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Sarkis' Cafe, Inc. v. Sarks in Park, LLC

United States District Court, N.D. Illinois, Eastern Division

July 3, 2014

SARKIS' CAFE, INC., an Illinois corporation, Plaintiff,
v.
SARKS IN THE PARK, LLC, an Illinois limited liability company, Defendant. SARKS IN THE PARK, LLC, an Illinois limited liability company, Third-Party Plaintiff,
v.
DANIEL K. GALLAGHER and SCOTT N. JAFFE, both individuals, Third-Party Defendants

Page 1035

For Sarkis Cafe, Inc., an Illinois corporation, Plaintiff, Counter Defendant: Michael J. Victor, O'Halloran Kosoff Geitner & Cook LLC, Northbrook, IL; Jeffrey Ray Rosenberg, O'Halloran, Kosoff, Geitner & Cook, PC, Northbrook, IL.

For Sarks in The Park, LLC, an Illinois limited liability company, Defendant, Thirdparty Plaintiff, Counter Claimant: Edward L. Bishop, Nicholas S. Lee, LEAD ATTORNEYS, Benjamin Adam Campbell, Monique Ann Morneault, Bishop Diehl & Lee, Ltd., Schaumburg, IL.

Scott N. Jaffe, Third Party Defendant, Pro se, Highland Park, IL.

JOHN Z. LEE, United States District Judge. Magistrate Judge Brown.

Page 1036

MEMORANDUM OPINION AND ORDER

JOHN Z. LEE, United States District Judge.

Plaintiff Sarkis' Cafe, Inc. (" Sarkis" ), an Illinois corporation, has sued Defendant Sarks in the Park, LLC (" SITP" ), an Illinois limited liability company, for false designation of origin, trademark infringement, dilution, unfair competition, consumer fraud, deceptive trade practices, and injunctive relief. Defendant asserts counterclaims against Plaintiff seeking a declaratory judgment as to non-infringement of Plaintiff's trademark and cancellation of Plaintiff's trademark. Defendant also asserts three third-party claims against Daniel Gallagher and Scott Jaffe (the " third-party Defendants" ). Plaintiff now moves to dismiss Defendant's counterclaims pursuant to Federal Rule of Civil Procedure (" Rule" ) 12(b)(6); to strike Defendant's affirmative defenses pursuant to Rule 12(f); and to strike Defendant's third-party claims under 28 U.S.C. § 1367(c). For the reasons set forth herein, the Court: (1) grants in part and denies in part Plaintiff's motion to dismiss Defendant's counterclaims; (2) grants Plaintiff's motion to strike Defendant's affirmative defenses;

Page 1037

and (3) denies Plaintiff's motion to strike Defendant's third-party claims.

Factual Background[1]

Gallagher sold SITP to Erin Knapp in March 2012. Def.'s Countercls. & 3d Party Cls. ¶ ¶ 9-10. Gallagher had been the sole owner of SITP starting in 2010. Id. ¶ 11. Prior to that time, he had owned SITP with a partner, Jose Alomia. Id.

During Gallagher's ownership in May 2009, he and Alomia were approached by Jaffe, who claimed to be the owner of Sarkis. Id. ¶ ¶ 12-13. On May 18, 2009, Jaffe entered into a letter agreement with Gallagher and Alomia, granting SITP permission to use Sarkis' " trade names, trademarks, recipes, names of suppliers and other intellectual property." Id. ¶ ¶ 12, 14. The letter also included terms for a royalty and stated that Sarkis would briefly provide SITP with employees. Id. ¶ 15. SITP officially opened in Chicago's Lincoln Park neighborhood on or around July 10, 2009, and sent its employees to be trained at Sarkis. Jaffe approved of, participated in, and authorized this training. Id. ¶ ¶ 18-19.

Around this time, Sarkis displayed in its restaurant three articles from local publications touting SITP's relationship with Sarkis. For example, Sarkis displayed a Chicago Sun-Times article from June 29, 2009, stating that Sarkis was opening its first satellite location in Lincoln Park (referring to SITP). Id. ¶ ¶ 21-22. Sarkis also exhibited an August 1, 2009, article that touted SITP as an outpost of Sarkis. Id. ¶ ¶ 23-24. Another article stated that " [Sarkis] has continued to thrive under its current owner, Scott Jaffe." Id. ¶ 20. Jaffe himself also promoted SITP as Sarkis' new Lincoln Park location in an interview that was posted on Vimeo. Id. ¶ 25. Defendant alleges that, through these and other actions, Sarkis " held out and informed the public and others that Sarks in the Park was its Lincoln Park location." Id. ¶ 26.

Despite this, on July 18, 2009, less than a month after SITP's opening, Sarkis' attorney informed Gallagher and SITP that the new restaurant's " use of the Sarkis name, mark, menu and logo would infringe upon Plaintiff's rights." Id. ¶ 27. Accordingly, Sarkis believed as early as July 18, 2009, that its marks were being used by SITP without permission. Id. ¶ 28. Despite receiving this communication from Sarkis, Gallagher did not inform Knapp before selling SITP to him that Sarkis had objected to SITP's use of the " Sarkis" mark and its right to open or operate the restaurant. Id. ¶ 31.

Defendant now asserts two counterclaims against Plaintiff, the first seeking a declaratory judgment that it is not infringing upon Plaintiff's trademark pursuant to 28 U.S.C. § § 2201 and 2202, and the second requesting cancellation of the Sarkis trademark pursuant to 15 U.S.C. § 1064(3). Defendant also brings claims against third party Defendants, Gallagher and ...


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