UNITED STATES DISTRICT COURT SOUTHERN … 1 - Defendant Shawn C. Carter (“Carter” or “Mr....

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK : ICONIX BRAND GROUP, INC.; STUDIO IP : HOLDINGS, LLC, and ICON DE HOLDINGS, : LLC, : : Plaintiffs, : Case 17 Civ. 3096 (AJN) : v. : : ROC NATION APPAREL GROUP, LLC; ROC : APPAREL GROUP LLC; ROC NATION, LLC; : SHAWN C. CARTER a/k/a JAY-Z; NEW ERA : CAP COMPANY, INC. d/b/a NEW ERA; MAJOR : LEAGUE BASEBALL PROPERTIES, INC.; HAT : WORLD, INC. d/b/a LIDS SPORTS GROUPS; : SAN FRANCISCO BASEBALL ASSOCIATES, : LLC d/b/a SAN FRANCISCO GIANTS; CIRCLE : OF SUCCESS LLC; MADEWORN HOLDINGS : LLC; EMERY JONES; KAREEM BURKE; : PAPER PLANES IP HOLDINGS, LLC, and : JOHN DOES 1-5, : : Defendants. : :

DEFENDANT SHAWN C. CARTER’S MEMORANDUM OF LAW IN SUPPORT OF HIS MOTION TO DISMISS PURSUANT TO RULES 8 AND 12(b)(6) OF THE

FEDERAL RULES OF CIVIL PROCEDURE

REED SMITH LLP

599 LEXINGTON AVENUE NEW YORK, NEW YORK 10022

212-521-5400

10 SOUTH WACKER DRIVE CHICAGO, ILLINOIS 60606

312-207-1000

Counsel for Defendant Shawn C. Carter

Case 1:17-cv-03096-AJN Document 74 Filed 10/27/17 Page 1 of 24

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TABLE OF CONTENTS

Page

PRELIMINARY STATEMENT .................................................................................................... 1

FACTUAL BACKGROUND ......................................................................................................... 2

LEGAL STANDARD ..................................................................................................................... 5

ARGUMENT .................................................................................................................................. 5

I. Plaintiffs’ Allegations Do Not State Valid Claims With Respect To Mr. Carter And Should Be Dismissed Pursuant To Rule 12(b)(6). .............................................................. 5

A. Plaintiffs’ Unfair Competition Claim Does Not Contain Sufficient Allegations To State A Claim Against Mr. Carter In His Individual Capacity. ................................................................................................................. 5

B. Plaintiffs’ Unjust Enrichment Claim Fails Because It Does Not State A Claim Against Mr. Carter In His Individual Capacity, And Is Duplicative Of Plaintiffs’ Tort Claims. ...................................................................................... 7

C. Count XI Does Not State a Cognizable Claim Under NYGBL § 349 - § 350 And Should Be Dismissed. ............................................................................ 10

D. Counts XIV (Tortious Interference with Contract) And XV (Tortious Interference With Prospective Economic Relations) Similarly Fail To State Actionable Claims Against Mr. Carter. ....................................................... 12

i. Plaintiffs have not alleged sufficient facts to hold Mr. Carter individually liable for tortious interference with contract. ....................... 12

ii. Because Mr. Carter cannot be held personally liable for any independent tort, Plaintiffs fail to state a claim for tortious interference with economic advantage. ..................................................... 14

II. Plaintiffs’ Amended Complaint Does Not Comply With Rule 8 Pleading Standards With Respect To Mr. Carter And Should Be Dismissed. ................................................. 15

CONCLUSION ............................................................................................................................. 17


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TABLE OF AUTHORITIES

Page(s)

Cases

Am. Med. & Life Ins. Co. v. CrossSummit Enters., Inc., 27 Misc. 3d 1210(A), (N.Y. Sup. Ct. Apr. 1, 2010) ..................................................................8

Am. Sales Co. v. AstraZeneca AB, No. 10 Civ. 6062(PKC), 2011 WL 1465786 (S.D.N.Y. Apr. 14, 2011) ...........................16, 17

Ashcroft v. Iqbal, 556 U.S. 662 (2009) ...................................................................................................................5

Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) ...................................................................................................................5

Corsello v. Verizon N.Y., Inc., 18 N.Y.3d 777, 967 N.E.2d 1177 (N.Y. 2012) ....................................................................9, 10

DePinto v. Ashley Scott, Inc., 222 A.D.2d 288 (N.Y. App. Div. 1995) ..................................................................................11

Freeman v. Complex Computing Co., 119 F.3d 1044 (2d Cir. 1997).....................................................................................................8

Goldemberg v. Johnson & Johnson Consumer Cos., 8 F. Supp. 3d 467 (S.D.N.Y. 2014) ..........................................................................................10

Greene v. Gerber Prods. Co., --- F. Supp. 3d ---, Nos. 16-CV-1153 (MKB), 17-CV-93 (MKB), 2017 WL 3327583 (E.D.N.Y. Aug. 2, 2017) ...........................................................................................10

Henneberry v. Sumitomo Corp. of Am., 415 F. Supp. 2d 423 (S.D.N.Y. 2006) ......................................................................................15

Hutter v. Countrywide Bank, N.A., 41 F. Supp. 3d 363 (S.D.N.Y. 2014) ..........................................................................................5

IMG Fragrance Brands, LLC v. Houbigant, Inc., 679 F. Supp. 2d 395 (S.D.N.Y. 2009) ..........................................................................12, 13, 14

Kaplan, Inc. v. Yun, 16 F. Supp. 3d 341 (S.D.N.Y. 2014) ..................................................................................10, 11

Koenig v. Boulder Brands, Inc., 995 F. Supp. 2d 274 (S.D.N.Y. 2014) ........................................................................................9


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Monsanto Co. v. Haskel Trading, Inc., 13 F. Supp. 2d 349 (E.D.N.Y. 1998) .........................................................................................6

Nat’l Gear & Piston, Inc. v. Cummins Power Sys., LLC, 975 F. Supp. 2d 392 (S.D.N.Y. 2013) ........................................................................................6

Nomination Di Antonio E Paolo Gensini S.N.C. v. H.E.R. Accessories, Ltd., No. 07 Civ. 6959(DAB), 2009 WL 4857605 (S.D.N.Y. Dec. 14, 2009) .................................11

Ochre LLC v. Rockwell Architecture Planning & Design, P.C., No. 12 Civ. 2837(KBF), 2012 WL 6082387 (S.D.N.Y. Dec. 3, 2012) .............................16, 17

PetEdge, Inc. v. Garg, 234 F. Supp. 3d 477 (S.D.N.Y. 2017) ..............................................................................6, 7, 15

Reynolds v. Lifewatch, Inc., 136 F. Supp. 3d 503 (S.D.N.Y. 2015) .............................................................................. passim

Rockland Exposition, Inc. v. Alliance of Auto. Serv. Providers of N.J., 894 F. Supp. 2d 288 (S.D.N.Y. 2012) ................................................................................12, 14

Ruotolo v. City of N. Y., 514 F.3d 184 (2d. Cir. 2008)......................................................................................................5

Salahuddin v. Cuomo, 861 F.2d 40 (2d Cir. 1988).......................................................................................................16

Shostack v. Diller, No. 15-CV-2255 (GBD) (JLC), 2015 WL 5535808 (S.D.N.Y. Sept. 16, 2015) .......................7

United States v. Nagelberg, 772 F. Supp. 120 (E.D.N.Y. 1991) ........................................................................................7, 8

Usov v. Lazar, No. 13 Civ. 818 (RWS), 2013 WL 3199652 (S.D.N.Y. June 25, 2013) ...................................7

Versatile Housewares & Gardening Sys., Inc. v. SAS Grp., Inc., No. 09-CV-10182(SHS), 2016 WL 4064036 (S.D.N.Y. July 29, 2016) ...................................8

Weisblum v. Prophase Labs, Inc., 88 F. Supp. 3d 283 (S.D.N.Y. 2015) ..........................................................................................9

Wolff v. Rare Medium, Inc., 210 F. Supp. 2d 490 (S.D.N.Y. 2002) ......................................................................................15

Rules

Fed. R. Civ. P. 8 .........................................................................................................................1, 16


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Fed. R. Civ. P. 8(a) ........................................................................................................................16

Fed. R. Civ. P. 8(d) ........................................................................................................................16

Fed. R. Civ. P. 9(b) ..................................................................................................................13, 15

Fed. R. Civ. P. 12(b)(6)..........................................................................................................1, 5, 13

Other Authorities

5 C. Wright & A. Miller, Federal Practice and Procedure § 1281 .................................................16


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Defendant Shawn C. Carter (“Carter” or “Mr. Carter”) respectfully submits this

Memorandum of Law in support of his motion for an order pursuant to Rules 8 and 12(b)(6) of

the Federal Rules of Civil Procedure, dismissing all claims and counts asserted against him,

namely Counts IX, X, XI, XIV, and XV of Plaintiff’s First Amended Complaint, for failure to

state a claim and for failure to adhere to the Federal Rules’ mandatory pleading standards.

PRELIMINARY STATEMENT

Plaintiffs’ attempt to use Mr. Carter and his celebrity status to advance their claims is

improper and should not be tolerated. Despite its length, Plaintiffs’ 119-page First Amended

Complaint (the “”Complaint”) provides essentially no clear allegations of conduct by Mr. Carter

that would render him personally liable for the alleged harm caused to Plaintiffs. The absence of

specific allegations of actions by Mr. Carter evidence Plaintiffs’ inclusion of Mr. Carter in this

lawsuit for improper purposes. For these reasons and the reasons set forth fully below, the

deficient claims asserted against Mr. Carter should be dismissed.

The Complaint asserts eighteen claims for relief in 528 paragraphs. More than two

hundred of those paragraphs purport to provide background information, only some of which

bears any relation to the claims at issue. Despite the prolixity and disorganization of Plaintiffs’

Complaint, the allegations and claims are fairly straightforward. Distilled to essentials, Plaintiffs

claim that they acquired intellectual property rights in what they call the “ROC Family of

Marks” through an Asset Purchase Agreement (the “APA”) and other agreements between

various parties to this suit. But despite these agreements, Plaintiffs claim, some or all of the

Defendants (Plaintiffs make no meaningful effort to distinguish among them) engaged in

activities constituting trademark infringement, unfair competition, and other related, duplicative

claims.


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Despite its length, the Complaint lacks any allegations that describe Mr. Carter’s

purported involvement in the alleged infringement and anticompetitive behavior. Although the

Complaint extensively details Mr. Carter’s involvement in creating the so-called “ROC Family

of Marks” and building a surrounding business around those marks, the Complaint does nothing

to suggest that Mr. Carter was personally involved in any of the activities forming the basis of

their claims. Rather, the crux of Plaintiffs’ claims against Mr. Carter appears to be he “owns

and/or controls” several companies—ROC NATION Apparel Group (“RNAG”), Roc Apparel

Group, LLC (“RAG”), Roc Nation, LLC (“RNLLC”), and Paper Planes IP Holdings, LLC

(“Paper Planes”)—that allegedly carried out the activities forming the basis of Plaintiffs’ claims.

But under well-established New York law, a person’s mere status as an owner, officer, or

director of a company, without more, is an insufficient basis to hold him individually liable for

actions taken by the company. Plaintiffs’ attempt to use Mr. Carter and his celebrity status to

advance their claims is improper and should not be tolerated.

In addition to the improper pleading and insufficient allegations necessary to invoke

personal liability for corporate acts, many of Plaintiffs’ claims against Mr. Carter fail to state

cognizable claims. For these reasons, set forth in greater detail below, Mr. Carter respectfully

requests that this Court dismiss all claims in the Complaint asserted against him.

FACTUAL BACKGROUND

The prolixity of Plaintiffs’ Complaint and the inclusion of largely irrelevant background

material make it difficult to discern the acts that Plaintiffs contend form the basis of each of their

claims for relief. This difficulty is compounded by Plaintiffs’ frequent attempts at “group

pleading,” that is, grouping various corporate and individual defendants together, sometimes

confusingly referring to them as “Defendants,” sometimes as the “ROC Defendants,” and

sometimes referring to them in the disjunctive, using “and/or” rather than attribute conduct to a


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specific individual or entity. As such, it is unclear which defendant, or defendants, are alleged to

have conducted the various acts alleged in the Complaint.

Plaintiffs essentially allege that their trademark rights in what they refer to as the “ROC

Family of Marks” were infringed. Plaintiffs claim to have acquired their rights in these marks

through a series of contracts and agreements.. However, the trademark infringement claims,

Counts I through VIII of the Complaint, are not asserted against Mr. Carter, but against various

corporate defendants including, with some variation for each count, RNAG, RAG, and RNLLC.

With respect to Mr. Carter, Plaintiffs allege that he “controls directly or indirectly RNLLC

and/or RNAG and/or RAG and/or COS and/or Paper Planes Holdings.” (Complaint at ¶ 20. A

copy of the Complaint is annexed to the accompanying Declaration of Jordan W. Siev, dated

October 27, 2017, as Exhibit “A”). Only five counts in the Complaint are directed to Mr.

Carter—Count IX (Unfair Competition), Count X (Unjust Enrichment), Count XI (violation of

NYGBL § 349 and § 350), Count XIV (Tortious Interference with Contract), and Count XV

(Tortious Interference with Prospective Economic Relations).

With respect to the unfair competition claim, Plaintiffs allege that “[b]y marketing,

advertising, promoting, manufacturing, distributing and/or selling” the allegedly infringing

apparel products, Defendants (as a group, again without distinguishing between them)

“misappropriated the fruits, labors, and expenditures” of the Plaintiffs. (Id. at ¶ 399.) RNAG,

RAG, RNLLC, and Paper Planes are further alleged to have “attempted to convert the goodwill,

fruits, and labors” through commingling the “ROC Family of Marks” with another mark called

the “Paper Plane Mark.” (Id. at ¶ 401.) Plaintiffs do not allege, anywhere in the Complaint, that

Mr. Carter was personally involved in any of the alleged misconduct, namely, the marketing,

advertising, promotion, manufacturing, distributing or selling of allegedly infringing goods or


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commingling the Paper Plane mark. Instead, the commingling activities are described in the

Complaint as actions taken by “RNAG, RAG, RNLLC, and/or other John Doe entities owned or

controlled by the Roc Defendants,” which by definition (in the Complaint) includes Mr. Carter.

(Id. at ¶ 103.) Plaintiffs’ unjust enrichment and NYGBL § 349 - § 350 claims are premised on

similar allegations and conduct. (See generally, id. at ¶¶ 415-445.) Plaintiffs’ claims against Mr.

Carter apparently rest, then, on his alleged direct or indirect ownership or control of these

companies. (See e.g., id. at ¶¶ 20; 182-186; 283.)

The tortious interference claims, Counts XIV and XV, are only slightly more detailed. In

Count XIV, Plaintiffs allege that Mr. Carter had knowledge of the various agreements

concerning the “ROC Family of Marks,” “owned or controlled RNAG and/or RNLLC directly or

indirectly,” was involved in negotiating two of those agreements, and induced one of his

companies that he “controls directly or indirectly” to enter into some unidentified dealings with

either Defendant MLB or Defendant New Era. (Id. at ¶¶ 463-469.) By “authorizing or allowing

the [infringing apparel] to be born and the [infringing apparel] to be sold at his direction or

approval,” Plaintiffs claim that Mr. Carter tortiously interfered with various agreements between

the parties. (Id. at ¶ 471.) In Count XV, Plaintiffs revert back to their naked ownership and

control allegations, claiming that the defendants—again, it is not clear which ones—made

fraudulent misrepresentations to Defendant New Era to convince New Era to enter into a contract

with “RNLLC, RAG, Paper Plane Holdings, Carter, RNAG, and/or John Does” to distribute, sell,

and promote allegedly infringing products. (Id. at ¶¶ 475-481.)

For the reasons stated below, none of Plaintiffs’ allegations state sufficient claims against

Mr. Carter, and the counts asserted against him should be dismissed.


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LEGAL STANDARD

To survive a motion to dismiss under Rule 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 (2009) (internal quotation omitted). Although these factual allegations

need not be particularly detailed to survive a motion to dismiss, “a plaintiff’s obligation to

provide the ‘grounds’ of his ‘entitle[ment] to relief” is not satisfied by pleading mere labels and

conclusions. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Even though factual

allegations must be accepted as true in reviewing a motion to dismiss, a formulaic recitation of

the elements of a cause of action does not satisfy this standard. Id.; Ruotolo v. City of N. Y., 514

F.3d 184, 188 (2d. Cir. 2008). If a plaintiff’s allegations do not “nudge[]” his claim “across the

line from conceivable to plausible,” the complaint “must be dismissed.” Bell Atl. Corp., 550

U.S. at 570. “Determining whether a complaint states a plausible claim for relief” requires a

“context-specific” analysis where the court should “draw on its judicial experience and common

sense. But where the well-pleaded facts do not permit the court to infer more than the mere

possibility of misconduct,” the plaintiff has not shown that he is entitled to relief. Ashcroft, 556

U.S. at 679.

ARGUMENT

I. Plaintiffs’ Allegations Do Not State Valid Claims With Respect To Mr. Carter And Should Be Dismissed Pursuant To Rule 12(b)(6).

A. Plaintiffs’ Unfair Competition Claim Does Not Contain Sufficient Allegations To State A Claim Against Mr. Carter In His Individual Capacity.

It is well-settled that, under New York law, an individual actor can only be held

personally responsible for a company’s tortious acts if the plaintiff pleads that the corporate

officer directly “participated in the alleged misconduct.” Hutter v. Countrywide Bank, N.A., 41

F. Supp. 3d 363, 374 (S.D.N.Y. 2014); Reynolds v. Lifewatch, Inc., 136 F. Supp. 3d 503, 526


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(S.D.N.Y. 2015). To be personally liable for a company’s torts, the owner, officer, or director

must “direct, authorize, or in some meaningful sense participate actively in the assertedly

wrongful conduct.” PetEdge, Inc. v. Garg, 234 F. Supp. 3d 477, 493-94 (S.D.N.Y. 2017).

Unfair competition is treated as a tort, and individual liability for corporate unfair competition

will lie only if the officer is a “moving, active conscious force” behind the wrongful acts.

Monsanto Co. v. Haskel Trading, Inc., 13 F. Supp. 2d 349, 354 (E.D.N.Y. 1998).

Reynolds is particularly instructive here. In that case, a consumer sued a medical alert

device company and several of its officers, asserting claims for deceptive trade practices, fraud,

and intentional misrepresentation. 136 F. Supp. 3d at 508-509. In particular, with respect to the

corporate officers, the plaintiff alleged that they had “personal involvement” in the corporate

business activities, were “involved in the decision making relating to the improper, deceptive,

and/or fraudulent activity” challenged in the case, “controlled the day-to-day operations” of the

company, including sales and marketing, and were aware of should have been aware of the

deceptive and improper conduct at issue in the suit. Id. at 526. These allegations, the court held,

were “only conclusory” and “insufficient to establish individual participation” in the challenged

corporate conduct. Id. Personal participation, such as individually making false statements

and/or personally committing acts constituting unfair competition, is typically required to

establish individual liability for corporate misconduct. Id. (collecting cases). See also Nat’l

Gear & Piston, Inc. v. Cummins Power Sys., LLC, 975 F. Supp. 2d 392, 401 (S.D.N.Y. 2013)

(plaintiff’s failure to allege any unlawful conduct separate from defendant’s alleged indirect

involvement rendered the claims facially implausible and subject to dismissal).

The allegations in Reynolds, held insufficient to survive a motion to dismiss as a matter

of law, are far more detailed than the allegations against Mr. Carter here. As noted above, the


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most detailed allegations against Mr. Carter with respect to the conduct at the heart of Plaintiffs’

unfair competition claim merely state that he owns or controls RNAG, RNLLC, RAG, and/or

Paper Planes. (See, e.g., Complaint at ¶¶ 20; 182-186; 283.) Plaintiffs do not allege that Mr.

Carter individually, meaningfully participated in any infringing conduct. Plaintiffs do not allege

that any infringement, misappropriation, dilution, or commingling was done at Mr. Carter’s

direction, or that Mr. Carter was personally involved in any of that activity. The conclusory

allegation that Mr. Carter owns or controls several of the corporate defendants alleged to have

committed wrongful acts is simply not enough to subject him to personal liability for that

activity. Courts applying New York law have repeatedly affirmed that these types of allegations

are not enough to satisfy even the Rule 8(a) plausibility pleading standard. Reynolds, 136 F.

Supp. 3d at 526; PetEdge, Inc., 234 F. Supp. 3d at 493-94; Shostack v. Diller, No. 15-CV-2255

(GBD) (JLC), 2015 WL 5535808, at *5 (S.D.N.Y. Sept. 16, 2015) (dismissing claims where

plaintiff failed to plead “any facts to demonstrate that the individual defendants themselves

engaged in the actions of which he complains, directed or authorized them, or were even aware

of them.”) Count IX, Plaintiffs’ unfair competition claim against Mr. Carter, suffers from these

very same infirmities, and should be dismissed accordingly.

B. Plaintiffs’ Unjust Enrichment Claim Fails Because It Does Not State A Claim Against Mr. Carter In His Individual Capacity, And Is Duplicative Of Plaintiffs’ Tort Claims.

Plaintiffs’ unjust enrichment claim fails for similar reasons. However, because unjust

enrichment is not a tort, but a quasi-contractual claim, the type of individual participation a

plaintiff is required to plead is even greater, namely akin to a piercing of the corporate veil

analysis. See United States v. Nagelberg, 772 F. Supp. 120, 123-24 (E.D.N.Y. 1991) (applying

New York’s veil piercing law to determine that individual defendants could be held personally

liable for unjust enrichment of a corporation); Usov v. Lazar, No. 13 Civ. 818 (RWS), 2013 WL


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3199652, at *4-5 (S.D.N.Y. June 25, 2013) (applying veil-piercing test to unjust enrichment

claim). Under New York law, to pierce the corporate veil, the plaintiff must allege and prove,

among other things, that the owner “has exercised such control that the corporation has become a

mere instrumentality of the owner.” Freeman v. Complex Computing Co., 119 F.3d 1044, 1052

(2d Cir. 1997) (citation omitted); Nagelberg, 772 F. Supp. at 123-24 (corporate veil may be

pierced upon a showing of “complete control by the dominating [party] that leads to a wrong

against third parties.”) In addition, the individual person, apart from the corporate entities he

owns, must personally benefit from the challenged action separate and apart from benefit to

themselves in their corporate capacities. See Versatile Housewares & Gardening Sys., Inc. v.

SAS Grp., Inc., No. 09-CV-10182(SHS), 2016 WL 4064036, at *5-6 (S.D.N.Y. July 29, 2016)

(unjust enrichment claim against individual actor failed without evidence that he personally

benefitted from the corporate activities); Am. Med. & Life Ins. Co. v. CrossSummit Enters., Inc.,

27 Misc. 3d 1210(A), at *4-5 (N.Y. Sup. Ct. Apr. 1, 2010) (dismissing unjust enrichment claim

where there was no evidence individual defendants acted in anything other than their corporate

capacities).

Plaintiffs have not alleged that Mr. Carter even participated in any of the infringing,

commingling, or dilution activity that forms the basis of their unjust enrichment claim, much less

allege that Mr. Carter dominated RNAG, RNLLC, or RAG in such a manner as to justify

disregarding the corporate form here. Plaintiffs’ Complaint is entirely devoid of any allegations

that Mr. Carter ever acted outside the scope of his corporate capacity. In addition, although

Plaintiffs allege in a conclusory manner that all Defendants unjustly retained some vague benefit

in the form of increased goodwill and value of corporate shares, none of these allegations state

that Mr. Carter personally benefited from any allegedly wrongful activity, rather than an indirect


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benefit by virtue of his positions and ownership interests in the corporate defendants. As such,

the unjust enrichment claim against Mr. Carter should be dismissed.

Even if Plaintiffs’ allegations were sufficient to establish a basis for Mr. Carter’s

individual liability, the unjust enrichment claim must be dismissed for an additional reason. As

the Reynolds court recognized, an “unjust enrichment claim cannot survive where it simply

duplicates, or replaces, a conventional contract or tort claim.” 136 F. Supp. 3d at 524 (quoting

Koenig v. Boulder Brands, Inc., 995 F. Supp. 2d 274, 290 (S.D.N.Y. 2014)). Unjust enrichment,

under New York law, “is available only in unusual situations when, though the defendant has not

breached a contract nor committed a recognized tort, circumstances create an equitable

obligation running from the defendant to the plaintiff.” Weisblum v. Prophase Labs, Inc., 88 F.

Supp. 3d 283 (S.D.N.Y. 2015) (quoting Corsello v. Verizon N.Y., Inc., 18 N.Y.3d 777, 790, 967

N.E.2d 1177 (N.Y. 2012)). Unjust enrichment claims cannot be used as a backstop, or to remedy

defects in traditional tort claims. Koenig, 995 F. Supp. 2d at 291.

Plaintiffs’ unjust enrichment claim is entirely duplicative of its trademark infringement,

unfair competition, and statutory NYGBL claims. It is based on the same conduct as Plaintiffs’

other claims. (See Complaint at ¶ 415) (incorporating by reference all preceding allegations,

which include the background allegations and the trademark and unfair competition-specific

pleadings). In the unjust enrichment claim, Plaintiffs seek recovery based on the “unlawful acts”

of the defendants, and the retention of monies and goodwill “gained through deceptive business

practices, infringement, acts of deceit, and the claims alleged herein.” (Id. at ¶ 421) (emphasis

added). Plaintiffs’ own pleading thus expressly concedes that the unjust enrichment claim is

duplicative, merely another bite at the apple, in an attempt to recover for the same allegedly

unlawful acts that underlie their other substantive claims. Unjust enrichment is “not a catchall


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cause of action to be used when others fail.” Greene v. Gerber Prods. Co., --- F. Supp. 3d ---,

Nos. 16-CV-1153 (MKB), 17-CV-93 (MKB), 2017 WL 3327583, at *27 (E.D.N.Y. Aug. 2,

2017) (citing Corsello, 18 N.Y.3d at 790). New York law is clear that this duplicative pleading

is not appropriate, and Courts applying New York law have dismissed unjust enrichment claims

in similar circumstances. See Reynolds, 136 F. Supp. 3d at 524-25; Corsello, 18 N.Y.3d at 790;

Goldemberg v. Johnson & Johnson Consumer Cos., 8 F. Supp. 3d 467, 483-84 (S.D.N.Y. 2014).

Accordingly, Count X should be dismissed.

C. Count XI Does Not State A Cognizable Claim Under NYGBL § 349 - § 350 And Should Be Dismissed.

Plaintiffs’ deceptive trade acts and practices count also fails to state an actionable claim

for an additional reason as well.1 The type of acts and practices cognizable under New York

General Business Law § 349 and § 350 are those that injure consumers or cause harm to the

public interest. Specifically, plaintiffs “must allege that a defendant has engaged in (1)

consumer-oriented conduct that is (2) materially misleading and that (3) plaintiff suffered injury

as a result of the allegedly deceptive act or practice.” Kaplan, Inc. v. Yun, 16 F. Supp. 3d 341,

352 (S.D.N.Y. 2014) (citation omitted). In general, trademark infringement and related unfair

competition allegations are not cognizable under these sections of the NYGBL. As the Kaplan

court noted, New York courts have “routinely dismissed trademark claims brought under

Sections 349 and 350 as being outside the scope of the statutes” because general trademark

1 Even assuming, arguendo, that Count XI does state a valid deceptive trade practices claim, it must still be dismissed against Mr. Carter for the same reasons articulated above with respect to Plaintiffs’ unfair competition claim. See Reynolds, 136 F. Supp. 3d at 525-27 (dismissing various NYGBL claims asserted against individual defendants, including a claim under NYGBL § 349 and § 350, where plaintiff failed to plead in a non-conclusory fashion that the individual defendants themselves meaningfully participated in the challenged activity). Because Plaintiffs have not alleged that Mr. Carter personally participated in or directed any of the infringement, misappropriation, commingling, or dilution activities that form the basis of the deceptive trade practices act claim, Count XI should be dismissed.


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infringement does not pose the type of “significant risk of harm to the public health or interest”

that the statute was “designed to address.” Id. (collecting cases) (quoting DePinto v. Ashley

Scott, Inc., 222 A.D.2d 288, 289 (N.Y. App. Div. 1995)). In order to be cognizable under

NYBGL § 349 and § 350, a plaintiff must allege a “specific and substantial injury to the public

interest over and above ordinary trademark infringement or dilution”—consumer confusion is

not enough. Nomination Di Antonio E Paolo Gensini S.N.C. v. H.E.R. Accessories, Ltd., No. 07

Civ. 6959(DAB), 2009 WL 4857605, at *7-8 (S.D.N.Y. Dec. 14, 2009).

Plaintiffs’ Complaint suffers from the same failures and merits dismissal for the same

reasons as addressed in Kaplan and Nomination Di Antonio. In Count XI, Plaintiffs allege that

RNLLC, RAG, and RNAG:

“intentionally and knowingly engaged in deceptive acts and practices” by “contracting, licensing, conveying, or authorizing” the manufacture, distribution, sale, marketing, or promoting of allegedly infringing products;

“intentionally and knowingly engaged in deceptive acts and practices…including the manufacturing, distribution, selling, marketing, and engaging in commerce” concerning additional allegedly infringing products; and

commingled the ROC NATION Mark with the Paper Plane Mark. (Complaint at ¶¶ 427-429.) This conduct, Plaintiffs allege, “is likely to mislead consumers and

the general public in a material way” by misrepresenting that the allegedly infringing products

“were genuine authorized goods associated with the ROC Family of Marks” and came from a

common source. (Id. at ¶¶ 434, 437.) This is precisely the type of harm implicated in every

trademark infringement claim, and which has been repeatedly found insufficient to sustain a

deceptive trade practices claim under New York law. Accordingly, Count XI should be

dismissed.


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D. Counts XIV (Tortious Interference with Contract) And XV (Tortious Interference With Prospective Economic Relations) Similarly Fail To State Actionable Claims Against Mr. Carter.

i. Plaintiffs have not alleged sufficient facts to hold Mr. Carter individually liable for tortious interference with contract.

Plaintiffs’ allegations in Count XIV are insufficient to justify subjecting Mr. Carter to

personal liability for tortious interference with contract. Under New York law, “a claim for

tortious interference requires the existence of a valid contract between plaintiff and a third party,

defendant’s knowledge of the contract, defendant’s intentional procurement of the third-party’s

breach of the contract without justification, actual breach of the contract, and damages resulting

therefrom.” IMG Fragrance Brands, LLC v. Houbigant, Inc., 679 F. Supp. 2d 395, 405-06

(S.D.N.Y. 2009) (internal quotation omitted). There are some notable contours to this general

statement of law, two of which are relevant here. First, where the defendants “have an economic

interest in the contract” at issue, the plaintiff must “adequately allege that the defendant either

acted maliciously, fraudulently, or illegally.” Id. at 406. Second, claims for tortious interference

are not generally actionable against officers of the company, unless they are “acting wholly

outside the scope of their authority for purely personal gain.” Id. at 407-08. A heightened

pleading standard applies to these individual liability claims. Id.; see also Rockland Exposition,

Inc. v. Alliance of Auto. Serv. Providers of N.J., 894 F. Supp. 2d 288, 338 (S.D.N.Y. 2012).

Both contours apply here, and separately doom Plaintiffs’ claims against Mr. Carter. The

crux of the allegations in Count XIV are that Mr. Carter, despite knowledge of Iconix’s purchase

of the “Roc Family of Marks” in the APA, tortiously interfered with the various agreements

between the parties by “authorizing or allowing” infringing products to be created and sold.

(Complaint at ¶¶ 469-472.) As Plaintiffs expressly allege in their Complaint, Mr. Carter was

“the direct or indirect beneficial owner[]” of Rocawear Licensing LLC, one of the parties to the


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APA. (Id. at ¶ 464.) Plaintiffs allege further that Mr. Carter “owned or controlled RNAG and/or

RNLLC directly or indirectly,” and that “Paper Plane Holdings is under common control and/or

beneficial ownership with RNAG and/or RNLLC.” (Id. at ¶¶ 465-466.) By virtue of Mr.

Carter’s alleged ownership of RNAG and RNLLC, Mr. Carter is not a “stranger” to any of the

agreements with which he is alleged to have tortiously interfered. In order to plead a viable case

against Mr. Carter, then, Plaintiffs must plead that Mr. Carter acted maliciously, fraudulently, or

illegally. Plaintiffs have not done so.

At most, Plaintiffs’ allegations state that Mr. Carter, despite knowing that neither RNLLC

nor RNAG allegedly had rights to the ROC NATION Marks at issue in this suit, allowed or

authorized those companies to enter into contracts and/or sell infringing products. This falls well

short of an allegation of malice, fraud, or illegal conduct necessary to state a sufficient claim in

these circumstances. For example, in IMG Fragrance Brands, LLC, the plaintiff similarly failed

to allege malice, fraud or illegal conduct where plaintiff claimed that defendants acted “without

justification.” 679 F. Supp. 2d at 406. There, none of the plaintiff’s conclusory statements of

fraud met Rule 9(b)’s heightened particularity standard, and therefore could likewise not support

a tortious interference claim. Id. And finally, the plaintiffs failed to allege illegal activity

because the defendants’ actions there—which also involved alleged Lanham Act trademark

claims—were really simple breaches of contract. Id. at 406-407. Here, Plaintiffs’ allegations

against Mr. Carter fall short of even those at issue in IMG. Plaintiffs’ threadbare statements that

Mr. Carter tortiously interfered with contracts simply cannot satisfy Rule 8(a) or Rule 12(b)(6).

But even if Plaintiffs’ allegations could satisfy the malice/fraud/illegal activity standard,

they still do not establish that Mr. Carter can be held personally liable for tortious interference.

In Rockland Exposition, the plaintiff’s tortious interference claim against an individual defendant


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was dismissed because it failed to allege that the acts “of the corporate officers [or directors]

were done with the motive for personal gain as distinguished from gain to their corporations”

and were “calculated to impair the plaintiff’s business for the defendant’s profit.” 894 F. Supp.

2d at 338 (internal quotation omitted). See also IMG Fragrance Brands LLC, 679 F. Supp. at

408 (tortious interference claim dismissed for failure to claim that the individual defendant

“acted to interfere” with the contract “for her own personal gain”). Plaintiffs here have likewise

failed to allege any facts to satisfy the heightened standard applied to individual defendants—

nothing in the Complaint even suggests that Mr. Carter engaged in any of the alleged activities

for his personal gain, or that he was acting “wholly outside the scope” of his authority, as the law

requires. Id. at 407-08. Because Plaintiffs’ tortious interference claim suffers from various

deficiencies such that it fails to state a valid claim, Count XIV should be dismissed.

ii. Because Mr. Carter cannot be held personally liable for any independent tort, Plaintiffs fail to state a claim for tortious interference with economic advantage.

Plaintiffs’ second tortious interference claim against Mr. Carter is similarly deficient. A

claim for tortious interference with prospective economic advantage is subject to an extremely

high pleading standard which is “more demanding” than the standard for contract-based tortious

interference claim. Rockland Exposition, Inc., 894 F. Supp. 2d at 332. To state a valid claim, a

plaintiff must allege that “(1) the plaintiff had business relations with a third party; (2) the

defendant interfered with those business relations; (3) the defendant acted for a wrongful purpose

or used dishonest, unfair, or improper means; and (4) the defendant’s acts injured the

relationship.” Id. (internal quotation omitted). In general, the only type of “wrongful means”

that will satisfy the third element are crimes and independent torts. Id. at 332-33. Plaintiffs

claim that RNLLC, Paper Planes, RAG, RNAG, and Mr. Carter and/or other companies

controlled by Mr. Carter “fraudulently misrepresented to New Era that one or more of them had


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the license rights to use, or authority to use, the ROC NATION Mark” for apparel “for the

purpose of inducing reliance” by New Era, which usurped Plaintiffs’ relationship with New Era.

(Complaint at ¶¶ 478-481.) These allegations are, again, insufficient to subject Mr. Carter to

personal liability.

Because this type of tortious interference claim is, by definition, a tort claim, the ordinary

rules governing personal liability for corporate torts apply. As stated above in the section

addressing Plaintiffs’ unfair competition claim, as a general rule, individuals are not liable for

corporate torts unless they “direct, authorize, or in some meaningful sense participate actively in

the assertedly wrongful conduct.” PetEdge, Inc., 234 F. Supp. 3d at 493-94. But here, again,

Plaintiffs do not allege that Mr. Carter himself entered into a business relationship with New Era,

or that he himself participated in any of the alleged fraudulent misrepresentations to New Era,

and certainly have not made such allegations with the particularity required by Rule 9(b), which

applies to allegations of fraudulent misrepresentation. See Henneberry v. Sumitomo Corp. of

Am., 415 F. Supp. 2d 423, 454 (S.D.N.Y. 2006); Wolff v. Rare Medium, Inc., 210 F. Supp. 2d

490, 499-500 (S.D.N.Y. 2002) (dismissing tortious interference claim for failure to plead

underlying fraudulent misrepresentations with sufficient particularity to satisfy Rule 9(b)).

Because Plaintiffs have not satisfied the applicable pleading standards and have not pled

sufficient facts to establish that Mr. Carter can be personally liable for the acts underlying their

tortious interference claim, Count XV fails to state a plausible claim against him and should be

dismissed.

II. Plaintiffs’ Amended Complaint Does Not Comply With Rule 8 Pleading Standards With Respect To Mr. Carter And Should Be Dismissed.

Although each of the claims asserted against Mr. Carter are subject to dismissal for the

individual reasons detailed above, the claims suffer from an additional common failure:


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Plaintiffs’ group pleading does not satisfy Rule 8 of the Federal Rules of Civil Procedure.

Throughout the Complaint, Plaintiffs make sweeping references to the “Roc Defendants” and the

“Defendants” without attempting to distinguish between them. The 528-paragraph Complaint is

littered with examples of this type of improper pleading practice. (See, e.g., Complaint at ¶¶

398-408; 416-418; 432-436; 478-480.) This is especially egregious as to Mr. Carter—the

Complaint provides essentially no clear allegations identifying precisely what acts Plaintiffs

claim Mr. Carter took to cause harm.

Fed. R. Civ. P. 8(a) requires that a complaint contain a “short and plain statement of the

claim showing that the pleader is entitled to relief.” Pleadings are supposed to be “simple,

concise, and direct.” Fed. R. Civ. P. 8(d). “Unnecessary prolixity in a pleading” is generally not

tolerated, as it “places an unjustified burden on the court and the party who must respond to it

because they are forced to select the relevant material from a mass of verbiage.” Salahuddin v.

Cuomo, 861 F.2d 40, 42 (2d Cir. 1988) (quoting 5 C. Wright & A. Miller, Federal Practice and

Procedure § 1281). Rule 8(a) requires plaintiffs to “indicate clearly the defendants against which

relief is sought and the basis upon which relief is sought against the particular defendants.” Am.

Sales Co. v. AstraZeneca AB, No. 10 Civ. 6062(PKC), 2011 WL 1465786, at *5 (S.D.N.Y. Apr.

14, 2011). Plaintiffs cannot “lump[] all the defendants together in each claim and provid[e] no

factual basis to distinguish their conduct.” Ochre LLC v. Rockwell Architecture Planning &

Design, P.C., No. 12 Civ. 2837(KBF), 2012 WL 6082387, at *6-7 (S.D.N.Y. Dec. 3, 2012).

The Complaint fails to comply with Rule 8 in each of these ways, particularly as it relates

to Mr. Carter. In order to include Mr. Carter as a defendant in this proceeding, Plaintiffs have,

for the most part, simply “lumped” him in with the corporate defendants, and allege that all or

some of the “Defendants” wronged them. Just as in Am. Sales Co., and Ochre LLC, the failure to


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distinguish the actions of the various defendants, Mr. Carter in particular, from one another

subjects their claims to dismissal. See Ochre LLC, 2012 WL 6082387, at *6-7; Am. Sales Co.,

2011 WL 1465786, at *5. Plaintiffs cannot engage in prolix and group pleading in an attempt to

“force the various defendants to guess at the nature” of their claims. Ochre LLC, 2012 WL

6082387, at *7 (dismissing, with prejudice, a copyright infringement action where plaintiff failed

to allege “plausible facts” supporting their claims or conduct by each defendant constituting

wrongful acts). Because it is impossible to decipher precisely what acts Plaintiffs attribute to

Mr. Carter, the counts of the Complaint directed against him should be dismissed in their

entirety.

CONCLUSION

For the foregoing reasons, Defendant Shawn C. Carter respectfully requests that the

Court enter an order (1) granting this motion to dismiss; (2) dismissing Counts IX, X, XI, XIV,

and XV of Plaintiffs’ First Amended Complaint against him with prejudice; and (3) granting

Shawn C. Carter such other and further relief as the Court deems just and proper.


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Dated: October 27, 2017 Respectfully Submitted,

/s/ Jordan W. Siev________________ Jordan W. Siev REED SMITH LLP 599 Lexington Avenue New York, New York 10022 Telephone: (212) 521-5400 Fax: (212) 521-5450 James T. Hultquist (Pro Hac Vice forthcoming) Lawrence E. James, Jr. (Pro Hac Vice forthcoming) REED SMITH LLP 10 South Wacker Drive 40th Floor Chicago, IL 60606-7507 Telephone: (312) 207-1000 Facsimile: (312) 207-6400 Counsel for Defendant Shawn C. Carter


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CERTIFICATE OF SERVICE I, the undersigned attorney, hereby certify that I electronically filed the foregoing document, on October 27, 2017 using the United States District Court for the Southern District of New York’s ECF System, which will send notice to all counsel of record.

By: /s/ Jordan W. Siev________________ Jordan W. Siev REED SMITH LLP 599 Lexington Avenue New York, New York 10022 Telephone: (212) 521-5400 Fax: (212) 521-5450


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