U.S. District Court, WDNY
Energy Brands Inc. v. Jorgensen
Background: Plaintiff Energy Brands Inc., doing business as Glaceau, commenced an action against defendants Jorgensen Farms Inc., Dexter Jorgensen, Noreen Jorgensen, Warren Jorgensen and Ben Baldwin, all sued individually and doing business as Jorgensen Farms and Food Waste Recycling Systems. The plaintiff, who is in the business of manufacturing and selling beverage products including vitamin water, asserts claims for breach of contract, fraud, violations of the Lanham Act and violations of New York’s General Business Law. The plaintiff’s claims arise as a result of a contract it made with Dexter, as principal for Jorgensen Farms, to remove and destroy products that had been designated as “off-spec” and no longer appropriate for sale and consumption.
The plaintiff asserts that instead of destroying the expired product as agreed to in the contract, the Jorgensen defendants conspired with the Avers defendants and the Hoffmans defendants to resell the expired product to various retail stores in New York. The plaintiff commenced this action after discovering that the expired product was being resold in retail stores throughout New York and elsewhere. The Jorgensen defendants move to dismiss the complaint for lack of personal jurisdiction and, alternatively, to transfer venue.
The Jorgensen defendants reside in South Dakota, and the Avers defendants are in Illinois. The contract at issue was to be performed, at least in part, in New York.
Ruling: Count VII of the plaintiff’s complaint is dismissed for failure to state a claim, and the Avers and Hoffmans defendants’ cross-claims are dismissed without prejudice. However, the remaining motions to dismiss or transfer venue are denied in all respects. Because the plaintiff has made a prima facie showing that all of the Jorgensen defendants are subject to New York’s long-arm jurisdiction, the court finds it unnecessary to address whether they are also “doing business” in New York within the meaning of CPLR §301. Due process is not offended by asserting jurisdiction over the Jorgensen defendants.
While each defendant’s role in the purported joint venture remains to be seen after discovery, the allegations in the complaint are sufficient to state a claim for liability against each of the Jorgensen defendants under a joint venture theory. Additionally, the complaint adequately alleges that the Jorgensen defendants were part of a conspiracy to distribute the expired vitamin water back into New York, in violation of their contractual obligations and the Lanham Act. If that conspiracy is proven, the acts of each co-conspirator will be attributable to all members of the conspiracy, according to the court.
The motion for partial dismissal of Count V is also denied. Count V alleges deceptive business practices under §349 of New York’s General Business Law, and seeks damages under §349 and injunctive relief under §360-L. Since the §360-L relates only to a remedy, and not the underlying claim itself, the court finds it unnecessary to address the issue of whether part of the remedy is now moot. That issue can be addressed at a later point in the litigation.
Christopher J. Belter of Goldberg Segalla LLP for the plaintiff; Lawrence J. Vilardo of Connors & Vilardo LLP for the defendants