Just Goods, Inc. v. Just, Inc.

District Court, N.D. California·Decided September 11, 2020·No. 3:18-cv-02198·Unknown

Opinion

JUST GOODS, INC., Case No. 3:18-cv-02198-WHO

Plaintiff, ORDER ON MOTION FOR ORDER TO v. SHOW CAUSE RE: CONTEMPT AND SANCTIONS JUST, INC., et al., Re: Dkt. No. 158 Defendants.

Despite mutually agreeing to terms to end this trademark and breach-of-contract case, the struggles continue for plaintiff Just Goods, Inc. (“JGI”) and defendants Eat Just, Inc. (fka Just, Inc., fka Hampton Creek, Inc.) and founder Joshua Tetrick (collectively, “EJ”). Before me is JGI’s motion for an order to show cause why EJ should not be held in contempt or sanctioned given EJ’s failures to comply with my order enforcing the Term Sheet. As explained below, I hold EJ in contempt of that order for multiple violations. I also prescribe corrective actions that EJ must take within 14 days of the date this order issues or face further sanctions. My March 30, 2020 Order (the “March 30 Order”) sets out the background of this case and the parties’ August 13, 2019 settlement under the provisions of their binding Term Sheet. Dkt. No. 142. As relevant here, in the March 30 Order I granted JGI’s motion to enforce the Term Sheet. I determined:

The Term Sheet permits EJ to use the term Just in the following ways: (1) in the Frame Logo, (2) as part of the names/phrases “Eat Just” and “Make it Just,” and (3) in text in conjunction with a generic product name (e.g., Just Egg). Other uses of the term violate the parties’ agreement. name to “Eat Just, Inc.” rather than “Eat JUST, Inc.” Id. 6. On May 15, 2020, I denied EJ’s motion to stay that Order. Dkt. No. 156. On June 23, 2020, the Ninth Circuit denied EJ’s emergency motion to stay. Dkt. No. 157. On July 10, 2020, JGI moved for an order to show cause why EJ should not be held in contempt and sanctioned for continued failure to comply with the Term Sheet and the March 30 Order. Plaintiff’s Motion for an Order to Show Cause re: Contempt and Sanctions (“Mot.”) [Dkt. No. 158]. JGI asks that I find EJ in contempt, order compliance, impose a fine of $5,000 per day until it demonstrates compliance, and grant JGI attorney fees related to the pending motion. At a hearing on the motion on August 19, 2020, JGI raised continued violations, including some not addressed in its Motion. EJ described its efforts to comply with the Term Sheet and the March 30 Order and its commitment to doing so. I instructed that the parties meet and confer over any continuing violations and submit a joint letter outlining any further disagreements. Prior to the parties’ meeting, JGI raised another set of alleged violations. The parties have now submitted their Joint Letter, which indicates that many alleged violations have been resolved but that many others remain in dispute. Joint Letter [Dkt. No. 169]. “Civil contempt consists of a party’s disobedience to a specific and definite court order by failure to take all reasonable steps within the party’s power to comply.” Inst. of Cetacean Research v. Sea Shepherd Conservation Soc’y, 774 F.3d 935, 945 (9th Cir. 2014) (internal quotation marks, citation, and formatting omitted). The standard for a civil contempt finding is “well settled”: The moving party has the burden of showing by clear and convincing evidence that the contemnors violated a specific and definite order of the court. The burden then shifts to the contemnors to demonstrate why they were unable to comply. F.T.C. v. Affordable Media, 179 F.3d 1228, 1239 (9th Cir. 1999) (internal quotation marks and citation omitted). Although good faith does not constitute an exception a party’s obligation to comply with a court order, “a person should not be held in contempt if his action appears to be based on a good faith and reasonable interpretation of the court’s order.” Armstrong v. Brown, Antitrust Litig., 10 F.3d 693, 695 (9th Cir.1993)). “Sanctions for civil contempt may be imposed to coerce obedience to a court order, or to compensate the party pursuing the contempt action for injuries resulting from the contemptuous behavior, or both.” Gen. Signal Corp. v. Donallco, Inc., 787 F.2d 1376, 1380 (9th Cir. 1986). “Compensatory awards are limited to actual losses sustained as a result of the contumacy.” Id. (internal quotations and emphasis removed). I. IMPROPER USES OF “JUST” JGI recites numerous uses of the word “Just” that allegedly violate the Term Sheet and the March 30 Order, including references to EJ as “JUST” or “Eat JUST, Inc.” on its website, in job postings, on Tetrick’s LinkedIn, and on EJ’s Wikipedia page. Bost Decl. [Dkt. No. 158-1] ¶ 2 (displaying screenshots from July 10, 2020); Joint Letter 6–10, Ex. C. On May 18, 2020, just three days after I denied EJ’s motion to stay its compliance with the March 30 Order, EJ referred to itself as JUST in press about a new business deal, and third-party press did the same.1 Bost Decl. ¶ 3. At the hearing, EJ described its efforts to comply but also attempted to slough off areas of non-compliance because it was known as Just for many years and lacks control over third parties who continue to refer to it by its former name. As this Order describes, EJ has been less than diligent and its own waffling (to put it charitably) with respect to its new name has prevented progress on that name being more broadly adopted. At this point, many of the alleged violations have been resolved. What follows are my determinations on the remaining disputed issues. a. Instagram Videos JGI represents that EJ has posted a number of videos on its Instagram account in which EJ employees refer to themselves as appearing on behalf of “Just.” Joint Letter 6; Joint Letter Ex. C at 20. EJ disputes the exact number of these videos but does not dispute that some contain the reference to Just. Joint Letter Ex. C at 20. Additionally, JGI alleges, and EJ does not dispute, that one person appearing in the videos often wears a “Just for All” shirt, which violates the trademark assigned to JGI under the Term Sheet. Id. These videos were posted from March 26, 2020 to September 3, 2020. Id. The September 3 video was, according to EJ, removed “within an hour” of EJ’s legal department becoming aware of it. Joint Letter 3. EJ does not address the remaining videos, other than to say that it “is reviewing each video to assess it . . . to remove the allegedly improper use of ‘Just.’” Joint Letter Ex. C at 20. I find EJ in CONTEMPT OF COURT for posting these videos and keeping them up. Many of the videos were posted after the March 30 Order and unambiguously state that those appearing in them are there on behalf of “Just.” As the March 30 Order makes clear, that use violates the Term Sheet. March 30 Order 5. Further, instead of removing the videos (and, if EJ wishes, reposting them edited to comply with the March 30 Order and the Term Sheet), EJ has left the videos up to “assess” them. Joint Letter Ex. C at 20. EJ is, therefore, not taking “all reasonable steps” to comply with my March 30 Order. No later than 14 days after this Order issues, EJ is ORDERED to file an affidavit attesting that the violations in the videos have been removed. If EJ fails to do so within this time limit, I will impose sanctions in addition to those required by this Order. b. #MakeItJUST The March 30 Order made clear that EJ may use “Just” in the phrase “Make it Just.” March 30 Order 5. JGI argues that the use of the hashtag “#MakeItJUST” with only the word “just” appearing in uppercase violates my March 30 Order. Joint Letter 10. That hashtag, with that capitalization, has been used on EJ’s LinkedIn, Twitter, Instagram, and Faceboo

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