Case Summary: Mercer Global Advisors, Inc. v. Hewitt - Final Ruling on Motion to Dismiss

Procedural Overview and Case Background

  • Case Name: Mercer Global Advisors, Inc. v. Hewitt

  • Court: United States District Court for the Central District of California

  • Case Number: CV 23−3659−GW−JPRxCV \, 23-3659-GW-JPRx

  • Date Decided/Filed: August 11, 2023

  • Presiding Judge: George H. Wu, United States District Judge

Subsequent History

  • June 17, 2024: Motion denied by Mercer Glob. Advisors, Inc. v. Hewitt, 2024 U.S. Dist. LEXIS 1833102024 \, U.S. \, Dist. \, LEXIS \, 183310

  • October 31, 2024: Motion granted by Mercer Glob. Advisors, Inc. v. Hewitt, 2024 U.S. Dist. LEXIS 2403412024 \, U.S. \, Dist. \, LEXIS \, 240341

  • April 8, 2025: Stay granted by Mercer Glob. Advisors, Inc. v. Hewitt, 2025 U.S. Dist. LEXIS 672192025 \, U.S. \, Dist. \, LEXIS \, 67219

  • June 13, 2025: Motion granted regarding costs and fees proceeding at Mercer Glob. Advisors, Inc. v. Hewitt, 2025 U.S. Dist. LEXIS 2778142025 \, U.S. \, Dist. \, LEXIS \, 277814

Parties and Counsel

  • Plaintiff: Mercer Global Advisors, Inc. ("Plaintiff"), represented by Andrew Bledsoe, Andrew Emilio Calderon, and Paul Anthony Rigali of Larson LLP.

  • Defendants: Ashlee Chu Hewitt, Alan Charles Hewitt (collectively "the Hewitts"), and Hewitt Advisors, Inc. ("Hewitt Advisors"), represented by Benjamin D. Scheibe, Milin Chun, and Andrew W. Gust of Ellis George Cipollone O'Brien Annaguey LLP.

Factual Allegations

  • Employment History: Plaintiff is a national wealth management firm. The Hewitts were employed as tax advisors by Mercer until September 2022.

  • Competing Firm Formation: While still employed at Mercer, the Hewitts allegedly took steps to initiate their own competing financial services firm, Hewitt Advisors.

  • Alleged Misconduct: Mercer alleges the Hewitts stole trade secret information in violation of a restrictive covenant agreement and used that information to solicit Mercer’s clients.

  • Trademark Infringement: Mercer alleges the Defendants infringed on the "Mercer Mark" by creating the "Hewitt Mark," which is claimed to be nearly identical in design, arrangement, and font.

Causes of Action

  1. Breach of duty of loyalty

  2. Breach of contract

  3. Misappropriation of trade secrets in violation of the California Uniform Trade Secrets Act ("CUTSA"), Cal. Civ. Code §§ 3426Cal. \, Civ. \, Code \, \S\S \, 3426, et seq.

  4. Unlawful and unfair business practices in violation of California’s Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code §§ 17200Cal. \, Bus. \, \& \, Prof. \, Code \, \S\S \, 17200, et seq.

  5. Violation of California’s False Advertising Law ("FAL"), Cal. Bus. & Prof. Code §§ 17500Cal. \, Bus. \, \& \, Prof. \, Code \, \S\S \, 17500, et seq.

  6. Common law trademark infringement

  7. False designation of origin under 15 U.S.C. § 1125(a)15 \, U.S.C. \, \S \, 1125(a)

  8. Intentional interference with prospective economic advantage

Legal Standard for Motion to Dismiss

Federal Rule of Civil Procedure 12(b)(6)

  • A defendant may move to dismiss for failure to state a claim upon which relief can be granted.

  • Two Primary Reasons for Dismissal:

    1. Lack of a cognizable legal theory.

    2. Insufficient facts under a cognizable legal theory (Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)550 \, U.S. \, 544, \, 555 \, (2007)).

  • Plausibility Standard: To survive, a complaint must contain sufficient factual matter, accepted as true, to "state a claim to relief that is plausible on its face" (Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)556 \, U.S. \, 662, \, 678 \, (2009)).

  • Judicial Review Constraints: The court generally considers only the pleadings, attached exhibits, and matters subject to judicial notice. It must construe the complaint in the light most favorable to the plaintiff.

Analysis of Trademark Infringement (5th, 6th, and 7th Causes of Action)

Defendants moved to dismiss these claims based on the alleged failure to plead a "likelihood of consumer confusion."

Definition: Likelihood of Confusion

  • Exists when consumers are likely to assume a product or service is associated with a source other than its actual source due to similarities in marks or marketing techniques.

  • The Ninth Circuit utilizes the eight-factor Sleekcraft test (AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 348−49 (9th Cir. 1979)599 \, F.2d \, 341, \, 348-49 \, (9th \, Cir. \, 1979)).

Factor 1: Strength of Mark

  • Conceptual Strength: Marks are classified as generic, descriptive, suggestive, arbitrary, or fanciful. The Mercer Mark components include the surname "Mercer" and the word "Advisors." The court noted that because "Advisors" is generic and the stylistic elements (bolding, font, vertical bar) are commonplace, the conceptual strength is low.

  • Commercial Strength: Based on marketplace recognition. Plaintiff alleged use of the mark for over seven years and identification of the mark with their services on marketing materials and websites. The court found this adequate to show some degree of commercial strength at this stage.

  • Conclusion on Strength: Neutral or cuts slightly against confusion due to low conceptual strength.

Factor 2: Proximity of Goods

  • Measured by whether products are complementary, sold to the same class of purchasers, and similar in use and function.

  • Both parties offer tax services. Even though Plaintiff is a national firm and Defendants are a two-person startup, the services remain functionally identical. This factor favors a finding of likelihood of confusion.

Factor 3: Similarity of the Marks

  • Evaluated based on appearance, sound, and meaning as they appear in the marketplace.

  • Similarities: Both use company names above the word "Advisors," bolded/distinctive fonts, smaller font for "Advisors," vertical bars, and right-justification.

  • Differences: The primary feature (the names "Mercer" vs. "Hewitt") differ in spelling, sound, font, and capitalization (small caps vs. all caps). The court found these differences likely significant enough to dispel confusion. This factor favors no likelihood of confusion.

Factor 4: Evidence of Actual Confusion

  • Plaintiff alleged receiving communications from clients who were "confused" about solicitations.

  • Court's Critique: The complaint failed to specify if the confusion was based on the trademark use itself or the general employment status/relationship. There were no specific allegations of trademark confusion. This factor favors no likelihood of confusion.

Factor 5: Marketing Channels Used

  • Considers locations of sales, price ranges, advertising types, and customer base overlap.

  • Internet Advertising: Given little weight since most companies use the internet.

  • Customer Base: Plaintiff alleged Defendants solicited over 500 of Plaintiff’s own clients. This supports an overlap in channels. On balance, this factor is equivocal.

Factor 6: Degree of Care

  • Confusion is less likely where buyers exercise high care (sophisticated or expensive items).

  • The court assumed that consumers of wealth management and tax advisory services likely exercise more care than an average retail consumer. This factor favors no likelihood of confusion.

Factor 7: Defendants' Intent

  • Presumption of confusion arises if a party knowingly adopts a similar mark to deceive.

  • Plaintiff alleged the Hewitts took steps to start the firm while still employees and misappropriated trade secrets. These allegations of misconduct raise an inference of intentionality. This factor favors a finding of likelihood of confusion.

Factor 8: Likelihood of Expansion

  • Relatively unimportant where companies already compete to a significant extent. This factor was deemed irrelevant or of little weight.

Conclusion on Trademark Claims

  • Despite several factors favoring the Defendants, the Court found that the Plaintiff adequately (though "barely") alleged a likelihood of confusion, which is a fact-intensive inquiry often inappropriate for resolution on a motion to dismiss. The motion to dismiss the 5th, 6th, and 7th causes of action was denied.

Analysis of Remaining Claims (1st, 4th, and 8th Causes of Action)

CUTSA Preemption Argument

  • Defendants argued that the claims for breach of duty of loyalty, UCL violations, and intentional interference with prospective economic advantage were preempted by the California Uniform Trade Secrets Act ("CUTSA").

  • Legal Rule: CUTSA provides the exclusive civil remedy for trade secret misappropriation and supersedes other civil remedies based on the same nucleus of facts (K.C. Multimedia, Inc. v. Bank of America Technology \& Operations, Inc., 171 Cal. App. 4th 939, 958 (2009)171 \, Cal. \, App. \, 4th \, 939, \, 958 \, (2009)).

Court's Ruling on Preemption

  • Defendants' argument relied on the assumption that the trademark claims would fail, leaving only trade secret allegations.

  • Because the court sustained the trademark claims, these causes of action are based at least in part on a "different nucleus of facts" than the trade secret misappropriation. Therefore, the preemption argument failed at the dismissal stage.

  • The motion to dismiss the 1st, 4th, and 8th causes of action was denied.

Final Ruling

  • The Motion to Dismiss filed by Defendants Ashlee Chu Hewitt, Alan Charles Hewitt, and Hewitt Advisors, Inc. is DENIED in its entirety.