Harley-Davidson Motor Co. v. Chrome Specialties, Inc.

173 F.R.D. 250, 43 U.S.P.Q. 2d (BNA) 1144, 38 Fed. R. Serv. 3d 955, 1997 U.S. Dist. LEXIS 7404, 1997 WL 275473
CourtDistrict Court, E.D. Wisconsin
DecidedMay 22, 1997
DocketNo. 96-C-925
StatusPublished
Cited by2 cases

This text of 173 F.R.D. 250 (Harley-Davidson Motor Co. v. Chrome Specialties, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Wisconsin primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Harley-Davidson Motor Co. v. Chrome Specialties, Inc., 173 F.R.D. 250, 43 U.S.P.Q. 2d (BNA) 1144, 38 Fed. R. Serv. 3d 955, 1997 U.S. Dist. LEXIS 7404, 1997 WL 275473 (E.D. Wis. 1997).

Opinion

DECISION and ORDER

MYRON L. GORDON, District Judge.

This trademark infringement action was originally assigned to Magistrate Judge William E. Callahan. On January 13, 1997, the plaintiffs, Harley-Davidson Motor Company and H-D Michigan, Inc. [collectively “Harley-Davidson”] filed a “Motion for a Preliminary or Permanent Injunction” and asked that the motion be referred to a district judge for resolution because the parties had not consented to magistrate judge jurisdiction. The matter was then assigned to this [251]*251district court for purposes of addressing the application for injunctive relief.

I. PROCEDURAL BACKGROUND

Harley-Davidson, a Wisconsin corporation which manufactures motorcycles, filed this action on August 16, 1996, against the defendant, Chrome Specialties, Inc. [“CSI”], a Texas corporation which manufactures and sells motorcycle parts for use, in part, on Harley-Davidson motorcycles and clothing for motorcycle enthusiasts. According to the allegations of the complaint, CSI infringed Harley-Davidson’s trademarks and engaged in unfair competition and trademark dilution in violation of federal trademark laws. The complaint also contains a claim under Wisconsin law that CSI misappropriated Harley-Davidson’s trademarks and trade dress.

On October 10, 1996, CSI filed its answer and counterclaims in the above-captioned action. On the same day, CSI commenced an action in Texas state court against Harley-Davidson Motor Company — one of the plaintiffs in the instant trademark action — and two of its Texas dealerships. Although CSI did not name H-D Michigan, Inc. — the other plaintiff in this action — as a defendant in its antitrust action, I will refer to the corporate defendant in the Texas action as “Harley-Davidson” in an effort to avoid confusion.

The complaint in the Texas action alleges that Harley-Davidson violated Texas antitrust laws by conspiring with its dealers to monopolize or unlawfully restrain trade and by selling its goods to dealers on the condition that the purchasers not use or deal in the goods of a competitor. Part of the relief sought by CSI in the Texas state court action is an injunction prohibiting Harley-Davidson from engaging in anti-competitive and monopolistic business practices including proceeding with its alleged frivolous trademark litigation against CSI. (Yager Aff. Tab A. Texas Petition.)

Harley-Davidson removed the Texas action from state court to the United States district court for the northern district of Texas on November 27, 1996. CSI filed a motion to remand the Texas action to state court; such motion is currently pending before the federal court in Texas. In addition, on December 2, 1996, Harley-Davidson filed a motion in the Texas federal court to dismiss or in the alternative to transfer the Texas action to this court for consolidation with the instant trademark action. The federal court in Texas has stayed briefing on the motion to dismiss or to transfer venue pending resolution of CSI’s motion to remand. (Yager Aff. Tab I.)

II. ARGUMENT

In its motion for injunctive relief, Harley-Davidson seeks an order prohibiting CSI from further prosecution of its antitrust lawsuit except as compulsory counterclaims in this trademark action. Harley-Davidson argues that injunctive relief is warranted for three reasons: (1) CSI’s claims in the Texas action are logically related to the claims advanced in this trademark dispute such that the claims in the Texas action should have been raised as compulsory counterclaims in the instant action under Rule 13(a), Federal Rules of Civil Procedure; (2) under the “first-filed” rule, a district court may enjoin “subsequent prosecution” of an action in another federal court involving the same parties and same issues which are already pending before that court; and (3) an order granting the relief sought by CSI in the Texas action would directly interfere with this court’s ability to adjudicate the instant case.

The court of appeals for the seventh circuit has held that where an action is filed subsequent to another suit in a different forum the court in the first-filed action may enjoin the subsequent suit if (1) the two suits involve the same parties and identical issues, or (2) the action sought to be enjoined is a compulsory counterclaim to the first-filed action. See Warshawsky & Co. v. Arcata National Corp., 552 F.2d 1257 (7th Cir.1977); Martin v. Graybar Electric Co., 266 F.2d 202 (7th Cir.1959).

Compulsory counterclaims are governed by Rule 13(a), Federal Rules of Civil Procedure, which provides, in relevant part:

A pleading shall state as a counterclaim any claim which at the time of.serving the pleading the pleader has against any op[252]*252posing party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party’s claim and does not require for its adjudication the presence of third parties of whom the.court cannot acquire jurisdiction.

The policy underlying Rule 13(a), Federal Rules of Civil Procedure, is to “prevent multiplicity of actions and to achieve resolution in a single lawsuit of all disputes arising out of common matters.” Warshawsky & Co., 552 F.2d at 1261 (citing Southern Construction Co. v. Pickard, 371 U.S. 57, 60, 83 S.Ct. 108, 110, 9 L.Ed.2d 31 (1962)). In order to further this policy, courts should interpret the words “transaction or occurrence” liberally and recognize that a transaction may consist of a series of many occurrences which are logically related. Warshawsky, 552 F.2d at 1261 (citing Moore v. New York Cotton Exchange, 270 U.S. 593, 610, 46 S.Ct. 367, 371, 70 L.Ed. 750 (1926)).

In my opinion, the antitrust claims involved in the Texas action are compulsory counterclaims to the trademark claims made against CSI in the present action. The crux of Harley-Davidson’s complaint in the instant trademark action is its contention that CSI, with specific intent to confuse the purchasing public and to trade on Harley-Davidson’s trade identity and goodwill, has unjustly enriched itself and injured Harley-Davidson by using unauthorized copies and imitations of Harley-Davidson’s federally registered and common-law trademarks and trade dress. At the heart of CSI’s Texas antitrust action is its contention that Harley-Davidson violated Texas antitrust law by (1) seeking to enforce its trademarks through “frivolous” lawsuits, including the present trademark action, (2) coercing its dealers not to deal with competitors of Harley-Davidson, and (3) using the shortage of Harley-Davidson’s motorcycles to control its prices.

The allegations of CSI’s pleading in the Texas action demonstrates that Harley-Davidson’s trademark litigation is a key issue in the Texas antitrust action; the pleading in the antitrust action provides, in part (emphasis added):

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173 F.R.D. 250, 43 U.S.P.Q. 2d (BNA) 1144, 38 Fed. R. Serv. 3d 955, 1997 U.S. Dist. LEXIS 7404, 1997 WL 275473, Counsel Stack Legal Research, https://law.counselstack.com/opinion/harley-davidson-motor-co-v-chrome-specialties-inc-wied-1997.