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LLC v. Carnet, LLC

United States District Court, D. Utah

April 21, 2017

CORNABY'S LLC, Plaintiff/Counterdefendant,
CARNET, LLC and CARMA CHRISTENSEN; Defendants/Counterclaimants.


          Jill N. Parrish United States District Court Judge

         Before the court is Carnet, LLC's motion for summary judgment regarding Cornaby's LLC's lack of standing. [Docket 103]. But courts may not adjudicate claims-summarily or otherwise-based upon a lack of standing; they may only dismiss the claims of a party that lacks standing. Common Cause of Penn. v. Pennsylvania, 3d 249');">558 F.3d 249, 257 (3d Cir. 2009) (“Absent Article III standing, a federal court does not have subject matter jurisdiction to address a plaintiff's claims, and they must be dismissed.” (citation omitted)). The court therefore treats Carnet's motion as a motion to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1) of the Federal Rules of Civil Procedure. See Lance v. Coffman, 37');">549 U.S. 437, 439 (2007) (per curiam) (“Article III of the Constitution limits the jurisdiction of federal courts to ‘Cases' and ‘Controversies.' One component of the case-or-controversy requirement is standing . . . .”); Colorado Envtl. Coal. v. Wenker, 353 F.3d 1221');">353 F.3d 1221, 1227 (10th Cir. 2004) (treating a dismissal for lack of standing as a Rule 12(b)(1) dismissal).

         The court DENIES Carnet's motion to dismiss. The court, however, GRANTS Carnet's request to reopen discovery so that it can depose David Cornaby and Janet Stocks regarding the standing issue.


         At the hearing for the many assorted motions pending before the court, Carnet argued for the first time that this court does not have standing to adjudicate Cornaby's causes of action because it acquired the Ultra Gel trademark only after it filed this lawsuit. See Gaia Techs. Inc. v. Recycled Prod. Corp., 3d 365');">175 F.3d 365, 369 (5th Cir. 1999) (“[I]n order to have standing under the federal infringement statutes, [a plaintiff] must prove that it owned the relevant . . . trademark when it filed suit . . . .”); Niemi v. Lasshofer, 3d 1252');">728 F.3d 1252, 1261 (10th Cir. 2013) (“[S]tanding to pursue a claim must normally exist by the time a lawsuit is filed.”). Carnet subsequently filed a motion requesting dismissal of Cornaby's claims for lack of standing. [Docket 103].

         Cornaby's responded to the motion by providing an affidavit signed by Janet and an affidavit signed by David. Attached to both affidavits, are copies of a purchase agreement and a trademark assignment agreement that clearly show that Janet assigned whatever rights she had in the Ultra Gel trademark to Cornaby's well before this suit was initiated. [Docket 110-4, 110-8].

         Carnet's reply did not challenge the authenticity of the trademark transfer documents produced by Cornaby's. Instead, Carnet argued that this court should ignore these documents for two reasons: (1) the documents were not produced before the discovery cutoff and (2) David's affidavit and attached documents should be disregarded because the affidavit contradicts his deposition testimony. In the alternative, Carnet asked for sanctions and an opportunity to depose David and Janet at Cornaby's expense. [Docket 116].



         Standing is a jurisdictional issue that may be raised at any time. United States v. $148, 840.00 in U.S. Currency, 521 F.3d 1268, 1273 (10th Cir. 2008) (“Whether a claimant has constitutional standing is a threshold jurisdictional question” that may be raised at any time.). A motion to dismiss for lack of jurisdiction under Rule 12(b)(1) may take one of two forms. A party may make a facial challenge to the allegations contained in the plaintiff's complaint, or a party may mount a factual challenge by asserting that the underlying facts of the case do not support the jurisdiction of the court. United Tribe of Shawnee Indians v. United States, 3 F.3d 543');">253 F.3d 543, 547 (10th Cir. 2001).

         By arguing that Cornaby's did not own the Ultra Gel trademark when it filed this suit, Carnet challenges the factual basis for Cornaby's standing. “In addressing a factual attack, the court . . . ‘has wide discretion to allow affidavits, other documents, and a limited evidentiary hearing to resolve disputed jurisdictional facts under Rule 12(b)(1).'” Id. (citation omitted).

         Cornaby's has produced conclusive documentary evidence that it owned the Ultra Gel trademark before it filed this suit. Carnet does not directly challenge the authenticity of these documents, but instead argues that this court should ignore the documents produced by Cornaby's for two reasons: as a discovery sanction or under the sham affidavit rule. The court rejects both of these arguments for excluding these documents from its consideration, but grants Carnet's alternative request to depose David and Janet regarding the authenticity of the transfer documents.

         A. Rule 37(c)(1)

         First, Carnet argues that the court should disregard the trademark transfer documents because they were not produced during discovery. It argues that these documents were responsive to the stipulated Rule 26 disclosures and that Cornaby's failed to provide them before the close of fact discovery. Therefore, Carnet asserts that Rule 37(c)(1) requires the exclusion of these documents. This rule provides: “If a party fails to provide information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that information or witness to ...

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