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Greenway Nutrients, Inc. v. Blackburn

United States District Court, D. Colorado

March 26, 2014

GREENWAY NUTRIENTS, INC., Plaintiff,
v.
STEVE BLACKBURN, STACY BLACKBURN, DAVID SELAKOVIC, FULFILLMENT SOLUTIONS SERVICES, LLC, ECOWIN, LLC, NEW EPIC MEDIA, LLC, CHRIS KOHLHAGEN, BEA'S HIVE, LLC, VEGALAB, LLC, GRINGO DIABLO HYDRO, GROWER TRUST, LLC, SUPREME GROWERS, LLC, HOOPS ENTERPRISE, LLC, JAMES HALK, DAVE THOMPSON, DAVID Y.S. PARK, and KOO KYUNG-BON, Defendants.

OPINION AND ORDER ADOPTING RECOMMENDATION AND GRANTING IN PART AND DENYING IN PART MOTION FOR LEAVE TO AMEND COMPLAINT

MARCIA S. KRIEGER, Chief District Judge.

THIS MATTER comes before the Court on the Recommendation (#99) by the Magistrate Judge that three Motions to Dismiss (#27, 68, 97), collectively filed by Defendants Steve Blackburn, Stacy Blackburn, David Selakovic, Fulfillment Solutions Services, LLC, Vegalab, LLC, Grower Trust, LLC, Dave Thompson, Josh Gill, Supreme Growers, LLC, and Hoops Enterprise, LLC, be granted.[1] Also before the Court is the Plaintiff's Motion for Leave to File First Amended Complaint (#101).

I. Background

The Complaint (#2) contains extensive factual allegations, many of which are rife with the resentment and hostility that frequently attends a business divorce. The Court only briefly summarizes those allegations here.

The Plaintiff Greenway Nutrients, Inc., is a Colorado corporation that sells plant nutrients and organic pesticides. At some unknown point in time, the Plaintiff identified two high effective agricultural products developed by Defendant Ecowin, LLC, a South Korean entity. The Plaintiff then imported and sold the products under the "Greenway Nutrients" trademark as "No Powdery Mildew" and "No Spider Mites."

Thereafter, the Plaintiff entered into business relationships with Defendant Steve Blackburn and Defendant Fulfillment Solutions Services, whereby Fulfillment agreed to process and fill orders for the Plaintiff's products. In conjunction with this arrangement, the Plaintiff and Defendants entered into a nondisclosure agreement. The Plaintiff disclosed confidential information to Blackburn, Fulfillment, and others, about the details of its business, including who its overseas supplier was. The Complaint alleges that the Defendants breached the nondisclosure agreement and schemed to obtain the Plaintiff's trade secrets.

At some point, the Plaintiff was financially incapable of purchasing product from Ecowin. Defendant Steven Blackburn suggested that his "partner, " Defendant David Selakovic could purchase product for the Plaintiff using his credit card, subject to reimbursement. Selakovic did so.

In March 2012, the Plaintiff and Defendant Ecowin entered into an "exclusive" contract for the distribution of "No Powdery Mildew." However, in November 2012, Ecowin told the Plaintiff that it had obtained other partners in the United States, and that it did not wish to deal with Plaintiff. The Plaintiff alleges that Steve Blackburn and Selakovic contacted Ecowin and interfered with the Plaintiff's relationship with Ecowin.

When the Plaintiff was "cut off" from purchasing from Ecowin, Steve Blackburn held "all of [the Plaintiff's] supplies as hostage at Fulfillment Solutions." The Complaint alleges that the Defendants have since been selling the Plaintiff's "No Powdery Mildew" and "No Spider Mites" products through shell corporations. It further alleges that Steve Blackburn and Selakovic reverse engineered the Plaintiff's "No Spider Mites" product and is selling the counterfeit product.

In April 2013, when the Plaintiff initiated this action, it asserted the following claims: (1) federal civil violations of Racketeer Influenced and Corrupt Organizations Act (RICO) arising under 18 U.S.C. §§ 1962(c) and (d); (2) breach of contract against Defendants Selakovic, Blackburn, Fulfillment, New Epic, and Ecowin; (3) civil conspiracy against all Defendants; (4) common law fraud against all Defendants; (5) unjust enrichment against all Defendants; (6) trademark infringement, 15 U.S.C. § 1114, against all Defendants; (7) false designation of origin arising under 15 U.S.C. § 1125(a), against all Defendants; (8) common law unfair competition against all Defendants; (9) violations of the Colorado Consumer Protection Act (CCPA), C.R.S. § 6-1-101 et seq., against all Defendants; and (10) violations of the Colorado Unfair Practices Act (CUPA), C.R.S. § 6-2-101 et seq., against all Defendants.

Several Defendants, including Steve Blackburn, Stacy Blackburn, David Selakovic, Fulfillment Solutions Services, LLC, Vegalab, LLC, Grower Trust, LLC, Dave Thompson, Supreme Growers, LLC, and Hoops Enterprise, LLC, moved to dismiss (#27, 68, 97) the claims against them pursuant to Fed.R.Civ.P. 8, 12(b)(1), and 12(b)(6). The Defendants argue that the Complaint as a whole represents a "shotgun" pleading in violation of Fed.R.Civ.P. 8; that the Court lacks personal jurisdiction over the out-of-state Defendants; and that as to each count asserted, the Plaintiff fails to state a claim upon which relief can be granted. The motions were referred to the Magistrate Judge.

The Magistrate Judge addressed each of the Defendants' arguments in a detailed Recommendation. With respect to personal jurisdiction, the Recommendation found that the Complaint fails to state a civil RICO claim and therefore the Plaintiff cannot establish jurisdiction over the out-of-state Defendants based on that claim. The Recommendation further found that the Complaint fails to allege facts sufficient to establish personal jurisdiction over Defendants Stacy Blackburn, Grower Trust, Dave Thompson, Hoops Enterprise, Vegalab, or David Selakovic. As to Defendants Steven Blackburn, Fulfillment Solutions Services, and Supreme Growers, the Recommendation found that the Complaint states sufficient facts to extend personal jurisdiction over these Defendants with its reference to a non-disclosure agreement they entered into with the Plaintiff and/or their presence in Colorado.

With regard to the remainder of the claims, the Recommendation found that (1) the Complaint fails to adequately state a claim of civil conspiracy or fraud; (2) the breach of contract claim is improperly pled under Rules 8(a)(2) and 10(b), and should therefore be dismissed; and (3) as to claims for trademark infringement, false designation under 15 U.S.C. § 1125, unfair competition, and violations of the CCPA and CUPA, the Complaint's style of "shotgun" pleading makes it impossible to tell which facts connect to which claims, and therefore these claims are improperly pled under Rule 8 and should be dismissed. The Recommendation found that the only claim sufficiently pled is a claim for unjust enrichment against Defendant Blackburn and Fulfillment Solutions Services, but recommended that the Court decline to exercise supplemental jurisdiction over this claim.

The Plaintiff filed a timely Objection (#99) to the Recommendation. However, Plaintiff makes no specific objection or argument as to any particular finding or conclusion in the Recommendation. Instead, it states that the "sole basis" of the objection is that the Court should grant it leave to amend the Complaint to cure the defects outlined in the Recommendation. The Plaintiff subsequently filed its Motion for Leave to File a First Amended ...


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