Tarazi v. Truehope Inc.

958 F. Supp. 2d 428, 2013 WL 3820664, 2013 U.S. Dist. LEXIS 103691
CourtDistrict Court, S.D. New York
DecidedJuly 24, 2013
DocketNo. 13 Civ. 1024(LAK)(JCF)
StatusPublished
Cited by11 cases

This text of 958 F. Supp. 2d 428 (Tarazi v. Truehope Inc.) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Tarazi v. Truehope Inc., 958 F. Supp. 2d 428, 2013 WL 3820664, 2013 U.S. Dist. LEXIS 103691 (S.D.N.Y. 2013).

Opinion

MEMORANDUM AND ORDÉR

JAMES C. FRANCIS IV, United States Magistrate Judge.

Defendants Truehope Inc. (“Truehope”), Open Mind Consulting (“Open Mind”), Dana Ray and Autumn Stringam (togeth[431]*431er, “the Stringams”), and Quintessential Bioseiences, LLC (“Q Sciences”) move to stay this action in deference to an earlier-filed action in the Court of Queen’s Bench of Alberta, Canada. For the reasons that follow, the defendants’ motion is granted. Background

This dispute centers on a series of agreements. The first, a Marketing and Distributorship Agreement, was executed on one side by Truehope, a Canadian corporation (through its CEO Anthony Stephan), and on the other side by the Stringams, who are Canadian citizens residing in Idaho; Ms. Stringam is Mr. Stephan’s daughter. (Marketing and Distributorship Agreement dated July 5, 2012 (“Exclusivity Agreement”), attached as Exh. B to Amended Affidavit of Martin M. Adler dated June 7, 2013 (“Adler Aff.”), at 1; First Amended Complaint (“Am. Compl.”), ¶¶ 8, 10-11; Affidavit of Anthony F. Stephan dated April 11, 2013 (“Stephan Aff.”), attached as Exh. B to Affidavit of David A. Kochman dated April 26, 2013 (“Kochman Aff.”), ¶ 8). This agreement allowed the Stringams “an exclusive, perpetual license to market, sell and distribute” in the United States “private label versions”1 of a “vitamin-mineral supplement[ ]” (the “Product”). (Exclusivity Agreement at 1). The Exclusivity Agreement is governed by the laws of the Canadian province of Alberta, which is where Truehope is located and incorporated. (Exclusivity Agreement at 1).

A few weeks later, Open Mind, a corporation of which the Stringams are officers and shareholders, Mr. Stringam, and plaintiff Micronutrient Solutions, Inc. (“MSI”), a Delaware corporation of which plaintiff Nadia Tarazi is Chief Executive Officer and a shareholder, entered into a Joint Venture Agreement, which assigned the Exclusivity Agreement to the Joint Venture. (Am. Compl., ¶¶ 6-7, 9-11; Memo Agreement between Micronutrient Solutions and Open Mind Consulting dated Aug. 17, 2012 (“Joint Venture Agreement”), attached as part of Exh. C to Adler Aff., Annex A at 2 & Annex C). The Joint Venture Agreement is governed by the laws of New York, which is where MSI has its principal place of business. (Am. Compl., ¶ 7; Joint Venture Agreement, Annex A at 5).

Thereafter, Truehope and Q Sciences executed an agreement allowing Q Sciences to market “branded products” in the United States “through its sales network of independent business owners” (the “Q Sciences Agreement”). (Stephan Aff., ¶ 21; Am. Compl., ¶ 36-37 (emphasis omitted)).

On January 29, 2013, Truehope filed a Statement of Claim in the Court of Queen’s Bench of Alberta against the Stringams, Open Mind, MSI, and Ms. Tarazi. (Statement of Claim dated Jan. 29, 2013 (“Statement of Claim”), attached as Exh. E to Kochman Aff.). According to the Statement of Claim, “it was an express term of the [Exclusivity] Agreement” that the Stringams would not assign that agreement without Truehope’s permission. (Statement of Claim, ¶ 7). Because True-hope allegedly did not consent to any assignment, MSI’s and Ms. Tarazi’s advertising and promotion under the Joint Venture Agreement of “branded products” — that is, products “using the trade name EMPower Plus or the trade name Truehope”'— breached the Exclusivity Agreement. (Statement of Claim, ¶¶8-12). In addition, the Statement of Claim alleges that the Stringams, Ms. Tarazi, Open Mind, and MSI “are utilizing [Truehope’s] trade[432]*432marks in a fashion as to damage the reputation of and the sales of the branded product and the trademarks” without authorization. (Statement of Claim, ¶ 13). Truehope seeks (1) a declaration that the Stringams breached the Exclusivity Agreement, allowing it to be rescinded; (2) a declaration that the assignment of the Exclusivity Agreement “purportedly made ... to Open Mind Consulting Inc., Micro-nutrient Solutions Inc., and Nadia Tarazi is null and void”; (3) a declaration that Ms. Tarazi and MSI have infringed Truehope’s trademarks and an injunction forbidding them from using the trademarks; and (4) damages, costs, and prejudgment interest. (Statement of Claim, ¶ 14). Ms. Tarazi and MSI have filed an application in the Canadian court to dismiss the claim, arguing, among other things, that the action does not have a “real and substantial connection” to the Province of Alberta. (Application by the Defendants, Nadia Tarazi and Micronutrient Solutions Inc. dated March 11, 2013 (“App. to Dismiss”), ¶ 8).

The plaintiffs here — Ms. Tarazi and MSI — filed this action on February 14, 2013. For their part, they allege that Truehope breached the Exclusivity Agreement by entering into the Q Sciences Agreement and by refusing to continue to supply the Product to MSI or to the Stringams. (Am. Compl., ¶¶ 3, 36, 39, 57-60). In addition, the plaintiffs assert that Open Mind and the Stringams breached the Joint Venture Agreement by “signfing] up to become [independent business owners] to sell” Q Science’s version of the Product. (Am. Compl., ¶¶ 4, 41, 100-103). These purported breaches were allegedly accomplished with the knowledge of Q Sciences. (Am. Compl., ¶¶ 37, 42, 45). The plaintiffs allege, in addition to the breaches of contract and certain other claims, (1) that Open Mind and the Stringams breached the fiduciary duty to the plaintiffs imposed upon them by the Joint Venture Agreement (Am. Compl., ¶¶ 68-70); (2) that Q Sciences and Truehope aided and abetted this breach (Am. Compl. ¶¶ 75-78); and (3) that Q Sciences tortiously interfered with MSI’s contractual rights (Am. Compl., ¶¶ 81-85).

The defendants have requested that this action be stayed, “pending the Canadian court’s resolution of [ ] fundamental issues underlying [the] [plaintiffs’ claims against [the defendants] in this action.” (Defendant Truehope Inc.’s Memorandum of Law in Support of Its Motion to Stay and to Enlarge Time to Respond to Plaintiffs’ Complaint (“Truehope Memo.”), at 1; Memorandum of Law of Defendant Quintessential Biosciences, LLC d/b/a Q Sciences in Support of Its Motion to Stay and Enlarge Time to Respond to Plaintiffs’ Complaint (“Q Sciences Memo.”), at 1; Defendant Open Mind Consulting’s Notice of Motion to Stay and Enlarge Time to Respond to Plaintiffs’ Complaint at 1-2; Memorandum Endorsement dated April 30, 2013). More specifically, they argue that, in order for the plaintiffs to succeed on their claims here, “it must first be established that ... [the Stringams] received certain rights from Truehope and that [the] [plaintiffs, in turn received a valid assignment of those rights from the Stringams,” which are issues raised in the Canadian action. (Truehope Memo, at 1; Q Sciences Memo, at 2). In the alternative, Q Sciences suggests that the action be stayed until the Canadian court resolves the motion to dismiss that the plaintiffs in this case have filed in the Canadian action. (Reply Memorandum of Law of Defendant Quintessential Biosciences, LLC d/b/a Q Sciences in Further Support of its Motion to Stay and to Enlarge Time to Respond to Plaintiffs’ Complaint (“Q Sciences Reply”), at 2; App. to Dismiss).

Discussion

A court may “dismiss or stay an action based on the pendency of a related [433]*433proceeding in a foreign jurisdiction,” Ole Media Management, L.P. v. EMI April Music, Inc., No. 12 Civ. 7249, 2013 WL 2531277, at *2 (S.D.N.Y. June 10, 2013) (collecting cases including Landis v. North American Co.,

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Cite This Page — Counsel Stack

Bluebook (online)
958 F. Supp. 2d 428, 2013 WL 3820664, 2013 U.S. Dist. LEXIS 103691, Counsel Stack Legal Research, https://law.counselstack.com/opinion/tarazi-v-truehope-inc-nysd-2013.