Esposito v. Info. Tech. Corp. of the Tri-States

VINCENT ESPOSITO; JULY 4 EVER FIREWORKS, INC.; and JULY 4 EVER CO., LTD., Plaintiffs, v. INFORMATION TECHNOLOGY CORP. OF THE TRI-STATES; FIREWORKS EXTRAVAGANZA, INC.; J&J COMPUTING, INC., d/b/a FIREWORKS EXTRAVAGANZA; and JOHN SAGARIA, Defendants.

No. 19 CV 2025 (VB)

United States District Court, S.D. New York

April 18, 2022

OPINION AND ORDER

Vincent L. Briccetti United States District Judge

Plaintiffs Vincent Esposito; July 4 Ever Fireworks, Inc. (“July 4 Ever Inc.”); and July 4 Ever Co., Ltd. (“July 4 Ever Co.”), bring this action against defendants Information Technology Corp. of the Tri-States (“ITC”); Fireworks Extravaganza, Inc. (“FEI”); J&J Computing, Inc. d/b/a Fireworks Extravaganza (“J&J Computing”); and John Sagaria, alleging violations of the Lanham Act, the Anticybersquatting Consumer Protection Act (“ACPA”), and the New York General Business Law (“GBL”), as well as conversion and tortious interference in violation of New York law, and seeking to pierce the corporate veil. Defendants assert a counterclaim against Esposito for defamation.

Now pending are the parties' cross-motions for summary judgment. Defendants seek judgment dismissing the amended complaint in its entirety. (Doc. #161). Plaintiffs seek judgment in their favor on all their claims except the veil-piercing claim; they also seek dismissal of defendants' counterclaim and other relief relating to defendants' conduct in discovery. (Doc. #162).

For the following reasons, the motions are GRANTED IN PART and DENIED IN PART.

The Court has subject matter jurisdiction pursuant to 28 U.S.C § 1331.

BACKGROUND

The parties have submitted memoranda of law, declarations with exhibits, andstatements of undisputed material facts pursuant to Local Civil Rule 56.1, which together reflect the following factual background.^[1]

Vincent Esposito and John Sagaria were friends until they had a falling out in 2016.

They were also competitors in the fireworks industry, and they both at times owned businesses that put on fireworks displays for holidays and other events.

July 4 Ever Inc. is still in the fireworks industry. It is solely owned by Esposito's brother, a nonparty.

Around 2011, Esposito pleaded guilty to federal gun charges. As a result of the guilty plea, Esposito surrendered his license to perform commercial fireworks shows and was disqualified from owning any regulated explosives for life. According to Esposito, he now works as a salesperson for July 4 Ever Inc. (Doc. #165 (“Esposito Aff.”) ¶ 15). According to defendants, the felony conviction means Esposito can no longer work in the fireworks industry. (Doc. #164, at 4).

Esposito is also the sole owner of July 4 Ever Co.^[2] According to Esposito, July 4 Ever Co. maintains July 4 Ever Inc.'s website. (Esposito Aff. ¶ 15). According to defendants July 4 Ever Co. only functions as a real estate holding company, and its sole asset is a ninety-nine-year lease for property in Walden, New York. (See Doc. #164-2 (“Esposito Dep.”), at 26-27).

Sagaria is the sole owner of ITC, which sells and repairs Apple products. He is also the sole owner of FEI and J&J Computing. J&J Computing is in the fireworks industry. According to Sagaria's deposition in this case, FEI is not and has never been in the fireworks industry. (Doc. #164-5 (“Sagaria Dep.”), at 62-63). Sagaria has, however, testified in other litigation that FEI's “primary business is designing and providing professional fireworks displays.” (See, e.g., Doc. #137-2 ¶ 15).

This litigation arises from a dispute over a website with the domain name july4ever.com (the “website”), which Esposito registered on November 29, 1998. (Doc. #166-2). At one time, Esposito hired defendants to design and maintain the website. (Esposito Dep. at 97).

From 2017 to April 2020, defendants caused the website to redirect to their website, FWExtravaganza.com. (See Doc. 122-1 ¶¶ 37, 47 (“Sagaria Aff.”); Sagaria Dep. at 109). In April 2020 and thereafter, defendants caused the website to redirect to a blank page. (Sagaria Aff. ¶ 47).

The parties dispute, however, who owned the website when it was being redirected.

Defendants offer evidence plaintiffs voluntarily transferred the website to ITC in 2007, and thereafter ITC owned the website. (See Doc. #164-6). Sagaria testified that, because he owned the website, he was within his rights to cause it to redirect. (See, e.g., Sagaria Dep. at 97, 102, 108-09).

Plaintiffs offer evidence the transfer of the website to ITC in 2007 was a mistake, and the website was promptly transferred back to plaintiffs. (Esposito Aff. ¶¶ 7-8). Plaintiffs point to an email from Sagaria to Esposito dated March 21, 2007, in which Sagaria informed Esposito the website was mistakenly transferred to ITC but Sagaria “changed it back to July 4 Ever.” (Doc. #137-5 at ECF 2).^[3]

Separately, defendants allege a counterclaim against Esposito for defamation. Specifically, defendants assert that, around April 14, 2019, Esposito falsely told a representative of the Town of Walkill that there was a judgment against J&J Computing and FEI. The parties agree a judgment was entered against defendants in Supreme Court, Orange County, on March 25, 2019. (See Doc. #166-8).

DISCUSSION

I. Legal Standard

The Court must grant a motion for summary judgment if the pleadings, discovery materials before the Court, and any affidavits show there is no genuine issue as to any material fact and it is clear the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).^[4]

A fact is material when it “might affect the outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute about a material fact is genuine if there is sufficient evidence upon which a reasonable jury could return a verdict for the non-moving party. See Id. It is the moving party's burden to establish the absence of any genuine issue of material fact. Zalaski v. Bridgeport Police Dep't, 613 F.3d 336, 340 (2d Cir. 2010).

If the non-moving party fails to make a sufficient showing on an essential element of its case on which it has the burden of proof, then summary judgment is appropriate. Celotex Corp. v. Catrett, 477 U.S. at 323. If the non-moving party submits “merely colorable” evidence, summary judgment may be granted. Anderson v. Liberty Lobby, Inc., 477 U.S. at 249-50. The non-moving party “must do more than simply show that there is some metaphysical doubt as to the material facts and may not rely on conclusory allegations or unsubstantiated speculation.” Brown v. Eli Lilly & Co., 654 F.3d 347, 358 (2d Cir. 2011). “[T]he mere existence of a scintilla of evidence” supporting the non-moving party's position is likewise insufficient; there must be evidence on which the jury could reasonably find for it. Dawson v. County of Westchester, 373 F.3d 265, 272 (2d Cir. 2004).

On summary judgment, the Court construes the facts, resolves all ambiguities, and draws all permissible factual inferences in favor of the non-moving party. Dallas Aerospace, Inc. v. CIS Air Corp., 352 F.3d 775, 780 (2d Cir. 2003). If “there is any evidence in the record from which a reasonable inference could be drawn in favor of the [non-moving] party” on the issue on which summary judgment is sought, “summary judgment is improper.” See Sec. Ins. Co. of Hartford v. Old Dominion Freight Line, Inc., 391 F.3d 77, 82-83 (2d Cir. 2004).

In deciding a motion for summary judgment, the Court need only consider evidence that would be admissible at trial. Nora Beverages, Inc. v. Perrier Grp. of Am., Inc., 164 F.3d 736, 746 (2d Cir. 1998).

In deciding cross-motions for summary judgment, “the court must evaluate each party's motion on its own merits, taking care in each instance to draw all reasonable inferences against the party whose motion is under consideration” and need not ultimately “grant judgment as a matter of law for one side or the other.” Heublein, Inc. v. United States, 996 F.2d 1455, 1461 (2d Cir. 1993).

Moreover, pursuant to Rule 56(d), if a party opposing summary judgment “shows by affidavit or declaration that, for specified reasons, it cannot present facts essential to justify its opposition, the court may: (1) defer considering the motion or deny it; (2) allow time to obtain affidavits or declarations or to take discovery; or (3) issue any other appropriate order.”

II. Cross-Motions for Summary Judgment

A. False Designation of Origin

The parties assert there is no genuine dispute of material fact with respect to plaintiffs' false designation of origin claim, and each side contends it is entitled to summary judgment.

The Court agrees summary judgment should be granted in favor of defendants, but for reasons different than those articulated by defendants.

Section 43(a) of the Lanham Act establishes a private right of action for:

Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce . . . any false designation of origin . . ., which . . . is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person.

15 U.S.C. § 1125(a)(1).

Section 43(a) has been construed to provide for two types of claims so-called “passing off” claims and “reverse passing off” claims. “Passing off . . . occurs when a producer misrepresents his own goods or services as someone else's. Reverse passing off . . . is the opposite: The producer misrepresents someone else's goods or services as his own.” Dastar Corp. v. Twentieth Century Fox Film Corp., ...