Michael K. Terry (MT 8625)
Cedar Street, Suite 250
Hills, MA 02481
STATES DISTRICT COURT
DISTRICT OF NEW YORK
OPPOSITION TO PLAINTIFFS' MOTION
LEAVE TO FILE AMENDED COMPLAINT AND MOTION
LEAVE TO MODIFY PRE-TRIAL SCHEDULING ORDER
REQUEST FOR SANCTIONS
Now comes the
Defendant, Wolfe's Borough Coffee, Inc., d/b/a Black Bear Micro Roastery
("Black Bear") and opposes the motion of the Plaintiffs,
Starbucks Corporation and Starbucks U.S. Brands, Inc.
("Starbucks") for leave to amend their Complaint and for leave
to modify the pre-trial scheduling order.
seeks to amend its Complaint by eliminating from the original any
request for an award of damages. While this may appear on its surface to
be a benign amendment that seemingly no reasonable defendant could
oppose, its effect, if allowed, may actually be quite devastating to
Black Bear. The only underlying rationale for this motion is quite
clearly and simply to eliminate Black Bear's insurance coverage, thereby
making it impossible for Black Bear to adequately defend this action.
Starbucks seeks to throw the playing field out of balance in order to
avoid having this matter decided upon the merits.
STATEMENT OF FACTS
the largest seller of specialty coffees in North America, with over four
thousand retail coffee shops in locations around the world, with annual
revenues in excess of two billion dollars. Black Bear is a small, family
owned and operated coffee roasting business with annual revenues that
generally total less than two hundred thousand dollars.
was commenced by Starbucks on or about July 2, 2001. Its complaint
includes counts for trademark infringement, dilution and unfair
competition. Starbucks complains of Black Bear's labeling and sale of a
coffee product under a name that incorporates the mark
"Charbucks." Starbucks has been aware of Black Bear's use of
said mark since August of 1997. To date, Black Bear has sold less than
twenty thousand dollars of the "Charbucks" product. (See Black
Bear sales report appended hereto as Exhibit A). It is Black Bear's
contention that it has neither infringed upon nor diluted Starbucks'
trademarks, that there is no possibility that Starbucks has been or
could be harmed by its use of the "Charbucks" mark and that
Starbucks has no legal basis for bringing this action.
conference was held in this matter on November 2, 2001. During said
conference, counsel for Starbucks advised defense counsel that he was
considering the option of seeking to amend his complaint by withdrawing
any damages claim, thereby eliminating
Black Bear's insurance coverage and with it its ability to defend itself
in the action.
Starbucks' insistence, a mediation session, presided over by Magistrate
Judge Katz, was held on November 19, 2001. Representatives of the
parties were in attendance, together with counsel. During the
discussion, Starbucks' counsel repeated the threat that he would seek to
eliminate the Black Bear's insurance coverages if no agreement could be
reached. James dark, corporate officer of Black Bear, stated that it
would agree to cease using the disputed mark if the Starbucks would
"make it whole," i.e., compensate it for the expenses it had
incurred as a result of the dispute.
In response to encouragement from Starbucks, Black Bear then
prepared and offered a settlement proposal to counsel for Starbucks via
email transmission on December 4, 2001.
a month later, on or about January 7, 2002, Starbucks responded with an
offer of settlement that was nominal in amount, less even than what had
been offered and rejected prior to the commencement of the litigation.
The pointless mediation and the resulting negligible offer had served
only to delay the progress of this action.
1, 2002, the Plaintiffs served their first discovery requests upon the
Defendant. By letter dated February 7, 2002, John Rawls, counsel for
Starbucks, notified Black Bear that Starbucks would in fact waive any
recovery of damages. The letter did not provide for a waiver of
attorneys fees or costs. (Copy of letter appended as Exhibit B). This
notice caused Black Bear another delay, as counsel was obliged to seek
an opinion from Black Bear's insurer as to continued coverage.
The court's pre-trial scheduling order provided that all
non-expert discovery would be completed by April 5. Black Bear requested
that Starbucks assent to an extension of the said discovery period due
to the delays in this matter. (Copy of letter of Michael K. Terry, dated
March 22, 2002 appended as Exhibit C). Starbucks has refused and has
likewise objected to Black Bear's discovery responses and requests as
filed its motion to amend, together with a motion to modify the
pre-trial scheduling order on April 1, 2002.
Plaintiffs' Motion Has Been Brought in Bad Faith.
the Rules of Civil Procedure are generally liberal regarding the
allowance of a party to amend its pleadings where appropriate, bad faith
or dilatory motive on the part of the movant or resulting undue
prejudice to the non-moving party may provide a basis for denial of a
motion to amend. See Foman v. Davis. 371,
U.S. 178, 9 L.Ed.2d 222, 83 S.Ct. 227 (1962)(copy appended as Exhibit
this case, the movant's bad faith is crystal clear. The explicitly
acknowledged rationale underlying Starbucks' motion is to eliminate
Black Bear's insurance coverage, thereby making it impossible for Black
Bear to adequately defend this action. There is no compelling legal
reason why the amendment would be offered otherwise. If it were
interested in eliminating monetary damages as an issue in the case,
Starbucks could simply not offer any such evidence and/or it could waive
any collection of damages awarded it. What Starbucks intends by this
motion is to end this case by preventing Black Bear from defending it.
of Starbucks' motion will result in undue prejudice to Black Bear.
Black Bear is a small, family business with no resources, save
its insurance coverages, to defend itself from a vast operation like
Starbucks. Justice requires that Black Bear be afforded the opportunity
to have its claims and defenses heard and decided on the merits.
If this motion to amend is allowed, that will be impossible, for
the proposed Amended Complaint has been carefully crafted so as to fail
to trigger the duty to defend of Zurich American Insurance Company,
Black Bears' commercial liability carrier. (See copy of letter from
Debra Bertone, Claims Case Manager dated March 12, 2002, appended as
Exhibit E\cf1 \par
Significantly, Starbucks' waiver of damages does not mean that
Black Bear is not potentially liable for monetary losses in this action,
for the proposed Amended Complaint still seeks attorneys' fees and
costs. An award by the
court of such fees and costs would likely be enough to put a small
company like Black Bear out of business.
Motion to Amend Is Offered Contrary to the Deadline Set by the Pre-trial
The court's pre-trial scheduling
order provided that all amendments of right were to be made by December
31, 2001. Starbucks has therefore also moved the court to grant it
relief from such order to allow it to file its motion to amend.
Starbucks has been less than accommodating to Black Bear,
however. Starbucks has steadfastly refused to assent to any modification
of the discovery deadlines proscribed by said same scheduling order,
notwithstanding the fact that delay in this case has largely resulted
from its own actions: (1) its insistence on a mediation, which proved to
be futile and a waste of time; and (2) its campaign to undermine Black
Bear's insurance coverage and thereby its ability to defend itself.
Just as it
dwarfs its commercial competitors and just as it has attempted to
intimidate Black Bear into submitting to its demand that it stop using
the "Charbucks" mark, Starbucks now seeks to use its colossal
resources to unfair advantage in this action.
Rather than have this matter heard and decided on the merits,
Starbucks seeks to undermine the Defendant's ability to defend itself in
this matter by underhandedly amending its Complaint for that purpose,
all the while claiming that it simply seeks to simplify the litigation.
Justice requires that the Plaintiffs' motion to amend be denied.
Further, such a predatory action on the part of the Plaintiffs
cries out for sanctions.
in accordance with all the foregoing, the Defendant respectfully
requests that the court grant it the following relief:
Dated: April 10, 2002