United States Securities and Exchange Commission v. Collector's Coffee Inc.

Background

The Securities and Exchange Commission brought the underlying action against Collector’s Coffee Inc., doing business as Collector’s Café, and Mykalai Kontilai, alleging violations of federal securities laws through investor fraud. Secured creditors later intervened and asserted claims against Collector’s Coffee, Kontilai, and the Jackie Robinson Foundation, Inc. The Foundation filed a crossclaim against Collector’s Coffee, and Collector’s Coffee responded with what the court called a counterclaim for clarity.

Collector’s Coffee alleged that the Jackie Robinson Foundation breached a contract to support the promotion and sale of two Major League Baseball contracts signed by Jackie Robinson in 1945 and 1947. Collector’s Coffee also alleged that the Foundation tortiously interfered with its efforts to sell those contracts. The Foundation moved to dismiss Collector’s Coffee’s counterclaim.

Report and Recommendation and Review

Magistrate Judge Gabriel W. Gorenstein recommended granting the Foundation’s motion to dismiss with prejudice to leave to amend. Collector’s Coffee objected. Judge Marrero determined that the objections merely repeated arguments made in the earlier briefing and were not sufficiently specific under Federal Rule of Civil Procedure 72(b)(2). The court therefore reviewed the recommendation for clear error, meaning whether the recommendation lacked support or was legally wrong. The court stated that it would reach the same result even under the more searching de novo standard of review.

Ruling

Judge Marrero adopted the Report and Recommendation in its entirety, denied Collector’s Coffee’s objections, and granted the Foundation’s motion to dismiss Collector’s Coffee’s counterclaim. The order states that the counterclaim was dismissed with prejudice to leave to amend. The provided opinion text adopts the recommendation but does not repeat the recommendation’s detailed reasoning for dismissal.