Emseal Joint Systems, Ltd. v. Schul International Co., LLC et al

Filing 147

///ORDER granting 113 MOTION for Judgment on the Pleadings on Plaintiff's Count III Unjust Enrichment Claim; granting 114 MOTION for Judgment on the Pleadings On Plaintiff's Count II Violation of the Consumer Protection Act/Unfair and Deceptive Trade Practices Claim. So Ordered by Judge Steven J. McAuliffe. (jbw)

UNITED STATES DISTRICT COURT
DISTRICT OF NEW HAMPSHIRE
Emseal Joint Systems, Ltd.,
Plaintiff
v.

Case No. 14-cv-358-SM
Opinion No. 2018 DNH 159

Schul International Co., LLC;
Steven R. Robinson; Brian J. Iske;
Willseal, LLC; and Ion Management, LLC,
Defendants
O R D E R
Plaintiff, Emseal Joint Systems, Ltd., filed suit against
Shul International Co., Steven R. Robinson, Brian J. Iske,
Willseal, LLC, and Ion Management, LLC, asserting claims for
patent infringement, violation of the New Hampshire Consumer
Protection Act/Unfair and Deceptive Trade Practices (“CPA”), and
unjust enrichment.

Defendants have moved for judgment on the

pleadings on plaintiff’s unjust enrichment claim.

Robinson and

Iske have moved for judgment on plaintiff’s Consumer Protection
Act claim.

Both motions are granted.

Standard of Review
Federal Rule of Civil Procedure 12(c) provides that,
“[a]fter the pleadings are closed but within such time as not to
delay the trial, any party may move for judgment on the
pleadings.”

“The standard of review of a motion for judgment on

the pleadings under Federal Rule of Civil Procedure 12(c) is the
same as that for a motion to dismiss under Rule 12(b)(6).”

Marrero-Gutierrez v. Molina, 491 F.3d 1, 5 (1st Cir. 2007)
(citations omitted).

Accordingly, “[t]he court accepts the

plaintiff's well-pleaded facts as true and draws all reasonable
inferences in the plaintiff's favor.”

Holder v. Town of Newton,

No. 09-CV-341-JD, 2010 WL 3211068, at *1 (D.N.H. Aug. 11, 2010)
(citing Citibank Global Mkts., Inc. v. Santana, 573 F.3d 17, 23
(1st Cir. 2009)).

To survive defendants' motion, each count of plaintiff's
complaint must allege all of the essential elements of a viable
cause of action and “contain sufficient factual matter, accepted
as true, to state a claim to relief that is plausible on its
face.”

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation

and internal punctuation omitted).

Judgment on the pleadings

will be entered “only if the uncontested and properly considered
facts conclusively establish the movant's entitlement to a
favorable judgment.”

Aponte-Torres v. Univ. of P.R., 445 F.3d

50, 54 (1st Cir. 2006).

Background

As alleged in its complaint, Emseal is the sole owner of
the following patents: U.S. Patent No. 8,739,495B1 1 issued by the

1

On November 10,
request for Ex Parte
reexamination of the
Schul’s request, the

2014, Schul International submitted a
Examination to the USPTO, seeking
‘495 patent’s claims. After granting
USPTO issued Ex Parte Reexamination
2

United State Patent and Trademark Office (“USPTO”) on June 3,
2014; U.S. Patent No. 9,528,262B2, issued by the USPTO on
December 27, 2016 (“the ‘262 patent”); U.S. Patent No.
9,644,368B1, issued by the USPTO on May 9, 2017 (“the ‘368
patent”); U.S. Patent No. 9,670,666B1, issued by the USPTO on
June 6, 2017 (“the ‘666 patent”); and U.S. Patent No.
9,637,915B1, issued by the USPTO on May 2, 2017 (“the ‘915
patent”) (collectively, the “Patents in Suit”).

All of the

Patents in Suit are entitled “Fire and Water Resistant Expansion
Joint System.”

According to plaintiffs, several of defendants’

products infringe one or more claims of the Patents in Suit,
and, defendants manufacture and sell, or cause others to
manufacture and sell, those infringing products without a
license.

Plaintiff alleges that defendants do minimal research and
development of their own; copy plaintiff’s test regime, and its
patented products and methods; and maintain minimal support
infrastructure.

As a result, says plaintiff, Defendants are

able to price their infringing products unfairly, thus
“creat[ing] or maintain[ing] a monopoly and/or harm[ing]
competition.”

Compl. ¶ 23.

Plaintiff further alleges that

defendants make disparaging and misleading statements to

Certificate No. 8,739,495C1. U.S. Patent No. 8,739,495C1 and Ex
Parte Reexamination Certificate No. 8,739,495C1 are collectively
referred to as “the ‘495 patent.”
3

potential purchasers of Emseal patented products, which
tarnishes plaintiff’s reputation and impacts plaintiff’s ability
to leverage its patents.

Finally, plaintiff contends that

defendants provide inferior support infrastructure, which harms
the entire fire seal industry.

Discussion
1.

Unjust Enrichment
Defendants make two arguments in support of their position

that the court should enter judgment on plaintiff’s unjust
enrichment claim.

First, defendants contend that, because

plaintiffs have not alleged a quasi-contractual relationship
between them, unjust enrichment is not applicable.

Second,

defendants assert that plaintiff’s unjust enrichment claim is
either barred by Patent Act preemption, or is covered by a New
Hampshire statutory cause of action.

Defendants correctly point out that plaintiff’s unjust
enrichment claim simply re-pleads its patent infringement and
CPA claims, adding only an allegation that defendants unjustly
benefited from their purported misdeeds. In support of its
unjust enrichment claim, plaintiff incorporates by reference its
earlier allegations, and alleges that defendants, as a result of
the alleged conduct, “will unjustly benefit from and be unjustly

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enriched by, their own intentional and wrongful acts.”

Compl. ¶

42.

Under New Hampshire law, “[u]njust enrichment is an
equitable remedy that is available when an individual receives a
benefit which would be unconscionable for him to retain.”
Axenics, Inc. v. Turner Constr. Co., 164 N.H. 659, 669, 62 A.3d
754 (2013) (internal quotation marks and emphasis omitted).
Plaintiff does not explicitly allege a benefit received by
defendants in its complaint, nor does plaintiff address that
point in its briefing.

However, plaintiff’s theory seems to be

that, by copying Emseal’s patented products, methods, and test
regimes, defendants benefited by saving money they otherwise
would have had to spend on research and development.

And, as a

result of those savings, defendants have been able to price
their competing (and infringing) products lower than Emseal’s
products, thereby presumably benefitting by selling more
products.

Here, plaintiff’s unjust enrichment claim, as pled, is
preempted.

“[F]ederal patent law preempts any state law that

purports to define rights based on inventorship.”

Univ. of

Colo. Found. v. Am. Cyanamid Co., 196 F.3d 1366, 1372 (Fed. Cir.

5

As the Court of Appeals for the Federal Circuit 2 has

1999).
noted:

To determine whether these state law torts are in
conflict with federal patent law and accordingly
preempted, we assess a defendant's allegedly tortious
conduct. If a plaintiff bases its tort action on
conduct that is protected or governed by federal
patent law, then the plaintiff may not invoke the
state law remedy, which must be preempted for conflict
with federal patent law. Conversely, if the conduct is
not so protected or governed, then the remedy is not
preempted.
Hunter Douglas, Inc. v. Harmonic Design, Inc., 153 F.3d 1318,
1335 (Fed. Cir. 1998), overruled on other grounds by Midwest
Indus., Inc. v. Karavan Trailers, Inc., 175 F.3d 1356 (Fed. Cir.
1999).

“A state claim is not protected or governed by patent

law when it ‘address[es] entirely different wrongs[,]’
‘provide[s] different forms of relief,’ and ‘is not an
impermissible attempt to offer patent-like protection to subject
matter addressed by federal law.’”

Picone v. Shire PLC, No. 16-

CV-12396-ADB, 2017 WL 4873506, at *14 (D. Mass. Oct. 20, 2017)
(quoting In re Loestrin 24 Fe Antitrust Litig., No. 13-md-2472,
2017 WL 3600938, at *37 (D.R.I. Aug. 8, 2017) ((quoting Dow
Chem. Co. v. Exxon Corp., 139 F.3d 1470, 1478 (Fed. Cir.
1998))).

2

“Federal Circuit law governs whether federal patent law
preempts a state law claim.” Ultra–Precision Mfg. v. Ford Motor
Co., 411 F.3d 1369, 1376 (Fed. Cir.2005).
6

Because plaintiff’s unjust enrichment claim directly
relates to its rights under federal patent law, and seeks to
enforce such rights under a common law guise, the unjust
enrichment claim is preempted.

See Veto Pro Pac, LLC v. Custom

Leathercraft Mfg. Co., Inc., No. 3:08-cv-302 (VLB), 2009 WL
276369, *2 (D. Conn. Feb. 5, 2009) (“to survive preemption, [the
plaintiff] must plead conduct in violation of [state law] that
is separate and independent from its patent law claim.”)
(emphasis added).

The gravamen of plaintiff’s unjust enrichment

claim is that defendants unjustly benefited from their patentinfringing use of the plaintiff’s intellectual property, one
consequence being that defendants saved money on research and
development.

Put differently, any purported “benefit”

defendants received resulted from defendant’s infringement of
plaintiff’s patents.

While benefits derived from infringing

conduct are always “unjust” in a general sense, here the unjust
character derives from the alleged infringement.

If defendants

did not infringe plaintiff’s patents, plaintiff’s unjust
enrichment claim would of course fail as it is tied to the
alleged infringement.

Plaintiff’s objection to defendant’s motion for judgment on
the pleadings does not respond to the preemption argument.

That

is problematic because arguments “not raised in a timely manner
are forfeited.”

Igartua v. United States, 626 F.3d 592, 603

7

(1st Cir. 2010).

As our court of appeals has stated, “a

plaintiff cannot expect a trial court to do his homework for
him.

Rather, the plaintiff has an affirmative responsibility to

put his best foot forward in an effort to present some legal
theory that will support his claim.”

McCoy v. Massachusetts

Inst. of Tech., 950 F.2d 13, 22–23 (1st Cir. 1991).

See also

Rivera-Gomez v. de Castro, 843 F.2d 631, 635 (1st Cir. 1988)
(“[j]udges are not expected to be mindreaders.

Consequently, a

litigant has an obligation ‘to spell out its arguments squarely
and distinctly,’ or else forever hold its peace.”) (quoting
Paterson–Leitch Co. v. Massachusetts Municipal Wholesale Elec.
Co., 840 F.2d 985, 990 (1st Cir. 1988)).

But, to the extent plaintiff might argue that its unjust
enrichment claim is also based on its allegations regarding
defendant’s “tarnish[ing]” of Emseal’s reputation, compl. ¶ 24,
plaintiff’s complaint offers no allegation that such conduct
resulted in a benefit to defendants.

Nor does plaintiff allege

any benefit to defendants resulting from defendants’ provision
of “inferior support infrastructure which tarnishes the fire
seal industry.”

Compl. ¶ 24.

The court is disinclined to

concoct an argument on plaintiff’s behalf, and need proceed no
further.

Cf., United States v. Zannino, 895 F.2d 1, 17 (1st

Cir. 1990) (“It is not enough merely to mention a possible
argument in the most skeletal way, leaving the court to do

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counsel's work, create the ossature for the argument, and put
flesh on its bones.”).

Resolution of plaintiff’s unjust enrichment claim as pled
depends entirely on resolution of plaintiff’s patent
infringement claims.

Therefore, plaintiff’s unjust enrichment

claim is preempted by federal patent law, and must be dismissed. 3

2.

New Hampshire Consumer Protection Act

Defendants Robinson and Iske seek judgment on plaintiff’s
Consumer Protection Act claim.

They argue that plaintiff has

not asserted any basis upon which the corporate veil might be
pierced to reach and hold them liable for the actions of Schul,
Ion or Willseal (collectively, the “Corporate Defendants”).
And, defendants further contend, plaintiff’s allegations in
support of its CPA claim are based entirely on the conduct of

3

Even if plaintiff’s unjust enrichment claim were not
subject to dismissal due to preemption, it would probably fail
as a matter of law because it is focused “on the savings that
[defendants] incurred – that is, money not spent – rather than
on a benefit bestowed – that is, money or some good received.”
Brown v. Saint-Gobain Performance Plastics Corp., No. 16-cv-242JL, 2017 WL 6043956, at *9 (D.N.H. Dec. 12, 2017). “New
Hampshire has not recognized negative unjust enrichment – that
is, unjust enrichment through a defendant’s failure to incur
costs rather than through receipt of a benefit – as a cause of
action.” Id. at *1; see also id. at *10 (discussing cases, and
dismissing unjust enrichment claim where it was “not based on a
‘specific legal principle or situation which equity has
established or recognized’ in New Hampshire so as ‘to bring
[this] case within the scope of the doctrine’.”) (quoting Cohen
v. Frank Developers, Inc., 118 N.H. 512, 518 (1978)).

9

the Corporate Defendants, not the actions of Robinson or Iske.
Because plaintiff does not allege that Robinson or Iske are
market participants, defendants say, the CPA claim against them
must be dismissed.

In response, Emseal takes the position that its CPA claim
against Robinson and Iske is not predicated on their capacity as
principles of the Corporate Defendants.

See Pl.’s Obj. to Mot.

for Judgment on the Pleadings (Document No. 119) at 4 (“Emseal
is not trying to impose the LLC’s underlying liability upon the
Individual Defendants, but rather alleges that all five named
Defendants are individually liable for their own actions.”)
(emphasis in original).
is unnecessary.

Therefore, piercing the corporate veil

Instead, Emseal argues, it has alleged that all

defendants collectively (including Robinson and Iske) have
engaged in conduct that violates the CPA.

Plaintiff notes that

Robinson and Iske are personally liable for any tort in which
they participated or authorized as members and managers of the
Corporate Defendants.

Plaintiff’s position, however, is at odds with the
governing legal standard.

“The general rule, and the rule in

this circuit, is that an officer of a corporation ‘is liable for
torts in which he personally participated, whether or not he was
acting within the scope of his authority.’” Escude Cruz v. Ortho

10

Pharm. Corp., 619 F.2d 902, 907 (1st Cir. 1980) (quoting Lahr v.
Adell Chemical Co., 300 F.2d 256, 260 (1st Cir. 1962)).

“What

is required is some showing of direct personal involvement by
the corporate officer in some decision or action which is
causally related to plaintiff's injury.”

Id.

Plaintiff’s complaint includes no factual allegations
related to Robinson or Iske, beyond their names, job titles, and
their addresses as listed with the New Hampshire Secretary of
State.

Plaintiff instead lumps together all defendants,

corporate and individual, and does not allege that either
Robinson or Iske had any direct personal involvement in the
challenged conduct.

Plaintiff’s allegations are utterly

insufficient to establish a basis for Robinson or Iske to be
held individually liable for the “alleged actions of the
corporations with which they are associated.”

Galvin v.

Metrocities Mortg., LLC, No. 1:16-CV-00268-JDL, 2017 WL 5632868,
at *8 (D.N.H. Nov. 17, 2017) (citations omitted).

Accordingly, Robinson’s and Iske’s motion for judgment on
the pleadings on plaintiff’s CPA claim is granted.

Conclusion
For the foregoing reasons, as well as those set forth in
defendants’ memoranda (documents. nos. 113-1, 114-1, and 123)
defendants’ motion for judgment on the pleadings on plaintiff’s
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unjust enrichment claim (document no. 113) is GRANTED.
Robinson’s and Iske’s motion for judgment on the pleadings on
plaintiff’s Consumer Protection Act/Unfair and Deceptive Trade
Practices claim (document no. 114) is GRANTED.

SO ORDERED.

____________________________
Steven J. McAuliffe
United States District Judge
August 6, 2018
cc:

Michael K. Kinney, Esq.
Robert R. Lucic, Esq.
Robert L. Rispoli, Esq.
Brian D. Thomas, Esq.
Bryanna K. Devonshire, Esq.
James P. Harris, Esq.
Peter A. Nieves, Esq.
Brendan M. Shortell, Esq.
David J. Connaughton, Jr., Esq.
James E. Hudson, III, Esq.
Gary E. Lambert, Esq.

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