Tongsui LLC v. LeCocoLove LLC

Background

Tongsui LLC, formerly known as Lecoco LLC, and Zijing Wang filed an amended complaint against LeCocoLove LLC and Lan Zou. The complaint asserted eight claims: trademark infringement, conversion, embezzlement, violation of California Business and Professions Code section 17200 and following, battery, assault, intentional infliction of emotional distress, and negligent infliction of emotional distress.

The complaint alleged that Wang founded Lecoco to sell coconut-jelly desserts using recipes she created and that Zou later became a co-founder. After Wang and Zou separated, Zou allegedly created LeCocoLove LLC, used Lecoco funds to apply for trademarks, took Wang’s recipe book and other assets, and sold products under the LE COCO mark. Plaintiffs also alleged that Zou struck Wang with a loaded handbag and a heavy file folder and threatened her. Wang obtained a civil-harassment restraining order against Zou from the Santa Clara County Superior Court on August 11, 2020.

Defendants answered the amended complaint and asserted estoppel as an affirmative defense. An affirmative defense is a stated reason why a defendant should not be held liable even if the plaintiff’s allegations are otherwise accepted. Defendants alleged that Plaintiffs had agreed Zou owned the Lecoco trademark but later applied for the trademark without Zou’s consent.

Motion for Judgment on the Pleadings

Plaintiffs moved under Federal Rule of Civil Procedure 12(c) for partial judgment on the pleadings on their battery and assault claims. Judgment on the pleadings is appropriate when, accepting the pleadings’ factual allegations as true and viewing them favorably to the nonmoving party, there is no material factual dispute and the moving party is entitled to judgment as a matter of law.

Plaintiffs relied on claim preclusion, also called res judicata. Claim preclusion generally prevents a party from litigating the same cause of action again after a final judgment on the merits between the same parties or parties legally connected to them. Plaintiffs argued that the battery and assault claims arose from the same April 23, 2020 incident described in Wang’s request for a civil-harassment restraining order and that the restraining-order proceeding had ended in a final judgment after a full hearing.

The court denied the motion for judgment on the pleadings. It explained that Plaintiffs did not cite authority supporting their use of an earlier court order to obtain judgment in their favor in a later action. More importantly, Plaintiffs did not establish the requirements for claim preclusion. The August 11, 2020 restraining order did not determine that Zou battered or assaulted Wang and did not contain factual findings on those issues. Plaintiffs, who bore the burden of proving claim preclusion, therefore had not shown that the earlier proceeding produced a final judgment on the merits of the assault and battery issues.

Motion to Strike

Plaintiffs also moved under Rule 12(f) to strike Defendants’ estoppel defense. A motion to strike asks the court to remove a defense or other pleading matter that is insufficient, redundant, immaterial, impertinent, or scandalous. The court noted that the challenged defense had to be viewed favorably to Defendants and that a defense must provide enough factual information to give the opposing party fair notice of its basis.

The court denied the motion to strike. Although it described Defendants’ allegations as not a model of clarity, it found that they supported plausible inferences that Plaintiffs knew the relevant facts, agreed that Zou owned the trademark, caused Defendants to rely on that position, and caused Defendants injury. Plaintiffs disputed that they had transferred the trademark to Zou, but the court held that dispute presented factual questions unsuitable for resolution at the pleading stage.

Disposition

Judge Donna Ryu denied Plaintiffs’ motion for judgment on the pleadings and denied Plaintiffs’ motion to strike Defendants’ affirmative defense. The order did not decide the ultimate merits of the assault, battery, trademark, or estoppel issues.