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Carlson v. Nielsen

United States District Court, N.D. Illinois, Eastern Division

September 24, 2014

BRAD M. CARLSON, Plaintiff,
RICHARD NIELSEN, et al., Defendants.


ROBERT M. DOW, Jr., District Judge.

This matter is before the Court on two motions to dismiss, one filed by Defendants Richard Nielsen, Thomas Peterson, and Robin Zander to dismiss Counts II, III, IV, VI, and VII of the second amended complaint [88] and the other brought by Defendants Cheap Trick, Inc., Carlos, Nielsen, Petersson & Zander, LLC, Cheap Trick Unlimited, Inc., Cheap Trick Touring, Inc., Cheap Trick Merchandising, Inc., ZPN&C, Inc., and ZPN&C, Inc. (collectively, the "Corporate Defendants") to dismiss Count II [92]. For the reasons set forth below, the Court denies both motions [88 and 92].

I. Background[1]

This action concerns the rock band Cheap Trick and claims asserted by its former drummer, Brad M. Carlson (also referred to at times as "Carlos"), against the remaining band members, Nielsen, Peterson, and Zander. Carlson's claims arise out of the alleged breach of an agreement between the parties called the "Live Performance Agreement." According to Carlson, in Section 2 of that agreement, Defendants promised that, although Carlson was no longer required to tour with the Band, he would "continue to receive all remuneration due to him under [other agreements between the parties] * * * without delay, penalty or offset." Defendants allegedly breached this promise by failing to pay Carlson hundreds of thousands of dollars which he is owed. Carlson also has asserted derivative claims for trademark infringement on behalf of two of the Cheap Trick Companies, based upon the Individual Defendants' allegedly unauthorized use of trademarks owned by those companies.

A. The Live Performance Agreement

Cheap Trick is an unincorporated joint venture ( i.e., a partnership) between Plaintiff Carlson and Defendants Nielsen, Peterson and Zander. The Corporate Defendants (also referred to as the "Cheap Trick Companies") are corporate entities which are jointly owned by the four band members. Each band member owns 25% of the shares of each of the Cheap Trick Companies. The band conducts much of its business through the Cheap Trick Companies.

On or about March 14, 2010, the three Individual Defendants entered into a contract with Carlson. The complaint alleges that the band members entered into this contract individually and on behalf of the Cheap Trick Companies. The agreement referenced and ratified the terms of the shareholder agreements and other extant contracts between and among the band members. Pursuant to Section 2 of the agreement, Carlson and Defendants agreed that, while "[Carlson] remains ready, willing and able to perform his obligations under the Agreements * * * Carlos shall not be required to perform, nor shall he perform, as a touring musician with the artist known as Cheap Trick' in connection with any and all concert dates and/or live performances following the date hereof * * *." Section 2 further provides that Carlson will nonetheless "continue to receive all remuneration due to him under the Agreements (including, without limitation, all remuneration that would have been paid to him had he fully performed at all of the Live Performances) without delay, penalty or offset." According to the complaint, the payment obligation under Section 2 applies to all Defendants. Carlson alleges that Defendants breached Section 2 of the agreement when they stopped paying monies owed to him under the agreement.

B. Infringement Allegations

The complaint alleges that in 2005 or 2006, ZPN&C, Inc. of Illinois became the exclusive owner of federal trademark registrations for the use of the name "Cheap Trick" for entertainment services and clothing (collectively, the "Cheap Trick Marks"). According to Plaintiff, he is uncertain whether ZPN&C, Inc. of Illinois currently owns the Cheap Trick Marks, or whether they have been transferred to ZPN&C, Inc. of Florida, allegedly because Defendants refuse to provide Carlson with access to the business files and other records of the Cheap Trick Companies. Thus, the second amended complaint alleges in the alternative that each of these two entities is the current owner of the Cheap Trick Marks.

Carlson is a co-owner of ZPN&C, Inc. of Illinois and ZPN&C, Inc. of Florida. Plaintiff alleges that the Individual Defendants are improperly making numerous unauthorized personal uses of the Cheap Trick Marks without authorization by ZPN&C, Inc. of Illinois or ZPN&C, Inc. of Florida.

II. Legal Standard

The purpose of a Rule 12(b)(6) motion to dismiss is not to decide the merits of the case; a Rule 12(b)(6) motion tests the sufficiency of the complaint. Gibson v. City of Chi., 910 F.2d 1510, 1520 (7th Cir. 1990). As previously noted, reviewing a motion to dismiss under Rule 12(b)(6), the Court takes as true all factual allegations in Plaintiff's complaint and draws all reasonable inferences in his favor. Killingsworth, 507 F.3d at 618. To survive a Rule 12(b)(6) motion to dismiss, the claim first must comply with Rule 8(a) by providing "a short and plain statement of the claim showing that the pleader is entitled to relief" (Fed. R. Civ. P. 8(a)(2)), such that the defendant is given "fair notice of what the * * * claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). Second, the factual allegations in the claim must be sufficient to raise the possibility of relief above the "speculative level, " assuming that all of the allegations in the complaint are true. E.E.O.C. v. Concentra Health Servs., Inc., 496 F.3d 773, 776 (7th Cir. 2007) (quoting Twombly, 550 U.S. at 555). "A pleading that offers labels and conclusions' or a formulaic recitation of the elements of a cause of action will not do.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555). However, "[s]pecific facts are not necessary; the statement need only give the defendant fair notice of what the * * * claim is and the grounds upon which it rests." Erickson v. Pardus, 551 U.S. 89, 93 (2007) (citing Twombly, 550 U.S. at 555) (ellipsis in original). The Court reads the complaint and assesses its plausibility as a whole. See Atkins v. City of Chi., 631 F.3d 823, 832 (7th Cir. 2011); cf. Scott v. City of Chi., 195 F.3d 950, 952 (7th Cir. 1999) ("Whether a complaint provides notice, however, is determined by looking at the complaint as a whole.")

III. Analysis

A. Trademark ...

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