Gorby, et al v. Philip-Michael Weiner, et al
Filing
20
MEMORANDUM OPINION. Signed by Judge Theodore D. Chuang on 9/23/2014. (kns, Deputy Clerk)
UNITED STA n:s DISTRICT COURT
IlISTlUCT OF ~IARYLAND
JOHN-RANDALL
GORBY, elal.,
PlaintifTs,
v.
Civil Action No. TOC-13-3276
PIlI LIP-MICHAEL WEINER, elal.,
Defendants.
~IEMORANDUM
OPINION
This is a Lanham Act trademark infringement, Lanham Act false advertising, and related
common
13\1,'
torts action filed by John-Randall Gorby ("Gorby") on his own behalf and as a
derivative action on behalf of Earth Starter. LLC ("Earth Starter") against Philip~Michaei Weiner
("Weiner"). Tumml. Inc. ("Tumm!"'), and Chadwick van Erbc ("van Erbc'').
are lummI's
Before the Court
Partial Motion to Dismiss for Failure to State a Claim, ECF NO.7; Weiner's
Motion to Dismiss for Failure to State a Claim, ECF No. 11; and van Erbc's Motion to Dismiss
for Failure to State a Claim. ECF No. 13. For the reasons set forth below, the Court finds that
Gorby can maintain this suit as a derivative action. and therefore that Weiner's and van Erhe's
motions as to Count XIV (Derivative Action) are denied.
As to the remaining counts. for the
reasons described below, the Court denies Weiner's and van Erbe's motions as to Counts l. II.
VI. IX. XI, XIII. and XV; and denies Tumml's motion as to Counts IX. XI. XIII. and XV. The
Court grants Weiner's and van Erbe's motions as to Counts III. IV. V, VII. VIII. X, XII. and
XVI. and grants Tumml's motion as to Counts IV, Vlll, X, and XII. As a result. Counts III, IV.
V, VII, VllI, X, XII, and XVI are dismissed against all Defendants, and Counts I, II, VI, IX, Xl,
XIII. and XV remain against all Defendants.
BACKGROUND
AND PROCEDURAL
HISTORY
For purposes of a motion to dismiss, this Court accepts as true the well-pled, nonconclusory factual allegations in a plaintilT's complaint. See Aziz v. A/colac, Inc., 658 F.3d 388,
390 (4th Cir. 201 I).
In March 2011, Gorby, then a student at the University
Environmental
Science, developed the idea for "Nourishmats:"
of Maryland
"self-watering
studying
plastic matls]
with color-coded properly-placed holes and seed balls that could be used in urban and suburban
settings to establish a small garden." Compl.'
14. In June 2011, Gorby approached Weiner, a
University of Maryland undergraduate majoring in Economics, and the two struck up a business
partnership relating to this idea. [d. at
16. They decided to Conn two companies:
Innovations, LLC ("Green Earth") and Earth Starter.
[d. at
Green Earth
18. Green Earth wuuId be nwned
solely by Gorby and would hold all of the patents and intellectual property associated with
Nourishmats.
[d. They also agreed that they would jointly own Earth Starter, and that Earth
Starter would be the operating company for Nourishmats.
ld. Gorby and Weiner contacted an
attorney to formalize this arrangement. ld. at 19. One year later, in June 2012, Earth Starter was
incorporated.!
ld. at
20.
Their attorney also drafted Articles of Incorporation, but neither
Gorby nor Weiner signed them. Resp. to Weiner's and van Erbe's Mot. Dismiss at 9, ECF No.
I
The Complaint does not indicate jf or when Green Earth was incorporated.
2
13. At some later point, Earth Starter trademarked "Nourishmat" and provisionally patented the
mat's design.2 Compl. 21.
Gorby and Weiner began to build the business. They found a factory in North Carolina
and got production underway. Id. at
22. They advertised the product on the internet. Id. at 1
23. In April 2013, they entered and won the University of Maryland's annual Cupid's Cup, a
competition for young entrepreneurs, which came with a prize of $50,000 in seed money. ld. at
24. The Nourishmat also won the Cupid's Cup Audience Choice Award, and with it an
additional $2,500 in seed money. Id. at
25.
Gorby and Weiner added to the Cupid's Cup
money by raising $100,000 through crowdsourcing on Kickstarter. Id. at 26.
At some point in this process, Weiner reached out to Tumml, "an urban impact
accelerator which supports early stage companies developing innovative consumer products and
services that improve urban living." Id. at
27. In May 2013, Weiner sat down with Tumml
representatives to discuss a relationship; Tumml indicated that it would fund and mentor Earth
Starter in exchange for a five percent ownership interest. Id Weiner and Gorby agreed. In June
2013, Gorby and Weiner headed to San Francisco-where TummI is headquartered-to
begin
working with Tumml in earnest. ld. at 28.
By August 2013, the relationship between Gorby and Weiner began to sour. Early that
month, Weiner offered to buyout Gorby. but Gorby refused. ld. at
28. On August 23, 2013,
Weiner broached the topic again with Gorby, during a meeting which included Clara Brenner,
Tumml's Chief Executive Officer (CEO). Id. at
30. This time, Weiner offered Gorby $5,000
for the majority of his share of Earth Starter and proposed that Gorby retain an eight percent
The Complaint states that Gorby and Weiner agreed that all intellectual property was to be held
by Green Earth, but subsequently asserts that the trademark and provisional patent were
registered by Earth Starter. Based on the posture of the lawsuit-Earth Starter, not Green Earth,
is a plaintiff-the Court takes the subsequent assertion as the accurate one.
2
3
ownership interest in the company.
ld. at
31.
Brenner, who seemed to have advance
knowledge of Weiner's proposal, urged Gorby to accept the offer.
ld. at ~ 32. Gorby again
refused. Id.
Gorby's second refusal of Weiner's buy-out offer triggered a concerted effort to oust
Gorby from Earth Starter. "Immediately after" Gorby rejected Weiner's second buy-out offer,
Weiner fired Craig Spahr, an Earth Starter employee "who[m] Weiner viewed as an ally of
Gorby." ld. at
34. "Within a few minutes" of rejecting the offer, Gorby discovered that he was
locked out of all of Earth Starter's electronic accounts.
ld. at
35. He discovered as well that
Weiner had removed all content from Earth Starter's website. ld An inquiry into Earth Starter's
hosting service revealed that the website had been registered only in Weiner's name, leaving
Gorby powerless to get the site back up and running.
ld. at
36. As a result, Gorby was left
without "any feasible means of communicating with actual and prospective customers."
Jd. at'
37. Gorby also later found that Weiner had "surreptitiously" instructed their patent attorney to
include Weiner on the patent application, "even though Weiner had nothing to do with the
invention of the Nourishmat."
ld. at ~ 38.
While Earth Starter's operations ground to a halt, Gorby learned that Weiner had started
another company, UrbnEarth; that UrbnEarth was "selling garden mats and seed balls that were
functionally the same as the products being sold by Earth Starter"; and that Weiner was using
Earth Starter's assets and equipment to get UrbnEarth up and running. ld. at ~ 39. By Gorby's
calculations, Weiner used $20,000 of Earth Starter's money for UrbnEarth's operating expenses.
ld at
42. Weiner also lured a number of Earth Starter employees to UrbnEarth. ld at
43. In
particular, Weiner tapped van Erbe, who handled production and inventory for Earth Starter, for
a leadership role at UrbnEarth. ld. at , 44-45. Van Erbe now identifies himself as UrbnEarth's
4
"co-founder and head of production."
[d. at
45. Upon defecting to UrbnEarth, Van Erbe held a
number of pieces of Earth Starter's equipment "ransom"-equipment
Starter's] continued operations"-and
46-47, 95.
that was "vital to [Earth
demanded that Gorby pay $5,000 for their return. ld. at
On October 30, 2013, when an Erbe finally returned the equipment,
discovered that some of it had been damaged. Id. at
In addition
to using Earth Starter's
Gorby
46.
assets and equipment,
Weiner was "falsely
advertis[ing)" Earth Starter's accomplishments as those of UrbnEarth. ld. at
49. For example,
UrbnEarth was billed as having won the Cupid's Cup and was touted as the subject of a number
of "laudatory news report(s]," reports that had actually been ahout Earth Starter. Id. On at least
one occasion, the "Nourishmat" trademark was used in UrbnEarth promotional materials.
Jd. at
55.
Tumml, for its part, backed UrbnEarth and essentially severed ties with Earth Starter. Id.
at
41. Tumml is "prominently identified" on UrbnEarth's website as an investor "supplying
funding, support and services," and UrbnEarth is headquartered
offices. Id. at
in Tumml's
San Francisco
40. Despite "supporting UrbnEarth in competition against Earth Starter, and
having no present connection with Earth Starter," Tumml was, as of the time of Gorby's
complaint, still proclaiming its affiliation with Earth Starter, "prominently"
identifying Earth
Starter on its website as one of the companies in TummJ's mentoring "portfolio."
Id. at'i
41,
51.
On November 4, 2013, Gorby filed suit against Defendants in this Court on his own
behalf and on behalf of Earth Starter.
action: (I) false advertising
infriogement
ECf No. 1. In his Complaint, he alleges 16 causes of
under thc Lanham Act, 15 U.S.c.
under the Lanham Act, 15 U.S.c.
5
S
11l4(1)(a);
S
1125(a); (II) trademark
(Ill) breach of contract; (IV)
tortious interference with contract; (V) tortious interference with prospective business relations;
(VI) tortious interference with contract and prospective economic advantage; (VB) breach of
fiduciary duty; (Vlll) tortious interference with fiduciary duties; (IX) conversion; (X) theft; (XI)
misappropriation;
(XII) extortion; (XIII) common law unfair competition;
(XIV) derivative
action; (XV) civil conspiracy; and (XVI) aiding and abetting tortious conduct.
On January 27. 2014, Tumml filed a Partial Motion to Dismiss for Failure to State a
Claim asking the Court to dismiss counts IV and Vlll.XVI ofthe Complaint. ECF NO.7. Gorhy
filed a Memorandum in Opposition to that Motion on February 10, 2014. and Tumml tiled its
Reply Memorandum on Fehruary 19,2014.
ECF Nos. 8, 12. On February 17,2014,
filed a Motion to Dismiss for Failure to Slate a Claim.
ECF No. II.
Weiner
On March 6. 2014, van
Erbe filed a Motion to Dismiss for Failure to State a Claim. ECF No. 13. On May 27, 2014,
Gorby submitted a consolidated Response to Weiner and van Erbe's motions.3
ECF No. 17.
Neither Weiner nor van Erbe tiled a Reply Memorandum.
DISCUSSION
I.
Standard of Review
To overcome a Federal Rule of Civil Procedure 12(b)(6) motion, a complaint must allege
enough facts to state a plausihle claim for relief. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A
claim is plausible when "'the plaintiff pleads factual content that allows the Court to draw the
reasonable
inference that the defendant is liable for the misconduct
alleged."
ld. Legal
conclusions or conclusory statements do not suffice and are not entitled to the assumption of
truth.
ld
In evaluating the sufficiency of the plaintiffs
claims, the Court must examine the
On March to, 2014, the Court (Titus, J.) stayed consideration of the pending motions in order
for the parties to pursue early settlement discussions. See ECF No. 15. Those negotiations broke
down in May 2014.
3
6
complaint as a whole, consider the factual allegations in the complaint as true, and construe the
factual allegations in the light most favorable to the plaintiff. Albright v. Oliver, 510 U.S. 266,
268 (1994); Lambeth v. Bd. ofComm'r,. of Davidson Cnly., 407 F,3d 266, 268 (4th Cir, 2005).
II.
Choice of Law
In regard to the federal causes of action-the
Lanham Act claims-this
Court applies
federal law as interpreted by the Fourth Circuit. In regard to the common law causes of action,
because this Court sits in Maryland, it looks to Maryland law to detennine what law governs
those claims. See Branhaven, LLC v. BeefFek, Inc., 965 F, Supp. 2d 650, 664 (D. Md. 2013)
("When a claim is based on state law, the choice of law rules are those of the state in which the
district court sits."). For state common law torts, Maryland applies the law of the state where the
iojury occurred. See Lab. Corp. of Am. v. Hood, 911 A.2d 841, 845 (Md. 2006). Here, the
alleged injuries are economic, rather than personal, and so are traditionally interpreted as
accruing where the injured party resides. See 21 M.L.E. Torts ~ 2 ("The place of injury means
the place where the injury was suffered rather than the place where the wrongful act took
placel.],,); Restatement of the Law-Conllict of Laws ~ 145 ("The effect of the loss, which is
pecuniary in its nature, will nonnally be felt most severely at the plaintiff's headquarters or
principal place of business."). Accordingly, because Earth Starter is a Maryland company and
Gorby is a Maryland resident, any injury they suffered was sustained in this State. This Court
therefore applies Maryland law to the state common law causes of action.
III.
The Sufficiency of Plaintiffs' Claims
Plaintiffs' complaint, which alleges 16 causes of action implicating different
combinations of the three defendants, is a scatter-shot enterprise. In an effort to establish a
general framework for the pleading, the Court begins with what Plaintiffs denote as Count
7
XIV-titled
"Derivative Action"-which
is not a cause of action, but n,ther factual averments
intended to establish Gorby's ability to file a derivative suit on behalf of Earth Starter.
The
Court then turns to each of Plaintiffs' remaining 15 causes of action in tum.
A.
Count XIV: Derivatil-'c Action
In Count XIV, Plaintiffs cast this suit as a derivative action brought by Gorhy"President and part-owner" of Earth Starter-on
behalf of the company "to remedy injury done
to [Earth Starter] by the Defendants." Compl.
99.100.
In their Motions to Dismiss, Weiner
and van Erbe challenge Gorby's ability to maintain such a derivative action.
They interpret
Counts I, II, V-VII, IX-XIII, and XV-XVI as derivative claims and argue that, as such, they must
be dismissed.
Specifically, they first contend that Gorby "failed to comply with the substantive
requirements to maintain a derivative action" because he did not make a "pre-suit demand" of
Earth Starter's Board of Directors to bring this action directly. Weiner Mot. Dismiss at 3, 5; see
van Erbe Mot. Dismiss at 5.
Second, Defendants contend that Gorby "does not fairly and
adequately represent the [i]nterests of Earth Starter's members in enforcing the rights of the
company."
Weiner's Mot. at 3 and 7; see van Erbe Mot. Dismiss at 8-10. Neither claim has
merit.
Unless there is an otherwise controlling federal law, the requirements for a derivative
action are governed by the state of incorporation, here, Maryland.
Kamen v. Kemper Financial
Services, Inc., 500 U.S. 90, 98 (1991). Under Maryland law, a member of a corporation can file
a derivative action if "members with authority to bring the action have refused to bring the action
or if an effort to cause those members to bring the action is not likely to succeed."
Ann., Corp's & Assoc. ~ 4A-801(b).
Md. Code
Marylaod courts have interpreted the latter half of this
provision as creating a "futility" exception to the demand requirement.
8
Wasserman v. Kay,
14
AJd
1193, 1217-18 (Md. 2011) ("[I]t is clear that the legislature intended the phrase 'not likely
to succeed' to equate with 'futility. '''); see Parish v, Maryland & Virginia Milk Producers Ass 'n,
242 A.2d 512, 544 (Md. 1968) ("[N]o ... prior demand is required when it would be futile."). To
sustain a derivative action, a plaintiff therefore must establish either that he made a demand of
members of authority to file suit and Cailed to garner majority approval, see Md. Code Ann.,
Corp's & Assoc. ~ 4A-403(b)(2), or that he did not make such a demand because doing so would
have been futile.
Gorby concedes that he made no pre-suit demand of Earth Starter's
shareholders, but excuses the failure by implicitly invoking the futility exception.
that Weiner was CEO of the company and owned 50 percent of its shares.
officers
and
Gorby notes
CampI. ~ 102. With
the "primary wrongdoer" owning half of the company, it would, Gorby maintains, have been
impossible to gamer the required majority approval to file suit. Jd. Defendants counter, relying
on Werbowsky v. Collomb, 766 A.2d 123 (Md. 200 I), that the futility exception is "very limited"
and argue that this case falls outside its ambit. See Weiner Mot. Dismiss at 6; van Erbe Mot.
Dismiss at 7. But Werboswky actually undennines their claim.
In Werbowsky, the Maryland
Court of Appeals explained that while the futility exception should be construed narrowly, it
applies where "a majority of the directors are so personally and directly conflicted or committed
to the decision in dispute that they cannot reasonably be expected to respond to a demand in
good faith and within the ambit of the business judgment rule." 766 A.2d at 144. That reasoning
applies here. Weiner, as the alleged "'primary wrong-doer" in the case, is personally and directly
conflicted, and so could not reasonably be expected to respond in good faith to a demand to sue.
Moreover,
because Weiner owns 50 percent of Earth Starter, his conflict would make it
impossible for Gorby to gamer the required majority approval for a derivative suit. Because the
9
law does not require a futile act, Gorby was not required to make a demand of Earth Starter's
officers and shareholders before filing this derivative action.
A plaintiff authorized to file a derivative action may maintain that action only if he
"fairly and adequately represent[s] the interests of the members in enforcing the right of the
limited liability company."
Md. Code Ann., Corp's & Assoc. ~ 4A-801(c).
Weiner and van
Erbe argue that Gorby's "true motivation" in filing this suit is "to pursue individual claims
against Weiner for what he views as Weiner's mistreatment of him, individually."
Dismiss at 8; see van Erbe Mot. Dismiss at 9.
Weiner Mot.
Weiner and van Erbe contend that because
Gorby's motivations are personal, his derivative claims are essentially "afterthoughts"
intended
merely "to bolster" his individual claims. [d. They conclude therefore that Gorby does not fairly
and adequately represent Earth Starter and so cannot maintain this derivative action.
This
argument warrants scant attention. The gravamen of Gorby's suit is that Weiner, van Erbe, and
Tumml traded on Earth Starter's good name to establish and expand UrbnEarth, costing Earth
Starter opportunities and revenue. See Compl. ~ 50. The rights of Earth Starter are thus central
to this case, and Gorby, in pressing to secure and protect those rights, serves as a fair and
adequate representative of the company and its interests.
Gorby can therefore maintain this suit
as a derivative action on behalf of Earth Starter.
B.
Count I: False Advertising under the Lanham Act
Count II: Trademark Infring£ment under the Lanham Act
Count Xlll: Unfair Compdition
In Count I of the Complaint, Plaintiffs allege that Defendants falsely advertise UrboEarth
using the accomplishments of Earth Starter, in violation of the Lanham Act, 15 U.S.C.
Jo Count II, Plaintiffs allege that by using the "Nourishmat"
trademark
9
1125(a).
in advertising
for
UrbnEarth, Defendants have infringed that mark. In their Response to the Weiner and van Erbe
10
Motions to Dismiss, Plaintiffs clarify that this is a Lanham Act, IS U.S.c. ~11l4(1)(a), not
common law, trademark infringement action. See Resp. at 8-9. In Count XIII, Plaintiffs recast
these claims more generally to allege the common law tort of unfair competition, asserting that
Defendants' "fraud, deceit, [and] trickery" have "damaged and jeopardized" Earth Starter's
business. CampI.
97. In response, Weiner attempts to hide behind the corporate veil, arguing
that if there was any infringement, it was infringement by UrbnEarth, not Weiner personally.
See Weiner Mot. Dismiss at 12. Van Erbe offers a semantic defense, asserting that because
Plaintiffs' do not accuse him by name in these Counts-referring instead only to "Defendants"the claims do not apply to him. See van Erbe Mot. Dismiss at 4. Tumml does not challenge
these counts.
Under the Lanham Act, a person is civilly liable for false advertising if he "uses in
commerce ... any false or misleading description of fact, or false or misleading representation of
fact" that "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." 15 U.S.C.
~1125(a). An individual is civilly liable under the Lanham Act for trademark infringement if,
without the consent of the trademark holder, he "use[sJ in commerce any reproduction,
counterfeit, copy, or colorable imitation of a registered mark in connection with the sale. offering
for sale, distribution, or advertising of any goods or services on or in connection with which such
use is likely to cause confusion, or to cause mistake, or to deceive." 15 U.S.C. ~1114(1)(a).
Echoing the false advertising claim, the common law tort of unfair competition makes an
individual liable for a deception that results in "the goods of one dealer [being] passed off as the
II
goods of another, and the seller receiv[ing] the profit which he would not have received except
for such deception." Edmondwn Village Theatre v. Einbinder, 116 A.2d 377, 380 (Md. 1955).
Plaintiffs' central assertion is that Defendants unfairly appropriated the success and
reputation of Earth Starter as well as the trademark "Nourishmat" and parlayed them into
business for UrbnEarth. That assertion is sufficient to establish these three causes of action.
Plaintiffs allege, for example, that Defendants advertised that UrbnEarth, not Earth Starter, won
the Cupid's Cup, and that UrbnEarth, not Earth Starter, was the "subject of [numerous] laudatory
news report[s]." Compl.
49. Plaintiffs allege as well that Defendants used the trademarked
name "Nourishmat" in efforts to raise money for UrbnEarth. Compi. ~ 55. These acts of
appropriation, taken as true for the purposes of these motions, amount to "false or misleading
description[s] of fact" and "deception" that are not only "likely to cause confusion," but, as
Gorby narrates it, designed to caused that confusion and thus to enable defendants to poach
business from Earth Starter by passing off Earth Starter products as UrbnEarth products.
Weiner, for his part, cannot avoid exposure to liability by hiding behind the corporate
veil. Lanham Act claims of False Advertising and Trademark Infringement are torts, as is the
claim of Unfair Competition. See Global Mail Ltd. v. Us. Postal Service, 142 F.3d 208, 211
(4th Cir. 1998) ("The Lanham Act creates in essence a federal statutory tort, derived from the
common law tort of unfair competition."). Under Maryland law, "[i]t is a generally accepted rule
that an officer of a corporation who takes part in the commission of a tort by the corporation is
personally liable." 6 M.L.E. Corporations
S
181; see Zeman v. Lotus Heart, Inc., 717 F. Supp.
373, 376 (D. Md. 1989) ("[Algents 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."). Nor is van Erbe (or Tumml) immune from liability simply because his name
12
is not recited in these counts. Plaintiffs allege the counts against the "Defendants," a collective
noun that includes all three parties.4
Even if van Erbe or Tumml were not included in that
collective, because Plaintiffs, as explained below, have adequately pleaded civil conspiracy, van
Erbe and Tumml face liability for these counts.
Plaintiffs thus have properly alleged a viable cause of action against Defendants under
Counts I, Il, and XIII for false advertising under 15 U.S.C. ~ I I 25(a), trademark infringement
under 15 U.S.c. ~ 1I 14(1)(a), and unfair competition.
C.
Count III: Breach of Contract
Count IV: Tortious Interference with Contract
"It is well-established in Maryland that a complaint alleging a breach of contract 'must of
necessity allege with certainty and definiteness facts showing a contractual obligation owed by
the defendant to the plaintiff.'" RRC Northeast, LLC v. BAA Maryland, Inc., 994 A.2d 430, 440
(Md. 2010) (quoting Continental Masonry Co., Inc. v. Verdel Constr. Co., Inc., 369 A.2d 566,
569 (1977)) (emphasis in original).
Here, Plaintiffs' allegations on the existence of a contract
are sparse. The Complaint alleges only that "Gorby and Weiner agreed to be co-owners in Earth
Starter and to devote their efforts to making Earth Starter a successful company."
Compl. ~ 58.
Plaintiffs' Response to Weiner's and van Erbe's Motions to Dismiss confirms that this brief
assertion is "the agreement at issue." Resp. at 9.
As pleaded, this agreement is too vague to constitute an enforceable contract.
"For a
contract to be legally enforceable, its language must not only be sufficiently definite to clearly
inform the parties to it of what they may be called upon by its terms to do, but also must be
sufficiently clear and definite in order that the courts, which may be required to enforce it, may
Notably, under different causes of action, such as Count VI, Plaintiffs do distinguish among the
defendants.
4
13
be able to know the purpose and intention of the parties." Robin.wn v, Gardiner, 76 A.2d 354,
356 (Md. 1950). The agreement that Plaintiffs describe here fails to meet these requirements.
Plaintiffs allege that there was some agreement between Gorby and Weiner, but provide no
specific information about the terms of that agreement, such as: How long was the agreement to
last? What particular efforts were required of each party? How did the parties define being
"devote[d]" to the business?
Many of these questions have ready answers in Earth Starter's Articles of Incorporation,
which Weiner attached to his Motion to Dismiss.
But Plaintiffs steadfastly disavow that
document, explaining that the Articles were never executed by the parties and therefore "they
never became effective." Resp. at 9. Neither side mentions or provides the April 9, 2012
"Noncompetition and Confidentiality Agreements" referenced in those Articles. See Weiner
Mot. Dismiss Ex. A, ECF No. 11-1. Instead, Plaintiffs resolutely direct this Court to consider
only the allegations in the Complaint. See Resp. at 9. Those allegations, however, provide no
indication of precisely how Gorby and Weiner agreed to be bound by their agreement, and thus
provide the Court no means to discern whether and how Weiner failed to fulfill his obligations
under the contract. The agreement, as pleaded, is thus effectively void. See Robinson, 76 A,2d
at 356 ("If the agreement be so vague and indefinite that it is not possible to collect from it the
intention of the parties, it is void because neither the court nor jury could make a contract for the
parties."). Plaintiffs therefore fail adequately to allege that Weiner had a contractual obligation
to Gorby and thus necessarily also fail adequately to allege that he breached that obligation. In
tum, in the absence of sufficient allegations of a contractual relationship, Plaintiffs' related claim
that Tumml and van Erbe are liable for "intentionally inducling] Weiner to breach {that]
contract" must also fail. CompI.' 65.
14
Accordingly, Counts III and IV are dismissed.
D.
Count V: Tortious Interference with Prospective Business Relations
Count VI: Tortious Interference witb Contract and Prospective Economic
Ad\:antage
In Count V, Plaintiffs accuse Weiner of tortious interference with prospective business
relations based on the allegations that Earth Starter "had prospective business relations with
lummi,"
and that Weiner "intentionally
induced lummi
relations, and instead to partner with UrbnEarth.
CampI.
not to enter into" those business
70. In Count VI, Plaintiffs claim
tortious interference with contract and prospective economic advantage based on the allegations
that van Erbe had an employment contract with Earth Starter, and that Weiner "induced van Erbe
to terminate" that contract and instead to begin working at UrbnEarth. CampI. ~ 75. In response
to Count V, Weiner argues that Plaintiffs' "bare allegations" fail to establish that his actions rose
to the level of improper conduct required to establish a claim for interference with prospective
business relations. Mot. Dismiss at 15. As to Count VI, Weiner points out that only a non-party
to a contract can be liable for interference with that contract, and contends that he is thus
shielded from liability because, as a co-member of Earth Starter, he was a party to van Erbe's
employment contract. See Mot. to Dismiss at 15-16.
In Maryland, the tort of interference with contract or business relations-sometimes
styled as malicious interference with business relations, or interference with economic relations,
among others-has
four elements:
(l) there were intentional and willful acts; (2) the acts were
calculated to cause damage to a plaintiff in the plaintiff's lawful business; (3) the acts were done
with the unlawful purpose to cause such damage and loss, without right or justifiable cause on
the part of a defendant, thus constituting malice; and (4) actual damage and loss resulted from
the acts of interference. See havePOWER LLC v. General Electric Co., 183 F. Supp. 2d 779, 784
15
(D. Md. 2002); Nalural Design, Inc. v. Rouse Co., 485 A.2d 663, 675 (Md. 1994) (quoting
Willner v. Silverman, 109 Md, 341 (Md. 1909», The tort involves a "classic three-party model":
two parties who have a contract, and a third party unrelated to the contract who interferes with it.
Kaser v. Financial Proleclion Marketing, Inc., 831 A.2d 49, 55 (Md. 2003), Under Maryland
law, the tort is cognizable only if the defendant tortfeasor is not a party to the economic
relationship with which he has allegedly interfered. /d. at 59.
Maryland courts have expanded the tort, finding a cause of action when the defendant
interferes with "contractual or business relations," an expansion that allows defendants to be
found liable for interfering with business relationships not governed by enforceable contracts.
See id. at 54-55; 21 M.L.E. Torts
S
28.
Such relationships include prospective business
relations--those relations not yet codified in a contract-and
contracts terminable at will,
because "a contract terminable at will is more closely akin to the situation where no contract
exists than to the situation in which an existing contract is breached." 21 M.L.E. Torts ~ 34.
When a business relationship is not codified in a contract, a defendant has a "broader
right to interfere" with it, on the theory that such interference is, from a different perspective,
simply competition in the marketplace. Mapping this idea on to the elements of the tort, if a
defendant acts "with the unlawful purpose [of] causing [his competitor] damage and loss," but
his aim in doing so is to gain a competitive advantage, that competitive advantage is a cognizable
"right or justifiable cause" for his interference. Natural Design, Inc., 485 A.2d at 676; see
Goldman v. Harford Rd. Bldg Ass'n.,
133 A. 843, 846 (Md. 1926) ("[C)ompetition is not
altruistic but is fundamentally the play of interest against interest, and so involves the
interference of the successful competitor with the interest of his unsuccessful competitor.").
Thus where a defendant's purpose in interfering with a non-contractual business relationship is
16
"at least in part to advance his interest in competing" with one of the parties, he is not liable in
tort for that interference unless the defendant acts with "tortious intent" and by means which are
themselves "wrongful."
Natural Design, Inc., 485 A.2d at 676 (quoting Restatement (Second) of
Torts, ~ 768 (1977»; Macklin v. Robert Logan Associates, 639 A,2d 112, 119 (Md. 1994).
Tortious intent is intent "to hann the plaintiff or to benefit the defendant at the expense of
the plaintiff." Macklin, 639 A.2d at 119. In this context, wrongful conduct is "incapable of
precise definition," but examples include the use of violence, intimidation, injurious falsehood or
fraud, or violations of criminal law.
"conduct that is independently
plaintiff's
Id.
Thus for the conduct to be wrongful, it must be
wrongful and unlawful, quite apart from its effect on the
business relationships."
Alexander
& Alexander
Inc. v. B. Dixon Evander
&
Associates, 650 A, 2d 260, 271 (Md. 1994).
In Count Y, Plaintiffs make no allegation that there was an enforceable contract between
Earth Starter and Tumml, instead casting their claim as one for interference with a potential
business relationship.
As to Count VI, Plaintiffs assert that Weiner interfered
with an
employment contract between Earth Starter and van Erbe, but offer no evidence in the Complaint
or elsewhere that van Erbe was bound by an enforceable, as opposed to at-will, employment
contrdct.S
With no contracts on which to rely, the Court must evaluate both of these counts
under the standard for interference with a business relationship.
By Plaintiffs' allegations, Weiner lured Tumml and van Erbe away from Earth Starter "in
favor of UrbnEarth."
Compl.'
20.
Thus, although there may have been intentional action
calculated to cause damage to Plaintiffs, any interference by Weiner in the business relationships
Because Plaintiffs' provide no evidence that there was an enforceable employment contract
between van Erbe and Earth Starter, Weiner's argument that he cannot be liable for tortious
interference with van Erbe's employment contract because, as an officer of Earth Starter, he was
a party to it, misses the mark. See Mot. Dismiss at 16.
S
17
among Earth Starter, Tumml, and van Erbe was at least in part to advance his interest in securing
UrbnEarth a competitive advantage over Earth Starter.
interfering
with those relationships
Weiner thus would not be liable for
unless the means by which he interfered
in them are
independently ""Tongful or unlawful.
As to Count V, Plaintiffs provide little specificity about the means Weiner used to
interfere with Earth Starter's relationship with Tumml,
alleging only that Weiner "induc[ed]
[Tumml] to withdraw its support from Earth Starter in favor ofUrbnEarth."
CampI.
70. In the
absence of an allegation of a specifically wrongful or unlawful tactic, Plaintiffs fail to make out
this claim. Merely luring away a competitor's business connection-when
bound by a contract-is
that connection is not
not actionable. Accordingly, Count V is dismissed.
As to Count VI, Plaintiffs assert that Weiner interfered with Earth Starter's business
relationship with van Erbe, through intentional action calculated to cause damage to Earth
Starter, by means of luring van Erbe away "by converting assets rightfully belonging to Earth
Starter."
CampI.
'~76-77. This allegation, too, is thin, but when read in the context of the
Complaint as a whole, which alleges conversion and misappropriation
sufficient to make out this cause of action.
as separate torts, it is
Plaintiffs assert not only that Weiner interfered in
Earth Starter's business relationship with van Erbe, but also that he did so specifically by means
of an act that was itself wrongful:
the conversion of Earth Starter's assets.
In so doing, they
establish for purposes of these motions that Weiner was not fairly or "legitimately competing"
for van Erbe's employment and therefore that his interference was without just cause. Macklin,
639 A.2d at 120. Plaintiffs have thus adequately pleaded Count VI.
In regard to vicarious liability, Plaintiffs make clear that Count VI "by [its] very nature"
cannot expose van Erbe to liability.
Resp. at 15 n. 5. Therefore, because, as set forth below,
18
Plaintiffs have adequately pleaded civil conspiracy, only Tumml also faces liability for this count
as a co-conspirator.
E.
Count VII: Breach of Fiducial')' Duty
Plaintiffs assert that Weiner, as part-o'NIler of Earth Starter, owed a fiduciary duty to the
company, including the "duties of loyalty and good faith."
Compl.
80. They allege that he
breached that duty by "taking assets and opportunities rightfully belonging to Earth Starter" and
using them for his 0'NIl benefit and at Earth Starter's expense.
Compl.
81.
Weiner, in
response, maintains that he cannot be liable for a breach of his fiduciary duty because Maryland
does not recognize this as an independent cause of action. See Mot. Dismiss at 16-17.
The consensus in both the Maryland courts and this District is that Weiner is correct.
Willis v. Bank oj America Corp., 2014 WI. 3829520 at '25-'26
(D. Md. 2014).
In Kann v.
Kann, 690 A.2d 509 (Md. 1997), the Maryland Court of Appeals held that "there is no universal
or omnibus tort for the redress of breach of fiduciary duty by any and all fiduciaries."
Id. at 521.
However, it went on to explain that "(t]his does not mean that there is no claim or cause of action
available for breach of fiduciary duty. Our holding means that identifying a breach of fiduciary
duty will be the beginning of the analysis, and not its conclusion."
Id. The Maryland Court of
Appeals later clarified that Kann stood for the proposition "that "although the breach of a
fiduciary duty may give rise to one or more causes of action, in tort or in contract, Maryland does
not recognize a separate tort action for breach of fiduciary duty." International Brotherhood of
Teamsters v. Willis Corroon Corp., 802 A.2d 1050, 1052 n. I (Md. 2002).
Subsequent decisions have distilled this precedent to the precept that, in Maryland, a
breach of a fiduciary duty may be an element of a tort, but it is not a tort in and of itself. See
G.M Pusey and Assocs., Inc. v. Britt/Paulk Ins. Agency, Inc., Civ. No. RDB-07-3229,
19
2008 WL
2003747, at '6-7, (D. Md. May 6, 2008) ("Maryland does not recognize an independent cause of
action for breach of fiduciary duty"); McGovern v. Deutsche Post Global Mail, Ltd.. Civ. No.
JFM-04-0060, 2004 WL 1764088 at'
12 (D. Md. Aug. 4, 2004) ("[AJ breach of fiduciary duty
can give rise to a cause of action-that is, it can he a componentof a cause of action-but it
cannot he a cause of action standing alone."); Wasserman Golds/en Family LIC v. Kay, 14 A.3d
1193, 1219 (Md. 2011) (noting that a breach of fiduciary duty is not "a stand alune
nonduplicative cause of action"); Vinogradova v, Sun/rust Bank, 875 A.2d 222, 231 (Md. Ct.
App. 2005) (explaining that a claim for breach of fiduciary duty and a claim for negligence
"condense to only one: the claim based on the tort of negligence"). Because Maryland does not
recognize the independent tort of breach of a fiduciary duty, Count VII is dismissed with
prejudice.
F.
Count VIII: Tortious Interference with Fiduciary Duties
In Count VIII, Plaintiffs claim that Tumml and van Erbe improperly induced Weiner to
breach his fiduciary duties to Earth Starter. See Compl.
82-84. lummi and van Erbe each
counter that tortious interference with fiduciary duties is not a cognizable cause of action under
Maryland law. See lummi Mot. Dismiss at 9-10; van Erbe Mot. Dismiss at 13. In their response
to lummi's motion to dismiss, Plaintiffs do not cite any authority establishing the existence of
the tort, but instead restate their allegations of lummI's \o\Tongdoing.See Resp. at 7-8. In their
response to van Erbe's Motion to Dismiss, Plaintiffs seem to abandon the claim entirely, offering
no response-factual or legal-to van Erbe's assertion that interference with fiduciary duties is
not a cognizable tort.
A diligent search of the case law confirms lummI's and van Erbe's contention that the
tort of interference with fiduciary duties, although recognized in a few jurisdictions, see, e.g.,
20
Nalley v. Langdale, 734 S.E.2d 908, 921 (Ga. Ct. App. 2012), is unknown to Maryland courts.
With Plaintiffs themselves choosing not to vigorously advocate for adoption of the tort, there is
no reason to tread into the traditional domain of the state courts by adopting a new state common
law cause of action. Accordingly, Count VIII is dismissed with prejudice.
G.
Count IX: Conversion
Count X: Theft
Count Xl: Misappropriation
Count XII: Extortion
In Count IX, Plaintiffs allege that Defendants improperly took and used Earth Starter's
"equipment,
inventory, and money" for their own benefit, and thus that they are liable for
conversion.
CampI. ~ 86. Counts X and XI repeat that allegation, but cast it as Theft and
Misappropriation,
respectively.
CompI.
89-90, 92-93.
In Count XII, Plaintiffs accuse
Defendants of Extortion with a slight variation on the theme of the previous counts, alleging that
the defendants "withheld" Earth Starter "equipment and inventory" and demanded a payment of
$5,000 for its return. Compl.
95.
Counts X and XII can be quickly dispatched. Theft is a form of conversion that gives rise
to crimina!, not civil, liability.
crimes).
See Md. Code Ann., Criminal Law, ~~ 7-101(m), 7-104 (theft
The civil remedy for theft is a claim for conversion, and so Count X essentially
duplicates Count IX. Extortion, too, is a crime, see Md. Code Ann., Criminal Law, ~~ 3-701-706
(extortion crimes), and has no corresponding civil right of action.
Yang v. Lee, 163 F. Supp. 2d
554,563 (D. Md. 2001), ujFd 32 Fed. Appx. 112 (4th Cir. 2002) ("Maryland ...
recognizes no
civil cause of action for extortion."). Counts X and XII are thus dismissed with prejudice.
As to Count IX, conversion is "an intentional exercise of dominion or control over chattel
which so seriously interferes with the right of another to control it that the actor may justly be
required to pay the other the full value of the chatteL"
21
United States v. Arora, 860 F. Supp.
1091,1097 (D. Md. 1994), afJ'd 56 FJd 62 (4th Cir. 1995) (quoting Restatement (Second) of
Torts, ~ 222A(I)); see a/sa Staub v. Staub. 376 A.2d 1129, 1131 (Md. 1977) ("The gist of a
conversion is not the acquisition of the property by the wrongdoer, but the wrongful deprivation
of a person of property to the possession of which he is entitled."). To make out a claim for
conversion, a plaintiff must therefore first adequately allege a trespass: he must allege that the
defendant exercised dominion or control over chattel rightly belonging to the plaintiff. See
Arura, 860 F. Supp at 1097 (discussing the relationship between trespass and conversion). He
must then establish that the defendant's trespass led to a significant interference in the plaintiff's
right of possession. This is not a showing that can be judged by hard and fast rules; it is, instead,
a question of degree. Potentially relevant factors include:
a) the extent and duration of the [defendant's] exercise of dominion or control;
b) the [defendant's] intent to assert a right in fact inconsistent with the
[plaintitTs] right of control;
e) the [defendant's] good faith;
d) the extent and duration of the resulting interference with the other's right of
control;
e) the hann done to the chattel;
f) the inconvenience and expense caused to the [plaintiff].
Id. at 1097-98. In addition, because conversion is essentially an intensification or amplification
of a trespass, "an action for conversion ordinarily lies only for personal property." SA M.L.E.
Conversion ~ 14. Money, because it is fungible, therefore "'cannot be the subject of a claim for
conversion unless it is a specific, segregated pool of money, thereby making it non-fungible." In
re Rood, 426 B.R. 538, 555 (D. Md. 2010).
Here, Plaintiffs allege that van Erbe, after he was no longer an employee of Earth Starter,
kept a variety of Earth Starter's inventory and equipment for over one month; that, as evidenced
by the ransom demand, he did so with the express intention of preventing Gorby and Earth
22
Starter from possessing the equipment; and that the equipment, once returned, was damaged.
This was no mere incidental trespass or misunderstanding.
Taking Plaintiffs' allegations as true,
it was an intentional and substantial disruption of Earth Starter's right of possession
that
impaired Earth Starter's ability to function as a business. Plaintiffs thus have sufficiently alleged
a plausible cause of action for conversion based on van Erbe's month-long possession of Earth
Starter equipment and inventory.
Plaintiffs cannot, however, establish a plausible cause of action for conversion based on
their allegation that Weiner took $20,000 of Earth Starter's funds to pay UrbnEarth's expenses.
As noted, money is fungible property, and so cannot be the subject of a claim of conversion
unless it has been clearly earmarked and segregated. Plaintiffs allegation-that
taken approximately
exception. Compl.
$20,000 from the Earth Starter bank account"--does
"Weiner has
not invoke that
42. Plaintiffs' claim for conversion based on Weiner taking and using Earth
Starter funds therefore fails.
The appropriate vehicle is instead Count Xl, alleging misappropriation.
established that where officers and directors are misappropriating
or misapplying
"'It is well
corporate
funds!,] a minority stockholder may sue in the name of the corporation to compel restitution."
Berger v. Bala Shoe Co., 78 A.2d 186, 188 (Md. 1951); see also 6 M.L.E. Corporations ~ 135
(explaining that grounds for a derivative action include "misappropriation
funds or assets").
or waste of corporate
Plaintiffs allege that Weiner took $20,000 of Earth Starter's money and used
it, not merely to pay expenses unrelated to Earth Starter, but specifically to pay the expenses of
Earth Starter's rival company.
That allegation, taken as true for purposes of these motions,
establishes a cause of action for misappropriation.
23
Plaintiffs have not. however, properly alleged a cause of action for misappropriation
related to Earth Starter's inventory and equipment. Essential to misappropriation is that one put
the misappropriated money or goods "to one's own use." Black's Law Dictionary (9th ed.
2009), misappropriation.
Plaintiffs allegations establish that, by withholding inventory and
equipment, van Erbe prevented Earth Starter from using those items, but not that he used the
items himself. Plaintiffs' claim for misappropriation based on van Erbe's month-long possession
of Earth Starter equipment and inventory therefore fails.
Accordingly, Count IX--eonversion-is
dismissed with prejudice in regard to the alleged
conversion of $20,000, but remains against van Erbe to the extent it alleges conversion of
equipment and inventory belonging to Earth Starter. Weiner and Tumml also face liability for
this count as members of the civil conspiracy, as explained below.
misappropriation-is
Count XI-
dismissed in regard to the alleged misappropriation of equipment and
inventory, but remains against Weiner to the extent it alleges misappropriation of $20,000 of
Earth Starter's funds. And because Plaintiffs have adequately pleaded civil conspiracy, van Erbe
and Tumml also face liability for this count.
II.
Count XV: Civil Conspiracy
Count XVI: Aiding and Abetting Tortious Conduct
In Count XV, Plaintiffs allege that Defendants engaged in a civil conspiracy because they
had "an agreement or understanding to engage in unlawful and/or tortious conduct," and their
conduct caused damage to Gorby and Earth Starter. Compl.
106. In Count XVI, Plaintiffs
allege that Defendants aided and abetted tortious conduct because they "gave substantial
assistance or encouragement to the other defendants engaging in tortious conduct." Compl.
110. Tumml insists that Plaintiffs' allegations are simply "conclusory," unsupported by "any
specific conduct" demonstrating such unlawful agreements. Tumml Mot. Dismiss at 17-18.
24
Weiner does not challenge the robustness of Plaintiffs' allegations of conspiracy or aiding and
abetting, but instead focuses on Plaintiffs' thin pleadings on the other counts.
Noting that an
individual can be liable for civil conspiracy or aiding and abetting only if there has been a
separate, underlying tort, Weiner argues that Plaintiffs have "failed to state any proper cause of
action against [him]" and that by failing to prove an underlying tort. have necessarily failed to
state a claim for civil conspiracy or aiding and abetting. Weiner Mot. Dismiss at 19-20. Van
Erbe essentially echoes Weiner's argument. See van Erbe Mot. Dismiss at 15.
1.
Civil Conspiracy
Under Maryland law, a civil conspiracy is a "combination of two or more persons by an
agreement
or understanding
to accomplish
an unlawful act or to use unlawful means to
accomplish an act not in itself illegal, with the further requirement that the act or the means
employed must result in damages to the plaintiff." Hoffman v. Stamper. 867 A.2d 276, 290 (Md.
2005) (internal quotations omitted).
Proof of a civil conspiracy requires a showing of (1) an
unlawful agreement; (2) the commission of an overt act in furtherance of the agreement; and (3)
as a result, the plaintiff suffered injury. See Marshall v. James B. Nutter & Co., 758 FJd 537,
541 (4th Cir. 2014); Mackey v. Compass Marketing, Inc., 892 A.2d 479, 485 (Md. 2006). Proof
can be in the fonn of circumstantial evidence.
Daugherty v. Kessler, 286 A,2d 95. 101 (Md.
1972). Thus, a civil conspiracy can be established "by inferences draYm from the nature of the
acts complained
of, the individual and collective interests of the alleged conspirators,
situation and relation of the parties, their motives and all the surrounding
the
circumstances
preceding and attending the culmination of the common design." Jd.
Reading Plaintiffs'
complaint as a whole, Plaintiffs have alleged sufficient facts to
establish that Defendants had an agreement or understanding to accomplish an unlawful act, or to
25
use unlawful means to accomplish an act, that damaged the Plaintiffs Those facts, taken as true
for purposes of these motions, would be sufficient to infer an agreement among Weiner, Tumml,
and van Erbe to oust Gorby and supplant Earth Starter by unlawful means, including engaging in
unfair competition, false advertising, trademark infringement, conversion, and misappropriation.
See supra part III. B. and G. Among the facts supporting the existence of such an agreement
include that (1) Tumml knew and approved of Weiner's efforts to buyout Gorby; (2) when
Gorby refused, Weiner removed all content from Earth Starter's website, cut ofTGorby's ability
to access Earth Starter's computer system, and started UrbnEarth; (3) in the same time frame,
Weiner recruited van Erbe to leave Earth Starter and be a co-founder of UrbnEarth; (4) once
UrbnEarth was founded, Tumml cut off its discussions to provide financial support to Earth
Starter and instead provided financial support to UrbnEarth as a "key investor"; and (5) Tumml
allowed UrbnEarth to establish its headquarters in Tumml's offices. These facts suggest a close
working relationship among Weiner, van Erbe, and Tumml and support an inference that
UrboEarth's rise to supplant Earth Starter was not mere happenstance, but the result of
agreement among the three to achieve this result through a deliberate strategy.
The allegations further permit the inference that the agreement between the Defendants
was not merely to supplant Earth Starter, but to do so through unlawful means. These allegations
include that (1) Van Erbe unlawfully converted essential Earth Starter equipment and inventory;
(2) Weiner unlawfully misappropriated Earth Starter funds for UrbnEarth use; (3) Defendants
falsely and deliberately traded
00
the similarities between UrbnEarth and Earth Starter to poach
Earth Starter's business, by falsely advertising on the UrbnEarth website that UrbnEarth had
received funding and accolades actually won by Earth Starter; (4) Tummi continued to falsely
advertise on its website an affiliation with Earth Starter long after it had aligned itself with
26
UrbnEarth; and (5) UrbnEartb unlawfully used the Earth Starter's trademark "Nourishmat"
part of a fundraising effort.
the conspiracy.
as
Each of these acts could qualify as an "overt act" in furtherance of
Lastly, Plaintiffs have sufficiently alleged that these actions resulted in damages
to Earth Starter and Gorby.
Plaintiffs have thus pleaded facts sufficient to establish that Defendants formed a civil
conspiracy to use unlawful means to supplant Earth Starter with UrbnEarth.
As Defendants
correctly point out, civil conspiracy is not "a separate tort capable of independently sustaining an
award of damages in the absence of other tortious injury to the plaintiff." Lloyd v. Gen. Motors
Corp., 916 A.2d 257, 284 (2007) (internal quotations omitted). Instead, it is a means "to extend
liability for a tort beyond the actual tortfeasor" to any others who might have encourdged,
facilitated, planned or assisted in the tort.
15A C.J.S. Conspiracy ~ 8. Thus where a civil
conspiracy exists, "the acts of one civil co-conspirator are attributed to other co-conspirators for
purposes of determining the civil liability of the participants in the conspiracy."
A.2d at 485.
Mackey, 892
Thus, for purposes of these motions, Weiner, Tumml, and van Erbe are each
potentially jointly and severally liable for every Count found to have been sufficiently pledCounts I, 11, VI, IX, XI, and XHI-with
the exception, noted earlier, that van Erbc cannot be
vicariously liable for interfering with his own employment contract under Count VI. See Resp.
atI5n.5.
2. Aiding and Abetting
While the crucial characteristic of a conspiracy is an agreement between the parties to
participate in wrongful conduct, aiding and abetting tortious conduct is defined by specific
actions:
a defendant is liable for aiding and abetting tortious conduct if he "by any means
(words, signs, or motions) encouraged, incited, aided, or abetted the direct perpetrator of the
27
tort." AI/eeo Inc. v. Weinberg Foundation, Inc., 665 A.2d 1038, 1049 (Md. 1995) (quoting Dulre
v. Feldman, 226 A.2d 345, 347 (Md. 1967».
Traditionally, "aiding or abetting" consists of
knowingly giving "substantial assistance" to someone committing a tort. Restatement (Second)
of Torts ~ 876. Thus, as with conspiracy, to establish liability for aiding and abetting, there must
be an underlying tort and a direct perpetrator of the tort whom the defendant aids and abets.
A/leco Inc.• 665 A.2d at 1050. If a defendant provides assistance to the commission of the tort,
he is liable with the principal tortfeasor for the resulting tort. See id. at 1049 ("All who actively
participate in any manner in the commission of a tort. or who ... aid or abet its commission, are
jointly and severally liable therefor") (quoting I Cooley, Law of Torts 244 (3d ed. 1906».
Although what constitutes aiding and abetting is a fact-specific question, it is limited to
instances in which a defendant can be shown to have helped the principal tortfeasor bring about a
particular tort. See Alleco. Inc., 665 A.2d at 1050 ("aider and abettor liability 'is based on the
civil liability imposed at common law of those who aid others in unlawful acts, and is distinct
from that which imposes liability on the basis that the parties participated in a joint venture"')
(quoting 1 Speiser, et aI., The American Law of Torts
9 3:4,
at 384-386 (1983»). See also Duke v.
Feldman, 226 A.2d 345, 347 (Md. 1967) (explaining that "[s]i1ent approbation or pleasure in
[another's commission of a tort] does not make a person" liable as an aider and abettor).
Thus,
Plaintiffs' allegations of civil conspiracy, which, for purposes of these motions, establish that
Defendants agreed to participate in the common enterprise of promoting UrbnEarth at Earth
Starter's expense through unlawful means, do not necessarily also establish aider and abettor
liability.
Instead, to state a claim for aider and abettor liability, Plaintiffs' allegations must
establish that, for any particular count, the non-primary tortfeasors assisted in bringing about the
specific tort at issue.
28
These constraints restrict the applicability of aider and abettor liability here. Because
aider and abettor liability is possible only for those counts that adequately plead an underlying
tort, only Counts I, II, VI, IX, XI, XIII need be considered.6 Within that limited group, aider and
abettor liability is relevant only if the defendant is not already accused of principal liability for
the tort. However, Plaintiffs' imprecise pleading makes determining whether a defendant is
being accused as a direct perpetrator difficult. Counts I, II, IX, XI, and XIII are all alleged
against "Defendants," and so, strictly speaking, cast each defendant as a principal. Practically,
however, the specific allegations in some counts make clear that a particular defendant is the
supposed principal wrongdoer. The Court will endeavor to chart a course through this uneven
terrain by taking each count in tum.
In Counts I, II, and XIII-the
Lanham Act and unfair competition counts-Plaintiffs
name each Defendant as a principal perpetrator of the tort and their specific allegations draw no
salient distinctions between them.
For example, Plaintiffs allege that "Defendants falsely
advertise that their new business entity, UrbnEarth, (1) won the Cupid's Cup Award actually
won by Earth Starter." CampI.
49. No defendant is picked out as the particular architect of
this scheme; no defendant is identified as the person who created the advertisement. Because the
Plaintiffs' allegations on these counts are directed equally to all Defendants, there is no means by
which to mark one defendant as a principal and another as an aider and abettor. "Ibe most
sensible reading of the allegations, then, is that they are directed at all Defendants as principal
tortfeasors. To the extent that Plaintiffs intended to assert aiding and abetting liability against
certain defendants with respect to these counts, the absence of additional allegations of the
Although Plaintiffs adequately plead a claim of civil conspiracy, civil conspiracy cannot stand
as an independent tort, and therefore cannot serve as the underlying tort that a defendant could
aid and abet.
6
29
specific assistance provided by specific defendants precludes a finding that they have
successfully asserted such a claim..
As to Count VI (Interference with Prospective Business Relations), Plaintiffs do allege a
principal \VTongdoer-Weiner-but
make no allegation, in that count or elsewhere, that anyone
other than Weiner took part specifically in inducing van Erbe to terminate his employment
contract. With no allegations of encouragement or assistance on the part of Tumml to aid
Weiner in inducing van Erbe to terminate his contract, Plaintiffs fail to allege sufficiently that
Tumml aided or abetted Weiner in commission of this tort.
Turning to Count IX (Conversion), Plaintiffs do not expressly allege a principal
\VTongdoer.Instead, they assert that "Defendants, acting individually and as a group" converted
Earth Starter's equipment and inventory. Compl.
87. The substance of Plaintiffs' allegations,
however, compel the conclusion that van Erbe-who
held Earth Starter's equipment and
inventory ransom-is the principal alleged \VTongdoer.The allegations do not, however. provide
grounds for aiding and abetting liability. Plaintiffs' bare assertion that Defendants effected this
conversion both "individually and as a group" provides no basis on which to infer that Weiner
and Tumml even knew of van Erbe's intentions, much less that they provided assistance to van
Erbe in carrying out those intentions.
As to Count Xl (Misappropriation), Plaintiffs again do not expressly allege a principal
\VTongdoer, but instead assert that "Defendants. acting individually and as a group,"
misappropriated $20,000 of Earth Starter's funds.
Compl.
93.
Here, the substance of
Plaintiffs' allegations elsewhere in the Complaint make clear that Weiner is the principal alleged
\VTongdoer. See Compi. ~ 42. But, as with Count IX, these allegations provide no grounds for
aiding and abetting liability. Plaintiffs provide no details that would permit the inference that
30
van Erbe or Tumml knew specifically of Weiner's plans to take money from Earth Starter's
accounts or that they assisted him in that withdrawal.
Accordingly, Count XVI is dismissed.
CONCLUSION
For the foregoing reasons, Defendants' Motions to Dismiss are granted in part and denied
in part. Counts III. IV, V. and XVI are dismissed against all Defendants.
14 days' leave to amend as to those counts.
Plaintiffs are granted
Counts VII, VIII, X, and XII are dismissed with
prejudice against all Defendants. Thc Motion to Dismiss is denied as to the remaining counts. A
separate order will follow.
Date: September 23, 2014
THEODORED. CI AN
United States District
31
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