United States District Court, N.D. Illinois, Eastern Division
June 16, 2004.
ROLLS-ROYCE PLC; ROLLS-ROYCE MOTOR CARS, LTD.; and ROLLS-ROYCE MOTOR CARS NA, LLC, Plaintiffs,
LUXURY MOTORS, INC., Defendant.
The opinion of the court was delivered by: JOHN W. DARRAH, District Judge
MEMORANDUM OPINION AND ORDER
Plaintiffs filed suit against Defendant, Luxury Motors, Inc.,
alleging trademark infringement and false designation of origin
and unfair competition in violation of the Lanham Act. Plaintiffs
also sought a preliminary and permanent injunction against Luxury
Motors' use of the Plaintiffs' trademarks. Luxury Motors seeks to
dismiss or stay the action pursuant to the doctrine of primary
jurisdiction or the Colorado River abstention doctrine.
A reading of the Complaint supports the following summary of
the alleged conduct of the parties.
Rolls-Royce Motor Cars, NA ("Rolls") is the sole authorized
distributor of Rolls-Royce cars in the United States and has the
exclusive right and license to use and control Rolls-Royce marks
for automotive use within North America pursuant to an agreement
with Rolls-Royce Motor Cars, Ltd. These marks include the
Rolls-Royce word mark, the "Rolls-Royce Badge," and the
"Rolls-Royce Monogram." The marks are distinctive, valid, and
enforceable and enjoy an exceedingly valuable reputation and
goodwill in the Untied States not only among purchasers of their
products but also among other members of the public at large.
In 1998, Rolls entered into a licensing agreement with Bentley
which granted Bentley a limited license for the automotive use of
Rolls-Royce marks during the life of the licensing agreement. At
midnight, December 31, 2002, the licensing agreement terminated,
leaving Bentley without any rights to continue to use the
Rolls-Royce marks. Also, from 1998 to December 31, 2002, Bentley
Motors, Ltd. produced Rolls-Royce passenger cars and distributed
them in North America. During that time, none of the Plaintiffs
had any ownership or affiliation with Bentley's manufacturing
Luxury Motors is an automobile dealer in Downers Grove,
Illinois. Luxury Motors entered into a 2002 dealer agreement with
Bentley through a subsidiary of Bentley. Neither Bentley nor its
subsidiaries have any connection to the Plaintiffs. Luxury
Motors' Dealer Agreement with Bentley, expressly stated that it
would expire on December 31, 2002, unless superseded by a new
dealer agreement with Bentley at an earlier date.
In early 2002, Luxury Motors submitted a proposal to Rolls
seeking to become an authorized Rolls-Royce dealer once
Rolls-Royce Motor Cars, Ltd. began producing the redesigned
Rolls-Royce Phantom for distribution in the United States. Rolls
did not accept Luxury Motors' proposal and did not select Luxury
Motors to be an authorized dealer of Rolls-Royce Motor Cars.
In February 2003, Luxury Motors filed a complaint with the
Illinois Motor Vehicle Review Board ("IMVRB"), seeking to have
Rolls tender a franchise renewal or otherwise comply with the
parties' franchise agreement. The complaint alleged that
Rolls-Royce violated the Illinois Motor Vehicle Franchise Act ("IMVFA") by failing to tender a renewal of
the franchise agreement without Luxury Motors' receiving a formal
notice of termination or nonrenewal. This complaint remains
pending before the IMVRB.
In March 2003, counsel for Luxury Motors received written
notice from Rolls that Bentley, and consequently Luxury Motors,
had no rights to use the Rolls-Royce marks. Notwithstanding that
notice, Luxury Motors continued to use the Rolls-Royce mark and
hold itself out as an authorized Rolls-Royce passenger car
On August 22, 2003, Plaintiffs filed the instant Complaint. On
October 28, 2003, the Court entered the parties' Agreed
Preliminary Injunction Order which enjoined Luxury Motors from
using or affixing Plaintiffs' trademarks and holding itself out
to customers that it was an authorized Rolls-Royce dealer.
Luxury Motors argues that the present case should be stayed
pursuant to the doctrine of primary jurisdiction.
The doctrine of primary jurisdiction is actually two doctrines.
See Arsberry v. Illinois, 244 F.3d 558, 563 (7th Cir. 2001)
(Arsberry). In its original form, the doctrine applies only
when an issue arises that is within the exclusive original
jurisdiction of the regulatory agency, although the agency's
resolution of the issue will usually be subject to judicial
review. See Arsberry, 244 F.3d at 563. In such a situation, the
suit is stayed and the issue is decided by the agency. Once the
agency decides this exclusive issue, the suit may proceed. See
Arsberry, 244 F.3d at 563.
Here, Luxury Motors has alleged before the IMVRB that because
Luxury Motors was not provided notice of termination of the
franchise agreement, as required by the IMVRA, the franchise
agreement remains in effect. The issue of whether the Defendants
failed to comply with the IMVFA is not within the exclusive jurisdiction of the IMVRB. See 815
ILCS 710 et seq. Accordingly, Luxury Motors' IMVFA claim does
not fall within the primary jurisdiction doctrine in its original
The primary jurisdiction doctrine has also been defined as a
doctrine that allows a court to refer an issue to an agency that
has specialized knowledge about the issue, even if the agency has
not been given exclusive jurisdiction to resolve that issue. See
Arsberry, 244 F.3d at 563.
Luxury Motors argues that the IMVRB has specialized knowledge
and expertise regarding automobile dealership agreements and
governing law and that, thus, the instant action should be stayed
so that the IMVRB may decide the IMVFA issue. However, Luxury
Motors fails to provide any support for this assertion. To the
contrary, claims relating to the IMVFA have been decided by the
District Courts without the need for input from the IMVRB. See,
e.g, Servpro Indust., Inc. v. Schmidt, 1997 WL 158316 (N.D. Ill.
March 31, 1997); Chrysler Credit Corp. v. Anthony Dodge, Inc.,
1996 WL 509888 (N.D. Ill. Sept. 4, 1996); Northwestern Buick,
Inc. v. Nissan Motor Corp. in the U.S.A., 1990 WL 43316
(N.D.Ill. March 29, 1990).
Based on the above, Luxury Motors has failed to demonstrate
that the present action should be stayed pursuant to the primary
Luxury Motors also argues that the present action should be
stayed pursuant to the Colorado River abstention doctrine.
Although federal courts may stay and wait a decision of
parallel proceedings as a matter of wise judicial administration,
any such stay should only be granted in exceptional cases. See
Finova Capital Corp. v. Ryan Helicopters U.S.A., Inc.,
180 F.3d 896, 898 (7th Cir. 1999) (Finova). To determine if abstention
is appropriate, the Court must first determine if the two pending
actions are in fact parallel. See Finova, 180 F.3d at 898. Actions are
parallel if substantially the same parties are litigating
substantially the same issues at the same time in two venues.
See Finova, 180 F.3d at 898. If the actions are parallel, the
Court then weighs ten factors to determine whether a stay is
appropriate. These factors include: (1) whether the state court
has assumed jurisdiction over the property at issue; (2) the
inconvenience of the federal forum; (3) the desirability of
avoiding piecemeal litigation; (4) the order in which the courts
obtained jurisdiction; (5) whether the source of governing law is
state or federal; (6) the adequacy of the state court action to
protect the federal plaintiff's rights; (7) the relative progress
of the actions; (8) the presence or absence of concurrent
jurisdiction; (9) whether the state court action is removable;
and (10) whether the federal action was filed for vexatious or
contrived purposes. See Finova, 180 F.3d at 898; Sverdrup
Corp. v. Edwardsville Comm. Unit Sch. Dist. No. 7, 125 F.3d 546,
550 (7th Cir. 1997) (Sverdrup). In balancing the ten factors,
"[p]articular weight must be given to the presence of a federal
question in the case." Sverdrup, 125 F.3d at 549.
Here, the two pending actions include Luxury Motors' claim that
Rolls-Royce Motor Cars NA violated the IMVFA and Plaintiffs'
trademark claims under the Lanham Act. Luxury Motors' improper
termination claim under the IMVFA is only one of numerous
defenses that Luxury Motors may raise in an attempt to avoid
liability. Furthermore, Luxury Motors' "improper franchise
termination" defense is unlikely to be found to be a defense at
all against Plaintiffs' claims of infringement under the Lanham
Act. See The Great American Chocolate Cookie Co. v. River Valley
Cookies, Inc., 970 F.2d 273, 282 (7th Cir. 1992) (franchisee
should not have infringed trademark but should have sued for
breach of contract); Gorestein Enter., Inc. v. Quality Care-USA,
Inc., 874 F.2d 431, 435 (7th Cir. 1989) (dispute regarding
franchise termination did not affect Lanham Act analysis); Jake Flowers, Inc. v. Kaiser, 2002 WL 31906688
(N.D.Ill.Dec. 31, 2002) (continued use of trademark after
franchise is terminated is not allowed franchisee may seek
other damages it may suffer from franchisor's unlawful action but
cannot continue to use the trademark). Accordingly, the parties
are not litigating substantially the same issues at the same time
in two venues.
Furthermore, the ten factors to be reviewed by the Court fail
to demonstrate that an exceptional case exists to warrant
abstention. The first factor is not applicable as no real or
tangible property is at issue. The federal forum does not present
an inconvenience as both proceedings are taking place in Chicago,
Illinois. There is little, to no, risk of piecemeal litigation
because, as discussed above, Luxury Motors' wrongful termination
defense is unlikely to affect the trademark infringement claims
and because any risk may be avoided by the adjudication of all
issues in this Court. While Luxury Motors' claim was filed first,
the Plaintiffs' federal claims weigh heavily against abstention.
The parties concede that neither action is much further along
than the other. While this Court and the IMVRB have concurrent
jurisdiction over Luxury Motors' one claim, only this Court has
jurisdiction over all other issues. Lastly, while Luxury Motors'
claim is not removable, Luxury Motors fails to demonstrate that
Plaintiffs brought their action for vexatious or contrived
purposes. The above review of the factors demonstrates that
abstention is not appropriate in the instant case.
For the foregoing reasons, Luxury Motors' Motion to Dismiss or
Stay is denied.
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