A legitimate affiliation confusion claim?

Grubbs v. Sheakley Group, Inc., 2015 WL 1321126, No. 1:13cv246 (S.D. Ohio Mar. 18, 2015)

 

The court adopted the magistrate judge’s recommendations in this case, dismissing Lanham Act claims (and RICO claims) and declining to retain jurisdiction over state claims.

 

Grubbs was the sole owner of Capital Concepts, Inc., a financial planning, wealth management, and tax preparation firm, which bought Tri–Serve Ltd. and Triserve # 1 LLC, companies that provided human resources and financial services to corporations. Defendant Strunk–Zwick worked for Tri–Serve as a managing director, then as the manager of Capital Concepts, then Tri–Serve again. Plaintiffs alleged that she schemed to defraud Capital Concepts, and later Tri–Serve, and to embezzle assets for her own purposes and for the benefit of other defendants. She allegedly worked with other defendants to transfer clients, employees, and other assets from Capital Concepts and Tri–Serve to entity defendants.  After Grubbs presented evidence of Strunk-Zwick’s scheme, including falsified bank documents, Strunk-Zwick was charged and ultimately convicted of wire fraud.

 

In July 2009, Strunk–Zwick sent emails to a limited number of Tri–Serve clients stating that individual defendants were partnering with Sheakley HR and moving their offices, but that there would be no change to the services provided other than new contact information. The new address was listed as: “TriServe LTD c/o Sheakley HR Solutions,” and Tri–Serve’s address and logo appeared at the bottom of the emails. Plaintiffs alleged that this represented an affiliation between Tri-Serve and Sheakley.

 

The court found that plaintiffs failed to plead likely confusion.  Before using the multifactor confusion test, the threshold question was “whether the defendants are using the challenged mark in a way that identifies the source of their goods.” Here, the Tri–Serve name and logo were used in a “non-trademark way.” The emails specified that clients “will begin to see the Sheakley HR name” as opposed to the name TriServe in future communications. “The use of TriServe’s mark in a ‘non-trademark way’ as a source of comparison between the two organizations and to identify to the email recipients a change in service provider does not make the Entity Sheakley Defendants liable to plaintiffs for trademark infringement. Because the emails sent by defendant Strunk–Zwick clearly identify Sheakley as the future service provider, there is no likelihood of confusion as to the origin of the future services coming from TriServe.”

 

Comment: wow, an affiliation confusion claim that I think should’ve been taken more seriously.  Will wonders never cease?  The problem isn’t that it wasn’t clear that Sheakley would be the service provider.  The problem with the quoted emails was that they made it sound like Tri-Serve was becoming Sheakley in voluntary fashion.  Parts of the emails not quoted in the opinion may have made clear that it was the individual defendants, not the whole Tri-Serve enterprise, that was moving, in which case the court’s ruling makes sense.  But “TriServe c/o Sheakley” sure sounds like an affiliation claim standing alone.

 

False advertising: Here the problem was “commercial advertising or promotion,” using the Gordon & Breach test.  The 2009 emails had only 23 recipients, and “[a]bsent allegations as to either the size of the relevant market or the number of entities within that market that [defendants] contacted, it remains entirely speculative as to whether [defendants’] communications have been ‘disseminated sufficiently to the relevant purchasing public to constitute advertising or promotion within [plaintiffs’] industry.”