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American Air Filter Co., Inc. v. Universal Air Products, LLC

United States District Court, W.D. Kentucky, Louisville Division

April 7, 2015

AMERICAN AIR FILTER COMPANY, INC., Plaintiff,
v.
UNIVERSAL AIR PRODUCTS, L.L.C., Defendant.

MEMORANDUM OPINION AND ORDER

THOMAS B. RUSSELL, Senior District Judge.

This matter comes before the Court on Defendant's motion to dismiss for lack of subject matter jurisdiction. (Docket #12). Plaintiff has responded. (Docket #14). Defendant has replied. (Docket #17). For the following reasons, Plaintiff's motion (Docket #12) is DENIED.

BACKGROUND

This lawsuit arises out of competition between two air filter manufacturers. Plaintiff American Air Filter Company, Inc. ("American Filter") is a manufacturer and marketer of air filtration systems. Defendant Universal Air Products, L.L.C. ("Universal Air") is also a manufacturer and marketer of air filtration systems. Universal Air was formed in 2000 by five former employees of American Filter (the "UAP Employees").

In 2001, American Filter claimed that Universal Air and the UAP Employees were using confidential information and trade secrets which belonged to American Filter. American Filter sued Universal Air and the UAP Employees in Kentucky state court in Jefferson County. The parties settled the case and signed a consent judgment which enjoined Universal Air and the UAP Employees from disclosing confidential information or holding themselves out as being affiliated with American Filter (the "Consent Judgment"). The Consent Judgment also stated: "This Court shall retain jurisdiction of this action to enforce the terms of this Consent Judgment." (Docket #1-2).

In this lawsuit, American Filter claims Universal Air has committed trademark infringement, unfair competition, and cyberpiracy. (Docket #1). Universal Air moves to dismiss this lawsuit on the grounds that this Court lacks subject matter jurisdiction because the state court action retained jurisdiction of the parties' dispute. Universal Air also argues American Filter's Lanham Act claim is barred by the doctrine of laches. For the following reasons, Universal Air's motion is denied.

STANDARD

"Federal courts are courts of limited jurisdiction." Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 378 (1994). "They possess only that power authorized by Constitution and statute." Id. It is presumed that a federal court lacks subject-matter jurisdiction and the "burden of establishing the contrary rests upon the party asserting jurisdiction." Id. ( citing Turner v. Bank of North-America, 4 U.S. 8, (1799); McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 182-183 (1936)). "Moreover, federal courts have an independent duty to determine whether they have jurisdiction and to police the boundaries of their own jurisdiction." McNutt v. Sanders, 2011 U.S. Dist. LEXIS 85731 *3 (W.D. Ky. 2011) (citation omitted); see also Fed.R.Civ.P. 12(h)(3).

United States District Courts have original federal question jurisdiction "of all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. District Courts also have original diversity jurisdiction over actions where the amount in controversy exceeds $75, 000, exclusive of interests and costs, and is between citizens of different states. Id. § 1332(a)(1). In addition to federal question and diversity jurisdiction, district courts have "supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy." 28 U.S.C. § 1367(a).

Once a federal court determines it has jurisdiction, it generally must exercise that jurisdiction. New Orleans Pub. Serv., Inc. v. Council of New Orleans, 491 U.S. 350, 358 (1989) ("We have no more right to decline the exercise of jurisdiction which is given, than to usurp that which is not given."). A federal court generally may not decline jurisdiction simply because a lawsuit could also have been brought in state court. Alabama Public Service Comm'n v. Southern R. Co., 341 U.S. 341, 361 (1951) ("it was never a doctrine of equity that a federal court should exercise its judicial discretion to dismiss a suit merely because a State court could entertain it"); Colo. River Water Conservation Dist. v. United States, 424 U.S. 800, 813 (1976) ("The doctrine of abstention, under which a District Court may decline to exercise or postpone the exercise of its jurisdiction, is an extraordinary and narrow exception to the duty of a District Court to adjudicate a controversy properly before it").

DISCUSSION

The Court will first discuss (I) the issue of subject matter jurisdiction. Then the Court will address why (II) the doctrine of laches does not bar American Filter's claims.

I. Subject matter jurisdiction.

As an initial matter, this Court has original subject matter jurisdiction over this dispute. This Court has federal question jurisdiction over American Filter's claims brought under the Lanham Act and 15 U.S.C. § 1114 because these claims arise "under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. This Court has jurisdiction over American Filter's state law claims because they form "part of the same case or controversy' as a claim over which the ...


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