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Toyrrific, LLC v. Edvin Karapetian

August 16, 2012

TOYRRIFIC, LLC, PLAINTIFF,
v.
EDVIN KARAPETIAN, AN INDIVIDUAL, EDWARD MINASYAN, AN INDIVIDUAL, LENA AMERKHANIAN, AN INDIVIDUAL, AND EDO TRADING, INC., A CALIFORNIA CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: Otis D. Wright, II United States District Judge

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS [24]

I.INTRODUCTION

Defendants Edvin Karapetian, Edward Minasyan, Lena Amerkhanian, and EDO Trading, Inc. move to dismiss Plaintiff Toyrrific, LLC's Complaint under Federal Rules of Civil Procedure 12(b)(6) and 12(b)(1), and for a more definite statement under Rule 12(e). (ECF No. 24.) For the following reasons, the Court GRANTS in part and DENIES in part Defendants' motion.*fn1

II.FACTUAL BACKGROUND

Toyrrific is a leader in the manufacturing, selling, and marketing of specific types of toys. (Compl. ¶ 8.) It also operates HobbyTron, which sells toys through its website, HobbyTron.com. (Id.)

Karapetian is a former Toyrrific employee who, along with Minasyan, allegedly stole Toyrrific's products, trade dress, copyrighted materials, trademarks, and trade secret information to establish a competing business, HobbyChase. (Compl. ¶¶ 6, 11--15.) HobbyChase operated through the website HobbyChase.com, for which Toyrrific alleged Karapetian and Minasyan used the same platform, design, content, product descriptions, photography, and graphics that Toyrrific used for HobbyTron.com. (Compl. ¶ 15.)

As a result of Karapetian and Minasyan's alleged infringement, Toyrrific filed an action against Karapetian and Minasyan in August 2010 for copyright infringement and other claims related to the unlawful interference with Toyrrific's company. Toyriffic*fn2 v. Karapetian ("Toyriffic I"), No. CV 10-5813-ODW(Ex) (C.D. Cal. Aug. 5, 2010). On November 24, 2010, this Court issued a preliminary injunction in Toyriffic I that enjoined Karapetian and Minasyan from continued infringement of HobbyCase's intellectual property. (Compl. ¶ 16.) The parties ultimately resolved Toyriffic I on December 12, 2011, through the execution of a Settlement Agreement and Mutual General Release ("Agreement").

By the Agreement, Karapetian and Minasyan agreed to "cease all operations of the business known as HobbyChase.com" and comply with the Court's preliminary injunction, which specifically prevented Karapetian and Minasyan's (and any of their associates') use of the HobbyChase trademark and continuation of the website HobbyChase.com, or any similar website. (Agreement ¶ 3.) Except for claims arising out of the Agreement, the parties also agreed to "absolutely, forever and fully" discharge each other and their respective agents "from all claims, administrative claims, demands, and/or causes of action heretofore or hereafter arising out of, connected with, or incidental to [Toyriffic I]." (Agreement ¶ 4.)

In executing the Agreement, the parties expressly disclaimed that they had not relied on any "statement, representation, or promise by the Parties" regarding any fact relied upon in entering into the Agreement, but instead relied solely "upon their own investigation, legal counsel and judgment." (Agreement ¶ 7(a).) The parties further agreed that "each Party is aware that it may hereafter discover claims or facts in addition to or different from those they now know or believe to be true with respect to the matters related" to the Agreement, but that all parties nevertheless intended "to fully, finally, and forever settle and release all such matters, and all claims relative thereto, which do now exist, may exist, or heretofore have existed with regard to the dispute." (Agreement ¶ 7(d).)

Toyrrific filed this subsequent action on May 23, 2012. Toyrrific now alleges that Defendants have infringed upon Toyrrific's business in direct violation of the Agreement. (Compl. ¶ 21.) Specifically, Toyrrific contends Defendants formed EDO Trading, a new business that infringes upon Toyrrific's products through the operation of a new website, airsoftrc.com. (Compl.¶ 20.) Toyrrific alleges airsoftrc.com is nearly identical to HobbyChase.com, and was formed prior to the execution of the Agreement (November 24, 2010), but after this Court entered the preliminary injunction in Toyriffic I (December 12, 2011). (Compl.¶ 19--21.) In spite of the recitations in the Agreement, Toyrrific maintains that in agreeing to settle Toyriffic I, it relied on Defendants' representations that they would not continue infringement. (Compl.¶ 19.)

The Complaint names the same two Defendants as the prior action (Karapetian and Minasyan), as well as two new Defendants: Lena Amerkhanian, who is alleged to be Minasyan's girlfriend, and EDO Trading, a corporation alleged to have been formed by Minasyan, Karapetyan, and Amerkhanian prior to the execution of the Agreement. (Compl. ¶ 20.) Defendants now move to dismiss Toyrrific's Complaint in its entirety.

III.LEGAL STANDARD

Dismissal under Rule 12(b)(6) can be based on "the lack of a cognizable legal theory" or "the absence of sufficient facts alleged under a cognizable legal theory." Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). A complaint need only satisfy the minimal notice pleading requirements of Rule 8(a)(2)-a short and plain statement-to survive a motion to dismiss for failure to state a claim under Rule 12(b)(6). Porter v. Jones, 319 F.3d 483, 494 (9th Cir. 2003); Fed. R. Civ. P. 8(a)(2). For a complaint to sufficiently state a claim, its "[f]actual allegations must be enough to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). While specific facts are not necessary so long as the complaint gives the defendant fair notice of the claim and the grounds upon which the claim rests, a complaint must nevertheless "contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

Iqbal's plausibility standard "asks for more than a sheer possibility that a defendant has acted unlawfully." Id. Rule 8 demands more than a complaint that is merely consistent with a defendant's liability-labels and conclusions, or formulaic recitals of the elements of a cause of action do not suffice. Id. The determination whether a complaint satisfies the plausibility standard is a "context-specific ...


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