JTH Tax, Inc. v. Williams

310 F. Supp. 3d 648
CourtDistrict Court, E.D. Virginia
DecidedMay 4, 2018
DocketCIVIL ACTION NO. 2:18cv26
StatusPublished
Cited by4 cases

This text of 310 F. Supp. 3d 648 (JTH Tax, Inc. v. Williams) is published on Counsel Stack Legal Research, covering District Court, E.D. Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
JTH Tax, Inc. v. Williams, 310 F. Supp. 3d 648 (E.D. Va. 2018).

Opinion

Therefore, to the extent that any factual or legal allegations in the Plaintiffs' Opposition *654contradict or diverge from those in the Amended Complaint, the court will consider only the version of the allegations that appears in the Amended Complaint. See Marks v. Dann, 600 F. App'x 81, 89 (4th Cir. 2015) ("The district court properly deemed these matters outside the complaint and refused to consider them as part of its Rule 12(b)(6) analysis."); Morgan Distrib. Co. v. Unidynamic Corp., 868 F.2d 992, 995 (8th Cir. 1989) ("[I]t is axiomatic that a complaint may not be amended by briefs in opposition to a motion to dismiss.... To hold otherwise would mean that a party could unilaterally amend a complaint at will." (citations omitted) ).

III. COUNT FIVE: FALSE DESIGNATION AND MISREPRESENTATION OF ORIGIN

Count Five of the Amended Complaint alleges that the Defendants' conduct constituted false designation and misrepresentation of origin, in violation of Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a). Am. Compl. ¶¶ 91-97.3 Section 43(a) of the Lanham Act states, in relevant part:

(1) Any person who, on or in connection with any goods or services, ... uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which-
(A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person
* * *
shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.

15 U.S.C. § 1125(a) (1) (A).4

To state a false designation claim, the Plaintiffs must plead that the Defendants used a designation in interstate commerce in connection with goods and services; that the designation was "likely to cause confusion, mistake or deception as to origin, sponsorship, or approval of defendant's goods or services"; and that the Plaintiffs were, or are likely to be, damaged by these acts. Am. Online, Inc. v. LCGM, Inc., 46 F.Supp.2d 444, 449 (E.D. Va. 1998).

The Plaintiffs allege that Mr. Williams, "as manager of the franchise locations," promotes his "businesses using promotions that are almost identical to such promotions employed by Liberty, and for the purpose of promoting tax preparation businesses." Am. Compl. ¶ 93. These promotions are described as "dressing employees similarly to the Statue of Liberty and waiving to passers-by in an attempt to *655draw customers to the store, as well as offering customers $50.00 for tax preparation referrals." Id. ¶ 59. The Plaintiffs allege that these promotions, combined with the continued use of the franchise locations as Mr. Williams's tax preparation centers, "give customers the impression such stores are Liberty Tax stores," and, further, were undertaken by Defendants "to cause confusion, or to cause mistake, or to deceive." Id. ¶¶ 94, 96. From this conduct, the Plaintiffs allege "damages to the value of the Marks and to customer goodwill," monetary damages, and irreparable injury. Id. ¶¶ 95, 97.

Courts have found that facts alleging a defendant's use of marks that "deceive or confuse customers into thinking" a plaintiff certified a defendant's actions, "or otherwise sponsored or approved her services," were sufficient at the motion to dismiss stage. Int'l Found. Emp. Benefit Plans, Inc. v. Cottrell, No. WDQ-14-1269, 2015 WL 127839, at *4 (D. Md. Jan. 7, 2015). Further, allegations that the defendant acted like a representative of the plaintiff and promoted "services ... in a manner likely to cause confusion as to whether such services were offered in connection with, or on behalf of" the plaintiff were sufficient to survive a motion to dismiss. AvePoint, Inc. v. Power Tools, Inc., 981 F.Supp.2d 496, 517 (W.D. Va. 2013). Asserting that a defendant used a mark "through distribution, advertising, offering for sale and sale of its products and services, and in other communications," was likewise sufficient to state a claim of false designation. Superior Performers, Inc. v. Family First Life, LLC, No. 1:14cv83, 2014 WL 7338923, at *4 (M.D.N.C. Dec. 22, 2014). Accordingly, based on the alleged facts contained in the Amended Complaint, the court hereby FINDS that the Plaintiff's allegations, presumed true, are sufficient to survive Mr. Williams's Partial Motion to Dismiss as to Count Five, False Designation and Misrepresentation of Origin, according to 15 U.S.C. § 1125(a)(1)(A).

IV. COUNT SEVEN: MISAPPROPRIATION OF TRADE SECRETS

Count Seven of the Amended Complaint alleges that the Defendants' conduct constituted misappropriation of trade secrets, Am. Compl. ¶¶ 105-09, which requires a plaintiff to prove (1) the existence of a trade secret, and (2) its misappropriation by a defendant. See, e.g., Milton v. IIT Research Inst., 138 F.3d 519, 521 (4th Cir. 1998). First, to constitute a trade secret, the business information at issue must have "independent economic value, actual or potential, from [ (a) ] not being generally known to, and [ (b) ] not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use." Va. Code Ann. § 59.1-336.5

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Bluebook (online)
310 F. Supp. 3d 648, Counsel Stack Legal Research, https://law.counselstack.com/opinion/jth-tax-inc-v-williams-vaed-2018.