The Cochran Firm Fraud Failed in CA Fed. Court

UNITED STATES DISTRICT COURTCENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERALCase No. CV 12-5868 PSG (MRWx) Date May 12, 2015

Title The Cochran Firm, P.C. v. The Cochran Firm Los Angeles, LLP, et al.

Present: The Honorable Philip S. Gutierrez, United States District Judge

Wendy Hernandez Not ReportedDeputy Clerk Court Reporter

Attorneys Present for Plaintiff(s): Attorneys Present for Defendant(s):

Not Present Not Present

Proceedings (In Chambers): Order GRANTING Defendants motion for an order dissolvingthe preliminary injunction.

Pending before the Court is Defendants and Counterclaimants Randy H. McMurray, P.C.and Randy H. McMurrays (collectively referred to as McMurray or Defendant)1 motion foran order dissolving the preliminary injunction or increasing the bond amount. Dkt. # 348. TheCourt finds this matter appropriate for decision without oral argument. See Fed. R. Civ. P.78(b); L.R. 7-15. After considering the papers and evidence submitted by the parties, the CourtGRANTS the motion for an order dissolving the preliminary injunction.

I. Introduction

This lawsuit involves intellectual property rights to the trademark The Cochran Firm. See generally Second Amended Complaint (SAC). McMurray brings this motion in an attemptto dissolve a preliminary injunction that was granted in favor of Plaintiff The Cochran Firm, P.C.(The Cochran Firm or Plaintiff), which essentially enjoins him, with limited exceptions,from using the term Cochran. Dkt. # 264. According to McMurray, the Court shoulddissolve the preliminary injunction because Plaintiff has unclean hands in the use of itstrademark by advertising itself as a national law firm when it is in fact comprised of anetwork of licensee-licensor relationships. Mot. 1:7-11; 18:12-21:19.

II. Background

1 Although the McMurray Defendants are plural, the Court will refer to them as McMurraysingularly.

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Case 2:12-cv-05868-PSG-MRW Document 364 Filed 05/12/15 Page 1 of 13 Page ID #:10547




Plaintiff is an Alabama corporation formed in 1998 under the name Cochran, Cherry,Givens & Smith, P.C. SAC 12. The firm later changed its name to The Cochran Firm Cochran, Cherry, Givens, Smith & Sistrunk, P.C. and subsequently filed an amendment to itsarticles of incorporation changing its name to The Cochran Firm, P.C. See Dkt. # 156-7.

In the spring of 1999, Johnnie Cochran Jr. (Cochran), Samuel A. Cherry (Cherry), J.Keith Givens (Givens), and Jock Smith entered into a California limited liability partnershipthat they named Cochran, Cherry, Givens & Smith LLP (the California LLP). FourthAmended Counterclaim (FACC) 7. The California LLP began with offices in New York andLos Angeles. Id. 25. According to McMurray, he was asked to join the California LLP as aco-managing partner of the Los Angeles office in June 1999. Id. 26.

In March of 2005, Cochran registered The Cochran Firm as a trademark with theUnited States Patent and Trademark Office (USPTO). Id. 34. Plaintiff acquired rights to themark under an assignment agreement after Cochrans death. Id. 35-36.

McMurray purchased the California LLPs Los Angeles office in January 2007 and thenext month formed a general partnership with Brian T. Dunn (Dunn) that took over theCalifornia LLPs Los Angeles office. Id. 41. McMurray alleges that Cherry and Givensconsented to the partnerships use of the name The Cochran Firm Los Angeles. Id. 42. Atsome point Joseph Barrett (Barrett) also became a partner of The Cochran Firm Los Angeles. Id. 50-52. Plaintiff pleads that it made numerous attempts to memorialize and execute anagreement outlining the partner and licensing relationship between the National Firm and theLos Angeles local office. SAC 32. Under the drafts of these agreements, The Cochran FirmLos Angeles had a duty to pay Plaintiff a portion of the fees earned and received by the LosAngeles office as compensation for administrative, IT, marketing, practice benefits and supportof being a Cochran Firm local office. Id. 35. Although no such agreement was ever executedby both Plaintiff and McMurray, from January 2006 until September 2010, The Cochran FirmLos Angeles complied with the monthly reporting requirements and payment of the agreed-upon National compensation. Id. 37. In February 2012, Plaintiff sent McMurray and Barretta Cease and Desist letter informing them that they were no longer allowed to use The CochranFirm mark. Id. 42.

McMurray claims that his relationship with Dunn and Barrett deteriorated and that Cherryand Givens convinced them to join a conspiracy to oust McMurray from The Cochran Firm LosAngeles. FACC 59-75. McMurray alleges that they formed a corporation, Dunn Law APCdba The Cochran Firm California to replace The Cochran Firm Los Angeles and engaged invarious fraudulent and wrongful acts. Id.

A. Procedural Background





On November 26, 2012, Plaintiff filed a SAC against The Cochran Firm Los Angeles,GP, and McMurray alleging trademark infringement for using the mark The Cochran Firm. Dkt. # 36. McMurray filed counterclaims against Counterdefendants The Cochran Firm, P.C.;The Cochran Firm Cochran, Cherry, Givens, Smith & Sistrunk, P.C.; Dunn Law, APC; BrianT. Dunn; Samuel A. Cherry; J. Keith Givens; Joseph Barrett; and Barvie Koplow alleging thatthey are liable for various fraudulent actions. FACC.

In January of 2013, Plaintiff filed a motion for a preliminary injunction forbiddingMcMurray from using the mark The Cochran Firm that was granted, and later modified, byU.S. District Court Judge Otero. See Dkts. # 58, 102. McMurray appealed the modifiedinjunction to the United States of Appeal for the Ninth Circuit. Dkt. # 125. While the appealwas pending, this matter was transferred to U.S. District Court Judge OConnell. Dkt. # 176.

On May 30, 2014, the Ninth Circuit issued a mandate reversing the preliminary injunctionorder and remanding the action to the district court. Dkt. # 242 (Mandate). Although theNinth Circuit found that the district district court did not abuse its discretion in concluding thatPlaintiff was likely to demonstrate that it owns The Cochran Firm trademark, it remanded forthe district court to augment the record and to reconsider [McMurrays] unclean handsargument. Mandate at 3. The Ninth Circuit emphasized that the structure of Plaintiffsbusiness is important in assessing whether [it] has unclean hands but that the record . . . [didnot] provide sufficient information about the relationships both between [Plaintiff] and the localoffices, or between [Plaintiff] and the public. Id. at 4-5. The Ninth Circuit instructed the Courtto keep the preliminary injunction in place while it examined the issue. Id. at 5. Additionally,the Ninth Circuit, finding the injunction to be too broad, instructed the district court to tailor theinjunction so as to burden no more protected speech than necessary. Id. at 5-6.

In response to the Ninth Circuit Mandate, McMurray filed an ex parte application on June6, 2014 requesting that the district court vacate certain portions of the injunction and set anevidentiary hearing. Dkt. # 243. On September 23, 2014, Judge OConnell granted theapplication in full and set an evidentiary hearing to be held October 21, 2014 to examine onlythe specific issue of Plaintiffs business structure as it relates to whether [Plaintiff] hasunclean hands in its use of the Cochran Firm trademark. Id. (emphasis and modificationin original). The district court held an evidentiary hearing on October 21 and 22, 2014 toexamine this issue. Dkts. # 302, 303. On October 30, 2014 McMurray filed an ex parteapplication for an order admitting additional evidence that was granted in part and denied in part. Dkt. # 312.

On November 17, 2014, this matter was assigned to this Court after Judge OConnell

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recused herself. Dkt. # 324.

McMurrays motion seeks an order dissolving the preliminary injunction or, in thealternative, increasing the bond amount. Mot.

B. Evidentiary Hearing

McMurray has outlined evidence that he argues supports his argument that Plaintiff iscomprised of a network of licensee-licensor relationships and not a single, national firm as it hasadvertised to the public. Mot. 8:3-12:9.

McMurray points to the declaration of Cherry, one of Plaintiffs principals, who describesThe Cochran Firm as a National Firm with aregional [sic] offices. Dkt. # 268-1, Declarationof Samuel A. Cherry, Jr. (Cherry Decl.) 5. According to Cherry, each regional office entersinto an agreement with national which governs its operation as part of The Cochran Firm andthese agreements either consist of partnership agreements between Plaintiffs principals andlocal attorneys or as operating agreements between partners (the partners being National andlocal attorneys). Id.

Although Cherry declared that it forms partnerships with partners at the regional offices,Defendant submitted sworn declarations from three partners at Plaintiffs Alabama Office eachstating that he or she has not now nor . . . ever been a partner or employee of The CochranFirm, P.C., also known as Cochran National. See Declaration of Yana G. Henriks (HenriksDecl.), Exs. 9, Declaration of Joseph D. Lane (Lane Decl.) 3; 10, Declaration of Angela J.Mason (Mason Decl.) 3; Declaration of J. Farrest Taylor (Taylor Decl.) 3.

Plaintiff represented to the district court in its motion for preliminary injunction that atsome point it re-established its Los Angeles office and rehired Mr. Dunn and Mr. Barrett as itsmanaging partners. Mot. for PI 5:7-8; see also Declaration of Samuel A. Cherry I/S/O Mot. forPI 18 (After I sent McMurray the cease and desist letter, The Cochran Firm re-established itsLos Angeles office by granting Mr. Dunn permission to begin to do business as The CochranFirm California, of which Mr. Dunn is managing partner.). On February 16, 2012 Dunn filed afictitious business name statement, on behalf of Dunn Law, APC, declaring that Dunn Law, APCis the sole owner of the business operating as The Cochran Firm California and The CochranFirm. Defendants Request for Judicial Notice (Def.s RJN), Ex. 9.2 In December of 2012,

2 McMurray requests that the Court take judicial notice of certain public documents. See Def.sRJN. The Court may take judicial notice of and consider matters that are not subject toreasonable dispute, including public records. See Fed. R. Evid. 201(b); Dudum v. Arntz,640 F.3d 1098, 1101 n.6 (9th Cir. 2011) (taking judicial notice of a verifiable public





Betty Jackson (Jackson), obtained a judgment against The Cochran Firm, amongst otherentities, for the return of client funds wrongfully retained that she was entitled to based on asettlement that Dunn signed on behalf of The Cochran Firm. See Henriks, Exs. 7, 8. McMurraystates that Jackson obtained a court order authorizing the seizure of Dunn Law, APC funds tocover the unpaid judgment to which Dunn responded with a verified third party claim ofownership on behalf of Dunn Law, APC stating that it is a separate and distinct entity from theJudgment Debtors. Id., Ex. 6.

McMurray also points the Court to copies of operating agreements entered into betweenPlaintiff and its regional offices that were admitted during the evidentiary hearing. See Dkt. #294. In the Operating Agreement for The Cochran Firm New York (New York OperatingAgreement), the agreement provides that the parties Plaintiff, Paul B. Weitz and Associates,P.C., and The Cochran Firm New York, P.C. do not intend to form a partnership. HenriksDecl., Ex. 5. The New York Operating Agreement also provides that the regional office isresponsible for all costs associated with its operation, including advertising. Id. 4.3. According to the New York Operating Agreement, Plaintiff is entitled to a certain share of thelocal offices distributable income. Id. 5.2. Specifically, Plaintiff is to receive a percentage ofthe gross fee revenue generated by the regional office within five days after the end of eachmonth. Id. 5.2-5.4. Additionally, the Operating Agreement provides that the local office mustuse the case management and accounting software chosen by Plaintiff and allow it remotecomputer access to the case management and accounting information of the Practice and thatPlaintiff has sole ownership over The Cochran Firm name. Id., Annex II at 4,8. Otheragreements provide similar provisions regarding each regional offices responsibility for certaincosts, fees paid to Plaintiff, and terms regarding the software that must be used. See CherryDecl., Exs. A-Q.

McMurray also describes testimony given by Austin Headland, Plaintiffs controller, in adeposition. Dkt. # 286-1, Deposition of Austin Headland (Headland Depo.). Headland statedthat he is also the controller for each of Plaintiffs regional offices. Headland Depo. 9:1-25. According to Headland, Plaintiff does not pay for payroll, lease, rent, phone, or computerexpenses as well as malpractice insurance. Id. 21:21-24. Headland also confirmed, after beingasked about each one of Plaintiffs regional offices, that the regional offices are separate entities,that Plaintiff does not pay for their operating expenses, liabilities, or malpractice insurance, andthat Plaintiff does not file joint tax returns with these offices. Id. 25:10-38:18. Headland alsotestified that he is employed by U.S. Legal P.C, owned by Givens, which provides managementcompany services for Plaintiff. Id. 8:5-10.

record). Accordingly, the Court GRANTS McMurrays request.5





In his declaration, offered in lieu of direct examination, Plaintiffs expert, John Steele,

stated that The Cochran Firm is a network of partnerships between Cochran National and theregional entities. Dkt. # 268-19, Declaration of John Steele (Steele Decl.) 19. During theevidentiary hearing, Steele testified that the network of the regional offices is built withagreements with national but that he was not aware of any agreements entered into between theregional offices. Evidentiary Hearing Transcript (TR) 60:11-61:11. McMurrays expert, inturn, described The Cochran Firm during the evidentiary hearing as not a national firm, butinstead like Jupiter with satellite moons.3 TR 126:5-15.

In opposition, Plaintiff, too, highlights certain sections of Cherrys declaration to supportits argument that it has the elements that a public would expect from a national firm. Accordingto Cherry, National requires that the regional offices maintain a minimum amount of insurance. Cherry Decl. 5(d). Cherry states that each regional office is managed by a managing partnerthat Johnnie Cochran personally knew, trusted, vetted, and selected and that an office that failsto meet The Cochran Firms quality standards is removed from the firm. Id. 5, 6. Lastly,Cherry outlines the control to which regional offices are subject to by National. Id. 5. Forexample, Plaintiffs Administration Coordinator, Bonnie Niver, communicates frequently withthe regional offices, Plaintiff requires the regional entities to use the same case managementsoftware, provides templates for documents (letterhead, business cards, and pleadings) and, viathe operating agreements, requires that each regional office abide by applicable law and ethicalrules and to comply with its National Operating Procedures. Id.

Plaintiff also points to testimony given by Givens at the evidentiary hearing purportedlyabout certain profits, expenses, and liabilities that are shared between Plaintiff and each of itsregional offices. Opp. 5:22-8:9. For example, Givens testified that the Cochran firm sometimesengages in class action campaigns and multi-district litigation which includes participation ofmultiple regional offices and results in profit sharing. TR 157:18-158:8. According to Givens,Plaintiff also has employees in the following divisions that assist the regional offices withvarious services: (1) Accounting; (2) Marketing and Advertising; (3) IT; (4) OperationsManagement; (5) HR and Legal; (6) Client Services Center; and (7) Web and Internet. TR154:18-155:13. Givens testified that the accounting department has CPAs, bookkeepers, andaccountants that offer general services to the regional offices. Id. 155:9-19. Givens also statedthat the client services center is a call center that receives around 300,000 annual calls to 1-800-

3 Plaintiff attacks Pecks credibility by writing that she has zero experience as a partner at a lawfirm, has never done transactional work, and has never formed a law firm. See Opp. 12:7-11. The Court disagrees that these facts render Pecks testimony less credible, especially in light ofher experience as a scholar of legal professional responsibility and experience as a judge of theCalifornia State Bar Court. See generally Peck Decl.





THEFIRM and that employees at this call center conduct preliminary client interviews, gathermedical records, obtain fee agreements, and enter all information gathered into a Client ProfilesSystem that is accessible to all regional offices. Id. 158:11-18; 160:17-161:4. Lastly, Givenstestified that Plaintiff has joint responsibility with the regional offices for professionalcompliance with all of the Bar regulations. Id. 159:3-7.

i. Excluded Evidence

McMurray argues that certain evidence was wrongfully excluded by Judge OConnellduring the evidentiary hearing held in October 2014 and in response to McMurrays ex parteapplication seeking to admit additional evidence. Mot. 12:21-18:12. The Court agrees with thedecisions made by Judge OConnell and, therefore, declines to admit and consider this evidencefor purposes of this motion.

As to McMurrays argument that the district court wrongfully denied McMurrayadditional time to cross-examine Cherry and Givens, the Court finds that the denial was notwrongful. Judge OConnell instructed the parties to provide a list of proposed witnessed beforethe hearing and their declarations to serve as direct examination and then each party was allotted1.5 hours to present their side during the evidentiary hearing to use as they thought appropriate. Dkt. # 264; TR 10:2-7. McMurray requested extra time, and Judge OConnell gave him tenextra minutes and then commented that she would not allow him to waste the Courts time . . .by asking the same questions, asking argumentative questions, fighting with the witness,smirking, and asking questions irrelevant to . . . the mandate. Id. 111:23-113:1. Courts havethe inherent power to manage their own affairs as to achieve the orderly and expeditiousdisposition of cases. Ready Transp., Inc. v. AAR Mfg., Inc., 627 F.3d 402, 404 (9th Cir. 2010)(quotations omitted) (citing Chambers v. NASCO, Inc., 501 U.S. 32, 43 (1991). Considering thelimited mandate for which the matter was remanded, Judge OConnells time limitations werereasonable.

Furthermore, as to the two samples of The Cochran Firms advertising that were deniedfor a lack of foundation, the Court concludes that McMurrays attempt to introduce them now isuntimely. See id. 17:17-18:3.

III. Legal Standard

A district court has inherent authority to modify a preliminary injunction inconsideration of new facts. A&M Records, Inc. v. Napster, Inc., 284 F.3d 1091, 1098 (9th Cir.2002) (citing System Federation No. 91 v. Wright, 364 U.S. 642 (1961).

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A party seeking a preliminary injunction must make a clear showing that: (1) it islikely to succeed on the merits; (2) that it is likely to suffer irreparable harm if an injunction isnot granted; (3) that the balance of equities tips in its favor; and (4) that an injunction is in thepublic interest. Winter v. N.R.D.C., 555 U.S. 7, 20, 22 (2008). In the Ninth Circuit, apreliminary injunction may also be appropriate if a [movant] demonstrates . . . that seriousquestions going to the merits were raised and the balance of hardships tips sharply in the[movants] favor, so long as the Winter irreparable injury and public interest factors aresatisfied. See Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1134-35 (9th Cir. 2011)(citation omitted).

IV. Discussion

McMurray argues that the Court should dissolve the injunction because (1) Plaintiff hasunclean hands in its use of The Cochran Firm Trademark and (2) Plaintiff filed a sham action. See Mot. 18:13-24:28. Alternatively, McMurray requests that the Court increase the bond from$25,000 to $1,000,000 because the preliminary injunction has caused McMurray damages in anamount that exceeds one million dollars. Id. 25:1-18. The Court agrees, at this stage, thatPlaintiff has unclean hands and, therefore, declines to address McMurrays second argument andfinds that McMurrays request to lower the bond amount is rendered moot.

A. Unclean Hands

To prevail on a federal trademark infringement cause of action, a plaintiff must show (1)ownership of a registered mark; (2) the defendants use of that mark in commerce; and (3) alikelihood of confusion. 15 U.S.C. 1114(1); KP Permanente Make-Up, Inc v. LastingImpression I, Inc., 408 F.3d 596, 602 (9th Cir. 2005). In granting Plaintiffs motion for apreliminary injunction, Judge Otero found that Plaintiff met its burden that it was likely tosucceed on the merits of its trademark infringement cause of action. Dkt. # 58.

Although the Ninth Circuit found that the district court did not abuse its discretion whenit found that Plaintiff was likely to demonstrate that it owns The Cochran Firm Trademark, itremanded the action for the district court to reconsider [McMurrays] unclean hands argumentafter augmenting the record. Mandate at 3.

As the Ninth Circuit explained, the doctrine of unclean hands is a defense to trademarkinfringement suits. Mandate at 4; Fuddruckers, Inc. v. Docs B.R. Others, Inc, 826 F.2d 837,847 (9th Cir. 1987). Within the context of a trademark suit, the rationale behind an uncleanhands defense is that, when the owner of a trade-mark applies for an injunction . . . it isessential that the plaintiff should not in his trade-mark . . . be himself guilty of any false ormisleading representation. Clinton E. Worden & Co. v. Cal. Fig. Syrup Co., 187 U.S. 516, 528





(1903). To succeed on an unclean hands defense, a trademark defendant must show that [the]plaintiff used the trademark to deceive customers and did so with bad intent. Japan Telecom,Inc. v. Japan Telecom Am. Inc., 287 F.3d 866, 870 (9th Cir. 2002) (Bad intent is the essence ofthe defense of unclean hands) (citations omitted).

Here, because Plaintiff has shown a likelihood of prevailing on the merits of thetrademark cause of action, the Court must determine whether McMurray has demonstrated that[he is] likely to succeed in proving [his] unclean hands defense. See Demarest v. Quick LoanFunding, Inc., 2009 WL 940377, *7 (C.D. Cal. 2009); Perfect 10, Inc. v. Amazon.com, Inc., 508F.3d 1146, 1158 (9th Cir. 2007) (stating that, at a preliminary injunction stage, once a plaintiffhas shown a likelihood of success on the merits, the burden shifts to [the defendant] to show alikelihood that its affirmative defense will succeed).

i. Analysis

McMurray contends that Plaintiff has unclean hands in the use of its trademark, TheCochran Firm because, although it markets itself to be a traditional, nationwide law firm, itsstructure reveals that it is, instead, a network of several partnerships that does not meet thedefinition of a law firm. Mot. 18:13-22:23.

In opposition, Plaintiff argues that Plaintiffs structure is not a major part of thetradename and, therefore, its configuration cannot be misleading as a matter of law. Opp.3:17-23. Plaintiffs is mistaken.

In its Mandate, the Ninth Circuit made clear that the structure of [Plaintiffs business isimportant in assessing whether [Plaintiff] has unclean hands. Mandate at 4. In fact, the NinthCircuit noted that Plaintiff may be misusing the trademark to deceive the public into believing itis a single, national firm, when in fact it is a network of separate partnerships. Id. at 4-5.

Here, Plaintiff does not contest that it advertises itself as a national law firm, and insteadargues that this representation is not untrue. Opp. 4:5-7.

After reviewing the evidence submitted by the parties, the Court concludes thatMcMurray has met his burden that he is likely to succeed in proving his unclean hands defense. As both parties agree, Plaintiff has been marketing itself as a traditional, national law firm withregional offices around the country, and at this point in the litigation, the evidence supportsMcMurrays contention that Plaintiffs relationship with its regional offices is composed of anetwork of several partnerships where the regional offices are only connected to each other

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through their relationship with Plaintiff like the spokes of a wheel with Plaintiff in the center.

As Defendant points out, Plaintiffs own expert testified that he has no knowledge of anyagreements among Plaintiffs purported regional offices and that The Cochran Firm is anetwork of partnerships between Cochran National and the regional entities. TR 60:11-61:11;Steele Decl. 19.

Plaintiff writes that Defendant has not met his burden that it has unclean hands bymarketing itself as a national firm because Defendants expert did not perform a survey of thepublic to determine what their understanding of the term national firm is. Opp. 8:19-26. Thisis not fatal to Defendants motion at this point in litigation. First, as the Ninth Circuit implied,the phrase national firm does not connote a network of separate partnerships. See Mandateat 4-5 (Specifically, [Plaintiff] may be misusing the trademark to deceive the public intobelieving it is a single, national firm, when in fact it is a network of separate partnerships.). Second, both parties substantially agree on the qualities that the public would expect from anational firm. For example, Defendant writes that a consumer would expect that a nationallaw firm would have the expertise of several hundred lawyers, experience, prestige, theresources of a multi-state institution, and, perhaps most importantly, financial stability. Mot.18:26-28. Plaintiff lists the following factors that clients could reasonably expect from anational firm: (1) nation-wide recognition and prestige; (2) large collective experience in avariety of subject areas; (3) nation-wide standardized resources and procedures; (4) the ability ofclients to collect if something does go wrong; (5) vetting; and (6) control. Opp. 8:19-10:17.

The Court does not doubt that The Cochran Firm and its regional office have prestige byuse of Plaintiffs trademark, but is not so sure that client of the regional offices have the benefitof large collective experience. Although regional offices all have access to the same clientmanagement system, there is no other evidence of communication across the different regionaloffices other than the fact that sometimes multiple office engage in class or multi-districtlitigation. See Opp. 6:1-4.

Furthermore, although Plaintiff points out that it provides certain services to the regionaloffices accounting, letterhead materials, assistance with HR and legal issues, and the clientservices center perhaps standardizing certain elements of the regional offices, testimony byPlaintiffs principal, Headland, and the operating agreements with the different regional officesshows that the regional offices shoulder most of the expenses associated with running theregional offices. See Headland Depo. 9:1-25; Cherry Decl., Exs. A-Q.

Plaintiff agrees with Defendant that one would expect that an office or attorney of anational firm would be better able to pay should malpractice occur and argues that because itrequires, under its operating agreements with the regional offices, that they maintain a minimum





amount of insurance, it meets this expectation. Opp. 9:13-21. Plaintiff fails to address,however, what happens when that regional office insurance fails to provide adequate relief. SeeReply 11:2-4. As the example of Jacksons attempt to collect a judgment from Plaintiff,described above, Plaintiff and its regional offices present themselves as one firm during someinstances, but also make clear that they are not connected when it comes to certain liability. SeeHenriks, Exs. 6-8.

Lastly, the evidence of vetting that the regional offices are managed by a managingpartner that Johnnie Cochran knew and of control over the regional offices the requirementthat they use the same case management software, the tracking of the offices statute oflimitations, and the requirement that the regional offices comply with Plaintiffs NationalOperating Procedures do not convince the Court that Plaintiff operates as a single nationalfirm, as opposed to a franchisor that wants to protect its trademark.

Defendant has met his burden that Plaintiff has unclean hands in the use of its trademarkby advertising itself as a national law firm when there is no evidence that the individual officesare connected other than through agreements with Plaintiff.

Defendant also argues that Plaintiff does not even meet the definition of a law firm. Mot.21:20-22:23. Having found that Plaintiff has unclean hands in its use of The Cochran Firmtrademark, the Court does not need to engage in this analysis. However, the Court does so toemphasize its concern that Plaintiff is deceiving the public when it presents itself as AmericasLaw Firm. Dkt. # 58-7.

Although Plaintiff is correct that the definitions of a firm provided under California lawby the California Rules of Professional Conduct are not necessarily the definitions that a publicwould attach to the term, the Court finds them informative. After all the Rules of ProfessionalConduct are there, in part, to protect the public. See Cal. Rules of Prof. Conduct 1-100(A) (thepurpose and function of the rules is to protect the public and to promote respect and confidencein the legal profession); see also In re Complex Asbestos Litig., 232 Cal. App. 3d 572, 586(1991) (writing that the paramount concern in the need to maintain the ethical standards ofprofessional responsibility must be the preservation of public trust in the scrupulousadministration of justice and the integrity of the bar).

The parties dispute whether The Cochran Firm, together with its regional offices, meetsthe definition of a law firm found in Rule1-100(B)(1)(a) of the California Rules of ProfessionalConduct. See Mot. 21:20-22:23; Opp. 5:22-8:9. Under this rule, a law firm is defined as: twoor more lawyers whose activities constitute the practice of law, and who share its profits,expenses, and liabilities. Cal. Rules Prof. Conduct 1-100(B)(1)(a).

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Here, as Plaintiff points out, Plaintiff is entitled to certain profits made by the regionaloffices under its operating agreements with them. Opp. 5:27-28. More importantly, however,there is no evidence of regional offices sharing profits with each other, unless, as Plaintiff pointsout, they engage in multi-district litigation or participate in class actions together, which is oftendone by different law firms. Id. 5:28-6:4.

In terms of expenses, the evidence shows that while the regional offices are responsiblefor most operating expenses, Plaintiff provides them with certain services (accounting, certainadvertising products, IT help, and web site management). Id. 6:5-8:3. Therefore, it does appearthat Plaintiff is sharing expenses with each local office although, again, there is no evidence thatthe shared office share expenses with each other.

Lastly, Plaintiff argues that it tracks statutes of limitations, but fails to explain how it,therefore, shares liability with the regional offices. Id. 8:5-9. That Plaintiff is regularly namedas a Defendant when clients sue for malpractice does not mean that it is sharing liabilities withthe local offices. Id. It does imply, however, that clients believe that Plaintiff and its regionaloffices are one firm.

In assessing whether Plaintiff meets the definition of a law firm under the CaliforniaRules of Professional Conduct, the Court finds that while it may be unclear whether Plaintiff andeach regional office can constitute a law firm, Plaintiff, together with all of the individualregional offices do not fit this definition.

ii. Defendants Unclean Hands

Plaintiff argues that Defendant cannot bring the unclean hands defense becauseDefendant, too, comes to the Court with tainted hands. First, Plaintiff argues that McMurraysuse of The Cochran Firm trademark to deceive the public into believing that he is still part ofThe Cochran Firm and his participation in Plaintiffs structure for years constitutes uncleanhands and bar him from relief. Opp. 10:20-12:3. The Court finds that Plaintiffs mereallegations are not sufficient to bar relief in this instance. Furthermore, even if the allegationswere true, after considering all of the evidence before the Court, it finds that Defendant is likelyto succeed under the doctrine equity as, at this stage in litigation, the evidence shows Plaintiff tobe more culpable.

Accordingly, the Court finds that McMurray has met his burden of showing a likelihoodof success that Plaintiff has unclean hands in the use of The Cochran Firm trademark and is notentitled to injunctive relief.

V. Conclusion





For the reasons stated above, the Court GRANTS Defendants motion for an orderdissolving the preliminary injunction. Therefore, the preliminary injunction is DISSOLVED. Plaintiffs bond is exonerated.

IT IS SO ORDERED.

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The Cochran Firm Fraud Failed in CA Fed. Court

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