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Eleutian Technology Inc. v. Ellucian Co., L.P.

United States District Court, D. Utah

February 21, 2017

ELEUTIAN TECHNOLOGY, INC., Plaintiff,
v.
ELLUCIAN COMPANY, L.P., Defendant.

          MEMORANDUM DECISION AND ORDER GRANTING IN PART AND DENYING IN PART [20] MOTION TO DISMISS

          David Nuffer District Judge.

         Defendant Ellucian Company, L.P. moved to dismiss the complaint for late service of process and for failure to state a claim.[1] Plaintiff Eleutian Technology, Inc., responded in opposition.[2] Ellucian replied in support of the motion.[3]

         After a hearing before Judge Jenkins, [4] both parties were ordered to supplement the briefing.[5] Eleutian[6] and Ellucian[7] provided additional briefing.

         On November 29, 2016, Judge Jenkins recused and the case was reassigned to Judge Waddoups.[8] On November 30, 2017, Judge Waddoups recused and the case was reassigned to the undersigned.[9]

         The 12(b)(5) portion of the Motion to Dismiss depends on the validity of a Ruling and Order Extending Time to Serve Complaint[10] entered by the magistrate judge prior to Judge Jenkin's assignment as case presiding judge. Because the Ruling and Order Extending Time to Serve Complaint resolves dispositive issues in the case, it is reviewed de novo.

         The Ruling and Order Extending Time to Serve Complaint[11] is ADOPTED as the order of the court. The Motion to Dismiss is GRANTED IN PART and DENIED IN PART. The third claim for relief is DISMISSED WITH PREJUDICE; the portions of the fourth and eighth claims for relief are DISMISSED WITHOUT PREJUDICE; and the seventh claim for relief is DISMISSED WITH PREJUDICE.

         Table of Contents

         Background Procedure and Facts .................................................................................................... 3

         Discussion ....................................................................................................................................... 5

         The Complaint will not be dismissed for late service. . ....................................................... 5

         The Motion for Extension of Time will be reviewed de novo. . .............................. 5

         The Ruling and Order Extending Time to Serve Complaint is adopted. . ............... 8

         The third and seventh claims for relief are dismissed with prejudice and portions of the fourth and eighth claims for relief are dismissed without prejudice. . ................... 11

         The third claim for relief is dismissed with prejudice for failure to state a claim. 13

         The portions of the fourth and eighth claims for relief that relate to dilution by tarnishment are dismissed without prejudice for failure to state a claim. . 15

         The seventh claim for relief is dismissed with prejudice for failure to state a claim ......................... 19 Order 21

         BACKGROUND PROCEDURE AND FACTS

         1. Eleutian filed the complaint on September 9, 2015.[12]

         2. The case was assigned to Magistrate Judge Pead.[13]

         3. Counsel for Eleutian emailed a “courtesy copy” of the complaint to Lori Lesser, an individual at Ellucian's counsel's firm.[14]

         4. The time period allotted by Federal Rule of Civil Procedure 4(m) for service expired on January 7, 2016.

         5. On January 26, 2016, Eleutian moved for an extension of time to serve the complaint.[15]

         6. In that motion, Eleutian requested a permissive extension.[16]

         7. Magistrate Judge Pead granted the Motion for Extension of Time in the Ruling and Order Extending Time to Serve Complaint.

         8. The Complaint includes the following causes of action:

a. First Claim: “Infringement of Plaintiff's Service Mark Certificate of Registration No. 4, 649, 191”;[17]
b. Second Claim: “Unfair Competition in Violation of Section 43(a)(1)(A) of the Lanham Act”;[18]
c. Third Claim: “False Advertising in Violation of Section 43(a)(1)(B) of the Lanham Act”;[19]
d. Fourth Claim: “Dilution of Famous Mark in Violation of Section 43(c) of the Lanham Act”;[20]
e. Fifth Claim: “Cancelation of the Registrations for the ELLUCIAN marks and the ELLUCIAN GO mark under Section 37 of the Lanham Act”;[21]
f. Sixth Claim: “Common Law Trademark and Trade Name Infringement”;[22]
g. Seventh Claim: “Unfair Competition in Violation of Utah Code Annotated Sections 13-5a-101-103”;[23] and
h. Eighth Claim: “Trademark Dilution in Violation of Utah Code Annotated Section 70-ca-403).”[24]

         9. Upon one or more party's request or failure to consent to the magistrate judge, the case was randomly assigned to Judge Jenkins on March 4, 2016.[25]

         10. On March 11, 2016, Ellucian filed this Motion to Dismiss.[26]

         11. On June 15, 2016, Judge Jenkins heard oral argument on this motion.[27]

         DISCUSSION

         The Complaint will not be dismissed for late service.

         The Motion to Dismiss seeks to dismiss for late service of process. Because Magistrate Judge Pead granted the Motion for Extension of Time, the nub of Ellucian's 12(b)(5) basis for dismissing Eleutian's complaint is whether Judge Pead's Ruling and Order Extending Time to Serve Complaint is effective.

         The Motion for Extension of Time will be reviewed de novo.

         General Order 11-001 states:

All full time Magistrate Judges in the District will be included in the civil case assignment process at the time the civil case is opened. The proportion of cases so assigned will be determined by the court and will be periodically reviewed and adjusted. Cases so assigned shall be deemed to be assigned to the Chief Judge and referred to the magistrate judge for the exercise of all authority under 28 U.S.C. 636(b) as provided in DUCivR 72-2(a)(6) during the period of time when the parties enter the case and decide whether to consent to the exercise of full civil jurisdiction under 28 U.S.C. § 636(c).

         Upon its filing, this case was therefore assigned to Chief Judge David Nuffer and referred to Magistrate Judge Pead under 28 U.S.C. § 636(b).

         28 U.S.C. § 636(b) provides two alternative paths for magistrate judge action on referral. Sub-section 636(b)(1)(A) states that “a judge may designate a magistrate judge to hear and determine any pretrial matter pending before the court, except” various specified motions, which go to the merits of the entire case and are commonly referred to as “dispositive motions.” Thus, sub-section 636(b)(1)(A) enables a magistrate judge to “determine” any non-dispositive motion. Any objection to such an order is reviewed to determine if it is clearly erroneous or contrary to law.[28]

         By contrast, sub-section 636(b)(1)(B) states that “a judge may . . . designate a magistrate judge to conduct hearings, including evidentiary hearings, and to submit to a judge of the court proposed findings of fact and recommendations for the disposition, by a judge of the court, of any motion excepted in” sub-section A. A magistrate judge may not determine a dispositive motion, but must report and recommend action to the district judge. The district judge reviews these matters de novo.[29]

         General Order 11-001 authorizes a magistrate judge to take action under sub-section 636(b)(1)(A) and under sub-section 636(b)(1)(B). Any objection to an order issued under subsection 636(b)(1)(A) or to a report and recommendation issued under sub-section 636(b)(1)(B) is handled by the Chief District Judge.

         Regardless of the form of a magistrate judge's order, the nature of the motion governs whether the magistrate judge's order will be considered as an order with immediate effect under sub-section A or as a report and recommendation under sub-section B.[30]

         Eleutian's Motion for Extension of Time appears, superficially, to be a non-dispositive motion. It only seeks to extend time for service of process. In Ocelot Oil Corp. v. Sparrow Industries, [31] the Tenth Circuit held that motions are not deemed dispositive on categorical bases, but rather are treated as dispositive motions “when they have an identical effect” to those motions excepted under section 636(b)(1)(A).[32]

         The time allotted for service by Federal Rule of Civil Procedure 4(m) expired on January 7, 2016. After that date, Ellucian had a 12(b)(5) defense for insufficient service of process[33] and the potential defense that the statute of limitations had run on some of Eleutian's claims. The Motion for Extension of Time effectively sought to overcome those defenses.[34] Ellucian's motion was, therefore, a dispositive motion.[35] Magistrate Judge Pead's Order will be construed as a report and recommendation subject to de novo review.

         Federal Rule of Civil Procedure 72(b) requires that “specific written objections” to the magistrate judge's findings and recommendations on dispositive motions must be filed “[w]ithin 14 days after being served with a copy of the recommended disposition.” Ellucian failed to make any objections to the Ruling and Order Extending Time to Serve Complaint.

         Failing to file objections or failing to file objections within 14 days precludes the right to an Article III judge's review.[36] Ellucian therefore has no right to complain about the effect of the Ruling and Order Extending Time to Serve Complaint. “[T]he district judge[, however] retains the power to engage in sua sponte review of any portion of the magistrate's report and recommendation, regardless of the absence of objections.”[37] “Such sua sponte review may be under a de novo standard, or any lesser standard of review.”[38] Even when there is no objection, “the better practice is for the district judge to afford some level of review to dispositive legal issues raised by the report.”[39]

         Because a district court judge has discretion to review a magistrate judge's report and recommendation even without objections, it is not necessary to construe Ellucian's Motion to Dismiss as an objection[40]-timely or not-to the Ruling and Order Extending Time to Serve Complaint. The court will exercise its discretion and review the Motion for Extension of Time de novo.

         The Ruling and Order Extending Time to Serve Complaint is adopted.

         In its Motion for Extension of Time, Eleutian sought “a permissive extension of the time for Eleutian to serve the Complaint on this matter . . . through and including fourteen . . . days from the entry of the Court's Order on this Motion.”[41]

         The version of Federal Rule of Civil Procedure 4(m) in place at the time Eleutian filed the complaint stated:

If a defendant is not served within 120[42] days after the complaint is filed, the court-on motion or on its own after notice to the plaintiff-must dismiss the action without prejudice against that defendant or order that service be made within a specified time. But if the plaintiff shows good cause for the failure, the court must extend the time for service for an appropriate period.

         In Espinoza v. U.S., [43] the Tenth Circuit states the framework for granting a motion for an extension of time to effect service.

The preliminary inquiry to be made under Rule 4(m) is whether the plaintiff has shown good cause for the failure to timely effect service . . . . If good cause is shown, the plaintiff is entitled to a mandatory extension of time. If the plaintiff fails to show good cause, the district court must still consider whether a permissive extension of time may be warranted. At that point the district court may in its discretion either dismiss the case without prejudice or extend the time for service.[44]

         The Tenth Circuit has not provided factors that should be considered when dismissing a case without prejudice.[45] It has stated, however, that dismissal without prejudice “can be an extreme sanction if the statute of limitations bars refiling, ” and consequently “the district court must explain why it imposed the extreme sanction of dismissal.”[46] And further, “dismissal without prejudice when statute of limitations has run is an extreme sanction which should only be used when lesser sanctions would not serve interests of justice.”[47]

         Eleutian's Motion for Extension of Time stated that it “does not seek a mandatory extension of time due to good cause.”[48] If good cause were shown, the extension would be mandatory.[49] Instead, Eleutian seeks a permissive extension.[50] Courts consider various factors when evaluating permissive extensions. “First, the advisory committee's note states that ‘[r]elief may be justified . . . if the applicable statute of limitations would bar the refiled action.'”[51]Second, courts should consider the complexity of effecting service.[52]

         Eleutian notified Ellucian of trademark concerns on November 26, 2012.[53] On September 9, 2015, Eleutian filed the complaint.[54] That same day, counsel for Eleutian emailed the complaint to Lori Lesser, [55] a partner at the firm representing defendant. Lesser had previously corresponded with counsel for plaintiff. She sent the response to Eleutian's November 26, 2012, notification of trademark concerns.[56] Sometime in November 2015, the statute of limitations for some Eleutian's claims may have expired. On January 7, 2016, the 120-day service period expired. On January 26, 2016, Eleutian filed the Motion for Extension of Time.[57]

         Eleutian could have served Ellucian. Service would not have been complicated. There was no labyrinthine bureaucracy with which to contend. This seems to have been nothing more than a breakdown in calendaring. Eleutian was aware of the possibility of bringing suit in 2012. It waited to file a complaint until within two months of the expiration of the statute of limitations. Then it appears to have done nothing for 139 days.

         Though Eleutian's practice is not approved, its failure to serve the complaint on Ellucian does not justify dismissal without prejudice. Therefore, the Ruling and Order Extending Time to Serve Complaint is adopted. The late service preserves the claims. The complaint will not be dismissed based on the time of Eleutian's service of process.

         The third and seventh claims for relief are dismissed with prejudice and portions of the fourth and eighth claims for relief are dismissed without prejudice.

         Ellucian seeks to dismiss the following claims with prejudice: Third Claim, False Advertising in Violation of Section 43(a)(1)(B) of the Lanham Act; Fourth Claim, Dilution of Famous Mark in Violation of Section 43(c) of the Lanham Act; Seventh Claim, Unfair Competition in Violation of Utah Code Annotated Sections 13-5a-101-103; and Eighth Claim, Trademark Dilution in Violation of Utah Code Annotated Section 70-3a-403.

         Ellucian is entitled to dismissal under Rule 12(b)(6) when the complaint, standing alone, is legally insufficient to state a claim for which relief may be granted.[58] When considering a motion to dismiss for failure to state a claim, the thrust of all well-pleaded facts in the complaint is presumed, but need not consider conclusory allegations.[59] Nor are the complaint's legal conclusions and opinions accepted, whether or not they are couched as facts.[60] “In evaluating a Rule 12(b)(6) motion to dismiss, courts may consider not only the complaint itself, but also attached exhibits, and documents incorporated into the complaint by reference.”[61]

         The United States Supreme Court has held that satisfying the basic pleading requirements of the federal rules “demands more than an unadorned, the defendant-unlawfully-harmed-me accusation. A pleading that offers ‘labels and conclusions' or ‘a formulaic recitation of the elements of a cause of action will not do.'”[62] “[T]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.”[63]“[N]aked assertions devoid of further factual enhancement, ”[64] do not state a claim sufficiently to survive a motion to dismiss.

         “But where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not ‘show[n]'-‘that the pleader is entitled to relief.'”[65] “[T]he mere metaphysical possibility that some plaintiff could prove some set of facts in support of the pleaded claims is insufficient; the complaint must give the court reason to believe that this plaintiff has a reasonable likelihood of mustering factual support for these claims.”[66] That is, “[t]he allegations must be enough that, if assumed to be true, the plaintiff plausibly (not just speculatively) has a claim for relief.”[67] “This requirement of plausibility serves not only to weed out claims that do not (in the absence of additional allegations) have a reasonable prospect of success, but also to inform the defendants of the actual grounds of the claim against them.”[68]

         Measured against this legal standard, the third, fourth, seventh, and eighth causes of action fail to state a claim for the reasons stated below.

         The third claim for relief is dismissed with prejudice for ...


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