Lolicel (Pty) Ltd. v. Stanmar Int'l [U.S.]

• Decision Date: 27 April 2023
• Docket Number: 22cv926-LL-BGS
• Parties: LOLICEL (PTY) LTD., Plaintiff, v. STANMAR INTERNATIONAL [USA] INC. and MARTIN PAMENSKY, Defendants.
• Court: U.S. District Court — Southern District of California

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LOLICEL (PTY) LTD., Plaintiff,
v.
STANMAR INTERNATIONAL [USA] INC. and MARTIN PAMENSKY, Defendants.

No. 22cv926-LL-BGS

United States District Court, S.D. California

April 27, 2023

ORDER GRANTING DEFENDANTS' MOTION TO DISMISS

[ECF No. 14]

Honorable Linda Lopez United States District Judge

Before the Court is Defendants Stanmar International [USA] Inc. (“Stanmar”) and Martin Pamensky's (“Pamensky”) (collectively “Defendants”) Motion to Dismiss the First Amended Complaint. ECF No. 14. Defendants' Motion to Dismiss has been fully briefed, and the Court deems it suitable for submission without oral argument. For the reasons stated below, the Court GRANTS Defendants' Motion to Dismiss.

I. BACKGROUND

Plaintiff Lolicel (Pty) Ltd. (“Plaintiff”) is a South African company that sells sugar-free gelatins and puddings under the Simply Delish brand. ECF No. 13, First Amended Complaint (“FAC”) ¶¶ 2, 4. The first Simply Delish logo and packaging was designed and launched in August 2008. Id. ¶ 19. Although Simply Delish's packaging varied between different flavors and dessert products, Plaintiff's trade dress was comprised of: “(a) the

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Simply Delish logo; (b) an image of the dessert colored to reflect the flavor of that particular product; and (c) an image of the product used to flavor the dessert (i.e. raspberries, strawberries, chocolate).” Id.

Defendant Stanmar International [USA] Inc. is a Delaware corporation whose principal place of business is in California. Id. ¶ 5. Defendant Martin Pamensky is allegedly the CEO and President of Stanmar, and a California resident. Id. ¶ 6.

In 2010, Plaintiff and Stanmar formed a joint venture for the sale of a new line of Simply Delish “Natural” products in the United States. Id. ¶¶ 2, 23. The new Simply Delish Natural product line used the same “Simply Delish” logo that had been developed in 2008, added the word “Natural,” and used Plaintiff's distinctive trade dress comprised of: “(a) the Simply Delish logo; (b) an image of the dessert colored to reflect the flavor of that particular product; and (c) an image of the product used to flavor the dessert.” Id. ¶ 23. Under this joint venture, all expenses and profits were to be shared 50/50. Id. Plaintiff would manufacture the product and retain ownership of the brand and its trade secrets, and Stanmar was authorized to distribute and market the Simply Delish Natural products in the United States. Id.

The parties operated as a joint venture over the next five years. Id. ¶ 26. Plaintiff claims however that beginning in at least 2015, and continuing into 2021, Pamensky “made repeated material misrepresentations of fact regarding Plaintiff's intellectual property and Stanmar's intent to form a new corporation to be owned 50% by Plaintiff and 50% by Stanmar and to hold all of Plaintiff's intellectual property rights.” Id. ¶ 93. According to Plaintiff, Pamensky knew that these misrepresentations were false when he made them, but he “made them in order to induce Plaintiff to rely on those misrepresentations and take various actions based upon said reliance.” Id. ¶ 95.

In February 2017, the parties agreed to a new business structure for the manufacture, distribution, and sale of the Simply Delish Natural products. Id. ¶ 29. The agreement provided that: (1) Plaintiff would be the sole manufacturer of the Simply Delish products, (2) Plaintiff would charge Stanmar for product at cost plus 15% and Stanmar would pay

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Plaintiff a royalty for the use of the Simply Delish brand of $0.05 per unit of Simply Delish-branded products sold, and (3) Stanmar would be the exclusive worldwide distributor of the Simply Delish Natural products, excluding distribution channels serviced by the Plaintiff. Id. ¶ 30. From about 2017 through 2020, “the parties conducted themselves in accordance with these agreed-upon terms while they sought to finalize the formal agreement(s) between them.” Id. ¶ 31.

In 2018, the parties discussed changing the Simply Delish Natural logo and packaging. Id. ¶ 35. The redesigned packaging still included Plaintiff's distinctive trade dress comprised of: “(a) the Simply Delish logo; (b) an image of the dessert colored to reflect the flavor of that particular product; and (c) an image of the product used to flavor the dessert.” Id. The new packaging, however, “added a new stylized Simply Delish logo comprised of a special font cursive script with the first letter of each word being in uppercase followed by lower case lettering” and added a stylized leaf logo on the righthand side. Id.

On March 24, 2020, Pamensky emailed Plaintiff and suggested that “the COVID-19 outbreak had created an immediate need for the parties to come up with a Plan B” and proposed the parties move production of all Simply Delish Natural products from South Africa to the United States. Id. ¶ 38. Pamensky “confirmed that the parties would transfer all of Plaintiff's intellectual property, including trademarks, trade dress, and other trade secrets, to the new company to be formed, which the parties would own 50/50.” Id. After the parties agreed that Stanmar would look for potential manufacturers to produce the Simply Delish Natural products, Plaintiff shared its confidential trade secret information with Defendants, including its suppliers and product formulations. Id. ¶ 40.

Plaintiff alleges that it was not thrilled with the idea of sharing its confidential trade secret information, but that it was willing to consider the proposition given the uncertainties of the COVID-19 pandemic and Pamensky's repeated representations that the parties would finalize the agreements they had been discussing since 2017. Id. ¶ 39. Relying on similar misrepresentations from Pamensky, Plaintiff also agreed to share trade secret

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information with a supplier that Stanmar approached for assistance in adjusting the Simply Delish Natural product formulations. Id. ¶¶ 44, 94(b).

In or around early 2021, Plaintiff believes that Stanmar finalized a revised formulation of the Simply Delish Natural product range with Plaintiff's supplier. Id. ¶ 45. On or about March 6, 2021, Pamensky sent Plaintiff an email with the “new formulation” asking Plaintiff to try to manufacture the “new formulation,” and if Plaintiff could, then Plaintiff could be Stanmar's producer of the product in South Africa. Id. According to Plaintiff, this was the first time that Stanmar asserted ownership or control of the Simply Delish brand. Id. Plaintiff states that Defendants had always acknowledged that Plaintiff owned the brand prior to this email. Id. From that point on, Defendants continued to claim that “Stanmar now owned the Simply Delish brand worldwide and that Plaintiff no longer had any rights to it.” Id. ¶ 46.

On June 23, 2022, Plaintiff commenced this action against Stanmar and Pamensky. ECF No. 1. On October 4, 2022, Plaintiff amended the complaint once as a matter of course and filed its FAC. ECF No. 13. In the FAC, Plaintiff asserts ten causes of action for: (1) Federal Trademark Infringement - False Designation of Origin, (2) Federal Trade Dress Infringement - False Designation of Origin, (3) Federal Unfair Competition/False Advertising, (4) Common Law Trademark Infringement and Unfair Competition, (5) Common Law Trade Dress Infringement and Unfair Competition, (6) False/Fraudulent registration, (7) Fraud, (8) Violation of Defend Trade Secrets Act, (9) Unfair Competition under Cal. Bus. & Prof. Code § 17200, and (10) Declaratory Relief. Id.

On October 18, 2022, Defendants moved to dismiss the second, fifth, and seventh causes of action. ECF No. 14-1, Motion to Dismiss (“Motion” or “Mot.”). Defendants also moved to dismiss the third, ninth, and tenth causes of action...