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Sink v. George Sink II Law Firm LLC

United States District Court, D. South Carolina, Charleston Division

August 9, 2019

GEORGE SINK, P.A. INJURY LAWYERS, Plaintiff,
v.
GEORGE SINK II LAW FIRM LLC, GEORGE SINK LAW FIRM LLC, SOUTHERN LEGAL ASSOCIATION LLC and GEORGE “TED” SINK, JR., Defendants.

          ORDER

          DAVID C. NORTON UNITED STATES DISTRICT JUDGE

         This matter is before the court on plaintiff George Sink P.A. Injury Lawyers' (“plaintiff” or “Sink P.A.”) motion to seal, ECF No. 16, and motion for preliminary injunction, ECF No. 14; and on defendants George Sink II Law Firm, LLC, George Sink Law Firm, LLC, Southern Legal Association, LLC (“SLA”), and George (“Ted”) Sink, Jr.'s[1] (collectively, “defendants”) motions to dismiss, ECF Nos. 11 and 26. For the reasons set forth below, the court grants the motion to seal, denies the motion to dismiss, and grants the motion for preliminary injunction.

         I. BACKGROUND

         This matter arises from a dispute between George Sink Sr. and his son, George Sink Jr. According to the complaint, George Sink Sr. started Sink P.A. in 1997, since which time he has used “GEORGE SINK-formative marks in connection with legal services.” ECF No. 17 ¶ 10. Plaintiff has expanded into 14 offices throughout South Carolina and Georgia. The firm advertises heavily on television, radio, billboards, mail, online, and through its website, www.sinklaw.com. Plaintiff owns U.S. Service Mark registration No. 3, 849, 776 (“the ‘776 registration” or “the ‘776 mark”) for the GEORGE SINK, P.A. INJURY LAWYERS and design mark, which was issued on September 10, 2010 after the mark was allegedly first used in commerce as early as February 18, 1999. Plaintiff also owns U.S. Service Mark Registration No. 4, 620, 500 (“the ‘500 registration” or “the ‘500 mark”) for the GEORGE SINK, P.A. INJURY LAWYERS mark, which was issued on October 14, 2014 and was allegedly used in commerce as early as February 18, 1999. Plaintiff alleges that these marks are associated with the firm's legal services and have acquired distinctiveness by having a secondary meaning to consumers. Plaintiff also claims that it has acquired common law rights in the GEORGE SINK marks, and that it has “expended significant resources in advertising and promoting its legal services” under these marks. Id. ¶ 22.

         Plaintiff alleges that in March 2013, George Sink Jr.-who had previously worked in marketing in New York City for ten years-moved to Charleston to perform marketing work for plaintiff. George Sink Jr. then attended Charleston School of Law and graduated in 2016. In March 2018, George Sink Jr. transitioned from plaintiff's marketing team to work as an entry-level attorney at the firm. On April 30, 2018, George Sink Jr. signed a Confidentially and Non-Solicitation Agreement (“the Agreement”) with Sink P.A..[2] The “circumstances surrounding entry into and the actual terms of [the Agreement] are set out by the Plaintiff's Amended Demand for Arbitration dated May 3, 2019.” Id. ¶ 31. George Sink Jr.'s employment with plaintiff was terminated on February 7, 2019. According to plaintiff, George Sink Jr. formed SLA on February 11, 2019 for the purposes of managing two other corporations, named Sink II and Sink III, that he also formed in February 2019.

         Plaintiff alleges that defendants “have been using in commerce the designations GEORGE SINK and GEORGE SINK II in connection with” the offering and marketing “of identical legal services in the same geographical regions as plaintiff.” Id. ¶ 34. Plaintiff claims that these uses violates its exclusive right to use its protected mark. Plaintiff alleges various instances of confusion among the public from defendants' use of plaintiff's marks.

         Plaintiff filed this lawsuit on April 25, 2019, and filed an amended complaint on May 21, 2019, bringing the following claims: (1) trademark infringement in violation of 15 U.S.C. § 1114; (2) unfair competition in violation of 15 U.S.C. § 1125(a); (3) cybersquatting in violation of 15 U.S.C. § 1125(d); (4) common law trademark infringement; (5) unfair trade practices in violation of S.C. Code § 39-5-20 et seq.; and (6) dilution in violation of S.C. Code § 39-15-1165. ECF No. 17. On May 21, 2019, plaintiff also filed a motion requesting permission to file under seal the Amended Demand for Arbitration filed by plaintiff against George Sink Jr. pursuant to the arbitration clause of the Agreement. ECF No. 16. On June 7, 2019, defendants filed a motion to dismiss for failure to state a claim. ECF No. 26.[3] On June 21, 2019, plaintiff filed its response, ECF No. 34, and on June 27, 2019, defendants filed their reply, ECF No. 34. On May 15, 2019, plaintiff filed a motion for preliminary injunction, ECF No. 14, to which defendants responded on May 29, 2019, ECF No. 20, and to which plaintiff replied on June 5, 2019, ECF No. 24.

         II. STANDARDS

         A. Motion to Dismiss

         Under Federal Rule of Civil Procedure 12(b)(6), a party may move to dismiss for “failure to state a claim upon which relief can be granted.” When considering a Rule 12(b)(6) motion to dismiss, the court must accept the plaintiff's factual allegations as true and draw all reasonable inferences in the plaintiff's favor. See E.I. du Pont de Nemours & Co. v. Kolon Indus., 637 F.3d 435, 440 (4th Cir. 2011). But “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). On a motion to dismiss, the court's task is limited to determining whether the complaint states a “plausible claim for relief.” Id. at 679. Although Rule 8(a)(2) requires only a “short and plain statement of the claim showing that the pleader is entitled to relief, ” “a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). The “complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570). “Facts pled that are ‘merely consistent with' liability are not sufficient.” A Soc'y Without a Name v. Va., 655 F.3d 342, 346 (4th Cir. 2011) (quoting Iqbal, 556 U.S. at 678).

         B. Preliminary Injunction

         “The purpose of a preliminary injunction is merely to preserve the relative positions of the parties until a trial on the merits can be held.” United States v. South Carolina, 840 F.Supp.2d 898, 914 (D.S.C. 2011) (quoting Univ. of Tex. v. Camenisch, 451 U.S. 390, 395 (1981)). “A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of the equities tips in his favor, and that an injunction is in the public interest.” Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 20 (2008). As the Supreme Court has noted, a preliminary injunction is “an extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is entitled to such relief.” Id. at 22.

         III. DISCUSSION

         A. Motion to Dismiss

         A brief discussion of the Agreement is required before addressing defendants' motion to dismiss. The Agreement contains an arbitration clause, under which the parties agreed that “any controversy arising under, or relating to, this Agreement will be subjected to binding arbitration pursuant to the South Carolina Uniform Arbitration Act [ ] in the County of Charleston, State of South Carolina.” ECF No. 11-1 at 3. The clause mandates that the arbitration “shall be conducted on a confidential basis, ” hence the pending motion to seal. Despite the requirement that all disputes between the parties be handled in arbitration, the clause contains the following exclusion: “[t]he Arbitrator shall be fully empowered to enter injunctive relief, and the parties may seek and obtain a temporary restraining order or injunction from a court while awaiting the decision of the Arbitrator on a claim for a restraining order or injunction.” Id. Plaintiff filed suit pursuant to this exclusion. ECF No. 17 ¶ 54.

         Defendants' motion to dismiss appears to articulate two distinct bases upon which the court should dismiss the complaint. First, defendants argue that the complaint seeks relief from this court beyond what is permitted by the arbitration clause and that the entire complaint should thus be dismissed. As discussed in the above paragraph, the arbitration clause allows either party to seek a temporary restraining order or injunction from the court while awaiting the Arbitrator's final decision. Defendants' arguments on this ground were put forth in their original motion to dismiss, ECF No. 11, which was filed before plaintiff filed the amended complaint, ECF No. 17. Defendants were correct that the original complaint-in seeking damages and permanent injunctive relief-went beyond the scope of relief allowed by the arbitration clause. However, the amended complaint seeks only temporary injunctive relief. Defendants' new motion to dismiss did not add anything to its original motion to dismiss, but rather incorporated wholly the arguments made in that first motion; thus, the current motion to dismiss does not account for the new complaint, which does not seek relief beyond what is allowed by the arbitration clause. While the amended complaint does allege that plaintiff has been damaged by defendants' infringing behavior, it does not request monetary damages. Furthermore, the only injunctive relief that plaintiff requests is “injunctive relief pursuant to the Arbitration Clause.” ECF No. 17 ¶ 54. Plaintiff's prayer for relief only asks that the court preliminarily enjoin defendants from using plaintiff's marks.

         Defendants next argue that the court should dismiss the complaint because the arbitration clause provides that “[t]he Employer may only recover up to $500.00, including all costs and fees for all claims, as a total sum, against Employee, agreeing that this represents full and final payment for all claims against Employee now and in the future.” ECF No. 11-1 at 3. Defendants claim to have tendered the $500.00 to plaintiff pursuant to this clause on March 8, 2019. Defendants argue that this clause precludes plaintiff from seeking any injunctive relief now that the $500.00 has been tendered, interpreting the above-quoted section of the arbitration clause to mean that literally the only relief Employer can get from employee is $500.00. The court disagrees and finds that this is an inaccurate interpretation of the arbitration clause. When reading the clause in totality, it is clear to the court that this $500.00 provision exists merely to limit the amount of money damages that the Employer can receive. There is nothing in this sentence to indicate that $500.00 is the exclusive remedy or that the Employer may not seek injunctive relief in addition to this $500.00. To the contrary, just a few sentences above this $500.00 provision, the arbitration clause clearly states that the Arbitrator may enter injunctive relief and that the parties may seek temporary injunctive relief from a court while awaiting the Arbitrator's decision. Thus, the court denies the motion to dismiss on this ground.

         Finally, defendants raise an issue that is ultimately irrelevant to the current motions. Defendants' motion to dismiss posits that “[i]t is foreseeable that the Plaintiff may argue that dismissal is not proper because its Demand for Arbitration alleges that the Non-Solicitation Agreement was the product of fraud” but that plaintiff “has waived its ability to advance any such argument.” ECF No. 11 at 5. Yet in the action before this court, plaintiff's response to the motion to dismiss does not argue that the motion should not be dismissed due to any issues with the Agreement. Rather, plaintiffs' response to defendants' two main arguments in favor of dismissal address the merits of those arguments directly. Nonetheless, defendants have argued that “[i]t is impossible that the plaintiff can advance in arbitration that the [ ] Agreement is the product of fraud and in this action invoke the power and authority of the same Agreement as justification for its complaint.” ECF No. 11 at 6. To the extent that defendants are actually asking the court to dismiss the complaint by arguing that plaintiff is estopped from bringing this suit because plaintiff has sought in arbitration to have the Agreement declared invalid, the court rejects this argument. Defendant improperly categorizes its “estoppel” argument. Plaintiff's attempt to reform, through the arbitration process, parts of the Agreement that it contends are invalid does not preclude plaintiff from seeking temporary relief from this court pursuant to the Agreement while it is awaiting the Arbitrator's decision. For all of the reasons set forth above, the court denies the motion to dismiss.

         B. Motion for Preliminary Injunction

         Plaintiff next asks the court to issue a preliminary injunction ordering the following relief:

prohibit [d]efendants from using the designations GEORGE SINK or GEORGE SINK II, or any other similar GEORGE SINK-formative designation; remove GEORGE SINK-formative references, including the email address georgesink@gmail.com and website <georgesinklawfirm.com>, from all profiles, including the State Bar directories and social media accounts; and whatever other relief the Court deems just and equitable.

         ECF No. 14 at 29.

         A party seeking a preliminary injunction must demonstrate that (1) it is likely to succeed on the merits, (2) it is likely to suffer irreparable harm in absence of the injunction, (3) the balance of hardships tips in its favor, and (4) the injunction is in the public interest. Metro. Reg'l Info. Sys. v. Am. Home Realty Network, Inc., 722 F.3d 591, 595 (4th Cir. 2013) (citing Winter, 555 U.S. at 20). “To obtain a preliminary injunction under the Winter test, a movant must make a ‘clear showing' of [the] four requirements.” Alkebulanyahh v. Nettles, 2011 WL 2728453, at *3 (D.S.C. July 13, 2011); see also Dewhurst v. Century Aluminum Co., 649 F.3d 287, 290 (4th Cir. 2011) (“Winter thus requires that a party seeking a preliminary injunction . . . must clearly show that it is likely to succeed on the merits.” (internal quotation omitted)).

         Plaintiff is seeking a prohibitory injunction to maintain the status quo until its disputes with defendants are resolved through arbitration. “Prohibitory preliminary injunctions aim to maintain the status quo and prevent irreparable harm while a lawsuit remains pending.” Pashby v. Delia, 709 F.3d 307, 319 (4th Cir. 2013). The Fourth Circuit has defined “status quo” in this context as “the last uncontested status between the parties which preceded the controversy.” Id. at 320. “To be sure, it is sometimes necessary to require a party who has recently disturbed the status quo to reverse its actions, but . . . [s]uch an injunction restores, rather than disturbs, the status quo ante.” Aggarao v. MOL Ship Mgmt. Co., 675 F.3d 355, 378 (4th Cir. 2012) (internal quotation marks and citation omitted); see also League of Women Voters of N. Carolina v. North Carolina, 769 F.3d 224, 236 (4th Cir. 2014) (finding that a motion to enjoin a law's “elimination of [same-day registration], out-of-precinct provisional voting, [ ] preregistration[, and] its cutback of early voting” was “the language and stuff of a prohibitory injunction seeking to maintain the status quo”). Plaintiff contends that the “last uncontested status” between it and defendants was just before defendants allegedly began using the GEORGE SINK mark in an allegedly infringing manner. Thus, plaintiff's motion for preliminary injunction seeks to restore the status quo by enjoining defendants from any infringing use of plaintiff's protected mark until the Arbitrator issues a final decision. The court will grant such relief.

         1. Likelihood of Success on Merits

         For a preliminary injunction to issue, plaintiff must first make a clear showing that it is likely to succeed on the merits. See Winter, 555 U.S. at 20. “Although [the likelihood-of-success] inquiry requires plaintiffs . . . to make a clear showing that they are likely to succeed at trial, plaintiffs need not show a certainty of success.” Pashby, 709 F.3d. at 321 (internal citations omitted). To succeed in a trademark infringement action under the Lanham Act, a plaintiff must establish:

(1) that it owns a valid mark; (2) that the defendant used the mark in commerce and without plaintiff's authorization; (3) that the defendant used the mark (or an imitation of it) in connection with the sale, offering for sale, distribution, or advertising of goods or services; and (4) that the defendant's use of the mark is likely to confuse customers.

Rosetta Stone, Ltd. v. Google, Inc., 676 F.3d 144, 152 (4th Cir. 2012); see also 15 U.S.C. § 1114(1)(a); Scurmont LLC v. Firehouse Rest. Grp., Inc., 2010 WL 11433199, at *7 (D.S.C. May 19, 2010) (“[T]he elements of common law unfair competition and trademark infringement under South Carolina law are identical to the elements for proving a Lanham Act claim.”). The court addresses each element in turn.

         a. Valid Trademark

         Plaintiff bases its motion on the two federal registrations it owns for the GEORGE SINK marks, as well as upon its common law trademark rights in the marks.

         Generally, “the party claiming ownership of a mark must be the first to use the mark in the sale of goods. The party claiming ownership must also use the mark as a trademark, that is, the mark must be used to identify the source of the goods to potential customers.” George & Co., LLC v. Imagination Entm't Ltd., 575 F.3d 383, 400 (4th Cir. 2009) (internal citation omitted). As long as the party claiming ownership of a mark “is the first to use a particular mark to identify his goods in a given market, and so long as that owner continues to make use of the mark, he is ‘entitled to prevent others from using the mark to describe their own goods' in that market.” Id. (quoting Defiance Button Mach. Co. v. C & C Metal Prods. Corp., 759 F.2d 1053, 1059 (2d Cir. 1985)).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If the U.S. Patent and Trademark Office (&ldquo;USPTO&rdquo;) issues a registration for a mark that has been registered on the principal register, then this registration &ldquo;shall be prima facie evidence of the validity of the registered mark, . . . of the registrant&#39;s ownership of the mark, and of the registrant&#39;s exclusive right to use the registered mark in commerce on or in connection with the goods or services specified in the registration. . . .&rdquo; 15 U.S.C. &sect; 1115(a). &ldquo;Registration grants a presumption of ownership, dating ownership to the filing date of the federal registration application, and the party challenging the registrant&#39;s ownership must overcome this presumption by a preponderance of the evidence.&rdquo; George & Co., 575 F.3d at 400 ...


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