National Grange Again Victorious in the Eastern District of California

On August 13, 2018, Judge Shubb of the Eastern District of California awarded sweeping relief to SGR client the National Grange of the Order of Patrons of Husbandry (the “Grange”), the nation’s oldest agricultural fraternal organization.  For years, California has been the epicenter of a heated battle between the Grange and the former leader of its chartered California chapter. The court’s award of summary judgment, the latest of a string of victories in favor of the Grange, confirms that the history and goodwill of the California State Grange, as well as copyrighted content produced by the organization, is the intellectual property of the Grange.

This litigation, National Grange of the Order of Patrons of Husbandry v. California Guild, No. 2:16-cv-00201-WBS-DB (E.D. Cal.), is one of a series of lawsuits arising from the revocation of the charter of the California State Grange in 2013 based on the organization’s failure to abide by the Grange By-Laws. After revocation, the former California State Grange Master, Defendant Robert McFarland, continued to run the organization as the “California State Grange” and refused to turn over Grange property.  The Grange subsequently brought litigation in the state and federal courts to recover both its tangible and intellectual property.  The Eastern District of California first found in the Grange’s favor in 2015, confirming the validity of GRANGE trademark and prohibiting the formerly chartered organization from continuing to call itself the “California State Grange.”  National Grange of the Order of Patrons of Husbandry v. California State Grange, 2:14-cv-00676-WBS-DB (E.D. Cal.)  Shortly after the Grange’s win, the corporate Defendant changed its name to “CSG,” an acronym widely known by members as another term for “California State Grange,” and later rebranded itself as the “California Guild.”  It also continued to act as the leader of the California Granges, adopting the California State Grange’s history as its own, as well as the content of the California State Grange website.  These actions resulted in widespread confusion among Grange members about who was the “real” California State Grange, and which organization had the right to claim the history and goodwill accrued by the more than century-old organization.

Both sides filed competing motions for summary judgment – the Grange and California State Grange on the merits of their eight causes of action, and the California Guild and McFarland on the grounds of claim splitting, res judicata and standing.  The Court granted summary judgment to the Grange on six of its claims: (1) false designation of origin, (2) federal false advertising, (3) false advertising under California law, (4) trademark infringement, (5) copyright infringement, and (6) trade libel.  The other two causes of action, trespass and conversion, were denied on the ground that they were effectively mooted by a final state court judgment in the Grange’s favor on identical claims.  The Court was not persuaded by Defendants’ claims of claim splitting and res judicata, and while it accepted their standing argument – resulting in the removal of the California State Grange as a plaintiff – it did not limit Defendants’ liability on the merits.

In addition to issuing a judgment in the Grange’s favor on its intellectual property claims, the Court awarded actual damages in the form of Defendants’ total gross revenues from dues and loan payments.  Further, Judge Shubb held that this case “can certainly be considered ‘exceptional’ [pursuant to Lanham Act § 35(a), 15 U.S.C. § 1117(a), and Cal. Civ. Code § 3294] given the intentional nature of defendants’ use of California State Grange property,” and awarded additional relief in the form of attorneys’ fees and costs, treble and punitive damages.

The parties will proceed with trial, currently scheduled to begin in late October, to determine the number of damages to which the Grange is entitled.  The Grange is represented by Jim Bikoff, Bruce McDonald, Holly Lance, and Darlene Tzou.

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