Alzheimer's Disease Res. Ctr., Inc. v. Alzheimer's Disease & Related Disorders Ass'n, Inc.
| Decision Date | 08 November 2013 |
| Docket Number | 13-CV-4244(ADS)(ARL),13-CV-3288 (ADS)(ARL) |
| Parties | ALZHEIMER'S DISEASE RESOURCE CENTER, INC., Plaintiff, v. ALZHEIMER'S DISEASE AND RELATED DISORDERS ASSOCIATION, INC. d/b/a ALZHEIMER'S ASSOCIATION, Defendant. ALZHEIMER'S DISEASE RESOURCE CENTER, INC., Plaintiff, v. ALZHEIMER'S DISEASE AND RELATED DISORDERS ASSOCIATION, INC. d/b/a ALZHEIMER'S ASSOCIATION, Defendant. |
| Court | U.S. District Court — Eastern District of New York |
MEMORANDUM OF
DECISION AND ORDER
APPEARANCES:
Morris Duffy Alonso & Faley
Attorneys for the Plaintiff
By: William J. Manning, Esq., Of Counsel
McDermott Will & Emery LLP
Attorneys for the Defendant
By: Jeffrey Baltruzak, Esq.
William P. Schuman, Esq.
Andrew B. Kratenstein, Esq., Of Counsel
These related lawsuits arise out of disputes between the Defendant Alzheimer's Disease and Related Disorders Association (the "Association"), a voluntary health organization dedicated to fighting Alzheimer's disease, and the Plaintiff Alzheimer's Disease Resource Center, Inc. (the "ADRC" or the "Former Chapter"), the former Long Island chapter for the Association. After these two entities disaffiliated from each other in late 2012, the ADRC filed a demand for arbitration against the Association seeking an order allowing the ADRC to retain the funds it previously raised for the Association.
On June 10, 2013, the ADRC commenced a lawsuit in this Court, no. 13-cv-3288, asserting that the Association unfairly competed with the ADRC after the Former Chapter's disaffiliation by sending out 15 mass mailings under the name "Alzheimer's Association - Long Island Chapter." On August 9, 2013, the Association moved pursuant to Federal Rule of Civil Procedure ("Fed. R. Civ. P.") 12(b)(6) to dismiss the complaint for failure to state a claim and to strike the ADRC's request for punitive damages.
Meanwhile, on July 26, 2013, the ADRC commenced another case in this District, no. 13-cv-4244, asserting that the Association breached an agreement between the parties by using donor information it previously obtained from the ADRC prior to the disaffiliation. On August 21, 2013, that case was reassigned from Judge Leonard D. Wexler to this Court, as related to case no. 13-cv-3288. On August 26, 2013, the Association moved to dismiss that complaint.
For reasons set forth below, the Court (1) grants in part and denies in part the motion to dismiss the complaint in case no. 13-cv-3288 and (2) grants in its entirety the motion to dismiss the complaint in case no. 13-cv-4244.
For purposes of these Fed. R. Civ. P. 12(b)(6) motions, the Court must take as true all of the allegations of the complaints, and must draw all inferences in the ADRC's favor. See Weixel v. Board of Educ., 287 F.3d 138, 145 (2d Cir. 2002). The Court may also consider "documents attached to the complaint as an exhibit or incorporated in it by reference," "matters of which judicial notice may be taken, or . . . documents either in [the] plaintiff['s] possession or of which plaintiff[] had knowledge and relied on in bringing suit." Brass v. Am. Film Techs., Inc., 987 F.2d 142, 150 (2d Cir. 1993).
The ADRC is a non-profit corporation with its principal place of business located at 45 Park Avenue, Bay Shore, New York 11706. Until its disaffiliation from the Association, the ADRC served as the Association's local chapter for Long Island. Indeed, the Former Chapter was incorporated in 1983 as "Alzheimer's Disease and Related Disorders Association - Nassau/Suffolk Counties Chapter, Inc." In 1994, the Former Chapter's name became "Alzheimer's Disease and Related Disorders Association - Long Island Chapter, Inc." In 1999, the Former Chapter's name became "Alzheimer's Association - Long Island chapter." On November 6, 2012, following the Former Chapter's disaffiliation from the Association, it assumed its current name, "Alzheimer's Disease Resource Center, Inc."
The Association is a separate non-for-profit organization consisting of multiple chapters and field offices, with its national office at 225 N. Michigan Avenue, Floor 17, Chicago, Illinois 60601. The Association is dedicated to funding research and raising awareness about Alzheimer's disease and related disorders, and is primarily funded through charitable donations and fundraising.
Since 2003, non-party Mary Ann Ragona served as the Executive Director/Chief Executive Officer of the former Long Island chapter until she joined the ADRC at its inception. The ADRC has approximately $2 million in net assets and raised about $1 million in the fiscal year ending June 2012.
In December 1998, the Association and the ADRC entered into an agreement called the "Statement of Relationship" ("SOR") which governed the ADRC's status as an Association chapter. The SOR provided that the former chapter was the local entity for the Association "charged with carrying out the purposes of the Alzheimer's Association at the local level within the territories approved by [the Association.]" (SOR, § 1.2.)
The SOR also contemplated that the Association and the former chapter could part ways. Specifically, the SOR provided that the distribution of "Chapter Assets," if not agreed upon, would be subject to binding arbitration.
The ADRC alleges that over the years, the Association breached the SOR by, among other things, permitting the Association's New York City chapter to fundraise from businesses on Long Island and hold golf events at courses on Long Island. The ADRC also asserts that the Association breached the SOR by interfering in the management of the Former Chapter.
On October 6, 2012, the Association voted to disaffiliate the ADRC on the basis that the latter had failed to comply with the SOR. In response, the ADRC's board of directors voted to disaffiliate from the Association. The ADRC subsequently repudiated its former name, changing its name from "Alzheimer's Association - Long Island Chapter" to its current name, "Alzheimer's Disease Resource Center, Inc." The Association immediately registered"Alzheimer's Association - Long Island Chapter" with the New York Secretary of State, and updated its registration with the New York Attorney General to reflect the name.
According to the Former Chapter, after it disaffiliated from the Association and changed its name to the ADRC, the Association sent out 15 direct mass mailings from October 2012 to January 2013 "to Long Island residents in an attempt to solicit donations for itself in the name of the former Long Island chapter." The ADRC alleges that these mailings from the Association (1) were purportedly sent from the "Alzheimer's Association - Long Island Chapter" at the Bay Shore office; (2) identified the "Alzheimer's Association - Long Island Chapter" as the recipient of the return correspondence; and (3) used a return address in Washington, D.C. belonging to the Association. The ADRC contends that the Association lacked any presence on Long Island at the time the solicitation letters were sent. The ADRC asserts that the mailings purportedly came from Ragona, and that the Association forged her signature in those mailings. The ADRC also asserts that multiple donors, including one named Irene Alexander, mailed checks to the Association based on the mistaken belief that the donations were going to the ADRC.
Similarly, the ADRC alleges that the Association breached the SOR post-disaffiliation by using donor information it previously obtained from the ADRC to solicit donors for the Association's charity walks on Long Island.
On May 3, 2013, the ADRC filed an arbitration demand against the Association with the American Arbitration Association seeking a declaration that it may retain the "Chapter Assets." In turn, the Association sought a declaration that the ADRC must return those assets to the Association. That arbitration is currently pending.
On June 10, 2013, the ADRC filed a complaint in an action bearing the index no. 13-cv-3288 asserting eight causes of action arising out of the allegedly improper mailings. Specifically, the ADRC asserts (1) violations of the Lanham Act, 15 U.S.C. § 1125(a); (2) violations of New York General Business Law § 349; (3) unfair competition under New York Law; (4) unjust enrichment; (5) payments on instruments with unauthorized signatures in violation of New York Uniform Commercial Code ("UCC") § 3-304; (6) conversion and conspiracy; (7) tortious interference with prospective economic advantage; and (8) fraud. The ADRC seeks monetary damages, including punitive damages in the amount of $50,000,000. On August 9, 2013, the Association moved pursuant to Fed. R. Civ. P. 12(b)(6) to dismiss the complaint in that action and to strike the ADRC's request for punitive damages.
In the interim, on July 26, 2013, the ADRC brought a similar action bearing the index no. 13-cv-4244, alleging three causes of action arising out of Association's use of ADRC donor lists. In particular, in that action, the ADRC asserts (1) breach of contract; (2) misappropriation of trade secrets; and (3) unfair competition. The ADRC seeks monetary damages and injunctive relief prohibiting the Association from utilizing the donor lists until their proper disposition is determined at the arbitration. On August 21, 2013, that case was reassigned as related to the case no. 13-cv-3288 from Judge Wexler to this Court. On August 26, 2013, the Association moved pursuant to Fed. R. Civ. P. 12(b)(6) to dismiss the complaint in case no. 13-cv-4244 for failure to state a claim.
In both actions, ADRC contends that the allegations and desired recovery are not governed by the arbitration provision of the SOR because they relate to post-disaffiliation events. The Court will first address the motion to dismiss the complaint in case no. 13-cv-3288 and will then address the motion to dismiss the complaint in case no. 13-cv-4244.
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