Broader Scope of Claims and Rule of First to File: What happens next?
Booze Pops, LLC ("Booze Pops"), Booze Pops Corporate, LLC ("Booze Corporate") and Booze Pops Distribution, LLC ("Booze Distribution," collectively "Booze Pop") manufacture and sell alcohol-infused popsicles ("AIPs") out of ice-cream trucks and other mobile vehicles. R.E. Flipz, LLC ("Flipz"), conducts business under the trade name "Buzz Pop Cocktails," a manufacturer and distributer of AIPs, Ruskaboy Holdings, LLC ("Ruskaboy"), Buzz Pop Cocktails Corporation, LLC ("BPCC"), Joseph Isaacs, and Juan C. Sastre (collectively, "Buzz Pop"). There was an agreement signed between Booze Pops and Buzz Pop which prevented Buzz Pop from selling AIPs while the contract was in force which was allegedly breached by Buzz Pop. Booze Pop further alleged that Buzz Pop has infringed on its registered trademark as well. Booze Pop sued Buzz Pop in the United States District Court District of South Carolina Charleston Division ("The Court") (Buzz Pop Cocktails Corp v Booze Pop, Civil Action No. 2:20-cv-691-RMG (D.S.C. Jun. 21, 2020)) on multiple counts. Buzz Pop challenged the Court's jurisdiction and challenged Booze Pops' complaint. The Court held that Buzz Pops' motion is accepted in part and rejected in part as Ruskaboy Holdings, LLC and Juan C. Sastre are dismissed as Defendants because of lack of jurisdiction.
Joseph Isaacs allegedly dissolved R.E. Flipz on January 31, 2019 and BPCC, the successor in interest to R.E. Flipz, acquired all property owned by R.E. Flipz, including the fictitious name "Buzz Pop Cocktails."
Around July 2017, Booze Pops began supplying AIPs manufactured by R.E. Flipz. On May 17, 2018, Plaintiffs and R.E. Flipz entered into an Exclusive Retail Sales Agreement ("ERSA"), The ERSA granted Booze Pop the exclusive right to distribute and sell AIPs manufactured by R.E. Flipz to retail mobile vendors and franchisees of Booze Corporate throughout the United States of America and its territories ("Territory").
Under the ERSA, R.E. Flipz agreed tonot sell the Products to any other person or entity for use, sale, or distribution within the Territory for mobile vending sales. The ERSA has a three-year term. The ERSA includes a "non-competition" clause whereby R.E. Flipz agrees not to compete with Plaintiffs in the Territory in competitive business in mobile vending of the Products during the life of the contract and for two years following termination of the contract. The ERSA is governed by South Carolina law, and contains a forum selection clause whereby the parties agree the Courts of South Carolina, whether state or federal, have sole jurisdiction over any matter arising from the interpretation, purpose, effect, or operation of the ERSA.
Booze Pop and R.E. Flipz decided together that that the venue would be in Charleston County and that they waive any rights to assert jurisdiction or venue in any Court other than the decided one. Booze Pop found that R.E. Flipz and BPCC (R.E. Flipz's successor in interest) were in breach of the ERSA as they were involved in mobile vending and franchising of AIPs in violation of the ERSA.
Booze Pop further found out that Isaacs, R.E. Flipz, and Ruskaboy wrongfully obtained three trademark registrations from the United States Patent and Trademark Office ("USPTO") and that R.E. Flipz and BPCC use said trademarks to infringe on Booze Pop's own mark i.e. "BOOZE POPS". The three trademarks at issue are: (1) BUZZPOPS (2) BPC LICK and (3) BUZZ POP COCKTAILS. Booze Pop alleged that Isaacs, R.E. Flipz, and Ruskaboy made false and misleading statements to the USPTO in the applications for said trademarks.
On February 11, 2020, Booze Pop filed a Complaint in the United States District Court District of South Carolina Charleston Division ("The Court"). Booze Pop sought action on 11 counts: (1) Federal False Advertising (2) Cancellation of Trademark Registrations (3) Fraud in Procurement of Trademark Registrations (4) Federal Trademark Infringement, False Association, False Designation of Origin, and Unfair Competition (5) South Carolina Trademark Infringement (6) South Carolina Unfair Trade Practices (7) Breach of Contract (8) Breach of Contract with Fraudulent Act (9) Breach of Express Warranties (10) Florida Deceptive and Unfair Trade Practices (11) Florida Common Law Unfair Competition.
On April 13, 2020, Buzz Pop filed a motion to dismiss or to transfer the venue. Buzz Pop submitted that: (1) this Court lacks personal jurisdiction over all Defendants; and that, (2) even if this Court did have personal jurisdiction over Defendants, the "first-to-file" rule dictates that the Court transfer this action to the Middle District of Florida.
The Court after hearing both the sides decided to settle Buzz Pops claims to dismiss and found that there was little to support the use of the first-to-file rule in the present case. Although an action in Florida was filed first by Buzz Pop, any reason to transfer or stay ended there. The issues were not precisely the same. While both actions concerned, in part, the Defendants' trademarks, the instant action was broader in scope than the Florida Action. The Court found no basis for the application of the first-to-file rule.
On Buzz Pop's claim that this Court lacked jurisdiction on the Defendants ("Buzz Pop") the Court stated that R.E Flipz and BPCC had created a substantial connection to South Carolina, while Ruskaboy had not. The Court has personal jurisdiction over R.E. Flipz and BPCC as both entities are signatories to the ERSA and consequently had consented to the jurisdiction of the courts of South Carolina, both state and federal if the case arises from the ERSA. The Court thus found that R.E. Flipz and BPCC had the requisite minimum contacts to allow this Court to exercise personal jurisdiction over them.
The Court went on to examine the contacts Isaacs had with South Carolina to ascertain its jurisdiction over him. The Complaint alleged that Isaacs is the COO of BPCC, the individual who controlled and operated R.E. Flipz and Ruskaboy at all times pertinent to the conduct alleged in this Complain. The Court found it had personal jurisdiction over Isaacs. The Complaint contained allegations of wrongdoing against Isaacs, COO of BPCC, allegedly directed toward or committed while physically in South Carolina.
Lastly, the Court examined the contacts that Sastre had with South Carolina to ascertain its jurisdiction over him. In their Complaint, Plaintiffs alleged that as the President of BPCC, Sastre was allegedly a driving force directing and/or materially participating in the wrongful conduct alleged in this Complaint. Upon a review of the Complaint and its attached Exhibits, the Court found it lacks personal jurisdiction over Sastre.
Based upon the aforementioned findings the Court decided that Buzz Pops' motion had to be accepted in part and rejected in part as Ruskaboy Holdings, LLC and Juan C. Sastrewere dismissed as defendants.
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