Am. Lecithin Co. v. Rebmann
| Decision Date | 24 July 2020 |
| Docket Number | 12-CV-929 (VSB) |
| Parties | AMERICAN LECITHIN COMPANY, LIPOID GmbH, LIPOID LLC, and PHOSPHOLIPID GmbH, Plaintiffs, v. CARSTEN MATTHIAS REBMANN, Defendant and Third-Party Plaintiff, v. HERBERT REBMANN, LIPOID STIFTUNG, LIPOID BETEILGUNGS GmbH, LIPOID VERWALTUNGS AG, LIPOID GRUNDSTUECKS GmbH, and PHOSPHOLIPID FORSCHUNGSZENTRUM e.V., Third-Party Defendants. |
| Court | U.S. District Court — Southern District of New York |
Appearances:
Gregory F. Hauser
Sherica R. Bryan
Wuersch & Gering LLP
New York, New York
Samuel Goldman
Samuel Goldman & Associates
Counsel for Defendant VERNON S. BRODERICK, United States District Judge:
American Lecithin Company ("ALC"), Lipoid GmbH, Lipoid, LLC, and Phospholipid GmbH (together with ALC, Lipoid GmbH, and Lipoid LLC, "Plaintiffs"), bring this action against Defendant Carsten Matthias Rebmann ("Defendant" or "Matthias") asserting various common law claims in connection with Matthias' registration of certain domain names (the "Domain Names"), and his retention of those domain names, a laptop (the "Laptop"), and a customer management software (the "CRM Software") following the termination of his employment with Plaintiffs ALC and Lipoid, LLC in August 2011. In turn, Defendant asserted various claims against Third-Party Defendants ALC, Lipoid GmbH, Lipoid LLC, Phospholipid GmbH, Dr. Herbert Rebmann ("Dr. Rebmann"), Lipoid Verwaltungs AG, and Lipoid Grundstuecks GmbH, Lipoid Stiftung, Lipoid Beteiligungs GmbH, and Phospholipid Forschungszentrum e.V. Now before me are (1) Third-Party Defendant Dr. Rebmann's motion for summary judgment dismissing Defendant's conversion claim against him, and (2) Defendant Matthias's motion dismissing all of Plaintiffs' claims against him.
Because there is a triable issue of fact as to whether Dr. Rebmann personally participated in the alleged conversion of Defendant's shares, Dr. Rebmann's motion is DENIED.
Defendant's motions are GRANTED IN PART and DENIED IN PART. Because there are issues of fact relating to Plaintiffs' cybersquatting claim and Plaintiffs' conversion and breach of fiduciary claims related to the domain names, Defendant's motion for summary judgment dismissing these claims is DENIED. Because there are disputes of fact as to Defendant's affirmative defenses of laches and unclean hands, his motion for summary judgment dismissing Plaintiffs' claims for injunctive relief is DENIED. The remainder of Defendant's motions are GRANTED. Specifically, because it is undisputed Defendant purchased the Laptop from Plaintiffs and because his retention of the Laptop and CRM Software did not interfere withPlaintiffs' rights, Defendant's motion for summary judgment on Plaintiffs' claim of conversion is GRANTED. Because Plaintiffs have pointed to no evidence in the record demonstrating damages, Defendant's motion for summary judgment on Plaintiffs' claims for breach of fiduciary duty relating to the Laptop and the CRM Software is GRANTED.
Plaintiffs are four corporate entities, Defendant is an individual, and Third-Party Defendant Dr. Rebmann is an individual. (See Am. Compl. ¶¶ 1-5; SAA ¶¶ 71-81.)2 According to Defendant, Plaintiffs are interrelated entities that are dominated and controlled by Dr. Rebmann. (SAA ¶¶ 71-81.) Plaintiff ALC is a Delaware corporation with its principal place of business in Connecticut. (Am. Compl. ¶ 1; SAA ¶ 72.) Plaintiff Lipoid LLC is a New Jersey limited liability company with its principal place of business in New Jersey. (Am. Compl. ¶ 3; SAA ¶ 73.) Plaintiffs Lipoid GmbH and Phospholipid GmbH are German limited liability companies with principal places of business in Germany. (Am. Compl. ¶¶ 2, 4; SAA ¶¶ 74-75.) Third-Party Defendant Dr. Rebmann is a German citizen and domiciliary, and Defendant's father. (SAA ¶¶ 76, 83; Pls.' Ans. 1-2.)3
In or about 1978, Dr. Rebmann began a business organized as Lipoid KG to manufacture, sell, and distribute lecithin and phospholipid products for use in the pharmaceutical, cosmetic, and dietetic industries. (Id. ¶ 82.) The initial shareholders of Lipoid KG were Dr. Rebmann (with 70%), his sister Rosabert (with 20%), and Birgit Wortberg, Dr. Rebmann's student (with 10%). (Id.) In or about 1989, Lipoid KG was reorganized, and Defendant received a 10% ownership interest in Lipoid KG. (Id. ¶ 85.) Dr. Rebmann divorced Defendant's mother in 1985 and later married Birgit Wortberg, his former student. (Id. ¶ 83.) In or about 1989, the share ownership in Lipoid KG was reorganized, so that Dr. Rebmann had 40%, Birgit Wortberg had 30%, Rosabert had 10%, Defendant had 10%, and Defendant's two half-brothers, Helge and Balder, had 5% each. (Id. ¶¶ 84-85.) In approximately 1996, Dr. Rebmann changed the name of Lipoid KG to Lipoid Grundstueks GmbH (i.e., Lipoid G), and established the other corporate Plaintiffs and Third-Party Defendants (together, the "Lipoid Group") to continue the business of Lipoid KG. (Id. ¶ 87.) Lipoid G's only asset is certain real estate used by the Lipoid Group. (Id. ¶ 88.) Following the reorganization of Lipoid KG's assets among and between the Lipoid Group, Defendant no longer had a 10% interest in the entire Lipoid Group, but was given a 10% interest in Lipoid G as successor to Lipoid KG. (Id.) Dr. Rebmann told Defendant that the reason for the name change and the creation of the corporate Plaintiffs and Third-Party Defendants was to "promote operating efficiencies and address liability issues, and not to take away his interest in the Lipoid business." (Id. ¶ 89.)
At Dr. Rebmann's request, Defendant filed a Certificate of Formation for Lipoid LLC in New Jersey on or about March 12, 2004. (Id. ¶ 99.) In or about late 2005, Dr. Rebmann offered Defendant the opportunity to assume full management responsibility of the Lipoid Group's U.S.operations. (Id. ¶ 101.) In 2007, Defendant engineered the acquisition of ALC by the Lipoid Group and became its President and CEO. (Id. ¶ 115.) Defendant's duties at ALC were the same duties he had with respect to Lipoid LLC. (Id.).
In 2010, Dr. Rebmann requested that Defendant file certain United States tax returns on behalf of Lipoid LLC. (Id. ¶ 123.) Defendant believed—based upon the advice of the company's accountant—that filing such returns would likely violate United States tax laws, and refused to file them. (Id. ¶ 123-24.) In August 2011, Dr. Rebmann terminated Defendant's employment with Lipoid LLC and ALC "for cause," because Defendant purportedly was "unwilling[] to work with the parent company and others within our group." (Id. ¶¶ 130.) However, employees of the Lipoid Group in Europe were told that Defendant was terminated "because he did not prepare reports." (Id. ¶ 131.)
In January 2013, during the pendency of this lawsuit, Dr. Rebmann allegedly caused the adoption of resolutions by Lipoid G that took away Defendant's 10% interest in that company and allowed Dr. Rebmann to determine how much Defendant would be paid for his 10% interest. (Id. ¶ 149.) The resolutions indicated Defendant's 10% interest was taken away "for cause," because Defendant "(a) had taken certain domain names that belonged to other members of the Lipoid Group, (b) had failed to file tax returns on behalf of Lipid LLC and ALC, and (c) had not repaid a loan from" Lipoid V, another member of the Lipoid Group. (Id.) Defendant alleges that his interest in Lipoid G was taken in retaliation for Defendant seeking sanctions against Dr. Rebmann for his failure to appear for his deposition in this case.4 (Id. ¶¶ 151-52.)
Plaintiffs allege that while Defendant was an officer of ALC and LLC, he "registered under his own name, or transferred to his own name" the following eight domain names: alcolec.com; americanlecithin.com; cerasome.com; lipoidllc.com; nanosolve.com; phosal.com; phospholipon.com; and phytosolve.com. (Am. Compl. ¶ 11.) The substance of each Domain Name—in other words, the text preceding ".com"—was identical to a trademark that had been previously registered by Plaintiffs. (Id. ¶ 9.) According to Plaintiffs, the registration or transfer of these names was done "in bad faith." (Id. ¶ 3.) Plaintiffs allege that after Defendant's employment with ALC and Lipoid, LLC was terminated in August 2011, they directed him to turn over all property of both companies. (Id. ¶ 17.) Defendant did not transfer the Domain Names, even after multiple demands. (Id. ¶¶ 17-21.)
In addition, Plaintiffs allege that after Defendant's employment was terminated, he improperly retained and used the Laptop, the CRM Software that was installed on the Laptop, and the data saved in the CRM Software, all of which they contend belonged to them. (Id. ¶¶ 29-33.)
Plaintiffs commenced this lawsuit by filing the Complaint on February 6, 2012. (Doc. 1.) Defendant filed the Amended Answer, Counterclaims, and Third-Party Claims, (Doc. 82), which Plaintiffs moved to dismiss. After I granted that motion in part and denied it in part, (Doc. 141), Defendant filed a Second Amended Answer. (Doc. 157.) Plaintiffs and the Third-Party Defendants moved to dismiss that pleading as well, (Doc. 170), which I granted in part anddenied in part by Memorandum & Opinion dated September 30, 2017. (Doc. 249.) Plaintiffs and the remaining Third-Party Defendant, Dr. Rebmann, filed their Answer to Defendant's counterclaims and third-party claims on May 25, 2018. (Doc. 261.)
While the second motion to dismiss was pending the parties were engaging in discovery6; therefore, in order to assess the status of the case, in the September 2017 Memorandum & Opinion the parties were asked to provide an update on the status of discovery. (See id.) On November 10, 2017, the parties informed me by joint letter that discovery was largely complete on Plaintiffs' original claims but that Plaintiffs sought additional discovery on the status of the domain...
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