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Republic Tobacco, L.P. v. North Atlantic Trading Co.

March 22, 2007

REPUBLIC TOBACCO, L.P., PLAINTIFF,
v.
NORTH ATLANTIC TRADING COMPANY, INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Samuel Der-yeghiayan, District Judge

MEMORANDUM OPINION

This matter is before the court on Defendants North Atlantic Trading Company, Inc.'s, North Atlantic Operating Company, Inc.'s, and National Tobacco Company, L.P.'s (collectively referred to as "North Atlantic") motion to join Top Tobacco, L.P., Adam's Apple Distributing, L.P., and DRL Enterprises, Inc. (collectively referred to as "Additional Parties") as plaintiffs pursuant to Federal Rule of Civil Procedure 19. For the reasons stated below, we deny North Atlantic's motion to join the Additional Parties as plaintiffs.

BACKGROUND

Plaintiff Republic Tobacco, L.P. ("Republic") alleges that North Atlantic and Republic both import and sell roll-your-own tobacco papers and products. Both North Atlantic and Republic allegedly market their products through distributors and wholesalers that sell the products to retail stores. North Atlantic allegedly imports and distributes its papers under the ZIG-ZAG brand name and Republic allegedly imports and distributes its products under brand names such as the TOP and JOB brand names.

Republic further alleges that North Atlantic prepared and circulated to its buyers a "false and misleading presentation deck titled 'Cigarette Paper Review.'" (Compl. Par. 9). In the "Cigarette Paper Review" ("Review"), North Atlantic allegedly criticized Republic for marketing "Look Alike Products" that Republic asserts are similar to the ZIG-ZAG brand. (Compl. Par. 9). North Atlantic also allegedly criticized Republic in the Review for falsely saying "[Republic's product] is the same paper" as the ZIG-ZAG brand paper. (Compl. Par. 9). In the Review, North Atlantic also allegedly portrayed Republic's Chairman, Donald R. Levin ("Levin"), as a liar. According to Republic, North Atlantic contacted Republic's customers and informed the customers that Levin lied to the customers and that Levin lied under oath about the composition of Republic's cigarette papers. (Compl. Par. 8). Specifically, Republic alleges that North Atlantic's promotional materials falsely accuse Republic of making statements that directly contradict Levin's sworn testimony in a previous law suit between North Atlantic and Republic. (Compl. Par. 12). Republic alleges that North Atlantic is making such allegations in order to "interfere with Republic's customer relationships by causing customers to be concerned about the nature and quality of Republic's products and the integrity and veracity of Republic's top executive." (Compl. Par. 13). Republic contends that the Review constitutes false advertising that was used by North Atlantic to undermine Republic's relationships with its customers and the perceived integrity of Republic's products. Republic alleges that North Atlantic's alleged misconduct has adversely impacted Republic's sales and damaged its business relationships and reputation in the cigarette paper industry.

Republic brought the instant action and included in the complaint a false advertising claim alleging a violation of 15 U.S.C. § 1125(a) of the Lanham Act, 15 U.S.C. § 1051 et seq.(Count I), a claim alleging a violation of 815 ILCS 510/2ofthe Illinois Uniform Deceptive Trade Practices Act ("UDTPA"), 815 ILCS 510/1 et seq. (Count II), a claim alleging a violation of 815 ILCS 505/2 of the Illinois Consumer Fraud and Deceptive Business Practices Act ("Fraud Act"), 815 ILCS 505/1 et seq. (Count III), a defamation claim (Count IV), and an unfair competition claim (Count V). On June 30, 2006, North Atlantic moved, pursuant to Federal Rule of Civil Procedure 12(b)(6), to dismiss the Fraud Act claim (Count III) and the unfair competition claim (Count V). On October 18, 2006, we denied the partial motion to dismiss in its entirety. North Atlantic now moves to join the Additional Parties pursuant to Federal Rule of Civil Procedure 19(a).

LEGAL STANDARD

Federal Rule of Civil Procedure 19 ("Rule 19(a)") provides, in relevant part that:

A person who is subject to service of process and whose joinder will not deprive the court of jurisdiction over the subject matter of the action shall be joined as a party in the action if (1) in the person's absence complete relief cannot be accorded among those already parties, or (2) the person claims an interest relating to the subject of the action and is so situated that the disposition of the action in the person's absence may (i) as a practical matter impair or impede the person's ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of the claimed interest. If the person has not been so joined, the court shall order that the person be made a party. . . .

Fed. R. Civ. P. 19(a).

DISCUSSION

North Atlantic argues that because the Additional Parties are part of Levin's "cloud of affiliates" that the court must join them as plaintiffs in order to allow North Atlantic to adequately represent Levin's reputation to the fact finder and to prevent North Atlantic's vulnerability to double, multiple or inconsistent obligations to the Additional Parties pending the outcome of this lawsuit. (Mot. at 2). Rule 19(a) was promulgated "'to permit joinder of all materially interested parties to a single lawsuit so as to protect interested parties and avoid waste of judicial resources.'" Davis Cos. v. Emerald Casino, Inc., 268 F.3d 477, 481 (7th Cir. 2001)(quoting Moore v. Ashland Oil, Inc., 901 F.2d 1445, 1447 (7th Cir. 1990)). In order to determine whether an absent party should be joined under Rule 19(a), the court must consider: "(1) whether complete relief can be accorded without joinder, (2) whether [the absent party's] ability to protect [its] interest will be impaired, and (3) whether the existing parties will be subjected to a substantial risk of multiple or inconsistent obligations unless [the absent party] is joined." Id. at 481.

I. Complete Relief

North Atlantic contends that the Additional Parties are an informal branch of Republic due to a "complex and formalistic corporate structure." (Mot. 3). In support of this proposition, North Atlantic points to the fact that Republic and the Additional Parties "share management, sell tobacco or tobacco related products, . . . reside at a single corporate address" and that "Levin . . . holds an ownership or management interest in each of the [Additional Parties] or a closely-related affiliate." (Mot. 3). However, such an attenuated relationship does not support joinder of the Additional Parties. Levin's statements, which are part of the basis for North Atlantic's alleged defamatory statements, were made by Levin in his capacity as Chairman of Republic, not in his capacity with the Additional Parties. Further, simply serving with others as a member on multiple boards, selling similar products, or even having a "cozy corporate relationship[]," (Mot. 3), is neither uncommon in today's economy, nor evidence that "allegations regarding an injury to the reputation of Republic . . . implicate the reputation[s] and stature of the" Additional Parties. (Mot. 3-4). See North Shore Gas Co. v. Salomon, Inc., 152 F.3d 642, 647-68 (7th Cir. 1998)(finding that joinder was inappropriate solely based on the subsidiary's connection to the parent company). ...


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