Supreme International Corp. v. Anheuser-Busch, Inc.

972 F. Supp. 604, 42 U.S.P.Q. 2d (BNA) 1790, 1997 U.S. Dist. LEXIS 10055, 1997 WL 373776
District Court, S.D. Florida·Decided April 16, 1997·No. 96-3670-CIV·Published·Cited by 14 cases

Opinion

ORDER

EDWARD B. DAVIS, Chief Judge.

“Drink Bud Ice, but Beware the Penguins,” is the slogan for Anheuser-Buseh’s national television commercial campaign featuring the stubby aquatic fowl terrorizing humans for their Bud Ice beer. Perhaps the company should have heeded its own ads a bit more closely, given the underlying lawsuit arguing that use of the penguins represents trademark infringement, unfair competition and deceptive business practices.

Anheuser-Busch (“A-B”) moved on January 10, 1997, to dismiss the case, or in the alternative to stay proceedings, alleging that the lawsuit duplicates A-B’s earlier-filed declaratory action in the Eastern District of Missouri. The Court held a hearing on this matter on April 15, 1997. Having thoroughly reviewed the pleadings and the oral arguments of counsel, the Court enters the following order granting A-B’s motion to stay the proceedings.

FACTUAL AND PROCEDURAL BACKGROUND

The Plaintiff, Supreme International (“Supreme”), is a Florida corporation and the assignee of penguin design trademark rights belonging to Munsingwear, which began putting penguin designs on golf shirts and other apparel in 1954. A-B started airing the Bud Ice penguin commercials last year. The popular ad campaign soon expanded to include putting the penguin on clothing and other promotional items. Supreme contends that A-B’s use of the penguin design violates its trademark.

Supreme’s first overture to A-B on this subject was amicable. A Supreme vice-president wrote to A-B on October 10, 1996, offering to travel to St. Louis to discuss the prospect of Supreme selling its penguin de *606 sign clothing in connection with the Bud Ice ad campaign. During a subsequent meeting, the vice president for the first time objected to A-B’s use of the penguin design. In late November or early December, a Supreme lawyer contacted an A-B lawyer to again complain about the penguin design. However, according to A-B’s in-house counsel, the two attorneys discussed settling the issue.

But the parties’ relationship turned as cold as the penguin’s Antarctic habitat when a New York law firm representing Supreme wrote to A-B on December 11, 1996, demanding not only that A-B stop putting the penguin design on clothing, but that it discontinue all advertising and promotional materials involving the “Beware the Penguins” slogan. The three-page letter concluded by stating that if A-B did not respond in writing within five business days, Supreme would “pursue additional legal action,” including suing.

Rather than respond, A-B on December 19 (the fifth business day) filed a declaratory action in the Eastern District of Missouri against both Supreme and Munsingwear. The lawsuit seeks a declaration that A-B’s penguin logo did not infringe on Supreme’s trademai’k. Five days later, Supreme filed the instant action.

DISCUSSION

A-B argues that the Court should dismiss this action based on the “first-filed” rule, which holds that when parties have instituted competing or parallel litigation in separate federal courts, the court initially having jurisdiction should hear the ease. Northwest Airlines, Inc. v. American Airlines, Inc., 989 F.2d 1002, 1006 (8th Cir.1993). The primary purposes of the rule are to conserve judicial resources and avoid conflicting rulings. Id. The Eleventh Circuit, in addition to most other circuits, follows this rule. Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Haydu, 675 F.2d 1169, 1174 (11th Cir.1982) (“In the absence of compelling circumstances, the court initially seized of a controversy should be the one to decide the case”).

Among the compelling circumstances that may justify departing from the rule are instances where one party, on notice of a potential lawsuit, files a declaratory judgment action in its home forum. See e.g., Serco Serv. Co. v. Kelley Co., 51 F.3d 1037 (Fed.Cir.1995); Tempco Elec. Heater Corp. v. Omega Eng’g, Inc., 819 F.2d 746 (7th Cir.1987); Northwest, 989 F.2d at 1007. However, those circumstances do not automatically compel abandoning the first-filed rule. The matter is one of discretion for the trial court. United States Fire Ins. Co. v. Goodyear Tire & Rubber Co., 920 F.2d 487 (8th Cir.1990). And even where those conditions are present, “[t]he first-filed action is preferred, even if it is declaratory, unless considerations of judicial and litigant economy, and the just and effective disposition of disputes, require otherwise.” Serco, 51 F.3d at 1039 (internal quotation marks omitted).

Supreme argues that there are compelling circumstances here because A-B, aware that Supreme was about to file an infringement lawsuit, jumped the gun and filed the declax-atory judgment action in Missouri. Supreme contends that this is impex’missible foxnxm shopping. Furthermore, Supreme argues that judicial economy favors hearing the action in Florida because Supreme is a Florida corporation with most of its offices and employees here, while A-B is a national operation. Certainly, the fact that A-B sought a declaratory judgment so quickly after being notified of a potential infringement lawsuit raises the red flag of foram shopping, and warrants a close examination of the recox'd. Although this is a close call, Supreme has failed to demonstrate compelling circumstances that would justify ignoring the first-filed rule.

One difficulty with this case is the posture in which it comes to the Court. Supreme’s lawsuit is the second-filed case. Even if the Court were inclined to agree with Supreme that the case should be tried here, it has no authority to mandate this result. If the Court does not dismiss or stay Supreme’s action, there is no guarantee that the Missouri court would follow suit and dismiss the declaratory judgment action. The parties would then be left with the exact situation *607 that the first-filed rule was designed to prevent — lawsuits on identical issues proceeding simultaneously in separate courts.

Because of this problem, many of the cogent arguments that Supreme makes are more properly presented to the Missouri court. That court, as the “first-filed” court, is the more appropriate forum in which to determine whether the first-filed case should proceed, or whether it should give way for reasons of judicial economy to this action. Indeed, all the cases that Supreme cites that have not followed the first-filed rule involve opinions from courts with jurisdiction over first-filed actions. None involved decisions from courts hearing second-filed lawsuits for damages. See, e.g., Serco, 51 F.3d 1037; Tempco, 819 F.2d at 746; EEOC v. University of Pa.,

Free access — add to your briefcase to read the full text and ask questions with AI

Supreme International Corp. v. Anheuser-Busch, Inc., 972 F. Supp. 604, 42 U.S.P.Q. 2d (BNA) 1790, 1997 U.S. Dist. LEXIS 10055, 1997 WL 373776 (S.D. Fla. 1997).

972 F. Supp. 604 (Supreme International Corp. v. Anheuser-Busch, Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

Related