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Britt Interactive LLC v. A3 Media LLC

United States District Court, S.D. Indiana, Indianapolis Division

March 5, 2018

BRITT INTERACTIVE LLC, and TOWNEPOST NETWORK INC., Plaintiffs and Counterclaim Defendants,
v.
A3 MEDIA LLC, COLLECTIVE PUBLISHING LLC, YELENA LUCAS, NEIL LUCAS, JANELLE MORRISON, CHILLY PANDA MEDIA, LLC, DANN VELDKAMP, and JODY VELDKAMP, Defendants, Counterclaimants and Third Party Plaintiffs, TOM BRITT, JEANNE BRITT, JOSHUA BROWN, and TONI FOLZENLOGEL, Third Party Defendants.

          ORDER ADOPTING MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION

          TANYA WALTON PRATT, United States District Court Judge

         This matter is before the Court on Plaintiffs', Britt Interactive LLC and Townepost, Inc. (collectively, the “Plaintiffs”), Motion to Hold Defendants in Contempt of Temporary Restraining Order (Filing No. 17) (the “Contempt Motion”). On July 28, 2017, the Magistrate Judge issued a Report and Recommendation, advising the Court to grant in part and deny in part the Contempt Motion (Filing No. 251). Defendants, A3 Media, LLC, Collective Publishing, LLC, Yelena Lucas, and Neil Lucas (collectively, the “Lucas Parties”), objected to the Magistrate Judge's Report and Recommendation, asserting that (1) the language of the temporary restraining order (“TRO”) at issue is too ambiguous to hold the Lucas Parties in contempt; (2) the Lucas Parties should not be held in contempt for violations of the TRO before they knew it was in effect; and (3) a civil contempt remedy is no longer necessary to coerce compliance with the TRO (Filing No. 256). For the following reasons, the Court OVERRULES the Lucas Parties' Objections and ADOPTS the Magistrate Judge's Report and Recommendation to grant in part and deny in part the Contempt Motion.

         I. BACKGROUND

         The facts of this case are set forth in the Magistrate Judge's Report and Recommendation which the Court adopts, so only a brief synopsis of the factual background is stated in this Order. Plaintiffs initiated this action against the Lucas Parties on September 23, 2016 in Hamilton County, Indiana Superior Court and alleged several claims, including breach of contract, tortious interference with contracts, and trademark infringement (Filing No. 3-2). On October 11, 2016, Plaintiffs filed a Motion for Temporary Restraining Order in the Hamilton County Superior Court, and Judge William J. Hughes held a hearing on Plaintiffs' motion on October 17, 2016 (Filing No. 18 at 3). At the conclusion of the TRO hearing, Judge Hughes determined that Plaintiffs were entitled to a TRO restricting the Lucas Parties' use of the “Carmel Magazine” and “Zionsville Magazine” marks (the “Marks”) and that such a TRO would go into effect as soon as Plaintiffs were able to post a $24, 000.00 bond (Filing No. 18 at 6-7).

         Despite Judge Hughes' determination that Plaintiffs were entitled to a TRO against the Lucas Parties, on October 17, 2016, the Lucas Parties continued to reference and assert ownership of the Marks in emails to advertisers and on their social media platforms after October 17, 2016 (Filing No. 18 at 7-17). Specifically, on October 18, 2016, the Lucas Parties sent invoices to advertisers in connection with upcoming issues of “Carmel Magazine” and “Zionsville Magazine” (Filing No. 19-11), and sent several additional emails to advertisers between 1:18 p.m. and 3:19 p.m. on October 19, 2016 to collect and negotiate fees for advertisements in “Carmel Magazine” and “Zionsville Magazine” (Filing No. 111-1; Filing No. 111-2; Filing No. 111-3).

         The Plaintiffs posted bond on October 19, 2016, and the TRO went into effect at 3:55 p.m. on October 19, 2016 (Filing No. 19-5 at 2-3). In his order granting the TRO, Judge Hughes stated that “Plaintiffs will suffer immediate and irreparable harm if [the Lucas Parties and Lena Lucas] distribute their October issues, or any subsequent issues, of the “Zionsville Magazine” and/or the “Carmel Magazine” and such distribution will cause further confusion among customers, advertisers, and the general public” (Filing No. 19-5 at 2). Judge Hughes' TRO order also temporarily restrained and enjoined the Lucas Parties and Lena Lucas from the following:

(a) distributing October issues, or any subsequent issues, of the “Zionsville Magazine” and/or the “Carmel Magazine”; (b) infringing TownePost's Licensed Marks in violation and contravention of the Lanham Act”; (c) infringing TownePost's common law marks in violation and contravention of the Indiana Trademark Act; (d) using marks that are the same as or confusingly similar to TownePost's Licensed Marks or common law marks in any manner including but not limited to in a print magazine, newsletter, or online medium; and (e) interfering with the contracts between TownePost and its advertisers.

(Filing No. 19-5 at 3). At 4:01 p.m. on October 16, 2016, Judge Hughes sent an email to counsel for Plaintiffs and the Lucas Parties, which included his order granting the TRO. (Filing No. 53 at 8.) Counsel for the Lucas Parties forwarded Judge Hughes' email to the Lucas Parties at 4:41 p.m. on October 19, 2016 (Filing No. 53 at 8). The Lucas Parties continued to send emails referencing the Marks after 3:55 p.m. on October 19, 2016. While they did not yet know the TRO was in effect, the Lucas Parties sent advertisers emails regarding a “limited time” offer for ads in “Carmel Magazine” and “Zionsville Magazine” at 4:06 p.m. and 4:08 p.m. on October 19, 2016 (Filing No 19-8; Filing No. 111-6).

         The Lucas Parties also continued to send emails to advertisers using the Marks between 5:27 p.m. on October 19, 2016 and 9:55 a.m. on October 24, 2016 (Filing No. 111-4; Filing No. 111-5; Filing No. 111-7; Filing No. 111-8). Furthermore, the Lucas Parties continued to represent ownership of the Marks and promote their upcoming issues of “Carmel Magazine” and “Zionsville Magazine” on Twitter until October 24, 2016 (Filing No. 19-6).

         On October, 24, 2016, the Lucas Parties removed the litigation to this Court (Filing No. 3). Based on the Lucas Parties' actions after the TRO went into effect, Plaintiffs filed the Contempt Motion on October 31, 2016, requesting that the Court award them their attorney's fees associated with their investigation of the Lucas Parties' TRO violations (Filing No. 17). This Court also extended the TRO until November 14, 2016 at 3:00 p.m. that same day (Filing No. 22).

         On July 28, 2017, the Magistrate Judge issued a Report and Recommendation, in which he recommended that the Court grant in part and deny in part the Contempt Motion (Filing No. 251). Specifically, the Magistrate Judge determined that while some of the alleged TRO violations actually occurred before the TRO went into effect and cannot be the basis for contempt, the Lucas Parties did violate paragraph (d) of the TRO by using the Marks in emails to advertisers and through social media after the TRO became effective at 3:55 p.m. on October 19, 2016 (Filing No. 251 at 10-18). Although the Lucas Parties argued that they were entitled to some leeway for the emails they sent on October 19, 2016 before learning the TRO was in effect, the Magistrate Judge found that the Lucas Parties were not entitled to any such leeway because they had sufficient notice from the October 17, 2016 hearing that the TRO would go into effect as soon as Plaintiffs posted bond and because they still continued to violate the TRO even after knowing it was in effect (Filing No. 251 at 12-20). Furthermore, the Magistrate Judge determined that Plaintiffs were entitled to recover their reasonable attorney's fees associated with bringing the Contempt Motion and that Plaintiffs would be able to seek any actual damages resulting from the Lucas Parties' contempt at a later date (Filing No. 251 at 20-22).

         The Lucas Parties objected to the Magistrate Judge's Report and Recommendation on August 11, 2017 (Filing No. 256). In their Objections, the Lucas Parties argue that the language of paragraph (d) of the TRO is too ambiguous to support a finding of civil contempt and that they should not be liable for any violations of the TRO before they knew it was in effect (Filing No. 256 at 3-4). The Lucas Parties further contend that no sanction is necessary to coerce compliance with the TRO because (1) Plaintiffs failed to show that all of their alleged violations occurred while the TRO was in effect; (2) they have fully complied with the TRO since October 24, 2016; and (3) any actual violations of the TRO were minimal (Filing No. 256 at 4-5; Filing No. 259 at 3-4). Plaintiffs oppose the Lucas Parties' objections, asserting that the language of the TRO is unambiguous and that the evidence of record clearly establishes that the Lucas Parties violated the TRO after it went into effect at 3:55 p.m. on October 19, 2016 (Filing No. 258).

         II. LEGAL STANDARD

         A. Magistrate Judge's Review of ...


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