Chefs Diet Acquisition Corp. v. Lean Chefs, LLC
| Decision Date | 28 September 2016 |
| Docket Number | 14-CV-8467 (JMF) |
| Parties | CHEFS DIET ACQUISITION CORP. d/b/a CHEFS DIET, Plaintiff, v. LEAN CHEFS, LLC, et al., Defendants. |
| Court | U.S. District Court — Southern District of New York |
This case involves a dispute between two competitors in the diet food delivery industry. Plaintiff Chefs Diet Acquisition Corporation ("Chefs Diet") sues Defendants Lean Chefs, LLC ("Lean Chefs") and two Lean Chefs executives, alleging a variety of claims under federal and New York law arising out of the latter's entry into the same diet food delivery market and alleged improper use of Chefs Diet's customer list. Defendants now move, pursuant to Rule 56 of the Federal Rules of Civil Procedure, for summary judgment on all claims and move, pursuant to Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), and Rule 702 of the Federal Rules of Evidence, to exclude the testimony and report of Chefs Diet's proposed damages expert. For the reasons stated below, Defendants' motion for summary judgment is GRANTED in part and DENIED in part, and their Daubert motion is DENIED.
The following facts, taken from the Complaint and admissible materials submitted in connection with the pending motions, are either undisputed or described in the light most favorable to Chefs Diet. See Costello v. City of Burlington, 632 F.3d 41, 45 (2d Cir. 2011).
As noted, Chefs Diet is engaged in the diet food delivery business. It entered that business in 2009, when — pursuant to an Asset Purchase Agreement (the "APA") — it purchased "certain intellectual property and confidential information" from Chefs Diet Delivery LLC, Zone Chefs Corp., and Kosher Chefs Diet Corp. (collectively, the "Sellers"). . Among other things, the APA provided Chefs Diet exclusive rights to two "Chefs Diet" registered trademarks and certain customer lists developed by the Sellers. . It also included a non-competition clause prohibiting the Sellers and their associates from competing with Chef Diets for a period of three years — that is, until at least March 2012. (Docket No. 91 ("Stephenson Decl."), Ex. 17 (APA) § 6.8).
Defendant Arthur Gunning was the former Chief Executive Officer of Zone Chefs, an officer at Chefs Diet Delivery LLC and Kosher Chefs Diet, and a shareholder in all three entities. (See Maniscalco 2014 Decl. 3 n.5). Defendant Nicholas Zazza was the Chief Technology Officer at Chefs Diet Delivery LLC; through two other companies, he also provided website, application, and telecommunication services to Chefs Diet Delivery LLC and Zone Chefs. (See Maniscalco 2014 Decl. 3 n.4; see also Siegel Decl., Ex. H ("Zazza Dep."), at 22, 41-42, 52-53). After the APA, Chefs Diet (the new entity) retained Zazza's company, Zazza Technologies, LLC, to manage its phone system and to aid in e-mail marketing. (See Zazza Dep. 38-44, 105-107; see also Docket No. 108 ("Utilla Decl.") ¶¶ 12-13).1
In February 2010, Zazza requested and received Chefs Diet's complete customer database of over 40,000 names and dietary preferences for use in his marketing efforts. (SeeSiegel Decl., Ex. A ("Utilla Dep."), at 140-43, 155; id., Ex. K ("2010 E-mail Compilation")). Before giving the database to Zazza, Chefs Diet had shared its full customer list with only one vendor: U.S.A. Web Solutions, the vendor responsible for managing and maintaining the list, which was bound by several non-disclosure agreements. . Chefs Diet did not have confidentiality agreements with its employees until 2012. (Utilla Dep. 31; Utilla Decl. ¶¶ 5, 9-10). Its predecessors-in-interest, however, had valid confidentiality agreements with their employees, who became Chefs Diet employees through the sale. (Id. ¶ 5). In any event, Zazza concedes that when he received the database in 2010 he knew that he was not authorized to use it in competition with Chefs Diet. (Zazza Dep. 148-50).
In November 2013, after expiration of the non-competition period, Zazza and Gunning opened Lean Chefs, a competing diet food delivery service. (See Zazza Dep. 130-32). Although Lean Chefs officially opened in November 2013, Defendants purchased the Lean Chefs domain name in September 2011 (id. at 108), and applied for a trademark on the name in July 2013 (id. at 113). At some point thereafter, the Chefs Diet customer data that had been shared with Zazza in 2010 was incorporated into the Lean Chefs' customer database and used to solicit new customers. (See id. at 150-52; see also Siegel Decl., Ex. L ("Defendants acknowledge receiving the 2010 Data and then using it to solicit potential customers.")). On December 2, 2013, Chefs Diet sent a cease-and-desist letter to Lean Chefs, requesting that the latter cease its use of Chefs Diet's "proprietary customer list" and various intellectual property, including its trademarked likeness. (Stephenson Decl., Ex. 6 ("2013 Cease-and-Desist Exchange"), at 1-2). Zazza, on behalf of Lean Chefs, sent several reply e-mails to Chefs Diet requesting clarification of the cease-and-desist letter, but he received no substantive response. (See id. at 3-5; Maniscalco 2015 Decl. ¶ 9; Stephenson Decl., Ex. 1 ("Zazza Decl.") ¶¶ 9-10).
According to Defendants' own expert, over 17% of Lean Chefs's current paying customers overlap with customers found in Chefs Diet's 2010 customer list. (Stephenson Decl., Ex. 15 ("Webster Expert Disc."), at 11). While many of those names can also be found on commercially available lists, over one hundred of them appear solely on the 2010 customer list and not on any commercial list identified by Lean Chef. (Id.). Other facts suggest that Defendants used Chefs Diet's list — and even had access to its customer data after the list was provided to Zazza in 2010. For instance, Chefs Diet included an intentional misspelling of one customer's name ("Joann" Glodek rather than "Joanne" Glodek) in the 2010 customer database sent to Zazza. (Siegel Decl., Ex. C, at 71-72). In 2014, Lean Chefs sent a mailing to Ms. Glodek with that exact spelling error. (Id. at 72). In 2012, Chefs Diet also added the name and contact information of an employee (Christian Ledan) as a fictitious customer to its list; and, in 2013, Chefs Diet added a fully fictitious name (Peter Daniel) that was linked to a Chefs Diet's employee's e-mail account. (Maniscalco 2015 Decl. ¶¶ 2-3). On September 3, 2014, Lean Chefs sent e-mail offers to those two fictitious customers identifying them by name. (Id.). Defendants claim that they obtained the two names from a commercial list purchased at a trade show in August 2013. (Zazza Decl. ¶ 15).
On October 21, 2014, Chefs Diet filed this suit against Lean Chefs, Zazza, and Gunning, alleging trademark infringement and unfair competition in violation of the Lanham Act, 15 U.S.C. §§ 1114, 1125; violation of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030(a)(2), (a)(4)-(5); and various state-law claims, including misappropriation of trade secrets, breach of contract (against Zazza and Gunning only), breach of fiduciary duty (against Zazza and Gunning only), unjust enrichment, conversion, and replevin. (See Compl.). In 2015, Chefs Diet suspended its business. (Docket No. 105 ("Perez Decl.") ¶ 4 n.2). Naturally, Chefs Dietcontends that the suspension of its business was due, at least in part, to Defendants' misconduct. . By contrast, Defendants maintain that Chefs Diet's problems stem from other causes, namely poor management decisions. (See, e.g., Docket No. 92 ( ) at 5-7).
Defendants now move for summary judgment on all claims and further move to exclude the testimony, opinions, and report of Chefs Diet's economic damages expert. Both sides have also moved for leave to file certain documents in redacted form. Because the report of Chefs Diet's expert does not bear on Defendants' summary judgment claims, the Court will address the motion for summary judgment first and then turn to the motions to exclude and redact.
Summary judgment is appropriate when the record demonstrates that there are no genuine disputes as to any material facts and that one party is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A genuine issue of material fact exists "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The moving party bears the initial burden of providing the basis for its motion and identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file that demonstrate the absence of a genuine dispute regarding any material fact. See Fed. R. Civ. P. 56(c); Celotex, 477 U.S. at 322. All evidence must be viewed in the light most favorable to the non-moving party, Overton v. N.Y. State Div. of Military & Naval Affairs, 373 F.3d 83, 89 (2d Cir. 2004), and the court must "resolve all ambiguities and draw all permissible factual inferences in favor of the party against whom summary judgment is sought," Sec. Ins. Co. of Hartford v. Old Dominion Freight Line, Inc., 391 F.3d 77, 83 (2d Cir. 2004).
To defeat a motion for summary judgment, the non-moving party must advance more than a "scintilla of evidence," Anderson, 477 U.S. at 252, and demonstrate more than "some metaphysical doubt as to the material facts," Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 576 (1986). The non-moving party "cannot defeat the motion by relying on the allegations in [its] pleading or on conclusory statements, or on mere assertions that affidavits supporting the motion are not credible." Gottlieb v. Cty. of Orange,...
To continue reading
Request your trial