By Chad M. Zimlich

In a published civil opinion handed down on Tuesday, March 31, 2015, the Fourth Circuit in vonRosenberg v. Lawrence took on an action in the District Court for the District of South Carolina involving two bishops of The Protestant Episcopal Church in the Diocese of South Carolina (“The Church”).

The Leader of a Church, Trademark, and a Pending State Court Decision

The case centered on a dispute between two clergymen, both claiming to be the head of The Church. Bishop Charles G. vonRosenberg filed an action against Bishop Mark J. Lawrence, alleging two Lanham Act violations and seeking declaratory and nondeclaratory relief. In response, Bishop Lawrence asked the district court to abstain pending state court proceedings. Relying on the abstention doctrine and broad discretion articulated in Brillhart v. Excess Insurance Co. of America, and Wilton v. Seven Falls Co., the district court stayed the action.

A Power Struggle

Bishop vonRosenberg claimed that in December 2012, the Disciplinary Board of The Protestant Episcopal Church in the United States removed Bishop Lawrence from his position. Following this, a Convention of the Diocese elected and installed vonRosenberg as Lawrence’s replacement. He further claimed that Bishop Lawrence has improperly continued to use the Church’s service marks and falsely advertised himself as the leader of the Church.

Bishop Lawrence asserted that he was never actually removed from office, but that Bishop vonRosenberg was the leader of an “unincorporated Episcopal association created to supplant the Diocese.” As each party asserted they were the head of the Church, each felt entitled to use the Church’s trademarks.

On January 4, 2013, prior to the lawsuit in the district court, a faction of Bishop Lawrence’s supporters filed suit in state court against the Episcopal Church. In the suit, the supporters alleged “service mark infringement” and “improper use of names, styles, and emblems” all under South Carolina state law. The state court responded by issuing a temporary restraining order preventing anyone other than Bishop Lawrence and those under his direction from using these service marks and names.

Bishop vonRosenberg then filed against Bishop Lawrence in district court seeking declaratory and injunctive relief for two violations of the Lanham Act, 15 U.S.C. § 1114 and § 1125(a)(1)(A) (2012). He alleged that Bishop Lawrence violated the Lanham Act by the unauthorized use of four service marks belonging to the Diocese of South Carolina, as well as by falsely advertising himself as the real Bishop. Bishop Lawrence then filed to dismiss the federal action for lack of standing or, in the alternative, for the court to abstain and stay this action pending resolution of the state court case.

The district court granted Bishop Lawrence’s motion to abstain, finding that, while Bishop vonRosenberg had standing, the court had broad discretion to abstain and to decline to grant declaratory relief under Brillhart and Wilton. This appeal followed that decision.

The District Court Should Have Used Colorado River, and, Thus, Was In Error

The Fourth Circuit noted that, as the decision to abstain was a legal question, their review was de novo. Bishop vonRosenberg’s contention on appeal was that the district court should have applied Colorado River Water Conservation District v. United States, rather than Brillhart or Wilton.

Under Colorado River, a federal court may abstain from deciding non-frivolous, nondeclaratory claims in favor of a parallel state suit for reasons of “wise judicial administration” only in “exceptional” circumstances. The Court explained that a federal court has a duty to decide federal claims, and thus the decision to abstain due to “administrative reasons” was much more limited. Additionally, a court is to balance several factors, with the balance heavily against abstention. The district court, however, did not consider any factors, and instead relied solely on the Brillhart/Wilton standard.

The Fourth Circuit noted that, while they had never spoken to the issue of standards in regards to complaints asserting claims for declaratory and nondeclaratory relief, it has held that when a court must deal with a nondeclaratory claim, it is cannot abstain from the declaratory claim, making it an all-or-nothing deal.

The Court noted that “Colorado River permits a court to abstain only in the rare circumstance” where judicial administration was so “pressing” that it overrides the natural obligation of the court. Brillhart and Wilson’s broad discretion, however, flowed from the Declaratory Judgment Act, which runs contrary to circumstances where a court must exercise jurisdiction.

The Fourth Circuit concluded by stating that Colorado River “must guide a court’s decision to abstain from adjudicating mixed complaints alleging claims for both declaratory and nondeclaratory relief.”

Furthermore, the Colorado River standard would apply to all mixed claims, even those where the claims are ancillary to the request for declaratory relief. The only exception would be a case where the injunctive relief is frivolous or to attempt to forum shop.

Applied to This Case, Colorado River Means a Higher Standard and a New Review

Because the district court did not apply the Colorado River standard, the Court vacated the stay order and remanded the case to the district court to make a determination of whether, under the circumstances, the “exceptional” standard was met.