531 F.Supp.3d 593
E.D.N.Y2021Background
- Plaintiffs Eminah Properties LLC and My Battery Supplier LLC (Eminah) are battery resellers; in 2019 they negotiated with Energizer (which acquired Spectrum) to buy a large lot of Rayovac overstock and to become an Energizer distributor.
- Email exchanges memorialized price/quantity/delivery terms for the Rayovac lot and included representations that Eminah would be set up as a direct Energizer distributor; Eminah paid over $230,000 and received some inventory.
- Energizer later refused to deliver the remaining batteries, did not complete the distributorship setup, and sought to change terms unilaterally.
- Energizer’s counsel sent cease-and-desist letters accusing Eminah of unauthorized sales; Energizer allegedly submitted false VeRO notices to eBay reporting infringement, which the plaintiffs say produced ‘‘black marks’’ and threatened listings/accounts.
- Procedural posture: defendants moved to dismiss the second amended complaint. The court denied dismissal in part (breach of contract, unjust enrichment, defamation survive) and granted dismissal in part (fraudulent inducement, Lanham Act claim, state unfair competition, tortious interference, trade libel dismissed).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of contract: existence/enforceability of agreement (sale + distributorship) | Emails and conduct memorialized essential terms for the Rayovac sale and an agreement that Eminah would become a distributor; partial performance (payments/delivery) removes Statute of Frauds bar | Agreement to make Eminah a distributor was an unenforceable agreement-to-agree and violates the Statute of Frauds | Court: contract plausibly alleged as to Rayovac sale and distributorship; Statute of Frauds defense rejected at this stage; breach claim survives |
| Unjust enrichment | Energizer was unjustly enriched by retaining $230,000 paid in expectation of distributorship | Payments were for goods; no unjust enrichment | Court: pleaded benefit at plaintiff’s expense and restitution is plausible; claim survives |
| Fraudulent inducement | Defendants misrepresented intent to set up distributorship to induce Eminah to pay and buy | Representations were promises about future performance, not actionable fraud; insufficient particularity for intent | Court: dismissed—pre-contractual/future promises not collateral misrepresentations; Rule 9(b) not satisfied |
| Lanham Act (false/misleading representation to eBay) | False VeRO/NOCI reports to eBay were commercial misrepresentations causing delisting and harm to purchasers | Plaintiffs fail to allege dissemination to the purchasing public or to show commercial advertising/promotion | Court: dismissed—complaint fails to plead dissemination to relevant purchasing public under Second Circuit standard |
| New York unfair competition | Same factual basis as Lanham Act; injury from false reports and listing removals | Fails for same reasons as Lanham Act claim | Court: dismissed as duplicative and deficient for same reasons |
| Tortious interference (with eBay contract / business relations) | Defendants’ false reports caused interference, ‘‘black marks’’ and risk of suspension harming relationship with eBay | No actual breach or demonstrated injury to eBay relationship | Court: dismissed—plaintiffs did not allege actual breach or sufficient injury to eBay relationship |
| Defamation (VeRO reports to eBay) | VeRO notices falsely accused plaintiffs of trademark/copyright infringement; published to eBay; defamatory per se; harmed business | Argues lack of public exposure, falsity, or harm | Court: claim survives—publication to eBay suffices, falsity adequately alleged, claims of defamation per se plausible |
| Trade libel / product disparagement | False infringement reports disparaged plaintiffs’ products causing economic loss | Plaintiffs fail to plead special damages with particularity | Court: dismissed for failure to plead special damages sufficiently |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility pleading standard for complaints)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading must contain sufficient factual matter to state a plausible claim)
- Matson v. Bd. of Educ., 631 F.3d 57 (2d Cir. 2011) (construing pleadings in plaintiff’s favor and drawing reasonable inferences)
- Miller v. Tawil, 165 F. Supp. 2d 487 (S.D.N.Y. 2001) (presumption against enforcing agreements with open/future terms)
- Gmurzynska v. Hutton, 355 F.3d 206 (2d Cir. 2004) (Second Circuit standard for "commercial advertising or promotion" under Lanham Act)
- Beth Israel Med. Ctr. v. Horizon Blue Cross & Blue Shield of New Jersey, 448 F.3d 573 (2d Cir. 2006) (elements of unjust enrichment)
- Rich v. Fox News Network, LLC, 939 F.3d 112 (2d Cir. 2019) (elements of tortious interference with contract under New York law)
- Spinelli v. Nat'l Football League, 903 F.3d 185 (2d Cir. 2018) (misrepresentations inducing contract must be collateral to support fraud)
- Palin v. New York Times Co., 940 F.3d 804 (2d Cir. 2019) (elements for defamation under New York law)