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Pacific Coast Breaker, Inc. and Pc Systems, Inc. v. Connecticut Electric

May 23, 2011

PACIFIC COAST BREAKER, INC. AND PC SYSTEMS, INC.
PLAINTIFFS,
v.
CONNECTICUT ELECTRIC, INC., ROD FORREST, BRUCE DUNHAM, AND DOES 1 THROUGH 20, INCLUSIVE, DEFENDANTS



ORDER

This case was on calendar on April 6, 2011, for hearing on defendant Connecticut Electric's motion to dismiss (ECF No. 14) and plaintiffs Pacific Coast Breaker and PC Systems' motion for a preliminary injunction (ECF No. 17). Vincent J. Allen, Carstens & Cahoon LLP, appeared telephonically for defendant; Brian Crone and Erick Turner, Berry & Block LLP, appeared for plaintiffs.

I. Background

Defendant Connecticut Electric, Inc. (CE or defendant) is a Delaware corporation, which maintains its principal place of business in Indiana. Compl. ¶ 4. Plaintiffs Pacific Coast Breakers, Inc. (PCB) and PC Systems (PCS) are California corporations with their principal places of business in Sacramento County. Id. ¶¶ 2-3. Plaintiffs and defendant are wholesale suppliers of commercial and residential circuit breakers; plaintiffs have purchased breakers from defendant and also sell breakers in competition with defendant. Id. ¶¶ 13, 18. Both sell a type of circuit breaker marketed as a replacement for a circuit breaker designed and sold by the Zinsco Company. Id. ¶ 14. In addition, defendant, which purchased the Zinsco name, sells originally manufactured Zinsco breakers; plaintiffs have purchased some of these originally manufactured breakers from defendants for resale. Id. ¶¶ 17, 18. Plaintiffs and defendant have many of the same customers. Declaration of Craig Volpe in Support of TRO (Volpe TRO Decl.), ECF No. 1-1 ¶ 5.

In October 2010, plaintiffs decided to increase the marketing of the replacement Zinsco breaker. Volpe TRO Decl. ¶ 13. Shortly thereafter CE sent an announcement to its customers claiming that plaintiffs were manufacturing and distributing counterfeit Zinsco circuit breakers and that these breakers had not been safety-tested. Volpe TRO Decl. ¶ 5. The announcement mentioned a lawsuit by CE concerning the circuit breakers. Id. & ECF No. 1-1 at 50-52.

On November 9, 2010, defendant had in fact filed an action against plaintiffs in the Southern District of Indiana based on plaintiffs' sales of circuit breakers, alleging trademark counterfeiting and infringement, 15 U.S.C. § 1114; trademark dilution, 15 U.S.C. § 1125; unfair competition, 15 U.S.C. § 1125(a); trade dress infringement, 15 U.S.C. § 1125(a); common law trademark infringement and unfair competition; forgery, Ind. Code § 35-43-5-2(b); and counterfeiting, Ind. Code § 35-43-5-2(a). Opp'n to Motion To Dismiss, Declaration of Brian Crone (Crone Decl.) & Ex. 4, ECF No. 18-2 at 53-62.

On November 11, 2010, Bruce Dunham, CE's National Sales Manager, called Craig Volpe, the Electric Manager and one of the owners of PCB and PCS. Declaration of Craig Volpe in Opposition to MTD (Volpe Opp'n Decl.), ECF No. 18-1 ¶¶ 1, 3; Compl. ¶ 6. Dunham asked Volpe to stop producing the Zinsco replacement circuit breakers or deal with a lawsuit. Volpe Opp'n Decl. ¶ 3. When pressed, Dunham conceded that the suit had already been filed.

Id. Volpe complained that Dunham should have called him before filing suit, but Dunham said defendant received more appropriate responses if a lawsuit had been filed first. Id. Volpe said he would get back to Dunham after he returned to Sacramento from a business trip and discussed the issue with his partners. Id. Dunham was agreeable. Id. Before Volpe had a chance to speak with his partners, he heard about defendant's announcement from several customers. Id.

On November 15, 2010, counsel for plaintiffs sent a letter to counsel for defendant, demanding a retraction of the notification defendant had sent. Motion To Dismiss (MTD), Declaration of Vincent J. Allen (Allen Decl.) ¶ 3; Declaration of Erick Turner in Support of TRO (Turner Decl.) ¶ 3 & Ex. B, ECF No. 1-1 at 61-63.

The next day, defendant filed its first amended complaint in Indiana, adding a claim for a declaratory judgment that it has not made any false or misleading claims against plaintiffs. Allen Decl. ¶ 4 & Ex. 1 (First Am. Compl.), ECF No. 15-1 at 17.

On November 17, 2010, plaintiffs filed this action in Sacramento County Superior Court, alleging claims for false and misleading advertising, 15 U.S.C. § 1125; trade libel; defamation; false advertising, Cal. Bus. & Prof. Code § 17500; unfair competition, Cal. Bus. & Prof. Code § 17200; intentional interference with prospective economic relations; and negligent interference with prospective economic advantage and seeking declaratory and injunctive relief as well as damages. Compl., ECF No. 1-1 at 9-17. Plaintiffs set an ex parte hearing on their motion for a temporary restraining order, giving notice to defendant's counsel by e-mail and facsimile only the day before the hearing. Allen Decl. ¶ 6; Turner Decl. ¶ 2 & Ex. 1, ECF No. 1-1 at 56-59. Counsel for plaintiffs avers that he filed the California action before he learned that defendant had filed its amended complaint in the Indiana action. Crone Decl. ¶ 5.

On November 19, 2010, defendant removed the Sacramento Superior Court action to this court. On December 10, 2010, plaintiffs filed a motion for a preliminary injunction in this court.

Plaintiffs have not answered the Indiana action but rather have filed a motion to dismiss for lack of personal jurisdiction or, in the alternative, to transfer that action to this court. Allen Decl. ¶ 7; Crone Decl. ¶ 2 & Ex. 1, ECF No. 18-2 R 5-23. Defendant has opposed this motion and secured PCB's stipulation to conduct limited discovery on the jurisdiction question. Crone Decl. ¶ 3 & Ex. 3, ECF No. 18-2 at 42-46; Reply, ECF No. 22-3 at 1-25.

As of the date of this writing, the Indiana Court has not decided its pending motion to dismiss or transfer. Docket, Connecticut Electric, Inc. v. Pacific Coast Breaker, ...


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