Tech Safety Lines, Inc. v. Mallory Safety & Supply LLC

1

TECH SAFETY LINES, INC., Plaintiff, v. MALLORY SAFETY AND SUPPLY, LLC d/b/a ENSA, and AEGIS ONSHORE, INC., Defendants.

Civil Action No. 3:23-CV-1015-X

United States District Court, N.D. Texas, Dallas Division

August 15, 2024

MEMORANDUM OPINION AND ORDER

BRANTLEY STARR, UNITED STATES DISTRICT JUDGE.

Before the Court is Defendant Mallory Safety and Supply LLC's (“ENSA”) and Aegis Onshore, Inc.'s (“Aegis”) motions to dismiss. (Docs. 58, 59). After reviewing the motions, responses, replies, and applicable law, the Court GRANTS IN PART and DENIES IN PART the motions. (Docs. 58, 59). Accordingly, the Court DISMISSES WITHOUT PREJUDICE Plaintiff Tech Safety Lines, Inc.'s (“TSL”) fraud-by-nondisclosure and fraudulent-inducement claims. If TSL wishes to pursue these two claims, it must file an amended complaint no later than 28 days from the date of this order. All other claims remain.

I. Background

This is a multi-facet business competition and infringement suit. TSL is a Texas-based business that sells numerous patented safety products. This suit revolves around two of TSL's patented products: “Rescue Kits” and “Training Kits.”

Rescue Kits are primarily used by technicians working at heights on structures used for wind energy generation. Training Kits are used to train people in using Rescue Kits. In total, TSL has sold more than 45,000 Rescue Kits in 35 different countries.

In protecting its product, TSL will not sell Rescue Kits unless the purchaser has completed a training in using Rescue Kits. TSL offers Rescue Kit training (1) at its own facility in Carrollton, Texas, (2) sending a certified trainer to a purchaser's location, or (3) through a program to train third-party professionals so they can become an authorized trainer (Train-the-Trainer). Companies commonly buy the Train-the-Trainer program so one employee may conduct Rescue Kit certification and recertification training to other employees in-house. Relevant here, while a purchaser of TSL's Train-the-Trainer program may train other inhouse-employees in the proper use of Rescue Kits, TSL does not permit purchasers of a Train-the-Trainer program to resell the Train-the-Trainer program itself to a third-party.

Defendants ENSA and Aegis are alleged to have violated federal and state law in multiple ways. ENSA is alleged to have offered unauthorized training services on TSL Rescue Kits on premises, remotely, and by offering TSL's Train-the-Trainer program for purchase. And Aegis is alleged to be somewhat of a middleman between TSL and ENSA allowing ENSA to distribute TSL's copyrighted materials discreetly. After allegedly catching on to this covert operation, TSL sent a cease-and-desist letter to ENSA regarding its “infringing use” of TSL's marks. TSL now brings an elevencount suit in this Court seeking monetary and injunctive relief for ENSA and Aegis's allegedly unlawful actions in sharing Train-the-Trainer materials between the two parties. ENSA and Aegis have filed separate motions to dismiss.

II. Legal Standard

Federal Rule of Civil Procedure 8 requires a pleading to state “a short and plain statement of the claim showing that the pleader is entitled to relief.”^[1]The pleading standard does not require detailed factual allegations, but “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.”^[2]For a complaint to survive a motion to dismiss under Rule 12(b)(6), it must contain sufficient factual matter, accepted as true, to “state a claim to relief that is plausible on its face.”^[3]A claim is facially plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”^[4] For purposes of a motion to dismiss, courts must accept all well-pleaded facts as true and construe the complaint in the light most favorable to the plaintiff.^[5]“In other words, a motion to dismiss an action for failure to state a claim admits the facts alleged in the complaint, but challenges plaintiff's rights to relief based upon those facts.”^[6] For fraud claims, Rule 9(b) requires a heightened pleading standard. To avoid dismissal of a fraud claim, plaintiffs must “state with particularity the circumstances constituting fraud or mistake.”^[7]“At a minimum, Rule 9(b) requires allegations of the particulars of time, place, and contents of the false representations, as well as the identity of the person making the misrepresentation and what he obtained thereby.”^[8]

III. Analysis

Both ENSA and Aegis have filed separate motions to dismiss seeking to dismiss all of TSL's eleven claims. The Court will address each in turn.

A. Federal and State Law Trademark Claims

In one fell swoop, ENSA moves to dismiss five of TSL's claims-trademark infringement, false designation of origin, false advertising, common law trademark infringement, and unfair competition by misappropriation-arguing that each of these claims are based upon the same conclusory allegations.^[9]In response, TSL argues that its sufficiently pled each of these lumped-together claims.^[10] The Court agrees with TSL.

As an initial matter, because ENSA states that “TSL's claims under federal law . . . should be equally dispositive of TSL's claims under Texas law,”^[11]the Court will address solely TSL's federal law claims and not opine directly on TSL's common law claims. As to the federal law claims, the Court holds that TSL has sufficiently pled its federal law claims.

The Court will begin with TSL's trademark infringement claims. To plead a trademark infringement claim, a plaintiff must allege (1) “that it possesses a legally protectable trademark and (2) [plaintiff's] use of [the] trademark creates a likelihood of confusion as to source, affiliation, or sponsorship.”^[12] TSL's operative complaint satisfies each factor. Simply stated, TSL pled that it owns the marks^[13] and TSL has also sufficiently pled that Defendants have created a likelihood of confusion.^[14] For similar reasons, the Court holds that TSL's complaint plausibly alleges a false designation of origin claim.^[15] Therefore, by extension, TSL has plausibly pled its trademark infringement, false designation of origin, false advertising,^[16] common law trademark infringement, and unfair competition by misappropriation claims.

B. Tortious-Interference-With-Prospective-Business-Relations Claim

ENSA moves to dismiss TSL's tortious-interference-with-prospective-business-relations-claim for two reasons.^[17] First ENSA argues that dismissal is warranted because TSL has not pled that ENSA's actions are in fact “independently tortious” or “wrongful.”^[18] Second, ENSA argues that dismissal is warranted because TLS does not allege with specificity any business relationship hindered by ENSA's actions.^[19] In response, TSL argues that its adequately pled that ENSA engaged in independently tortious conduct so long as one of their other claims, such as trademark infringement, false advertising, unfair competition, etc., survives dismissal.^[20] The Court agrees with ENSA's second argument-that TSL has failed to plead with specificity any business relationship hindered by ENSA's actions.

Under Texas law, a plaintiff pleading a tortious interference-with-prospective-business-relations claim must show:

(1) there was a reasonable probability that the plaintiff would have entered into a business relationship with a third party; (2) the defendant either acted with a conscious desire to prevent the relationship from occurring or knew the interference was certain or substantially certain to occur as a result of the conduct; (3) the defendant's conduct was independently tortious or unlawful; (4) the interference proximately caused the plaintiff injury; and (5) the plaintiff suffered actual damage or loss as a result.^[21]

Courts in this Circuit (applying Texas law) require plaintiffs to plead the first element with specificity.^[22]For example, in Pureshield, the Eastern District of Texas dismissed a plaintiff's tortious interference with prospective relations claim where, on reasonable probability, the plaintiff stated simply that “[t]here was reasonable probability that Plaintiffs would have entered into a business relationship with third parties, including customers or business partners.”^[23] More aggressively, in Corrosion Prevention, the Southern District of Texas dismissed a tortious interference with prospective relations claim where the plaintiff named three companies, yet failed to allege “any facts showing what business relationship they expected to have with the listed businesses or pointed to a specific contract they allegedly lost because of” the other parties' actions.^[24]

Similarly, here, TSL's complaint fails to allege what specific business relationship fell through as a result of ENSA's actions. While the entirety of TLS's complaint is relevant to the issue, the most relevant portion on tortious interference with prospective relations occurs between paragraphs 107 and 112. There, TLS simply states that ENSA's actions prevented it from “sell[ing] Rescue Kits to customers.”^[25] On this claim, TLS's complaint almost mirrors the dismissed complaint in Pureshield, which simply stated that “[t]here was reasonable probability that Plaintiffs would have entered into a business relationship with third parties, including customers or business partners.”^[26] Thus, TSL's complaint fails to meet the first element of a tortious-interference-with-prospective-business-relationship claim.

Therefore the Court DISMISSES WITHOUT PREJUDICE TSL's tortious-interference-with-prospective-business-relationship claim. If TSL wishes to pursue these claims, it must replead it within 28 days of the date of this...