Nourieli v. Lemonis

Background

Howard Nourieli and Bowery Kitchen Supplies, Inc. sued Marcus Lemonis, Marcus Lemonis, LLC, Camping World Holdings, Inc., Machete Corporation, and other defendants. Bowery Kitchen Supplies had appeared on the television program The Profit. The complaint alleged that the program showed Lemonis agreeing to buy an ownership stake in Bowery Kitchen, but that the on-air transaction was simulated and the check was only a prop.

The complaint further alleged that, after filming, Marcus Lemonis LLC offered a one-page term sheet concerning financial support and revenue percentages. Nourieli and Bowery Kitchen alleged that the term sheet was only a preliminary document and did not give Lemonis or his companies permission to use the Bowery Kitchen trademark. They alleged that Lemonis-affiliated entities later sold products bearing the Bowery Kitchen name and logo at Camping World without permission, and that customers complained about the products.

The complaint asserted 16 causes of action, including trademark and unfair-competition claims, New York claims for deceptive business practices, tortious interference, and unjust enrichment, five fraud-related claims, a federal civil Racketeer Influenced and Corrupt Organizations Act claim, and a request for a declaration that the term sheet was void. The defendants moved to dismiss under Rule 12(b)(6), which tests whether a complaint alleges enough facts to state a legally recognized claim.

Trademark-Related Claims and the Term Sheet

The court explained that the trademark claims depended on whether the term sheet was a binding contract. Under New York law, a preliminary agreement may be binding if the parties agreed on all points requiring negotiation, or it may bind the parties only to continue negotiating in good faith while leaving important terms open.

The court held that the complaint plausibly alleged that the term sheet was not binding. The handwritten note stating that the parties had discussed rights retained in New York, Miami, and Amsterdam suggested that further negotiations remained necessary. Lemonis LLC’s later efforts to obtain a separate agreement concerning trademark rights also supported the allegation that the term sheet did not already grant those rights. In addition, the term sheet used vague terms concerning revenue and did not expressly state that Lemonis LLC could use Bowery Kitchen’s trademark.

The court noted that some facts pointed toward a binding agreement, including the absence of an express reference to a later writing, the alleged payment of approximately $290,000, and a 2017 email in which Nourieli stated that the parties had agreed to the sale of their marks. But the court concluded that these fact-specific issues were better addressed at summary judgment or trial than on a motion to dismiss. The trademark and related declaratory-judgment claims therefore survived.

The court also allowed the New York deceptive-business-practices claim to proceed because the complaint alleged that consumers complained after being misled by allegedly unauthorized Bowery Kitchen-branded products. The unjust-enrichment claims also survived at the pleading stage, although the court noted that they might later be dismissed as duplicative. The tortious-interference claims were dismissed because the complaint alleged only generalized relationships with customers, rather than specific business relationships with particular third parties.

The court denied dismissal as to counts 1–7, 14, and 16: the six trademark or unfair-competition counts, the deceptive-business-practices count, the unjust-enrichment count, and the declaratory-judgment count.

Fraud Claims

The court dismissed the fraud, fraudulent-inducement, fraudulent-concealment, fraudulent-misrepresentation, and promissory-fraud claims. Federal Rule of Civil Procedure 9(b) requires fraud to be pleaded with particular detail. The court found that many alleged statements—such as promises to be “equal business partners,” take the business “to the next level,” or “trust the process”—were vague or aspirational rather than provably false statements of fact.

The court identified the producer’s statement that the on-air negotiations were real and binding as the closest alleged concrete misrepresentation. But it found that reliance on that statement was unreasonable in light of the release’s clear language describing the on-air transaction as simulated and involving a prop check. The complaint also did not adequately connect the alleged statements to specific damages. The court therefore dismissed the fraud claims.

Civil RICO Claim

The court dismissed the civil RICO claim. It found that the complaint did not adequately allege a pattern of racketeering activity, including two qualifying predicate acts. The alleged fraud predicates were inadequately pleaded, and the plaintiffs abandoned the alleged predicate involving trafficking in counterfeit marks by failing to defend it in their opposition brief. The complaint also did not adequately allege that the plaintiffs were harmed by the alleged fraud.

Disposition

Judge J. Paul Oetken concluded that the defendants’ motions to dismiss were granted in part and denied in part. All claims against Machete Corporation were dismissed. All claims against the other defendants were dismissed except counts 1–6, count 7, count 14, and count 16. The court denied the plaintiffs’ general request for leave to amend the dismissed claims because they had already amended once and did not explain what additional allegations they would add. The remaining defendants were ordered to answer the surviving claims within 21 days after the opinion and order.