United States District Court, S.D. Florida
ADT & ADT U.S. HOLDINGS, INC., Plaintiffs,
ALARM PROTECTION LLC, et al., Defendants.
ORDER GRANTING IN PART AND DENYING IN PART
DEFENDANTS' MOTION FOR PARTIAL SUMMARY JUDGMENT
L. Rosenberg UNITED STATES DISTRICT JUDGE
matter is before the Court on Defendants' Motion for
Partial Summary Judgment [DE 232]. The Motion has been fully
briefed. For the reasons set forth below, the Motion is
granted as to Defendants' arguments on the issue of
attorney's fees and denied in all other respects.
case is about door-to-door sales. Defendants are a collection
of companies, operating under the name of “Alder,
” that target Plaintiffs' customers' houses. At
its core, this is case about how Defendants train their sales
agents and how those agents conduct themselves.
Defendants' position is that they train their sales
agents to be honest and forthright but, from time to time,
individual agents may utilize aggressive sales tactics or
deviate from their training. Plaintiffs' position is that
Defendants' sales agents are intentionally deceptive-not
just because of their individual preferences, but because of
Defendants' training programs.
disputes between the parties have a long procedural history.
Originally, in case 12-CV-80898 (“ADT
I”), the parties litigated whether Plaintiffs'
trademark and Defendants' trademark were similar enough
to generate confusion in the mind of consumers. Defendants
won that lawsuit after a trial by jury. Both parties
appealed, and the appellate court ultimately held that the
jury's verdict in favor of the Defendants should stand.
parties' disputes were not limited to the possibility of
confusion with their respective trademarks. Plaintiffs also
believed that Defendants' sales practices were deceptive
and, as a result, the instant suit was filed prior to the
ADT I trial. While ADT I was pending on
appeal, this case was stayed. After the appellate court's
decision in ADT I, this case resumed. Before the
Court is Defendants' Motion for Partial Summary Judgment
on the issue of Plaintiffs' theory for damages.
ADT LLC and ADT U.S. Holdings, Inc. (commonly referred to as
“ADT”), filed this lawsuit alleging that
Defendants train their sales agents to sell Defendants'
electronic security services to Plaintiffs' customers
under the guise that the agents are affiliated with
Plaintiffs. Plaintiffs' Third Amended Complaint alleges
unfair competition under the Lanham Act, 15 U.S.C. §
1125(a) (Count I), and common law unfair competition (Count
II). Plaintiffs seek a permanent injunction barring further
use of deceptive sales practices; compensatory damages; an
accounting of Defendants' profits; punitive damages; and
attorney's fees and costs incurred by Plaintiffs in
bringing this suit.
assert that Defendants target Plaintiffs' customers by
identifying houses with Plaintiffs' signs in the yard.
Plaintiffs contend that Defendants' agents use deceptive
sales pitches that mislead Plaintiffs' customers into
believing that the agents represent, or are otherwise
affiliated with, Plaintiffs. According to Plaintiffs, the
purpose of these pitches is to trick Plaintiffs'
customers into believing that Plaintiffs have an existing
business relationship with the agents. The agents then get
the customers to sign contracts with Defendants based on the
mistaken belief that they are receiving an upgrade to their
alarm system (Plaintiffs' alarm system).
SUMMARY JUDGMENT STANDARD
judgment is appropriate if “the movant shows that there
is no genuine dispute as to any material fact and the movant
is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a). The existence of a factual dispute is not
by itself sufficient grounds to defeat a motion for summary
judgment; rather, “the requirement is that there be no
genuine issue of material fact.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
247-48 (1986). A dispute is genuine if “a reasonable
trier of fact could return judgment for the non-moving
party.” Miccosukee Tribe of Indians of Fla. v.
United States, 516 F.3d 1235, 1243 (11th Cir. 2008)
(citing Anderson, 477 U.S. at 247-48). A fact is
material if “it would affect the outcome of the suit
under the governing law.” Id. (citing
Anderson, 477 U.S. at 247-48).
deciding a summary judgment motion, the Court views the facts
in the light most favorable to the non-moving party and draws
all reasonable inferences in that party's favor. See
Davis v. Williams, 451 F.3d 759, 763 (11th Cir. 2006).
The Court does not weigh conflicting evidence. See Skop
v. City of Atlanta, 485 F.3d 1130, 1140 (11th Cir.
2007). Thus, upon discovering a genuine dispute of material
fact, the Court must deny summary judgment. See id.
moving party bears the initial burden of showing the absence
of a genuine dispute of material fact. See Shiver v.
Chertoff, 549 F.3d 1342, 1343 (11th Cir. 2008). Once the
moving party satisfies this burden, “the nonmoving
party ‘must do more than simply show that there is some
metaphysical doubt as to the material facts.'”
Ray v. Equifax Info. Servs., LLC, 327 F. App'x
819, 825 (11th Cir. 2009) (quoting Matsushita Elec.
Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574,
586 (1986)). Instead, “[t]he non-moving party must make
a sufficient showing on each essential element of the case
for which he has the burden of proof.” Id.
(citing Celotex Corp. v. Catrett, 477 U.S. 317, 322
(1986)). Accordingly, the non-moving party must produce
evidence, going beyond the pleadings, to show that a
reasonable jury could find in favor of that party. See
Shiver, 549 F.3d at 1343.
Motion for Summary Judgment seeks a ruling from this Court on
the issue of damages. Defendants argue that Plaintiffs'
request for royalty damages is improper as a matter of law.
Defendants similarly argue that Plaintiffs' request for
compensatory damages (determined by market value), request
for goodwill and reputational damages, request for punitive
damages, and request for attorney's fees are improper as
a matter of law. The Court addresses each category of damages
Plaintiffs' Request for Royalty Damages
seek royalty damages from Defendants because it is
Plaintiffs' contention that customer accounts have been
essentially stolen from Plaintiffs' dealers and taken
over by Defendants. Plaintiffs therefore seek to recover from
Defendants compensation akin to the compensation Plaintiffs
would have otherwise received from their dealers had the
customers not been transferred to Defendants. Defendants
argue these damages are improper for many reasons: royalties
are not recoverable pursuant to Plaintiffs' claim as a
matter of law, Plaintiffs' royalty damages are
speculative, Plaintiffs should be judicially estopped from
seeking royalty damages, and Plaintiffs should be sanctioned
under the Federal Rules of Civil Procedure through exclusion
of Plaintiffs' royalty damages theory. The Court
addresses each of these arguments in turn, however, the Court
first addresses two central premises at the heart of many of
Defendants' arguments on this issue.
Premises Underpinning Defendants' Arguments on the
Issue of Royalty Damages
central premises are at the heart of many of Defendants'
arguments. Defendants' first premise encompasses several
different points. Defendants contend that there are no
allegations of trademark infringement in this case and, as a
result, (i) Plaintiffs may not utilize any damages theory
that in turn requires trademark infringement, (ii) lost
profit damages require trademark infringement, and (iii)
Plaintiffs therefore cannot pursue lost profits.
Defendants' second premise is that Plaintiffs do not
utilize a royalty as part of their business model and thus
Plaintiffs may not utilize any damages theory that involves a
royalty. Each of these premises underpins the theme of
Defendants' arguments against Plaintiffs' royalty
damages theory. Each of these premises is incorrect.
with respect to whether there are allegations of trademark
infringement in this case, this is an issue Defendants have
developed in a confusing manner. What Plaintiffs have alleged
is that Defendants have violated the Lanham Act, 15 U.S.C.
§ 1125(a). Section 1125, which is entitled “False
designations of origin, false descriptions, and dilution
forbidden, ” reads as follows:
Any person who, on or in connection with any goods or
services, or any container for goods, 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, or (B) in commercial
advertising or promotion, misrepresents the nature,
characteristics, qualities, or geographic origin of his or
her or another person's goods, services, or commercial
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.
(emphasis added). Plaintiffs have alleged that Defendants
have confused Plaintiffs' customers by falsely
affiliating themselves with Plaintiffs. DE 174 at 32.
Colloquially, Plaintiffs' cause of action is classified
as a “false affiliation” claim. The Lanham Act
provides for an award of loss profits when the Act is
violated. 15 U.S.C. § 1117(a). A false affiliation claim
is, of course, a cause of action under the Lanham Act.
Plaintiffs have prayed for an award of lost profits. DE 174
at 36. Lost profits may be awarded under the Lanham Act for,
inter alia, an unjust enrichment caused by a
violation of 15 U.S.C. § 1125(a), which Plaintiffs have
alleged here; a plaintiff need not show diverted sales in
order to obtain lost profits. Optimum Techs., Inc. v.
Home Depot, Inc., 217 F. App'x 899, 902 (11th Cir.
2007); Maltina Corp. v. Cawy Bottling Co., 613 F.2d
582, 584-85 (5th Cir. 1980). An unjust enrichment occurs when
a defendant sells “by tapping into the reputation and
goodwill” of the plaintiff. Howard Johnson Co. v.
Khimani, 892 F.3d 1512, 1521 n.9 (11th Cir. 1999).
Plaintiffs have so alleged. See generally DE 174.
Thus, regardless of whether Plaintiffs have brought “a
trademark infringement ...