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Mutual Industries, Inc. v. American International Industries

United States District Court, E.D. Pennsylvania

May 24, 2017

MUTUAL INDUSTRIES, INC.
v.
AMERICAN INTERNATIONAL INDUSTRIES

          MEMORANDUM

          R. BARCLAY SURRICK, J.

         Presently before the Court is Defendant American International Industries' Motion for Summary Judgment. (ECF No. 30.) For the following reasons, Defendant's Motion will be denied.

         I. BACKGROUND

         Plaintiff Mutual Industries, Inc. is a Pennsylvania corporation that sells beauty supplies. (Am. Compl. ¶¶ 1, 3-6, ECF No. 10.) Defendant American International Industries is the “leading manufacturer and distributor of beauty supply products and skin care products.” (Id. ¶ 11.) This is a diversity action in which Plaintiff alleges that Defendant sought to eliminate Plaintiff from the beauty supply market by tortiously interfering with five distribution contracts that Plaintiff had with three different representative groups. (Id. ¶¶ 2, 11, 12.)

         A. Procedural History

         Plaintiff commenced this lawsuit in the Court of Common Pleas in Philadelphia, Pennsylvania. (Compl., Notice of Removal, Ex. A, ECF No. 1.) Defendant removed the action to this Court pursuant to 28 U.S.C. § 1332 and 28 U.S.C. § 1441. (Notice of Removal ¶ 14.) Defendant filed a motion for a more definite statement. (ECF No. 3.) A Memorandum (ECF No. 8) and accompanying Order (ECF No. 9) were issued, granting in part and denying in part Defendant's motion. Plaintiff subsequently filed an Amended Complaint in compliance with this Order. Defendant filed an Answer to the Amended Complaint. (ECF No. 12.)

         At the conclusion of discovery, Defendant filed the instant Motion for Summary Judgment. (Def.'s Mot., ECF No. 30.) Plaintiff filed a Response (Pl.'s Resp., ECF No. 33), and Defendant filed a reply. (Def.'s Reply, ECF No. 33.) This Motion is now ripe for disposition.

         A. Factual Background

         1.Mastex Industries

         Plaintiff claims that the dispute between it and Defendant stems from an underlying disagreement about Plaintiff's use of the trade name Mastex on some of its products. (Id.) In October 2008, Plaintiff purchased Mastex Health, a division of Mastex Industries, Inc., a company that manufactures professional beauty supplies and at-home healthcare products. (Id.)[1]Defendant subsequently purchased Thermal Spa Products, [2] a separate division of Mastex Industries, without knowledge that Plaintiff had previously purchased a different division of Mastex. (Pl.'s Resp. 4; Ryzman Dep. 52-54, Pl.'s Resp. Ex. 9.)[3]

         In 2010, both Plaintiff and Defendant attended the CosmoProf trade show in Las Vegas, Nevada.[4] (Pl.'s Resp. 2.) At the show, Plaintiff's booth appeared under the name “Mutual Industries Mastex Health” and several of their products were also labeled with this name. (Lipkowitz Dep. 96-97.) According to Plaintiff, at some time around 10:30 a.m. on July 18 (Pl.'s Resp. 6; Lipkowitz Dep. 63, 92), Zvi Ryzman, Defendant's owner, along with its Vice-President Terry Cooper, and Vice-President of Sales, Mark Moesta, approached Plaintiff's booth. (Pl.'s Resp. 4; Lipkowitz Dep. 120; Ryzman Dep. 32.) At the time, Martin Lipkowitz, the National Sales Manager of Plaintiff's beauty division was representing Plaintiff at the booth. (Lipkowitz Dep. 111.) At Plaintiff's booth, there was a confrontation because Plaintiff was displaying a paraffin wax warmer that Ryzman thought Defendant “owned the mold to” and because Plaintiff was using the trade name Mastex that Ryzman also thought Defendant owned. (Ryzman Dep. 44-46, 54; Lipkowitz Dep. 115-116.)

         Cooper entered Plaintiff's booth, and began picking up and examining Plaintiff's display products. (Lipkowitz Dep. 112-13.) Cooper accused Plaintiff of being “unprofessional” and claimed that Plaintiff had no right to display the products under the Mastex name. (Id. at 115.) Cooper took the paraffin wax warmer off a shelf in the back of Plaintiff's booth and said the warmer belonged to Defendant. (Lipkowitz Dep. 115.) Cooper then pulled Plaintiff's label off of the wax warmer, which revealed some writing. (Id.) Lipkowitz claims that after Cooper pulled Plaintiff's label off the wax warmer, he saw that there was something else printed there, but was unsure what it read. (Id. at 117-18.) Lipkowitz took the warmer back from Cooper and put it under the table in Plaintiff's booth. (Id. at 119.) During this time, Moesta was taking pictures of the items Plaintiff had on display. (Id. at 119-20.)

         Ryzman was also involved in the confrontation. According to Lipkowitz, Ryzman “started to scream” at him, so that everyone in the surrounding booths could hear. (Id. at 122.) Ryzman said, “Your boss is a crook and a thief and a cheat and a liar, and he has no right showing these products. He has no right using the name Mastex.” (Lipkowitz Dep. 122.) Ryzman also told Lipkowitz “he should be ashamed of himself” and called him “dishonest” and a disgrace to the industry. (Id.) Ryzman claims the confrontation was not “comfortable, ” but he did not admit that he was yelling. (Ryzman Dep. 48-49.) Ryzman also did not remember if onlookers watched the incident, but said that it was unlikely because the confrontation happened early in the morning. (Id. at 49.) Finally, Lipkowitz asked Ryzman and the others to leave, to which Ryzman responded that his lawyers would be in contact with Plaintiff. (Lipkowitz Dep. 125.) Ryzman testified that the entire confrontation lasted about two or three minutes. (Ryzman Dep. 48.) A short time later, a representative from Defendant delivered a cease and desist letter to Lipkowitz asking Plaintiff to cease marketing its products under the Mastex trademark. (Pl.'s Resp. Ex. 3, Cooper Letter Ex.; Lipkowitz Dep. 130.)

         Following this confrontation, a few individuals from other companies, including Irv Morgenstern, Ron Grazulo, and a client from Texas, approached Lipkowitz and told him that Ryzman had been discussing the incident, and had been making disparaging comments about Plaintiff and Lipkowitz. (Lipkowitz Dep. 62-68, 74-86; Lipkowitz Aff. 40-41.) Lipkowitz claims that he was told by a “couple of people that were around [Defendant's] booth that the owner was telling people that he doesn't want any of their rep groups to sell or represent Mutual Industries.” (Lipkowitz Dep. 62.)

         Ryzman admits that after the confrontation at Cosmoprof, he learned that Plaintiff had purchased the right to use the name “Mastex Health.” (Ryzman Dep. 57-58.) In fact, on September 21, 2010, Plaintiff and Defendant entered into a settlement agreement under which the parties agreed that Plaintiff was permitted to use the name “Mastex Health.” (Def.'s Answer, Ex. B.)

         2.BTB Sales & Marketing, Inc. Contracts

         BTB Sales & Marketing, Inc. (“BTB”) represents manufacturers of professional beauty products. (Edward Berger Aff. ¶ 3, Def.'s Mot. Ex. G.) BTB is comprised of two separate divisions that are separate companies: the northeast division and the southeast division. (Eric Berger Dep. 12-13, Def.'s Mot. Ex. H.) Both divisions are owned by Eric Berger, Edward Berger, and Frank Turchi. (Eric Berger Dep. 12-13; Lipkowitz Dep. 26-27.) On March 1, 2010, Plaintiff entered into a manufacturer's representative agreement with BTB Northeast and BTB Southeast whereby BTB agreed to market and sell Plaintiff's various product lines. (Pl.'s Resp. Ex. 1, BTB Northeast Contract; Pl.'s Resp. Ex. 2, BTB Southeast Contract; Lipkowitz Dep. 34.) BTB also represented some of Defendant's products at that time. (Eric Berger Dep. 22-23.)

         At the 2010 Cosmoprof show, Eric Berger witnessed from a distance the “verbal standoff” between Plaintiff and Defendant. (Eric Berger Dep. 24, 28.) Eric Berger believed that the argument was about Plaintiff using the name Mastex on some of its products. (Eric Berger Dep. 24.) After discussing the argument between Plaintiff and Defendant with the other BTB owners, BTB determined that it was possible that issues between Plaintiff and Defendant would continue to arise in the future. (Eric Berger Dep. 25, 27-28, 31-32.) At Cosmoprof, Eric Berger and Frank Tucci discussed what had happened between Plaintiff and Defendant with Defendant's employees. (Id. at 31-32.) Then, BTB determined that it was in its best interest to stop representing Plaintiff's products. (Id. at 32.) BTB informed Defendant that BTB would no longer be representing Plaintiff's products. (Id. at 32-33.) On July 20, 2010, BTB terminated its agreement with Plaintiff for the Northeast region. (Pl.'s Resp. 7; Lipkowitz Dep. 43.) According to Edward Berger, BTB's decision to discontinue its agreement with Plaintiff was “made solely by BTB, and was not influence[d] in any way by [Defendant].” (Edward Berger Aff. ¶ 11.) Eric Berger explained that BTB's decision was based on BTB's “feelings of just that [Cosmoprof] show and [Plaintiff and Defendant's] argument and things like that.” (Eric Berger Dep. 34.)

         On March 1, 2011, BTB renewed its one-year contract with Plaintiff for the Southeast, through Eric Berger. (Pl.'s Resp. 9.) One month later, on April 1, 2011, BTB terminated the renewed contract and stopped representing Plaintiff in the Southeast. (Lipkowitz Dep. 43, 135.) BTB decided to “disengage[] completely” from representing Plaintiff after BTB heard from its customers that Plaintiff was pursuing a lawsuit against Defendant. (Eric Berger Dep. 41-42.) Eric Berger testified that no one from BTB ever spoke to Defendant about the current lawsuit. (Eric Berger Dep. 42-43.)

         3.VNC Contracts

         VNC Sales & Marketing (“VNC”) represents manufacturers of professional beauty products. (Coleman Dep. 10, Def.'s Mot. Ex. C.) VNC is made up of five territories, which are each separate legal entities controlled by either Charlie Coleman or Kevin Van Nest. (Id. at 10, 37.) Coleman owns a majority share in and operates VNC Northeast and VNC Midwest. (Id. at 37-38; Van Nest Dep. 10-11, Def.'s Mot. Ex. E.) Van Nest owns a majority share in and operates VNC Southwest, VNC Westcoast, and VNC Southeast. (Van Nest Dep. 10-11.) VNC represents Defendant's product lines in the northeast, midwest, and southwest. (Coleman Dep. 12-13.) VNC represented many of these lines in 2010. (Id.)

         On October 1, 2010, Plaintiff and VNC Northeast entered into a contract whereby VNC agreed to represent Plaintiff's products in the northeast. (Pl.'s Resp. Ex. 5.) On November 1, 2010, VNC Westcoast also entered into a contract with Plaintiff, agreeing to represent Plaintiff's products throughout the west coast. (Pl.'s Resp. 8; Pl.'s Resp. Ex. 4.) On March 19-20, 2011, Plaintiff appeared at the Northeast Beauty Representatives Association (“NeBRA”) Eastern Buying Conference Trade Show under the VNC banner because VNC Northeast was representing Plaintiff at the time. (Lipkowitz Aff. ¶¶ 53-54.)

         On April 1, 2011, Plaintiff received a letter from Coleman and Van Nest of VNC. (Pl.'s Resp. Ex. 6.) The letter informed Plaintiff that VNC was terminating its relationships with Plaintiff “as to all lines and for all purposes effective April 1, 2011.” (Pl.'s Resp. Ex. 6.) The letter did not cite a reason for the termination. (Id.) According to Coleman, the termination letter was sent because Plaintiff's product line “was just not generating enough, ” and VNC's representatives needed to concentrate on the larger lines. (Coleman Dep. 27-28.) Coleman decided that VNC would stop representing Plaintiff's products in the northeast region. (Coleman Dep. 31, 33.) Coleman said his decision was not discussed with Defendant. (Coleman Dep. 32-33.) John Madia, the territory manager for VNC Westcoast (Coleman Dep. 10-11), decided to stop representing Plaintiff's products on the west coast.[5] (Van Nest Dep. 16.) According to Madia, VNC's decision to terminate its agreement with Plaintiff “was made solely by VNC, in the best interests of the company, and was not controlled by [Defendant].” (Def.'s Ex F, Madia Aff. ¶ 8.) Lipkowitz testified that David Harrison, John Madia, and two female representatives each told him that VNC had to resign Plaintiff's product line because Coleman had received a call from Defendant “saying that we would suggest that you no longer represent Mutual Industries.” (Lipkowitz Dep. 157-59, Lipkowitz Aff. ¶ 60.)

         4. CFN Contract

         CFN Beauty Representation or CFN Sales and Marketing (“CFN”) represents manufacturers of professional beauty products. (Cohen Aff. ¶ 3, Def.'s Mot. Ex. J; Cohen Dep. 8, Def.'s Mot. Ex. K.) CFN is a partnership owned by Charles Cohen, Steven Nutile, and Gary Fishkin. (Cohen Dep. 8.) CFN represents some of Defendant's brands in the northeast. (Cohen Dep. 11.) On July 16, 2010, at Cosmoprof, Cohen visited Plaintiff's booth, and according to Lipkowitz, expressed interest in representing Plaintiff's products in the Midwest region. (Pl.'s Resp. 4; Lipkowitz Aff. ¶¶ 26-27; Lipkowitz Dep. 168-69.) Cohen allegedly told Lipkowitz “I would like to have [Plaintiff's product line] for the Midwest, ” and agreed to send Lipkowitz a contract. (Lipkowitz Dep. 169.) Cohen says that no such interest was ever expressed. (Cohen Dep. 17.) A few days later, Cohen informed Plaintiff via telephone that CFN would not represent Plaintiff's product line. (Pl.'s Resp. 7; Lipkowitz Aff. ¶ 49; Cohen Dep. 19.) Lipkowitz claims Cohen said “we would love to represent you in the midwest, but a lot of us reps are under pressure from [Defendant] not to be involved with you.” (Lipkowitz Dep. 170.) Cohen again denied making any such statements, and said CFN declined to represent Plaintiff's product line because Cohen was not interested in doing business with Lipkowitz. (Cohen Dep. 19-20.) ...


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