Snow Ingredients, Incorporated v. SnoWizard
833 F.3d 512
| 5th Cir. | 2016Background
- SnoWizard and Southern Snow are competing New Orleans sno-ball companies with prolonged litigation over patents, trademarks, and business practices spanning multiple federal cases consolidated as the "Consolidated Cases."
- Consolidated Cases proceeded through extensive motions, summary judgment, and an eight-day trial that ended in a jury verdict and subsequent appeals to the Federal Circuit resolving many trademark and patent issues.
- After and during the Consolidated Cases, Southern Snow filed a separate suit (including a Second Amended Complaint) repeating many claims (RICO, antitrust, trademark fraud, unfair trade practices, malicious prosecution, and attorney-conspiracy claims) tied to the same facts litigated earlier.
- The district court dismissed Southern Snow’s Second Amended Complaint under Rule 12(b)(6), finding many claims precluded by res judicata and the remainder failed to state viable causes of action; SnoWizard’s motions for Rule 11 sanctions were denied.
- On appeal, the Fifth Circuit affirmed dismissal: most counts were claim-precluded as arising from the same nucleus of operative facts, Southern Snow’s civil-RICO and malicious-prosecution claims failed pleading standards, and conspiracy allegations against two attorneys (Morris and Tolar) lacked required factual agreement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Southern Snow's claims are barred by claim preclusion (res judicata) | Southern Snow reasserts claims based on litigation and PTO conduct as new legal theories (RICO, antitrust, unfair trade) | Defendants: prior judgment in Consolidated Cases covered the same nucleus of operative facts; claims must be precluded | Held: Precluded — counts based on the same facts as Consolidated Cases dismissed |
| Whether civil-RICO claims (obstruction of justice / witness tampering predicates) were adequately pleaded | Southern Snow: defendants’ litigation/PTO misrepresentations and sham litigation satisfy predicate criminal acts | Defendants: litigation conduct absent corruption is not criminal predicate; prior rulings already rejected RICO theories | Held: Dismissed — RICO claims fail to plead actual criminal predicate acts and thus do not state a claim |
| Whether conspiracy and RICO conspiracy claims against nonparty attorneys (Morris, Tolar) are plausible | Southern Snow: attorneys knowingly joined and conspired in the unlawful litigation scheme | Defendants: no allegations of an agreement or specific intent; conspiracy cannot be premised on negligence | Held: Dismissed — conspiracy claims fail for lack of factual allegations showing agreement and intent |
| Whether Rule 11 sanctions were warranted against Southern Snow’s counsel | SnoWizard: RICO allegations were legally frivolous and filed to harass; sanctions appropriate | Southern Snow: claims were colorable and law arguably unsettled; not sanctionable | Held: Affirmed denial of sanctions — district court did not abuse discretion given colorable arguments and unsettled law |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility pleading standard applies under Rule 8)
- Ashcroft v. Iqbal, 556 U.S. 662 (conclusory allegations insufficient to show facial plausibility)
- Test Masters Educ. Servs. v. Singh, 428 F.3d 559 (elements and transactional test for res judicata)
- St. Germain v. Howard, 556 F.3d 261 (civil-RICO requires pleaded predicate criminal acts)
- Cooter & Gell v. Hartmax Corp., 496 U.S. 384 (Rule 11 abuse-of-discretion appellate standard)