses in their initial pleadings. A defendant may thus raise an affirmative defense for the first time in a motion for judgment on the pleadings, but only if the delay does not prejudice the plaintiff.” Owens v. Kaiser Found. Health Plan, Inc., 244 F.3d 708, 713 (9th Cir. 2001) (citations and internal quotation marks omitted). The Ninth Circuit has also recognized that:
There is no prejudice to a plaintiff where an “affirmative defense would have been dispositive” if asserted “when the action was filed.” Owens v. Kaiser Found. Health Plan, Inc., 244 F.3d 708, 713 (9th Cir. 2001). Rather, a party must point to a “tangible way in which it was prejudiced by the delay.” See Ledo Fin. Corp. v. Summers, 122 F.3d 825, 827 (9th Cir. 1997).Garcia v. Salvation Army, 918 F.3d 997, 1008-09 (9th Cir. 2019).
Plaintiff argues Defendants should not be allowed to raise a laches/statute of limitations defense for the first time in the instant Motion because Plaintiff has been prejudiced by Defendants' delay in asserting the defense. According to Plaintiff, the delay
deprived [Plaintiff] of a fair and meaningful opportunity to develop evidence to respond to the Motion. Among other things, [Plaintiff] had propounded multiple written discovery requests and conducted [Federal] Rule [of Civil Procedure] 30(b)(6) depositions of all Defendants before the Motion was filed. Had [Plaintiff] known that Defendants would assert laches and statute of limitations defenses, it would have included discovery aimed at those defenses, identified specific topics relevant to those defenses in the 30(b)(6) deposition notices, and examined each deponent on this issue.[Mem. in Opp. at 9 (citing LaPorte Decl. ¶ 16).]
On June 26, 2023, Defendants' counsel met with Plaintiff's counsel for a prefiling conference regarding the Motion, as required by Local Rule 7.8. See Defs.' Reply CSOF, Supplemental Declaration of Erika L. Amatore (“Amatore Reply Decl.”) at ¶ 4. At that time, the discovery period was still open. See Second Amended Rule 16 Scheduling Order, filed 4/3/23 (dkt. no. 104), at ¶ 5a (stating the discovery deadline is October 20, 2023). Thus, there was sufficient time for Plaintiff to conduct discovery regarding the issues identified during the prefiling conference.
Although Plaintiff's counsel emphasizes that the Rule 30(b)(6) depositions for all Defendants had been conducted by the time Defendants filed the Motion, [LaPorte Decl. at ¶ 15,] Defendants' counsel points out that the Rule 30(b)(6) depositions of Hollandia's and MGDH's witnesses were conducted after the prefiling conference, and Plaintiff's counsel questioned those witnesses about issues related to the Motion, [Amatore Reply Decl. at ¶ 6]. Defendants acknowledge that Heritage's and Saputo's Rule 30(b)(6) witnesses were deposed prior to the prefiling conference, but Defendants point out that Plaintiff never requested to reopen those depositions to address the issues raised in the Motion. [Id. at ¶ 5.] Further, Sadeghi's deposition was conducted after the filing of the Motion, and Plaintiff's counsel questioned him about issues related to the Motion. [Id. at ¶ 7.]
Plaintiff also served multiple discovery requests after the prefiling conference, and those requests addressed issues raised in the Motion. [Id. at ¶ 8.] For example, Plaintiff requested that MGDH produce “[a]ll Documents depicting any dairy products sold in Hawaii by Dean Foods or its predecessors at any time from 1994 through 2020 with the phrase ‘Made with Aloha' on the container.” [Amatore Reply Decl., Exh. 32 (Plaintiff Hawaii Foodservice Alliance, LLC's Fifth Set of Requests for Production and Answers to Interrogatories to Defendant Meadow Gold Dairies Hawaii, LLC, dated 7/28/23) at Request for Production No. 46.] Plaintiff made similar requests regarding Lani Moo's image, “MOOhalo,” “Dairymen's Association,” the Dairymen's Text, “Hawaii's Dairy,” [Id. at Request for Production Nos. 47-55.]
To the extent that Plaintiff believed Defendants' delay in asserting their laches/statute of limitations defense impaired Plaintiff's ability to respond to the Motion, Plaintiff could have sought additional time to conduct discovery to oppose the Motion. See Fed.R.Civ.P. 56(d)(2). Plaintiff, however, did not do so. This Court finds that, under the circumstances of this case, Plaintiff has failed to identify “a tangible way in which it was prejudiced by the delay” in asserting Defendants' laches/statute of limitations defense. See Garcia, 918 F.3d at 1009 (quotation marks and citation omitted). This Court therefore rejects Plaintiff's waiver argument and will consider Defendants' laches/statute of limitations defense. This Court next turns to the merits of Defendants' laches defense.
II. Laches
The affirmative defense of laches “is an equitable time limitation on a party's right to bring suit, which is derived from the maxim that those who sleep on their rights, lose them.” Miller v. Glenn Miller Prod., Inc., 454 F.3d 975, 997 (9th Cir. 2006) (per curiam) (citations and internal quotation marks omitted).
“The application of the defense of laches is committed to the sound discretion of the district court.” A.C. Aukerman Co. v. R.L. Chaides Const. Co., 960 F.2d 1020, 1032 (Fed. Cir. 1992), abrogated on other grounds by SCA Hygiene Prod. Aktiebolag v. First Quality Baby Prod., LLC, --- U.S.----, 137 S.Ct. 954, 197 L.Ed.2d 292 (2017). As an equitable doctrine, laches is not applied using “mechanical rules.” Id. (quoting Holmberg v. Armbrecht, 327 U.S. 392, 396, 66 S.Ct. 582, 90 L.Ed. 743 (1946)). A court must look at all the “particular facts and circumstances” and “weigh the equities of the parties.” Id.Bluetooth SIG, Inc. v. FCA U.S. LLC, 463 F.Supp.3d 1169, 1196 (W.D. Wash. 2020).
On appeal, Bluetooth SIG was vacated and remanded on other grounds. 30 F.4th 870 (9th Cir. 2022).
Laches can be asserted to “defeat an otherwise valid claim under the Lanham Act.” La Quinta Worldwide LLC v. Q.R.T.M., S.A. de C.V., 762 F.3d 867, 878 (9th Cir. 2014) (quotation marks and citation omitted). It can also be asserted against Hawai'i Revised Statutes Chapter 480 UMOC claims. See Kowalski v. Anova Food, LLC, Civil No. 11-00795 HG-RLP., 2014 WL 8105172, at *14 (D. Hawai'i Dec. 31, 2014) (“The laches defense is applicable to patent infringement claims as well as Lanham Act claims for false advertising and state law claims for unfair competition.” (citing Jarrow Formulas, Inc. v. Nutrition Now, Inc., 304 F.3d 829, 835 (9th Cir. 2002))).
For purposes of the instant Motion, it is not necessary to for this Court to address the merits of Plaintiff's claims. To the extent that Plaintiff has viable claims, the Motion asks this Court to determine whether Defendants have valid defenses that preclude Plaintiff from recovering.
This Court is not aware of any case law directly addressing the issue of whether a laches defense can be asserted against a Chapter 481A claim. However, because the nature of Plaintiff's Chapter 481A claim is similar to Plaintiff's Lanham Act claim and UMOC claim, this Court concludes that the same limitations period applies and that a laches defense is also available. See Second Amended Complaint at ¶ 120 (alleging Defendants violated Chapter 481A by, inter alia, using “‘deceptive representations or designations of geographic origin in connection with goods' and causing ‘likelihood of confusion or misunderstanding as to the source' of goods in the conduct of one's business, vocation, or occupation”); Flynn v. Marriott Ownership Resorts, 165 F.Supp.3d 955, 964-65 (2016) (citations omitted) (applying Chapter 480 limitations period to Chapter 481A and Haw. Rev. Stat. Chapter 514E claims because “an examination of the allegations . . . reveals that the nature of the claim is ultimately a Chapter 480 [unfair and deceptive acts and practices] claim” (citing Au v. Au, 63 Haw. 210, 214, 626 P.2d 173, 177 (1981))).
Plaintiff's Section 708-781 claim is not subject to the Chapter 480 limitations period. See Hawaii Health & Welfare Tr. Fund for Operating Eng'rs v. Philip Morris, Inc., 52 F.Supp.2d 1196, 1200 (D. Hawai'i 1999) (applying two-year limitations period in Haw. Rev. Stat. § 657-7 to a § 708-781 claim). However, because the Section 708-781 claim is similar in nature to Plaintiff's Lanham Act false advertising claim, to which laches can apply, this Court concludes that a laches defense is also available against Plaintiff's Section 708-781 claim.
A. Tacking
This Court must first address MGDH's argument that, for purposes of laches, MGDH “may ‘tack' [on] the time that the intellectual property at issue was owned and used by [MGDH]'s predecessor.” [Motion, Mem. in Supp. at 2 n.1 (citations omitted).]
“The federal circuit has not, in the laches context, prescribed the standard to be applied in determining whether an alleged infringer may ‘tack on' delay periods from prior infringing activity[.]” Engineered Prods. Co. v. Donaldson Co., Inc., 165 F.Supp.2d 836, 854 (N.D. Iowa 2001). Regardless, there “never has been any magic in corporate entity[,]” and disallowing tacking for a successor infringing corporation “is not in the ends of justice” and promotes “form-over-substance.” Raber v. Pittway Corp., No. C 92-2581, 1994 WL 374542, at *3 (N.D. Cal. July 11, 1994) (quoting Am. Home Prods. Corp. v. Lockwood Mfg. Co., 173 U.S.P.Q. 486 (S.D. Ohio 1972), aff'd, 483 F.2d 1120 (6th Cir. 1973)). Consequently, several courts have adopted the rule that tacking should be allowed “in cases where only the ownership of the defendantbusiness changes hands.” Id. (quoting 6 Donald S. Chisum, Patents, § 19.05 [2][a][ii]); Radar Indus., Inc. v. Cleveland Die & Mfg. Co., 632 F.Supp.2d 686, 692 (E.D. Mich. 2009); Five Star Mfg., Inc. v. Ramp Lite Mfg., Inc., 44 F.Supp.2d 1149, 1156 (D. Kan. 1999) (a defendant may tack when there is “some formal transfer of the technology and good-will of the accused product”); Sec. & Access (Elec. Media) Ltd. v. Nokia, Inc., No. 95-1689, 1997 WL 158308, at *4 (M.D. Fla. Mar.24, 1997).Enel Co. v. Schaefer, No. 12-cv-1369-IEG(WMC), 2013 WL 5727421, at *6 (S.D. Cal. Oct. 22, 2013) (alterations in Enel Co.) (adopting rule allowing tacking in a patent infringement action).
Further, there is no strict definition of a successor or party-in-privity that must be met for a party to avail itself of tacking; the issue of whether tacking is available turns on the particular circumstances of the case. For example, in Bluetooth SIG, the district court ruled:
weighing the facts and circumstances, the Court finds that FCA [US LLC] may “tack on” Chrysler's use of Bluetooth[ SIG, Inc.]'s trademarks for purposes of laches. See, e.g., Reese v. AT & T Mobility II, LLC, No. 2:13-cv-05198-ODW-PLA, 2014 WL 1873046, at *5 (C.D. Cal. May 9, 2014) (“So long as the corporate name change did not have the effect of concealing the entity's identity- such that [plaintiff] was impeded from bringing suit-there is no principled reason to refuse to allow AT & T to assert Cingular's laches defense. To hold otherwise to [sic] would be to exalt form over substance.”) (citation omitted); Enel Co., LLC v. Schaefer, No. 12-CV-1369-IEG WMC, 2013 WL 5727421, at *4 (S.D. Cal. Oct. 22, 2013) (collecting cases and finding that “the Federal Circuit did not explicitly or implicitly narrowly define a successor or privity in the manner that Plaintiffs suggest”).463 F.Supp.3d at 1197 (alterations in Bluetooth SIG).
MGDH did not acquire all of Dean Foods' assets in Hawai'i. See, e.g., Sadeghi Reply Decl. at ¶ 4 (explaining why the Honolulu Dairy Processing Facility was not part of the MGDH Acquisition). However, the MGDH Acquisition did involve substantial Meadow Gold assets in Hawai'i, “including its intellectual property, product formulations, goodwill, Hilo processing facility, and Maui and Kauai distribution operations,” and MGDH later acquired a distribution center in Waipahu in a separate transaction. [Sadeghi Reply Decl. at ¶ 5.] Further, it undisputed that, since the acquisition from Dean Foods, MGDH has been the only entity distributing Meadow Gold brand products in Hawai'i.
Plaintiff emphasizes that MGDH refused to assume Dean Foods' obligations to Meadow Gold employees in Hawai'i -including obligations under collective bargaining agreements, benefit plans, and pension plans - and the bankruptcy court expressly stated that MGDH was not successor, alter ego, or continuation of Dean Foods. See Mem. in Opp. at 4-5 (citing LaPorte Decl., Exh. B (Sadeghi Depo.) at 75, Exh. C (4/28/20 Bankruptcy Order) at 26, ¶ 16). However, as previously noted, there is no strict definition of a successor or party-in-privity that must be satisfied in order for tacking to apply. See Bluetooth SIG, 463 F.Supp.3d at 1197 (citing Enel Co., LLC v. Schaefer, No. 12-CV-1369-IEG WMC, 2013 WL 5727421, at *4 (S.D. Cal. Oct. 22, 2013)). MGDH effectively assumed Dean Foods' distribution of the Meadow Gold brand in Hawai'i, and the specific portions of Dean Foods' Hawai'i operations that were excluded from the MGDH Acquisition “did not have the effect of concealing [MGDH's] identity - such that [Plaintiff] was impeded from bringing suit.” See Reese, 2014 WL 1873046, at *5. Therefore, having considered the “particular facts and circumstances” of this case and “weigh[ing] the equities of the parties,” this Court concludes that tacking is available to MGDH. See A.C. Aukerman, 960 F.2d at 1032.
B. MGDH's Laches Defense
A two-step analysis applies when a laches defense is asserted.
First, we determine whether the limitations period for laches has expired. If the period has not expired before suit was filed, there is a strong presumption against the laches defense. [Tillamook Country Smoker, Inc. v. Tillamook Cnty. Creamery Ass'n, 465 F.3d 1102, 1108 (9th Cir. 2006).] That presumption is reversed if the laches period expired before the suit was filed. Id. . . . Second, if the laches period expired before suit was filed, we apply the factors listed in E-Systems, Inc. v. Monitek, Inc., 720 F.2d 604, 607 (9th Cir. 1983), to determine whether “the trademark owner's delay in filing suit was unreasonable and, therefore, barred,” Tillamook, 465 F.3d at 1108. . . .
....To prove that a delay in filing was unwarranted, the party asserting a laches defense must show that the following six factors weigh in its favor:
(1) strength and value of trademark rights asserted; (2) plaintiff's diligence in enforcing mark; (3) harm to senior user if relief denied; (4) good faith ignorance by junior user; (5) competition between senior and junior users; and (6) extent of harm suffered by junior user because of senior user's delay.
E-Systems, 720 F.2d at 607; see also Tillamook, 465 F.3d at 1108. To benefit from this equitable defense, “[t]he party asserting laches must demonstrate that it has ‘suffered prejudice as a result of plaintiff's unreasonable delay in filing suit.'” Tillamook, 465 F.3d at 1108 (quoting Jarrow Formulas, Inc. v. Nutrition Now, Inc., 304 F.3d 829, 835 (9th Cir. 2002)).La Quinta, 762 F.3d at 878 (some alterations in La Quinta).
As to the first step,
[t]he limitations period for laches starts “from the time the plaintiff knew or should have known about its potential cause of action.” [Jarrow Formulas, 304 F.3d] at 838; see also ProFitness Physical Therapy Center v. Pro-Fit Orthopedic and Sports Physical Therapy P.C., 314 F.3d 62, 70 (2d Cir. 2002) (“[A] plaintiff should not be obligated to sue until its right to protection has ripened such that plaintiff knew or should have known . . . that [it] had a provable infringement claim against defendant.”); Sara Lee Corp. v. Kayser-Roth Corp., 81 F.3d 455, 462 (4th Cir. 1996) (holding that the trademark owner need not sue “until the likelihood of confusion looms large”) (citation and internal quotation marks omitted).Tillamook Country Smoker, 465 F.3d at 1108 (some alterations in Tillamook).
As previously noted, Plaintiff admits that Lani Moo was used in Meadow Gold marketing and advertising for decades, and that the phrase “Hawaii's Dairy” was used in Meadow Gold advertisements since 1990. [Pltf.'s CSOF at ¶¶ 14, 17-18.] Plaintiff also presented testimony acknowledging the historical connection between the Dairymen's Association and Meadow Gold Dairies Hawaii. See Marcello Decl. at ¶ 4. Further, although the parties dispute the degree, Plaintiff admits that the production of milk in Hawai'i began to decline after 1982 and that milk imports began in 1984. See Pltf.'s CSOF at ¶ 8. Plaintiff admits, by 2004, some Meadow Gold brand products distributed in Hawai'i bore the tagline “Hawaii's Dairy” while other products did not, but, according to Plaintiff, those that bore the tagline were “packaged in Hawaii.” See id. at ¶ 21; see also Defs.' CSOF at ¶ 21. However, Buck acknowledged that he did not know why some products processed at the Honolulu Dairy Processing Facility had the tagline “Hawaii's Dairy” on the package but others did not. See Buck Decl. at ¶ 13. The historically used Lani Moo mascot and “Hawaii's Dairy” tagline imply a connection to Hawai'i, but they do expressly convey that the dairy products originated in Hawai'i, i.e. that the milk came from cows located in Hawai'i. Thus, to the extent that Plaintiff's claims are based upon a theory that the use of Hawaii-themed images and phrases in connection with the sale of Mainland Milk Products gives the false impression regarding the origin of the milk, the same or similar conduct was occurring years before the MGDH Acquisition. Information was available by approximately 2004 that could have potentially supported a cause of action by a Meadow Gold competitor in Hawai'i. Thus, by 2008 when Plaintiff began to distribute milk and dairy products in Hawai'i, it knew or should have known of its potential cause of action. This Court therefore concludes that, by the time Plaintiff filed this action in November 2021, the laches period for each of its claims against MGDH based on the use of those images and statements had expired. This ruling applies to the use of the Lani Moo mascot and the “Hawaii's Dairy” tagline, as well as to other images and phrases that suggest a connection to Hawai'i without making a representation about origin, including “MOOhalo,” “Made with Aloha,” and notations of the historical connection with the Dairymen's Association. These will be referred to collectively as “the Hawai'i-Themed Images and Phrases.”
Defendants have presented some evidence that Dean Foods used the “Made with Aloha” tagline before the MGDH Acquisition. See Sadeghi Decl. at ¶ 10. Plaintiff has acknowledged that some MGDH employees, while they were employed by Dean Foods, used the phrase “Made with Aloha” in their email correspondence, but they assert Dean Foods never used the phrase on milk products. See Pltf.'s CSOF at ¶ 31 (some citations omitted) (citing Marcello Decl. at ¶ 14). This Court cannot resolve this factual dispute on summary judgment, but this dispute does not preclude a ruling on summary judgment.
In contrast, the Dairymen's Text contains an express representation about the origin of the products. See Marcello Decl. at ¶ 10 (“Today we operate statewide and continue to manufacture fresh milk, dairy, juice and nectar products in Hawai'i.” (emphases added)). Defendants have not presented any evidence that Dean Foods or any of MGDH's other predecessors used similar statements representing that Meadow Gold brand products were manufactured fresh in Hawai'i. Viewing the record in the light most favorable to Plaintiff, this Court assumes that this portion of the Dairymen's Text was not used on Meadow Gold brand products until after the MGDH Acquisition in 2020. Therefore, at the time Plaintiff filed the instant case, the laches period for Plaintiff's claims based on the use of that portion of the Dairymen's Text had not expired, and there is a strong presumption against the laches defense. See La Quinta, 762 F.3d at 878. MGDH is not entitled to summary judgment as to their laches defense against the portion of Plaintiff's claims based upon the use of the portion of the Dairymen's Text which represents that Meadow Gold products are manufactured fresh in Hawai'i. The Motion is denied as to that portion of Plaintiff's claims.
In considering Defendants' Motion, this Court must view the record in the light most favorable to Plaintiff as the (. . . continued)
This Court next turns to the E-Systems factors to analyze whether Plaintiff's delay in filing claims based on the use of the Hawai'i-Themed Images and Phrases was unreasonable.As to the first factor, it is undisputed that the Meadow Gold brand is well-known and has a long history in Hawai'i. Similarly, the Lani Moo mascot and the “Hawaii's Dairy” are also well established. As to the second factor, based on this Court's finding that Plaintiff knew or should have known about its nonmoving party. See Harris v. Cnty. of Orange, 17 F.4th 849, 855 (9th Cir. 2021). potential claims by approximately 2008, this Court finds that Plaintiff was not diligent in litigating its claims based upon the Hawai'i-Themed Images and Phrases.
This Court has modified the E-Systems factors to suit the claims in this case because the original factors addressed trademark infringement claims. See E-Systems, 720 F.2d at 607.
As to the third and fifth E-System factors, Plaintiff and MGDH are competitors, and Plaintiff alleges Defendants' actions give MGDH an unfair advantage. See Defs.' CSOF at ¶¶ 2627 (regarding Plaintiff's and MGDH's respective shares of the wholesale milk distribution market); Pltf.'s CSOF at ¶¶ 26-27 (admitting Defs.' ¶¶ 26-27, with a clarification as to the definition of the wholesale milk distribution market); see also, e.g., Second Amended Complaint at ¶ 104 (unfair competition allegation).
As to the fourth and sixth E-System factors, Sadeghi states that, when he entered into the MGDH Acquisition, he “relied upon the ability to continue to use [Meadow Gold's] Hawai'i-themed IP, regardless of whether [Meadow Gold's] milk was sourced locally or from the mainland.” [Sadeghi Decl. at ¶ 7.] MGDH also relied upon the continued ability to use the Hawai'i-Themed Images and Phrases when it entered into transactions with the Dairy Farmers and other vendors. See Id. at ¶ 11. Further, since the acquisition, “MGD[H] has spent over $625,000 in marketing, advertising, and developing its Hawai'i-themed branding, including the ‘Made with Aloha' tagline.” [Id. at ¶ 10.] In light of Meadow Gold's long-standing use of the Lani Moo mascot and the “Hawaii's Dairy” tagline, even after the incorporation of Mainland Milk Products, this Court finds that Sadeghi had a good faith belief that the use of the Hawai'i-Themed Images and Phrases was possible.
Having considered all of the E-Systems factors, this Court concludes that Plaintiff unreasonably delayed in bringing its claims based on the use of the Hawai'i-Themed Images and Phrases and that MGDH suffered prejudice as a result of the unreasonable delay. Therefore, even viewing the record in the light most favorable to Plaintiff, there are no genuine issues of material fact, and this Court concludes, as a matter of law, that MGDH has a valid laches defense against Plaintiff's claims based on the use of the Hawai'i-Themed Images and Phrases. See Fed. R. Civ. P. 56(a) (“The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”).
C. Unclean Hands
Plaintiff next argues that, even if laches would otherwise apply, MGDH is not entitled to summary judgment as to the laches defense because there are triable issues of fact as to the issue of whether MGDH has unclean hands. [Mem. in Opp. at 25-26.]
A plaintiff can prevail on the “unclean hands” counter-defense to laches “only if the court is left with a firm conviction” that the defendant acted willfully. Jarrow Formulas Inc. v. Nutrition Now Inc., 304 F.3d 829, 842 (9th Cir. 2002). This is a demanding standard. See id. Eat Right [Foods Ltd.'s (“Eat Right”)] circumstantial evidence that Whole Foods [Market Pacific Northwest, Inc. (“Whole Foods”)] must have known it was infringing because it carried Eat Right cookies is not sufficient to show unclean hands. As in Jarrow, though Whole Foods' hands “are not as ‘clean as snow,'” neither do “its actions rise to the level of unclean hands.” See id. (citation omitted).Eat Right Foods Ltd. v. Whole Foods Mkt., Inc., 779 Fed.Appx. 471, 474 (9th Cir. 2019).
Plaintiff points to correspondence that it argues raises a triable issue of fact as MGDH's unclean hands. [Mem. in Opp. at 25-26 (citing Marcello Decl., Exh. A; LaPorte Decl., Exh. K at SAP000065).] Exhibit A to the Marcello Declaration is the May 22, 2020 email chain between Marcello, Sadeghi, and Muranaka, discussing proofs for cartons of Meadow Gold products for Hollandia to use. [Dkt. no. 148-6.] In one message, Marcello wrote: “Can we put the ‘Made with Aloha' logo on there given these specific cartons will be co-packed at Hollandia?” [Id. at PageID.1013.] Muranaka responded, “I don't see why not. I'd like all of our labels and cartons stating ‘Made with Aloha'.” [Id. at PageID.1016.] He later wrote:
I know it's a stretch especially if people know that it is packaged on the mainland. My thought is that anything labeled with Meadow Gold
(“Hawaii's Dairy) [sic] and distributed philosophically is Made with Aloha. In other words, Hawaii's Dairy and Made in [sic] Aloha is synonymous.
We may be challenged in the future, but for now we need to build a local brand.[Id. at PageID.1019-20.] Sadeghi denies that those statements are attributable to him or to MGDH. See Sadeghi Reply Decl. at ¶ 8. Sadeghi states that Muranaka “was not an MGD[H] employee, contractor, or consultant. Instead, he was interested in purchasing Meadow Gold, and was at that time engaged in negotiations that ultimately ended. Any statements he made were his alone, and not those of me or MGD[H].” [Id.] Sadeghi does not deny being copied on the email in which Muranaka made those statements, and there is no indication in the record that Sadeghi responded to Muranaka's email to dispute Muranaka's statements. In considering Defendants' Motion, this Court cannot weigh the credibility of Muranaka's and Sadeghi's statements. See Estate of Lopez ex rel. Lopez v. Gelhaus, 871 F.3d 998, 1009 n.10 (9th Cir. 2017) (“At the summary judgment stage, ‘[c]redibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge.'” (alteration in Lopez) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986))).
Viewing the record in the light most favorable to Plaintiff, the emails in Plaintiff's Exhibit A show that Sadeghi had notice of the fact that the use of the phrase “Made with Aloha” on Mainland Milk Products could be subject to challenge. However, even viewing the record in the light most favorable to Plaintiff, the mere recognition that a challenge might be brought in the future is not enough to leave this Court “with a firm conviction that [MGDH] acted willfully.” See Eat Right Foods, 779 Fed.Appx. at 474 (citation and internal quotation marks omitted).
Exhibit K to the LaPorte Declaration is an email chain, dated from April 13, 2022 to June 22, 2022, between various MGDH personnel and various Saputo personnel, regarding the review of changes to the Meadow Gold packaging. [Dkt. no. 148-19.] The page that Plaintiff relies upon has a proof of a milk carton panel with the Dairymen's Text. [Id. at SAP000065.] On May 16, 2022, Dave Connor, Saputo Regional Sales Manager, wrote to Megahn Chun (“Chun”) at MGDH, stating “there is still a concern with the language on the on the [sic] far left panel (glamour shot) of the whipping cream, the wording we feel can be miss-leading [sic].” [Id.] On May 23, 2022, Chun responded that she would check with Sadeghi about it. [Id. at SAP000064.] On May 25, 2022, Chun wrote:
Thank you for red flagging that, can we replace that copy with the below:
At home chefs love Meadow Gold's 36% heavy whipping cream! Add a touch of rich creaminess to homemade soups, sauces, mashed potatoes, eggs and salad dressings. Top your favorite berries and warm baked goods with a dollop of cool freshness. Whether it's sweet or savory, Meadow Gold heavy whipping Cream brings out the best in any dish for your 'ohana.[Id. at SAP000063 (emphasis in original).] The change was approved by all persons involved for both parties. See id. at 000058-61.
This Court has already ruled that MGDH is not entitled to summary judgment as to Plaintiff's claims based on the use of the portion of the Dairymen's Text which represents that Meadow Gold products are manufactured fresh in Hawai'i. Thus, it is not necessary to address the issue of whether unclean hands preclude a laches defense as to those claims. Even viewing the record in the light most favorable to Plaintiff, Exhibit K does not raise a genuine issue of fact for trial as to whether MGDH acted willfully in its use of the Hawai'i-Themed Images and Phrases. See Jarrow Formulas, 304 F.3d at 842.
Further, even considering Exhibits A and K together with the record as a whole, Plaintiff has failed to raise a triable issue of fact as to whether MGDH's actions rise to the level of unclean hands. This Court therefore concludes that, as a matter of law, Plaintiff cannot prevail on its unclean hands counter-defense to MGDH's valid laches defense.
D. Ruling
This Court has concluded that laches applies to Plaintiff's claims against MGDH based upon MGDH's use of the Hawai'i-Themed Images and Phrases, and this Court has concluded that laches does not apply to Plaintiff's claims against MGDH based upon of MGDH's use of the portion of the Dairymen's Text which represents that Meadow Gold products are manufactured fresh in Hawai'i. The Motion is therefore denied as to MGDH's request for summary judgment as to Plaintiff's claims based on that portion of the Dairymen's Text. MGDH is entitled to summary judgment as to all of Plaintiff's other claims against it.
Even if the laches defense did not apply to Plaintiff's state law claims, this Court would make the same ruling as to Plaintiff's against MGDH by applying the same reasoning in the laches analysis to MGDH's statute of limitations defense.
However, “a laches defense is personal to the defendant raising it[.]” Israel Bio-Eng'g Project v. Amgen Inc., 401 F.3d 1299, 1306 (Fed. Cir. 2005). The Dairy Farmers therefore cannot assert a laches defense based on MGDH's laches defense. Further, any statute of limitations defense that the Dairy Farmers assert would be distinct from the defenses that MGDH raised in the instant Motion. Defendants' Motion is therefore denied to the extent that it seeks summary judgment in favor of the Dairy Farmers. The Dairy Farmers' defenses are more appropriately addressed in connection with their Motion for Partial Summary Judgment (“Dairy Farmers' Motion”), [filed 10/20/23 (dkt. no. 158)]. See Minute Order - EO: Court Order Regarding Pending Motions for Summary Judgment and the Trial Date, filed 1/29/24 (dkt. no. 174), at PageID.1633 (allowing the Dairy Farmers to amend their motion based on the rulings on Defendants' Motion and issuing a briefing schedule).
CONCLUSION
For the foregoing reasons, Defendants' Motion for Summary Judgment, filed July 24, 2023, is HEREBY GRANTED IN PART AND DENIED IN PART. The Motion is GRANTED insofar as summary judgment is granted in favor of MGDH as to Plaintiff's claims against MGDH based on the use of the Hawai'i-Themed Images and Phrases. The Motion is DENIED as to Plaintiff's claims against MGDH based on the use of the portion of the Dairymen's Text which represents that Meadow Gold products are manufactured fresh in Hawai'i. Further, the Motion is DENIED to the extent that it seeks summary judgment in favor of the Dairy Farmers.
IT IS SO ORDERED.