Wexler v. Hasbro, Inc.

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DAVID WEXLER, Plaintiff, v. HASBRO, INC., Defendant.

No. 20-CV-1100 (VEC)

United States District Court, S.D. New York

March 11, 2022

OPINION & ORDER

VALERIE CAPRONI, UNITED STATES DISTRICT JUDGE

David Wexler, a toy inventor, has sued Hasbro, Inc. (“Hasbro”), alleging that the toy company unlawfully used two of his ideas without paying him royalties. Wexler asserted claims for breach of contract misappropriation, unfair competition, and unjust enrichment. Hasbro moved for summary judgment. For the following reasons Hasbro's motion for summary judgment is GRANTED.

BACKGROUND

Wexler invents toys and games for a living.^[1] Pl. 56.1 Stmt., Dkt. 68 ¶ 206.^[2] Many professional toy inventors, including Wexler, pitch ideas to toy companies, in the hopes that a company will license and develop their proposal in return for royalties. Id. ¶¶ 217, 366, 368, 369. Hasbro, a global toy and game company, regularly meets with outside inventors who present their ideas to representatives from Hasbro's Products Acquisitions department.^[3] Id. ¶¶ 214, 217. At the end of each meeting, a Hasbro representative records the pitched ideas on an Inventor Review Record form and notes his or her disposition for each listed idea. Id. ¶¶ 333, 378; Def. 56.1 Stmt. ¶¶ 4, 6, 7. A disposition of “Pass” is an outright rejection. Def. 56.1 Stmt. ¶ 8. A disposition of “Hold/Send In” means that Hasbro may further consider the idea and will keep or be provided with the materials presented at the meeting. Id. ¶ 9; Pl. 56.1 Stmt. ¶ 334, 338. And a disposition of “Inventor to do more work, ” means just that: Hasbro may be willing to reconsider the idea in the future, after additional work by the inventor. Def. 56.1 Stmt. ¶ 10 (Pl. Resp.).

In a series of meetings between 2007 and 2015, Wexler pitched various toy and game ideas to Hasbro. Pl. 56.1 Stmt. ¶¶ 228, 252, 254, 257, 259, 266, 267. One of the ideas, which Wexler alleges he pitched at each of the pertinent meetings, see id., was “a branded collection of combined games, each of which is controlled by Hasbro, and uses combined play pattern of the original games and the games' names together as the name of the new product.” Resp., Dkt. 55 at 11. Wexler identified the collection with the slogan “Hasbro Presents . . . Mash-Ups . . . The Classics Combined.” Pl. 56.1 Stmt. ¶ 240. At each of the meetings, Wexler presented illustrative examples of games that could be included in the collection.^[4] Id. ¶¶ 243, 244, 253, 255, 258, 260. Hasbro ultimately passed on the idea, including each of the pitched illustrative examples. Def. 56.1 Stmt., ¶¶ 38, 42, 45, 49, 52, 54.^[5] The Court will refer to Wexler's proposed collection as the “Mash-Up Idea.”

At an April 30, 2015, meeting, separate from his Mash-Up Idea, Wexler pitched an idea for a game that would combine Connect 4 and Nerf.^[6] Pl. 56.1 Stmt. ¶ 270. Wexler described his proposal as “an action-based game with a play pattern derived from classic Connect 4 game play, where players use Nerf blasters and projectiles to shoot four in a row on a Connect 4 board inspired grid on a vest.” Id. ¶ 271. Although the idea was initially marked “Hold/Send In” on the Inventor Review Record form, Id. ¶ 343, ^[7] Hasbro ultimately passed on the idea, Def. 56.1 Stmt. ¶ 66. The Court will refer to this idea as “Connect 4/Nerf.”

Wexler contends that Hasbro later used both his Mash-Up Idea and his Connect/4 Nerf idea without paying him royalties. From 2019 to 2020, Hasbro sold a line of products under the name “game mash+ups” at Target. Def. 56.1 Stmt. ¶¶ 99, 129-131; Pl. 56.1 Stmt. ¶ 295. The products included the following game combinations: Monopoly/Jenga, Taboo/Speak Out, Guess Who?/Clue, Candy Land/Connect 4, Twister/Scrabble, Simon/Sorry!, The Game of Life/Trouble, and Operation/Perfection. Def. 56.1 Stmt. ¶¶ 129-131. Wexler agrees that he never proposed to Hasbro any of the specific combinations in the line of products sold at Target. Id. ¶¶ 146-147. Additionally, in the fourth quarter of 2019, Hasbro began selling a game called “Connect 4 Blast!” Id. ¶ 141. The goal of the game is “to dislodge discs from a stand-alone Connect 4 grid by blasting Nerf projectiles at it.” Id. ¶ 145. Although Connect 4 Blast! was also sold at Target, it was not part of the “game mash+ups” line. Id. ¶¶ 102, 142.

Wexler sued Hasbro for breach of implied contract, misappropriation, unfair competition, and unjust enrichment. Compl., Dkt. 1 ¶¶ 79-90, 98-114.^[8] Following discovery, ^[9] Hasbro moved for summary judgment on all claims, see Not. of Mot., Dkt. 46, and Wexler opposed, see Resp., Dkt. 55.

LEGAL STANDARD

Summary judgment is appropriate when “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). “Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial.” Scott v. Harris, 550 U.S. 372, 380 (2007) (internal quotation marks omitted) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)). To defeat summary judgment, the nonmoving party must come forward with “specific facts showing that there is a genuine issue for trial.” Sista v. CDC IXIS N. Am., Inc., 445 F.3d 161, 169 (2d Cir. 2006). Courts “construe the facts in the light most favorable to the nonmoving party and resolve all ambiguities and draw all reasonable inferences against the movant.” Delaney v. Bank of Am. Corp., 766 F.3d 163, 167 (2d Cir. 2014) (per curiam) (cleaned up).

DISCUSSION

I. Each of Wexler's Claims Requires Proof of Novelty and Use

Wexler brings four causes of action: breach of implied contract misappropriation, unfair competition, and unjust enrichment. Wexler contends that Hasbro breached an implied contract and committed the three torts by using his Mash Up Idea and his Connect 4/Nerf idea to create Hasbro games. Among other elements unique to each claim, each of Wexler's legal claims requires a showing that his idea was novel^[10] and that Hasbro unlawfully used the idea. Accordingly, to survive summary judgment on those claims, there must be genuine disputes of material fact as to whether either of Wexler's ideas was novel and as to whether Hasbro unlawfully used either of the novel ideas.

A. Breach of Implied Contract

Under New York law, “[a] contract implied in fact may result as an inference from the facts and circumstances of the case, although not formally stated in words, and is derived from the presumed intention of the parties as indicated by their conduct.” Beth Israel Med. Ctr. v. Horizon Blue Cross & Blue Shield of N.J., Inc., 448 F.3d 573, 582 (2d Cir. 2006) (citation omitted). “An implied contract, like an express contract, requires consideration, mutual assent, legal capacity and legal subject matter.” Wallace v. Health Quest Sys., Inc., No. 20-CV-545, 2021 WL 1109727, at *10 (S.D.N.Y. Mar. 23, 2021) (internal citation omitted).^[11] “For contract-based claims in submission-of-idea cases, a showing of novelty to the buyer will supply sufficient consideration to support a contract.” Nadel v. Play-By-Play Toys & Novelties, Inc., 208 F.3d 368, 376 (2d Cir. 2000).

Additionally, to prove breach of the contract, a plaintiff must show that the defendant unlawfully used his novel idea. Id. at 377 n.5 (noting that breach of an implied-in-fact contract requires a “defendant's subsequent use of the idea, ” among other requirements); Id. at 380 n.10 (“In order to recover for breach of contract, a plaintiff must demonstrate some nexus or causal connection between his or her disclosure and the defendant's use of the idea, i.e., where there is an independent source for the idea used by the defendant, there may be no breach of contract, and the plaintiff's claim for recovery may not lie.”).^[12] In short, breach of implied contract in a submission-of-idea case requires proof that the plaintiff's idea is novel and that the defendant made unauthorized use of the novel idea.

B. Misappropriation

Under New York law, the tort of misappropriation of ideas has two elements: a “requisite legal relationship must exist between the parties, and the idea must be novel and concrete.” Turner v. Temptu Inc., 586 Fed.Appx. 718, 722 (2d Cir. 2014) (collecting cases).^[13] Further, the plaintiff must prove that his “ideas were actually used by the defendant.” AEB & Assocs. Design Grp., Inc. v. Tonka Corp., 853 F.Supp. 724, 734 (S.D.N.Y. 1994) (“[E]ven where a plaintiff's concept is novel and original, recovery will be denied where it is established that the party alleged to have misappropriated another's concept, arrived on its own initiative or by wholly independent means at a concept similar to that devised by the party seeking recovery for misappropriation.” (internal quotations omitted)).^[14] Thus, similar to the claim of breach of implied contract, a claim for misappropriation of idea requires a showing that the plaintiff's idea was novel and that the defendant made unauthorized use of the novel idea.

C. Unfair Competition

“Unfair competition encompasses the principle that one may not misappropriate the results of the skill, expenditures and labors of a competitor.” Stuart's, LLC v Edelman, 196 A.D.3d 711, 714 (2d Dep't 2021) (internal citations omitted). Given this principle, misappropriation is considered the “cornerstone” of an unfair competition claim, see Ruder & Finn Inc. v. Seaboard Sur. Co., 52 N.Y.2d 663, 671 (1981), and courts often treat an unfair competition claim as part and parcel of a plaintiff's misappropriation claim, see, e.g., Nadel, 208 F.3d at 373 n.2 (treating “Nadel's unfair competition claim as a claim for...