Speedfit LLC et al v. Woodway USA, Inc. et al

Filing 59

ORDER. For the reasons set forth in the attached Memorandum and Order, defendant Woodway's motions to dismiss or transfer plaintiffs' patent infringement claims in favor of the pending Eastern District of Wisconsin action are denied. Defen dant's motion to dismiss plaintiffs' state law claims is denied as to the breach of contract, unjust enrichment, constructive trust and conversion claims, and granted as to the breach of fiduciary duty claim. Defendants shall answer the Ame nded Complaint within the time specified by the Federal Rules, and, per Judge Tomlinson's September 3, 2014 Minute Order, counsel shall contact Judge Tomlinson's chambers within three days to set the remaining discovery schedule. Ordered by Judge Kiyo A. Matsumoto on 10/10/2014. (Alagesan, Deepa)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
--------------------------------------- X
SPEEDFIT LLC and AUREL A. ASTILEAN,
Plaintiffs,
MEMORANDUM AND ORDER
13-CV-1276(KAM)(AKT)

-againstWOODWAY USA, INC. and DOUGLAS G.
BAYERLEIN,
Defendants.
--------------------------------------- X
MATSUMOTO, United States District Judge:

On March 11, 2013, plaintiffs Speedfit LLC
(“Speedfit”) and Aurel A. Astilean (together, “plaintiffs”)
filed an action for, inter alia, declaratory judgment
invalidating defendants Woodway USA, Inc. (“Woodway”) and
Douglas G. Bayerlein’s (together, “defendants”) patent for a
manually-powered treadmill.

(See generally ECF No. 1,

Complaint.) Plaintiffs amended their complaint against
defendants on June 17, 2013 to abandon their declaratory
judgment claim and instead allege infringement of plaintiffs’
own patents for components of a manually-powered treadmill.
(See generally ECF No. 18, Amended Complaint (“Am. Compl.”).)
Presently before the court is defendant Woodway’s motion,

presumably pursuant to Fed. R. Civ. P. 12(b)(6),1 to dismiss
plaintiffs’ patent infringement claims in favor of Woodway’s
pending declaratory judgment action against plaintiffs,
currently before the Eastern District of Wisconsin, and to
dismiss plaintiffs’ state law claims for failure to state a
claim upon which relief can be granted.

Woodway moves this

court, in the alternative, for transfer of this case to the
Eastern District of Wisconsin pursuant to 28 U.S.C. § 1404(a).
For the reasons discussed below, Woodway’s motion to dismiss and
motion to transfer are denied except as to plaintiffs’ breach of
fiduciary duty claim, which is dismissed for failure to state a
claim.
BACKGROUND
I.

Factual Allegations in the Amended Complaint
The allegations in the Amended Complaint are taken to

be true for purposes of deciding a motion pursuant to Fed. R.
Civ. P. 12(b)(6), and concern the inventorship and development
of a manually-powered treadmill, currently marketed by Woodway
as the “Curve” treadmill.

Plaintiff Speedfit, founded by

plaintiff Astilean, is a New York-based company that develops
fitness programs and equipment.

(Am. Compl. ¶¶ 3-4.)

1

Together,

In violation of Local Civil Rule 7.1(a)(1), Woodway’s Notice of Motion to
Dismiss fails to identify the procedural rule or statute pursuant to which
defendant seeks to dismiss the Amended Complaint. Woodway further fails to
serve any notice of their motion to transfer this action to the Eastern
District of Wisconsin.

2

Astilean, a former world-class athlete and resident of the
Eastern District of New York, and Speedfit have developed a
patented fitness program to promote speed training and “the legpowered, non-motorized treadmill” at the center of this
litigation.

(Id. ¶ 4.)

Defendant Woodway is a Wisconsin-based

corporation that manufactures and sells treadmills, including
motorized models and the manually-operated Curve treadmill, both
domestically and internationally.

(Id. ¶ 5.)

Bayerlein is the president of Woodway.

Defendant

(Id. ¶ 6.)

Astilean owns two active patents relating to a
manually-powered treadmill: Nos. 8,308,619 (the “‘619 Patent”),
filed on October 29, 2010 and granted by the United States
Patent and Trademark Office (“PTO”) on November 13, 2013, and
8,343,016 (the “‘016 Patent”), filed on November 1, 2010 and
granted by the PTO on January 1, 2013).
Am. Compl. Exs. A, B.)

(Id. ¶¶ 7-8; see also

Both the ‘619 and ‘016 Patents “relate

generally to a motorless leg powered curved treadmill that
allows the rider to walk, jog, run or sprint without making any
adjustments to the treadmill other than shifting the user’s
center of gravity forward or backwards.”

(Id. ¶ 9.)

The events surrounding the development of the
treadmill at issue are summarized below, based on the
allegations of the Amended Complaint, which the court accepts as
true for purposes of the instant motion.

3

Astilean and Bayerlein

first met at a fitness equipment trade show in San Francisco,
California in the spring of 2002 and began discussing Speedfit’s
exercise programs and equipment.

(Id. ¶ 14.)

Astilean and

Bayerlein met in New York City on May 1, 2003, at which time
they executed a non-disclosure/circumvention agreement.
15.)

(Id. ¶

After signing the agreement, they discussed Speedfit’s

idea for a non-motorized treadmill.

(Id.)

Astilean provided

the specifications for his treadmill design to Woodway in 2004,
and Woodway agreed to build a prototype at no cost to Speedfit
or Astilean.

(Id. ¶ 16.)

Astilean and another business

partner, Tami Mack, visited Woodway’s offices in May 2005 and
signed a second non-disclosure/circumvention agreement with
Woodway.

(Id. ¶ 17.)

The agreement included the following

terms:
1.
Woodway has signed a non-disclosure agreement
(the “NDA”) related to any designs and other
information supplied by Speedfit. The NDA continues to
be applicable to all disclosures made by Speedfit and
all actions taken by Woodway as a result of said
disclosures, including, without limitation, the
construction of prototypes of personal exercise
equipment based on Speedfit’s design.
[...]
5. Speedfit owns every right of every kind in and to
its designs and any other information supplied to
Woodway, and to any prototypes that Woodway builds as
a result thereof....
(Id.)
¶ 18.)

Woodway completed the prototype by August 15, 2005.

(Id.

Speedfit requested extra operative parts from Woodway

4

(chassis with belts) so that it could continue to refine the
treadmill design.

(Id.)

On August 18, 2005, Woodway provided

Speedfit with a memorandum acknowledging Speedfit’s invention of
the treadmill and corresponding intellectual property rights, as
well as proposed agreements for partnerships between the two
companies in the eventual sale of the product.

(Id. ¶ 19.)

The

proposed agreements provided for some amount of money to be paid
from Woodway to Speedfit.
Woodway’s proposals.

(Id.)

Speedfit did not accept

(Id.)

In December 2006, Astilean visited Woodway to
supervise the ongoing construction of the latest version of the
non-motorized treadmill, named the “Speedboard” by Speedfit.
(Id. ¶ 20.)

Speedfit and Woodway debuted the Speedboard at an

industry show in the spring of 2007, with logos for both
companies on the treadmill itself.

(Id.)

Plaintiffs allege

upon information and belief that Woodway began selling the
Speedboard to the public after the Spring 2007 trade show,
without Speedfit’s consent. (Id. ¶ 22.)

Woodway did not remit

any of its profits from sale of the treadmill to Speedfit.

(See

id.)
After the trade show, Speedfit continued to work on
the Speedboard design in efforts to render it totally manuallyoperated, as it still contained a motorized mechanism to adjust
the treadmill’s incline.

(Id. ¶ 21.)

5

By May 2008, Speedfit had

become frustrated with Woodway’s inability to meet Speedfit’s
specifications for the prototype and undertook a re-design on
its own.

(Id. ¶ 23.)

Speedfit completed a curved, wooden,

fully non-motorized treadmill by August 2008.

(Id. ¶ 24.)

The

new curved design (the “Curve”) allowed users to move to
different sections of the treadmill in order to experience a
greater incline, obviating the need for the industry-standard
manual, motorized incline mechanism.

(Id.)

Astilean filed a provisional patent application (No.
61/193,239) on November 7, 2008, before presenting the Curve to
Woodway in order to build a model for public sale.

(Id. ¶ 25.)

Speedfit then sent Woodway the specifications for the Curve,
along with the wooden version, for Woodway to duplicate in
metal.

(Id. ¶ 25.)

Around this time, Bayerlein confirmed to

Astilean that Woodway was still bound to the terms of the nondisclosure agreement.

(Id.)

In January 2009, before Woodway’s metal prototype of
the Curve was ready, Speedfit introduced the wooden version of
the Curve at a Discovery Channel program.

(Id. ¶ 26.)

The

metal version was completed in February 2009 and was named
“‘SpeedFit Speedboard’ by Woodway, SpeedFit Trade name.”
27.)

(Id. ¶

Woodway would later rename the product as the “Woodway

Curve,” though the “Curve,” “SpeedFit Speedboard,” and “Woodway
Curve” all refer to the same product design.

6

(Id.)

The SpeedFit Speedboard by Woodway was showcased at a
March 2009 fitness show and enjoyed immediate success, including
being featured in many print and online magazines and catalogs.
(Id. ¶ 28.)

In May 2009, Woodway provided Speedfit with a

“strategic evaluation agreement” (“SEA”), which acknowledged
Speedfit’s development of the Curve and entitlement to patent
the design, in an effort to secure a commercial interest in the
product.

(Id. ¶ 29.)

Speedfit refused to sign the agreement,

finding it unfair, but plaintiffs continued to discuss its terms
with Woodway in an effort to resolve the disagreement.
30.)

(Id. ¶

As recently as August 2009, Bayerlein wrote to Astilean

that the purpose of the agreement was to protect Astilean and
his invention.

(Id. ¶ 32.)

On March 17, 2009, and without Speedfit’s knowledge,
Bayerlein and other Woodway employees filed patent application
number 13/235,065 (the “‘065 Application”) with the PTO for a
leg-powered treadmill.

(Id. ¶ 31.)

The ‘065 Application

describes a “virtually identical leg powered treadmill.”
39; see Am. Compl. Ex. C.)

(Id. ¶

Plaintiffs allege on information and

belief that the ‘065 Application “was assigned to Woodway by the
purported inventors.”

(Id. ¶ 33.)

Plaintiffs further allege

that Woodway began manufacturing and selling the Curve without
the Speedfit logo in December 2010 and continues to manufacture
and sell the treadmill as its own product.

7

(Id. ¶ 34.)

Woodway

has not provided plaintiffs with any profits derived from the
sale of its non-motorized treadmills.
II.

(Id.)

Procedural History
Plaintiffs Speedfit and Astilean commenced this action

on March 11, 2013 against defendants Woodway and its president,
Bayerlein, seeking a declaratory judgment invalidating Woodway’s
‘065 Application or, alternatively, adding Astilean as an
inventor on the pending application.

The complaint also

included New York state law claims for breach of contract,
unjust enrichment, constructive trust, breach of fiduciary duty,
and conversion.

On May 13, 2013, defendants filed a pre-motion

conference letter in anticipation of filing a motion to dismiss
plaintiffs’ complaint for lack of subject matter jurisdiction.
(ECF No. 10, Letter re: Motion to Dismiss for Lack of
Jurisdiction.)

On May 16, 2013, plaintiffs responded to

defendants’ letter and indicated that they intended to amend
their complaint; subsequently, this court ordered plaintiffs to
file an amended complaint by June 15, 2013.

On May 17, 2013,

counsel for plaintiffs represented to counsel for Woodway that
plaintiffs planned to amend their complaint to claim that
Woodway’s treadmill infringes the ‘619 and ‘016 Patents.
On June 13, 2013, and before plaintiffs filed their
amended complaint in this case, Woodway commenced a declaratory
judgment action against Astilean in the United States District

8

Court for the Eastern District of Wisconsin, Case No. 13-cv-681,
(the “Wisconsin Action”), seeking a declaration that plaintiffs’
‘619 and ‘016 Patents are invalid or, in the alternative, a
correction of the ‘619 and ‘016 Patents to name the relevant
Woodway employees as co-inventors.2

Astilean and Speedfit filed

their amended complaint in this action on June 17, 2013, which
added allegations that Woodway infringed the ‘619 and ‘016
patents and dropped the claim for declaratory judgment relating
to the ‘065 Application.

Woodway served the instant motion on

plaintiffs on September 27, 2013, seeking (1) dismissal of
plaintiffs’ patent infringement claims in favor of what Woodway
claims is the earlier-filed Wisconsin Action, or, in the
alternative, transfer to the Eastern District of Wisconsin
pursuant to the first-to-file rule and 28 U.S.C. § 1404(a), and
(2) dismissal of plaintiffs’ New York common law claims for
failure to state a claim.

(ECF No. 34-2, Mem. of Law in Support

2

Astilean moved to dismiss the Wisconsin Action (or, in the alternative,
transfer the Wisconsin Action to the Eastern District of New York) on
September 24, 2013. On December 18, 2013, Magistrate Judge William E.
Callahan, Jr. issued a decision denying Astilean’s motion to dismiss and
transfer and ordering that the Wisconsin Action be stayed pending this
court’s determination of which case should proceed. (See Decision and Order
Deny. Def.’s Mot. to Dismiss or to Transfer, ECF No. 13, Woodway USA, Inc. v.
Astilean, Case No. 12-cv-681 (E.D. Wis. Dec. 18, 2013).) Counsel for
plaintiffs notified the court of Magistrate Judge Callahan’s December 18
decision by letter filed on December 23, 2013, and counsel for defendants
responded to plaintiffs’ letter on December 24, 2013. (See ECF Nos. 37-38.)

9

of Woodway’s Mot. to Dismiss (“Mem.”).)3

The fully-briefed

motion was filed on November 9 and November 11, 2013.
DISCUSSION
I.

Motion to Dismiss in Favor of the Wisconsin Action
A.

Legal Standard
Federal Circuit law governs the application of the

first-to-file rule in patent cases.

See Futurewei Techs., Inc.

v. Acacia Research Corp., 737 F.3d 704, 708 (Fed. Cir. 2013)
(internal citations omitted).

The “first-to-file” rule counsels

that, absent special circumstances, only the first-filed action
should proceed when multiple lawsuits involving the same parties
and issues are pending in different jurisdictions.4

See

Genentech, Inc. v. Eli Lilly & Co., 998 F.2d 931, 937-38 (Fed.
Cir. 1993) (applying the rule to patent cases) abrogated on
other grounds, Wilton v. Seven Falls Co., 515 U.S. 277 (1995);

3

Defendant Bayerlein has not moved to dismiss plaintiffs’ Amended Complaint
at this time, pending plaintiffs potentially dismissing him voluntarily. He
reserves his right to move for dismissal for, inter alia, lack of personal
jurisdiction and improper venue. (See Mem. at 1 n.1.)
4

The threshold issue of which court should decide whether the first-to-file
rule should apply was thoroughly analyzed in Magistrate Judge Callahan’s
decision in the Wisconsin Action. “Leaving the decision of the ‘first to
file’ dispute to the court in which the first case was filed makes good
sense, as it establishes a ‘bright line rule’, which is as easy to apply as
it is to understand.” Kimberly-Clark Corp. v. McNeil-PPC, Inc., 260 F. Supp.
2d 738, 740 (E.D. Wis. 2003) (quoting Daimler-Chrysler Corp. v. General
Motors Corp., 133 F. Supp. 2d 1041, 1044 (N.D. Ohio 2001)); see also Silver
Line Bldg. Prods. LLC v. J-Channel Indus. Corp., -- F. Supp. 2d --, No. 13CV-6561, 2014 WL 1221338, at *6 (E.D.N.Y. Mar. 24, 2014) (noting that the
first-filed court should determine not only which forum is appropriate, but
which forum should determine the appropriate forum). Because plaintiffs in
this case filed their action first, this court will decide whether the firstto-file rule applies.

10

see also Emp’rs Ins. of Wausau v. Fox Entm’t Grp., Inc., 522
F.3d 271, 274-75 (2d Cir. 2008) (applying the rule in a nonpatent case).

The cases need not be identical for the first-to

file rule to apply, but they must have substantial overlap.

See

Futurewei Techs., 737 F.3d at 708 (citing Merial Ltd. v. Cipla
Ltd., 681 F.3d 1283, 1299 (Fed. Cir. 2012)).

The date that

complaint was filed is the relevant filing date, and it is in
the discretion of the district court to stay, transfer, or
dismiss the later-filed action.

See Merial, 681 F.3d at 1299.

The purpose of the first-to-file rule is to “avoid
conflicting decisions and promote judicial efficiency,” while
respecting principles of federal comity.
F.3d at 1299.

See Merial Ltd., 681

The rule is not absolute, however, and its

application is a matter within the district court’s discretion.
Futurewei Techs., 737 F.3d at 708.
The parties do not dispute that the pending actions
sufficiently overlap to warrant application of the first-to-file
rule.

Rather, as discussed below, defendants contend that only

the Amended Complaint in this action substantially overlaps with
the Wisconsin Action, and, therefore, the Wisconsin Action is
first-filed because it predates the Amended Complaint.

(See

Mem. at 13; Reply at 6 (“The cases only became substantially
similar once Plaintiffs amended their claims to add infringement
of the [‘619 and ‘016 Patents], which was after Woodway filed

11

its declaratory action in the Eastern District of Wisconsin on
these same patents.”).)

In response, plaintiffs assert that the

original complaint in this case was filed before the complaint
in the Wisconsin Action and, therefore, the present case is the
first-filed action; further, plaintiffs argue that the Amended
Complaint relates back to the original complaint in this action
under Federal Rule of Civil Procedure 15(c)(1)(b).

(ECF No. 35,

Mem. of Law of Pls. in Opp. to Pre-Answer Mot. to Dismiss
(“Opp.”) at 8.)

Thus, the court turns to the question of which

action was first-filed under the applicable doctrine.
In deciding which case was first-filed, this court
must determine whether the operative date in this case is the
date on which the initial complaint, including claims related to
Woodway’s ‘065 Patent Application, or the Amended Complaint,
including claims related to Astilean’s ‘619 and ‘016 Patents,
was filed.

The Second Circuit’s decision in Mattel, Inc. v.

Louis Marx & Co., 353 F.2d 421, 424 (2d Cir. 1965), is
instructive.5

In that case, the Second Circuit applied the

5

Woodway asserts that Second Circuit law does not apply to this analysis,
claiming that “Federal Circuit law governs whether a court should accept (or
decline) jurisdiction in an action for declaration of patent rights in view
of a later-filed suit for patent infringement.” (Mem. at 5 n.1 (citing
Elecs. for Imaging, Inc. v. Coyle, 394 F.3d 1341, 1345-46 (Fed. Cir. 2005).)
As noted above, Federal Circuit law generally governs application of the
first-to-file rule in patent cases; however, the court is not aware of any
Federal Circuit case addressing application of the rule to an amended
pleading with related but not identical claims, nor has Woodway cited any
such case. Under such circumstances, “district courts look to understandings
of the doctrine as developed generally in the federal courts.” Shire U.S.,
Inc. v. Johnson Matthey, Inc., 543 F. Supp. 2d 404, 408 (E.D. Pa. 2008).

12

first-filed rule in favor of a plaintiff that had amended its
complaint to include issues that the defendant had raised in a
later-filed suit in another district.

Id.

In so ruling, the

court noted that the first-filed action was the one that brought
both parties into court and “made possible the presentation of
all the issues,” even though the trademarks and patents alleged
to have been infringed in the second-filed action were not at
issue in the first-filed action until the amendment of the
complaint.

Id.

The court concluded:

The fact that these issues were not all spelled
out in the New Jersey action until Marx had
amended its complaint is immaterial. Marx amended
its complaint as of right as allowed by Rule 15,
Federal Rules of Civil Procedure. Thus, the New
Jersey suit was the first suit which made
possible the presentation of all the issues and
which, by amendment of the complaint did raise
all the substantial issues between the parties.
Id.
District courts applying the first-to-file rule to
disputes, where the competing cases involve claims that are not
identical or “mirror images” (i.e., a patent infringement claim
and declaration of invalidity claim concerning the same patent)
prior to amendment of the first-filed complaint, have taken an
approach similar to the Mattel court’s in both patent and nonpatent cases.

See, e.g., GlycoBioSciences, Inc. v. Nycomed US,

Inc., No. 11-CV-1280, 2012 WL 540928, at *3 (E.D.N.Y. Feb. 15,
2012) (internal citation omitted) (patent case); AU Optronics

13

Corp. v. LG.Philips LCD Co., No. 07-C-137-S, 2007 WL 5613513, at
*3 (W.D. Wis. May 30, 2007) (patent case); GT Plus, Ltd. v. JaRu, Inc., 41 F. Supp. 2d 421, 424 (S.D.N.Y. 1998) (contract and
unfair competition case); see also Versus Tech., Inc. v.
Hillenbrand Indus., Inc., No. 04-CV-168, 2004 WL 3457629, at *78 (W.D. Mich. Nov. 23, 2004) (finding that first-to-file rule
should apply to two cases involving different patents that
involved similar technology).
Here, although the Wisconsin Action was the first to
assert a claim involving plaintiffs’ ‘619 and ‘016 Patents, this
case was the first to bring the parties into court and allow for
the presentation of all claims relating to the inventorship of
the Curve treadmill.

Woodway does not dispute plainitffs’

assertion that it could have filed a counterclaim in the action
before this court, asserting the same claims as it did in its
Wisconsin Action.

Accordingly, the court disagrees with

Woodway’s argument that the Wisconsin Action was first-filed
because the actions “only became substantially similar once
Plaintiffs amended their claim.”

(Mem. at 6.)

This case, from

its commencement, involved Speedfit, Astilean, Woodway, the
joint development of the treadmill technology relating to both
Woodway’s ‘065 Patent Application and Astilean’s ‘619 and ‘016
Patents, and the parties’ rights concerning that technology.
Application of the first-filed rule in favor of the present

14

action is therefore proper because the two cases sufficiently
overlapped even prior to the amendment of the complaint in this
action.6

See GlycoBioSciences, 2012 WL 540928, at *3 (applying

the first-filed rule in favor of an amended complaint where the
claims in the original and amended complaints involved identical
parties and arose “out of the same allegedly infringing
conduct”).
Woodway cites to one decision from the Northern
District of California in support of its position that this case
should be deemed later-filed because the patent infringement
claims appear in an amended pleading.

In its reply, Woodway

argues that Diablo Techs., Inc. v. Netlist, Inc., 13-CV-3901YGR, 2013 WL 5609321 (N.D. Cal. Oct. 11, 2013), counsels
dismissal of this action in favor of the Wisconsin Action.

In

Diablo, a later-filed declaratory judgment before the district
court was found to be first-filed in comparison to an amended
complaint pending in the Central District of California.7
3.

Id. at

The court reasoned that the original complaint filed in the

6

The fact that plaintiffs substituted their claim for correction of
defendants’ ‘065 Patent Application with their claims for infringement of
plaintiffs’ ‘619 and ‘016 Patents, instead of amending the complaint to
include both sets of claims, as the Mattel defendant did, is immaterial; the
court finds that the filing of this case was the operative action taken by
plaintiffs to bring the parties and their disputes before this court.
7

Although Woodway states that the Diablo court “concluded that the amended
complaint did not relate back to the original complaint” (Reply at 6), the
district court did not appear to rely on the relation back doctrine in
reaching its decision.

15

Central District could not be considered “the ‘first’ complaint
with respect to the issues and parties of concern” because (1)
it did not include any allegations regarding the particular
patents later at issue or any patent infringement claims, and
(2) the plaintiff in the Northern District case was not a party
to the original Central District complaint.8

Id.

The court

finds that this case does not present sufficiently similar facts
to warrant reliance on Diablo.

Here, all of the parties in the

Wisconsin Action were parties to the original complaint in this
case.

Furthermore, the original complaint in this case alleged

facts involving the development and inventorship of the Curve
and included claims regarding Woodway’s patent application of
related technology.

Thus, the court finds that this case was

the first to bring the parties and issues into court and, thus,

8

Although the original Central District complaint mentioned the patent at
issue in the Northern District litigation, it included only antitrust, unfair
competition and fraud claims and “did not bring any claims related to patent
infringement or validity, did not name Diablo, and did not reference the
accused ULLtraDIMM product.” Id. at 1.

16

is the first-filed action.9
Even if the claims in the originally-filed complaint
in this action are not considered sufficiently similar to the
claims in the Wisconsin Action, this case is the first-filed
action because the Amended Complaint relates back to the
original complaint under Federal Rule of Civil Procedure
15(c)(1)(B).

An amended pleading relates back to the date of

the originally-filed pleading when “the amendment asserts a
claim or defense that arose out of the conduct, transaction, or
occurrence set out . . . in the original pleading.”

Fed. R.

Civ. P. 15(c)(1)(B); see also ASARCO LLC v. Goodwin, 756 F.3d
191, 202 (2d Cir. 2014).

“[T]he central inquiry is whether

adequate notice of the matters raised in the amended pleading

9

Defendant’s contention in its reply brief that plaintiffs would gain a
litigation advantage if the court finds this action to be first-filed because
they would benefit from an earlier filing date by amending deficient claims
in response to viable claims brought by Woodway in the Wisconsin Action is
disingenuous. As an initial matter, Woodway’s assertion that the original
complaint failed to establish subject matter jurisdiction is unsupported; at
minimum, the original complaint asserted claims against diverse parties, and
any ambiguity as to the diversity of citizenship was cured by the Amended
Complaint. See Compl. ¶¶ 2-5; Am. Compl. ¶¶ 3-6; see also Herrick Co. v. SCS
Commc'ns, Inc., 251 F.3d 315, 329 (2d Cir. 2001) (“where the facts necessary
to the establishment of diversity jurisdiction are subsequently determined to
have obtained all along, a federal court may simply allow a complaint to be
amended to assert those necessary facts and then treat diversity jurisdiction
as having existed from the beginning”). Furthermore, as Woodway details in
its motion, “Woodway believed in good faith that Mr. Astilean would sue
Woodway for infringement of the ‘619 and ‘016 patents. As a result, on June
13, 2013, Woodway filed a declaratory judgment action against Mr. Astilean in
the United States District Court for the Eastern District of Wisconsin . . .
.” (Mem. at 5.) Woodway candidly admits that it filed the declaratory
judgment action in Wisconsin after this court granted plaintiffs leave to
file an amended complaint by a specific date. Thus, Woodway ostensibly hoped
to gain a litigation advantage by bringing its anticipatory declaratory
judgment action in its preferred venue to the exclusion of plaintiffs’
earlier-filed action, as amended.

17

has been given to the opposing party . . . by the general fact
situation alleged in the original pleading” for purposes of the
statute of limitations or other provision.

See ASARCO, 756 F.3d

at 202.
Plaintiffs’ initial declaratory judgment claims
regarding the ‘065 Patent Application and patent infringement
claims concerning the ‘619 and ‘016 Patents arise out of same
allegedly infringing course of conduct by defendants.

See,

e.g., GlycoBioSciences, 2012 WL 540928, at *3; Barnes & Noble,
Inc. v. LSI Corp., 823 F. Supp. 2d 980, 990-91 (N.D. Cal. 2011)
(holding that an amended complaint with new invalidity and noninfringement claims related back because new patents named in
the amended complaint involved similar technology and components
as those named in the original complaint); see also Nat’l Foam,
Inc. v. Williams Fire & Hazard Control, Inc., No. 97-3105, 1997
WL 700496, at *4-5 (E.D. Pa. Oct. 29, 1997) (finding that a
subsequently-filed amendment related back to the original
complaint in the first-filed case because the new claims raised
similar issues to those initially presented).

Furthermore, it

is undisputed that Speedfit provided Woodway’s counsel with
notice of their intent to file an amended complaint that
included patent infringement claims on the ‘619 and ‘016
Patents.

Woodway offers no explanation or authority for its

argument that plaintiffs’ patent infringement claims do not

18

relate back to the originally-filed complaint; thus, the patent
infringement claims in the Amended Complaint are deemed to
relate back to the filing of the original complaint in this
action on March 11, 2013.
Applying the principles above, the court finds that
because this action was filed on March 11, 2013, the claims in
the Amended Complaint are first-filed in comparison to the
Wisconsin Action, filed on June 13, 2013.

Accordingly,

Woodway’s motion to dismiss the patent infringement claims in
favor of the Wisconsin Action is denied.
II.

Motion to Transfer
Having determined that this case is the first-filed

action, the court turns to whether it should transfer the case
to the Eastern District of Wisconsin pursuant to factors
outlined in 28 U.S.C. § 1404(a).10
this determination.

Second Circuit law governs

See Audiovox Corp. v. S. China Enter.,

Inc., No. 11-CV-5142, 2012 WL 3061518, at *6 n.4 (E.D.N.Y. July
26, 2012) (citing Children's Network, L.L.C. v. PixFusion
L.L.C., 722 F. Supp. 2d 404, 409 n.2 (S.D.N.Y. 2010)).
“For the convenience of parties and witnesses, in the
10

Plaintiffs contend that a motion to transfer is not properly before the
court because Woodway did not include a motion to transfer in its pre-motion
conference letter. As previously discussed, Woodway also failed to provide
any notice of motion regarding their request to transfer venue. Nonetheless,
because courts deciding whether departure from the first-to-file rule is
warranted apply the convenience factors under 28 U.S.C § 1404(a), the court
finds it appropriate to decide whether to transfer this case to the Eastern
District of Wisconsin in connection with Woodway’s motion to dismiss.

19

interest of justice, a district court may transfer any civil
action to any other district or division where it might have
been brought.”

28 U.S.C. § 1404(a).

Generally, plaintiff’s

forum choice “should not be disturbed unless the balance of
factors tips decidedly in favor of a transfer.”

Audiovox Corp.,

2012 WL 3061518, at *8 (internal citations and quotation marks
omitted).
Courts have broad discretion to transfer cases on an
individualized, case-by-case basis.

D.H. Blair & Co. v.

Gottdiener, 462 F.3d 95, 106 (2d Cir. 2006) (citing In re
Cuyahoga Equip. Corp., 980 F.2d 110, 117 (2d Cir. 1992)).

In

considering a motion to transfer venue, the court must
determine: (1) whether the action could have been brought
originally in the proposed transferee district, and (2) whether
transfer is justified in the interest of justice and convenience
of the parties.

Audiovox Corp., 2012 WL 3061518, at *8 (citing

Excelsior Designs, Inc. v. Sheres, 291 F. Supp. 2d 181, 185
(E.D.N.Y. 2003)).

The moving party bears the “burden of making

out a strong case for transfer” by clear and convincing
evidence.

N.Y. Marine & Gen. Ins. Co. v. Lafarge N. Am., Inc.,

599 F.3d 102, 113-14 (2d Cir. 2010)).
In determining whether a motion to transfer venue
should be granted, courts consider the following factors:
(1) the plaintiff's choice of forum, (2) the

20

convenience of witnesses, (3) the location of relevant
documents and relative ease of access to sources of
proof, (4) the convenience of parties, (5) the locus
of operative facts, (6) the availability of process to
compel the attendance of unwilling witnesses, [and]
(7) the relative means of the parties
Audiovox Corp., 2012 WL 3061518, at *7 (citing D.H. Blair & Co.,
462 F.3d at 106-107).

Additionally, courts may consider trial

efficiency, court congestion, relative familiarity of the courts
with applicable law, and any local interest in having a
controversy decided in a particular district.

See Pergo, Inc.

v. Alloc, Inc., 262 F. Supp. 2d 122, 129 (S.D.N.Y. 2003)
(internal citations omitted).
The parties do not dispute that this action could have
been brought initially in the Eastern District of Wisconsin.
(See Opp. at 12; Mem. at 15.)

The court therefore turns to the

discretionary factors in assessing whether to transfer this
case.
A.

Plaintiffs’ Choice of Forum
Plaintiffs chose to bring this action in the Eastern

District of New York.

A plaintiff’s choice of forum is “given

great weight,” D.H. Blair & Co, 462 F.3d at 107, but the weight
given to plaintiff’s choice is diminished where the operative
facts are not meaningfully connected the chosen forum or where
plaintiff does not reside in the chosen forum, see EasyWeb
Innovations, LLC v. Facebook, Inc., 888 F. Supp. 2d 342, 348-49

21

(E.D.N.Y. 2012) (internal citations omitted).

Speedfit is a New

York corporation (Am. Compl. ¶ 3), and its sole principal,
Astilean, resides in East Hampton, New York (Id. ¶ 4).
Woodway cites to Capitol Records, LLC v. VideoEgg,
Inc., 611 F. Supp. 2d 349 (S.D.N.Y. 2009), in support of its
argument that the operative facts in this case did not occur in
the Eastern District of New York.

While the court in Capitol

Records gave less emphasis to the plaintiffs’ choice of forum,
the plaintiffs in that case were “major record companies and
music publishers,” three of which were California corporations,
and two of which were already litigating other matters in the
proposed transferee district.

Id. at 354, 367.

As discussed in

greater detail below, however, courts in this district have held
that the operative facts in a patent infringement case are
materially related to the site where the patented technology was
developed――in this case, Long Island, New York, as alleged by
plaintiffs.11

See EasyWeb Innovations, 888 F. Supp. 2d at 350.

Accordingly, plaintiffs’ choice of forum is given great
deference.
B.

See id.

Convenience of the Witnesses
“The convenience of the witnesses is probably the

single most important factor in the transfer analysis.”
11

Neil

“For purposes of ruling on a motion to transfer venue, the Court accepts all
factual allegations of the complaint as true.” Bossom v. Buena Cepa Wines,
LCC, 11 CV 6890 VB, 2011 WL 6182368, at *1 (S.D.N.Y. Dec. 12, 2011).

22

Bros. v. World Wide Lines, Inc., 425 F. Supp. 2d 325, 329
(E.D.N.Y. 2006).

The party seeking transfer typically submits

an affidavit listing “the potential principal witnesses expected
to be called and . . . the substance of their testimony.”

Pall

Corp. v. PTI Techs., Inc., 992 F. Supp. 196, 198 (E.D.N.Y. 1998)
(internal citations omitted).
At this stage of the litigation, the court finds this
factor to be neutral.

In its reply memorandum, Woodway states

that it expects “a number of witnesses, including third-party
witnesses” to testify, all of whom reside in Wisconsin.
at 8.)

(Reply

Woodway expects to call at minimum the seven inventors

listed on the ‘065 Patent Application (id.), but has not
submitted an actual witness list.

On the other hand,

plaintiffs, as the non-moving party, have not identified
principal witnesses, other than Mr. Astilean who resides in this
district and would be inconvenienced by travel to Wisconsin.
See EasyWeb Innovations, 888 F. Supp. 2d at 351-52; see also Orb
Factory, Ltd. v. Design Sci. Toys, Ltd., 6 F. Supp. 2d 203, 208–
09 (S.D.N.Y. 1998) (“Vague generalizations and failure to
clearly specify the key witnesses to be called, along with a
statement concerning the nature of their testimony, are an
insufficient basis upon which to grant a change of venue under §
1404(a).”).
The court therefore concludes that this factor is

23

neutral.

Even if the court assumes, however, that this factor

favors transfer given the number of Wisconsin witnesses Woodway
intends to call, the court finds that the other factors, on
balance, weigh against transfer.
C.

Locus of Operative Facts
“[I]n patent cases, the locus of operative facts can

include the district where either the patent-in-suit or the
allegedly infringing product was designed, developed, and
produced.”

EasyWeb Innovations, 888 F. Supp. 2d at 354; but see

Whitehaus Collection v. Barclay Prods., Ltd., No. 11 Civ. 217,
2011 WL 4036097, at *2 (S.D.N.Y. Aug. 29, 2011) (quoting
Bristol–Myers Squibb Co. v. Andrx Pharms., LLC, No. 03 Civ.
2503(SHS), 2003 WL 22888804, at *3 (S.D.N.Y. Dec. 5, 2003)) (“In
a patent infringement action, the locus of operative facts is
the jurisdiction where the design and development of the
infringing patent occurred.”).
Speedfit asserts that it designed and developed its
leg-powered treadmill in the Eastern District of New York.
Opp. at 4-6, 13.)

(See

Woodway states, meanwhile, that the allegedly

infringing product was designed and developed in the Eastern
District of Wisconsin.

Def. Mem. at 17.

Both districts are

materially connected to the operative facts in this case;
therefore, this factor is neutral.
F. Supp. 2d at 353-54.

24

See EasyWeb Innovations, 888

D.

Location of Evidence
Woodway contends that this factor supports transfer to

the Eastern District of Wisconsin because “the majority of the
documents and evidence” are located in that district.
16.)

(Mem at

With regard to documents, their physical location is of

little consequence.

“[I]t has been repeatedly noted that ‘[i]n

in an era of electronic documents, easy copying and overnight
shipping, this factor assumes much less importance than it did
formerly.’”

Mazuma Holding Corp. v. Bethke, No. 13-CV-6458,

2014 WL 814960, at *20 (E.D.N.Y. Mar. 3, 2014) (quoting ESPN,
Inc. v. Quiksilver, Inc., 581 F. Supp. 2d 542, 548 (S.D.N.Y.
2008)).
Woodway argues that the costs of shipping physical
evidence (i.e., treadmills) from Wisconsin would be an
unnecessary burden.

Although the presence of physical evidence

in the Eastern District of Wisconsin may weigh slightly in favor
of transfer, see Int'l Commodities Exp. Corp. v. N. Pac. Lumber
Co., 737 F. Supp. 242, 246 (S.D.N.Y. 1990), Woodway does not
address the fact that it routinely sells and ships treadmills
nationwide and internationally. (See Am. Compl. at ¶ 5.)

Absent

a more detailed showing of Woodway’s burden, this factor is
neutral and given little weight.
WL 814960, at *20.

25

Cf. Mazuma Holding Corp., 2014

E.

Convenience of the Parties
Both plaintiffs and Woodway argue that they would be

inconvenienced by having to appear in this action should it
proceed outside of their home districts.

“While transfer is

disfavored when it ‘merely shift[s] the inconvenience from one
party to the other,’ . . . it ‘may be appropriate where
inconvenience for the party moving for transfer could be
completely eliminated without substantially adding to the
nonmoving party's inconvenience.’”

JetBlue Airways Corp. v.

Helferich Patent Licensing, LLC, 960 F. Supp. 2d 383, 399
(E.D.N.Y. 2013) (internal citations omitted).

Transfer to the

Eastern District of Wisconsin might completely eliminate
Woodway’s burden (see Mem. at 15-16), but only by shifting that
burden entirely to Speedfit and Astilean (see Opp. at 13).
F.

Availability of Process to Compel the Attendance of
Witnesses
Woodway argues that the availability of compulsory

process supports transfer.

Without the identification a witness

who would be unwilling to testify in the Eastern District of New
York, however, this factor does not favor transfer.

See JetBlue

Airways Corp., 960 F. Supp. 2d at 400; EasyWeb Innovations, 888
F. Supp. 2d at 354.

Moreover, as often occurs with out-of-state

witnesses located beyond the court’s compulsory process, witness
depositions could be used at trial if the witness is determined

26

to be unavailable.
G.

Fed. R. Civ. P. 32(a)(4).

The Relative Means of the Parties
Plaintiffs argue that this factor weighs against

transfer, because Speedfit is “a small local business with one
principal.”

(Opp. at 13.)

A party opposing transfer because of

inadequate means “‘must offer documentation to show that
transfer . . . would be unduly burdensome to his finances.’”
See Mazuma Holding Corp., 2014 WL 814960, at *21-22; TouchTunes
Music Corp. v. Rowe Int'l Corp., 676 F. Supp. 2d 169, 176
(S.D.N.Y. 2009).

Because plaintiffs have not supplied the court

with any documentation showing that transfer would be
financially burdensome, this factor is neutral.
H.

Other Factors and the Interests of Justice
The Eastern District of New York and the Eastern

District of Wisconsin are equally familiar with the federal
patent law underlying this dispute.

See JetBlue Airways Corp.,

960 F. Supp. 2d at 400 (citing Recoton Corp. v. Allsop, Inc.,
999 F. Supp. 574, 578 (S.D.N.Y. 1998)).
therefore neutral.

Id.

This factor is

The court’s exercise of supplemental

jurisdiction over plaintiffs’ New York common law claims is also
neutral, given that the district court in Wisconsin is capable
of applying New York law.
The median time from filing to disposition of civil
cases is 8.7 months in the Eastern District of New York,

27

compared to 6.2 months in the Eastern District of Wisconsin.
(See Mem. at 17 (citing Administrative Office of the United
States Courts, Judicial Business of the United States Courts,
available at http://www.uscourts.gov/uscourts/Statistics/
JudicialBusiness/2013/appendices/C05Sep13.pdf)).

This factor

weighs in favor of transfer, but only minimally.

See In re

Hanger Orthopedic Grp., Inc. Sec. Litig., 418 F. Supp. 2d 164,
171 (E.D.N.Y. 2006) (holding that only “minimal weight” should
be afforded to this factor given a difference in median
disposition time of 2.7 months).

Furthermore, given that Judge

Callahan has stayed the Wisconsin Action pending this court’s
determination “regarding which case should proceed,” Woodway’s
argument that trial efficiency necessitates transfer (Mem. at
18) is inapposite.
On balance, the factors used to determine whether
motions to transfer venue should be granted are generally
neutral and do not strongly favor Woodway.

Therefore, the court

gives deference to plaintiffs’ choice of forum and respectfully
declines to transfer this action to the Eastern District of
Wisconsin.
III. Motion to Dismiss Plaintiff’s State Law Claims
A.

Standard of Review
Pursuant to Rule 12(b)(6), a pleading may be dismissed

for “failure to state a claim upon which relief can be granted.”

28

Fed. R. Civ. P. 12(b)(6).

“To survive a motion to dismiss, 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) (quoting

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).

“A claim

has facial plausibility when the plaintiff pleads factual
content that allows the court to draw the reasonable inference
that the defendant is liable for the misconduct alleged.”
(citing Twombly, 550 U.S. at 556).

Id.

“Threadbare recitals of the

elements of the cause of action, supported by mere conclusory
statements, do not suffice”; “[w]hile legal conclusions can
provide the framework of a complaint, they must be supported by
factual allegations.”
B.

Id. at 678-79.

Breach of Contract
Woodway argues that plaintiffs have failed to meet the

minimum pleading threshold for their breach of contract claim.
To state a claim for breach of contract under New York law,
plaintiffs must allege “(1) the existence of an agreement, (2)
adequate performance of the contract by the plaintiff, (3)
breach of contract by the defendant, and (4) damages.”

Harsco

Corp. v. Segui, 91 F.3d 337, 348 (2d Cir. 1996) (internal
citations omitted).

“While these elements need not be

separately pleaded, failure to allege them will result in
dismissal.” James v. Countrywide Fin. Corp., No. 10 Civ. 4953,

29

2012 WL 359922, at *22 (E.D.N.Y. Feb. 22, 2012) (citation and
internal quotation marks omitted).

“Courts have generally

recognized that relatively simple allegations will suffice to
plead a breach of contract claim even post-Twombly and Iqbal.”
Comfort Inn Oceanside v. Hertz Corp., No. 11–CV–1534, 2011 WL
5238658, at *7 (E.D.N.Y. Nov. 1, 2011).
Plaintiffs have adequately pled the existence of an
agreement between plaintiffs and Woodway.

“In order to

adequately allege the existence of an agreement, a plaintiff
must plead the provisions of the contract upon which the claim
is based.

A plaintiff need not attach a copy of the contract to

the complaint or quote the contractual provisions verbatim,” but
“must at least set forth the terms of the agreement upon which
liability is predicated by express reference.”

James, 2012 WL

359922, at *22 (quoting Howell v. Am. Airlines, Inc., No. 05
Civ. 3628, 2006 WL 3681144, at *3 (E.D.N.Y. Dec. 11, 2006)).
Plaintiffs have alleged that the second non-disclosure agreement
signed by Speedfit and Woodway included terms providing for
Speedfit’s ownership of its designs and any prototypes Woodway
was to build from those designs, as well as non-disclosure of
any information provided to Woodway from Speedfit.
Compl. ¶ 17.)

(See Am.

In addition, plaintiffs have pled facts

concerning the circumstances under which the contracts were
formed in 2003 and 2005.

(See id. ¶¶ 14-17, 25.)

30

The Amended Complaint also avers that plaintiffs
performed under the alleged agreements by providing Woodway with
treadmill designs and specifications (see id. ¶¶ 17-28) and that
Woodway breached the agreement by selling the treadmill
allegedly designed by Speedfit to the public as Woodway’s own
creation and applying to obtain a patent for its design (Id. ¶
48).

Although defendant argues that the provisions plaintiffs

identify did not prevent Woodway from “independently developing
improvements and enhancements to the publicly known, basic
concept of a manual treadmill, which is exactly what Woodway
did” (Mot. at 9), the court’s role at this stage of the
litigation is to determine whether the allegations in the
Amended Complaint state the essential elements for a breach of
contract claim, not to look into the merits of plaintiffs’ case.
Finally, plaintiffs allege that they were damaged in the amount
of Woodway’s profit from its breach, or the sale of the Woodway
Curve.

(Id. ¶ 49)

Thus, the court finds that plaintiffs’

allegations in the Amended Complaint, taken as true, are
sufficient to state a plausible claim for breach of contract,
and defendant’s motion to dismiss the breach of contract claim
is denied.
C.

Unjust Enrichment and Constructive Trust
Plaintiffs also bring claims for unjust enrichment and

imposition of a constructive trust against Woodway.

31

To state a

claim for unjust enrichment under New York law, a plaintiff must
allege (1) “that the defendant was enriched at the plaintiff’s
expense” and (2) “that equity and good conscience require the
plaintiff to recover the enrichment from the defendant.”
Giordano v. Thomson, 564 F.3d 163, 170 (2d Cir. 2009) (internal
citations omitted).

A cause of action for unjust enrichment

sounds in quasi-contract and cannot lie where an enforceable
contract governs the disputed matter.

See Labajo v. Best Buy

Stores, L.P., 478 F. Supp. 2d 523, 530-31 (S.D.N.Y. 2007)
(internal citations omitted).

Where there is a bona fide

dispute regarding the existence of a contract, however, both an
unjust enrichment and a breach of contract claim may be pled.
Id. (internal citations omitted).
While plaintiffs’ unjust enrichment claim is derived
from the same set of facts as plaintiffs’ breach of contract
claim, plaintiffs may plead alternative theories of liability at
this stage because Woodway disputes the existence of an

32

agreement.12

See ESI, Inc. v. Coastal Power Prod. Co., 995 F.

Supp. 419, 436 (S.D.N.Y. 1998) (denying motion to dismiss unjust
enrichment claim where the defendant contested the validity and
enforceability of the contracts covering the dispute as issue);
see also Fed. R. Civ. P. 8(e)(2) (permitting alternative
pleading).

Woodway cites no authority for its argument that

plaintiffs must state in the Amended Complaint that their unjust
enrichment claim is pled in the alternative for the claim to be
sustained.

(See Reply at 3.)

Plaintiffs have alleged that

Woodway benefitted at the expense of Speedfit and Astilean
through Woodway’s purported co-opting of plaintiffs’ designs,
and the facts as alleged support an inference that equity and
good conscience necessitate that plaintiffs recover the alleged
benefit wrongly realized by Woodway.

Thus, plaintiffs’ unjust

enrichment claim may proceed.
The elements of a constructive trust claim are “(1) a
confidential or fiduciary relationship; (2) a promise, express
12

The cases cited by Woodway in support of its argument that plaintiffs may
not bring claims for unjust enrichment or constructive trust alongside a
breach of contract claim each involved an uncontested operative contract
pertaining to the dispute at issue. See Sundahl v. State Farm Mut. Auto Ins.
Co., No. 08-cv-1342, 2009 U.S. Dist. LEXIS 68093, at *25-27 (E.D.N.Y. Mar.
31, 2009) (dismissing unjust enrichment claim “relat[ing] specifically to the
legal obligations created by the insurance policies with [defendant]”);
Spread Enters., Inc. v. First Data Merch. Servs. Corp., No. 11-CV-4743, 2012
WL 3679319, at *6 (E.D.N.Y. Aug. 22, 2012) (“In this case, there appears to
be no genuine dispute that the Merchant Agreement is a binding contract that
governs the claims at issue in the present case.”); N. Shipping Funds I, LLC
v. Icon Capital Corp., 921 F. Supp. 2d 94, 107 (S.D.N.Y. 2013) (dismissing
constructive trust claim because a valid agreement controlled the dispute at
issue and “there is no reason to believe that the legal remedy is inadequate
in this case”).

33

or implied; (3) a transfer made in reliance on that promise; and
(4) unjust enrichment.”

See Bankers Sec. Life Ins. Soc'y v.

Shakerdge, 49 N.Y.2d 939, 940 (1980).

The constructive trust

doctrine is equitable in nature and should not be “rigidly
limited” by the four elements.

In re Koreag, Controle et

Revision S.A., 961 F.2d 341, 352 (2d Cir. 1992).

At the motion

to dismiss phase, the district court’s focus is whether the
defendant was unjustly enriched.

State Farm Mut. Auto. Ins. Co.

v. Cohan, No. 12-CV-1956, 2013 WL 4500730, at *5 (E.D.N.Y. Aug.
20, 2013) (citing In re First Central Fin. Corp., 377 F.3d 209,
212 (2d Cir. 2004)).
Because plaintiffs have sufficiently pled unjust
enrichment against Woodway, the court denies Woodway’s motion to
dismiss plaintiffs’ constructive trust claim.

Plaintiffs allege

that they were in a confidential relationship with Woodway under
the non-disclosure agreements, which expressly or implicitly
represented a promise by Woodway not to disclose or use
plaintiffs’ designs without their consent.

Plaintiffs also

allege that they supplied proprietary information in reliance on
their agreement with Woodway.

Thus, while plaintiffs have not

traced a specific transfer of funds to Woodway, they have
alleged facts sufficient to state a plausible claim that they
are entitled to the proceeds from the sale of the Woodway Curve.
Cf. In re Koreag, 961 F.2d at 353 (“the absence of any one

34

factor will not itself defeat the imposition of a constructive
trust when otherwise required by equity”); Cohan, 2013 WL
4500730, at *5.

The court finds plaintiffs’ allegations

sufficient to state a claim for constructive trust.
D.

Breach of Fiduciary Duty and Conversion
Woodway argues that plaintiffs’ final state law claim,

breach of fiduciary duty and conversion, is barred by the
applicable statute of limitations and fails to state a claim.13
To state a cause of action for breach of fiduciary duty,
plaintiffs must allege “(i) the existence of a fiduciary duty;
(ii) a knowing breach of that duty; and (iii) damages resulting
therefrom.”

N. Shipping Funds I, 921 F. Supp. 2d at 101 (citing

Johnson v. Nextel Comms., Inc., 660 F.3d 131, 138 (2d Cir. 2011)
(internal quotation marks omitted).

“‘A fiduciary relationship

exists between two persons when one of them is under a duty to
act for or to give advice for the benefit of another upon
matters within the scope of the relation.’”

Id. (quoting Krys

v. Butt, 486 Fed. App’x 153, 154 (2d Cir. 2012)).

In most

cases, an arm’s-length commercial transaction will not give rise
to a fiduciary relationship absent “a higher level of trust.”
Id.

13

Although Woodway’s motion states that plaintiffs’ “claim for breach of
fiduciary duty and conversion should be dismissed,” Woodway argues only that
the breach of fiduciary duty claim is untimely and insufficiently pled. (See
Mem. at 10-12.) Accordingly, the court will not consider whether plaintiffs
have stated a claim for conversion.

35

“A breach of fiduciary duty claim must be dismissed as
duplicative of a breach of contract claim if the parties owe
each other no duty independent of the contract itself.”

Perkins

v. Am. Transit Ins. Co., No. 10 CIV. 5655, 2013 WL 174426, at
*10 (S.D.N.Y. Jan. 15, 2013) (internal citations omitted).

In

order to state a claim for breach of fiduciary duty independent
of a claim for breach of contract, the complaint must include
“allegations that, apart from the terms of the contract, the
parties created a relationship of higher trust than would arise
from their contracts alone.”

N. Shipping Funds I, 921 F. Supp.

2d at 105 (quoting Balta v. Ayco Co., 626 F. Supp. 2d 347, 36061 (W.D.N.Y. 2009)).
A claim for breach of fiduciary duty generally accrues
at the time of breach.

Malmsteen v. Berdon LLP, 369 Fed App’x

248, 249-50 (2d Cir. 2010) (citing Kaufman v. Cohen, 760
N.Y.S.2d 157, 166 n.3 (N.Y. App. Div. 1st Dep’t 2003)).

Under

New York law, a breach of fiduciary duty claim has a six-year
statute of limitations if the relief sought is equitable, and a
three-year statute of limitations if only money damages are
sought.

Id. at 249 (citing Weiss v. T.D. Waterhouse, 847

N.Y.S.2d 94, 95 (N.Y. App. Div. 2d Dep’t 2007)).

“However, New

York law permits certain actions for damages to property or
pecuniary interest to be brought under a tort or contract
theory, and hence applies the longer of the two statutes of

36

limitations, as long as the asserted liability has its genesis
in the contractual relationship of the parties.”

Id. at 250

(citations and some internal punctuation omitted).

The statute

of limitations for a breach of fiduciary duty claim sounding in
tort is three years when money damages are sought, but the
statute of limitations for a breach of fiduciary duty claim
sounding in contract is six years.

N.Y. C.P.L.R. § 213(2);

Malmsteen, 369 Fed App’x at 250.
Woodway contends that plaintiffs’ claim must be
dismissed under a three-year statute of limitations because
plaintiffs seek only money damages.

Plaintiffs argue that a

six-year statute of limitations applies because the substantive
remedy they seek is “breach of contract and/or unjust
enrichment,” and that their breach of fiduciary duty claim is
timely under either limitations period.

(Opp. at 20-21.)

Because the fiduciary duty alleged by plaintiffs arises from a
contractual relationship, the six-year statute of limitations
applies to plaintiffs’ claim.

See Ironshore Ins. Ltd. v. W.

Asset Mgmt. Co., No. 11 CIV. 5954, 2012 WL 1981477, at *4
(S.D.N.Y. May 30, 2012) (denying motion to dismiss breach of
fiduciary duty claim as time-barred where plaintiff’s claim
“ha[d] its genesis in a contractual relationship”).

As

defendant recognizes, the earliest allegation of breach in the
Amended Complaint is plaintiffs’ allegation that Woodway began

37

selling the Speedboard, a treadmill purportedly based on
Speedfit’s designs, after a trade show held in Spring 2007.
(See Opp. at 11; Am. Compl. ¶ 22.)

Plaintiff filed its original

complaint in the instant action on March 11, 2013; therefore,
any claim for breach of fiduciary duty would have had to accrue
by March 11, 2007.

Taking the facts alleged in the Amended

Complaint to be true, the court finds that plaintiffs’ claim for
breach of fiduciary duty is timely under the six-year statute of
limitations.
Although the breach of fiduciary duty claim is timely,
however, the court finds that plaintiffs have failed to
sufficiently allege the existence of a fiduciary relationship
other than the parties’ purported contractual obligations.

As

defendants note in their opposition brief, plaintiffs allege
only that “Defendants owed fiduciary duties to Plaintiffs.”
(Am. Compl. ¶ 61.)

From the facts alleged in the complaint

relating to the non-disclosure agreements, it can be inferred
that Woodway owed plaintiffs a duty not to disclose or otherwise
exploit plaintiffs’ treadmill designs.

Plaintiffs do not

allege, however, that the parties had a relationship of higher
trust independent of their obligations under the two nondisclosure agreements upon which plaintiffs rely.

Thus, the

breach of fiduciary duty claim must be dismissed.

Cf. N.

Shipping Funds I, 921 F. Supp. 2d at 105 (dismissing fiduciary

38

duty claim where the complaint’s allegations of a fiduciary
relationship related solely to the contract between the
parties).
CONCLUSION
For the reasons stated above, defendant Woodway’s
motions to dismiss or transfer plaintiffs’ patent infringement
claims in favor of the pending Eastern District of Wisconsin
action are denied.

Defendant’s motion to dismiss plaintiffs’

state law claims is denied as to the breach of contract, unjust
enrichment, constructive trust and conversion claims, and
granted as to the breach of fiduciary duty claim.

Defendants

shall answer the Amended Complaint within the time specified by
the Federal Rules.

Per Magistrate Judge Tomlinson’s September

3, 2014 Minute Order, counsel shall contact Judge Tomlinson’s
chambers within three days to set the remaining discovery
schedule.
SO ORDERED.
Dated:

October 10, 2014
Brooklyn, New York
_____________/s/_____________
Kiyo A. Matsumoto
United States District Judge

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