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Malava, LLC v. Innovative Beverage Group Holdings

November 19, 2010

MALAVA, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY, PLAINTIFF,
v.
INNOVATIVE BEVERAGE GROUP HOLDINGS, INC., A NEVADA CORPORATION, INNOVATIVE BEVERAGE GROUP, INC., A NEVADA CORPORATION, DEFENDANTS
INNOVATIVE BEVERAGE GROUP HOLDINGS, INC., A NEVADA CORPORATION, INNOVATIVE BEVERAGE GROUP, INC., A NEVADA CORPORATION, COUNTER-CLAIMANTS,
v.
MALAVA, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY, COUNTER-DEFENDANT.



The opinion of the court was delivered by: Hayes, Judge

ORDER

The matter before the court is Plaintiff Malava LLC's Motion to Voluntarily Dismiss Case. (ECF No. 57).

BACKGROUND

On January 29, 2009, Plaintiff initiated this action by filing the Complaint. (ECF No. 1). On October 20, 2009, Plaintiff filed a First Amended Complaint ("FAC"). (ECF No. 34).

The FAC alleges that Plaintiff is the owner of the common law trademark and registered United States Trademark "The Anti-Energy Drink." Id. at 3¶ 9. The Complaint alleges that Defendant misappropriated its mark by using the following slogans, "'anti energy', 'the anti energy drink', and 'the world's first anti energy drink.'" Id. at 4 ¶ 15. The Complaint alleges the following claims for relief: (1) federal trademark infringement; (2) federal unfair competition, false designation of origin, passing off, and false advertising; (3) false advertising in violation of section 17500, et seq., of the California Business and Professions Code; and (4) unfair business practices in violation of section 17200, et seq., of the California Business and Professions Code.

On March 5, 2009, Defendant filed an Answer and Counterclaim. (ECF No. 8). On October 21, 2009, Defendant filed an Amended Answer and Counterclaim. (ECF No. 37). The Counterclaim seeks declaratory judgment of non-infringement and invalidity of Plaintiff's mark. Id. at 10.

On October 4, 2010, Plaintiff Malava LLC filed a Motion to Voluntarily Dismiss the Case. (ECF No. 57). On October 18, 2010, Defendant Innovative Beverage Group Holdings and Innovative Beverage Group's Opposition to Plaintiff's Motion to Voluntarily Dismiss was filed. (ECF No. 61). On October 23, 2010, Plaintiff filed a Reply. (ECF No. 62).

Plaintiff seeks voluntarily dismiss of its affirmative claims and requests the Court dismiss the case in its entirety. Plaintiff contends that if the Complaint is dismissed, Defendants will not suffer prejudice by the counterclaims being dismissed because the counterclaims would be unnecessary.

Defendants do not oppose dismissal of Plaintiff's Complaint provided that dismissal is with prejudice and Defendant's counterclaims are not dismissed. Defendants contend that there is a case pending before the Trademark Office's Trial and Appeal Board which has been stayed in favor of resolution of this case, and even if that case was decided, Plaintiff could return to federal court and relitigate these issues by appealing the decision. Defendants contend that Plaintiff is merely forum shopping to gain a tactical advantage. Defendants also contend that the Court has jurisdiction to determine the counterclaims.

DISCUSSION

I. Plain Legal Prejudice

Under Rule 41(a)(2) of the Federal Rules of Civil Procedure, "an action may be dismissed at the plaintiff's request only by court order, on terms that the court considers proper." Fed. R. Civ. P. 41(a)(2). Dismissal pursuant to Rule 41(a)(2) is without prejudice unless the order dismissing the case states otherwise. Id. "Rule 41 vests the district court with discretion to dismiss an action at the plaintiff's instance upon such terms and conditions as the court deems proper." Hargis v. Foster, 312 F.3d 404, 412 (9th Cir. 2002). "A district court should grant a motion for voluntary dismissal under Rule 41(a)(2) unless a defendant can show that it will suffer some plain legal prejudice as a result." Smith v. Lenches, 263 F.3d 972, 975 (9th Cir. 2001).

Plain legal prejudice is defined in the Ninth Circuit as "prejudice to some legal interest, some legal claim, some legal argument." Westlands Water Dist. v. United States, 100 F.3d 94, 97 (9th Cir. 1996). "Plain legal prejudice, however, does not result simply when defendant faces the prospect of a second lawsuit or when plaintiff merely gains some tactical advantage." Hamilton v. Firestone Tire & Rubber Co., 679 F.2d 143, 145 (9th Cir. 1982)(citation omitted); see also Westlands Water Dist. v. United States, 100 F.3d 94, 96 (9th Cir. 1996) ("[T]he threat of future litigation which causes uncertainty is insufficient to establish plain legal prejudice.)

Although Defendants contend that they may face the prospect of a future litigation and that Plaintiff may gain some tactical advantage, Defendants have failed to show that they will suffer plain legal prejudice as a result of the granting of Plaintiff's Motion to Voluntarily Dismiss ...


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