Asher Worldwide Enterprises LLC, v. Sur La Table, Inc. et al

Filing 72

MEMORANDUM Opinion and Order: For the foregoing reasons, the Rubins' motion to dismiss Counts I and II in Plaintiff's amended complaint is denied. 57 Status hearing set for 10/15/2013 at 09:00 AM. Signed by the Honorable Thomas M. Durkin on 8/26/2013:Mailed notice(srn, )

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
Asher Worldwide Enterprises LLC, d/b/a,
Reliabuy.com,

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Plaintiff,
v.
Housewaresonly.com Incorporated,
Stuart N. Rubin, and
Marcia Rubin,
Defendants.

No. 12 C 568

Judge Thomas M. Durkin

MEMORANDUM OPINION AND ORDER
Plaintiff Asher Worldwide Enterprises, LLC (“AWE”) brings this suit against
Defendants Housewaresonly.com Incorporated (“Housewaresonly.com”), Stuart
Rubin, and Marcia Rubin. The amended complaint sets forth a claim for relief
against all three defendants for copyright infringement under 17 U.S.C. § 501 et.
seq. (“Count I”), and violations of the Lanham Act, 15 U.S.C. § 1125(a)(1) (“Count
II”). R. 35, Am. Compl. ¶¶ 26-31. The individual defendants Stuart and Marcia
Rubin (“the Rubins”) move to dismiss Counts I and II against them. R. 57. For the
following reasons, the Rubins’ motion to dismiss is denied.
Background
The following relevant facts, drawn from AWE’s amended complaint, are
accepted as true, and all reasonable inferences are drawn in its favor. See Tamayo
v. Blagojevich, 526 F.3d 1074, 1081 (7th Cir. 2008). Additionally, relevant facts
drawn from AWE’s opposition brief to the Rubins’ motion to dismiss are considered
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insofar as they are consistent with the amended complaint. See Geinosky v. City of
Chicago, 675 F.3d 743, 745 n.1 (7th Cir. 2012) (citing cases). AWE is a corporate
business that sells discount commercial kitchen and restaurant equipment through
a website called “Reliabuy.com.” R. 35 ¶¶ 1, 11, 12. Defendants Stuart and Marcia
Rubin are the president and registered agent, respectively, of Housewaresonly.com
and RestaurantKitchenWarehouse.com, businesses that make available for
purchase various restaurant, kitchen, and other appliances through their websites
and are direct competitors of AWE and its Reliabuy.com site. Id. at ¶¶ 14, 15, 17,
19. According to AWE, the Rubins “direct and control” the operations of
Housewaresonly.com and are the only people associated with the business. Id. at ¶
19; R. 65 at 4-5.
While operating Reliabuy.com, AWE and others acting on its behalf created
descriptions, product feature listings, and promotions to appear on the website and
accompany the products listed for sale. R. 35 ¶ 13. AWE applied for copyright
registration for those descriptions, feature listings, and promotions with the United
States Copyright Office. 1 Id. at ¶ 14. Between October 29, 2009 and January 27,
2010,

AWE

published

65

original

product

listings

with

descriptions

on

Reliabuy.com. Id. at ¶ 23. And between March 17, 2010 and July 17, 2010, 47 of

AWE attached copies of these applications to its amended complaint. R. 35-2. See
Geinosky, 675 F.3d at 745 n. 1 (in ruling on motion to dismiss, district court can
consider complaint, documents attached to complaint, and documents critical to
complaint and referred to in it).

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those 65 descriptions were published on the Housewaresonly.com’s website. 2 Id. On
August 11, 2010, AWE published 25 more descriptions on its website, and all of
those descriptions were copied onto Housewaresonly.com’s website on September
22, 2010. Id. In September and October of 2010, AWE further published 139
additional descriptions, and by October 22, 2010, Housewaresonly.com copied and
published 75 of those 139 descriptions on its website. 3 Id. At no time did AWE give
permission to the defendants to use the descriptions. Additionally, consumer
Internet searches for “Reliabuy” display Housewaresonly.com pages and links. Id.
at ¶ 22.
In September 2010, AWE redesigned its website to focus on discount
commercial restaurant equipment. Id. at ¶ 25. On September 22, 2010, shortly after
AWE made this switch, Housewaresonly.com registered a new website called
“RestaurantKitchenWarehouse.com” that focused on the same area of equipment.
Id. That new website included over 200 product descriptions created, owned, and
published by AWE. Id.
On July 15, 2011, AWE filed this federal action in the United States District
Court for the Western District of Washington against Sur La Table, Inc.,
Housewaresonly.com, and RestaurantKitchenWarehouse.com, alleging, among
AWE attached over 20 instances of descriptions being duplicated on
Housewaresonly.com’s website to its amended complaint. R. 35.

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In its amended complaint, AWE further alleges that “another” 1,000 product
listings were listed on AWE’s website from October 2008 to October 2009, and over
150 of those descriptions were copied onto Housewaresonly.com’s website between
March 17, 2010 and July 17, 2010. R. 35 ¶ 23. This allegation is confusing given
AWE’s earlier statements.
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other things, copyright infringement and violations of the Lanham Act. R. 1. After
AWE voluntarily dismissed defendant Sur La Table, Inc. from the lawsuit on July
27, 2011, R. 4, the district court concluded that it did not have personal jurisdiction
over the remaining defendants and accordingly, venue was not proper in the
Western District of Washington, R. 14. On January 10, 2012, the case was
transferred to this district. Id. Upon receiving the case, on May 22, 2012, the Court
referred the case to Magistrate Judge Valdez for settlement purposes. R. 24 (Dow,
J.). AWE alleges that during this time, instead of engaging in settlement
discussions, the Rubins were “winding up the affairs of Housewaresonly.com and
moving themselves away from Chicago.” R. 65 at 3. AWE further alleges that the
Rubins had in fact “abandoned their websites and appear[ed] to be depleting the
assets, if any, of the websites in an attempt to avoid financial liability for the
actions complained of in this case.” Id. In response to these actions, on September
10, 2012, AWE moved to amend its complaint, seeking to add the Rubins personally
as named defendants, R. 30, a request that this Court granted, R. 34 (Dow. J.).
After the amended complaint was filed, AWE attempted to serve the Rubins
but encountered difficulty. AWE alleges that it attempted to serve them at the
address listed as Housewaresonly.com’s corporate headquarters, but discovered that
the address was for a UPS facility in Wilmette, Illinois and no one at the facility
had information regarding the Rubins’ whereabouts. R. 65 at 3-4. AWE served
interrogatories asking for the Rubins’ current address. Counsel for the corporate
defendants initially responded that the Rubins current address was “unknown”—

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the Rubins had apparently moved leaving no forwarding address—but later agreed
to accept service of the complaint on their behalf. Id. at 4. Counsel for
Housewaresonly.com then filed an appearance on the Rubins’ behalf. R. 47, 48.
Legal Standard
The purpose of a Rule 12(b)(6) motion to dismiss is not to decide the merits of
the case; a Rule 12(b)(6) motion tests the sufficiency of the complaint. Gibson v. City
of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). To survive a Rule 12(b)(6) motion to
dismiss, the complaint must provide “a short and plain statement of the claim
showing that the pleader is entitled to relief,” Fed. R. Civ. P. 8(a)(2), sufficient to
provide defendant with “fair notice” of the claim and the basis for it. Bell Atl. Corp.
v. Twombly, 550 U.S. 544, 555 (2007). The Seventh Circuit has explained that this
rule “reflects a liberal notice pleading regime, which is intended to focus litigation
on the merits of a claim rather than on technicalities that might keep plaintiffs out
of court.” Brooks v. Ross, 578 F.3d 574, 580 (7th Cir. 2009) (internal quotation
marks omitted). While “detailed factual allegations” are not required, “labels and
conclusions, and a formulaic recitation of the elements of a cause of action will not
do.” Twombly, 550 U.S. at 555. The complaint must “contain sufficient factual
matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). “A
claim has facial plausibility ‘when the plaintiff pleads factual content that allows
the court to draw the reasonable inference that the defendant is liable for the

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misconduct alleged.’” Bissessur v. Ind. Univ. Bd. of Trs., 581 F.3d 599, 602 (7th Cir.
2009) (quoting Iqbal, 556 U.S. at 678).
Analysis
In their motion to dismiss, the Rubins challenge the sufficiency of the
allegations in AWE’s amended complaint to hold them liable in their individual
capacities. The Rubins argue that AWE’s allegations fall short of the “special
showing” required to hold them personally liable for the infringement of the
corporation. According to the Rubins, AWE’s statements in its amended complaint
that they directed and controlled the operations of the corporation, as their alter
egos, are conclusory and insufficient to survive a Rule 12(b)(6) motion to dismiss. R.
57 at 4.
Long ago, the Seventh Circuit discussed when corporate officers may be held
personally liable for patent infringement by their corporation:
[I]n the absence of some special showing, the managing officers of a
corporation are not liable for the infringements of such corporation,
though committed under their general direction . . . . It is when the
officer acts willfully and knowingly—that is, when he personally
participates in the manufacture or sale of the infringing article (acts
other than as an officer), or when he uses the corporation as an
instrument to carry out his own willful and deliberate infringements,
or when he knowingly uses an irresponsible corporation with the
purpose of avoiding personal liability—that officers are held jointly
with the company.
Dangler v. Imperial Mach., Co., 11 F.2d 945, 947 (7th Cir. 1926). 4 Courts continue
to apply this standard to personal liability for all types of corporate intellectual

Despite its age, Dangler remains the seminal case that establishes the standard
for when corporate officers may be held personally liable for intellectual property
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property infringement. See Peaceable Planet, Inc. v. Ty, Inc., 362 F.3d 986, 994 (7th
Cir. 2004); FM Indus., Inc. v. Citicorp Credit Servs., Inc., No. 07 C 1794, 2007 WL
4335264, at *4 (N.D. Ill. Dec. 5, 2007). Thus, for personal liability for corporate
intellectual property infringement to extend to corporate officers, a special showing
must be made that they acted willfully and knowingly and personally participated
in the infringing activities or used the corporation to carry out their own deliberate
infringement. Id.; see also FM Indus., 2007 WL 4335264, at *4. Merely being an
officer in the corporation will not confer liability on an individual. DEV Indus., Inc.
v. Rockwell Graphic Sys., Inc., No. 91 C 7197, 1992 WL 100908, at *3 (N.D. Ill. May
4, 1992). When corporate officers are in control of the decisions of the corporation at
all times, however, they may be liable for the intellectual property infringements of
the corporation. Weller Mfg. Co. v. Wen Products, Inc., 231 F.2d 795, 801 (7th Cir.
1956); see also Peaceable Planet, Inc. v. Ty, Inc., 362 F.3d 986, 994 (7th Cir. 2004);
C.S.B. Commodities, Inc., v. Urban Trend (HK) Ltd., 626 F. Supp. 2d 837, 857-60
(N.D. Ill. 2009).
AWE contends that the following factual allegations in its amended
complaint are sufficient to support its claims against the Rubins personally: (1) “Mr.
and Ms. Rubin have, without the authorization or permission of AWE, copied and
duplicated many of the descriptions”; (2) “Mr. Rubin and Ms. Rubin direct and

infringement by their corporation. Although Dangler involved patent infringement,
its standard has also been applied to trademark and copyright infringement. See
Peaceable Planet, Inc. v. Ty, Inc., 362 F.3d 986, 994 (7th Cir. 2004); FM Indus., Inc.
v. Citicorp Credit Servs., Inc., No. 07 C 1794, 2007 WL 4335264, at *4 (N.D. Ill. Dec.
5, 2007).
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control

the

operations

of

Defendants

Housewaresonly.com,

and

RestaurantKitchenWarehouse.com”; and (3) “Defendant Housewaresonly.com is the
alter ego[ ] of Defendants Mr. Rubin and Ms. Rubin and is under the direct control
of Mr. Rubin and Ms. Rubin.” R. 35 ¶¶ 16, 19, 20. Whether these allegations alone
are sufficient to reveal personal participation and direction and survive a 12(b)(6)
motion is a close question. The Rubins’ argument that AWE’s allegations about
them personally are conclusory is well-taken. The complaint, however, includes
additional factual allegations that Stuart Rubin was the owner and president of the
corporations, and Marcia Rubin was the registered agent for the corporations. Plus,
the sheer number of infringements alleged, over 300, 5 leads to the reasonable and
credible inference that the Rubins acted willfully and knowingly when they
duplicated the product descriptions.
Ultimately, the Court need not rely solely on the allegations in the amended
complaint to resolve this dispute. AWE adds further elaboration to the factual
allegations in its amended complaint in its brief opposing dismissal, which this
Court may consider in deciding a Rule 12(b)(6) motion to dismiss provided they are
“consistent with the pleadings.” Geinosky, 675 F.3d at 745 n.1 (citing cases). AWE
reiterated in its brief that Stuart and Marcia Rubin are the only two individuals
associated with the corporations. R. 65 at 4. AWE’s brief also points to the following

This number includes the 47 product descriptions uploaded onto the
Housewaresonly.com website between March 17, 2010 and July 17, 2010; the 25
descriptions uploaded on September 22, 2010; and the 75 descriptions uploaded on
October 22, 2010. R. 35 ¶ 23. This number also includes the over 200 product
descriptions copied onto the RestaurantKitchenWarehouse.com website. Id. ¶ 25.
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facts (and reasonable inferences from those facts) that AWE contends supports its
claim that the Rubins were personally involved in the corporation’s infringements:
(1) the structure of the corporations, which included only the Rubins as being
associated with the them; (2) the Rubins’ listing of a UPS store facility as the
corporate headquarters; (3) the Rubins’ suspicious attempts during the litigation to
avoid service; and (4) the fact that the websites were abandoned, the assets
withdrawn, and the corporation dissolved at the same time that the Rubins moved
(to an unknown address) in an attempt to delay the federal case. Id. at 6. According
to these allegations, the Rubins were not only the heads of the corporations, but
they also comprised its entire workforce, which leads to the reasonable inference
that they were personally involved in the corporation’s infringements. The timing of
the corporations’ shutdown also lends further support to the claim that the
corporation’s conduct was fully under the control of the Rubins. Essentially, given
the structure of the corporations, it is reasonable to infer that the infringement
actions of the corporations were committed by the Rubins because they are in fact
“the corporation.” Moreover, the suspicious nature of the timing and attempts to
avoid service in connection with the federal suit leads to the inference that the
Rubins knowingly and willfully participated in the infringements and were shutting
down the corporations to avoid personal liability. Ultimately, when all these facts
are taken together, along with the sheer number of infringements alleged, the claim
that the Rubins were personally involved in the infringements and that the

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corporation was their alter ego, allowing them to conduct their own infringements
and shield them from liability, is at least plausible.
After viewing the allegations in the amended complaint and AWE’s
opposition brief in the light most favorable to AWE, the Court finds that AWE has
made at this stage a “special showing” that the Rubins personally participated in
the corporation’s infringement. It is at least plausible, taking all the allegations as
true, that the Rubins “use[d] the corporation as an instrument to carry out [their]
own willful and deliberate infringements” and “knowingly use[d] an irresponsible
corporation with the purpose of avoiding personal liability.” Dangler, 11 F.2d at 947.
Accordingly, AWE has sufficiently alleged a level of personal participation in the
allegedly infringing activities to survive the Rubins’ 12(b)(6) motion. 6

It would be an inefficient use of the parties’ resources to grant the Rubins’ motion
to dismiss without prejudice and allow AWE leave to amend its complaint again to
include the additional allegations included in its opposition brief. As demonstrated
above, the Court has already found the allegations in the complaint and the further
elaborations in AWE’s opposition brief together are sufficient to survive the Rubins’
12(b)(6) motion to dismiss. AWE could therefore cure the defects in its complaint if
it were granted leave to amend it. Through AWE’s opposition brief, the Rubins are
on notice of the allegations against them and may proceed with discovery
accordingly.
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Conclusion
For the foregoing reasons, the Rubins’ motion to dismiss Counts I and II in
AWE’s amended complaint is denied.
ENTERED:
__________________________
Thomas M. Durkin
United States District Judge
Dated: August 26, 2013

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