Helios International SARL et al v. Cantamessa U.S.A., Inc. et al

Filing 18

OPINION re: 9 MOTION to Dismiss Notice of Partial Motion to Dismiss Plaintiffs' Complaint filed by Cantamessa U.S.A., Inc., Robert Kheit, Fabrizio Cantamessa. Upon the conclusions set forth above, the Defendants' partial motion to dismiss is granted in part and denied in part, and leave is given to replead within 20 days. (Signed by Judge Robert W. Sweet on 7/27/2013) (cd)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

---------------------------------- -X
HELlOS INTERNATIONAL S.A.R.L. and
IDEA ITALIANA s.r.l.,
Plaintiffs,
-against-

OPINION

CANTAMESSA USA, INC., FABRIZIO
CANTAMESSA, and ROBERT KHEIT,
Defendants.

----------------------------X
A P PEA RAN C E S:
Attorne

for Plaintif

OBERDIER RESSMEYER LLP
655 Third Avenue, 28th Floor
New York, NY 10017
By:
Carl W. Oberdier, Esq.
Kellen G. Ressmeyer, Esq.

Attorne

12 Civ. 8205

for Defendants

COWAN, LIEBOWITZ & LATMAN, P.C.

1133 Avenue of the Americas

New York, NY 10036

By:
J. Christopher Jensen, Esq.

Scott P. Ceresia, Esq.

Sweet, D.J.

Defendants Cantamessa USA,
Cantamessa and Robert Kheit
moved under Fed. R. C

Inc.,

Fabrizio

(collectively, "Defendants") have

P. 12 (b) (6)

partial dismissal of the complaint

("Rule 12 (b) (6)")

("Complaint")

plaintiffs Helios International S.A. R. L.
Italiana s.r.l.

("CUSA"),

r

filed by

("Helios") and Idea

("Idea" and collectively, "Plaintiffs").

In the Complaint, which was filed on November 9, 2012,
Plaintiffs have asserted the following causes of action:
violations of the Racketeer Influenced and Corrupt Organizations
Act ("RICO"), 18 U.S.C. § 1962 (Counts 1-4); copyright
infringement under the U.S. Copyright Act, 17 U.S.C. §§ 106(1)­
(3)

(Count 5) i trademark in

U.S.C. § 1125 (Count 6)
(Count 7) i

lse

i

ingement under the Lanham Act, 15

trademark dilution under the Lanham Act

signation under the Lanham Act

(Count 8);

cancellation of federal registration under the Lanham Act (Count
9); state statutory and common law trademark infringement under
the Trademark Act of New York, Gen. Bus. L. 360-1 and the common
law of each of the fi

y states (Count 10); conversion (Count

11); common law fraud (Count 12); trespass to chattels

(Count

13); breach of fiduciary duty (Count 14); misappropriation of
trade secrets

(Count 15); un

ir competition (Count 16); and

breach of the New York Consumer Protection Act

("NYCPA") § 349

(Count 17).

On January 18, 2013, Defendants submitted the instant
motion

r partial dismissal of

Complaint, which moved for

dismissal of the following c

ims:

(i) RICO (Counts 1-4);

trademark dilution (Count 7);

(iii) common law fraud (Count 12);

(i v) breach of fiduciary duty (Count 14);
misappropriation (Count 15); and (
(Count 17).

The motion was

(ii)

(v) trade secret

breach of the NYCPA § 349

rd and marked fully submitted on

March 13, 2013.

Based upon the conclusions set

rth below, the

Defendants' motion to dismiss is granted with respect to Counts
1-4, Count 7, Count 12, and Count 17, and denied with respect to
the ot

r counts.

The Facts

As required on a motion to dismiss pursuant to Rule
12(b) (6), the

s alleged in the Complaint, which are set

forth in pertinent part below, are presumed to be true, and all
factual inferences are drawn in t
v. Polar

plaintiffs' favor. See Mills

12 F.3dl170, 1174 (2dCir. 1993).

2

Plaintiffs are owners and distributors of the
Cantamessa brand of jewelry.
of jewel

was founded in

Compl.

~

2.

business began to
s.r.l.") was

Id. 1 3.

rship.

amessa line

lenza, Italy in 1939 by

Cantamessa family, and flourished for six
family's le

The

cades under t

However, in

early 2000s the

line, and in 2004 the company ("Cantamessa

ced to

kruptcy.

lare

Id.

In 2007, Cantamessa s.r.l.'s assets, incl
tangible assets, i.e.,
copyright

ng its

jewelry, and intangible assets, i.e.,

jewelry designs, the Cantamessa name and

Cantamessa "Crown Logo" trademark (collectively, t
"Intellectual Property"), were acquired by pla

1 4. In 2009, plaintiff Helios pu

iff I

Id.

sed Idea's entire

inventory of Cantamessa brand jewelry and entered into an
ive

stributorship agreement with Idea.

In December 2009, Hel

s ente

Id.

~

5.

into an agreement

defendant Fabrizio Cantamessa ("Cantamessa"), a grandson of
the founder of Cantamessa s.r.l., in which Cantamessa agreed to
act as Helios' global sales agent in connection with the
marketing and sale of Cantamessa brand jewelry, and was
authorized to use the Intellectual Property in that capacity.

3

Id. 'l1'l1 39-41.

Cantamessa was granted "unrestricted,

unsupervised access" to a warehouse in Geneva,

Switzerland

containing Cantamessa jewelry (the "Warehouse") and permission
to remove jewelry from the Warehouse, and also was given
"general authority to execute sales" of any Cantamessa jewelry
that he took from the Warehouse.

Id.

~~

6,

47.

The agreement

granted the same rights to Cantamessa's wife, non-party Paola
Brussino ("Brussino").

In 2010, defendant Robert Kheit

("Kheit"), a business

associate of Cantamessa, entered into an agreement with Helios
similar to the agreement between Helios and Cantamessa.
44-47.

1

Id.

~~

As with Cantamessa, Kheit was bestowed with

authorization to use the Intellectual Property in connection
with the marketing and sale of Cantamessa brand jewelry.

Id.

At some point in 2010, Cantamessa, who was "infuriated
and embittered by the loss of his family's jewelry business,"
secretly devised a plan with Kheit "to steal back from Helios

It is unclear from the Complaint whether Kheit's agreement was
made directly with Helios, or with Cantamessa acting as an agent
for Helios.
Regardless, the Complaint has alleged that Kheit
possessed the same authority and agency powers as Cantamessa,
see Compl. ~~ 47-48, so for the purposes of the instant motion,
it will be assumed that the nature of the relationship between
Helios and Kheit is functionally identical to that between
Helios and Cantamessa.
1

4

and Idea the entire

amessa brand,

dollars of inventory,
Cantamessa name."

Id.

jewel
~

including millions of

signs,

the Crown Logo and the

48.

In September 2010, t

s incorporated

De

defendant Cantamessa USA in New York and thereafter opened a
boutique located in New York
of

Y (t

red Cantamessa brand jewelry

"New York Boutique") that

r sa

Defendants used the Intellectual

~~

Id.

rty to market Cantamessa

jewelry in the United States, and Pia

iffs

alleged that

this included both authorized and unauthori
us

Id.

~

49, 63.

tances of

43.

From March 2010 through December 2010, Cantamessa and
sold approximately 125 pieces of Cantamessa jewelry having
an

te aggregate value of $1,757,484.00.

Pursuant to their respective agreements with

Id.

~

50.

aintiffs,

Cantamessa and Kheit were entitled to retain a total of

$236,380.95 as commission, and were required to
rema
ret

to Helios.

Id.

However, Cantamessa

the
it

$1,138,787.26, and remitted only $618,696.81 to Helios.

Id.

5

t
Defendants

185 pieces of Cantamessa jewel

Warehouse.
these p

beginning of 2011 through November 2011,

Id.

-55.

s

from t

Defendants subsequently sold many of

all of the sales proceeds for themselves.

Id.

During t

course of 2011,

efforts to publicize

Cantamessa brand by sending pieces of
United States and the world for

Cantamessa jewelry around t

sibility events.

use in high-profile and high
June 2011,

a

Defendants dona

use in a charity event he
fashion designer Valentino.

photo shoot of actress
In September 2011,

Id.

~~

72.

In

ir of Cantamessa earrings for
Paris,

Id.

France hosted by the

In July 2011,

several pieces of Cantamessa jewel

Id.

Defendants engaged in

Defendants sent

to California for use in a
r Vanity Fair magazine.

ay
De

s sent several pieces of

Cantamessa jewelry to Flori

use

supermodel Adriana Lima for Elle Magaz

a photo shoot of
Id.

In December

2011, Defendants sent several pieces of Cantamessa jewelry to
Philadelphia for use in a photo shoot of Melania Trump, wife of
Donald Trump,

for Philadelphia Style Magazine.

Id.

Also in 2011, Cantamessa and Kheit asked Helios
Idea to send approximately $5 million of jewelry to New York on

6

jewelry was to be used in a temporary

the premise that

exhibition (the "New York

ion") meant to publicize t

U.S. consumers.

Cantamessa jewelry line
shipping the jewel

cating t

t

t

subject to the usual taxes t
imported for commerc

1 sale.

~

Id.

58.

During the exhibition,

Intellectual Property,

including the Cantamessa name
the signage used to di

and therefore were not

t would be due on items being

Cantamessa and Kheit utiliz

Cantamessa Crown Logo, on

ay t

eces.

Defendants began sell

Id.

~79.

jewel

York Boutique and via the internet.

Id.

~

produce proof of the jewelry's return to Italy
of $27,452.61.

Id.

~

De

trademark registration applications to the Un
("USPTO")

cIa

t

t

failure to
11 result in a

s submitted
ed States Patent

and the Trademark and Desi

Office of the European Union ("ETO")
~~

has been

I

97.

In June 2011 and November 2011,

Id.

Following the
their New

63.

notified by the Italian Chamber of Commerce t

Cantamessa name.

In

items were being imported

temporarily and would later be returned,

& Trademark Office

57.

, Relios and Idea filed certain forms with

customs officials

exhibition,

~

Id.

80-85.

for the Crown Logo

The application to the USPTO

CUSA was the owner of the Crown Logo and

Cantamessa name, and the ETO application asserted ownership by

7

ssa himself, whereas in actuality the Crown Logo and the

a.

Cantamessa name belong to I
ication claimed that t

amessa name were

15, 2011, whereas in actuality

been used by De

market

In addition, the USPTO

Crown Logo and

first used in commerce on Ma
they

Id.

s prior to that date in their

efforts on behalf of Helios.

Id.

Helios first became aware of Defendants' all
scheme in October 2011, when it

rformed an invento

the contents of the Warehouse
missing.

Id.

<JI

ch revealed that jewel
tigation revealed t

Furt

53.

taken by Cantamessa and Kheit.

jewelry

k on

Id.

was
t the

On October

5, 2011, Helios demanded an accounting by Cantamessa of all
sales of Hel
possession.
respond to

s'

<JI

66.

When Cantamessa did not immediately
sti

request, Helios

discovered t

s still in Cantamessa's

jewelry and all p

its entire invent

Warehouse was missing.

Id.

<JI

t

ed further and
t had been sto

in the

67.

In early November 2011, Helios terminated its
agreement with Cantamessa, restri
access to its

Cantamessa from having

ory, and demanded that Cantamessa cease

associating himself with Helios or t

Cantamessa brand and/or

using the Cantamessa Intellectual Property.

8

Id.

<JI<JI

67-68.

On January 25, 2012, counsel for Idea sent CUSA and
a wr
re

ten demand for the return of its merchandise and a

rsement of all customs penalties incurred by virtue of

De

s' conduct.

Id.

~

69.

The demand was re

by

ter from Defendants' counsel dated January 31, 2012.
I

Id.

renewed its demand via letters in March 2012,

2012, but received no response.

Id.

~~

il

69, 71.

On February 12, 2012, Helios sent a written
Cantamessa and his wife seeking updat

contact

any of Plaintiffs' customers who pur

the request.

Id.

~

70.

d sales proceeds,

Cantamessa did not respond to

Id.

In or about February 2012, De
of Cantamessa jewelry to the same
Thailand (the

rmation for

jewelry through

Cantamessa and his wife, as well as any
less commission due.

st to

cturing facility in

ry")

~Delora

s shipped pieces

I

had previously used to

sted that Delora produce

manufacture its jewelry,
replicas of those pieces.

Id.

~~

73-78.

In addition,

Defendants asked Delora to produce certain pieces of jewelry
using molds t
for Idea.

Id.

Delora
De

ously used to produce pieces

s

rected Delora to send the new

9

pieces to the Unit

States by April 2012.

July and August 2012,
offering for sa

Id.

In addition,

discovered that Pia
tional pieces of

had been produced

in

iffs were
ssa jewelry that

Delora factory.

Id.

~~

77-78.

The Rule 12(b) (6) Standard

On a motion to dismiss pursuant to Rule 12(b) (6), all
factual all

ions in the complaint are accepted as true, and

all inferences are drawn in favor of t
Molecular Corp., 12 F.3d at 1174.
plaintiff will ultimately prevail
entitled to of

Polar

issue is not whet
whether the cia

r evidence to support the claims."

Suffolk, New York v.

First Am. Re

179, 187 (2d Cir. 2001)
Darien, 56 F.3d 375, 378
808

"

pleader.

r a
is

Count

of

Estate Solutions, 261 F.3d
llager Pond,

Inc. v. Town of

(2d Cir. 1995), cert. deni

,

519 U.S.

(1996)).

To survive a motion to

smiss pursuant to Rule

12 (bl (6), "a complaint must contain sufficient factual matter,
as true, to 'state a claim to relief that is
on its face.,ff
~__~

556 U.S.

662,

678

ible
(2009)

______~__~~~~~~~~, 550 U.S. 544, 570

10

(2007)).

This is not intended to
only allege facts suf
across the line from conce

an onerous burden, as plaintiffs
in order to "nudge[] their claims
e to plausible."

Twombly, 550

u.s. at 570.

The Complaint Fails To State A RICO Claim

Section 1962 of Title 18
action for those injured by anot
activity.

s a private cause of
ttern of racketeering

It states, in relevant

(a) It shall be unlawful
r
rson who
has received any income der
rectly or
indirectly, from a pattern of racketeering
acti vi ty.
. to use or invest,
rectly or
indirectly, any part of such income, or
proceeds of such income, in acquisition of
any interest in, or the establi
or
operation of, any enterprise which is
engaged in, or the activities of whi
affect, interstate or foreign commerce

[

.

.]

(c) It shall be unlawful for any person
employed by or associated with any
se engaged in, or the act
s of
ch af
, interstate or foreign
commerce, to conduct or participate,
rectly or indirectly, in the conduct of
such
ise's affairs through a pattern
of racketeering activity .

11

(d) It shall be unlawful for any person to
conspire to violate any of the provisions of
subsection (a), (b), or (c) of this section.

18 u.s.c. § 1962.

To state a claim for civil damages under Section 1962,
a plaintiff has a twofold pleading burden. First, the plaintiff
must allege that the defendant has violated the substantive RICO
statute, 18 U.S.C. § 1962 ("§1962"). See Moss v. Morgan Stanley
Inc., 719 F.2d 5, 17

(2d Cir. 1983).

Second, the plaintiff must

allege that he or she was injured in his or her business or
property by reason of the violation of Section 1962. See 18
u.S.C. § 1964(c); Moss, 719 F.2d at 17.

To plead a RICO violation, a plaintiff must allege:
"(1) that the defendant

(2) through the commission of two or

more acts

(3)

constituting a 'pattern'

activity'

(5) directly or indirectly invests in, or maintains an

interest in, or participates in (6)

(4) of 'racketeering

an 'enterprise'

(7) the

activities of which affect interstate or foreign commerce."
Moss, 719 F.2d at 17

(citing 18 U.S.C. §§ 1962(a), 1962(b) and

1962(c)); The Jordan (Bermuda)

Inv. Co., Ltd. v. Hunter Green

Invs. Ltd., 154 F. Supp. 2d 682,690

12

(S.D.N.Y. 2001).

In

r to satisfy the "

rement, a pla

iff must show (i) at least at least two

predicate racketee
cates are

ern of racketeering"

ng acts,
at

(ii)

"the racketeer

,and (iii)

amount to or pose a

t

threat of continued criminal activity."

H.J. Inc. v.

Northwestern Bell Tel. Co., 492 U.S. 229, 239.
of Tit

18 sets fo

the various

Section 1961(1)

nal violations

by state and federal law that can constitute predicate acts of
rac

eering acti
s

ty upon which a §1962 RICO claim may be

See 18 U.S.C. § 1961 (1).

"Because the mere assertion of a RICO claim .
an a

izing effect on those named as

t inevitable st

de

s,

RICO al

. . . courts should strive to f

out frivolous

ions at an early stage of the litigation."

Heppt, 423 F. Supp. 2d 147, 150 (S.D.N.Y. 2006)
internal quotations omit
are

).

of "ga

. .]

[has

a vehicle

va

ety fraud or

t

le damages by resort to what [.

en] referred to as 'the litigation

thermonuclear device.'"
392, 394

(citations and

some Plaintiff has attempted to

breach of contract cases
transform

Kirk v.

Such frivolous RICO allegations

manifested in

0

s

ivalent of a

v. Sichenza, 118 F. Supp. 2d

Gol

(S.D.N.Y. 2000)

Schmidt v. Fleet

----------------~------

Supp. 2d 340, 346 (S.D.N.Y. 1998)).
13

This Court has

,16 F.
iously

counseled that courts "must
c

wary of putative civil RICO

s

ims that are nothing more

clothing."

Kirk,

masquerading in wolves'

423 F. Supp. 2d at 149 (quoting W. 79th St.
ion Kahl Minchas Chi

No. 03 Civ. 8606

(RWS), 2004 WL 2187069, at *5 (S.D.N.Y.
instant case presents just such a s

29,2004)).

The

ion.

In an effort to satisfy RICO's pI

requirements,

intiffs have alleged the commission of a

dable array of

cate acts:

National Stolen Property Act

of
(b)

(a) transportation of stolen

sa

2315;

of st

("NSPA"),

in violation
18 U.S.C. § 2314;

en goods in violation of the NSPA, 18 U.S.C. §

(c) laundering of money instruments in

U.S.C. § 1956(a) (2); interstate and foreign t
t

at

lation of 18
or

in aid of racketeering enterprises in

of 18 U. S. C. § 1952;

(e) criminal copyright infringement in

violation of 18 U.S.C. § 2319;
services by mail

olation

(f) deprivation of honest

wire fraud in violation of 18 U.S.C. §§

1341, 1343 & 1346;

(g) mail and wire fraud in violation of

18 U.S.C. §§ 1341 & 1343.

Comp1.

~~

106-35.

However, "Plaintiffs cannot turn this case into a RICO
case simply by recasti

of contract [and common bus

torts] as conspiracies of

ion and fraud."
14

Bachewicz v.

s

Pre

rred Dev.,

Inc., No. 10 C 3875, 2011 WL 2560218, at *5

(N.D. Ill. June 28,
of t

2011).

allegations of
cate racketee

more

As set

rth below,

red in support of these putat
acts reveals

this case is nothing

a commonplace business di

essence, "garden var

an examination

involving what are, at

y" commercial cla

such as brea

of

contract, breach of fiduciary duty and infringement of
intel

ual property r

s.

A.

Plaintiffs' all
engaged

ions that Cantamessa and Kheit

transportation of stolen goods

U.S.C. § 2314 are premi

upon the contention

following conduct consti

such a violation:

removal of jewelry from the Warehouse,
retent

of jewelry sent

and (iii)

ation of 18

(ii)

t
(i)

72, 110.

ibition,

of jewelry to various parts of

the United States for use in photo shoots, and sh
jewelry to Paris for use in a

Defendants'
s'

De

r use at the New York

Defendants' sh

the

rity auction.

of

See Compl.

~~

However, that contention is belied by the allegations

15

in the Complaint
between Helios,

scr

ng the contractual relationships
ssa

Khe

, under which:

• De ndants were"g
n unrestricted, unsupervis
access to Plaintiffs' multi-million dollar
inventory wa
se," Compl. ~ 6;
• Defendants were "allowed to take jewelry from the
warehouse
t
for sale, display or
marketing,"
to "serve as cashier on a l l .
jewelry sales,"
. ~ 6;

• Defendants

were
"
ral authority to
execute sales,"
to "draw[] upon the warehouse
for international
to Cantamessa
customers," Compl. ~ 47;

• Defendants were aut i
. Cantamessa jewelry"

to "market and sell
"to use the Crown
a
Logo and Cantamessa name" to engage in such
marketing and sales ef
ts, Compl. ~ 41; and

• Defendants

"were required to use their utmost
skills to further Helios' interests. " Compl.
46.

With respect to the allegations re

Defendants'

removal of jewelry from the Warehouse, given De

s' express

rity to effect such removal, these all
a contract dispute regarding the extent
ed to Defendants over the Warehouse me

~

raise
i

and
se.

Alt
these allegations are largely stated with re
to
only
Cantamessa, they are assumed to
e
lly
icable to Kheit, since as noted above, the Complaint has
characterized Cantamessa and Kheit as possessing commensurate
powers and dut s with respect to Helios.
See Compl. ~~ 46 47.
2

16

With respect to the allegations concerning Defendants'

retention

of the jewelry sent for the New York Exhibition, given
Defendants' express authority to engage in the marketing and
sale of Cantamessa jewelry, these allegations merely indicate a
contract dispute regarding the extent of the authority and
autonomy granted to Defendants over marketing and sales.
same goes for the allegations concerning Defendants'

The

shipment of

the jewelry to domestic and international locations for use in
photo shoots and other promotional events - such allegations
evidence a contract dispute as to the extent of the autonomy
afforded to Defendants in fulfilling their contractual duty to
market the Cantamessa brand and further Helios'

B.

interests.

Sale of Stolen Goods

Plaintiffs' allegations in support of the putative
predicate act of selling stolen goods mirror those asserted in
support of the putative predicate act of transportation of
stolen goods.

See Compl.

~~

110, 112.

Accordingly, for

substantially the same reasons stated above,

see supra

§

A,

Plaintiffs' allegations purporting to establish that Defendants
sold stolen goods in violation of 18 U.S.C.
sound in breach of contract.

17

§

2315 actually

C.

Launder

of Mone

Instruments

Plaintiffs' all
laundering in

s

V10

ions that Defendants engaged in
ion of 18 U.S.C. § 1956(a) (2)

upon the contention

constitut

money laundering:

are

the following conduct
(i) Defendants' trans

r of

$35,000 to the Delora factory in payment for the production of
Cantamessa jewelry;
stora

(ii)

De

costs associated wi

s' payment of

ing and

shipment of jewel

t

from the

Warehouse to Switzerland 3 ; and (iii) Defendants' trans
least $1.5

Ilion for the purpose of "advertising, mar

exhib

selling" Cantamessa brand jewelry.

is contention is
and powers
contract

r of at
ing,
~

Compl.

by the substantial aut

Ii

were vested in

s by virtue of

agreements with PIa

iffs.

sale, display or marketing," Compl.
of jewelry from

Since Defendants were

the jewelry.

r

6, Defendants' ar

~

Warehouse to New York

merely raises a contractual issue
the autonomy af

ty
ir

"allowed to take jewelry from the warehouse unmonitored

for the s

114.

ng the parameters of

rded to Defendants as to the transportation of
se, since De

3 The jewelry was subsequently transpo
Compl. ~ 112.

18

s were contractually

to New York.

See

aut

zed to "mar

t and sell Cantamessa jewelry," Compl . • 39,

intiffs' allegation that Defendants' expended
purpose of "advertis

for the

, marketing, exhibiting and selling"

Cantamessa jewelry merely implies a contractual dispute
regarding t

parameters of the autonomy afforded to Defendants

to fulfill their contractual obI
al

tions.

ion that Defendants pa

lly, Plaintif

r the production of Cantamessa

jewelry with the intention of selling

gives rise to either a

contractual dispute or perhaps a cause of action for breach of
iary duty.4

D.

Rac

Interstate and Foreign Travel or Transportation in
ises

d of

Plaintiffs' allegations with respect to this putat
cate act are premised upon the contention that
following conduct by Defendants constituted interstate and

4

is alleged
t the complained-of conduct occur
s is of no
to have te
ted its
ement with De
consequence, as Defendants' conduct nonetheless evi
s a
commercial dispute re rding the contracting parties' rights to
unilaterally terminate the agreement, or perhaps the nature
substance of the
rties' r
s in the wa
of a terminat
of
the agreement.
Indeed, the Complaint has alleged that
Defendants' arrangement of the production of Cantamessa pieces
by the
factory constituted a
ach of Defe
s'
fiduci
duties to
aintiffs, see Compl. ~~ 122 23, thereby
implying that the contractual relationship between Plaintiffs
and Defendants
rsisted in some form even at that point in
t
19

foreign travel or transportation in aid of rac

ee

enterprises:

u.s.

(i) Defendants' travel, both in the

ng

internationally, and Defendants' use of facilities in interstate
or fore

commerce,

market [ing] ,
(ii)

for the pu

ibit[ing] and sell[ing]" Cantamessa jewelry; and

De

s' use of facilit

commerce to s
the Delora

se of "advertis[ing],

s of interstate or

the design of a
ct

and to trans

ce of Cantamessa jewelry to
to the Delora

r

production of Cantamessa jewelry.

in payment

However, as set forth above,

Compl.

ctory
~

116.

see -"---"-""'-=--­ § C, due to the
s

contractual nature of the parties' relationship, Plaintiffs'
in breach of contract or other common law

allegations
causes of act

, rather than cr

form the basis

lations suff

r a RICO claim.

E.

1

to

Criminal Copyright Infringement

Plaintiffs
criminal copyright
ory to produce 27

alleged that Defendants committed
ngement by ar

r the Delora

s of Cantamessa jewelry by the Delora

ctory in February 2012, and taking delivery of those pieces in
April 2012.

However, as noted above, see s

contract with Plaintiffs
sell Cantamessa jewel

ra § 0,

Defendants'

ed them authority to "market and
" Compl.

~

20

39, so De

s' alleged

Ils more into t

conduct

realm of breach of contract or

breach of fiduciary duty.

Moreover, as noted in Pro

ssor

d Nimmer's

treatise Nimmer on Copyright, which has been characterized as
the "1

ng copyright treatise," New York Mercantile

_I_n_c~.__
v~.__
I_n~t~e~r~c~o~n_t~l_·n~e_n_t~a~l~~__~~~_I_n~c~.,

497 F.3d 109, 114

Cir. 2007), and "the bedrock authority on all
matters,"

1 copyri

instances of cr

313
y the most egregious

infringement

upheld as predicate offenses to rac

§

ight

raco v. Lawler

F. Supp. 2d 247, 253 (S.D.N.Y. 2004), "[oj

RICO."

ever

teering charges

--------------~--~--

(2013)

(emphasis added).

This is in keeping with

general adage that courts "must be wary of

att

ative ci

ims that are nothing more than sheep masque

cloth

r

Melville B. Nimmer & David Nimmer, 1 Nimmer on

3.04 [B] [3J

c

(2d

" Kirk,

in wo

s'

423 F. Supp. 2d at 149, and of plaintiffs

ing to "appl [yJ

controversies."

1 RICO

[RICOJ to commonplace commercial

Ba

~~~----~~--~--------~~~-----

3:07CV212-HEH, 2007 3124881, at *4

An example of an
that was deemed sufficient

No.

(E.D. Va. Oct. 23, 2007).

tance of copyright infringement
"egregious" so as to constitute a

cate act for RICO purposes is found
21

Inc., 573 F. Supp. 2d 1254

(C.D. Cal. 2007), where the court

upheld a RICO claim based upon a predicate act of criminal
copyright infringement of a line of dolls that was bringing in
an annual revenue of $500 million to the alleged infringer.
id. at 1257.

See

Here, Plaintiffs have alleged that the infringing

jewelry produced by Defendants has an aggregate retail value of
merely $270,000.

Compl.

~

119; Pl. Opp. at 13.

The relatively

minor value of the allegedly infringing items, coupled with the
overall "run-of-the-mill commercial dispute" tenor of the case,
see supra §§ A-D, indicates that even if Plaintiffs have
adequately alleged the requisite elements of criminal copyright
infringement, it would nonetheless be inappropriate for such
infringement to constitute a predicate act for RICO purposes.
Cf. Stewart v. Wachowski, No. CV 03-2873 MMM (VBKx), 2005 WL
6184235, at *4

(C.D. Cal. June 14, 2005)

(noting that the

legislative history of the Anticounterfeiting Consumer
Protection Act of 1996, Pub. L. No. 104-153, § 3, 110 Stat. 1386
("ACPA"), which added §2319 to the list of crimes that can serve
as a predicate act for RICO purposes, indicates that "Congress
intended that the ACPA would provide necessary sanctions against
large-scale organized counterfeiting schemes")

22

(emphasis added).

F.

& Deprivation of Honest Services by Mail

Mail and Wire
Wire Fraud

Plaintiffs' all

ions with respect to

cate acts of mail f

and deprivation

by mail and wire fraud are

st services

sed upon the contention that the

lowing conduct by De
use of

putative

s constituted criminal fraud:

internet and social media to "market, a

sell" Cantamessa jewelry;

(ii) use of the interna t

and wires to obtain jewelry

the Warehouse;

(i)

rtise and
I mails

(iii) use of the

international mails and wires to convince Plaintiffs to s
jewel

r use in the New York
t

ion;

(iv) use of

I mails and wires to arrange for the Delora

factory's p

ion of pieces of Cantamessa jewelry.

1. 'IT'lT

122 23, 129.

s contention is contravened by the all

ions

in the

aint that describe De

the jewel

s' "unfettered" access

the Warehouse, Compl. 'IT 9, and contractual

authorization to "market and sell Cantamessa jewelry," Compl. 'IT
39, which

cate that the compla

causes of action
rather than
a "broad-based"

of conduct supports

ral criminal fraud that was
I racketeering scheme.

Allen v. Devine, 726 F. Supp. 2d 240, 248
2010) (citation

lor fiduciary duty,

r breach of contract

tted as part of
See Allen ex reI.

(E.D.N.Y.

("the [RICO] statute was intended to

23

bring only the most serious, broa
courts")

frauds into

federal

(emphasis added) .

*

*

*

As set fo

above, the aIle

ions in the Complaint

that purport to plead predicate criminal acts suffic
e

ish a cause of action under RICO "amount merely to a
of contract

cannot
of

ga

[and common business torts], whi
into a RICO cIa

ing that the

Carr v.

in t

a

transmogrif

----------------~

is

, 591 F.

was fraudulent,
909,

another instance of"
to fit a s
riety business di

Midwest Grinding Co. v. Spitz,
1992).

to

Whi

918

viI RICO P

Plaintiffs'

[who] persist

s into civil RICO actions."
976 F.2d 1016, 1025 (7th Cir.
a case against

[breach of contract, or other
absolutely no case against

[Plainti

lation."

r a civil RICO

Given the absence

if

This case

in a round hole by squeezing

[Defendants] for breach

[Defendants]

indeed criminal."

(7th Cir. 2010).

"[Plaintiffs] may very well

business torts,]

by the facile

vi

failed to

Id. at 1025 26.

e predicate acts,
"pattern of rac

teering"

that is a necessary and core element of substantive RICO claims
24

under 18 U.S.C. §§ 1962 (a), (b)
4 and I, respectively), the
causes of action.
substant

(asserted

re as Counts 3,

necessitating di

In addit

RICO claim, PIa

1962(d)

(c)

&

ssal of those

the absence of a validly pled
iffs' claim under 18 U.S.C. §

r RICO conspiracy fails as well.

Jordan

Bermuda

Inv. Co., 154 F. Supp. 2d at 695.

The Complaint Fails To State A Claim For Trademark Dilution

In

0

r to plead t

Trademark Dilution Revision Act

rk dilution under t
("TDRA"), 15 U.S.C.§ 1125(c), a

trademark owner must allege four elements:
famous;

(2)

commerce;

mark is

the defendant is making use of the mark in
such use began a

(3)

and (4) that

(1) that

re is a likelihood

the defendant's use.

mark became

r
0

lution as a resu

Heller Inc. v. Desi

Within Reach

Si

of
Inc.,

--------------------~----------------~-----

No. 09 Civ. 1909 (JGK), 2009 WL 2486054, at *3 (S.D.N.Y.
15, 2009).

In order for a given mark to

considered "famous"

under the TDRA, it must be "widely recognized by the general
consuming public of

United States as a

indicating a single source of good or se
15 U.S.C.

§

1125(c))

signation
ces. "

(internal quotation mar

25

Id.

(quoting

ed) .

"[C]ourts generally have limited famous marks to those that
receive multi-million dollar advertising budgets, generate
hundreds of millions of dollars in sales annually, and are
almost universally recognized by the general public."

Id.

(collecting cases that have found "fame" with respect to marks
such as DuPont, Buick, Kodak and Budweiser) .

In addition, the

statute's caveat that the mark be widely recognized "by the
general consuming public of the United States" is intended to

exclude "dilution claims based on 'niche'

fame,

limited to a particular channel of trade,

segment of industry or

service, or geographic region."

i.e.,

fame

Dan-Foam A/S v. Brand Named

Beds, LLC, 500 F. Supp. 2d 296, 307 n. 90 (S.D.N.Y. 2007).

A claim for trademark dilution under the TDRA will
survive a motion to dismiss only when the plaintiff has "ple[d]
enough facts to show that its dilution claim is facially
plausible."

Heller, 2009 WL 2486054, at *4.

While Plaintiffs

have made a conclusory allegation that the Crown Logo and the
Cantamessa name are "famous," Compl.

181, they do not allege

~

that these marks are "widely recognized by the general consuming
public of the United States"; rather, Plaintiffs allege that the
marks "have an extremely high degree of recognition among
consumers of luxury jewelry."

Compl.

~

181 (emphasis added)

This is the very definition of the type of "niche" fame that is

26

ng of fame for TDRA purposes.

ufficient to support a fi

See Luv N' Care, Ltd. v. Regent Baby Prods. Corp., 841 F. Supp.
2d 753, 758-59 (S.D.N.Y. 2012)

ssing dilution claim where

"plaintiffs in this case have not all

cts indicating that

. trademarks [at issue] are
market, i.e., the baby product mar

zed beyond a niche
").

Since Plaintiffs have a11e

t the marks in

stion enjoy fame only within the narrow niche of the American
ic that comprises the consumer market
their

r "luxury jewelry,"5

lution claim fails because they have not

facts to show that the dilution claim is fa

"enough

lly plausible."

Heller, 2009 WL 2486054, at *4.

The Complaint Fails To State A Claim For Common Law Fraud

r New York law, a plaintiff asserting f
establish t

t "(1) the defendant made a material false

representation,
plaintiff the

must

(2)

defendant intended to defraud the
(3) the plaintiff reasonably relied upon

representation, and (4)

plaintiff suffered damage as a

ions in the Complaint, it appears that the
5 Based on the all
average piece of Cantamessa jewelry retails for at least $5,000.
See, e.g., Compl.
112, 119.

27

reliance."

result

Bri

__________
stone/Firestone_ _ _ _ _ _ _ _ _ _ _ _
v.

_ _ _ _- L_ _ _ _ _ _

~

~

Credit Servs., Inc., 98 F.3d 13, 19 (2d Cir. 1996).

iffs have aIle

a
common law f
York for di

that Defendants

by convincing Pla
1

iffs to ship jewelry to New

at the New York

tion, and then

return the jewelry to Defendants
~~

56-65.

iling to

ately thereafter.

However, at the time

representation, P

trated

Compl.

allegedly fraudu

iffs and De

s were engaged in a

contractual relationship that specifically granted authori

to

Defendants to "mar

and sell Cantamessa jewelry," Compl.

Accordingly, De

s' eventual failure to return the jewel

to Plaintiffs is at

st a breach of

Plaintiffs, as

by Plaintif

iary duties to

'

allegation that the

Regarding s

ch of Defendants'

iffs, see Compl.

a

s

39.

r contract with

ilure to the return the jewelry was a
f

~

~

123(b).

uations, New York courts have long

that "a cause of action for fraud does not arise when the
only fraud charged relates to a breach of contract."
~~~~~~~~~~~~~~~,

Div. 1998)

243 A.D.2d 107, 118 (N.Y. App.

(quoting Tesoro Petroleum

108 A.D.2d 607
"t

Non-Linear

(N.Y. App.

. 1985)).

cause of action at issue .

Oil Co.
According

. does not alle

28

,here, where
t

breach

of a duty extraneous to, or

stinct from the contract between

the parties," Courageous Syndicate v. People-to-People Sports
Comm., 141 A.D.2d 599, 600

(N.Y. App. Div. 1988)

Edwil

________________________~____-L-, 131 A.D.3d 425
Div. 1987)),

(N.Y. App.

"plaintiff[s'] theory of recovery is

necessarily 1

v.

ted to a breach of contract."

50 A.D.2d 108, 113 (N.Y. App. Div. 1975).

Moreover, while Plaintiffs have alleged that
Defendants "tric

d" Plaintiffs into

pping the jewelry

because Defendants never intended to return the pieces,
not provide any

ctual basis for

Defendants' state of mind at the t

i i 56-65.

ir assertion rega
of exchange.

Under New York law, "if a

with a preconcei

do

See

se was actually

and undisclosed intention of not perfo

ng

it, it constitutes a misrepresentation of material existing
" giving rise to a fraud claim. Sabo v. Delman
714, 716 (N.Y. 1957).

However, "[t]

mere conclusory

ion that a party never intended to

al

r

fficient" to state a cause of action in f
Lasermedics,

Inc., No.

95 C

(S.D.N.Y. Apr. 3, 1996).
i

c facts indicat

honor his or her obli

1122

164 N.Y.S.2d

rm.

is
Grossberg v.

(DC), 1996 WL 1537 01, at * 2

"Instead, a plaintiff must set forth
the promisor never intended to
ions at the time the p

29

se was made."

Id.

Accordingly, Plaintiffs' conclusory allegation that

Defendants did not intend to return the jewelry at the time that
they persuaded Plaintiffs to send it is insufficient to state a
claim for common law fraud.

The Complaint Has Stated A Claim For Breach Of Fiduciary Duty

To state a claim for breach of fiduciary duty under
New York law, a plaintiff must plead "breach by a fiduciary of a
duty owed to plaintiff; defendant's knowing participation in
that breach; and damages."
Co., 360 F.3d 329, 342

SCS Commc'ns, Inc., v. Herrick

(2d Cir. 2004).

Defendants contend that

Plaintiffs' claim for breach of fiduciary duty fails because the
relationship between Plaintiffs and Defendants was not fiduciary
in nature, but rather was an "arms' length" business
relationship that does not give rise to a fiduciary
relationship.

Def. Mem. at 30-31.

However,

Plaintiffs have

alleged that pursuant to their agency relationship with
Defendants, Plaintiffs entrusted Defendants with broad authority
and discretion over Plaintiffs' business, including "unfettered"
authority to draw inventory from Plaintiffs' warehouse.
Compl.

~~

4-6, 9,

41, 44,

46-47, 52.

See

An agency relationship of

such an extensive nature creates a fiduciary bond between the
involved parties.

See, e.g., St. John's Univ. v. Bolton, 757 F.
30

Supp. 2d 144, 168 (E.D.N.Y. 2010)
relationship

(finding a fiduciary

re the defendants "were entrust

with

[plaintiff's] resources and the autonomy and discretion to use
those resources"
knowledge and

cause the defendants possess
rtise required to exploit

therefore "[the

the special
se resources, and

intiff] was vulnerable to

abuse of their pos

s of trust .

fendants']

."); Pensee Assocs., Ltd.

v. Quon Indus., Ltd., 241 A.D.2d 354, 359 (N.Y.
("Agency is a fiducia
conduct by parties mani

. 1997)

relationship created as a result of
sting that the principal party is

willing to allow the other party, upon such other party's
consent, to act for it

ect to the principal's control and

within the limits of

ty thus conferred.
a commission agent

includes the relationsh
i

1 for the sale of goods,

principal.")
al

This
a

in which title rema

(internal citations omitted).

the

Accordingly, t

ions in the Complaint are sufficient to plead t

existence of a fiduciary relationship between Plaintiffs and
De
f

sis for Plaintiffs'

ndants which can serve as a
iary duty claim.

31

of

The Complaint Has Stated A Claim For Trade Secret
Misappropriation

To plead a claim

trade secret mis

riation

under New York law, a plaintiff must allege: "(1) t
posses

a trade secret, and (2) that defendants used that

trade secret in breach of an a
relationsh
me a n s . "

it

ement, confidential

or duty, or as a result of discovery by improper

_L_________'--_I_n_c_._v_._ _d...-i...;.t_s...;.u_L_t...;.d_.

230 F. S u pp. 2 d 4 92 , 4 97­

98 (S.D.N.Y. 2002).

s have conte

De
state a claim

trade secret mis

based upon jewel
sales and displ

that Plaintiffs

designs that

il

to

ation because it is
been made public

of those pieces, as well as through

registration of
Def. Mem. at 32 33.

designs with

U.S. Copyright Of

However, the Comp

ce ..

int has alleged

Defendants misappropriated Plaintiffs "propriety business
information," which included not only "proprietary jewel
designs [and] mo

" but also proprietary "products,

lations, indust
documents, planning

1 processes, internal corporate
strategy documentation, financial and

accounting information, customer contact lists and information,
[and] supplier contact lists and information."
Plaintiffs further all

Compl. i

223.

that they "took reasonable steps to
32

maintain the conf
Compl. 1 224.

iality of t

ir proprietary

formation."

s' allegations with respect to t

latter items are sufficient to state a claim for t
misappropriation with respect to those items.
. Inc. v. Ranir, LLC, 596 F.

secret

See Medtech

2d 778

(S.D.N.Y. 2008)

Iding that generally allegations

rding manu

ails, drawings, test data, and ot

r information

sign and manufacturing process were

cost
the

ficient to state a

aim for trade secret misappropriation) .

With respect to the jewelry

signs, however, t

ct

design drawings were available to the public and that

that t

pieces constructed from such designs were sold to the public
lude the designs themselves from

does

lifying as t

secrets for the purposes of a misappropriation cause of act
~P~h~i~l~l~~~~~~s I_n_c~.,
__

See
*7

(N.D. Ill. May 28, 1996)

not a t

Accord

r as it is asserted wi

designs

(holding that a copyrighted work was

secret because "it was readily available through t

Copyright Office").
inso

1996 U.S. Dist. LEXIS 7342, at

y, Plaintiffs' cla
respect to t

fails
ical jewelry

were publicly disclosed via sales of the pieces and

registration of the designs with the Copyright Office.

33

The Complaint Has Stated A Claim Under The NYCPA

New York General Obli
is modeled after
courts have inte

tions Law § 349 (the "NYCPA")

Federal

Commiss

ted the statute's scope as limited to t

types of offenses to the public

erest that would trigger

ral Trade Commission intervent
as

under 15 C.S.C.
lth or sa

ential danger to the public

LLC v. Fried Denim, Inc.,
2009).

Act, and "federal

634 F.

y."

§

45, such

Do Denim

2d 403, 409 (S.D.N.Y.

"It is well settled

that trademark or trade dress

infringement claims are not cognizable under [

NYCPA] unless

there is a specific

substantial injury to t

public

interest over and

ordinary tra

dilu

on."

rk in

t

Nat'l Distillers Prods. Co., LLC v. Re

or

shment

Brands, Inc., 198 F. Supp. 2d 474, 486-87 (S.D.N.Y. 2002)
(emphasis added).

Here, Plaintif

NYCPA cIa

f

is premis

upon

s conspired to deceive American

allegations that De
consumers with counter

goods.

allegat

to state a cIa

are suffic
914 F.

Compl.

. 964, 984

~~

233-35.

S

under the NYCPA.

In

(S.D.N.Y. 1995)

(holding t

allegations of

goods and

importing of counterfeit goods with the

lse advertising of a plaintiff's

34

to

source

ive customers as to

origin of the products

were sufficient to state a claim under §349 because such conduct
would involve a

ic harm if proved) .

Conclusion

Upon the conc
partial motion to
and leave is

sions set

h above, the Defendants'
ed in

smiss is

and deni

ven to replead within 20 days.

New York, NY
July
2013

? 7,

U.S.D.J.

35

in part,