Free Response to Motion - District Court of Arizona - Arizona

Robert M. Frisbee #018779 FRISBEE & BOSTOCK, PLC 2 1747 Morten Ave. E. Suite 108 Phoenix, Arizona 85020 3 Phone: (602) 354-3689 [email protected] 4 Attorneys for Defendant Greg Hancock
1 5 6 7 8 9 10 11

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA MERITAGE CORPORATION, a Maryland corporation Plaintiff, vs. ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

NO. CIV 04-0384-PHX-ROS DEFENDANT GREG HANCOCK'S RESPONSE TO PLAINTIFFS' SUPPLEMENTAL BRIEF PER THE COURT'S ORDER OF APRIL 20, 2007

GREG HANCOCK, an individual; RICK HANCOCK, an individual; and 12 RICK HANCOCK HOMES, L.L.C., an Arizona Corporation,
13

Defendants.
14 15

Defendant Greg Hancock submits this Response to Meritage's Supplemental Brief
16

pursuant to the Court's Order of April 20, 2007.
17 18 19 20 21 22 23 24 25 26

I. Plaintiffs Cannot Adequately Distinguish MJ & Partners, There Is Insubstantial Evidence of Confusion, and Its Claims Must Be Dismissed. Meritage attempts to distinguish MJ & Partners first, by claiming it is distinguishable on its facts because Meritage has more claims - "association,"and "false advertising" - than those considered in MJ & Partners; second, by trying to sell the proposition that "trade dress" applies - it would have the court adopt the ridiculous assertion that tract houses are equivalent to taco stands; and third, that the case "overstates the law." While the attempt is interesting, it is unpersuasive, and misses the mark for several reasons. First, this case is exactly like MJ & Partners in that Greg Hancock granted an initial license to Meritage and a subsequent one to Rick Hancock. Unlike MJ & Partners,

Case 2:04-cv-00384-ROS

Document 479

Filed 05/01/2007

Page 1 of 7

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

however, Greg Hancock canceled Meritage's license before Rick Hancock ever started to use the name "Rick Hancock Homes." Meritage's discussion about whether or not the Ninth Circuit has or would adopt Ballet Makers, Inc. v. United States Shoe Corp., 633 F.Supp. 1328 (S.D.N.Y. 1991), relied on by the MJ & Partners court, is irrelevant - the essence of its holding is indisputable, "the Lanham Act is designed to protect the public, not licensees." 633 F.Supp. at 1334. Second, all of Meritage's claims, however labeled, are subject to proof that there is actual confusion, or a likelihood of confusion in the marketplace. As is said in MJ & Partners: "A plaintiff must prove that a likelihood of confusion would occur to a significant number of consumers and not merely in an isolated situation. Door Systems, Inc. v. Pro-Line Door Systems, Inc., 83 F.3d 169, 173 (7th Cir. 1996)." 10 F.Supp 2d at 927 (underlining supplied). See, also, KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 125 S.Ct. 542, 160 L.Ed.2d 440, 73 USLW 4029 (2004). As has been pointed out in prior arguments, and as is once again glaringly evident, the only evidence of confusion Meritage presents is the self-serving declaration of Mario Atkins, an underling of Marine Major/ Snell & Wilmer lawyer Steve Erickson. In addition to it being an "isolated situation," Atkins himself signed a disclaimer (disingenuously unmentioned in his declaration) on April 29, 2005: "Buyer [Atkins] hereby acknowledges and understands that Seller, Rick Hancock Homes, is not affiliated with Meritage and/or Hancock Communities." 03/22/2007)1 The "trade dress/false advertising" cases cited by Meritage are so far afield as to be laughable. In Chevron Chem. Co. v. Voluntary Purchasing Groups, Inc., 659 F.2d 695 (5th Cir. 1981), the court considered virtually identical packaging, logos and labels on (Document 460-2, filed

As pointed out in earlier submissions, numerous witnesses, even Meritage employees, testified that one would have to be a "fool" not to understand the difference between "Rick Hancock Homes" and "Hancock Communities."

1

2 Case 2:04-cv-00384-ROS Document 479 Filed 05/01/2007 Page 2 of 7

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

defendant's weed killer, and described factors ("digits") to determine the likelihood of consumer confusion: intent, similarity of design, actual confusion, similarity of product, similarity of retail outlets and purchasers, and similarity of advertising. 659 F.2d 706. In this case, Greg Hancock was in no way connected with Rick Hancock's home sales, and aside from selling homes to home buyers, none of the other "digits" are present. Rick Hancock intended only to sell "Rick Hancock" homes, all printed material is not only different but contains the disclaimer, there was no confusion, and Rick Hancock did not advertise. In Two Peso v. Taco Cabana, 505 U.S. 763 (1992), the topic was a taco restaurant knockoff, down to exterior, menu, servers' uniforms, and the like "reflecting on the total image of the restaurant." There is no evidence in this case of anything similar other than a development location at Sundance, albeit separated by a freeway. Third, even in MJ & Partners there was some evidence of attempted competition a "whispering campaign," press releases, using Michael Jordan's vehicles, etc. In this case Meritage has produced no evidence that Rick Hancock did any advertising at all. The one small sign at his development, mandated as an identifier by the City of Buckeye and impossible to see from the Watson off-ramp at I-10, contained the very disclaimer that Atkins signed. There is no evidence of any media advertising, because there was none. And there is no evidence of interstate competition, again because there was none. All are fatal to the federal Lanham Act claims. See, e.g., Horlick's Malted Milk Corp. v. Horluck's, Inc., 49 F.2d 13 (9th Cir. 1932); CCM Investors, Inc. v. Everest Development, Ltd., 840 F.Supp. 1304 (D.Minn. 1994). Finally, as has also been documented in prior submissions, there is no believable evidence of any damage suffered by Meritage. It has sold out the Sundance subdivision, and does not claim it was delayed or deterred in any way by Rick Hancock's presence. \\ \\
3 Case 2:04-cv-00384-ROS Document 479 Filed 05/01/2007 Page 3 of 7

1 2

II. Dismissal of The Federal Unfair Competition Claim Requires Dismissal of The State Unfair Competition Claim. The Court's April 20, 2007, Order cites Taylor v. Quebedeaux, 126 Ariz. 515, 617

3

P.2d 23 (1980), for its statement of the essence of unfair competition, "confusion of the
4

public." Federal unfair competition law was not implicated in that case because plaintiffs
5

held no federally registered trademark. However, in affirming an injunction requiring
6

defendants to further identify their goods and utilize a disclaimer (similar to the one utilized
7

by Rick Hancock) the court noted some salient facts totally absent from this case: "The name
8

taken by the Quebedeuxes has resulted in misdelivered mail, equipment returned to the
9

wrong store, misdirected customers, and the inescapable conclusion to the people in and
10

around Show Low that Leon and Blanchie Taylor are somehow associated with the
11

Quebedeaux business." Here, except for the entirely impeachable Mario Atkins, there is no
12

such evidence.
13

Later Arizona cases demonstrate the state's deference to federal unfair competition
14

law and dictate that if the federal claim is dismissed, so should be the state claim. In Kaibab
15

Shop v. Desert Son, Inc., 135 Ariz. 487, 662 P.2d 452 (1983), defendant started selling
16

moccasins identical to moccasins long sold by plaintiff. The trial court awarded both
17

damages and an injunction requiring further identification of defendant's products. The
18

damage award was reversed because there was no evidence of "palming off" or that
19

defendants did anything to mislead or confuse purchasers. Moreover, such an award would
20

infringe on federal patent law and Sears, Roebuck & Co. v. Stiffel Company, 376 U.S. 225,
21

84 S.Ct. 784, 11 L.Ed.2d 661(1964) and Compco Corp. v. Day-Brite Lighting, Inc., 376
22

U.S. 234, 84 S.Ct. 779, 11 L.Ed.2d 669 (1964), which held that states could not, under state23

established unfair competition law, award damages from a competitor who sells a virtually
24

identical non-patented article even in the presence of market confusion.
25

Then, in Fairway Constructors, Inc. v. Ahern, 193 Ariz. 122, 970 P.2d 954 (1999),
26 4 Case 2:04-cv-00384-ROS Document 479 Filed 05/01/2007 Page 4 of 7

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

rev. denied 1/12/99, the Arizona Court of Appeals affirmed the dismissal of a complaint which was held to be within the exclusive patent jurisdiction of the federal court. Plaintiff could not sue in federal court because it was not an exclusive licensee of the copyright in question, and it was held that the attempted "passing off" and "misappropriation" claims were similarly barred: "We agree that an unfair competition claim is preempted [by federal law] unless it alleges elements that make it qualitatively different from a copyright infringement claim." 970 P.2d at 954. The decision contains an extensive discussion of various federal cases on which the court relied, and contains a nicely descriptive passage regarding unfair competition generally: The common law doctrine of unfair competition is based on principles of equity. House of Westmore, Inc. v. Denney, 151 F.2d 265 (3d Cir. 1945); Metropolitan Opera Ass'n v. Wagner-Nichols Recorder Corp., 199 Misc. 786, 101 N.Y.S.2d 483, 488 (1950). The general purpose of the doctrine is to prevent business conduct that is "contrary to honest practice in industrial or commercial matters." American Heritage Life Ins. Co. v. Heritage Life Ins. Co., 494 F.2d 3, 14 (5th Cir. 1974). The doctrine encompasses several tort theories, such as trademark infringement, false advertising, "palming off," and misappropriation. W.Page Keeton, et. al., Prosser and Keeton on the Law of Torts 130 at 1-13-30 (5th Ed. 1984). . . . 970 P.2d at 954. Finally, where state unfair competition doctrine or statute is substantially congruent

17

to federal law, dismissal of the federal unfair competition claims compels dismissal of the
18 19 20

pendent state claims. Denbicare U.S.A. INC. v. Toys "R" US, INC., 84 F.3d 1143 (9th Cir. 1996) and Antelecom, Inc. v. Japan Telecom America, Inc., 287 F.3d 866, 875 (9th Cir. 2002).

21

The MJ & Partners court also made the following observation, apropos of this topic:
22

"We note, in closing, that until now the basis of our subject matter jurisdiction has been
23

plaintiffs' Lanham Act claim since there is no diversity of citizenship. We have been
24

reviewing plaintiff's pendent state law claims from the perspective of federal pleading
25

requirements.
26

However, we question whether we continue to have subject matter

5 Case 2:04-cv-00384-ROS Document 479 Filed 05/01/2007 Page 5 of 7

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

jurisdiction since we have dismissed plaintiffs' Lanham Act claim. . . ." 10 F.Supp.2d at 933. III. Conclusion Plaintiffs have failed to meet the Court's challenge to explain why its federal unfair competition claims should not fail, and their pendent state claims with them. This case has been pending for years and discovery has been exhaustive, yet Meritage still cannot present any credible evidence of its many claims, particularly against Greg Hancock. It is reduced to inaccuracy and distortion: 1. "[D]efendants' misleading promotional activities." P.2 There is no evidence of any promotional activities by Greg Hancock, and none other than on-site displays by Rick Hancock, all of which contained disclaimers. 2. "The evidence shows that consumers dealing with Rick Hancock Homes' sales operation at Sundance believed they were dealing with Meritage." P.3. Meritage could only produce one "consumer," Atkins, and he disclaimed that he was confused. 3. " Likewise, Rick Hancock's marketing presentations to customers identified by Sgt. Atkins and as reflected in the billboards is actionable under the false advertising prong." P. 4. There is not a single untrue statement in what is claimed to have been presented to Atkins, Rick Hancock does not pass himself off as either Meritage or Hancock Communities, Atkins disclaimed confusion, and there were no "billboards" - only a barely visible small sign containing the disclaimer. This Court should do exactly what Meritage says at P. 10 - - rule as a matter of law that no consumer was or could be confused between Rick Hancock and Meritage. That conclusion is compelled under the circumstances, rather than error. Whatever the decision regarding Rick Hancock's activities, there is not a single shred of evidence that Greg Hancock did anything whatever with Rick Hancock other than sell him land, which Meritage concedes he was entitled to do. The claims against
6 Case 2:04-cv-00384-ROS Document 479 Filed 05/01/2007 Page 6 of 7

1 2 3 4 5 6 7

Greg Hancock must be dismissed as a matter of law. Respectfully submitted this day 1st day of May, 2007.

FRISBEE & BOSTOCK, PLC /s/ Robert M. Frisbee Robert M. Frisbee Attorney for Greg Hancock

The foregoing Response to Order re Dismissal was electronically filed and served this 1st day of May, 2007, and copy 9 thereof mailed to the Honorable Judge Silver.
8 10

/s/ Robert M. Frisbee
11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 7 Case 2:04-cv-00384-ROS Document 479 Filed 05/01/2007 Page 7 of 7