OPINION & ORDER Plaintiff CV Collection, LLC d/b/a The Great Eros (“CV”) brings claims for copyright infringement, violations of the Lanham Act, unfair competition, and related state law claims against defendants Weworewhat LLC (“WWW”), Onia, LLC d/b/a Www Apparel (“Onia”), Danielle Bernstein (“Bernstein”), Saks Fifth Avenue, Inc. (“Saks”), Bop LLC (“Bop”), Carbon 38, Inc. (“Carbon”), and Does 1-10 inclusive. The claims arise from defendants’ allegedly unauthorized copying and use of CV’s “signature” design (the “Design”), which features line drawings of nude women. Defendants move to dismiss only Count III of the Consolidated Amended Complaint (“CAC”), Dkt. 38, which alleges unfair business practices under California Business and Professions Code §§17200, et seq. (the California Unfair Competition Law, or “UCL”), for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). Defendants also move for sanctions under Federal Rule of Civil Procedure 11. For the following reasons, the Court grants the motion to dismiss in part, denies it in part, and denies the motion for sanctions. I. Background A. Factual Background1 CV owns and operates The Great Eros, a fashion label founded by designer Christina Viviana. CAC 2. Defendant WWW is a fashion label founded by defendant Bernstein, a blogger and social media influencer. Id.
3, 11. Defendant Onia is a co-owner of WWW and does business under the business name “Www apparel.” Id. 10. Defendant Saks is a New York corporation that operates an e-commerce platform and brick-and-mortar department stores. Id. 12. Saks is alleged to have sold the infringing goods through both its website and these stores. Id. Defendant Bop is a Wisconsin LLC alleged to have sold the infringing goods through its e-commerce website. Id. 13. Defendant Carbon is a Delaware corporation that is alleged to have sold the infringing goods on its e-commerce platform and at its brick-and-mortar stores in Bridgehampton, New York, and Pacific Palisades, California. Id. 14. Since its inception, the CAC alleges, CV has wrapped its products in tissue paper bearing the Design, which consists of a pattern of line-drawn female figures in various poses. Id. 2. Below are examples of the tissue paper bearing the Design: The CAC alleges that at some point, Bernstein and WWW collaborated with Onia to produce and distribute swimwear and other products that the CAC alleges bore its Design (the “infringing goods”). Id. 4. According to the CAC, before producing the infringing goods, Bernstein had visited the showroom of CV’s sales representative and inquired about obtaining CV’s products in exchange for promoting the label on her social media platforms. Id. 6. This offer was declined, the CAC alleges, but Bernstein, WWW, and/or Onia later purchased products from CV that were wrapped in the tissue paper bearing the Design. Id. The CAC alleges that the infringing goods proved so popular that Bernstein, Onia, and WWW later reprinted the Design on other products including scarves, yoga mats, and wallpaper. Id. Below are examples of Bernstein’s, Onia’s, and WWW’s products that allegedly bear the Design: CV alleges that after it demanded that defendants cease use of its Design, Bernstein and WWW claimed that they had not copied the Design, that the Design did not reflect creativity, and that neither Bernstein nor WWW had heard of CV or purchased its products. Id. 5. The CAC further alleges that Bernstein, WWW, and Onia “stepped up their use of the CV Design” after receiving CV’s demand. Id. B. Procedural History of This Action On October 15, 2020, WWW and Onia filed a declaratory judgment action in this District (the “New York Action”) seeking a declaration that WWW and Onia did not infringe the Design and that there had been no unfair competition or violation of state law claims. See Dkt. 1.2 On November 10, 2020, CV filed a lawsuit (CV’s “Original Complaint”) against WWW and Onia in the Central District of California, alleging copyright infringement, violations of the Lanham Act, and violations of related state law claims. See No. 21 Civ. 1623 (PAE), Dkt. 1 (“Compl.”). On January 26, 2021, defendants moved to dismiss the Original Complaint for improper venue or, in the alternative, to transfer the action and consolidate it with the prior-filed New York Action. Id. at Dkt. 22. On February 23, 2021, after the motion to dismiss the Original Complaint was fully briefed, the parties agreed to transfer the case to this District. Id. at Dkt. 35. The case was consolidated with the case pending in this District. On May 3, 2021, the Court ordered CV to file the CAC. Dkt. 37. On May 7, 2021, the CAC was filed; it became the operative complaint. Diet. 38. On May 21, 2021, defendants moved for partial dismissal. Dkt. 42 (“MTD”). On June 11 and June 18, 2021, respectively, the opposition to dismissal and reply were filed. Dkts. 46 (“Opp’n”), 51. On June 14, 2021, WWW, Onia, and Bernstein filed a motion for sanctions against CV’s counsel. Dkt. 47 (“Mot. Sanctions”). On June 28, 2021, CV opposed the motion; and on July 7, 2021, defendants filed a reply. Dkts. 52, 62. On July 19, 2021, the Court authorized CV to file a sur-reply to enable it to respond to new evidence and arguments raised in defendants’ reply. Dkt. 67 (“Sur-reply”). On July 26, CV filed its sur-reply. Dkt. 68. II. Discussion A. The Motion to Dismiss Count III Defendants argue that Count III of the CAC, which brings a claim under the UCL, should be dismissed because the CAC does not allege a sufficient connection to violations of law occurring in California. To state a claim under the UCL, “plaintiffs who are not California residents must…allege facts to show that the alleged violations occurred within California, because California’s unfair competition law does not apply extraterritorially.” Aghaji v. Bank of Am., N.A., 247 Cal. App. 4th 1110, 1119 (2016). The Court finds that the CAC pleads a sufficient connection between alleged misconduct and California as to to defendant Carbon only. 1. Legal Standards Under Rule 12(b)(6) To survive a motion to dismiss under Rule 12(b)(6), a complaint must plead “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). A claim is facially plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A complaint is properly dismissed where, as a matter of law, “the allegations in a complaint, however true, could not raise a claim of entitlement to relief.” Twombly, 550 U.S. at 558. When resolving a motion to dismiss, the Court must assume all well-pleaded facts to be true, “drawing all reasonable inferences in favor of the plaintiff.” Koch, 699 F.3d at 145. That tenet, however, does not apply to legal conclusions. See Iqbal, 556 U.S. at 678. Pleadings that offer only “labels and conclusions” or “a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555. 2. CV’s Threshold Argument Under 12(g)(2) At the threshold, CV argues that Rule 12(g)(2) bars the motion to dismiss Count III because defendants did not make this argument in their previous motion to dismiss, filed in the Central District of California. See No. 21 Civ. 1623, Compl. That motion was mooted when the parties stipulated to transfer the case to this District, where the CAC was then filed. See Dkt. 38. Rule 12(g)(2) provides: “[e]xcept as provided in Rule 12(h)(2) or (3), a party that makes a motion under [Rule 12] must not make another motion under this rule raising a defense or objection that was available to the party but omitted from its earlier motion.” Rule 12(h)(2) exempts from this bar any Rule 12(b)(6) defenses raised (A) in an Answer; (B) in a Motion for Judgment on the Pleadings; or (C) at trial. And Rule 12(h)(3) exempts challenges to a court’s subject matter jurisdiction. Critically, Rule 12(g)(2) cannot bar a later motion to dismiss where, as here, the plaintiff’s amended complaint contains materially different allegations. In the CAC, CV stripped out — from the Original Complaint — all but one reference to misconduct in California. See Compl.
