Slep-Tone Entertainment Corp. v. Wired for Sound Karaoke & DJ Services, LLC
676 F. App'x 654
| 9th Cir. | 2017Background
- Slep-Tone (and successor Phoenix Entertainment Partners) sued defendants for trademark infringement and unfair competition under the Lanham Act; later asserted a breach-of-settlement-agreement claim in the operative Second Amended Complaint.
- Parties had an earlier settlement agreement containing paragraph 15 that gave Slep-Tone an election on defendant default: (y) accelerate debts and sue for breach of the agreement, or (z) void a covenant and sue for trademark infringement.
- Defendants moved for summary judgment on the breach claim and the district court dismissed the trademark claims with prejudice and granted summary judgment for defendants on the breach claim.
- At summary judgment, defendants argued Slep-Tone’s trademark suit operated as an election that waived/voided the contract remedy; defendants did not plead waiver as an affirmative defense in their answer.
- The Ninth Circuit reviewed de novo, affirmed dismissal of trademark claims (in a separate per curiam opinion), but reversed the grant of summary judgment on the breach claim and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Slep-Tone’s trademark suit waived its contract remedy under paragraph 15 | Slep-Tone can pursue both claims; the Second Amended Complaint alleges both breach and trademark claims and the claims relate back | Filing for trademark infringement constituted an election that voided the settlement covenant and waived the contract claim | Reversed: dismissal of breach claim was improper; remanded to consider contract claim on the merits |
| Whether defendants may assert waiver when not pleaded until summary judgment | Plaintiff: waiver is an affirmative defense; defendants failed to plead it and were prejudiced by its late assertion | Defendants: an affirmative defense can be raised at summary judgment if no prejudice | Held: defendants’ late reliance on waiver prejudiced Slep-Tone because it had no fair opportunity to litigate both remedies; waiver defense improperly resolved at summary judgment |
| Whether amended complaint supersedes prior pleadings and preserves both theories for summary judgment stage | Slep-Tone: the Second Amended Complaint superseded the original and alleged both claims, which relate back under Rule 15(c) | Defendants: original prosecution focused on trademark; plaintiff elected trademark remedy | Held: operative complaint alleged both claims at summary judgment, so plaintiff was pursuing both theories and could not be foreclosed on breach without prejudice |
| Standard of contract interpretation applicable on summary judgment | Slep-Tone: contract interpretation requires looking at plain meaning and context; factual questions preclude summary disposition of breach | Defendants: paragraph 15’s language shows an election when plaintiff sued for trademark | Held: Ninth Circuit interprets contract de novo and found summary judgment on breach improper; remanded for merits consideration |
Key Cases Cited
- Am. Tower Corp. v. City of San Diego, 763 F.3d 1035 (9th Cir. 2014) (standard of review for summary judgment)
- Corbin v. Time Warner Entm’t-Advance/Newhouse P’ship, 821 F.3d 1069 (9th Cir. 2016) (issue waiver for failure to distinctly raise argument on appeal)
- Flores v. Lynch, 828 F.3d 898 (9th Cir. 2016) (contract interpretation reviewed de novo)
- Blonder-Tongue Labs., Inc. v. Univ. of Ill. Found., 402 U.S. 313 (U.S. 1971) (purpose of pleading affirmative defenses is to give notice and opportunity to respond)
- Camarillo v. McCarthy, 998 F.2d 638 (9th Cir. 1993) (an affirmative defense may be raised first at summary judgment if no prejudice)
- Lacey v. Maricopa County, 693 F.3d 896 (9th Cir. 2012) (an amended complaint supersedes the original complaint)
- Wingate v. Gin, 148 Ariz. 289, 714 P.2d 459 (Ariz. Ct. App. 1985) (contract provision can make filing a complaint an election of remedies)