United States District Court, D. Minnesota
GENERAL MILLS, INC. Plaintiff,
RETROBRANDS USA, LLC, and JEFFREY L. KAPLAN, Defendants.
ORDER TO REMAND
E. Brasel United States District Judge.
case involves an alleged breach of a settlement agreement.
Plaintiff General Mills, Inc. (“General Mills”)
requests that this Court remand this case to state court. The
Defendants contend that remand is inappropriate because there
is federal-question jurisdiction under the Lanham Act.
Because this case involves only state law breach-of- contract
claims, the Court orders this case to be remanded to
Minnesota state court.
Mills sued the Defendants in Minnesota state court. [ECF No.
1-1.] The complaint alleges that Jeffrey L. Kaplan breached a
settlement agreement dated July 13, 2009. (Id.
¶ 1.) The agreement settled an ongoing trademark dispute
between General Mills' subsidiary, The Pillsbury Company,
LLC, and the Defendants. (Id. ¶ 9.) According
to the complaint, the Defendants “breached the
Settlement Agreement by filing an application for the mark
DUNKAROOS for ‘cereal-based snack foods' with the
USPTO under Serial No. 88/119, 368.” (Id.
Defendants removed the case to federal court. [ECF No. 1.]
This Court indicated in an order that it had concerns about
whether it had subject-matter jurisdiction over the case and
requested the parties either stipulate to remand or brief the
issues pursuant to a briefing schedule. [ECF No. 7.] The
Defendants filed a Memorandum in Support of Removal [ECF No.
9] and General Mills filed a response, requesting the Court
remand the case to state court. [ECF No. 11.]
Court must make sure it has subject-matter jurisdiction over
this case. See 28 U.S.C. 1447(c); Bueford v.
Resolution Tr. Corp., 991 F.2d 481, 485 (8th Cir. 1993).
It may, therefore, raise the issue of subject-matter
jurisdiction sua sponte. Blueford, 991 F.2d
at 485. The parties do not argue there is diversity between
them, so this Court must determine whether federal-question
jurisdiction is present in this case. See Franchise Tax
Bd. of State of Cal. v. Constr. Laborers Vacation Tr. for S.
California, 463 U.S. 1, 8 (1983) (“For this case-
as for many cases where there is no diversity of citizenship
between the parties-the propriety of removal turns on whether
the case falls within the original ‘federal
question' jurisdiction of the United States district
courts.”) Pursuant to 28 U.S.C § 1331,
“[t]he district courts shall have jurisdiction of all
civil actions arising under the Constitution, laws, or
treaties of the United States.” “The presence or
absence of federal-question jurisdiction is governed by the
‘well-pleaded complaint rule,' which provides that
federal jurisdiction exists only when a federal question is
presented on the face of the plaintiffʹs properly
pleaded complaint.” Caterpillar Inc. v.
Williams, 482 U.S. 386, 392 (1987). The Supreme Court
has made clear that “[t]he rule makes the plaintiff the
master of the claim; he or she may avoid federal jurisdiction
by exclusive reliance on state law.” Id.
determine whether a “well-pleaded complaint”
establishes federal-question jurisdiction, courts must
consider whether (1) “federal law creates the cause of
action” or (2) “the plaintiff's right to
relief necessarily depends on resolution of a substantial
question of federal law.” Franchise Tax Bd.
463 U.S. at 27-28. General Mills does not allege a federal
cause of action in this case. Count I of the complaint
alleges a state law breach of contract and Count II seeks a
declaratory judgment under the Minnesota Declaration Judgment
Act. [ECF No. 1-1 ¶¶ 21-35.] Neither count
qualifies as a federal cause of action. See Meyers v.
Richland Cty., 429 F.3d 740 (8th Cir. 2005)
(“Because an action to enforce a settlement agreement
is a claim for breach of contract, it should be heard in
state court unless it has ‘its own basis for
jurisdiction.'”) (citing Kokkonen v. Guardian
Life Insurance Co. of Am., 511 U.S. 375, 377 (1994)).
The Defendants argue that General Mills has pled trademark
infringement under the Lanham Act in the complaint, but the
complaint does not allege trademark infringement as a cause
of action. [ECF No 9 at 4.] Rather, it alleges the Defendants
breached the settlement agreement through trademark
infringement. The complaint, therefore, only raises state law
claims. As a result, General Mills has not raised a federal
cause of action in the complaint and this Court lacks
subject-matter jurisdiction over this case.
Defendants also argue that General Mills has sought remedies
exclusive to the Lanham Act in the complaint. (Id.
at 5.) However, General Mills merely seeks damages for losses
it incurred as the result of the Defendants' alleged
breach of the settlement agreement. “[T]he appropriate
measure of damages for breach of contract is that amount
which will place the plaintiff in the same situation as if
the contract had been performed.” Peters v. Mut.
Ben. Life Ins. Co., 420 N.W.2d 908, 915 (Minn.Ct.App.
1988). And courts may award specific performance under
certain circumstances. Saliterman v. Bigos, 352
N.W.2d 494, 496 (Minn.Ct.App. 1984). The Court need not
assess the validity of the damages requested at this point in
the litigation-it is enough to determine whether the damages
requested arise from a federal or state cause of action.
General Mills asks the presiding court, among other things,
to “[e]nter an order requiring Defendants to
specifically perform their obligations under the Settlement
Agreement, including withdrawing their application for the
DUNKAROOS trademark and the DUNKAROOs Cancellation
action” and “[a]ward General Mills damages . .
. consisting of the legal fees and costs it has incurred and
will incur to defend the DUNKAROOS Cancellation
action.” [ECF No. 1-1 at 11.] The requested relief
would merely put General Mills in the position it would have
been in if the Defendants had not allegedly breached the
settlement agreement by interfering with General Mills'
trademark. These damages flow from the alleged state cause of
action for breach of contract. As a result, General
Mills' requested damages do not change the Court's
determination of whether it has subject-matter jurisdiction
over this case.
exceptions to the well-pleaded-complaint rule apply here. The
Supreme Court has held that a federal court may have
jurisdiction over a settlement agreement when “the
parties' obligation to comply with the terms of the
settlement agreement had been made part of the order of
dismissal-either by separate provision (such as a provision
‘retaining jurisdiction' over the settlement
agreement) or by incorporating the terms of the settlement
agreement in the order.” Kokkonen, 511 U.S at
381. The Court in Kokkonen found that neither
circumstance was present, and thus federal courts had no
ancillary jurisdiction over disputes arising from the
settlement agreement. Id. There is no evidence
before this Court that either of those circumstances has
occurred in this case either. This case, like
Kokkonen, must therefore be remanded to state court.
this case does not depend on the resolution of a substantial
issue of federal law. The Supreme Court has held that:
[F]ederal jurisdiction over a state law claim will lie if a
federal issue is: (1) necessarily raised, (2) actually
disputed, (3) substantial, and (4) capable of resolution in
federal court without disrupting the federal-state balance
approved by Congress. Where all four of these requirements
are met, we held, jurisdiction is proper because there is a
‘serious federal interest in claiming the advantages
thought to be inherent in a federal forum,' which can be
vindicated without disrupting Congressʹs intended
division of labor between state and federal courts.
Gunn v. Minton, 568 U.S. 251, 258 (2013) (citing
Grable & Sons Metal Products, Inc. v. Darue
Engineering & Mfg., 545 U.S. 308, 313-14 (2005).
It is a “special and small category” of cases
that meet these factors. Id. (citation omitted). The
Supreme Court confronted a case similar to this one in
Gunn, where the plaintiff sued his attorney for
committing malpractice in a patent case for failing to argue
an experimental-use exception. 568 U.S at 253. The Supreme
Court held that federal patent law may be necessary to the
plaintiff's case because the district court had to use
patent law to understand if the attorney breached a duty.
Id. at 259. The Court also held that whether the
experimental-use exception applied was “actually
disputed, ” but that the plaintiff's arguments
failed the third and fourth factors-whether the federal issue
was “substantial” and “capable of
resolution in federal court without disrupting the
federal-state balance approved by Congress.”
Id. The Court determined that the federal issue was
not substantial because “it will not change the
real-world result of the prior federal patent litigation,
” nor would it “undermine the development of a
uniform body of [patent] law.” Id. at 261
(internal quotation marks and citation omitted). Finally, the
Gunn Court also determined that allowing a state
court to determine the case would not upset the balance of
state and federal judicial responsibilities. Id. at
same analysis applies here. The Defendants argue “to
the extent that the underlying question is the significance
of Retrobrands' registration (and not use) of the
DUNKAROOS intent-to-use mark, that is a federal question and
federal question alone.” [ECF No. 9 at 6.] The
Defendants are correct that whether they breached the
agreement may require some interpretation of federal
trademark law. However, such analysis would go only to
whether the Defendants breached a contract-fundamentally, a
state law dispute. Whether the Defendants breached the
agreement does not affect the underlying prior trademark
dispute, nor does it implicate any substantial federal issue
that could impact other cases. Just as patent law in
Gunn applied only to whether the attorney committed
malpractice, trademark law here would be implicated only to
determine whether the Defendants breached the settlement
agreement. It would not impact the body of case law under the
Lanham Act nor impact the disposition of future trademark
cases. This case therefore ...