Fenwick ex rel. Pro-Nrg, LLC v. Eddie Duruman, Tania Patruno, Helen Khorosh, Joseph Rasa, Brandon Jacobs, Brayden Enters., LLC

JOSHUA FENWICK, individually and on behalf of PRO-NRG,LLC, a New Jersey Corporation, Plaintiff, v. EDDIE DURUMAN, TANIA PATRUNO, HELEN KHOROSH,JOSEPH RASA, BRANDON JACOBS, BRAYDEN ENTERPRISES, LLC,and SANTE PUR SOLUTIONS LLC, Defendants.

Civil Action No.: 13-4359 (CCC)

UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY

March 20, 2015

NOT FOR PUBLICATION

OPINION & ORDER

CECCHI, District Judge.

I. INTRODUCTION

This matter comes before the Court by way of three separate motions to dismiss Joshua Fenwick's ("Fenwick") Amended Complaint: (1) Defendant Joseph M. Rasa's motion to dismiss the Complaint under Fed. R. Civ. P. 12(b)(1) and 12(b)(6) (the "Rasa motion") [ECF No. 36], (2) Defendants Brayden Enterprises, LLC and Brandon Jacobs' motion to dismiss the complaint pursuant to Fed. R. Civ. P. 8(a) and 12(b)(6) (the "Brayden motion") [ECF No. 35], and (3) Defendants Eddie Dukhman, Tania Patrano, Helen Khorosh. and Sante Pur Solutions, LLC's motion to dismiss Plaintiff's complaint pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6) (the "Dukhman motion") [ECF No, 34]. No oral argument was heard pursuant to Fed. R. Civ. P. 78. For the reasons set forth below, Plaintiff's complaint is dismissed without prejudice.

II. BACKGROUND

This case arises out of a joint business venture entered into by Fenwick and Eddie Dukhman ("Dukhman") to manufacture, market, and sell a high-protein, non-milk based energy drink called PRO-NRG. (Am. Compl. ¶ 12, 17). After developing a business plan and deciding that they would form a company called PRO-NRG, LLC, which would own the PRO-NRG drink. Fenwick and Dukhman recruited Joseph Rasa ("Rasa") as General Counsel in April 2011 and requested that he incorporate their company. (Am. Compl. ¶¶ 15, 18-19.) Rasa did so on June 7, 2011. (Am. Compl. ¶ 22.)

Due to Dukhman's criminal background, Dukhman enlisted his sister, Helen Khorosh ("Khorosh"), to serve as his representative within PRO-NRG, LLC. (Am. Compl. f 21.) The PRO-NRG, LLC certificate of incorporation therefore lists Rasa, Fenwick, and Khorosh as the managing members of PRO-NRG, LLC, and Khorosh's name is used in place of Dukhman's on all of the LLC's formation documents. (Am. Compl. ¶¶ 21-23.) Plaintiff alleges that Khorosh had no involvement in the development of PRO-NRG or PRO-NRG, LLC and that her role was strictly limited to acting as Dukhman's representative. (Am. Compl. ¶ 24.)

To promote their new energy drink, Fenwick contacted Brandon Jacobs ("Jacobs"), a professional football player, who entered into an Endorsement Agreement with PRO-NRG, LLC in August 2011. (Am. Compl. ¶ 25.) Around September 30, 2011, Fenwick, Khorosh (on behalf of Dukhman), Rasa, and Jacobs on behalf of a company he owns called Brayden Enterprises, LLC ("Brayden") executed an Operating Agreement for PRO-NRG, LLC (the "Operating Agreement"). (Am. Compl. ¶¶ 26-27.) The Operating Agreement listed Fenwick, Rasa, and Dukhman as members of the Management Committee. (Am. Compl. ¶ 29.) Throughout the next year, Fenwickand Dukhman continued to develop PRO-NRG, producing boxes with Jacobs' image and manufacturing 8,000 bottles of their energy drink with the name PRO-NRG on the bottles. (Am. Compl. ¶ 34.) In February 2012, Fenwick and Dukhman brought samples of PRO-NRG to gyms and food and nutrition stores, while Fenwick worked on finalizing a PRO-NRG website. (Am. Compl. ¶¶ 36-37.)

Fenwick alleges that, for reasons not disclosed to the Court, since the time Fenwick, Khorosh, and Rasa signed the Operating Agreement, all of the Defendants (but most specifically Dukhman) have engaged in concerted activity to eliminate his interest in the PRO-NRG business. (Am. Compl. ¶ 70.) For example, Fenwick asserts that the Defendants set up a shadow company called Sante Pur Solutions, LLC ("SPS"), naming Rasa as SPS's agent and Khorosh as the sole member, in an attempt to take ownership of the PRO-NRG drink. (Am. Compl. ¶ 31-32.) PRO-NRG is now allegedly being marketed under the SPS name and all of PRO-NRG, LLC's assets have been transferred to SPS. (Am. Compl. ¶ 72.) Additionally, Fenwick alleges that Dukhman secretly opened a bank account for PRO-NRG, LLC using a fraudulent copy of the PRO-NRG, LLC Certificate of Formation that listed Dukhman as the sole member, and that Dukhman has kept Fenwick from accessing the account. (Am. Compl. ¶¶ 37-43.) Further. Fenwick asserts that Dukhman persuaded Jacobs and various other marketing, manufacturing, and distribution contacts to cease communication with Fenwick regarding PRO-NRG, thereby interfering with his business relationships. (Am. Compl. ¶ 48.) He also alleges that Dukhman and/or his agents changed the login information to Fenwick's PRO-NRG email and website accounts to deny him access to said accounts, (Am. Compl. ¶¶ 49-50.) Fenwick also maintains that Jacobs and Dutchman's wife, Tania Patruno ("Patruno"), went on the television show Shark Tank, falsely represented that Patruno had sole authority to determine whether to sell an interest in PRO-NRG, LLC, and sold a30% interest in PRO-NRG. LLC to an investor for $250,000, even though Patrano had no involvement in the development of PRO-NRG or authority to sell the company. (Am. Compl. ¶¶ 64-71.)

Finally, Fenwick alleges that, in March 2012, "one or more" of Dukhman, Rasa, Kfiorosh, Patruno, and Jacobs applied for a Federal Trademark for "PRO-NRG," fraudulently listing Khorosh as the owner of the trademark when it was in fact owned by PRO-NRG, LLC. (Am. Compl. ¶ 51.) In support of the trademark application, Khorosh allegedly misrepresented that she used the PRO-NRG mark in commerce, and submitted false specimens of the mark which in fact belonged to PRO-NRG, LLC. (Am. Compl. ¶ 87-88.) The U.S. Patent and Trademark Office granted the PRO-NRG trademark to Khorosh on November 27, 2012. (Am. Compl. ¶ 53.)

Fenwick instituted this action on July 17, 2013, bringing five counts under the Lanham Act, 15 U.S.C.§§ 1051 et seq., and twelve state law causes of action. Defendants filed three separate motions to dismiss [ECF Nos. 13, 17, 18]. On April 29, 2014, the Court granted Defendant Dukhman's motion,¹ denied the motions of Rasa and Brayden as moot, and dismissed Plaintiff's complaint without prejudice [ECF No. 26]. Fenwick filed an amended complaint on July 14, 2014 [ECF No. 30].² Defendants then filed the instant motions seeking to dismiss Plaintiff's amended complaint [ECF Nos, 34-36],

III. LEGAL STANDARDS

The gravamen of the Dukhman motion³ is that Plaintiff lacks standing to bring these Lanham Act claims. A motion to dismiss for lack of standing is properly brought pursuant to Fed. R. Civ. P. 12(b)(1) because standing is a matter of jurisdiction. Ballentine v. U.S., 486 F.3d 806, 810 (3d. Cir. 2007) (citing St. Thomas-St. John Hotel Tourism Assn v. Gov't of the U.S. Virgin Islands, 218 F.3d 232, 240 (3d. Cir. 2000)); Kauffman v. Dreyfus Fund, Inc., 434 F.2d 727, 733 (3d Cir. 1970). However, not all 12(b)(1) motions are created equal: "[a] district court has to first determine [] whether a Rule 12(b)(1) motion presents a 'facial' attack or a 'factual' attack on the claim at issue, because that distinction determines how the pleading must be reviewed." Constitution Party of Pennsylvania v. Aichele, 757 F.3d 347, 357-58 (3d Cir. 2014). A facial attack "is an argument that considers a claim on its face and asserts that it is insufficient to invoke the subject matter jurisdiction of the court because, for example, it does not present a question of federal law". Id. at 358. A factual attack, in contrast, "is an argument that there is no subject matter jurisdiction because the facts of the case . . . do not support the asserted jurisdiction." Id. For instance, "while diversity of citizenship might have been adequately pleaded by the plaintiff, the defendant can submit proof that, in fact, diversity is lacking." Id. Here, the Dukhman motion attacks the sufficiency of the Amended Complaint on the grounds that the pleaded facts do not establish constitutional standing. Accordingly, the Court considers the Dukhman motion a facial attack on the Amended Complaint and therefore "must only consider the allegations of the complaint and documents referenced therein and attached thereto, in the light most favorable tothe plaintiff." Id.

Pursuant to Article III of the U.S. Constitution, federal courts may only hear cases in which a plaintiff demonstrates adequate standing. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992) ("Though some of its elements express merely prudential considerations that are part of judicial self-government, the core component of standing is an essential and unchanging part of the case-or-controversy requirement of Article III."). "The standing inquiry focuses on whether the party invoking jurisdiction had the requisite stake in the outcome when the suit was filed." Constitution Party of Pennsylvania v. Aichele, 757 F.3d 347, 360 (3d Cir. 2014) (citing Davis v. FEC, 554 U.S. 724, 734 (2008)). To establish standing, a plaintiff must satisfy a three-part test, showing:

(1) an 'injury in fact,' i.e., an actual or imminently threatened injury that is 'concrete and particularized' to the plaintiff; (2) causation, i.e., traceability of the injury to the actions of the defendant; and (3) redressability of the injury by a favorable decision by the Court.

Nat'l Collegiate Athletic Ass'n v. Gov. of N.J., 730 F.3d 208,218 (3d. Cir. 2013) (citing Summers v. Earth Island Inst., 555 U.S. 488, 493 (2009)). "The party invoking federal jurisdiction bears the burden of establishing these elements." Lujan, 504 U.S. at 561.

IV. DISCUSSION

A. Federal Claims

Plaintiff⁴ asserts three federal causes of action pursuant to the Lanham Act: damages for fraudulent trademark registration under 15 U.S.C. § 1120, cancellation of the PRO-NRG trademark under 15 U.S.C. § 1051(a), and declaratory judgment for cancelation of the PRO-NRGtrademark under 15 U.S.C. § 1064. (Am. Compl. ¶¶ 76-91.) For the reasons...