Stubby Strip, LLC v. Food Market Merchandising, Inc. et al

Filing 37

MEMORANDUM-DECISION and ORDER - ORDERED that defendants' motion to dismiss (Dkt. No. 13) is GRANTED and Stubby's complaint (Dkt. No. 1) is DISMISSED; and it is further ORDERED that Stubby's motion for leave to amend (Dkt. No. 22) isDENIED; and it is further ORDERED that the Clerk close this case. Signed by Senior Judge Gary L. Sharpe on 9/26/2016. (jel, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
________________________________
STUBBY STRIP, LLC,
Plaintiff,

5:15-cv-1410
(GLS/ATB)

v.
FOOD MARKET
MERCHANDISING, INC. et al.,
Defendants.
________________________________
APPEARANCES:
OF COUNSEL:
FOR THE PLAINTIFF:
Scalfone Law PLLC
247 West Fayette St., Suite 203
Syracuse, NY 13202
FOR THE DEFENDANTS:
Food Marketing Merchandising,
Inc., Reach Companies, LLC,
Affordable Natural, LLC, Magic
Straws, LLC, Convenience
Merchandising, LLC, Shatter
Marketing, Inc., Diversified
Consumer Goods, LLC, Jon
Tollefson, and Paul Henson
Christensen Law Office PLLC
800 Washington Avenue North
Suite 704
Minneapolis, MN 55401
Lee Palmateer Law Office LLC
90 State Street, Suite 700
Albany, NY 12207

MELODY DOMENICA
WESTFALL, ESQ.

CARL E. CHRISTENSEN, ESQ.

LEE PALMATEER, ESQ.

Jacquet, Inc.
Christensen Law Office PLLC
800 Washington Avenue North
Suite 704
Minneapolis, MN 55401

CARL E. CHRISTENSEN, ESQ.

Gary L. Sharpe
Senior District Judge
MEMORANDUM-DECISION AND ORDER
I. Introduction
Plaintiff Stubby Strip, LLC commenced this action against defendants
Food Marketing Merchandising, Inc. (FMMI), Reach Companies, LLC,
Affordable Natural, LLC, Magic Straws, LLC, Convenience Merchandising
LLC, Shatter Marketing, Inc., Jacquet, Inc., Diversified Consumer Goods,
LLC, Jon Tollefson, and Paul Henson, alleging claims of copyright
infringement and unfair competition.1 (Compl. ¶¶ 47-75, Dkt. No. 1.)
Pending are defendants’2 motion to dismiss, (Dkt. No. 13), and Stubby’s
motion for leave to amend the complaint, (Dkt. No. 22). For the reasons
1

Stubby labels a third cause of action for “Accounting.” (Compl. ¶¶ 76-77, Dkt. No. 1.)
An accounting is a form of equitable relief, not a claim. As such, there will be no analysis of
whether Stubby has stated a claim for an “accounting.”
2

Notably Jacquet is the only defendant that did not move to dismiss. For simplicity’s
sake and because dismissal is required as against all defendants anyway, the court will refer
to the motion to dismiss as being filed by defendants generally.

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that follow, defendants’ motion is granted and Stubby’s motion is denied.
II. Background3
In late 2014, Stubby and FMMI, through Henson, began negotiating
an agreement by which FMMI would distribute Stubby’s beverage holder
products. (Compl. ¶¶ 26-27.) After a tumultuous back-and-forth, FMMI
ultimately refused to enter into a distribution agreement, and, instead,
opted to send Stubby’s products to a Chinese manufacturer to be copied
and reproduced under different branding. (Id. ¶¶ 28-44.) FMMI eventually
launched products similar to Stubby’s, which it marketed as the “Bev
Barrel.” (Id. ¶ 45.) Defendants have used Stubby’s marketing materials,
including certain copyrighted photographs, samples, and business
strategies. (Id. ¶ 44.)
As a result of the foregoing, Stubby alleges that defendants are
infringing its copyright in the pictoral works used by defendants and unfairly
competing by using those same copyrighted images to the detriment of
Stubby. (Id. ¶¶ 47-75.)
III. Standard of Review

3

Unless otherwise noted, the facts are drawn from the complaint and presented in the
light most favorable to Stubby.

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A.

Motion for Leave to Amend
A party may amend its pleading before trial as a matter of course

under certain circumstances and within a certain time frame. See Fed. R.
Civ. P. 15(a)(1). Even though amendment as of right is no longer available
in this case because Stubby’s motion seeking leave to amend was filed
more than twenty-one days after defendants moved to dismiss under Rule
12(b), (compare Dkt. No. 13, with Dkt. No. 22), the rule provides that “[t]he
court should freely give leave when justice so requires” even in those
instances where a party may not amend as of right, Fed. R. Civ. P.
15(a)(2). Barring “futility, undue delay, bad faith or dilatory motive,
repeated failure to cure deficiencies by amendments previously allowed, or
undue prejudice to the non-moving party,” leave should generally be
granted. Burch v. Pioneer Credit Recovery, Inc., 551 F.3d 122, 126 (2d
Cir. 2008).
In addition to the foregoing, in this District, motions for leave to
amend are governed by Local Rule 7.1(a)(4), which requires the moving
party to attach an unsigned copy of the proposed amended pleading, with
either redline/strikeout or equivalent means to denote changes, to its
motion papers. The court always retains discretion to deny a motion for
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failure to comply with the Local Rules.
B.

Motion to Dismiss For Failure to State A Claim
The standard of review under Fed. R. Civ. P. 12(b)(6) is well

established and will not be repeated here. For a full discussion of the
standard, the court refers the parties to its prior opinion in Ellis v. Cohen &
Slamowitz, LLP, 701 F. Supp. 2d 215, 218 (N.D.N.Y. 2010), abrogated on
other grounds by Altman v. J.C. Christensen & Assocs., Inc., 786 F.3d 191
(2d Cir. 2015).
IV. Discussion
The court first addresses Stubby’s motion for leave to amend. For
the reasons explained below, that motion is denied. First, in an attorney
affidavit, Stubby’s counsel asserts that the only change sought relates to
paragraph fifty-two. (Dkt. No. 22, Attach. 1 ¶¶ 3-4.) However, the court,
which refuses to read the complaint and proposed amended complaint
line-by-line for their difference,4 has noticed other undisclosed changes.
For example, paragraph forty-four is different in the two documents.
Counsel further asserts that “[i]n preparing the Complaint . . . an oversight
4

This is the exact reason for Local Rule 7.1(a)(4)’s requirement that a red-lined version
of the proposed pleading be submitted in connection with a motion for leave to amend or that
some equivalent means for identifying proposed changes be included with the motion papers.

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was made in attaching a copyright license agreement granting a nonexclusive license,” (id. ¶ 5), suggesting that she intended to attach a
different document instead. Counsel then indicates that the documents
that should have been attached are an exclusive license and assignment
of rights, which came in to existence on February 26, 2016, some three
months after the complaint was filed. (Id.) How, pray tell, does one
mistakenly forget to attach a document to the complaint that did not exist at
the time the original complaint was filed? This kind of bogus response is
part-and-parcel of counsel’s conduct throughout this short-lived litigation.
Counsel’s first misstep relates to her failure to timely file a response
to defendants’ motion to dismiss. Defendants raised the issue in their reply
and requested that the court exclude the late response from consideration
consistent with the Local Rules. (Dkt. No. 23 at 1-2.) In recognition of the
fact that the filing was only one day late, the court reasonably permitted
counsel to make a showing of good cause that would excuse the late filing.
(Dkt. No. 28.) Counsel’s attempt to show good cause was her
“misinterpretation of the Local Rule” and corresponding miscalculation of
the response deadline. (Dkt. No. 29.) As the court then observed, such an
explanation was preposterous because a notice, which was electronically
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transmitted to counsel of record, was generated contemporaneously with
the filing of the motion to dismiss that included Stubby’s response
deadline. (Dkt. No. 31.) In any event, the court accepted the late
response and also noted another error of counsel in selecting a return date
for her motion for leave to amend that did not comport with the court’s
motion return calendar as set forth in General Order 25. (Id.)
All of this is to say that counsel has been less than careful in her
prosecution of this case, and the court, which would ordinarily give the
benefit of the doubt, cannot accept counsel’s claim that the reason for
amendment is to correct an “oversight.” (Dkt. No. 22, Attach. 1 ¶ 5.) That
bogus assertion is compounded by Stubby’s failure to abide by the Local
Rules in seeking leave to amend by: (1) failing to accurately identify the
changes in the proposed amended pleading; (2) failing to include a
memorandum of law; and (3) according to defendants, whom the court
credits, (Dkt. No. 33 ¶ 2; Dkt. No. 34 ¶ 7), failing to make a good faith effort
to resolve or reduce differences to a non-dispositive issue and seek a court
conference with the assigned Magistrate Judge regarding those issues.
See N.D.N.Y. L.R. 7.1(a)(4), (b)(2). For all of these reasons, the request
for leave to amend is denied.
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Turning to defendants’ motion, they make several arguments in
support of dismissal. (Dkt. No. 13, Attach. 1.) First, they contend that
Stubby has not stated a copyright claim because it has failed to allege valid
copyright and copyright ownership, which demonstrates that Stubby is
without standing, and also because Stubby failed to adequately plead the
identity of the infringer. (Id. at 4-8.) As for the unfair competition claim,
defendants assert that copyright infringement cannot serve as the basis for
such a claim. (Id. at 8.) Defendants also argue that Stubby has failed to
allege facts that support its alter ego theory, which requires dismissal of
the claims as against all parties other than FMMI. (Id. at 9.) Lastly,
defendants claim that personal jurisdiction is lacking with respect to Reach,
Affordable Naturals, Magic Straws, Convenience, Shatter, Diversified,
Tollefson, and Henson because, among other things, New York’s long-arm
statute has not been satisfied. (Id. at 9-13.)
In response to defendants’ arguments, Stubby asserts that it has
alleged sufficient facts to establish its alter ego theory, its allegations
adequately specify which of the defendants infringed, and that personal
jurisdiction is not lacking as to any defendant. (Dkt. No. 21.) Notably
absent from Stubby’s briefing is any argument responsive to defendants’
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contention that Stubby lacks standing with respect to its copyright claim or
that it has failed to state a claim for unfair competition.
Beginning with defendants’ standing argument, the court notes first
that Stubby’s failure to respond amounts to abandonment of the copyright
claim and consent to dismissal of it. See Lefevre v. Cty. of Albany, No.
1:14-cv-155, 2015 WL 1626005, at *3 (N.D.N.Y. Apr. 13, 2015). In any
event, Stubby is without standing to assert copyright infringement in the
pictorial works. While Stubby alleges that it “is the sole owner of” the
copyright in the pictoral works as the result of a transfer of ownership by
the original owner, (Compl. ¶¶ 49-52), a copyright license agreement,
which was attached to the complaint, demonstrates otherwise, (Dkt. No. 1,
Attach. 3). The agreement provides for a “non-exclusive commercial
license” and specifically reserves to the grantor of the license “all rights in
the copyrighted works.” (Id. at 1, 4.) Stubby, as a non-exclusive
licensee—with no ownership interest in the copyright—lacks standing to
sue others for infringement. See Davis v. Blige, 505 F.3d 90, 101 (2d Cir.
2007) (“A non-exclusive license conveys no ownership interest, and the
holder of a nonexclusive license may not sue others for infringement.”
(citation omitted)).
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Turning next to Stubby’s unfair competition claim, as with its failure to
address standing, its failure to respond to arguments regarding its second
cause of action likewise amounts to abandonment and consent to
dismissal. As an aside, it appears that Stubby’s “common law” unfair
competition claim is asserted pursuant to state common law for which the
court would decline to exercise supplemental jurisdiction having dismissed
the copyright claim.
V. Conclusion
WHEREFORE, for the foregoing reasons, it is hereby
ORDERED that defendants’ motion to dismiss (Dkt. No. 13) is
GRANTED and Stubby’s complaint (Dkt. No. 1) is DISMISSED; and it is
further
ORDERED that Stubby’s motion for leave to amend (Dkt. No. 22) is
DENIED; and it is further
ORDERED that the Clerk close this case; and it is further
ORDERED that the Clerk provide a copy of this MemorandumDecision and Order to the parties.
IT IS SO ORDERED.

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September 26, 2016
Albany, New York

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