Styczinski v. Westminster Mint, Inc. et al

Filing 45

ORDER denying 19 Motion to Dismiss/General (Written Opinion). Signed by Judge Susan Richard Nelson on 11/14/2014. (SMD)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA

Case No. 14-cv-00619 (SRN/HB)
THOMAS J. STYCZINSKI, on behalf of
himself and all others similarly situated,
Plaintiff,
v.

MEMORANDUM OPINION
AND ORDER

WESTMINSTER MINT, INC., et al.,
Defendant.

Joseph A. Osefchen, Shane T. Prince, and Stephen P. DeNittis, DeNittis Osefchen PC,
525 Route 73 North, Suite 410, Marlton, New Jersey 08053; and Steven J. Ellison,
Ellison Law Offices, 14565 114th Street North, Stillwater, Minnesota 55082, for Plaintiff.
Kelly W. Hoversten and Craig P. Miller, Gray Plant Mooty Mooty & Bennett PA, 80
South 8th Street, Suite 500, Minneapolis, Minnesota 55402, for Defendants.

SUSAN RICHARD NELSON, United States District Judge
This matter is before the Court on Defendants’ Motion to Dismiss [Doc. No. 19].
For the reasons set forth below, the Court denies Defendants’ Motion.
I.

BACKGROUND
Plaintiff, Thomas J. Styczinki, a resident of Hennepin County, Minnesota brought

this class action on behalf of purchasers of two or more “imitation numismatic items”
manufactured, distributed, and/or sold by Defendants, Westminster Mint, Inc., a
Minnesota Corporation doing business throughout the United States, Bullion

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International, Inc. d/b/a Highland Mint, International Fulfilment House, a Florida
Corporation doing business in Minnesota and throughout the United States, Ian Clay,
individually; and Michael Kott, individually (collectively “Defendants”). (Comp ¶¶ 1-9
[Doc. No. 1-1.) Plaintiff alleges that Defendants have failed to comply with their
obligations under the Hobby Protection Act, 15 U.S.C. § 2101(“HPA”) by unlawfully
manufacturing, importing, distributing, marketing, and/or selling “imitation numismatic
items” not appropriately marked “COPY,” as required under the HPA. (Id. ¶¶ 1-11.)
Plaintiff seeks to enjoin Defendants from engaging in unlawful business practices and
seeks monetary damages. (Id. ¶ 1.)
A.

The Hobby Protection Act

In 1973, Congress enacted the HPA to protect hobbyists and collectors from being
defrauded by corrupt individuals and businesses that marked or distributed imitation
numismatic items. DeMarco v. Nat’l Collector’s Mint, Inc., 229 F.R.D. 73, 77 (2d Cir.
2005). The HPA provides that
[t]he manufacture in the United States, or the importation into
the United States, for introduction into or distribution in
commerce of any imitation numismatic item which is not
plainly and permanently marked “copy”, is unlawful and is an
unfair or deceptive act or practice in commerce under the
Federal Trade Commission Act.
15 U.S.C. § 2101(b). The term “original numismatic item” is defined in the HPA as:
“[a]nything which has been a part of a coinage or issue which has been used in exchange
or has been used to commemorate a person or event.” Id. at § 2106(3). In contrast, the
term “imitation numismatic item” is defined in the HPA as “[a]n item which purports to

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be, but in fact is not, an original numismatic item or which is a reproduction, copy, or
counterfeit of an original numismatic item.” Id. at § 2106(4). The HPA provides that
“any interested person” may commence a private enforcement action for the violation of
§ 2101(b). Id. at § 2102.
The HPA protects would-be consumers from unscrupulous business practices so
that consumers are not deceived into “believing they are buying items that are original
numismatic items . . . when, in fact, they are buying copies of money.” Demarco, 229
F.R.D. at 77. Neither knowledge nor intent to deceive need be shown on the part of the
business to prove that the HPA has been violated. In re Gold Bullion Int’l, Ltd., 92
F.T.C. 196 (1977).
B.

United States and Canadian “Original Numismatic Items”

On or about November 24, 1986, the United States Mint released the American
Silver Eagle coin composed of one troy ounce of 99.9% pure silver. (Comp. ¶ 13 [Doc.
No. 1-1].) The American Silver Eagle coin is legal tender with a face value of one dollar
and is an “original numismatic item” as defined by the HPA because it is coinage that has
been or is “currently used in exchange.” (Id. ¶¶ 13-15); see 15 U.S.C. § 2106(3). Among
other identifying characteristics, the front side of the American Silver Eagle coin displays
Adolph A. Wienman’s “Walking Liberty” pictorial and contains inscriptions of the word
“LIBERTY” and the phrase “IN GOD WE TRUST.” (Comp. ¶ 17 [Doc. No. 1-1].) The
reverse side carries an image of a heraldic eagle behind a shield holding an olive branch
in its right talon and arrows in its left talon. (Id. ¶ 18.) The eagle carries a banner

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inscribed with the phrase “E PLURIBUS UNUM.” (Id.) Additionally, the reverse side is
inscribed with the words “UNITED STATES OF AMERICA.” (Id.)
In 1988, the Royal Canadian Mint issued the Canadian Silver Maple Leaf coin
comprised of 99.99% pure silver. (Id. ¶ 20.) The Maple Leaf coin is legal tender in
Canada and carries a face value of five Canadian dollars. (Id. ¶ 21.) Like the American
Silver Eagle coin, the Maple Leaf coin meets the definition of an “original numismatic
item” under the HPA because it is used in exchange. (Id. ¶ 22.) The front of the Maple
Leaf coin depicts the image of Queen Elizabeth II and the year of minting. (Id. ¶ 24.)
The reverse side presents a centered maple leaf graphic with the number “9999” printed
on either side. (Id.) In addition, the reverse side of the coin is inscribed with the word
“CANADA” and the phrase “FINE SILVER 1 OZ ARGENT PUR.” (Id. ¶ 25.)
In 2011, the Royal Canadian Mint issued the Canadian Timber Wolf coin
comprised of 99.99% pure silver. (Id. ¶ 27.) Like the Maple Leaf coin, the Timber Wolf
coin is legal tender in Canada and carries a face value of five Canadian dollars. (Id. ¶ 28.)
The Timber Wolf coin meets the definition of an “original numismatic item” under the
HPA because it is coinage that has been or is “used in exchange.” (Id. ¶ 29.) The front
side of the Timber Wolf coin depicts an image of Queen Elizabeth II alongside an
inscription of her name and states a face value of “5 DOLLARS.” (Id. ¶ 30.) The reverse
side carries the graphic of a wolf standing in a snow-covered mountain landscape with
the number “9999” below. (Id. ¶ 31.) Further, the reverse side is inscribed with the word
“CANADA” and the phrase “FINE SILVER 1 OZ ARGENT PUR.” (Id.)

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C.

Defendants’ Products

Defendant Westminster Mint, Inc. (“Westminster”) is a Minnesota corporation
whose principal place of business is Plymouth, Minnesota. (Id. ¶ 5.) Defendant Ian Clay
(“Clay”) is Westminster’s Chief Executive Officer. (Id.) Clay shares a business address
with Westminster and is responsible for formulating, directing, and controlling the acts
and practices of Westminster throughout the United States. (Id. ¶ 7.) Through its
website, Westminster advertises and sells, among other items, two silver bullion
“rounds,” described as the American Silver Eagle Design and the Timber Wolf Design.
(Id. ¶ 33.)
Defendant Bullion International, Inc. d/b/a Highland Mint and International
fulfillment House (“Bullion”) is a Florida Corporation. (Id. ¶ 6.) Defendant Michael
Kott (“Kott”) is the President of Bullion and is responsible for the merchandise
fulfillment and credit card processing of orders made on Westminster’s website. (Id. ¶¶
8, 34.)
On or about January 20, 2014, Plaintiff purchased both the Silver Eagle round and
the Canadian Timber Wolf round from Westminster’s website. (Id. ¶ 33.) Sometime
thereafter, Plaintiff’s credit card was charged by Defendant Bullion, and the rounds were
shipped from one of Bullion’s facilities in Florida. (Id. ¶ 34.)
Plaintiff alleges that Westminster, Bullion, Clay, and Kott acted in concert to
manufacture, import, distribute, market, and sell the American Silver Eagle round and the
Canadian Timber Wolf round in the State of Minnesota and throughout the United States
in violation of the HPA. (Id. ¶ 9.) Plaintiff claims that both the Silver Eagle round and
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the Canadian Timber Wolf round are “imitation numismatic items” under the HPA
because they are similar to legal tender used in exchange and therefore should have been
marked “COPY” per the HPA guidelines. (Id. ¶ 37.)
The Complaint further alleges that the Silver Eagle round imported and/or
manufactured by Defendants is substantially similar to the United States minted Silver
Eagle dollar. Among other characteristics, Plaintiff claims that the Silver Eagle round
depicts the identical “Walking Liberty” design by Adolph Weinman, bears the same
inscriptions of “LIBERTY” and “IN GOD WE TRUST,” and contains the exact image of
a heraldic eagle and shield clutching a banner inscribed with the phrase “E PLURIBUS
UNUM” as the authentic Silver Eagle coin. (Id. ¶ 38.) Further, Plaintiff alleges that
Defendants’ round bears the inscription “UNITED STATES OF AMERICA” in the same
location as the authentic coin. (Id.) In light of these similarities, Plaintiff contends that
Defendants had an obligation to mark the Silver Eagle round with the word “COPY,” as
required under the HPA. (Id. ¶ 43.)
Similar to Defendants’ Silver Eagle Round, Plaintiff alleges that Defendants’
Canadian Timber Wolf round is substantially similar to the authentic Canadian Maple
Leaf and Timber Wolf coinage. (Id. ¶ 47.) Specifically, one side of the Timber Wolf
round depicts the same maple leaf design as the actual Maple Leaf coin. (Id.) Further,
the other side of the Timber Wolf round displays the same wolf pictorial used on the
authentic Timber Wolf coin and, like the original, carries the inscription “FINE SILVER
1 OZ ARGENT PURE.” (Id.) Plaintiff thus asserts that Defendants had an obligation to

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mark the Canadian Timber Wolf round with the word “COPY” as required under the
HPA. (Id. ¶ 43.)
II.

DISCUSSION
Defendants move to dismiss Plaintiff’s Complaint for failure to state a claim for

which relief can be granted under Federal Rule of Civil Procedure 12(b)(6).
A.

Standard of Review

When considering a motion to dismiss under Rule 12(b)(6), the Court assumes all
facts in the Complaint to be true and interprets all reasonable inferences from those facts
in the light most favorable to the plaintiff. Morton v. Becker, 793 F.2d 185, 187 (8th
Cir.1999). The Court need not accept mere conclusory allegations, Hanten v. Sch. Dist.
of Riverview Gardens, 183 F.3d 799, 805 (8th Cir. 1999), or legal conclusions that the
plaintiff infers from the facts pled. Westcott v. City of Omaha, 901 F.2d 1486, 1488 (8th
Cir. 1990). The Court typically does not consider matters outside the pleadings, see
FED.R.CIV.P. 12(d), but may consider exhibits attached to the complaint and documents
that are inexorably covered by the pleadings. Mattes v. ABC Plastics, Inc., 323 F.3d 695,
698 n.4 (8th Cir. 2003). Here, the Court considers the exhibits attached to the Complaint,
which generally consist of photocopy images of the coins in question.
To overcome a motion to dismiss, a pleading must contain “enough facts to state a
claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544,
545 (2007). A claim is facially plausible when the plaintiff offers sufficient factual
allegations to allow the court to draw a reasonable inference that the defendant is liable
for the conduct alleged. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A pleading that
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contains mere “labels and conclusions” or “a formulaic recitation of the elements of a
cause of action will not do.” Twombly, 550 U.S. at 555. A complaint must assert
enough fact “to raise a reasonable expectation that discovery will reveal evidence of [the
claim].” Id. at 556.
Defendants assert three arguments in support of their Motion to Dismiss: (1) that
the rounds at issue and sold by Defendants do not qualify as “imitation numismatic
items” under the HPA and therefore need not be marked with the word “COPY;” (2) that
Plaintiff’s claims fail as a matter of law with respect to Westminster because the HPA
applies only to manufactures and importers of numismatic items and Westminster is
neither; and (3) regardless of whether Plaintiff has stated an actionable claim, his
allegations do not support a cause for monetary damages and he is therefore not entitled
to relief. (Defs.’ Motion to Dismiss [Doc. No. 19].)
B.

“Imitation Numismatic Items”

Defendants assert that the American Silver Eagle and Canadian Timber Wolf
rounds do not quality as “imitation numismatic items” within the purview of the HPA.
(Id.). They claim that the Silver Eagle and Timber Wolf rounds are not exact replicas of
any pre-existing currency and contend that there are “notable, striking, and significant
design differences” between the rounds and the actual legal tender. (Defs.’ Mem. in
Support of Motion to Dismiss at 3 [Doc. No. 21].) For example, Defendants note some
differences with regard to each round’s size, weight, silver content, and graphic artistry
relative to the original numismatic items detailed in the Complaint. (Id. at 3-4.) Because
of these dissimilarities, Defendants claim that “no reasonable and unsuspecting purchaser
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could assume the rounds were original coins.” (Id. at 1.) Accordingly, Defendants argue
that the rounds are not “imitation numismatic items” and need not be marked with the
word “COPY,” as required by the HPA. (Defs.’ Motion to Dismiss [Doc. No. 19].)
The Court disagrees with Defendants’ narrow application of the HPA. See
Demarco, 229 F.R.D. at 78 (discussing that under the HPA “imitation numismatic items”
need not be exact reproductions of existing coins). Specifically, under the HPA, the term
“imitation numismatic item” includes any item that “purports to be, but in fact is not” an
original numismatic item, in addition to those items that are wholly “reproduction and
counterfeits.” 16 C.F.R. § 304.1(d). In denying a motion to dismiss on similar grounds,
the court in Demarco found that the commemorative Freedom Tower Silver Dollar
(“FTSD”) coin, depicting the September 11th attacks, was an “imitation numismatic item”
even though the coin did not resemble any previously minted or presently circulated
United States coinage. 229 F.R.D. at 78. The FTSD was inscribed with the phrases “IN
GOD WE TRUST” and “One Dollar.” Such phrases are required by law to appear on all
United States legal tender. Id. The court concluded that “[while the] characteristics of
the FTSD might not fool a sophisticated coin collector . . . they could lead an
unsophisticated purchaser to believe the FTSD was indeed legal tender issued by the
Government.” Id. Therefore the court in Demarco found that the complaint sufficiently
alleged that the FTSD purported to be “coinage used in exchange” and was subject to the
regulations of the HPA. Id.
As in Demarco, Plaintiff here has alleged plausible violations of the HPA. The
Complaint asserts that the Silver Eagle and Timber Wolf rounds are “imitation
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numismatic items” within the definition of the HPA. (Comp. ¶ 37 [Doc. No. 1-1].) The
Complaint lists specific and numerous characteristics of each round that mimic
characteristics of the authentic, government-minted coinage. (Id. ¶¶ 38-48). Among
other similarities, the Silver Eagle and Timber Wolf rounds share artistry, written mottos,
and markings in the exact locations as the original numismatic items to which they are
compared in the Complaint. (Id.) Plaintiff supports these allegations with detailed
photographs of both the Defendants’ rounds and the authentic legal coinage. (Plaintiff
Exhibits A-F [Doc. No. 1-1].) Just as the court noted in Demarco, 229 F.R.D. at 78,
here, some of the inscriptions found on the Defendants’ Silver Eagle round are required
by law to appear on all United States’ coinage. Further, the Complaint alleges that the
American Eagle and Timber Wolf rounds were not marked “COPY” as required under
the HPA. (Comp. ¶¶ 43, 51 [Doc. No. 1-1].) Drawing all reasonable inferences in favor
of Plaintiff, the allegations in the Complaint concerning “imitation numismatic items”
sufficiently support a claim under the HPA.
C.

Manufacturer or Importer

Defendants next contend that Plaintiff’s claim fails as a matter of law with respect
to Defendant Westminster because the HPA applies only to manufacturers and importers
and Westminster is neither. Again, on a motion to dismiss, the Court must accept all
well-pleaded facts in the complaint as true and determine if such facts inform a plausible
inference that the plaintiff is entitled to relief. See generally Becker, 793 F.2d at 187.
Here, Plaintiff alleges a complex business relationship between the Defendants that
creates a plausible inference that Defendant Westminster either directly or indirectly
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imported and/or manufactured the rounds at issue. (Comp. ¶¶ 4-9 [Doc. No. 1-1].)
Further, the Complaint creates “a reasonable expectation that discovery will reveal
evidence of [that claim].” Twombly, 550 U.S. at 556. Defendants’ argument that
Westminster is not a manufacturer or importer does not warrant dismissal under Rule
12(b)(6).
D.

Plaintiff’s Request for Relief

Finally, Defendants assert that Plaintiff’s allegations do not support a claim for
monetary damages because Plaintiff’s request for relief is not well-pleaded. (Defs.’
Motion to Dismiss [Doc. No. 19].) Defendants contend that Plaintiff has: (1) failed to
describe with specificity the monetary damages suffered; and alternatively, (2) may
receive less for rescission of the transaction than the value of the silver coins at the spot
silver price, thus invalidating any legitimate claim of monetary loss. (Id.) The Court
finds that neither argument warrants the dismissal of Plaintiff’s claim.
First, Plaintiff requests specific relief in the Complaint, seeking monetary
damages resulting from the Defendants’ conduct, an injunctive order estopping
Defendants from continued violations of 15 U.S.C § 2102(b), and reasonable attorney’s
fees. Plaintiff’s failure to include an exact dollar figure as to damages suffered is not
grounds for dismissal of the request for monetary relief. See Andrus ex. rel. Andrus v.
Arkansas, 197 F.3d 953, 955 (8th Cir. 1999) (holding that a request for incorrect relief is
not grounds for dismissal); and Holt Civic Club v. City of Tuscaloosa, 439 U.S. 60, 65
(1978) (determining that a party’s omission of a prayer for relief in the pleadings is not a
barrier to redress in an otherwise meritorious claim).
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Second, Defendants’ alternative argument that any requested rescission of the
transaction would result in a greater loss to Plaintiff due to the fluctuating value of silver
is outside the scope of a 12(b)(6) motion. Such an inquiry would require the Court to
look beyond the Complaint into areas that will almost certainly be contested. These
issues include the exact damages incurred by Plaintiff and the proper method(s) used to
calculate such damages. Again, the scope of this Court’s review on a motion to dismiss
is limited to the allegations in the Complaint. See Becker, 793 F.2d at 187. Assuming, as
this Court must, that Plaintiff has suffered some monetary damage as a result of the
allegations, this Court finds that the Complaint has raised a plausible basis for such relief.
III.

ORDER
Based on the foregoing, and all the files, records, and proceedings herein, IT IS

HEREBY ORDERED THAT:
1.

Defendants’ Motion to Dismiss [Doc. No. 19] is DENIED.

Dated: November 14, 2014

s/Susan Richard Nelson
SUSAN RICHARD NELSON
United States District Judge

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