Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County No. BC 390497, David A. Workman, Judge.
Marh & Associates, David Marh and Simon H. Langer for Plaintiffs and Appellants.
Law Offices of L’tanya M. Butler and L’tanya M. Butler for Defendants and Respondents.
FLIER, Acting P. J.
Appellants Young Lee and Pro Pac Distributing Company, Inc., doing business as Pro Club, filed an action against respondents Seung Tchul Ahn, Mak T. Pak and PRO 5 APPAREL, Inc., claiming that respondents were passing off T-shirts manufactured by them as T-shirts manufactured by appellants. We will refer to this action as the “instant” case or action, to distinguish it from other actions that are germane to this appeal. Respondents’ demurrer to the first amended complaint was sustained without leave to amend on the ground that the instant action is barred by res judicata. We agree and affirm the judgment.
Sometimes variously spelled as “Thul” throughout the record.
PROCEDURAL HISTORY
The instant action is the fourth lawsuit involving T-shirts manufactured by Lee that Lee has brought against various parties; respondent Ahn has been named as a defendant in all of these actions.
On August 31, 2004, appellant Lee filed an action in the Los Angeles County Superior Court against respondent Ahn and Two Horses, Inc., a California corporation. This action alleged that Lee manufactured T-Shirts under the name “ProClub,” the name being registered as a trademark under No. 100418. The complaint alleged that Ahn and Two Horses, Inc., manufactured T-shirts that were an exact duplicate of Lee’s “ProClub” shirts, that they named their shirts “PRO 5,” and that they also used Lee’s trademark number. We are informed by respondents, who do not provide a record citation, that Lee voluntarily dismissed this action on August 24, 2005.
The second action was filed in the United States District Court for the Central District of California on August 3, 2005 (hereafter the federal action). The plaintiffs in the federal action were the same as those in instant case. The defendants were respondent Ahn, Two Horses, Inc., two individuals and several other entities, none of whom are named in the instant action. In substance, the federal action alleged that the defendants in that action manufactured T-shirts that were identical to those manufactured by Lee and that they used trademarks that were copies of those owned by Lee. The federal action set forth five claims for relief. They were for infringement of a registered trademark; infringement of an unregistered trademark; unfair competition in violation of title 15 United States Code section 1125(a); violation of California Business and Professions Code section 17200 et seq.; and a violation of California common law unfair competition law.
Even though Lee is not the only plaintiff in the federal and the instant action, we will refer to Lee only and intend the reference to include the other plaintiffs.
The course of litigation in the federal action is summarized in the “Civil Minutes” of the United States District Court entered on July 25, 2007. The occasion for this extended minute order will become clear as we summarize its contents.
The district court first noted that Ahn vigorously defended his use of the PRO 5 trademark. Ahn sought expedited discovery and an early trial. Lee, on the other hand, has “failed to prosecute [the] complaint from the moment it was filed.” Although rule 26 of the Federal Rules of Civil Procedure requires a joint report about discovery, Lee failed to participate in this process and Ahn filed a unilateral report. Lee’s counsel failed to make himself available to discuss a required settlement conference and also failed to file their pretrial documents as they were required to do.
“Even more egregious than [Lee’s] utter indifference to the procedural requirements imposed by this Court is [Lee’s] complete disregard for the substance of [his] claims.” Lee simply failed to respond to any of the discovery propounded by Ahn. When Ahn sought to exclude all documents and expert witnesses not produced by Lee in discovery, rather than responding to Ahn’s motion to exclude, Lee repeatedly attempted to dismiss the case without prejudice. The court rebuffed these attempts and went on to grant Ahn’s motion to exclude. A week before trial, Lee had failed to file the final preconference order, the joint witness list, the joint exhibit list and the memorandum of contentions of law and fact, all of which were required by the trial court’s rules. “Rather than proceed to trial with no ‘likelihood of confusion’ expert and few documents, [Lee] dismissed [his] claims against Ahn with prejudice.”
Next, Lee requested an entry of default against Two Horses, Inc., because it had been suspended as a California corporation. The clerk entered the default. Two Horses paid the back taxes and was revived as a California corporation; Two Horses then moved to vacate the default.
The occasion for the minute order we have been discussing was the motion to vacate the default. The court found good cause to set aside the default and did so. The court again noted that Lee had completely failed to prosecute his case. The court found that Ahn and Two Horses had identical defenses. The court noted that there had not been an adjudication on the merits but that this was so only because Lee “consistently avoided adjudication on the merits.” The court dismissed the case against Two Horses with prejudice.
The foregoing minute order was entered on July 23, 2007. On August 13, 2007, Lee, along with the usual plaintiffs, filed his third action, again in the United States District Court for the Central District of California. The third action was identical to the second, with the exception that the sole defendant in the third action was PRO 5 APPAREL, Inc.; this entity had not been named in the second action. On November 6, 2007, the federal court found that the second and third actions were based on claims that were factually and legally identical. The court found that Ahn and PRO 5 APPAREL, Inc., had identically aligned interests and identical defenses. The court stated that a dismissal with prejudice is a final judgment on the merits and concluded for that reason that the third action was barred by res judicata.
The instant action was filed on May 8, 2008. The operative pleading is the first amended complaint, which was filed on October 29, 2008. The plaintiffs were the same as in the preceding three actions. The defendants, as noted, were Ahn, Mak T. Pak and PRO 5 APPAREL, Inc. As before, the gravamen of the action was that the defendants were passing off T-Shirts manufactured by them as those manufactured and distributed by Lee. The causes of action alleged were for California common law unfair competition (first); California trademark violation (second); injury to business reputation and dilution of trademark (third); misappropriation of customer list (fourth); false advertising (fifth); and interference with business advantage (sixth).
The complaint alleges that Pak is Ahn’s wife.
The trial court sustained the demurrer to the first amended complaint on the ground that the action is barred by res judicata.
DISCUSSION
1. The Voluntary Dismissal With Prejudice in the First Federal Action Is Res Judicata
The text of the stipulation dismissing Ahn with prejudice states: “Pursuant to Rule 41(a)(1)(ii) of the Federal Rules of Civil Procedure [(28 U.S.C.S.)], it is hereby stipulated by and between the parties to the above-entitled action (the ‘Action’), through their designated counsel, defendant Seung Thul Ahn is hereby dismissed from the Action with prejudice.” We set forth the text of rule 42(a)(1)(A)(ii) in the margin.
All further references to rules are to the Federal Rules of Civil Procedure (28 U.S.C.S.) unless otherwise indicated.
“(a) Voluntary Dismissal. [¶] (1) By the Plaintiff. [¶] (A) Without a Court Order. Subject to Rules 23(e), 23.1(c), 23.2, and 66 and any applicable federal statute, the plaintiff may dismiss an action without a court order by filing: [¶]... [¶] (ii) a stipulation of dismissal signed by all parties who have appeared.” (Rule 41(a)(1)(A)(ii).) Technically, the reference in the stipulation should have been to rule 41(a)(1)(A)(ii).
“It is clear that a stipulation of dismissal with prejudice, or, for that matter, a dismissal with prejudice at any stage of a judicial proceeding, normally constitutes a final judgment on the merits which bars a later suit on the same cause of action.” (Astron Industrial Associates, Inc. v. Chrysler Motors Corp. (5th Cir. 1968) 405 F.2d 958, 960; accord, U.S. v. Cunan (1st Cir. 1998) 156 F.3d 110, 115.) A dismissal with prejudice under rule 41(a) “is subject to the usual rules of res judicata and is effective not only on the immediate parties to the action but also on their privies.” (Wright & Miller, Federal Practice and Procedure: Civil 3d (2008) § 2367, p. 557.)
Thus, while it is true that unless the stipulation states otherwise, a dismissal under rule 41(a) is without prejudice, here the stipulation clearly stated that the dismissal was with prejudice. Thus, the dismissal was res judicata.
“Unless the notice or stipulation states otherwise, the dismissal is without prejudice. But if the plaintiff previously dismissed any federal- or state-court action based on or including the same claim, a notice of dismissal operates as an adjudication on the merits.” (Rule 41(a)(1)(B).)
2. Appellants’ Claim That the Dismissal of Ahn Was Not Res Judicata Is Frivolous
Appellants devote at least six pages of the opening brief to a discussion of the point that a dismissal under of rule 41(b) is procedural only and not a disposition on the merits that is entitled to res judicata effect. In fact, appellants commence the legal argument set forth in the opening brief with the statement, citing a United States Supreme Court case, that a “dismissal with prejudice, based on Rule 41(b) (failure to prosecute) is not a dismissal on the merits, but a procedural dismissal.”
Rule 41(b) provides: “Involuntary Dismissal; Effect. If the plaintiff fails to prosecute or to comply with these rules or a court order, a defendant may move to dismiss the action or any claim against it. Unless the dismissal order states otherwise, a dismissal under this subdivision (b) and any dismissal not under this rule--except one for lack of jurisdiction, improper venue, or failure to join a party under Rule 19--operates as an adjudication on the merits.”
This contention is not only without merit, it is frivolous. The dismissal in this case was by stipulation under the provisions of rule 41(a); this was not a dismissal for failure to prosecute under rule 41(b).
Appellants exacerbate their untenable position by claiming that the dismissal of the federal action was “procedurally forced.” What brought about Ahn’s dismissal with prejudice was Lee’s inexcusably dilatory conduct of the litigation, which resulted in the decision by Lee to dismiss Ahn with prejudice; no one compelled Lee to make this decision. Equally frivolous is the claim that the federal court admitted (appellants’ choice of words) that the dismissal of Ahn and Two Horses was not “on the merits.” Given the tenor of the federal court’s minute order of July 23, 2007, as well as the text of the stipulation dismissing Ahn, we find it hard to imagine a dismissal more “on the merits” than the one entered by the federal court.
This improbable assertion is repeated later in the brief.
3. Appellants’ Multiple Factual Assertions Without Support in the Record Are Disregarded
Appellants assert that Ahn is using PRO 5 APPAREL to manufacture T-shirts that are allegedly unauthorized copies of T-shirts manufactured by Lee and that Ahn is engaged in creating corporations like PRO 5 APPAREL to stay one step ahead of Lee’s efforts to stop the infringement. There is no citation to the record to support this assertion.
As with many of the other factual assertions in appellants’ brief, this assertion, even if true, is of no moment. The question in this appeal is whether the judgment in the federal action (the second action) is res judicata. If the federal action and the instant action involve the same primary right, the instant action is barred by the doctrine of res judicata. (Branson v. Sun-Diamond Growers (1994) 24 Cal.App.4th 327, 341.) We return to this subject in part 4, post. Here we note only that the reason that Ahn incorporated PRO 5 APPAREL has no bearing on whether the primary right in the two actions is the same.
Assertions of fact not supported by references to the record may be disregarded; they also violate the California Rules of Court. (Yeboah v. Progeny Ventures, Inc. (2005) 128 Cal.App.4th 443, 451; Cal. Rules of Court, rule 8.204(a)(1)(C).) Appellants’ assertions of fact that are not supported by references to the record are too numerous to list in this opinion. Suffice it to say that we disregard them.
4. The Primary Right Asserted in the Federal Action Is the Same As That Asserted in the Instant Action
The gist of appellants’ position is that the judgment in the federal action is not res judicata because Pak and PRO 5 APPAREL were not parties to the federal action.
A former judgment is binding on persons who, though not parties to the former judgment, are in privity with a party. (Armstrong v. Armstrong (1976) 15 Cal.3d 942, 951.) A nonparty is in privity if it is “sufficiently close to the original case to afford application of the principle of preclusion.” (People ex rel. State of Cal. v. Drinkhouse (1970) 4 Cal.App.3d 931, 937.) The nonparty should have an identity of interest with the party. (Lynch v. Glass (1975) 44 Cal.App.3d 943, 948.)
The first amended complaint alleges: “There exists, and at all times herein mentioned there existed, a unity of interest and ownership between defendants Ahn, Pak and Pro 5 Apparel, Inc. such that any individuality and separateness between defendants Ahn, Pak and defendant corporation has ceased.”
The well pleaded allegations of a complaint are binding on the plaintiff. (Malone v. Roy (1897) 118 Cal. 512, 513; see generally 4 Witkin, Cal. Procedure (5th ed. 2008) Pleading, § 455, pp. 587-588.) It is evident that Pak and PRO 5 APPAREL were and are in privity with Ahn.
It is also clear that the primary right asserted in the federal action, i.e., Lee’s proprietary rights in T-shirts manufactured by him, is the same as that asserted in the instant action. “California has consistently applied the ‘primary rights’ theory, under which the invasion of one primary right gives rise to a single cause of action.” (Slater v. Blackwood (1975) 15 Cal.3d 791, 795.)
During oral argument, appellant stressed that the instant action differs from the federal action in that the instant action alleges violations of California’s trademark laws, not the federal Lanham Act (15 U.S.C. § 1125(a)), and that the instant action seeks relief based on the misappropriation of a customer list, which was not a claim that was asserted in the federal action.
California’s trademark statute is based on the Model State Trademark Bill in order to provide uniformity with the laws of other states and the Lanham Act. (13 Witkin, Summary of Cal. Law (10th ed. 2005) Personal Property, § 81, p. 102.) As the federal and state laws are uniform, it cannot be said that the primary rights protected by these laws are different. A review of the customer list claim discloses that, in substance, it is simply a restatement of the trademark claim.
There is no doubt that res judicata bars the instant action.
Even if appellants had conducted the prior litigation in good faith and generally in conformance with the state and federal rules of court, we would note with disapproval that appellants have subjected the defendants in the various actions, and particularly Mr. Ahn, to repetitive litigation over the same issue. This has been exacerbated by the fact that neither in the prior litigation nor in this appeal have appellants conducted litigation in conformance with applicable rules and standards.
DISPOSITION
The judgment is affirmed. Respondents are to recover their costs on appeal.
We concur: BIGELOW, J., MOHR, J.
Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.