Innovation Ventures, LLC v. Nutrition Science Laboratories, LLC et al

Filing 33

ORDER Proposing Course of Case Management and Requiring Briefing in View of Resolution of Case Number 12-13850. (Response due by 7/14/2017) Signed by District Judge Terrence G. Berg. (AChu)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
INNOVATION VENTURES,
LLC,
Plaintiff,
Case No. 16-11179
Hon. Terrence G. Berg

v.
NUTRITION SCIENCE
LABORATORIES, LLC,
L.O.D.C. Group, Ltd, and
L.O.D.C., Inc.
Defendants.

ORDER PROPOSING COURSE OF
CASE MANAGEMENT AND REQUIRING BRIEFING IN
VIEW OF RESOLUTION OF CASE NO. 12-13850
This case is a spin-off of Innovation Ventures, LLC v. Custom
Nutrition Laboratories, LLC, Nutrition Science Laboratories, LLC,
and Alan Jones, Case No. 12-13850. This case contains claims that
are virtually identical in many respects to the claims in Case No.
12-13850. The Parties in Case No. 12-13850 recently submitted a
stipulated judgment, which the Court has entered, that resolved
the case for purposes of appeal only.
In view of the Parties’ resolution of Case No. 12-13850, and considering the similarity and overlap between the resolved claims in
that case and the claims in this case, the Court hereby ORDERS

the Parties to submit briefing that outlines the Parties’ views on
the impact on this case (No. 16-11179) of the resolution of Case No.
12-13850, and that addresses the case-management course proposed in this Order.
In this lawsuit, Plaintiff has asserted 10 causes of action against
Defendants:
I.

Breach of Contract (Breach of Covenant Not to Use
Prohibited Ingredients)

II.

Other Breaches of the Contract by NSL (including alter egos LD Operating and LD Inc.)

III.

Breach of Contract by NSL (including alter egos LD
Operating and LD Inc.)

IV.

Breach of Contract by NSL (including alter egos LD
Operating and LD Inc.) (Third Party Beneficiary)

V.

Tortious Interference with Contract by NSL (including alter egos LD Operating and LD Inc.)

VI.

Tortious Interference with Business Expectancy by
NSL (including alter egos LD Operating and LD Inc.)

VII.

Tortious Interference with Contract by LD Operating
and/or LD Inc.

VIII.

Tortious Interference with Business Expectancy by
LD Operating and/or LD Inc.

IX.

Fraudulent Transfer Under the Texas or Michigan
Uniform Fraudulent Transfer Acts as to NSL, LD Operating and LD Inc.

X.

Civil Conspiracy as to All Defendants

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Counts I-VI in this case are virtually identical to Counts I and
IV-VIII in Case No. 12-13850, but in this case the claims are asserted against both NSL and the LD entities (as the alter egos of
NSL), whereas in Case No. 12-13850 Plaintiff asserted the causes
of action only against NSL. In Case No. 12-13850, the Court entered
judgment in favor of NSL on Counts IV-VIII. For consistency, the
Parties may wish to stipulate to the entry of judgment in Defendants’ favor on Counts II-VI.
As to Count I, in Case No. 12-13850 the Parties stipulated to an
entry of judgment in Plaintiff’s favor. But the Court has ruled in
that case that the contractual provision at issue in Count I had only
a three-year duration. Consequently, this provision ceased to bind
NSL in 2012: two years before the LD entities were created. In view
of the legal effect of this ruling, the Parties may wish to stipulate to
the entry of judgment in favor of the LD entities on Count I because—even if the LD entities were found to be alter egos of NSL—
they could not have been bound by the contract between NSL and
Plaintiff. And, given the judgment in favor of Plaintiff and against
NSL in Case No. 12-13850, the Parties may wish to stipulate to the
entry of the same judgment in this case.
As for Counts VII and VIII in this case (tortious interference with
contract and with business expectancy), given the Court’s ruling in
Case No. 12-13850 regarding the duration of the “choline family”
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restriction, the Parties may wish to stipulate to the entry of judgment in favor of the LD entities because, by the time the LD entities
were in existence, the contract had expired, meaning Plaintiff no
longer had any contract or business expectancy with which the
LD entities could interfere.
As for Count IX, which alleges a fraudulent transfer of assets
between NSL and the LD entities, the Parties may wish to stipulate
to the dismissal of this claim without prejudice because, in Case No.
12-13850, Plaintiff stipulated to a judgment that awarded only
nominal damages of $1 (and thus did not award any actual damages). Unless the Sixth Circuit reverses this Court’s rulings in Case
No. 12-13850 regarding the availability of certain methods of calculating actual damages, Plaintiff may only recover $1 in nominal
damages from NSL. If so, Plaintiff could secure the judgment
against NSL in the amount of $1 and could collect that $1, meaning
Plaintiff would be unable to demonstrate that any purported fraudulent transfer of assets between NSL and the LD entities actually
harmed Plaintiff. Consequently, Plaintiff would lack standing to
bring this claim. On the other hand, if the Sixth Circuit concludes
in Case No. 12-13850 that Plaintiff may recover from NSL more
than nominal damages of $1, Plaintiff could re-assert this claim.
And as for Count X (Civil Conspiracy), the Parties may wish to
stipulate to the entry of judgment in favor of Defendants because
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(1) the LD entities could not conspire to circumvent a contract that
ceased to bind NSL and Jones before the LD entities were created
and (2) Plaintiff could have asserted this claim against NSL in Case
12-13850 based on a conspiracy between NSL and Jones, but chose
not to.
If the Parties were to reach a stipulated judgment along the lines
suggested here, the Court could enter a final order in this case,
which would make it ripe for appeal to the Sixth Circuit. It may be
that the Parties would desire to consolidate this case (for appeal
purposes only) with any appeal in Case No. 12-13850 because a reversal in Case No. 12-13850 could require any judgment in this case
to be vacated in part or in whole.
To summarize, the Court invites the Parties to consider the casemanagement course that the Court proposes here, and to respond
as to whether, in order to expedite their appeal of this case and consolidate its appeal with Case No. 12-13850, they wish to stipulate
to the dismissal of Count IX without prejudice, and to the entry
judgment in favor Plaintiff and against NSL on Count I, in favor of
the LD entities on Count I, in favor of all Defendants on Counts IIVIII and X.
Consequently, the Parties are hereby ORDERED to submit, by
no later than 11:59 p.m. on July 14, 2017, briefs not exceeding

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10 pages that (1) outline the Parties’ views on the impact of the resolution of Case No. 12-13850 on this case (No. 16-11179) and (2)
address the case-management course proposed in this Order. Plaintiff may file one brief, and Defendants may file one joint brief.
SO ORDERED.

Dated: June 28, 2017

s/Terrence G. Berg
TERRENCE G. BERG
UNITED STATES DISTRICT JUDGE

Certificate of Service
I hereby certify that this Order was electronically filed, and
the parties and/or counsel of record were served on June 28,
2017.
s/A. Chubb
Case Manager

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