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Wellness Publishing v. Barefoot

January 8, 2008


The opinion of the court was delivered by: Joel A. Pisano United States District Judge


Presently before the Court is a motion by defendants Direct Marketing Concepts, Inc. ("DMC"), ITV Direct, Inc. ("ITV"), Kevin Trudeau ("Trudeau") and Shop-America (USA) L.L.C. ("Shop America") (collectively, "Defendants") to dismiss the Second Amended Complaint ("SAC") pursuant to Federal Rule of Civil Procedure 12(b)(1), 12(b)(6)*fn1 and 9(b). Also before the Court is a motion by plaintiffs Wellness Publishing ("Wellness"), Holt, M.D. Consulting, Inc. ("Holt Consulting"), Nature's Benefit, Inc., and Stephen Holt, M.D. ("Holt," collectively with the other plaintiffs "Plaintiffs") to compel mediation pursuant to Federal Rule of Civil Procedure 16 and Local Rule 301.1. For the reasons set forth below, Plaintiffs' motion to compel mediation is denied, and Defendants' motion to dismiss is granted.

I. Background

A. Factual Background*fn2

Plaintiff Holt is a medical doctor and, according to Plaintiffs, is an internationally known authority on dietary nutritional supplements. SAC at ¶ 1, 16. He is an author of academic and clinical research articles, a medical researcher, and a college professor. Id. He has higher training in clinical pharmacology, nutrition, and therapeutics. Id.

Plaintiffs Holt Consulting and Nature's Benefit, Inc. are New Jersey corporations, and plaintiff Wellness Publishing is a wholly-owned subsidiary of Holt Consulting. Id. at ¶¶ 1, 13. All of the Plaintiffs do business in the nutritional supplement industry and health care publishing industry. Id. at ¶ 2.

This dispute involves allegations of copyright infringement, fraud, unfair competition, false advertising, conversion and interference with contractual relations. All of the claims center on the advertising and sale of coral calcium supplements and related promotional materials. The present dispute had its genesis in early 2000, when at a scientific advisory meeting, former defendant Robert R. Barefoot*fn3 solicited plaintiff Holt to formulate a nutritional supplement product through a joint venture between the two. Id. at ¶ 18. Barefoot made a number of proposals regarding the formulation of specific products. Holt advised Barefoot that a number of these proposals were medically unsafe for formulation, using excessive doses of vitamin D and toxic metals, such as cesium, in dietary supplements. Id. at ¶ 19.

In a letter dated March 3, 2000, Barefoot told Holt that he wanted to work with him in marketing a coral calcium dietary supplement. Holt, however, became concerned that Barefoot would not act ethically in marketing a coral calcium supplement. Barefoot assured Holt that he intended to practice good ethics and would abide by all of Holt's admonitions. Id. at ¶ 21.

On or about April 18, 2000, Holt and Barefoot entered into a "general letter of agreement" that Barefoot would use his "best efforts to show" a product manufactured by Holt Consulting. Id. at ¶ 22. The product was to be known as "Barefoot's Coral Calcium Plus." In May 2001, Wellness, the wholly-owned entity of Holt Consulting, entered into a contract with Barefoot and former defendant Deonna Enterprises ("Deonna"), a company that Barefoot owned and/or operated. Id. at ¶ 25. Essentially, that contract granted Wellness exclusive rights in the book Barefoot on Coral Calcium (referred to at times herein as the "Work"), which Plaintiffs described as "a non-fiction work about the uses for Coral Calcium." Id. The agreement also contained a non-compete clause that provided that Barefoot would not compete with Plaintiffs on the subject of coral calcium. Id. at ¶ 26.

Despite Barefoot's contractual commitment, however, Barefoot solicited and obtained more lucrative offers involving products that competed with Coral Calcium Plus. Barefoot allegedly sabotaged the sales of Coral Calcium Plus and converted customers to competing products. Id. at ¶ 22.

Holt, nevertheless, made efforts to proceed with the joint venture. Holt continued to stress to Barefoot that claims regarding the coral calcium product must be true and ethical. Id. at ¶ 23. Barefoot, however, expressed his dissatisfaction at times when Holt would not permit certain claims to be made about the product. Id. Further, Barefoot's website contained representations regarding coral calcium that Holt felt were unlawful. Id. at ¶ 28.

According to the SAC, beginning in early 2002, "it became apparent that Barefoot had been acting in bad faith ab initio." Id. at ¶ 29. The SAC contains a list of allegedly "tortious acts" committed by Barefoot, which include the following:

C Instead of promoting the Work pursuant to the contract with Wellness, Barefoot promoted a competing "literary work" and associated items in at least two infomercials. One infomercial was created and marketed by Barefoot and defendants Trudeau, DMC, and former defendants Triad Marketing, Inc. and King Media, Inc. The other infomercial was created and marketed by Barefoot and defendants Trudeau and Shop-America. The SAC alleges that the Defendants were "made aware of" the contract between Plaintiffs on the one hand and Barefoot and Deonna Enterprises on the other.

C Barefoot misappropriated certain content from the Work into another book. C Barefoot undertook to compete with Plaintiffs in the sale of coral calcium products.

C Barefoot also violated agreements with other manufacturers and distributors who he lead to believe would be exclusively associated with him.

C Holt "had to resist" Barefoot's "insistence" on manufacturing coral calcium products that would have been dangerous, and Holt was required to insist that Barefoot desist from making inaccurate or illegal statements on the use of coral calcium to treat disease.

While it is clear from the summary above that most of the factual allegations in the SAC center on the actions of Barefoot, who is no longer a defendant in the case, the allegations are nevertheless relevant to this motion in that Plaintiffs allege that the moving Defendants engaged in wrongful acts, detailed further below, which relate to Barefoot's actions. However, it is notable that the specific factual allegations set forth in the SAC regarding the moving Defendants are extremely limited. As noted above, the SAC states that Defendants "created and marketed" two infomercials with Barefoot in which Barefoot "promoted competitive literary work and competitive associated items for sale." SAC ¶ 29.A. One infomercial was "created and marketed" by Barefoot with defendants Trudeau and DMC along with others not relevant to this motion. The second was "created and marketed" by Barefoot with Trudeau and Shop America. Id. ITV was also involved in the production of one or more of these infomercials. Id. at Count Nine, ¶ 2.

The SAC also alleges that certain content from the Work was misappropriated by Barefoot into a new edition of his book The Calcium Factor. Plaintiffs note in the SAC, however, that Barefoot claimed that such misappropriation was done by DMC and others not relevant to this motion. SAC ¶ 29.B. The remaining allegations against the moving Defendants are set out in Counts One through Twelve of the SAC, as detailed below.

B. Causes of Action Pled in the Second Amended Complaint

The SAC contains twelve counts. As noted above, virtually all of the facts recited in the SAC center on the actions of Barefoot. Because, however, Barefoot has reached a settlement with Plaintiffs, none of the counts in the SAC are directed at Barefoot. The first count is asserted against defendants Trudeau, DMC and Shop America, as well as others not relevant to this motion. Count One alleges that each of these defendants, individually and in concert with others and/or with Barefoot and Deonna, have "misappropriated, converted, published and/or sold Works of which plaintiffs hold the copyright, in violation of 17 U.S.C. §501." SAC at Count One.

Count Two asserts that all Defendants made false and misleading statements with regard to Barefoot's coral calcium product, as well as with regard to their rights to sell coral calcium associated with the Barefoot name and the Work. Plaintiffs allege that such conduct violates 15 U.S.C § 1125(a), which prohibits false advertising.

In Count Three, Plaintiffs allege that Defendants deceived the public with unauthorized claims regarding coral calcium products and literary works associated with the Barefoot name.

Count Four alleges that defendants DMC, Trudeau and Shop America tortiously interfered with the contract between Plaintiffs and Barefoot/Deonna.

In Count Five, Plaintiffs allege that Shop America and Trudeau promoted the Work in an infomercial with Barefoot and Deonna, and defendants made inaccurate and unauthorized claims regarding the coral calcium products. It is also alleged that DMC joined with Trudeau and Barefoot to promote coral calcium in another infomercial, which similarly made false claims about coral calcium. The SAC alleges that Defendants' claims were meant to mislead, constitute fraud, unfair competition and violate various statutory and regulatory provisions.

Count Six asserts that Defendants tortiously interfered with the contract between Plaintiffs and Barefoot/Deonna by utilizing Barefoot's likeness in infomercials on coral calcium in order to sell items such as coral calcium supplements.

Count Seven alleges that Defendants converted Plaintiffs' property.

In Count Eight, Plaintiffs allege that ITV misappropriated Plaintiffs' copyright. The SAC asserts that ITV was involved in the production and airing of one of the previously mentioned infomercials "and/or [was] involved in the sale of calcium nutritive supplements and books which misappropriated Plaintiff's copyright." SAC, Count Eight, ¶ 2.

According to Count Nine, in the course of these activities, ITV made claims designed to deceive the public. Based on this, Count Nine alleges that ITV engaged in common law unfair competition.

Count Ten alleges that ITV tortiously interfered with Plaintiffs' contractual relations by utilizing Barefoot's likeness on infomericals in order to sell items such as coral calcium supplements.

In Count Eleven, Plaintiffs assert that defendants Trudeau, Shop America and ITV conspired to tortiously interfere with the contract between Plaintiffs and Barefoot/Deonna.

Count Twelve alleges that Trudeau, Shop America and ITV conspired "to unfairly compete through false advertising." Count Twelve at ¶ 2. Specifically, Plaintiffs claim these defendants conspired "to falsely advertise the benefits of coral calcium in two infomercials which had the effect of ultimately damaging the market for the Plaintiff's coral calcium product." Id. at ¶ 3.

C. Procedural History*fn4

The original complaint in this matter was filed on August 5, 2002. Plaintiffs filed an Amended Complaint on October 9, 2002. In response, Defendants filed a motion to dismiss. The Court granted Defendants' motion and dismissed the matter, finding there to be a lack of personal jurisdiction. The Third Circuit reversed and remanded the case for further proceedings.

Subsequently, on July 3, 2006, Plaintiff filed a motion seeking leave to file a second amended complaint to add ITV as a defendant, cure certain technical deficiencies in the complaint and refine existing causes of action. This motion was granted by the Magistrate Judge, and Plaintiffs filed their Second Amended Complaint on October 6, 2006. This motion followed.

II. Analysis

1. Plaintiffs' Motion to Compel Mediation

While Plaintiffs' appeal of this Court's earlier order was pending in the Court of Appeals, the parties participated in the Third Circuit's mediation program in an attempt to reach a resolution of their dispute. This mediation was unsuccessful. Subsequently, on or about April 3, 2006, by order of the Magistrate Judge, the parties again participated in ...

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