False Start: A Steelers Fan's Doomed Attempt to Use Litigation to Save His Team

Not every case involving a matter of emergency business litigation is one of dire importance.

On December 29th, 2013, the Kansas City Chiefs played the San Diego Chargers with the fate of two teams on the line. The Chargers would reach the postseason with a win, but if they had lost, the Pittsburgh Steelers, by virtue of a tiebreaker, would gain the final playoff spot in the AFC instead. The game was tied 24-24 with just a few seconds left on the clock when the Chiefs’ kicker missed a field goal wide right that would have won the game.  Instead, the game remained tied at the end of regulation, forcing an overtime period where the Chargers eventually scored the game-winning field goal, ending the Steelers’ season.

The problem was, though, that the Chargers had broken the rules when defending against the Chiefs’ field goal attempt at the end of regulation, as they violated formation rules by placing more than six players on one side of the field, in an attempt to block the field goal by bringing superior numbers to bear on one side of the Chiefs’ offensive line. The penalty for this rule violation is five yards and a replay of down, and so the Chiefs, by rule should have been granted another field goal attempt which, if made, would have ended the game in their favor. The plaintiff contends that the NFL’s ‘challenge system’, which allows coaches to challenge certain rulings, was “fraudulent and negligent” because, due to the vagaries of the rule, coaches cannot make any challenges within the final two minutes of regulation time, and so the Chiefs’ coach was unable to challenge this erroneous ruling.

The plaintiff also called attention to a ruling made in the overtime period, where a member of the Chargers appeared to fumble the ball to the Chiefs, but as his helmet had been stripped from his head before the fumble occurred, the officials enforced a rule that declared the play dead as the result of the ball carrier losing his helmet during the play. The plaintiff contended that this rule, enacted by the NFL Rules Committee only a few years ago, did not comport with the intent of the NFL “Forefathers”, and was, therefore, unconstitutional.

The plaintiff then provided a number of suggestions for solving this crisis, such as replaying the controversial field goal attempt, replaying the entire game, or simply declaring the Chiefs the victors of the game, thereby giving the Steelers the Chargers’ spot in the playoffs.

Unfortunately, this request for a TRO was doomed to failure from the start, as the first factor that a court examines in determining whether to grant such an order is whether there is a likelihood of success on the merits. In this case, there appear to be two major defects, either of them fatal on their own, that prevent a TRO from being issued almost immediately.

First, it is unclear what the cause of action in this case was. The plaintiff appeared to make two claims, first, that the challenge system, as implemented, is fraudulent and negligent because the rules in the last two minutes of the game are different from those in the remainder of the game. That hardly seems to flow logically. The second claim is that the rule regarding helmets is “improper and unconstitutional” because it was not the intent of the NFL “Forefathers”. Obviously, that claim is defective as well.

Second, even if a cause of action could be chiseled out of this complaint, the plaintiff almost assuredly lacks standing to pursue the claim, as the plaintiff has no legally protected interest in this case. Even if the NFL has misapplied its own rules, the plaintiff, as a private citizen, would have suffered no cognizable injury, and in this case, the plaintiff is suing under the argument that it is the NFL’s rulemaking process that is at fault, rather than the actual operation of the rules.

In either case, the court would quickly find that there was no likelihood of success on the merits and, as a result, that the TRO could not be issued, ending the Steelers’ final chance of continuing their 2013 NFL season.

 

 

Sriracha: Hot Sauce, Hot Problems

Emergency business litigation does not always arise out of the board room. Sometimes, it can just drift in, like a cloud.

Sriracha, a hot sauce made mostly of chili peppers and vinegar, was originally invented decades ago in Thailand, before being reformulated in America by immigrants in Los Angeles’ Chinatown. Over the past few years, however, its popularity in the United States has skyrocketed, to the point where a brand new factory dedicated to making the sauce recently opened in Irwindale, California.

And that is where the troubles began.

As one might expect from a rather large factory that processes massive quantities of chili peppers, garlic, and various other spices, controlling the spread of odors from the factory is essential, lest the town of Irwindale be flooded with the intense smell of pepper and garlic in perpetuity. To that end, the company that operates the plant, Huy Fong Foods, installed a carbon-based filtering system to try and remove the odor from the plant’s emissions. Local residents complained that the smell of chili peppers was still pervasive, and was so intense that it caused health problems, such as burning of the eyes and irritated throats. Responding to their constituents, the city of Irwindale asked Huy Fong Foods to install a more expensive filtration system, estimated to cost the company $600,000. Huy Fong refused, protesting that the residents had exaggerated the intensity of the odor, noting that their factory workers, who were exposed to the unfiltered fumes at much closer proximity, were able to do their work without complaint.

The city of Irwindale countered with a suit alleging that the factory was a public nuisance, and filed for a TRO and a preliminary injunction to shut down the factory while the issue is being litigated. On Thursday, a Los Angeles Superior Court judge ruled on the TRO, denying it, and keeping the factory open for the time being.

His reasoning illustrates the one critical difference between a TRO and a preliminary injunction--timing. The city of Irwindale had asked the judge, on very short notice and without the benefit of a full hearing, to shut down an entire factory for an indefinite period of time, which, as the court noted, was a rather extreme request to make on such short notice.  The judge was unwilling to allow such a radical remedy even if, in the case of a TRO, it would only last until the city’s request for a preliminary injunction could be heard later that month.

Instead, the factory will remain open at least until the court can conduct a full hearing on whether or not the emanations from the factory are noxious to the point where an injunction is necessary.

This case just shows how emergency business litigation can come when one least expects it. Knowing how to defend against such litigation can be the difference between a business keeping its doors open, or being shut down for good.

The Patterson Law Firm is experienced in handling cases that need to be dealt with on an emergency basis—Tom Patterson wrote the book on temporary restraining orders and preliminary injunctions. To learn more about the services we offer visit pattersonlawfirm.com or call 312.223.1699.

 

A Tale of Two Cracker Barrels

There are many species of commercial litigation where a preliminary injunction may prove helpful, or even necessary, and trademark protection is one of the most important. The recent litigation between Kraft and Cracker Barrel Old Country Store is a good example of this kind of dispute.

This trademark dispute has a long and complicated history. Suffice to say that, as of the present, Kraft owns the trademark rights to the Cracker Barrel line of products, mostly meat and cheeses, sold in grocery stores throughout the country. At the same time, however, there is also a national chain of restaurants that label themselves as “Cracker Barrel Old Country Store” (CBOCS), which also holds a trademark on the name. The two companies had, in the past, acknowledged that Kraft had the superior trademark, but they were not direct competitors.

Recently, however, CBOCS licensed its brand to John Morrell for a line of meat products to be sold in grocery stores throughout the country. Kraft filed a suit for trademark infringement, as well as a preliminary injunction to stop CBOCS from bringing its own products to grocery stores.  The court granted the injunction, and it is instructive to examine why.

The first element that the court examined was whether or not the suit was likely to succeed on its merits. The exact standard for what chance of success a claim might have varies from circuit to circuit. As this case was filed in the U.S. District Court for Northern Illinois, the Seventh Circuit’s standard, that the claim need only have a “better than negligible” chance was used. Kraft was easily able to clear this barrier. Both parties had, in the past, acknowledged that Kraft had the superior trademark over the “Cracker Barrel” name. In addition, the court noted that the particular packaging used by CBOCS on its licensed line and the relative similarity of the Kraft and CBOCS products created a significant likelihood for confusion between the two lines, a necessary part of any trademark infringement case.

The court next turned to whether there was an adequate remedy at law, and whether irreparable harm would be done if CBOC were allowed to sell its meat products in grocery stores. In trademark cases, it is established precedent, at least in the Seventh Circuit that there is a presumption that this element will be met if a trademark if infringed upon. Kraft also argued that should CBOCS be allowed to use the Cracker Barrel brand in its meat line, then Kraft’s Cracker Barrel brand would become diluted, and the reputation of the brand will fall outside of Kraft’s control. The damages, in such a scenario, would be difficult to ascertain. The court generally agreed with this rationale, and found that Kraft had met this element as well.

The court then looked at the final two elements, both of which it disposed of relatively quickly. First, it balanced the harms, and concluded that because this new line of products was essentially an ancillary business for CBOCS, and because the products had been withdrawn from circulation as a result of the litigation, that there was little harm done to CBOCS in comparison to the potential harm that Kraft might suffer absent an injunction. Next, the court looked at the public interest in this case, and simply concluded that the public interest was preventing confusion in the marketplace, supporting Kraft’s argument for a preliminary injunction.

As the granting of a preliminary injunction is an equitable remedy, however, the court was also forced to consider a pair of defenses raised by CBOCS. First, CBOCS argued that Kraft had shown acquiescence by allowing CBOCS to use the Cracker Barrel name for decades to sell food in its own restaurants and stores, and to sell it through other channels, such as catalogues and the internet as well. The court did not find this argument persuasive, as Kraft was not selling its own Cracker Barrel products in any of those locations, and thus had no fears of confusion in those locations, unlike the grocery store market, which was Kraft’s primary point of sale for its Cracker Barrel products.

CBOCS next argued that laches applies, as CBOCS had first broached the idea of selling its own Cracker Barrel products in grocery stores in 2006, and that Kraft and CBOCS had discussed the issues regarding CBOCS bringing their own Cracker Barrel products to grocery stores at that time, and that, if Kraft had any objections to the plan, it should have made them in 2006, rather than waiting until CBOCS had already planned and begun distribution of its line. The court was not persuaded by this argument either. It found that while the two parties had exchanged some correspondence in 2006, the discussions were more preliminary than decisive, and Kraft had been concerned about trademark infringement at the time, and had requested that CBOCS give them notice before undertaking any venture into grocery retail.

As a final matter, the bond requirement was upheld in this case, and Kraft was required to post a $5 million bond before the injunction would be entered. Even though Kraft had made many compelling arguments, including showing that CBOCS was not poised to lose much more than opportunity costs should the injunction be granted, the court still took the bond requirement from the Federal Rules of Civil Procedure very seriously, and required a substantial bond from the movant, as is not unusual in cases of this type.

In conclusion, the Cracker Barrel case shows how a preliminary injunction intersects with other forms of commercial litigation, and what effect the laws of trademark have on showing the elements of a preliminary injunction.