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United Supreme Council v. United Supreme Council of Ancient Accepted Scottish Rite

United States District Court, E.D. Virginia, Alexandria Division

July 16, 2018


          Hon. Ivan D. Davis Judge


          Liam O'Grady Judge

         This matter came before the Court on Defendants' Motion for Summary Judgment (Dkt. 255).[1] The Court heard oral arguments on March 9, 2018. See Dkt. 339. Having considered the pleadings, the oral arguments, and the evidence in the case, the Court concluded that summary judgment for Defendants was appropriate. In recognition of the pending trial date, the Court issued a short order to this effect on March 9, 2018, with a memorandum opinion to follow. See Dkt. 338. Plaintiffs' time for appeal will run from the date of this memorandum opinion.

         I. Background

         The background of this case has been addressed at length in the pleadings and in the Court's previous order addressing Defendants' Motion to Dismiss. See Dkt. 71. The Court will not review matters previously addressed, but will turn directly to the issues raised by Defendants' Motion for Summary Judgment. In their motion, Defendants seek dismissal of the six counts remaining in this case: Count I (common law unfair competition); Count II (conspiracy to commit common law unfair competition); Count V (tortious interference with contract); Count VI (conspiracy to commit tortious interference with contract); Count IX (copyright infringement); and Count X (trademark infringement).[2] Defendants also challenge Plaintiffs' standing to bring these claims.

         II. Legal Standard

         The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). Summary judgment is appropriate if the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Celotex Corp. v. Catretl, 477 U.S. 317, 322 (1986). A party moving for summary judgment has the initial burden of showing the court the basis for its motion and identifying the evidence that demonstrates the absence of a genuine issue of material fact. Id. Once the moving party satisfies its initial burden, the opposing party has the burden of showing, by means of affidavits or other verified evidence, that there exists a genuine dispute of material fact. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986).

         In reviewing a summary judgment motion, the court must "draw all justifiable inferences in favor of the nonmoving party." United Slates v. Carolina Transformer Co., 978 F.2d 832, 835 (4th Cir. 1992). Summary judgment is not appropriate if the resolution of material issues depends on credibility determinations. Meyers v. Baltimore Cty., 713 F.3d 723, 730 (4th Cir. 2013).

         III. Analysis

         Defendants challenge Plaintiffs' claims on several grounds. The Court will first address Plaintiffs' standing, and will then consider the merits of Plaintiffs' claims of tortious interference with contract, copyright infringement, trademark infringement, unfair competition, and conspiracy.

         a. Standing

         Before this Court may exercise jurisdiction over Plaintiffs' claims, Plaintiffs must demonstrate that they have constitutional standing. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). Plaintiffs must show that: (1) they have suffered an "injury in fact" to a legally protected interest and that the injury is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant; and (3) it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision. Id.

         Defendants challenge the standing of both named Plaintiffs in this case: (1) the United Supreme Council, 33 Degree of the Ancient and Accepted Scottish Rite of Freemasonry, Prince Hall Affiliation, Southern Jurisdiction of the United States of America ("Plaintiff USC-SJ"); and (2) the United Supreme Council 33° of the Ancient and Accepted Scottish Rite of Freemasonry (Prince Hall Affiliation) Southern Jurisdiction U.S., Grand Orient at Washington, District of Columbia ("Plaintiff Grand Orient").

         i. Plaintiff USC-SJ

         Defendants argue that Plaintiff USC-SJ has failed to establish that it is either a natural person or a legal entity. See Dkt. 256 at 20. In the absence of a legal existence, Defendants argue, Plaintiff has suffered no injury in fact that can be redressed by this lawsuit. Id.

         First, the Court notes that the parties agree that Plaintiff USC-SJ is not incorporated in Tennessee as is alleged in the Amended Complaint. See Dkt. 182; Dkt. 183; see also Dkt. 44 at ¶ 1. On October 9, 2017, Plaintiffs filed a Motion for Leave to File a Second Amended Complaint, requesting, among other things, leave to amend to "reflect that the first named Plaintiff [USC-SJ] is, and has operated as, a D.C. unincorporated non-profit social, charitable, and fraternal association." See Dkt. 182 at 2. Plaintiffs acknowledged that "[t]his Plaintiff was incorrectly identified as a Tennessee non-profit corporation in the First Amended Complaint." Id. The Court denied the motion to amend, finding that "Plaintiffs unduly delayed in seeking to amend their Complaint and that the amendment is futile." See Dkt. 215 at 1. Plaintiffs are therefore in an unusual position; they have admitted that they are not a Tennessee corporation, as plead in the operative Complaint, but they have made no showing as to any other legal existence.

         Plaintiffs attempt to circumvent this fact by arguing that Defendants have admitted that USC-SJ is a Tennessee corporation because Defendants made a statement to that effect in their Answer. See Dkt. 319 at 4; see also Lucas v. Burnley, 879 F.2d 1240, 1242 (4th Cir. 1989) (noting that a party is bound by the admissions of his pleadings). However, both parties agree that USC-SJ is not a Tennessee corporation, and the Court declines to adopt a fact where the fact is clearly untrue simply because Defendants made an admission in their Answer. See Dkt. 182 at 2; Dkt. 256 at 16; New Amsterdam Cas. Co. v. Waller, 323 F.2d 20, 24 (4th Cir. 1963) ("[A] court, unquestionably, has the right to relieve a party of his judicial admission if it appears that the admitted fact is clearly untrue and that the party was laboring under a mistake when he made the admission.") Cornell Constr. Corp. v. Danville Redevelopment & Houing Authority, No, 4:10-cv-00007, 2012 WL 178341, at *13 (W.D. Va. Jan. 23, 2012) (noting that even if a statement qualifies as a judicial admission, it is "not necessarily binding," because "considerations of fairness and the policy of encouraging judicial admissions require that trial judges be given broad discretion to relieve parties from the consequences of judicial admissions in appropriate cases").

         Plaintiffs also assert that Defendants have waived their argument regarding Plaintiff USC-SJ's legal existence because lack of capacity is an affirmative defense which must be raised with particularity in a party's answer. See Dkt. 319 at 3; Fed.R.Civ.P. 9(a); see also Definitive Res., Inc. v. United States, No. DKC 2005-3233, 2006 WL 3423854, at *2 (D. Md. Nov. 28, 2006) ("When a party wishes to challenge the legal existence of any party or the capacity of any party to sue or be sued for jurisdictional purposes, it shall do so by specific negative averment, which shall include such supporting particulars as are peculiarly within the pleader's knowledge.").

         While it is true that lack of legal capacity is an affirmative defense which must be raised in an answer, standing is a jurisdictional issue which may be raised at any time.[3] See China Cast Edu. Corp. v. Chen Zhou Goit, No. 15-05475, 2016 WL 10653269, at *2 (CD. Cal. Jan. 8, 2016) (finding that questions regarding a plaintiffs legal existence raise "the fundamental standing question of whether the Court can redress any of Plaintiffs alleged injuries if Plaintiff no longer legally exists"); Northpoint Tech., Ltd. v. Directv, Inc., No. 1-09-cv-506, 2010 WL 11444098, at *2 (W.D. Tex. Oct. 25, 2010) ("A question as to legal existence is a question of standing."). Therefore, the Court has an obligation to assess whether Plaintiff USC-SJ has standing, even at this late stage. See Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547 (2016) (finding that courts lack subject matter jurisdiction where a plaintiff lacks standing).

         Here, Defendants assert that Plaintiff USC-SJ has failed to establish that it is a legal entity of any kind. See Dkt. 256 at 20. The Court agrees. Plaintiff USC-SJ is indisputably not a Tennessee corporation. Plaintiff USC-SJ has not made any showing that it is a D.C. unincorporated association. If Plaintiff USC-SJ has failed to establish a legal existence, it can have no stake in the outcome of this case. Northpoint Tech., 2010 WL 11444098, at *2; see also Levy v Am. Med. Collections Bureau, 2016 WL 5462722, at *2 (E.D. Va. Sept. 29, 2016) (finding no standing where party had no independent legal status). Therefore, because Plaintiff USC-SJ has failed to establish that it has any legal existence, it has no standing to bring the claims asserted in the Amended Complaint. See Benn v. Seventh-Day Adventist Church, 304 F.Supp.2d 716, 721-22 (D. Md. 2004).

         ii. Plaintif ...

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