Zanotti v. Invention Submission Corp.

JULIE ZANOTTI, RONESE BROOKS, and SHERRY PORTER,on behalf of themselves and all other persons similarly situated, Plaintiffs, v. INVENTION SUBMISSION CORPORATION d/b/a INVENTHELP, TECHNOSYSTEMS CONSOLIDATED CORP.,TECHNOSYSTEMS SERVICE CORP., WESTERN INVENTION SUBMISSION CORP.,UNIVERSAL PAYMENT CORPORATION, INTROMARK INCORPORATED,INNOVATION CREDIT CORP., ROBERT J. SUSA, INVENTS COMPANY,INVENTS COMPANY, LLC, GLOBAL EXPRESS MANUFACTURING,SMITH LILLY MANUFACTURING, ZAMBRO MANUFACTURING, INC.,ABRAMS GENTILE ENTERTAINMENT, LLC, ABRAMS GENTILE ENTERTAINMENT, INC.,ASHKAN NAJAFI, ESQ., RG PATENT CONSULTING LLC, RACHEL GILBOY,THOMAS FROST, P.A., THOMAS FROST, LAW OFFICE OF KYLE FLETCHER, P.C.,KYLE A. FLETCHER, CROSSLEY & STEVENSON, KAUFHOLD & DIX, RUTH EURE,PATENTS FOR PEOPLE, JOHN DOE COMPANIES 1-10, and JOHN DOE INDIVIDUALS 1-10, Defendants.

No. 18-cv-5893 (NSR)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

June 2, 2020

OPINION & ORDER

NELSON S. ROMÁN, United States District Judge:

Plaintiffs Julie Zanotti and Ronese Brooks¹ ("Plaintiffs") bring this action against Defendants alleging violations of the American Inventors Protection Act of 1999 ("AIPA"), theTelephone Consumer Protection Act ("TCPA"), and New York state consumer protection statutes, and stating various common law claims sounding in, inter alia, fraud, breach of contract, and breach of the implied covenant of good faith and fair dealing. (See Am. Compl. (ECF No. 21).) Plaintiffs originally filed suit in the Supreme Court of the State of New York, Westchester County, on or about January 25, 2018. (See Notice of Removal (ECF No. 4).) On July 2 2018, Defendant Intromark Incorporated ("Intromark") filed a Notice of Removal removing the suit to federal court pursuant to the Class Action Fairness Act, 28 U.S.C. § 1332(d) ("CAFA"). (Id.)

Presently before the Court are (1) Plaintiffs' motion to remand this case to the Supreme Court of the State of New York, Westchester County, for lack of subject matter jurisdiction pursuant to 28 U.S.C. § 1447(c), (ECF No. 127), (2) the motion of Defendants Invention Submission Corporation d/b/a InventHelp ("InventHelp"), Technosystems Consolidated Corp., Technosystems Service Corp., Western Invention Submission Corp., Universal Payment Corp., Intromark, and Robert J. Susa (collectively, "InventHelp Defendants") to dismiss the Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) or transfer venue to the United States District Court for the Western District of Pennsylvania, (ECF No. 136); (3) the motion of Defendant Ashkan Najafi, Esq., to dismiss the Amended Complaint pursuant to Federal Rules of Civil Procedure 12(b)(2) and 12(b)(6), (ECF No. 145), and (4) the motion of Rachel Gilboy and RG Patent Consulting LLC (together, the "RG Patent Defendants") to dismiss the Amended Complaint pursuant to Federal Rules of Civil Procedure 12(b)(2) and 12(b)(6), (ECF No. 149). InventHelp Defendants oppose Plaintiff's motion to remand. (ECF No. 130). Plaintiffs oppose each of the motions to dismiss. (ECF Nos. 141, 153, 154). For the following reasons, Plaintiffs' motion to remand is DENIED, InventHelp Defendants' motion to dismiss or transfer venue isGRANTED IN PART, Defendant Najafi's motion to dismiss is GRANTED IN PART, and RG Patent Defendants' motion to dismiss is GRANTED IN PART.

BACKGROUND²

In 2014, Plaintiff Zanotti, a professional hair stylist, believed she had created a new invention: a hollow comb that could be filled with styling product to evenly distribute the product through the hair by ejecting it through the teeth of the comb. (Am. Compl. ¶ 58.) After seeing television commercials advertising the services of Defendant InventHelp, Zanotti contacted InventHelp by phone and gave her contact information to an InventHelp representative. (Id. ¶¶ 59-61.) Zanotti subsequently received a call from Defendant Invents Company and met with a representative of Invents Company named Pamela Mitchell on May 5, 2014, at Invents Company's New Jersey offices. (Id. ¶¶ 62 & 69.)

At the meeting, Mitchell assured Zanotti that her idea was viable, original, and profitable. She also represented to Zanotti that Invents Company and Defendant Invents Company LLC (together, "Invents"), had contacts at Paul Mitchell Hair Products who would be very interested in Zanotti's idea. (Id. ¶ 70.) Mitchell told Zanotti that Invents would partner with her to market her invention for $7,950.00, but Zanotti advised that she could not afford the fee. (Id. ¶¶ 74-75.) Mitchell then suggested that Zanotti take out a loan from a separate company, Defendant Innovations Credit Corporation ("Innovations Credit"), and provided her with a loan application form. (Id. ¶¶ 76-77.) Mitchell urged Zanotti to take out the loan with Innovations Credit, promising that it was interest-free and required no credit check. (Id. ¶¶ 80-82.) Ultimately, Zanotti executed a promissory note dated May 5, 2014, with Innovations Credit for the amountof $7,950.00. (Id. ¶ 83.) Contrary to Mitchell's representations, the promissory note provides for interest at a rate of 18% per annum. (Id. ¶ 84.)

At the same meeting, Zanotti entered into a "New Product Marketing Agreement" with Invents Company LLC whereby she retained Invents to market her invention to industry in exchange for a one-time fee of $7,950.00. (Id. ¶ 86.) Pursuant to the marketing agreement, Invents made specific promises to "commercialize [Zanotti's] invention concept" in various manners and use best efforts to submit the concept to companies for their review. (Id. ¶¶ 87-89.)

In Spring 2015, Invents referred Zanotti to Defendant Ashkan Najafi, a Florida attorney, for purposes of obtaining a utility patent for her proposed invention. (Id. ¶ 91.) Najafi presented himself as unaffiliated with Invents or InventHelp. (Id. ¶ 92.) However, Plaintiffs state that Najafi receives all or a substantial percentage of his business from those entities. (Id. ¶ 91.) By letter dated May 7, 2015, Zanotti engaged Najafi to represent her for purposes of obtaining a utility patent for the sum of $4,490.00, plus an additional $950.00 to $1,500.00 per response for each "Office Action" that the United States Patent and Trademark Office took rejecting her utility patent. (Id. ¶ 93.) Najafi allegedly knew that Zanotti's idea was not suitable for a utility patent since it was not novel, non-obvious, or otherwise unavailable to the public, but did not inform her of this fact. (Id. ¶¶ 94-95.)

On December 15, 2015, Zanotti received an email from "cynthia@invents.com" informing her that Invents would forward her idea to Defendant Zambro Manufacturing, Inc. ("Zambro") and "will notify you if they are interested." (Id. ¶ 96.) On January 15, 2016, Zanotti received an email from Ray Anderson on behalf of Zambro, advising her that Zambro was interested in her invention and wanted to offer her a licensing and manufacturing agreement. (Id. ¶ 98.) Zanotti spoke to Anderson on the phone and agreed to sign a manufacturing and licensingagreement with Zambro, promising to pay Zambro $3,000.00. (Id. ¶¶ 98-100.) Zanotti forwarded her credit card information to Zambro to make a $2,000.00 down-payment. (Id. ¶ 100.) On February 2, 2016, her card was charged $2,000.00 by Defendant Global Express Manufacturing ("Global Express"). (Id.)

None of the entities or individuals with which Zanotti dealt fulfilled their contractual and verbal promises to Zanotti, in spite of her paying over $10,000.00. (Id. ¶ 102.)

In 2016, Plaintiff Brooks believed she had created a new invention: eyeglasses with detachable and adjustable arms. (Id. ¶ 104.) Like Zanotti, Brooks contacted InventHelp, provided her contact information, and then received a call from Invents Company. (Id. ¶¶ 105-08.) Brooks met with a representative of Invents Company named Philip Brown at the New York offices of Invents Company on February 2, 2016. (Id. ¶ 109.) Brown told Brooks that she would have to pay a fee of $795.00 to begin working with Invents. (Id.) Brooks declined. (Id.)

Later in February, Brown called Brooks advising that Invents Company was extremely interested in her invention and believed it would be very profitable. (Id. ¶ 110.) Brooks scheduled another meeting with Invents, this time with a representative named Chet Dombrowski, on March 2, 2016. (Id. ¶¶ 111-12.) Dombrowski represented that Brooks' idea was worth "billions." (Id. ¶ 112.) At the end of the meeting, Brooks entered into a nondisclosure agreement with Invents Company and paid $595.00 by check for an initial patent search and project summary digest. (Id. ¶ 114.)

Shortly thereafter, Invents advised Brooks that the initial patent search showed no similar patents and that Invents wanted to partner with Brooks and proceed to developing, marketing, advertising, and securing license agreements or manufacturing deals for her invention. (Id. ¶ 115.) Brooks met with Dombrowski for a third time on April 22, 2016. (Id. ¶ 117.) At thatmeeting, Dombrowski proposed a contract price of $10,000.00, but offered Brooks a reduction of that price by $1,050.00 if she signed that same day. (Id.) Ultimately, Brooks entered into a marketing agreement with Invents Company LLC similar to the one Zanotti entered, at a contract price of $8,950.00. (Id. ¶ 118.)

In October 2017, Invents referred Brooks to Defendant RG Patent Consulting for purposes of obtaining a utility patent for her invention. (Id. ¶ 119.) Plaintiffs state that RG Patent Consulting receives all or a substantial percentage of its business from Invents or InventHelp. (Id. ¶ 91.) According to Plaintiffs, the attorney with whom Brooks worked knew that her invention was not eligible for a utility patent but did not advise her of this fact. (Id. ¶ 120.) Brooks paid $2,800.00 to RG Patent Consulting for a utility patent. (Id. ¶ 119.)

Months passed and Invents failed to return any of Brooks' calls, until someone who introduced himself as Chet Dombrowski of Global Express contacted Brooks...