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JaM Cellars, Inc. v. Vintage Wine Estates, Inc.

United States District Court, N.D. California

June 12, 2017

JaM CELLARS, INC., Plaintiff,
v.
VINTAGE WINE ESTATES, INC., Defendant.

          ORDER DENYING MOTION TO STRIKE

          CHARLES R. BREYER, UNITED STATES DISTRICT JUDGE

         Plaintiff JaM Cellars, Inc. ("JaM"), owner of the BUTTER mark and maker of BUTTER chardonnay, brought suit against Defendant Vintage Wine Estates, Inc. ("Vintage"), fledgling developer of "BUTTER BOMB" and "BUTTER KNIFE" chardonnays, over concerns that its loyal customers will mistakenly purchase Vintage's offerings, only to declare, "I Can't Believe It's Not BUTTER!®" See Compl. (dkt. 1). Vintage moves to strike two causes of action pursuant to California's anti-SLAPP statute, arguing that JaM has sued it for protected activity, and that JaM cannot show a probability of prevailing on the merits. See Mot. (dkt. 13). As the Court indicated from the bench, it hereby DENIES the motion and will allow the case to ferment further.

         I. BACKGROUND

         JaM owns the trademark "BUTTER, " and uses it on its California chardonnay table wine. Compl. ¶ 5.[1] JaM has owned the trademark BUTTER for wine since 2011, with constructive use rights dating back to 2010; the registration is incontestable. Id. ¶ 8. BUTTER chardonnay is available in forty-eight states. Id. ¶ 10. JaM has sold over six million bottles of BUTTER since 2010, over three million of which were in 2016 alone. Id. That might be enough BUTTER to make Paula Deen blush. But see Paula Deen, Paula's Fried Butter Balls, Food Network, www.foodnetwork.com/recipes/paula-deen/paulas-fried-burter-balls-recipe-1946687 (last viewed May 23, 2017). Sales of JaM's BUTTER chardonnay have exceeded fifty three million dollars since 2010, twenty-six million dollars of which were in 2016 alone. Compl. ¶ 11. JaM's BUTTER wine was the #2 selling chardonnay in the $15-20 range in the United States. Id. ¶ 13. JaM has spent over two million dollars marketing its BUTTER chardonnay since 2010, and was the primary sponsor of the BottleRock Napa Valley music festival in 2015 and 2016. Id. ¶¶ 14-15.

         Vintage also makes and sells table wines, and, among other things, creates private labels for chain retailers. Id. ¶ 6.[2] In 2016, Vintage and national grocery retailer, Kroger, developed two wine brands, BUTTER BOMB and BUTTER KNIFE, as private labels for Kroger. Id¶19. BUTTER BOMB and BUTTER KNIFE are California chardonnays. Id. According to the complaint, Vintage and Kroger intend to price the wines lower than JaM's BUTTER wine, to trade on the goodwill of JaM's BUTTER mark, and even to place the wines "directly adjacent to JaM's BUTTER wine" on shelves. Id. ¶¶ 19, 30. In June 2016, Vintage filed applications to register BUTTER BOMB and BUTTERKNIFE WINES as trademarks. Id. ¶¶ 20-23. JaM's counsel notified Vintage that it objected to Vintage using the term BUTTER as part of its trademarks, and received no response from Vintage. Id. ¶ 24. In December 2016 and January 2017, Vintage applied for and received Federal Certificate of Label Approvals ("COLAs") for BUTTER BOMB and BUTTER KNIFE[3]wines, despite JaM's objections. Id. ¶¶ 25-28.

         JaM, immune to Vintage's wine charms, brought suit in March 2017, accusing Vintage of (1) trademark infringement pursuant to 15 U.S.C. § 1114, (2) false designation of origin pursuant to 15 U.S.C. § 1125, (3) common law trademark infringement, (4) unfair competition pursuant to California Business and Professions Code § 17200, (5) unjust enrichment, and (6) false or misleading statements pursuant to California Business and Professions Code § 17500. See Compl. ¶¶ 43-66. Uncorked and decanted, the complaint alleges that Vintage "used the BUTTER BOMB and BUTTER KNIFE marks in commerce or such use is imminent" as "confirmed by Kroger, " and that the Vintage wines are "likely to confuse consumers into believing that its wine is affiliated with, connected to, or sponsored by JaM and its popular BUTTER wine." Id. ¶¶ 32, 36. JaM further asserts that the marks are "similar in sight and sound, " both starting with the dominant term "BUTTER, " using the same yellow and black colors, and appearing on the same goods in the same channels of trade. Id.

         Vintage, urging that JaM is trying to cut its wine legs out from under it, brings a motion to strike the two unfair competition law ("UCL") claims in the complaint (those brought pursuant to California Business and Professions Code sections 17200 and 17500), as a Strategic Lawsuit Against Public Participation ("SLAPP"). See Mot.

         II. LEGAL STANDARD

         California's anti-SLAPP statute provides that any "cause of action against a person arising from any act of that person in furtherance of the person's right of petition or free speech under the United States Constitution or the California Constitution in connection with a public issue" is "subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim." Cal. Code Civ. Proc. § 425.16(b)(1). The statute facilitates "the early dismissal of unmeritorious claims filed to interfere with the valid exercise of the constitutional rights of freedom of speech and petition." Club Members for an Honest Election v. Sierra Club, 45 Cal.4th 309 (2008). Plaintiffs who find their claims stricken pursuant to the statute describe it as spicy, with a harsh mouthfeel and a bitter finish.

         III. DISCUSSION

         Analysis of a motion to strike pursuant to the anti-SLAPP statute consists of two steps. "The defendant bears the initial burden to show that the statute applies because the lawsuit arises"-or in this case, the challenged causes of action arise-"from defendant's act in furtherance of its right of petition or free speech." See Doe v. Gangland Prods., Inc., 730 F.3d 946, 953 (9th Cir. 2013).[4] If the defendant makes that showing, the court then considers whether the plaintiff has demonstrated "a reasonable probability" of prevailing on the merits of his claims. In re NCAA Student-Athlete Name & Likeness Licensing Litig., 724 F.3d 1268, 1273 (9th Cir. 2013) (quoting Batzel v. Smith. 333 F.3d 1018, 1024 (9th Cir. 2003)). Vintage argues that (A) the two UCL claims arise from Vintage's protected activity of filing trademark and COLA applications, and (B) although it seeks to play the role of wine stopper, JaM cannot demonstrate a probability that it will prevail on those UCL claims.

         A. Protected Activity

         The first step of the anti-SLAPP analysis, determining whether the relevant claims implicate a protected activity, is a matter of interpretation. "A defendant in an ordinary private dispute cannot take advantage of the anti-SLAPP statute simply because the complaint contains some references to . . . petitioning activity by the defendant." Sansoe v. Ford Motor Co.. 668 Fed.Appx. 718, 719 (9th Cir. 2016) (quoting People ex rel. fire Ins. Exch. v. Anapol, 211 Cal.App.4th 809 (2012)). "[T]he mere fact an action was filed after protected activity took place does not mean it arose from that activity." City of Cotati v. Cashman, 29 Cal.4th 69, 76-77 (2002). On the other hand, "a plaintiff cannot frustrate the purposes of the SLAPP statute through . . . combining allegations of protected and nonprotected activity under the label of one 'cause of action.'" Martinez v. Metabolife Intern.. Inc.. 113 Cal.App.4th 181, 188 (2003) (quoting Fox Searchlight Pictures Inc. v. Paladino. 89 Cal.App.4th 294, 308 (2001)). The Court must trust its palate to isolate the dominant flavors of the claim. "[I]t is the principal thrust or gravamen of the plaintiffs cause of action that determines whether the anti-SLAPP statute applies." Martinez. 113 Cal.App.4th at 188 (emphasis in original; citing to City of Cotati. 29 Cal.4th at 79).

         JaM's claim for violation of section 17200 incorporates all of the prior allegations in the complaint, alleges that such conduct by Vintage is "unfair, unlawful, and fraudulent, " and goes on to allege that "JaM has suffered direct injury and damage because sales have been and will be diverted to Vintage. . . because consumers mistakenly believe that Vintage's wine originates with JaM or is a 'bargain' version of JaM's wine." Compl. ¶¶ 59-61. Its claim for violation of section 17500 incorporates all of the prior allegations in the complaint and alleges that such conduct by Vintage constitutes "dissemination and making of untrue or misleading statements." Id. ΒΆΒΆ 65-66. Vintage argues in the motion that the two UCL claims thus challenge Vintage's filing of a trademark application with the USPTO and its COLA applications, and, further, that ...


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