NOSSK, Inc. v. Fitness Anywhere LLC

Background

Fitness Anywhere LLC, doing business as TRX, asserted counterclaims against NOSSK, Inc., WONODA, Inc., Wolfgang Ott, and Nadia Ott. TRX alleged patent and trademark infringement, corporate-veil piercing, successor liability, violation of California’s Unfair Competition Law, tortious interference, and fraudulent conveyance. The claims were partly based on allegations that the third-party defendants took assets from WOSS Enterprises LLC after WOSS became bankrupt. TRX had previously obtained a $13,002,462.70 judgment against WOSS for patent and trademark infringement.

NOSSK and the third-party defendants moved under Federal Rule of Civil Procedure 12(f) to strike all claims against the third-party defendants. They also moved under Rule 12(b)(6), which allows dismissal for failure to state a legally sufficient claim, challenging the corporate-veil, successor-liability, and tortious-interference claims and parts of TRX’s California Unfair Competition Law claim.

Third-Party Claims and Joinder

The court denied NOSSK’s motion to strike TRX’s claims against WONODA, Wolfgang Ott, and Nadia Ott. It held that TRX properly joined the Otts as required parties under Rule 19 because, based on TRX’s allegations, the court could not provide complete relief without them. The court also held that the allegations were sufficient to support WONODA’s joinder under Rules 13, 19, and 20. The court further held that TRX did not need the court’s permission to add the third-party defendants when filing its initial or amended answer under the circumstances presented.

Corporate-Veil Claim

The court granted NOSSK’s motion to dismiss TRX’s corporate-veil-piercing counterclaim with leave to amend. It held that piercing the corporate veil is not an independent cause of action; it is a method for imposing liability for an underlying substantive claim. The court stated that TRX could direct its corporate-veil allegations to its substantive claims in an amended pleading.

Successor-Liability Claim

The court granted NOSSK’s motion to dismiss TRX’s California successor-liability counterclaim with leave to amend. It held that successor liability also cannot stand alone because it extends liability for an underlying cause of action to another corporation. TRX may redirect those allegations to substantive claims in an amended pleading.

California Unfair Competition Law Claim

The court granted NOSSK’s motion to dismiss without leave to amend the portion of TRX’s California Unfair Competition Law counterclaim based on alleged patent infringement. The court held that this theory was preempted by federal patent law because it duplicated patent-infringement claims and contained no qualitatively different element.

The court denied NOSSK’s motion to dismiss the other “example” allegations supporting TRX’s Unfair Competition Law claim. It stated that TRX would be bound by its pleading and could seek permission to amend if discovery revealed additional theories of liability.

Tortious-Interference Claim

The court granted NOSSK’s motion to dismiss TRX’s tortious-interference counterclaim with leave to amend. The court held that TRX’s allegations concerning generally lost business and prospective customers were too speculative because they did not identify an existing economic relationship of the type protected by the tort.

Other Orders and Disposition

The court struck TRX’s briefing seeking permission to file a motion for an “early veil determination,” finding that TRX improperly sought affirmative relief in its opposition to NOSSK’s motion. The court also limited each side to one summary-judgment motion during the case unless the court expressly allowed another.

In the final order, the court denied the motion to strike; granted with leave to amend the motions concerning corporate-veil piercing, successor liability, and tortious interference; granted without leave to amend the motion concerning the patent-infringement theory of the Unfair Competition Law claim; denied the motion concerning the “example” allegations; struck TRX’s early-veil-determination briefing; and ordered TRX to file an amended pleading within 21 days. This was a procedural ruling on the pleadings and joinder, not a final decision on the ultimate liability issues.