The family that owns the property at 25861 Railroad Ave., home to The Original Saugus Cafe for decades, is now seeking to move a lawsuit filed by the family that operated the restaurant there into federal court.
Arguments filed last month on behalf of Louise Arklin and North Valley Construction Corp. claim that ownership of The Original Saugus Cafe is a trademark dispute involving the Lanham Act, the federal law that governs trademarks and unfair competition.
The Mercados, who had operated The Original Saugus Cafe since 1998, are trying to stop the move, after filing a complaint in L.A. County Superior Court the month prior, claiming breach of contract, fraud, common law trademark infringement and federal trademark infringement.
Yesenia “Jesse” Mercado said Larry Goodman, who was their landlord at the cafe acting on behalf of the property owner, made the family sign an onerous lease, after years of a verbal agreement between the family and their previous landlord, Hank Arklin.
She said this new lease, which the family signed in September, stripped the Mercados of any rights to the business they had built over the decades. It included everything from the TVs to the plates to the chairs customers would sit in, expenses the Mercados had paid for over the years, she said.
Goodman told The Signal that the Mercados changed their minds several times regarding whether they wanted to stay at the restaurant and, ultimately, he had to find a new operator. He said they didn’t have any ownership rights to the business.
He has since brought in the operator of Dario’s in Canyon Country, Eduardo Reyna, to run the establishment, which reopened under a new name, “Saugus Restaurant,” after the Mercados ceased operation.
In January, the Mercado family filed suit, claiming Goodman never planned to let them sell the restaurant, citing a federal trademark application filed for the name of the restaurant they’d been operating, The Original Saugus Cafe, on Aug. 30, one day before the new Mercado lease took effect.
An attempt to reach Arklin’s attorney was not returned as of this story’s publication.
Both sides are looking at interpretations of federal law, in terms of where the case should be adjudicated.
In a Feb. 18 filing, Aaron Levine, representing Arklin and NVCC, argues the Mercado claims “contain the following federal causes of action: (i federal trademark infringement and (ii) federal unfair competition pursuant to 15U.S.C. § 1125(a). (8) 28 U.S.C. § 1338(a) provides that the district court shall have original jurisdiction of any civil action arising under any Act of Congress relating to trademarks. 28 U.S.C. § 1338(b) provides that the district court shall have original jurisdiction over any civil action asserting a claim of unfair competition when joined with a substantial and related claim under trademark laws.”
Steffanie Stelnick, the attorney representing the Mercado family, filed a “motion to remand,” which would put the case back to L.A. County Superior Court, on Thursday.
“The motion for remand is brought pursuant to 28 U.S.C. § 1447(c) and 28 U.S.C. § 1367(c), on the grounds that the pendant state law claims should be adjudicated along with the federal law claims in the initial jurisdiction which they were brought, because: (1) the state courts retain concurrent jurisdiction over the particular federal claims plaintiff brings; (2) Plaintiff is not seeking relief under portions of the Lanham Act that trigger preemption; and (3) this court may exercise its discretion to remand both federal and state law claims,” according to Stelnick’s filing.
The defendants have until March 25 to answer, with a hearing scheduled for April 2 to hear the arguments from both sides.
