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

United States District Court, D. Maryland

May 1, 2018

STEVEN DOWNEY, et al., Defendants.


          Ellen Lipton Hollander United States District Judge

         In this commercial dispute, plaintiff Farm Fresh Direct Direct By a Cut Above, LLC (“Farm Fresh Direct”)[1] filed suit against defendants Jessica Sinsky; Steven Downey; Clipper City Lending, LLC (“Clipper City”); and Farm Fresh Direct Home Food Services, LLC (“Farm Fresh Home”), alleging unfair competition in violation of Section 43(a) of the Lanham Act, codified at 15 U.S.C. § 1125(a) (Count One), and unfair competition and deceptive trade practices under Maryland common law (Count Two). ECF 1 (“Complaint”).[2] Count Three alleges breach of contract only as to Downey and Clipper City. See Id. at 6-7.

         Downey, who is self-represented, lodged a counterclaim against Farm Fresh Direct (ECF 33) (“Counterclaim”), supported by exhibits. See ECF 33-1 through ECF 33-14.[3] The Counterclaim is titled “Amended Motion to Request Hearing and/or Declare ‘Independent Representative Agreement' & ‘Non-Compete Agreement' a Fraudulent, Unenforceable & Illegal Document which forced signing took place under duress and HEREBY Counterclaims.” Id.

         Pending are numerous motions filed by Sinsky, Downey, and Farm Fresh Direct.

         On behalf of Clipper City and Farm Fresh Home, Downey filed a “Motion to Set-Aside Default Judgement.” ECF 35. Notably, no default judgment has been entered as to either entity. See Docket. In any event, Downey, who is not a lawyer, is not entitled to file any pleadings on behalf of either entity. See ECF 11; ECF 16; ECF 27; ECF 38. Farm Fresh Direct opposes the motion. See ECF 44.

         In addition, Downey filed a “Motion to Request and Set-In a Hearing Date” on behalf of himself, Clipper City, and Farm Fresh Home. See ECF 37. Farm Fresh Direct did not respond. See Docket. Downey filed a second “Motion to Request and Set-In a Hearing Date” (ECF 39), asking the Court to hold a hearing with regard to Downey's Counterclaim. Farm Fresh Direct opposes that request. See ECF 41.

         Further, Downey filed a “Motion for Partial Dismissal as to Count III of the Complaint - Breach of Contract” (ECF 40), which is supported by several exhibits. See ECF 40-1 through ECF 40-9. Plaintiff opposes this motion. ECF 43. Downey has not filed a reply (see Docket), and the time to do so has expired. See Local Rule 105.2.a.

         Sinsky, who is also self-represented, has filed a Motion to Amend her Answer to the Complaint. See ECF 26.[4] Farm Fresh Direct has not opposed Sinsky's Motion to Amend (see Docket), and the time to do so has expired. See Local Rule 105.2.a.

         Farm Fresh Direct has filed a motion to dismiss Downey's Counterclaim. ECF 34. By Order of March 29, 2018 (ECF 46), I directed the Clerk to notify Downey as to the filing of the motion to dismiss and his right to respond. Notice was mailed to Downey that same day. ECF 47. Downey subsequently filed a response in opposition to the motion to dismiss. ECF 50. And, Farm Fresh Direct has replied. See ECF 53.

         Farm Fresh Direct has also filed a “Motion for Order to Show Cause” (ECF 45), with an accompanying memorandum of law (ECF 45-1), asking the Court to issue an order as to why Downey should not be held in contempt and sanctioned. ECF 45-1 at 1, 5. In its motion, Farm Fresh Direct argues that Downey has failed to comply with orders and instructions of this Court, prohibiting him from litigating on behalf of Clipper City and/or Farm Fresh Home. Id.; see, e.g., ECF 11; ECF 16. Downey has not responded to this motion (see Docket), and the time for him to do so has passed. See Local Rule 105.2.a.

         The Court is mindful of its obligation to construe liberally the pleadings of pro se litigants, 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). Nevertheless, no hearing is necessary to resolve these motions. See Local Rule 105.6.

         For the reasons that follow, I shall grant Sinsky's unopposed Motion to Amend her Answer (ECF 26). I shall deny Farm Fresh Direct's Motion to Dismiss Downey's Counterclaim (ECF 34). And, I shall construe Downey's Answer (ECF 49) to include the Counterclaim (ECF 33). I shall deny Downey's Motion to Dismiss Count Three of the Complaint (ECF 40). I shall also deny Downey's Motion to Set-Aside Default Judgment as to Clipper City and Farm Fresh Home (ECF 35), as well as his motions requesting hearings (ECF 37; ECF 39). Moreover, I shall deny Farm Fresh Direct's motion for a show cause order. ECF 45.

         I. Factual and Procedural Background


         Farm Fresh Direct is a Maryland limited liability company (“LLC”). ECF 1, ¶ 1. It describes itself as a “direct-to-consumer supplier of quality, natural foods and related services.” Id. Farm Fresh Direct claims to own the trade name “Farm Fresh Direct Direct.” Id. ¶ 9. Lawrence Everett and Robert Siegal are co-owners of Farm Fresh Direct, each owning a 50% share in the company. ECF 33, ¶¶ 3, 7. Alan Fabian is the Chief Financial Officer of Farm Fresh Direct. ECF 33, ¶¶ 4-5.

         Clipper City is a Maryland LLC. ECF 1, ¶ 2-3. Downey is its “sole Owner” and its “sole member.” ECF 33, ¶¶ 12, 16; see also ECF 33-8 at 2 (email from Fabian to Downey, dated April 5, 2017). Farm Fresh Home is also a Maryland LLC. ECF 1, ¶ 4. And, Downey is its “sole Owner” and its “sole member.” ECF 33, ¶¶ 10, 17. Sinsky is the “resident agent and incorporator” of Farm Fresh Home. ECF 1, ¶ 13.

         Plaintiff states that on June 7, 2017, it registered ownership of the trade name “Farm Fresh Direct Direct” with the Maryland State Department of Assessments and Taxation (“SDAT”). ECF 1, ¶ 9. Downey claims that he was hired, on an unspecified date, by Siegal to be an “Independent Contractor/Sales Representative” for Farm Fresh Direct. ECF 33, ¶ 23. Downey also asserts that when he was hired Siegal informed him that “there would be no ‘Non-Compete Agreement' required as a condition of employment” with Farm Fresh Direct. ECF 33, ¶ 53; see also Id. ¶ 26.

         According to Downey, he attended “Sales Training, ” without compensation, from February 20, 2017, through March 4, 2017. ECF 33, ¶¶ 24, 25. Beginning on March 9, 2017, Downey “began running sales appointments on behalf of” plaintiff. ECF 33, ¶ 34. Downey expected to be paid “by close of business, Friday, April 7, 2017.” Id. ¶ 35.

         On April 5, 2017, Downey received an email from Fabian, titled “Representative Agreement & Non-Compete Agreement.” ECF 33, ¶ 36; see also ECF 33-8 at 2-3 (email from Fabian to Downey, dated April 5, 2017). Attached to Fabian's email were unsigned and undated versions of an Independent Representative Agreement (“IRA”) and a Non-Compete Agreement (“NCA”) (the “Agreements”). See ECF 33-8 at 4-6 (IRA); ECF 33-8 at 7-8 (NCA). In the body of the email, Fabian stated, inter alia, that Downey must “execute these agreements” and “return a scanned copy and the original” to Fabian “before” Fabian could “issue any commission payments” to Downey. ECF 33-8 at 2.

         According to Farm Fresh Direct, “on or about April 5, 2017, ” Farm Fresh Direct entered into an IRA and an NCA with Clipper City and Downey. ECF 1, ¶ 11. As indicated, on April 5, 2017, Fabian attached unsigned and undated copies of the IRA and the NCA to an email sent to Downey. See ECF 33-8 at 2-8. The text of the IRA and the NCA indicate they were “entered into as of March 5, 2017.” ECF 33-8 at 7 (NCA); see also Id. at 4 (IRA). However, there is no indication that the Agreements were executed on that date.

         By email to Fabian dated April 12, 2017, and titled “Independent Representative Agreement - Ratified - 4.5.2017.pdf” (ECF 33-10 at 2), Downey attached a copy of the IRA that was dated April 5, 2017, signed by Downey on behalf of himself and Clipper City. ECF 33-10 at 4-6. However, the NCA was not attached to this email. See ECF 33-10.

         In an email of April 12, 2017 (ECF 33-11), Fabian wrote to Downey stating, id. at 2: “The noncompete agreement which is an integral part of this agreement is not attached.” Downey asserts that he “did not in good conscience provide ‘Farm Fresh Direct' (Plaintiff) with a ratified copy of the . . . ‘Non-Compete Agreement.'” ECF 33, ¶ 37.

         Downey maintains that Farm Fresh Direct refused to pay him unless and until he “executed the . . . ‘Non-Compete Agreement.'” ECF 33, ¶ 40. By email of April 13, 2017 (ECF 33-12 at 2), titled “Notice Regarding Payroll, ” Fabian wrote to Downey, stating that Farm Fresh Direct would “need the rest of the documents I sent you signed prior to payment.”

         By email dated April 18, 2017 (ECF 33-13), Downey provided Fabian with a copy of the NCA (ECF 33-13 at 7-8), dated April 5, 2017, which Downey signed on behalf of himself and Clipper City. Id. at 8. According to Downey, he was “forced/compelled while under duress” of nonpayment to sign the NCA, “against his wishes.” ECF 33, ¶ 40.

         The IRA and the NCA are central to Count Three of the Complaint, which alleges breach of contract against Downey and Clipper City. See ECF 1. The Agreements are also central to Downey's Counterclaim, which contends, inter alia, that the IRA and the NCA are unenforceable. See ECF 33.

         Although plaintiff did not submit the Agreements with the Complaint (see ECF 1), Downey has submitted versions of the IRA and the NCA with his Counterclaim. See ECF 33-8 at 4-6 (unsigned and undated IRA); ECF 33-8 at 7-8 (unsigned and undated NCA). As indicated, Downey signed both the IRA and the NCA on behalf of himself and Clipper City, and the Agreements are dated April 5, 2017. See ECF 33-10 at 4-6 (IRA); ECF 33-13 at 7-8 (NCA). Both the IRA (ECF 33-10 at 4-6) and the NCA (ECF 33-13 at 7-8) indicate that Everett was the agent designated to sign the Agreements on behalf of Farm Fresh Direct. See ECF 33-10 at 6; ECF 33-13 at 8. However, no version of the IRA or the NCA submitted to the Court bears a signature of a Farm Fresh Direct representative.

         The IRA defines Clipper City as the “Representative” and Farm Fresh Direct as the “Company.” ECF 33-10 at 4. And, it states: “The COMPANY hereby employs the REPRESENTATIVE to perform . . . salesman services on behalf of the COMPANY . . . .” Id. (capital letters in original); see also ECF 1, ¶ 11. But, the IRA also specifies that, “[u]nless otherwise agreed, all work will be performed by Steven Downey.” ECF 33-10 at 4. Additionally, the IRA states, id. at 5-6:

The REPRESENTATIVE agrees that any and all information received by the REPRESENTATIVE during the furtherance of the REPRESENTATIVE's obligations in accordance with this contract, which concerns the personal, financial or other affairs of the COMPANY to include written, oral, printed, web-based or any other form will be treated by the REPRESENTATIVE in full confidence and will not be revealed to any other persons, firms or organizations without the prior oral or written permission of the COMPANY.
This clause will continue in effect for one (1) year after the termination of this agreement.
The REPRESENTATIVE agrees that it and Steven Downey will be liable for any damages resulting from a breach of this clause.

         (Bold text and capital letters in original; italics added); see also ECF 1 at 3-4.

         The NCA states that it was “entered into . . . between FARM FRESH DIRECT . . . (the ‘Company') and CLIPPER CITY LENDING LLC AND STEVEN DOWNEY (the ‘Representative'), both of whom agree to be bound by this Agreement.” ECF 33-13 at 7. The NCA further states, id. (capital letters in original):

NON-COMPETITION. For the duration of the Representative Agreement and any subsequent agreement executed for the same or similar purpose and for ONE (1) YEAR after the termination of such agreements, the Representative shall not work as an employee, officer, director, partner, consultant, agent, owner, or in any other capacity in any competition with the Company. This means that the Representative must not do any of the above for a COMPANY that PROVIDES HOME FOOD SERVICES OF ANY TYPE in NORTHERN VIRGINIA, DISTRICT OF COLUMBIA, MARYLAND AND SOUTHERN
REPRESENTATIVE ACKNOWLEDGMENTS. The Representative acknowledges that: (a) this Agreement has been specifically bargained between the Parties; (b) the Representative has had the opportunity to obtain legal counsel to review this Agreement; (c) the restrictions imposed are fair, reasonable and necessary to protect the legitimate business interests of the Company; and (d) such restrictions will not place an undue burden upon the Representative's livelihood in the event of enforcement of the restrictions described.

         Farm Fresh Direct avers that Downey and Clipper City acquired confidential information relating to Farm Fresh Direct's customers. ECF 1, ¶ 12. Moreover, it 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.'” Id. 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.

         Further, plaintiff alleges that Downey and Clipper City “attempt[ed] to open an account with [plaintiff's] meat supplier.” Id. ¶ 15. And, plaintiff claims that “Downey and Clipper City have retained contact information for [plaintiff's] 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. According to plaintiff, it has “suffered damages” as a result of the alleged breach of the Agreements. Id. ¶ 29.

         Farm Fresh Direct avers that, on or about June 16, 2017, upon learning that Downey and Clipper City violated “the Agreement, ” Downey and Clipper City were terminated. ECF 1, ¶ 14. Plaintiff does not specify which agreement, the IRA or the NCA, was allegedly violated.

         In his Counterclaim, Downey argues that Farm Fresh Direct “forced” him to sign the IRA and the NCA by “threatening to withhold” his “Earned Pay” unless and until he agreed to sign the Agreements. ECF 33-13, ¶ 41. He asks the Court to ...

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