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MC1 Healthcare LLC v. Mountainside Solutions, Inc.

United States District Court, W.D. North Carolina, Asheville Division

August 6, 2019

MC1 HEALTHCARE LLC, d/b/a MOUNTAINSIDE, Plaintiff,
v.
MOUNTAINSIDE SOLUTIONS, INC. n/k/a MOUNTAINVIEW RECOVERY, INC., and MICHAEL E. ELKINS, Defendants.

          MEMORANDUM OF DECISION AND ORDER

          Martin Reidinger United States District Judge

         THIS MATTER is before the Court on the Defendant Michael E. Elkins' Motion to Dismiss [Doc. 47], the Plaintiff's Motion to Amend Complaint [Doc. 52], and the Plaintiff's Motion to Dismiss Defendants' Counterclaims [Doc. 54].

         I. PROCEDURAL BACKGROUND

         The Plaintiff MC1 Healthcare, LLC, doing business as Mountainside (“Plaintiff”), initiated this action in the United States District Court for the Southern District of New York on August 1, 2018, against Defendants Mountainside Solutions, Inc., now known as Mountainview Recovery, Inc., (“Defendant Mountainview”) and Michael E. Elkins (Defendant Elkins) (collectively, “Defendants”) alleging trademark infringement, cybersquatting, and unfair competition. [Docs. 1, 6].[1]

         On August 27, 2018, the Defendants filed a motion to dismiss for lack of personal jurisdiction pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure. [Doc. 14]. In response, the Plaintiff filed a motion to transfer the action to the United States District Court for the Western District of North Carolina. [Doc. 24]. In turn, the Defendants filed a motion for attorneys' fees and costs, on the basis of having to file a motion to dismiss. [Doc. 29]. On October 25, 2018, the New York Federal Court granted the Plaintiff's motion to transfer, denied the Defendants' motions, and transferred the action to this Court on November 1, 2018. [See Text Orders dated October 25, 2018; Docs. 36, 37].

         On November 15, 2018, Defendant Mountainview filed an Answer to the Complaint and Counterclaims against the Plaintiff seeking the cancellation of Plaintiff's federal trademark registration. [Doc. 46]. On the same day, Defendant Elkins filed the present motion to dismiss the Complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. [Doc. 47]. Thereafter, the Plaintiff filed the present motions to amend the Complaint and to dismiss the Defendant Mountainview's Counterclaims pursuant to Rule 12(b)(6). [Docs. 52, 54].[2]

         II. FACTUAL BACKGROUND

         According to the Complaint, Plaintiff is a limited liability company with its principal place of business in Canaan, Connecticut. [Doc. 6 at ¶ 5]. The Plaintiff operates a drug and alcohol addiction treatment center with facilities in Connecticut and New York. [Id. at ¶ 8]. The Defendant Mountainview is a corporation organized under the laws of the State of North Carolina with a business address in Weaverville, North Carolina. [Id. at ¶ 6]. Defendant Mountainview operates a drug and alcohol recovery facility in North Carolina. [Id. at ¶ 19]. Defendant Elkins is the president of Defendant Mountainview and “controlled, directed, and was the moving force behind the wrongful activities of [Defendant] Mountainview.” [Id. at ¶ 7].

         On May 23, 2017, the Plaintiff obtained a federal trademark registration, Registration No. 5208592, for “MOUNTAINSIDE” in connection with services for “rehabilitation of drug addicted patients, ” which is currently valid and registered on the Principal Trademark Register of the United States Patent and Trademark Office. [Id. at ¶¶ 14-15]. The Plaintiff also alleges that for decades it has used the name and mark “MOUNTAINSIDE” extensively in advertising and promotion in the United States. [Id. ¶¶ 16-17]. Plaintiff further alleges to have expended substantial time, effort, and money to ensure that members of the public associate the mark exclusively with Plaintiff and its treatment services. [Id. at ¶ 17].

         Recently, Plaintiff discovered that Defendant Mountainview was operating a drug and alcohol addiction facility in North Carolina as “Mountainside Solutions.” [Id. ¶ 19]. Plaintiff alleges that Defendant Mountainview intentionally selected and chose to incorporate into its name the term “MOUNTAINSIDE” in order to confuse consumers into believing that it was associated with the Plaintiff to gain immediate acceptance in the marketplace, to compete unfairly, and to trade off the goodwill and reputation established by Plaintiff's name and mark. [Id. at ¶ 21, 27]. The Plaintiff further alleges that the day after Defendant Mountainview was formed, Defendant Mountainview registered www.mountainsidesolutionsinc.com as a domain name without the permission or authorization of Plaintiff and with complete knowledge of Plaintiff's “MOUNTAINSIDE” name and mark. [Id. at ¶¶ 20, 22]. The Defendant Mountainview wholly incorporated the name and mark “MOUNTAINSIDE” in its name, trade name, domain name, and used a logo substantially similar to that used by Plaintiff. [Id. at ¶ 23]. Further, the Defendant Mountainview also actively misrepresented being affiliated with the Plaintiff, causing people to inquire with the Plaintiff about a non-existent “new location” in North Carolina. [Id. at ¶ 25].

         The Plaintiff, by a letter dated July 2, 2018, notified the Defendant Mountainview of the Plaintiff's intellectual property rights in its name, mark, and logo “MOUNTAINSIDE, ” and demanded transfer of the domain name, among other demands. [Id. at ¶ 29]. The Defendant Mountainview did not respond to Plaintiff's letter. [Id. at ¶ 30]. Thereafter, the Plaintiff learned that Defendant Mountainview changed its company name from “Mountainside Solutions, Inc., ” to “Mountainview Recovery, Inc., ” and appeared to have stopped using the domain name at issue. [Id. at ¶ 31, 32]. The Defendant Mountainview continues to offer the same addiction treatment services and operates a website with a domain name of www.mountainviewrecovery.com using a logo with the same image, color scheme, font, and style as its prior mark. [Id. at ¶¶ 32-33].

         The Plaintiff alleges that both the Defendant Mountainview's prior use of the “MOUNTAINSIDE” mark and current use of the “MOUNTAINVIEW RECOVERY” mark infringe on Plaintiff's mark, as such marks are likely to cause confusion between the two respective drug and alcohol addiction treatment services. [Id. at ¶¶ 30-31].

         The Defendant Elkins now moves to dismiss the Plaintiff's Complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure for “lack of venue.” [Doc. 47]. In response to the Defendant Elkins' Motion, the Plaintiff filed a Motion to Amend Complaint [Doc. 52], which the Defendant Mountainview partially opposes and the Defendant Elkins asserts is futile [Doc. 57]. In addition, the Plaintiff has also ...


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