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Clergy Financial, LLC v. Clergy Financial Services, Inc.: US District Courts : CIVIL PROCEDURE - no venue transfer; MN suit the only one filed; nothing filed in Colorado, nor imminence clear

1
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
CLERGY FINANCIAL, LLC,
Plaintiff,
v. MEMORANDUM OF LAW AND ORDER
Civil File No. 08‐5838 (MJD/JJG)
CLERGY FINANCIAL SERVICES,
INC.,
Defendant.
Josh Jacobson, Law Offices of Josh Jacobson, P.A., Counsel for Plaintiff.
Sheila M. Heidmiller, Macheledt Bales Heidmiller LLP, admitted pro hac vice, and
David A. Davenport, Winthrop & Weinstine, PA, Counsel for Defendant.
I. INTRODUCTION
This matter comes before the Court on Defendant Clergy Financial
Services, Inc.s Motion to Dismiss or, Alternatively, Transfer Venue [Docket No.
9]. The Court heard oral argument on January 30, 2009.
II. BACKGROUND
a. The Parties
Plaintiff Clergy Financial, LLC is a Minnesota limited liability company
with its principal place of business in Champlin, Minnesota. Clergy Financial,
2
LLC is wholly owned by Mark Friesen, a citizen of Minnesota. (Compl. 2.)
Defendant Clergy Financial Services, Inc. is a Colorado corporation with its
principal place of business in Loveland, Colorado. (Id. 3.) Both parties provide
similar accounting and financial services to clergy and churches nationwide.
b. Factual Background
Plaintiff initiated this lawsuit on October 27, 2008. The essence of the
lawsuit is that both parties lay claim to the Clergy Financial trademark.
Defendant owns federal trademark registrations for various iterations of Clergy
Financial. Plaintiff, on the other hand, does not own any federal Clergy
Financial trademarks. Instead, Plaintiff alleges in the Complaint that it is the
senior user of the Clergy Financial mark in interstate commerce. (Compl. 1.)
The Complaint lists twelve counts against Defendant, including various
violations of federal law, common law trademark infringement, violations of
Minnesota law, common law unfair competition, and tortious interference. In
addition to an order canceling Defendants federal trademark registrations,
Plaintiff seeks damages as well as a permanent injunction enjoining Defendant
from using the Clergy Financial mark and operating any website that uses the
Clergy Financial mark, and further requiring Defendant to engage in corrective
advertising.
3
Determining the date that the Clergy Financial mark was first used in
interstate commerce will be critical to resolving this case. In the Complaint,
Plaintiff states its belief that it can establish a first use date of sometime in 1986.
(Compl. 16, 22‐23.) Plaintiff further states in a later submission to the Court
apparently after having uncovered additional evidencethat it has used the
Clergy Financial mark in interstate commerce since at least February 3, 1981.
(Pl.s Mem. in Opp. at 4.) To support this statement, Plaintiff provides the Court
with a letter dated February 3, 1981. (Friesen Aff. Ex. A.) The letter, written on
stationary for the South Dakota District Council of the Assemblies of God, Inc.,
refers to Mr. Jake Friesen who is a representative for Clergy Financial
Management. (Id.) Jake Friesen is Mark Friesens father.
Defendant secured its federal trademark registrations on June 10, 2008. A
week later, Defendant sent its first cease and desist letter to Plaintiff, setting in
motion the events leading to this lawsuit. In its May 2007 applications to register
the Clergy Financial mark with the United States Patent and Trademark Office
(PTO), Defendant identified its first use date as [a]t least as early as
10/01/2000. (Compl. 30.) In mid‐September 2008, Defendant amended its
federal trademark applications to include a first use date of 00/00/1980. (Id.
42.) Though Defendant maintains that such evidence is not required to prove
4
its claimed first use date of 1980, Defendant has provided the Court with
evidence in the form of multiple bills, dated in 1982, for tax preparation services
performed by Clergy Financial Planning Service. (Answer and Counterclaim Ex.
P.)
c. The Dispute
The present dispute centers on Defendants contention that Plaintiff filed
this suit in bad faith as a preemptive move to deprive the defendant of its
rightful position as the true Plaintiff in the proper forum of Colorado District
Court. (Def.s Mem. in Supp. at 1.) To support this argument, Defendant
recounts for the Court a series of letters sent back and forth between opposing
counsel that began in June 2008.
In a cease and desist letter, dated June 17, 2008, Defendant notified
Plaintiff of its belief that Plaintiffs use of Clergy Financial violated
Defendants trademarks. At the end of the letter, Defendants counsel writes that
Plaintiffs counsel must contact me . . . no later than June 27, 2008 or else we
will advise our client to pursue the full legal remedies available to rectify this
situation. (Jacobson Aff. Ex. B at 5.) Plaintiffs counsel characterizes his
response to Defendants June 17 letter as a litigation threat of his own. (See
Jacobson Aff. Ex. C at 1.) In that letter, Plantiffs counsel notifies Defendants
5
counsel of his belief that Plaintiff is the senior user of the Clergy Financial mark
because
[w]hile your clients various filings with the USPTO allege a first use
date of October 1, 2000, [my clients] use of the Disputed Marks can
be traced to at least January, 1988, when Mark Friesens father filed a
corporate name change document with the Minnesota Secretary of
State changing the name of the family company to Clergy Financial
Management, Inc.
(Id.) Four weeks later, on July 21, Defendant responded to Plaintiffs June 23
letter, expressing a willingness to engage in a dialogue for purposes of entering
into an agreement setting forth the respective rights of the parties. (Jacobson
Aff. Ex. D at 1.) Plaintiff responded to that letter with a July 31 letter in which
Plaintiffs counsel writes
I am far from certain that we will be able to resolve this dispute
through any means other than litigation. Moreover, given . . . your
clients claimed first use date of October 1, 2000, I am surprised that
you questioned [my clients] senior use of the Clergy Financial mark
in interstate commerce. Nevertheless, a cursory search of [my
clients] files . . . uncovered documents from the mid‐1980s
evidencing [my clients] use of the mark in interstate commerce.
The parties did not exchange any more letters until October. In the meantime,
Defendant amended the first use date of its trademark application to 0/0/1980.
On October 16, 2008, Defendant sent Plaintiff a letter notifying Plaintiff that
the first use dates had been corrected/amended to reflect the actual first use
6
dates of 1980. (Jacobson Aff. Ex. E at 1.) In that letter, Defendants counsel
writes that her client is fully prepared and poised to litigate this matter. (Id.)
After proposing, in the interest of avoiding litigation, a solution in which
Defendant would be willing to grant [Plaintiff] permission to make certain
limited uses of marks consisting in whole or in part of clergy and []financial
within the State of Minnesota, defense counsel writes that [w]e must hear from
you no later than October 26, 2008 or else we will instruct our client to move
forward with litigation of this matter. (Id.) On October 20, Plaintiff responded
to Defendants letter, asking for evidence to support Defendants newly amended
first use date. (Jacobson Aff. Ex. F.) In that letter, Plaintiff states that it could not
evaluate its options until Defendant provided it with documentary evidence to
support Defendants first use claims. (Id.) Defendant did not respond to
Plaintiffs October 20 letter before the October 26 deadline, and Plaintiff filed this
lawsuit on October 27.
On October 29, Defendant responded to Plaintiffs October 20 letter,
writing that
any documentary evidence to support a corrected first use date is
part of the public record in the online U.S. Patent and Trademark
Office. Moreover, as you should also know, amendment under
section 7 of the Trademark Act is supported by a 37 C.F.R. Section
7
2.20 declaration. We look forward to hearing back from you no later
than November 5, 2008.
(Jacobson Aff. Ex. G.) 37 C.F.R. 2.20 states
Instead of an oath, affidavit, verification, or sworn statement, the
language of 28 U.S.C. 1746, or the following language, may be used:
The undersigned being warned that willful false statements and the
like are punishable by fine or imprisonment, or both, under 18 U.S.C.
1001, and that such willful false statements and the like may
jeopardize the validity of the application or document or any
registration resulting therefrom, declares that all statements made of
his/her own knowledge are true; and all statements made on
information and belief are believed to be true.
After Plaintiff filed this lawsuit, the parties entered into a stipulation to
extend by three weeks Defendants time to file an Answer and Counterclaim.
(Jacobson Aff. Ex. H.) As of the date of oral argument, Defendant had not filed a
lawsuit in the District of Colorado.
Based on Plaintiffs actionswhich Defendant characterizes as
anticipatory forum shopping meant to rob the true plaintiff of its right to be in
the proper venue of ColoradoDefendant seeks an order dismissing Plaintiffs
claims or, in the alternative, transferring venue to the District of Colorado. For
the following reasons, the Court denies Defendants motion.
III. DISCUSSION
a. Motion to Dismiss for Improper Venue
8
Defendant argues for dismissal under 28 U.S.C. 1406(a), which states that
[t]he district court of a district in which is filed a case laying venue in the wrong
division or district shall dismiss, or if it be in the interest of justice, transfer such
case to any district or division in which it could have been brought.
To the extent that Defendant presents an argument to dismiss for improper
venue under 1406(a), Defendant fails to show that the District of Minnesota is
an improper venue for this casea prerequisite for dismissal under 1406(a).
For purposes of venue, a defendant that is a corporation is deemed to reside in
any judicial district in which it is subject to personal jurisdiction at the time the
action is commenced. 28 U.S.C. 1391(c). Defendant does not dispute that it is
subject to personal jurisdiction in the District of Minnesota. Accordingly, the
Court finds that venue is proper in the District of Minnesota.
b. Transferring Venue to the District of Colorado under First‐Filed
Doctrine
Defendant primarily argues that the Court should apply a first‐filed rule
analysis and transfer venue to the District of Colorado. The United States Court
of Appeals for the Eighth Circuit has defined the first‐filed rule as follows:
The well‐established rule is that in cases of concurrent jurisdiction,
the first court in which jurisdiction attaches has priority to consider
the case. This first‐filed rule is not intended to be rigid,
mechanical, or inflexible, but is to be applied in a manner best
9
serving the interests of justice. The prevailing standard is that in
the absence of compelling circumstances, the first‐filed rule should
apply.
Northwest Airlines, Inc. v. American Airlines, Inc., 989 F.2d 1002, 1005 (8th Cir.
1993). The rule reflects a federal policy against duplication of litigation and in
favor of efficient use of judicial resources. See id. at 1004. In this case, the Court
does not find the sorts of compelling circumstances that would allow it to ignore
the first‐filed rule and to instead transfer venue to the District of Colorado.
A number of facts undermine Defendants first‐filed rule argument, not the
least of which is the fact that Defendant has not filed suit in the District of
Colorado. Indeed, as the Eighth Circuit wrote in Northwest Airlines, the firstfiled
rule applies in cases of concurrent jurisdiction. Id. at 1005. In addition,
the very name of the first‐filed rule clearly implies that at least one other case is
involved. Here, Plaintiffs case is the only case that has been filed.
Defendant cites to no authority where a court has used the first‐filed rule to
transfer venue in a case where the parties had only one lawsuit pending in
federal court. As exhibited in case after case, the first‐filed rule is intended to
give priority to the choice of venue of the party that first establishes jurisdiction
in cases where parallel litigation has been instituted in separate courts. See, e.g.,
10
Northwest Airlines, 989 F.2d 1002. Here, there is no parallel litigation for this
Court to consider.
Nevertheless, Defendant argues that this case exhibits the sorts of traits
that allow courts to refuse to apply the first‐filed rule and to instead transfer
venue to the preferred venue of the second‐filing party. The Eighth Circuit has
identified red flags that, where present, may indicate the compelling
circumstances that would justify a courts refusal to apply the first‐filed rule.
See Anheuser‐Busch, Inc. v. Supreme Intl Corp., 167 F.3d 417, 419 (8th Cir. 1999);
Northwest Airlines, 989 F.2d at 1007. In Anheuser‐Busch, the Eighth Circuit
declined to overturn a district courts refusal to apply the first‐filed rule in a case
where (1) the first‐filing party was on notice that the second‐filing party was
going to imminently file suit and (2) the first‐filing partys suit was for a
declaratory judgment. See 167 F.3d at 419. In the earlier Eighth Circuit case of
Northwest Airlines, the court listed other factors that would justify a courts
refusal to apply the first‐filed rule: (1) the first‐filing party acted in bad faith, (2)
the first‐filing party raced to the courthouse to preempt a suit by the secondfiling
party, and (3) the first‐filing party does not allege that the second‐filing
partys actions have had an adverse effect on the first‐filing party. See 989 F.2d at
1007.
11
Defendant argues that compelling circumstances exist in this case. For
example, Defendant points to the fact that Plaintiff filed its lawsuit only a day
after the October 26 deadline included in Defendants October 16 letter as
evidence that (1) Plaintiff was on notice that Defendant was going to file suit and
(2) Plaintiff raced to the courthouse to preempt Defendants forum choice.
Taken on its face, the fact that Plaintiff filed this suit only a day after the
October 26 deadline would appear to support Defendants argument that
Plaintiff raced to the courthouse. However, the evidence before the Court shows
that Defendant had previously instituted a June 2008 deadline by which Plaintiff
had to respond or else face the threat of litigation. In addition, the fact that
Defendant wrote Plaintiff a letter dated two days after Plaintiff had filed this
suita letter that included yet another deadline to respondleads the Court to
conclude that Defendants litigation threats were not as serious as it claims. See
id. at 1007 (finding that a previous letter between the parties gave no indication
that a lawsuit was imminent and that the letter was not doing anything more
than blowing smoke about a potential lawsuit). The fact that Defendant
required an extension to file its Answer and Counterclaim further undermines
Defendants contention that it was prepared to file suit in its forum of choice.
Finally, although Plaintiff does seek a declaratory judgment, it also seeks
12
injunctive relief and damages. Thus, without commenting on the merits of
Plaintiffs case, the face of Plaintiffs Complaint is enough to satisfy the Court
that Plaintiff is a true plaintiff in the sense that it affirmatively alleges that it is
the senior user of the disputed trademark. As a result, Defendant fails to
persuade the Court when it argues that the nature of Plaintiffs claims is similar
to the plaintiffs claims in Anheuser‐Busch, where the Eighth Circuit held that
the district court was justified in refusing to apply the first‐filed rule in part
because the first‐filing party sought a declaratory judgment only. See Anheuser‐
Busch, 167 F.3d at 419.
c. Transferring Venue under 1404(a)
Defendant also urges the Court to exercise its discretion under 28 U.S.C.
1404(a) and transfer venue to Colorado. Section 1404(a) states that, [f]or the
convenience of parties and witnesses, in the interest of justice, a district court
may transfer any civil action to any other district or division where it might have
been brought. In general, federal courts give considerable deference to a
plaintiffs choice of forum and thus the party seeking a transfer under section
1404(a) typically bears the burden of proving that a transfer is warranted. Terra
Intʹl, Inc. v. Miss. Chem. Corp., 119 F.3d 688, 695 (8th Cir. 1997). Initially the
13
moving party must show that the transferee district is one where venue would be
proper. See 28 U.S.C. 1391.
Even if the Court were to find that Defendant has adequately shown that
venue would be proper in Colorado, it is clear that Defendant has not satisfied its
burden of showing that the balance of section 1404(a) factors favors transferring
the case. When deciding this issue, the Court has previously considered (1) the
convenience of the parties, (2) the convenience of the witnesses, and (3) the
interests of justice. See August Technology Corp. v. Camtek, Ltd., No. 05‐1396,
2005 WL 3274667 (D. Minn. Dec. 2, 2005) (citing Terra Intl, 119 F.3d at 691 (8th
Cir. 1997)).
Each of Defendants 1404(a) arguments in favor of transferring venue to
the District of Colorado applies with equal force to Plaintiff. For example,
Defendant argues that it would be more convenient for it to try its case in
Colorado because all of its witnesses and evidence are located in Colorado. As
Plaintiff points out, however, it is more convenient for Plaintiff to try its case in
Minnesota because all of its witnesses and evidence are located in Minnesota.
Indeed, Defendants motion to transfer this case would merely shift the
inconvenience to the Plaintiff. ComputerUser.com, Inc. v. Tech. Publns, LLC,
No. Civ. 02‐832, 2002 WL 1634119 at *8 (D. Minn. July 20, 2002). Furthermore, the
14
Court takes note of the fact that, if Plaintiffs factual allegations against
Defendant are true, its injuries were felt primarily in Minnesota. Likewise, if
Defendants factual allegations against Plaintiff are true, its injuries were felt
primarily in Colorado. In other words, for purposes of determining venue, the
facts giving rise to this cause of action occurred just as much in Minnesota as in
Colorado. Both states have an equal connection to the case.
Finally, in response to one of Defendants arguments in favor of
transferring venue to Colorado, this Court has previously written that courts
can just as easily apply the law of another state as easily as their own. Erickson
v. Hertz Corp., No. Civ. 05‐1690, 2006 WL 1004385 at *4 (D. Minn. Apr. 17, 2006).
Thus, Defendants corresponding argumentthat the interests of justice favor
transferring the case to Colorado because this case involves issues of Colorado
lawis unpersuasive. Moreover, Plaintiffs claims involve issues of Minnesota
law. Here again, Defendants arguments in favor of transfer apply with equal
force to Plaintiffs argument in favor of keeping the case in the District of
Minnesota. For all of these reasons, the Court finds that Defendant has not
carried its heavy burden of showing that the balance of 1404(a) factors favors
transferring this case.
15
Accordingly, based on the files, records, and proceedings herein, IT IS
HEREBY ORDERED that Defendants Motion to Dismiss or, Alternatively,
Transfer Venue [Docket No. 9] is DENIED.
Date: February 17, 2009 s/ Michael J. Davis
Michael J. Davis
Chief Judge
United States District Court
 

 
 
 

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