U.S. Supreme Court, Keathley v. Buddy Ayers Construction, Inc.

Judicial Estoppel

 

Equitable Doctrine

 

Bankruptcy Proceedings

 

 

 

Judicial estoppel is an “equitable doctrine” intended “to protect the integrity of the judicial process,” both by “prohibiting parties from deliberately changing positions according to the exigencies of the moment,” and by preventing the “risk of inconsistent court determinations.” New Hampshire, 532 U. S., at 749–751.

 

Sometimes, as happened here, a debtor seeks to litigate a claim against a third party that he failed to disclose in his bankruptcy proceedings.

 

Some lower courts apply judicial estoppel to bar such lawsuits, reasoning that application of the doctrine “raises the cost of lying” and “induces debtors to be truthful in their bankruptcy filings.” Cannon-Stokes v. Potter, 453 F. 3d 446, 448 (CA7 2006).

 

The courts that apply judicial estoppel to claims in the bankruptcy context view the debtor’s failure to disclose a particular claim as an “implicit representation” that the claim does not exist. 18B C. Wright, A. Miller, & E. Cooper, Federal Practice and Procedure §4477.9 (3d ed. 2019 and Supp. 2026) (collecting cases). On this view, when the debtor files a lawsuit based on that claim, he has taken inconsistent positions in the two judicial proceedings “by asserting in the civil lawsuit that he has a claim against the defendant while denying under oath in the bankruptcy proceeding that the claim exists.” Slater v. United States Steel Corp., 871 F. 3d 1174, 1176 (CA11 2017) (en banc).

 

Based on that understanding, those lower courts have developed a general rule for the application of judicial estoppel in the bankruptcy context: “If a plaintiff-debtor omits a pending (or soon-to-be-filed) lawsuit from the bankruptcy schedules and obtains a discharge (or plan confirmation), judicial estoppel bars the action.” Ah Quin v. County of Kauai Dept. of Transp., 733 F. 3d 267, 271 (CA9 2013).

 

While this Court has never applied judicial estoppel in the bankruptcy context, in a different context we left open whether it “may be appropriate to resist application of judicial estoppel” when the party’s prior inconsistent position was due to “inadvertence or mistake.” New Hampshire, 532 U. S., at 753. For purposes of this opinion, we assume without deciding that judicial estoppel can apply in the bankruptcy context and that “inadvertence or mistake” can function as an exception to that application. Operating under those assumptions, the Fifth Circuit’s understanding of “inadvertence or mistake” is simultaneously too rigid and too broad.

 

The rigidity comes from the Fifth Circuit’s failure to fully recognize that “judicial estoppel is an equitable doctrine.” Id., at 750 (internal quotation marks omitted). As such, its “examination must be made in the light of the recognized principles of equity.” United States Nat. Bank v. Chase Nat. Bank, 331 U. S. 28, 36 (1947). Equity, we have said, “eschews mechanical rules; it depends on flexibility.” Holmberg v. Armbrecht, 327 U. S. 392, 396 (1946). Thus, when a court conducts an equitable inquiry, it must act “on a case-by-case basis,” considering all relevant facts and circumstances. Holland v. Florida, 560 U. S. 631, 649–650 (2010) (internal quotation marks omitted). In other words, equitable doctrines require room to consider all of the particulars.

 

By contrast, the Fifth Circuit’s rule allows courts to consider only two circumstances when assessing inadvertence or mistake: whether the debtor knew of the underlying facts of the claim, and whether there was a potential motive to conceal the claim. See In re Coastal Plains, Inc., 179 F. 3d 197, 210 (CA5 1999); Love, 677 F. 3d, at 262. And under

this rule, a court may not look at any other evidence tending to show that the omission was inadvertent. That rigidity is out of step with equity. To determine whether the omission was inadvertent or a mistake, the Fifth Circuit instead should have examined the totality of the circumstances surrounding Keathley’s failure to report his personal-injury claims earlier. See, e.g., Ah Quin, 733 F. 3d, at 276 (“Rather than applying a presumption of deceit, judicial estoppel requires an inquiry into whether the plaintiff ’s bankruptcy filing was, in fact, inadvertent or mistaken, as those terms are commonly understood” (emphasis added and deleted)).

 

The Fifth Circuit’s rule is not only overly rigid; it is also overly broad. In particular, the Fifth Circuit holds that an omission falls outside of the exception any time a debtor knows certain facts or could potentially benefit from non-disclosure of a claim. But it is rare for a debtor to be unaware of the underlying facts of his claim, and a debtor will almost always hypothetically benefit from not revealing such a claim to his creditors. In essence, then, the Fifth Circuit’s approach is a one-size-fits-all test that requires courts to view as purposeful nearly every bankruptcy omission. Indeed, the decision below acknowledged as much, noting that, under Fifth Circuit precedent, the potential-motive element “‘is almost always met if a debtor fails to disclose a claim or possible claim to the bankruptcy court.’” 2025 WL 673434, *5 (quoting Love, 677 F. 3d, at 262).

 

The overbreadth of the Fifth Circuit’s rule (the fact that it almost always is satisfied) makes it patently incompatible with an inadvertence-or-mistake standard, which suggests that circumstances—and outcomes—may vary. A near-dispositive criterion is a poor fit for a fair inquiry into whether an omission is actually the result of inadvertence or mistake.

 

Today’s decision is straightforward. The Fifth Circuit artificially narrowed its inquiry into whether Keathley’s bankruptcy-schedule omission was the result of inadvertence or mistake by assessing only whether he had knowledge of the underlying facts or a potential motive to conceal his personal-injury suit. That was error. Accordingly, we vacate the judgment of the Court of Appeals for the Fifth Circuit and remand the case for further proceedings consistent with this opinion.

 

(The parties also dispute at some length whether bad faith is required for judicial estoppel to apply (...) In light of our narrow holding - responding only to the analysis used by the Fifth Circuit - we need not resolve any further questions about the application of judicial estoppel in the bankruptcy context).

 

(U.S. Supreme Court, June 11, 2026, Keathley v. Buddy Ayers Construction, Inc., J. Jackson, Unanimous)

 

 

 

 

 

California Court of Appeal, Fox Paine & Company, LLC v. Twin City Fire Insurance Company, A168803

Estoppel

 

California Law

 

 

 

As to estoppel, we discussed this as well, in California-American Water Co. v. Marina Coast Water District (2022) 86 Cal.App.5th 1272, 1292−1293, noting among other things that estoppel “‘generally requires a showing that a party’s words or acts have induced detrimental reliance by the opposing party.’ (Lynch v. California Coastal Com. (2017) 3 Cal.5th470, 475–476; see Rubin v. Los Angeles Fed. Sav. & Loan Assn. (1984).

 

159 Cal.App. 3d 292, 298 [‘detrimental reliance is not a necessary element of waiver, only of estoppel’]; City of Hollister v. Monterey Ins. Co. (2008) 165 Cal.App.4th 455, 487 [same].)”

 

 

 

 

(California Court of Appeal, Sept. 5, 2024, Fox Paine & Company, LLC v. Twin City Fire Insurance Company, A168803, Certified for Publication)

 

 

 

U.S. Court of Appeals for the First Circuit, QBE Seguros v. Carlos A. Morales-Vázquez, Docket No. 19-1503

 

Maritime Law

 

Admiralty

 

Marine Insurance Contracts

 

Doctrine of Uberrimae Fidei

 

Duty of Utmost Good Faith

 

Warranty of Truthfulness

 

False Statement

 

Actual Reliance is Not a Necessary Prerequisite for an Insurer to Void a Marine Insurance Policy under the Doctrine of Uberrimae Fidei

 

Materiality of a False Statement or an Omission, Without More, Provides a Sufficient Ground for Voiding Such a Policy

 

Waiver and Estoppel May Be Affirmative Defenses

 

Should Federal or State Common Law Apply?

 

English Admiralty Law

 

 

This appeal involves a dispute between a boat owner (who purchased a policy of marine insurance without disclosing, among other things, a prior grounding) and his insurance company. Resolving the appeal requires us to revisit the doctrine of uberrimae fidei — an entrenched principle of maritime law that imposes a duty of utmost good faith on the parties to marine insurance contracts. Concluding, as we do, that the district court faithfully applied this doctrine, we affirm the entry of judgment in favor of the insurer.

 

As part of his application for this insurance policy, Morales left blank the spaces provided for answers to questions asking him to describe his prior boating history and all accidents related to any vessel he had previously owned, controlled, and/or operated.

 

He omitted the remaining information called for by section six even though the application form plainly stated that "if incorrect answers are provided (either by error, omission or neglect), I will be in breach of this warranty and the policy, if issued, will be void from inception."

 

We think it useful to start by sketching the evolution of the doctrine of uberrimae fidei. The Latin phrase "uberrimae fidei" loosely translates as "utmost good faith." See Black's Law Dictionary (10th ed. 2014). As relevant here, the doctrine requires parties to a marine insurance contract to disclose all known facts or circumstances material to an insurer's risk. See Windsor Mount Joy Mut. Ins. Co. v. Giragosian, 57 F.3d 50, 54-55 (1st Cir. 1995). Under the doctrine, an insurer may void a marine insurance policy if its insured fails to disclose "all circumstances known to the insured and unknown to the insurer" that materially impact the insurer's risk calculus. Caitlin at Lloyd's v. San Juan Towing & Marine Servs., Inc., 778 F.3d 69, 83 (1st Cir. 2015) (emphasis in original); cf. Stipcich v. Metro. Life Ins. Co., 277 U.S. 311, 316 (1928) (holding to like effect with respect to certain contracts outside marine insurance context).

 

The origins of the doctrine can be traced back to eighteenth-century London, which was — and remains — a global insurance hub. In its nascent form, the doctrine applied to a myriad of insurance contracts across a wide swath of industries. As early as 1766, Lord Mansfield recognized that insurance contracts impose a heightened duty of good faith to prevent a party from omitting or concealing facts that would induce the counterparty "into a bargain, from his ignorance." Carter v. Boehm (1766) 97 Eng. Rep. 1162, 1164 (K.B.). Such a requirement was rooted in practical wisdom, recognizing that an insurer often lacked the ability to verify the insured's representations before issuing a policy. See Thomas J. Schoenbaum, Admiralty and Maritime Law § 19:14, at 460 (6th ed. 2018). This practical wisdom still rings true when applied to marine insurance — an industry in which, for example, a policy may have to be issued in London, on a time-sensitive basis, for a vessel berthed halfway across the globe.

 

American courts first recognized the doctrine of uberrimae fidei in connection with marine insurance contracts in the early nineteenth century. See McLanahan v. Universal Ins. Co., 26 U.S. (1 Pet.) 170, 185 (1828). In 1882, the Supreme Court confirmed the strict disclosure requirements that the doctrine imposed on an insured. See Sun Mut. Ins. Co. v. Ocean Ins. Co., 107 U.S. 485, 510-11 (1883).

 

For some time, American and English law concerning marine insurance continued to develop in parallel through a parade of judicial decisions. Parliament, however, codified the by-then-venerable doctrine of uberrimae fidei by including it in the Marine Insurance Act of 1906 (1906 MIA). See Marine Insurance Act 1906, 6 Edw. 7 c. 41, § 17 (U.K.). Congress, however, remained silent; and American courts continued to develop their own federal common law of admiralty and continued to interpret marine insurance policies as incorporating, by implication, the doctrine of uberrimae fidei. See, e.g., San Juan Towing, 778 F.3d at 82; N.Y. Marine & Gen. Ins. Co. v. Cont'l Cement Co., 761 F.3d 830, 839 (8th Cir. 2014); AGF Marine Aviation & Transp. v. Cassin, 544 F.3d 255, 263 (3d Cir. 2008); Certain Underwriters at Lloyd's, London v. Inlet Fisheries Inc., 518 F.3d 645, 650 (9th Cir. 2008); HIH Marine Servs., Inc. v. Fraser, 211 F.3d 1359, 1362 (11th Cir. 2000); Puritan Ins. Co. v. Eagle S.S. Co. S.A., 779 F.2d 866, 870 (2d Cir. 1985).

 

Parliament lately adopted a number of insurance reforms. As relevant here, Parliament passed the Insurance Act of 2015, which (among other things) effectively amended the 1906 MIA to preclude an insurer from voiding a marine insurance policy by recourse to the doctrine of uberrimae fidei. See Insurance Act 2015, c.4, § 14 (U.K.) ("Any rule of law permitting a party to a contract of insurance to avoid the contract on the ground that the utmost good faith has not been observed by the other party is abolished."). Even so, Congress did not follow Parliament's lead.

 

This lack of congressional action is significant. As the federal common law of admiralty developed, the Supreme Court acknowledged that congressional silence left room for courts, among others, to fill the vacuum. See Wilburn Boat Co. v. Fireman's Fund Ins. Co., 348 U.S. 310, 321 (1955) ("We, like Congress, leave the regulation of marine insurance where it has been — with the States.").

 

(This means, of course, that questions sometimes arise in maritime cases as to whether federal or state common law should apply. See San Juan Towing, 778 F.3d at 76-80. Here, however, the parties present their uberrimae fidei arguments exclusively in terms of federal common law, and we therefore may accept the parties' plausible view that federal common law supplies the substantive rules of decision. Cf. Borden v. Paul Revere Life Ins. Co., 935 F.2d 370, 375 (1st Cir. 1991) (holding that, in diversity jurisdiction, court may accept parties' plausible agreement as to which state's law applies).)

 

Standard Oil offers us two important takeaways. First, American courts are not bound by legal developments in the United Kingdom. And even though the Standard Oil Court was speaking of judicial decisions, we think it follows, a fortiori, that acts of Parliament are equally non-binding. Second, although harmony between American and English admiralty law is desirable, "our practice is no more than to accord respect to established doctrines of English maritime law." The respect accorded by American courts to English maritime law stems from the wisdom of the particular doctrine, not from either the acceptance or the rejection of that doctrine by Parliament. It follows, we think, that federal courts tasked with hearing admiralty cases should take heed of developments in English law, but they are not obliged to change course merely because Parliament acts to alter a previously entrenched principle.

 

(…) We have never held that actual reliance is a necessary prerequisite for an insurer to void a marine insurance policy under the doctrine of uberrimae fidei. Rather, we have held that the materiality of a false statement or an omission, without more, provides a sufficient ground for voiding such a policy.

 

(If the named insured has, before or after a loss made a false statement or representation with respect to this insurance or has concealed or misrepresented any material fact or circumstance relating to this insurance, this policy shall be void and without effect. The false statement or representation or concealment need not be related to the damages or loss claimed in order to void the entire policy.

This language embodies the core of the uberrimae fidei
that omission or misrepresentation of a material fact is a sufficient ground, in and of itself, to allow an insurer to void a policy of marine insurance).

 

(…) Contractual requirements may operate as affirmative defenses. For example, waiver and estoppel may be affirmative defenses to a claim that an insured has committed a breach of a policy warranty.

 

 

Secondary sources: Thomas J. Schoenbaum, Admiralty and Maritime Law § 19:14, at 460 (6th ed. 2018); Thomas J. Schoenbaum, The Duty of Utmost Good Faith in Marine Insurance Law: A Comparative Analysis of American and English Law, 29 J. Mar. L. & Com. 1, 11 (1998).

 

 

(U.S. Court of Appeals for the First Circuit, Jan 19, 2021, QBE Seguros v. Carlos A. Morales-Vázquez, Docket No. 19-1503)

 

 

 

 

U.S. Court of Appeals for the Federal Circuit, Cheetah Omni LLC v. AT&T Services, Inc., Docket No. 19-1264

Patent Infringement

License Agreements

Patent’s Continuations

Implied License Presumption

Legal Estoppel

Legal estoppel prevents licensors from derogating or detracting from definable license rights granted to licensees for valuable consideration

Contract Drafting

Cheetah owns U.S. Patent 7,522,836 (“the ’836 patent”) directed to optical communication networks. AT&T uses a system of hardware and software components in its AT&T fiber optic communication networks.

In the district court, Cheetah asserted that AT&T infringes the ’836 patent by making, using, offering for sale, selling, or importing its fiber equipment and services. In response to the allegations, Ciena moved to intervene in the suit because it manufactures and supplies certain com- ponents for AT&T’s fiber optic systems and because those components formed the basis of some of Cheetah’s infringement allegations. The court granted Ciena’s motion to intervene.

(…) In their motion, Ciena and AT&T argued that the two prior licenses included implicit licenses to the ’836 patent covering all of the accused products. The district court agreed, granting summary judgment and dismissing the suit with prejudice.

(…) Cheetah granted to Ciena “a perpetual, irrevocable, worldwide, non- exclusive, fully paid-up license under the Licensed Patents to make, have made (directly or indirectly and solely for Ciena or its Affiliates), use, offer to sell, sell, and import and export the Licensed Products.” J.A. 411. The agreement defined “Licensed Patents” to mean

(i) the Patents-in-Suit, and (ii) all parents, provisionals, substitutes, renewals, continuations, continuations-in-part, divisionals, foreign counterparts, reissues, oppositions, continued examinations, reexaminations, and extensions of the Patents-in-Suit owned by, filed by, assigned to or otherwise controlled by or enforceable by Cheetah or any of its Affiliates or its or their respective successors in interest at any time as of, prior to, on or after the Effective Date, whether filed before, on or after the Effective Date.

J.A. 410. The “Effective Date” was defined as “the earliest date upon which all Parties had signed the Agreement or identical counterparts thereof.” J.A. 411. The “Licensed Products” were defined as

(i) all past, present or future Ciena or Ciena Affiliate products, services or combinations, components, or systems of products or services, and any modifications or enhancements thereof, that could by themselves or in combination with other products, services, components or systems, be alleged to infringe at least one claim of at least one Licensed Patent in the absence of a license under this Agreement and (ii) all Ciena products identified or accused by Cheetah of infringing any claim of any of the Patents-in-Suit in its complaint, amended complaint, infringement contentions, or otherwise.

Key to the parties’ dispute is the relationship between the ’836 and ’714 patents. The ’714 patent is a continuation-in-part of U.S. Patent 6,943,925 (“the ’925 patent”). The ’836 patent is a continuation of U.S. Patent 7,145,704 (“the ’704 patent”), which is also a continuation of the ’925 patent. These relationships are depicted below: (...)

Because the ’714 patent was asserted in the ROADM litigation, it is necessarily included in the Ciena license. By its terms, the Ciena license also includes “all parents” to the patents in the ROADM litigation, and, as the parent to the ’714 patent, the ’925 patent is likewise an expressly li- censed patent under the agreement, even if not enumerated. The question we are presented with here, however, is whether the ’836 patent, a continuation of a continuation of the ’925 patent, i.e., its grandchild, is impliedly licensed under the Ciena license. In personal terms, because the uncle and grandparent of the ’836 patent, are licensed, is the ’836 patent also licensed?

Relying on our holding in General Protecht Group Inc. v. Leviton Manufacturing Co., 651 F.3d 1355, 1361 (Fed. Cir. 2011), the district court determined that the ’836 patent was impliedly licensed as the grandchild of the expressly licensed ’925 patent. Decision, slip op. at 10. The district court reasoned that an express license of the ’925 patent included an implied license for its continuations “because those continuations disclose the same inventions as the licensed patent.” Id. We agree.

We agree with the district court, and with AT&T and Ciena, that the licenses include an implied license to the ’836 patent that extends to the accused AT&T systems. Legal estoppel prevents licensors from derogating or detracting from definable license rights granted to licensees for valuable consideration. AMP Inc. v. United States, 389 F.2d 448, 452 (Ct. Cl. 1968). In TransCore, we interpreted legal estoppel to provide an implied license to a related, later-issued patent that was broader than and necessary to practice an expressly licensed patent. TransCore, LP v. Elec. Transaction Consultants Corp., 563 F.3d 1271, 1279 (Fed. Cir. 2009).

Two years later, we considered whether an express license to a patent includes an implied license to its continuations, even when the continuation claims are narrower than previously asserted claims. General Protecht, 651 F.3d at 1361. Relying on TransCore, we answered that question in the affirmative: “Where . . . continuations issue from parent patents that previously have been licensed as to certain products, it may be presumed that, absent a clear indication of mutual intent to the contrary, those products are impliedly licensed under the continuations as well.” Id. We further explained that parties could contract around the presumption of an implied license if it did not “reflect their intentions” but that it was the parties’ burden to “make such intent clear in the license.” Id.

In General Protecht, the continuation patent at issue had not yet issued at the time of the parties’ express license of the parent patent. Cheetah attempts to cabin General Protecht’s holding to express licenses executed before the issuance of a continuation patent. We decline to read General Protecht so narrowly. The timing of patent issuance is not material to the policy rationale underpinning our implied license presumption. See TransCore, 563 F.3d at 1279. Moreover, if anything, it is easier for the parties to clearly identify an already-issued continuation and expressly exclude it from a license agreement.

(…) If Cheetah had a contrary intent, it could have made its intent clear in the agreement as a matter of contract drafting.

(U.S. Court of Appeals for the Federal Circuit, February 6, 2020, Cheetah Omni LLC v. AT&T Services, Inc., Docket No. 19-1264)

U.S. Court of Appeals for the Fifth Circuit, Universal Truckload, Inc., v. Dalton Logistics, Inc., Docket No. 17-20725

Indication of Interest Letter

Asset Purchase Agreement

Promissory Estoppel

Reliance Damages

Contract Law

Texas Law

Universal Truckload sent Dalton an Indication of Interest Letter and then Don Cochran, president of Universal Truckload’s parent company, and Limback came to North Dakota in April to see Dalton’s operations in person. Dalton claims that since the initial conversation regarding purchasing Dalton, Limback and Cochran were in near-constant communication with Dalton about the purchase, routinely giving assurances that a deal would be finalized soon.

(…) These assurances that the deal would eventually work out allegedly continued for months, all while Dalton continued to deplete its resources to keep the company operational for Universal Truckload’s promised buyout.

In August 2013, Dalton sent financial statements to Universal Truckload. Three weeks later, Universal Truckload sent Dalton an Asset Purchase Agreement offering $10.3 million upfront with a potential two-year earn-out totaling $24.3 million. Dick Meredith called Cochran to object to the new terms and Cochran agreed that this was not the deal Universal Truckload and Dalton had struck in May.

(…) All of Universal Truckload’s claims against Dalton, and Dalton’s crossclaims against Universal Truckload, proceeded to a jury trial. The jury found that Dalton should recover under a promissory estoppel theory. Dalton was awarded $5.7 million in reliance damages—the difference between the amount of cash it had on hand before Universal Truckload’s promise and the “zero” balance in its bank account when Universal Truckload called its bond. The jury awarded Universal Truckload the $1.9 million in freight charges that Dalton owed. The court, however, concluded that the $1.9 million was incurred in reliance on Universal Truckload’s promises and therefore awarded Dalton a $1.9 million offset against Universal Truckload’s breach of contract claim.

(…) Because there was sufficient evidence to conclude Universal Truckload made a promise, Dalton reasonably relied on the promise to its detriment, and that reliance caused Dalton $5.7 million in damages, we affirm the district court’s denial of the JMOL and the jury verdict on Dalton’s promissory estoppel claim.

(…) We have subject-matter jurisdiction under 28 U.S.C. § 1332 because the amount in controversy is over $75,000 and the parties are diverse.

(…) Under the Erie doctrine, this court must apply substantive state law in diversity jurisdiction cases. Erie R.R. v. Tompkins, 304 U.S. 64, 78 (1938). Here, the parties agree that Texas law applies.

The elements of promissory estoppel in Texas are: “(1) a promise, (2) reliance thereon that was foreseeable to the promisor, and (3) substantial reliance by the promisee to his detriment.” J.D. Fields & Co. v. U.S. Steel Int’l, 690 F. Supp. 2d 487, 503–04 (S.D. Tex. 2009); see also MetroplexCore, L.L.C. v. Parsons Transportation, Inc., 743 F.3d 964, 977 (5th Cir. 2014).

(…) Dalton points to Universal Truckload’s post-promise conduct. The record on appeal shows that Universal Truckload’s leadership had a “running dialog” about the takeover with Dalton leadership for over a year. Universal Truckload repeatedly asked Dalton to “hang in there,” and assured Dalton that it would “get something done.”

(…) We considered similar facts in MetroplexCore. There, an engineering firm bid for a contract to build a passenger rail line in Houston. 743 F.3d at 968. The lead contractor repeatedly assured MetroplexCore, the plaintiff, that it would be included in the project if the defendant’s bid got accepted. Id. at 970. The defendant regularly reassured MetroplexCore by saying “our commitment to you is still in play,” “we are still committed to MetroplexCore being on the management team,” and “we are going to live up to our commitment to you,” among other reassurances. Id. at 970–71. When MetroplexCore was not included in the project, it sued the lead contractor for reliance damages based on its promise. Id. at 971. We held that these numerous, specific statements constituted actionable promises, and accordingly reversed the district court’s grant of summary judgment for the defendant. Id. at 982.

The reassurances made here seem at least as strong as those made in MetroplexCore. The reassurances given were just as continuous, numerous, and specific. Despite Dalton’s lack of action to formalize the promise, the jury was presented with sufficient evidence to find a promise occurred.

(…) Dalton succeeded on a promissory estoppel theory, which requires the absence of a contract. See Wheeler v. White, 398 S.W.2d 93, 96 (Tex. 1965) (explaining that promissory estoppel exists to furnish a remedy for “reasonable reliance upon an otherwise unenforceable promise”).

(…) Connor holds that reliance on a contract is not reasonable after the other party unequivocally repudiates its obligations. 267 F.3d at 436. Here, there is no contract at issue, and therefore there is nothing Universal Truckload could have “unequivocally repudiated.” Connor does not require reliance damages to stop in August 2013, because the promise at issue was not clearly broken until a much later date— when Universal Truckload expressly told Dalton it would not be purchasing the company at all and required Dalton to repay the $1.9 million.

(…) Mistletoe Express Serv. v. Locke, 762 S.W.2d 637, 638–39 (Tex. App.—Texarkana 1988, no writ) (explaining that a promisor is liable for any debts that a promisee incurred as a foreseeable consequence of the promise).

(U.S. Court of Appeals for the Fifth Circuit, January 3, 2020, Universal Truckload, Inc., v. Dalton Logistics, Inc., Docket No. 17-20725)

U.S. Court of Appeals for the Eleventh Circuit, Kroma Makeup EU, LLC (a United Kingdom Limited Liability Company), v. Boldface Licensing + Branding, Inc. (a Nevada Corporation), Docket No. 17-14211, Published

Trademark

Jurisdiction

Conflict of Laws

Distribution Agreement

Licensing Agreement

Standing to Sue

Statutory Standing

Cause of Action

Import in Europe

Motion for a Preliminary Injunction

Promissory Estoppel (under Florida Law)

Appeal from the United States District Court for the Middle District of Florida.

Our sister courts of appeals have agreed with the general sentiment that a license agreement between two parties can limit a licensee’s ability to bring a Lanham Act claim.

Plaintiff-Appellant Kroma Makeup EU, LLC (“Kroma EU”) appeals the district court’s grant of summary judgment based on its finding that Kroma EU lacked standing to enforce the KROMA trademark. Because Kroma EU does not have sufficient rights in the mark to sue under the Lanham Act, we affirm the judgment of the district court.

Kroma EU is the former European distributor of cosmetics products using the federally registered mark, KROMA. The owner and registrant of the mark is By Lee Tillett, Inc. (“Tillett”) and the rights to use the KROMA mark in the United States rest solely with Tillett. In October 2012, Tillett granted an exclusive license to Kroma EU to import, sell, and distribute KROMA products in Europe, and to use the KROMA mark in furtherance of its business. As part of the licensing agreement, Tillett guaranteed that it owned the KROMA mark and would hold Kroma EU harmless from any judgments against Tillett based on the mark. Tillett retained the right to use the KROMA mark in the United States.

Defendant-Appellees—the Kardashian sisters—were celebrity endorsers of a cosmetic line called “Khroma Beauty,” sold and manufactured by Defendant Boldface Licensing & Branding, Inc. (“Boldface”). The Kardashians claim that they had no personal knowledge of the KROMA trademark until an entertainment news website, TMZ, published an article about the Kardashians’ potential infringement. However, before the Khroma Beauty line launched, Boldface had purportedly conducted a trademark search that revealed the existence of the KROMA mark. The Kardashians claim that they did not receive this information. Boldface sought to register the KHROMA or KARDASHIAN KHROMA mark with the U.S. Patent and Trademark Office, but registration was denied because of likelihood of confusion with the previously registered KROMA mark.

After the Khroma line was released, Boldface sought a declaratory judgment in California federal court that Boldface did not infringe the KROMA trademark. There, Tillett filed a trademark infringement counterclaim, adding the Kardashians as counterclaim defendants. The California district court granted Tillett’s motion for a preliminary injunction against Boldface, finding that Tillett had demonstrated a likelihood of success on the trademark infringement claim. Boldface Licensing + Branding v. By Lee Tillett, Inc., 940 F. Supp. 2d 1178 (C.D. Cal. 2013). Thereafter, Boldface rebranded the product line to “Kardashian Beauty” and the parties settled the dispute. Kroma was not a party to the California action and did not receive a share of the settlement recovery from Tillett.

Kroma EU subsequently filed this action in the Middle District of Florida against Boldface and the Kardashians, alleging that Boldface directly infringed the KROMA trademark under common law trademark infringement and the Lanham Act by distributing “Khroma” branded cosmetics in Europe, and that the Kardashians were vicariously liable for Boldface’s infringement. Kroma EU also brought claims against Tillett, alleging a cause of action for promissory estoppel. As to the promissory estoppel claim, the district court held in an earlier order that under Florida law, a foreign licensee could not state a claim for promissory estoppel against its licensor; however, Kroma EU was able to proceed against Tillett under a breach of contract theory. Kroma Makeup EU, Ltd. v. Boldface Licensing + Branding, Inc., No. 6:14-cv-1551-ORL, 2015 WL 1708757, at *1 (M.D. Fla. Apr. 15, 2015).

The Kardashians moved for summary judgment arguing that Kroma EU did not have the requisite standing to bring the infringement action and that the trademark infringement cause of action was barred by claim preclusion. Kroma EU also moved for partial summary judgment on the issue of liability. Earlier in the litigation, Tillett successfully moved to compel arbitration and Kroma EU’s claim against Tillett remains stayed pending the arbitration.

The district court granted the Kardashians’ motion. The court found that Kroma EU lacked standing to sue for trademark infringement and did not reach the Kardashians’ claim preclusion argument. Relying primarily on the licensing agreement between Tillett and Kroma EU, the district court held that the agreement “plainly authorized only Tillett to enforce the trademarks” and to “protect” the mark “from any attempts of illegal use,” while “Kroma EU’s sole directive was to inform Tillett of instances of infringement.” Based on this reading, the district court concluded that these provisions “plainly authorized only Tillett to enforce the trademarks governed by the License Agreement.” Therefore, Kroma EU “lacked contractual authority, and hence standing, to pursue § 1125(a) violations against infringers in its own capacity.” Based on Kroma EU’s purported lack of standing, the court denied Kroma EU’s motion for partial summary judgment as moot.

The issue before us is the extent of a licensee’s rights in a trademark infringement action under Section 43(a) of the Lanham Act. While the Lanham Act typically evokes questions of standing, as a licensee, Kroma EU’s rights thereunder rely upon the licensing agreement it entered with Tillett. We adopt the position taken by the district courts in this circuit—that a licensee’s right to sue to protect the mark “largely depends on the rights granted to the licensee in the licensing agreement.” Drew Estate Holding Co. v. Fantasia Distrib., Inc., 875 F. Supp. 2d 1360, 1366 (S.D. Fla. 2012) (quoting Hako-Med USA, Inc. v. Axiom Worldwide, Inc., No. 8:06-cv- 1790-T-27EAJ, 2006 WL 3755328, at *6 (M.D. Fla. Nov. 15, 2006)). See also Aceto Corp. v. TherapeuticsMD, Inc., 953 F. Supp. 2d 1269, 1279 (S.D. Fla. 2013) (“Standing to sue depends largely on the rights granted to the licensee under the licensing agreement.”).

(…) The statute affords a cause of action to “any person who believes that he or she is likely to be damaged.” But, despite this broad language, 1125(a) does not get “such an expansive reading” so as to allow “all factually injured plaintiffs to recover.” Lexmark Int’l, Inc v. Static Control Components, Inc., 572 U.S. 118, 129 (2014) (quoting Holmes v. Sec. Inv'r Prot. Corp., 503 U.S. 258, 266 (1992)). This is especially true where, as here, a licensing agreement between two parties governs each party’s entitlement to infringement claims.

The court below focused its attention on whether the license agreement between Tillett and Kroma EU conferred adequate standing on Kroma EU to bring a claim under Section 1125(a). But, the question before us is not that of traditional standing. Indeed, it is “not of standing at all.” City of Miami v. Bank of Am. Corp., 800 F.3d 1262, 1276 (11th Cir. 2015), vacated on other grounds, 137 S. Ct. 1296 (2017). Rather, it is whether the statute “grants the plaintiff the cause of action that he asserts.” Bank of Am. Corp. v. City of Miami, 137 S. Ct. 1296, 1302 (2017). See also Lexmark, 572 U.S. at 128 n.4. (“We have on occasion referred to this inquiry as ‘statutory standing’ and treated it as effectively jurisdictional. That label is an improvement over the language of ‘prudential standing,’ since it correctly places the focus on the statute. But it, too, is misleading, since the absence of a valid . . . cause of action does not implicate subject-matter jurisdiction, i.e., the court’s statutory or constitutional power to adjudicate the case.” In other words, does the licensing agreement between Tillett and Kroma EU give Kroma EU, the licensee, sufficient “rights in the name” to sue under the Lanham Act? Camp Creek Hosp. Inns, Inc. v. Sheraton Franchise Corp., 139 F.3d 1396, 1412 (11th Cir. 1998).

The answer is no.

To start, “a statutory cause of action extends only to plaintiffs whose interests ‘fall within the zone of interest protected by the law invoked.’” Lexmark, 572 U.S. at 129 (quoting Allen v. Wright, 468 U.S. 737, 751 (1984)). The licensing agreement affords rights and imposes obligations on the parties relating to the enforcement of any trademark claims. As such, there is little dispute between the parties that we turn to that agreement to determine if Kroma’s interests fall within the zone of interest protected by the Lanham Act. In so doing, we fall back on basic principles of contract interpretation and “construe the agreement as a whole,” Westport Ins. Corp. v. Tuskegee Newspapers, Inc., 402 F.3d 1161, 1164 (11th Cir. 2005), careful to afford the plain language meaning of “each and every word the agreement contains,” Equity Lifestyle Props., Inc. v. Fla. Mowing & Landscape Serv., Inc., 556 F.3d 1232, 1242 (11th Cir. 2009).

Here, applying the licensing agreement to this inquiry is a straightforward exercise. The plain language of the agreement demonstrates the parties’ intent for Tillett to retain all ownership and enforcement rights. Kroma EU—while it may have other rights under the agreement—does not possess the ability to assert its rights in the mark in this proceeding.

(U.S. Court of Appeals for the Eleventh Circuit, Kroma Makeup EU, LLC (a United Kingdom Limited Liability Company), v. Boldface Licensing + Branding, Inc. (a Nevada Corporation), April 1, 2019, Docket No. 17-14211, Judge Goldberg, Published)

Honorable Richard W. Goldberg, United States Court of International Trade Judge, sitting by designation.