ROSSI et al v. INNOVATION VENTURES, LLC et al

Filing 31

OPINION filed. Signed by Judge Joel A. Pisano on 4/1/2014. (jjc)

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

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JULES L. ROSSI and ROBIN S. ROSSI,
Plaintiffs,
v.
INNOVATION VENTURES, LLC,
INNOVATION VENTURES, LLC dba Living
Essentials, LIVING ESSENTIALS, LLC, BIO
CLINICAL DEVELOPMENT, INC., MANOJ
BHARGAVA and JOHN DOES 1-10
(fictitious names) and ENTITIES 1-10
(fictitious names),
Defendants.

Civil Action No. 13-cv-1870 (JAP)
OPINION

PISANO, District Judge
Presently before the Court is Defendants Innovation Ventures, LLC, Innovation Ventures
LLC dba Living Essentials, and Living Essentials, LLC’s (collectively referred to as “Innovation
Defendants”) Motion to Dismiss the Amended Complaint pursuant to Federal Rule of Civil
Procedure 12(b)(6), or in the alternative, strike Exhibit A from the Amended Complaint [docket
#18] and Defendants Bio Clinical Development, Inc. (“BCD”) and Manoj Bhargava’s Motion to
Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction
[docket #19]. Plaintiffs, Jules L. Rossi (“Plaintiff) and Robin S. Rossi (“Mrs. Rossi”) oppose
these motions [docket #22 and #21, respectively]. The Court considered the papers filed by the
parties as well as oral argument on March 28, 2014.

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For the reasons that follow, this Court GRANTS Defendants BCD and Manoj Bhargava’s
Motion to Dismiss for lack of personal jurisdiction [docket #19] and GRANTS in part and
DENIES in part the Innovation Defendants’ Motion to Dismiss or in the alternative, strike
Exhibit A from the Amended Complaint [docket #18].
I.

BACKGROUND
Plaintiffs Amended Complaint, received by the Court on July 8, 2013 as an exhibit to

Plaintiff’s Cross Motion to Amend the Complaint [docket #14] consists of seven (7) causes of
action for: (1) Products Liability; (2) Negligence; (3) Strict Liability; (4) Punitive Damages; (5)
to Pierce the Corporate Veil; (6) Civil Racketeer Influenced and Corrupt Organizations Act
(“RICO”); (7) the New Jersey Consumer Fraud Act; and (8) Plaintiff Robin S. Rossi asserts a per
quad claim for loss of consortium.1 Plaintiff’s claims arise out of Plaintiff, Jules L. Rossi’s
consumption of the product known as 5-hour Energy. The following allegations are taken from
Plaintiffs Amended Complaint and are accepted as true for purposes of this Court’s review only.
On or about February 22, 2011, Plaintiff drank a 5-hour energy and subsequently lost
consciousness due to dehydration allegedly caused by the product. Amended Complaint
(“Compl.”) ¶¶ 1, 4. After losing consciousness, Plaintiff fell down a flight of stairs and suffered
a sub-arachnoid brain bleed which has led to seizures and other psychological and physiological
symptoms. Compl. ¶ 4. Plaintiff alleges that 5-hour energy has ingredients in it which cause
dehydration and the product does not contain an adequate warning advising consumers of these
risks thereby rendering it not reasonably safe for its intended purpose. Compl. ¶ 8. Plaintiff

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On July 30, 2013, Magistrate Judge Goodman granted Plaintiff’s Motion to Amend the Complaint and instructed
Plaintiff to file the Amended Complaint on the docket within five (5) days of the Order [docket #16]. On August 1,
2013, Plaintiff filed an Amended Complaint on the docket but did not include “Exhibit A” with this filing [docket
#17]. “Exhibit A” is the subject of Innovation Defendants’ motion and the Court is not aware of any other
substantive differences between the two Amended Complaints. Thus, for purposes of clarity, the Court will construe
the Complaint included in Plaintiff’s cross-motion to amend [docket #16] as Plaintiff’s most recent Complaint.

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further contends that the Defendants were aware of these risks, but continued to introduce the
product into the stream of commerce and market 5-hour energy with a reckless disregard for the
safety of its foreseeable consumers. Compl. ¶ 8. In support of this contention, Plaintiff attached
as “Exhibit A” to the amended complaint an adverse event report from the Food and Drug
Administration (“FDA”) which Plaintiff claims demonstrates the substantial risk of adverse
medical consequences caused by the use of energy drinks. Compl. ¶ 8.
II.

DISCUSSION
a.

Bio Clinical Development, Inc. and Manoj Bhargava’s Motion to Dismiss for
Lack of Personal Jurisdiction
a. Legal Standard

Federal Rule of Civil Procedure 12(b)(2) provides for dismissal of a complaint against a
defendant if there is a lack of personal jurisdiction. Fed. R. Civ. P. 12(b)(2). A federal court
sitting in diversity must undertake a two-step inquiry to exercise personal jurisdiction over a
defendant. “First, the court must apply the relevant state long-arm statute to see if it permits the
exercise of personal jurisdiction; then, the court must apply the precepts of the Due Process
Clause of the Constitution. In New Jersey, this inquiry is collapsed into a single step because the
New Jersey long-arm statute permits the exercise of personal jurisdiction to the fullest limits of
due process.” See IMO Indus., Inc. v. Kiekert AG, 155 F.3d 254, 258-59 (3d Cir. 1998) (citing
DeJames v. Magnificence Carriers, Inc., 654 F.2d 280, 284 (3d Cir.1981)).
Pursuant to the New Jersey long-arm statute, Plaintiff must show that there is either
specific or general jurisdiction over Defendant. See Jacobs v. Walt Disney World, 309 N.J.
Super. 443, 452 (App. Div. 1998).

“[G]eneral jurisdiction exists where the defendant has

“systematic and continuous contacts” with the forum.” See Watiti v. Walden Univ., 2008 WL
2280932 (D.N.J. May 30, 2008). Alternatively, “’[s]pecific jurisdiction exists when the claim
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arises from or relates to conduct purposely directed at the forum state.’” Id. at *-- (quoting
Marten v. Godwin, 499 F.3d 290, 296 (3d Cir.2007)).
b. Analysis
Plaintiffs Amended Complaint alleges that Defendant BCD was “engaged in the design,
manufacture, production, testing, study, inspection, mixture, labeling, marketing, advertising,
sales and/or distribution of 5-hour [energy].” Compl. ¶ 2. As an initial matter, Defendant
contends that BCD does not engage in these functions but merely owns some of the intellectual
property rights relating to the product. See Declaration of Matthew Dolmange ¶ 11. However,
taking Plaintiff’s allegations as true, Plaintiff has still failed to establish that personal jurisdiction
exists over Defendant BCD.
BCD is a Michigan corporation with its principal place of business located in Farmington
Hills, Michigan. Id. ¶ 3. BCD is not registered to do business in the State of New Jersey, nor
does it maintain a registered agent in the State of New Jersey. Id. ¶ 4. To the extent that BCD
manufactures, produces, designs, advertises and/or sells 5-hour energy, it does not do any of
these activities in New Jersey, or otherwise conduct any business or maintain any contacts in
New Jersey. Id. ¶¶ 5-9. Similarly, Plaintiffs claim(s) do not arise from or relate to any conduct
by Defendant BCD that is purposely directed at New Jersey.
Moreover, Plaintiff attempts to gain personal jurisdiction over Defendant Bhargava by
allegations relating to piercing the corporate veil. Compl. ¶¶ 2-3. Under New Jersey law, veil
piercing is an equitable remedy whereby a court disregards the corporate existence to hold an
individual defendant liable for the corporation’s debts. See Rowen Petroleum Properties, LLC v.
Hollywood Tanning Sys., Inc., 899 F. Supp. 2d 303 (D.N.J. 2012). Putting aside the fact that veil
piercing is a remedy, in viewing Plaintiff’s Amended Complaint favorably, there must be

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sufficient facts showing that personal jurisdiction over an individual defendant in order to
establish such a veil piercing theory. Plaintiff has simply failed to do this.
Again, assuming Plaintiff’s allegations are true that Defendant Bhargava designed,
manufactured, produced, tested, sold, or marketed 5-hour Energy, Plaintiff fails to establish that
any of these actions by Defendant Bhargava were conducted in New Jersey or purposely directed
at New Jersey. Compl. ¶ 2. Defendant Bhargava is not a resident of New Jersey, does not own
or possess any real property in New Jersey, and does not perform any work or render any
services in New Jersey. See Declaration of Manoj Bhargava ¶ 7.
Accordingly, Plaintiff has failed to show that Defendants BCD and Bhargava have
continuous or systematic contacts with New Jersey sufficient to establish that general jurisdiction
exists, or alternatively, has failed to establish specific jurisdiction as Plaintiff’s claims do not
arise out of any conduct by BCD or Bhargava directed at New Jersey. As such, Plaintiff’s claims
against Defendants BCD and Bhargava are DISMISSED.
b.

Innovation Defendants’ Motion to Dismiss or in the Alternative, Strike
Exhibit A to the Amended Complaint
a. Legal Standard

Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of a complaint if the
plaintiff fails to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). Under
Federal Rule of Civil Procedure 8(a)(2), a pleading must contain “a short and plain statement of
the claim showing that the pleader is entitled to relief.” This pleading standard does not require
“detailed factual allegations,” but it does require “more than labels and conclusions”; a
“formulaic recitation of the elements of a cause of action” will not suffice. Bell Atlantic Corp. v.
Twombley, 550 U.S. 544, 555 (2007). Therefore, in order to withstand a motion to dismiss

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pursuant to 12(b)(6), “a complaint must 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).
The plausibility standard is satisfied “when the plaintiff pleads factual content that allows
the court to draw the reasonable inference that the defendant is liable for the misconduct
alleged.” Id. The plausibility standard is not a “probability requirement,” but “it asks for more
than a sheer possibility that a defendant has acted unlawfully.” Id. To decide if a complaint
meets this plausibility standard and therefore, survives a motion to dismiss, the Third Circuit has
required a three step analysis: (1) the Court must “outline the elements a plaintiff must plead to .
. . state a claim for relief”; (2) the Court must identify “those allegations that are no more than
conclusions and thus not entitled to the assumption of truth”; and (3) “where there are wellpleaded factual allegations, [the Court] should assume their veracity and then determine whether
they plausibly give rise to an entitlement for relief.” Bistrian v. Levi, 696 F.3d 352, 365 (3d Cir.
2012); Santiago v. Warminster Twp., 629 F.3d 121, 130 (3d Cir. 2010).
Further, Federal Rule of Civil Procedure 12(f) provides that a “court may strike from a
pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous
matter.” Fed. R. Civ. P. 12(f). Similar to Rule 12(b)(6), “[m]otions to strike are to be decided
‘on the basis of the pleadings alone.’” Tonka Corp. v. Rose Art Indus., Inc., 836 F. Supp. 200,
218 (D.N.J. 1993) (quoting Total Containment, Inc. v. Environ Products, Inc., 1992 WL 208981,
at *1 (E.D. Pa. Aug. 19, 1992)). “Courts possess considerable discretion under Rule 12(f) to
dispose of motions to strike.” In re Schering-Plough Corp./Enhance Sec. Litig., 2009 WL
1410961, at *1 (D.N.J. May 19, 2009). “Motions to strike are disfavored, however, and ‘usually
will be denied unless the allegations have no possible relation to the controversy and may cause
prejudice to one of the parties, or if the allegations confuse the issues in the case.’ Striking

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matters from the record is a ‘drastic remedy to be resorted to only when required for the purposes
of justice.’” Id. (quoting Kim v. Baik, 2007 WL 674715, at *5 (D.N.J. Feb. 27, 2007)).
b. Analysis
i.

Products Liability

In order to state a prima facie claim under the New Jersey Products Liability Act
(“PLA”), a “plaintiff must show that the defendant manufactured the product, that a reasonably
foreseeable user was injured, that the product was defective, that the defect existed when it left
the defendant’s control, and that the defect was the factual or proximate cause of the plaintiff’s
injury.” Durkin v. Paccar, Inc., 2010 WL 4117110, at *6 (D.N.J. Oct. 19, 2010) (citing Myrlak v.
Port Auth. of N.Y. and N.J., 157 N.J. 84, 723 A.2d 45, 52 (N.J.1999)).
While Plaintiff may face evidentiary issues in this litigation surrounding proximate cause,
the Court must construe Plaintiff’s allegations as true in determining whether Plaintiff has stated
a claim for relief under the PLA.

In so doing, Plaintiff has alleged that the Innovation

Defendants manufactured 5-hour Energy, that Plaintiff was a reasonably foreseeable user of the
product, that Plaintiff’s injury was proximately caused by the defective product, and that 5-hour
energy was defective because it was not accompanied by a proper warning label. Compl. ¶¶ 111. Accordingly, Plaintiff’s Complaint alleges sufficient facts to state a claim for relief under the
PLA and the Innovation Defendants’ motion to dismiss this claim is DENIED, without prejudice.
ii.

Plaintiff’s Remaining State Law Claims

As set forth above, Plaintiff’s Amended Complaint also alleges causes of action for: (1)
Negligence; (2); Strict Liability; (3) Punitive Damages; (4) Piercing the Corporate Veil; (5)
RICO; and (6) the New Jersey Consumer Fraud Act. However, in finding that Plaintiff has
sufficiently stated a claim for relief under the PLA, the remaining state law claims must be

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dismissed because the PLA “effectively creates an exclusive statutory cause of action for claims
falling within its purview.” Repola v. Morbark Indus., Inc., 934 F.2d 483, 492 (3d Cir. 1991).
Stated differently, the PLA subsumes Plaintiff’s remaining common law products liability
claims. Id.
At oral argument, Plaintiff did not oppose this contention with respect to five (5) of the
six (6) remaining state law claims, but contended that the consumer fraud cause of action falls
outside the scope of the PLA. However, the only factual allegations contained in Plaintiff’s
Complaint and in support of Plaintiff’s consumer fraud claim relate to a physical injury caused
by the alleged defective product. As such, the PLA subsumes Plaintiff’s cause of action under
the Consumer Fraud Act. See Arlandson v. Hartz Mountain Corp., 792 F. Supp. 2d 691, 704
(D.N.J. 2011) (holding that consumer fraud claims relating to personal injury caused by a
defective product, as opposed to economic injury caused to the product itself, are subsumed by
the PLA.). Accordingly, Plaintiff’s remaining state law claims are DISMISSED.
iii.

Plaintiff Robin S. Rossi’s Per Quad Claim

The Innovation Defendants move to dismiss Mrs. Rossi’s per quad claim for loss of
consortium, arguing that because her cause of action is derivative of her husband’s claims, and
Mr. Rossi has failed to state any claims for relief, Mrs. Rossi’s claim must also be dismissed.
However, as set forth above, the Court has found that Plaintiff, Mrs. Rossi’s husband,
sufficiently pled a cause of action under the PLA. Further, “[i]t is well settled that a wife is
entitled to ‘fair and reasonable compensation for any loss or impairment of her husband's
services, society or consortium because of injuries sustained by him as a proximate result of
defendant's wrongdoing.’” Thalman v. Owens-Corning Fiberglas Corp., 290 N.J. Super. 676,

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684, 676 A.2d 611, 614 (App. Div. 1996) (quoting Zalewski v. Gallagher, 150 N.J.Super. 360,
372, 375 A.2d 1195 (App.Div.1977)).
Plaintiff’s Complaint sufficiently alleges that Mrs. Rossi is the wife of Jules L. Rossi, and
that the conduct of the Innovation Defendants proximately caused her to suffer the loss of her
husband’s services, society and companionship, as well as financial damages. Compl. p. 13, ¶¶
2-3. Taking these factual allegations as true, Mrs. Rossi has sufficiently pled a cause of action
for loss of consortium. Accordingly, the Innovation Defendants’ motion to dismiss Mrs. Rossi’s
per quad claim is DENIED, without prejudice.
iv.

Striking Exhibit A

The Innovation Defendants also move this Court to strike Exhibit A from Plaintiff’s
Amended Complaint pursuant to Rule 12(f), arguing that it is immaterial, impertinent, and
scandalous.

As stated above, however, striking matters from pleadings or the record is

disfavored and will be allowed only where they “have no possible relation to the controversy and
may cause prejudice to one of the parties, or [where] the allegations confuse the issues in the
case.’” In re Schering-Plough Corp., 2009 WL 1410961, at *1 (internal citation omitted).
Exhibit A is a copy of adverse event reports published by the FDA, and relied upon by Plaintiff
to show that Defendant had knowledge of the potential adverse reactions of its product but failed
to update its warning. The Innovation Defendants contend that these reports are immaterial
because the only reports which relate to dehydration involve the products known as “Rock Star
Energy” or “Monster Energy,” but there are no reports regarding 5-hour energy.
As an initial matter, similar products that contain similar ingredients may be relevant in
determining whether a Defendant had knowledge of potential risks associated with its product.
Further, adverse event reports contained in Exhibit A involving 5-hour Energy list “loss of

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consciousness,” which is precisely what Plaintiff experienced here. As such, the Court finds
that, at this stage of the litigation, Exhibit A is not immaterial, impertinent, or scandalous, as it
does have a possible relation to the controversy and will not confuse allegations in the case.
Accordingly, Defendants motion to strike Exhibit A from the Amended Complaint is DENIED,
without prejudice.

III.

CONCLUSION
For the foregoing reasons, and the reasons set forth on the record, this Court GRANTS

Bio Clinical Development, Inc. and Manoj Bhargava’s Motion to Dismiss in its entirety [docket
#19] and GRANTS in part and DENIES in part the Innovation Defendants’ Motion to Dismiss or
alternatively strike Exhibit A to the Amended Complaint [docket #18]. An appropriate Order
accompanies this Opinion [docket #30].

Date: April 1, 2014

/s/ Joel A. Pisano
JOEL A. PISANO
United States District Judge

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