Nutrimost Doctors, Llc v. Sterling et al

BRIEF in Opposition re Motion to Dismiss for Failure to State a Claim

W.D. Pa.August 25, 2016

IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA NUTRIMOST DOCTORS, LLC, Plaintiff, v. ZANE STERLING, D.C.; IDAHO FAT LOSS TWIN FALLS, LLC; IDAHO FAT LOSS IDAHO FALLS, LLC; IDAHO FAT LOSS, INC.; STERLING CLINICS, LLC; JOEL FEEMAN, D.C; COMPLETE HEALTH & WELLNESS, LLC; CUSTOMIZED HEALTH & WELLNESS, LLC; DOCTORS HEALTH & WELLNESS, LLC; NEW LIFE CHIROPRACTIC CENTER, INC., P.C.; NEW LIFE HEALTH & WELLNESS SOUTHWEST, LLC; JASON OLAFSSON, D.C.; CUSTOM FAT LOSS, INC.; CUSTOM AND WELLNESS, INC., Defendants. Civil Action No.: 2:16-cv-00479-MRH The Honorable Mark R. Hornak Electronically filed PLAINTIFF NUTRIMOST DOCTORS, LLC’S BRIEF IN OPPOSITION TO MOTION TO DISMISS PLAINTIFF’S AMENDED COMPLAINT PURSUANT TO FED. R. CIV. P. 12(b)(6) OF DEFENDANTS JOEL FEEMAN, D.C., COMPLETE HEALTH AND WELLNESS, LLC, CUSTOMIZED HEALTH & WELLNESS LLC, DOCTORS HEALTH & WELLNESS, LLC, NEW LIFE CHIROPRACTIC CENTER, INC., P.C., AND NEW LIFE HEALTH AND WELLNESS SOUTHWEST, LLC AND NOW, comes the PLAINTIFF, NUTRIMOST DOCTORS, LLC (“Nutrimost”), by and through its undersigned counsel, and files this Brief in Opposition to the Motion to Dismiss Plaintiff’s Amended Complaint Pursuant to Fed. R.Civ.P. 12(b)(6) [Dkt. 59-60], filed by Defendants, Joel Feeman, D.C., Complete Health & Wellness, LLC, Customized Health & Wellness LLC, Doctors Health & Wellness, LLC, New Life Chiropractic Center, Inc., P.C., and New Life Health & Wellness Southwest, LLC, (“the Feeman Defendants”), as follows: Case 2:16-cv-00479-MRH Document 74 Filed 08/25/16 Page 1 of 23 2 I. Introduction Defendants, Joel Feeman, D.C. Complete Health and Wellness, LLC, Customized Health & Wellness LLC, Doctors Health & Wellness, LLC New Life Chiropractic Center, Inc., P.C., and New Life Health and Wellness Southwest, LLC, (collectively, the “Feeman Defendants”) move this Court pursuant to Fed. R.Civ.P. 12 for dismissal of Plaintiff’s Amended Complaint on various grounds. For the following reasons, the Feeman Defendants’ Motion to Dismiss Amended Complaint [Dkt. 59] (“Feeman Motion to Dismiss”) should be denied. II. Facts Alleged in the Amended Complaint and Nutrimost’s RICO Case Statement The factual basis of Plaintiff’s claims is set forth in detail in Nutrimost’s Amended Complaint [Dkt. No. 52] and RICO Case Statement [Dkt. No. 9], both of which are adopted and incorporated herein by reference. Nutrimost believes its legal claims, as pleaded, are sufficient to defeat the Feeman Defendants' Motion to Dismiss. III. Argument A. Nutrimost has Adequately Pleaded Fraud Defendants’ assertion that Plaintiff has failed to adequately plead fraud, as per the requirements of Federal Rule 9, is at odds with the very specific averments of Plaintiff’s Amended Complaint. 1. Plaintiff has Pleaded Materiality and Reliance The Feeman Defendants assert that Nutrimost has not pleaded how the misrepresentations made by the Defendants - that Plaintiff’s supplements are contaminated - are Case 2:16-cv-00479-MRH Document 74 Filed 08/25/16 Page 2 of 23 3 “’material” to the transaction at hand- performance under the Franchise Agreements.” (Feeman Mem. p. 4). The Feeman Defendants, in an effort to misframe the argument, posit that Nutrimost cannot state a claim for fraud because it declined to release the Feeman Defendants from their contractual obligations, in reliance upon the bogus lab report. The Feeman Defendants err in supposing that their fraud would be actionable only if Nutrimost had blindly capitulated to their bad faith demand that they be released from their Agreements. Nutrimost did not, as Defendants had hoped, simply roll over upon receipt of the Defendants’ demand. But it did act in reliance upon the Defendants’ fraudulent representation - that Nutrimost’s propriety supplement had been found to contain banned substances - as expressly pleaded in paragraph 99, by commencing an investigation, hiring professionals and otherwise incurring costs. Plaintiff could not be more specific in pleading that: 99. Plaintiff has incurred costs and expenses in responding to Defendants’ fraudulent misrepresentations, including investigative costs, independent laboratory fees and legal expenses. 100. Plaintiff, before learning that Defendants misrepresentations were fraudulent, rightfully and responsibly relied on the all statements and representations, as described above. The Feeman Defendant’s conduct - intentionally adulterating a sample of Plaintiff’s supplement, obtaining a bogus lab report and representing the report to Plaintiff as being legitimate - would be actionable fraud, regardless of the contractual relationship of the parties. Feeman’s attempt to define the “transaction at hand,” consequently, is unavailing. Defendant Feeman also asserts that Plaintiff’s Amended Complaint fails to aver the “time, place and content of the false misrepresentation, the fact misrepresented and what was Case 2:16-cv-00479-MRH Document 74 Filed 08/25/16 Page 3 of 23 4 obtained or given up as a consequence of the fraud.” The Feeman Defendants further argue that Plaintiff’s averments of fraud are deficient, inasmuch as averments of fraud may not be made solely “upon information and belief.” (Feeman Brief, p. 6.). The Feeman Defendants support their argument by selectively quoting from two of the only three paragraphs in the Amended Complaint1 in which Plaintiff used the offending phrase. Plaintiff’s fraud claim, however, is in no way dependent upon the three substantive “information and belief” paragraphs in the one hundred and seventy count Amended Complaint. To the contrary, the Defendants’ fraudulent scheme and the acts by which it was carried out are specifically described in paragraphs 78 through 87, and in the paragraphs of Count I, proper, (paragraphs 95 through 104) not “upon information and belief,” but upon the hard facts set forth therein, which are supported and easily discernable by reference to the writings attached to the Amended Complaint. These averments, and the bogus lab reports and letters from Defendants’ counsel, unquestionably establish that the three individual defendants, Drs. Sterling, Feeman and Olafsson, on behalf of themselves and their controlled entity defendants, each provided adulterated Nutrimost supplements to the Avomeen Lab and each caused their respective counsel to forward the bogus lab report(s) to Nutrimost, making identical demands that their Franchise Agreements be deemed void. Further, as admitted by the Feeman Defendants, averments of fraud “upon information and belief” are adequate where the complaint contains “supporting facts upon which this belief is 1 Other than party identification paragraphs, in which Plaintiff identifies the business addresses of the various defendants “upon information and belief.” Case 2:16-cv-00479-MRH Document 74 Filed 08/25/16 Page 4 of 23 5 founded.” (Feeman Brief at p. 6, citing Tredenick v. Bone, 647 F.Supp.2d 495, 501 (W.D.Pa. 2007)). Facts set forth in Plaintiff’s Amended Complaint provide ample and compelling support for Plaintiff’s averments of fraud. Specifically, Plaintiff’s aver that: 1) Each of the three named individual defendants provided intentionally adulterated Nutrimost products to the Avomeen Laboratory: Dr. Sterling, (from Idaho) on or before January 7, 2016 (Amended Complaint, ¶ 78) and Drs. Feeman (Indiana) and Olaffson (Michigan) on or before February 26, 2016) (Amended Complaint, ¶ 82). 2) Each of the three named individual defendants, through their respective counsel, represented to Nutrimost that its proprietary supplement was contaminated, in that it contained Fenproporex, Aminorex and Fluoxetine.(Amended Complaint, paras. 77; 80 and 84). 3) Each of the three named individual defendants, through their respective counsel, demanded that their Franchise Agreements be deemed void, solely by virtue of the bogus Lab Reports. (Amended Complaint, Exhibits “V” and “W”). 4) Each of the three named individual defendants knew that the samples provided to Avomeen had been intentionally contaminated and intended that Nutrimost rely to its detriment on the bogus Lab Reports. (Amended Complaint, paras. 78; 82; 98 and 98). 5) Nutrimost incurred expenses in relying upon the fraudulent misrepresentations of the Defendants. (Amended Complaint, ¶ 99). The Feeman Defendants also contend that Plaintiff has improperly “lump[ed] Defendants together…fail[ing] to inform each and every defendant of the nature of his alleged participation in the fraud.” (Feeman Brief at p. 7). This is simply not true. As to the many corporate entity defendants, it is axiomatic that a corporation can act only through its officers, employees or other agents. See, e.g., Lokay v. Lehigh Valley Cooperative Farmers, Inc., 342 Pa.Super. 89, 97, 492 A.2d 405, 408 (1985). Plaintiff has specified the actions of the three named individual Case 2:16-cv-00479-MRH Document 74 Filed 08/25/16 Page 5 of 23 6 defendants, Drs. Feeman, Sterling and Olafsson, and identifies, in paragraphs 55-59 of the Amended Complaint, the corporate defendants for which each of the three individuals was acting. Defendants Feeman, Sterling and Olafsson and their corporate entities are very plainly on notice as the specific acts with which they are each charged. B. Plaintiff Has Pleaded a Valid RICO Claim (Count III) 1. Standing /Direct Link Article III standing requires that the “plaintiff must have suffered an injury in fact - an invasion of a legally protected interest which is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical.” Township of Piscataway v. Duke Energy, 488 F. 3d 203, 208 (3d Cir. 2007). RICO “likewise requires injury and that the harm have resulted from a violation of the statute… where RICO is implicated this becomes a question of causation (whether the damages pleaded are the proximate result of the illegal conduct)”. In re Jamuna Real Estate, LLC, 416 B.R. 412, 417 (2009). “The Court must determine first if the count pleads a RICO violation and, if it does, whether damages are pleaded which are the proximate result of the illegal conduct.” Id. at 417. Defendants suggest that Nutrimost’s claimed injuries do not arise from the predicate acts pleaded in the Amended complaint, but rather “directly from the Defendants’ purported breaches of the Franchise Agreements”. (Feeman Mem., p. 10). Defendants further assert that Nutrimost makes nothing more than a conclusory statement that “Sterling, Olafsson and Feeman have each engaged in two or more predicate acts of racketeering activities during the past year”, but that these activities have not been adequately described. Defendants then suggest that if they had not transmitted the contaminated samples to Nutrimost but stopped abiding by the terms of the Case 2:16-cv-00479-MRH Document 74 Filed 08/25/16 Page 6 of 23 7 franchise agreements, the alleged injuries to Nutrimost would be identical; however, if they had provided the contaminated samples to Nutrimost, but still abided by the payment terms of the franchise agreements, the damages would be “non-existent”. (Feeman Mem., at p. 10). In making this argument, Defendants’ would apparently have this Court believe that they merely wished to disengage from Nutrimost and launch separate weight loss businesses in an ordinary, competitive commercial relationship. Defendants apparently believe that because Nutrimost did not immediately release them from their respective franchise agreements, Nutrimost has not suffered any injuries. Or that somehow, even if they had transmitted the bogus test results to Nutrimost, there would be no damage whatsoever provided that they adhered to the payment terms of their franchise agreements, and that the Feeman conspirators just happened to end up as competitors of Nutrimost in the weight loss marketplace, irrespective of their outrageous contamination scheme. Defendants’ argument completely misses the point. These outrageous acts are at the core of Defendants’ scheme to void the Franchise Agreements and compete with Nutrimost and therefore are directly, causally related to Nutrimost’s harm. These acts form the basis for Defendants’ extortion threat; the purported alleviation of the obligation to pay royalties; the competing weight loss programs that are based on the fraud of the contaminated samples; and the ongoing, unlawful racketeering activity and competition with Nutrimost. In short, these acts provide the underpinnings for Defendants’ unlawful competition against Nutrimost. As such, the Amended Complaint sets forth adequate facts upon which this Court can find that a “direct relationship between [Nutrimost’s] injuries and Defendants’ injurious conduct as alleged”. Baglio v. Baska, 116 F. 3d 467 (3d Cir. 1997). Case 2:16-cv-00479-MRH Document 74 Filed 08/25/16 Page 7 of 23 8 2. Predicate Acts In accordance with Rule 9(b), Plaintiffs must plead with particularity “the ‘circumstances’ of the alleged fraud in order to place the defendants on notice of the precise misconduct with which they are charged, and to safeguard defendants against spurious charges of immoral and fraudulent behavior’”. Seville Indus. Mach. Corp. v. Southmost Mach. Corp., 742 F. 2d 786, 791 (3d Cir. 1984). Plaintiffs may satisfy this requirement by pleading the “date, place or time” of the fraud, or through “alternative means of injecting precision and some measure of substantiation into their allegations of fraud”. Id. At paragraphs 77-93, Nutrimost alleges, with elaborate detail including exhibits, the predicate acts which form the basis for the harm it has sustained. These paragraphs set forth with particularity the details of a scheme involving the intentional procurement of a false laboratory report relating to a Nutrimost “supplement” product; the provision of the false report to Nutrimost in letters from Defendants’ counsel (attached to the Amended Complaint as exhibits); demands by Defendants that their franchise agreements be deemed void based on the purported presence of banned substances in the supplement; the resulting sequence of events leading to Defendants’ association with competitors of Nutrimost; their plans to compete with Nutrimost; and their scheme to blackmail, extort, disparage, defraud and otherwise harm Nutrimost. Likewise, Nutrimost’s RICO Statement details these acts at pps. 2-5 and include Defendants’ letters providing samples of the same lot of Nutrimost Weight Loss Formula, to the same laboratory, and invoking the resulting bogus lab reports as a pre-textual basis for voiding their franchise agreements. Case 2:16-cv-00479-MRH Document 74 Filed 08/25/16 Page 8 of 23 9 Nutrimost has very clearly set forth the “Contaminated Supplement Scheme” in its RICO Case Statement, as noted. Nutrimost has alleged that Defendants (outrageously) provided contaminated samples of its product to Avomeen Laboratories, while knowing that the samples had been intentionally altered. (Amended Complaint, ¶ 121-122; RICO Case Statement, at p. 4). The false report obtained from Avomeen and the assertions to Nutrimost that the findings of contamination were grounds for the demanded release from the Franchise Agreements, under threats of extortion (“Defendant Feeman’s demand for payment of $600,000 in exchange for not reporting the alleged contamination constitutes blatant wire/mail fraud and extortion”), all were made in furtherance of the scheme to illegally compete with Nutrimost and/or defraud it. (Amended Complaint, ¶ 125-128; RICO Case Statement, p. 5). Moreover, it is not as though Defendants are not apprised of the dates, or contents of their fraudulent representations, as each of the Avomeen reports is dated, as are the letters from Defendants’ counsel to Nutrimost. (RICO Case Statement, p. 3). As a result, Nutrimost has adequately pleaded predicate acts which identify the “purpose of the mailing within the defendant’s fraudulent scheme and which specify the time, place, and content of the alleged misrepresentation”. Bonavitacola Electric Contractor, Inc. v. Boro Developers, Inc., 87 Fed Appx. 227, 331 (3d Cir. 2003). 3. Enterprise and Pattern of Racketeering Activity Enterprise At page 13 of their brief, Defendants state “Plaintiff does not even attempt to plead that the alleged enterprise is more than an association of individuals and entities conducting the Case 2:16-cv-00479-MRH Document 74 Filed 08/25/16 Page 9 of 23 10 normal affairs of weight loss businesses.” On the contrary, Plaintiff has pleaded allegations which establish an enterprise and a pattern of racketeering activity. Nutrimost has properly pleaded how the Defendants operate as an “enterprise” under RICO. To suggest otherwise ignores a common sense reading of the allegations of the Amended Complaint. RICO defines an “enterprise” as including “any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not as a legal entity.” 18 U.S.C. § 1961(4). The Amended Complaint alleges that each of the Defendants is a “person and/or entity… who operated [a Nutrimost franchise] and/or other controlled entities.” (Amended Complaint, Para.14;18;19; 20; 21; 111-117). At paragraph 114, Nutrimost alleges that each and/or any combination of the three defendants, constitutes an “enterprise” and further clarifies that the same combinations operated as a group associated in fact “with regard to the unlawful conduct alleged herein…” (Amended Complaint, para. 116- 117). This allegation, combined with the allegations that support Plaintiff’s contention that “on or prior to January 2016 and the date of … this civil action, Sterling, Olafsson and Feeman knowingly and intentionally devised a scheme and artifice to defraud plaintiff and obtain money and property from it”, and “have, at all times since, engaged in the fraudulent scheme to defraud Nutrimost”, are sufficient allegations supporting the existence of the “enterprise” required under RICO. (Amended Complaint, at para. 119). Indeed, all of the Defendants are now competing with Nutrimost through the same competitor, an alleged goal of the enterprise that continues to compete with Nutrimost, using the “Contaminated Supplement Scheme” as a pretext for their brazen breach of their Franchise Agreements with Nutrimost. (Amended Complaint, paras. 2, 19-21, 76, 87-88, 94). The above- Case 2:16-cv-00479-MRH Document 74 Filed 08/25/16 Page 10 of 23 11 described well-pled facts, combined with all reasonable inferences derived therefrom where all Defendants: (1) claim their Franchise Agreements are void based on the same allegedly illegal substances (none of which was found in Nutrimost’s independent testing); (2) used the same laboratory for testing the samples; (3) made claims through legal counsel all around the same time after consulting with one another; and (4) are competing with Nutrimost through the same competitor, are more than sufficient to set forth the conspiracy and enterprise employed by these Defendants. In Boyle v. United States, 129 S.Ct.2237 (2009), the Supreme Court resolved a conflict among the Circuits by holding that, although an association in fact enterprise must have a structure, it need not have an “ascertainable structure” beyond that inherent in the pattern of racketeering activity in which it is engaged. The Court rejected the defense argument that the enterprise “must have at least some additional structural attributes:” Such a group need not have a hierarchical structure or a ‘chain of command;’ decisions may be made on an ad hoc basis and by any number of methods. . . . Members of the group need not have fixed roles; different members may perform different roles at different times. The group need not have a name, regular meetings, dues, established rules and regulations… While the group must function as a continuing unit and remain in existence long enough to pursue a course of conduct, nothing in RICO exempts an enterprise whose associates engage in spurts of activity punctuated by periods of quiescence. Nor is the statute limited to groups whose crimes are sophisticated, diverse, complex, or unique; for example, a group that does nothing but engage in extortion through old-fashioned, unsophisticated, and brutal means may fall squarely within the statute's reach. 129 S.Ct. at 2245-46. The Boyle Court reaffirmed that it is it is incorrect to say “that the existence of an enterprise may never be inferred from the evidence showing that persons associated with the enterprise engaged in a pattern of racketeering activity.” 129 S.Ct. at 2245. Case 2:16-cv-00479-MRH Document 74 Filed 08/25/16 Page 11 of 23 12 Here, an inference is not necessary. The allegation that Feeman’s “demand for payment of $600,000 in exchange for not reporting the alleged contamination” qualifies as an “old- fashioned, brutal means” of an extortion threat furthering Defendants’ criminal enterprise (Amended complaint, at ¶ 128-133; RICO Case Statement, at ¶ 5). Taken as a whole, these allegations provide every indication of an “enterprise” needed to advance the scheme for a competing weight loss business, and the manner by which the competing business entities, would be started. (Amended Complaint, at ¶ 127-134). Common sense suggests that the existence of an association-in-fact is oftentimes more readily proven by what it does, rather than by abstract analysis of its structure. The Amended Complaint adequately notifies the Defendants as to what they did. The Feeman defendants, all franchisees of Nutrimost, “together as an enterprise engaged in a concerted effort to perpetuate a scheme to defraud Nutrimost…” and the Amended Complaint places these defendants on notice of the particulars of their wrongful activities. In this instance, a RICO enterprise has been sufficiently pleaded. a. Framework The requirements of McCullough v. Zimmer, 382 Fed. App. 225 (3d Cir. 2010) are met by Nutrimost in its Amended Complaint. The Feeman Defendants are not alleged to be carrying out the “ordinary affairs of [the defendant corporation]”. Rather, Nutrimost has alleged a purposeful fraud and common plan, in which three individuals acted in concert to obtain false lab reports, from the same laboratory, as a basis to renounce their respective franchise agreements for the purpose of unlawful competition. These individuals constitute a distinct group, with a “common purpose of engaging in a course of [illegal] conduct”; a longevity to pursue the enterprise’s purpose; and a “framework” of communications, including “collaboration”, as set Case 2:16-cv-00479-MRH Document 74 Filed 08/25/16 Page 12 of 23 13 forth by McCullough. The allegation that Sterling, Olafsson, and Feeman made threats to Nutrimost attempting to extort money from it, along with a demand to be released from their franchise agreements, demonstrates the framework in which the competing weight loss businesses were launched, and advanced. (Amended Complaint, at ¶ 127-134). b. Continuing Activity/ Pattern Defendants misapprehend the Court's remarks in Marshall-Silver Constr. Co. v. Mendel, 894 F.2d 593 (Third Cir. 1990), and the requirement of "long-term" continuing activity. The existence of continuity as required by RICO, 18 U.S.C.S. §§ 1961-68, must be demonstrated either by a showing that the predicates themselves amount to long-term continuing racketeering activity, or by proof that those predicates otherwise constitute a threat of long-term continuing racketeering activity. The Court in Mendel noted that "predicate acts extending over a few weeks or months and threatening no future criminal conduct do not satisfy [the continuity] requirement." 894 F. 2d at 597. Here, Nutrimost has pleaded that Defendants intend to continue their competing enterprise for an ongoing, indefinite period of time and in fact are operating it today, all based on the pretext of the Contaminate Supplement Scheme. Defendants' activities were not "one-off", or infrequent activities, but rather were, and are, intended to continue to injure Plaintiff’s business or property as set forth in Count III of the Amended Complaint. Nutrimost has alleged that in developing and perpetuating the Contaminated Supplement Scheme, Defendants actions are continuous and have extended over a period from “on or prior to January 2016” through the present. (Amended Complaint, at ¶ 115). Nutrimost also apprehends a significant threat of future racketeering activity, that Defendants intend to “further the scheme”, Case 2:16-cv-00479-MRH Document 74 Filed 08/25/16 Page 13 of 23 14 and “more fully effectuate their fraudulent scheme”, as set forth in Paragraphs 124-125 of the Amended Complaint. Further, the requisite “pattern of racketeering activity” committed by the Feeman Defendants is established in this case because Nutrimost has pled that Defendants’ fraudulent scheme involved numerous instances of wire and/or mail fraud by these Defendants. See, Amended Complaint ¶¶ 120- 136 (alleging that as part of the scheme to defraud, each submission to Avomeen constitutes a communication in interstate commerce, in furtherance of the scheme, and that each Defendant made threats to Nutrimost threatening to report the false laboratory results). “To establish predicate offenses under… §1343, it is the scheme that must be fraudulent, not necessarily the particular… wire transmission that constitute the offenses.” Kolar v. Preferred Real Estate Investments, Inc., 361 Fed.Appx. 354, 362 (3d Cir. 2010) (emphasis added); Germinaro v. Fidelity Nat. Title Ins. Co., 2015 WL 3407911, *22 (W.D. Pa. May 27, 2015). C. Plaintiffs Have Pleaded a Valid Claim for Civil Conspiracy (Count IV) The facts pleaded in the Amended Complaint adequately state a cause of action for Civil Conspiracy. In Pennsylvania “a civil conspiracy is a combination of two or more persons to do an unlawful or criminal act or to do a lawful act by unlawful means or for an unlawful purpose. A conspiracy becomes actionable when some overt act is done in pursuance of the common purpose or design held by the conspirators and actual legal damage results.” Baker v. Rangos, 324 A.2d 498, 351 (Pa. Super, 1974)(internal citations omitted). The complaint, moreover, need not spell out the times and places of meetings or dates upon which the conspiracy was hatched. It is instead sufficient if the complaint sets forth facts Case 2:16-cv-00479-MRH Document 74 Filed 08/25/16 Page 14 of 23 15 from which the conspiracy may be inferred. Weaver v. Franklin County, 918 A.2d 194 (Pa. Commw. Ct. 2007), appeal denied, 593 Pa. 751, 931 A.2d 660 (2007); Com. ex rel. Pappert v. TAP Pharmaceutical Products, Inc., 885 A.2d 1127 (Pa. Commw. Ct. 2005); Brown v. Blaine, 833 A.2d 1166 (Pa. Commw. Ct. 2003). Moreover, “allegations of conspiracy are not measured under the ... [Fed.R.Civ.P.] 9(b) standard, which requires greater particularity of allegation of fraud, but are measured under the more liberal ... [Fed.R.Civ.P. 8(a)] pleading standard.” Odesser v. Continental Bank, 676 F.Supp. 1305, 1313 (E.D.Pa.1987) . A conspiracy claim must also contain supportive factual allegations. See Black & Yates, Inc. v. Mahogany Ass’n, 129 F.2d 227, 231-32 (3d Cir.1941), cert. denied, 317 U.S. 672, 63 S.Ct. 76, 87 L.Ed. 539 (1942). The allegations must be sufficient to “describe the general composition of the conspiracy, some or all of its broad objectives, and the defendant’s general role in that conspiracy.” Alfaro v. E.F. Hutton & Co., Inc., 606 F.Supp. 1100, 1117-18. “ ‘Although mere inferences from the complaint are inadequate to establish the necessary factual basis’, a court may look to any ‘factual allegations of particular acts’ within the complaint as a whole incorporated by the conspiracy claim to provide this basis.” Rose v. Bartle, 871 F.2d 331, 336 (3d Cir.1989)(citations omitted). There are ample allegations set forth in the Amended Complaint and RICO Case Statement, which, if proven, clearly allege expressly and give rise to a reasonable and plausible inference that the Defendants were acting together for an unlawful purpose, with the ultimate goal of competing with Nutrimost in violation of their Franchise Agreements. See, e.g., Commonwealth v. TAP Pharmaceuticals Products, Inc., 885 A.2d 1127, 1141 (Pa. Commw. Ct. 2005)(“Courts do not require minute detail in the pleading of [conspiratorial] contact, but rather Case 2:16-cv-00479-MRH Document 74 Filed 08/25/16 Page 15 of 23 16 only allegations of fact that, if proven, would support and inference that defendants are acting together for an unlawful purpose.”). Contrary to the Feeman Defendant’s assertion, the Amended Complaint does allege underlying torts (Common Law Fraud)(Count I) as well as blackmail, criminal coercion, wire fraud, bribery and/or extortion. (Count III). Plaintiff very specifically alleges the intent of the Defendants in entering into the conspiracy, the overt acts taken by each in furtherance of the conspiracy and the damages incurred by Plaintiff as a result of the conspiracy. Defendants’ motion to dismiss Count IV consequently should be denied. D. Feeman’s Motion to Dismiss Count II (Breach of Contract) is Baseless The Feeman Defendant’s move to dismiss Count II on the stated basis that Plaintiff “admits that the Nutrimost weight loss supplement samples tested by Avomeen did, in fact, test ‘positive for trace amounts of the three aforementioned substances....”(Feeman Mem, p. 18, citing ¶¶ 79 and 83 of the Amended Complaint.) This averment is disingenuous at best. The two paragraphs cited by Feeman for this “admission” by Plaintiff contain nothing more than descriptions of the Avomeen reports: 79. Avomeen returned a report to Defendant Sterling, dated January 7, 2016, indicating that the sample, purportedly taken from Nutrimost lot no. 150622- FUCO, was positive for trace amounts of the three aforementioned substances, including the two aforementioned banned substances. And 83. Avomeen returned a report to Defendants Feeman and Olafsson, dated February 26, 2016, indicating that the sample, again purportedly taken from Nutrimost lot no. 150622-FUCO, was positive for trace amounts of the same three substances. Case 2:16-cv-00479-MRH Document 74 Filed 08/25/16 Page 16 of 23 17 Characterizing these paragraphs as “admissions” by Nutrimost that its product contains the banned substances would be nothing less than ludicrous, even if Plaintiff had not included the signal adverb “purportedly” to describe the Defendants’ contention that the samples were genuine Nutrimost supplements. Even were we to credit Defendants with an oddly mistaken but honestly held interpretation of these paragraphs, the Feeman defendants go well beyond taking semantic liberties, flagrantly misrepresenting in their memorandum that “nowhere in the Amended Complaint does Plaintiff allege that the weight loss supplements provided to Defendants, from which samples were taken, did not contain the banned substances.” (Feeman Mem., p. 18). This assertion of the Defendants is entirely and unquestionably refuted, by a glance at paragraph 75 of the Amended Complaint, in which Plaintiff avers that: 75. The Nutrimost supplements provided by Nutrimost to its franchisees (including the Defendant Franchisees named herein) were and are completely free of any and all illegal, banned and/or illicit substances, including, but not limited to, Fenproporex and Aminorex and Fluoxetin. Plaintiff could not have been more clear - Nutrimost supplements do not contain the substances identified in the Avomeen reports. Plaintiff, moreover, has very specifically pleaded that the samples provided by the conspirators to Avomeen had been intentionally adulterated (Complaint, ¶ 77) and has referred to the Avomeen report, no less than ten times, as the “bogus” Avomeen report. See, Amended Complaint, paras. 81; 85; 92; 125; 126; 127; 128; 147 and 170. Plaintiff also “specifically denies,” in paragraph 170, that its products contain the banned substances. Case 2:16-cv-00479-MRH Document 74 Filed 08/25/16 Page 17 of 23 18 The Feeman Defendants, having misrepresented the content of Plaintiff’s Amended Complaint, urge the Court to accept the finding of the disputed Avomeen reports and essentially proceed with summary judgment, finding the Franchise Agreements to be void as against public policy. (Feeman Mem., p. 19)(“Plaintiff continues to fail to even properly allege that the Nutrimost weight loss supplements provided to Defendants, and required to be sold under the Franchise Agreements, were free of illegal substances, therefore, Plaintiff cannot assert that Defendants breached their contractual obligations”). This is balderdash. The essential facts, as pleaded by Plaintiff, are that: 1) Defendants intentionally adulterated Plaintiff’s supplement; 2) The Avomeen Reports are bogus; 3) Plaintiff’s supplements do not contain the banned substances; 4) Defendants conceived the bogus lab reports as a pretext to escape their Franchise Agreements; 5) Defendants cited the bogus lab reports as the sole pretextual basis upon which they each ceased performing their obligations as Nutrimost Franchisees; 6) None of the Defendants provided so much as a single adverse incident report to the FDA, as might be expected of a health care provider who was truly concerned about a patient’s alleged adverse reaction to a supplement; 7) Nutrimost had its control samples tested by a competent lab, which confirmed the absence of the banned substances; 8) Defendants were informed of the control sample test results and refused to provide aliquots of the samples provided by them to Avomeen; Case 2:16-cv-00479-MRH Document 74 Filed 08/25/16 Page 18 of 23 19 9) Defendants began operating in violation of their Franchise Agreements even before making their fraudulent misrepresentations about the samples to Nutrimost. 10) Defendants have offered basis whatsoever for their breachs of their respective Franchise Agreements. Count II pleads a valid claim for breach of the Franchise Agreements against the Feeman Defendants. The Defendant's only basis for moving to dismiss Count II is their misrepresentation of the contents of the Amended Complaint. Other than doubling down on their contaminated supplement scheme, Defendants offer no basis upon which Count II is deficient or should be dismissed. E. Mandatory Injunctive Relief is Appropriate A motion for preliminary injunction will be granted if the movant can "establish that [it] is likely to succeed on the merits, that [it] is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in [its] favor, and that an injunction is in the public interest.'" Ferring Pharms., Inc. v. Watson Pharms., Inc., 765 F.3d 205, 210 (3d Cir. 2014) (quoting Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 20, 129 S. Ct. 365, 172 L. Ed. 2d 249 (2008)). The moving party "bears the burden of showing that these four factors weigh in favor of granting the injunction." Id. Injunctive relief is a common remedy in instances in which a covenant not to compete is violated, as here. In the present case, Nutrimost can demonstrate that it will be irreparably damaged and injured and that “unless the Defendants are directed to cease their competition with the Plaintiff and use of the trade secrets of Plaintiff, including some or all of the Nutrimost Case 2:16-cv-00479-MRH Document 74 Filed 08/25/16 Page 19 of 23 20 Weight Loss System, Plaintiff will be caused irreparable injury and damage”. (Amended Complaint, ¶. 152). The Franchise Agreements contain, among other things, a covenant by the Defendants: (d) Not to enter a competitive business with Plaintiff, during the five year term of the Franchise Agreements and any renewal thereof, involving the sale of any weight loss products or services sold as a weight loss product without first obtaining prior written consent of Plaintiff; and (e) Upon termination of the Franchise Agreements, not engage in a business competitive with that of Plaintiff involving the sale of any weight loss products or services within five (5) miles of any part of each Defendant’s respective prior zip code territory for a period of two (2) years; (Amended Complaint, Exhibits “A” through “U,” Section Nineteen.) Section Nineteen also expressly provides that Nutrimost shall, in the event of a breach of the covenant not to compete, have the option of “[p]ursuing any legal or equitable remedies due to such breach.” Id. Plaintiff has pleaded, and will easily prove on hearing, that the Defendants, all of which are within the initial five year period contemplated by subparagraph 19(d) of their respective Franchise Agreements, are operating as and/or are affiliated with a competing weight loss business, at and from the very same locations at which they formerly operated as Nutrimost franchisees and without the written consent of Nutrimost. F. Plaintiff has Pleaded a Valid Claim for Declaratory Judgment Defendants argue that Plaintiff’s claim for declaratory judgment is “redundant” in Plaintiff’s other claims for relief (all of which Defendant contends should be dismissed). Count VII, however, states a quintessential claim for declaratory judgment, as demonstrated by the Feeman Defendant’s insistence that the bogus Lab Reports justify their unilateral determination that the Franchise Agreements are null and void. Case 2:16-cv-00479-MRH Document 74 Filed 08/25/16 Page 20 of 23 21 Contrary to Defendant’s argument, Plaintiff’s claim for breach of contract does make Count VII cumulative or redundant. Rather, the Declaratory Judgment Act, 28 U.S.C. § 2201(a) (“DJA”) specifically provides that “[i]n a case of actual controversy within its jurisdiction, ... any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such a declaration, whether or not further relief is or could be sought.” 28 U.S.C. § 2201. American Type Founders, Inc. v. Lanston Monotype Machine Co., 137 F.2d 728, 729 (3d Cir.1943) (court “entertain[ed] no doubt that an actual controversy exist[ed] within the purview of the Declaratory Judgment Act” where plaintiff sought declaration of right to cancel contract while defendant sought its enforcement); Lehigh Coal & Navigation Co. v. Central R.R. N.J., 33 F.Supp. 362, 365 (E.D.Pa.1940) (“Construction and interpretation of written instruments ... is the principle function of a declaratory judgment proceeding.”). So long as there is an actual controversy between the parties, the DJA allows a court to settle the parties’ respective rights, even before there is a violation of law, exercise of right, or breach of duty. See, e.g., Océ-Office Systems, Inc. v. Eastman Kodak Co., 805 F.Supp. 642, 646 (N.D.Ill.1992) (“Resolving the uncertainty and anxiety resulting from a looming lawsuit is, indeed, the purpose of the Declaratory Judgment Act.”); American Mail Line, Ltd. v. United States, 213 F.Supp. 152, 160 (W.D.Wash.1962) (“[T]he Declaratory Judgment Act was enacted to permit parties to resolve their disputes before a cause of action has accrued....”). See also 22A AM. JUR.2d, 677, Declaratory Judgments, § 8 (1988) (“[A] prime purpose of declaratory judgment statutes is to ... make a controversy over a legal or equitable right or title justiciable at an earlier state of the controversy than that which gives rise to a cause of action at common law; Case 2:16-cv-00479-MRH Document 74 Filed 08/25/16 Page 21 of 23 22 Hardware Mutual Casualty Co. v. Schantz, 178 F.2d 779, 780 (5th Cir.1949) (“The purpose of the Declaratory Judgment Act is to settle ‘actual controversies’ before they ripen into violations of law or a breach of some contractual duty.”). Here, the Plaintiff has pleaded that the three individual named Defendants, each a disgruntled franchisee controlling multiple franchise locations, operating in geographically disparate states, by what the Defendants can only claim is a remarkable coincidence, claim, apparently “on a hunch”, to have sent samples of the same lot of Plaintiff’s supplement to the same laboratory for evaluation. These three individual defendants then caused their respective attorneys to send letters to Plaintiff, in which they do not, as might be expected, alert Nutrimost to a possible problem and offer to assist in investigation or remediating the situation, but rather unequivocally and finally assert that the Plaintiff’s supplement contains a banned substance, with each of the attorneys similarly claiming that the Franchise Agreements are null and void as against public policy. When informed of the negative test result of the supplement control sample and when asked to cooperate by providing an aliquot of the samples provided to Avomeen, the Defendants refuse. With more than one hundred and fifty other franchise locations continuing to use the proprietary supplement, without problem, with no governmental recall or other action, with no evidence whatsoever of the presence of the banned substances in Nutrimost’s proprietary supplements, the Defendants here cling to their story and continue to illegally compete with Plaintiff, in blatant violation of their Franchise Agreements. If ever a set of facts presented a perfect case for a declaratory judgment, this is it. IV. Conclusion Case 2:16-cv-00479-MRH Document 74 Filed 08/25/16 Page 22 of 23 23 For all of the foregoing reasons, Defendants’ Motion to Dismiss the Amended Complaint should be denied. Dated: August 25, 2016 Respectfully Submitted, MARGOLIS EDELSTEIN /s/ Daniel M. Taylor, Jr.____________ DANIEL M. TAYLOR, JR. PA I.D. No. 62936 dtaylor@margolisedelstein.com /s/ Kyle T. McGee_________________ KYLE T. McGEE PA I.D. No. 205661 kmcgee@margolisedelstein.com 525 William Penn Place Suite 3300 Pittsburgh, PA 15219 (412) 281-4256 (412) 642-2380 (fax) Counsel for Plaintiff, Nutrimost Doctors, LLC COOPER OWEN & RENNER, P.C. /s/ Jeffrey R. Owen__________________ JEFFREY R. OWEN PA I.D. No. 45896 1 Priority Lane, #419 Murrysville, PA 15668 (412) 475-9696 jowen@corlaw.com Counsel for Plaintiff, Nutrimost Doctors, LLC Case 2:16-cv-00479-MRH Document 74 Filed 08/25/16 Page 23 of 23