UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

-----------------------X
ARDIS HEALTH, LLC, CURB YOUR CRAVINGS,
LLC
1
USA HERBALS, LLC
1
Plaintiffs,
- against -
ASHLEIGH NANKIVELL,
Counter-Claimant
1
- against -
JORDAN FINGER,
Counter-Defendant.
------X
NAOMI REICE BUCHWALD
UNITED STATES DISTRICT JUDGE
Ardis Health, LLC ("Ardis
11
)
1
("CYC"), and USA Herbals, LLC ("USA
"Companies
11
) commenced t s action
: DOCLi:v!ENT
! ELECTRONICALLY FILED
:' DOCc
i " ----------;;---:;-----
MEMORANDUM AND ORDER
11 Civ. 5013 (NRB)
Your Cravings/ LLC
8
11
) (collectively/ the
nst their former
employee
1
Ashleigh Nanki vell ( "Nanki vell") , seeking damages and
injunctive relief aris from Nankivell's alleged conversion
and unlawful use of intellectual and tangible
property following nation from employment. Nankivell
counterclaimed against Companies and filed a third-party
complaint against ir owner, Jordan Finger ("Finger") ,
alleging/ inter alia, that violated her state law
rights and subject to a hostile work environment. In the
instant motions/ and Finger (collectively/ the
Case 1:11-cv-05013-NRB Document 44 Filed 10/23/12 Page 1 of 26
"movants") di ssal Nank ll's countercla and
third y c int. For the reasons set forth below,
motions are grant
BACKGROUND
1
CYC, and USA Herbals are a group of close
filiated companies that develop herbal, natural health,
wellness
1
and beauty products and market them online. The
Companies operate under the direction
1
ownership, and control of
Finger. In October 2008, hi Nanki vell to as a
Video Producer for CYC. (Thi -Party Compl. ~ 9.) Shortly
thereafter
1
Nankivell began working as a Video and Social Media
Producer at USA Herbals. Id. ~ ~ 10 11.) In most recent
position, Nankivell produced videos, designed
posted marketing content to websites and blogs. (Id. ~ 11.) On
approximately June 2011, Finger terminated Nankivell,
allegedly for cause. Id. ~ 90.) s litigation followed.
I. The Companies' Action Against Nankivell
The complete tual background of the Companies' action
against Nanki vell is set forth the Court's opi
liarity with which is assumed. Ardis Health, LLC v.
Nankivell, No. 11 Civ. 5013 (NRB), 2011 WL 4965172, at *1-2
(S.D.N.Y. Oct. 19, 2011)
The Background is derived from the Memorandum and Order dated October
19, 2011; the Second Amended Answer and Counterclaims ("Countercls."), filed
November 11, 2011; and the Verified Amended Third-Party Complaint ("Third-
Party Compl."), filed December 9, 2011.
2
Case 1:11-cv-05013-NRB Document 44 Filed 10/23/12 Page 2 of 26
In July 2011, Companies filed suit against Nankivell,
seeking damages injunct rel f sing from Nankivell' s
alleged conversion the Companies' intellectual and tangible
property lowing her termination. The Companies all that
Nanki vell refused to return a laptop and other work equipment,
together th swords and login information for work-related
websites, 1 accounts, social medi accounts, and third
party servers. The Companies also objected to Nankivell's
display content from Whatsinurs website on her personal
webpages.
In August 2011, Companies moved a preliminary
injunction aga Nankivell, ring her to (i) return the
laptop,
2
passwords, and login information and (ii) refrain from
using any and all of Companies' proprietary content and
trademarked or copyrighted works. By Memorandum and Order dated
October 19, 2 011'
the Court rul that t Companies were
entitled to recover the passwords and ot log information,
but not the laptop.
. '
at *2-4 . The Court also declined the
Companies' request to enjoin Nankivell from displaying
Whatsinurs content on her personal websites. Id., at *4 5.
The original motion also requested the return of other equipment,
including a video camera. However, the Companies later withdrew that part of
the motion.
3
Case 1:11-cv-05013-NRB Document 44 Filed 10/23/12 Page 3 of 26
II. Nankivell's Counterclaims Against the Companies and Third-
Party Complaint Against Finger
3
Shortly
ter the Court ruled on the Companies' motion for
injunct relief, Nankivell counterclaimed against
Companies and filed a third-party complaint against Finger.
4
Nankivell's claims arise from the alleged ( i) work
contributed to the Whatsinurs project;
( i i) destruction of
Nankivell's personal property; and (iii) perpetuation of a
hostile work environment.
A. The Whatsinurs Project
Nankivell leges that, in June 2010, she began developing
a business concept called "Whatsinurs." (Third-Party Compl. ~
12.) The purpose of the project was to create a web based
portal, located at Whatsinurs.com, that would allow shoppers of
health and beauty products to interact with one another. Id. ~
For the purposes of the instant motions, the Court assumes Nankivell's
allegations to be true. v 600 F.3d 159, 161 n.2 (2d Cir.
2010). We note, however, that Nankivell attempts to support her claims by
including additional factual allegations in her opposition brief. The Court
may only consider the allegations that Nankivell asserts in the pleadings.
Ins. Co. v. 474 F.3d 54, 57 (2d Cir.
2007) court to consider allegations
outside the complaint and its exhibits when resolving motions brought under
Rule 12(b) (6) and Rule 12(c) of the Federal Rules of Civil Procedure).
Although Nankivell styles her claims against Finger in the form of a
third-party complaint, this is inappropriate for two reasons. First,
Nankivell does not contend that Finger nis or may be liable to [her] for all
or part of the claim[s]" that the Companies assert against her. Fed. R. Civ.
P. 14 (a) (1). Second, Nankivell filed the complaint more than 14 days after
serving her original answer without first obtaining the Court's leave. Id.
Nonetheless, Finger's joinder to this action would be appropriate under
Rule 13(h) of the Federal Rules of Civil Procedure. The claims that
Nankivell asserts against Finger, but not against the Companies, similarly
would be permissible under Rule 18(a) of the Federal Rules of Civil
Procedure.
4
Case 1:11-cv-05013-NRB Document 44 Filed 10/23/12 Page 4 of 26
14.) Nankivell claims that her work on Whatsinurs was not
related to her employment with the Companies, but was the
subject of an independent partnership. Id. ~ 17.)
According to Nankivell, on or around June 21, 2010/ she
entered into an oral partnership agreement with Finger and
another associate, Karl Alomar ( "Alomar")
1
5
to develop the
Whatsinurs concept. Id. ~ 14.) Nankivell alleges that the
parties agreed to incorporate a limited liability company
"Lukuani LLC doing business as Whatsinurs. com" and to share
its profits equally. Id. ~ ~ 16, 19.) According to Nankivell,
the parties also agreed to perform various tasks in furtherance
of the putative partnership. Id. ~ 21.)
Nanki vell claims that was responsible developing
the Whatsinurs website, which did: She completed Alpha and
Beta versions of the website over the course of the year. Id.
~ ~ 22/
2 6.) Nankivell alleges that she did not receive
remuneration her work, but toiled under the expectation of
future partnership profits. Id. ~ 19.)
Meanwhile/ Finger allegedly agreed to incorporate the LLC,
reserve the Whatsinurs. com domain name, and file trademark and
copyright applications. Id. ~ 27.) According to Nankivell
1
Finger never incorporated the LLC. Id. ~ 32.) Although Finger
Nankivell that Alomar worked as a contractor through Lukuani
Inc., his own computer-based company. (Third-Party Compl. ~ 15.) Neither
Alomar nor Lukuani Inc. is a party to this suit.
5
Case 1:11-cv-05013-NRB Document 44 Filed 10/23/12 Page 5 of 26
did ster the domain name and file trademark and copyright
applications, he did so under the names of his own companies,
rather than the putative partnership.6 ~ 40.)
According to Nankivell, Finger so agreed to draft a
partnership equity agreement (the "Founders Agreement") to
ize the parties' relationship. Id. ~ 27.) Despite
Nankivell's prodding, Finger did not deliver the Founders
Agreement until June 13, 2011 approximately one year after
the part s formed the putative partnership. Id. ~ ~ 34-35.)
The Founders Agreement did not locate an equal equity interest
to Nankivell, as she expected. Id. ~ 93.) Instead, it
allocated a ten percent interest to Nankivell while
"maximize[ing]" Finger's (Id. " 93, 185.)
Nankivell alleges that, approximately one week after Finger
circulated the Founders Agreement, Finger asked her whether she
had signed the agreement. Id. ,95.) NankiveIl told Finger
that her attorney was reviewing the document. Id. ~ 96.)
Approximately days later, Finger sent Nankivell an email,
purportedly terminating her employment for cause (the
"Termination Email"). Id. , ~ 95, 98.) In the Termination
Email, Finger asked Nankivell how much time she intended to
devote to the Whatsinurs proj ect going forward. Id. , 104.)
~ ..--.. --
Finger stered the Whatsinurs. com domain name on behalf of Movie
Star Looks and filed the trademark and copyright applications under the name
of Ardis Health. 11 40.) Nankivell alleges that she does not have
ownership interests in either of these companies. Id. ~ 41.)
6
Case 1:11-cv-05013-NRB Document 44 Filed 10/23/12 Page 6 of 26
However, to this date, the Founders Agreement remains unsigned.
(Id. ~ ~ 95 96.)
As a result of the foregoing, Nanki veIl aims that she
owns the Whatsinurs website and related intellectual property,
either in whole or in part. She asserts various claims against
the movants, including breach of fiduc duty, fraudulent
inducement, conversion, unjust enrichment, and
B. Destruction of Personal Property
Nankivell alleges that, during the course her
employment, the Companies destroyed her laptop, video camera,
and digital camera and iled to reimburse her. (Countercls. ~ ~
160-74.) Accordingly, Nankivell asserts a counterclaim against
the Companies for destruction of personal property.
C. Hostile Work Environment
Nankivell claims that the movants discriminated against her
on the basis of sex by creating a hostile work environment.
Specifical Nankivell alleges that Finger relocated the
Companies' holiday party from a karaoke bar to a strip club
(Third- Party Compl. ~ 51) repeatedly invited his employees to
join him at strip clubs for a lunchtime "treat" id. ~ 58);
showed Nankivell a sexually explicit scene from a television
show and commented on the lead actress's breasts id. ~ ~ 62 63) i
described his sexual encounters with a stripper and various
other women id. ~ ~ 65-71) i and consulted with Nankivell about
7
Case 1:11-cv-05013-NRB Document 44 Filed 10/23/12 Page 7 of 26
inappropriate business proposals, such as the hiring of
burlesque dancers to perform at an upcoming conference (id. ~ ~
72 74). Nanki veIl brings claims against the movants under the
New York Human Rights Law, N.Y. Exec. Law 290 _e_t____~ . , and the
New York City Human Rights Law, N. Y. C. Admin. Code 8 107 et
III. The Instant Motions
Finger moves to dismiss the claims against him under Rule
12 (b) (6) of the Federal Rules of Civil Procedure ( "Rule
12(b) (6)/1), and the Companies move for a judgment on the
pleadings pursuant to Rule 12(c) of Fede Rules of Civil
Procedure ("Rule 12 (c) ff) .
DISCUSSION
I. Jurisdiction
The Companies apparently dispute that this Court has
jurisdiction over Nankivell's counterclaims. (Answer to
Countercl. , 146.) Al though the Companies do not pursue this
contention, the Court rna the authority and, indeed,
the obligation to satisfy it f that subject matter
jurisdiction exists. Kalson v. Paterson, 542 F.3d 281, 286 n.l0
(2d Cir. 2008).
Where, as here, there is no diversi citizenship on
which to ground a defendant's state law counterclaims,
supplemental jurisdiction, as codified in 28 U.S.C. 1367,
8
Case 1:11-cv-05013-NRB Document 44 Filed 10/23/12 Page 8 of 26
provides the only basis for jurisdiction. Jones v. Ford Motor
Credit Co., 358 F.3d 205,213 (2d Cir. 2004).7 That statute
provides:
[I] n any civil action of which the district courts
have original jurisdiction, the district courts shall
have supplemental jurisdiction over all other claims
that are so related to claims in the action within
such original jurisdiction that they form part of the
same case or controversy under Article III of the
United States Constitution.
28 U.S.C. 1367 (a)
Disputes form "part of the same case or controversy within
1367 when they de from a common nucleus of operative
fact.a Achtman v. re LLP, 464 F.3d 328,
335 (2d Cir. 2006) (internal quotation marks omitted). Thus,
supplemental jurisdiction exists if "the facts pertinent to the
federal and state claims substantially overlap," or "if
presentation of the federal claim necessarily would bring the
facts underlying the state claim before the court. a BLT Rest.
LLC v. Tourondel, 855 F. Supp. 2d 4, 10 (S.D.N.Y. 2012)
(internal quotation marks and alterations omitted) .
Here, the Court has original jurisdiction over the
Companies' claims under the Copyright Act of 1976 (the
ff
"Copyright Act ) , 17 U.S.C. 101 et . , and the Lanham Act,
----=-
15 U.S.C. 1051 et These claims arise from Nankivell's
----=-
Indeed, "[S] ection 1367 has displaced, rather than codified, whatever
validity inhered in the earlier view that a permissive counterclaim requires
independent jurisdiction (in the sense of federal question or diversity
jurisdiction) .tt , 358 F.3d at 213.
9
Case 1:11-cv-05013-NRB Document 44 Filed 10/23/12 Page 9 of 26
allegedly unlawful use of the Whatsinurs website, over which
Ardis Health maintains copyright and trademark protection.
In response to the Companies' legations, Nankivell
asserts a host counterclaims -- including breach of fiduciary
duty, fraud in the inducement, conversion, unj ust enrichment,
and meruit that seek either to (i) challenge the
movants' ownership of the Whatsinurs website and related
intellectual property or (ii) recover the value Nankivell's
services performed in connection with the Whatsinurs proj ect.
The Court has supplemental jurisdiction over these counterclaims
because they arise from, and will invite substantial proof
concerning, the same broad areas of historical fact as the
Companies' federal copyright and trademark claims.
The same cannot be said of Nankivell' s counterclaims for
destruction of personal property and sex discrimination.
Critically, neither of these counterclaims leges any facts
that are relevant or related to the Companies' copyright and
trademark claims. See Bu ex reI. Bu v. Benenson, 181 F. Supp.
2d 247, 254 (S.D.N.Y. 2001) (state law claims are not part of
the same case or controversy when they "involve different
rights, different interests, and different underlying facts"
than the federal law claims). Accordingly, these counterclaims
do not arise out of a "common nucleus of operative fact," and,
thus, are not subject to the Court's supplemental jurisdiction.
10
Case 1:11-cv-05013-NRB Document 44 Filed 10/23/12 Page 10 of 26
Therefore, we dismiss lack of subject matter
jurisdiction Nankivell's first, second, and eighth counterclaims
against the Companies, as well as her first and second
counterclaims against Finger. However, we maintain supplemental
jurisdiction over the remaining state law counterclaims, which
we will now address for their sufficiency.
II. Legal Standards
The same standard applies to motions brought under Rule
12 (c) and Rule 12 (b) (6). Bank N.Y. v. rst Millennium,
Inc., 607 F.3d 905, 922 (2d Cir. 2010) In each case, the
pleadings must include "enough facts to state a claim for relief
that is plausible on its face." _ B _ e ~ _ I _ I __A_t_I_.____~ ______~ __~ , 550
U.S. 544, 570 (2007). Where a aintiff - or, in s case, a
counter-claimant - has not "nudged [its] claims across the line
from conceivable to plausible," both dismissal and a judgment on
the pleadings are appropriate. Id.
In applying these standards, we accept as true 1 factual
allegations in eadings and draw all reasonable inferences
in the non-moving party's favor. Anderson News, L.L.C. v. Am.
Media, Inc., 680 F.3d 162, 185 (2d Cir. 2012). However, we
"give no effect to assertions of law or to legal conclusions
couched as factual allegations." Id. (internal quotation marks
and alterations omitted) .
11
Case 1:11-cv-05013-NRB Document 44 Filed 10/23/12 Page 11 of 26
III. Breach of Fiduciary Duty: Nankivell Has Failed to Allege
the Existence of a Partnership
To state a claim breach of fiduciary duty, a party must
allege "(i) the existence of a fiduciary duty; (ii) a knowing
of that duty; and (iii) damages re ting therefrom."
Johnson v. Nextel Commc'ns, Inc., 660 F.3d 131, 138 (2d Cir.
2011) . Where, as here, claim is premised upon fraudulent
conduct, party must so satis the ightened pleading
standards of Rule 9(b) of the Federal Rules of Civil Procedure.
v. Weiss, 826 F. Supp. 2d 676, 695 (S.D.N.Y. 2011);
- - - - ~ - - ~ . - - - - - - - - - - - - - -
Abercrombie v. Andrew ColI., 438 F. Supp. 2d 243, 274 (S.D.N.Y.
2006) . In other words, the party "must set forth specific facts
constituting the alleged relationship with suffic
particulari to enable the court to determine whether, if true,
such s could give rise to a fiduciary relationship." World
Wrestl Entm't Inc. v. Jakks Pac. Inc., 530 F. Supp. 2d 486,
- - - - - - - - - - ~ - - - - - - - - ~ - - - - - - - - - - - - - - - - - - - - - - ~ - - - - - - -
504 (S.D.N.Y. 2007) (internal quotation marks omitted).
NankiveIl claims that Finger owed a fiduciary duty by
virtue of a partnership between them.
8
It is undisputed,
however, that the parties did not execute a written partnership
agreement. Therefore, the relevant inquiry is whe Nankivell
NankiveIl also describes her business wi th as a
"joint venture." (Third-Party Compl. ~ ~ l7, 19 20.) The distinction is
immaterial for the purpose of the instant motions. See Scholastic Inc. v.
Harris, 259 F. 3d 73, 84 (2d Cir. 2001) ("Under New York law ventures
are governed by the same legal rules as partnerships, because a joint venture
is essential a partnership for a limited purpose./I) (internal citations
omitted) i infra note 11.
12
Case 1:11-cv-05013-NRB Document 44 Filed 10/23/12 Page 12 of 26
specific s, pled with particulari
has
demonstrating
existence of a partnership fact. See
Cze cki v. Lawniczak, 904 N.Y.S.2d 127, 131 (N.Y. App. Div.
2010) ( "When re is no written partnership agreement between
the parties, the court must ermine whether a partnership in
fact sted. . " )
To plead the stence of a partnership fact, a party
must all (i) the sharing profits and lossesi (ii) joint
control and management of the business i (iii) the contribution
by each party of property, financial resources, effort, skill,
or knowledge; and (iv) intent to form a partnership. Anwar
v. Fairfield Greenwich Ltd., 728 F. Supp. 2d 372, 403 04
(S.D.N.Y. 2010); see also Moses v. Savedoff, 947 N.Y.S.2d 419,
423 (N.Y. App. Div. 2012) (articulating the same factors).9
Al though none of factors is determinat some of them
we more heavily than others. For example, an agreement to
share losses is "indispensible" to partnership formation.
Steinbeck v. Gerosa, 151 N.E.2d 170, 178 (N.Y. 1958) i see also
Moses, 947 N.Y.S.2d at 423 ("[Ilt is axiomatic the
essential elements of a partnership must include an agreement
9 When ing the existence of a partnership in fact, courts may also
consider additional factors, including the ownership of partnership assets,
joint liability to creditors, compensation, the contribution of capital, and
loans to the organization. Ashlock v No. 10 Civ. 453
(PAE) , 2012 'tIL 3055775, at *7 26, 2012 i , 904 N. Y. S.
2d at 131.
13
Case 1:11-cv-05013-NRB Document 44 Filed 10/23/12 Page 13 of 26
between the principals to share losses as well as profits. II)
(internal quotation marks omitted)
Here, the pleadi are bereft of any allegation that the
parties agreed to share losses. 10 Without this "indispensable
u
ingredient, Nankivell cannot plead the existence of a
partnership in fact.
i1
See e .. , Latture v. Smith, 766 N.Y.S.2d
906, 906-07 (N.Y. App. Div. 2003) (finding that plaintiff fail
to set forth a legally cognizable cause of action based on an
\\
oral partnership agreement when he led to plead a mutual
promise or undertaking to share the burden of the losses the
alleged enterprise, an indispensable element a partnership or
joint venture"); Poon v. Roomorama, LLC, No. 09 3224 (RMB) ,
2009 WL 3762115, at *4 (S.D.N.Y. Nov. 10, 2009) (dismissing a
claim for breach of fiduciary duty when "[pJ laintiff d [idJ
not appear to have committ to the sharing of any losses
ll
)
The pleadings are similarly deficient with respect to the
intent element. Nankivell does not lege any facts that enable
10
While it is true that Nankivell stood to lose the value of the services
she rendered in connection with the putative partnership, "the value of
services is not sufficient to satisfy the required sharing of losses
element.
u
!<-idzSloz, Inc. v. Officially For Kids, Inc., 320 F. Supp. 2d 164,
172 (S.D.N.Y. 2004) (internal quotation marks omitted) i see also 90sy Goose
Hellas v. ,581 F. Supp. 2d 606,62021 (S.D.N.Y. 2008)
collecting cases .
11 Nankivell's failure to allege an agreement to share losses also belies
any conclusion that the parties formed a joint venture. ~ ~ ~ : . . ' Zeising
v. Kel , 152 F. Supp. 2d 335, 348-49 (S.D.N.Y. 2001) (dismiss a claim for
breach of fiduciary duty, premised on the existence of a joint venture, when
the plaintiffs failed to allege an agreement to share losses) i
Nos. 09 Civ. 4410 (JG) (LB), 09 Civ. 3935 (JG) (LB) i 2010 WL 475302,
at *3 (E.D.N.Y. Feb. 8, 2010) (same).
14
Case 1:11-cv-05013-NRB Document 44 Filed 10/23/12 Page 14 of 26
the Court to conclude
Finger and/or Alomar intended to
Instead,
relies on two documents that
a part
allegedly nce the parties' intent: ( i ) Founders
Agreement and (ii) the Terminat Email. Nei document
supports Nankivell's position.1
2
Nankivell alleges that the Founders Agreement "acknowledged
and confirmed" "status as a founding partner." rd-Party
~ 92.) In reality, however, the Founders Agreement
suf the same defect as Nankivell's al ions: it does not
contemplate a loss sharing arrangement. Thus, even if executed,
the Founders Agreement would not have created a valid
partnership New law. See Chanler v. Roberts, 606
N.Y.S.2d 649, 650 (N.Y. App. Div. 1994) (\\ [A] n undertaking to
share in profits without submitting to burden making good
the losses renders such an agreement a nulli under partnership
law."). Accordingly, to extent the document evinces the
parties' intent, it does nothing to bolster Nankivell's claims.
NankiveIl's reliance on the Termination Email is equal
mi aced. According to pleadings, the Termination Email
"acknowledged [Nankivell's] partie ion in Whatsinurs was
independent of status as an employee." (Third-Party Compl.
:2 In cons the instant motions, the Court may consider "any
statements or documents incorporated in [the pleadings] by reference," as
well as any ftdocuments that [Nankivell] either possessed or knew about and
upon which [she] relied in bringing the suit." Rothman v. ~ r " ' . n " r , 220 F.3d
81, 88-89 (2d Cir. 2000).
15
Case 1:11-cv-05013-NRB Document 44 Filed 10/23/12 Page 15 of 26
__ __
I
105.) To
sure, the Termination Email \\ inquired how much
time [Nankivell] intended to devote to the Whatsinurs venture
going forward." Id. 104; se_e____s_o Decl. Jordan Finger in
Supp. of s. I Mot. for Prelim. Inj. (\\Finger Decl. II) Ex. K
(\\ [W] e should still discuss what your commi tment is to work on
Whatsinurs.
II
At the same timel however the Termination Email ) I
also demanded the return of "creat assets
ll
related to the
Whatsinurs project. (Finger Decl'
l
Ex. K.) Thus
l
contrary to
Nankivell's contention
l
the document far from "proves
ll
that
"Whatsinurs was a venture separate and apart from NankiveIl s
aried employment. II (Am. Mem. of Law in Opp/n to s.' and
Third-Party Def./s Mot. to Dismiss at 2.)
Based on the foregoing
l
we find that Nankivell has not pled
the existence of a partnership in fact. AccordinglYI we dismiss
her counterclaims for breach of fiduciary duty (counterclaims
tenl eleven, twelve
l
and thirteen against Finger) .
IV. Nankivell' s Fraudulent Inducement Claim Fails as a Matter
of Law
Under New York lawI \\, general allegations that defendant
entered into a contract while lacking the intent to perform it
are insufficient to support a fraud claim. I II Garrett v. Music
L_L_CI 740 F. Supp. 2d 457 1 465 (S.D.N.Y. 2010)
(internal alterations omitted) (quoting Wall v. CSX
Inc'
l
471 F.3d 410
/
416 (2d Cir. 2006. "To maintain a fraud
16
I
Case 1:11-cv-05013-NRB Document 44 Filed 10/23/12 Page 16 of 26
claim based on intentionally- se statements indicating an
intent to perform under a contract," a party must " (i)
demonstrate a legal duty e from the duty to perform under
the contractj (ii) demonstrate a fraudulent misrepresentation
collat or extraneous to the contractj or (iii) seek speci
damages that are caused by the misrepresentation and
unrecoverable as contract damages." Miller v. Holtzbrinck
publishers L. L.C., 377 Fed. App'x 72, 74 (2d r. 2010 )
(internal quotation marks and alterations omitted) .
Here, Nankivell explicitly bases her fraudulent inducement
claim upon allegations that Finger entered into the putative
partnership agreement while lacking the intent to perform it.
Nankivell alleges that nger promised her that she would be an
equal equity partner in the Whatsinurs partnership (Third-Party
Compl. ~ ~ 203-04) I but did "not intend" for her to be an equal
equity partner and, indeed, never provided her an equal equity
interest id. ~ ~ 206, 209) Although Nankivell endeavors to
establish a separate legal duty by invoking her "fiduciary
relationship with Finger" id. ~ 207), the eadings fail to
demonstrate the existence such a relationship, as discussed
supra. Thus, we find that Nankivell's ent inducement
claim fails as a matter of law. We dismiss counterclaim
fourteen against Finger.
17
Case 1:11-cv-05013-NRB Document 44 Filed 10/23/12 Page 17 of 26
v.
Nankivell's Conversion Claims Are Preempted
by the
Copyright Act and/or Fail to State a Claim
Nankivell asserts claims against the movants conversion
of Whatsinurs website, domain name, trademark, trade ss,
and copyright. We find that the Copyright Act preempts
Nankivell's claim for conversion the website, and that
Nankivell has fail to state a claim for conversion of the
ight, trademark, trade domain name.
A. The Copyright Act Preempts Nankivell's Claim for
Conversion of the Website
Section 301 of Copyright Act preempts a state law claim
when (i) work at issue f Is within "the type works
protected by the Copyright Act under 17 U.S.C. 102 and 103"
and ( i i) the state law claim
"
to vindicate 'legal or
equi table rights that are equivalent' to one of t bundle of
exclus rights ready protected by copyright law under 17
U.S.C. 106."
Inc., 650 F.3d 876, 892 (2d r.2011) (quoting 17 U.S.C.
301 )
The first prong, ref to as
"
ect matter
requirement," is satisfied when the state law claim "applies to
a work of authorship fixed in a tangible medium of expression
and falling within the ambit of one of the categories of
copyrightable works."
Pictures, Inc., 373 F.3d 296, 305 (2d Cir. 2004). The work
18
" ' ~ - - - - - - - - - - - - - - - - - - - - - - - - - -
Case 1:11-cv-05013-NRB Document 44 Filed 10/23/12 Page 18 of 26
"need not consist entirely of copyrightable material" but must
"only fit into one of copyrightable categories a broad
sense./f I d.; see al so _I__=<--__l_v_e_N_u_t_r_i__t_l_'_o_n-,--_I_n_c_,_v_,_A_c_a_d_,__o_f
Heal Nutrition, 476 F, Supp. 2d 291, 296 (S.D,N.Y. 2007)
second prong, referred to as the "general scope
requirement," is satisfied when the state created right may be
abridged by an act that would,
"
and of it sel f ," infringe an
exclusive right of copyright. Forest Park P s v, Universal
Television Network, Inc" 683 F.3d 424, 430 (2d Cir. 2012)
(internal quotation marks omitted). "In other words, the state
law c im must involve acts of reproduction, adaptation,
performance, stribut ion [, ] or display." Br ch, 373 F. 3 d
- - _ . . . . : . . . . . . . . : . . . . ~
at 305. If the cause of action requires an extra ement
"
ead of or in addition to" these acts, then the state-
created right does not 1 within general scope of
copyright, and preemption will not apply. Forest Park Pictures,
683 F.3d at 430 (internal quotation marks omitted) .
Here, Ardis Heal registered a copyright for the
Whatsinurs website, which Nankivell claims she owns in whole or
in part. under these circumstances, one would have thought that
Nanki veIl would (i) seek a declaration that she is the sale
author of the Whatsinurs website and, thus, the sale owner of
its copyright; (ii) seek a declarat that the website
qualifies as a "joint work" within the meaning of 17 U.S.C,
19
Case 1:11-cv-05013-NRB Document 44 Filed 10/23/12 Page 19 of 26
101; or (iii) simply raise these arguments fense to the
Companies' copyright infringement claim.
Curiously, however,
Nankivell goes to great lengths to avoid these obvious claims
and, thus, the traps they might entail
13
and opts instead to
bring a claim state law conversion. Our speculation aside,
we proceed to cons whether Nankivell's effort survives
federal preemption.
The parties do not dispute that the Whatsinurs website
Is wi thin the subj ect matter of copyright. 14 The only point
of contention is whether Nanki vell' s conversion claim contains
an "extra element" that spares it from preemption.
is with the cause action itself. We begin our
Under New York law, "conversion is the unauthorized assumption
and exercise of the right of ownership over goods belonging to
another to the exclusion of the owner's rights. fI f v.
13
Given the work for hire doctrine, it is far from clear that Nankivell
would on any claims brought under the Copyright Act. See , ~ ,
Fleurimond v. New York - F. Supp. 2d ,No. 09 Civ. 3739 (ADS) (AKT),
2012 WL 2813996 E.D.N.Y. July 10, 2012).
14 The Court recognizes the existence of authority, remarkably absent from
Nankivell's brief, supporting the proposition that a website, in and of
itself, does not necessarily satis the subj ect matter requirement. See,
v. Sec. Inc. No. 10 civ. 390 (KSF) I
.D. Ky. May 23, 2012. In this case, however,
Nankivell explicitly anchors her conversion claim in the website's "design'l
and "distinctive look" (Third-Party Compl. ~ 122), both of which fall within
the general ambit of federal copyright law.
No. 05 civ. 1362 (HRL) , 2005 WL 1593533, at *4
also ive Inc., 476 F. Supp. 2d at 296. To the extent that
the also encompasses non-copyrightable aspects of the website, "these
are not sufficient to remove [the claim] from the broad ambit of the subject
matter categories." 373 F. 3d at 306. Indeed," [i] t bears
repeat that a work need not consist entirely of copyrightable material in
order to satisfy the subject matter requirement." Nutrition
Inc., 476 F. Supp. 2d at 296.
(N.D. Ca . June 29, 2005 ; see
20
Case 1:11-cv-05013-NRB Document 44 Filed 10/23/12 Page 20 of 26
Nationwide Mut. Ins. Co. I 460 F. 3d 400, 403 04 (2d Cir. 2006)
(internal quotation marks terat omitted) (quoting
ilant Ins. Co. of Am. v. Hous. Auth'
l
660 N.E.2d 11211 1126
(N.Y. 1995. Courts In this Circuit routinely hold that
conversion claims are not qualitatively different from copyright
actions and
l
thus, are preempted. See . , Miller
l
377
---''----'''''-
& Row Publishers Inc. v. Nation Enters.,
723 F.2d 195[ 200-01 (2d Cir. 1983), rev/d on other
App' x at 74 i
I 471
U.S. 539 (1985) i Miller v. Holtzbrincj<: Publishers LLC
I
No. 08
l
Civ. 3508 (HB) 2008 WL 4891212
1
at *2-3 (S.D.N.Y. Nov. 111 I
2008) . To determine whether NankiveIl s claim meets the same I
fate, we must analyze the property ri s seeks to protect
l
the theories under which she seeks to protect them, the
rights seeks to enforce. Bri 373 F.3d at 306. I
- - - - - - - - - ' ~ - - - -
The gravamen of Nankivell/s claim is that she "created" the
Whatsinurs website, including its "design" and "distinctive
look, ff and that the movants exerci "unauthorized dominion"
over the work and presented it to the public as their own.
rd-Party Compl. ~ ~ 120-26.) In other words, Nankivell
asserts protectable interests in a copyrighted work (the website
and its content) that allegedly belong to her by virtue of
authorship. Among the rights Nankivell seeks to protect is her
ability to di ay the work to the public. This cIa falls
21
Case 1:11-cv-05013-NRB Document 44 Filed 10/23/12 Page 21 of 26
squarely wi thin the general ambit of federal copyright law. 15
See e. . , Archie Comic Publ' ns , Inc. v. DeCarlo, 141 F. Supp.
2d 428, 432 (S.D.N.Y. 2001) (finding a conversion claim
preempted when authorship was the only basis the plaintiff's
leged rights in the subj ect work); see also _H_a_r_l_"'--__~ ___=_
No. 08 Civ. 5791 (KBF) (RBP) , 2012 WL 1538434, at *5 (S.D.N.Y.
April 30, 2012) (noting that a conversion claim cannot stand as
a matter of law when it asserts property interests in a
copyrighted work) .
To avoid this result, Nankivell argues that her conversion
claim contains "extra elements" insofar as it alleges that (i)
Finger breached a fiduciary duty, (i i) the movants do not
rightful own any property interests in the website, (iii)
the movants
t
copyright registration is inval Nankivell's
argument not only fails as a matter of law, but also serves to
illustrate the broader shortcomings of her pleadings.
Nankivell's argument fails as a matter law because it is
the elements of the cause of action, not the facts pled to prove
them, that dictate whether a particular claim involves rights
15
Although Nankivell does not raise the issue, the Court notes that, in
""-'--_....b .. ~ _ ..&.: .. _ the Court of Appeals for the Second Circuit suggested, in _____~
dictum, that a conversion claim may survive Copyright Act preemption when it
alleges the physical possession of a copyrighted work. See 723 F. 2d at 201
(reasoning that such a tort would involve acts that are "qualitatively
different from those proscribed by copyright law.") i Nimmer on
Copyrights 1.01. Here, Nankivell claims that the movants exercised
"unauthorized dominion" over the website. (Third-Party Compl. ~ 124.)
However, this allegation cannot serve as a prophylactic for preemption
because Nankivell's claim is explicit rooted in intangible property rights
that are not capable of physical possession. See supra note 14.
22
Case 1:11-cv-05013-NRB Document 44 Filed 10/23/12 Page 22 of 26
. ,
equivalent to those set forth in the Copyright Act. See
s v. Associated Press, 3 F.3d 656, 666 (2d Cir. 1993); see
& Distrib. LLC v. Rubber Co.
Ltd., 682 F.3d 292
1
310 (4th Cir. 2012) ("[TJ focus under
301 is not on the conduct or facts pI but on the ements
the causes of action. ") (internal quotation marks omitted).
Nankivell does not and cannot contend t t, inter alia, a
defendant's possession of an invalid copyright is a neces
element of a conversion claim.
16
Indeed Nankivell/s assertion of such "extra elements" only
l
reinforces the Court's conclusion that claim is a copyright
action disguise. If Nankivell truly wished to challenge the
ownership of copyrighted mat all she should have lit ed
s claim under the Copyright Act rather than endeavoring to
shoehorn it into a state law conversion action. Because she has
fail to do so, we must dismiss Nankivell's third counterclaim
against the movants as preempt In any event, t pleadings
also fail to state a claim, as discussed infra.
B. Nankivell Fails to State a Claim for Conversion of the
Copyright, Trademark, Trade Dress, and Domain Name
To state a claim for conversion under New York law, a party
must al that (i) "the party charged has acted without
In any event, Nankivell al these "extra elements" by way of
shotgun eading. (Third-Party Compl. ~ 119.) As courts in this District
have recognized, such pleading "illustrates utter disrespect for Rule 8 of
the Federal Rules of Civil Procedure. 1/ Manbeck v. Micka, 640 F. Supp. 2d
351, 366 (S.D.N.Y. 2009) (internal quotation marks and alterations omitted).
23
Case 1:11-cv-05013-NRB Document 44 Filed 10/23/12 Page 23 of 26
authorization
u
and
(i i) "exercised dominion or a right of
ownership over property belonging to another," and that (iii)
"the rightful owner rna [del a demand
property" and (iv)
such demand was "refused." Lenard v. Desi studio, F. Supp.
2d No. 08 Civ. 10560 (JPO) , 2012 WL 3642402, at * 9
(S.D.N.Y. Aug. 24, 2012) (internal quotation marks omitted).
"Where the original possess is lawful, a conversion does not
occur until [party charged] refuses to return the property
after demand or until he sooner sposes of the property."
f v. Nationwide Mut. Ins. Co., 360 Fed. App'x 179, 180 (2d
Cir. 2010) (internal quotation marks omitted) .
Here, Nankivell acknowledges that the movants' initial
possession the property, to the extent the property could be
possessed,17 was lawful insofar as it arose in the context of
putative partnership. However, Nankivell does not lege that
she demanded return of property, or that movants refused
any such demand. Accordingly, Nankivell ls to state a claim
conversion, and we must dismiss fourth, fifth, s h,
and seventh counterclaims alleged against the movants. See
e.g., Lenard, 2012 WL 3642402, at *9 (dismissing conversion
17 The movants argue that Nankivell's conversion claims are inactionable
because they involve intangible property. While this is certainly true with
respect to at least some of the property interests, see, e. g. , v.
F. Supp. 2d -, No. 11 civ. 3450 (SAS) 2012 WL 1744976, at *7 I
(S.D.N.Y. r"lay 16, 2012) (describing a trademark as "intangible intellectual
property having no existence apart from the good will of the product or
service it symbolizes") (internal quotation marks omitted) I the Court need
not reach this issue in light of the other shortcomings in NankiveIl's
pleadings.
24
Case 1:11-cv-05013-NRB Document 44 Filed 10/23/12 Page 24 of 26
demand) i Stadt v. Fox News Network
for f lure to
LLC, 719 F. Supp. 2d 312, 322 (S.D.N.Y. 2010) (same) i im
whi te Food Prods. . , 868 N.Y.S.2d 279, 280 81
(N.Y. App. Div. 2008) (same).
VI. The Copyright Act Preempts Nanki veIl's Claims for Unj ust
Enrichment and Quantum Meruit
18
\\Courts generally conc that theory unjust
enrichment protects rights are es ally 'equivalent' to
rights cted by the Copyright Act i unjust enrichment
cl related to the use of copyrighted material are generally
preempted./I Weber v. Geffen Records Inc., 63 F. Supp. 2d 458,
- - - - - - - - - - - - - - - - - - - - - - - - - - - - ~ - - - - - -
462 (S.D.N.Y. 1999) (internal quotation marks omitted) i see also
~ ~ ~ ~ __, 373 F.3d at 306 07.
Here, there is no reason to depart from s conclusion.
Nankivell's unjust enrichment and quantum meruit claims apply to
the Whatsinurs website, which undisputedly Is within the
subject matter of the Copyright Act. See note 14.
Furthermore, NankiveIl bases her claims on the movants' public
use display of the website (Thi Party Compl. ~ ~ 171, 176),
a right ected by 17 U.S.C. 106. fore, we dismiss
and count aims against Finger, as well as the
ninth and t counterclaims aga t the Companies, as
preempted.
e
18 Applying New York lawI a court "may and unjust
enrichment together as a single quasi contract
analyze
v. Cornell
Univ., 584 F.3d 487, 509 n.9 (2d Cir. 2009).
25
Case 1:11-cv-05013-NRB Document 44 Filed 10/23/12 Page 25 of 26
CONCLUSION
For the foregoing reasons! the motions (docket nos. 35 and
36) are granted.
Dated: New York, New York
October 23, 2012
NAOMI REICE BUCHWALD
UNITED STATES DISTRICT JUDGE
Copies of the foregoing Order have been mailed on t s date to
the following:
Attorney for Counter-Claimant
Gail I. Auster, Esq.
Law Offices of Gail I. Auster & Associates! PC
910 West End Avenue! Suite 1A
New York! NY 10025
Attorneys for Counter-Defendants
David E. Valicenti, Esq.
Christopher Michael Hennessey! Esq.
Cohen Valicenti & Cook LLP
28 North Street, Third oor
Pittsfield! MA 01201
26
Case 1:11-cv-05013-NRB Document 44 Filed 10/23/12 Page 26 of 26