The Knit With v. Knitting Fever Inc., Array

• Decision Date: 27 September 2010
• Docket Number: Array
• Citation: 742 F.Supp.2d 568
• Parties: The KNIT WITH, Plaintiff,v.KNITTING FEVER, INC., Designer Yarns, Ltd., Filatura Pettinata V.V.G. Di Stefano Vaccari & C., Sion Elalouf, Diane Elalouf, Jeffrey J. Denecke, Jr., Jay Opperman, and Debbie Bliss, Defendants.The Knit With, Plaintiff,v.Eisaku Noro & Co., Ltd., Knitting Fever, Inc., Sion Elalouf, Diane Elalouf, and Jay Opperman, Defendants.
• Court: U.S. District Court — Eastern District of Pennsylvania

742 F.Supp.2d 568

The KNIT WITH, Plaintiff,

v.KNITTING FEVER, INC., Designer Yarns, Ltd., Filatura Pettinata

v.v.G. Di Stefano Vaccari & C., Sion Elalouf, Diane Elalouf, Jeffrey J. Denecke, Jr., Jay Opperman, and Debbie Bliss, Defendants.The Knit With, Plaintiff,

v.Eisaku Noro & Co., Ltd., Knitting Fever, Inc., Sion Elalouf, Diane Elalouf, and Jay Opperman, Defendants.

Civil Action Nos. 08–4221

08–4775.

United States District Court, E.D. Pennsylvania.

Sept. 27, 2010.

James F. Casale, Law Office of James Francis Casale, Chestnut Hill, PA, Angela N. O'Rourke, Robert J. Guite, Squire Sanders Dempsey LLP, San Francisco, CA, for Plaintiff.Joshua R. Slavitt, Pepper Hamilton LLP, Philadelphia, PA, for Defendants.

MEMORANDUM

BUCKWALTER, Senior District Judge.

Currently pending before the Court is a Motion for Summary Judgment filed by Defendants Knitting Fever, Inc. (“KFI”), Sion Elalouf, Diane Elalouf, Jeffrey J. Denecke, Jr., and Jay Opperman (collectively, the “KFI Defendants”). For the reasons which follow, the Motion is denied.

I. FACTUAL AND PROCEDURAL HISTORY

The factual background of this case is one familiar to both the parties and the Court and has been reiterated in several of this Court's prior opinions. ¹ This matter arises between Plaintiff, The Knit With (“TKW”), a small, family-owned and operated business retailing specialty yarns and accessories to consumers, and Defendant Knitting Fever, Inc. (“KFI”), a New York corporation that manufactures and distributes specialty yarns. At the core of the dispute is Plaintiff's claim that KFI sold designer knitting yarns to TKW, representing that the yarns contained a percentage of cashmere, which they allegedly did not.

Plaintiff initiated litigation on September 2, 2008, against KFI, its officers/directors, and several related entities, alleging that, as a consequence of the false labeling of three of the six Cashmerino yarns at issue, its business and commercial interests were harmed. (Compl., The Knit With v. Knitting Fever, Inc., No. CIV.A.08–4221 (E.D.Pa. Sep. 2, 2008) (“ The Knit With I ”).) The Complaint set forth several causes of action, including: (1) breach of the express warranty of merchantability; (2) breach of the implied warranty of merchantability; (3) false advertising under the Lanham Act, 15 U.S.C. § 1125(a)(1)(B); (4) injury to business and property pursuant to the Racketeer Influenced and Corrupt Organization Act (“RICO”), 18 U.S.C. § 1962; (5) conspiracy to cause injury to business and property pursuant to RICO; (6) perfidious trade practices (deceit) under the common law of unfair competition; and (7) piercing the corporate veil. ( Id. ¶¶ 82–150.) Defendants moved, on September 24, 2008, to dismiss the third, fourth, and fifth counts,

On October 6, 2008, prior to the resolution of this motion to dismiss, Plaintiff initiated a second litigation against KFI, also including as Defendants the Japanese manufacturers of the remaining three Cashmerino yarns at issue. (Compl., The Knit With v. Eisaku Noro & Co., Ltd., No. CIV.A.08–4775 (E.D.Pa. Oct. 6, 2008) (“ The Knit With II ”).) The Complaint in that case set forth the following causes of action: (1) breach of express warranty of merchantability of goods for resale to consumers; (2) breach of implied warranty of merchantability of goods for resale to consumers; (3) explicitly false advertising pursuant to the Lanham Act, 15 U.S.C. § 1125(a)(1)(B); (4) perfidious trade practices and common law unfair competition; (5) civil conspiracy; and (6) piercing the corporate veil. Defendants filed another motion to dismiss. ( Id. ¶¶ 35–82.)

On December 18, 2008, this Court, in The Knit With I, granted the motion to dismiss the Lanham Act claim on standing grounds, but declined to dismiss the RICO claims. The Knit With v. Knitting Fever, Inc., No. CIV.A.08–4221, 2008 WL 5381349, at *1–6 (E.D.Pa. Dec. 18, 2008). The following day, the Court also dismissed the Lanham Act claim in The Knit With II. The Knit With v. Eisaku Noro & Co., Ltd., No. CIV.A.08–4775, 2008 WL 5273582 (E.D.Pa. Dec. 19, 2008). By way of Order dated December 23, 2008, both actions were consolidated under the first civil action number.

Following the KFI Defendants' submission of their Answer, Plaintiff moved, on January 22, 2009, to dismiss all counterclaims and strike all affirmative defenses, The Court struck Defendants' fifth affirmative defense, but denied the motion in all other respects.

Via a Motion for Judgment on the Pleadings, filed on July 15, 2009, the KFI Defendants sought dismissal of the entire Complaint. On October 20, 2009, the Court granted the Motion as to Plaintiff's claims of perfidious dealing and civil conspiracy and dismissed these causes of action with prejudice.

Currently pending before the Court is the KFI Defendants' May 18, 2010 Motion for Summary Judgment on the grounds that Plaintiff is not the real party in interest. Plaintiff responded on June 10, 2010, Defendants submitted a Reply Brief on June 22, 2010, and Defendants filed a Sur-reply Brief on July 12, 2010.

II. STANDARD ON A MOTION FOR SUMMARY JUDGMENT

Summary judgment is proper “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed. R. Civ. P. 56(c)(2). A factual dispute is “material” only if it might affect the outcome of the case, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). For an issue to be “genuine,” a reasonable fact-finder must be able to return a verdict in favor of the non-moving party. Id.

On summary judgment, the moving party has the initial burden of identifying evidence that it believes shows an absence of a genuine issue of material fact. Conoshenti v. Pub. Serv. Elec. & Gas Co., 364 F.3d 135, 145–46 (3d Cir.2004). It is not the court's role to weigh the disputed evidence and decide which is more probative, or to make credibility determinations, Boyle v. County of Allegheny, 139 F.3d 386, 393 (3d Cir.1998) (citing Petruzzi's IGA Supermkts., Inc. v. Darling–Del. Co. Inc., 998 F.2d 1224, 1230 (3d Cir.1993)). Rafter, the court must consider the evidence, and all reasonable inferences which may be drawn from it, in the light most favorable to the non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (citing United States v. Diebold Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962)), Tigg Corp. v. Dow Corning Corp., 822 F.2d 358, 361 (3d Cir.1987). If a conflict arises between the evidence presented by both sides, the court must accept as true the allegations of the non-moving party, and “all justifiable inferences are to be drawn in his favor.” Anderson, 477 U.S. at 255, 106 S.Ct. 2505.

Although the moving party bears the initial burden of showing an absence of a genuine issue of material fact, it need not “support its motion with affidavits or other similar materials negating the opponent's claim.” Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). It can meet its burden by “pointing out ... that there is an absence of evidence to support the nonmoving party's claims.” Id. at 325, 106 S.Ct. 2548. Once the movant has carried its initial burden, the opposing party “must do more than simply show that there is some metaphysical doubt as to material facts.” Matsushita Elec., 475 U.S. at 586, 106 S.Ct. 1348. “[T]he non-moving party must rebut the motion with facts in the record and cannot rest solely on assertions made in the pleadings, legal memoranda, or oral argument.” Berckeley Inv. Group, Ltd. v. Colkitt, 455 F.3d 195, 201 (3d Cir.2006). If the nonmoving party “fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party wilt bear the burden at trial,” summary judgment is appropriate. Celotex, 477 U.S. at 322, 106 S.Ct. 2548. Moreover, the mere existence of some evidence in support of the nonmovant will not be sufficient to support a denial of a motion for summary judgment; there must be enough evidence to enable a jury to reasonably find for the nonmovant on that issue, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249–50, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

III. DISCUSSION

As noted above, KFI Defendants move for summary judgment on the ground that Plaintiff is not the real party in interest. Specifically, KFI Defendants argue that TKW, as it existed during the time of the transactions challenged by the present Complaint, had no legal identity independent of the late Marguerite Casale, who owned TKW as a sole proprietorship. Because Mrs. Casale passed away on July 4, 2004, and because no Letters of Administration were ever issued and no personal representative ever appointed in connection with her estate, no individual or entity exists to bring the present claim. The KFI Defendants conclude that, given these circumstances, the present form of TKW holds no interest that would be sufficient to render it a “real party in interest” under Federal Rule of Civil Procedure 17.

In order to address this Motion, the Court first summarizes the material facts pertinent to resolution of this Motion, as reflected by the parties' evidentiary submissions. The Court then turns to the legal discussion of whether Plaintiff is legally the real party in interest to the present suit.

A. Material Facts Pertinent to Defendant's Motion for Summary Judgment ²

TKW was founded by Marguerite Casale as a sole proprietorship in 1971. (Defs.' Mot. Summ. J., Ex. A.) She was the only person identified on the original fictitious name registration as owning or interested in TKW. ( Id.) On July 4, 2004, at the age of seventy-four, Mrs. Casale died at her home in Chestnut Hill, Pennsylvania. (Defs.' Mot. Summ. J., Ex. B at...