Friday, November 18, 2005

"Gross Misconduct" of Leo Stoller and his Counsel Leads to Dismissal of Chicago Lawsuit

Frequent TTAB litigant Leo Stoller has once again failed dismally in an action for alleged infringement of the mark STEALTH. In a November 16, 2005 ruling by Judge George W. Lindberg, the U.S. District Court for the Northern District of Illinois dismissed the claims of Central Mfg. Co. and Stoller with prejudice, and entered a default judgment on Defendants' counterclaims, in light of the "gross misconduct" of Mr. Stoller and his attorney. Central Mfg. Co. et al. v. Pure Fishing, Inc. et al., Case No. 05-c-0725 (N.D. Ill., November 16, 2005). [Previously discussed here at the TTABlog].

The court noted that Mr. Stoller is a frequent litigant in the Chicago federal court (at least 49 cases) and has "earned a reputation for initiating spurious and vexatious federal litigation." "In keeping with Mr. Stoller's reputation, his actions in the instant litigation have been vexatious and sanctionable."

The court described Mr. Stoller's "business" as obtaining trademark registrations, issuing cease and desist letter, and then threatening "to file an infringement action unless the targeted companies pay him a licensing fee for the use of the allegedly trademark terms."

At a hearing on November 9th, the attorney for Central "admitted to the following conduct:" authorizing Mr. Stoller to sign the attorney's name to pleadings and other filings without independently verifying the contents thereof, including a motion to compel that lacked any evidentiary support "and accused this Court of 'being an integral part of [a scheme] to defraud the Federal Court and to defraud Leo Stoller out of his valuable trademarks.'"

Mr. Stoller, for his part, provided counsel with the information included in the groundless motion to compel, erroneously represented that Central Mfg. Co. is a separate legal entity, filed baseless pro se motions (most notably, meritless motions to disqualify Judge Lindberg and Defendants' counsel), and (despite repeated admonishments that he is not an attorney and cannot represent a corporate entity) filed a pleading on behalf of a corporate counter-defendant.

With regard to the corporate counter-defendants, the court ruled that the attorney was disqualified from representing them, and it entered a default judgment against those parties "for failure to obtain competent representation, despite ample opportunity to do so."

With regard to the conduct of Stoller and his attorney, individually and on behalf of Central, the court concluded that they "repeatedly violated the Federal Rules of Evidence" and also violated Rule 11(b) "by maintaining that Central Mfg. Co. was a Delaware corporation." Stoller knew that he had not incorporated Central Mfg. Co, but he "likely attempted to conceal this fact from the Court because the trademark registrations that are the basis for the infringement claims, state that Central Mfg. Co., not Central Mfg. Inc., owns sole title to the disputed marks."

Finally, turning his attention to Leo Stoller in particular, the court ruled as follows:

"Mr. Stoller appears to believe that this Court exists to serve his selfish interests and to promote his questionable business, rather than to serve the interests of justice. Mr. Stoller is wrong and must be sanctioned in the only manner that will deprive him of the very process he has sought to manipulate and pervert. In light of the above mentioned egregious conduct and flagrant contempt of court, to allow Mr. Stoller and his wholly owned entities to continue to 'invoke the judicial mechanism for [their] own benefit would raise concerns about the integrity and credibility of the civil justice system that transcend the interests of the parties immediately before the court.' [citation omitted]. Accordingly, under the Court's inherent power, plaintiff's case is dismissed with prejudice and a default judgment is entered against Mr. Stoller in his capacity as a counter-defendant."

TTABlog note: Defendants' counterclaims may be found here. The relief requested by Defendants includes cancellation of the STEALTH registrations listed in the Complaint, an award of damages, costs, and attorneys' fees, and an order barring Stoller and his companies, as vexatious litigants, from instituting any further trademark actions or oppositions without leave of the court.

TTABlog comment: In TTAB proceedings, unlike in federal court actions, a corporate entity need not be represented by an attorney:

"Any individual may appear in a trademark or other non-patent case in his or her own behalf. Any individual may appear in a trademark case for (1) a firm of which he or she is a member or (2) a corporation or association of which he or she is an officer and which he or she is authorized to represent, if such firm, corporation, or association is a party to a trademark proceeding pending before the Office." Trademark Rule 10.14(e).

Text Copyright John L. Welch 2005


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