Farm Fresh Direct By A Cut Above, LLC v. Steven Downey et al
MEMORANDUM OPINION. Signed by Judge Ellen L. Hollander on 10/26/2017. (c/m 10/27/17 jnls, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
FARM FRESH DIRECT DIRECT BY
A CUT ABOVE LLC,
Civil Action No. ELH-17-1760
STEVEN DOWNEY, et al.,
Plaintiff Farm Fresh Direct Direct By a Cut Above, LLC (“Farm Fresh Direct”) filed suit
(ECF 1) against defendants Steven Downey; Clipper City Lending, LLC (“Clipper City”); Farm
Fresh Direct Home Food Services, LLC (“Farm Fresh Home”); and Jessica Sinsky, alleging
unfair competition, in violation of Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a) (Count
I), and unfair competition and deceptive trade practices under Maryland common law (Count II).
ECF 1 at 5-6.1 Count III, for breach of contract, is brought only as to Downey and Clipper City.
See ECF 1 at 6-7.2
Deceptive trade practice is codified in the Commercial Law Article of the Maryland
Code (2013 Repl. Vol., 2016 Supp.), §§ 13-301 et seq.
Downey subsequently filed for bankruptcy. Therefore, the case is stayed as to him
under 11 U.S.C. § 362(a)(1). However, in my Order of August 15, 2017 (ECF 16), I explained
that the automatic stay as to Downey does not preclude the continuation of the suit as to Sinsky,
Farm Fresh Home, and Clipper City. Id. at 2 (citing Kreisher v. Goldberg, 478 F.3d 209, 213
(4th Cir. 2007)). Notably, neither Clipper City nor Farm Fresh Home responded to the suit.
Accordingly, the Clerk entered default as to Clipper City on September 7, 2017 (ECF 19), and as
to Farm Fresh Home on September 27, 2017. ECF 20.
On October 23, 2017, Downey, Sinsky, Farm Fresh Home, and Clipper City filed a
“Motion to Request Hearing . . .”, also styled as a “Complaint” (ECF 24), with multiple exhibits
(ECF 24-1 through ECF 24-14), setting forth counterclaims and defenses. Downey appears to
have signed ECF 24 on page 10. Clipper City is not included in the list of defendants at the end
of the submission. Id. at 10-11.
Sinsky, who is self-represented, filed an Answer to the Complaint on July 24, 2017. ECF
10 (“Answer”).3 In addition, Sinsky moved to dismiss the Complaint. ECF 12 (“Motion”).
Plaintiff opposes the Motion. ECF 14 (“Opposition”). No reply has been filed. See Docket.
No hearing is necessary to resolve the Motion. See Local Rule 105.6. However, in
resolving the Motion, the Court is mindful of its obligation to construe liberally the pleadings of
a pro se litigant, which are “held to less stringent standards than formal pleadings drafted by
lawyers.” Erickson v. Pardus, 551 U.S. 89, 94 (2007); see also White v. White, 886 F.2d 721,
722-23 (4th Cir. 1989).
For the reasons that follow, I shall deny the Motion.
In its Complaint (ECF 1), plaintiff states that Farm Fresh Direct has been registered as a
limited liability corporation (“LLC”) with the Maryland State Department of Assessments and
Taxation (“SDAT”) since December 22, 2016.
ECF 1, ¶ 9.
On June 7, 2017, plaintiff
registered with SDAT its ownership of the trade name “Farm Fresh Direct Direct.”
Plaintiff alleges that it has “worked to develop the Farm Fresh Direct trade name and
trademark by working to create a network of providers inside and outside of Maryland,” and by
“working directly with suppliers throughout the mid-Atlantic region to bring fresh, natural and
quality foods directly to consumers.” Id. ¶ 10. Further, plaintiff asserts that it uses the Farm
Fresh Direct trade name and trademark in interstate commerce. Id.
The Court reiterates, consistent with earlier advisements, that an LLC may only appear in
court through counsel. ECF 11; ECF 16; ECF 22. Therefore, the submission is improper as to
both Farm Fresh Home and Clipper City, even assuming the Orders of Default as to them (ECF
19; ECF 20) do not otherwise preclude such a submission. And, given that the case has been
stayed as to Downey, the Court is unclear as to his right to make such a filing.
On October 25, 2017, Sinsky filed a Motion to Amend her Answer. ECF 26. The
Motion to Amend the Answer is not relevant to the disposition of the Motion.
According to plaintiff, “on or about April 5, 2017,” it entered into an Independent
Representative and Non-Compete Agreement (“Agreement”) with Downey and Clipper City.
Id. ¶ 11. Pursuant to the Agreement, Downey served as a representative salesperson for and on
behalf of plaintiff. Id. The Agreement forms the basis for Count III, which pertains only to
Downey and Clipper City and is not at issue in this Memorandum.
Plaintiff asserts that, on or about April 25, 2017, “Downey and . . . Sinsky filed with
SDAT articles of organization for a competing company with name [sic] intentionally
confusing with Farm Fresh Direct’s, ‘Farm Fresh Direct Direct Home Food Services, LLC.’”
ECF 1, ¶ 12. Additionally, plaintiff asserts that the “filings with SDAT state that [Farm Fresh
Home’s] purpose is to sell fresh all natural food plans and other household items to residential
customers.” Id. ¶ 12. Of relevance here, plaintiff also alleges that “Sinsky is the resident agent
and incorporator” for Farm Fresh Home. Id. ¶¶ 12-13.
Further, plaintiff alleges that Downey and Clipper City “attempt[ed] to open an account
with [plaintiff’s] meat supplier.” Id. ¶ 15. And, “Downey and Clipper City have retained
contact information for [plaintiff’s] providers and clients, . . . and have created or are seeking
to create commercial relationships with them in violation of the Agreement[,] unfairly
completing [sic] with [plaintiff], including, through the use of the intentionally confusing . . .
‘Farm Fresh Direct’ name.” Id. ¶ 16. Plaintiff adds: “Sinsky aided, abetted and supported
these and other violations of Farm Fresh Direct’s rights to the name Farm Fresh Direct
Direct . . . .” Id. ¶ 16.
Standard of Review
A defendant may test the legal sufficiency of a complaint by way of a motion to dismiss
under Rule 12(b)(6). In re Birmingham, 846 F.3d 88, 92 (4th Cir. 2017); Goines v. Valley
Cmty. Servs. Bd., 822 F.3d 159, 165-66 (4th Cir. 2016); McBurney v. Cuccinelli, 616 F.3d 393,
408 (4th Cir. 2010), aff’d sub nom. McBurney v. Young, 569 U.S. 221 (2013); Edwards v. City
of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999). A Rule 12(b)(6) motion constitutes an
assertion by a defendant that, even if the facts alleged by a plaintiff are true, the complaint fails
as a matter of law “to state a claim upon which relief can be granted.”
Whether a complaint states a claim for relief is assessed by reference to the pleading
requirements of Fed. R. Civ. P. 8(a)(2). That rule provides that a complaint must contain a
“short and plain statement of the claim showing that the pleader is entitled to relief.” The
purpose of the rule is to provide the defendant with “fair notice” of the claims and the “grounds”
for entitlement to relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56 (2007).
To survive a motion under Fed. R. Civ. P. 12(b)(6), a complaint must contain facts
sufficient to “state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570; see
Ashcroft v. Iqbal, 556 U.S. 662, 684 (2009) (“Our decision in Twombly expounded the pleading
standard for ‘all civil actions’ . . . .” (citation omitted)); see also Willner v. Dimon, 849 F.3d 93,
112 (4th Cir. 2017). But, a plaintiff need not include “detailed factual allegations” in order to
satisfy Rule 8(a)(2). Twombly, 550 U.S. at 555.
To be sure, federal pleading rules “do not countenance dismissal of a complaint for
imperfect statement of the legal theory supporting the claim asserted.” Johnson v. City of
U.S. ___, 135 S. Ct. 346, 346 (2014) (per curiam). Nevertheless, the rule demands
more than bald accusations or mere speculation. Twombly, 550 U.S. at 555; see Painter’s Mill
Grille, LLC v. Brown, 716 F.3d 342, 350 (4th Cir. 2013). A complaint is insufficient if it
provides no more than “labels and conclusions” or “a formulaic recitation of the elements of a
cause of action.” Twombly, 550 U.S. at 555. Rather, to satisfy the minimal requirements of Rule
8(a)(2), the complaint must set forth “enough factual matter (taken as true) to suggest” a
cognizable cause of action, “even if . . . [the] actual proof of those facts is improbable and . . .
recovery is very remote and unlikely.” Twombly, 550 U.S. at 556 (internal quotations omitted).
In reviewing a Rule 12(b)(6) motion, a court “‘must accept as true all of the factual
allegations contained in the complaint’” and must “‘draw all reasonable inferences [from those
facts] in favor of the plaintiff.’” E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d
435, 440 (4th Cir. 2011) (citations omitted); see Semenova v. Maryland Transit Admin., 845 F.3d
564, 567 (4th Cir. 2017); Belmora, LLC v. Bayer Consumer Care AG, 819 F.3d 697, 705 (4th
Cir. 2016); Houck v. Substitute Tr. Servs., Inc., 791 F.3d 473, 484 (4th Cir. 2015); Kendall v.
Balcerzak, 650 F.3d 515, 522 (4th Cir. 2011), cert. denied, 565 U.S. 943 (2011). But, a court is
not required to accept legal conclusions drawn from the facts. See Papasan v. Allain, 478 U.S.
265, 286 (1986). “A court decides whether [the pleading] standard is met by separating the legal
conclusions from the factual allegations, assuming the truth of only the factual allegations, and
then determining whether those allegations allow the court to reasonably infer” that the plaintiff
is entitled to the legal remedy sought. A Society Without a Name v. Virginia, 655 F.3d 342, 346
(4th Cir. 2011), cert. denied, 566 U.S. 937 (2012).
In general, courts do not “resolve contests surrounding the facts, the merits of a claim, or
the applicability of defenses” through a Rule 12(b)(6) motion. Edwards v. City of Goldsboro,
178 F.3d 231, 243 (4th Cir. 1999). The purpose of the rule is to ensure that defendants are
“given adequate notice of the nature of a claim” made against them. Twombly, 550 U.S. at 55556. But, “in the relatively rare circumstances where facts sufficient to rule on an affirmative
defense are alleged in the complaint, the defense may be reached by a motion to dismiss filed
under Rule 12(b)(6).” Goodman v. Praxair, Inc., 494 F.3d 458, 464 (4th Cir. 2007) (en banc);
accord Pressley v. Tupperware Long Term Disability Plan, 533 F.3d 334, 336 (4th Cir. 2009);
see also U.S. ex rel. Oberg v. Penn. Higher Educ. Assistance Agency, 745 F.3d 131, 148 (4th Cir.
2014). However, because Rule 12(b)(6) “is intended [only] to test the legal adequacy of the
complaint”, Richmond, Fredericksburg & Potomac R.R. Co. v. Forst, 4 F.3d 244, 250 (4th Cir.
1993), “[t]his principle only applies . . . if all facts necessary to the affirmative defense ‘clearly
appear[ ] on the face of the complaint.’” Goodman, 494 F.3d at 464 (quoting Forst, 4 F.3d at
250) (emphasis added in Goodman).
Plaintiff alleges that Sinsky violated 15 U.S.C. § 1125(a)(1)(A) and engaged in unfair and
deceptive trade practices, in violation of Maryland common law. ECF 1, ¶¶ 17-22, 23-26. At its
core, plaintiff’s contention is that “Sinsky is the resident agent and incorporator” of Farm Fresh
Home (ECF 1, ¶¶ 12-13), and in that capacity she “filed” the articles of organization for Farm
Fresh Home, creating a name for the “competing company” that is “intentionally confusing”
because of its similarity to Farm Fresh Direct. ECF 1, ¶ 12.
A. Individual Liability
Farm Fresh Home is a limited liability company. As a threshold matter, I must determine
whether Sinsky is subject to suit in light of Farm Fresh Home’s status as a limited liability
It is well settled that “[a] corporation exists as a legal entity separate and distinct from its
corporate shareholders.” Cancun Adventure Tours, Inc. v. Underwater Designer Co., 862 F.2d
1044, 1047 (4th Cir. 1988); see Johnson v. Flowers Indus., Inc., 814 F.2d 978, 980 (4th Cir.
1987). Notably, a corporation is a “‘creature of legal fiction,’” and “‘a corporation must of
necessity act through its agents . . . .’” Southern Management Corp. v. Taha, 378 Md. 461, 480,
836 A.2d 627, 638 (2003) (citations omitted).
The concept of a corporation as a separate legal entity “is expressed by the colorful
metaphor of the corporate veil, which presumes that acts of the corporation are not acts of the
shareholder.” Johnson, 814 F.2d at 980. The corporate veil doctrine “is a basic attribute of the
corporate form; it encourages business investment and fosters stability in commercial
transactions.” Cancun Adventure, 862 F.2d at 1047. And, in Maryland “the fiction of the wholly
separate corporate form is jealously guarded . . . .” Baltimore Line Handling Co. v. Brophy, 771
F. Supp. 2d 531, 552 (D. Md. 2011).
In the seminal Maryland case of Bart Arconti & Sons, Inc. v. Ames-Ennis, Inc., 275 Md.
295, 340 A.2d 225, 234 (1975), the Maryland Court of Appeals observed that, in the absence of
fraud or unless necessary to enforce a paramount equity, shareholders are generally not liable for
the acts of a corporation. It said, id. at 310, 340 A.2d at 234:
The most frequently enunciated rule in Maryland is that although courts will, in a
proper case, disregard the corporate entity and deal with substance rather than
form, as though a corporation did not exist, shareholders generally are not held
individually liable for debts or obligations of a corporation except where it is
necessary to prevent fraud or enforce a paramount equity.
Similarly, in Cancun Adventure, 862 F.2d at 1047, the Fourth Circuit recognized that
“[s]ubstantial ownership of a corporation by a single individual is not alone sufficient to pierce
the corporate veil.” Although the Cancun Court acknowledged that the corporate veil “is not
sacrosanct,” it cautioned that “[a] court’s power to pierce the corporate veil and impose liability
on a shareholder in his individual capacity [must] be exercised with extreme circumspection.”
Id.; see also Hildreth v. Tidewater Equipment Co., Inc., 378 Md. 724, 733, 838 A.2d 1204, 1209
(2003) (noting that a party may seek to pierce the corporate veil when “‘necessary to prevent
fraud or enforce a paramount equity’”) (citations omitted); DeWitt Truck Brokers, Inc. v. W. Ray
Flemming Co., 540 F.2d 681, 683 (4th Cir. 1976) (stating that the “power to pierce the corporate
veil . . . is to be exercised ‘reluctantly’ and ‘cautiously.’”) (Citation omitted).
The challenge facing a party seeking to pierce the corporate veil has been described as
“herculean.” Dixon v. Process Corp., 38 Md. App. 644, 645-46, 382 A.2d 893, 894-95 (1978)
(“A commercial corporation is a legal entity conceived by the mind of man and legitimated by
statute for the avowed purpose of achieving maximum profit with a minimum exposure to
liability . . . [W]oe unto the creditor who seeks to rip away the corporate façade. . . .”). Indeed,
“Maryland is more restrictive than other jurisdictions in allowing a plaintiff to pierce a
corporation’s veil.” Residential Warranty Corp. v. Bancroft Homes Greenspring Valley, Inc.,
126 Md. App. 294, 309, 728 A.2d 783, 790-91 (1999). Accord Whitmore v. Hawkins, 217 F.3d
843, at *4 (4th Cir. 2000) (table).
To this Court’s knowledge, no Maryland appellate court has issued a reported opinion
allowing veil piercing to enforce a “paramount equity.” See Ramlall v. Mobile Pro Corp., 202
Md. App. 20, 30, 30 A.3d 1003, 1009 (2011). The “standard has been so narrowly construed that
neither [the Maryland Court of Special Appeals] nor the [Maryland] Court of Appeals has
ultimately ‘found an equitable interest more important than the state’s interest in limited
shareholder liability.’” Serio v. Baystate Props., LLC, 209 Md. App. 545, 559-60, 60 A.3d 475,
484 (2013) (quoting Residential Warranty, 126 Md. App. at 307 n.13, 728 A.2d at 789 n.13).
Even where a party seeks to hold a shareholder liable for conduct that was “clearly designed to
cause the corporation to evade a legal obligation” and “had the effect of rendering [the
corporation] ‘all but insolvent,’” paramount equity does not justify piercing the veil. Hildreth,
378 Md. at 738-39, 838 A.2d at 1212-13 (quoting Bart Arconti, 275 Md. at 305, 340 A.2d at
Of import here, the principles described above also apply to an LLC. Under Maryland
law, a member of an LLC is not “personally liable for the obligations of the limited liability
company, whether arising in contract, tort or otherwise, solely by reason of being a member of
the limited liability company.” Md. Code (2014 Repl. Vol., 2016 Supp.), § 4A-301 of the
Corporations & Associations Article (“C.A.”); see Allen v. Dackman, 413 Md. 132, 158, 991
A.2d 1216, 1228 (2010) (“[A] member of an LLC generally is not liable for torts committed by,
or contractual obligations acquired by, the LLC.”). Moreover, “a person cannot be held liable
under a contract to which he was not a party. . . .” Residential Warranty Corp., 126 Md. App. at
316, 728 A.2d at 794.
Dackman, supra, 413 Md. at 135-36, 991 A.2d at 1218, is instructive. There, the
Maryland Court of Appeals considered whether a member of an LLC could be held liable for
injuries sustained by lead paint victims at a property owned by the LLC. The Dackman Court
concluded, id. at 154, 991 A.2d at 1228: “An LLC member is liable for torts he or she personally
commits, inspires, or participates in because he or she personally committed a wrong, not
‘solely’ because he or she is a member of the LLC.” Thus, the Dackman Court determined that a
member of an LLC who had never intended to lease a property and was unaware that a property
was occupied, could nevertheless be held personally liable for lead paint injuries at that property
because the definition of “owner” under the Baltimore City Housing Code is broader than the
plain language definition. Id. at 148-152, 991 A.2d at 1225-1229; see also Planet Technologies,
Inc., 735 F. Supp. 2d at 402 (“[A]lthough a corporate officer or agent is generally not liable for
torts committed by the corporation, corporate officers or agents can be held liable for the torts
that they ‘personally commit, or which [they] inspire or participate in, even though performed in
the name’ of the corporation.”) (alteration in Planet Technologies, Inc.) (quoting Dackman, 413
Md. at 153, 991 A.2d at 1228).
Moreover, when an individual defendant who is otherwise protected by an organization’s
limited liability shield commits a tort or violates the Lanham Act, she may be held individually
liable. See Newport News Holding Corp v. Virtual City Vision, Inc., 650 F.3d 423, 433-434 (4th
Cir. 2011) (involving false advertising and unfair competition under 15 U.S.C. § 1125(a)); Polo
Fashions, Inc. v. Craftex, Inc., 816 F.2d 145, 149 (4th Cir. 1987) (considering both a false
association claim under § 1125(a) and a common law unfair competition claim); Gorby v.
Weiner, TDC-13-3276, 2014 WL 4825962, at *7 (D. Md. Sept. 23, 2014) (containing a § 1125(a)
false advertising claim and a common law unfair competition claim); Planet Technologies, Inc.
v. Planit Technology Group, LLC, 735 F. Supp. 2d 397, 402, 405 (D. Md. 2010) (involving an
unfair competition claim under Lanham Act, § 1, codified at 15 U.S.C. § 1051); Stafford Urgent
Care, Inc. v. Garrisonville Urgent Care, P.C., 224 F. Supp. 2d 1062, 1065-66 (D. Md. 2002)
(considering a § 1125(a) claim).
For example, in response to a § 1125(a) false association claim and a common law unfair
competition claim, the Fourth Circuit has said: “A corporate official may be held personally
liable for tortious conduct committed by him, though committed primarily for the benefit of the
corporation. This is true in [§ 1125(a)] and unfair trade practices cases.” Polo Fashions, Inc.,
816 F.2d at 149. Indeed, Lanham Act claims brought under § 1125(a) “are torts, as is the
[common law] claim of Unfair Competition.” Gorby, 2014 WL 4825962, at *7. “The Lanham
Act creates in essence a federal statutory tort, derived from the common law tort of unfair
competition.” Global Mail Ltd. v. U.S. Postal Service, 142 F.3d 208, 211 (4th Cir. 1998); see
Zeman v. Lotus Heart, Inc., 717 F. Supp. 373, 376 (D. Md. 1989) (“[A]gents and employees of a
corporation may become jointly and severally liable with the corporation for torts committed by
them while in the scope of service to the corporation.”); see also Stafford Urgent Care, Inc., 224
F. Supp. 2d at 1065-66 (“[I]t is equally well-established that an individual corporate officer or
director can be held personally liable for [a § 1125(a) claim].”).
Courts have considered different factors when determining whether an individual is liable
for unfair competition or a violation of 15 U.S.C. § 1125(a)(1)(A). In Polo Fashions, Inc., 816
F.2d at 147-49, the Fourth Circuit reviewed a § 1125(a) false association claim and reversed the
district court’s decision to shield two corporate officers from personal liability. Finding that one
of the individuals was “president and principal stockholder” and the other was the “plant
manager,” and that the individuals “participated” in the infringement, the Fourth Circuit
concluded that these individuals could be held personally liable for their alleged violations of,
inter alia, 15 U.S.C. § 1125(a). Id. at 147, 150.
In Gorby, Judge Chuang denied the individual defendants’ motions to dismiss because
the plaintiff had “properly alleged viable claims of action against [the individual] Defendants”
under § 1125(a)’s false advertising prong and Maryland’s common law tort of unfair
competition. 2014 WL 4825962, at *6-7. In that case, plaintiff had alleged that the defendants
personally participated in the false advertising of plaintiff’s successes and products. Id. at *7. In
Planet Technologies, Inc., 735 F. Supp. 2d at 405, the Court denied the individual defendant’s
motion to dismiss because the plaintiff had alleged that defendant “personally participated in the
selection of the [offending company] name,” and “authorized and approved” the offending
activity by directing “counsel to file a trademark registration application.” And, in Stafford
Urgent Care, Inc., 224 F. Supp. 2d at 1065-66, the Court denied the individual defendants’
motion to dismiss because they had “incorporated the [offending] entity, using the [confusingly
similar name] in its signage, with the intent and purpose of diverting patients and business from
Here, plaintiff has alleged that “Sinsky is the resident agent and incorporator” of Farm
Fresh Home (ECF 1, ¶¶ 12-13), and that she personally “filed” its “articles of organization” to
create a name confusingly similar to Farm Fresh Direct. ECF 1, ¶ 12. Further, plaintiff alleges
that Sinsky incorporated Farm Fresh Home for the “purpose” of selling “fresh all natural food
plans and other household items to residential customers,” in competition with plaintiff. Id.
Although plaintiff does not allege that Sinsky is an employee or officer of Farm Fresh Home,
plaintiff does allege that Sinsky participated in alleged violations of the Lanham Act and
engaged in unfair competition under Maryland common law by registering Farm Fresh Home’s
name with the SDAT. ECF 1, ¶ 12. The allegations are akin to those that were sufficient in
Stafford Urgent Care, Inc., 224 F. Supp. 2d at 1065-1066, where the defendant allegedly
“incorporated the [offending] entity, using the [confusingly similar name] . . . with the intent and
purpose of diverting . . . business from [plaintiff].”
The question here is not whether plaintiff will ultimately prevail. Its allegations as to
Sinsky border on thin. But, for purposes of the Motion, plaintiff adequately alleges sufficient
facts and inferences that Sinsky participated in the creation of Farm Fresh Home for the purpose
of using a confusingly similar name to compete with Farm Fresh Direct. See A Society Without a
Name, 655 F.3d at 346. Therefore, plaintiff is not entitled to the protection of the corporate
shield at this juncture.
B. Section 43(a) of the Lanham Act
In Count I, plaintiff claims a violation of Section 43(a) of the Lanham Act, codified at 15
U.S.C. § 1125(a). See ECF 1 at 5-6. Plaintiff has adequately stated a claim.
The Lanham Act (the “Act”) is intended, inter alia, to “regulate commerce within the
control of Congress by making actionable the deceptive and misleading use of marks in such
commerce” and to thereby “protect persons engaged in such commerce against unfair
competition.” 15 U.S.C. § 1127.
Although “‘much of the Lanham Act addresses the
registration, use, and infringement of trademarks and related marks, [§ 1125(a)] goes beyond
trademark protection.’” Belmora, 819 F.3d at 706 (quoting Dastar Corp. v. Twentieth Century
Fox Film Corp., 539 U.S. 23, 28-29 (2003)). Section 1125(a)(1) “sets forth unfair competition
causes of action for [both] false association and false advertising.” Belmora, 819 F.3d at 706.
In relevant part, §§ 1125(a)(1)(A), (B) of the Act state:
(1) Any person who . . . uses in commerce any word, term, name, symbol, or
device . . . or any false designation of origin, false or misleading description of
fact, or false or misleading representation of fact, which . . .
(A) [False Association:] 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) [False Advertising:] 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 he or she is or is
likely to be damaged by such act.
Thus § 1125(a)(1) provides two grounds for a plaintiff to assert an unfair competition
§ 1125(a)(1)(A) protects against “false designation of origin” likely to cause “confusion, . . .
mistake, or to deceive as to the . . . association of such person with another.”5 The second
The Act defines “person” as “a juristic person as well as a natural person,” and defines
“juristic person” to “include a firm, corporation, union, association, or other organization
capable of suing and being sued in a court of law.” 15 U.S.C. § 1127.
In § 1125(a) cases, the terms “false designation” and “false association” are often used
ground protects against false “commercial advertising or promotion.” § 1125(a)(1)(B). See, e.g.,
Lexmark Int'l, Inc. v. Static Control Components, Inc., ___ U.S. ___, 134 S. Ct. 1377, 1384
(2014); see Belmora, 819 F.3d at 706 (“Subsection A, which creates liability for statements as to
‘affiliation, connection, or association’ of goods, describes the cause of action known as ‘false
association.’ Subsection B, which creates liability for ‘misrepresent[ing] the nature,
characteristics, qualities, or geographic origin’ of goods, defines the cause of action for ‘false
advertising.’”); Int’l Found. of Emp. Benefit Plans v. Cottrell, WDQ-14-1269, 2015 WL 127839,
at *2 (D. Md. Jan. 7, 2015).
Plaintiff alleges only the violation of § 1125(a)(1)(A) of the Act, i.e., the false association
prong. ECF 14 at 4-6. A plaintiff’s success under § 1125(a)(1)(A) requires the defendant’s “use
in commerce” of “any word, term, name, symbol, or device” or “any false designation of origin,
false or misleading description of fact, or false or misleading representation of fact[.]” (Emphasis
added).6 And, although plaintiff argues that § 1125(a)(1) broadly authorizes suit by “any person
who believes that he or she is or is likely to be damaged by” defendant’s “use[ of a false
association] in commerce” (ECF 14 at 5), the Lexmark Court explained that § 1125(a) “should
not get such an expansive reading.” Lexmark, 134 S. Ct. at 1388 (citation omitted).
interchangeably. See Belmora, 819 F.3d at 705 n.4. In the Opposition, plaintiff uses both terms.
See ECF 14 at 4 (“false association”); ECF 14 at 5 (“false designation”). However, as the Fourth
Circuit noted in Belmora, it is “preferable to follow the Supreme Court’s terminology
in Lexmark [Int’l., Inc. v. Static Control Components, Inc., ___ U.S. ___, 134 S. Ct. 1377
(2014)]”, where the Court used the term “false association.” Belmora, 819 F.3d at 705 n.4.
Notably, § 1125(a) does not require a plaintiff to have possessed or used a registered
trademark in U.S. commerce. Belmora, 819 F.3d at 706 (distinguishing the requirements of a
“false association” claim under § 1125(a) with those of a trademark infringement suit under
Lanham Act § 32, codified at 15 U.S.C. § 1114); id. at 708 (“Nothing in Lexmark can be read to
suggest that [§ 1125(a)] claims have an unstated requirement that the plaintiff have first used its
own mark (word, term, name, symbol, or device) in U.S. commerce before a cause of action will
lie against a defendant who is breaching the statute.”).
In order to pursue a claim under § 1125(a), a plaintiff who has sufficiently alleged a
defendant’s “use in commerce” of a false association must also satisfy Lexmark’s two-part
inquiry: (1) whether plaintiff’s allegations fall within § 1125(a)(1)(A)’s zone of interests; and (2)
whether plaintiff has alleged “proximate causation of a cognizable injury.” Lexmark, 134 S. Ct.
at 1389-90, 1391 (“The zone-of-interests test is therefore an appropriate tool for
determining who may invoke the cause of action in § 1125(a)” and “a plaintiff suing under §
1125(a) ordinarily must show economic or reputational injury flowing directly from the
deception wrought by the defendant[.]”); see Belmora, 819 F.3d at 710.
To meet the zone of interests test, a plaintiff must sufficiently allege facts showing its
claim furthers an enumerated purpose of § 1125(a)(1)(A).
Lexmark, 134 S. Ct. at 1389;
Belmora, 819 F.3d at 711. But, the “breadth of the zone of interests varies according to the
provisions of law at issue.” 134 S. Ct. at 1389. In other words, although the zone of interests
test “is not ‘especially demanding’” in the context of the Administrative Procedure Act’s
“‘generous review provisions’”, it may require more of a plaintiff bringing suit under another
statute. Id. However, “[i]dentifying the interests protected by the Lanham Act . . . requires no
guesswork, since the Act includes an ‘unusual, and extraordinarily helpful,’ detailed statement of
the statute’s purposes.” Lexmark, 134 S. Ct. at 1389 (quoting H.B. Halicki Productions v. United
Artists Communications, Inc., 812 F.2d 1213, 1214 (9th Cir. 1987)).
Those purposes are
outlined in 15 U.S.C. § 1127, which states:
The intent of this chapter is to regulate commerce within the control of Congress
by making actionable the deceptive and misleading use of marks in such
commerce; to protect registered marks used in such commerce from interference
by State, or territorial legislation; to protect persons engaged in such commerce
against unfair competition; to prevent fraud and deception in such commerce by
the use of reproductions, copies, counterfeits, or colorable imitations of registered
marks; and to provide rights and remedies stipulated by treaties and conventions
respecting trademarks, trade names, and unfair competition entered into between
the United States and foreign nations.
Notably, the Lexmark Court said: “Most of the [Act’s] enumerated purposes are relevant
to false-association cases.” 134 S. Ct. at 1389. Among § 1127’s purposes is Congress’s intent to
“protect persons . . . against unfair competition” by “making actionable the deceptive and
misleading use of marks” in “commerce.” 15 U.S.C. § 1127; see also Belmora, 819 F.3d at 711
(drawing upon this purpose in a Lanham Act, false association case).
A plaintiff must then allege sufficient facts to show its “injuries are proximately caused
by violations of [§ 1125(a)(1)(A)]”, rather than a cause “that is ‘too remote’ from the defendant’s
unlawful conduct.” Lexmark, 134 S. Ct. at 1390 (citations omitted) (stating that harm is too
remote when it “is purely derivative of ‘misfortunes visited upon a third person by the
defendant’s acts.’”). To show proximate cause in a § 1125(a)(1)(A) claim, the plaintiff must
allege “‘economic or reputational injury flowing directly from the deception wrought by the
defendant’s’” false association. Belmora, 819 F.3d at 711-12 (quoting Lexmark, 134 S. Ct. at
Plaintiff has alleged facts sufficient to defeat Sinsky’s motion to dismiss the
§ 1125(a)(1)(A) false association claim. As noted, 15 U.S.C. § 1125(a)(1)(A) protects against
“false designation of origin” likely to cause “confusion, . . . mistake, or to deceive as to the . . .
association of such person with another.” A plaintiff’s success under § 1125(a)(1)(A) requires
the defendant’s “use in commerce” of “any word, term, name, symbol, or device” or “any false
designation of origin, false or misleading description of fact, or false or misleading
representation of fact[.]” (Emphasis added). Here, the alleged offending “word, term, name,
symbol, or device” is the Farm Fresh Home name.
Plaintiff alleges that Sinsky was the
“incorporator” of Farm Fresh Home (ECF 1, ¶¶ 12-13), because she “filed” its “articles of
organization” and thereby created a “false designation of origin,” § 1125(a)(1), in the form of
Farm Fresh Home, LLC. ECF 1, ¶ 12.
This name, plaintiff alleges, is confusingly similar to its own name, Farm Fresh Direct.
ECF 1, ¶ 12. Construing the facts in the light most favorable to the plaintiff, as I must,
plaintiff has adequately alleged that the similarity between the names is likely to cause
“mistake, or to deceive as to the . . . association of such person with another.” § 1125(a)(1)(A).
Thus, plaintiff has alleged facts plausibly showing Sinsky’s actions contributed to the “use in
commerce” of a “false designation” of the Farm Fresh Direct “name.” Id.
Because plaintiff has sufficiently alleged facts showing its claim furthers an enumerated
purpose of § 1125(a), it has also met the zone of interests test. See Lexmark, 134 S. Ct. at 1389;
Belmora, 819 F.3d at 711. As the Lexmark Court stated, “Identifying the interests protected by
the Lanham Act . . . requires no guesswork . . . .” Lexmark, 134 S. Ct. at 1389. Here, as in
Belmora, the relevant Lanham Act purpose is the protection of persons from unfair competition
by “making actionable the deceptive and misleading use of marks” in “commerce.” 15 U.S.C. §
1127; Belmora, 819 F.3d at 711. According to plaintiff, Sinsky organized Farm Fresh Home
with the “purpose [of] sell[ing] fresh all natural food plans and other household items to
residential customers”, in competition with plaintiff (ECF 1, ¶ 12), by using a confusingly
similar name to that of plaintiff, Farm Fresh Direct. ECF 1, ¶ 12. Therefore, plaintiff has
plausibly alleged that its claim is within the intended reach of § 1125(a)(1)(A).
And, because plaintiff alleges plausible facts to create the inference that “economic or
reputational injury” is at least likely to “‘flow directly from the deception wrought by’” the
false association, Belmora, 819 F.3d at 711-12 (quoting Lexmark, 134 S. Ct. at 1391), plaintiff
has met its burden under Lexmark’s proximate causation inquiry.
Plaintiff alleges Sinsky
organized an LLC with the deceptively similar name to that of plaintiff’s company (ECF 1, ¶
12), and that she did so to sell products similar to those of plaintiff. ECF 1, ¶ 12. Plaintiff also
alleges that it has “worked to develop the Farm Fresh Direct trade name and trademark by
working to create a network of providers inside and outside of Maryland,” and by “working
directly with suppliers throughout the mid-Atlantic region to bring fresh, natural and quality
foods directly to consumers.” ECF 1, ¶ 10.
For the foregoing reasons, I shall deny Sinsky’s Motion as to plaintiff’s § 1125(a)(1)(A)
false association claim.
C. Unfair Competition Under Maryland Common Law
In Count II, plaintiff asserts unfair competition under Maryland common law. See ECF 1
Maryland’s common law tort of unfair competition can extend to “‘all cases . . . in the
field of business.’” Electronics Store, Inc. v. Cellco Partnership, 127 Md. App. 385, 407, 732
A.2d 980, 991 (1999) (quoting Baltimore Bedding Corp. v. Moses, 182 Md. 229, 236, 34 A.2d
338, 342 (1943)).
Generally, “Unfair competition is ‘damaging or jeopardizing another’s
business by fraud, deceit, trickery or unfair methods of any sort.’” Thompson v. UBS Financial
Services, Inc., 443 Md. 47, 60, 115 A.3d 125, 133 (2015) (quoting Balt. Bedding Corp, 182 Md.
at 237, 34 A.2d at 342) (internal quotation marks omitted). As Judge Chuang noted in Gorby,
2014 WL 4825962, at *6, “unfair competition makes an individual liable for a deception that
results in ‘the goods of one dealer [being] passed off as the goods of another, and the seller
receiv[ing] the profit which he would not have received except for such deception.’” (Quoting
Edmondson Village Theatre v. Einbinder, 208 Md. 38, 44, 116 A.2d 377, 380 (1955)). The rules
of unfair competition preclude “trading by one dealer upon the good name and reputation built
up by another.” Balt. Bedding, 182 Md. at 237, 34 A.2d at 342.
However, unfair competition is not limited to “passing off” a competitor’s wares as one’s
own. Delmarva Sash & Door Co. of Md., Inc. v. Anderson Windows, Inc., 218 F. Supp. 2d 729,
733 (D. Md. 2002) (citing GAI Audio of New York, Inc. v. Columbia Broadcasting System,
Inc., 27 Md. App. 172, 189, 340 A.2d 736, 747 (1975); Edmondson Village Theatre, 208 Md. at
42, 116 A.2d at 379)). As Judge Blake noted in Delmarva, 218 F. Supp. 2d at 733, the Maryland
Court of Appeals “has preserved a high degree of flexibility in the law of unfair competition.”
She said, id. (quoting Balt. Bedding, 182 Md. at 237, 34 A.2d at 342):
“What constitutes unfair competition in a given case is governed by its own
particular facts and circumstances. Each case is a law unto itself, subject, only, to
the general principle that all dealings must be done on the basis of common
honesty and fairness, without taint of fraud or deception.”
Moreover, “[t]he legal principles which are controlling here are simply the principles of
old-fashioned honesty. One [person] may not reap where another has sown, nor gather where
another has strewn.” GAI Audio, 27 Md. App. at 192, 340 A.2d at 748 (citation omitted).
Therefore, “in cases of unfair competition, fraudulent intent is not essential . . . .” Edmondson
Village Theatre, 208 Md. at 46, 116 A.2d at 381. Indeed, the “absence of fraudulent intent ought
not to stay the hand of the court where a trade name is adopted so similar to a trade name already
in use by a business competitor that it is obvious that injury to the original user will inevitably
Plaintiff alleges that Sinsky organized Farm Fresh Home with the purpose of competing
with plaintiff. ECF 1, ¶ 12. Further, plaintiff alleges that the name Farm Fresh Home was
intended to confuse plaintiff’s providers and customers and thus encourage them to deal with
Farm Fresh Home, rather than with Farm Fresh Direct. ECF 1, ¶¶ 12, 16. It is not essential
that plaintiff allege Sinsky herself intended to perpetrate a fraud. Farm Fresh Home is “so
similar to a trade name already in use by [Farm Fresh Direct]”, which is “a business competitor,”
that “it is [at least plausible] that injury to [Farm Fresh Direct] will inevitably result.”
Edmondson Village Theatre, 208 Md. at 46, 116 A.2d at 381. By alleging facts showing Farm
Fresh Direct, through Downey, has contacted plaintiff’s “meat supplier” (ECF 1, ¶ 15) and has
retained lists of plaintiff’s “providers and clients” (ECF 1, ¶ 16), plaintiff has plausibly
articulated how Farm Fresh Home is attempting to “reap where [Farm Fresh Direct] has sown.”
For these reasons, I shall deny the Motion as to plaintiff’s unfair competition claim.
I shall DENY the Motion because plaintiff has alleged facts sufficient to state a claim
under 15 U.S.C. § 1125(a)(1)(A) and the Maryland common law, as to the tort of unfair
An Order follows.
Date: October 26, 2017
Ellen Lipton Hollander
United States District Judge
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