Arkansas Trademark Infringement Case Dismissed for Lack of Jurisdiction

The Western District of Arkansas dismissed a trademark case for lack of jurisdiction in Flexible Staffing Services, Inc. v. Integro Employment Services, Inc., 2008 WL 1928827 (W.D. Ark. 4/29/08) (previously posted 1/23/08). Integro filed an Arkansas state trademark case against one of FSS's affiliates in Northwest Arkansas. The district court held the federal action was really a response to the state action raising a federal defense. The court held it had no jurisdiction over the dispute and dismissed the federal action.

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Eighth Circuit Affirms Dismissal of Securities Fraud Claim Against Merrill Lynch

The Eighth Circuit affirmed dismissal of claims based on the Arkansas Securities Act and fraud in Benton v. Merrill Lynch & Co., Inc., No. 07-2224 (5/5/08).

 

In 2001 and 2002, David Howell fraudulently obtained money from various investors. He then set up an institutional account at Merrill Lynch. By summer 2002 he had lost all the money in the account, and he committed suicide shortly thereafter. Plaintiffs filed suit against Merrill Lynch under a theory that it aided and abetted Howell's fraud. The district court dismissed for failure to state a claim.

 

The Eighth Circuit affirmed because the fraud occurred only when Howell took money from investors. Merrill Lynch never took part in taking the money and had no communications with the investors. Merrill Lynch simply cannot be liable for events that occurred before its relationship with Howell.

 

 

Class Certification Affirmed in Arkansas Class Action Against ChartOne

The Arkansas Supreme Court affirmed class action certification in ChartOne, Inc. v. Raglon, No. 07-940 (4/24/08).

 

ChartOne provides copying services of medical records for medical providers in Arkansas. Access to medical records for legal proceedings is controlled by Ark. Code Ann. § 16-46-106, which sets maximum charges for copying services. The class action complaint alleges ChartOne charged fees in excess of the statutory maximum and included a claim for deceptive trade practices pursuant to Ark. Code Ann. 4-88-101, et seq.  Because ChartOne applied the same practices to all its customers, the court easily affirmed class certification.

Preliminary Injunction Affirmed Based on Noncompete Agreement but not Trade Secrets

The Arkansas Court of Appeals affirmed a preliminary injunction in Freeman v. Brown Hiller, Inc., No. 07-717 (4/2/08).

 

Freeman was an insurance agent for BHC. She signed a limited noncompete agreement that prohibited her from soliciting BHC customers for a period of 2 years after her employment ended. The contract also had a provision prohibiting disclosure of trade secrets. The agreement did not contain a geographic limitation. Freeman resigned and immediately went to work for a competitor. Before resigning she accessed, copied and deleted 300 of BHC's computer files.

 

The trial court granted the preliminary injunction for breach of the noncompete agreement but not for trade secret misappropriation. On appeal, Freeman argued the agreement was really an unenforceable covenant not to compete masquerading as a nondisclosure agreement. The court of appeals rejected this argument and affirmed the preliminary injunction.

 

Although Freeman copied an deleted 300 computer files, BHC did not bring a claim for Computer Trespass or Computer Fraud, which is the focus of this recent Arkansas Lawyer article-- Beyond Trade Secrets: Protecting Business Information in Arkansas.

Candy Bouquet Files Arkansas Trademark Infringement Lawsuit

Candy Bouquet has filed a trademark infringement action against one of its former franchisees. Candy Bouquet International, Inc. v. McClendon, No. 08-340 (E.D. Ark., filed 4/ 17/08). According to the complaint, McClendon owned three Candy Boutique franchises. After violating the terms of her franchise agreements, Candy Bouquet terminated the agreements. The complaint alleges McClendon is still using Candy Bouquet's trademarks and trade secrets, although the complaint has no count for trade secret misappropriation.

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LaserAim Files Arkansas Patent Infringement Lawsuit

LaserAim has filed a declaratory judgment action in LaserAim Tools, Inc. v. SDA Manufacturing, LLC, No. 08-329 (E.D. Ark., filed 4/9/08). The complaint alleges that LaserAim had developed products that SDA should have disclosed in its application. The lawsuit seeks a declaration that SDA's patent is invalid.

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Vestcom Files Declaration of no Patent Infringement in Arkansas

Vestcom has filed a declaratory judgment of no patent infringement in Vestcom International, Inc. v. Information Planning and Management Service, Inc., No. 08-276 (E.D. Ark., filed 4/2/08). Vestcom provides shelf strips to Sears. According to the complaint, IPMS told Sears it holds a patent on the strips. Vestcom alleges that IPMS's patent is invalid and that its strips do not infringe the patent.

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A Practitioner's Note on Arkansas's No-Citation Rule, Highlighted by Today's Decision in Dodson

Today's per curiam in Dodson v. Norris highlights a textual subtlety of Rule 5-2: the plain text of the rule does not bar citation of unpublished decisions from other jurisdictions.

Rule 5-2 of the Supreme Court and Court of Appeals of Arkansas states, in pertinent part (emphasis supplied):

Opinions of the court of appeals not designated for publication shall not be published in the Arkansas Reports and shall not be cited, quoted or referred to by any court or in any argument, brief, or other materials presented to any court (except in continuing or related litigation upon an issue such as res judicata, collateral estoppel, or law of the case).

(A note on the words "court of appeals" after the jump.)

The rule creates an interesting situation: advocates are free to tell the Arkansas Supreme Court what, for example, the Idaho Court of Appeals held via unpublished opinion on a certain issue, and even urge adoption of that court's reasoning. But advocates are not allowed to tell the Arkansas Supreme Court  what its own Court of Appeals held on the same issue.

Of course, the opinions of the Idaho Court of Appeals and the Arkansas Court of Appeals are equally binding on the Arkansas Supreme Court, that is, not at all.

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Arkansas Supreme Court, Having Recently Declined to Abolish its No-Citation Rule, Bars Litigant From Citing Unpublished Opinions

The Arkansas Supreme Court recently decided not to abolish its no-citation rule. The rule is contained in Arkansas Supreme Court Rule 5-2 and bars litigants from citing any unpublished decision of the Arkansas Court of Appeals in a brief filed in the Arkansas appellate courts.

Today, in Dodson v. Norris, No. 07-1179, the Arkansas Supreme Court sent the message that it was quite serious about its decision to keep the no-citation rule. The petitioner, who is briefing a criminal law question certified to the Court by the Eastern District of Arkansas, requested permission to cite some unpublished Court of Appeals opinions because "only four published opinions exist on the issues involved in this appeal."

The Court replied, "no," by way of citation to Weatherford v. State, 352 Ark. 324, 101 S.W.3d 227 (2003). Weatherford was an interesting case that presented a federal due-process challenge to Rule 5-2, as well as arguments under the Arkansas Constitution--all of which were denied. In denying petitioner's motion, the Court wrote:

We dealt extensively with the use of unpublished opinions in Weatherford v. State . . . we said, “While Appellant may prefer those cases that are not published, there is nothing to indicate that Appellant is impaired in seeking immediate appellate relief by not being able to rely on those cases.” Such is the case here.

Objector's Failed Intervention Prevents Arkansas Supreme Court Review of State-Court Coupon Settlement

After receiving notice of a pending coupon settlement in a class action against Little-Rock based cellular service provider Alltel, Frank DeJulius attempted to intervene in the action and object to the settlement. He did not, however, opt out of the settlement. The trial court denied his motion to intervene and his objection to the settlement, and today the Arkansas Supreme Court, via Justice Imber, affirmed.

Justice Imber first cited the general rule that "if a person seeking intervention will be left with the right to pursue his own independent remedy against the parties, regardless of the outcome of the pending case, then he has no interest that needs protecting by intervention of right." Justice Imber then noted that DeJulius could have opted out of the settlement and sued Alltell on his own. "By requesting exclusion [from the class], DeJulius would have maintained the right to pursue his own independent remedy." Because he failed to do so, he failed to satisfy Rule 24(a)(2)'s requirements.

DeJulius also stated that he received the class notice too late to be able to meaningfully review his options--arguing, in effect, that the late notice took away his right to opt out of the class. Justice Imber made short work of this argument, holding that DeJulius failed to make an adequate record.