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Farm Fresh Direct By A Cut Above, LLC v. Downey

United States District Court, D. Maryland

October 26, 2017

FARM FRESH DIRECT DIRECT BY A CUT ABOVE LLC, Plaintiff,
v.
STEVEN DOWNEY, et al., Defendants.

          MEMORANDUM OPINION

          Ellen Lipton Hollander United States District Judge.

         Plaintiff Farm Fresh Direct Direct By a Cut Above, LLC (“Farm Fresh Direct”) filed suit (ECF 1) against defendants Steven Downey; Clipper City Lending, LLC (“Clipper City”); Farm Fresh Direct Home Food Services, LLC (“Farm Fresh Home”); and Jessica Sinsky, alleging unfair competition, in violation of Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a) (Count I), and unfair competition and deceptive trade practices under Maryland common law (Count II). ECF 1 at 5-6.[1] Count III, for breach of contract, is brought only as to Downey and Clipper City. See ECF 1 at 6-7.[2]

         Sinsky, who is self-represented, filed an Answer to the Complaint on July 24, 2017. ECF 10 (“Answer”).[3] In addition, Sinsky moved to dismiss the Complaint. ECF 12 (“Motion”). Plaintiff opposes the Motion. ECF 14 (“Opposition”). No reply has been filed. See Docket.

         No hearing is necessary to resolve the Motion. See Local Rule 105.6. However, in resolving the Motion, the Court is mindful of its obligation to construe liberally the pleadings of a pro se litigant, which are “held to less stringent standards than formal pleadings drafted by lawyers.” Erickson v. Pardus, 551 U.S. 89, 94 (2007); see also White v. White, 886 F.2d 721, 722-23 (4th Cir. 1989).

         For the reasons that follow, I shall deny the Motion.

         I. Factual Summary

         In its Complaint (ECF 1), plaintiff states that Farm Fresh Direct has been registered as a limited liability corporation (“LLC”) with the Maryland State Department of Assessments and Taxation (“SDAT”) since December 22, 2016. ECF 1, ¶ 9. On June 7, 2017, plaintiff registered with SDAT its ownership of the trade name “Farm Fresh Direct Direct.” Id. Plaintiff alleges that it has “worked to develop the Farm Fresh Direct trade name and trademark by working to create a network of providers inside and outside of Maryland, ” and by “working directly with suppliers throughout the mid-Atlantic region to bring fresh, natural and quality foods directly to consumers.” Id. ¶ 10. Further, plaintiff asserts that it uses the Farm Fresh Direct trade name and trademark in interstate commerce. Id.

         According to plaintiff, “on or about April 5, 2017, ” it entered into an Independent Representative and Non-Compete Agreement (“Agreement”) with Downey and Clipper City. Id. ¶ 11. Pursuant to the Agreement, Downey served as a representative salesperson for and on behalf of plaintiff. Id. The Agreement forms the basis for Count III, which pertains only to Downey and Clipper City and is not at issue in this Memorandum.

         Plaintiff asserts that, on or about April 25, 2017, “Downey and . . . Sinsky filed with SDAT articles of organization for a competing company with name [sic] intentionally confusing with Farm Fresh Direct's, ‘Farm Fresh Direct Direct Home Food Services, LLC” ECF 1, ¶ 12. Additionally, plaintiff asserts that the “filings with SDAT state that [Farm Fresh Home's] purpose is to sell fresh all natural food plans and other household items to residential customers.” Id. ¶ 12. Of relevance here, plaintiff also alleges that “Sinsky is the resident agent and incorporator” for Farm Fresh Home. Id. ¶¶ 12-13.

         Further, plaintiff alleges that Downey and Clipper City “attempt[ed] to open an account with [plaintiffs] meat supplier.” Id. ¶ 15. And, “Downey and Clipper City have retained contact information for [plaintiffs] providers and clients, . . . and have created or are seeking to create commercial relationships with them in violation of the Agreement[, ] unfairly completing [sic] with [plaintiff], including, through the use of the intentionally confusing . . . ‘Farm Fresh Direct' name.” Id. ¶ 16. Plaintiff adds: “Sinsky aided, abetted and supported these and other violations of Farm Fresh Direct's rights to the name Farm Fresh Direct Direct . . . .” Id. ¶ 16.

         II. Standard of Review

         A defendant may test the legal sufficiency of a complaint by way of a motion to dismiss under Rule 12(b)(6). In re Birmingham, 846 F.3d 88, 92 (4th Cir. 2017); Goines v. Valley Cmty. Servs. Bd., 822 F.3d 159, 165-66 (4th Cir. 2016); McBurney v. Cuccinelli, 616 F.3d 393, 408 (4th Cir. 2010), aff'd sub nom. McBurney v. Young, 569 U.S. 221 (2013); Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999). A Rule 12(b)(6) motion constitutes an assertion by a defendant that, even if the facts alleged by a plaintiff are true, the complaint fails as a matter of law “to state a claim upon which relief can be granted.”

         Whether a complaint states a claim for relief is assessed by reference to the pleading requirements of Fed.R.Civ.P. 8(a)(2). That rule provides that a complaint must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” The purpose of the rule is to provide the defendant with “fair notice” of the claims and the “grounds” for entitlement to relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56 (2007).

         To survive a motion under Fed.R.Civ.P. 12(b)(6), a complaint must contain facts sufficient to “state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570; see Ashcroft v. Iqbal, 556 U.S. 662, 684 (2009) (“Our decision in Twombly expounded the pleading standard for ‘all civil actions' . . . .” (citation omitted)); see also Willner v. Dimon, 849 F.3d 93, 112 (4th Cir. 2017). But, a plaintiff need not include “detailed factual allegations” in order to satisfy Rule 8(a)(2). Twombly, 550 U.S. at 555.

         To be sure, federal pleading rules “do not countenance dismissal of a complaint for imperfect statement of the legal theory supporting the claim asserted.” Johnson v. City of Shelby, ___ U.S. ___, 135 S.Ct. 346, 346 (2014) (per curiam). Nevertheless, the rule demands more than bald accusations or mere speculation. Twombly, 550 U.S. at 555; see Painter's Mill Grille, LLC v. Brown, 716 F.3d 342, 350 (4th Cir. 2013). A complaint is insufficient if it provides no more than “labels and conclusions” or “a formulaic recitation of the elements of a cause of action.” Twombly, 550 U.S. at 555. Rather, to satisfy the minimal requirements of Rule 8(a)(2), the complaint must set forth “enough factual matter (taken as true) to suggest” a cognizable cause of action, “even if . . . [the] actual proof of those facts is improbable and . . . recovery is very remote and unlikely.” Twombly, 550 U.S. at 556 (internal quotations omitted).

         In reviewing a Rule 12(b)(6) motion, a court “‘must accept as true all of the factual allegations contained in the complaint'” and must “‘draw all reasonable inferences [from those facts] in favor of the plaintiff.'” E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 440 (4th Cir. 2011) (citations omitted); see Semenova v. Maryland Transit Admin., 845 F.3d 564, 567 (4th Cir. 2017); Belmora, LLC v. Bayer Consumer Care AG, 819 F.3d 697, 705 (4th Cir. 2016); Houck v. Substitute Tr. Servs., Inc., 791 F.3d 473, 484 (4th Cir. 2015); Kendall v. Balcerzak, 650 F.3d 515, 522 (4th Cir. 2011), cert. denied, 565 U.S. 943 (2011). But, a court is not required to accept legal conclusions drawn from the facts. See Papasan v. Allain, 478 U.S. 265, 286 (1986). “A court decides whether [the pleading] standard is met by separating the legal conclusions from the factual allegations, assuming the truth of only the factual allegations, and then determining whether those allegations allow the court to reasonably infer” that the plaintiff is entitled to the legal remedy sought. A Society Without a Name v. Virginia, 655 F.3d 342, 346 (4th Cir. 2011), cert. denied, 566 U.S. 937 (2012).

         In general, courts do not “resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses” through a Rule 12(b)(6) motion. Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999). The purpose of the rule is to ensure that defendants are “given adequate notice of the nature of a claim” made against them. Twombly, 550 U.S. at 555-56. But, “in the relatively rare circumstances where facts sufficient to rule on an affirmative defense are alleged in the complaint, the defense may be reached by a motion to dismiss filed under Rule 12(b)(6).” Goodman v. Praxair, Inc., 494 F.3d 458, 464 (4th Cir. 2007) (en banc); accord Pressley v. Tupperware Long Term Disability Plan, 533 F.3d 334, 336 (4th Cir. 2009); see also U.S. ex rel. Oberg v. Penn. Higher Educ. Assistance Agency, 745 F.3d 131, 148 (4th Cir. 2014). However, because Rule 12(b)(6) “is intended [only] to test the legal adequacy of the complaint”, Richmond, Fredericksburg & Potomac R.R. Co. v. Forst, 4 F.3d 244, 250 (4th Cir. 1993), “[t]his principle only applies . . . if all facts necessary to the affirmative defense ‘clearly appear[ ] on the face of the complaint.'” Goodman, 494 F.3d at 464 (quoting Forst, 4 F.3d at 250) (emphasis added in Goodman).

         III. Discussion

         Plaintiff alleges that Sinsky violated 15 U.S.C. § 1125(a)(1)(A) and engaged in unfair and deceptive trade practices, in violation of Maryland common law. ECF 1, ¶¶ 17-22, 23-26. At its core, plaintiff's contention is that “Sinsky is the resident agent and incorporator” of Farm Fresh Home (ECF 1, ¶¶ 12-13), and in that capacity she “filed” the articles of organization for Farm Fresh Home, creating a name for the “competing company” that is “intentionally confusing” because of its similarity to Farm Fresh Direct. ECF 1, ¶ 12.

         A. Individual Liability

         Farm Fresh Home is a limited liability company. As a threshold matter, I must determine whether Sinsky is subject to suit in light of Farm Fresh Home's status as a limited liability company.

         It is well settled that “[a] corporation exists as a legal entity separate and distinct from its corporate shareholders.” Cancun Adventure Tours, Inc. v. Underwater Designer Co., 862 F.2d 1044, 1047 (4th Cir. 1988); see Johnson v. Flowers Indus., Inc., 814 F.2d 978, 980 (4th Cir. 1987). Notably, a corporation is a “‘creature of legal fiction, '” and “‘a corporation must of necessity act through its agents . . . .'” Southern Management Corp. v. Taha, 378 Md. 461, 480, 836 A.2d 627, 638 (2003) (citations omitted).

         The concept of a corporation as a separate legal entity “is expressed by the colorful metaphor of the corporate veil, which presumes that acts of the corporation are not acts of the shareholder.” Johnson, 814 F.2d at 980. The corporate veil doctrine “is a basic attribute of the corporate form; it encourages business investment and fosters stability in commercial transactions.” Cancun Adventure, 862 F.2d at 1047. And, in Maryland “the fiction of the wholly ...


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