S. Snow Mfg. Co. v. Snowizard Holdings, Inc.

• Decision Date: 14 December 2012
• Docket Number: 10–0791,11–1499.,09–3394,Civil Action Nos. 06–9170
• Citation: 912 F.Supp.2d 404
• Parties: SOUTHERN SNOW MANUFACTURING CO., INC. v. SNOWIZARD HOLDINGS, INC., et. al.
• Court: U.S. District Court — Eastern District of Louisiana

912 F.Supp.2d 404

SOUTHERN SNOW MANUFACTURING CO., INC.

v.SNOWIZARD HOLDINGS, INC., et. al.

Civil Action Nos. 06–9170, 09–3394, 10–0791, 11–1499.

United States District Court, E.D. Louisiana.

Dec. 14, 2012.

Mark Andrews, Andrews Arts & Sciences Law, LLC, New Orleans, LA, for Plaintiff.

Jack Edward Morris, Jack E. Morris, Attorney at Law, Kenneth L. Tolar, Kenneth L. Tolar, APLC, Metairie, LA, Brad Elliot Harrigan, Simeon B. Reimonenq, Jr., Lugenbuhl, Wheaton, Peck, Rankin & Hubbard, New Orleans, LA, for Defendants.

ORDER AND REASONS¹

NANNETTE JOLIVETTE BROWN, District Judge.

Before the Court is SnoWizard, Inc.'s and Ronald R. Sciortino's (collectively, the “Defendants”) Motion to Dismiss Alleged RICO Claims Under Rule 12(b)(6) (Ref: 11–1499).² Therein, Defendants request that this court dismiss with prejudice Counts 1 through 24 of the Complaint ³ and Counts 1 through 13 of the Amended Complaint,⁴ in Civil Action No. 11–1499. Defendants argue that even assuming all allegations in the plaintiffs' Complaint and Amended Complaint are true, they fail to assert the predicate criminal acts required to establish a cause of action under the Racketeer Influenced and Corrupt Organizations Act (“RICO”),⁵18 U.S.C. § 1961 et seq. Having considered the motion, the response, the reply, the record, and the applicable law, the Court will, for the following reasons, grant Defendants' Motion to Dismiss Alleged RICO Claims Under Rule 12(b)(6).

I. Background

A. Procedural Background

Civil Action No. 06–9170 began in 2006, when Plaintiff Southern Snow Manufacturing Co., Inc. filed a Petition ⁶ and a Supplementing and Amending Petition ⁷ in the Civil District Court for the Parish of Jefferson, State of Louisiana, against SnoWizard Holdings, Inc., SnoWizard Inc., SnoWizard Extracts, Inc., and SnoWizard Supplies, Inc. (collectively, “SnoWizard”) for violations of Louisiana state law and U.S. trademark law. On October 27, 2006, SnoWizard filed a Notice of Removal ⁸ in the Eastern District of Louisiana invoking this Court's jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1338(a), which was allotted to Judge Jay C. Zainey, Section “A.” On May 13, 2012, Judge Zainey consolidated Civil Action No. 06–9170 with Civil Actions Nos. 09–3394 and 10–0791.⁹

On June 24, 2011, Plaintiffs Claude Black and Donna Black d/b/a Plum Street Snowballs; Theodore Eisenmann; Raggs Supply, LP d/b/a Raggs Sno–Cone Supplies; Special T Ice Co., Inc.; Parasol Flavors, LLC; Simeon, Inc.; Southern Snow Mfg. Co., Inc.; and Snow Ingredients, Inc. filed a Complaint ¹⁰ against Defendants in Civil Action No. 11–1499. Although the case was initially allotted to Judge Martin L.C. Feldman, Section “F,” Civil Action No. 11–1499 was subsequently transferred to Judge Zainey ¹¹ and consolidated with the consolidated Civil Action No. 06–9170.¹² The Amended Complaint in 11–1499 ¹³ (“Amended Complaint”) was subsequently filed in this matter on August 27, 2011 by the above-named plaintiffs together with new plaintiff Van Howenstine d/b/a Van's Snowballs (collectively, “Plaintiffs”). Defendants filed their Motion to Dismiss Alleged RICO Claims Under Rule 12(b)(6) (Ref:11–1499) on August 30, 2011.¹⁴ On October 1, 2011, Plaintiffs filed their Opposition to Defendant's Motion to Dismiss Under Rule 12(b)(6).¹⁵ After receiving leave of Court, Defendants filed a reply in support of their motion.¹⁶ On October 7, 2011, the consolidated matter, encompassing Civil Actions Nos. 06–9170, 09–3394, 10–0791, and 11–1499, was transferred to Section “G” of this Court while the motion to dismiss was still pending.¹⁷

B. Factual Background

“Snowballs” or “snoballs” are shaved ice confections flavored and colored with “flavoringsyrups” made from “flavor concentrate” mixed with simple syrup.¹⁸ In this case, all parties are engaged in the sale, distribution, or manufacture of snowballs. SnoWizard, owned by Defendant Ronald R. Sciortino (“Sciortino”), is a manufacturer and purveyor of snowball flavor concentrates and ice-shaving machines that it sells at wholesale, at retail, and as private labelings.¹⁹ Plaintiff Plum Street Snoballs (“Plum Street”) is a vendor of snowballs at retail to the general public and a former customer of SnoWizard.²⁰ Plaintiffs Southern Snow Manufacturing, Co., Inc. and Snow Ingredients, Inc. (collectively, “Southern Snow”) are commonly owned manufacturers and purveyors of ice-shaving machines and snowball flavor concentrates.²¹ Plaintiff Theodore Eisenmann is a former owner of Eisenmann Products, a manufacturer of flavor concentrates and ice-shaving machines under the trademark FLAVOR SNOW. Eisenmann Products' FLAVOR SNOW business was sold in 2006 to the owner of Southern Snow.²² Plaintiff Parasol Flavors, LLC (“Parasol”) is a manufacturer of snowball flavor concentrates.²³ Plaintiff Simeon, Inc. is related to Southern Snow through common ownership, and is a company owning rights, recipes, and designs for snowball-related products.²⁴ Plaintiff Raggs Supply, LP (“Raggs”) is a distributor of snowball flavor concentrates and ice-shaving machines and non-exclusively distributed SnoWizard flavor concentrates between 1991 and 2010.²⁵ Raggs continues to distribute Southern Snow and Parasol products. Plaintiff Special T Ice Co., Inc. (“Special T”) is also a distributor of snowball flavor concentrates and ice-shaving machines.²⁶

In this litigation the parties bitterly dispute the scope and existence of patents on the ice-shaving machine and its parts. According to Plaintiffs, SnoWizard filed a patent application for the entirety of the ice-shaving machine in 1942, which was denied; however, the words “patent pending” were displayed on the door of the machines from 1942 to 1984, at which time the molding on the door was altered to read “patented,” and SnoWizard's promotional literature also claimed the machine was patented.²⁷ In 2009, SnoWizard stopped molding the word “patented” into the door of the machine and started placing stickers to that effect on the machine.²⁸ On April 7, 1987, Plaintiffs allege that Sciortino obtained a U.S. patent on the “stabilization means” of the ice-shaving machine, but he subsequently abandoned that patent in 1995 due to nonpayment of the maintenance fee.²⁹ Despite the alleged abandonment of the patent, on April 12, 2001, Sciortino posted on the internet that “[t]here are differences between the two machines in quality since Southern Snow did not have the patent to manufacture the SnoWizard machine exactly.” ³⁰

In 2002, SnoWizard began using a new ratchet-style linkage in its ice-shaving machines. According to Plaintiffs, this ratchet linkage was designed and manufactured in cooperation with Precision Metalsmiths, Inc. and without the execution of a confidentiality agreement.³¹ In 2004, Sciortino applied for a patent on the ratchet linkage, allegedly listing only himself as the inventor and failing to disclose the parts' public use and sale for more than one year before the application was filed.³² Patents on the ratchet linkage and a new leg design were granted in 2007, and after a period of abandonment for failure to pay the issue fee, were revived in 2009 based on Sciortino's statement that abandonment was unintentional.³³ Based on the patents SnoWizard claimed on its ice-shaving machines, Plaintiffs allegedly stopped purchasing, distributing, selling, and using ice-shaving machines that were not of the SnoWizard brand.³⁴

The parties are also in disagreement over a number of claimed state and federal trademarks and trademark registrations. In late 2007 and early 2008, Plaintiff Parasol made preparations to change the name of its sugar-free simple syrup mix to “SNOW SWEET,” formerly “Simply Sweet.” SnoWizard allegedly contacted the owners of the mark “SIMPLY SWEET,” causing them to send a cease and desist letter to Parasol, making it more urgent for Parasol to re-label its product “SNOW SWEET.” Parasol registered “SNOW SWEET” in March 2008, but, in July 2008, SnoWizard registered the mark “SNOSWEET” with the United States Patent and Trademark Office (“USPTO”) and the Louisiana Secretary of State. Although Parasol was using its mark “SNOW SWEET” in commerce prior to SnoWizard's application for registration of the “SNOSWEET” mark, SnoWizard sent a cease and desist letter to Parasol.

Starting in 1981, Southern Snow began manufacturing flavor concentrates and ice-shaving machines in Gretna and Belle Chasse, Louisiana.³⁵ Also in the early 1980s, SnoWizard sold flavor concentrates manufactured by the Charles Dennery Company.³⁶ But, in the mid–2000s, SnoWizard began asserting various state and federal trademark and patent rights, including registering 22 trademarks between 2003 and 2008. SnoWizard then sent cease and desist letters to manufacturers and distributors on the basis of its registered trademarks. ³⁷

The snowball flavor and name “ORCHID CREAM VANILLA” was allegedly developed by the first owner of Plum Street, and it became a signature flavor of Plum Street, leading it to be a separately listed asset in the sale of Plum Street to Donna and Claude Black in 1979.³⁸ According to Plaintiffs, SnoWizard copied the flavor without authorization, used the flavor with no claim of exclusivity for approximately five years, and then applied for and received federal trademark registration in May 2004. SnoWizard then sent cease and desist letters to Southern Snow and Simeon, Inc. asserting the federal trademark registration. The registration was later cancelled in December 2009 by the Trademark Trial and Appeal Board (“TTAB”) of the USPTO. ³⁹

Plaintiffs claim that the snowball flavor “SILVER FOX” was a signature flavor and trademark of Eisenmann Products, which was acquired by Simeon, Inc. and related entities in 2006, when the “FLAVOR SNOW” brand was purchased. ⁴⁰ Although the owners of “FLAVOR SNOW” and Southern Snow claimed a trademark in “SILVER FOX” by affixing a “TM” to the term in promotional materials, SnoWizard began using the “SILVER FOX”...