Snow Ingredients, Inc. v. Snowizard, Inc., CIVIL ACTION NO. 12-1412
| Decision Date | 27 March 2014 |
| Docket Number | CIVIL ACTION NO. 12-1412 |
| Parties | SNOW INGREDIENTS, INC., ET AL. v. SNOWIZARD, INC., ET AL. |
| Court | U.S. District Court — Eastern District of Louisiana |
Before the Court is a Motion to Dismiss the Second Amended and Supplemented Complaint1 filed by Defendants SnoWizard, Inc., Ronald R. Sciortino, Jack E. Morris, and Kenneth L. Tolar (collectively, "Defendants"). Defendants contend that the Second Amended and Supplemented Complaint ("Second Amended Complaint"), filed by Plaintiffs Snow Ingredients, Inc., Simeon, Inc., Southern Snow Manufacturing, Co., Inc., Parasol Flavors, LLC, Theodore Eisenmann, Raggs Supply LP, and Special "T" Ice Co., Inc. (collectively, "Plaintiffs"), fails to state a claim for which relief can be granted. The Court has considered the Second Amended Complaint, the parties' respective briefs, the record, and the applicable law. For the reasons set forth below, the Court will grant the motion. Specifically, the Court grants the motion to dismiss with regards to the RICO, antitrust, Lanham Act, unfair trade practices, and fraud claims against SnoWizard on the basis of res judicata. Further, the Court grants the motion to dismiss with regards to the RICO claims against Morris and Tolar on the basis of there being no underlying predicate act to support a RICO claim. Finally, the Court grants the motion to dismiss regarding the malicious prosecution claims against all Defendants because there was no bona fide termination in Plaintiffs' favor in the lawsuits SnoWizard brought against Plaintiffs, as required by law for such claims to be successful.
Plaintiffs filed this action against Defendants in the Eastern District of Louisiana on June 1, 2012, and it was transferred to this section, Section G, because it is related to cases that were already pending in this Court in consolidated Civil Action No. 06-9170.2 Defendants answered the complaint on July 19, 2012.3 The next day, Plaintiffs filed an Amended Complaint.4 With leave of Court, Plaintiffs filed a Second Amended and Supplemented Complaint on February 4, 2013.5 On March 12, 2013, Defendants filed the instant Motion to Dismiss Second Amended Complaint under Rule 12(b)(6).6 Plaintiffs opposed the motion on April 2, 2013.7
Although the above-captioned case was not consolidated with Civil Actions Nos. 06-9170, 09-3394, 10791, and 11-1499 (hereinafter, the "Consolidated Cases"), the factual background of this case is deeply intertwined with the consolidated cases. All parties, except for the attorney-defendants, Jack Morris and Kenneth Tolar, are involved in the sale, distribution, or manufacturer of snowballs, snowball flavor concentrates, and ice-shaving machines.
Between 2003 and 2008, SnoWizard began to acquire and enforce various patent and trademark rights, and this litigation ensued when Southern Snow first filed suit in 2006. In the consolidated cases, the claims and counterclaims predominantly covered the scope, existence, and ownership of certain patents and trademarks and the fairness of the parties' businesspractices. Throughout the litigation, Plaintiffs have claimed that Defendants have fraudulently and unfairly procured and enforced their claimed intellectual property rights. After significant motion practice over the course of multiple years, the remaining claims were submitted to a jury in an eight-day trial. On February 28, 2013, the jury returned a verdict, and the Court entered a judgment on the basis of the jury verdict on March 5, 2013.8
The jury found for Plaintiffs on a single cause of action: that Plum Street Snoballs owns a valid and enforceable trademark for the unregistered term ORCHID CREAM VANILLA and that SnoWizard used a reproduction, counterfeit, copy or colorable imitation of that trademark in a manner that was likely to cause confusion, or to cause mistake, or to deceive as to the source, origin, sponsorship, or approval of such product under Lanham Act §§ 43(a) and 35, 15 U.S.C. §§ 1125(a) and 1117.9 With regards to this cause of action, the jury further found that SnoWizard's conduct was "unethical, oppressive, unscrupulous, or deceptive," and that Plum Street Snoballs was entitled to the costs of the action.10 The jury rendered judgment against Plaintiffs on all of their other causes of action11 including additional claims involving infringement of Plaintiffs' claimed trademarks to ORCHID CREAM VANILLA and claims involving infringement of Plaintiffs' claimed trademarks to SNOW SWEET as well as SnoWizard's alleged fraudulent assertions of rights in the trademarks ORCHID CREAM VANILLA, SNOSWEET, SNOBALL, SNOBALL MACHINE, HURRICANE, MOUNTAIN MAPLE, BUTTER-CREAM, BUTTERED POPCORN, CAKE BATTER, CAJUN RED HOT, COOKIE DOUGH, DILL PICKLE, GEORGIA PEACH, KING CAKE, MUDSLIDE,PRALINE, and WHITE CHOCOLATE & CHIPS.12 The jury found for Defendants on six of their eight counter-claims.13
In addition to the trademarks claims, both Plaintiffs and SnoWizard raised multiple claims regarding SnoWizard's patent in U.S. Patent No. 7,536,871 ("Icemaker with Improved Cam Assembly").14 The jury found against Plaintiffs on all of its false and invalid patent claims against SnoWizard and found for SnoWizard on most of its counterclaims, including all but one of its patent infringement claims.15
According to the Second Amended Complaint in this case, "Defendant SnoWizard is attempting to manipulate the snowball market through a scheme to assert exclusive monopoly rights to sell products in that market, threatening and bringing litigation to force withdrawal of legitimate products and producers from the market based on fraudulently asserted and obtained patent and trademark rights."16 Plaintiffs claim that SnoWizard's attorneys Kenneth Tolar and Jack Morris have conspired with SnoWizard and Sciortino to acquire, maintain, and enforce bogus patents and trademark registrations as a means of asserting unwarranted monopoly rights, through abusive litigation and obstruction of justice.17
In particular, Plaintiffs allege the following:
In what Plaintiffs identify in their Second Amended Complaint as "Count 1," they allege that SnoWizard, Sciortino, Tolar, and Morris engaged in a litigation scheme that constitutesobstruction of justice and a violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1961, et seq.18
In "Count 2" and "Count 6," Plaintiffs allege that SnoWizard has engaged in sham litigation against Plaintiffs and made material misstatements in court and to the United States Patent and Trademark Office ("USPTO") in a manner that violates both federal and state antitrust laws.19
In "Counts 3-4," Plaintiffs accuse SnoWizard of violating the Lanham Act for their allegedly fraudulent trademark registration of WHITE CHOCOLATE & CHIPS and CAJUN RED HOT.20
In "Count 5," Plaintiffs raise another Lanham Act claim wherein they allege unfair competition in violation of section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a). 21
In "Count 7," Plaintiffs allege that SnoWizard has engaged in conduct that violates the Louisiana Unfair Trade Practices Act ('LUTPA"), Louisiana Revised Statute § 51:1401, et seq.22
In "Count 8" and "Count 11", Plaintiffs claim that, pursuant to Louisiana Civil Code Article 2315, SnoWizard must pay damages for fraud, obstruction of justice, and abusive litigation, and that Morris and Tolar conspired to commit those acts and are thus liable under Louisiana Civil Code Article 2324.23
In "Count 9", Plaintiffs accuse SnoWizard of malicious prosecution for pursuit of its claims in Southern Snow Manufacturing Company, Inc. v. SnoWizard, Inc., Case No. 10-4275.24
In "Count 10", Plaintiffs raise a similar claim for SnoWizard's role in SnoWizard, Inc. v. Doty, et al., Case No. 11-0515.25
Finally, in "Counts 10-13," Plaintiffs allege that Defendants Morris and Tolar are liable as conspirators for SnoWizard's alleged wrongdoing as set forth in "Counts 1-9."26
SnoWizard argues that Plaintiffs' RICO claims here are "identical" to those alleged by the same plaintiffs in the Consolidated Cases.27 SnoWizard asserts that the raised claims in the Consolidated Cases "result[ed] in the entry of a Judgment on Jury Verdict'" on March 5, 2013, and that "[r]elitigation of each of these claims and issues therefore is barred under the doctrine of res judicata."28 Accordingly, SnoWizard concludes, "Counts 1-8" and "Count 11" of the Second Amended Complaint fail to state a claim for which relief can be granted.29
Without elaboration, SnoWizard argues that Plaintiff's civil RICO claim suffers from "glaringly deficient or nonexistent allegations of a pattern, relatedness, continuity, injury,proximate cause, and standing among other serious pleading deficiencies."30 SnoWizard contends that the alleged "Litigation Scheme" that Plaintiffs accuse SnoWizard of perpetrating "does not satisfy RICO's requirements of a predicate criminal act or of a pattern of racketeering activity."31 While SnoWizard acknowledges that obstruction of justice qualifies as a predicate act,32 SnoWizard argues that Plaintiffs' RICO claim is "implausible on its face because Plaintiffs' factual allegations do not allow the Court to draw the reasonable inference that defendants committed any predicate criminal acts."33
SnoWizard cites several district court cases from outside the Fifth Circuit for the proposition that "litigation activities" cannot constitute the basis for a RICO claim.34 SnoWizard thus argues that its conduct is not actionable under RICO because "[t]his case does not involve 'bribery of a witness' . . . or 'additional allegations of extortion or some other pattern of racketeering activity.'"35 At...
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