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TheECheck.com v. NEMC Financial Services Group Inc.

United States District Court, S.D. New York

June 16, 2017

THEECHECK.COM, LLC, Plaintiff,
v.
NEMC FINANCIAL SERVICES GROUP INC., CYBERBOX TECHNOLOGY, INC., ELLINGTON PICHARDO, PRESLEY MARTINEZ and OJAY MARTINEZ-GIL, Defendants.

          MEMORANDUM AND ORDER

          P. Kevin Castel United States District Judge.

         Under Rule 55(a), Fed. R. Civ. P, a party defaults when it “has failed to plead or otherwise defend” against a judgment for affirmative relief. “It is an ancient common law axiom that a defendant who defaults thereby admits all well-pleaded factual allegations contained in the complaint. However, it is also true that a district court need not agree that the alleged facts constitute a valid cause of action.” City of N.Y. v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 137 (2d Cir. 2011) (internal citation and quotation marks omitted). “[P]rior to entering default judgment, a district court is ‘required to determine whether the [plaintiff's] allegations establish [the defendant's] liability as a matter of law.” Id. (alterations in original) (quoting Finkel v. Romanowicz, 577 F.3d 79, 84 (2d Cir. 2009)). “Accordingly, a court must consider whether the complaint alleges enough facts to state a claim to relief that is plausible on its face, and find it lacking where the complaint tenders naked assertions devoid of further factual enhancement.” Belizaire v. RAV Investigative & Sec. Servs. Ltd., 61 F.Supp.3d 336, 344 (S.D.N.Y. 2014) (Oetken, J.) (citing Ashcroft v. Iqbal, 556 U.S. 662 (2009); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)).

         Plaintiff TheECheck.com, LLC (“ECheck”) has filed two motions for entry of default judgment. The first motion is made against the corporate defendants, NEMC Financial Services Group Inc. (“NEMC”) and Cyberbox Technology, Inc. (“Cyberbox”). (Docket # 29.) The second motion is made against two of the three individual defendants, Ellington Pichardo and Ojay Martinez-Gil. (Docket # 37.) ECheck has filed affidavits of service as to these defendants, and the Clerk has issued certificates of default against them. (Docket # 19-20, 24-25, 28, 35-36.)

         The Complaint includes one claim of false advertising under the Lanham Act and six claims under New York common law. Subject matter jurisdiction is premised on federal question jurisdiction over the Lanham Act claim. (See Docket #16 (letter from ECheck disclaiming allegation of diversity jurisdiction); Compl't ¶ 12 (asserting federal question jurisdiction).)

         For the reasons that will be explained, ECheck's motion for entry of default judgment is granted solely against NEMC as to liability for ECheck's claim under the Lanham Act and its breach of contract claim. It is denied in all other respects.

         BACKGROUND.

         According to the Complaint, “Defendants own, operate and/or control” businesses that compete with ECheck, including NEMC and Cyberbox. (Compl't ¶ 2.) ECheck alleges that in April 2012, Pichardo executed an agreement with ECheck on behalf of NEMC, which required NEMC to pay $100, 000 to ECheck. (Compl't ¶¶ 46-47.) It alleges that NEMC stopped making its required payments, and still owes $60, 000 to ECheck. (Compl't ¶¶ 48-49.)

         Allegedly, the undifferentiated “Defendants” then launched “a smear campaign” to steer business away from ECheck and toward NEMC and non-party World Credit Express. (Compl't ¶ 43.) The Complaint alleges, with no supporting allegation, that defendant NEMC is the alter ego of the three individual defendants. (Compl't ¶ 11.)

         ECheck's claims principally involve a negative comment left on website called Ripoff Report, which apparently publishes consumer reviews. ECheck alleges that defendants “commenced and orchestrated a systematic pattern of online harassment and disparagement” based on this negative review. (Compl't ¶¶ 4, 27 & Ex. A.) On May 20, 2013, a reviewer using the name “Nemc - New York New York” posted negative comments about ECheck to the Ripoff Report. (Compl't Ex. A.) The review states in full:

Carlos Santini and Andre Rosa where [sic] always available and everything was no issue until we started putting business to them. First issue was that they were having an issue with one of their accounts and advised us to continue to processing. I want to clear up that what we did with them was check processing not credit card processing. Long story short according to them the accounts were frozen and I would receive my funds as soon as bank released them which would be a couple of months. Here I am over a year out and I have not been able to get a concrete answer from any one of these ripoff artists who once again were always available. Banks do not hold funds for this long. I honestly don't know who they are trying to BS.. Also if you guys think you can intimidate people cause “zeus” was accused of murder.. I could careless.. [sic] Pay up and stop the bulls**t

(Compl't Ex. A.)

         Ripoff Report posted a rebuttal from “Jesus aka Zeus Vega / TheECheck.com / 1-855-403-3855, ” which asserted that the company was “completely compliant with all legal governances, policies and procedures in the merchant processing arena, ” with “unprecedented” customer service. (Compl't Ex. A.) An author identified as “Nemc” responded, stating that, “This response by Jesus is like a taunt.” (Compl't Ex. A.) The “Nemc” response then described three telephone calls to TheECheck.com, and being placed on hold for more than 10 minutes each time without receiving an answer. (Compl't Ex. A.) The Complaint alleges, upon information and belief, that “Defendants” published these comments “to hundreds of third parties, ” including those doing business with ECheck. (Compl't ¶ 31.)

         On the basis of these “Nemc” posts to Ripoff Report, ECheck brings claims of 1.) false advertising under the Lanham Act, 15 U.S.C. § 1125(a)(1)(B), 2.) trade libel and commercial disparagement, 3.) common law unfair competition, 4.) tortious interference, and 5.) breach of non-solicitation agreement. (Compl't ¶¶ 55-80, 88-90.) It also alleges breach of contract and unjust enrichment based on NEMC's failure to pay $60, 000 allegedly owed to ECheck. (Compl't ¶¶ 81-90.)

         DISCUSSION.

         I. ECheck's Motion Is Denied as to Any Individual Defendant.

         As to the individual defendants, the Complaint engages in impermissible group pleading, and does not allege facts to show that the corporate defendants are the alter egos of the individual defendants. Moreover, its allegations against the individual defendants are conclusory and fail to allege specific conduct that supports a claim for relief against them.

         First, the Complaint engages in impermissible group pleading. “Although Fed.R.Civ.P. 8 does not demand that a complaint be a model of clarity or exhaustively present the facts alleged, it requires, at a minimum, that a complaint give each defendant ‘fair notice of what the plaintiff's claim is and the ground upon which it rests.'” Atuahene v. City of Hartford, 10 Fed.Appx. 33, 34 (2d Cir. 2001) (summary order) (quoting Ferro v. Ry. Express Agency, Inc., 296 F.2d 847, 851 (2d Cir. 1961)). A complaint fails to give fair notice when it “lump[s] all the defendants together in each claim and provid[es] no factual basis to distinguish their conduct . . . .” Id. ECheck's allegations generally attribute misconduct to the “Defendants” collectively, and do not differentiate between the five defendants. (See, e.g., Compl't ¶ 11 (“Defendants acted in concert or individually in a covert scheme and/or conspiracy to harass and defame Plaintiff.”); Compl't ¶ 26 (“Defendants have posted taunting material and defamatory statements . . . .”); Compl't ¶ 43 (“Defendants began a smear campaign intended to drive Plaintiff out of business.”); Compl't ¶ 53 (alleging that “Defendants” published false and misleading statements); Compl't ¶ 86 (“Defendants have materially breached the parties' agreement . . . .”).) For key factual allegations, the Complaint attributes conduct to defendants “Pichardo, Presley and/or Ojay, ” with the use of the phrase “and/or” impliedly acknowledging that one or more defendant may have played no role in the alleged activity. ...


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