Lopez v. Zazzle, Inc. et al

MEMORANDUM OF LAW in Support re: 242 MOTION to Dismiss Fourth Amended Complaint. . Document

S.D.N.Y.July 27, 2018

i UNITED STATES U.S. DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ------------------------------------------------------- X : : : : : : : : : : X ROBERT G. LOPEZ, an individual, Plaintiff, -against- BONANZA.COM, INC., ET AL., Defendants. CASE NO. 1:17-cv-08493(LAP) ------------------------------------------------------- MEMORANDUM IN SUPPORT OF MOTION TO DISMISS CLAIMS AGAINST SEAN T. BROIHIER Bruce B. Paul STITES & HARBISON PLLC 323 East Court Avenue Jeffersonville, IN 47130 Telephone: (812) 282-7566 Facsimile: (502) 779-9831 Email: bpaul@stites.com ATTORNEY FOR DEFENDANT SEAN T. BROIHIER D/B/A FINE ART AMERICA Case 1:17-cv-08493-LAP Document 243 Filed 07/27/18 Page 1 of 15 ii TABLE OF CONTENTS I. SUMMARY OF ARGUMENT ....................................................................... 1 II. PROCEDURAL HISTORY............................................................................ 1 III. STATEMENT OF MATERIAL ALLEGATIONS RELATED TO SEAN BROIHIER.......................................................................................... 2 IV. ARGUMENT.................................................................................................. 4 A. The Court has no personal jurisdiction over Sean Broihier ................... 4 1. Rule 12(b)(2) standard ......................................................................... 4 2. Plaintiff has no general personal jurisdiction over Sean Broihier ..................................................................................................... 5 3. Plaintiff’s claims do not arise from any conduct that gives New York specific jurisdiction over Mr. Broihier.................................... 7 B. Plaintiff fails to state any valid claims against Sean Broihier .............. 9 1. Legal Standard .................................................................................... 9 2. Plaintiff fails to articulate sufficient facts to pierce Pixels.com, LLC’s corporate veil and hold Mr. Broihier liable ...............................10 IV. CONCLUSION............................................................................................. 11 Case 1:17-cv-08493-LAP Document 243 Filed 07/27/18 Page 2 of 15 iii TABLE OF AUTHORITIES Cases ABN AMRO Bank, N.V. v. MBIA Inc., 952 N.E.2d 463 (N.Y. 2011).......................... 11 Ashcroft v. Iqbal, 556 U.S. 662 (2009)....................................................................... 2, 9 Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 171 F.3d 779 (2d Cir. 1999) ........................................................................................................................... 5 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) ...................................................... 2, 9 BNSF Ry. v. Tyrrell, 137 S.Ct. 1549 (2017).................................................................. 6 Board of Mgrs. Of 325 Fifth Ave. Condominium v. Continental Residential Holdings LLC, 149 A.D.3d 472 (N.Y. App. Div. 2017)............................................................ 10 Bristol Myers Squibb Co. v. Superior Court, 137 S.Ct. 1773 (2017) ............................ 8 Brown v. Lockheed Martin Corp., 814 F.3d 619 (2d Cir. 2016).................................... 5 Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985) ................................................. 6 Daimler AG v. Bauman, 134 S. Ct. 746 (2014)......................................................... 6, 8 Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011) .................... 6 In re Currency Conversion Fee Antitrust Litig., 265 F.Supp.2d 385 (S.D.N.Y. Jul. 3, 2003) ................................................................................................................... 10, 11 Int’l Shoe Co. v. Washington, 326 U.S. 310 (1945) ....................................................... 6 Jazini v. Nissan Motor Co. Ltd., 148 F.3d 181 (2d Cir. 1998) ..................................... 5 Sonera Holding B. V. v. Cukurova Holding A. S., 750 F.3d 221 (2d Cir. 2014).......... 6 Walden v. Fiore, 134 S.Ct. 1115 (2014)......................................................................... 8 Rules Fed. R. Civ. P. 12(b)(6)................................................................................................... 9 Federal Rule of Civil Procedure 12(b)(2)................................................................... 4, 5 Other Authorities N.Y. C.P.L.R. § 301 (McKinney)................................................................................ 5, 6 N.Y. C.P.L.R. § 302 (McKinney)................................................................................ 7, 8 Case 1:17-cv-08493-LAP Document 243 Filed 07/27/18 Page 3 of 15 1 I. SUMMARY OF ARGUMENT This is Plaintiff’s fifth iteration of his claims against Mr. Broihier, alleging that he-Pixels.com, LLC’s (“Pixels”) owner-violated Plaintiff’s so-called rights in the trademarks LES NYC and LOWER EAST SIDE vis-à-vis Mr. Broihier’s relationship with Pixels. While Plaintiff has expanded his allegations beyond the solitary and conclusory ground that he controls Pixels in the Third Amended Complaint, his new allegations are just as conclusory. Plaintiff’s new allegations also provide no facts to support a veil-piercing theory of recovery against Mr. Broihier. Therefore, Plaintiff has not cured the insufficient personal jurisdiction and veil-piercing allegations against Mr. Broihier from the Third Amended Complaint. Further, because Plaintiff’s allegations against Pixels-and, by extension, Mr. Broihier-consist entirely of threadbare and conclusory labels, the FAC comes no closer to stating a valid claim against Pixels or Mr. Broihier than his Third Amended Complaint. In sum, this fifth attempt to state a cogent claim against Mr. Broihier fails, as no facts are present to support personal jurisdiction in New York, a substantive claim against Pixels, and certainly no acts by Mr. Broihier personally that have harmed Plaintiff. II. PROCEDURAL HISTORY Plaintiff’s Third Amended Complaint correctly identified Mr. Broihier as a California resident and citizen who is the founder and owner of Pixels. [See DN 90 at ¶ 14.] On that basis alone, Plaintiff sought recovery against Mr. Broihier for alleged infringement by Pixels. [Id. at ¶ 124.] Case 1:17-cv-08493-LAP Document 243 Filed 07/27/18 Page 4 of 15 2 Pixels moved to dismiss Plaintiffs’ claims in the Third Amended Complaint on multiple grounds. In addition to incorporating all of the deficiencies of Plaintiff’s claims against Pixels into its motion [DN 127 at 1, n. 1], Mr. Broihier argued that the southern district of New York lacks personal jurisdiction over him-a California citizen. [Id. at 3-7.] Further, Mr. Broihier noted that Plaintiff articulated no factual basis in the Third Amended Complaint for Pixels’ veil to be pierced. [Id. at 8-9.] In response to Mr. Broihier’s motion, Plaintiff filed this FAC. [See DN 214.] In Plaintiff’s FAC, he does not change his tune on Mr. Broihier’s citizenship or position with Pixels. [Id. at ¶ 14.] And while Plaintiff dedicates more paragraphs to Mr. Broihier, those paragraphs contain nothing more than conclusory allegations designed to satisfy all the elements of his claims. [Id. at ¶¶ 131-136.] That is, rather than articulating a factual basis for including Mr. Broihier in this case and in this Court, Plaintiff relies entirely on labels and legal conclusions of wrongdoing by Pixels. [Id.] The law forbids such threadbare allegations of wrongdoing, which simply mirror the elements of legal claims. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The FAC against Mr. Broihier should be dismissed, with prejudice. III. STATEMENT OF MATERIAL ALLEGATIONS RELATED TO SEAN BROIHIER1 1 Because Plaintiff is pursuing Mr. Broihier for the alleged actions of Pixels, presumably through a veil-piercing strategy, Mr. Broihier incorporates herein Pixels’ memorandum in support of motion to dismiss. Mr. Broihier has elected to save the Court’s time by not reproducing all of the facts and arguments that support Pixels’ motion to dismiss here, but Mr. Broihier nevertheless asserts that the factual and legal deficiencies in Plaintiff’s allegations against Pixels apply equally to him. Case 1:17-cv-08493-LAP Document 243 Filed 07/27/18 Page 5 of 15 3 Plaintiff has now filed five renditions of a complaint in which he purports to have multiple trademarks. In the Fourth Amended Complaint (“FAC”), he alleges that Pixels d/b/a www.fineartamerica.com has infringed his marks LES NYC and LOWER EAST SIDE in violation of the Lanham Act and has been unjustly enriched by those alleged violations. [See DN 214 at ¶¶ 111-124.2] Plaintiff correctly alleges that Sean Broihier is the founder, owner, and executive member of Pixels, though Plaintiff is incorrect about its business office address.3 [Id. at ¶¶ 13-14.] Plaintiff makes no other jurisdictional allegations about Sean Broihier, who is a California resident and citizen. [See DN 214.] Plaintiff begins his claims against Mr. Broihier by asserting that Pixels, not Mr. Broihier, owns www.fineartamerica.com, which is “the world’s largest art marketplace and print-on-demand technology company.” [Id. at ¶ 116.] He further alleges in paragraph 116 that “[w]ith just a few clicks, artists and photographers can upload their images to finartamerica.com, set their price for hundreds of different print-on-demand products and then instantly sell those products to a global audience online, mobile and real world buyers.” [Id.] 2 Although Mr. Broihier is citing these paragraphs for the Court’s convenience in evaluating the sufficiency of the pleadings, most of the paragraphs cited contain legal conclusions that are not entitled to the presumption of truth. For example, Plaintiff alleges in conclusory form-without a single supporting fact-that “Pixel.com’s [sic] use of Plaintiff’s . . . trademarks is NOT a fair use as Pixels.com is using the marks for commercial business and for a profit” (¶ 123); “Pixels . . . . use of Plaintiff’s trademarks . . . are a ‘use in commerce’ . . . . “ (¶ 124); “Pixels.com’s use of the mark LOWER EAST SIDE in connection with clothing is likely to continue to cause confusion between Plaintiff’s LES NYC mark as both marks under trademark law are deemed phonetic equivalents” (¶ 125). These and other allegations in the FAC contain no supporting facts and can be appropriately ignored in assessing this Motion to Dismiss. Legal conclusions and “[t]hreadbare recitals of the elements of a cause of action,” are not entitled to any presumption of truth. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic v. Twombly, 550 U.S. 544, 570 (2007)). 3 Pixels’ business address is now 2202 East Main Street, Santa Monica, California. Plaintiff identified a past business address for Pixels in his FAC. Case 1:17-cv-08493-LAP Document 243 Filed 07/27/18 Page 6 of 15 4 The FAC contains one factual allegation and a series of legal conclusions regarding Mr. Broihier. Plaintiff asserts in Paragraph 131 of the FAC that Mr. Broihier “is the owner and operator of the website www.fineartamerica.com . . . and as the founder, owner and executive member of Defendant Pixels.com, LLC [sic] has the right and ability to supervise the infringing activity alleged herein, and has a direct financial interest in Defendant Pixels.com, LLC d/b/a Fine Art America, and as such is jointly and severally liable with Defendant Pixels.com, LLC d/b/a Fine Art America.” [DN 214 at ¶ 131.] Although Plaintiff is correct that Mr. Broihier is the founder and owner of Pixels.com, the remaining allegations are legal conclusions that the Court can ignore. Likewise, Paragraphs 132, 133, 134, 135, and 136 all contain legal conclusions that match elements of Plaintiff’s claims without any factual detail about Mr. Broihier. [Id. at ¶¶ 132, 133, 134, 135, and 136.] Sean Broihier contends that the Court does not possess personal jurisdiction over him and, even if he had any connection with New York state, Plaintiff has not alleged sufficient facts to state a viable legal claim against him. IV. ARGUMENT A. The Court has no personal jurisdiction over Sean Broihier. The Court should dismiss this case against Sean Broihier pursuant to Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction. The Court may only exercise personal jurisdiction over Mr. Broihier if (a) it has general personal jurisdiction over Mr. Broihier or (b) it has specific personal jurisdiction over Mr. Broihier. It has neither in this case. 1. Rule 12(b)(2) standard. Case 1:17-cv-08493-LAP Document 243 Filed 07/27/18 Page 7 of 15 5 “When responding to a Rule 12(b)(2) motion to dismiss . . . the plaintiff bears the burden of establishing that the court has jurisdiction over the defendant.” Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 171 F.3d 779, 784 (2d Cir. 1999). In order to meet his burden, Plaintiff must put forth supporting facts, not conclusory statements. See Jazini v. Nissan Motor Co. Ltd., 148 F.3d 181, 185 (2d Cir. 1998). Therefore, the Court is not bound by Plaintiff’s conclusory allegation that “[t]his Court has personal jurisdiction over the Defendants because Defendants engage in continuous and significant business activities in, and directed to the State of New York within this judicial district and because Defendants have committed tortuous [sic] acts aimed at and causing harm within the State of New York and this judicial district.” [DN 214 at ¶ 3.] Nor is the Court bound by Plaintiff’s similarly conclusory allegation that Mr. Broihier “conducts continuous business activities in New York and provides printing, shipping and other services to his business associates and customers in New York City.” [Id. at ¶ 135.] 2. Plaintiff has no general personal jurisdiction over Sean Broihier The Court’s general personal jurisdiction over Sean Broihier is first determined by looking to the law of New York, where the Court sits. See Brown v. Lockheed Martin Corp., 814 F.3d 619, 624 (2d Cir. 2016). In New York, CPLR § 301 governs general personal jurisdiction. Once the Court determines that jurisdiction exists under CPLR § 301, the Court must ensure that its exercise of jurisdiction comports with the federal due process requirements of fair play and substantial Case 1:17-cv-08493-LAP Document 243 Filed 07/27/18 Page 8 of 15 6 justice. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 467 (1985), quoting Int’l Shoe Co. v. Washington, 326 U.S. 310, 320 (1945). CPLR § 301 provides that a New York court “may exercise jurisdiction over persons, property, or status as might have been exercised heretofore.” N.Y. C.P.L.R. § 301 (McKinney 1962). New York courts have interpreted § 301 to permit the exercise of jurisdiction over an out-of-state corporation that “has engaged in such a continuous and systematic course of ‘doing business’ in New York that a finding of its presence in New York is warranted.” Sonera Holding B. V. v. Cukurova Holding A. S., 750 F.3d 221, 224 (2d Cir. 2014). That “continuous and systematic” language has been narrowed by recent Supreme Court holdings. In 2014, the United States Supreme Court clarified the “continuous and systematic” language by stating that general personal jurisdiction can only exist if a defendant’s contacts with a forum state are “so ‘continuous and systematic’ as to render [it] essentially at home in the forum state.” Daimler AG v. Bauman, 134 S. Ct. 746, 749 (2014) (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011). Typically an entity is “at home in” states where it is incorporated or where its principal place of business is located. See Id. at 760. In 2017, the Supreme Court further clarified this rule by holding that an entity may be subject to general jurisdiction in another state in an “exceptional case” where the defendant’s operations “may be so substantial and of such a nature as to render the corporation at home in that State.” See BNSF Ry. v. Tyrrell, 137 S.Ct. 1549, 1552 (2017) (quoting Daimler, 134 S.Ct. at 760-61). Case 1:17-cv-08493-LAP Document 243 Filed 07/27/18 Page 9 of 15 7 Plaintiff correctly alleges that Mr. Broihier lives in California. [DN 214 at ¶ 14.] Aside from a single conclusory allegation attributing Pixels’ business activities to Mr. Broihier personally [id. at ¶ 135], Plaintiff identified no other New York connection because no such connection exists. Sean Broihier is not “at home in” New York, so it is not surprising that Plaintiff has failed to allege facts sufficient to establish this Court’s general jurisdiction over Mr. Broihier in this case. 3. Plaintiff’s claims do not arise from any conduct that gives New York specific personal jurisdiction over Mr. Broihier. New York’s codified requirements for specific personal jurisdiction are found at CPLR § 302. As applied here, § 302 allows personal jurisdiction to lie only if Plaintiff asserts claims that are related to the following acts by Mr. Broihier within New York: 1. transact[ion of] any business within [New York State] or contracts anywhere to supply goods or services in the state; or 2. [commission of] a tortious act within the state, except as to a cause of action for defamation of character arising from the act; or 3. [commission of] a tortious act without the state causing injury to person or property within the state, except as to a cause of action for defamation of character arising from the act, if he regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in the state, or expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce; or Case 1:17-cv-08493-LAP Document 243 Filed 07/27/18 Page 10 of 15 8 CPLR § 302(a)(1)-(3). Further clarifying these benchmarks, the United States Supreme Court held in 2017 that “in order for a state court to exercise specific jurisdiction, ‘the suit’ must ‘arise out of or relate to the defendant’s contacts with the forum.’” Bristol Myers Squibb Co. v. Superior Court, 137 S.Ct. 1773, 1780 (2017) (quoting Daimler, 134 S.Ct. 754). Moreover, even though a defendant may interact with a third party, who has a relationship with a forum state, “a defendant’s relationship with a . . . third party, standing alone, is an insufficient basis for jurisdiction.” Walden v. Fiore, 134 S.Ct. 1115, 1123 (2014). Plaintiff identifies no connection between Mr. Broihier and New York. Again, Mr. Broihier’s only connection to this lawsuit is his role as a member of Pixels. But, as set forth in Bristol Myers Squibb, his relationship with a third party alone is not grounds for Mr. Broihier to be dragged into a New York court. After all, conclusory allegations aside, Plaintiff has failed to state a single allegation of fact that connects Mr. Broihier personally with any of the alleged infringement that is at the heart of the FAC. And, as is argued below, Mr. Broihier is not responsible for the alleged acts of his company given the threadbare allegations in the FAC. Plaintiff has cited no tort committed by Mr. Broihier in New York, no harm suffered in New York by Mr. Broihier’s personal conduct elsewhere, and no business relationship between Mr. Broihier in New York. In sum, Plaintiff has connected no dots between Mr. Broihier and New York courts. Dismissal of Plaintiff’s FAC against Mr. Broihier is warranted on the grounds of personal jurisdiction alone. Case 1:17-cv-08493-LAP Document 243 Filed 07/27/18 Page 11 of 15 9 B. Plaintiff fails to state any valid claims against Sean Broihier.4 1. Legal Standard A complaint is subject to dismissal if it fails to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). “To survive a motion to dismiss, 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) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). In other words, “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555. “A pleading that offers ‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause of action will not do.’ Nor does a complaint suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.’” Iqbal, 556 U.S. at 678 (citation omitted) (quoting Twombly, 550 U.S. at 555, 557). In addition, although a court should assume the veracity of well-pleaded factual allegations, courts “are not bound to accept as true a legal conclusion couched as a factual allegation.” Id. (quoting Twombly, 550 U.S. at 555). Therefore, claims based only on conclusory statements that are unsupported by specific factual allegations will not survive a motion to dismiss under Rule 12(b)(6). See id. (“Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.”). 4 Again, while Mr. Broihier also contends Plaintiff has failed to state a claim against him for all the reasons outlined in Pixels’ motion to dismiss, Mr. Broihier is simply incorporating those arguments by reference rather than including them, verbatim, in this memorandum. Case 1:17-cv-08493-LAP Document 243 Filed 07/27/18 Page 12 of 15 10 Finally, conclusory allegations are insufficient to state claims based on veil- piercing or alter ego theories of liability. See In re Currency Conversion Fee Antitrust Litig., 265 F.Supp.2d 385, 426 (S.D.N.Y. Jul. 7, 2003). “The unadorned invocation of dominion and control is simply not enough.” Id. 2. Plaintiff fails to articulate sufficient facts to pierce Pixels.com, LLC’s corporate veil and hold Mr. Broihier liable Plaintiff alleges that Pixels has violated his intellectual property rights in LES NYC and LOWER EAST SIDE. Pixels has moved for dismissal of those claims on multiple grounds, and Mr. Broihier joins in that motion and incorporates it herein. But Mr. Broihier contends that Plaintiff’s claims fails against him for a more simplistic reason: Plaintiff’s only allegations of specific personal conduct by Mr. Broihier that has allegedly wronged Plaintiff are “threadbare conclusions” of company control that mirror the elements of his claims. [See DN 214 at ¶¶ 131-136.] Because Plaintiff’s singular reason for suing Mr. Broihier personally is Mr. Broihier’s position with Pixels as its founder and sole member, New York law forbids Plaintiff from piercing Pixels’ corporate veil. New York is no different from other states in protecting members of limited liability companies from the obligations of the companies themselves under most circumstances. See Board of Mgrs. Of 325 Fifth Ave. Condominium v. Continental Residential Holdings LLC, 149 A.D.3d 472, 475 (N.Y. App. Div. 2017). To pierce the corporate veil under New York law, the plaintiff must establish that the owner of a limited liability company, “through their domination, abused . . . the corporate form to perpetrate a wrong or Case 1:17-cv-08493-LAP Document 243 Filed 07/27/18 Page 13 of 15 11 injustice against that party such that a court in equity will intervene.” ABN AMRO Bank, N.V. v. MBIA Inc., 952 N.E.2d 463, 475 (N.Y. 2011). Plaintiff alleges no conduct by Mr. Broihier that shows his total domination over Pixels, much less conduct that has perpetrated a wrong or injustice against Plaintiff. [See DN 214.] At worst, Pixels-not Mr. Broihier-violated the Lanham Act, which Pixels and Mr. Broihier reject. But even if that were true, Plaintiff has cited no grounds for Mr. Broihier to be found personally liable for Pixels’ corporate act. His conclusory allegations about Mr. Broihier’s control are not sufficient to state a veil-piercing claim. See In re Currency Conversion Fee Antitrust Litig., 265 F.Supp.2d at 426. Dismissal of Mr. Broihier is therefore warranted. V. CONCLUSION Plaintiff’s FAC contains no facts to support his claims against Sean Broihier. Mr. Broihier is a California citizen, and, accordingly, no grounds exist that subject him to this Court’s personal jurisdiction on either a general or specific basis. Moreover, Plaintiff’s thin-on-facts and conclusory allegations that Mr. Broihier can be held liable for the purported acts of his limited liability are unsupported by New York law. As a consequence, Plaintiff’s FAC should be dismissed as against Mr. Broihier for these as well as the reasons set forth in Pixels’ motion to dismiss, which Mr. Broihier incorporates by reference herein. Case 1:17-cv-08493-LAP Document 243 Filed 07/27/18 Page 14 of 15 12 Dated: July 27, 2018 Respectfully Submitted, By: /s/ Bruce B. Paul Bruce B. Paul STITES & HARBISON PLLC 323 East Court Avenue Jeffersonville, IN 47130 Telephone: (812) 282-7566 Facsimile: (502) 779-9831 Email: bpaul@stites.com ATTORNEY FOR DEFENDANT SEAN T. BROIHIER D/B/A FINE ART AMERICA 95978:2 Case 1:17-cv-08493-LAP Document 243 Filed 07/27/18 Page 15 of 15