Case: 1:16-cv-05577 Document #: 67 Filed: 12/21/17 Page 1 of 23 PageID #:933
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF ILLINOIS
`EASTERN DIVISION
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`Case No. 16-cv-5577
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`Judge Robert M. Dow, Jr.
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`VITALGO, Inc. and VITALGO SYSTEMS LTD., )
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`Plaintiffs,
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`v.
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`KREG THERAPEUTICS, INC. and
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`CRAIG POULOS,
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`Defendants.
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`MEMORANDUM OPINION AND ORDER
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`Plaintiffs VitalGo, Inc. (“VitalGo”) and VitalGo Systems Ltd. (“Plaintiffs”) bring this
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`action against Defendants Kreg Therapeutics, Inc. (“Kreg”) and Craig Poulos (“Defendants”)
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`alleging copyright and trademark infringement and unfair competition under federal and state
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`law. Currently before the Court is Defendants’ combined motion [49] to strike portions of
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`Plaintiffs’ First Amended Complaint and to dismiss all claims in the First Amended Complaint
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`with prejudice and Defendants’ motion [55] to stay discovery. For the reasons stated below,
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`Defendants’ motion [49] is granted and part and denied in part. The Court grants Defendants’
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`motion to strike in part: paragraphs 28–47, 50–53, 55, 64, 77–79, 84–87, 89–91, and 108–09, as
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`well as portions of paragraphs 25 and 113 (25(1)–(10) and 113(1)–(10)), are stricken from the
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`First Amended Complaint as they relate solely to the claims this Court has previously dismissed.
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`Furthermore, the Court grants Defendants’ motion to dismiss Count II, Count III, Count V,
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`Count VI, and Count VII, and denies Defendants’ motion to dismiss Count I and Count IV.
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`Plaintiffs will be given one final attempt to replead Counts II, III, V, VI, and VII on or before
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`January 22, 2018. Defendants’ motion [55] to stay discovery pending the resolution of its
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`motion to strike and to dismiss is denied as moot. This case is set for further status on January
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`Case: 1:16-cv-05577 Document #: 67 Filed: 12/21/17 Page 2 of 23 PageID #:934
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`30, 2018 at 10:00 a.m. to discuss a discovery plan.1 Counsel are directed to confer and submit an
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`updated joint status report no later than January 26, 2018.
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`I.
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`Background
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`The background of this case, and of the more extensive litigation in which VitalGo and
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`Kreg have been engaged before this Court, is set forth in the Court’s previous opinion in this
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`case, knowledge of which is assumed here. [See 41 at 1–7.] Briefly summarized, the parties
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`entered into an agreement pursuant to which Kreg was granted the exclusive right to distribute
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`Plaintiffs’ Total Lift Bed product in certain regions of the country. In 2011, VitalGo terminated
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`the parties’ agreement, and Kreg thereafter filed suit (the “2011 Lawsuit”) against VitalGo for
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`breach of that agreement. VitalGo counterclaimed that Kreg had violated the parties’ agreement
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`by both making unauthorized alterations to the Total Lift Bed without VitalGo’s prior written
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`approval and by failing to obtain VitalGo’s approval of all advertisements and promotional
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`materials Kreg used to promote and sell Total Lift Beds.2
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`In May 2016, Plaintiffs filed the instant lawsuit, bringing claims against Defendants for
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`copyright infringement in violation of 17 U.S.C. § 501 (Count I); unfair competition and false
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`designation of origin pursuant to Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a)(1)(A)
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`(Count II); unfair competition and false advertisement pursuant to Section 43(a) of the Lanham
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`Act, 15 U.S.C. § 1125(a)(1)(B) (Count III); common law trademark infringement (Count IV);
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`1 In their motion [55] to stay discovery, Defendants have complained about the scope of the discovery
`requests that Plaintiffs served on them in May 2017. In light of the Court’s decision, Plaintiffs should
`retailor their requests to be consistent with the claims that are allowed to go forward. To the extent that
`Plaintiffs are successful in the future in meeting the Rule 9(b) particularity standard for the claims that are
`being dismissed here, Plaintiffs may expand the scope of discovery at the appropriate time.
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` 2
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` The 2011 Lawsuit has concluded proceedings before the district court and is currently on appeal. After
`a bench trial, the Court concluded that Kreg was entitled to $642,610 in damages plus $364,593 in
`prejudgment interest, for a total award of $1,007,203. See Kreg Therapeutics, Inc. v. Vitalgo, Inc.,
`Docket Entry 250, No. 11-cv-6771 (N.D. Ill.) (Memorandum Opinion and Order).
`2
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`Case: 1:16-cv-05577 Document #: 67 Filed: 12/21/17 Page 3 of 23 PageID #:935
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`common law unfair competition (Count V); violation of the Illinois Uniform Deceptive Trade
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`Practices Act (IUDTPA), 815 Ill. Comp. Stat. 510/1 et seq. (Count VI); and violation of the
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`Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA), 815 Ill. Comp. Stat.
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`505/1 et seq. (Count VII). [1 ¶ 2.] According to the original complaint, Plaintiffs began using
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`VitalGo and Total Lift Bed marks in the United States in 2008, Plaintiffs began showing the
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`Total Lift Bed in advertising and marketing materials in approximately 2008, and Plaintiffs have
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`filed copyright applications for a brochure and for two digital renderings of the Total Lift Bed.
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`[1 ¶¶ 14, 18.] Plaintiffs alleged that (1) Defendants marketed Plaintiffs’ Total Lift Bed as an
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`“Exclusive Kreg Product” or as a “Kreg Bed” and used Plaintiffs’ Copyrighted Works in doing
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`so since October 2011; (2) Defendants made modifications to Plaintiffs’ Total Lift Beds but
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`continued to advertise them as Total Lift Beds in 2010 or 2011; and (3) Defendants developed
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`the Kreg Catalyst Bed in 2014 to compete with the Total Lift Bed and, until March 2016, they
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`promoted the Catalyst Bed using the Total Lift Bed mark and Plaintiffs’ Copyrighted Works.
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`[41 at 7.]
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`Defendants moved to dismiss [18] Plaintiffs’ complaint in July 2016. To support their
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`motion, Defendants argued that (1) Plaintiffs were judicially estopped from asserting their
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`claims; (2) Plaintiffs’ claims could not be alleged in an independent lawsuit because they
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`constituted impermissible claim splitting; (3) no factual allegations demonstrated Defendant
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`Poulos’s personal liability; (4) the doctrine of laches barred Plaintiffs’ Lanham Act claims; (5)
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`Plaintiffs did not allege actual consumer reliance on Defendants’ alleged misleading
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`advertisements as necessary to support its Lanham Act claims; and (6) Plaintiffs could not seek
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`attorneys’ fees under the Copyright Act. On March 29, 2017, the Court granted in part and
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`denied in part Defendants’ motion. [See 41.] The Court held that the doctrine of claim splitting
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`3
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`Case: 1:16-cv-05577 Document #: 67 Filed: 12/21/17 Page 4 of 23 PageID #:936
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`precluded Plaintiffs from bringing claims against Defendants relating
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`to Defendants’
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`modifications to the Total Lift Bed and to Defendants’ allegedly infringing marketing and
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`promotional materials for the Total Lift Bed because those claims were based on the same set of
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`operative facts underlying VitalGo’s counterclaim in the 2011 Lawsuit. [41 at 9–18.] The Court
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`also held that Plaintiffs could proceed with their claims to the extent these claims are based on
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`Defendants’ alleged marketing of their Catalyst Bed using Plaintiffs’ intellectual property
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`because the underlying facts on which these allegations are based are separate and distinct from
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`those underlying Plaintiff VitalGo’s counterclaims in the 2011 Lawsuit. [41 at 18–19.] The
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`Court also dismissed Plaintiffs’ claims for attorneys’ fees pursuant to § 505 of the Copyright Act.
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`[41 at 27.]
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`Plaintiffs then filed their First Amended Complaint on May 3, 2017. [See 43.]
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`Defendants responded on May 31, 2017 by filing the instant motion [49] to strike various
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`allegations from the First Amended Complaint concerning the Total Lift Bed pursuant to Federal
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`Rule of Civil Procedure (“Rule”) 12(f) and to dismiss the remaining claims in the First Amended
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`Complaint pursuant to Rule 12(b)(6).
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`II.
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`Defendants’ Rule 12(f) Motion to Strike
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`A.
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`Legal Standard
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`Under Rule 12(f), “[t]he court may strike from a pleading an insufficient defense or any
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`redundant, immaterial, impertinent, or scandalous matter.” Fed. R. Civ. P. 12(f). Motions to
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`strike are generally disfavored but may be used to expedite a case by “remov[ing] unnecessary
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`clutter.” Heller Fin., Inc. v. Midwhey Powder Co., Inc., 883 F.2d 1286, 1294 (7th Cir. 1989); see
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`also NewNet Commc'n Techs., LLC v. VI E-Cell Tropical Telecom, Ltd., 85 F. Supp. 3d 988, 993
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`(N.D. Ill. 2015) (“But where a defendant's asserted [affirmative defenses] are both legion and
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`4
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`Case: 1:16-cv-05577 Document #: 67 Filed: 12/21/17 Page 5 of 23 PageID #:937
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`mostly frivolous, a motion to strike can aid the parties in resolving the case by removing
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`irrelevant issues from consideration.”). When seeking to strike specific allegations, “the movant
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`must show that the allegations being challenged are so unrelated to plaintiff's claim as to be void
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`of merit and unworthy of any consideration and that the allegations are unduly prejudicial.”
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`Cumis Ins. Soc’y, Inc. v. Peters, 983 F. Supp. 787, 798 (N.D. Ill. 1997) (internal quotation marks
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`and citation omitted); see also Manuel v. Lucenti, 2004 WL 2608355, at *2 (N.D. Ill. Nov. 16,
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`2004) (“To prevail on a motion to strike under Rule 12(f), defendants must demonstrate that the
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`material at issue does not bear on the subject matter of the litigation and will prejudice the
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`defendants.”). A district court has “considerable discretion” in striking redundant, immaterial,
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`impertinent, or scandalous matter. Delta Consulting Grp., Inc. v. R. Randle Constr., Inc., 554
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`F.3d 1133, 1141 (7th Cir. 2009).
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`B.
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`Analysis
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`Defendants argue that the vast majority of the factual allegations contained in Plaintiffs’
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`First Amended Complaint must be stricken because they only relate to the previously dismissed
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`claims (regarding Defendants’ modifications to the Total Lift Bed and to Defendants’ allegedly
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`infringing marketing and promotional materials for the Total Lift Bed) and, as such, are
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`irrelevant to the Catalyst Bed-related claims that remain in the case. Specifically, Defendants
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`request that the Court strike paragraphs 20–23, 25–66, 69–79, 84–87, 89–91, 108–09, and 116–
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`28 in their entirety and portions of paragraphs 25 and 113 from the First Amended Complaint.
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`Defendants argue that it would be highly prejudicial for these factual allegations to remain in the
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`First Amended Complaint—thus “reviving” the previously-dismissed claims—because then
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`Defendants would not reap the benefit of their successful motion to dismiss.
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`5
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`Case: 1:16-cv-05577 Document #: 67 Filed: 12/21/17 Page 6 of 23 PageID #:938
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`The Court concludes that at least some of the allegations in the First Amended Complaint
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`must be stricken because they have no apparent relevance to the Catalyst Bed-related claims that
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`remain in the litigation. A court may strike particular allegations if “[t]he Court unequivocally
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`dismissed Plaintiff’s claims based on these allegations with prejudice, thereby precluding
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`Plaintiff from raising them again” in an amended complaint. Wei Liang v. Frontline Asset
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`Strategies, LLC, 2017 WL 1365604, at *2 (N.D. Ill. Apr. 14, 2017) (striking several paragraphs
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`from Plaintiff’s amended complaint and rejecting the plaintiff’s argument that these facts were
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`still relevant to his remaining claims); see also Simons v. Ditto Trade, Inc., 2015 WL 1918617, at
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`*5–6 (N.D. Ill. Apr. 28, 2015) (striking a counterclaim’s allegations regarding the plaintiff’s
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`relationship to another because “none” of the amended counterclaims were about that
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`relationship); Hickman v. Wells Fargo Bank NA, 2010 WL 3833669, at *7 (N.D. Ill. May 11,
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`2010) (striking disputed language from amended complaint because “the Court has already held
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`that Plaintiff has failed to state a claim * * * in this regard”); David v. Vill. of Oak Lawn, 1996
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`WL 494268, at *2 (N.D. Ill. Aug. 27, 1996) (striking references to a conspiracy in plaintiff’s
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`amended complaint because the court had previously dismissed the conspiracy counts). Here,
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`several of the factual allegations in the First Amended Complaint relate solely to the two theories
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`that the Court has previously dismissed because they cannot be brought in a lawsuit separate
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`from the 2011 Lawsuit: (1) that Defendants marketed the Total Lift Bed as an “Exclusive Kreg
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`Product” or as a “Kreg Bed” using Plaintiff’s Copyrighted Works, and (2) that Defendants made
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`modifications to Plaintiffs’ Total Lift Beds but continued to advertise them as Total Lift Beds.
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`These allegations are without any relevance to the Catalyst Bed claims. 3 Keeping such
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`3 As an example, paragraph 34 in the First Amended Complaint states, “[d]espite Defendants’ substantial
`modifications or alterations to Plaintiffs’ Total Lift Beds, Defendants used and continue to use Plaintiffs’
`TOTAL LIFT BED mark to advertise, market, rent, and/or sell hospital beds that were not, and are not,
`Plaintiffs’ Total Lift Beds.” [43 ¶ 34.] This paragraph entirely relates to dismissed claims premised on
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`Case: 1:16-cv-05577 Document #: 67 Filed: 12/21/17 Page 7 of 23 PageID #:939
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`allegations in the operative complaint would have the effect of “confusing the issues” and thus
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`causing prejudice to Defendants in that respect. Cumis Ins. Soc’y, 983 F. Supp. at 798.
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`Plaintiffs argue that the allegations Defendants seek to have stricken are necessary to
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`support and provide context to Plaintiffs’ claims and clearly bear on the subject matter of the
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`litigation. The Court disagrees that all of the allegations Plaintiffs have included in their First
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`Amended Complaint perform such functions. Allegations in a complaint need not bear directly
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`on the subject matter of a claim, and thus need not be stricken from the complaint, as long as
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`they bear some relationship to the parties’ or the Court’s understanding of the actual claims in
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`the case. See Extra Equipamentos E Exportacao Ltda. v. Case Corp., 2005 WL 843297, at *13–
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`14 (N.D. Ill. Jan. 20, 2005) (allegations should not be stricken if they “might serve to achieve a
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`better understanding of the claim or perform some other useful purpose in the just disposition of
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`the litigation”) (internal alterations omitted); Vakharia v. Little Co. of Mary Hosp. & Health
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`Care Ctrs., 2 F. Supp. 2d 1028, 1033 (N.D. Ill. 1998) (refusing to strike allegations where they
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`were “so general in nature” that they “very well” could relate to the viable claims in a case). But
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`here, many of the disputed paragraphs that Defendants seek to strike from the First Amended
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`Complaint are not general background information regarding the parties’ relationship but
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`specific facts that relate to the previously dismissed claims. As such, they are irrelevant to the
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`subject matter of the litigation.
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`Nevertheless, Defendants’ motion has painted with too broad of a brush. Some of the
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`paragraphs that Defendants seek to have stricken provide context regarding the parties’
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`allegations that Defendants made modifications to the Total Lift Beds yet continued to advertise them as
`Total Lift Beds and is irrelevant to allegations regarding Defendants’ Catalyst Bed. See also [43 ¶ 30]
`(“On or about 2010 and 2011, Defendants began making modifications or alterations to Plaintiffs’ Total
`Lift Beds. In the Prior Litigation, Defendants admitted they made substantial modifications or alterations
`to Plaintiffs’ Total Lift Beds.”); [Id. ¶ 33] (“As a result of Defendants’ substantial modifications or
`alterations to Plaintiffs’ Total Lift Beds, Defendants are offering a product that is materially different
`from the Total Lift Bed supplied by Plaintiffs.”).
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`7
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`Case: 1:16-cv-05577 Document #: 67 Filed: 12/21/17 Page 8 of 23 PageID #:940
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`relationship, what the Total Lift Bed marks and Plaintiffs’ Copyrighted Works are, and the
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`alleged personal liability of Defendant Poulos. See, e.g., [43 ¶ 20] (“In 2011, Defendant Kreg
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`stated that Plaintiffs’ ‘Total Lift Bed is the only hospital-grade bed that can elevate someone
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`from a lying to a fully standing position, with zero lifting on the part of the caregiver.’”); [id.
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`¶ 66] (“Defendants intentionally used Plaintiffs’ TOTAL LIFT BED mark so as to create
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`consumer confusion and traffic off of Plaintiffs’ reputation and goodwill under the TOTAL LIFT
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`BED mark.”); [id. ¶ 87] (“In the Prior Litigation, Defendant Poulos testified during his
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`deposition that he focuses all of his time on behalf of Defendant Kreg to sales and marketing.”).
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`Leaving these paragraphs in the First Amended Complaint would not prejudice Defendants and
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`therefore they do not need to be stricken. Other paragraphs that Defendants move to strike
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`arguably relate to Plaintiffs’ claims regarding the Catalyst Bed because they refer generally to
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`Defendants’ hospital beds. See, e.g., [43 ¶ 56] (“Defendants are not authorized to use Plaintiffs’
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`TOTAL LIFT BED mark in association with hospital beds.”); [id. ¶ 59] (“Defendants’ use of
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`Plaintiffs’ TOTAL LIFT BED mark falsely suggests that * * * Defendants’ hospital beds
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`originate from Plaintiffs.”); [id. ¶ 64] (“Defendants’ use of Plaintiffs’ TOTAL LIFT BED mark
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`is likely to cause, has caused, and is causing actual consumer confusion in the marketplace as to
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`* * * Plaintiffs’ affiliation with Defendants and Defendants’ hospital beds.”). Considering the
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`close relationship between Defendants’ Rule 12(f) and Rule 12(b)(6) motions, and considering
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`the need to draw all reasonable inferences in Plaintiff's favor at the motion to dismiss stage,
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`Killingsworth v. HSBC Bank Nevada, N.A., 507 F.3d 614, 618 (7th Cir. 2007), the Court will not
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`strike allegations as immaterial that could refer to Plaintiffs’ Catalyst Bed claims. These
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`paragraphs may remain in the First Amended Complaint, but only as they relate to the Catalyst
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`Bed.
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`8
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`Case: 1:16-cv-05577 Document #: 67 Filed: 12/21/17 Page 9 of 23 PageID #:941
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`The Court will therefore grant in part and deny in part Defendants’ motion to strike as
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`follows. Paragraphs 28–47, 50–53, 55, 64, 77–79, 84–87, 89–91, and 108–09, as well as the
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`portions of paragraphs 25 and 113 that relate exclusively to the dismissed claims (25(1)–(10) and
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`113(1)–(10)), are stricken from the First Amended Complaint as they relate solely to the claims
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`this Court has previously dismissed. The Court declines to strike the remaining paragraphs that
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`Defendants have identified on the understanding that these paragraphs are offered as background
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`or support for Plaintiffs’ Catalyst Bed theory only.
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`III. Defendants’ Rule 12(b)(6) Motion to Dismiss
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`Defendants next move to dismiss Plaintiffs’ remaining Catalyst Bed-related claims in the
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`First Amended Complaint. Specifically, Defendants move to dismiss the Lanham Act unfair
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`competition, common law unfair competition, IUDTPA, and ICFA claims (Counts II–III and V–
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`VII) because they do not meet the heightened pleading requirements of Rule 9(b). Defendants
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`also move to dismiss the copyright infringement and common law trademark infringement
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`claims (Counts I and IV) because they do not meet the more liberal pleading requirements of
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`Rule 8.
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`A.
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`Legal Standard
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`“To survive a motion to dismiss under Rule 12(b)(6), plaintiff’s complaint must allege
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`facts which, when taken as true, ‘plausibly suggest that the plaintiff has a right to relief, raising
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`that possibility above a speculative level.’” Cochran v. Illinois State Toll Highway Auth., 828
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`F.3d 597, 599 (7th Cir. 2016) (quoting EEOC v. Concentra Health Servs., Inc., 496 F.3d 773,
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`776 (7th Cir. 2007)). The Court “accept[s] all well-pleaded facts as true and draw all reasonable
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`inferences in plaintiff’s favor.” Id. at 600 (citing Tamayo v. Blagojevich, 526 F.3d 1074, 1081
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`(7th Cir. 2008)). The Court reads and assesses the plausibility of the complaint as a whole. See
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`9
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`Case: 1:16-cv-05577 Document #: 67 Filed: 12/21/17 Page 10 of 23 PageID #:942
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`Atkins v. City of Chicago, 631 F.3d 823, 832 (7th Cir. 2011). In reviewing a motion to dismiss
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`pursuant to Rule 12(b)(6), the Court accepts as true all of Plaintiffs’ well-pleaded factual
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`allegations and draws all reasonable inferences in Plaintiffs’ favor. Killingsworth, 507 F.3d at
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`618.
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`B.
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`Analysis
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`Defendants argue that all remaining claims against them must be dismissed because, once
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`the irrelevant allegations against them are removed pursuant to Rule 12(f), the First Amended
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`Complaint is insufficient to support these remaining claims under either the heightened pleading
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`standard of Rule 9(b) (for Counts II–III and V–VII) or the regular pleading standard of Rule 8(a)
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`(for Counts I and IV). Plaintiffs make several arguments in opposition. They argue (1)
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`Defendants’ second Rule 12(b) motion should be denied outright pursuant to Rule 12(g)’s
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`consolidation bar; (2) Defendants’ Rule 12(b)(6) motion should be denied based on the doctrines
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`of law of the case and judicial estoppel; and (3) Defendants’ motion should be denied because
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`Plaintiffs sufficiently pled the remaining asserted claims.
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`1.
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`Rule 12(g)’s Consolidation Bar
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`Plaintiffs first argue that Rule 12(g) bars Defendants’ instant motion because they have
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`previously moved to dismiss the complaint based on Rule 12(b)(6). [See 18.] Rule 12(g) states
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`that, “[e]xcept as provided in Rule 12(h)(2) or (3), a party that makes a motion under this rule
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`must not make another motion under this rule raising a defense or objection that was available to
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`the party but omitted from its earlier motion.” Fed. R. Civ. P. 12(g)(2). Plaintiffs argue that all
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`of Defendants’ Rule 12(b)(6) arguments were available when Defendants filed their first Rule
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`12(b)(6) motion in July 2016 and, therefore, must have been included in that first motion.
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`10
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`Case: 1:16-cv-05577 Document #: 67 Filed: 12/21/17 Page 11 of 23 PageID #:943
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`Plaintiffs’ argument fails for two reasons. First, Defendants’ current Rule 12(b)(6)
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`arguments were not “available” to them prior to the Court’s ruling on March 29, 2017.
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`Defendants have moved to dismiss the claims contained in the First Amended Complaint “[a]fter
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`removing all of VitalGo’s allegations related to the Total Lift Bed Claims.” [50 at 7.] Their
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`motion to dismiss is explicitly based on a court order and targeted at an amended complaint that
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`did not exist when they previously moved to dismiss the original complaint and, as such, would
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`not be included in the Rule 12(g) consolidation bar. Second, even if these arguments were
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`available to Defendants earlier, the Seventh Circuit has clearly stated that “Rule 12(g)(2) does
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`not prohibit a new Rule 12(b)(6) argument from being raised in a successive motion.” Ennenga
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`v. Starns, 677 F.3d 766, 773 (7th Cir. 2012); see also Cheese Depot, Inc. v. Sirob Imports, Inc.,
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`2015 WL 7251949, at *3 (N.D. Ill. Nov. 17, 2015) (applying Ennenga to hold that defendant was
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`within its right to bring a motion for failure to state a claim in a successive motion to dismiss);
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`About U.S. Real Estate, Inc. v. Burnley, 2015 WL 3397025, at *6 (N.D. Ill. May 26, 2015)
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`(same). Therefore, the Court will not deny Defendants’ motion on this basis.
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`2.
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`Judicial Estoppel
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`Plaintiffs next argue that Defendants are precluded by judicial estoppel and the law of the
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`case doctrine from arguing that Rule 9(b) applies to any of their claims, as they contended in
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`their first Rule 12(b)(6) motion that Rule 8 applied to all of Plaintiffs claims. Judicial estoppel
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`precludes a party from abandoning positions after they have prevailed on them in earlier
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`litigation. Zedner v. United States, 547 U.S. 489, 504 (2006). The doctrine “is invoked to
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`protect the integrity of the judicial process by estopping parties from asserting contradictory
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`positions in court to derive an unfair advantage.” Burns v. Vill. of Crestwood, 2013 WL 352784,
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`at *3 (N.D. Ill. Jan. 29, 2013); see also Levinson v. United States, 969 F.2d 260, 264 (7th Cir.
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`11
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`Case: 1:16-cv-05577 Document #: 67 Filed: 12/21/17 Page 12 of 23 PageID #:944
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`1992) (Judicial estoppel is “intended to protect the courts from being manipulated by
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`chameleonic litigants who seek to prevail, twice, on opposite theories.”). Judicial estoppel is an
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`equitable doctrine that cannot be reduced to a precise formula or test, see Zedner, 547 U.S. at
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`504, and it is a matter of discretion. Commonwealth Ins. Co. v. Titan Tire Corp., 398 F.3d 879,
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`887 (7th Cir. 2004). Three factors that inform the decision about whether to apply judicial
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`estoppel are: (1) whether the later position is clearly inconsistent with the earlier position; (2)
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`whether the party to be estopped succeeded in persuading the first court to accept its earlier
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`position, “so that judicial acceptance of an inconsistent position in a later proceeding would
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`create the perception that either the first or second court was misled;” and (3) whether the party
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`seeking to assert an inconsistent position would derive an unfair advantage or impose an unfair
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`detriment on the opposing party if not estopped. In re Knight-Celotex, LLC, 695 F.3d 714, 721
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`(7th Cir. 2012) (citation and internal quotation marks omitted). Under the law of the case
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`doctrine, “a ruling made in an earlier phase of a litigation controls the later phases unless a good
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`reason is shown to depart from it.” Tice v. Am. Airlines, Inc., 373 F.3d 851, 853 (7th Cir. 2004).
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`The Court concludes that neither judicial estoppel nor the law of the case doctrine bars
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`Defendants’ arguments regarding the applicability of Rule 9(b). In their first Rule 12(b)(6)
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`motion, Defendants did not even mention the applicability of either standard, much less construct
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`an argument based on them. [See 17, 35, 41.] The majority of arguments that Defendants made
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`focused on legal defenses rather than whether Plaintiffs had sufficiently stated a claim.
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`Defendants’ principal argument directed towards the content of the original complaint was that
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`Plaintiffs did not allege actual consumer reliance to support their Lanham Act claims. [See 41 at
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`26.] This argument did not rely on the sufficiency of the allegations under either pleading
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`12
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`Case: 1:16-cv-05577 Document #: 67 Filed: 12/21/17 Page 13 of 23 PageID #:945
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`standard, however, and the Court did not reference Rule 8 in its decision on this argument.4 [Id.]
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`Moreover, the Court’s discussion of Rule 8(a) in the context of the legal standard on a motion to
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`dismiss does not represent a decision that Rule 9(b) does not apply to these claims. See Drobny
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`v. JP Morgan Chase Bank, NA, 929 F. Supp. 2d 839, 844 (N.D. Ill. 2013) (noting that Rule 9
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`must be read “in conjunction” with Rule 8). Because the Court has not previously decided
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`whether Rule 9(b)’s heightened pleading standard applies to the unfair competition claims in
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`Plaintiffs’ complaint, this argument is not barred by judicial estoppel or the law of the case. Cf.
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`Carnegie v. Household Int’l, Inc., 220 F.R.D. 542, 545 (N.D. Ill. 2004) (judicial estoppel barred
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`reconsideration of prior ruling by the district court specifically holding that the complaint had
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`satisfied the heightened pleading requirements of Rule 9(b)).
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`3.
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`12(b)(6) Arguments
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`Defendants argue that all of the claims in Plaintiffs’ amended complaint must be
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`dismissed for failure to state a claim. Defendants first argue that the unfair competition-related
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`claims must be dismissed for failure to satisfy Rule 9(b)’s particularity requirement. Defendants
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`also argue that Plaintiffs’ copyright infringement and trademark infringement claims must be
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`dismissed for failure to satisfy Rule 8(a)’s pleading requirement.
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`a.
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`Counts II–III and V–VII
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`Defendants contend that the First Amended Complaint’s Lanham Act claims, along with
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`the IUDTPA, ICFA, and common law unfair competition claims, all sound in fraud and therefore
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`must comply with the heightened pleading requirements of Rule 9(b); according to Defendants,
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`Plaintiffs’ First Amended Complaint does not comply with this standard. Plaintiffs argue that
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`4 The Court did reference the difference between Rule 8 and Rule 9 in its decision on the sufficiency of
`the allegations regarding Defendant Poulos’s personal liability, [see 41 at 24], but this was not in response
`to any particular argument made by Defendants.
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`Case: 1:16-cv-05577 Document #: 67 Filed: 12/21/17 Page 14 of 23 PageID #:946
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`the Rule 9(b) heightened pleading standard does not apply to these claims but, even if it does,
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`their claims sufficiently comply with the rule’s requirements.
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`
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`Rule 9(b) requires that, “[i]n alleging fraud or mistake, a party must state with
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`particularity the circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b). “To satisfy
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`the heightened pleading standard of Rule 9(b),
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`the circumstances [of
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`the alleged
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`misrepresentation] must be pleaded in detail. The who, what, when, where, and how: the first
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`paragraph of any newspaper story.” Blankenship v. Pushpin Holdings, LLC, 2015 WL 5895416,
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`at *7 (N.D. Ill. Oct. 6, 2015) (internal quotation marks omitted; citing DiLeo v. Ernst & Young,
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`901 F.2d 624, 627 (7th Cir. 1990)). Rule 9(b) specifically requires alleging with particularity:
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`“the identity of the person making the misrepresentation, the time, place, and content of the
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`misrepresentation, and the method by which the misrepresentation was communicated to the
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`plaintiff.” Id. at *5 (quoting U.S. ex rel. Grenadyor v. Ukranian Vill. Pharmacy, Inc., 772 F.3d
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`1102, 1106 (7th Cir. 2014)).
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`Plaintiffs bring two unfair competition claims under Section 43(a) of the Lanham Act: a
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`claim for false designation of origin and a claim for false advertising.5 District courts in the
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`Seventh Circuit have not been uniform in requiring that such claims meet the heightened
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`pleading standards of Rule 9(b). Several courts have applied Rule 9(b)’s heightened pleading
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`
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`5 Because the state law claims rely on the same factual allegations as these Lanham Act claims, they are
`analyzed according to the same principles as the Lanham Act claims. See Morningware, Inc. v.
`Hearthware Home Prod., Inc., 673 F. Supp. 2d 630, 639 (N.D. Ill. 2009) (“Where a plaintiff’s factual
`allegations under the Illinois Uniform Deceptive Trade Practices Act also form the basis for plaintiff’s
`claim under the Lanham Act, the legal inquiry is the same under both statutes.”) (citation omitted); see
`also Bob Creeden & Assocs., Ltd. v. Infosoft, Inc., 326 F. Supp. 2d 876, 880 (N.D. Ill. 2004) (noting that
`courts resolve state law unfair competition and deceptive practices claims according to the same
`principles as set forth in the Lanham Act); MJ & Partners Res. Ltd. P’ship v. Zadikoff, 10 F. Supp. 2d
`922, 929 (N.D. Ill. 1998) (“[T]he legal inquiry is the same under the Lanham Act as under the Consumer
`Fraud Act and the Deceptive Trade Practices Act.”). Therefore, for purposes of determining whether
`Rule 9(b)’s pleading standard applies, the IUDTPA and ICFA claims “must rise or fall based on the
`outcome of the Lanham Act claim[s].” BlueStar Mgmt. v. The Annex Club, LLC, 2010 WL 2802213, at
`*8 (N.D. Ill. July 12, 2010); see also Morningware, 673 F. Supp. 2d at 639 (common law unfair
`competition claim does not need to be addressed separately because it is codified by the IUDTPA).
`14
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`Case: 1:16-cv-05577 Document #: 67 Filed: 12/21/17 Page 15 of 23 PageID #:947
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`standard to Lanham Act (and related state law) claims when these claims sound in fraud. See,
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`e.g., Oil-Dri Corp. of Am. v. Nestle Purina Petcare Co., 2017 WL 1436965, at *3 (N.D. Ill. Apr.
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`24, 2017) (“Lanham Act claims alleging false representation must meet Rule 9(b)’s heightened
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`pleading