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Salonclick LLC v. Superego Management LLC

United States District Court, S.D. New York

January 18, 2017

SALONCLICK LLC d/b/a MIN NEW YORK, Plaintiff,
v.
SUPEREGO MANAGEMENT LLC and MINDY YANG, Defendants.

          MEMORANDUM OPINION AND ORDER

          KIMBA W. WOOD United States District Judge

         Plaintiff, Salonclick LLC d/b/a Min New York ("MiN NY"), brings this action against its former independent contractor, Defendants Mindy Yang and SuperEgo Management LLC, for trademark infringement and causes of action related to Defendants' unauthorized use of Plaintiffs domain names and social media accounts. Defendants move to dismiss Plaintiffs causes of action for replevin, conversion, and trespass on the ground that Plaintiff cannot have a property right in domain names or social media accounts. Defendants also move to dismiss Plaintiffs breach of fiduciary duty cause of action for failing to state a claim. For the reasons set forth below, Defendants' motion to dismiss is GRANTED in part and DENIED in part.

         I. BACKGROUND[1]

         Salonclick LLC was founded by Chad Murawczyk in 1999, and at all times he has been the sole owner. Am. Compl. ¶ 7, ECF No. 16. Salonclick LLC has done business under the name "Min New York, " through which it has manufactured and sold hair color, hair care, and skin care products. Id. MiN NY also sells fragrenences and is an "innovative manufacturer, distributor, retailer and curator that specializes in formulating and identifying exceptional fragrance and grooming products for both men and women." Id.¶3. MiN NY has utilized a variety of website domain names including www.mensgroomingessentials.com, id. ¶ 7, and www.inventoryofexperiences.com, id. ¶ 27. Since at least 2007, MiN NY has utilized the phrase "The Art of Living" as a tagline in packaging, advertising, and online. Id. ¶ 18. In 2014, MiN NY launched a house brand of perfumes called "Scent Stories, " for which MiN NY has been awarded a trademark. Id. ¶¶ 16-17 & Ex. A. Murawczyk also ran www.newyorkheart.org and its corresponding Facebook page, a vehicle for advocating against ivory poaching, which has been affiliated with MiN NY to promote it as a "socially responsible and concerned business." Id. ¶ 24.

         MiN NY hired Yang, through her company SuperEgo, as an independent contractor to assist with "graphic design, public relations, and marketing, particular social media." Id. ¶¶ 9, 10. The business relationship deteriorated, see Id. ¶ 12, and, in December 2015, Murawczyk told Yang that he would no longer be needing her services, id. ¶ 13. In retribution, Yang used her access to MiN NY's website and social media accounts for Yang's own benefit. Id. ¶ 15. Yang created a new online business www.theartofliving. earth, id. ¶ 21, and redirected MiN NY's websites-including www.mensgroomingessentials.com, www.inventoryofexperiences.com, and www.newyorkheart.org -to Yang's website, id. ¶¶ 26-28. Yang has also used MiN NY's social media pages-such as the Twitter page @ScentStories and the New York Heart Facebook page-to promote Yang's new online business. Id. ¶¶22, 23, 25. For instance, a post on the @ScentStories Twitter account told a customer to write to the e-mail address hello@TheArtOfLiving.Earth, an e-mail address for Yang's new business, for invitations to special events. Id. ¶ 21 & Ex. B. Yang also created her own domain name, www.mensgroomingessentials.earth, which redirected to www.theartofliving.earth. Id. ¶28.

         This action was filed in March 2016 in New York State Supreme Court and was timely removed to this court in April. See ECF No. 1-2. On May 25, 2016, Defendants filed a motion to dismiss pursuant to Federal Rule 12(b)(6). ECF No. 14. The case was reassigned to the undersigned on November 22, 2016.

         II. LEGAL STANDARD

         In order to survive a Rule 12(b)(6) motion to dismiss, a plaintiff must plead sufficient factual allegations "to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is facially plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The Court accepts as true all well-pleaded factual allegations and draws all reasonable inferences in favor of the non-moving party. See Famous Horse Inc. v. 5th Ave. Photo Inc., 624 F.3d 106, 108 (2dCir. 2010).

         III. DISCUSSION

         Defendants move to dismiss count one (replevin), count two (conversion), and count seven [2] (trespass) on the ground that Plaintiff fails to allege a cognizable property or possessory interest in the domain names and social media accounts that were allegedly taken unlawfully. Def. Mem. 4, ECF No. 15. Further, Defendants move to dismiss count eight (breach of fiduciary duty) for failure to state a claim. Id. at 6.

         A. Replevin, Conversion, and Trespass

         Plaintiff alleges that Defendants have committed replevin and conversion by "wrongfully, without authority or permission, tak[ing] MiN NY's assets, to wit, the @ScentStories Twitter account, the inventoryofexperiences.com domain name, the newyorkheart.org domain name, and the New York Heart Facebook page, " Am. Compl. ¶¶ 31, 34, and that Defendants have committed trespass by accessing "without authorization ... multiple computer services which rightly belong to MiN NY, " id. ¶ 62, which also are violations of criminal law, id. ¶ 63. Defendants argue that Plaintiff cannot have a cognizable property or possessory interest in access to domain names or social media accounts, and thus that Plaintiff cannot state a claim. Def. Mem. 4, ECF No. 15.

         In 2006, the Second Circuit Court of Appeals certified to the New York Court of Appeals the question "whether electronic data, computer programs, or electronic data saved in computer programs can support a claim for conversion under New York law." Thyroff v. Nationwide Mut. Ins. Co., 460 F.3d 400, 407 (2d Cir.). In its answer, New York Court of Appeals noted the long-standing general rule that an action for conversion cannot normally be brought with respect to intangible property, as well as the "merger" doctrine exception, which recognizes "that an intangible property right can be united with a tangible object for conversion purposes, " such as a stock certificate for the ownership of a stock share. Thyroff v. Nationwide Mut. Ins. Co., 8 N.Y.3d 283, 289 (2007) (citing Agar v. Orda, 264 N.Y. 248, 251 (1934)). The New York Court of Appeals concluded that the time to recognize conversion of intangible property "has arrived": "It cannot be seriously disputed that society's reliance on computers and electronic data is substantial, if not essential. Computers and digital information are ubiquitous and pervade all aspects of business, financial and personal communication activities." Id. at 291-92. The New York Court of Appeals concluded:

[T]he tort of conversion must keep pace with the contemporary realities of widespread computer use. We therefore answer the certified question in the affirmative and hold that the type of data that Nationwide allegedly took possession of-electronic records that were stored on a computer and were indistinguishable from printed documents-is subject to a claim of conversion in New York. Because this is the only type of intangible property at issue in this case, ...

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