United Tactical Sys., LLC v. Real Action Paintball, Inc.

• Decision Date: 10 November 2015
• Docket Number: Case No. 14-cv-04050-MEJ
• Citation: 143 F.Supp.3d 982
• Parties: United Tactical Systems, LLC, Plaintiff, v. Real Action Paintball, Inc., et al., Defendants. And Related Action and Cross Action
• Court: U.S. District Court — Northern District of California

143 F.Supp.3d 982

United Tactical Systems, LLC, Plaintiff,

v. Real Action Paintball, Inc., et al., Defendants.And Related Action and Cross Action

Case No. 14-cv-04050-MEJ

United States District Court, N.D. California.

Signed November 10, 2015

John Christopher Kirke, Jason Mattson Flom, Donahue Fitzgerald LLP, Oakland, CA, Michael Lawrence Blumenthal, Milton M. Blumenthal and Associates, Chicago, IL, for Plaintiff.

B. Douglas Robbins, Kelley Anne Harvilla, Wood Robbins LLP, San Francisco, CA, Paul B. Overhauser, Overhauser Law Offices LLC, Greenfield, IN, for Defendants.

ORDER RE: (1) MOTION TO DISMISS COUNTERCLAIMS; (2) MOTION TO STRIKE COUNTERCLAIMS; AND (3) MOTION TO TRANSFER BOND

MARIA-ELENA JAMES

, United States Magistrate Judge

INTRODUCTION

Real Action Paintball, Inc. and its principal, K.T. Tran (collectively ‘Real Action")¹ filed 18 counterclaims in this matter (First Am. Counterclaim (‘FACC"), Dkt. No. 152), which United Tactical Systems, LLC (‘UTS") and related Counter-Defendants (collectively with UTS, ‘Counter-Defendants")² now seek to dismiss or strike on a multitude of different grounds. See Mot. to Dismiss Brief (‘MTD Br."), Dkt. No. 160; Mot. to Strike Brief (‘MTS Br."), Dkt. No. 163.³ Real Action also filed a motion asking the Court to transfer the bond held by the Northern District Court of Indiana, which previously issued a temporary restraining order (‘TRO") against Real Action. See Mot. to Transfer Bond (‘Transfer Mot."), Dkt. No. 158. Having considered the parties' positions, relevant legal authority, and the record in this case, the Court GRANTS IN PART and DENIES IN PART Counter-Defendants' Motions and DENIES AS MOOT Real Action's Transfer Motion for the following reasons.

BACKGROUND

UTS and Real Action sell irritant filled projectiles. Compl. ¶ 2, Dkt. No. 1; FACC ¶¶ 20, 29. Typically used by law enforcement or military, these projectiles are non-lethal capsules that contain a pepper substance and can be shot like paintballs. FACC ¶ 19. UTS's predecessor in interest, Advanced Tactical Ordnance Systems, LLC (‘ATO"), an Indiana corporation, previously brought suit against Real Action, a California company, in a case styled Advanced Tactical Ordinance Systems, LLC v. Real Action Paintball, Inc., et al. , Case No. 12-00296-JVB-RBC (N.D. Ind.) (the ‘Indiana Action"), alleging Real Action infringed on its ‘PepperBall" trademark by making statements implying that Real Action sold PepperBall projectiles, among other things. Compl. ¶¶ 1, 36; FACC ¶¶ 30-31, 48. ATO alleges it acquired PepperBall Technologies, Inc. in 2012, procuring the use of the PepperBall mark, among other things. Compl. ¶ 2. ATO obtained a temporary restraining order and later a preliminary injunction in the Indiana Action to stop Real Action's use of the PepperBall mark and related acts by Real Action. Compl. ¶ 36; FACC ¶¶ 36, 51.

ATO also sued Conrad Sun, Sun LLC, and Apon in the Indiana Action. FACC ¶¶ 86-87. Apon manufactured irritant projectiles, while Conrad Sun and his company Sun LLC had previously helped broker a deal for the sale of irritant filled projectiles from Apon to Real Action. Compl. ¶¶ 11, 12, 14-16; FACC ¶ 28. Real Action alleges ATO settled with Sun, Sun LLC, and Apon in the Indiana Action ‘on abusive terms," which made it so that Real Action was unable to acquire the irritant projectiles it contracted for from Sun LLC and Apon, and consequently harmed Real Action's position in the marketplace. FACC ¶ 96.

Meanwhile, Real Action challenged whether the Northern District of Indiana (the ‘Indiana Court") properly invoked personal jurisdiction over it. Id. ¶ 44. The Court of Appeals for the Seventh Circuit confirmed the Indiana Court did not have personal jurisdiction over Real Action, and the Indiana Court consequently dismissed the suit. Id. ; see also Advanced Tactical Ordnance Sys., LLC v. Real Action Paintball, Inc. , 751 F.3d 796 (7th Cir.2014)

.

The case has found new residence in this Court. Real Action filed the first suit, styled as Real Action Paintball, Inc. v. Advanced Tactical Ordnance Systems, LLC et al. , Case No. 14-2435-MEJ (N.D. Cal.) (the ‘ATO Case"). It asserted 17 claims against ATO, including claims for wrongful injunction, declaratory relief, unfair competition, and restraint of trade. Real Action also sued attorneys Michael Blumenthal and David Piell, who represented ATO in the Indiana Action, and the persons and entities who had formed ATO. ATO Case, Dkt. No. 1. Specifically, Real Action sued Gary Gibson and Perfect Circle Projectiles LLC as well as Tyler Tiberius and Tiberius Arms LLC. Id. Gibson owns or owned Perfect Circle, which in turn owns or owned 50% of ATO. FACC ¶¶ 23, 25. Perfect Circle also once supplied irritant projectiles to Pepperball Technologies. Id. ¶ 20. Tiberius is or was a co-owner of Tiberius Arms, which Real Action alleges owns or owned the other 50% of ATO. Id. ¶¶ 24-25. Finally, Real Action also sued Robert N. Trgovich in his capacity as clerk of the United States District Court for the Northern District of Indiana. ATO Case, Dkt. No. 1; see also FACC ¶ 11.

After Real Action filed suit in this Court, UTS was formed and purchased ATO and the PepperBall mark. Compl. ¶ 2. UTS then filed the present lawsuit against Real Action (the ‘UTS Case"), and moved for a temporary restraining order. Dkt. No. 27. The Court denied that motion but construed it as a motion for a preliminary injunction. Dkt. No. 34. The Court ultimately granted in part and denied in part UTS's motion for a preliminary injunction, which enjoined Real Action from using the PepperBall name to refer to its irritant projectiles. Dkt. No. 85. Real Action subsequently counter-sued UTS for various claims (many of which are similar to those asserted against ATO), as well as Blumenthal and Piell for misappropriation of trade secrets related to information published with the filing of UTS's motion for a temporary restraining order. Dkt. No. 51.

The Court subsequently consolidated the ATO and UTS actions under the UTS Case. Dkt. No. 140. In light of this consolidation, the Court denied Real Action's Motion to Amend its Complaint, and denied without prejudice UTS's and ATO's pending Motions to Dismiss and Motions to Strike,⁴ but granted the parties leave to amend their pleadings. Id.

On June 16, 2015, Real Action filed its First Amended Counterclaims against Counter-Defendants as well as Trgovich. Dkt. No. 152. Real Action brings a total of 18 claims:

1. Wrongful Injunction (under Federal law of the Seventh Circuit)—ATO and Trgovich

2. Wrongful Injunction (under Indiana law)—ATO and Trgovich

3. Wrongful Seizure (under Federal law)—ATO, Gibson, Tiberius, and Trgovich

4. Abuse of Process (under Indiana law)—ATO, Gibson, Tiberius, Blumenthal, and Piell

5. Malicious Prosecution (under Indiana law)—ATO, Gibson, Tiberius, Blumenthal, and Piell

6. Intentional Interference with Contractual Relations (under Indiana and California laws)—ATO, Perfect Circle, Gibson, Tiberius, Tactical Air,⁵ Tiberius Arms, Blumenthal, and Piell

7. Intentional or Negligent Interference with Prospective Economic Advantage (under Indiana and California laws)—ATO, Gibson, Tiberius, Blumenthal, and Piell

8. Tortious Conversion (under Indiana and California laws)—ATO, Gibson, and Blumenthal

9. Criminal Conversion (under Indiana law)—ATO, Gibson, and Blumenthal

10. False Designation of Origin (under 15 U.S.C. § 1125

)—ATO, Gibson, Tiberius, and UTS

11. Monopoly and Combination in Restraint of Trade (under the Sherman Act)—ATO, Perfect Circle, and Tiberius Arms

12. Combination in Restraint of Trade (under California's Cartwright Act)—ATO, Perfect Circle, and Tiberius

13. Unfair Competition and False Advertising (under California Business and Professions Code sections 17200 and 17500 )—ATO, Perfect Circle, and UTS

14. Declaratory Judgment of No Violation of the Lanham Act nor of Common Law Trademark nor Trade Dress—ATO and UTS

15. Declaratory Judgment of No Trade Secret Misappropriation—ATO and UTS

16. Unjust Enrichment (under Indiana law)—ATO and Perfect Circle

17. Conspiracy (under Indiana and California laws)—ATO, Perfect Circle, Gibson, Tactical Air, Tiberius Arms, Tiberius, Blumenthal, and Piell

18. Successor Liability—UTS, UTSIH, and UTSH⁶

After filing the FACC, Real Action filed a Second Motion for the Court to Accept and Hold the Bond from the Indiana Action. Dkt. No. 158. The Court previously dismissed without prejudice Real Action's First Motion to Accept and Hold the Bond, finding the motion premature as ‘the Court ha[d] not yet determined its role in assessing the Northern District of Indiana's earlier injunction against Real Action." Dkt. No. 148. On October 28, 2015, Counter-Defendants filed a Notice stating the Indiana Court released the bond, presumably back to ATO. Dkt. No. 184. Real Action has not responded to this notice.

This Order considers the Court's power to hear Real Action's Wrongful Injunction counterclaims under the circumstances and also considers Counter-Defendants' Motions to Dismiss Real Action's Counterclaims pursuant to Rule 12(b)(6) or alternatively to Strike those counterclaims pursuant to California Code of Civil Procedure section 425.16

, California's anti-SLAPP law. See Dkt. Nos. 159 (Mot. to Dismiss); 162 (Motion to Strike) (filed July 9, 2015).

LEGAL STANDARDS

A. Motion to Dismiss

Rule 8(a) requires that a complaint contain a ‘short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2)

. A complaint must therefore provide a defendant with ‘fair notice" of the claims against it and the grounds for relief. Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)

(internal quotations and citation omitted).

A court may dismiss a complaint under Rule 12(b)(6) when it does not contain enough facts to state a claim to relief that is plausible on its face. Id. at 570, 127 S.Ct. 1955

. ‘A claim has facial plausibility when the plaintiff pleads factual content that...