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Cosmetic Alchemy, LLC v. R&G

November 17, 2010

COSMETIC ALCHEMY, LLC AN ARIZONA LIMITED LIABILITY COMPANY, PLAINTIFF,
v.
R&G, LLC, A LIMITED LIABILITY COMPANY; REGINALDO TORRES, AN INDIVIDUAL; AND GABRIELA DABDOUB, AN INDIVIDUAL, DEFENDANTS.
R&G, LLC, A LIMITED LIABILITY COMPANY; REGINALDO TORRES, AN INDIVIDUAL; AND GABRIELA DABDOUB, AN INDIVIDUAL, COUNTERCLAIMANTS,
v.
COSMETIC ALCHEMY, LLC AN ARIZONA LIMITED LIABILITY COMPANY; SCOTT WASSERMAN AND HOPE WASSERMAN, A MARRIED COUPLE; KIMBER-LEIGH OPPMAN, AN INDIVIDUAL; MARIO RIOS, AN INDIVIDUAL; EVA BAEZ GARCIA, AN INDIVIDUAL; BEAUTIFUL EASY, LLC, AN ARIZONA LIMITED LIABILITY COMPANY; JANE AND JOHN DOES I-X; AND BLACK AND WHITE COMPANIES I-X, COUNTERDEFENDANTS.



ORDER

Pending before this Court are a Motion to Strike (Doc. 24) and Motion to Dismiss (Doc. 25) filed by Plaintiff/Counterdefendant Cosmetic Alchemy, LLC, and Counterdefendants Scott Wasserman, Hope Wasserman, Kimber-Leigh Oppman, Mario Rios, Eva Baez Garcia, and Beautiful Easy, LLC. For the reasons stated below, the Court grants the Motion to Strike (Doc. 24) and grants in part and denies in part the Motion to Dismiss (Doc. 25).

BACKGROUND

Counterclaimants allege the following. (Doc. 9). In 2007, Kimber-Leigh Oppman of Cosmetic Alchemy approached Gabriela Dabdoub about working with the company as an independent contractor to launch Li'LashTM cosmetic products in the Latin market. Several months later, Ms. Dabdoub and Mr. Reginaldo Torres formed R & G, LLC and became the exclusive distributors of Li'Lash in Mexico. After Cosmetic Alchemy terminated its contract with R & G, R & G decided to launch its own eyelash-enhancing products. C Coast Labs, which also produced Cosmetic Alchemy's products, manufactured the product, which Counterclaimants allege is different from the compound purchased by Cosmetic Alchemy. R & G sells its product, DABALASH, in Mexico, Argentina and other Latin American countries.

Around April 2008, Mario Rios began doing some web services work for R & G. Mr. Rios had set up a website for Cosmetic Alchemy's Li'Lash product. R & G hired him to perform web design work related to its DABALASH product, including designing and maintaining a website and establishing e-mail accounts. The dabalash.com domain name was registered by Mr. Rios on behalf of R & G in April 2009. R & G promoted its product through the website, and eventually sales of DABALASH approached $40,000 per month. The company promoted the product and dabalash.com website in magazines and other media.

According to Counterclaimants, R & G informed Mr. Rios in March and April 2010 that the company intended to hire a new firm to do its web-related work. Following those discussions, and without R & G's consent, Mr. Rios transferred the dabalash.com domain name to Dr. Wasserman of Cosmetic Alchemy. Mr. Rios and Cosmetic Alchemy removed the dabalash.com website and blocked R & G's access to relevant email accounts. Defendants/Counterclaimants raise a number of claims related to this transfer of the domain name and company information.

DISCUSSION

A. Motion to Strike

Counterdefendants move to strike from the counterclaim references to an alleged extramarital relationship involving two of the Counterdefendants and the immigration status of Counterdefendant Rios. (Doc. 24). Pursuant to Federal Rule of Civil Procedure 12(f), the Court may strike from a pleading "any redundant, immaterial, impertinent, or scandalous matter." "'Immaterial matter is that which has no essential or important relationship to the claim for relief or the defenses being pleaded.'" Skydive Ariz., Inc. v. Quattrochi, 2006 WL 2460595, at *3 (D. Ariz. Aug. 22, 2006) (quoting Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993), rev'd on other grounds, 510 U.S. 517 (1994)). "'Impertinent matter consists of statements that do not pertain, and are not necessary to the issues in question.'" Id. (internal quotations omitted). "Scandalous material is that which 'cast[s] an excessively adverse light on the character of an individual or a party.'" Reichert v. Nat'l Credit Sys., Inc., 2005 WL 55549677, at *4 (D. Ariz. March 31, 2005) (quoting OKC Corp. v. Williams, 461 F.Supp. 540, 550 (N.D. Tex. 1978), cert. denied, 449 U.S. 952 (1980)).

The "function of a 12(f) motion to strike is to avoid the expenditure of time and money that must arise from litigating spurious issues by dispensing with those issues prior to trial." Sidney-Vinstein v. A.H. Robins Co, 697 F.2d 880, 885 (9th Cir. 1983)."Motions to strike are generally viewed with disfavor, and will usually be denied unless the allegations in the pleading have no possible relation to the controversy, and may cause prejudice to one of the parties." Osei v. Countrywide Home Loans, 692 F.Supp.2d 1240, 1247 (E.D. Cal. 2010) (citing 5A C. Wright & A. Miller, FEDERAL PRACTICE AND PROCEDURE § 1380 (2d ed. 1990)).

Defendants/Counterclaimants allege that Mr. Rios is an "illegal alien," and in their response to the motion to strike contend that such allegation is "directly relevant to the counterclaims." (Doc. 9, 26). They raise the following counterclaims: (1) intentional interference with business expectancy; (2) intentional interference with contractual relations; (3) unfair competition; (4) misappropriation of trade secrets; (5) false advertising; (6) trespass to chattels; (7) conversion; (8) cybersquatting; (9) defamation; and (10) breach of contract. (Doc. 9). Mr. Rios' immigration status is both immaterial and impertinent to any of these counterclaims.It appears that Counterclaimants are attempting to use their counterclaim to challenge Cosmetic Alchemy's promissory fraud claim. Although their response clearly states that Mr. Rios' immigration status is directly relevant to their counterclaims, the substance of the response addresses Cosmetic Alchemy's claim that Mr. Rios justifiably relied on Defendants' promise to Rios that if he would close his own business and work exclusively for Defendants, Defendants would provide him with his own eyelash product to sell. (Doc. 1). Counterclaimants have not provided any specific argument connecting Mr. Rios' immigration status to their counterclaims. Moreover, the allegation that Mr. Rios is an "illegal alien" is highly prejudicial and not relevant to this case. Striking this allegation in no way prevents Counterclaimants from presenting evidence of Mr. Rios' employment outside R & G during the period of time at issue. Accordingly, the Court grants Counterdefendants' motion to strike the allegation.

With regard to the references of a romantic relationship between Dr. Wasserman and Ms. Oppman, Counterclaimants contend that proof of such relationship "is relevant to show [the Counterdefendants] were acting together in their tortious actions." (Doc. 26).They rely on a case, in which a district court denied a motion to strike language from an indictment that referenced a romantic relationship between two of the defendants who were charged with aiding and abetting one another in the commission of a wire fraud scheme. U.S. v. Adams, 2010 WL 1751967, at *1 (W.D. Okla. Apr. 30, 2010). Counterclaimants do not raise a conspiracy claim, but rather argue that "Dr. Wasserman and Ms. Oppman, among others, acted knowingly and directly" in committing the alleged torts. (Doc. 26) (emphasis added). Thus, the Court is not persuaded that the alleged romantic relationship "bears [any] possible relation to the controversy" at issue, and certainly such allegations will cause some prejudice to Counterdefendants. Wilkerson v. Butler, 229 F.R.D. 166, 170 (E.D. Cal. 2005) (citing Talbot v. Robert Matthews Distrib. Co., 961 F.2d 654, 664 (7th Cir. 1992)).Should the joint action of Dr. Wasserman and Ms. Oppman ever prove relevant, their relationship may be offered. Until such time, however, the allegations serve no apparent purpose. Accordingly, the Court grants the motion to strike as to these references.

B. Motion to Dismiss

1. Legal Standard

To survive dismissal for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6), a complaint must contain more than "labels and conclusions" or a "formulaic recitation of the elements of a cause of action"; it must contain factual allegations sufficient to "raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). While "a complaint need not contain detailed factual allegations... it must plead 'enough facts to state a claim to relief that is plausible on its face.'" Clemens v. DaimlerChrysler Corp., 534 F.3d 1017, 1022 (9th Cir. 2008) (quoting Twombly, 550 U.S. at 570). The plausibility standard "asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are 'merely consistent with' a defendant's liability, it 'stops short of the line between possibility and plausibility of entitlement to relief.'" Id. (quoting Twombly, 550 U.S. at 557) (internal citations omitted).

When analyzing a complaint for failure to state a claim under Rule 12(b)(6), "[a]ll allegations of material fact are taken as true and construed in the light most favorable to the nonmoving party." Smith v. Jackson, 84 F.3d 1213, 1217 (9th Cir. 1996). However, legal conclusions couched as factual allegations are not given a presumption of truthfulness, and "conclusory allegations of law and unwarranted inferences are not sufficient to defeat a motion to dismiss." Pareto v. FDIC, 139 F.3d 696, 699 (9th Cir. 1998).

2. Analysis

Count 1: Intentional Interference with Business Expectancy Counterdefendants contend that this claim should be dismissed because it is preempted by Arizona's Uniform Trade Secrets Act ("AUTSA"), A.R.S. § 44-407 (2010). (Doc. 25). They argue specifically that the claim is based on the alleged misappropriation of trade secrets, and AUTSA "displaces conflicting tort, restitutionary and other laws of [Arizona] providing civil remedies for misappropriation of a trade secret." § 44-407(A). However, the counterclaim also alleges Counterdefendants' intentional interference through the act of "contact[ing] R & G's customers and distributors and inform[ing] them that DABALASH did not contain the allegedly necessary active ingredient [thereby] ...


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