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Leapers, Inc. v. Trarms, Inc.

United States District Court, S.D. Indiana, Indianapolis Division

August 23, 2016

LEAPERS, INC., Plaintiff,
v.
TRARMS, INC. doing business as PRESMA, INC., CHUANWEN SHI, Defendants.

          ORDER DENYING DEFENDANTS' MOTION TO DISMISS

          SARAH EVANS BARKER, JUDGE

         This matter comes before the Court on Defendants Trarms, Inc.'s and Chuanwen Shi's (“Shi”) Motion to Dismiss Plaintiff Leapers, Inc.'s (“Leapers”) Amended Complaint [Dkt. No. 34.], filed on January 15, 2016, pursuant to Federal Rule of Civil Procedure 12(b)(6). For the following reasons, we DENY Defendants' motion.

         Factual and Procedural Background

         Leapers is a firearms and outdoor sporting business that sells shooting, hunting, and outdoor gear, including firearm scopes. Am. Compl. at 3. Chuanwen Shi was the former General Manager of Leapers's scope factory before his employment was terminated by Leapers. Id. at 4. Following his termination, Shi became President of Trarms-a California-based corporation that, in part, imports and distributes scopes. Id. Plaintiff alleges that Shi has utilized his experience acquired at Leapers's former factory, his knowledge of Leapers's scopes, and “certain tools associated” with the scopes to enable Trarms to manufacture a line of scopes that were “virtually exact copies” of Leapers's scopes, which were shipped to and sold in Indiana. Id. at 4-5.

         Leapers has asserted property rights in the “Markings” affixed to its scopes and alleges that Defendants willingly and intentionally used those “Markings” on their own line of scopes without Leapers's permission. Id. at 3-4. Leapers further alleges that by using the Markings, Defendants are attempting to profit from Leapers's “immediate recognition” and the “substantial goodwill” developed by Leapers with its business and its customers. Id.

         On December 31, 2015, Leapers filed an Amended Complaint under the Indiana Crime Victim's Relief Act (ICVRA) alleging that Defendants have violated Leapers's property rights under Indiana criminal law and have caused Leapers to suffer a pecuniary loss as a result. Id. at 1; see Ind. Code § 34-24-3-1. Specifically, Leapers alleges that Defendants committed: Theft and Conversion, in violation of Indiana Code §§ 35-43-4-2, 3; Forgery and Counterfeiting, in violation of Indiana Code § 35-43-5-2; and Criminal Mischief, in violation of Indiana Code § 35-43-1-2. Am. Compl. at ¶¶ 5, 7, 8, 10.

         On January 15, 2016, Defendants filed a Motion to Dismiss Plaintiff's Amended Complaint, pursuant to Federal Rule of Civil Procedure 12(b)(6). [Dkt. No. 34.] The motion was fully briefed as of February 11, 2016 and is now ripe for disposition by the Court.

         Standard of Review

         Defendants' 12(b)(6) Motion to Dismiss requires the Court to accept as true all well-pled factual allegations in the Amended Complaint and draw all ensuing inferences in favor of the non-movant. Lake v. Neal, 585 F.3d 1059, 1060 (7th Cir. 2009). Nevertheless, the Amended Complaint must “give the defendant fair notice of what the . . . claim is and the grounds upon which it rests, ” and its “[f]actual allegations [must] raise a right to relief above the speculative level.” Pisciotta v. Old Nat'l Bancorp, 499 F.3d 629, 633 (7th Cir. 2007) (citations omitted). The Amended Complaint must therefore include “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007); see Fed. R. Civ. P. 8(a)(2). A facially plausible complaint is one which permits “the court to draw the reasonable inference that that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

         Discussion

         Leapers brought this action against Defendants under the Indiana Crime Victim's Relief Act (“ICVRA”), Ind. Code § 34-24-3-1. The ICVRA provides relief to persons who suffer a pecuniary loss based on violation(s) of the provisions of Article 43 of Indiana's Criminal Code. A criminal conviction, however, is not necessary to maintain an action under the ICVRA; rather, the plaintiff need only prove a violation of the relevant criminal prohibition by a preponderance of evidence in order to pursue civil penalties against the defendant under the act. See Meridian Financial Advisors, Ltd. v. Pence, 763 F.Supp.2d 1046, 1060 (S.D. Ind. 2011).

         Here, Leapers alleged that Defendants violated five provisions of the Indiana Code: §§ 35-43-4-2 (Theft), 35-43-4-3 (Conversion), 35-43-5-2(a) (Counterfeiting), 35-43-5-2(b) (Forgery), and 35-43-1-1 (Criminal Mischief). Defendants argued that the Amended Complaint fails to state a legally cognizable claim. Dkt. 34. Defendants' argument is three-fold: First, that the underlying criminal statutes are inapplicable to the facts of this case; second, that if the statutes were applicable, then they would be unconstitutionally void-for-vagueness; finally, that this case is duplicative of another ongoing litigation pending in the Eastern District of Michigan. We address each of these contentions in turn below.

         I. Applicability of the Underlying Statutes

         Defendants argue that applying the underlying criminal statutes to the facts alleged by Leapers would result in inappropriately “novel and expansive” interpretations of Indiana law. More precisely, Defendants argue: (a) that the alleged “Markings” do not constitute “written instruments” under the Counterfeiting and Forgery statutes; (b) that Defendants' alleged actions do not constitute “exertion of control” under the Theft and Conversion statutes; and (c) that the ...


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