Tenth Circuit Affirms Preliminary Injunction Under Lanham Act, but “Went Too Far” With Mandatory Provision Requiring Removal of Two Sculptures from School Campus

In The Trial Lawyers College v. Gerry Spence Trial Lawyers College, No. 20-8038 (10th Cir. Jan. 27, 2022), the Tenth Circuit substantially affirms a district court’s preliminary injunction in a dispute between two rival factions at a trial-lawyer school, though it holds the district court abused its discretion by  “ordering removal of sculptures bearing the College’s logo.”

“This appeal grew out of a dispute over a program (called ‘The Trial Lawyers College’) to train trial lawyers. The College’s board of directors splintered into two factions, known as the ‘Spence Group’ and the ‘Sloan Group.’ The two groups sued each other: The Spence Group sued in [Wyoming] state court for dissolution of the College and a declaratory judgment recognizing the Spence Group’s control of the Board; the Sloan Group then sued in federal court, claiming trademark infringement under the Lanham Act.”

The district court enjoined the Spence Group from purporting ‘definitively to be [the College]’s true Board unless and until such time as the state court makes a ruling to that effect’ and using ‘linguistic plays on words or various terms associated with The Trial Lawyers College to create or cause confusion as to whether [the Spence Group] [is] acting as The Trial Lawyers College.’”

While the dispute continued, a member of the Spence Group owned one ranch that served as a campus, although it had been closed during the COVID-19 pandemic. The campus displayed two sculptures that incorporated the logo of the school, a disputed trademark in the federal case. “One of these sculptures hung on the side of a barn; the other hung above a wooden archway.” The district court ordered “removal of sculptures bearing the College’s logo” pending the outcome of the case.

The Tenth Circuit dismisses part of the appeal as moot, affirms the preliminary injunction, but reverses the ordered removal of the logo sculptures.

The panel holds that two parts of the appeal were mooted by developments in the state-court case. First, “In the state-court action, the Spence Group requested the removal of two board members aligned with the Sloan Group . . . . During the pendency of our appeal, the state court rejected the Spence Group’s request for removal of the two board members, concluding that they had been validly elected. This conclusion effectively left the Sloan Group in control of the Board, mooting this part of the requested stay.”

The panel also holds that it lacks appellate jurisdiction over the Spence Group’s motion for a stay of the federal action while the state court decided the leadership issue, rejecting arguments under (1) the collateral-order doctrine (because the stay order was not “conclusive”); (2) the practical construction doctrine (on the ground that “[p]iecemeal litigation is unlikely because the state court has already decided the issue of Board control, and the Spence Group doesn’t identify an unsettled issue of unique urgency)”; and (3) pendant appellate jurisdiction (because the preliminary injunction is not “inextricably intertwined with the denial of a stay”).

On the merits of the preliminary injunction, the panel holds that the district court for the most part did not abuse its discretion. “[T]he district court could reasonably find irreparable injury from . . . the College’s efforts to protect its name and logo as trademarks and . . . evidence of likely confusion among customers of the College. The Sloan Group presented testimony of its efforts to differentiate the College from competitors. These efforts include registration of trademarks, investment in branded merchandise, and restrictions on use of the College’s name when alumni give presentations.” The Sloan Group also “presented evidence of likely confusion from the Spence Group’s statements and advertisements . . . . Taken as a whole, the evidence provided reasonable support for the finding of a risk to the College’s reputation and goodwill.”

Nevertheless, the panel holds that the district court “went too far by requiring the Spence Group to remove two sculptures.” The error arose because the district court mischaracterized the order as “’prohibitory’ in the sense that [it] prohibit[s] the defendant from doing something.”

The panel holds that “[i]n ordering removal of the sculptures, the district court imposed a mandatory injunction by affirmatively ordering the Spence Group to take action . . . . The court could have issued a prohibitory injunction by disallowing training programs at the ranch as long as the sculptures remained visible to attendees. But the court went further by ordering the Spence Group to remove the sculptures. In requiring affirmative conduct, the court issued an injunction that was mandatory rather than prohibitory.”

A mandatory injunction is an “extraordinary step” that was unwarranted here. No classes were taking place at the ranch. “Given the inactivity at the ranch and the option to restrict programming at the ranch, the district court abused its discretion by ordering removal of the sculptures.”

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