Mmk Group, LLC v. Sheshells Co., LLC, Case No. 3:07 CV 55.

• Citation: 591 F.Supp.2d 944
• Decision Date: 24 December 2008
• Docket Number: Case No. 3:07 CV 55.
• Parties: MMK GROUP, LLC, Plaintiff, v. The SHESHELLS COMPANY, LLC, et al., Defendant.
• Court: United States District Courts. 6th Circuit. United States District Court of Northern District of Ohio

591 F.Supp.2d 944

MMK GROUP, LLC, Plaintiff, v. The SHESHELLS COMPANY, LLC, et al., Defendant.

Case No. 3:07 CV 55.

United States District Court, N.D. Ohio, Western Division.

December 24, 2008.

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Amanda B. Lewis, James J. Wolfson, Carlton Fields, Atlanta, GA, Tybo A. Wilhelms, Bugbee & Conkle, Toledo, OH, for Plaintiff.

Thomas P. Dillon, Neema M. Bell, Shumaker, Loop & Kendrick, Gregory H. Wagoner, Robert M. Anspach, Anspach Meeks Ellenberger, Toledo, OH, Christopher

M. Bauer, U.S. Department of Homeland Security Office of the Principal Legal Advisor, Washington, DC, for Defendant.

JUDGMENT ENTRY

KATZ, District Judge.

For the reasons stated in the Memorandum Opinion filed contemporaneously with this entry, IT IS HEREBY ORDERED, ADJUDGED and DECREED that Counterclaim/Third Party Defendant Bruce's motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(2) is granted (Doc. 156). All claim brought against Tina Bruce are dismissed.

Counterclaim/Third Party Defendants MMK, M & MK, Pawloski, and Bruce's motion to dismiss Thermodyn Defendants' Third Party Complaint and Counterclaims is denied (Doc. 157). Both claims brought by Thermodyn Defendants survive.

Plaintiff MMK's motion to dismiss She-Shells Defendants Amended Counterclaim is granted in part and denied in part (Doc. 181). The only surviving claim brought by SheShells Defendants is Count IV (Breach of Contract).

MEMORANDUM OPINION

This case is before the Court on the following motions: Counterclaim/Third Party Defendant Tina Bruce's motion to dismiss for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2) (Doc. 156); Counterclaim/Third Party Defendants MMK Group, LLC, Me & My Kids, LLC, Charles Pawloski, and Tina Bruce's motion to dismiss Defendants Thermodyn Corporation and James MacMillan's Third Party Complaint and Counterclaims pursuant to Fed.R.Civ.P. 12(b)(6) (Doc. 157); and Plaintiff MMK's motion to dismiss Defendants Sheshells Company, LLC, Thomas Hass, and Michael Teadt's Amended Counterclaim pursuant to Fed.R.Civ.P. 12(b)(6) (Doc. 181). The Court addresses each of these motions below.

I. Background

A. Procedure

MMK Group, LLC, ("MMK") a Georgia limited liability company that markets, distributes, and sells Lilypadz breast shields, commenced this action in January, 2007. On November 11, 2007, MMK filed a Second Amended Complaint against the following defendants: The SheShells Company ("SheShells"), an Ohio limited liability company; Thomas Hass ("Hass"), the incorporator and registered agent of She-Shells; Michael Teadt ("Teadt"), the director of sales for SheShells; Thermodyn Corporation ("Thermodyn"), an Ohio corporation specialized in manufacturing; and James MacMillan ("MacMillan"), the President and Chief Executive Officer of Thermodyn. (See Doc. 139).

On January 7-8, 2008, Defendants Thermodyn and MacMillan (collectively "Thermodyn Defendants") filed an Answer to Plaintiff's Second Amended Complaint, a Counterclaim against MMK, and a Third Party Complaint against Charles Pawloski ("Pawloski") and Tina Bruce ("Bruce"). (See Doc. 149, Doc. 150). MMK now files a motion to dismiss Thermodyn Defendants' claims with regard to Bruce for lack of personal jurisdiction, and a motion to dismiss Thermodyn Defendants' claims with regard to MMK, Pawloski, and Bruce for failure to state a claim. (Doc. 156; Doc. 157)

On May 28, 2008, Defendants SheShells, Hass, and Teadt (collectively "SheShells Defendants") filed an Answer to Plaintiff's Second Amended Complaint and Counterclaim against MMK. (Doc. 171; see also Doc. 15). MMK now files a motion to dismiss the SheShells Defendants' Counterclaim for failure to state a claim. (Doc. 181).

B. Facts

1. MMK Group, LLC's Second Amended Complaint

In the Second Amended Complaint, MMK alleges the facts that gave rise to this suit. MMK explains that in 2002, Bruce invented the re-usable Lilypadz breast shield, a device that prevents breast milk leakage from nursing mothers. (Doc. 139 at ¶ 10). To refine and commercialize this idea, Bruce joined with Pawloski, her uncle, to form Me & My Kidz, L.L.C. ("M & MK"), an Ohio limited liability company.¹ (Id. at ¶ 11). MMK claims that on September 12, 2002 in Ohio, M & MK entered into a Non-Disclosure Agreement with Thermodyn ("M & MK/Thermodyn NDA"). (Id. at ¶ 17, Ex. B). The M & MK/Thermodyn NDA permitted Thermodyn to obtain and access M & MK's confidential information, and allowed M & MK to retain ownership over the confidential information. (Id. at ¶¶ 17-18). MMK claims that the agreement prohibited Thermodyn and Thermodyn employees from disclosing M & MK's trade secret information and from competing with M & MK for the time period prescribed by the agreement. (Id. at ¶¶ 19-22).

MMK alleges that as a result of the M & MK/Thermodyn NDA, Thermodyn manufactured Lilypadz and shared confidential information with its employees, including Hass. (Id. at ¶¶ 24-27). MMK alleges that in October, 2004, Hass performed a marketing survey using Lilypadz to test the viability of launching SheShells Breast Coverlets as a competing product. (Id. at ¶ 30). MMK states that Hass did so under a company called "Solutions Direct" and without M & MK's knowledge. (Id. at ¶ 30). In early 2005, MMK claims that while Hass was an employee of Thermodyn, Hass was in the process of negotiating a contract to sell Lilypadz to Boots, a United Kingdom retailer. (Id. at ¶ 33). M & MK asked Thermodyn to cease the negotiations. (Id.).

In late 2004, MMK alleges that Thermodyn intended to start charging M & MK a significantly higher manufacturing fee, and MacMillan desired to obtain ownership over M & MK's pending patent or control over MMK. (Id. at ¶¶ 31-33). Around June 14, 2005, MMK claims to have asked if Thermodyn would consider selling their Lilypadz production equipment. (Id. at ¶ 34). On or about June 23, 2005 through June 25, 2005, MMK alleges that MacMillan, acting on behalf of Thermodyn, considered, for the first time, the relationship between Thermodyn and M & MK to be a joint venture, and threatened to stop production unless MMK: (1) provided increased financial benefits; (2) handed over all patent information; (3) wrote a letter indemnifying Thermodyn from any law suits. (Id. at ¶ 35-37). On June 27, 2005, MMK claims to have agreed to comply with Thermodyn's requests if Thermodyn would meet all standing production orders. (Id. at ¶ 38). On June 28, 2005, MMK alleges that MacMillan acknowledged receipt of the requested information and made an offer to MMK for the sale of the materials, inventory, equipment, and expertise to manufacture Lilypadz for $150,000.00. (Id. at ¶¶ 39-40).

On July 1, 2005, MMK claims that M & MK notified Thermodyn of its intention to terminate their relationship. (Id. at ¶ 41). On July 25, 2005, M & MK removed its materials from Thermodyn's building. (Id. at ¶ 43). In the months before and after this termination, MMK believes that Hass created SheShells and began marketing SheShells Breast Coverlets in direct competition with Lilypadz breast shields and in violation of the M & MK/Thermodyn NDA and MMK's trade secrets. (Id. at ¶¶ 46-49).

MMK alleges fifteen counts against Defendants under federal and state law, including: federal common law trade dress infringement and false advertising under the Lanham Act, 15 U.S.C. § 1125(a)(1)(A) and (b); trade secret misappropriation under the Ohio Trade Secrets Act, R.C. § 1333.61 et seq.; unfair competition arising under the laws of the state of Ohio; willful false and deceptive trade practice under the Ohio Deceptive Trade Practices Act, R.C. § 4165.01 et seq.; predicate acts of mail and wire fraud, interstate transportation and sale of stolen goods or property in civil violations of the Racketeering Influenced and Corrupt Organizations Act; violation of the Ohio Corrupt Activity Act, R.C. § 2923.31 et seq.; tortious interference with business relations; tortious interference with a contract; unjust enrichment; misappropriation and conversion; and patent infringement.

2. Thermodyn Defendants' Answer, Counterclaim, and Third Party Complaint

Thermodyn Defendants claim to have had no knowledge of the M & MK/Thermodyn NDA until MMK informed Thermodyn Defendants of the agreement when relations between them began to decline in 2005. (Doc. 150 at ¶¶ 9, 18). The Counterclaim and Third Party Complaint allege that a memorandum titled "Thermodyn and M & MK Relationship," and a November 8, 2002 letter from Pawloski to Thermodyn defined the relationship between Thermodyn and MM & K and are evidence that the companies had a joint venture. (Id. at ¶¶ 7-9). Thermodyn states that it invested over $160,000 in the joint venture and added numerous modifications to the Lilypadz product. (Id. at ¶¶ 10-11). In June, 2005, Thermodyn Defendants state that MacMillan requested the Lilypadz insurance policy and patent information from Pawloski. (Id. at ¶ 12). Thermodyn alleges that Pawloski failed to provide the information and on June 29, 2005, Pawloski, Bruce, MMK, and M & MK unilaterally terminated the joint venture by removing material from the Thermodyn facility. (Id. at ¶ 14). After this exchange, Thermodyn alleges that MMK presented the M & MK/Thermodyn NDA to Thermodyn for the first time in order to prevent Thermodyn from producing anymore Lilypadz. (Id. at ¶¶ 17-19).

Thermodyn Defendants claim that they are entitled to damages because M & MK, MMK, Bruce, and Pawloski caused a breach of joint venture, and tortious interference with business relations. It is these claims to which Bruce, Pawloski, and MMK have responded with: (1) Bruce's motion to dismiss for lack of personal jurisdiction, and (2) Bruce, Pawloski, and MMK's motion to dismiss for failure to state a claim. (Doc. 156; Doc. 157). The Court addresses both of these motions below.

3. SheShells Defendants' Answer and Counterclaim

The Answer and Counterclaim allege that in March, 2003, MMK...