| MPEG LA, L.L.C. v GXI Intl., LLC |
| 2015 NY Slip Op 02692 [126 AD3d 641] |
| March 31, 2015 |
| Appellate Division, First Department |
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| MPEG LA, L.L.C., Respondent, v GXIInternational, LLC, Appellant, et al., Defendants. MPEG LA, L.L.C., Appellant, v GXIInternational, LLC, Defendant, and GXI Outdoor Power, LLC, et al.,Respondents. |
Ford Marrin Esposito Witmeyer & Gleser, L.L.P., New York (Jon R. Grabowskiof counsel), for GXI International, LLC, appellant.
Windels Marx Lane & Mittendorf, LLP, New York (Craig P. Murphy ofcounsel), for MPEG LA, L.L.C., respondent/appellant.
Ford Marrin Esposito Witmeyer & Gleser, L.L.P., New York (Elizabeth M.DeCristofaro of counsel), for GXI Outdoor Power, LLC, GXI Parts & Service,LLC, Access HD, LLC and Gordon Jackson, respondents.
Order, Supreme Court, New York County (Melvin L. Schweitzer, J.), entered June13, 2013, which, inter alia, granted plaintiff's motion to dismiss defendants'counterclaims, unanimously affirmed, with costs. Amended order, same court andJustice, entered October 18, 2013, which granted defendants GXI Outdoor Power, LLC,GXI Parts & Service, LLC, Access HD, LLC, and Gordon Jackson's motion todismiss the complaint as against them, unanimously reversed, on the law, without costs,and the motion denied. Appeal from order, same court and Justice, entered September 24,2013, unanimously dismissed, without costs, as superseded by the [*2]appeal from the amended order.
Defendants' counterclaims, which allege violations of antitrust law, are conclusoryand fail to adequately allege a harm to competition attributable to the alleged conspiracy,in view of defendants' own allegations as to external forces affecting the market (see Global Reins. Corp.-U.S.Branch v Equitas Ltd., 18 NY3d 722, 732 [2012]; Continental Guest Servs. Corp. vInternational Bus Servs., Inc., 92 AD3d 570, 574-575 [1st Dept 2012]). In anyevent, the counterclaims are time-barred.
Plaintiff's factual allegations in support of piercing the corporate veil againstdefendants GXI Outdoor Power, LLC, GXI Parts & Service, LLC, Access HD,LLC, and Gordon Jackson to hold them liable for outstanding royalties under plaintiff'slicensing agreement with GXI International, LLC (GXI) are sufficient to survive themotion to dismiss (see Shisgal vBrown, 21 AD3d 845, 848 [1st Dept 2005]; see also CPLR 3013). Theassertion that Jackson exercised complete control over GXI and the affiliated entities issupported by allegations and evidence of overlap in the ownership, officers, directors,and personnel of those entities: Jackson and his wife were the sole members andmanagers of each entity, and Jackson was the president; common office space, addresses,and phone number; disregard of corporate formalities and lack of independent businessdiscretion: the trademark in the television converter boxes was assigned from GXI toGXI Outdoor Power, and converter boxes were cross-sold, cross-warranted andcross-serviced; and inadequate capitalization of GXI: Jackson failed to reserve fundsfrom the sale revenues to pay plaintiff's accumulating royalty bills. Plaintiff furtheralleges that defendants abused the corporate forms to harm it by purporting to "winddown" GXI without paying a large amount of the royalties incurred in selling converterboxes, and then offering converter boxes for sale from GXI Outdoor Power.Concur—Tom, J.P., Andrias, Saxe, Manzanet-Daniels and Kapnick, JJ. [PriorCase History: 2013 NY Slip Op 31265(U).]