Magee v. Varsity Brands Holding Co Inc

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

STEVEN MAGEE, §

PLAINTIFF, §

§

V. § CASE NO. 3:24-CV-833-E-BK

§

VARSITY BRANDS HOLDING CO., §

INC. ET AL., §

DEFENDANTS. §

FINDINGS, CONCLUSIONS AND RECOMMENDATION

OF THE UNITED STATES MAGISTRATE JUDGE

Pursuant to 28 U.S.C. § 636(b) and Special Order 3, this case was referred to the

undersigned United States magistrate judge for pretrial management, including the issuance of

findings and a recommended disposition when appropriate. Before the Court is Varsity Brand

Holding Co. LLC, Adam Blumenfeld, and Jerry Garcia’s Motion to Dismiss Plaintiff’s Amended

Complaint with Prejudice, Doc. 42. As detailed here, the motion should be GRANTED.

I. BACKGROUND

This lawsuit is the third in a trilogy of actions Plaintiff has filed alleging trademark

infringement of “Hooplife” apparel. Doc. 42 at 8-12. Here, Plaintiff Steven Magee, proceeding

pro se, alleges Defendants Varsity Brands Holding Co., Inc. (“Varsity”), Adam Blumenfeld

(“Blumenfeld”), and Gerardo “Jerry” Garcia (“Garcia”) (collectively, “Defendants”) violated

Plaintiff’s trademark on Hooplife apparel by selling products reflecting Hooplife’s brand name

and image. Doc. 39.

Plaintiff’s claims stem from a settlement agreement (the “Agreement”) negotiated and

executed between Plaintiff and BSN Sports, LLC (“BSN”), in or about November 2022, to

resolve a previous dispute. Doc. 39 at 129, 148; Doc. 42 at 8-9. Plaintiff alleges that despite

entering into the Agreement, Varsity, doing business as BSN, continues to infringe upon

Plaintiff’s trademark rights in Hooplife. Doc. 39 at 81, 112. Accordingly, Plaintiff seeks to hold

Varsity liable through BSN by asserting claims for, inter alia, breach of contract (Counts I-V),

fraudulent misrepresentation and fraudulent inducement (Counts VI-VII), trademark

infringement under federal and state law (Counts VIII-XII), and unfair competition (Count XIII).

Doc. 39 at 146-176.

Plaintiff also asserts claims against certain employees of Varsity for their purported roles

in the continued infringement on Plaintiff’s trademark. Doc. 39 at 177-82. Against Blumenfeld,

Varsity’s chief executive officer, Plaintiff claims fraudulent misrepresentation and fraudulent

inducement (Count I), trademark infringement (Count II), contributory trademark infringement

(Count III), and unfair competition (Count IV). Doc. 39 at 177-80. Against Garcia, Varsity and

BSN’s Senior Vice President and Deputy General Counsel, Plaintiff brings a single claim of

fraudulent inducement (Count I). Doc. 39 at 181-82. In sum, Plaintiff theorizes that Blumenfeld

and Garcia are liable for the various claims he asserts against them because of their involvement

in procuring the Agreement. Doc. 39 at 177-82.

Defendants now move to dismiss Plaintiff’s Amended Complaint, Doc. 39, for failure to

state a claim. Doc. 42. Plaintiff timely filed his response, Doc. 43, and Defendants timely filed a

reply. Doc. 44. Thus, the motion is ripe for determination.

II. APPLICABLE LAW

A plaintiff fails to state a claim for relief under Rule 12(b)(6) when the complaint does

not contain “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). In order to overcome a Rule 12(b)(6) motion, a plaintiff’s

complaint should “contain either direct allegations on every material point necessary to sustain a

recovery or contain allegations from which an inference fairly may be drawn that evidence on

these material points will be introduced at trial.” Campbell v. City of San Antonio, 43 F.3d 973,

975 (5th Cir. 1995) (cleaned up). Moreover, the complaint should not simply contain conclusory

allegations but must be pled with a certain level of factual specificity. Collins v. Morgan Stanley

Dean Witter, 224 F.3d 496, 498 (5th Cir. 2000). Put differently, a court must be able to

reasonably infer “that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556

U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). But “a formulaic recitation of the

elements of a cause of action will not do . . . ,” and factual allegations must accompany legal

conclusions. Id. (quoting Twombly, 550 U.S. at 555). When reviewing the complaint, “the

court accepts all well-pleaded facts as true, viewing them in the light most favorable to the

plaintiff.” In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007) (cleaned up).

III. ANALYSIS

A. Plaintiff’s Breach of Contract Claims Against Varsity (Counts I-V) Fail Because

Varsity Is Not a Party to the Agreement.

1. Plaintiff’s Allegations Do Not Support Piercing Varsity’s Corporate Veil Under an

Alter Ego Theory.

Plaintiff asserts five claims of breach of contract against Varsity for BSN’s alleged

continued infringement upon Plaintiff’s Hooplife trademark after the Agreement’s execution.

Doc. 39 at 146-56. Instead of asserting his claims directly against BSN, however, Plaintiff

identifies Varsity as the legally responsible party, asserting an alter ego theory to pierce Varsity’s

corporate veil. See Doc. 39 at 147 (alleging that BSN is merely an extension of Varsity and is

Varsity’s alter ego).

“Under Texas law, a party generally must be a party to a contract before it can be held

liable for a breach of the contract.” Ibe v. Jones, 836 F.3d 516, 524 (5th Cir. 2016) (cleaned

up).1 But traditional principles of state law allow a contract to be enforced by or against

nonparties through piercing the corporate veil or alter ego theory. Halliburton Energy Servs.,

Inc. v. Ironshore Specialty Ins., 921 F.3d 522, 531 (5th Cir. 2019). However, “courts do not

lightly or routinely pierce the corporate veil.” USHealth Grp., Inc. v. South, 636 F. App’x 194,

202 (5th Cir. 2015).

“Under Texas law the alter ego doctrine allows the imposition of liability on a

corporation for the acts of another corporation when the subject corporation is organized or

operated as a mere tool or business conduit.” Gardemal v. Westin Hotel Co., 186 F.3d 588, 593

(5th Cir. 1999) (citation omitted). The doctrine applies “when there is such unity between the

parent corporation and its subsidiary that the separateness of the two corporations has ceased and

holding only the subsidiary corporation liable would result in injustice.” Id. (citation omitted);

see USHealth Grp., Inc., 636 F. App’x at 201-02 (“Under the alter ego doctrine, a corporation

may be bound by an agreement entered into by its subsidiary . . . when their conduct

demonstrates a virtual abandonment of separateness.”) (cleaned up). This theory of liability

involves two considerations: (1) the relationship between the two entities, and (2) “whether the

entities’ use of limited liability was illegitimate.” SSP Partners v. Gladstrong Invs. (USA) Corp.,

1 Although Plaintiff does not include Varsity’s state of incorporation in his amended complaint,

the parties do not seem to dispute that Texas law applies to the determination of Plaintiff’s veil

piercing theories. See Doc. 39 at 6 (stating that Varsity is headquartered in Texas); Doc. 42,

passim (citing to Texas law); Proxi Healthcare Staffing LLC v. Curative Talent, LLC, No. 3:22-

CV-2553-S, 2024 WL 779610, at *3 (N.D. Tex. Feb. 26, 2024) (Scholer, J.) (“[W]hether a

corporation . . . or individual may be held liable pursuant to a veil-piercing theory is determined

by the law of the state in which the entity is organized.”) (citing, inter alia, Alberto v. Diversified

Grp., Inc., 55 F.3d 201, 203 (5th Cir. 1995)).

275 S.W.3d 444, 455 (Tex. 2008).

As to the first prong, Plaintiff posits that alter ego liability is appropriate because BSN is

a mere “extension” of Varsity, and the entities lack separateness. Doc. 39 at 91-109. In support

of his position, Plaintiff argues that a laundry list of considerations suggest that the two entities

lack separateness. Doc. 39 at 83-87. For example: (1) Varsity “maintains substantial control”

over BSN’s operations; (2) BSN is a “division” of Varsity, as compared to a separate company;

(3) Varsity and BSN share certain employees, such as Blumenfeld and Garcia, and employment

practices; (4) Varsity “does business as” BSN; (5) Varsity and BSN share certain policies,

websites, and marketing materials; (6) Varsity owns 100% of BSN stock; and (7) Varsity and

BSN “share transactions.” Doc. 39 at 83-87, 91-109. Plaintiff’s repetitive, yet factually bare

allegations—for which he provides little to no credible factual support—do not adequately

demonstrate “the degree of assimilation necessary for alter ego liability.” See, e.g., Hargrave v.

Fibreboard Corp., 710 F.2d 1154, 1160 (5th Cir. 1983) (“We have noted often that 100% stock

ownership and commonality of officers and directors are not alone sufficient to establish an alter

ego relationship between two corporations.”); Proxi Healthcare Staffing LLC, 2024 WL 779610,

at *4 (finding that plaintiff’s laundry list of conclusory allegations did not satisfy first prong of

alter ego analysis); SSP Partners, 275 S.W.3d at 455 (“We have never held corporations liable

for each other’s obligations merely because of centralized control, mutual purposes, and shared

finances.”). And while Plaintiff lists numerous factors relevant to the alter ego analysis, there is

no indication that Plaintiff’s contentions are anything more than “a formulaic recitation of the

elements of a cause of action [which] will not do.” Twombly, 550 U.S. at 555. This failure alone

is enough to defeat Plaintiff’s attempt to hold Defendants liable via an alter ego theory.

Even if Plaintiff had established a lack of separateness between Varsity and BSN,

however, Plaintiff has not adequately alleged that the purported relationship was illegitimate.

See Al Rushaid v. Nat’l Oilwell Varco, Inc., 757 F.3d 416, 424 (5th Cir. 2014) (stating that

illegitimate use of the corporate form includes perpetuating a fraud, evading an existing

obligation, achieving or perpetuating a monopoly, circumventing a statute, protecting a crime, or

justifying wrong). Plaintiff alleges, in a purely conclusory fashion, that Varsity used BSN “as a

shield against liability” or “subterfuge of illegal transaction(s),” and therefore, “an unjust or

inequitable result” would occur “if the corporate entity is not disregarded.” Doc. 39 at 84-85, 88.

The only “fact” Plaintiff proffers in support of his allegations is that Varsity used BSN to

wrongfully enter into the Agreement. Doc. 39 at 87. This allegation is likewise conclusory and

unsupported, thus insufficient to establish an illegitimate relationship. See Proxi Healthcare

Staffing LLC, 2024 WL 779610, at *4 (holding that the plaintiff’s conclusory allegations

regarding the defendant’s illegitimate use of the corporate form were insufficient to justify

piercing the corporate veil).

For the foregoing reasons, the Court concludes Plaintiff has not plausibly alleged that

Varsity can be held liable for the alleged actions of BSN under an alter ego theory.2

2. Plaintiff’s Other Theories of Liability for the Purported Agreement Breaches

Likewise Cannot Survive Defendants’ Rule 12(b)(6) Motion to Dismiss.

Relying on the same facts undergirding his alter ego theory of liability, Plaintiff also

contends Varsity is liable for BSN’s purported breaches of the Agreement under (1) a single

2 As the Court finds that Plaintiff’s alter ego allegations do not even meet the standards of Rule

12(b)(6), it does not reach the issue of whether Plaintiff’s alter ego allegations meet the standards

of Rule 9(b). See Martagon v. Murillo, No. 18-CV-2605-BK, 2019 WL 3731900, at *3 (N.D.

Tex. Aug. 8, 2019) (Toliver, J.) (applying the heightened pleading standard of Rule 9(b) to claim

of perpetration of fraud by alter ego).

business enterprise theory and (2) an agency theory. Doc. 39 at 82-91. Both attempts fail.

Plaintiff’s attempt to establish Varsity’s liability under the “single business enterprise”

theory is unavailing. Doc. 39 at 82-88; see also Paramount Petroleum Corp. v. Taylor Rental

Ctr., 712 S.W.2d 534, 536 (Tex. App.—Houston [14th Dist.] 1986, writ ref’d n.r.e) (explaining

that the single business enterprise theory applies “when corporations are not operated as separate

entities but rather integrate their resources to achieve a common business purpose”), abrogated

on other grounds by SSP Partners, 275 S.W.3d at 456. This theory does not support “the

imposition of one corporation’s obligations on another.” SSP Partners, 275 S.W.3d at 456; see

Clapper v. Am. Realty Invs., Inc., No. 3:14-CV-2970-D, 2016 WL 302313, at *6 n.10 (N.D. Tex.

Jan. 25, 2016) (Fitzwater, J.) (collecting cases recognizing that the Texas Supreme Court has

consistently rejected the single business enterprise theory).

Plaintiff’s assertion of Varsity’s liability under an “agency theory” likewise fails. Doc.

39 at 88-91. Again, Plaintiff asserts the same factual bases as under his alter ego theory,

however, “the concepts of alter ego and agency invoke different legal standards.” Richard

Nugent & CAO, Inc. v. Estate of Ellickson, 543 S.W.3d 243, 264 (Tex. App.—Houston [14th

Dist.] 2018, no pet.). Without any factual support, Plaintiff makes conclusory allegations that

BSN is the agent of Varsity and, as such, is a party to the Agreement. Doc. 39 at 92, 99, 119-22,

124-25, 128. Even liberally construing the amended complaint, Plaintiff’s factual allegations do

not support any “agency theory” of liability. See Richard Nugent & CAO, Inc., 543 S.W.3d at

264-65 (“[A]n agency relationship involves two distinct individuals or entities, with one (the

agent) acting on behalf of the other (the principal).”); In re Parkcentral Global Litig., No. 3:09-

CV-765-M, 2010 WL 3119403, at *10 (N.D. Tex. Aug. 5, 2010) (Lynn, J.) (dismissing claims

under a vicarious liability theory based on agency and respondent superior where the “allegations

[we]re conclusory and lack[ed] specificity” and declining to pierce the veil).

For all of the foregoing reasons, Plaintiff has failed to state viable claims for breach of

contract against Varsity. Thus, the motion to dismiss should be granted as to those claims.

B. Plaintiff Failed to Plead His Claims for Fraudulent Misrepresentation and

Fraudulent Inducement Against Varsity (Counts VI-VII), Blumenfeld (Count I),

and Garcia (Count I) With Particularity.

Defendants argue two bases to dismiss Plaintiff’s fraud-based claims: (1) Plaintiff’s

fraud-based claims are barred by the economic loss rule, and (2) dismissal is warranted because

Plaintiff did not plead his fraud-based claims with the requisite particularity required by Rule

9(b). Doc. 42 at 21-23. While Defendants’ argument regarding the economic loss rule fails,

their second argument prevails.

1. Plaintiff’s Fraud-Based Claims Are Not Barred by the Economic Loss Rule.

Defendants incorrectly contend that Plaintiff’s claims for fraudulent inducement and

fraudulent misrepresentation are barred by the economic loss rule. Doc. 42 at 21-22. “The

economic loss rule generally precludes recovery in tort for economic losses resulting from a

party’s failure to perform under a contract when the harm consists only of the economic loss of a

contractual expectancy.” Chapman Custom Homes, Inc. v. Dall. Plumbing Co., 445 S.W.3d 716,

718 (Tex. 2014) (citations omitted). However, “[s]everal courts in the Fifth Circuit have held

that this rule does not apply to fraud claims.” Ison-Newsome v. JPMorgan Chase Bank, Nat’l

Ass’n, No. 3:22-CV-2805-L-BH, 2023 WL 5022287, at *6 (N.D. Tex. July 21, 2023) (Ramirez,

J.) (collecting cases and holding that economic loss doctrine did not bar fraudulent

misrepresentation claim), adopted by 2023 WL 5022681 (Aug. 7, 2023) (Lindsay, J.); see

Container Store, Inc. v. Fortna Inc., No. 3:20-CV-2893-B, 2021 WL 1250334, at *5 (N.D. Tex.

Apr. 5, 2021) (Boyle, J.) (“Under Texas law, the economic-loss rule does not bar fraudulent-

inducement claims.”). Accordingly, the economic loss rule does not bar Plaintiff’s fraudulent

misrepresentation and fraudulent inducement claims here.

2. Plaintiff Failed to Plead His Fraudulent Misrepresentation and Fraudulent

Inducement Claims with Particularity as Required by Rule 9(b).

In the alternative, Defendants correctly contend that Plaintiff has not alleged sufficient,

particular facts to support his fraud-based claims against the Defendants. Doc. 42 at 22-23.

To satisfy Rule 9(b) regarding his fraudulent misrepresentation claims, Plaintiff must

allege sufficient facts to show:

(1) the defendant made a representation to the plaintiff; (2) the representation

was material; (3) the representation was false; (4) when the defendant made the

representation, the defendant knew it was false or made the representation

recklessly and without knowledge of its truth; (5) the defendant made the

representation with the intent that the plaintiff act on it; (6) the plaintiff relied

on the representation; and (7) the representation caused the plaintiff injury.

Ison-Newsome, 2023 WL 5022287, at *6 (citing Shandong Yinguang Chem. Indus. Joint Stock

Co. v. Potter, 607 F.3d 1029, 1032-22 (5th Cir. 2010)). Similarly, “a fraudulent inducement

claim requires: (1) a material misrepresentation, (2) made with knowledge of its falsity or

asserted without knowledge of its truth, (3) made with the intention that it should be acted on by

the other party, (4) which the other party relied on and (5) which caused injury.” Container

Store, Inc., 2021 WL 1250334, at *5 (cleaned up). “Because fraudulent inducement arises only

in the context of a contract, the existence of a contract is also an essential part of its proof.” Id.

(cleaned up).

When alleging these elements, a plaintiff is subject to the heightened pleading

requirements of Rule 9(b) and must specify the who, what, when, where, and how of the

statements at issue. Dorsey v. Portfolio Equities, Inc., 540 F.3d 333, 339 (5th Cir. 2008). “A

dismissal for failure to plead fraud with particularity pursuant to Rule 9(b) is treated the same as

a Rule 12(b)(6) dismissal for failure to state a claim.” Scott v. Wollney, No. 3:20-CV-2825-M-

BH, 2021 WL 4851852, at *7 (N.D. Tex. Sept. 10, 2021) (Ramirez, J.), adopted by 2021 WL

4845779 (Lynn, J.).

In his amended complaint, Plaintiff makes the blanket assertion that BSN’s representation

in the Agreement that it would not sell products bearing the Hooplife mark “induced the Plaintiff

to act on the misrepresentation” and enter into the Agreement. Doc. 39 at 158. This fails to meet

the Rule 9(b) standard of specificity. See Dorsey, 540 F.3d at 339 (“[S]imple allegations that

defendants possess fraudulent intent will not satisfy Rule 9(b).”) (quoting Melder v. Morris, 27

F.3d 1097, 1102 (5th Cir. 1994)).

First, Plaintiff’s attempts to hold Varsity liable for fraudulent inducement and

representation merely under an agency theory fails for the reasons set out supra. See Doc. 39 at

156 (alleging merely that Varsity is “the responsible party for the actions of BSN Sports”); Doc.

39 at 158 (baldly alleging without any factual support that Varsity “clearly knew that [BSN] had

no intention of ceasing the sale of items bearing the Plaintiff’s ‘Hooplife’ mark(s)”).

Next, Plaintiff wholly fails to identify any actual statements—fraudulent or otherwise—

made by Varsity, Blumenfeld, or Garcia. He contends only that Garcia “fraudulently signed” the

Agreement on behalf of BSN; fraudulently represented himself as an employee of BSN; and

“willfully and knowingly and personally participated” in unspecified fraudulent activities, Doc.

39 at 161-63, 182, and that Blumenfeld is liable for fraudulent misrepresentation and fraudulent

inducement because he allegedly “authoriz[ed] and empower[ed] the infringing activity” and

“authoriz[ed] and empower[ed] Garcia” during the negotiations. Doc. 39 at 177. See Dorsey,

540 F.3d at 339 (“The plaintiffs must set forth specific facts supporting an inference of fraud.”)

(emphasis in original) (quoting Melder, 27 F.3d at 1102); MLM Express Courier & Freight Serv.

LLC, No. 3:23-CV-0368-G, 2023 WL 3313592, at *4 (N.D. Tex. May 5, 2023) (Fish, J.)

(dismissing fraud claims because plaintiff failed to identify any specific misrepresentation made

by the defendants).

Further, Plaintiff does not adequately allege how Garcia’s execution of the Agreement

and Blumenfeld’s alleged oversight during negotiations and execution of the Agreement

constitute fraudulent misrepresentations. See Scott, 2021 WL 4851852, at *8 (dismissing

fraudulent inducement and intentional misrepresentation claims because, among other reasons,

plaintiff failed “to sufficiently explain how such a statement constitute[d] a misrepresentation”).

Again, these claims appear to be based solely on the alleged failure of BSN to comply with the

terms of the Agreement after it was executed, and not on any actions on the part of Garcia and

Blumenfeld at the time of its negotiation or execution.

Thus, Plaintiff’s fraud-based claims against all Defendants should be DISMISSED for

failure to comply with Rule 9(b).

C. Plaintiff’s Trademark Infringement Claims Against Varsity (Counts VIII-X)3

and Blumenfeld (Count II) Should Be Dismissed Because Defendants Did Not

Engage in Infringing Behavior.

Defendants also move to dismiss Plaintiff’s claims for trademark infringement under the

Lanham Act, false designation of origin, and Texas common law trademark infringement. In

sum, Defendant argues that these claims fail because Plaintiff alleges that BSN, not Varsity,

engaged in the infringing behavior. Doc. 42 at 27-28. The Court agrees.

3 Defendants correctly note that Count XII against Varsity “appears to be another claim for

trademark infringement” although referred to as “Violation of Rights 15 U.S.C. § 1114” and

“Violation of Rights.” Doc. 42 at 14 n.4; Doc. 39 at 3, 172.

The Lanham Act governs Plaintiff’s trademark claims. 15 U.S.C. §§ 1051-72; see Magee

v. Nike Inc., No. 3:21-CV-1726-G-BT, 2023 WL 3357594, at *3 (N.D. Tex. Apr. 24, 2023)

(Rutherford, J.) (“The standards for analyzing trademark infringement under the Lanham Act,

trademark infringement under Texas common law, and false designation of origin are

identical.”), adopted by 2023 WL 3362607 (May 10, 2023) (Fish, J.). To succeed on a trademark

infringement claim under the Lanham Act, a plaintiff must show ownership of a legally

protectable mark and then establish infringement of the mark. Am. Rice, Inc. v. Producers Rice

Mill, Inc., 518 F.3d 321, 329 (5th Cir. 2008).

The Lanham Act provides a cause of action for infringement where one uses (1)

any reproduction, counterfeit, copy, or colorable imitation of a mark; (2) without

the registrant’s consent; (3) in commerce; (4) in connection with the sale, offering

for sale, distribution, or advertising of any goods; (5) where such use is likely to

cause confusion, or to cause mistake or to deceive.

Id. (cleaned up).

Plaintiff wholly fails to state infringement claims because he simply fails to allege any

infringing actions by Defendants. Plaintiff asserts that Varsity and Blumenfeld were “connected

or affiliated in some way” with the infringement of Plaintiff’s alleged trademark. Doc. 39 at

169. As explained supra, Plaintiff cannot hold Varsity liable for the acts of BSN under an alter

ego theory, and therefore, his trademark infringement claims fail. See Bulot v. Welch, No. 15-

1158, 2016 WL 3365354, at *5 (E.D. La. June 16, 2016) (holding that plaintiff could not

maintain trademark infringement claims when it failed to prove that defendants did not directly

sell the products at issue and that alter ego liability was appropriate). Because Plaintiff does not

allege that Varsity or Blumenfeld—rather than BSN—engaged in infringing behavior, Plaintiff’s

claims for direct trademark infringement, false designation of origin, and common law

infringement against Varsity and Blumenfeld fail.

D. Plaintiff Does Not State Claims for Contributory Infringement Against

Varsity (Count XI) or Blumenfeld (Count III).4

Defendants correctly argue for dismissal of Plaintiff’s contributory trademark claims

because he fails to allege that Varsity or Blumenfeld intentionally caused or knowingly

facilitated any alleged infringement. Doc. 42 at 28.

“A party is liable for contributory infringement when it, with knowledge of the infringing

activity, induces, causes, or materially contributes to infringing conduct of another.” Alcatel

USA, Inc. v. DGI Techs., Inc., 166 F.3d 772, 790 (5th Cir. 1999) (cleaned up). Thus, if one has

reason to know that an “affiliate is directly infringing on a trademark and does not ‘make

reasonable efforts to stop the practice,’ it may be held liable for contributory infringement.”

Magee, 2023 WL 3357594, at *5 (quoting Eclipse Aesthetics LLC v. Regenlab USA, LLC, No.

3:15-CV-3748-M, 2016 WL 4207993, at *3 (N.D. Tex. Aug. 10, 2016) (Lynn, C.J.)).

Even construing Plaintiff’s amended complaint liberally, he fails to state a claim for

contributory infringement related to BSN’s alleged direct infringement. Plaintiff makes no

cogent allegation that Varsity somehow had knowledge of any alleged infringement of his

Hooplife trademark by producing any infringing goods, facilitating the distribution of the

infringing goods, or supplying any infringing goods to BSN. See Magee, 2023 WL 3357594, at

4 Although Plaintiff labels his claim as “contributory negligence,” the Court liberally construes

his amended complaint as also setting forth a vicarious liability theory of liability to support his

attempt to hold Varsity and Blumenfeld liable for BSN’s alleged infringement. See Erickson v.

Pardus, 551 U.S. 89, 94 (2007) (noting that pro se pleadings “must be held to less stringent

standards than formal pleadings drafted by lawyers”); Magee, 2023 WL 3357594, at *4 (stating

that vicarious liability based on agency principles is a theory of secondary liability for trademark

infringement). However, this theory fails as Plaintiff merely makes vague references to the

existence of a partnership without any factual support. Doc. 39 at 131-33, 167; Magee, 2023 WL

3357594, at *6 (dismissing vicarious liability for trademark infringement claim because Plaintiff

failed to establish an agency relationship or that defendant could “control the actions of or

contractually bind” the infringing party). Accordingly, to the extent Plaintiff asserts a vicarious

liability theory, his claims fail.

*6 (dismissing contributory trademark infringement claim because Plaintiff merely made “bald

assertions” about defendant’s knowledge of infringing activities). Rather, Plaintiff avers only

that Varsity, while “in complete control of and dominating BSN Sports while in partnership and

under contract with New Balance,” produced hundreds of products adorned with his Hooplife

mark. Doc. 39 at 170-71. In support of these allegations, Plaintiff attaches to his amended

complaint images of a BSN store, not of Varsity or any of its employees, selling Hooplife-

branded apparel. Doc. 39 at 221, 239; see United States ex rel. Willard v. Humana Health Plan

of Tex., Inc., 336 F.3d 375, 379 (5th Cir. 2003) (“In deciding a motion to dismiss the court may

consider documents attached to or incorporated in the complaint . . . .”). In sum, Plaintiff makes

no allegation that Varsity itself engaged in any activity that would qualify as contributory

trademark infringement.

Plaintiff also alleges that Blumenfeld contributed to the alleged infringement because he

“willingly authoriz[ed], over[saw] and . . . directly control[ed] the operations and actions of

Varsity” while doing business as BSN. Doc. 39 at 179. Without more, such conclusory

allegations do not suffice to withstand a Rule 12(b)(6) motion. Magee, 2023 WL 3357594, at *6.

Therefore, Plaintiff’s contributory infringement claims against both Varsity and Blumenfeld

should be DISMISSED.

E. Plaintiff Does Not Assert Viable Claims for Unfair Competition Against Varsity

(Count XIII) or Blumenfeld (Count IV).

Although not clear, Plaintiff appears to assert his unfair competition claims under 15

U.S.C. § 45 and 18 U.S.C. § 2320(a). See Doc. 39 at 1 (listing as a cause of action “Unfair

Competition 15 U.S.C. § 45”); Doc. 43 at 31 (agreeing “that like the counterfeit claim [under] 18

U.S.C. § 2320,” the claim for unfair competition against Varsity under 15 U.S.C § 45 should be

dismissed). As Defendants correctly argue and Plaintiff concedes, these statutes provide no

private right of action. Doc. 43 at 31; see, e.g., Cranfill v. Scott & Fetzer Co., 752 F. Supp. 732,

734 (E.D. Tex. 1990) (“It is well settled law that no such implied private right of action [under

15 U.S.C. § 45] exists.”); GESPA Nicaragua, S.A. v. Inabata Europe GmbH, No. EP-17-CV-

306-PRM, 2018 WL 6220175, at *7 (W.D. Tex. July 27, 2018) (“[A plaintiff alleging claims

under 18 U.S.C. § 2320] does not have standing to institute a federal criminal prosecution or any

power to enforce a criminal statute.”).

To the extent Plaintiff bases his unfair competition claims on some other theory, the

Court is under no obligation to scour his 189-page amended complaint searching for a valid legal

claim. See United States v. del Carpio Fescas, 932 F.3d 324, 331 (5th Cir. 2019) (“[J]udges are

not like pigs, hunting for truffles buried in the record.”) (cleaned up). Therefore, because

Plaintiff’s unfair competition claims fail to assert any legal basis for relief, they should be

DISMISSED.

IV. LEAVE TO AMEND

“Generally a district court errs in dismissing a pro se complaint for failure to state a claim

under Rule 12(b)(6) without giving the plaintiff an opportunity to amend.” Bazrowx v. Scott, 136

F.3d 1053, 1054 (5th Cir. 1998). However, in determining whether to grant leave to amend, a

court should consider “prejudice to the opposing party, undue delay, repeated failure to cure

deficiencies with prior amendment, bad faith, dilatory motive and futility of amendment.” Union

Planters Nat’l Leasing, Inc. v. Woods, 687 F.2d 117, 121 (5th Cir. 1982).

Here, based on the legal theories and facts Plaintiff asserts in his 189-page amended

complaint, the Court concludes that he cannot state a plausible legal claim for breach of contract.

In addition, the Court notes that Plaintiff has unsuccessfully asserted similar claims for

trademark infringement and unfair competition in the instant case and other matters. Doc. 42 at

8-12 (detailing two cases previously filed by Plaintiff). The Court is not required to grant leave

to amend “if the plaintiff has already pleaded his ‘best case,’” as would appear to be the

circumstances here. Brewster v. Dretke, 587 F.3d 764, 768 (5th Cir. 2009). Allowing another

amendment on these claims under these circumstances would be futile and cause needless delay.5

Therefore, Plaintiff’s claims of breach of contract (Counts I-V against Varsity), trademark

infringement (Counts VIII-XII against Varsity and Counts II-III against Blumenfeld), and unfair

competition (Count XIII against Varsity and Count IV against Blumenfeld) should be

DISMISSED WITH PREJUDICE.

However, the Court finds that Plaintiff should be granted leave to amend his claims of

fraudulent inducement and fraudulent misrepresentation (Counts VI-VII against Varsity, Count I

against Blumenfeld, and Count I against Garcia), as he has not previously asserted these claims

or been granted an opportunity to amend them. Thus, Plaintiff should be given the opportunity

to cure the defects in his fraudulent inducement and fraudulent misrepresentation claims, if

possible. Accordingly, Plaintiff’s claims of fraudulent inducement and fraudulent

misrepresentation should be DISMISSED WITHOUT PREJUDICE.

V. CONCLUSION

For the foregoing reasons, Defendants Varsity Brand Holding Co. LLC, Adam

Blumenfeld, and Jerry Garcia’s Motion to Dismiss Plaintiff’s Amended Complaint with

Prejudice, Doc. 42, should be GRANTED. Plaintiff’s claims of breach of contract (Counts I-V

against Varsity), trademark infringement (Counts VIII-XII against Varsity and Counts II-III

5Notwithstanding the Court’s finding regarding the futility of granting leave to amend as to

Plaintiff’s breach of contract, trademark infringement, and unfair competition claims, the 14-day

objection period attendant to this Recommendation will provide ample opportunity for Plaintiff

to specify facts, if any, that can operate to cure the deficiencies in the statement of those claims

that are outlined herein.

against Blumenfeld), and unfair competition (Count XII against Varsity and Count IV against

Blumenfeld) should be DISMISSED WITH PREJUDICE. Plaintiffs claims of fraudulent

inducement and fraudulent misrepresentation (Counts VI-VII against Varsity, Count I against

Blumenfeld, and Count I against Garcia) should be DISMISSED WITHOUT PREJUDICE,

and Plaintiff should be granted a reasonable period to amend these claims to cure the deficiencies

outlined here, if possible.

SO RECOMMENDED on August 8, 2025.

Lv 4

E HARRIS TOLIVER

UNNEDSTATES MAGISTRATE JUDGE

INSTRUCTIONS FOR SERVICE AND

NOTICE OF RIGHT TO APPEAL/OBJECT

A copy of this report and recommendation will be served on all parties in the manner

provided by law. Any party who objects to any part of this report and recommendation must file

specific written objections within 14 days after being served with a copy. See 28 U.S.C.

§ 636(b)(1); FED. R. Civ. P. 72(b). An objection must identify the finding or recommendation to

which objection is made, state the basis for the objection, and indicate where in the magistrate

judge’s report and recommendation the disputed determination is found. An objection that merely

incorporates by reference or refers to the briefing before the magistrate judge is not specific.

Failure to file specific written objections will bar the aggrieved party from appealing the factual

findings and legal conclusions of the magistrate judge that are accepted or adopted by the district

court, except upon grounds of plain error. See Douglass v. United Servs. Auto. Ass’n, 79 F.3d

1415, 1417 (Sth Cir. 1996), modified by statute on other grounds, 28 U.S.C. § 636(b)(1) (extending

the time to file objections to 14 days).

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