Lucky Brand Dungarees, Inc. v. Marcel Fashions Group, Inc.
Lucky Brand Dungarees, Inc. v. Marcel Fashions Group, Inc.
Opinion
*1592 This case arises from protracted litigation between petitioners Lucky Brand Dungarees, Inc., and others (collectively Lucky Brand) and respondent Marcel Fashions Group, Inc. (Marcel). In the latest lawsuit between the two, Lucky Brand asserted a defense against Marcel that it had not pressed fully in a preceding suit between the parties. This Court is asked to determine whether Lucky Brand's failure to litigate the defense in the earlier suit barred Lucky Brand from invoking it in the later suit. Because the parties agree that, at a minimum, the preclusion of such a defense in this context requires that the two suits share the same claim to relief-and because we find that the two suits here did not-Lucky Brand was not barred from raising its defense in the later action.
I
Marcel and Lucky Brand both sell jeans and other apparel. Both entities also use the word "Lucky" as part of their marks on clothing. In 1986, Marcel received a federal trademark registration for "Get Lucky"; a few years later, in 1990, Lucky Brand began selling apparel using the registered trademark "Lucky Brand" and other marks that include the word "Lucky."
Three categories of marks are at issue in this case: Marcel's "Get Lucky" mark; Lucky Brand's "Lucky Brand" mark; and various other marks owned by Lucky Brand that contain the word "Lucky." These trademarks have led to nearly 20 years of litigation between the two companies, proceeding in three rounds.
A
In 2001-the first round-Marcel sued Lucky Brand, alleging that Lucky Brand's use of the phrase "Get Lucky" in advertisements infringed Marcel's trademark. In 2003, the parties signed a settlement agreement. As part of the deal, Lucky Brand agreed to stop using the phrase "Get Lucky." App. 191. In exchange, Marcel agreed to release any claims regarding Lucky Brand's use of its own trademarks.
B
The ink was barely dry on the settlement agreement when, in 2005, the parties began a second round of litigation (2005 Action). Lucky Brand filed suit, alleging that Marcel and its licensee violated its trademarks by copying its designs and logos in a new clothing line. As relevant here, Marcel filed several counterclaims that all turned, in large part, on Lucky Brand's alleged continued use of "Get Lucky": One batch of allegations asserted that Lucky Brand had continued to use Marcel's "Get Lucky" mark in violation of the settlement agreement, while others alleged that Lucky Brand's use of the phrase "Get Lucky" and "Lucky Brand" together was "confusingly similar to"-and thus infringed--Marcel's "Get Lucky" mark. Defendants' Answer, Affirmative Defenses, and Counterclaims to Plaintiffs' Complaint in No. 1:05-cv-06757 (SDNY), Doc. 40-2, p. 39; see
Lucky Brand moved to dismiss the counterclaims, alleging that they were barred *1593 by the release provision of the settlement agreement. After the District Court denied the motion without prejudice, Lucky Brand noted the release defense once more in its answer to Marcel's counterclaims. But as the 2005 Action proceeded, Lucky Brand never again invoked the release defense.
The 2005 Action concluded in two phases. First, as a sanction for misconduct during discovery, the District Court concluded that Lucky Brand violated the settlement agreement by continuing to use "Get Lucky" and permanently enjoined Lucky Brand from copying or imitating Marcel's "Get Lucky" mark. Order Granting Partial Summary Judgment and Injunction in No. 1:05-cv-06757, Doc. 183; see also App. 203-204. The injunction did not enjoin, or even mention, Lucky Brand's use of any other marks or phrases containing the word "Lucky." Order Granting Partial Summary Judgment and Injunction, Doc. 183. The case then proceeded to trial. The jury found against Lucky Brand on Marcel's remaining counterclaims-those that alleged infringement from Lucky Brand's continued use of the "Get Lucky" catchphrase alongside its own marks. See Brief for Respondent 52.
C
In April 2011, the third round of litigation began: Marcel filed an action against Lucky Brand (2011 Action), maintaining that Lucky Brand continued to infringe Marcel's "Get Lucky" mark and, in so doing, contravened the judgment issued in the 2005 Action.
This complaint did not reprise Marcel's earlier allegation (in the 2005 Action) that Lucky Brand continued to use the "Get Lucky" phrase. Marcel argued only that Lucky Brand's continued, post-2010 use of Lucky Brand's own marks-some of which used the word "Lucky"-infringed Marcel's "Get Lucky" mark in a manner that (according to Marcel) was previously found infringing. 1 Marcel requested that the District Court enjoin Lucky Brand from using any of Lucky Brand's marks containing the word "Lucky."
The District Court granted Lucky Brand summary judgment, concluding that Marcel's claims in the 2011 Action were essentially the same as its counterclaims in the 2005 Action.
But the Court of Appeals for the Second Circuit disagreed.
The Second Circuit further rejected Marcel's request to hold Lucky Brand in contempt for violating the injunction issued in the 2005 Action. The court noted that the conduct at issue in the 2011 Action was Lucky Brand's use of its own marks-not the use of the phrase "Get Lucky." By contrast, the 2005 injunction prohibited Lucky Brand from using the "Get Lucky" mark-not Lucky Brand's own marks that happened to contain the word "Lucky."
*1594
On remand to the District Court, Lucky Brand moved to dismiss, arguing-for the first time since its motion to dismiss and answer in the 2005 Action-that Marcel had released its claims by entering the settlement agreement. Marcel countered that Lucky Brand was precluded from invoking the release defense, because it could have pursued the defense fully in the 2005 Action but had neglected to do so. The District Court granted Lucky Brand's motion to dismiss, holding that it could assert its release defense and that the settlement agreement indeed barred Marcel's claims.
The Second Circuit vacated and remanded, concluding that a doctrine it termed "defense preclusion" prohibited Lucky Brand from raising the release defense in the 2011 Action.
II
A
This case asks whether so-called "defense preclusion" is a valid application of res judicata: a term that now comprises two distinct doctrines regarding the preclusive effect of prior litigation. 18 C. Wright, A. Miller, & E. Cooper, Federal Practice and Procedure § 4402 (3d ed. 2016) (Wright & Miller). The first is issue preclusion (sometimes called collateral estoppel), which precludes a party from relitigating an issue actually decided in a prior case and necessary to the judgment.
Allen v. McCurry
,
The second doctrine is claim preclusion (sometimes itself called res judicata). Unlike issue preclusion, claim preclusion prevents parties from raising issues that could have been raised and decided in a prior action-even if they were not actually litigated. If a later suit advances the same claim as an earlier suit between the same parties, the earlier suit's judgment "prevents litigation of all grounds for, or defenses to, recovery that were previously available to the parties, regardless of whether they were asserted or determined in the prior proceeding."
*1595
Brown v. Felsen
,
Put another way, claim preclusion "describes the rules formerly known as 'merger' and 'bar.' "
Taylor v. Sturgell
,
As the Second Circuit itself seemed to recognize, see
B
Put simply, the two suits here were grounded on different conduct, involving different marks, occurring at different times. They thus did not share a "common nucleus of operative facts." Restatement (Second) § 24, Comment b , at 199.
To start, claims to relief may be the same for the purposes of claim preclusion if, among other things, " 'a different judgment in the second action would impair or destroy rights or interests established by the judgment entered in the first action.' " Wright & Miller § 4407. Here, however, the 2011 Action did not imperil the judgment of the 2005 Action because the lawsuits involved both different conduct and different trademarks.
*1596 In the 2005 Action, Marcel alleged that Lucky Brand infringed Marcel's "Get Lucky" mark both by directly imitating its "Get Lucky" mark and by using the "Get Lucky" slogan alongside Lucky Brand's other marks in a way that created consumer confusion. Brief for Respondent 52. Marcel appears to admit, thus, that its claims in the 2005 Action depended on Lucky Brand's alleged use of "Get Lucky." Id., at 9-10 ("Marcel's reverse-confusion theory [in the 2005 Action] depended, in part, on Lucky's continued imitation of the GET LUCKY mark").
By contrast, the 2011 Action did not involve any alleged use of the "Get Lucky" phrase. Indeed, Lucky Brand had been enjoined in the 2005 Action from using "Get Lucky," and in the 2011 Action, Lucky Brand was found not to have violated that injunction.
Not only that, but the complained-of conduct in the 2011 Action occurred after the conclusion of the 2005 Action. Claim preclusion generally "does not bar claims that are predicated on events that postdate the filing of the initial complaint."
Whole Woman's Health
v.
Hellerstedt
, 579 U.S. ----, ----,
This principle takes on particular force in the trademark context, where the enforceability of a mark and likelihood of confusion between marks often turns on extrinsic facts that change over time. As Lucky Brand points out, liability for trademark infringement turns on marketplace realities that can change dramatically from year to year. Brief for Petitioners 42-45. It is no surprise, then, that the Second Circuit held that Marcel's 2011 Action claims were not barred by the 2005 Action. By the same token, the 2005 Action could not bar Lucky Brand's 2011 defenses.
At bottom, the 2011 Action involved different marks, different legal theories, and different conduct-occurring at different times. Because the two suits thus lacked a "common nucleus of operative facts," claim preclusion did not and could not bar Lucky Brand from asserting its settlement agreement defense in the 2011 Action.
III
Resisting this conclusion, Marcel points to treatises and this Court's cases, arguing *1597 that they support a version of "defense preclusion" doctrine that extends to the facts of this case. Brief for Respondent 24-26. But these authorities do no such thing. As an initial matter, regardless of what those authorities might imply about "defense preclusion," none of them describe scenarios applicable here. Moreover, we doubt that these authorities stand for anything more than that traditional claim- or issue-preclusion principles may bar defenses raised in a subsequent suit-principles that, as explained above, do not bar Lucky Brand's release defense here.
Take, for example, cases that involve either judgment enforcement or a collateral attack on a prior judgment.
attack a previously decided claim. 3 But these principles do not preclude defendants from asserting defenses to new claims, which is precisely what Marcel would have us do here.
In any event, judgment-enforcement and collateral-attack scenarios are far afield from the circumstances of this case. Lucky Brand's defense in the 2011 Action did not threaten the judgment issued in the 2005 Action or, as Marcel argues, "achieve the same practical result" that the above-mentioned principles seek to avoid. Brief for Respondent 31-32. Indeed, while the judgment in the 2005 Action plainly prohibited Lucky Brand from using "Get Lucky," it did not do the same with respect to Lucky Brand's continued, standalone use of its own marks containing the word "Lucky"-the only conduct at issue in the 2011 Action. Put simply, Lucky Brand's defense to new claims in the 2011 Action did not risk impairing the 2005 judgment.
Nor do cases like
Beloit v. Morgan
,
* * *
At bottom, Marcel's 2011 Action challenged different conduct-and raised different claims-from the 2005 Action. Under those circumstances, Marcel cannot preclude Lucky Brand from raising new defenses. The judgment of the Second Circuit is therefore reversed, and the case is remanded for proceedings consistent with this opinion.
It is so ordered.
See Complaint for Injunctive Relief and Trademark Infringement in No. 1:11-cv-05523 (SDNY), Doc. 1, ¶15 ("Despite the entry of the [2005 Action judgment], [Lucky Brand] ha[s] continued to willfully ... infringe [Marcel's] GET LUCKY mark by using the Lucky Brand marks in the identical manner and form and on the same goods for which [it] w[as] found liable for infringement");
There may be good reasons to question any application of claim preclusion to defenses. It has been noted that in suits involving successive claims against the same defendant, courts often "assum[e] that the defendant may raise defenses in the second action that were not raised in the first, even though they were equally available and relevant in both actions." Wright & Miller § 4414. This is because "[v]arious considerations, other than actual merits, may govern" whether to bring a defense, "such as the smallness of the amount or the value of the property in controversy, the difficulty of obtaining the necessary evidence, the expense of the litigation, and [a party's] own situation."
Cromwell v. County of Sac
,
One might ask: If any preclusion of defenses (under the claim-preclusion rubric) requires identity of claims in two suits, how could the second similar suit have avoided standard claim preclusion in the first place? Different contexts may yield different answers. In a judgment-enforcement context, the answer may be that claim preclusion applies only "to a final judgment rendered in an action separate from that in which the doctrine is asserted." 18 J. Moore, D. Coquillette, G. Joseph, G. Vairo, & C. Varner, Federal Practice § 131.31[1], p. 131-116 (3d ed. 2019) (emphasis added). Thus-although claim preclusion does apply to a later, standalone suit seeking relief that could have been obtained in the first-it "is not applicable to ... efforts to obtain supplemental relief in the original action, or direct attacks on the judgment." Ibid (footnote deleted). The upshot is that-even if a court deems the underlying core of operative facts to be the same-a plaintiff in that circumstance is not precluded from enforcing its rights with respect to continuing wrongful conduct.
Reference
- Full Case Name
- LUCKY BRAND DUNGAREES, INC., Et Al., Petitioners v. MARCEL FASHIONS GROUP, INC.
- Cited By
- 238 cases
- Status
- Published