Case 1:12-cv-00456-RWR Document 20 Filed 06/15/12 Page 1 of 13

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

JOHN N. XEREAS, Plaintiff, Civil Action No. 1:12-cv-00456-RWR V. MARJORIE A. HEISS, et al, Defendants

PLAINTIFFS RESPONSE TO DEFENDANTS HEISS, DAWSONS AND RIOT ACT DC, LLCS MOTION TO DISMISS PRELIMINARY STATEMENT In this Memorandum, plaintiff will not attempt to refute the many improper and irrelevant factual statements contained in the Memorandum of defendants Heiss, Dawson, and Riot Act, LLC (hereinafter in this Response referred to collectively as defendants.) other than to say plaintiff will, at the proper time, prove those statements to be untrue. Defendants willingness to make these unsworn assertions in a Motion to Dismiss, for which facts alleged in the Complaint are the only relevant consideration, lends credence to the original bad faith of defendants. COUNTS l, ll, AND lll ARE NOT MOOT1 Defendants, in their motion, state they plan, at some unspecified time, to cease using the domain name and mark, RIOT ACT, and its variations as they intend to
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In their motion, defendants incorporate without further argument the positions taken by their codefendant, Squiid, with respect to Counts l, ll, and lll. Plaintiff is filing his separate opposition to Squiids motion that will address those issues.

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change their business model to a non-comedy based venture. Motion at 2. Because of this, they argue, the court no longer has to consider Counts l, ll, or lll as they will soon be moot. Defendants position is not correct for several reasons. When a party seeks an injunction, as plaintiff has done in his Complaint, a statement by defendants that they intend to stop the infringing action is not sufficient to make the request for an injunction moot. The case law is clear that even if defendants had already ceased the actions complained of, this would not make the requested injunctive relief moot as there is always the possibility defendants will either not fully cease using the mark or that they may resume their improper use of the names at a later date. Covenant Media, Cal. v. City, Huntington Park, Ca, 377 F.Supp.2d 828,834 (C.D. Cal., 2005). Voluntary cessation of unlawful conduct does not moot a request for injunctive relief if the unlawful conduct may recur. Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. TOC), Inc., 528 U.S. 167, 174, 120 S.Ct. 693, 145 L.Ed.2d 610 (2000) ("A defendant's voluntary cessation of allegedly unlawful conduct ordinarily does not suffice to moot a case"). In fact, "a defendant claiming that its voluntary compliance moots a case bears the formidable burden of showing that it is absolutely clear the allegedly wrongful behavior could not reasonably be expected to recur." Id. at 190, 120 S.Ct. 693.

And, of course, here, defendants have not even said that as of the date they filed their motion, they have actually stopped their violations. In fact, there are serious indications that these defendants have not been candid with the court concerning their intentions. Attached hereto as Exhibit 1 is a copy of an advertisement from defendant Riot Act DC and one from a comedian hired by Riot Act DC in which future comedy acts are publicized at least as late as December 2012.

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Moreover, of course, in his Complaint, plaintiff seeks not only injunctive relief; he also seeks both statutory and actual damages as authorized by 15 U.S.C. 1117. Complaint, Prayer for Relief F, G, H, and I. Defendants cannot escape from paying for their misdeeds by now merely agreeing not to violate plaintiffs rights and interests from some indefinite future time or even from now on l. PLAINTIFF HAS MORE THAN ADEQUTELY STATED HOW DEFENDANTS HEISS AND DAWSON BREACHED THEIR CONTRACT WITH PLAINTIFF. Plaintiff, of course, agrees with defendants that he must allege sufficient facts to establish the existence of a contract and how the defendant breached it. (citation omitted). Motion at 7. In that regard, as defendants only concern themselves with whether facts allege how the contract was breached, the existence of a contract is conceded and not an issue. There are, in fact, two contracts relevant to Count V: the Amended and Restated Operating Agreement (Operating Agreement); and the Business Plan for Start Up Business Riot Act Comedy Theater (Business Plan).2 Under the terms of the Operating Agreement and Business Plan, the three Managing Members, plaintiff, Heiss, and Dawson, were to be responsible for managing the business. Complaint 34. The two documents recognized plaintiffs long standing rights in, and use of, the RIOT ACT trademarks. Complaint 37. Plaintiff was designated as the General Manager and would be responsible for entertainment bookings and contributing his 12,000 email addresses and contact list. Complaint 38.

The Amended Operating Agreement is attached to the Complaint as Exhibit 13. The Business Plan is described at Paragraph 36 of the Complaint and a copy of the plan is attached to the Complaint as Exhibit 14.

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Those contracts were breached by defendants Heiss and Dawson in at least the following ways as set out in the Complaint and which are to be taken as true for the purposes of the Motion to Dismiss. 57. Defendants, without provocation or warning terminated two high level employees hired by plaintiff to assist him in managing the club. 58. On January 26, 2012, defendants Heiss and Dawson held a meeting at which they purported to remove plaintiff as manager and arranged for the locks to be changed so as to deny plaintiff access to the club and its business records. They further denied plaintiff access to his long standing email account and terminated his access to all Riot Act email accounts and data bases. 59. Defendants, on the same date, terminated the employment of plaintiffs mother who had assisted plaintiff in the operation of the club and denied her access to the email account. 60. Defendants instructed codefendant Squiid to change the various domain name registrations to transfer them from plaintiff to defendant Riot Act DC, LLC. 62. Defendants, since the date they terminated plaintiffs managerial role and his access to the club and its records, have also terminated all employees associated with plaintiff. 63. Defendants began a campaign of false and defamatory statements about plaintiff. 69. Defendants Heiss and Dawson entered into the Amended Operating Agreement, business relationship and implied trademark license with plaintiff in bad

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faith, intending to take advantage of plaintiffs skills and knowledge and to thereafter terminate him from the business. All of those details are summarized in 94 of the Complaint: Defendants breached their duty of good faith and fair dealing by fraudulently inducing Plaintiff to enter into a business relationship with them, to sign the Operating Agreement, to contribute $100,000, and to contribute his time and industry expertise, contacts, and business plans, as well as the right to use Plaintiffs RIOT ACT Trademarks and Domain Names, to the Venture, and then terminating Plaintiff Xereas participation, involvement, and ownership in the Venture shortly after the clubs opening.

The allegations referred to above more than sufficiently set out the facts of a breach of contract. ll. COUNT V IS NOT A STAND ALONE CLAIM OF BREACH OF BAD FAITH As with their argument in their Section l, defendants have misread the details of the Complaint. Count V specifically repeats and realleges every allegation set forth in Paragraphs 1 through 91 above. Complaint 92. The cause of action detailed in Count V alleges specific acts of a breach of contract and include, as a part thereof, an allegation of a breach of the covenant of good faith. a. THE COMPLAINT STATES SPECIFIC PARTS OF THE CONTRACTS VIOLATED BY DEFENDANTS As shown above, the Complaint sets out the specific provisions of the contract that defendants violated. For example, the Operating Agreement specified plaintiff would be the General Manager. The contracts both recognized plaintiffs ownership in the Domain names and Trademarks. And the Complaint then recites detailed allegations of how defendants breached those contracts.

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b. A CAUSE OF ACTION BASED IN PART ON A VIOLATION OF AN IMPLIED COVENANT OF GOOD FATIH IS NOT IDENTICAL TO A CAUSE OF ACTION FOR FRAUDULENT INDUCEMENT A claim that defendants breached their contract by actions that includes a violation of an implied covenant of good faith is not identical to a cause of action alleging fraud. The first, good faith, is fact based on how defendants performed their contract while the second, fraudulent inducement, looks to defendants actions and intent in entering into the contract with plaintiff. In addition, the relief to which plaintiff may be entitled is different. A breach of contract will not allow for punitive damages; while proof of fraud may entitle plaintiff to punitive damages and counsel fees. Bay Gen. Industries v. Johnson, 418 A.2d 1050, 1057-58 (D.C. 1980). lll. PLAINTIFF HAS MORE THAN ADEQUEATELY PLED FACTS WITH THE PARTICULARITY REQUIRED FOR A CAUSE OF ACTION BASED ON FRAUD (COUNT Vl) AND CONSPIRACY TO DEFRAUD (COUNT Vll). Plaintiff has met the requirements of Rule 9 F. R. Civ. P. that the facts stating causes of action based on fraud or conspiracy must be pled with particularity. In the Complaint, plaintiff sets out the representations made that resulted in the Operating Agreement and its amended version, setting out not only its terms but who drafted the document and the date of the document. Complaint 33, 34, 36. The Complaint also details in many ways how plaintiff relied on those representations and the actions he took in reliance on them. The many examples of facts pled by plaintiff that show the specific actions plaintiff took in reliance on the express representations of defendants Heiss and Dawson include: his contribution of $100,000 towards the venture, his

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contribution of his voluminous contact lists, his trade names and their variations, his vast experience and his labor, all with minimal compensation. Complaint 36-49. Those details plaintiff sets out in his Complaint differ dramatically from those listed by the court in the case cited by defendants, Ellipso, Inc. v. Mann, 460 F.Supp.2d 99, 106 (D.D.C., 2006). The rest of the counterclaim is filled with vague and often inconsistent references to transfers of money either to or for the benefit of Ellipso it is never clear which and expenditures of time and effort by Mann, doing what, it is not said. The failure to identify specific acts in reliance, which can be traced to specific misrepresentations, is fatal to any claim of fraud. The failure to plead fraud with particularity abounds. Counterclaimplaintiffs often refer to "representations" or "assurances," without providing the basics necessary to state a claim in fraud: what was said or written; who wrote it or said it; roughly when and where they did so; why that statement was false when made; and what the plaintiff did in reasonable reliance on that statement that caused it to suffer loss. The facts set out in the instant Complaint are not the conclusory factual allegations relied on by various courts to dismiss fraud and conspiracy claims. Rather they detail specific representations by defendants made to induce plaintiff to take the actions he did in reliance on their representations. Also, it is important to note that in all fraudulent inducement cases, the fraudulent statement may literally be true if the declarant makes it, as was done here, to create a false impression. Standardized Civil Jury Instruction for the District of Columbia (1998 rev. ed.), 20-2 FRAUDULENT MISREPRESENTATION ELEMENTS DEFINED. And, of course, conspiracy to defraud, by its very nature, is never something done out in the open air; rather it requires secrecy and is most often discerned by the eventual actions of the conspirators.
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lV. THE CAUSE OF ACTION FOR TORTIOUS INTERFERENCE OF CONTRACTUAL RELATIONS (COUNT Vlll) IS ACTUALLY A CLAIM FOR TORTIOUS INTEFERENCE WITH PROSPECTIVE BUSINESS RELATIONSHIPS Notwithstanding the caption3 used in Count Vlll referring to a tortious interference with a contractual relationship, the allegations accurately state a cause of action for tortious interference with prospective business relationships. The elements of tortious interference with prospective business advantage mirror those of interference with contract. Brown v. Carr, 503 A.2d 1241, 1247 (D.C.1986). To prevail, however, a plaintiff obviously need not demonstrate the existence of a contract, but merely a prospective advantageous business transaction. See id. CASCO MARINA DEV. v. RED. LAND AGENCY, 834 A.2d 77,84 (DC, 2003). There is no question but that plaintiff has pled long standing business relationships with numerous persons in the comedy field. See e.g. Complaint 12. In fact, those relationships were the very reason defendants Heiss and Dawson wanted plaintiff to be a part of their venture. Complaint 37-38. V. UNJUST ENRICHMENT (COUNT lX)

Plaintiff agrees with the position of defendants Heiss and Dawson with respect to Count lX (Unjust Enrichment) as there is an actual contract between plaintiff and those defendants. However, there is no such contract alleged between plaintiff and defendant Riot Act DC, LLC. Therefore, the cause of action for unjust enrichment exists as to defendant Riot Act DC, LLC. Vl. STATEMENTS ALLEGING INCOMEPETENCE AND DISHONESTY ARE ACTIONABLE AS A CAUSE OF ACTION FOR DEFAMATION (COUNT Xl)

The caption of the alleged tort is not technically a part of the cause of action; rather it is the facts that are actually pled that state the cause of action.

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In his detailed Complaint, plaintiff alleged facts showing a long standing business expertise in producing and managing comedy clubs and special comedy events. His reputation in the comedy field is vital to his ability to continue in his chosen work. The Complaint alleged that defendants Heiss and Dawson repeatedly made oral and written statements directly stating or implying that Plaintiff Xereas was dismissed from the Venture due to incompetence and/or dishonest business practices. Complaint 114. The Complaint also alleged those statements were made to members of the entertainment industry, including RIOT ACT fan club members, agents, and event planners. Complaint 63. The allegations of dishonesty included statements alleging deceptive sales practices. Complaint 63. Those statements directly harm plaintiffs credibility and reputation, both of which are crucial to his ability to conduct business in his field. As stated forcefully in Wallace v. Skadden, Arps, 715 A.2d 873, 877 (DC, 1998), "A statement is `defamatory' if it tends to injure the plaintiff in her trade, profession or community standing, or lower her in the estimation of the community." Moss v. Stockard, 580 A.2d 1011, 1023 (D.C. 1990) (citations and internal quotation marks omitted). "If it appears that the statements are at least capable of a defamatory meaning, then whether they were defamatory and false are questions of fact to be resolved by the jury." Id. "One who publishes a slander that ascribes to another conduct, characteristics or a condition that would adversely affect her fitness for the proper conduct of her lawful business, trade or profession ... is subject to liability without proof of special harm." RESTATEMENT (SECOND) OF TORTS 573 (1977). See also: Community for Creative Non-Violence v. Pierce, 814 F.2d 663 671, 259 U.S.App. D.C. 134 (C.A.D.C., 1987) (Courts generally accept that an imputation of dishonesty or fraud is defamatory.)

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Accusing a business person of dishonesty is most certainly not a mere statement of opinion. Rather, it can only properly be viewed as a statement of fact designed to harm the persons business reputation, standing, and ability to be successful in his profession. Vll. THE MODERN CONCEPT OF PROPERTY ALLOWS FOR CONVERSION OF DOMAIN NAMES AND EMAIL ADDRESSES SUCH THAT DEFENDANTS HEISS, DAWSON, AND RIOT ACT DC, LLC ARE PROPERLY SUED FOR CONVERTING THE DOMAIN NAMES BELONGING TO PLAINTIFF (COUNT lV) Conversion in the District of Columbia is defined as the "unlawful exercise of ownership, dominion and control over the personalty of another in denial or repudiation of his right to such property." Fotos v. Firemen's Ins. Co., 533 A.2d 1264, 1267. (DC, 1987). While historically the law of conversion has made a distinction between conversion of tangible property (for which a remedy is allowed) and conversion of intangible property (for which no cause of action was allowed), more modern decisions recognize that, at least with respect to some personalty, the line of distinction is at best blurred. This is especially true with such categories as email addresses and domain names. First, of course, those items have specific value in their own right and can readily be appraised. But also, email addresses and domain names are nothing but short hand for actual physical computer code. The most thorough discussion of the modern willingness of courts to allow causes of action for domain names and email addresses can be found in Kremen v.

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Cohen4, 337 F.3d 1024, 1030 (9th Cir.2003) (noting modern rejection of hard line between tangible and intangible property and holding plaintiff could state conversion claim as to internet domain name) and in In re EASY SAVER REWARDS Litigation, 737 F.Supp.2d 1159 (S.D. Cal., 2010). See also: Kremen v. Cohen, 325 F.3d 1035, 1043 (2003) (KOZINSKI, Circuit Judge, dissenting). As pointed out in Kremen 2 at 1033-34, a domain name is a form of document that is capable of being converted. The fact that it is stored in electronic form is irrelevant. In todays economy, it makes eminent sense to hold a tortfeasor responsible for conversion of domain names and email addresses. They are often the lifeblood of a business and without the ability to protect against conversion, businesses would be in mortal danger. Domain names and email addresses are actively bought and sold for huge sums. Vlll. DEFENDANT RIOT ACT DC, LLC, AS THE ENTITY THAT RE-REGISTERED PLAINTIFFS DOMAIN NAMES INTO ITS OWN NAME, IS RESPONSIBLE UNDER THE ACPA (COUNT X) The Complaint alleges at paragraph 60 that at the instruction of defendants Heiss and Dawson, Squiid transferred the ownership of the various plaintiff owned domain names to Riot Act DC, LLC. Riot Act DC, LLC then became the official registrant and owner of the names. As such, by using those names, the LLC is in direct violation of the ACPA, 15 U.S.C. 1125 (d).

Hereinafter referred to as Kremen 2

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CONCLUSION5 For the above reasons and for any that may be stated during any argument thereon, plaintiff requests the court to deny the Motion to Dismiss. Respectfully submitted, /s/Irwin H. Liptz /s/Leonard J Koenick /s/Harlan L. Weiss ________________________________ Irwin H. Liptz, Esquire Bar No. 171702 Leonard J. Koenick, Esquire Bar No. 166116 Harlan L. Weiss Bar No. 13748 KIVITZ & LIPTZ, LLC 7979 Old Georgetown Rd., Ste 750 Bethesda MD 20814 301-951-3400 Kivitzliptz2@verizon.net CERTIFICATE OF SERVICE I certify that the above Praecipe Entering Appearance was filed electronically with the courts CM/ECF system on June 15, 2012, which will then send notification of the filing to: Julia Anne Matheson Lawrence R. Hefter Stephanie H. Bald FINNEGAN, HENDERSON, FARABOW, GARRETT, & DUNNER, LLP Alec P. Rosenberg Joshua Allen Fowkes ARENT FOX, LLP Timothy R. Clinton
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The arguments made by defendant Squiid in its separate Motion to Dismiss and which are referred to and incorporated by defendants Heiss, Dawson, and Riot Act DC, LLC in their Motion are also being treated in a separate Opposition being filed along with this opposition.

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CLINTON & PEED, PLLC

/s/Leonard J Koenick

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