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Luv N' Care Ltd v. Jackel International Ltd.

United States District Court, W.D. Louisiana, Monroe Division

March 14, 2019

LUV N' CARE, LTD.
v.
JACKEL INTERNATIONAL LIMITED, ET AL.

          KAREN L. HAYES, MAG. JUDGE

          RULING

          TERRY A. DOUGHTY, UNITED STATES DISTRICT JUDGE

         Pending before the Court are Plaintiff Luv N'Care, Ltd.'s (“LNC”) Motion to Amend Complaint [Doc. No. 38] and two Motions for Sanctions [Doc. Nos. 28 & 47] filed by Defendants Mayborn Group Limited, Jackel International Limited, Mayborn USA, Inc., Jackel China, Ltd., Mayborn Anz Pty, Ltd., and Product Marketing Mayborn, Ltd.

         For the following reasons, LNC's Motion to Amend Complaint is GRANTED, Jackel's Motion for Sanctions [Doc. No. 28] is DENIED AS MOOT in part and otherwise DENIED, and Jackel's second Motion for Sanctions [Doc. No. 47] is DENIED.

         I. ALLEGED FACTS AND PROCEDURAL HISTORY

         LNC is a Louisiana corporation with its place of business in Monroe, Louisiana. LNC is a family-owned business that designs, manufactures, and sells baby products under the “Nuby” brand name.

         Jackel International, Mayborn USA, Mayborn ANZ, and Product Marketing Mayborn, Ltd., are wholly-owned subsidiaries of Mayborn Group Limited, a privately held English company, which is owned by Jake Acquisitions Limited. Jackel China, Ltd., is primarily owned by Product Marketing Mayborn, Ltd. Jake Acquisitions Limited is ultimately owned by Shanghai Jahwa United Co. Ltd., which is publicly traded in China. The entity Defendants, which the Court will collectively refer to as “Jackel, ”[1] are also in the business of designing, manufacturing, marketing, and selling baby products. Jackel sells its own products under the brand name Tommee Tippee.

         In 2003, Jackel and LNC entered into a distribution agreement under which Jackel served as the exclusive distributor of LNC products in Great Britain, Ireland, and Gibralter. The 2003 agreement was replaced by a second agreement in 2008, which terminated on April 1, 2010.

         The 2008 Agreement included two provisions governing use of proprietary designs or information:

15(B). Distributor hereby acknowledges and agrees not to copy or utilize any of LNC's formulae, trade secrets, product design, patents, drawings, business plans, prototypes, packaging, procedures and methods, [or] any other proprietary designs or information without LNC's written permission.
19. During the term of this Agreement and continuing after the expiration or termination hereof, either party shall not disclose or make accessible to anyone, or make use of the knowledge or information which either party obtains or obtained during the term of this Agreement with respect to formulae, trade secrets, product design, patents, drawings, business plans, prototypes, procedures, and methods [or] any other proprietary designs or information of LNC without the written consent of the other party.

[Doc. No. 1-6 at ¶¶ 15(B), 19].

         On May 24, 2010, LNC brought suit against Jackel alleging breach of the 2008 Agreement by selling certain soft-spout, flip-top, and straw cups with a silicone compression valve (“LNC I”). That case went to trial, and jury found in favor of LNC and against Jackel on LNC's claims of breach of the distribution agreements and the Louisiana Unfair Trade Practices Act (“LUTPA”). The May 22, 2013 Judgment provided that Jackel breached the 2003 or 2008 distribution agreements “with respect to Jackel's (1) soft spout cups; (2) flip-top cup; and (3) straw cup.” More specifically, the “Litigated Products” identified in Exhibit A to the Judgment: (1) First Cup; (2) Kids on the Go Active Cup; (3) Tip It Up Cup; (4) Tip It Up Trainer Cup; (5) Tip It Up Beaker Cup; (6) Tip It Up Sportster Cup; and (7) Tip It Up Flip Top Cup. [Jackel's Exh. 8; Tr. 93:10-20]; [Doc. No. 1-4]. The jury further found that Jackel's actions violated the LUTPA. Id.

         Damages in the amount of $754, 887.64 were awarded through December 31, 2102, with pre-judgment and post-judgment interest. LNC was also awarded costs and attorneys' fees. Judgment was entered in favor of Jackel and against LNC on Jackel's Anti-Cybersquatting Consumer Protection Act claim, and Jackel was awarded damages of $2, 000.00.

         The Jackel I Court also entered a permanent injunction enjoining Jackel from selling any of the Litigated Products “as well as any further versions thereof” or other non-litigated products not in existence at the commencement of the January 2013 trial that are copies and/or colorable imitations of LNC's silicone compression valve, i.e., “(1) soft spout cups; (2) flip-top cups; or (3) straw cups.” [LNC's Exh. 9].

         Shortly before the entry of final judgement in LNC I, on May 3, 2013, LNC filed a second state court action (“LNC II”) in which LNC alleged that Jackel's sales of “additional products” breached the 2008 distribution agreement and violated LUTPA. [Doc. No. 11, Exh. D]. Jackel removed this lawsuit to federal court. LNC voluntarily dismissed LNC II on August 27, 2013.

         Although all parties appealed the judgment in LNC I, the appeal was settled and dismissed on November 21, 2013. That settlement agreement contained a reservation of rights: “Nor shall anything within this Agreement be deemed a settlement or withdrawal of any claims or defenses between the LNC Parties and the [Jackel] Parties relating to [LNC II ] or the Threatened Hard Top Cups Action or the products accused therein, all rights with respect to which are expressly reserved by the parties hereto.” [LNC's Exhibit 11, p. 3; Tr. 97:10-24, 99:3-5, 99-21-25].

         On August 14, 2014, LNC filed a third action (“LNC III”) against Jackel. See Luv N' Care, Ltd. v. Jackel Int'l, Ltd., No. 2:14-cv-855, 2015 Westlaw 4734701 (E.D. Tex. Aug. 8, 2015). In that lawsuit, LNC focused on the same hard-top cups, but added patent infringement claims to the breach and LUTPA claims. The district court dismissed LNC's breach of the distribution agreements and LUTPA claims as barred by res judicata.Id. The ...


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