690 F.Supp.3d 831
N.D. Ill.2023Background
- Expeditee LLC (filed as “Xped LLC”) obtained an ex parte TRO in Dec. 2021 freezing hundreds of online sellers’ accounts, including RJITSCT, LLC d/b/a Respect the Look, for alleged FLAGWIX trademark counterfeiting.
- Expeditee’s filings misidentified its corporate details: used a pseudonym, listed Nevada and Chicago as state/principal place of business though it is a Delaware LLC based in Hanoi, Vietnam.
- Counsel Patrick Jones certified service by email to Schedule A defendants though he had relied on third‑party platforms (e.g., PayPal, Alibaba) and lacked confirmation that defendants had been served; an amended certificate followed.
- Respect the Look appeared, produced evidence it is a Connecticut company and U.S.-based, moved to dissolve the TRO and for sanctions, and was the only defendant to defend at the preliminary injunction hearing.
- The Court found multiple false or reckless representations (about Expeditee’s location, Respect the Look’s U.S. presence, trademark use, and a fraudulent certificate of service), concluding counsel/Expeditee committed fraud on the court and acted in bad faith.
- Remedy: the Court granted sanctions under its inherent authority, dismissed Expeditee’s claims against Respect the Look with prejudice, and awarded/ordered reasonable attorney’s fees and costs related to vacating the TRO and opposing the preliminary injunction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Rule 11 safe‑harbor bars inherent‑power sanctions | Expeditee/PMJ argue Rule 11 procedures were not followed and safe harbor precludes inherent sanctions | Respect the Look argues emergency posture and prior filings put Expeditee on notice, so Rule 11 is inadequate | Court: Rule 11 was substantially complied with or inadequate under emergency circumstances; inherent power may be used |
| Whether Expeditee (via counsel) misrepresented its corporate identity/principal place of business | Expeditee contends errors were inadvertent, based on trademark record; seeks leave to amend | Respect the Look contends misstatements were intentional, material, and induced the TRO | Court: misrepresentation that Expeditee was based in Chicago was intentional or recklessly made, material, constituted fraud on the court; sanctions warranted |
| Whether Expeditee’s assertions that Respect the Look was foreign and likely to abscond were supported | Expeditee asserted many defendants were overseas and assets would be moved, justifying ex parte asset freeze | Respect the Look showed Connecticut registration, U.S. contact info, and disputed being foreign | Court: allegations lacked reasonable pre‑suit inquiry; counsel violated Rule 11 and acted in bad faith; claims about Respect the Look’s foreign status were sanctionable |
| Whether trademark infringement claims were legally frivolous when defendants did not use the FLAGWIX mark | Expeditee argued defendants were counterfeiting its product images and metadata could show use | Respect the Look argued images differ and did not display the FLAGWIX mark | Court: trademark claim requires use of the registered mark; where defendants did not use it, trademark claims were frivolous under Rule 11(b)(2) |
| Whether the January 10 certificate of service was false/fraudulent | Expeditee/ Jones certified email service to defendants | Respect the Look showed Jones relied on third parties and lacked confirmation; amended service later did not cure notice problem | Court: the certificate was an intentional or misleading omission and material; it was fraud on the court and sanctionable |
Key Cases Cited
- Mays v. Dart, 974 F.3d 810 (7th Cir. 2020) (discussing likelihood of success requirement for preliminary injunction/TRO)
- Methode Elecs., Inc. v. Adam Techs., Inc., 371 F.3d 923 (7th Cir. 2004) (explaining Rule 11 limits in emergency/TRO contexts and substantial compliance)
- Sanders v. Melvin, 25 F.4th 475 (7th Cir. 2022) (sanctions under inherent power for dishonesty and deterrence)
- United States v. Rogers Cartage Co., 794 F.3d 854 (7th Cir. 2015) (inherent power may be used even when rules exist; court must explain why rules are inadequate)
- Chambers v. NASCO, Inc., 501 U.S. 32 (U.S. 1991) (recognizing district courts’ inherent sanctioning authority)
- Greyer v. Illinois Dept. of Corrections, 933 F.3d 871 (7th Cir. 2019) (fraud on the court requires intentional and material misrepresentations)
- Fuery v. City of Chicago, 900 F.3d 450 (7th Cir. 2018) (bad‑faith standard for sanctions: must be designed to obstruct judicial process; mere negligence insufficient)
- McGreal v. Village of Orland Park, 928 F.3d 556 (7th Cir. 2019) (substantial compliance with Rule 11 may suffice in some circumstances)
- KP Permanent Make‑Up, Inc. v. Lasting Impression I, Inc., 543 U.S. 111 (U.S. 2004) (trademark infringement under § 1114 requires use of the registered mark)
- Hertz Corp. v. Friend, 559 U.S. 77 (U.S. 2010) (defining "principal place of business" as the corporation’s nerve center)
- Goodman v. Illinois Dept. of Financial & Professional Regulation, 430 F.3d 432 (7th Cir. 2005) (describing the exacting standard for preliminary injunctions)