Unicorn Crowdfunding, Inc. v. New St. Enter., Inc.

• Decision Date: 17 December 2020
• Docket Number: 18 Civ. 10110 (PAE)
• Citation: 507 F.Supp.3d 547
• Parties: UNICORN CROWDFUNDING, INC., Plaintiff and Counterclaim Defendant, v. NEW STREET ENTERPRISE, INC., d/b/a Socialfix, Ossian Ventures, Inc., and Teresa Tateossian, Defendants and Counterclaim Plaintiffs. New Street Enterprise, Inc., d/b/a Socialfix, Ossian Ventures, Inc., and Teresa Tateossian, Third-Party Plaintiffs, v. Michael Gelinas and Brian Bodik, Third-Party Defendants.
• Court: U.S. District Court — Southern District of New York

507 F.Supp.3d 547

UNICORN CROWDFUNDING, INC., Plaintiff and Counterclaim Defendant,

v.NEW STREET ENTERPRISE, INC., d/b/a Socialfix, Ossian Ventures, Inc., and Teresa Tateossian, Defendants and Counterclaim Plaintiffs.

New Street Enterprise, Inc., d/b/a Socialfix, Ossian Ventures, Inc., and Teresa Tateossian, Third-Party Plaintiffs,

v.Michael Gelinas and Brian Bodik, Third-Party Defendants.

18 Civ. 10110 (PAE)

United States District Court, S.D. New York.

Signed December 17, 2020

Vivek Jayaram, Jayaram Law Group, Chicago, IL, Wendy Brasunas Heilbut, Jayaram Law Group, New York, NY, for Plaintiff and Counterclaim Defendant, Third-Party Defendant Unicorn Crowdfunding, Inc., Michael Gelinas.

Vivek Jayaram, Jayaram Law Group, Chicago, IL, for Third-Party Defendant Brian Bodik.

Joshua Lawrence Weiner, Coughlin Duffy LLP, Morristown, NJ, for Defendants and Counterclaim Plaintiffs/Third-Party Plaintiffs.

OPINION & ORDER

PAUL A. ENGELMAYER, District Judge:

This case arises from a falling out between the producer of a television program, plaintiff and counterclaim defendant Unicorn Crowdfunding, Inc. ("Unicorn"), and its business partner, defendant and counterclaim plaintiff New Street Enterprise, Inc., d/b/a Socialfix ("Socialfix"). For a little over a year, Socialfix worked with Unicorn to develop, brand, market, and advertise the show, titled The Unicorn. But at the end of that year, the relationship soured. After Unicorn rebuffed Socialfix's demands for payment for services it claimed to have provided to Unicorn, Socialfix sent a cease-and-desist letter to the network on which the parties planned to air The Unicorn —non-party Bloomberg Television ("Bloomberg")—claiming rights to the show's logo and other intellectual property associated with it. As a result, Unicorn alleges, the network removed Unicorn's branding from a major promotional event and ultimately decided not to air the show.

Soon after Socialfix sent that letter, Unicorn commenced this action, suing Socialfix, its co-founder Teresa Tateossian, and Ossian Ventures, Inc. ("Ossian" and, together with Socialfix and Tateossian, "Socialfix") for false designation of origin, false description, and false representation under the Lanham Act, 15 U.S.C. § 1125(a) ; deceptive acts and practices under state law; and tortious interference with prospective business relations under state law. Socialfix has since responded with counterclaims against Unicorn and two of its co-founders—third-party defendants Michael Gelinas and Brian Bodik—alleging breach of contract, unjust enrichment, quantum meruit, and promissory estoppel. The counterclaims all arise from Unicorn's alleged failure to pay Socialfix for the work it performed.

Before the Court now are the parties’ cross-motions for summary judgment. Socialfix has moved for partial summary judgment, solely as to liability, on its counterclaims for unjust enrichment and quantum meruit. It has also moved for summary judgment dismissing Unicorn's state-law claims. Unicorn opposes Socialfix's motion as it relates to Socialfix's counterclaims for unjust enrichment and quantum meruit, but does not itself move for summary judgment on those claims. Unicorn cross-moves for partial summary judgment, solely as to liability, on its claim for tortious interference and for full summary judgment on its Lanham Act claim.

For the reasons that follow, the Court grants Socialfix's motion in part and denies it in part, and denies Unicorn's motion.

I. Background

A. Factual Background¹

1. Parties

Plaintiff and counterclaim defendant Unicorn is a Delaware production and media company, with its principal places of business in New York and Illinois. JSF ¶ 1; Unicorn 56.1 ¶ 1; Dkt. 1 ("Compl.") ¶ 1. It intends to produce a television program, titled The Unicorn , through which viewers are introduced to contestant startup companies in which they can buy equity. Unicorn 56.1 ¶ 1. Third-party defendants Michael Gelinas and Brian Bodik, both residents of Illinois, are co-founders and shareholders of Unicorn, which they jointly operate. JSF ¶¶ 2–3; Socialfix 56.1 ¶ 9.

Defendant and counterclaim plaintiff Socialfix, a New Jersey corporation with its principal place of business in New Jersey, is a digital-media marketing and consulting company. JSF ¶ 4. It provides brand strategy, advertising, and website and mobile app design for businesses. Id. Defendant and counterclaim plaintiff Teresa Tateossian, a New Jersey resident, owns and co-founded Socialfix along with non-party Ken Krysinski. Id. ¶ 5; Socialfix 56.1 ¶¶ 1–2.

Defendant and counterclaim plaintiff Ossian Ventures is a Wyoming corporation with no principal place of business. JSF ¶ 6.²

2. The Unicorn

This case centers on the parties’ efforts to produce and market a television program: The Unicorn. The show's premise combines "aspects of TV shows Shark Tank and American Idol , with each episode introducing audience members to start-up companies participating in a round of equity crowdfunding." Socialfix 56.1 ¶ 6; Unicorn 56.1 ¶ 2. The show, in other words, envisions start-up companies appearing, pitching their idea to the audience, and gaining investments from viewers who see the start-up as promising.

3. Unicorn and Socialfix's Business Relationship

In mid-2017, as Unicorn's founders developed their plans for the show, they began to look for a company to provide them with marketing, branding, and social-media services. Socialfix 56.1 ¶ 12. In July 2017, Unicorn co-founder Carl Heil contacted Socialfix to ask about a potential partnership aimed at marketing and promoting the show. JSF ¶ 7; Socialfix 56.1 ¶ 10. At the time, Unicorn intended Socialfix to serve as its "branding, marketing[, and] social media" experts. Socialfix 56.1 ¶ 16; Unicorn 56.1 ¶ 3. The services Socialfix provided would aim in part at recruiting companies to pay to participate in the show as contestants. See Weiner Decl., Ex. E ("MOU") at 1. Soon after, Heil introduced Tateossian from Socialfix to Bodik and Gelinas at Unicorn. Socialfix 56.1 ¶ 11; Weiner Decl., Ex. A ("Tateossian Tr.") at 60.

In September 2017, Socialfix and Unicorn entered into a Memorandum of Understanding ("MOU") prepared by Gelinas, Bodik, and Heil. JSF ¶ 8; Socialfix 56.1 ¶ 14; Unicorn 56.1 ¶ 6; see MOU at 2. Neither side now contends that the MOU represented a binding contract.³ Instead, the MOU "provided a general outline of the initial deliverables that were to be provided by Socialfix, as well as an estimated budget for the services Socialfix was to provide." Socialfix 56.1 ¶ 13; Unicorn 56.1 ¶ 7. The MOU contemplated a "good-faith deposit of $5,000 to get started on preliminary and mutually beneficial work" to "kick-start the strategic partnership" between the companies, and an "[e]stimated budget" of "$75,000 monthly on-going that will be coming from companies being on-boarded." MOU at 1. It identified the following as the "Deliverable": "One marketing package that we can present to the companies that are being on-boarded to the Unicorn Platform process. In the package, it will include social media, marketing, media buy, celebrity involvement, production, process flow and project management." Id.

In one respect, the parties dispute the significance of the MOU. Socialfix claims that the MOU aimed to "outline the business relationship between Socialfix and Unicorn moving forward," and that, consistent with the MOU, Socialfix expected to receive $75,000 per month for its services. Socialfix 56.1 ¶ 15; Socialfix Reply 56.1 ¶ 9; see Tateossian Tr. at 95; Weiner Decl., Ex. B ("Krysinski Tr.") at 21. Unicorn disagrees. It maintains that the MOU was intended only as an outline of the parties’ arrangement "at the beginning of the relationship." Unicorn Reply 56.1 ¶ 15. As discussed more fully below, Unicorn argues that, apart from early one-off payments such as the $5,000 "good-faith deposit" described in the MOU, the parties understood that, going forward, Unicorn would pay Socialfix with equity, not the $75,000-per-month cash "budget" set forth in the MOU. See id. ; see also id. ¶¶ 29–30.

4. Unicorn's Relationship with Bloomberg

Bloomberg Television is a cable television network that Unicorn viewed as a good fit for The Unicorn. Unicorn 56.1 ¶ 16. In February 2018—while Unicorn and Socialfix were working together to develop, market, and brand the show—Unicorn pitched the show to Bloomberg. Unicorn 56.1 ¶ 17. Bloomberg liked "the concept." Id. In March 2018, after negotiations, Unicorn and Bloomberg entered into a sponsorship agreement. Id.⁴ Unicorn claims that, under that agreement, it paid Bloomberg $625,000 to serve as a "lead sponsor" of five Bloomberg events. Id. ¶ 18. But see Socialfix Reply 56.1 ¶ 18. It also claims that it spent another $75,000 on advertising and running commercials on Bloomberg. Unicorn 56.1 ¶ 19. But see Socialfix 56.1 ¶ 19.⁵ Unicorn viewed its relationship with Bloomberg as essential to the show's development. Unicorn 56.1 ¶ 20. And much of the work that Socialfix and Unicorn did during their relationship sought to promote Unicorn and the show at the Bloomberg events. Id. ¶ 21; see Socialfix Reply 56.1 ¶ 21 (admitting that the parties worked toward this end, but stating that Unicorn's evidence does not specify how much of such work was undertaken for that purpose).

5. Socialfix's Work Between October 2017 and October 2018

Between October 2017 and October 2018, the parties "developed and maintained a ‘business relationship’ " through which Socialfix provided a variety of services to Unicorn. Socialfix 56.1 ¶ 17; JSF ¶ 9. Each agrees, in general, as to the services Socialfix performed. Those included:

• Participation in the creation of television show "concepts and treatments";⁶

• Introduction of Unicorn to individuals at EisnerAmper, an accounting firm;

• Introduction of Unicorn to potential investors;

• Creation of relationships with equity crowdfunding portals;

• Generation of sales commitments for the show;

• Design and creation of investor pitch

...