NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

NATRALITE FILTERS, INC.

AND LTL COLOR

COMPOUNDERS, INC.,

Plaintiffs, Civil Action No. 11-01557 (CCC)

V.

OPINiON

REXEL, INC.; SUMMERS GROUP,

INC.; DAVID MULLANE;

R&R PLASTICS, INC.;

ROSARIO RUSSELL CORONA; AND

SERGIO VALENTE,

Defendants.

CECCHI, District Judge.

This matter comes before the Court by way of two motions to dismiss Plaintiffs’

Complaint (“Complaint”). The motions were filed by Defendant R&R Plastics, Inc. (“R&R”)

and Defendants Corona and Valente, pursuant to Federal Rule of Civil Procedure I 2(b)(6). The

Court has considered the submissions made in support of and in opposition to the instant

motions. No oral argument was heard, Fed. R. Civ. P. 78. Based on the reasons that follow, the

motion to dismiss on behalf of Defendant R&R and the motion to dismiss on behalf of

Defendants Corona and Valente are granted and Plaintiffs’ claims are dismissed without

prejudice. Plaintiffs’ request for leave to amend their Complaint is granted.

I. FACTS AND PROCEDURAL HISTORY

Plaintiff Natralite Filters, Inc. (“Natralite”) manufactures, distributes, and sells light

filters in the United States and internationally. (Compi. ¶ 20.) Natralite is the owner of the

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United States Trademark Registration No. 3,090,644 for the mark NATRALITE for light filters

for fluorescent lamps, which was registered on the Principal Register on May 9, 2006. (Compi. ¶

13, Ex.1.) According to Natralite, it has used the NATRALITE trademark continuously in

commerce in connection with light filters since 1996, (Compi. ¶ 13.) Natralite light filters are

used in shopping centers, department stores, boutiques, museums, libraries, and art galleries.

(Compi. ¶J 23-24.) Plaintiff LTL Color Compounders, Inc. (“LTL”) supplies Natralite with the

compounds used in the manufacturing of NATRALITE light filters for fluorescent lamps.

(Compi. ¶ 3.)

Defendants Rexel, Inc. (“Rexel”), and Summers Group, Inc. (“Summers”), are lighting

suppliers in the United States. (Compi. ¶ 4.) Defendant David Mullane is the President of

Capitol Light, which is a subsidiary of Rexel. (Compl. ¶ 5.) Defendant R&R is a manufacturer

and distributor of lighting diffusers and covers. (Compl. ¶ 26.) Defendant Rosario Russell

Corona is the President of R&R Plastics and Defendant Sergio Valente is the Vice President of

R&R Plastics. (Compi. ¶J 7-8.)

Plaintiffs claim that Defendants supplied Marathon Electrical Contractors, Inc.

(“Marathon”), a lighting contractor, with light filters using the NATRALITE trademark without

authorization from Natralite. (Compi. ¶ 27-3 3.) Marathon supplied and installed the light filters

it purchased from Defendants at a Starwood Hotel (“Starwood”) that was under construction in

Homewood, Alabama. (Compl. ¶ 34-37.) These light filters later failed, melted, and started a

fire at the hotel facility. (Compi. ¶ 38, Plaintiffs’ Opposition Brief at 2.) Following the fire, a

representative from Starwood contacted Plaintiff under the belief that the light filters were

genuine Natralite brand light filters. (Compl. ¶ 39.)

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Plaintiffs claim that the light filters at the Starwood facility were not authentic Natralite

light filters. (Compi. ¶J 39, 44.) Plaintiffs further assert that Defendants did not purchase the

light filters from Plaintiffs, nor were they licensed to use the technology covered by the patents

owned by Plaintiffs. (Compi. ¶ 17, 30.) Plaintiffs also claim that Defendants were not

authorized to sell or supply the light filters that were sold to Marathon using the Natralite mark.

(Compl. ¶ 32.) With regard to Defendants Corona and Valente, Plaintiffs claim that they are

integral to the alleged infringing activities of R&R. (Compi. ¶ 10.)

Plaintiffs filed the instant Complaint on March 14, 2011. On June 28, 2011, Defendant

R&R and Defendants Corona and Valente filed motions to dismiss for failure to state a claim

upon which relief can be granted, under Federal Rule of Civil Procedure 12(b)(6).

II. STANDARD OF REVIEW

For a complaint to survive dismissal pursuant to Federal Rule of Civil Procedure

1 2(b)(6), it “must contain sufficient factual matter, accepted as true, to ‘state a claim to reliefthat

is plausible on its face.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Bell Ati. Corp.

v. Twombly, 550 U.S. 544, 570 (2007)). In evaluating the sufficiency of a complaint, the Court

must accept all well-pleaded factual allegations in the complaint as true and draw all reasonable

inferences in favor of the non-moving party. See Phillips v. County ofAllegheny, 515 F.3d 224,

234 (3d Cir. 2008). “Factual allegations must be enough to raise a right to relief above the

speculative level,” Twombly, 550 U.S. at 555. Furthermore, “[a] pleading that offers ‘labels and

conclusions’ or ‘a formulaic recitation of the elements of a cause of action will not do. Nor does

a complaint suffice if it tenders ‘naked assertion [s]’ devoid of ‘further factual enhancement.”

Iqbal,129 S. Ct. at 1949.

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The burden of proof for showing that no claim has been stated is on the moving party.

Hedges v, US., 404 F.3d 744, 750 (3d Cir. 2005) (citing Kehr Packages, Inc. v. Fidelcor, Inc.,

926 F.2d 1406, 1409 (3d Cir. 1991)). During a court’s threshold review, “[tjhe issue is not

whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to

support the claims.” In re Rockefeller Ctr. Props., Inc., 311 F.3d 198, 215 (3d Cir. 2002).

III. DISCUSSION

Plaintiffs’ Complaint contains claims for trademark counterfeiting, trademark

infringement, false designation of origin, and unfair competition under the Lanham Act, common

law unfair competition, tortious interference with a contractual relationship, and tortious

interference with economic advantage. (See Compi. ¶J 64-105.) Defendants R&R, Corona, and

Valente have moved to dismiss all of Plaintiffs’ claims. The Court now considers each motion to

dismiss in turn.

A. R&R’s Motion to Dismiss

1. Counts One through Four

In counts one and two of the Complaint, Plaintiffs state claims of trademark

counterfeiting and trademark infringement, asserting that Defendants used the NATRALITE

trademark in violation of the Section 32 of the Lanham Act, 15 U.S.C. § 1114, (Compl. ¶J 64-

81.) Count three asserts a claim of false designation of origin and unfair competition in violation

of Section 43(a) ofthe Lanham Act, 15 U.S.C. § 1125(a). (Compl. ¶J 82-89.) Count four asserts

a state law claim for unfair competition. (Compi. ¶j 90-96.)

In its motion to dismiss, R&R argues that Plaintiffs failed to provide any facts in support

of these allegations. (R&R Br. 3.) In particular, R&R claims that it was not a party to any of

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the transactions at issue and that it has never marketed or distributed any products using the

NATRALITE trademark or any name resembling PlaintiffNatralite’s trademark, (R&R Br. 4.)

The Lanham Act “broadly prohibits uses oftrademarks, trade names, and trade dress that

are likely to cause confusion about the source of a product or service. Infringement law protects

consumers from being misled by the use of infringing marks and also protects producers from

unfair practices by an ‘imitating competitor.” Moseley v. V Secret Catalogue, Inc., 537 U.S.

418, 428 (2003) (citations omitted). Section 32 ofthe Lanham Act provides:

Any person who shall, without the consent of the registrant[,j use in commerce

any reproduction, counterfeit, copy, or colorable imitation of a registered mark in

connection with the sale, offering for sale, distribution, or advertising of any

goods or services on or in connection with which such use is likely to cause

confusion, or to cause mistake, or to deceive. . . shall be liable in a civil action by

the registrant.

15 U.S.C. § 1114(1)(a)-(b).

Section 43(a) ofthe Lanham Act provides:

Any person who, on or in connection with any goods or services . . . uses in

commerce any word, term, name, symbol, or device, or any combination thereof,

or any false designation of origin, false or misleading description of fact, or false

or misleading representation of fact, which is likely to cause confusion, or to

cause mistake, or to deceive as to the affiliation, connection, or association. . . or

as to the origin, sponsorship, or approval of. . . goods, services, or commercial

activities,, . shall be liable in a civil action by any person who believes that he or

she is or is likely to be damaged by such act.

15 U.S.C. § 1125(a)(1)(A)-(B)

The Third Circuit has stated that it “measure[s] federal trademark infringement [under

Section 32], 15 U.S.C. § 1114, and federal unfair competition [under Section 43], 15 U.S.C. §

1 125(a)(1)(A), by identical standards,” A & H Sportswear Inc. v. Victoria’s Secret Stores, Inc.,

237 F.3d 198, 210 (3d Cir. 2000). To prove either trademark infringement under Section 32 or

unfair competition under Section 43(a), a plaintiff must establish that: (1) the mark is valid and

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legally protectable; (2) the mark is owned by the plaintiff; and (3) the defendant’s use of the

mark to identify goods or services is likely to create confusion concerning the origin ofthe goods

or services. Checkpoint Sys., Inc. v. C’heck Point Software Techs,, Inc., 269 F.3d 270, 279 (3d

Cir. 2001); A & H Sportswear, Inc., 237 F.3d at 210 (citation omitted).

With respect to New Jersey unfair competition law, it is substantially equivalent to the

federal unfair competition provision contained in Section 43(a) of the Lanham Act. See, e.g.,

Miller Yacht Sales, Inc. v. Smith, 384 F.3d 93, 105 (3d Cir. 2004); American Tel. and Tel. o. v.

Winback and Conserve Program, Inc., 42 F.3d 1421, 1433 (3d Cir, 1994). Accordingly, a

finding of liability under Section 43(a) ofthe Lanham Act leads to a finding ofliability under the

New Jersey unfair competition law. Video Pieiine, Inc. v. Buena Vista Home Entm ‘, Inc., 210

F. Supp. 2d 552, 560-61 (D.N.J. 2002); Nat’l Football League Prop., Inc. v, N.J Giants, Inc.,

637 F. Supp. 507, 519-20 (D.N.J. 1986) (citing SK & F Co. v. Premo Pharm. Lab., Inc., 625 F.2d

1055, 1065 (3d Cir.1980)).

Here, Plaintiff Natralite alleges that it has used the NATRALITE trademark in commerce

since 1996 and that the mark has “acquired a secondary meaning so that any product and

advertisement bearing such trademark is immediately associated by purchasers and the public as

being a product of Natralite.” (Compi. ¶J 13-14,) Plaintiffs further claim that Defendants,

including R&R, supplied Marathon with counterfeit Natralite light filters for installation at the

Starwood Hotel. (Compi. ¶ 37.) Plaintiffs assert that by wrongfully using the NATRALITE

trademark, Defendants have “benefited and profited from Plaintiffs’ outstanding reputation for

high quality products.” (Compl. ¶ 53.)

Defendants argue that Plaintiffs have not identified any transactions in which R&R sold

counterfeit light filters using the NATRALITE trademark. (Def. Br. 4.) In fact, the Complaint

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indicates that Rexel, Inc. sold Marathon the light filters that were ultimately used at the Starwood

Hotel. (Compi. ¶ 28, Ex. 2.) In their opposition, however, Plaintiffs claim that R&R sold the

counterfeit NATRALITE light filters to Rexel. (P1. Opp. 11-12.) Furthermore, Plaintiffs argue

that according to a deposition from Mr. Corona and other documents, including a letter from

Rexel’s Vice President, R&R had been placed on notice of Plaintiffs’ claims. (P1. Opp. 10-12.)

To the extent these additional facts would be sufficient to support Plaintiffs’ arguments,

Plaintiffs may not amend the complaint through statements made in their opposition brief. See

commonwealth of Pa. cx rd. Zimmerman v. Pepsico, Inc., 836 F.2d 173, 181 (3d Cir. 1988).

Plaintiffs are, however, permitted to amend their complaint to detail specific facts relating to

R&R’s use in commerce ofthe NATRALITE trademark.

2. Claims Five and Six

Claims five and six of the Complaint assert causes of action for tortious interference with

a contractual relationship and economic advantage. Plaintiffs claim that Defendants “wrongfully

and intentionally affected the business relationship between Plaintiffs Natralite and LTL” by

“engag[ingj in counterfeiting of goods under Plaintiff Natralite’s NATRALITE trademark,”

which led to the loss of the contract between Plaintiffs NatraLite and LTL. (Compl. ¶J 98-100.)

Plaintiffs further allege that they “had a reasonable expectation of economic benefit from their

business relationship” and that Defendants intentionally interfered with Plaintiffs’ economic

benefit, (Compl. ¶J 102-05.)

In order to establish a claim for tortious interference with a contractual relationship under

New Jersey law, the plaintiffmust show that: “(1) plaintiff had an existing contract or reasonable

expectation of economic benefit or advantage; (2) the defendant knew of the contract or

expectancy; (3) the defendant wrongfully interfered with that contract or expectancy; (4) it is

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reasonably probable that the loss of the contract or prospective economic gain was a result of the

interference; and (5) damages resulted from the interference.” Florian Greenhouse, Inc. v.

CardinallG Coip., 11 F,Supp.2d 521, 525-26 (D.N.J. 1998); see also Printing Mart-Morristown

v. Sharp Elec. Corp., 116 N.J. 739, 75 1-52, (1989).

For a claim of tortious interference with economic advantage, the plaintiff must prove

“(1) that Defendant interfered with some reasonable expectation of economic advantage, (2) the

interference was done intentionally and with malice, (3) the interference caused the loss of the

prospective gain, and (4) but for the interference, there was a reasonable probability that plaintiff

would have received the anticipated economic benefits.” See Printing Mart-Morristown v. Sharp

Elec. Corp., 116 N.J. 739, 751-52 (1989).

The Complaint in this matter asserts that Natralite and LTL have a contractual

relationship. (Compi. ¶J 2, 3, 19.) However, as Defendants have argued, Plaintiffs fail to allege

any facts to support the assertion that the contract between Natralite and LTL was breached or

lost as a result of Defendants’ wrongful interference. Plaintiffs have also not alleged any facts to

support the claim that they lost an economic advantage due to Defendants’ malicious

interference. In fact, no actionable interference with this contract is stated. Accordingly, the

causes of action asserted in Claims V and VI of the Complaint are dismissed. Plaintiffs are

granted leave to amend the Complaint to highlight facts sufficient to sustain the claims of

tortious interference with a contractual relationship and tortious interference with economic

advantage.

B. Corona and Valente’s Motion to Dismiss

With respect to Defendants Corona and Valente, Plaintiffs claim that as corporate officers

of R&R, they “played a significant role in the counterfeiting, trademark infringement, false

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designation of origin and unfair competition, and tortious interference with contractual

relationship and economic advantage.” (P1. Opp. 13.> The Complaint asserts that Defendants

Corona and Valente are the “active, moving and conscious forces behind the alleged infringing

activities ofR&R.” (Compi. ¶ 10.)

It is well-settled that a corporation is a separate entity from its officers and shareholders,

and that “a primary reason for incorporation is the insulation of shareholders from the liabilities

of the corporate enterprises.” State Dep ‘t. of Envtl. Prot. v. Ventron Corp., 94 N.J. 473, 500

(1983). In order to hold a corporate officer liable, a plaintiff must pierce the “corporate veil,”

which requires a showing that: (1) the corporation is organized and is operating as a mere

instrumentality of a shareholder, (2) the shareholder uses the corporation to commit fraud,

injustice or circumvent the law, and (3) the shareholder fails to maintain the corporate identity.

Bd. of Tr. of Teamsters Local 863 Pension Fund v. Foodtown, Inc., 296 F.3d 164, 17 1-72 (3d

Cir. 2002).

A corporate officer can also be held individually liable for his or her intentional torts

without piercing the corporate veil. See Ballinger v. Delaware River Port Auth., 172 N.J. 586,

608 (2002) (individual employees who personally participated in wrongful discharge were

subject to liability); U.S. cx rd. Haskins v. Omega Institute, Inc., 11 F. Supp. 2d 555 (D.N.J.

1998) (corporate officers could be held individually liable for fraudulent and false statements

they made on behalf of corporation); Borecki v, Easter mt ‘1 Mgm ‘t €orp,, 694 F. Supp. 47, 5 9-60

(D.N.J. 1988) (finding that a corporate officer may be held liable for wrongful discharge when he

made all major decisions and many minor decisions affecting the corporation, including whom to

hire and fire); Sunset Financial Resources, Inc. v. Redevelopment Group V LLc’, Nos. 05-2914,

05-2915, 2006 WL 3675384, at *3..6 (D.N.J. Dec. 12, 2006) (“[Ajn individual who personally

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participates in a tort may be held individually liable for that tortious conduct even if that

individual does so on behalf of his employer.”).

Here, Plaintiffs have failed to plead any ofthe necessary elements to pierce the corporate

veil. They have not asserted that R&R is a mere instrumentality of Corona and Valente; that

Corona and Valente use R&R to commit fraud or to circumvent the law; or that Corona and

Valente fail to maintain R&R’s corporate identity.

Instead, Plaintiffs argue that Defendants Corona and Valente should be held individually

liable for their intentional torts. (P1. Opp. 13.) As stated above, case law supports a claim for

individual liability for corporate officers based on their tortious conduct without resort to a

piercing of the corporate veil theory. Nevertheless, in accordance with Part III.A.1 and III.A.2,

supra, a sufficient factual basis is required to sustain Plaintiffs’ claims against Corona and

Valente. Plaintiff is permitted to amend the complaint with respect to all claims against

Defendants Corona and Valente.

IV. Conclusion

Based on the reasons set forth above, the motion to dismiss on behalf of Defendant R&R,

and the motion to dismiss on behalf of Defendants Corona and Valente are granted and

Plaintiffs’ claims are dismissed without prejudice. Plaintiffs’ request for leave to amend their

Complaint is granted. An appropriate Order accompanies this Opinion.

DATED: February 1 1,2012

--

cCLAIRE cCECCHI, U.S.D.J.

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