OPINION & ORDER
Before the Court is plaintiffs’ motion for leave to amend their Amended Complaint. For the reasons that follow, that motion is granted as to plaintiffs’ applications to add Count 10, for breach of contract, against Ezriel Polatsek; to add Count 13, for unjust enrichment, against Abraham Polat-sek, Ouleaf, Qian Liu, and Onlyou; and to amend the Amended Complaint’s factual allegations. In all other respects, the motion is denied.
I. Background and Procedural History
The Court assumes familiarity with the facts of this case, including specifically those set out in the Court’s previous written decisions, issued in March 2014, see Dkt. 58, and July 2014, see Dkt. 156. In brief, Ezriel Polatsek (“Ezriel”) was the founder and CEO of an imitation perfume company, Preferred Fragrance, Inc. (“Preferred Fragrance”), which he sold to plaintiffs in October 2011.
. A. The Motions to Dismiss or Stay and the Brooklyn Action
On December 17, 2013, two sets of defendants filed separate motions to dismiss or stay this action in favor of an action that had been filed by certain defendants in New York Supreme Court in Kings County (the “Brooklyn Action”). They argued that this Court should abstain from hearing this case under Colorado River Water Conservation District v. United States,
On January 7, 2014, plaintiffs filed the Amended Complaint, which attempted to cure the asserted defect in the 10b-5 claim. See Dkt. 32 ¶ 130.
On January 24, 2014, the same two sets of defendants again moved to dismiss or stay this action in favor of the Brooklyn Action, under Colorado River. Dkt. 34, 37. On March 6, 2014,
B. The Motions for Preliminary Relief
On March 3, 2014, plaintiffs applied, based on limited documentary evidence, for a temporary restraining'order and preliminary injunction to prevent Ezriel from violating the noncompete agreements. See Dkt. 52.
On March 14, 2014, after briefing, the Court issued an opinion from the bench, denying the motion without prejudice but also setting a schedule for expedited discovery with regard to the non-compete issue. Dkt. 68,101.
On May 1, 2014, after expedited discovery had been taken, plaintiffs renewed their motion for a preliminary injunction against Ezriel. Dkt. 113.
On July 10, 2014,
C. The Instant Motion
On May 30, 2014, plaintiffs moved for leave to amend their Amended Complaint, Dkt. 143, attaching a supporting memorandum of law, Dkt. 144 (“Pl. Br.”), a declaration, Dkt. 145 (“Steel Decl.”), and a proposed Second Amended Complaint, Steel Decl. Ex. 1 (“proposed SAC” or “PSAC”). In support of their motion, plaintiffs state that “[djuring expedited discovery, Plaintiffs learned additional facts that provided ... bases to allege additional claims against Ezriel Polatsek for his involvement in competing enterprises Ouleaf and Exceed, and to assert claims against these competing enterprises as well as against Abraham Polatsek, Qian Liu, and Onlyou.” PL Br. 4. In the proposed SAC, plaintiffs allege, in essence, that Ezriel and the proposed additional defendants devised a scheme to copy the business model of Preferred Fragrance and to sell similar imitation fragrance products to its customers. See PSAC ¶¶ 4, 103. As such, plaintiffs propose 11 new causes of action, including fraud, id. ¶¶ 200-06, copyright infringement, id. ¶¶ 214-24, trade dress infringement, id. ¶¶ 225-40, unfair competition, id. ¶¶ 241-44, tortious interference with business relationships, id. ¶¶ 245-50, breach of contract, id. ¶¶ 251-57, breach of fiduciary duty and aiding and abetting same, id. ¶¶ 258-67, unjust enrichment, id. ¶¶ 268-71, and civil conspiracy, id. ¶¶ 272-75. They also propose to add five new defendants: Abraham, Ouleaf, Qian Liu, Onlyou, and Exceed. Id. ¶¶ 17-21.
On June 13, 2014, Preferred Fragrance and Ezriel, Sarah, and Harry Polatsek opposed the motion to amend.
Federal Rule of Civil Procedure 15 supplies the legal standard applicable to a motion to amend a complaint. Rule 15(a)(2) provides that leave to amend a complaint shall be “freely” given when “justice so requires.” Fed.R.Civ.P. 15(a)(2). However, “ ‘it is within the sound discretion of the district court to grant or deny leave to amend.’ ” Barbota v. Latamie, No. 11 Civ. 7381(DLC),
A proposed amendment is futile if the amended pleading fails to state a claim upon which relief could be granted, and would thus not survive a motion to dismiss. See TouchTunes Music Corp. v. Rowe Int'l Corp.,
III. Discussion
The moving defendants oppose the proposed amendments on the grounds that they are futile and that allowing, plaintiffs to amend their complaint, would unduly prejudice defendants. Specifically, they argue that (1) the proposed fraud and breach of fiduciary duty claims against Ezriel are duplicative of the proposed claim for breach of contract; (2) the proposed claims for copyright and trade dress infringement are insufficiently pled; (3) the proposed claims for unfair competition, tortious interference, and civil conspiracy are preempted by federal law; and (4) permitting plaintiffs leave to amend and to add parties will further complicate and delay this litigation by introducing unrelated claims requiring additional discovery.
A. Futility
1. Fraud Claim (Count 3)
In Count 3, plaintiffs allege that Ezriel “made misrepresentations to induce Plaintiffs to enter into the Transaction,” PSAC ¶ 201, by “representing] that he would abide by the terms of the Restrictive Covenants for the time specified therein,” id. ¶ 202, when, in fact, he “did not intend to abide by the[ir] terms,” id. ¶ 203. The moving defendants contend that this proposed fraud claim is duplicative of plaintiffs’ proposed breach of contract claim against Ezriel, Count 10, which the defendants do not challenge. Accord
“The Second Circuit has held that, as a general rule, the allegation that a party entered into a contract intending to breach that contract is insufficient to support a claim for fraud under New York law.” Marriott Int’l, Inc. v. Downtown Athletic Club of N.Y. City, Inc., No. 02 Civ. 3906(MBM),
Here, the proposed SAC alleges only that Ezriel “represented that he would” but “did not intend to abide by” the terms of the Restrictive Covenants when he signed the APA and Employment Agreements. See PSAC ¶¶ 202-03; see also id. ¶ 101. Furthermore, plaintiffs do not allege facts meeting any exception to the Second Circuit rule. Specifically, the PSAC does not “(i) demonstrate a legal duty separate from the duty to perform under the contract; or (ii) demonstrate a fraudulent misrepresentation collateral or extraneous to the contract; or (in) seek special damages that are caused by the misrepresentation and unrecoverable as contract damages.” Bridgestone/Fire-stone,
2. Breach of Fiduciary Duty Claims (Counts 11 & 12)
In Count 11, plaintiffs allege that Ezriel breached his fiduciary duties to plaintiffs by “operating or participating in ventures that were directly competing with the Company, misappropriating confidential and proprietary information concerning the Company’s Business and customer relationships, ... and misappropriating corporate opportunities of the Company.” PSAC ¶ 259. In Count 12, plaintiffs allege that Abraham, Liu, Exceed, Ouleaf, and Onlyou had knowledge of and assisted in Ezriel’s breach of his duties by forming Ouleaf and contributing to its operations. See id. ¶¶ 263-67. The moving defendants assert that the proposed claim against
“Where a fiduciary duty is based upon a comprehensive written contract between the parties, a claim for breach of fiduciary duty is duplicative of a claim for breach of contract” and must be dismissed. Alitalia Linee Aeree Italiane, S.p.A. v. Airline Tariff Publ’g Co.,
Specifically, “[a] breach of fiduciary duty claim is duplicative when it is based on allegations of fiduciary wrongdoing that are expressly raised in plaintiffs breach of contract claim.” Northern Shipping,
Plaintiffs misunderstand the deficiency here. Regardless of the source or existence of Ezriel’s duty, the critical issue is that the proposed “breach of fiduciary duty claim is identical in substance to the breach of contract claim and is therefore duplicative. Both claims are premised upon the same facts and seek the same damages for the alleged conduct.” Northern Shipping,
In their proposed breach of fiduciary duty claim, plaintiffs allege that Ezriel breached his duties by “operating or participating in ventures that were directly competing with the Company, misappropriating confidential and proprietary information concerning the Company’s Business and customer relationships, which he had a duty to keep confidential, and misappropriating corporate opportunities of the Company.” PSAC ¶ 259. Specifically, plaintiffs point to Ezriel’s: (1) “assisting Ouleaf by (at least) introducing it to customers of the Company,” (2) “participating in the Wilhelmina Venture,” (3) “misappropriating, wrongfully disclosing and using for improper purposes the Company’s confidential information ... to enable Ouleaf to compete with and solicit the customers of the Company,” and (4) “diverting the opportunity to participate in the Wilhelmina Venture away from the Company and, instead, in favor of his outside business interest in Exceed.” Id. ¶ 260.
Each of these allegations—Ezriel’s disclosure of confidential information, misappropriation of corporate opportunities, and activities in connection with Ouleaf and Wilhelmina—mirrors those supporting plaintiffs’ breach of contract claim. See id. ¶¶ 252-57. Indeed, plaintiffs do not allege or point to a single fact supporting the proposed breach of fiduciary duty claim that is not already included in the proposed breach of contract claim. Because the fiduciary duty claim duplicates the breach of contract claim, Count 11 must be dismissed, even if plaintiffs have sufficiently alleged a fiduciary relationship. E-
Accordingly, although the parties did not address the issue in their briefs, the Court holds that plaintiffs’ claim for aiding and abetting breach of fiduciary duty (Count 12) must also be dismissed, because, under New York law, “ ‘[a] claim for aiding and abetting a breach of fiduciary duty requires ... a breach by a fiduciary of obligations to another.’ ” Lerner v. Fleet Bank, N.A.,
3. Copyright Infringement Claim (Count 5)
In Count 5, plaintiffs allege that Ezriel and the proposed new defendants “had access to and copied the Preferred Design Elements present on the fragrance product packaging for [three of plaintiffs’ products],” PSAC ¶217, and that Ouleaf “creatfed] and distributed] the Infringing Products, which incorporate elements substantially similar to the copyrightable matter in the Preferred Design Elements,” id. ¶218. They further allege that Ezriel, Abraham, Liu, and Onlyou “are contributorily liable for the infringing acts of Ouleaf, as they are moving, active forces behind the infringement and personally induced, caused and materially contributed to the infringement.” Id. ¶¶ 219-20.
“In order to establish a claim of copyright infringement, ‘a plaintiff with a valid copyright must demonstrate that: (1) the defendant has actually copied the plaintiffs work; and (2) the copying is illegal because a substantial similarity exists between the defendant’s work and the protectible elements of plaintiffs.’ ” Peter F. Gaito Architecture v. Simone Dev.,
As a preliminary matter, the Court finds that plaintiffs have adequately pleaded the first element—copying—circumstantially through their allegations that Ezriel and the proposed new defendants had access to the copyrighted works and that there are similarities between the works. See PSAC ¶¶ 217-18. Contrary to defendants’ assertions, plaintiffs have also adequately alleged that Ezriel had knowledge of and contributed to the alleged infringing activity. See id. ¶¶ 101, 103-06, 130, 219. However, the analysis does not end there.
As to the second element, contrary to plaintiffs’ assertions, the Second Circuit has held that:
The question of substantial similarity is by no means exclusively reserved for resolution by a jury, ... and we have repeatedly recognized that, in certaincircumstances, it is entirely appropriate for a district court to resolve that question as a matter of law, “either because the similarity between two works concerns only noncopyrightable elements of the plaintiffs work, or because no reasonable jury, properly instructed, could find that the two works are substantially similar.”
Gaito Architecture,
Thus, where, as here, the works in question are attached to a plaintiffs complaint,6 it is entirely appropriate for the district court to consider the similarity between those works in connection with a motion to dismiss, because the court has before it all that is necessary in order to make such an evaluation. If, in making that evaluation, the district court determines that the two works are “not substantially similar as a matter of law,” the district court can properly conclude that the plaintiffs complaint, together with the works incorporated therein, do not “plausibly give rise to an entitlement to relief.”
Id. (citations omitted). And, “when faced with works ‘that have both protectible and unprotectible elements,’ our analysis must be ‘more discerning,’ and ... we instead ‘must attempt to extract the unprotectible elements from our consideration and ask whether the protectible elements, standing alone, are substantially similar.’” Id. at 66 (quoting Fisher-Price, Inc. v. Well-Made Toy Mfg. Corp., 25 F.3d 119, 123 (2d Cir.1994) and Knitwaves, Inc. v. Lollytogs Ltd. (Inc.),
In light of these standards, the Court must consider whether (1) the similarity between the two works concerns only non-copyrightable elements of the plaintiffs’ work, and (2) no reasonable jury, properly instructed, could find that the two works are substantially similar.
Here, plaintiffs allege that they hold “valid copyrights registered with the
Plaintiffs’ version of the first product, an imitation “Beyonce Heat” fragrance box set, entitled “Hottest,” features a solid pink lid embossed with floral designs, with the image of a flame along the top right side extending onto the side of the box; inside, the plastic liner is also printed with a translucent flame image, and the red bottles feature gold caps and floral designs. See PSAC Ex. C. In contrast, Oul-eafs version, entitled “Beyond Hot,” features a lid printed with an image of orange and yellow clouds; inside, the plastic liner is clear over a red background and the bottles are solid red, with no designs or gold lids. See PSAC Ex. F. Strikingly, Ouleafs version does not contain any flame or floral design elements whatsoever, and the labels are printed in noticeably different fonts. Clearly, both products are intended to evoke “heat,” and do so through the use of a red and orange color scheme. However, the idea of expressing heat through such colors is not protectible, and Ouleafs packaging does not employ any of plaintiffs’ flame or floral designs.
Plaintiffs’ version of the second product, an imitation ‘Viva La Juicy” fragrance box set, entitled “La Vida Loca,” features a solid pink lid with gold floral designs along the top and gold stars bordering the sides and bottom; inside, the plastic liner is clear over a gold background, two of the bottles are clear with white floral designs, and one bottle is pink with gold stars. See PSAC Ex. D. Ouleafs version, entitled “Lucy, the Diva,” also features a solid pink lid, but with a solid gold line surrounding the rim, small abstract designs in the corners, and an embellished heart insignia; inside, the plastic liner is clear over a bright pink background and the bottles are bright pink with silver lettering. See PSAC Ex. G. As with the first product, these are also printed with markedly different fonts, and Ouleafs does not use gold stars anywhere or employ the same floral designs as plaintiffs. Here, both parties use similar pink and gold color schemes to evoke femininity, luxury, and glamor but, again, that idea is neither original nor protectible, and Ouleafs packaging does not employ plaintiffs’ floral or star designs.
Plaintiffs’ version of the third product, an imitation “Snooki by Nicole Polizzi” fragrance box set, entitled “Sexy Babe,” features a pink and black zebra-print lid with an image of red puckered lips; inside, the plastic liner is clear over a silver background and the bottles are printed with blue, purple, and pink zebra stripes and the same puckered lip design. See PSAC Ex. E. In contrast, Ouleafs version, entitled “Sexies Only,” features a pink and black leopard-print lid, with no other images or designs; inside, the plastic liner is clear over a pink background, and the bottles are printed with pink and black leopard spots, with one featuring a photograph of a woman’s face. See PSAC Ex. H. Again, each version uses a different font. As with the other two products, both parties use the color pink and animal prints to evoke “sexiness” but, again, that idea is hardly original. Here, not only does Ouleaf employ an entirely different
Ultimately, plaintiffs seem to take issue with defendants’ mimicking of their practice of creating “impression of fragrance products.” However, the strategy of “knocking off’ or imitating successful branded products is neither unique to plaintiffs nor protectible. Plaintiffs have no proprietary interest in the packaging designs of successful designer fragrance products marketed by others: Plaintiffs have no greater right to mimic a designer fragrance than do defendants; nor do plaintiffs have the right to exclude others from seeking to do so. Critically, plaintiffs do not allege that defendants copied their particular copyrighted artwork or graphic designs—such as the flame or lips images. Rather, plaintiffs allege that defendants developed similar competing products, using everyday ideas like wrapping a gift box with a bow or evoking heat through the color red. The similarities on which plaintiffs’ claim is based implicate only non-copyrightable elements. And no reasonable jury, properly instructed, could find the element of substantial similarity. Accordingly, plaintiffs fail to “state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal,
4. Trade Dress Infringement Claims (Counts 6 & 7)
The proposed SAC includes two trade dress claims. Count 6 alleges that defendants have designed and sold “products that contain a collection of design elements that is confusingly similar to the Preferred Trade Dress” in violation of the Lanham Act, 15 U.S.C. § 1125(a). PSAC ¶227. Count 7 alleges that defendants have committed common law trade dress infringement. Id. ¶¶ 236-40.
“The analysis for trade dress infringement is the same under both the Lanham Act and New York State common law.” Sports Traveler, Inc. v. Advance Magazine Publishers, Inc.,
Because plaintiffs do not have a relevant registered trademark, they are “proceeding under § 43(a) of the Lanham Act, which prohibits a person from using ‘any word, term, name, symbol, or device, or any combination thereof that is ‘likely to cause confusion ... as to the origin, sponsorship, or approval of his or her goods.’ ” Yurman Design, Inc. v. PAJ, Inc.,
“In any action under § 43(a), the plaintiff must prove (1) that the mark is distinctive as to the source of the good, and (2) that there is a likelihood of confusion be
Where the mark is a word, symbol or even product packaging, the plaintiff may prove distinctiveness by showing either that the “intrinsic nature” of the mark serves to identify a particular source (what is known as “inherent distinctiveness”) or that “in the minds of the public, the primary significance of [the mark] is to identify the source of the product rather than the product itself’ (what is known as “acquired distinctiveness” or “secondary meaning”).
Id. (quoting Samara Bros.,
Plaintiffs’ problem is simple: they have not alleged, and logically cannot allege, that their products involve a “mark [that] is distinctive as to the source of the good.” Yurman Design,
In sum, the proposed SAC does not identify what plaintiffs’ trade dress supposedly is, other than the concept of imitating others’ perfume and, perhaps, the addition in some instances of a tag reading “our impression of’ and, perhaps, the words “Preferred Fragrance.”
5. Unfair Competition, Tortious Interference, and Civil Conspiracy Claims (Counts 8, 9, & 14)
Finally, the moving defendants argue that plaintiffs’ claims for unfair competition, tortious interference, and civil conspiracy are preempted by federal law because they are merely duplicative of plaintiffs’ Copyright Act claims. The Court holds that these claims are deficient, but for other reasons.
“‘The essence of unfair competition under New York common law is the bad faith misappropriation of the labors and expenditures of another, likely to cause confusion or to deceive purchasers as to the origin of the goods.’ ” Enzo Biochem, Inc. v. Amersham PLC,
Under New York law, the elements of a claim for tortious interference with business relations are: that “(i) the plaintiff had business relations with a third party; (ii) the defendants interfered with those business relations; (iii) the defendants acted for a wrongful purpose or used dishonest, unfair, or improper means; and (iv) the defendants’ acts injured the relationship.” Lombard v. Booz-Allen & Hamilton, Inc.,
Finally, “[u]nder New York law, a claim for civil conspiracy may stand only if it is connected to a separate underlying tort.” Meisel v. Grunberg,
6. Unjust Enrichment Claim (Count 13)
In Count 13, plaintiffs allege that proposed new defendants Abraham, Liu, Oul-eaf, and Onlyou “were unjustly enriched at the expense of the Plaintiffs, in that they received profits from engaging in unfair competition and selling products that infringed on the Preferred Trade Dress and Preferred Design Elements,” PSAC ¶ 269, and that “[i]t is against equity and good conscience to permit Defendants Ouleaf, Onlyou, Liu, and Abraham Polatsek to retain these profits” since “Plaintiffs had a relationship of trust with these Defendants,” id. ¶ 270. The moving defendants do not allege futility as to this claim, because it does not concern them, but only new defendants. Once formally added to the case, those defendants will have an opportunity to answer or move to dismiss this claim.
7. Breach of Contract Claim Against Ezriel (Count 10)
In the Amended Complaint, plaintiffs brought a cause of action for breach of contract against the “APA Defendants,” i.e., the individual stockholders of Preferred Fragrance who signed the APA, including Ezriel, alleging that they breached certain representations and warranties in the APA by making certain omissions and during the sale of Preferred Fragrance. Dkt. 32 ¶¶ 140-46 (Count 3). In the Amended Complaint, that cause of action was denominated Count 3.
The proposed SAC retains Count 3, while renumbering it as Count 4, and asserts a new cause of action for breach of contract. Specifically, Count 10 alleges that Ezriel, by working with Ouleaf, Exceed, and on a venture with Wilhelmina, a modeling company, breached his noncom-pete agreements, as well as his contractual duties to devote substantially all of his time Fragrance Acquisitions while employed there and to not disparage Fragrance Acquisitions or disclose its confidential information. See PSAC ¶¶251-257. The non-compete allegations are based heavily on evidence that the Court received in connection with plaintiffs’ motion for a preliminary injunction against Ezriel.
Wisely, defendants do not argue that it would be futile to amend the operative complaint to add Count 10. Accordingly, the Court will allow the addition of Count 10.
In sum, the Court holds that it would be futile to grant plaintiffs leave to add the claims discussed swpra, Section III.A.1-5, ie., those for fraud (Count 3), copyright infringement (Count 5), trade dress infringement (Counts 6 and 7), unfair competition (Count 8), tortious interference (Count 9), breach of fiduciary duty (Count 11), aiding and abetting breach of fiduciary duty (Count 12), and civil conspiracy (Count 14).
B. Undue Prejudice to the Opposing Party
The moving defendants also argue that permitting plaintiffs leave to amend will result in unfair prejudice because the proposed new claims largely do not involve the existing defendants, see Def. Br. 5, and will materially add to the complexity and costs of discovery, see Def. Reply Br. 8. These arguments were made, however, in response to the prospect of adding all of the proposed new claims. In light of this Court’s foregoing rulings, the only new claims that survive are the new breach of contract claim against Ezriel (Count 10) and the unjust enrichment claim against four proposed new defendants (Count 13).
In this Circuit, an “[a]mendment may be prejudicial when ... it would ‘require the opponent to expend significant additional resources to conduct discovery and prepare for trial’ or ‘significantly delay the resolution of the dispute.’ ” AEP Energy Servs. Gas Holding Co. v. Bank of Am., N.A.,
Allowing plaintiffs leave to add Counts 10 and 13 would impose little additional burden on defendants. Count 13, the unjust enrichment claim, is only brought against four of the proposed new defendants: Ouleaf, Onlyou, Abraham, and Liu. Adding this claim will not substantially burden the current defendants. As plaintiffs point out, “the current Defendants who are not implicated in Ezriel’s breaches of the Restrictive Covenants have already demonstrated a practical approach' to dealing with [those] claims [that do not implicate them]: they have simply not attended depositions or hearings relating to those claims.” Pl. Reply. Br. 10. As such, there is little reason why the addition of one claim that does not implicate those defendants would significantly burden them.
As to Ezriel, the proposed new breach of contract claim, Count 10, will not substantially prejudice him. It arises out of conduct during the same period during the same period as the original claims, and this conduct is related to the conduct relevant to those claims. See State Teachers,
Finally, although plaintiffs’ amendment may result in some minor delay, it will not unduly prejudice the current defendants. “This is not a case where the amendment came on the eve of trial and would result in new problems of proof.” State Teachers,
CONCLUSION
For the foregoing reasons, plaintiffs’ motion for leave to amend the Amended Complaint is, for the most part, denied. In particular, the Court denies plaintiffs’ application to add the following counts: fraud (Count 3), copyright (Count 5), trade dress (Counts 6 and 7), unfair competition (Count 8), tortious interference (Count 9), breach of fiduciary duty (Count 11), aiding and abetting breach of fiduciary duty (Count 12), and civil conspiracy (Count 14). The Court also denies plaintiffs’ application to add Exceed as a defendant. Plaintiffs may add Count 10, for breach of contract against Ezriel; Count 13, for unjust enrichment, against Abraham, Ouleaf, Qian Liu, and Onlyou; and they may amend their factual allegations as proposed. Plaintiffs are directed to file a Second Amended Complaint consistent with this decision by Wednesday, July 23, 2014, and to serve it forthwith on all defendants. At the time plaintiffs serve the Second Amended Complaint on the new defendants, they shall also serve them with this order; the scheduling order issued by the Court on July 18, 2014; and a cover letter specifically directing the new defendants’ attention to this concluding section, which discusses next steps in this case.
As to next steps, the Court notes that, on Friday, July 18, 2014, Ezriel moved under Federal Rule of Civil Procedure 60(b), to be relieved of the preliminary injunction against him. Dkt. 158-60; see also Dkt. 156 (preliminary injunction order). Despite earlier acknowledging the facial adequacy of the Amended Complaint, Ezriel now argues that this Court lacks jurisdiction over this case because the sole federal claim, brought under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, fails to state a claim. Ezriel also states that, within a week, defendants intend to move to dismiss the Amended Complaint on the same grounds.
If the Court grants these motions, it will then direct the parties promptly to brief whether the Court should exercise supplemental jurisdiction over the remaining claims.
If the Court denies these motions and determines that it does have jurisdiction, it will then direct the parties, by a date it will specify at that time, to meet and confer promptly and to submit (1) a joint letter setting forth a proposed schedule for the remainder of discovery and for the filing and briefing of any motions by the new defendants to dismiss the Second Amended Complaint; (2) a revised proposed case management plan; and (3) a statement of whether the parties believe that an initial pretrial conference, this time involving the new defendants, would be productive.
In the interest of economy, the Court extends indefinitely the new defendants’ obligation to answer or move to dismiss the Second Amended Complaint. Upon resolving the existing defendants’ challenge to the sole federal claim, the Court will set a deadline for such responsive pleadings; the Court expects this deadline will be due 14 days after the issuance of an order by the Court resolving the existing defendants’ motions challenging the sole federal claim.
SO ORDERED.
Notes
. For the sake of clarity, because there are multiple Polatseks involved in this case, the Court refers to each Polatsek by first name.
. On April 2, 2014, the Honorable Carolyn E. Demarest, acting in recognition of this Court’s decision to exercise jurisdiction, dismissed the Brooklyn Action "without prejudice to a motion to restore should the federal action not resolve all issues.” Preferred Fragrance, Inc., et al. v. Fragrance Acquisitions,
. For ease of reference, in this opinion the Court will refer to these defendants as the “moving defendants.”
. Where the proposed amendment seeks to add parties, Rule 21 governs. It provides that "[o]n motion or on its own, the court may at any time, on just terms, add or drop a party.” Fed.R.Civ.P. 21. Although Rule 21 on its face might appear to countenance amendments not authorized by Rule 15, the case law dictates that, in determining whether the terms are "just” under Rule 21, courts should " ‘apply the same standard of liberality afforded to motions to amend pleadings under Rule 15.' ” Bridgeport Music, Inc. v. Universal Music Grp., Inc.,
. As a court in this District explained: "This rule derives from a very long and very puzzling line of New York cases. On at least four occasions, New York’s Court of Appeals has expressly held that 'a contractual promise made with the undisclosed intention not to perform it constitutes fraud.’ At the same time, however, there are numerous Appellate Division cases that state precisely the opposite rule.” Cougar Audio, Inc. v. Reich, No. 99 Civ. 4498(LBS),
. See PSAC Ex. C-H.
. Despite plaintiffs' assertions that their products are “labeled to identify Preferred Fragrance as the source,” PSAC ¶ 112, the Court does not observe where, if at all, the trade name "Preferred Fragrance” is indicated on the packaging of any of the three products at issue here. Given this apparent lack of clear branding, and the admitted lack of any other consistent elements across plaintiffs’ products, it is hard to see how any consumer could possibly discern the source of these goods based on the packaging alone.
. Contrary to the moving defendants' argument, the unfair competition claim is not, in fact, preempted. Although "unfair competition and misappropriation claims grounded solely in the copying of a plaintiff's protected expression are preempted by the Copyright Act,” LaChapelle,
. The moving defendants also accuse plaintiffs of "opportune timing,” Def. Reply Br. 10, asserting that seeking leave to amend while their motion for a preliminary injunction was pending is "clear evidence of bad faith,” Def. Br. 2; see also id. at 5. The moving defendants do not, however, explain why this timing is suggestive of bad faith. Quite the contrary, the instant motion to enlarge plaintiffs' claims was indisputably prompted by evidence first obtained during expedited discovery. Further, as plaintiffs point out, their timing was dictated by the Court's May 13, 2014 scheduling order, which required that any motion to amend or to join parties be filed within 45 days. Dkt. 118; see PL Reply Br. 10. On the record at hand, there is no basis to accuse plaintiffs of acting with bad faith or dilatory motives.