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AL Laboratories, Inc., a Minnesota corporation, Plaintiff, v. Bou-Matic, LLC, a Ne

MEMORANDUM AND ORDER

PAUL A. MAGNUSON, United States District Court Judge

This matter is before the Court on Defendant's Motion to Dismiss and Transfer Venue. For the reasons that follow, the Motion is granted in part and denied in part.

BACKGROUND

Plaintiff AL Laboratories, Inc. ("AL") supplies chemicals for dairy sanitation and udder hygiene. For a number of years, AL was the exclusive supplier of such products to DEC International ("DEC"), a distributor which re-sold AL's products to consumers. DEC declared bankruptcy in August 2001. As part of the liquidations proceedings, DEC and AL amended their agreement to provide that AL could supply products directly to consumers. Defendant Bou-Matic, LLC ("Bou-Matic") subsequently purchased the pertinent part of DEC's business. Bou-Matic and AL were unable to come to terms on a new contract, and after a flurry of threatening letters, this litigation ensued.

Two days after AL served its Complaint on Bou-Matic, Bou-Matic filed a lawsuit against AL, its parent corporation, and the former and current president of AL in the Western District of Wisconsin. This is the same District in which DEC's bankruptcy is proceeding. In that lawsuit, Bou-Matic claims trademark infringement, trademark dilution, unfair competition, false advertising, theft of trade secrets, breach of fiduciary duty, and breach of contract, and further seeks an accounting.

In this case, AL claims that Bou-Matic has attempted to lure AL employees away from AL in violation of those employees' non-competition agreements and brings a claim for tortious interference. AL also claims that Bou-Matic's statements about the collapse of contract negotiations with AL are defamatory. Finally, AL seeks a declaration that it is the owner of the trademarks "SANI-WIPES" and "READY-WIPES" and seeks a declaration that it is not infringing these trademarks.

Bou-Matic contends that there is no case or controversy about the ownership of the trademarks because Bou-Matic has conceded that it does not own either of the marks in the United States. Bou-Matic also argues that there can be no tortious interference claim when no contract has actually been breached and that the statements complained of are not defamatory as a matter of law. According to Bou-Matic, if the Court dismisses all of these claims, the sole remaining claim for declaration of non-infringement should be transferred to the Western District of Wisconsin.

DISCUSSION

A. Motion to Dismiss

1. Standard of Review

For the purposes of the Motion to Dismiss, the Court takes all facts alleged in the Amended Complaint as true. Westcott v. Omaha, 901 F.2d 1486, 1488 (8th Cir. 1990). The Court must construe the allegations in the Amended Complaint and reasonable inferences arising from the Amended Complaint favorably to Plaintiff. Morton v. Becker, 793 F.2d 185, 187 (8th Cir. 1986). A motion to dismiss will be granted only if "it appears beyond doubt that the Plaintiff can prove no set of facts which would entitle him to relief." Id.; see also Conley v. Gibson, 355 U.S. 41, 45-46 (1957).

2. Trademark

In Count I of the Amended Complaint, AL seeks a declaration that Bou-Matic does not have the right to use the SANI-WIPES and READY-WIPES marks in the United States. (Am. Compl. ¶ 31.) This claim is the result of a December 9, 2002, letter from Bou-Matic to AL in which Bou-Matic demanded that AL cease using various trademarks, including SANI-WIPES and READY-WIPES. (Id. ¶¶ 16, 20.)

Bou-Matic contends that there is no case or controversy on this claim. After the initial Complaint in this matter was served, Bou-Matic served AL with a motion to dismiss and motion for summary judgment, which included a declaration from the President of Bou-Matic that Bou-Matic does not use or claim ownership of either of those marks in the United States. (Kmoch Decl. ¶ 2, attached to Weber Decl. Ex. 1.) This same declaration was filed with the Court in support of the instant Motion. (Kmoch Decl. ¶ 2, Clerk Doc. No. 10.)

There seems to be some confusion as to the relief sought by Count One. Both AL and Bou-Matic characterize the relief sought as a declaratory judgment that AL is the rightful owner of the trademarks at issue. (See, e.g., Pl.'s Opp'n Mem. at 15.) However, Count One only seeks a declaration that Bou-Matic does not have the right to use the trademarks in the United States. The Amended Complaint also seeks a declaration that AL has a license to use certain trademarks, including "Ready-Wipe" but not including SANI-WIPES. (Am. Compl. at 10-11, ¶¶ 2-3; see also Am. Compl. Ex. A at Ex. C.) There is no request for a declaration that AL is the rightful owner of READY-WIPES and SANI-WIPES.

There is no case or controversy as to the declaration that AL seeks in Count One. This Count only asks for a declaration that Bou-Matic cannot use the trademarks at issue. Bou-Matic has sworn that it has not used, nor does it claim ownership of, the marks. Absent some concrete threat that Bou-Matic intends to use the marks in the future, there is no case or controversy. AL has not shown that there is a legitimate threat that Bou-Matic will use the marks in the future. The only evidence that AL has is Bou-Matic's refusal to agree to swear that it would not use the marks in the future unless it obtained a license to do so from AL. Bou-Matic had good reason to refuse to agree to this statement, however. If AL loses the license for these marks, then an agreement that Bou-Matic must seek AL's permission to use the marks makes no sense. Count One must be dismissed.

3. Defamation

Bou-Matic argues that AL's defamation claim must be dismissed because the statements about which AL complains are not capable of a defamatory meaning. The statements at issue are statements about the status of the contract negotiations between AL and Bou-Matic. Many of the statements imply or state that the failure to reach a new agreement was due to AL. AL contends that these statements imply that AL was not negotiating in good faith and therefore tend to lower AL's reputation among its customers.

On a Motion to Dismiss, the Court is bound to consider AL's allegations as true and give AL the benefit of all reasonable inferences. Read in isolation, the statements about which AL complains are fairly innocuous. However, in context, the statements may be capable of defamatory meaning. The Motion to Dismiss as to the defamation claim is denied.

4. Tortious Interference

In Count Four of the Amended Complaint, AL claims that Bou-Matic attempted to hire away AL employees knowing that doing so would cause those employees to violate non-competition agreements with AL. Bou-Matic seeks a dismissal of this tortious interference claim because it contends that AL has not pled the elements of a prima facie case of tortious interference. Tortious interference requires a showing that (1) there is a contract; (2) the tortfeasor knew about the contract; (3) the tortfeasor procured the breach of that contract; (4) without justification; (5) resulting in damages. Kallok v. Medtronic, Inc., 573 N.W.2d 356, 361 (Minn. 1998). According to Bou-Matic, because no employee actually left AL in breach of his or her contract with AL, AL's claim fails at the third element.

Bou-Matic reads the elements of a tortious interference claim too narrowly. Although "procure" may mean "obtain," it also has the sense of "devise" or "plot." See Random House College Dictionary at 1056 (definition of "procure"), 293 (definition of "contrive") (rev. ed. 1982). Thus, in this sense, a tortious interference claim may lie when a rival attempts to secure the breach of a contract, not merely when such a breach actually happens. Contrary to Bou-Matic's contentions, Metropolitan Sports Facilities Commission v. Minnesota Twins Partnership, 638 N.W.2d 214 (Minn.Ct.App. 2002), stands for precisely this proposition. In that case, the defendant argued that the plaintiff's tortious interference claim failed because the breach had not yet occurred. Id. at 228. The Court dismissed this argument, finding that injunctive relief is available for tortious interference claims. Id. The implication of this finding is that a tortious interference claim can arise before the breach occurs, because if a claim only arises after the breach then there would be nothing to enjoin. Indeed, in this case, AL does not ask for damages for the alleged tortious interference but only seeks an injunction preventing Bou-Matic from further interfering with AL's contracts with its employees. (Am. Compl. ¶ 57.) Bou-Matic's Motion on this point is denied.

B. Motion to Transfer Venue

28 U.S.C. § 1404(a) provides that, "[f]or the convenience of the parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought." The party seeking a transfer bears the "heavy" burden to establish that the balance of factors "strongly favors the movant." United Mortgage Corp. v. Plaza Mortgage Corp., 853 F. Supp. 311, 315 (D.Minn. 1994) (Doty, J.) (emphasis omitted). Transfers under § 1404(a) "should not be freely granted," id., and there is a presumption in favor of the plaintiff's forum choice. Christensen Hatch Farms, Inc. v. Peavey Co., 505 F. Supp. 903, 911 (D.Minn. 1981).

The basis for Bou-Matic's Motion to Transfer is that once the claims for defamation and tortious interference and the first declaratory judgment claim are dismissed, the only remaining claim for a declaration of non-infringement is better litigated in Bou-Matic's case in the Western District of Wisconsin. Because the Court has denied Bou-Matic's Motion with respect to two of the three Counts at issue, however, Bou-Matic's reasoning for the transfer does not apply.

Bou-Matic also attempts to portray AL's lawsuit as a rush-to-the-courthouse in an effort to get around the first-filed rule. There is no indication, however, that AL filed this suit as a preemptive strike. Rather, AL raises legitimate claims that it has a right to raise. Even if the Court agreed that three of AL's claims should be dismissed, the first-filed rule would apply and the Motion to Transfer would be denied.

In its opposition papers, AL asks for an injunction against Bou-Matic's Wisconsin action. Such an injunction is not warranted at this point. Should it become clear at a later stage of the litigation that the Wisconsin case is unnecessarily duplicative, AL can renew its Motion.

CONCLUSION

Accordingly, for the foregoing reasons, and upon all of the files, records, and proceedings herein, IT IS HEREBY ORDERED that:

1. Defendant's Motion to Dismiss (Clerk Doc. No. 7) is GRANTED in part and DENIED in part and Count One of the Amended Complaint is DISMISSED; and
2. Defendant's Motion to Transfer Venue (Clerk Doc. No. 7) is DENIED.

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Comments

AL LABORATORIES, INC. v. BOU-MATIC, LLC, (D.Minn. 2003)
(Apr 25, 2003)