SCI N.C. FUNERAL SERVS., LLC v. McEWEN ELLINGTON FUNERAL SERVS., INC.
2013 NCBC 11
N.C. Bus. Ct.2013Background
- Plaintiffs SCI North Carolina Funeral Services, LLC and Carothers Holding Company sue Defendants McEwen Ellington Funeral Services, Inc.; McEwen Funeral Home, Inc.; McEwen Funeral Services, Inc.; and Carl M. Ellington, Jr. for common law trademark infringement and unfair/deceptive trade practices.
- Plaintiffs moved for preliminary relief; TRO granted; hearing held February 1, 2013; extended by agreement to allow full consideration.
- Historical context: the McEwen name was used by Plaintiffs for decades in Charlotte area; stock and asset sales in 1986 to SCI included rights to trade names; DEFENDANTS later opened a competing Morehead Street funeral home using McEwen Ellington Funeral Services.
- Defendants publicly used McEwen Ellington signage, advertising, and décor at the Morehead Street location; alleged to mimic Plaintiffs’ branding.
- Courts noted standing questions: whether Plaintiffs own the rights to the trade names they seek to protect and whether they have standing to sue individually for corporate trade-name rights.
- Court ultimately adopts a fraudulent-intent standard (Bingham School/Zagier) rather than a pure likelihood-of-confusion test and grants preliminary injunctive relief restraining Defendants from using the McEwen name in specified counties.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Do Plaintiffs have exclusive common-law right to use McEwen in Charlotte? | Plaintiffs claim senior, exclusive common-law rights to the McEwen name. | Defendants argue no exclusive right solely from surname; others may use the name absent intent to injure. | No exclusive right; fraudulent-intent standard applies. |
| Should Defendants be barred under fraudulent-intent standard from using McEwen in the same locality? | Use within Charlotte area risks confusion and misappropriation of goodwill. | No improper intent proven; no gateway to injunctive relief. | Defendants enjoined in same locality under fraudulent-intent standard. |
| Do Plaintiffs have standing to enforce rights in McEwen trade names? | Plaintiffs own MFS/MFS Mint Hill assets and may enforce rights in those names. | Standing is limited to rights owned by the party or its direct corporate ownership. | Plaintiffs may sue to protect Mint Hill trade names they own; may lack standing for other names not owned by them. |
| What effect do NC Board of Funeral Services and Secretary of State registrations have on common-law rights? | Registrations do not defeat common-law rights; rights persist regardless of registration. | Registrations might limit use or create protections. | Registrations do not authorize violation of third-party rights or defeat common-law rights. |
| Are Plaintiffs barred from relief by clean-hands doctrine? | Plaintiffs acted to protect legitimate business interests; no clean-hands bar. | Plaintiffs engaged in anti-competitive conduct toward suppliers. | Court finds no sufficient unclean-hands showing to revoke relief. |
Key Cases Cited
- Bingham Sch. v. Gray, 122 N.C. 699 (NC 1909) (trade-name cannot be taken in a surname; fraud/dishonesty condemned)
- Zagier v. Zagier, 167 N.C. 616 (NC 1914) (anyone with same surname may conduct similar business absent intent to injure; localized considerations noted)
- Blackwell's Durham Tobacco Co. v. The American Tobacco Co., 145 N.C. 367 (NC 1907) (confusion standard not always applicable; distinguishes surname cases from generic-trademark disputes)
- Two Way Radio Serv., Inc. v. Two Way Radio of Carolina, Inc., 322 N.C. 809 (1988) (possible application of secondary meaning to surnames or descriptive terms)
- Howe Scale Co. v. Wyckoff, 198 U.S. 118 (U.S. 1905) (dishonesty in use of name condemned, not use per se)