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holding that allegations that plaintiffs "'were damaged as a result' sufficiently plead a claim for common law fraud and fraudulent misrepresentation under the higher pleading standard of Rule 9(b)"
Summary of this case from United States v. StrockOpinion
15-CV-4681 (WFK) (RML)
09-01-2016
SPRINT SOLUTIONS, INC. and Sprint Communications Company L.P., Plaintiffs, v. Cassin N. SAM a/k/a Gucci Cassie, Iquinda M. Cerisier, Ashley Ann Henry a/k/a Ashley-Anna Henry, Samuel G. Coley, Jamila Carry, and Jane and John Does 1-20, Defendants.
Gail Podolsky, Carlton Fields, Atlanta, GA, James B. Baldinger, Stacey K. Sutton, Jennifer A. Yasko, Carlton Fields, P.A., West Palm Beach, FL, for Plaintiffs. Iquinda M. Cerisier, Brooklyn, NY, pro se. Jamila Carry, Brooklyn, NY, pro se.
Gail Podolsky, Carlton Fields, Atlanta, GA, James B. Baldinger, Stacey K. Sutton, Jennifer A. Yasko, Carlton Fields, P.A., West Palm Beach, FL, for Plaintiffs.
Iquinda M. Cerisier, Brooklyn, NY, pro se.
Jamila Carry, Brooklyn, NY, pro se.
MEMORANDUM AND ORDER
WILLIAM F. KUNTZ, II, UNITED STATES DISTRICT JUDGE
Sprint Solutions, Inc. and Sprint Communications Company L.P. (collectively, "Plaintiffs") brought this action against Cassin N. Sam a/k/a Gucci Cassie, Iquinda M. Cerisier, Ashley Ann Henry a/k/a Ashley-Anna Henry, Samuel G. Coley, Jamila Carry, and Jane and John Does 1-20. Defendant Cerisier ("Defendant"), proceeding pro se , has moved to dismiss the Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons discussed below, the Court DENIES Defendant's motion to dismiss.
BACKGROUND
On August 10, 2015, Sprint Solutions, Inc. and Sprint Communications Company L.P. ("Plaintiffs") commenced this action against Cassin N. Sam a/k/a Gucci Cassie, Iquinda M. Cerisier, Ashley Ann Henry a/k/a Ashley-Anna Henry, Samuel G. Coley, Jamila Carry, and Jane and John Does 1-20. ECF No. 1 ("Complaint"). The Complaint alleges that Plaintiffs provide customers with mobile devices for use on their wireless network at lower-than-wholesale prices devices, and that Defendant and her co-defendants perpetrated an unlawful scheme to profit from the illegal acquisition and resale of these devices by targeting customer accounts and stealing Plaintiffs' financial investment. Id. ¶ 1. The Complaint further alleges that Defendant and her co-defendants allegedly profited to the detriment of Plaintiffs and Plaintiffs' customers. Id. Plaintiffs have brought the following claims against Defendant: unfair competition; tortious interference with prospective business relations and economic advantage; tortious interference with contractual relations; conspiracy to commit fraud and fraudulent misrepresentation; unjust enrichment; common law fraud and fraudulent misrepresentation, violations of the Computer Fraud and Abuse Act ("CFAA"), 18 U.S.C. § 1030, et seq. ; federal trademark infringement under 15 U.S.C. § 1114 ; federal common law trademark infringement and false advertising under 15 U.S.C. § 1125(a)(1)(A) and (B) ; contributory trademark infringement, conversion, false advertising in violation of N.Y. Gen. Bus. Law § 350, et seq. ; and deceptive acts and practices in violation of N.Y. Gen. Bus. Law § 349. Complaint ¶¶ 67-223.
The parties filed their briefing papers on the motion to dismiss on December 2, 2015 and February 26, 2016. ECF Nos. 21 ("Mot."), 30 ("Opp."), 31 ("Rep.").
DISCUSSION
I. Legal Standard
A complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a). The pleading requirements of Rule 8 are intended to give the defendant "fair notice of what the claim is and the grounds upon which it rests." Dura Pharms., Inc. v. Broudo , 544 U.S. 336, 346, 125 S.Ct. 1627, 161 L.Ed.2d 577 (2005) (citations omitted). When a complaint includes allegations sounding in fraud, those allegations must also "be pleaded with particularity" under the requirements of Federal Rule of Civil Procedure 9(b). Harsco Corp. v. Segui , 91 F.3d 337, 347 (2d Cir.1996) ; see also Fed. R. Civ. P. 9(b) ("In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake.").
To survive a motion to dismiss under Federal Rule for Civil Procedure 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face." ’ Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 557, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). In applying this standard, the Court is guided by "[t]wo working principles." Harris v. Mills , 572 F.3d 66, 72 (2d Cir.2009) (quoting Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 ). First, the Court must "accept all factual allegations in the complaint as true and draw all reasonable inferences in [the plaintiffs'] favor." Johnson v. Rowley , 569 F.3d 40, 43 (2d Cir.2009) (per curiam) (citations omitted). The Court need not, however, credit "legal conclusions" in a claim or "threadbare recitals of the elements of a cause of action, supported by mere conclusory statements." Harris , 572 F.3d at 72 (quoting Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 ) (quotations and alteration omitted). "Second, only a complaint that states a plausible claim for relief survives a motion to dismiss," and "[d]etermining whether a complaint states a plausible claim for relief will ... be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. (quoting Iqbal , 556 U.S. at 679, 129 S.Ct. 1937 ) (quotations omitted).
"When considering a motion to dismiss drafted by a pro se defendant, the Court is mindful that a pro se party's pleadings must be liberally construed in favor of that party and are held to less stringent standards than formal pleadings drafted by lawyers." Water Res. Grp., LLC v. Powers , 12–CV–3779, 2013 WL 5202679, at *5 (E.D.N.Y. Sept. 13, 2013) (Bianco, J.) (quotation marks and citations omitted). Although courts "liberally construe pleadings and briefs submitted by pro se litigants" and "read[ ] such submissions to raise the strongest arguments they suggest," Bertin v. United States , 478 F.3d 489, 491 (2d Cir.2007) (quotation marks and citations omitted), "conclusory allegations or legal conclusions masquerading as factual conclusions will not suffice when construing a motion to dismiss," Water Res. Grp. , 2013 WL 5202679, at *5 (quotation marks and citations omitted).
II. Analysis
A. New Issues of Fact are Improper on the Motion to Dismiss
Defendant's primary argument in her motion to dismiss is that she was the victim of identity theft. Mot. ¶¶ 5-21; Rep. ¶¶ 3-6. Defendant argues that co-defendant Cassin Sam "must have gone through [Defendant's] papers and stolen [Defendant's] Social Security number and other identity documents" during her stay at Defendant's apartment in 2011, and that Defendant "allowed Ms. Sam to use another line on [Defendant's] Sprint account ... to help [Defendant] pay the bill." Mot. ¶¶ 11-13. Defendant argues that when "Sprint contacted [her] in 2013 about unusual activity," Defendant confronted co-defendant Sam about "why [Sam] tampered with [Defendant's] account" and "immediately cut off [Sam's] tempering with [Defendant's] Sprint account." Id. ¶ 14. Defendant further argues that after reviewing a credit report, she "knew for sure that [Sam] was the person who stole [Defendant's] identity." Id. ¶ 15. Defendant also includes exhibits of a police report and a credit report in support of her argument that she was the victim of identity theft. See ECF No. 23 ("Ex. A," "Ex. B").
Defendant has raised several new factual assertions, many of which Plaintiffs dispute, at the motion to dismiss stage. Plaintiffs contest, for example, Defendant's assertion that Plaintiffs alerted Defendant to the identity theft issue in 2013. Opp. at 5. Plaintiffs respond that Defendant's account was never marked for "identify theft," but rather was flagged as one used to conduct fraudulent activity. Id. Plaintiffs further disagree with several of Defendant's additional assertions, including Defendant's assertions that she lacked involvement with the theft and trafficking scheme, that she never lived with co-defendant Sam, that she allowed co-defendant Sam to stay in her apartment during which time co-defendant Sam obtained Defendant's personal identification documents, and that she did not make fraudulent orders of phones on her account that were shipped to her address. Id.
The Court concludes it would be inappropriate to consider these new factual assertions on a motion to dismiss. The Court's decision is supported by precedent holding that such questions of fact are not appropriate on a motion to dismiss. See, e.g. , Zevon v. Dep't Stores Nat. Bank , 12–CV–4970, 2013 WL 3479432, at *4–5 (S.D.N.Y. July 8, 2013) (McMahon, J.) (denying Rule 12(b)(6) motion to dismiss in part because the issue the defendant raised was a "question of fact" that was "more properly made on a motion for summary judgment—not in a motion to dismiss"); McCarthy v. Stollman , 06 Civ. 2613, 2009 WL 1159197, at *1, *4 (S.D.N.Y. Apr. 29, 2009) (Batts, J.) (adopting Report and Recommendation, which held that "disputed issues of fact are not appropriately decided at the dismissal stage" and that "for the purposes of the pending motion, this Court must accept as true the Plaintiffs' version of the facts").
Accordingly, the Court denies Defendant's motion to dismiss to the extent she relies on additional factual assertions. If Defendant intended her motion to dismiss to serve as a motion for summary judgment, the Court denies that motion as premature and permits the motion to be renewed once discovery has been completed.
B. Claims are Properly Pled
Defendant argues that "[n]one of the allegations purportedly about [Defendant] are supported by sufficient specific and nonconclusory statements to withstand a motion to dismiss," Mot. ¶ 27 Rep. ¶ 9, and points to several examples of such conclusory allegations, Mot. 28-31; Rep. ¶¶ 10-13. Construing Defendant's motion liberally, the Court reads Defendant's argument to mean that Plaintiffs have not alleged the necessary elements of each claim in the Complaint. As detailed below, the Court, in reviewing the allegations pleaded in the Complaint, finds the Complaint sufficiently alleges each cause of action.
The Complaint does not include any cause of action corresponding to Count Eight. The Court, therefore, discusses only Counts One through Seven and Nine through Sixteen.
1. Trademark-Related Claims (Counts One, Eleven, Twelve, Thirteen, Fifteen, and Sixteen)
Counts One, Eleven, Twelve, Thirteen, and Fifteen are all based on Plaintiffs' allegations that it has valid trademarks upon which Defendants are infringing or encroaching.
Count One is a claim for unfair competition under state law, which requires Plaintiffs to allege: (1) a likelihood of confusion and (2) Defendant's bad faith. See New York City Triathlon, LLC v. NYC Triathlon Club, Inc. , 704 F.Supp.2d 305, 325 (S.D.N.Y.2010) (McMahon, J.). The Court finds the Complaint's allegations that Defendant used Plaintiffs' marks, which was done in bad faith and has caused and will further cause a likelihood of confusion, mistake, and deception, satisfy the pleading requirements for unfair competition. See Complaint ¶¶ 69-71.
Count Eleven is a claim for trademark infringement under the Lanham Act, which requires Plaintiffs to allege: (1) they have a valid, protectable mark and (2) Defendant's use of the mark is likely to cause confusion, or to cause mistake, or to deceive. See 15 U.S.C. §§ 1114, 1125. The Complaint alleges Plaintiffs have valid, protectable marks use for telecommunications products and services, and Defendant's use of the marks has caused, and will further cause, a likelihood of confusion, mistake, and deception. Complaint ¶¶ 32-35, 175. The Court concludes the Complaint alleges sufficient facts to support that Plaintiffs have Defendant's actions were committed in violation of the federal trademark infringement provisions of the Lanham Act.
Counts Twelve, Fifteen, and Sixteen are claims for false advertising. Count Twelve presents a claim for false advertising under the Lanham Act, which makes it unlawful for "[a]ny person who ... in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities." 15 U.S.C. § 1125(a)(1)(B). Counts Fifteen and Sixteen are claims for false advertising and deceptive acts and practices in violation of New York General Business Law §§ 349 and 350, which require Plaintiffs to allege that: (1) the act, practice, or advertisement was consumer-oriented and misleading in a material respect, and (2) Plaintiffs were thereby injured. See Ackerman v. Coca – Cola Co. , 09–CV–395, 2010 WL 2925955, at *22 (E.D.N.Y. July 21, 2010) (Gleeson, J.). The Complaint alleges Defendant used Plaintiffs' trademarks in commercial advertising or promotion, which misrepresented the nature, characteristics, and/or qualities of the infringing products; deceived or had the capacity to deceive customers; had a material effect on the purchasing decisions; and affected interstate commerce. Complaint ¶ 190. The Complaint further alleges the deceptive acts and advertisements by Defendant were directed at consumers, were misleading in a substantial and material way, and caused injury to Plaintiffs and their consumers. Id. ¶¶ 218-21. The Court concludes these allegations sufficiently plead a claim for false advertising and deceptive acts and practices under federal and state law.
Count Thirteen is a claim for contributory trademark infringement applying to those who "either intentionally induce [ ] a third party to infringe the plaintiff's mark or suppl[y] a product to a third party with actual or constructive knowledge that the product is being used to infringe that mark," Steinway, Inc. v. Ashley , 1 Civ. 9703, 2002 WL 122929, at *1 (S.D.N.Y. Jan. 29, 2002) (Lynch, J.). Here, the Complaint alleges Defendants knowingly aided and enabled distributors and/or sellers of their products to market the products to the general public infringing Plaintiffs' trademarks by placing an instrument of consumer deception in the hands of distributors and/or sellers. Complaint ¶ 196. The Complaint further alleges the sale of Defendants' phones falsely suggested these phones were created, authorized, or approved by Plaintiffs and they included warranties, leading to post-sale consumer confusion. Id. 197–98. The Court concludes these allegations sufficiently plead a claim for contributory trademark infringement.
2. Tortious Interference Claims (Counts Two and Three)
Counts Two and Three are based on Plaintiffs' allegations of tortious interference. Count Two is a claim for tortious interference with prospective business relations and economic advantage, which requires Plaintiffs to plead: (1) the existence of a profitable business relationship; (2) Defendant's interference with that relationship; (3) Defendant's use of dishonest, unfair or improper means; and (4) damage to Plaintiffs' business relationships. See Bertuglia v. City of New York , 839 F.Supp.2d 703, 729 (S.D.N.Y.2012) (Koeltl, J.). The Complaint alleges Defendant regularly and systematically misrepresented to Plaintiffs that the phones at issue were being acquired for a legitimate purpose and the phones would be used by Defendant, or other legitimate consumers, in accordance with Plaintiffs' terms and conditions. Complaint ¶¶ 108-12. The Complaint further alleges Defendant intended to induce Plaintiffs to rely on her misrepresentations, that Plaintiffs reasonably relied on these misrepresentations, and, as a result, Plaintiffs were damaged. Id. ¶¶ 113-15. The Court concludes these allegations sufficiently plead a claim for tortious interference with prospective business relations and economic advantage.
Count Three is a claim for tortious interference with contractual relations, which requires Plaintiffs to allege: (1) a valid contract between Plaintiffs and a third party; (2) Defendant's knowledge of that contract; (3) Defendant's intentional procurement of the breach of that contract; and (4) damages. See G.D. Searle & Co. v. Medicore Commc'ns, Inc. , 843 F.Supp. 895, 910–11 (S.D.N.Y.1994) (Edelstein, J.). The Complaint alleges that Defendant had knowledge of Plaintiffs' contractual relationship with authorized dealers, authorized retailers, and legitimate customers; Defendant intentionally interfered with and/or knowingly facilitated a conspiracy to interfere with these contracts; and Plaintiffs were damaged by Defendant's actions. Complaint ¶¶ 92-95. The Court concludes these allegations sufficiently plead a claim for tortious interference with contractual relations.
3. Unjust Enrichment Claim (Count Five)
Count Five is a claim for unjust enrichment, which requires Plaintiffs to allege that (1) Defendant benefited (2) at Plaintiffs' expense, and (3) that equity and good conscience require restitution. See Allstate Ins. Co. v. Rozenberg , 590 F.Supp.2d 384, 395 (E.D.N.Y.2008) (Spatt, J.). The Complaint alleges that Defendant obtained benefits from Plaintiffs that caused Plaintiffs significant harm by fraudulently acquiring Plaintiffs' phones and using them for resale, unlocking, and shipping. Complaint ¶ 103. The Complaint further alleges Defendant retained the benefits and did not pay Plaintiffs the value of the benefits acquired, which was unjust and inequitable to Plaintiffs. Id. ¶ 105. The Court concludes these allegations sufficiently plead a claim for tortious interference with contractual relations.
4. Fraud and Misrepresentation Claims (Counts Four and Six)
Count Four is a claim for conspiracy to commit fraud and fraudulent misrepresentation. To establish this claim, Plaintiffs must allege: (1) the underlying fraud; (2) an agreement among two or more parties; (3) a common objective; (4) acts in furtherance of the objective; and (5) knowledge. See JP Morgan Chase Bank v. Winnick , 406 F.Supp.2d 247, 259 (S.D.N.Y.2005) (Lynch, J.). The Complaint alleges facts sufficient to establish that Defendant was involved in a conspiracy with her co-defendants, and that an agreement existed among them to acquire, traffic, and resell Plaintiffs' phones unlawfully and to induce individuals to breach their contracts with Plaintiffs. Complaint ¶ 98. Plaintiffs further allege that Defendant knowingly agreed to engage in and did engage in one or more overt acts in pursuit of the common objective to defraud Plaintiffs out of new phones. Id. ¶¶ 99-100. The Court concludes these allegations sufficiently plead a claim for conspiracy to commit fraud and fraudulent misrepresentation under the heightened pleading standard of Rule 9(b).
Count Six is a claim for common law fraud and fraudulent misrepresentation. To establish this claim, Plaintiffs must allege: (1) Defendant made a material false representation; (2) Defendant intended to defraud Plaintiffs thereby; (3) Plaintiffs reasonably relied on the representation; and (4) Plaintiffs suffered damage as a result of such reliance. See Elkind v. Revlon Consumer Products Corp. , 14–CV–2484, 2015 WL 2344134, at *12 (E.D.N.Y. May 14, 2015) (Seybert, J.). In addition, fraud claims are subject to the heightened pleading standards of Federal Rule of Civil Procedure 9(b). Fed. R. Civ. P. 9(b). Here, Plaintiffs allege Defendant did not intend to use the phones at issue for a legitimate purpose, and regularly and systematically misrepresented to Plaintiffs that the phones would be used for legitimate purposes on Plaintiffs' wireless network and in accordance with the terms and conditions. Complaint ¶¶ 108, 111-12. Plaintiffs further allege Defendant intended to induce Plaintiffs to rely on the misrepresentations, and that Plaintiffs reasonably relied on those representations and were damaged as a result. Id. ¶¶ 113-15. The Court concludes these allegations sufficiently plead a claim for common law fraud and fraudulent misrepresentation under the higher pleading standard of Rule 9(b).
5. Computer Fraud and Abuse Act Claims (Counts Seven, Nine, and Ten)
Counts Seven, Nine, and Ten all arise from the Computer Fraud and Abuse Act ("CFAA"). Count Seven is a claim for trafficking in computer passwords in violation of 18 U.S.C. § 1030(a)(6), which requires Plaintiffs to allege Defendant: (1) knowingly and with intent to defraud; (2) accessed a protected computer without authorization; (3) obtained anything of value; and (4) caused a loss and damages aggregating at least $5,000.00. See 18 U.S.C. §§ 1030(a)(4), 1030(g). The Complaint alleges Defendant accessed Plaintiffs' protected computers knowingly and with the intent to defraud, and fraudulently obtained consumer account information in order to place unauthorized orders for Plaintiffs' products and make unauthorized changes to the account. Complaint ¶¶ 156-62. The Complaint further alleges Defendant obtained items with significant value that caused Plaintiffs to suffer loss in excess of $5,000.00. Id. ¶ 164–69. The Court concludes these allegations sufficiently plead a claim for trafficking in computer passwords under the CFAA.
Count Nine is a claim for unauthorized access in violation of 18 U.S.C. § 1030(a)(5)(C), which prohibits intentionally accessing a protected computer without authorization, and thereby causing damage and loss. See 18 U.S.C. §§ 1030(a)(5)(C), (c)(4)(A)(i)(I), (g). The Complaint alleges Defendant intentionally and illegally gained access to Plaintiffs' protected computer system, which caused and will cause Plaintiffs to suffer injury with damages and losses in excess of $5,000.00 over a one-year period. Complaint ¶¶ 148-51. The Court concludes these allegations sufficiently plead a claim for unauthorized access under the CFAA.
Count Ten is a claim for trafficking in computer passwords, in violation of 18 U.S.C. § 1030(a)(6), which requires Plaintiffs to allege Defendant: (1) knowingly and with the intent to defraud (2) trafficked in (3) a computer password or similar information through with a computer may be accessed without authorization (4) in a manner affecting interstate commerce. See 18 U.S.C. §§ 1030(a)(6), 1030(c)(4)(A)(i)(I), 1030(g). The Complaint alleges Defendant knowingly and systematically obtains and traffics in Plaintiffs' confidential codes to access its proprietary computer systems with the intent to defraud, and these actions substantially affect interstate commerce. Complaint ¶¶ 118-33. The Court concludes these allegations sufficiently plead a claim for trafficking in computer passwords under the CFAA.
6. Conversion (Count Fourteen)
Count Fourteen is a claim for conversion, for which Plaintiffs must allege: (1) Plaintiffs had a possessory right or interest in the property and (2) Defendant's dominion over the property or interference with it derogates Plaintiffs' rights. Rentrak Corp. v. Bandsman , 12–CV–1576, 2014 WL 1342960, at *7 (E.D.N.Y. Mar. 31, 2014) (Seybert, J.). The allegations in the Complaint sufficiently plead a claim for conversion because the Complaint alleges Defendant knew or should have known she obtained the phones at issue through illegitimate means and therefore had no legal right to advertise, use, or resell the phones, and Defendant intentionally and willfully exerted dominion and ownership over the phones. See Complaint ¶¶ 205-08.
CONCLUSION
For the reasons discussed above, the Court DENIES Defendant's Motion to Dismiss. The Clerk of Court is respectfully directed to mail a copy of this Decision and Order to Defendant.