MC1 Healthcare LLC v. Mountainside Sols.
| Decision Date | 21 April 2020 |
| Docket Number | CIVIL CASE NO. 1:18-cv-00315-MR |
| Court | U.S. District Court — Western District of North Carolina |
| Parties | MC1 HEALTHCARE LLC, d/b/a MOUNTAINSIDE, Plaintiff, v. MOUNTAINSIDE SOLUTIONS, INC. n/k/a MOUNTAINVIEW RECOVERY, INC., and MICHAEL E. ELKINS, Defendants. MOUNTAINSIDE SOLUTIONS, INC. n/k/a MOUNTAINVIEW RECOVERY, INC., Counterclaim-Plaintiff, v. MC1 HEALTHCARE LLC, d/b/a MOUNTAINSIDE, Counterclaim-Defendant. |
THIS MATTER is before the Court on Defendant Michael Elkins' Motion to Dismiss [Doc. 64] and the Plaintiff MC1's Motion to Dismiss Defendant Mountainview's Counterclaims [Doc. 70].
On August 1, 2018, the Plaintiff MC1 Healthcare LLC, doing business as Mountainside ("MC1" or the "Plaintiff"), filed a complaint (the "Original Complaint") in the United States District Court for the Southern District of New York against Mountainside Solutions, Inc., now known as Mountainview Recovery, Inc., ("Defendant Mountainview" or "Mountainview") and Michael Elkins ("Defendant Elkins" and collectively "Defendants"), alleging trademark infringement, cybersquatting, unfair competition, and unfair and deceptive trade practices. [Doc. 1].1 On October 25, 2018, the United States District Court for the Southern District of New York issued an Order transferring the case to this Court, and the case was transferred to this Court on November 11, 2018. [Doc. 37].
On November 15, 2018, Defendant Mountainview filed an answer to the Original Complaint and counterclaims against MC1 seeking the cancellation of MC1's trademark registration. [Doc. 46]. On the same day, Defendant Elkins filed a motion to dismiss the claims in the Original Complaint against him pursuant to Federal Rule of Civil Procedure Rule 12(b)(6). [Doc. 47].
On December 21, 2018, MC1 filed motions to amend the Original Complaint and to dismiss Defendant Mountainview's counterclaims pursuant to Rule 12(b)(6). [Docs. 52, 54]. On August 6, 2019, this Court issued an Order granting MC1's motion for leave to amend the Original Complaint, denying MC1's motion to dismiss Defendant Mountainview's counterclaims as moot, and denying Defendant Elkins' motion to dismiss the claims against him in the Original Complaint as moot. [Doc. 61].
On August 12, 2019, MC1 filed an amended complaint (the "Amended Complaint"). [Doc. 62]. On September 3, 2019, Defendant Mountainview filed an answer to the Amended Complaint and counterclaims seeking cancellation of MC1's trademark registration. [Doc. 66]. On the same day, Defendant Elkins filed a motion to dismiss the claims in the Amended Complaint against him pursuant to Federal Rule of Civil Procedure Rule 12(b)(6). [Doc. 64]. On October 1, 2019, MC1 filed a motion to dismiss Defendant Mountainview's counterclaims pursuant to Federal Rules of Civil Procedure Rule 9(b) and 12(b)(6). [Doc. 70].2 The parties have responded and replied to those respective motions.
Having been fully briefed, this matter is ripe for disposition.
To survive a motion to dismiss pursuant to Rule 12(b)(6), the pleadings "must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). To be "plausible on [their] face," the claims must demonstrate more than "a sheer possibility that a defendant has acted unlawfully." Id. at 678.
In considering the motions to dismiss, the Court accepts the allegations in non-moving party's pleadings as true and construes the allegations in the light most favorable to that party. Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc., 591 F.3d 250, 253 (4th Cir. 2009); Francis v. Giacomelli, 588 F.3d 186, 190-92 (4th Cir. 2009). The Court must accept the truthfulness of all factual allegations but is not required to assume the truth of "legal conclusions, elements of a cause of action, and bare assertions devoid of further factual enhancement . . . ." Consumeraffairs.com, 591 F.3d at 255; see also Giacomelli, 588 F.3d at 189. "The mere recital of elements of a cause of action, supported only by conclusory statements, is not sufficient to survive a motion made pursuant to Rule 12(b)(6)." Walters v. McMahen, 684 F.3d 435, 439 (4th Cir. 2012).
Determining whether the pleadings state a plausible claim for relief is "a context-specific task," Giacomelli, 588 F.3d at 193, which requires the Court to assess whether the factual allegations of the pleadings are sufficient "to raise the right to relief above the speculative level," Twombly, 550 U.S. at 555. As the Fourth Circuit has explained:
To satisfy this standard, a [claimant] need not forecast evidence sufficient to prove the elements of the claim. However, the [counterclaims] must allege sufficient facts to establish those elements. Thus, while a [claimant] does not need to demonstrate in a complaint that the right to relief is probable, the complaint must advance the [claimant's] claim across the line from conceivable to plausible.
Walters, 684 F.3d at 439 (citations and internal quotation marks omitted).
Taking the well-pleaded factual allegations of MC1's Amended Complaint as true, the following is a summary of the relevant facts.3
MC1 is a Connecticut limited liability company operating in Connecticut and New York. [Doc. 62 at ¶¶ 7, 9]. MC1 provides services for individuals with substance abuse issues. [Id. at ¶ 9]. Since its inception, MC1 hascontinuously used the MOUNTAINSIDE mark (the "Mark") in connection with its services. [Id. at ¶ 12]. On May 23, 2017, the United States Patent and Trademark Office ("PTO") issued Federal Registration Number 5208592 to MC1 for the Mark related to services provided for the rehabilitation of patients with drug addictions. [Id. at ¶ 15]. Registration 5208592 is currently valid, subsisting, in full force, and registered with the Principal Trademark Register of the PTO. [Id. at ¶ 16]. In addition to the Mark, MC1 also has used the following logo for decades:
Image materials not available for display.
On April 10, 2018, Defendant Mountainview was formed as a North Carolina corporation operating under the name Mountainside Solutions, Inc. [Id. at ¶¶ 7, 22]. Defendant Mountainview provides services for individuals with substance abuse issues at a drug and alcohol addiction recovery facility. [Id. at ¶ 21]. Defendant Elkins is a 50% owner of Defendant Mountainview and serves as its President. [Id. at ¶ 8]. Under Defendant Elkins' direction, or with his ratification and participation, Defendant Mountainview intentionally selected the Mountainside Solutions, Inc. name to confuse consumers into believing that MC1 was affiliated with DefendantMountainview. [Id. at ¶ 23]. On April 11, 2018, under Defendant Elkins' direction, or with his ratification and participation, Defendant Mountainview registered the domain name www.mountainsidesolutionsinc.com despite knowing about MC1's name and the Mark and without having authorization from MC1 to use MC1's name or the Mark. [Id. at ¶ 24]. Defendant Mountainview also created and used the following logo despite knowing about MC1's name and the Mark and without having authorization from MC1 to use MC1's name or the Mark:
Image materials not available for display.
[Id. at ¶ 25]. Under Defendant Elkins' direction, or with his ratification and participation, Defendant Mountainview intentionally copied MC1's name, trademark, and logo. [Id. at ¶ 29].
MC1 had been using the Mark, its name, and the www.mountainside.com domain name before Defendant Mountainview first used its mark, its logo, or registered the www.mountainsidesolutionsinc.com domain name. [Id. at ¶ 28]. Under Defendant Elkins' direction, or with his ratification and participation, Defendant Mountainview also activelymisrepresented that it was affiliated with MC1 by claiming that it was affiliated with the "Mountainside in Connecticut." [Id. at ¶ 27].
On July 2, 2018, MC1 sent a cease-and-desist letter to Defendant Mountainview regarding its intellectual property rights in the name, trademark, and logo being used by Defendant Mountainview. [Id. at ¶ 31]. Defendant Mountainview did not respond to MC1's letter. [Id. at ¶ 32].
On July 20, 2018, Defendant Mountainview filed a document, signed by Defendant Elkins, to amend its articles of incorporation to change its company name from "Mountainside Solutions, Inc." to "Mountainview Recovery, Inc." [Id. at ¶ 33]. Following the name change, Defendant Mountainview created and adopted a new logo:
Image materials not available for display.
[Id. at ¶ 35]. Defendant Mountainview also stopped operating the website www.mountainsidesolutionsinc.com and began operating a website at www.mountainviewrecovery.com after the name change. [Id. at ¶ 34].
The Amended Complaint asserts six claims against Defendant Elkins including a claim for trademark infringement under 15 U.S.C. § 1114(1) ("Count One"); a claim for trademark infringement under 15 U.S.C. § 1125(a)("Count Two"); a claim for cybersquatting/cyberpiracy under 15 U.S.C. § 1125(d) ("Count Three"); a claim for common law trademark infringement ("Count Four"); a claim for common law unfair competition ("Count Five"); and a claim for unfair and deceptive trade practices under N.C. Gen. Stat. § 75-1.1 ("Count Six"). [Doc. 62 at 9-12].
Defendant Elkins moves to dismiss all the claims against him, arguing that the "few allegations . . . related to Elkins are insufficient to state a legally cognizable claim" and that "[v]irtually all of the allegations in the Complaint that even mention Elkins lump him in with the corporate defendant." [Doc. 65 at 1, 3].
MC1 first argues that Defendant Elkins is barred from bringing the present motion to dismiss because this Court already ruled on the sufficiency of MC1's...
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