Delta Air Lines, Inc. v. Network Consulting Associates, Inc. et al
Filing
80
ORDER granting in part and denying in part 70 motion to dismiss. Signed by Judge Susan C Bucklew on 9/2/2014. (JD)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
DELTA AIR LINES, INC.,
Plaintiff,
v.
Case No. 8:14-cv-948-T-24 TGW
NETWORK CONSULTING
ASSOCIATES, INC., ET AL.,
Defendants.
__________________________/
ORDER
This cause comes before the Court on Defendants Millennium Travel and Promotions,
Inc., Vacation Tours, USA, Inc., and Henry J. Armand’s Motion to Dismiss. (Doc. No. 70).
Plaintiff opposes the motion. (Doc. No. 77). As explained below, the motion is granted in part
and denied in part.
I. Standard of Review
In deciding a motion to dismiss, the district court is required to view the complaint in the
light most favorable to the plaintiff. See Murphy v. Federal Deposit Ins. Corp., 208 F.3d 959,
962 (11th Cir. 2000)(citing Kirby v. Siegelman, 195 F.3d 1285, 1289 (11th Cir. 1999)). The
Federal Rules of Civil Procedure do not require a claimant to set out in detail the facts upon
which he bases his claim. Instead, Rule 8(a)(2) requires a short and plain statement of the claim
showing that the pleader is entitled to relief in order to give the defendant fair notice of what the
claim is and the grounds upon which it rests. See Bell Atlantic Corp. v. Twombly, 127 S. Ct.
1955, 1964 (2007)(citation omitted). As such, a plaintiff is required to allege “more than labels
and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Id.
at 1965 (citation omitted). While the Court must assume that all of the allegations in the
complaint are true, dismissal is appropriate if the allegations do not “raise [the plaintiff’s] right
to relief above the speculative level.” Id. (citation omitted). The standard on a 12(b)(6) motion
is not whether the plaintiff will ultimately prevail in his or her theories, but whether the
allegations are sufficient to allow the plaintiff to conduct discovery in an attempt to prove the
allegations. See Jackam v. Hospital Corp. of Am. Mideast, Ltd., 800 F.2d 1577, 1579 (11th Cir.
1986).
II. Background
Plaintiff Delta Air Lines, Inc. alleges the following in its amended complaint (Doc. No.
46): Plaintiff is the owner of the Delta trademark, and Plaintiff has never authorized Defendants
to use it. Plaintiff contends that Defendants have engaged in a fraudulent scheme to sell travel
club memberships, which includes sending marketing materials (such as “the Fly Letter”) that
improperly use Plaintiff’s Delta trademark in the letterhead.1 Specifically, Plaintiff contends that
Defendants mail out the Fly Letter, which falsely appears to have been sent on behalf of
Plaintiff. The Fly Letter fraudulently informs the recipient that they have “qualified for an award
of two (2) round-trip airline tickets” that “are valid for travel anywhere within the Continental
United States.” (Doc. No. 46-1). The Fly Letter directs the recipient to call a toll-free number to
claim the award. When the recipient calls the number, the person answering the phone (referred
to as a “scheduler”) asks the caller a series of income and lifestyle-related questions to determine
1
The Fly Letter is just one example of the bogus marketing materials sent by Defendants
that improperly use Plaintiff’s Delta trademark. In its motion for a preliminary injunction,
Plaintiff provides much more information regarding Defendants’ fraudulent scheme and the
infringing letters that were sent. (Doc. No. 58).
2
whether the caller qualifies as a potential travel club membership purchaser.
If the scheduler determines that the caller is not likely to be a travel club membership
purchaser, the scheduler informs the caller that they are not eligible to receive the two free
airline tickets that were promised in the Fly Letter. If the scheduler determines that the caller is
likely to be a travel club membership purchaser, the scheduler tells the caller that in order to
claim the two free airline tickets, the caller must attend a nearby travel-related sales meeting.
The callers are not told that the sales meeting that they will be attending is, in fact, a highpressure sales presentation conducted for the purpose of selling worthless travel club
memberships.
If a caller actually purchases a travel club membership, the caller is directed to a travel
fulfillment company. When the caller attempts to book travel through the travel club
membership, he or she typically learns that the membership offers no meaningful discount and
is, in fact, worthless.
If a caller that attended the sales presentation insists upon receiving the two promised
free airline tickets, the caller is given a voucher that includes contact information for a purported
award fulfillment company. When the caller calls the award fulfillment company, the caller
learns that he or she must pay expenses, taxes, and fees that often exceed the total value of the
“free” airline tickets. If the caller pays the expenses, taxes, and fees, he or she ultimately finds
out that the tickets contain broad limitations and restrictions that render the tickets essentially
worthless.
Alternatively, sometimes the award fulfillment company engages in a bait and switch,
and the award fulfillment company attempts to convince the caller to accept travel on a cruise
3
ship instead of the airline tickets. However, in this situation, the caller is asked to pay a nonexistent “port tax” fee.
Thus, in reality, Defendants use the Fly Letter to lure recipients into a high-pressure sales
presentation for travel club memberships that are, in most instances, worthless. As explained
above, this fraudulent scheme is made up of five categories of participants: First, the travel
fulfillment company is selling the travel club memberships. Second, the “mailers” send out the
bogus marketing materials that improperly use Plaintiff’s Delta trademark. Third, the schedulers
receive phone calls from people who believe that they have won two free airline tickets, and the
schedulers determine which callers qualify to attend the sales presentations. Fourth, the
“distributors” hold the sales presentations where they attempt to sell the travel club memberships
for the travel fulfillment company. Fifth, the award fulfillment company is contacted by the
people attempting to obtain their two free airline tickets.
Plaintiff contends that Defendants have the following roles in this scheme: Defendant
Network Consulting Associates, Inc. (“NCA”) is a mailer, and it specializes in the printing and
mailing of direct mail advertisements. Defendants John Anderson, John Elmer, and Jody Ritter
are owners, officers, and/or managers of NCA, and they personally participated in, directed, and
ratified the infringing acts of NCA.
Defendants Millennium Travel and Promotions, Inc. (“MTP”), Vacation Tours USA, Inc.
(“VTU”), and their principal, Henry J. Armand, are distributors (and/or are marketers for other
distributors). MTP and VTU acted through Armand, who personally participated in, directed,
and ratified the infringing acts of MTP and VTU. MTP and VTU hired NCA to carry out the
infringing marketing campaign.
4
Based on the above, Plaintiff contends that Defendants make it appear that Plaintiff has
endorsed or is otherwise involved with Defendants in their travel club scheme. Plaintiff
contends that Defendants’ wrongful acts and representations harm Plaintiff and its business
reputation. Furthermore, Plaintiff contends that Defendants’ wrongful acts and representations
are likely to cause confusion and mistake by the public, such that the public is deceived into
believing that Plaintiff is associated with Defendants’ fraudulent scheme.
As a result, Plaintiff asserts nine claims in its amended complaint against all Defendants:
(1) federal trademark infringement, (2) unfair competition under federal law, (3) dilution of a
famous mark by blurring under the Lanham Act, (4) dilution of a famous mark by tarnishment
under the Lanham Act, (5) contributory trademark infringement, (6) federal RICO violations, (7)
violation of Florida’s Deceptive and Unfair Trade Practices Act, (8) unjust enrichment, and (9)
punitive damages. In response, MTP, VTU, and Armand (collectively, the “Millennium
Defendants”) filed the instant motion to dismiss.
III. Motion to Dismiss
The Millennium Defendants move to dismiss all nine claims. Accordingly, the Court will
analyze each claim.
A. Trademark Infringement
In Count I, Plaintiff asserts a trademark infringement claim. In order to succeed on a
claim for trademark infringement:
[T]he plaintiff must show, first, that its mark is valid and, second, that
the defendant's use of the contested mark is likely to cause confusion.
. . . Determination of likelihood of confusion requires analysis of the
following seven factors: (1) type of mark, (2) similarity of mark, (3)
similarity of the products the marks represent, (4) similarity of the
parties' retail outlets and customers, (5) similarity of advertising
5
media used, (6) defendant's intent and (7) actual confusion. Of these
factors, the type of mark and the evidence of actual confusion are the
most important in this circuit.
Dieter v. B&H Industries of Southwest Florida, Inc., 880 F.2d 322, 326 (11the Cir.
1989)(internal citations omitted). “[T]he touchstone of liability in a trademark infringement
action is not simply whether there is unauthorized use of a protected mark, but whether such use
is likely to cause consumer confusion.” Custom Manufacturing & Engineering, Inc. v. Midway
Services, Inc., 508 F.3d 641, 647 (11th Cir. 2007)(citations omitted). Plaintiff contends that
Defendants’ use of its Delta trademark in the letterhead portion of the Fly Letter constitutes
trademark infringement, because such use will likely cause customer confusion by falsely
suggesting affiliation, sponsorship, or endorsement of the Fly Letter by Plaintiff.
The Millennium Defendants move to dismiss this claim, arguing that they did not
infringe on Plaintiff’s trademark, because their conduct falls within the nominative use
exception. As explained by one court:
[O]ne can use another's mark truthfully to identify another's goods or
services in order to describe or compare its product to the
markholder's product. This right to use a mark to identify the
markholder's products—a nominative use—however, is limited in
that the use cannot be one that creates a likelihood of confusion as to
source, sponsorship, affiliation, or approval. . . . [W]here a
nominative use of a mark occurs without any implication of
affiliation, sponsorship, or endorsement—i.e., a likelihood of
confusion—the use “lies outside the strictures of trademark law.” In
order to avail itself of the shield of nominative use, the defendant (1)
may only use so much of the mark as necessary to identify the
product or service and (2) may not do anything that suggests
affiliation, sponsorship, or endorsement by the markholder.
Pebble Beach Co. v. Tour 18 I Limited, 155 F.3d 526, 545-46 (5th Cir. 1998)(internal citations
omitted), abrogated on other grounds by, TrafFix Devices, Inc. v. Marketing Displays, Inc., 532
6
U.S. 23, 32-33 (2001); see also Ford Motor Co. v. O.E. Wheel Distributors, LLC, 868 F. Supp.2d
1350, 1368 (M.D. Fla. 2012). The Millennium Defendants argue that they used the Delta mark
in the Fly Letter to properly identify the potential airlines upon which a recipient might obtain
the free tickets.
The Court rejects the Millennium Defendants’ argument that dismissal is appropriate,
because the use of Plaintiff’s mark in the letterhead portion of the Fly Letter arguably suggests
affiliation, sponsorship, or endorsement of the Fly Letter by Plaintiff. Accordingly, the Court
denies the Millennium Defendants’ motion as to this claim.
B. Unfair Competition under the Lanham Act
In Count II, Plaintiff asserts a federal unfair competition claim under the Lanham Act, in
violation of 15 U.S.C. § 1125(a). This provision of the Lanham Act provides the following:
Any person who, on or in connection with any goods or services, or
any container for goods, uses in commerce any word, term, name,
symbol, or device, or any combination thereof, or any false
designation of origin, false or misleading description of fact, or false
or misleading representation of fact, which—
(A)
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, or
(B)
in commercial advertising or promotion, misrepresents the
nature, characteristics, qualities, or geographic origin of his
or her or another person's goods, services, or commercial
activities
shall be liable in a civil action by any person who believes that she or
she is likely to be damaged by such act.
15 U.S.C. § 1125(a)(1). As such, in order “[t]o establish a prima facie case under § 1125(a), a
plaintiff must show (1) that the plaintiff had enforceable trademark rights in the mark or name,
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and (2) that the defendant made unauthorized use of it such that consumers were likely to
confuse the two.” Midway Services, 508 F.3d at 647 (quotation marks and citations omitted).
The Millennium Defendants move to dismiss this claim based on the same argument
made with respect to the trademark infringement claim—that they did not infringe on Plaintiff’s
trademark, because their conduct falls within the nominative use exception for trademark
infringement. Again, this Court rejects the argument and concludes that this claim is not subject
to dismissal.
C. Dilution by Blurring
In Count III, Plaintiff asserts a claim for dilution of a famous mark by blurring under the
Lanham Act, in violation of 15 U.S.C. § 1125(c). Section 1125(c)(1) provides protection to an
“owner of a famous mark that is distinctive, inherently or through acquired distinctiveness.”2
Specifically, this section prohibits any “person who, at any time after the owner's mark has
become famous, commences use of a mark or trade name in commerce that is likely to cause
2
Pursuant tp § 1125(c)(2)(A):
[A] mark is famous if it is widely recognized by the general
consuming public of the United States as a designation of source of
the goods or services of the mark's owner. In determining whether a
mark possesses the requisite degree of recognition, the court may
consider all relevant factors, including the following:
(I)
The duration, extent, and geographic reach of
advertising and publicity of the mark, whether
advertised or publicized by the owner or third parties.
(ii)
The amount, volume, and geographic extent of sales
of goods or services offered under the mark.
(iii) The extent of actual recognition of the mark.
(iv)
Whether the mark was registered under the Act of
March 3, 1881, or the Act of February 20, 1905, or on
the principal register.
8
dilution by blurring or dilution by tarnishment of the famous mark, regardless of the presence or
absence of actual or likely confusion, of competition, or of actual economic injury.” 15 U.S.C.
§ 1125(c)(1). Section 1125(c) describes dilution by blurring as follows:
“[D]ilution by blurring” is [an] association arising from the similarity
between a mark or trade name and a famous mark that impairs the
distinctiveness of the famous mark. In determining whether a mark
or trade name is likely to cause dilution by blurring, the court may
consider all relevant factors, including the following:
(I)
The degree of similarity between the mark or trade
name and the famous mark.
(ii)
The degree of inherent or acquired distinctiveness of
the famous mark.
(iii) The extent to which the owner of the famous mark is
engaging in substantially exclusive use of the mark.
(iv)
The degree of recognition of the famous mark.
(v)
Whether the user of the mark or trade name intended
to create an association with the famous mark.
(vi)
Any actual association between the mark or trade
name and the famous mark.
15 U.S.C. § 1125(c)(2)(B).
“To prevail on a federal dilution claim, the plaintiff must demonstrate that: (1) the
plaintiff’s mark is famous; (2) the defendant used the plaintiff’s mark after the plaintiff’s mark
became famous; (3) the defendant’s use was commercial and in commerce; and (4) the
defendant’s use of the plaintiff’s mark has likely caused dilution.” Rain Bird Corp. v. Taylor,
665 F. Supp.2d 1258, 1266-67 (N.D. Fla. 2009). Furthermore, “[a] plaintiff’s showing that a
defendant used identical trademarks may constitute circumstantial evidence sufficient to support
a finding of dilution.” Bentley Motors Limited Corp. v. McEntegart, 976 F. Supp.2d 1297, 1314
(M.D. Fla. 2013).
The Millennium Defendants move for dismissal of this claim, arguing that there can be
no dilution by blurring, because “[b]lurring involves a diminution in the uniqueness or
9
individuality of a mark because of its use on unrelated goods.” Scott Fetzer Co. v. House of
Vacuums Inc., 381 F.3d 477, 489 (5th Cir. 2004). The Millennium Defendants argue that they
did not use Plaintiff’s mark on unrelated goods; instead, they used Plaintiff’s mark in connection
with Plaintiff’s airline services—to properly identify Plaintiff’s airline as one on which a
recipient might obtain free tickets.
The Court rejects the Millennium Defendants’ argument because they are narrowly
limiting how dilution occurs. Defendants used Plaintiff’s mark in the letterhead of the Fly
Letter, and by doing so, they have arguably suggested that Plaintiff (and its mark) is associated
with the free ticket promotion described therein. Stated differently, a jury could conclude that
Defendants did not use Plaintiff’s mark simply to identify that the recipient could receive free
tickets on Plaintiff’s airline; instead, a jury could find that Defendants used Plaintiff’s mark to
induce recipients into believing that Plaintiff was one of the entities involved in sending the Fly
Letter and involved in the creation of the free ticket offer. As such, the Court denies the
Millennium Defendants’ motion as to this claim.
D. Dilution by Tarnishment
In Count IV, Plaintiff asserts a claim for dilution of famous mark by tarnishment under
the Lanham Act. Dilution by tarnishment differs from dilution by blurring in that “‘dilution by
tarnishment’ is association arising from the similarity between a mark or trade name and a
famous mark that harms the reputation of the famous mark.” 15 U.S.C. § 1125(c)(2)(C).
“Tarnishing occurs when a trademark is linked to products of shoddy quality, or is portrayed in
an unwholesome or unsavory context, with the result that the public will associate the lack of
quality or lack of prestige in the defendant's goods with the plaintiff's unrelated goods.” Scott
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Fetzer, 381 F.3d at 489 (internal quotation marks and citations omitted).
The Millennium Defendants move for dismissal of this claim, arguing that there can be
no dilution by tarnishment because the recipients are eligible to receive tickets on Plaintiff’s
airline. As such, the Millennium Defendants argue that there can be no tarnishment because
nothing is offered of shoddy quality, nor is anything portrayed in an unwholesome or unsavory
context.
The Court rejects the Millennium Defendants’ argument that dismissal is warranted.
Plaintiffs have alleged that the Fly Letter is part of a fraudulent and deceptive scheme, and even
in the cases where the recipient receives the promised free airline tickets, those tickets are
essentially worthless. Therefore, the inclusion of Plaintiff’s mark on the letterhead of the Fly
Letter arguably suggests an association between Plaintiff, the fraudulent scheme, and the
worthless tickets. Therefore, the Court denies the Millennium Defendants’ motion as to this
claim.
E. Contributory Infringement
In Count V, Plaintiff asserts a claim for contributory trademark infringement. This type
of claim has been described as follows:
It is well-established that liability for trademark infringement can
extend beyond those entities that actually perform the acts of
infringement. To be liable for contributory trademark infringement,
a defendant must have intentionally induced another to infringe a
trademark. Any liability for contributory infringement will
necessarily depend upon whether or not the contributing party
intended to participate in the infringement or actually knew about the
infringing activities.
ITT Corp. v. Xylem Group, LLC, 963 F. Supp.2d 1309, 1324 (N.D. Ga. 2013).
The Millennium Defendants move for dismissal of this claim, arguing that Plaintiff has
11
not identified which defendants performed the infringement and which defendants intentionally
induced the infringement. The Court rejects this argument, as Plaintiff has clearly alleged that:
(1) MTP and VTU acted through Armand, who personally participated in, directed, and ratified
the infringing acts of MTP and VTU; and (2) MTP and VTU hired NCA to carry out the
infringing marketing campaign. Thus, Plaintiff has sufficiently alleged that MTP, VTU, and
Armand (the defendants that filed the instant motion) intentionally induced the infringement that
allegedly occurred in this case. Accordingly, the Court denies the Millennium Defendants’
motion to dismiss this claim.
F. RICO
In Count VI, Plaintiff asserts a claim for federal RICO violations. Pursuant to 18 U.S.C.
§ 1962(c), it is illegal “for any person employed by or associated with any enterprise engaged in,
or the activities of which affect, interstate or foreign commerce, to conduct or participate,
directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering
activity.” Therefore, in order to state a RICO claim under § 1962(c), a plaintiff must allege (1)
conduct, (2) of an enterprise, (3) through a pattern, (4) of racketeering activity. See Williams v.
Mohawk Indus., Inc., 465 F.3d 1277, 1282 (11th Cir. 2006).
In Williams, the court described the first two elements in the following manner:
With regard to elements (1) and (2) of the four-part test under
§ 1962(c), the plaintiff[] must establish “conduct of an enterprise”
and that the enterprise had a common goal. Furthermore, [the
defendants] “must participate in the operation or management of the
enterprise itself.
An enterprise “includes any individual, partnership, corporation,
association, or other legal entity, and any union or group of
individuals associated in fact although not a legal entity.” . . . “[T]he
existence of an enterprise is proved by evidence of an ongoing
organization, formal or informal, and by evidence that the various
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associates function as a continuing unit.” Furthermore, “the
definitive factor in determining the existence of a RICO enterprise is
the existence of an association of individual entities, however loose
or informal, that furnishes a vehicle for the commission of two or
more predicate crimes, that is, the pattern of racketeering activity
requisite to the RICO violation.” . . . This Court has never required
anything other than a “loose or informal” association of distinct
entities.
As for the common purpose, [it is sufficient if] . . . [t]he acts of
racketeering activity committed by [the defendants] have the same or
similar objective . . . .[T]he common purpose of making money [is]
sufficient under RICO. . . . Furthermore, [the defendants] “must
participate in the operation or management of the enterprise itself.”
That is, [the defendants] “must have some part in directing” the
affairs of the enterprise.
Id. at 1283-85 (internal citations omitted). With regard to the third and fourth elements, the
Williams court explained:
A pattern of racketeering activity, for purposes of the RICO Act,
requires at least two acts of racketeering activity. An act of
racketeering is commonly referred to as a predicate act. A pattern
of racketeering activity is shown when a racketeer commits at least
two distinct but related predicate acts.
Id. at 1283 (quotation marks and citations omitted).
“‘Racketeering activity’ is defined to include such predicate acts as mail and wire fraud.”
American Dental Assoc. v. Cigna Corp., 605 F.3d 1283, 1290 (11th Cir. 2010). In order to state
a claim for mail or wire fraud, a plaintiff must allege that a person or entity “(1) intentionally
participates in a scheme to defraud another of money or property and (2) uses the mails or wires
in furtherance of that scheme.” Id. (quotation marks and citation omitted).
Furthermore, when a plaintiff’s RICO “claim is based on an alleged pattern of
racketeering consisting entirely of mail and wire fraud, [the plaintiff’s] substantive RICO
allegations must comply . . . with [Federal Rule of Civil Procedure] 9(b)’s heightened pleading
13
standard.” American Dental, 605 F.3d at 1291. In doing so:
[The] plaintiff must allege: “(1) the precise statements, documents,
or misrepresentations made; (2) the time, place, and person
responsible for the statement; (3) the content and manner in which
these statements . . . [were misleading]; and (4) what the defendants
gained by the alleged fraud.” The plaintiff must allege facts with
respect to each defendant's participation in the fraud.
Id.
The Millennium Defendants contend that Plaintiff has not sufficiently pled its RICO
claim. The Court disagrees. Plaintiff contends that Defendants were all involved in a fraudulent
scheme to sell worthless travel club memberships. Additionally, Plaintiff alleges that the scheme
involved mail fraud (via the Fly Letter) and wire fraud (via recipients of the Fly Letter calling
Defendants to claim their free tickets and/or to purchase the worthless travel club membership),
which constitutes a pattern of racketeering activity by an enterprise engaged in and affecting
interstate commerce. Finally, Plaintiffs allege that the Millennium Defendants participated in the
operation or management of the enterprise via allegations that: (1) MTP and VTU acted through
Armand; and (2) MTP and VTU hired NCA to carry out the fraudulent marketing campaign.
The Millennium Defendants also argue that Plaintiff has not alleged sufficient proximate
cause to support a claim of injury, nor has Plaintiff alleged a direct, cognizable injury. The
Court rejects these arguments. Plaintiff has alleged that the Fly Letter was fraudulent because it
contained Plaintiff’s Delta trademark in its letterhead, which suggested that Plaintiff was
involved in the sending of the Fly Letter. Defendants’ use of Plaintiff’s trademark in the
letterhead was unauthorized and caused consumer confusion. Furthermore, recipients of the Fly
Letter that called to claim their free airline tickets learned that the tickets were essentially
worthless. Thus, the Fly Letter, which led to the telephone calls, resulted in consumer confusion
14
regarding Plaintiff’s association with the fraudulent scheme and resulted in damage to Plaintiff’s
goodwill. Accordingly, the Court denies the Millennium Defendants’ motion to dismiss this
claim.3
G. Florida’s Deceptive and Unfair Trade Practices Act
In Count VII, Plaintiff asserts a claim for violation of Florida’s Deceptive and Unfair
Trade Practices Act (“FDUTPA”).4 FDUTPA prohibits “[u]nfair methods of competition . . .
and unfair or deceptive acts or practices in the conduct of any trade or commerce.” Fla. Stat.
§ 501.204(1). Plaintiff alleges that Defendants have violated FDUTPA by using Plaintiff’s Delta
trademark as part of their fraudulent scheme to sell worthless travel club memberships, which
has caused damage to Plaintiff’s goodwill symbolized by the Delta trademark.
Pursuant to Florida Statute § 501.211(2), a person who has suffered a loss due to a
violation of FDUTPA may recover actual damages. Therefore, in order to state a FDUTPA
claim for damages, a plaintiff must allege: “(1) a deceptive act or unfair practice; (2) causation;
and (3) actual damages.” Rollins, Inc. v. Butland, 951 So. 2d 860, 869 (Fla. 2d DCA
2007)(citations omitted). When asserting a FDUTPA claim, a plaintiff may not pursue a claim
for damage to property other than the property that is the subject of the consumer transaction.5
3
The Court also denies the Millennium Defendants’ request that the Court require
Plaintiff to file a civil RICO Case Statement.
4
This claim is titled in the amended complaint as “Unfair Competition and Deceptive
Trade Practices (State),” and the claim refers to Florida Statute § 501.204, et seq. As such, it
appears to the Court that this is a claim under FDUTPA. However, if Plaintiff is attempting to
assert a claim other than a FDUTPA claim in Count VII, the Court will give Plaintiff leave to
amend in order to more clearly assert such a claim.
5
In this case, the property that was damaged was Plaintiff’s trademark, which was a part
of the sale of the travel club memberships. See Klinger v. Weekly World News, Inc., 747 F.
15
Fla. Stat. § 501.212(3).
The Millennium Defendants move to dismiss this claim, arguing that Plaintiff has not
stated a claim for recoverable damages. Specifically, the Millennium Defendants argue that
damages under FDUTPA must be calculated the following way:
[T]he measure of actual damages is the difference in the market value
of the product or service in the condition in which it was delivered
and its market value in the condition in which it should have been
delivered according to the contract of the parties. [ ... ] A notable
exception to the rule may exist when the product is rendered
valueless as a result of the defect—then the purchase price is the
appropriate measure of actual damages.
Id. (quotation marks and citations omitted).
The Court rejects the Millennium Defendants’ argument. The Court agrees that the
above damages description is the appropriate calculation of damages when a purchaser of a
product is deceived about the product by the seller. However, the instant case involves a
trademark owner’s claim against the unauthorized use of its trademark and the damages to the
goodwill associated with the trademark that resulted from the unauthorized use. In such a
scenario, the damages calculation described above would not properly measure the damages
caused by the deceptive/unfair practice. See, e.g., Marco Island Cable v. Comcast Cablevision
of the South, Inc., 312 Fed. Appx. 211, 214 (11th Cir. 2009)(awarding damages based, in part,
on the plaintiff’s expert’s opinion of the diminished value of its business that resulted from the
defendant’s conduct). Accordingly, the Court denies the Millennium Defendants’ motion to
Supp. 1477, 1480-81 (S.D. Fla. 1990)(stating that the property that was damaged in the case was
the plaintiff’s trademark).
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dismiss this claim.6
H. Unjust Enrichment
In Count VIII, Plaintiff asserts an unjust enrichment claim under Florida law based on
Defendants’ unauthorized use of Plaintiff’s trademark. The Millennium Defendants move for
dismissal of this claim, arguing that there was no understanding, either express or implied,
between Plaintiff and the Millennium Defendants such that an unjust enrichment claim could be
asserted. Plaintiff responds that courts have allowed recoveries for trademark infringement
under an unjust enrichment theory. Both parties’ arguments have a basis in the law.
The Court agrees with the Millennium Defendants that an unjust enrichment claim under
Florida law should be dismissed. This is because there is a difference between unjust
enrichment, which refers to mistaken transfers, and wrongful enrichment, which refers to
wrongful takings. See Guyana Telephone & Telegraph Co. v. Melbourne International
Communications, Ltd., 329 F.3d 1241, 1245 n.3 (11th Cir. 2003). As the court in Guyana
Telephone explained:
[The underlying plaintiff] asserts that its right to restitution arises
from an unjust enrichment. This is not quite accurate. The fact that it
would be “unjust” (as in “unfair”) for a defendant to retain a benefit
obtained through the commission of wrong does not mean that the
basis of the restitutionary obligation arises from an unjust
enrichment. . . . The paradigm examples of unjust enrichment are
mistaken transfers. “As soon as [a] claimant relies on a wrong [to
supply the unjust factor], the right on which he relies arises from that
wrong, not from unjust enrichment.” Here, because [the plaintiff’s]
right to restitution arises from the wrong of the tort committed by the
conspiracy [via misrepresentations that caused the plaintiff not to be
6
To the extent that the Millennium Defendants also request that the Court require Plaintiff
to post a bond in connection with this claim, pursuant to Florida Statute § 501.211(3), the Court
denies the request.
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paid fees that it was entitled to receive], this is a case of wrongful
enrichment rather than unjust enrichment: the breach of a primary tort
duty gave rise to a secondary right to restitution for the benefit
obtained through commission of the wrong.
Id. (internal citations omitted).
In this case, Plaintiff’s unjust enrichment claim is based on Defendants’ unauthorized use
of Plaintiff’s trademark. However, courts that have applied the theory of unjust enrichment in
connection with trademark infringement claims have done so in determining the plaintiff’s
recovery under the Lanham Act via an award of the infringer’s profits. See Monsanto Co. v.
Campuzano, 206 F. Supp.2d 1252, 1267 (S.D. Fla. 2002)(stating that an accounting of an
infringer’s “profits furthers the congressional purpose by making infringement unprofitable, and
because it deprives the defendant of unjust enrichment and provides a deterrent to similar
activity in the future, it is justified”); Nutrivida, Inc. v. Inmuno Vital, Inc., 46 F. Supp.2d 1310,
1315 (S.D. Fla. 1998)(stating that an award of an infringer’s profits under the Lanham Act has
been recognized as compensation for the defendant’s unjust enrichment); Babbit Electronics,
Inc. v. Dynascan Corp., 38 F.3d 1161, 1182 (11th Cir. 1994)(awarding profits under the Lanham
Act and stating that “an accounting of profits is proper under a theory of unjust enrichment”).
Therefore, the Court dismisses Plaintiff’s unjust enrichment claim under Florida law, and
instead, Plaintiff may pursue damages under the Lanham Act in the form of Defendants’ profits
under a theory of unjust enrichment.
I. Punitive Damages
In Count IX, Plaintiff asserts a claim for punitive damages, pursuant to Florida Statute
§ 768.72(2). Section 768.72(2) provides that “[a] defendant may be held liable for punitive
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damages only if the trier of fact, based on clear and convincing evidence, finds that the defendant
was personally guilty of intentional misconduct or gross negligence.”
The Millennium Defendants move to dismiss Count IX, because it is not an independent
claim for relief. Instead, punitive damages are a potential remedy that is related to the other
claims asserted in the amended complaint. See Kaplan v. Zicker & Associates, P.A., 2013 WL
6002216, at *4 (S.D. Fla. Nov. 12, 2013). The Court agrees with the Millennium Defendants
that Count IX should be dismissed; however, the Court will grant Plaintiff leave to amend to add
a request for punitive damages within the appropriate claims that remain.
IV. Conclusion
Accordingly, it is ORDERED AND ADJUDGED that:
(1)
Defendants Millennium Travel and Promotions, Inc., Vacation Tours, USA, Inc.,
and Henry J. Armand’s Motion to Dismiss (Doc. No. 70) is GRANTED IN
PART AND DENIED IN PART: The motion is GRANTED as to Count VIII
(unjust enrichment under Florida law) and Count IX (punitive damages);
otherwise, the motion is DENIED.
(2)
If Plaintiff wishes to pursue punitive damages, it must file a second amended
complaint by September 9, 2014. Also, if Plaintiff is attempting to assert a claim
other than a FDUTPA claim in Count VII, it must more clearly assert such a
claim in the second amended complaint.
DONE AND ORDERED at Tampa, Florida, this 2nd day of September, 2014.
Copies to: Counsel of Record
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