Toyota Motor Sales v The Partnerships etc. on Schedule A, 24-cv-09401 (Nov 18, 2024 Daniel, J.)
The Northern District of Illinois is done with the “Anything Goes” phase of multi-defendant trademark litigation and has entered a new rules-based phase of Schedule A Defendant litigation. Here, a (recently appointed) ND Ill. judge dismissed a SAD case (without prejudice), sua sponte, for lack of joinder. To be clear on two points: (1) I’m troubled by the dicta in this case, not the holding; and (2) my hoodlum friends discussed below went on to law-abiding careers.
The court begins:
“The plaintiff seeks to join 103 defendants in this infringement action. Concerned that joinder was not proper, the Court directed the plaintiff to file a supplemental memorandum addressing the propriety of joinder. Having considered the plaintiff’s arguments, the Court finds that joinder is not proper and dismisses the complaint without prejudice.“
Here are the arguments that the court did not find persuasive with regard to joinder:
“According to the plaintiff, joinder is proper because:
(1) it allows the plaintiff to combat the unique problem of offshore Internet-based counterfeiters who exploit the anonymity and mass reach afforded by the Internet;
(2) the defendants all fit the same profile, working in a similar manner and during the same time period to sell counterfeit products as part of the same occurrence or series of occurrences;
(3) district courts have broad discretion to evaluate joinder as the case progresses, so they should just allow joinder and adjust as needed;
(4) some counterfeiters coordinate actions to evade detection and liability, so district courts should infer that all counterfeiters, including the defendants named here, coordinate actions to evade detection and liability;
(5) some counterfeiters use the same wording in product descriptions, so district courts should infer that the use of the same wording means that all of the defendants are in league with each other; and
(6) some Seller Aliases may have common ownership, so district courts should allow joinder because the plaintiff does not have access to the information necessary to show common ownership at this time. “
Now here’s a passage by Judge Daniel that brought back memories of a misspent youth:
I went to a concert a few weeks ago. When I got off the train, a vendor was selling what I suspected to be counterfeit t-shirts bearing the performer’s likeness. As I continued toward the venue, I encountered a second vendor selling some of the same t-shirt designs as the first vendor. As I crossed the venue’s parking lot, a third counterfeiter offered some of the same t-shirt designs for sale as the first two. These three vendors had the same profile. They sold the same merchandise. They used the same tactics to try to get my attention. Two of them even offered similar deals (“two for $30”). One could even argue that they “swarmed” the concert venue that evening. But that does not establish a “logical relationship” between them. Had I purchased a t-shirt from all three, only to have each fall apart after the first wash, it would not establish a series of transactions or occurrences allowing me to join them in a single lawsuit. That is, unless I had some link connecting them. To further illustrate this point, assume I am a super fan and decided to follow the performer to Los Angeles, California, where I encountered similar vendors selling the same t-shirts as I approached the venue. Even if the t-shirts came from the same factory, and even if the unauthorized vendors employed the same hustle, I would have a hard time establishing a connection between a vendor in Chicago and a vendor in Los Angeles—even though they fit a particular profile.
To borrow from the “hub-and-spoke conspiracy” context, there needs to be a “rim” connecting the various defendants. See, e.g., Marion Healthcare, LLC v. Becton Dickinson & Co., 952 F.3d 832, 842 (7th Cir. 2020)(describing a hub-and-spoke conspiracy). A rim would allow one to treat all of the transactions or occurrences as a series, or to hold defendants jointly and severally liable. Having similar profiles, however, says nothing about the relationship between the various transactions or occurrences that give rise to the plaintiff’s claims and does not make defendants jointly and severally liable. As the plaintiff concedes, not every defendant is working with other defendants. That means that the transactions or occurrences are not linked.
I’m not sure I totally agree with the bit about the “same factory.” In college, my hoodlum buddies, Sharit and Sitver (not Sharit’s and Sitver’s real names), would buy the same unauthorized event t-shirts from the same guy (known only as Joey). These unauthorized shirts tended to be created for that artist’s particular tour. My friends would take their places on Eighth Avenue outside the Garden the night of the Jethro Tull concert (or whatever). They were competing with other but also tacitly agreeing to stay a certain distance away from each other and the other miscreants in Joey’s distribution network. Also, they would keep each other apprised of the level of law enforcement that evening (this was before cellphones, so they probably would just yell if the police approached). So, using the terminology in footnote 2 of the decision, some of these t-shirt hawkers had both a common purpose (selling shirts) and a common purpose (sell shirts in such a way that no one got arrested, and Joey get his hands on a new batch of shirts for the next concert).
I looked at the cited case’s definition of “hub and spokes” conspiracy which was:
This type of conspiracy requires a plaintiff to allege both that there was a central coordinating party (the “hub”), and that each participant (along the “rim”) recognized that it was part of the greater arrangement, and it coordinated or otherwise carried out its duties as part of the broader group. In other words, a “hub-and-spokes conspiracy” requires a “rim” connecting the various horizontal agreements.
Marion Healthcare, LLC v. Becton Dickinson & Co., 952 F.3d 832, 842 (7th Cir. 2020)
I think in my hoodlum friends hypo, in a case where the defendants are selling the identical infringing product, it doesn’t seem impossible to plead that there is a central coordinating party (the manufacturer) and that each participant is conscious that they are part of a broader group.
p.s. Read the court’s discussion of judicial economy, and that lack thereof in SAD litigation, last para on page 4.