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Case 1:18-cv-00095-LAK Document 36 Filed 04/19/18 Page 1 of 22

UNITED STATES DISTRICT COURT


FOR THE SOUTHERN DISTRICT OF NEW YORK

)
KEURIG GREEN MOUNTAIN, INC., a ) CIVIL ACTION NO. 18-CV-0095
Delaware corporation, )
)
Plaintiff, )
)
vs. )
)
GLOBAL BARISTAS U.S., LLC, a
)
Washington limited liability company, and
)
GLOBAL BARISTAS, LLC, a Washington
)
limited liability corporation
)
Defendants.

ANSWER AND COUNTERCLAIMS

Defendants Global Baristas U.S., LLC and Global Baristas, LLC (collectively, “the Global

Baristas Parties” in the singular) for its answer to Plaintiff’s complaint (the “Complaint”), responds

and alleges as follows:

1. The Global Baristas Parties are without knowledge as to the allegations in paragraph

1 of the Complaint (“Paragraph 1”) and deny that Plaintiff is entitled to any relief in this action.

2. The Global Baristas Parties are without knowledge as to the allegations in

Paragraph 2.

3. The Global Baristas Parties are without knowledge as to the allegations in

Paragraph 3.

4. The Global Baristas Parties admit the allegations in Paragraph 4, except deny that

Global Baristas, LLC manages Global Baristas U.S., LLC.

5. The Global Baristas Parties admit the allegations in Paragraph 5 for jurisdictional

purposes only.
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6. The Global Baristas Parties deny the allegations in Paragraph 6, except admit that

this Court has personal jurisdiction over Global Baristas, LLC.

7. The Global Baristas Parties deny the allegations in Paragraph 7 except admit that

venue is proper.

8. The Global Baristas Parties admit that the Plaintiff and Global Baristas, LLC

entered into a trademark license agreement (the “Trademark License Agreement”), and refer the

Court to the Trademark License Agreement for the full meaning and import of its terms. The Global

Baristas Parties deny that Global Baristas U.S., LLC is a party to the Trademark License

Agreement.

9. The Global Baristas Parties are without knowledge as to the allegations in

Paragraph 9 and, to the extent Paragraph 9 refers to the Trademark License Agreement Global

Baristas refers the Court to the Trademark License Agreement and exhibits for the full meaning

and import of its terms.

10. The Global Baristas Parties are without knowledge as to the allegations in

Paragraph 10.

11. The Global Baristas Parties are without knowledge as to the allegations in

Paragraph 11.

12. The Global Baristas Parties are without knowledge as to the allegations in

Paragraph 12.

13. The Global Baristas Parties neither admit nor deny the conclusions of law asserted

in Paragraph 13, and refers the Court to the Trademark License Agreement for the full meaning

and import of its terms. The Global Baristas Parties deny that Global Baristas U.S., LLC is a party

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to the Trademark License Agreement and, accordingly, deny that Global Baristas U.S., LLC has

any obligations pursuant to the Trademark License Agreement.

14. The Global Baristas Parties neither admit nor deny the conclusions of law asserted

in Paragraph 14, and refers the Court to the Trademark License Agreement for the full meaning

and import of its terms. The Global Baristas Parties deny that Global Baristas U.S., LLC is a party

to the Trademark License Agreement and, accordingly, deny that Global Baristas U.S., LLC has

any obligations pursuant to the Trademark License Agreement.

15. The Global Baristas Parties neither admit nor deny the conclusions of law asserted

in Paragraph 15, and refers the Court to the Trademark License Agreement for the full meaning

and import of its terms. The Global Baristas Parties deny that Global Baristas U.S., LLC is a party

to the Trademark License Agreement and, accordingly, deny that Global Baristas U.S., LLC has

any obligations pursuant to the Trademark License Agreement.

16. The Global Baristas Parties neither admit nor deny the conclusions of law asserted

in Paragraph 16, and refers the Court to the Trademark License Agreement for the full meaning

and import of its terms. The Global Baristas Parties deny that Global Baristas U.S., LLC is a party

to the Trademark License Agreement and, accordingly, deny that Global Baristas U.S., LLC has

any obligations pursuant to the Trademark License Agreement.

17. The Global Baristas Parties neither admit nor deny the conclusions of law asserted

in Paragraph 17, and refers the Court to the Trademark License Agreement for the full meaning

and import of its terms. The Global Baristas Parties deny that Global Baristas U.S., LLC is a party

to the Trademark License Agreement and, accordingly, deny that Global Baristas U.S., LLC has

any obligations pursuant to the Trademark License Agreement.

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18. The Global Baristas Parties deny the allegations in Paragraph 18 as phrased, and

refer the Court to the Trademark License Agreement for the full meaning and import of its terms.

The Global Baristas Parties deny that Global Baristas U.S., LLC is a party to the Trademark

License Agreement and, accordingly, deny that Global Baristas U.S., LLC has any obligations

pursuant to the Trademark License Agreement.

19. The Global Baristas Parties neither admit nor deny the conclusions of law asserted

in Paragraph 19, and refer the Court to the Trademark License Agreement for the full meaning and

import of its terms.

20. The Global Baristas Parties deny the allegations in Paragraph 20 as phrased, and

refer the Court to the Trademark License Agreement for the full meaning and import of its terms.

The Global Baristas Parties deny that Global Baristas U.S., LLC is a party to the Trademark

License Agreement and, accordingly, deny that Global Baristas U.S., LLC has any obligations

pursuant to the Trademark License Agreement.

21. The Global Baristas Parties deny the allegations in Paragraph 21 as phrased, and

refer the Court to the Trademark License Agreement for the full meaning and import of its terms.

The Global Baristas Parties deny that Global Baristas U.S., LLC is a party to the Trademark

License Agreement and, accordingly, deny that Global Baristas U.S., LLC has any obligations

pursuant to the Trademark License Agreement.

22. The Global Baristas Parties neither admits nor denies the conclusions of law

asserted in Paragraph 22, and refer the Court to the Trademark License Agreement for the full

meaning and import of its terms. The Global Baristas Parties deny that Global Baristas U.S., LLC

is a party to the Trademark License Agreement and, accordingly, deny that Global Baristas U.S.,

LLC has any obligations pursuant to the Trademark License Agreement.

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23. The Global Baristas Parties deny the allegations in Paragraph 23 as phrased, and

refer the Court to the Trademark License Agreement for the full meaning and import of its terms.

The Global Baristas Parties deny that Global Baristas U.S., LLC is a party to the Trademark

License Agreement and, accordingly, deny that Global Baristas U.S., LLC has any obligations

pursuant to the Trademark License Agreement.

24. The Global Baristas Parties deny the allegations in Paragraph 24 as phrased, and

refer the Court to the Trademark License Agreement for the full meaning and import of its terms.

The Global Baristas Parties deny that Global Baristas U.S., LLC is a party to the Trademark

License Agreement and, accordingly, deny that Global Baristas U.S., LLC has any obligations

pursuant to the Trademark License Agreement.

25. The Global Baristas Parties deny the allegations in Paragraph 25 as phrased, and

refer the Court to the Trademark License Agreement for the full meaning and import of its terms.

The Global Baristas Parties deny that Global Baristas U.S., LLC is a party to the Trademark

License Agreement and, accordingly, deny that Global Baristas U.S., LLC has any obligations

pursuant to the Trademark License Agreement.

26. The Global Baristas Parties deny the allegations in Paragraph 26. Additionally, the

Global Baristas Parties deny that Global Baristas U.S., LLC is a party to the Trademark License

Agreement.

27. The Global Baristas Parties deny the allegations in Paragraph 27 as phrased, and

refer the Court to the Trademark License Agreement for the full meaning and import of its terms.

28. The Global Baristas Parties deny the allegations in Paragraph 28 as phrased, and

refer the Court to the Trademark License Agreement for the full meaning and import of its terms.

The Global Baristas Parties deny that Global Baristas U.S., LLC is a party to the Trademark

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License Agreement and, accordingly, deny that Global Baristas U.S., LLC has any obligations

pursuant to the Trademark License Agreement. The Global Baristas Parties further refer the Court

to the letter annexed to the Complaint as “Exhibit B” (the “Notice Letter”) for the full meaning and

import of its terms, including the fact that the Notice Letter does not refer to Global Baristas U.S.,

LLC.

29. The Global Baristas Parties deny the allegations in Paragraph 29 as phrased, and

refer the Court to the Trademark License Agreement for the full meaning and import of its terms.

The Global Baristas Parties deny that Global Baristas U.S., LLC is a party to the Trademark

License Agreement and, accordingly, deny that Global Baristas U.S., LLC has any obligations

pursuant to the Trademark License Agreement.

30. The Global Baristas Parties deny the allegations in Paragraph 30 and refer the Court

to the Trademark License Agreement for the full meaning and import of its terms. The Global

Baristas Parties deny that Global Baristas U.S., LLC is a party to the Trademark License

Agreement and, accordingly, deny that Global Baristas U.S., LLC has any obligations pursuant to

the Trademark License Agreement.

31. The Global Baristas Parties deny the allegations in Paragraph 31.

32. The Global Baristas Parties deny the allegations in Paragraph 32 and refer the Court

to the Trademark License Agreement for the full meaning and import of its terms. The Global

Baristas Parties deny that Global Baristas U.S., LLC is a party to the Trademark License

Agreement and, accordingly, deny that Global Baristas U.S., LLC has any obligations pursuant to

the Trademark License Agreement.

33. The Global Baristas Parties deny the allegations in Paragraph 33, and refer the Court

to the Trademark License Agreement for the full meaning and import of its terms. Global Baristas

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neither admits nor denies any conclusions of law contained in Paragraph 33. The Global Baristas

Parties deny that Global Baristas U.S., LLC is a party to the Trademark License Agreement and,

accordingly, deny that Global Baristas U.S., LLC has any obligations pursuant to the Trademark

License Agreement.

34. The Global Baristas Parties denies the allegations in Paragraph 34 and refers the

Court to the terms of the Trademark License Agreement and the Notice Letter for their full meaning

and import. The Global Baristas Parties neither admit nor deny any conclusions of law contained

in Paragraph 34. The Global Baristas Parties deny that Global Baristas U.S., LLC is a party to the

Trademark License Agreement and, accordingly, deny that Global Baristas U.S., LLC has any

obligations pursuant to the Trademark License Agreement.

35. The Global Baristas Parties deny the allegations in Paragraph 35 and refer the Court

to the terms of the Trademark License Agreement and the Notice Letter for their full meaning and

import. Global Baristas neither admits nor denies any conclusions of law contained in Paragraph

35. The Global Baristas Parties deny that Global Baristas U.S., LLC is a party to the Trademark

License Agreement and, accordingly, deny that Global Baristas U.S., LLC has any obligations

pursuant to the Trademark License Agreement.

36. The Global Baristas Parties deny the allegations in Paragraph 36 and refer the Court

to the terms of the Trademark License Agreement and the Notice Letter for their full meaning and

import. The Global Baristas Parties neither admit nor deny any conclusions of law contained in

Paragraph 36. The Global Baristas Parties deny that Global Baristas U.S., LLC is a party to the

Trademark License Agreement and, accordingly, deny that Global Baristas U.S., LLC has any

obligations pursuant to the Trademark License Agreement.

PLAINTIFF’S COUNT I

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37. In response to paragraph 37, the Global Baristas Parties adopt and restate their

answers to the preceding paragraphs as if fully stated.

38. The Global Baristas Parties lack knowledge or information sufficient to form a

belief as to the truth of the allegations in Paragraph 38.

39. Paragraph 39 sets forth legal conclusions to which no response is required. To the

extent the Court requires a response; the Global Baristas Parties deny the allegations in Paragraph

39.

40. Paragraph 40 sets forth legal conclusions to which no response is required. To the

extent the Court requires a response; the Global Baristas Parties deny the allegations in Paragraph

40.

41. Paragraph 41 sets forth legal conclusions to which no response is required. To the

extent the Court requires a response; the Global Baristas Parties deny the allegations in Paragraph

41.

42. Paragraph 42 sets forth legal conclusions to which no response is required. To the

extent the Court requires a response; the Global Baristas Parties deny the allegations in Paragraph

42.

PLAINTIFF’S COUNT II

43. In response to paragraph 43, the Global Baristas Parties adopt and restate their

answers to the preceding paragraphs as if fully stated.

44. Paragraph 44 sets forth legal conclusions to which no response is required. To the

extent the Court requires a response; the Global Baristas Parties deny the allegations in Paragraph

44.

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45. Paragraph 45 sets forth legal conclusions to which no response is required. To the

extent the Court requires a response; the Global Baristas Parties deny the allegations in Paragraph

45.

46. Paragraph 46 sets forth legal conclusions to which no response is required. To the

extent the Court requires a response; The Global Baristas Parties deny the allegations in Paragraph

46.

PLAINTIFF’S COUNT III

47. In response to paragraph 47, Global Baristas adopts and restates its answers to the

preceding paragraphs as if fully stated.

48. Paragraph 48 sets forth legal conclusions to which no response is required. To the

extent the Court requires a response; the Global Baristas Parties deny the allegations in Paragraph

48. The Global Baristas Parties further deny that Global Baristas U.S., LLC is a party to the

Trademark License Agreement and, accordingly, deny that Global Baristas U.S., LLC has any

obligations pursuant to the Trademark License Agreement.

49. Paragraph 49 sets forth legal conclusions to which no response is required. To the

extent the Court requires a response; the Global Baristas Parties deny the allegations in Paragraph

49. The Global Baristas Parties further deny that Global Baristas U.S., LLC is a party to the

Trademark License Agreement and, accordingly, deny that Global Baristas U.S., LLC has any

obligations pursuant to the Trademark License Agreement.

50. Paragraph 50 sets forth legal conclusions to which no response is required. To the

extent the Court requires a response; the Global Baristas Parties deny the allegations in Paragraph

50.

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PLAINTIFF’S COUNT IV

51. In response to paragraph 51, the Global Baristas Parties adopt and restate their

answers to the preceding paragraphs as if fully stated.

52. Paragraph 52 sets forth legal conclusions to which no response is required. To the

extent the Court requires a response; the Global Baristas Parties deny the allegations in Paragraph

52. The Global Baristas Parties further deny that Global Baristas U.S., LLC is a party to the

Trademark License Agreement and, accordingly, deny that Global Baristas U.S., LLC has any

obligations pursuant to the Trademark License Agreement.

53. Paragraph 53 sets forth legal conclusions to which no response is required. To the

extent the Court requires a response; the Global Baristas Parties deny the allegations in Paragraph

53.

54. Paragraph 54 sets forth legal conclusions to which no response is required. To the

extent the Court requires a response; the Global Baristas Parties deny the allegations in Paragraph

54.

55. Paragraph 55 sets forth legal conclusions to which no response is required. To the

extent the Court requires a response; the Global Baristas Parties deny the allegations in Paragraph

55.

56. Paragraph 56 sets forth legal conclusions to which no response is required. To the

extent the Court requires a response; the Global Baristas Parties deny the allegations in Paragraph

56.

PLAINTIFF’S COUNT V

57. In response to paragraph 57, the Global Baristas Parties adopt and restate their

answers to the preceding paragraphs as if fully stated.

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58. Paragraph 58 sets forth legal conclusions to which no response is required. To the

extent the Court requires a response; the Global Baristas Parties deny the allegations in Paragraph

58.

59. Paragraph 59 sets forth legal conclusions to which no response is required. To the

extent the Court requires a response; the Global Baristas Parties deny the allegations in Paragraph

59.

PLAINTIFF’S COUNT VI

60. In response to paragraph 60, the Global Baristas Parties adopt and restate their

answers to the preceding paragraphs as if fully stated.

61. Paragraph 61 sets forth legal conclusions to which no response is required. To the

extent the Court requires a response; the Global Baristas Parties deny the allegations in Paragraph

61. The Global Baristas Parties further deny that Global Baristas U.S., LLC is a party to the

Trademark License Agreement and, accordingly, deny that Global Baristas U.S., LLC has any

obligations pursuant to the Trademark License Agreement.

62. Paragraph 62 sets forth legal conclusions to which no response is required. To the

extent the Court requires a response; the Global Baristas Parties deny the allegations in Paragraph

62. The Global Baristas Parties further deny that Global Baristas U.S., LLC is a party to the

Trademark License Agreement and, accordingly, deny that Global Baristas U.S., LLC has any

obligations pursuant to the Trademark License Agreement.

PLAINTIFF’S PRAYER FOR RELIEF

The Global Baristas Parties deny that Keurig Green Mountain, Inc. is entitled to any relief

from the Global Baristas Parties, or either of them, including the relief identified by Plaintiff in its

Prayer for Relief.

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THE GLOBAL BARISTAS PARTIES’ AFFIRMATIVE DEFENSES

By pleading these defenses, the Global Baristas Parties do not assume the burden of

proving any fact, issue, or element of a cause of action where such burden properly belongs to

Plaintiff. Moreover, nothing stated herein is intended or shall be construed as a concession that

any particular issue or subject matter is relevant to Plaintiff’s allegations. The Global Baristas

Parties reserve the right to assert additional affirmative defenses as investigation and discovery

proceeds in this case

FIRST AFFIRMATIVE DEFENSE

The Trademark License Agreement (and any other contracts) referenced by Plaintiff in the

Complaint is/are unenforceable because it is in whole or in part unconscionable.

SECOND AFFIRMATIVE DEFENSE

The Trademark License Agreement (and any other contracts) referenced by Plaintiff in the

Complaint is/are unenforceable and void because it violates public policy, is per se illegal, and

because Plaintiff violated the law when presenting the contract to Global Baristas, LLC, including

the laws governing the sale of franchises in California, Hawaii, Illinois, Indiana, Maryland,

Michigan, Minnesota, New York, Virginia, Washington, Wisconsin, North Dakota, South Dakota,

Rhode Island, Florida, New Jersey, Connecticut, and Oregon.

THIRD AFFIRMATIVE DEFENSE

Plaintiff’s claims are barred in whole or in part by its own breaches and/or failures to

perform under the contract or to satisfy one or all of the conditions precedent to the contract, and/or

by its breaches of the covenant of good faith and fair dealing.

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FOURTH AFFIRMATIVE DEFENSE

Plaintiff’s claims are barred by the doctrines of economic duress, waiver, estoppel, laches

and unclean hands

FIFTH AFFIRMATIVE DEFENSE

Plaintiff’s Complaint fails to state a claim upon which relief may be granted against the

Global Baristas Parties, or either of them.

SIXTH AFFIRMATIVE DEFENSE

Plaintiff has waived, ratified, or released all or part of its claims against the Global Baristas

Parties and/or has acquiesced to the Global Baristas Parties’ conduct.

SEVENTH AFFIRMATIVE DEFENSE

Plaintiff will be unjustly enriched if allowed to recover on its claims.

EIGHTH AFFIRMATIVE DEFENSE

Without conceding that any act by the Global Baristas Parties caused damage to Plaintiff,

the Global Baristas Parties are informed and believe that they are entitled to offset and recoup.

NINTH AFFIRMATIVE DEFENSE

Plaintiff’s claims are barred in whole, or in part, by the applicable statute of limitations.

TENTH AFFIRMATIVE DEFENSE

Plaintiff has failed to mitigate its claimed damages.

ELEVENTH AFFIRMATIVE DEFENSE

Plaintiff’s claims are barred in whole, or in part, by fraud, mistake, and/or duress.

TWELFTH AFFIRMATIVE DEFENSE

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The damages claimed by Plaintiff were caused by persons other than the Global Baristas

Parties over whom the Global Baristas Parties had no control, and were not caused or contributed

to by the Global Baristas Parties.

THIRTEENTH AFFIRMATIVE DEFENSE

Global Baristas U.S., LLC is not a party to the Trademark License Agreement and,

accordingly, is not bound by its terms. This Court does not have personal jurisdiction over Global

Baristas U.S., LLC.

FOURTEENTH AFFIRMATIVE DEFENSE

Plaintiff’s claimed damages, if any, were caused in whole, or in part, by the acts and/or

omissions of Plaintiff and Plaintiff’s agents or representatives.

FIFTEENTH AFFIRMATIVE DEFENSE

Plaintiff’s claims are barred in whole, or in part, by the doctrine of intervening/superseding

cause.

SIXTEENTH AFFIRMATIVE DEFENSE

Plaintiff’s claims under the Lanham Act are barred because Plaintiff abandoned the

trademarks that are the subject of those claims, and because those trademarks are otherwise

unenforceable or invalid.

SEVENTEENTH AFFIRMATIVE DEFENSE

Plaintiff’s equitable claims are barred, in whole or in part, to the extent that there is an

adequate remedy at law.

EIGHTEENTH AFFIRMATIVE DEFENSE

Plaintiff’s request for attorneys’ fees is barred, in whole or in part, to the extent it lacks any

basis in law or contract.

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THE GLOBAL BARISTAS PARTIES’ COUNTERCLAIMS

As and for its counterclaims against Plaintiff, the Global Baristas Parties plead and allege

as follows1:

1. On July 21, 2014, Plaintiff, Keurig Green Mountain, Inc. (“Plaintiff”) and Global

Baristas, LLC entered into the “Trademark License Agreement,” which provides Global Baristas,

LLC, with a license to use Plaintiff’s trademarks, including the “Tully’s” brand and other trade

names, trademarks and service marks in connection with the retail sale of licensed products, solely

at licensed retail stores, and in connection with the operation of licensed retail stores where

licensed products are used and sold.

2. The Trademark License Agreement provides Plaintiff with the right to exert

significant control over Global Baristas, LLC’s operations, including by conducting inspections of

Global Baristas, LLC’s businesses and operations; conducting ‘quality control audits;’ reserving

control over all advertising, promotional, and marketing efforts related to the businesses;

controlling the appearance and functionality of Global Baristas, LLC’s website; approving or

rejecting all vendors Global Baristas, LLC did business with; monitoring and approving/rejecting

all packaging of all products sold by Global Baristas, LLC supplied by another vendor; and

prohibiting Global Baristas, LLC from selling any competing products in its stores, among other

things.

3. Plaintiff exercised its rights to control Global Baristas, LLC’s business operations

pursuant to the Trademark License Agreement, including by taking actions in accordance with the

provisions set forth in paragraph 2, above.

1
Global Baristas reserves the right to amend its Counterclaim, if necessary, based on discovery
and further factual investigation.

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4. The Trademark License Agreement provides that Global Baristas, LLC would pay

Plaintiff a ‘royalty fee’ of $250,000 per year, beginning in 2016. In fact, Plaintiff initiated this

lawsuit in order to collect that fee. The royalty fee constitutes a ‘payment’ to Plaintiff.

5. The Trademark License Agreement states that it applies to a “Territory” which is

defined as “worldwide except Japan.” Accordingly, the Trademark License Agreement is

applicable to the entire United States.

COUNTERCLAIM I – FAILURE TO REGISTER AND/OR DISCLOSE A FRANCHISE


AND RELATED VIOLATIONS OF STATE STATUTES OF CALIFORNIA, HAWAII,
MICHIGAN, NORTH DAKOTA, RHODE ISLAND, VIRGINIA, AND WASHINGTON
STATE

6. Global Baristas re-alleges and incorporates by reference paragraphs 1-5, above, as

if set forth fully herein.

7. Pursuant to its terms, the Trademark License Agreement is applicable to the entire

United States, so Global Baristas, LLC was granted in a franchise in all 50 states.

8. Pursuant to the terms of the Trademark License Agreement, Global Baristas was

granted (i) a license to use a trade name, service mark, trademark; and (ii) the right to engage in

offering goods or provide services under a marketing plan substantially prescribed by Plaintiff, and

that is substantially associated with Plaintiff’s trademarks, and in which Global Baristas, LLC and

Plaintiff had a community of interest in the marketing of goods/services and over which Plaintiff

had significant control. Pursuant to the Trademark License Agreement, in consideration of the

foregoing, Global Baristas, LLC was required to pay a fee in excess of $500. Accordingly, Plaintiff

offered and sold Global Baristas, LLC a franchise as defined by the “Registration State Statutes”

(as that term is defined in paragraph 9, below).

9. Accordingly, Plaintiff is required to comply with the requirements of all state laws

relevant to the sale of a franchise, including (i) the California Franchise Investment Law, California

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Corporations Code, Title 4, Division 5, § 3100 et seq.; (ii) Hawaii’s Franchise Investment Law,

Hawaii Statutes & Rules, Title 26, Chapter 482E §482e-1 et seq.; (iii) Michigan’s Franchise

Investment Law, Michigan Compiled Laws Annotated, Chapter 445 § 445.1501 et seq.; (iv) North

Dakota’s Franchise Investment Law, North Dakota Statute and Court Rules, Title 51 § 51-19-01

et seq.; (v) Rhode Island’s Franchise Investment Act, Title 19, Chapter 28.1 § 19-28.1-1 et seq.;

(vi) Virginia’s Retail Franchising Act, Code of Virginia, Title 13.1, Chapter 8, § 13.1-557 et seq.;

and (vii) the Franchise Investment Protection Act, Washington State Statute, Title 19, Chapter

19.100, et seq. (Hereafter, the foregoing statutes are referred to as the “Registration State

Statutes.”)

10. Plaintiff violated the Registration State Statutes, by, among other things, failing to

register a FDD, selling a franchise without having first registered the FDD and selling a franchise

without first providing the FDD and all proposed agreements to the Global Baristas Parties prior

to the sale of the franchise.

11. Plaintiff’s violations of the Registration State Statutes were knowing, willful and

material.

12. Plaintiff’s violations of the Registration State Statutes have damaged the Global

Baristas Parties in an amount to be determined by the Court, and the Global Baristas Parties

demand that their first counterclaim be granted and that the Global Baristas Parties be awarded

actual damages, in an amount to be determined at trial, pursuant to the Registration State Statutes.

13. In the alternative, the Global Baristas Parties demand rescission, pursuant to the

laws of the states of California, Hawaii, Michigan, Washington, North Dakota, and Rhode Island.

14. In addition to any/all of the foregoing, the Global Baristas Parties demand their

costs and attorneys’ fees pursuant to the laws of the states of Hawaii, Michigan, Virginia,

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Washington, North Dakota, and Rhode Island; three times actual damages pursuant to the laws of

the states of Hawaii and Washington; expert fees pursuant to the laws of the state of Rhode Island;

and interest of 12 percent from the date of purchase pursuant to the laws of the state of Michigan.

15. The Global Baristas Parties further seek to declare the franchise void pursuant to

Virginia state law.

COUNTERCLAIM II- VIOLATION OF TRADE PROTECTION STATUTES OF


FLORIDA AND NEW JERSEY

16. The Global Baristas Parties re-allege and incorporate by reference paragraphs 1-15,

above, as if set forth fully herein.

17. The Federal Trade Commission regulates the sale of franchises pursuant to 16

C.F.R. § 436.1, et seq. (the “FTC Rule”).

18. Pursuant to the FTC Rule, a commercial business arrangement is a “franchise” if it

satisfies three definitional elements: (1) the franchisor grants to franchisee the right to operate a

business that is identified or associated with the franchisor’s trademark; (2) the franchisor will

exert or has authority to exert significant control or provide significant assistance in the operation

of the business; and (3) as a condition of obtaining or commencing operation of the franchise, the

franchisee makes a required payment or commits to make a required payment to the franchisor or

its affiliate.

19. The Trademark License Agreement gave Global Baristas, LLC the right to operate

a business that is identified and associated with Plaintiff’s trademarks and other intellectual

property.

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20. As stated in paragraphs (2) and (3), above, Plaintiff reserved the right to exert

significant control over Global Baristas, LLC’s operations, and did, in fact, exert significant

control over Global Baristas, LLC’s operations.

21. The Trademark License Agreement provided that Global Baristas, LLC would

make payments to Plaintiff.

22. Accordingly, the terms and conditions of the Trademark License Agreement

constitute a “franchise” relationship and the Trademark License Agreement constitutes the sale of

a “franchise” under the FTC Rule.

23. The FTC Rule provides that it is an unfair or deceptive act for the franchise seller

(here, Plaintiff) to fail to furnish a prospective franchisee (here, Global Baristas, LLC) with a copy

of the franchisor’s current disclosure document (the “FDD”), at least 14 calendar days before the

prospective franchisee signs a binding agreement with, or makes any payment to, the franchisor or

an affiliate in connection with the proposed franchise sale.

24. Plaintiff violated the FTC Rule by selling Global Baristas, LLC a franchise without

furnishing Global Baristas, LLC with an FDD.

25. As stated above, pursuant to the terms of the Trademark License Agreement,

Plaintiff sold Global Baristas goods/services and/or other things of value, in exchange for a fee.

26. As also stated above, pursuant to its terms, the Trademark License Agreement is

applicable to the entire United States.

27. Accordingly, Plaintiff’s sale of a franchise to Global Baristas, LLC violates the laws

of all U.S. trade protection statutes in each state, (i) the Florida Deceptive and Unfair Trade

Practices Act, Florida Statutes Annotated, Chapter 501 Part II, § 501.201 et seq. and (ii) the New

Jersey Consumer Frauds Act, Title 56, Chapter 8 § 56:8-1 et seq. (the “Trade Protection Statutes”).

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Case 1:18-cv-00095-LAK Document 36 Filed 04/19/18 Page 20 of 22

28. Plaintiff violated the Trade Protection Statutes, by, among other things, engaging

in unfair or deceptive acts or practices in conducting trade or commerce and by employing

unconscionable tactics in connection with selling goods or services.

29. As stated above, Plaintiff’s failure to ever provide Global Baristas, LLC with an

FDD (in violation of the Registration State Statutes) also constitutes a violation of the FTC Rule.

Violation of the FTC Rule and/or state law constitutes a per se violation of the Trade Protection

Statutes.

30. Plaintiff’s violations of the Trade Protection Statutes were knowing, willful and

material.

31. Plaintiff’s violations of the Trade Protection Statutes have damaged the Global

Baristas Parties in an amount to be determined by the Court, and the Global Baristas Parties

demand that their second counterclaim be granted and that the Global Baristas Parties be awarded

actual damages, in an amount to be determined at trial, costs and attorneys’ fees, pursuant to the

Trade Protection Statutes, and a refund of all of their money and treble damages in accordance

with New Jersey Statute.

32. In the alternative, the Global Baristas Parties demand rescission of the Trademark

License Agreement and costs and attorneys’ fees in accordance with New Jersey Statute.

COUNTERCLAIM III– DECLARATORY JUDGMENT

33. The Global Baristas Parties re-allege and incorporate by reference paragraphs 1-32,

above, as if set forth fully herein.

34. The Trademark License Agreement constitutes the sale of a franchise.

35. As described above, Plaintiff violated the FTC Rule, the Registration State Statutes,

and the Trade Protection Statutes.

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Case 1:18-cv-00095-LAK Document 36 Filed 04/19/18 Page 21 of 22

36. Accordingly, the Trademark License Agreement is an illegal contract, and is null

and void and unenforceable as to the Global Baristas Parties.

COUNTERCLAIM IV– ATTORNEYS’ FEES

37. The Global Baristas Parties re-allege and incorporate by reference paragraphs 1-36,

above, as if set forth fully herein.

38. The Trademark License Agreement provides that the prevailing party in any action

related to the Trademark License Agreement shall be entitled to recover its reasonable attorneys’

fees and costs incurred in such a proceeding.

39. Accordingly, to the extent that the Global Baristas Parties, or either of them,

successfully defend the claims against them (or either of them), and to the extent the Global

Baristas Parties (or either of them) prevail in any of their counterclaims against Plaintiff, then the

Global Baristas Parties (or either of them) demand their fourth counterclaim be granted, and that

the Global Baristas Parties be awarded attorneys’ fees, in accordance with the Trademark License

Agreement’s terms.

PRAYER FOR RELIEF ON COUNTERCLAIMS

WHEREFORE, the Global Baristas Parties respectfully requests that this Court

deny the relief requested by the Plaintiff and grant the relief requested in the Global Baristas

Parties’ counterclaims, in their entirety, together with the costs and disbursements of this action.

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Case 1:18-cv-00095-LAK Document 36 Filed 04/19/18 Page 22 of 22

JURY DEMAND

Global Baristas demands a trial by jury on all claims and defenses to which it is entitled

by law.

Dated: New York, New York


April 19, 2018 EINBINDER & DUNN, LLP

/s/ Mackenzie Dimitri___________


Mackenzie Dimitri (MD-4684)
Michael Einbinder (ME-3930)
Attorneys for Defendants
112 Madison Avenue, FL. 8
New York, New York 10018
Tel: (212) 391-9500
Fax: (212) 391-9025
MLD@ed-lawfirm.com
ME@ed-lawfirm.com

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