Wednesday, September 11, 2013

Home Depot Faces Class Action Suit Filed by Accused Shoplifters


The tongue-in-cheek 1987 Smiths' song "Shoplifters of the World Unite" urges petty thieves to get their act together and take over the world. Some accused shoplifters in California may be taking that message to heart.

According to a class action complaint filed by lead plaintiff Mr. Jimin Chen in California Superior Court last week, Home Depot's Florida-based lawyers extorted millions of dollars in settlements from accused shoplifters, by fraudulently representing that the home improvement giant would press criminal charges and bring civil claims, without any intention of ever doing so.

Specifically, the lead plaintiff alleges that he and a friend were shopping at a local California Home Depot in early June.  Before Chen's $1,445.90 purchase of a large quantity of lumber, he and his friend casually put on a pair of $3.99 work gloves.  Before the purchase was rung up by cashiers, they removed the gloves and placed them on the top of the lumber.  The checkout personnel failed to scan the gloves.


After he paid for the lumber, but before he left the store, Chen alleges he was suddenly taken into custody by a Home Depot security guard who accused him of trying to shoplift the gloves.

Chen claims he suffered an asthma attack and was handcuffed and kept in custody for as much as 30 minutes.  The police were never called and no charges were filed.  Chen was asked by Home Depot's personnel to sign an agreement that would keep Chen from shopping at any Home Depot for 90 days. Chen signed the agreement and presumably was happy to oblige. The agreement also contained a general "notice" that purported to warn the accused thief that he might face further charges, or civil demands.


Soon after the incident, Chen received a formal letter from a Florida law firm, demanding payment of $350 as a civil settlement of possible ramifications from the incident within 20 days.  When he failed to respond, a follow-up letter from the lawyers allegedly upped the demand to $625.

Instead of paying, Chen filed the class action lawsuit.  Chen alleges that in 4 years, Home Depot hasn't sued a single person under California's anti-shoplifting law, which provides that merchants are entitled to recover the cost of stolen items, up to a total value of $500.

Rather, he alleges that Home Depot illegally created a "profit center" out of a scheme to defraud frightened customers/alleged shoplifters.

It is worth noting that there were no clear damages in Chen's incident, as the two pair of gloves were recovered before Chen left the store, in any event.  There is no clear indication why Home Depot would be entitled to any civil recovery from Chen, much less $625.

The suit further alleges that Home Depot and its lawyers were capitalizing on the fact that thousands of accused shoplifters would be terrified by the demand letters and would pay up, instead of facing a lawsuit and/or criminal prosecution.

It is also worth noting that it is a crime for someone to overtly threaten to file criminal charges in exchange for compensation. Home Depot's rights and remedies for attempted petit larceny were to press criminal charges.

Needless to say, the suit has created a public relations embarrassment for Home Depot, which has reportedly responded by saying that it disagrees that the "general practice of civil demands is unlawful."

Tuesday, September 10, 2013

Despite Legal Threat, Rights to MUMBO Sauce Trademark Stay in Chicago


Argia B. Collins' Chicago Area Restaurant

"Mumbo sauce" is sometimes used as the colloquial name for a tangy sauce served in Washington, D.C. restaurants and local eateries. However, a legal challenge to the validity of the name as a unique trademark appears to have been resolved in favor of the Windy City as the owner's locale.

The Washington Post describes the D.C. sauce's flavor as somewhere between barbecue and sweet-and-sour sauce.  The sauce is also sometimes called "Mambo sauce."  It is a versatile condiment that can be used for anything from fried rice to ribs or wings.

The Chicago Tribune reported in 2007 that Argia B. Collins, who died in 2005, and who had been one of Chicago's premier African American restauranteurs, first coined the term in the 1950's.  Collins' heirs ultimately transferred the rights to the name to Select Brands, LLC.

According to the Select Brands' website:  "A perfectionist when it came to his restaurants, Argia B. was not satisfied with the bland, watered-downed sauces served in other establishments or the tart, over-powering national brands sold by restaurant supply houses....Drawing on his southern roots, he wanted to create a sauce with the savory flavors reminiscent of the homemade Sunday dinners that he had enjoyed on his family's farm."

An image displayed on the Select Brands' website documents Collins' use of "Mumbo Bar-B-Q Sauce" in 3 flavors.

Capital City's Mumbo Sauce
In the 1990's, Select Brands LLC filed for a federal trademark on "MUMBO" for barbecue sauce in International Class 36, and it was granted.

Subsequently, a petition to cancel this trademark on the basis that it had become the "generic" name for a type of sauce was filed by Capital City, LLC, the makers of Capital City Mumbo Sauce, a D.C.-based company.

The petition cited printed materials taken from several different websites that showed a variety of sauces described as unauthorized "Mumbo sauces."

The Trademark Trial and Appeal Board was not persuaded, however, finding that while this evidence showed "some generic use of the term 'Mumbo' in connection with sauces," that evidence consisted of printouts from only a few websites, and was not an overwhelming evidence of widespread generic usage.

Further, the Board seemed persuaded that Collins' heirs had undertaken serious efforts to police what they deemed as improper use of the trademark, and did not find the level of widespread and unrestricted usage necessary to deem a registered mark totally unworthy of protection.  The Board refused to cancel Select Brands' trademark.

The federally registered Mumbo trademark will therefore remain owned by Select Brands LLC.

However, in the event that Select sues Capital or the other unauthorized Mumbo sauce users for trademark infringement, the jury and judge would get the final say in the matter, as genericness as well as lack of likely confusion can be used as complete defenses in an infringement case in court.

Delay in Resolving ABSOLUT Trademark Dispute Raises Thorny Issues



The Everett, Washington hair salon's name/logo
Self-help guru Napoleon Hill once wrote that "procrastination is the bad habit of putting off until the day after tomorrow what should have been done the day before yesterday."  A number of parties involved in a trademark dispute in the state of Washington may agree with that statement more than they would care to.

According to recent reports, when Jesse Skittrall purchased the small Absolut Hair and Makeup salon in Everett, Washington in 2009, he was informed by Gayle Pratt, the former owner of the salon, that Vodka giant Absolut had sent a formal cease and desist letter in 2005, but didn't follow up on its demand that the salon change its name.

Consequently, Pratt evidently concluded that the matter was not being pursued by the vodka maker, and the hair salon management changed hands.

However, at the end of July 2013, the vodka maker finally followed up, and reportedly gave Skittrall until January 1, 2014 -- 6 months -- to completely change the salon's name, or else face a federal lawsuit for trademark infringement.

Skittrall has appealed to the community to raise money, and appeared on local radio stations, complaining that the vodka company had "come out of nowhere."

On GoFundMe.com, Skittrall apparently seeks as much as $20,000 to fund the name change, but as of today, has raised only $125.  It is not clear why it would cost $20,000 for the business to change its name, but the salon would obviously need new signage, a new website and new business cards.
The Vodka Maker's Trademark

On the crowd funding site, Skittrall claims that "I bought the business with this name and existing signage and was not aware of any trademark issues."

But the former owner disputes Skittrall's characterization, saying that she fully informed him of the unresolved trademark dispute back in 2009.

But what of the vodka maker's apparent delay in following up?

Precedent from the Ninth Circuit Court of Appeals, which governs Washington, lays out a clear duty for a trademark owner to act diligently once it has sent a cease and desist letter that has become unresolved.

Otherwise, the trademark owner might face the possibility that its delay in protecting its rights may rise to the level of being "estopped by laches."  The doctrine is sometimes just referred to as "laches," which comes from the French for "laziness."

The Latin phrase "Vigilantibus non dormientibus æquitas subvenit (Equity aids the vigilant, not the sleeping ones (that is, those who sleep on their rights))" is often quoted to help explain the doctrine.

In other words, the vodka maker's delay in pursuing the 2005 matter against the hair salon could have led the former and new owners to reasonably infer that the alcohol beverage company had lost interest in protecting its rights in this instance.

To the extent that the salon owners relied upon that delay to their detriment and suffered prejudice, courts may hold that delay against the trademark owner, not the salon.

The Ninth Circuit Court of Appeals had said in Brookfield Communications v. West Coast Entertainment in 1999:

"Although we have applied laches to bar trademark infringement claims, we have done so only where the trademark holder knowingly allowed the infringing mark to be used without objection for a lengthy period of time. See E–Systems, Inc. v. Monitek, Inc., 720 F.2d 604, 607 (9th Cir.1983). In E–Systems, for example, we estopped a claimant who did not file suit until after the allegedly infringing mark had been used for eight years where the claimant had known of the infringing use for at least six years. See id.; see also Carter–Wallace, Inc. v. Procter & Gamble Co.,434 F.2d 794, 803 (9th Cir.1970). We specifically cautioned, however, that “had defendant's encroachment been minimal, or its growth slow and steady, there would be no laches.” E–Systems, 720 F.2d at 607; accord Carter–Wallace, 434 F.2d at 803 n. 4."

In this case, the delay would appear to be from 2005 to 2013:  approximately eight years.  There is no clear evidence of progressive encroachment, as the local hair salon appears to be largely the same as it was in 2005, despite having new management.

Furthermore, Washington's statute of limitations may also apply here, which enforces a three year statute of limitations to trade name disputes.

Consequently, the vodka maker may face a problem if the hair salon simply refuses to change its name, and invokes these doctrines in its defense. 

The lingering problem for the salon, of course, is that estoppel by laches is a defense that can only be asserted in a lengthy court proceeding, after factual discovery has been exchanged.  And invoking such equitable defenses obviously costs time and money, and litigation comes with no guarantees.

In conclusion, had all the parties more clearly resolved their original dispute back in 2005, more costly headaches for all involved might have been avoided.