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Lone Wolf Distributors, Inc. v. Bravoware, Inc.

United States District Court, D. Idaho

March 3, 2017

LONE WOLF DISTRIBUTORS, INC. Plaintiff,
v.
BRAVOWARE, INC. and SOPCOM, INC. Defendants.

          MEMORANDUM DECISION AND ORDER

          B. Lynn Winmill, Chief Judge

         INTRODUCTION

         The Court has before it plaintiff Lone Wolf's motion for sanctions. The motion is fully briefed and at issue. For the reasons explained below, the Court will grant the motion.

         BACKGROUND

         In its motion for sanctions, plaintiff Lone Wolf claims that defendants misrepresented that they had no connection with an entity named BravoTac. After Lone Wolf expended considerable time and effort to expose the falsity of these representations, defendants withdrew them. In this motion for sanctions, Lone Wolf seeks reimbursement for its efforts in uncovering the truth regarding defendants' connection to BravoTac.

         Plaintiff Lone Wolf is an Idaho corporation. It makes aftermarket firearm accessories, including a thread cap protector that fits on the end of a gun barrel to protect the barrel's threads from damage during transport or storage.

         Lone Wolf claims that the two defendants - Bravoware Inc. and Sopcom, Inc., both owned by Gino Shemesh - sold counterfeit Lone Wolf thread cap protectors over the internet through an alter ego named BravoTac. Lone Wolf accuses the defendants of trademark counterfeiting and unfair competition, among other claims.

         In its original complaint, Lone Wolf did not name either BravoTac or Gino Shemesh as defendants. Instead, Lone Wolf claimed that BravoTac is conducting business as an alter-ego of the two named defendants, Bravoware Inc. and Sopcom Inc. Lone Wolf's complaint alleged that Shemesh established a relationship with it, an Idaho company, to become an authorized dealer of Lone Wolf products, and then conducted sales of counterfeit products on eBay under the pseudonym “BravoTac, ” which was in turn an alter-ego of the two named defendants owned by Shemesh. The complaint alleged that the BravoTac website (1) falsely advertised 9mm thread protectors as Lone Wolf products; and (2) advertised that Lone Wolf parts were made in South Korea and that its barrels were not stainless steel, both of which were false. See Complaint (Dkt. No. 1) at ¶ ¶ 16, 17 & 18.

         Defendants responded on April 3, 2015, by filing a motion to dismiss alleging that this Court lacked personal jurisdiction over the two named defendants. Defendants argued that the two named defendants had no contacts with Idaho, and that any actions of BravoTac could not be attributed to them. Their brief alleged that “[n]either defendant operates a website. The website complained of by plaintiffs is not owned by either defendant.” See Defense Brief (Dkt. No. 17-1) at p. 4. The brief was supported by a Declaration of Shemesh wherein he states that “[n]either Sopcom nor Bravoware owns the web site www.bravotac.com mentioned in the complaint.” See Shemesh Declaration (Dkt. No. 17-2) at ¶ 9. Shemesh also states that “[n]either Sopcom nor Bravoware was involved in any of the activities described in the Complaint.” Id. at ¶ 8.

         Lone Wolf responded by filing a motion seeking to do discovery on the relationship between BravoTac and the defendants. On April 27, 2015, the defendants opposed that motion, and in their brief argued that discovery “would be futile because [Lone Wolf] could never prove that BravoTac is the ‘alter ego' of either Defendant.” See Defense Brief (Dkt. No. 18) at p. 5. Defendants filed another Declaration from Shemesh stating that Sopcom and Bravoware had “no subsidiaries or divisions.” See Shemesh Second Declaration (Dkt. No. 18-1) at ¶¶ 3-4. Defendants argued in their brief that Shemesh's statement “establishes that BravoTac cannot be an alter ego of either company because neither has any subsidiaries.” See Defense Brief (Dkt. No. 18) at p. 5.

         The attorney for the defendants, Paul Reidl, states that he prepared these Declarations after consulting with Shemesh. See Reidl Affidavit (Dkt. No. 42-1). Reidl discussed the relationship between Bravoware, Sopcom, and BravoTac with Shemesh “in multiple telephone conversations and e-mails, ” and reviewed the Declarations “paragraph by paragraph with Shemesh over the telephone.” Id. at ¶ 6. Reidl states that Shemesh told him that Sopcom and Bravoware had nothing to do with BravoTac, and that BravoTac was Shemesh's personal eBay seller name. Id. at ¶ 5.

         Reidl conducted his own investigation into whether there was a connection between BravoTac and the two named defendants. Id. He explains that he was aware of the BravoTac website but could find no connection between it and the two named defendants in his investigation. Id. He discovered the BravoTac d/b/a, but was told by Shemesh that “it was a d/b/a for his eBay business and that he had used it before Bravoware had been formed.” Id. at ¶ 7. When Reidl searched for the d/b/a, he saw that it was registered July 23, 2013, a date after Sopcom had been dissolved and before Bravoware had been formed. Id. at ¶ 8. This chronology, Reidl explains, confirmed to him the truth of what Shemesh had told him:

Because the purpose of a d/b/a is to publicly identify the person or entity who is doing business under that name, the filer could not have been Sopcom (which had been dissolved) or Bravoware (which had not yet been incorporated). It had to have been Mr. Shemesh personally.

See Reidl Supplemental Declaration, supra, at ¶ 6.

         Turning back to Lone Wolf's motion for jurisdictional discovery, the Court granted that motion and allowed discovery into the following three areas:

(1) Whether BravoTac is an alter ego of Bravoware and/or Sopcom, (2) How Shemesh [the owner of Defendants] interacted with BravoTac, Bravoware and Sopcom, and (3) The details of Shemesh's relationship with Lone Wolf.

See Order (Dkt. No. 23) at p. 4. As a result of defendants' denials of any connection between them and BravoTac, Lone Wolf's counsel traveled to a hotel in California to take Shemesh's deposition.

         In the hotel lobby, just thirty minutes before the deposition was set to begin, Reidl met with Shemesh and recalls that “[n]othing he told me was inconsistent with or contradicted anything” that he had said earlier concerning the relationship between BravoTac, Bravoware, and Sopcom. See Reidl Supplemental Declaration (Dkt. No. 48-5) at ¶ 2.

         At the deposition, the following exchange took place between Shemesh and Lone Wolf's counsel.

Q: Have you ever filed registering a fictitious business name in L.A. County?
A: Yes, I did.
Q: What fictitious business name was that?
A: BravoTac.
Q: And who was that filed on behalf of?
A: Bravoware.
. . . .
Q: Was the Bravotac eBay store used to conduct any business for Sopcom Inc.?
A: At that time, yes.
Q: At what time are you ...

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