BLT Rest. Grp. LLC v. Tourondel

• Decision Date: 22 February 2012
• Docket Number: No. 10 Civ. 6488 (MHD).,10 Civ. 6488 (MHD).
• Citation: 855 F.Supp.2d 4
• Parties: BLT RESTAURANT GROUP LLC, f/k/a BLT Management LLC, Plaintiff, v. Laurent TOURONDEL, Michael Cinque and LT Burger, Inc., Defendants.
• Court: U.S. District Court — Southern District of New York

855 F.Supp.2d 4

BLT RESTAURANT GROUP LLC, f/k/a BLT Management LLC, Plaintiff,

v.Laurent TOURONDEL, Michael Cinque and LT Burger, Inc., Defendants.

No. 10 Civ. 6488 (MHD).

United States District Court,

S.D. New York.

Feb. 22, 2012.

Julian David Schreibman, Sara G. Spiegelman, William B. Wachtel, Wachtel & Masyr, LLP, New York, NY, Elliot Silverman, Wachtel & Masyr, LLP, Irvine, CA, for Plaintiff.

David A. Kalow, Milton Springut, Tal S. Benschar, Kalow & Springut LLP, Ralph R. Hochberg, Platzer, Swergold, Karlin, Levine, Goldberg & Jaslow, New York, NY, for Defendants.

MEMORANDUM & ORDER

MICHAEL H. DOLINGER, United States Magistrate Judge.

Plaintiff BLT Restaurant Group (“BLT”) commenced this lawsuit to assert a variety of claims—one federal and the others based on state law—in the wake of the departure of defendant Laurent Tourondel from his contractual relationship with plaintiff. Until Tourondel's withdrawal, he played a central role in designing the food and related practices of a number of restaurants opened under the name BLT. He now operates and is opening another series of restaurants in conjunction with other investors.

Currently before the court are three motions, two by defendants. Defendants seek dismissal of a portion of the current amended complaint for lack of supplemental jurisdiction, and they ask for summary judgment on one claim and a portion of a second claim, also from the current complaint. Plaintiff has moved for leave to serve a second amended complaint, which would add claims, reorganize some of the current claims, and insert some further factual allegations. For the reasons that follow, we deny defendants' motion to dismiss, grant plaintiff's motion to amend, and deny all but a sliver of defendants' motion for partial summary judgment.

PROCEDURAL BACKGROUND

Plaintiff filed suit in mid–2010. As embodied in its current pleading—the Amended Complaint—BLT asserted eight claims against Tourondel, some of which it also pressed against an associate of Tourondel named Michael Cinque and an entity known as LT Burger, Inc., which was formed by the two individual defendants. In substance, plaintiff alleged that it had entered into a contractual arrangement with Tourondel, an accomplished French chef, under which Tourondel was to work with plaintiff in developing a series of restaurants using the trade name BLT (for Bistro Laurent Tourondel). (Am. Compl. ¶¶ 10–17). According to BLT, after these restaurants had attained substantial critical and financial success, Tourondel left (as was his contractual right) to set up his own restaurants with other financiers under the trade name LT, and he has in fact opened one such establishment in Sag Harbor, and intends to open others. ( Id. ¶¶ 38–39, 60). Plaintiff complained, however, that in doing so Tourondel had violated his contractual obligations in a variety of respects and has engaged in unfair competition by the use of “proprietary” or “confidential” information belonging to plaintiff. This alleged wrongful conduct is said to include the copying of recipes originally used in dishes featured in the BLT restaurants, the use of names for dishes that imitated the fanciful names utilized in the BLT menus, the choice of combinations of featured dishes that mimic those offered by plaintiff's eateries and a mimicking of plaintiff's pricing. ( Id. ¶¶ 40–45).

Based on these allegations, plaintiff asserted, as its first cause of action, a breach-of-contract claim against Tourondel, alleging that he had violated the contractual ban on his use of “proprietary and confidential” information belonging to plaintiff. ( Id. ¶¶ 73–77; see also id. ¶¶ 25–33). ¹ Plaintiff next invoked its one federal-law claim, asserted against all three defendants, contending that they have engaged in “unfair competition” under the Lanham Act, 15 U.S.C. § 1125, by virtue of their alleged use of aspects of the BLT menu—misconduct that is described as including false designation of origin, false representations, misappropriation of property rights and good will and the false suggestion that plaintiff was affiliated with defendants' restaurants. ( Id. ¶¶ 79–86). Plaintiff's third claim, asserted against all defendants, was based on the same conduct and alleged “deceptive acts and practices”, in violation of N.Y. Gen. Bus. Law § 349. ( Id. ¶¶ 88–91).

The fourth and fifth claims, both targeting Tourondel, sought declaratory judgments. The fourth asked for a declaration that under plaintiff's contract with Tourondel, he was prohibited from using plaintiff's “proprietary and confidential information, including but not limited to its recipes, menus and marketing materials” at his own restaurants. ( Id. ¶¶ 93–97). The fifth claim asserted that Tourondel had fraudulently induced plaintiff into amending the original contract so that, if Tourondel left to go into business on his own, he could use the trade name BLT but plaintiff could not do so in connection with any new restaurants. On the basis of that claimed fraud, plaintiff asked for a reformation of the amended contract to allow it to use the BLT trade name in connection with all of its restaurants, old and new. ( Id. ¶¶ 99–108; see also id. ¶¶ 18–24).

Plaintiff's sixth claim was for unjust enrichment. The stated basis for this claim was its contention, once again, that Tourondel had tricked plaintiff into giving up its right to use the BLT trade name on new restaurants. As a result, it contended, Tourondel has been unjustly enriched. ( Id. ¶¶ 110–14).

Plaintiff's seventh claim was for breach of fiduciary duty by Tourondel. The complaint noted that under plaintiff's contract, it retained the services of Tourondel as a consultant, and it claimed that Tourondel has breached his obligations in that respect by engaging with another financier, through the entity BLT Burger Ltd., to open a restaurant in Hong Kong, a transaction that plaintiff alleges has deprived it of a profitable business opportunity in that location. ( Id. ¶¶ 116–18; see also id. ¶¶ 61–71).

Plaintiff's eighth labeled claim amounted to a demand for attorney's fees and costs. Plaintiff premised this request on a provision of the contract between it and Tourondel under which any breach of the agreement that triggered a need for attorneys would justify an award of such fees and costs to the prevailing party. ( Id. ¶¶ 120–22).

Following the filing of plaintiff's amended complaint and a responsive pleading by defendants, defendants moved for judgment on the pleadings under Federal Rule of Civil Procedure 12(c). By memorandum and order filed July 19, 2011, the District Court granted the motion with respect to the General Business Law, contract-reformation and unjust-enrichment claims and otherwise denied defendants' application. BLT Rest. Grp. LLC v. Tourondel, 2011 WL 3251536, *4–7 (S.D.N.Y. July 19, 2011).

The parties have pursued written discovery, including principally the exchange of documents. While still engaged in that process, however, they filed the three motions now before us. We address these motions seriatim.

ANALYSIS

I. Supplemental Jurisdiction

Defendants have moved to dismiss portions of plaintiff's remaining state-law claims for lack of subject-matter jurisdiction. The premise for their motion is that plaintiff cannot satisfy the statutory requirements for the court's assertion of supplemental jurisdiction with respect to any of their state-law claims except insofar as the complaint asserts that defendants' menu violates plaintiff's rights either under the contract or under other state-law theories. (Defs.' Juris. Mem. of Law at 3–9; Defs.' Juris. Reply Mem. of Law at 1–9). We disagree, and hence deny this motion.²

The Supreme Court long ago addressed the permissible scope of what it then termed pendent federal-court jurisdiction over state-law claims. In United Mine Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966), it held that such jurisdiction may be asserted if the state and federal claims share a “common nucleus of operative fact”. Id. at 725, 86 S.Ct. 1130;accord Lyndonville Sav. Bank & Trust Co. v. Lussier, 211 F.3d 697, 704 (2d Cir.2000). This principle was later adapted and incorporated into the United States Code under the rubric of supplemental jurisdiction. The pertinent provision states:

Except as provided in subsections (b) and (c) or as expressly provided otherwise by Federal statute, in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution.

28 U.S.C. § 1367(a). The statute goes on to provide that even if the state-law claims meet the Article III “case or controversy” test, the district court may, in its discretion, decline to assert jurisdiction over them in four circumstances:

if—

(1) the claim raises a novel or complex issue of State law,

(2) the claim substantially predominates over the claim or claims over which the district court has original jurisdiction,

(3) the district court has dismissed all claims over which it has original jurisdiction, or

(4) in exceptional circumstances, there are other compelling reasons for declining jurisdiction.

28 U.S.C. § 1367(c).

The focus of defendants' argument is on plaintiff's asserted failure to meet the initial, mandatory “case or controversy” requirement of section 1367(a). (Defs.' Juris. Mem. of Law at 4–9).³ To satisfy that test, the federal and state claims must, as under United Mine Workers, “stem from the same ‘common nucleus of operative fact.’ ” Montefiore Med. Ctr. v. Teamsters Local 272, 642 F.3d 321, 332 (2d Cir.2011) (quoting United Mine Workers, 383 U.S. at 725, 86 S.Ct. 1130). What that term means more precisely is subject to some question, but our circuit court has recognized that...