Theta Chi Fraternity, Inc. v. Leland Stanford Junior University

212 F. Supp. 3d 816, 2016 WL 4524305, 2016 U.S. Dist. LEXIS 116863
CourtDistrict Court, N.D. California
DecidedAugust 30, 2016
DocketCase No. 16-cv-01336-RMW
StatusPublished
Cited by4 cases

This text of 212 F. Supp. 3d 816 (Theta Chi Fraternity, Inc. v. Leland Stanford Junior University) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Theta Chi Fraternity, Inc. v. Leland Stanford Junior University, 212 F. Supp. 3d 816, 2016 WL 4524305, 2016 U.S. Dist. LEXIS 116863 (N.D. Cal. 2016).

Opinion

[819]*819ORDER REGARDING MOTIONS TO DISMISS AND STRIKE

Re: Dkt. Nos. 14, 31

Ronald M. Whyte, United States District Judge

Before the court are motions to dismiss the complaint filed by plaintiff Theta Chi Fraternity, Inc. (“Theta Chi” or “plaintiff’) against Leland Stanford Junior University, The Board of Trustees of Leland Stanford Junior University, Alumni Association of Chi Theta Chi House, The Board of Directors of Alumni Association of Chi Theta Chi House, and Thomas Abel Allison, Dkt. No. 1 (“Compl.”). Defendants Alumni Association of Chi Theta Chi House and Thomas Abel Allison (collectively, the “Alumni Association defendants”) filed a motion to dismiss and strike on May 13, 2016. Dkt. No. 14. Defendant The Board of Trustees of the Leland Stanford Junior University (“Stanford”) filed a motion to dismiss on June 23, 2016. Dkt. No. 31. Plaintiff filed oppositions, defendants filed replies, and the court held a hearing on August 26, 2016.1 For the reasons set forth below, the court grants both motions to dismiss with leave to amend and grants in part and denies in part the Alumni Association defendants’ motion to strike.

I. BACKGROUND

Plaintiff Theta Chi brings this action against the defendants for alleged trademark infringement and related state law claims. Dkt. No. 1 (“Compl.”). At issue here are two of plaintiffs federally-registered trademarks: the phrase THETA CHI2 and the identifying Greek letters @X3 (collectively, the “Theta Chi marks”). Id. ¶ 1.

As alleged in the complaint, plaintiff, a national fraternity founded in 1856 and based in New York, comprises a Grand Chapter, 114 active chapters, and seven “colonies.” Id. ¶ 12. Stanford University is a research and teaching institution in California that is governed by its Board of Trustees. Id. ¶ 13. From 1920 to 1988, plaintiff maintained an active chapter at the university called the Alpha Epsilon Chapter of Theta Chi Fraternity. Id. ¶ 45. In 1928, members of the chapter created the Alpha Epsilon Alumni Association, a California tax-exempt corporation, to facilitate the chapter’s operations. Id. ¶¶ 46-47. Following its formation, the Alumni Association purchased the structure at 576 Alvarado Row, Stanford, California (the “house”) from the university and entered into a lease that identified the Alumni Association as owner of the house and the university as owner of the parcel of land on which the house is built. Id. ¶¶ 2, 48, 51. As membership declined in the 1970s, the chapter began allowing students unaffiliated with Theta Chi to live in the house. Id. ¶ 54. In 1988, the Grand Chapter declared the Alpha Epsilon Chapter inactive due to lack of membership and allegedly improper conduct by house residents. Id. ¶ 57.

Plaintiff asserts that in the mid-1980s, one or more members of the Alpha Epsilon Chapter disaffiliated with Theta Chi and formed a competing group called the “Ex-Theta Chi’s” or “X-Theta Chi’s”—denoted symbolically as “X-@X” and by name as “Chi Theta Chi.” Id. ¶ 55. According to plaintiff, Chi Theta Chi holds itself out as having “evolved” from, “split apart” away from, “broke from, or “succeeded” the Theta Chi Fraternity. Id. ¶ 65. Plaintiff states that in reality, Chi Theta Chi has no relation to or [820]*820affiliation with Theta Chi Fraternity. Id. ¶ 66.

The complaint alleges that after the Alpha Epsilon Chapter was declared inactive in 1988, members of Chi Theta Chi continued living in the house and using the Theta Chi marks in various deceptive ways. Id. ¶¶ 62, 67. The complaint alleges that, unbeknownst to plaintiff at the time, Chi Theta Chi used its name interchangeably with “Theta Chi” and infringed on plaintiffs trademarks. See id. ¶¶ 68-69. Plaintiff alleges that by falsely holding itself out to be the legitimate successor entity to the Alpha Epsilon Chapter of Theta Chi Fraternity, Chi Theta Chi capitalized on plaintiffs goodwill, reputation, and historical legacy to attract new residents and benefit financially. Id. Chi Theta Chi allegedly continued conducting operations under the name of the Alpha Epsilon Alumni Association, including availing itself of all rights under the lease, filing false tax forms, and using the Alumni Association’s name and federal tax ID number—thus usurping the Alumni Association’s corporate identity. Id. Plaintiff states that on March 21, 2012, without plaintiffs knowledge, Chi Theta Chi filed Amended Articles of Incorporation with the California Secretary of State to change the Alumni Association’s name from “Alpha Epsilon Alumni Association of Theta Chi Fraternity” to “Alumni Association of Chi Theta Chi House.” Id. ¶ 84.

According to plaintiff, the university assumed full control of the house after the lease ended on or about April 2, 2012, and residents began paying rent directly to the university by September 2012. Id. ¶¶ 86, 96. The university allegedly permitted Chi Theta Chi members to remain in the house. Id. ¶ 89.

Plaintiff maintains that Chi Theta Chi continued its infringement of the Theta Chi marks despite repeated demands by plaintiff to cease and desist. Id. ¶ 90. On October 30, 2012, plaintiff filed a lawsuit against the Alumni Association of Chi Theta Chi House for trademark infringement (Theta Chi 7)-4 Id. ¶ 91. Stanford was not a party to that lawsuit. See Dkt. No. 1-1 Ex. 3. Nevertheless, plaintiff alleges that it coordinated with the university throughout the litigation “given [the university’s] role in supervising and managing the activities of such groups as Chi Theta Chi on campus.” Id. ¶ 93. Theta Chi and the Alumni Association executed a settlement agreement and mutual release on January 11, 2013, and the matter was dismissed with prejudice. Id. ¶¶ 6, 94; Dkt. No. 1-1, Ex. 3 (Settlement Agreement and Mutual Release). The agreement was signed by defendant Allison in his capacity as president of the Alumni Association of Chi Theta Chi House. Among other things, the agreement directed the Alumni Association to:

• Permanently cease all use in commerce of the Theta Chi and Chi Theta Chi Marks in whole or in part as a trade name, trademark, service mark, or domain name,” Dkt. No. 1-1 ¶ l.a.i;
• Initiate its dissolution by filing its Certificate of Election to Wind Up and Dissolve with the California Secretary of State within 20 days after the date of the agreement, id. ¶ l.c; and
• Complete its dissolution and terminate its existence by filing a Certificate of Dissolution with the California Secre[821]*821tary of State by no later than August 1, 2013, id.

The settlement agreement also provided:

Theta Chi also agrees that the Association may use the name “Alumni Association of Chi Theta Chi House” in connection with filing the Certificate of Election to Wind Up and Dissolve Association ... and the name “Alpha Epsilon Alumni Association of Theta Chi Fraternity” and/or “Alumni Association of Chi Theta Chi House” as may be reasonably required in the Association’s state or federal income and other tax returns of the Association for tax year 2012 and their related correspondence and any final returns relating to the Association’s dissolution in 2013.

Id. ¶ l.a.iii.

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212 F. Supp. 3d 816, 2016 WL 4524305, 2016 U.S. Dist. LEXIS 116863, Counsel Stack Legal Research, https://law.counselstack.com/opinion/theta-chi-fraternity-inc-v-leland-stanford-junior-university-cand-2016.