Delectable Brands, LLC v. Yogurtlab United States, LLC

DELECTABLE BRANDS, LLC, Plaintiff, v. YOGURTLAB USA, LLC, et al., Defendants.

Case No. 2:15-cv-01511-TMP

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ALABAMA SOUTHERN DIVISION

August 25, 2017

MEMORANDUM OPINION AND ORDER

Pending before the court is a Motion to Dismiss Counts III, IV, and V of the Amended Complaint, filed by Defendants YogurtLab USA, LLC, Yogurt Lab Franchising, LLC, Yogurt Lab Holdings, LLC, Yogurt Lab II, LLC, and Yogurt Lab, LLC (together "defendants"). (Doc. 35). The motion has been fully briefed, and the parties have consented to dispositive jurisdiction by a magistrate judge.

I. PROCEDURAL HISTORY

The above-styled case was removed to this court from the Circuit Court of Jefferson County, Alabama, on September 1, 2015. (Doc. 1). The original Complaint named as defendants YogurtLab USA, LLC, and Aaron Switz ("original defendants"). The original defendants filed a Motion to Dismiss the Complaint, which was granted as to defendant Aaron Switz, but denied as to defendant YogurtLab USA, LLC. Following a Joint Motion to Amend the Scheduling Order, which the court granted, the plaintiff filed an Amended Complaint on January 15, 2017. (Doc. 25). In the Amended Complaint, the plaintiff named four additional defendants: Yogurt Lab Franchising, LLC, Yogurt Lab Holdings, LLC, Yogurt Lab II, LLC, and Yogurt Lab, LLC (the "new defendants"). The Amended Complaint incorporated by reference Counts I and II of the Original Complaint, and asserted new Counts III through V. All counts are pleaded against all defendants.

The defendants filed the instant Motion to Dismiss on February 13, 2017. (Doc. 35). After receiving an extension from the court, the plaintiff filed its response to the motion on March 8, 2017. (Doc. 47). The defendants' filed a reply to the plaintiff's response on March 15, 2017. (Doc. 51).

II. FACTS

The facts, as pleaded in the Amended Complaint by the non-moving plaintiff, are as follows:

The plaintiff is an Alabama limited liability company with its primary place of business in Jefferson County, Alabama. It is a food service business that operates retail yogurt stores in the state of Alabama. Defendant YogurtLab USA,LLC, is a Minnesota corporation headquartered in Minneapolis, Minnesota, and doing business in the state of Alabama. Prior to April 2, 2013, YogurtLab USA, LLC, began using the trade name "YogurtLab" in Minnesota. The trade name, however, was registered to the plaintiff at the time. The plaintiff, therefore, sent a "cease and desist" letter to YogurtLab USA, LLC, demanding that it stop using the trade name "YogurtLab."

After negotiation, the plaintiff and YogurtLab USA, LLC, then entered into a Purchase Agreement through which YogurtLab USA agreed to purchase certain trademarks and other intellectual property from the plaintiff. The transaction occurred on April 2, 2013. As part of the Purchase Agreement, the plaintiff retained a license to use the intellectual property made the subject of the Purchase Agreement, including the tradename "YogurtLab," at its existing Alabama locations. The terms of the Purchase Agreement required YogurtLab USA, LLC, as the purchaser, to make periodic payments to the plaintiff, subject to minimum payments of $25,000.00 on the second, third, fourth, and fifth anniversary dates of the April 2, 2013, closing date. YogurtLab USA, LLC, failed to make the first payment on April 2, 2015, and remains in default on that payment.¹ The plaintiff notified YogurtLab USA, LLC of its default under the terms of the Purchase Agreement as early as April 8, 2015. On July 1, 2015, the plaintiff's attorneynotified YogurtLab USA, LLC, via electronic mail and regular mail of its breach of the Purchase Agreement.

The new defendants are all Minnesota corporations with principal places of business Minnesota. The new defendants also have been using the tradename "YogurtLab" made the subject of the Purchase Agreement entered into between the plaintiff and YogurtLab USA, LLC, on April 2, 2013, under a license from YogurtLab USA, LLC. All of the new defendants and YogurtLab USA, LLC, are commonly owned, at least partially, by Aaron Switz, who is listed as the "manager" of all of the defendants with the Minnesota Secretary of State. They all share the same address. None of the new defendants has made payments to the plaintiff under the Purchase Agreement, or as a royalty for the use of the tradename, which they all continue to use.

III. DISCUSSION

A. Shotgun Pleading

The defendants argued in their motion to dismiss that the Amended Complaint is an impermissible shotgun pleading. The Eleventh Circuit sets out in Weiland v. Palm Beach County Sheriff's Office, that there are approximately four types of "shotgun pleadings."

The most common type—by a long shot—is a complaint containing multiple counts where each count adopts the allegations of all preceding counts, causing each successive count to carry all that came before and the last count to be a combination of the entire complaint. The next most common type, at least as far as our published opinions on the subject reflect, is a complaint that does not commit the mortal sin of re-alleging all preceding counts but is guilty of the venial sin of being replete with conclusory, vague, and immaterial facts not obviously connected to any particular cause of action. The third type of shotgun pleading is one that commits the sin of not separating into a different count each cause of action or claim for relief. Fourth, and finally, there is the relatively rare sin of asserting multiple claims against multiple defendants without specifying which of the defendants are responsible for which acts or omissions, or which of the defendants the claim is brought against. The unifying characteristic of all types of shotgun pleadings is that they fail to one degree or another, and in one way or another, to give the defendants adequate notice of the claims against them and the grounds upon which each claim rests.

792 F.3d 1313, 1323 (11th Cir. 2015). The plaintiff's Amended Complaint incorporates by reference the original Complaint and states, as if by rote under each count, that it "affirms and incorporates by reference the allegations set forth" in preceding paragraphs. Although this type of incorporation by reference is procedurally frowned-upon, each Count in the Amended Complaint also sets out the basis for that particular count. The Amended Complaint does not create confusion about the nature of the claims asserted against each defendant, namely breach of the Purchase Agreement and, alternatively, violation of the Lanham Act for using the tradename "YogurtLab."

Defendants also argue that it was improper for the plaintiff to bring each count generally against all defendants. It is not inappropriate, however, to assert a claim against multiple defendants. In the Amended Complaint, the plaintiff asserts that Counts I and II are set out against the new defendants as well as YogurtLab USA, LLC. (Doc. 25, ¶ 17). Also, beneath the headings of Count III through V, the plaintiff notes that each counts relate to "(All Defendants)." (Doc. 25, pp. 6-8). The problem with shotgun pleadings is that they fail "to give the defendants adequate notice of the claims against them and the grounds upon which each claim rests." Weiland, 729 F.3d at 1323. That is not the case here. While it may be that the facts pleaded fail to establish particular types of claims, there is no confusion that plaintiff alleges that each defendant has breached the Purchase agreement and has wrongfully used the tradename "YogurtLab" in violation of plaintiff's rights in the name. Therefore, on the argument that the Amended Complaint is an inadmissible shotgun pleading, the Motion to Dismiss the Amended Complaint is due to be denied.

B. Personal Jurisdiction

The new defendants contend that this court lacks personal jurisdiction over them. The new defendants argue that specific personal jurisdiction is the only basis by which the plaintiff can argue that personal jurisdiction exists over them and because the court has determined no personal jurisdiction exists over AaronSwitz, the new defendants also do not meet the criteria for establishing minimum contacts and specific personal jurisdiction. The plaintiff counters, however, that because the new defendants are assignees to the Purchase Agreement entered in to between the plaintiff and YogurtLab USA, LLC, the new defendants stand in equal place with the original defendant, owing the same duties to the plaintiff under the Purchase Agreement. Therefore, argues the plaintiff, the new defendants have the same minimum contacts as the original defendant. The plaintiff also argues that minimum contacts are established because the defendants' wrongful acts were intentional and, therefore, the defendants were aware that the harm caused by those actions would be felt by a specific entity in the state of Alabama.

As to establishing minimum contacts for specific personal jurisdiction, the Eleventh Circuit Court of Appeals has explained:

We undertake a two-step inquiry to determine whether the exercise of personal jurisdiction over a nonresident defendant is proper. First, we determine whether the state's long-arm statute provides jurisdiction. Internet Solutions Corp. v. Marshall, 557 F.3d 1293, 1295 (11th Cir. 2009). Only where the long-arm statute provides jurisdiction do we proceed to the second step and determine whether "the defendant ha[s] minimum contacts with the forum state" and, if it does, whether the district court's exercise of jurisdiction over that defendant would "offend traditional notions of fair play and substantial justice." Id. at 1295-96 (citations omitted) (alteration in original).

PVC Windoors, Inc., v. Babbitbay Beach Constr., 598 F.3d 802, 807 (11th Cir. 2010). In Alabama, "the two inquiries merge, because Alabama's long-arm statuepermits the exercise of personal jurisdiction to the fullest extent...