Gristede's Foods, Inc. v. Unkechauge Nation, 06-CV-1260 (CBA).

• Decision Date: 28 November 2007
• Docket Number: No. 06-CV-1260 (CBA).,06-CV-1260 (CBA).
• Citation: 532 F.Supp.2d 439
• Parties: GRISTEDE'S FOODS, INC., Plaintiff, v. UNKECHAUGE NATION a/k/a Unkechauge Poospatuck Tribe; Harry Wallace; Poospatuck Smoke Shop and Trading Post; the Shinnecock Tribe, a/k/a "the Shinnecock Indian Nation; Randall King; James W. Eleazer, Jr.; Lance A, Gumbs; Shinnecock Ltd.; and John Does 1 through 100, Defendants.
• Court: U.S. District Court — Eastern District of New York

Page 439

532 F.Supp.2d 439

GRISTEDE'S FOODS, INC., Plaintiff, v. UNKECHAUGE NATION a/k/a Unkechauge Poospatuck Tribe; Harry Wallace; Poospatuck Smoke Shop and Trading Post; the Shinnecock Tribe, a/k/a "the Shinnecock Indian Nation; Randall King; James W. Eleazer, Jr.; Lance A, Gumbs; Shinnecock Ltd.; and John Does 1 through 100, Defendants.

No. 06-CV-1260 (CBA).

United States District Court, E.D. New York.

November 28, 2007.

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Howard Kleinhendler, William B. Wachtel, Wachtel & Masyr, LLP, New York, NY, for Plaintiff.

James Simermeyer, New York, NY, Robert J. Kipnees, John Albert Fialcowitz, Lowenstein Sandler PC, Roseland, NJ, William C. Cagney, Windels Marx Lane & Mittendorf LLP, New Brunswick, NJ, B. Benjamin Fenner, Monteau & Pebbles, LLP, Omaha, NE, for Defendants,

MEMORANDUM AND ORDER

AMON, District Judge.

Plaintiff Gristede's Foods, Inc. ("Gristede's") has filed suit against the Unkechauge Nation, a/k/a Unkechauge Poospatuck Tribe (the "Unkechauge"), Lance A. Gumbs, and the Poospatuck Smoke Shop and Trading Post (collectively, the "Unkechauge defendants"), as well as the Shinnecock Tribe, a/k/a the Shinnecock Indian Nation (the "Shinnecock"), Harry Wallace, Randall King, James W. Eleazer, Jr., and Shinnecock, Ltd. (collectively, the "Shinnecock defendants"). Plaintiff alleges that the defendants have engaged in the unauthorized sale of untaxed cigarettes to nontribe members through smoke shops, over the internet, and through telemarketing and print ads, and that the defendants have "created, fostered and nourished a thriving black market in illegally discounted cigarette sales." (Pl.'s Br. at 1.) The complaint alleges three federal law claims for relief and four state law claims for relief. It alleges two claims for civil violations of 18 U.S.C. §§ 1962(a), (b), (c), and (d), the Racketeering Influence and Corrupt Organizations Act ("RICO"), one against the Unkechauge defendants, and one against the Shinnecock defendants. The complaint also alleges, against all defendants, one claim of false advertising in violation of the Lanham Act, 15 U.S.C. § 1125(a); two claims for violations of New York statutes prohibiting false advertising and deceptive trade practices, New York General Business Law §§ 349 and 350; a claim for common law unfair competition; and a claim for common law unjust enrichment. The defendants have moved to dismiss all claims pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. For the reasons set forth below, defendants' motions are granted in part and denied in part.

I. Standard of Review

Under Rule 12(b)(6), a complaint may be dismissed "for failure of the pleading to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). Although "a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiffs obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.... Factual allegations must be enough to raise a right to relief above the speculative level ... on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Bell Atl. Corp. v. Twombly, ___ U.S. ___, ___-___, 127 S.Ct. 1955, 1965-66, 167 L.Ed.2d 929 (2007) (internal citations and quotations omitted). Thus, in order to survive a motion to dismiss, a complaint must contain "enough fact to raise a reasonable expectation that discovery will reveal evidence" that the alleged violation of law took place. Id. at 1965. The Second Circuit has interpreted Twombly to require "a flexible `plausibility standard,' which obliges a pleader to amplify a claim with some factual allegations in those contexts where such amplification is needed to render the claim plausible." Iqbal v. Hasty, 490 F.3d 143, 157-58 (2d Cir.2007) (emphasis in original).

When determining the sufficiency of a pleading for Rule 12(b)(6) purposes, "consideration is limited to the factual allegations in plaintiffs' [] complaint, which are accepted as true, to documents attached, to the complaint as an exhibit or incorporated in it by reference, to matters of which judicial notice may be taken, or to documents either in plaintiffs' possession or of which plaintiffs had knowledge and relied on in bringing suit." Brass v. Am. Film Techs., Inc., 987 F.2d 142, 150 (2d Cir. 1993) (citations omitted). The Court will draw all reasonable inferences in the plaintiffs favor. Chambers v. Time Warner Inc., 282 F.3d 147, 152 (2d Cir.2002).

II. Discussion

A. Plaintiff is Granted Leave to Amend the Complaint

The Unkechauge argue that the case against it should be dismissed because they have not been properly named by Gristede's. New York State Indian Law §§ 150-153 specifically names the Unkechauge people as the "Poospatuck (Unkechauge) Indian Nation" or the "Poospatuck Indian tribe." However, the tribe is referenced in the complaint as "the Unkechauge Nation, a/k/a Unkechauge Poospatuck Tribe." In addition, the Unkechauge defendants argue that the "Poospatuck Smoke Shop and Trading Post" "does not exist" as "no such entity is registered with the New York Department of State or filed with the Suffolk County Clerk as a DBA, partnership or sole proprietorship." (Unkechauge Def.'s Br. at 3-4, 6.) Similarly, the Shinnecock defendants allege that "Shinnecock Ltd." is a non-existent entity because it is not registered with the New York Department of State. (Shinnecock Def.'s Br. at 20-21.)

According to Rule 15(a) of the Federal Rules of Civil Procedure, leave to amend the complaint "shall be freely given when justice so requires." Fed.R.Civ.P. 15(a). Furthermore, an amended pleading that "changes the party or the naming of the party" against whom a claim is asserted will "relate back" to the date of the original pleading when the claim asserted in the amended pleading arose out of the conduct, transaction, or occurrence set forth in the original complaint, and the party received notice of the action within the' period provided by Rule 4(m) for service of the summons. Fed Rule Civ. P. 15(c)(3). The Court grants the Gristede's leave to amend the complaint to properly name the Unkechauge defendants, as there is no dispute that the proper defendants received actual notice of this action prior to the expiration of the initial 120-day period for service under Rule 4(m).

In addition, the Court finds that registration with the New York Department of State is not dispositive of whether "Poospatuck Smoke Shop and Trading Post" and "Shinnecock Ltd." are suable entities. The Court declines, to dismiss plaintiffs claims against these defendants on this ground.

B. RICO Claims

The RICO statute makes it unlawful for any person to: (a) use or invest income from a pattern of racketeering activity to acquire an interest in, establish, or operate an enterprise; (b) acquire or maintain an interest in an enterprise through a pattern of racketeering activity; (c) conduct or participate in the, affairs of an enterprise through a pattern of racketeering activity; or (d) conspire to do any of the above. 18 U.S.C. §§ 1962(a)-(d). Section 1964(c) creates a private civil cause of action for "[a]ny person injured in his business or property by reason of a violation of section 1962." Id. § 1964(c).

In order to demonstrate standing under the RICO statute, a plaintiff must plead and ultimately prove "(1) a violation of the RICO statute, 18 U.S.C. § 1962; (2) an injury to business or property; and (3) that the injury was caused by the violation of Section 1962." De Falco v. Bernas, 244 F.3d 286, 305 (2d Cir.2001) (quoting Pinnacle Consultants, Ltd. v. Leucadia Nat'l Corp., 101 F.3d 900, 904 (2d Cir.1996)); accord Lerner v. Fleet Bank, N.A., 318 F.3d 113, 120 (2d Cir.2003). Because a civil RICO plaintiff must plead that his injuries were caused "by reason of the defendant's RICO violation, 18 U.S.C. § 1964(c), a civil RICO plaintiff "only has standing if, and can only recover to the extent that, he has been injured in his business or property by the conduct constituting the violation," Ouaknine v. MacFarlane, 897 F.2d 75, 83 (2d Cir.1990) (quoting Sedima, S.P.R.L. Imrex Co., 473 U.S. 479, 496, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985)) (emphasis omitted). Furthermore, there must be a "direct relation between the injury asserted and the injurious conduct alleged." Anza v. Ideal Steel Supply Corp., 547 U.S. 451, 126 S.Ct. 1991, 1996, 164 L.Ed.2d 720 (2006) ("Anza") (citing Holmes v. Sec. Investor Protection Corp., 503 U.S. 258, 268, 112 S.Ct. 1311, 117 L.Ed.2d 532 (1992)).

1. Plaintiffs RICO Section 1962(c) Claim

RICO Section 1962(c) prohibits conducting or participating in the affairs of an enterprise through a pattern of racketeering activity. 18 U.S.C. § 1962(c). As discussed above, a plaintiff must allege that the conduct constituting a RICO violation caused injury to the plaintiffs business or property. The compensable injury flowing from a violation of section 1962(c) "necessarily is the harm caused by predicate acts sufficiently related to constitute a pattern, for the essence of the violation is the commission of those acts in connection with the conduct of an enterprise." Sedima, 473 U.S. at 497, 105 S.Ct. 3275; see also Ouaknine, 897 F.2d at 83. A plaintiff, therefore, must plausibly allege that the predicate acts themselves are the proximate cause of its injury. See Anza, 126 S.Ct. at 1996-97. Analysis of causation under Section 1962(c) is controlled by the Supreme Court's decision in Anza v. Ideal Steel Supply Corp., 126 S.Ct. 1991, (2006), which found that the connection between defendant's alleged tax fraud and competitor's lost sales was too attenuated to allow a competitor to maintain civil suit for section 1962(c) violations, as the claim failed to meet Section 1964(c)'s requirement for a "direct causal connection"...