Opinion
23-cv-63 (GHW) (JW)
02-15-2024
DROB COLLECTIBLES, LLC, and RONALDO DE ASSIS MOREIRA a/k/a RONALDINHO, Plaintiffs, v. LEAF TRADING CARDS, LLC, Defendant.
REPORT & RECOMMENDATION
JENNIFER E. WILLIS, United States Magistrate Judge
To the Honorable Gregory H. Woods, United States District Judge:
This action has been referred to this Court for general pretrial supervision as well as for a Report and Recommendation on dispositive motions. Dkt. No. 5. Before the Court are Defendant's motion to dismiss (Dkt. No. 15 (the “Motion to Dismiss” or “MTD”)) and Defendant's motion to transfer the case to the Eastern District of Texas (Dkt. No. 17 (the “Motion to Transfer”)). For the reasons stated below, Defendant's Motion to Transfer at Dkt. No. 17 is DENIED, and this Court recommends that the Motion to Dismiss Counts I, III, V, VI, and VII be GRANTED.
The following facts are drawn primarily from the Complaint at Dkt. No. 1 and are presumed true for the purposes of the Motion to Dismiss. See Meyer v. JinkoSolar Holdings Co., Ltd., 761 F.3d 245, 247 (2d Cir.2014).
Plaintiffs Drob Collectibles LLC (“Drob”) and Ronaldo De Assis Moreira (a/k/a “Ronaldinho”) commenced the instant action on January 4, 2023 arising under “the Lanham Act, 15 U.S.C. § 1051 et. seq. and the statutory and common laws of the state of New York.” Dkt. No. 1 (“Complaint” or “Compl.”) at 3.Plaintiff Ronaldinho is a retired international professional football player, who currently resides in Brazil. Compl. at 2. Drob is a limited liability company formed and existing under the laws of the state of Michigan, and Ronaldinho has assigned his intellectual property rights to Drob. Id. at 3. Ronaldinho, individually and/or through Drob, enters into licensing and endorsement agreements with third parties for the authorized use of Ronaldinho's name, nickname, pictures, persona, likeness, and signature. Id. at 1, 67. Defendant Leaf Trading Cards, LLC (“Leaf” or “Defendant”) is a Texas limited liability company that specializes in creating and selling trading cards, some of which feature athletes. Id. at 3, 9. Plaintiffs allege that Leaf has “advertised and sold various products” bearing Ronaldinho's name, nickname, picture, persona, likeness, and signature through various e-commerce and media platforms, including Leaf's website. Id. at 7.
This Court notes that the Complaint is misnumbered in multiple locations. For example, page 13 of the Complaint includes ¶¶ 74-79 and the next page of the Complaint includes ¶¶ 72-79. Therefore, this Court will cite to page numbers rather than paragraph references. Page number references refer to those generated by ECF, where applicable.
On or about August 2, 2021, Ronaldinho signed one thousand autographs including jerseys and numbers. Compl. at 10. Plaintiffs allege that Ronaldinho did not sign any Leaf cards or stickers. Id. Plaintiffs further allege that Leaf advertises “counterfeit autographs of Ronaldinho” and places fraudulent stickers on its cards to “deceive, confuse and make consumers believe that they purchase authentic products bearing Ronaldinho's authenticated autograph. Id. at 10-11.
Leaf alleges that Ronaldinho signed a Statement of Authenticity and Agreement (the “Alleged Contract”) on August 6, 2021. Compl. at 7. The Alleged Contract states that Ronaldinho autographed 500 signature labels or cards and granted Leaf non-exclusive rights to distribute his likeness etc. for the “purpose of producing and promoting trading cards.” Id. Ex. 2 at 2. Leaf argues that the Alleged Contract constitutes a license agreement which granted it rights to use Ronaldinho's name, nickname, picture, likeness, and autograph. Id. at 7. Plaintiffs contest that the Alleged Contract is a valid licensing agreement. Id. at 8.
On December 13, 2022, counsel for Ronaldinho sent a Notice of Claim to Leaf. Compl. at 7. On December 15, 2022, Leaf filed an action alleging breach of Contract in the District Court for the Eastern District of Texas, which is pending before District Judge Sean Jordan under the caption Leaf Trading Cards, LLC v. Ronaldo De Assis Moreira, a/k/a Ronaldinho, Drob Collectibles LLC, Damian Rodrigo Olivera Bergallo, and John Doe 1, Case No. 4:22-cv-01051 (the “Texas Action”). Id. On January 27, 2023, Drob filed a motion to dismiss the Texas Action for lack of personal jurisdiction. See Texas Action, Dkt. No. 11. As of the date of this Report and Recommendation, the motion to dismiss the Texas Action is still pending before the court. See id.
In the instant action, Leaf filed a motion to dismiss Counts I, III, V, VI, and VII of Plaintiffs' Complaint. Dkt. No. 16 at 8. Alternatively, Leaf asks this Court to transfer this case to the Eastern District of Texas, citing in part that the Texas Action was the first filed related to the claims at issue between the Parties. Dkt. No. 18 at 4.
LEGAL STANDARD
To survive a motion to dismiss under Rule 12(b)(6), Plaintiffs' Complaint must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim has “facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Garner v. Behrman Bros. IV, LLC, No. 16 Civ. 6968 (PAE) 260 F.Supp.3d 369, 375 (S.D.N.Y. 2017) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009)). A complaint may be properly dismissed, where, as a matter of law, “the allegations in a complaint, however true, could not raise a claim of entitlement to relief.” Id. (quoting Twombly, 550 U.S. at 558). Although the Court must accept as true all well-pled factual allegations in the complaint and draw all reasonable inferences in the plaintiff's favor, Steginsky v. Xcelera Inc., 741 F.3d 365, 368 (2d Cir. 2014), that tenet is “inapplicable to legal conclusions.” Iqbal, 556 U.S. at 678. Further, “dismissal with prejudice is appropriate when the flaws in the pleading are incurable.” Kling v. World Health Org., 532 F.Supp.3d 141, 154 (S.D.N.Y. 2021) (internal quotation marks omitted).
“For the convenience of parties and witnesses, in the interest of justice, a [D]istrict [C]ourt may transfer any civil action to any other district or division where it might have been brought” 28 U.S.C. § 1404(a). The Court determines whether to transfer pursuant to § 1404(a) in two steps. Dynamic Data Techs., LLC v. HTC Corp., No. 1:18-CV-10180 (GHW), 2019 WL 2433549, at *2 (S.D.N.Y. June 11, 2019). First, the Court evaluates whether the case could have been brought in the proposed transferee district by determining whether “venue, personal jurisdiction, and subject matter jurisdiction would have been proper in the transferee court at the time of filing.” Id. Next, if the threshold inquiry is satisfied, the Court considers the following factors:
“(1) the convenience of the witnesses; (2) the convenience of the parties; (3) the location of relevant documents and the relative ease of access to sources of proof; (4) the locus of operative facts; (5) the availability of process to compel the attendance of unwilling witnesses; (6) the relative means of the parties; (7) the forum's familiarity with the governing law; (8) the weight accorded the plaintiff's choice of forum; and (9) trial efficiency and the interests of justice.”Id. (citing Multiwave Sensor Inc. v. Sunsight Instruments, LLC, No. 1:16-CV-1361-(GHW), 2017 WL 1498058, at *6 (S.D.N.Y. Apr. 26, 2017)).
“The Court ... has broad discretion in making determinations of convenience under Section 1404(a) and notions of convenience and fairness are considered on a case-by-case basis.” Sentegra, LLC v. ASUS Computer Int'l, 15-cv-3768 (GHW), 2016 WL 3093988, at *2 (S.D.N.Y. June 1, 2016). “The movant bears the burden of establishing, by clear and convincing evidence, that transfer is warranted.” HTC Corp., 2019 WL 2433549, at *2.
DISCUSSION
A. Motion to Transfer
Defendant seeks to transfer this action to the Eastern District of Texas arguing that the action could have been initiated there and convenience factors weigh heavily towards transfer. Dkt. No. 18 at 3-10. Plaintiffs contest that the action would have been brought in the Eastern District of Texas and argue that convenience factors weigh against transfer. Dkt. No. 20 at 3-10. On balance, considering the pending motion to dismiss in the Texas Action, this Court is not persuaded that transfer is proper at this time.
As a threshold matter, despite Plaintiffs' arguments to the contrary, this action could have been initiated in the Eastern District of Texas. Whether the case could have been brought in the transferee district turns on whether “jurisdiction over the defendant could have been obtained at the time the suit was brought.” Sentegra, LLC, 15-cv-3768 (GHW), 2016 WL 3093988, at *2. Here, Defendant is a Texas domiciliary, Compl. at 3, and a Texas court would have personal jurisdiction over the Defendant. Dkt. No. 21 at 2. Subject matter jurisdiction would also be proper in the Eastern District of Texas as this case arises under the Lanham Act, 15 U.S.C. § 1051 et seq., and Plaintiffs assert federal claims under 28 U.S.C. §§ 1331 and 1338(a). Compl. at 3. Additionally, a federal court has supplemental jurisdiction over Plaintiffs' state law claims under 28 U.S.C. § 1367(a). Id. at 3-4. Therefore, this Court is satisfied that this action could have been initiated in the Eastern District of Texas.
Considering the convenience factors, Defendant asserts that it is domiciled in Texas, and many of its employees and records are in Texas so transfer would be convenient. Dkt. No. 18 at 6. Plaintiffs counter that Defendant did not provide a list of probable witnesses and have failed to carry their burden. Dkt. No. 20 at 5. Here, neither party alleges specific connection with New York (outside of the commercial context), so these factors weigh slightly in favor of transfer to Texas.
Defendant argues Texas is the locus of operative facts because this is a dispute over the Alleged Contract, performance of which took place in Texas. Dkt. No. 18 at 7. Defendant does concede customers and sale of products in New York. Id. at 8. Plaintiffs counter that this is not a dispute over the Alleged Contract and this factor should be viewed neutrally as New York is potentially “one of several loci of operative facts[.]” Dkt. No. 20 at 7 (quoting Pence v. Gee Grp., Inc., 236 F.Supp.3d 843, 855 (S.D.N.Y. 2017)).
Plaintiffs also argue that their choice of forum should be given substantial deference. Dkt. No. 20 at 9 (citing Stoltz v. Fage Dairy Processing Indus., S.A., No. 14-CV-3826 (MKB), 2015 WL 5579872, at *6 (E.D.N.Y. Sept. 22, 2015)). Defendant states that filing this action in this jurisdiction is “a classic example of forum shopping.” Dkt. No. 18 at 1. While this Court understands Defendant's concerns, this Court is “not tasked with determining the best venue, only a suitable one,” and it cannot say that venue in this Court is improper. Bryant v. Potbelly Sandwich Works, LLC, No. 17-CV-7638 (CM), 2018 WL 898230, at *4 (S.D.N.Y. Feb. 5, 2018).
With respect to the final factor of trial efficiency and the interests of justice, this Court disagrees with Plaintiffs' assessment that this action is separate and apart from the breach of contract claim. If the Texas Action finds that the Alleged Contract is valid and Plaintiffs are in breach, then many of the claims in the instant action fall away. However, given that the Eastern District of Texas has not yet ruled on whether personal jurisdiction exists in the Texas Action, this Court declines to exercise its discretion to transfer venue from an efficiency perspective. Therefore, the Motion to Transfer is DENIED without prejudice to renewal. Defendant may raise the issue again with this Court after a ruling has been made regarding the live motion to dismiss the Texas Action.
B. Motion to Dismiss
Defendant Leaf moves to dismiss Counts I, III, V, VI, and VII of the Complaint pursuant to Fed.R.Civ.P. 12(b)(6). MTD at 1.
While the Motion to Dismiss also references Fed.R.Civ.P. 12(f), MTD at 1, the motion papers do not ask this Court to strike any portion of the Complaint. See Dkt. No. 16. Therefore, this Court will only analyze 12(b)(6).
i. The MTD Count I should be GRANTED.
Count I alleges a “Violation of Privacy Rights” under N.Y. Civ. Rights Law § 50 seeking remedies under N.Y. Civ. Rights Law § 51. Compl. at 11. Defendant argues that this is a mislabeled right of publicity claim, Dkt. No. 16 at 9, and Plaintiffs concede as much in their opposition papers. Dkt. No. 19 at 6. “A federal court ... adjudicating state law claims that are pendent to a federal claim must apply the choice of law rules of the forum state.” Champion v. Moda Operandi, Inc., No. 20-CV-7255 (CM), 561 F.Supp.3d 419, 443 (S.D.N.Y. 2021). In New York, “[i]t is absolutely and indisputably the case that an individual who does not reside in New York cannot bring a claim under New York's Right of Publicity Law.” Id. Further, plaintiffs “domiciled outside of New York cannot maintain a claim for damages under Section 51.” Id.
Defendant alleges that Plaintiffs' Count I claims fail because Ronaldinho and Drob are not New York residents. Dkt. No. 16 at 9 (quoting Champion, 561 F.Supp.3d at 443). Plaintiffs do not contend with the case cited by Defendant, nor acknowledge the case law that a plaintiff must be domiciled in New York to bring a claim under New York's Right of Publicity Law. See generally Dkt. No. 19. Instead, Plaintiffs argue that the Court should not dismiss the publicity claims because they have adequately pled a claim under N.Y. Civ. Rights Law and “[t]he New York Court of Appeals has stated that ‘rights of publicity' claims are governed by the substantive law of the plaintiff's domicile[.]” Dkt. No. 19 at 8 (citing Rogers v. Grimaldi, 875 F.2d 994, 1001 (2d Cir. 1989) (citing another source)). Plaintiffs ask for leave to “cure any deficiencies in their pleadings and plead a violation of publicity claim under Brazilian law.” Dkt. No. 19 at 9. Defendant responds that the cases cited by Plaintiffs had nothing to do with Section 50 and 51 of N.Y. Civ. Rights Law because the plaintiffs in those cases pled a claim under the applicable jurisdiction. Dkt. No. 22 at 3. Further, Defendant argues that Brazilian law has no bearing on this case because Ronaldinho has “assigned his intellectual property rights” to Drob so he is not an appropriate Plaintiff for the claim. Id. at 3-4.
The Complaint alleges a violation of N.Y. Civ. Rights Law and requests damages pursuant to N.Y. Civ. Rights Law, Compl. at 11, which is impossible for plaintiffs who do not reside in New York. See, e.g., Champion, 561 F.Supp.3d at 443. Therefore, this Court recommends that the Motion to Dismiss Count I be GRANTED.
ii. The MTD Count III should be GRANTED.
Count III of the Complaint alleges trademark dilution in violation of N.Y. Gen. Bus. Law § 360-l. Compl. at 13-14. Under New York law, to state a claim for dilution a plaintiff must plead the existence of “(1) a distinctive mark capable of being diluted, and (2) a likelihood of dilution.” Akiro LLC v. House of Cheatham, Inc., 946 F.Supp.2d 324, 342 (S.D.N.Y. 2013) (quoting another source). Under prong two, to show a likelihood of dilution, a plaintiff must show “substantial similarity.” Id.
Defendant argues that Plaintiffs have failed to allege ownership of a valid trademark. Dkt. No. 16 at 11. Plaintiffs counter that “celebrities have a trademarklike interest in their name, likeness, and persona that may be vindicated through a false endorsement claim under the Lanham Act.” Bondar v. LASplash Cosms., No. 12 CIV.1417 (SAS), 2012 WL 6150859, at *5 (S.D.N.Y. Dec. 11, 2012); Dkt. No. 19 at 9. Defendant responds that Count III is not a false endorsement claim under the Lanham Act so the cases that Plaintiffs cite are inapposite. Dkt. No. 22 at 4-5.
Defendant also argues that Plaintiffs have not identified which of Defendant's products are substantially similar to Plaintiffs' “trademark(s)”, so they have “failed to identify the source of any purported blurring or tarnishment.” Dkt. No. 16 at 11. Plaintiffs counter that the Complaint alleges that Defendant used “identical marks, namely Ronaldinho's image, name, nickname, photographs[,] and signature on its products[.]” Dkt. No. 19 at 11.
This Court notes that while the Complaint says “[a]nnexed hereto as Exhibit 1 is a true and accurate copy of Defendant's website showing the Infringing Products[,]” Compl. at 7, Exhibit 1 does not depict any products, but instead only the Notice of Claim sent to Defendant on December 13, 2022, with no specific products identified. Compl. Ex. 1 at 2-3. To show a likelihood of dilution, Plaintiffs must show “substantial similarity.” Akiro LLC, 946 F.Supp. at 342. Courts in this district rely heavily on images of infringing products when analyzing substantial similarity. See, e.g., Jackpocket, Inc. v. Lottomatrix NY LLC, 645 F.Supp.3d 185, 207 (S.D.N.Y. 2022) (granting a motion to dismiss where marks were not substantially similar). As Plaintiffs provide no images of alleged infringing products, this Court cannot determine whether any products are substantially similar such that there is a likelihood of dilution.
For the foregoing reasons, this Court recommends that the Motion to Dismiss Count III be GRANTED.
iii. The MTD Count V should be GRANTED.
Count V of the complaint alleges unjust enrichment. Compl. at 15. In New York, the elements of unjust enrichment claims are: “(1) the defendant benefitted; (2) at the plaintiff's expense; and (3) equity and good conscience require restitution.” Dkt. No. 19 at 11 (quoting Fed. Treasury Enter. Sojuzplodoimport v. Spirits Int'l N.V., 400 Fed.Appx. 611, 613 (2d Cir. 2010)). However, New York courts have recognized that “New York Civil Rights law preempts all common law claims based on unauthorized use of name, image, or personality, including unjust enrichment claims.” Zoll v. Ruder Finn, Inc., No. 02 CIV. 3652 (CSH), 2004 WL 42260, at *4 (S.D.N.Y. Jan. 7, 2004); see also, e.g., Passelaigue v. Getty Images (US), Inc., No. 16-CV-1362 (VSB), 2018 WL 1156011, at *9 (S.D.N.Y. Mar. 1, 2018) (recognizing New York Civil Rights Law as preempting common law claims based on a right of privacy or publicity) (citations omitted).
Defendant alleges that the claims for unjust enrichment for the unauthorized use of an image or likeness must fail because they are preempted by N.Y. Civ. Rights Law. Dkt. No. 16 at 11-12 (citing Zoll, 2004 WL 42260, at *4). Defendant also relies on Sondik v. Kimmel, 131 A.D.3d 1041, 1042 (2015) to argue that even where a plaintiff's N.Y. Civ. Rights Law §§ 50 and 51 claims were dismissed, the claim for unjust enrichment was still preempted.
Plaintiffs unsuccessfully attempt to distinguish Sondik and contend that Defendant should not be able to argue dismissal of the N.Y. Civ. Rights Law §§ 50 and 51 claims and the simultaneous preemption of the common law unjust enrichment claims. Plaintiffs further argue that “unjust enrichment cannot be preempted by Brazillian [sic] law[,]” citing no case support for their position. Dkt. No. 19 at 11-12.
At the outset, as discussed supra Part B(i), Plaintiffs have not pled a cause of action under Brazilian law. Additionally, Plaintiffs contend that Sondik does not stand for the proposition that Plaintiffs' unjust enrichment claim is preempted regardless of whether Count I survives because the Sondik court dismissed the N.Y. Civ. Rights Law claims on the merits and “dismissed the unjust enrichment claim not because of some preemption, but because there was no unjust enrichment.” Dkt. No. 19 at 11-12. Plaintiffs misstate the case and offer a borderline sanctionable misrepresentation to this Court. Fed.R.Civ.P. 11(b)(2) requires that attorneys certify “legal contentions are warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law.” Plaintiffs go a step further than distinguishing Sondik on the merits to say that the Sondik court did not dismiss the unjust enrichment claim “because of [] preemption,” Dkt. No. 19 at 12, when the case clearly states that the “[c]ommon-law unjust enrichment claims for the unauthorized use of an image or likeness [were] preempted by Civil Rights Law §§ 50 and 51[.]” Sondik, 131 A.D.3d at 1042 (emphasis added).
Further, the case law is clear that even where the N.Y. Civ. Rights Law claims fail, unjust enrichment claims are still preempted. See, e.g., Sondik, 131 A.D.3d at 1042; Hampton v. Guare, 195 A.D.2d 366, 367 (1993) (affirming dismissal of both N.Y. Civ. Rights Law and unjust enrichment claims based on the preemptive effect of the former); see also, e.g., Gross v. Madison Square Garden Ent. Corp., No. 23-CV-3380(LAK)(JLC), 2024 WL 103235, at *3 (S.D.N.Y. Jan. 9, 2024) (recommending dismissal of both N.Y. Civ. Rights Law and unjust enrichment claims, relying in part on the preemption of the unjust enrichment claims).
This Court notes that at the time of the filing of this R&R, the Report and Recommendation in Gross, 2024 WL 103235, at *11, had not yet been adopted by the assigned District Judge.
Therefore, this Court recommends that the Motion to Dismiss Count V be GRANTED.
iv. The MTD Count VI should be GRANTED.
Count VI of the Complaint alleges tortious interference with prospective economic advantage claiming damages of not less than two million dollars. Compl. at 15-16. To state a claim for tortious interference under New York Law, Plaintiffs must show: “(1) the plaintiff had business relations with a third party; (2) the defendant interfered with those business relations; (3) the defendant acted for a wrongful purpose or used dishonest, unfair, or improper means; and (4) the defendant's acts injured the relationship.” Catskill Dev., L.L.C. v. Park Place Ent. Corp., 547 F.3d 115, 132 (2d Cir. 2008).
Defendant argues that Plaintiffs do not establish that Defendant knew of any business relationships with third parties or that Defendant intentionally interfered with such relationships for a wrongful purpose. Dkt. No. 22 at 6. Plaintiffs counter that Defendant interfered with Plaintiff Ronaldinho's relationship with Plaintiff Drob, as well as Plaintiffs' relationship with “authorized distributers and customers.” Plaintiffs also point to the Texas Action, the Alleged Contract, and Plaintiffs' allegation that “[Defendant] Leaf places fraudulent stickers on its cards in order to deceive, confuse and make consumers believe that they purchase authentic products bearing Ronaldinho's authenticated autograph” to allege that Defendant acted with wrongful purposes. Dkt. No. 19 at 13-14. Notably, Plaintiffs do not respond to the cases cited by Defendant and offer minimal case citations (with little to no analysis of their effect on the particular facts in this action) to support their positions. Dkt. No. 19 at 12-13.
At the first prong, the relationship between Drob and Ronaldinho may be able to suffice for a claim. While both are Parties to this action, “[a] ‘third party' for the purposes of a tortious interference claim is someone who is not a party to the contract at issue.” Roselink Invs., L.L.C. v. Shenkman, 386 F.Supp.2d 209, 228 (S.D.N.Y. 2004) (citing Finley v. Giacobbe, 79 F.3d 1285, 1295 (2d Cir.1996)). However, the general allegations of customer harm are insufficient to support a claim in this jurisdiction. McGill v. Parker, 179 A.D.2d 98, 105 (1st Dep't 1992) (dismissing a claim that “[made] only a general allegation of interference with customers without any sufficiently particular allegation of interference with a specific contract or business relationship”). Similarly, the reference to “distributors” generally does not suffice to support a claim. See, e.g., Kid Car NY, LLC v. Kidmoto Techs. LLC, 518 F.Supp.3d 740, 763 (S.D.N.Y. 2021). In Kid Car NY, LLC, 518 F.Supp.3d at 763, the defendant initiated a counterclaim of tortious interference based on allegations that the plaintiff contacted drivers who worked for both companies and threatened them. The Court found that “[t]o the extent the Counterclaim fail[ed] to identify a specific business relationship, its claim for tortious interference with prospective business advantage [could not] survive a motion to dismiss[,]” where the allegations only identified “drivers” generally. Id. (emphasis added). Here, Plaintiffs point to no conduct by Defendant aimed at any specific “distributors” and instead offer only general allegations to support their claim.
To satisfy prong two, the Plaintiffs needed to plead that Defendant interfered with business relationships with a third party. Catskill Dev., L.L.C., 547 F.3d at 132. Plaintiffs allege that “[b]y selling unauthorized sports trading cards and other memorabilia” and by bringing the “improper” Texas Action “Defendant interfered with Ronaldinho's business relationship with Drob and Drob's business relationships with its authorized distributors and customers.” Dkt. No. 19 at 13. As stated previously, this Court is not persuaded that this allegation is specific enough to sustain a claim of tortious interference. See Kid Car NY, LLC, 518 F.Supp.3d at 762; see also Marilyn Miglin, Inc. v. Gottex Indus., Inc., 790 F.Supp. 1245, 1254 (S.D.N.Y. 1992) (“[plaintiff] alleges no actions taken towards third parties by [defendant], and therefore [the tortious interference] claim must be dismissed”). Similarly, here, Plaintiffs point to no conduct of Defendant directed at specific authorized distributors or customers, so their claim must be dismissed. With respect to the Texas Action, there is no evidence that Defendant acted with a wrongful purpose in bringing the claim.
Prong three of the tortious interference claim requires that “the defendant acted for a wrongful purpose or used dishonest, unfair, or improper means[.]” Catskill Dev., L.L.C., 547 F.3d at 132. To allege wrongful or improper means in this context, Defendant's conduct “must amount to a crime or an independent tort or be for the sole purpose of inflicting harm on plaintiffs.” Kid Car NY, LLC, 518 F.Supp.3d at 763 (internal quotation marks omitted). Further, “[w]hen a defendant has acted with a permissible purpose, such as normal economic self-interest, wrongful means have not been shown, even if the defendant was indifferent to the [Plaintiffs'] fate.” Id. (cleaned up).
Plaintiffs allege that this prong may be satisfied by “fraud or misrepresentation, civil suits . . . and some degrees of economic pressure.” Dkt. No. 19 at 13 (citing Scutti Enterprises, LLC. v. Park Place Ent. Corp., 322 F.3d 211, 216 (2d Cir. 2003)). In this Court's view, while Plaintiffs allege that the “questionable” nature of the Alleged Contract and the Texas Action are indicative of wrongful conduct, Dkt. No. 19 at 14, these facts provide neutral reasons for Defendant's conduct. As Plaintiffs concede, Defendant asserts that Ronaldinho signed the Alleged Contract that gives them licensing rights to use his likeness and signature. Dkt. No. 19 at 14. In suing under the Alleged Contract, Defendant was clearly acting within “normal economic self-interest,” which falls short of the wrongful requirement.
For the foregoing reasons, this Court recommends that the Motion to Dismiss Count VI be GRANTED.
v. The MTD Count VII should be GRANTED.
Count VII alleges deceptive acts and unfair trade practices in violation of N.Y. Gen. Bus. Law § 349. Compl. at 16. To state a cause of action under this provision, Plaintiffs must allege (i) “the challenged act or practice was consumer-oriented;” (ii) “it was misleading in a material way;” and (iii) “the plaintiff suffered injury as a result of the deceptive act.” Crawford v. Franklin Credit Mgmt. Corp., 758 F.3d 473, 490 (2d Cir. 2014) (internal quotation marks omitted). “When corporate competitors bring a claim under Section 349, a consumer protection law, ‘the gravamen of the complaint must be consumer injury or harm to the public interest.'” Jackpocket, Inc. v. Lottomatrix NY LLC, No. 1:22-cv-5772 (LJL), 645 F.Supp.3d 185, 280 (S.D.N.Y. 2022) (citing Securitron Magnalock Corp. v. Schnabolk, 65 F.3d 256, 264 (2d Cir. 1995)). In the Second Circuit, while there is some dispute over whether trademark infringement claims are viable under N.Y. Gen. Bus. Law § 349, the majority view is that “'trademark infringement claims are not cognizable under. . . § 349 unless there is specific and substantial injury to the public interest over and above the ordinary trademark infringement.'” A.V.E.L.A., Inc. v. Est. of Marilyn Monroe, LLC, No. 12-cv-4828 (KPF), 131 F.Supp.3d 196, 217 (S.D.N.Y. 2015) (quoting another source). This is because, in trademark infringement actions alone, “there is insufficient public harm” to satisfy § 349. Jackpocket, Inc., No. 1:22-cv-5772 (LJL), 645 F.Supp.3d at 280.
Defendant alleges that Count VII should be dismissed because a trademark action is insufficient to support a cause of action under N.Y. Gen. Bus. Law § 349. Dkt. No. 16 at 14-15. Plaintiffs' opposition papers do not address the cases cited by Defendant or analyze § 349 in the context of a trademark action. Dkt. No. 19 at 1516. Instead, Plaintiffs argue that they do not merely allege consumer confusion and “thoroughly allege that there are indications that Defendant's cards are not authentic and bear counterfeit autographs falsely purporting to be of and by Ronaldinho.” Dkt. No. 19 at 15.
In this Court's view, Plaintiffs' claims of trademark infringement are insufficient to support a claim under § 349 and should be dismissed. This Court agrees with the overwhelming majority of authority in this Circuit finding that a trademark claim is not cognizable under § 349 “unless there is a specific and substantial injury to the public interest over and above ordinary trademark infringement or dilution.” Nat'l Distillers Prods. Co., LLC v. Refreshment Brands, Inc., 198 F.Supp.2d 474, 486-87 (S.D.N.Y. 2002) (emphasis added).
In A.V.E.L.A., Inc., No. 12-cv-4828 (KPF), 131 F.Supp.3d 196 at 217, the Court granted a motion to dismiss a § 349 claim where the claim alleged the actions “[were] likely to cause confusion, mistake or deception as to source or origin of the goods or services or falsely suggest sponsorship or association between [the Movants] and the Estate of Marilyn Monroe.” The Court reasoned that the claims failed as a matter of law because the alleged deceptive acts “[were] precisely the acts that constitute[d] the alleged trademark infringement[.]” A.V.E.L.A., Inc., No. 12-cv-4828 (KPF), 131 F.Supp.3d 196 at 217 (quoting another source). Similarly, here, Plaintiffs only allege that Defendant sold inauthentic cards with counterfeit autographs by Ronaldinho. Dkt No. 19 at 15. These are essentially the same claims underpinning the infringement claim that Defendant “has advertised and sold various products, including, among others, cards bearing [Ronaldinho's] name, nickname, picture, persona, likeness, and signature[.]” Compl. at 7. This is insufficient to support a claim under § 349.
Further, in Luv N' Care, Ltd. v. Walgreen Co., 695 F.Supp.2d 125, 135-36 (S.D.N.Y. 2010), the Court granted summary judgment on a deceptive act claim where claimants asserted “that Walgreens violated NYGBL § 349 by conducting a ‘bait and switch,' and misleading customers by commissioning misleading ‘knock-off' products and ‘palming them off' to confused customers.” This is much like the instant action where Plaintiffs allege that Defendant sold fraudulent trading cards infringing on Ronaldinho's likeness and signature. This claim is similarly insufficient to sustain a claim under N.Y. Gen. Bus. Law § 349. Therefore, this Court recommends that the Motion to Dismiss Count VII be GRANTED.
vi. Dismissal with Prejudice is Appropriate for Counts I, V, VI, and VII.
Plaintiffs seek leave to amend the complaint to “cure any deficiencies” and specifically ask to amend Count I to include a right of publicity claim under Brazilian law and Count VI for tortious interference with prospective business relations. Dkt. No. 19 at 16-17.
Defendant contends that Ronaldinho lacks standing to bring a claim under Count I because he's assigned his rights to Drob so the amendment to include Brazilian Law will not cure the defects in the Complaint. Dkt. No. 22 at 2, 4 (citing Newsome v. Brown, 209 Fed.Appx. 11, 13 (2d Cir. 2006), which held that a plaintiff who had assigned her intellectual property interests lacked standing to bring claim for infringement)). Further, Defendant argues that Plaintiffs failed to amend in a diligent timely fashion as a matter of course under Fed.R.Civ.P. 15(a)(1). Dkt. No. 22 at 9. Finally with respect to the tortious interference claim, Defendant states that “any amendments to that claim would be futile” because the existence of the alleged Contract “negates any plausible assertion that Defendant acted solely out of malice, or used dishonest, unfair, or improper means[.]” Id. at 9-10.
Pursuant to Rule 15, the Court “should freely give leave [to amend] when justice so requires.” Fed.R.Civ.P. 15(a)(2). “A district court has discretion to deny leave for good reason, including futility, bad faith, undue delay, or undue prejudice to the opposing party.” McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 200 (2d Cir. 2007) (citing Foman v. Davis, 371 U.S. 178, 182 (1962)).
With respect to Count I, the MTD filed on March 24, 2023 put Plaintiffs on notice that Defendant was opposing the applicability of New York right of publicity law because neither Plaintiff is domiciled in New York. Dkt. No. 16 at 9. Case law cited by Defendant is clear that “individual[s] who do[] not reside in New York cannot bring a claim under New York's Right of Publicity Law.” Id. (citing Champion, 561 F.Supp. at 443 (S.D.N.Y. 2021)). Additionally, in Champion, “the New York State right of publicity law claims brought by the [] non-resident plaintiffs [were] dismissed with prejudice ” Id. at 444 (emphasis added).
“A party may amend its pleading once as a matter of course within . . . if the pleading is one to which a responsive pleading is required, 21 days after service[.]” Fed.R.Civ.P. 15 (a)(1)(B). However, rather than amending the Complaint, Plaintiffs opposed the MTD conceding that “[t]he New York Court of Appeals has stated that ‘rights of publicity' claims are governed by the substantive law of the plaintiff's domicile[,]” but arguing “[Defendant] Leaf violated [Ronaldinho's] rights of publicity under both New York and Brazilian law.” Dkt. No. 19 at 8. In this Court's view, Plaintiffs had ample opportunity to amend and investigate the adequacy of their claims before the time to amend expired.
Further with respect to Count I, Defendant cites to Khaled v. Bordenave, No. 18 CIV. 5187 (PAE), 2019 WL 1894321, at *7 (S.D.N.Y. Apr. 29, 2019) where the Court denied leave to amend because plaintiffs' “failure earlier to investigate adequately the elements of the cause of action they brought [did] not justify an amendment[.]” In that action, regarding a similar claim of right to privacy under New York law, the Court denied plaintiffs' request to amend to bring claims under Florida law (where plaintiffs resided). Id. at *6-7. Similarly, here, Plaintiffs' request should be denied because they were responsible for “sizing up the viability of their claims, including whether reformulated claims under a different [jurisdiction's] law might have greater potential.” Id. at 7. Count I alleges a violation of privacy rights under N.Y. Civ. Rights Law §§ 50 and 51, Compl. at 11, which cannot be cured as Plaintiffs do not reside in New York. Compl. at 2-3.
Therefore, this Court recommends that leave to amend not be granted. See Sokol Holdings, Inc. v. BMB MUNAI, INC., No. 05 Civ. 3749 (KMW) (DF), 2009 WL 2524611, at *8 (S.D.N.Y. Aug. 14, 2009) (“[E]xamples of a party's failure to act with sufficient diligence include basing a proposed amendment on information that the party knew, or should have known, in advance of the deadline.”).
With respect to the Count V claim of unjust enrichment any amendment is futile because the claims are preempted by N.Y. Civ. Rights Law §§ 50 and 51. See supra, Part B(iii); see also Sondik, 131 A.D.3d at 1042 (where “[c]ommon-law unjust enrichment claims for the unauthorized use of an image or likeness [were] preempted by Civil Rights Law §§ 50 and 51”). Therefore, this Court recommends that leave to amend not be granted.
Regarding Count VI for tortious interference with prospective economic advantage, as analyzed supra, Part B(iv), this Court agrees that the existence of the alleged Contract defeats prong three that “the defendant acted for a wrongful purpose or used dishonest, unfair, or improper means[.]” Catskill Dev., L.L.C., 547 F.3d at 132. The Complaint specifically acknowledges Defendant's contention that the Alleged Contract “constitutes a license agreement which granted Defendant limitless rights to use Ronaldinho's name, nickname, picture, likeness, and autograph.” Compl. at 7. In this Court's view, this is sufficient to overcome the claim that Defendant took any actions for the “sole purpose of inflicting harm on plaintiffs[,]” and rather acted with the permissive purpose of “normal economic self-interest.” Kid Car NY, LLC, 518 F.Supp.3d at 763. Therefore, leave to amend should not be granted as any amendment would be futile.
Finally, with respect to Count VII alleging deceptive acts and trade practices in violation of N.Y. Gen. Bus. Law § 349, as discussed supra, Part B(v), “‘trademark infringement claims are not cognizable under. . . § 349 unless there is specific and substantial injury to the public interest over and above the ordinary trademark infringement.'” A.V.E.L.A., Inc., No. 12-cv-4828 (KPF), 131 F.Supp.3d at 217 (quoting another source). As Plaintiffs allege no specific injury to the public, this Court similarly recommends that leave to amend should not be granted.
Assuming arguendo that the District Court disagrees with the above analysis, this Court recommends that Plaintiffs be granted leave to amend Count VII only.
However, this Court does believe that Plaintiffs should be permitted to amend Count III. Clearly, Plaintiffs intended to include photographs of alleged infringing products. Compl. at 7 (“Annexed hereto as Exhibit 1 is a true and accurate copy of Defendant's website showing the Infringing Products.”). Further, this Court is not persuaded that an amendment will be futile.
The test under N.Y. Gen. Bus. Law § 360-l does not require a trademark, but rather a “distinctive mark capable of being diluted.” Akiro LLC, 946 F.Supp.2d at 342. Courts in this Circuit have found marks “truly distinctive” under N.Y. Gen. Bus. Law § 360-l where the plaintiff “met the more rigorous standard for fame under the Lanham Act[.]” A.V.E.L.A., Inc. v. Est. of Marilyn Monroe, LLC, No. 12-cv-4828 (KPF), 131 F.Supp.3d at 216 (citing George Nelson Found. v. Modernica, Inc., 12 F.Supp.3d 635, 651 (S.D.N.Y. 2014)). In A.V.E.L.A., Inc., 131 F.Supp.3d at 201, the Estate of Marilyn Monroe, LLC claimed trademark dilution of their rights in Monroe's identity, persona, name, and likeness. While the opposing party argued that the Estate did not allege a “distinctive” mark, the Court disagreed. Id. at 212. After finding that the “MONROE Marks” were sufficiently famous to qualify for protection under federal law, the Court reasoned that they had to satisfy the lower threshold of “distinctive” for the purpose of N.Y. Gen. Bus. Law.
In the instant action, Plaintiffs have pled and argued Ronaldinho's fame. Compl. at 5, 12; Dkt. No. 19 at 10. Defendant Leaf does not challenge Ronaldinho's fame. Dkt. No. 22 at 5 (“[Defendant] Leaf is not contending that Ronaldinho is not famous”). While this Court notes that A.V.E.L.A., Inc. is distinguishable because that action included a false endorsement claim, the logic applies squarely to the instant action. As Defendant does not contest that Ronaldinho meets the threshold for fame, he must also meet the lesser threshold of “distinctive” to satisfy the N.Y. Gen. Bus. Law dilution claim. Therefore, this Court is satisfied that Plaintiffs may be able to amend Count III to cure the pleading defects.
RECOMMENDATION
For the foregoing reasons, this Court recommends that the Motion to Dismiss Counts I, III, V, VI, and VII be GRANTED.
FILING OF OBJECTIONS TO THIS REPORT AND RECOMMENDATION
Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure, the parties shall have fourteen days from service of this Report to file written objections. See also Fed.R.Civ.P. 6. Such objections, and any responses to objections shall be filed with the Clerk of Court and on ECF. Any requests for an extension of time for filing objections must be directed to Judge Woods. Failure to file objections within fourteen days will result in a waiver of objections and will preclude appellate review. See Thomas v. Arn, 474 U.S. 140 (1985); Cephas v. Nash, 328 F.3d 98, 107 (2d Cir. 2003).
The Clerk of the Court is respectfully directed to close the motion at Dkt. No. 17.
SO ORDERED.