Case 2:18-cv-Ol022-CB-RCM Document 48 Filed 01/03/19 Page 1 of 45

TNTHE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF PENNSYLV ANTA

ETIA CALHOON, on behalf of herself and all )

other persons similarly situated, )
Plaintiff; )
)
vs ) Civil Action No. 18-1022
) Judge Bissoon
INVENTION SUBMISSION CORPORATION ) Magistrate Judge Mitchell
d/b/a TNVENTHELP, er al., )
Defendants. )

REPORT AND RECOMl'v1ENDATION

1. Recommendation

It is respectfully recommended that the Motion (0 Dismiss Plaintiff's Amended

Complaint Under Rule 12(b)(6) and Motion to Strike Under Rule 12(1) filed by Defendants

Invention Submission Corporation d/b/a Inventllelp, Western Invention Submission Corporation

d/b/a Western lnvenn+elp, Technosystems Consolidated Corporation, Technosystems Service

Corporation, Universal Payment Corporation, Intromark Incorporated and Robert J. Susa (ECF

No. 29) be granted to dismiss Robert J. Susa without prejudice; granted with respect to Counts II,

VIl, VIII and IX ofthe Amended Complaint; denied with respect to Counts I, lII,IV, V and VI;

and denied as to the motion to strike. It is further recommended that the motion to dismiss for

failure to state a claim and lack of jurisdiction tiled by Defendants Kyle A. Fletcher. Law Office

of Kyle fletcher, P.C., Thomas Frost, Thomas Frost, P.A. and Kaufhold & Dix (ECF No. 38) be

granted to dismiss Kyle A. Fletcher, Law Office of Kyle Fletcher, P.C. and Kaufhold & Dix but

denied as to Thomas frost and Thomas Frost, P.A.; granted with respect to Count II of the
 Case 2:18-cv-01022-CB-RCM Document 48 Filed 01/03/19 Page 2 of 45

Amended Complaint and denied with respect to Counts TV, V, VI, Vll, VIl! and IX (which

remain as to Thomas Frost and Thomas Frost, P.A.).

u. Report

Plaintiff, Etta Calhoun, brings this action on her own and on behalf of all others similarly

situated, raising claims under the American Inventors Protection Act, 35 U.S.c. § 297 (A 11'1\),

and Pennsylvania law. Plaintiff alleges that tile defendants, while purporting to act as invention

promoters and patent attorneys, in fact are engaged in a deceptive and fraudulent invention

promotion scam that has bilked her and thousands of other aspiring inventors and entrepreneurs

into paying millions or dollars lor services that the defendants do not and never intend to

provide, Named as Defendants are: Invention Submission Corporation d/b/a Inventl Ielp

C'lnventHclp"), Western Invention Submission Corporation d/b/a Western lnventHelp ("Western

Inventl-lelp"), Technosysrems Consolidated Corporation, Technosystems Service Corporation,

Universal Payment Corporation, lntromark Incorporated (Intromark) and Robert 1. Susa

(president of these companies) (together, "the lnventl+elp Defendants"); Thomas Frost, Thomas

Frost, P.A., Kyle Fletcher, the Law Office of Kyle Fletcher, P.C., Kaufhold & Dix (together, the

"Attorney Defendants"); Crossley &.. Stevenson, Crossley Patent Law, Above Board Drafting,

Inc., Innovation Credit COl])., John Doe Companies 1-10, and John Doc Individuals 1- IO.

Presently pending before the Court for disposition are two motions to dismiss, one

filed by the Invcntllclp Defendants (ECF No. 29) and the second filed by the Attorney

Defendants (ECF No. 38). Plaintiffhas filed briefs in opposition and the moving defendants

have filed reply briefs, so the motions are now ripe for disposition. For the reasons that follow,

the motion filed by the lnvcntl+elp Defendants should be granted to dismiss Robert .T. Sus a

without prejudice; granted with respect to Counts II, VII, VIII and IX of the Amended
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 Case 2:18-cv-01022-C6-RCIVI cocument aa Filed 01103/19 Page 3 0145

Complaint; denied with respect to Counts l,lll,lV, V and VI; and denied as to the motion to

strike and the motion filed by the Artorney Defendants should be granted to dismiss Kyle A.

Fletcher, Law Office of Kyle Fletcher,P.C. and Kaufhold & Dix but denied as to Thomas Frost

and Thomas Frost, P.A.; granted with respect to Count 11 of tile Amended Complaint and denied

with respect to Counts TV, V, VI, VII, VTII and IX (which remain as to Thomas Frost and

Thomas Frost, P.A.).

Facts

During 2012, Plaintiff Etta Calhoun believed that she had created a new invention- bed

linens printed with words of Christian scripture. She named her invention, "Word of God

Bedding:' (Am. Compl. 1148.)' Aftercontacting Inventl-lelp through the 1-800 number

advertised on late-night television, she met with lnventllelp at its Pearland, Texas offices on

February 1S, 2012. (Td.lI~ 49-52.) Upon entering the offices, Ms. Calhoun was given the

impression that TnventHelp had successfully helped other inventors, and thus that it is a reliable

and reputable company. CI!l) At that meeting, Ms. Calhoun was assured by lnventl-lelp's

representative, Renee Hopes, that her idea was not only viable, but that it was original and

presented an excellent opportunity for profit. (It!. ~ 53.) Plaintiff now believes that her idea was

not novel, non-obvious or otherwise unavailable to the public, and several companies already

manufacture and sell products similar to bel' idea and thus, she alleges that Hopes's statements

were knowingly false when made and/or were made with reckless disregard for the truth or

falsity. (Id. "/53-54.)

I ECFNo. 25.

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At that meeting, the seemingly experienced and expert Inventllelp representative told

Ms. Calhoun that she had a great "add on" idea for the invention: in addition to linens printed

with Christian scripture, the pillowcases could have a "listening device" that would play audio

recordings of the words (Id. ~ 56). Plaintiff states that, although she did not know it at the time,

InventHelp did not suggest this "add on" to help her with her invention; rather, the addition of a

listening device would render her idea potentially patentable, thereby allowing InventHelp to sell

more services to her. (hl. '1 57,)

Ms. Calhoun was overjoyed that Inventllelp - a seemingly experienced and successful

company - was impressed with her idea. (hl. ,r 60.) She signed a contract for the "Basic

Information Package" and agreed to pay Inventt lelp $780. (hl.) She coutd nor afford this

payment. and the representative told her that Inventl-lelp had a "relationship" with a "private

money lender" and had a "Retail Installment Contract" from Universal Payment Corporation Oil

hand. (Id. ~~ 66-67.) She notes, however, that the entity that charged her credit card for that

transaction was not Universal Payment Corporation; it was "Techno Inventl-lelp." (.!.Q_, ~ 68.) The

Basic Infonnation Package contained various disclosures about Inventl-lelp's success rate, as

required by the AlP1\. (ld. 'Ml6l-62.) Specifically, InventHelp indicated that:

The total number of customers who have contracted with InvcntHelp in

the past 5 years is 8,095.

TIle total number of customers to have received a net financial profit as a

direct result of invention promotion services provided by Inventlielp is unknown.
However, the total number of clients known (0 have received more money than
they paid InventHelp for submission services as a direct result of these services is
38.

(Am, Compl. '1 61; ECF No. 30 Ex. 13.)

A separate disclosure sheet, signed and dated by Ms. Calhoun that same date (but

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captioned "Western TnventHelp") stated that:

The total number of customers who have contracted with the Invention
Developer since 1985 is 53,037.

The total number ofcustomers known by this lnvention Developer to have

received, by virtue of this Invention Developer's performance, an amount or
money in excess of the amount paid by the customer to this Invention Developer
is O.

(Am. Compl. '162; ECF No. 30 Ex. C.) Plainriff alleges that these numbers arc all false. (Am.

Compl. '1'124, 63, 117, 13J(a), 145, 179.) She specifically alleges that:

At that meeting, Invcntllclp did not inform Plaintiff of, inter alia, the
accurate number or customers it had in the least five years, the number of positive
and negative evaluations, the accurate number of customers who received a net
profit from inventions, (he accurate number of customers who received license
agreements, or the name and addresses of invention promotion companies with
whom lnvcntHclp or its officers were affiliated in the last ten (10) years.

(Am. Comp l. '1 63.)

])1 addition, she alleges that, at that first meeting, Ms. Hopes told her that Inventllclp

would partner with her for $9,950.00 for their "Submission Services," but Ms. Calhoun was

shocked by this amount and declined. (ld. 'I~

64-65.) Aller February 12, 2012, Inventlfelp

repeatedly called her to urge her:to move forward with submission services and at a second

meeting on March 15,2012, Ms. Hopes again presented her with a Submission Agreement for

$9,950.00, but she len the meeting without committing to the contract. (Id. ~ 69.)

Plaintiff states that she received numerous phone calls from Invenrtlclp but did not want

1.0 speak to anonymous sales agents. She tried reaching Renee Hopes, but was told that she was

no longer with the company. Plaintiff alleges that she was repeatedly told that certain

representatives with whom she spoke or met had Jell and was juggled from person to person.

(Td.~ 72.) She eventually spoke with a sales representative named Heather, who told her that

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"The Word of God Bedding" idea was brilliant, that she would buy it and that, if Ms. Calhoun

moved forward with Invcntl-lelp, she would have a great chance of profiting from her invention.

Ms. Calhoun was extremely apprehensive about spending $9,950.00, a tremendous amount of

money, and repeatedly asked Heather's opinion; Heather at all times unequivocally told her to go

forward. (.& '173.)

In April 2012, Ms. Calhoun received the "Basic Information Package" in the mail. (k!,

~ 74.) It contained a "Preliminary Patentability Opinion" purportedly drafted by Defendant

Thomas Frost, a patent attorney. (Id. ~ 75.) lnventflelp led Ms. Calhoun 10 believe that Thomas

Frost was an objective and independent patent attorney; in truth, she alleges that Defendant Frost

receives all or most of his business from InventHelp and is neither independent nor objective.

Qs1 '176.) Ms. Calboun never spoke with Thomas Frost about her invenriors=rhe patentability

opinion was based solely upon information that Ms. Calhoun had provided to InventHclp. M
~ 75.) The "Preliminary Patentability Opinion" appeared professional. hut it was filled with

technical jargon that she did not understand. M~~

76-77.) She also received a hard-bound book

that appeared to be professional, but she now understands is nothing more than loosely-related

cut and paste information with her Dame on the first page. (Td.~ 80.)

Plaintiff alleges that, although purporting to be an end in itself; the Basic Information

Package is actually Step One or Inventl-lelp's ploy to COlI consumers into signing contracts for

lnventl lelp's much more expensive Submission Services. (Td.'1'14,81-82.) Indeed, Invcntl-lelp

contacted Ms. Calhoun several times 10 schedule a meeting to go over the results of the Basic

Information Package M '183.) III truth, the professed reason for those calls was a ruse+

TnventHelp wanted to get her back into their offices 10 "upsell" her on the expensive Submission

Services Agreement. (& "14,82-83.)

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After repeated phone calls from Invcnrllelp, on August 2, 2013, Ms. Calhoun met with

lnventllelp representative Joy Hinson atlnvcrul+elp's Woodlands, Texas office (Jd.'1 84.) Ms.

Hinson told her that lnventl lelp was wrapping up a "special offer." and that it was the last day to

receive a $1,000 discount for Submission Services, which normally COSlapproximately $10,000.

(Ttl.) In truth, this was a lie-there was no such "special." (ld. OJ 21.) Al the August 2 meeting,

Ms. Calhoun again told TnventHelp that the cost of submission services - $10,000 - was far out

ofher price range, (Id. ~ 85.) Ms. Hinson pressured Ms. Calhoun and told her that she qualified

for a "loan" through Universal Payment Corporation, which would advance InventHclp $8,990.

(ld. '1'186-87.) In truth, contrary to Invcntl-lclps explicit written and verbal representations,

Universal Payment Corporation docs not front money to InventHelp so that Invent Help can

proceed with expensive and complicated work on inventors' behalf. Universal Payment

Corporation is an indispensable ann of lnvenrl-lclp's integrated fraudulent scheme, enabling

Invenrflelp to charge consumers monthly for years on end. (JQ.. ~ 15.)

On August 2, 2013, Ms. Calhoun signed a Submission Agreement for $8,990, financed

through Universal Payment Corporation. (1d. '1 S7.) At the same time, she signed an "Intrornark

Proposal" with Defendant Intromark. (Td. ,1'll04-05.) The lntrornark Proposal states that it "shall

remain in effect for a period of twenty-lour (24) months. This will automatically renew lor an

additional three years unless terminated in writing by Client upon thirty (30) days' writren noticc

priorto the expiration of the original term of this Agreement." (Id. ~ 104; BCFNo. 30 Ex. F at I,

~ 3.) Thus, the lntromark Proposal remained in full force and effect for five (5) years, until

August 2, 2018.

At the August 2, 2013 meeting, Inventllclp presented Ms. Calhoun with various AIPA-

mandated disclosures, purportedly representing numbers of customer contracts, licensing

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 Case 2:18-cv-01022-CB-RCtvI Document 48 Filed 01103/19 Page 8 of 45

agreements, and profit by virtue of lnventl lelp's efforts. Specifically, Western Inventltelp

advised her that:

The total number of customers who have contracted with the Invention
Developer since 1985 is 56,345.

The total number of customers known by this Invention Developer to have

received, by virtue of this Invention Developer's performance, an amount of
money in excess of the amount paid by the customer to this Invention Developer
is O.

ffii ~94; ECF No. 30 Ex. E.) Plainuffnotcs thaI this statement directly contradicts the

disclosure she signed OJ\ February 12,2012, which stated that, over the past 5 years "the total

number of clients known to have received more money than they paid Invent+lelp for submission

services as a direct result of these services is 38." (Am, Compl. ~ 95.)

She also signed another disclosure document, which stated that:

The total number of customers to have received a net financial profit as a direct
result of invention promotion services provided by Invent+Ielp is unknown.
However. the total number of clients known to have received more money than
they paid Invent Help for submission services as a direct result of these services is
37.

The total number of customers known by lnventl lelp to have received license
agreements for their inventions as a direct result of InventHeip services is 187.

(Plitt AlI Ex. C.)2 Plaintiff asserts that the numbers in these disclosures are false. (Am. Compl.

~i'124,63, 117, 145, 179.) She also contends that Submission Agreements obtained from

potential class members provide wildly different numbers of clients helped. (Td. ~~ 96-99.)

By letter dated April 23, 2014, InvcntHeip represented to Ms. Calhoun that her idea was

mailed to twenty "Data Hank companies" named on an enclosed list. (Id. '1100.) Unbeknownst to

2 scr No. 36-1.

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her, many of the companies on Inventl-lelp's list do not exist and those that do have no

relationship with Invcni+lelp, never received any information about her invention and/or never

signed nondisclosure agreements with InventHelp. @ ,i' 101, 113, 152.) She also alleges that

lnventl+clp had no infrastrucrurc to deal with companies that actually wanted to proceed with

ideas, but rather Inventf-lelp just takes consumers' money with no intention to pursue their

inventions. (ld. '1103.)

On August 26, 2014, lnventttelp sent Ms. Calhoun a DVD containing renderings of her

"Word of God Bedding" invention. @ '1109.) She was extremely distressed when she viewed

the DVD: it was shoddily-made, and, to her dismay, did not present her "Word of God Bedding"

in an attractive light. (Id. ~ 110.) She immediately called InventlleJp to express her

disappointment and concern. (Id. ~ 111.) An Inventflelp representative assured her that her

invention was purposefully presented in this way because, otherwise, "someone could steal your

idea." (.!!L) She took Invenrl+elp at its word-after all, she thought, lnventl+elp were experts in the

field, and she was merely a laypcrsonlliL)

fly letter dated December 10,2015, Inverul-lelp stated that: "In accordance with your

Intromark Proposal we will continue to follow up with any company who may express an

interest in your invention as a result of our efforts for an additional 3 years." (Id. ~ 112; Plitt Aff.

Ex. B.) By leuer dated March 8, 2016, TnventHelp represented that it was continuing to perform

under the Submission Agreement: "Your New Product Submission Brochure was mailed to the

companies on the enclosed report listed as Data Bank." ([d. '1113; Plitt Aff. Ex. A.) Many of (he

companies on the enclosed list did not exist and others had not signed nondisclosure agreements

with JnventHelp.lliL ~ 113.) Ms. Calhoun did not know this and has continued to dutifully make

payments to Universal Payment Corporation to date. (Td. ~~ 114-15.) As of March 8, 2016, she
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believed, and was explicitly led to believe, that Inventtlelp was still fulfilling its contractual and

statutory obligations to her. (Id. fifll 13-14.) Plaintiff alleges that, in truth, InvcntHelp was doing

nothing more than generating paperwork to create this false impression (and, of course,

collecting her monthly payments). (Id. ~ 17.)

Procedural Historv

Plaintiff filed this action in the United Slates District Court for the Eastern District of

Pennsylvania 011 June 1,20 18. She indicated that jurisdiction is based on the federal question

presented by the ArrA claim, 28 U.S.C. § 1331, and also pursuant to the Class Action Fairness

Act, 28 U.S.C. § I332(d), in that the amount in controversy exceeds the sum of $5,000,000,

exclusive of interest and costs, and is a class action in which one member of the class of

plaintiffs is a citizen of a state different from the defendants (Compl. '135).

On July 27,2018, Judge Sanchez entered an order (ECF No.1 0) granting Plaintiffs

motion to transfer venue to the United Slates District Court for the Western District of

Pennsylvania (ECF No.7) and the case was transferred to this Court. On September 18,2018,

Plaintiff filed an Amended Complaint (ECF No. 25). Count 1alleges a claim under the AlP A

against the Invcntlielp Defendants. Count II alleges a claim under the Pennsylvania Unfair

Trade Practice-s and Consumer Protection Law, 73 P.S. §§ 201.1 to 201.9.3 (UTPCPL), against

all Defendants. Count TITalleges a claim under the Telephone Consumer Protection Act, 47

U.S.C. § 227 (TCPA) against the InventHelp Defendants.' Count IV alleges a claim of fraud

against all Defendants. Count V alleges a claim of negligent misrepresentation against all

3 Although not explicitly staled, the Amended Complaint replaced Count Ill olrhc original
complaint, which bad been asserted under the Pennsylvania Telemarketer Registration Act, with
a claim under the TePA and thus it provides an additional basis for federal question jurisdiction.
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Defendants. Counl VI alleges a claim of breach of contract against all Defendants. Count VII

alleges a claim of breach of the covenant of good faith and fair dealing against all Defendants.

Count VIII alleges a claim or unjust enrichment against all Defendants. Count DC alleges a claim

of breach of fiduciary duty against all Defendants.

00 October 2, 2018, the Invemllelp Defendants filed a motion to dismiss (ECF No. 29).

00 October 24,2018, Plaintiff filed a brier in opposition (ECF No. 36) and on October 3 1,2018,

the Inventfielp Defendants filed a reply bricf(ECF No. 37). On November 14, 2018, the

Attorney Defendants filed a motion to dismiss (ECF No. 38). On December 6, 2018, Plaintiff

tiled a brier in opposition (ECF No. 43) and on December 12, 2018, the Attorney Defendants

llled a reply brief(ECF No. 47)4

The InventHelp Defendants argue that: 1) Count J fails to state a claim because Western

lnventl-lclp made all required disclosures under the ATPA and it is barred by the expiration or the

statute of limitations; 2) Count II should be dismissed because the UTJ'CI'L does not apply to

business transactions; 3) Count III should be dismissed because Plainriff'never alleges that she

was called on her cell phone and, in any event, these were not automated random calls but calls

from organizations with which Plaintiff had a business relationship; 4) Counts IV and V should

be dismissed based on the gist of the action doctrine, the integration clauses of the contracts and

the fact that it would be unreasonable for Plaintiff to rely on oral rcprcscntauons that directly

contradicted the terms of written contracts; 5) Count VI is barred by the expiration of the statute

oflimitations; 6) Count VI! should be dismissed because Pennsylvania docs not recognize an

4 No appearance has heen made on behalf of Innovation Credit Corp., Above Board Drafting,
Inc., Crossley & Stevenson, Crossley Patent Law, John Doe Companies I-I U or John Doc
Individuals 1-10.
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independent claim lin breach ofthe duty or good faith and fair dealing; 7) Count vm should be

dismissed because Plaintiff cannot state a claim for unjust enrichment when she signed contracts

with these defendants; 8) Count IX should be dismissed because Plainriff'provides no basis to

hold these defendants liable for breach of fiduciary duty, and the claim is barred by the gist of

the action doctrine; 9) Plaintiff s other claims arc also barred by the expiration or the statutes of

limitations, whether four years (for the AlPA claim) or two years (for the tort claims); 10)

Plaintiff alleges vaguely that "Defendants" are liable without distinguishing between them: II)

Paragraph 121 of the Amended Complaint alleges "criminal activity" and should be stricken; and

"12)the Amended Complaint names Thomas Frost, Above Board Drafting, Kyle Fletcher,

Crossley and Stevenson and Kaulhold & Dix, but contains no facts indicating that Plaintiff had

dealings with them.

Plaintiff responds that: l) Invcntllclp and Western InventHelp both made false

disclosures and false oral statements that differed from the written disclosures, both or which are

actionable under the AlP A; 2) Plaintiff can state a claim under the UTPCPL because she was not

engaged in a business venture "together" with Invenrl-lclp and its own agreements disavow that it

is seeking financial gain for its customers; 3) the Amended Complaint states a claim under the

TePA because it alleges that TnventHelp called Plaintiff repeatedly on her cell phone and any

issues beyond that are disputed and cannot be resolved at this time; 4) the gist of this action is

that Plaintiff was fraudulently induced to sign contracts and the integration clauses do not alter

this result, and it was reasonable for her to rely on lnverul+elp's oral representations despite the.

disclaimers in the contracts; 5) the contracts indicated that Introruark was to act as Plaintiff's

agent ill securing licensing agreements and thus it was her fiduciary; 6) the defendants

themselves do not distinguish between the various entities and the same individuals (Joy Hinson
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and Renee Hopes) signed on behalf ofTnventHelp, Western lnventrlelp and lntromark, so they

cannot claim thai Plaintiff must distinguish between them; 7) all of her claims are timely because

the contracts are still in effect and InventHelp strung her along for years with false

representations; 8) InvcntHclp lacks standing to make arguments on behalf of the Attorney

Defendants; 9) it is premature to dismiss any of her common law claims; and 10) motions to

strike are disfavored and the allegation that lnventHclp acted criminally is central to the

Amended Complaint so it should not be stricken.

Tna reply brief, the TnventHelp Defendants argue (hat: I) Plaintiff cannot maintain her

claims by referring vaguely to "class plaintiffs" and she cannot rely on alleged "fraudulent

statements" when the disclosures clearly informed her that lnventl lelp had either "0" or "38"

successes, demonstrating the difficulty 0(" obtaining patents; 2) she cannot ignore the separate

corporations and alleges claims against Mr. Susa without contending that he is the "alter ego" of

any corporation; 3) she cannot ignore written integrated contracts; and 4) the UTPCPL claim is

barred because the purpose of the transaction was for business, not personal reasons, she cannot

toll the statutes of limitations based on the claims of unnamed "class plaintiffs;' the gist of the

action issue can be resolved on a motion to dismiss when the contracts are in evidence, she

provides no basis for a fiduciary relationship and makes other irrelevant arguments.

The Attorney Defendants incorporate the arguments made by the Inventllclp Defendants.

(EeF No. 39 at 9.) In addition, they argue that: 1) Plaintiff provides no basis for the exercise of

personal jurisdiction over Frost, Fletcher or Kaufhold & Dix; 2) Frost is alleged to have

conducted a patent search, but Plaintiffnever entered into a contract with him or even spoke to

him and the other Auorncy Defendants are not specifically referred to at all; and 3) as to Fletcher

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and Kau0101d & Dix, Plainulfcites no relationship with her or harm from any acts on their part,

and thus she has no standing to pursue any claims against them.

Plaintiff responds that: I) specific personal jurisdiction can he exercised over attorneys

who conspired with Pennsylvania-based lnvemllelp and engaged in concerted action with it to

defraud her, referrals were made to Kaufhold & Dix and these attorneys receive a substantial

portion of their business from Inventtlelp; 2) it is premature to consider the issue of standing

prior to class certification and in any event conspirators can be connected by means of a judicial

link; and 3) co-conspirators can be held liable for the torts of other conspirators.

In a reply brief, the Attorney Defendants argue that: 1) the absent co-conspirator doctrine

does not apply if the attorneys were unaware of the acts oflnventHelp and Plaintiff makes no

allegations that they worked in concert; 2) the "juridical link doctrine" has never been adopted in

Pennsylvania or the Third Circuit, it would run afoul or Article ITl standing requirements and

Plaintiff cannot "piggy back" 011 the alleged injuries or unnamed class members; and 3) no

fiduciary duties were owed and none were breached-the letters regarding patentahility provide

true facts and Plaintiffs own letter states that, although she is unlikely to obtain a utility patent,

she could possibly obtain a design patent.

StandingS

The Attorney Defendants contend that Plaintiff does not allege any relationship with

Fletcher or Kaufhold & Dix or any harm caused hy them and thus she lacks standing to pursue

5 The Supreme Court has held that "a federal court generally may not rule on the merits of a case
without first determining that it has jurisdiction over the category or claim in suit (subject-matter
jurisdiction) and the parties (personal jurisdiction)." Sinochem Int'l Co. v. Malavsia InCI
Sh.ipping Corp., 549 U.S. 422,430-31 (2007) (citing Steel Co. v. Citizens (or Belter Env't, 523
U.S. 83, 93-102 (1998».
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claims against them. Plaintiff responds that it is premature to consider issues of standing prior to

class certification and that the "judicial link" doctrine allows her to pursue claims against co-

conspirators. The Attorney Defendants reply that the "juridical link doctrine" has never been

adopted by the Third Circuit and raises serious concerns.

The Supreme Court has held that:

TnLujan v. Defenders of Wildlife, 504 U.S. 555, 560-561, 112 S.Ct. 2130,
119 L.Ed.2d 351 (1992), we held that, to satisfy Article Ill's standing
requirements, a plaintiffmust show (I) it has suffered an "injury in fact" that is
(a) concrete and particularized and (b) actual or imminent, not conjectural or
hypothetical; (2) the injury is fairly traceable to the challenged action of the
defendant; and (3) it is likely, as opposed to merely speculative, that the injury
will be redressed by a favorable decision.

I't'iends of the Earth, Inc. v. Laidlaw Envn Scrvs (TOe). Inc., 528 U.S. 167,180-81 (2000).

Plaintiff alleges no actions on the part of Fletcher or Kaufhold & Dix that injured her.

To the extent that Plaintiff seeks to use federal Rule or Civil Procedure 23 (class actions)

to litigate claims against defendants who did not engage in activity with her that gives lise to her

claims," she cannot do so:

A federal rule cannot alter a constirutional requircmcru. It is well established that

"a plaiutiffmustdcmonstrarc standing for each claim [slhe seeks to press."
DaimlerChrysler Con). v. Cuno, 547 U.S. 332,335,126 S.Ct. 1854, 164 L.Ed.2d
589 (2006). Thus, with respect to each asserted claim, "fa] plaintiffmust always
have suffered a distinct and palpable injury to [her'[self." Gladstone Realtors v.
ViiI. of Bellwood, 441. U.S. 91, IOU, 99 S.Ct. 1601,60 L.Ed.2d 66 (1979)
(internal quotation marks omitted). "In no event ... may Congress abrogate the
Art. liT minima ...." Td.; see also I ,ewis v. Casev, 518 U.S. 343, 357, 116 S.CL.
2174, 135 L.Ed.2d 606 (1996) (" "That a suit may be a class action ... adds
nothing to the question of standing, for even named plaintiffs who represent a
class must allege and show that they personally have been injured, not that injury
has been suffered by other, unidentified members of the class to which they
belong and which they purport to represent.' ,. (alterations in original) (quoting

s Plaintiff submits evidence that Fletcher and Kaufhold & Dix sent lcucrs to other individuals
who might become class members (Plitt AlI II Exs. D, E, G, I) (ECFN(l. 43-1.), but not to her.
15
 Case 218·cv·Ol022·CB·RCM Document 48 Filecl 01/03/19 Page 16 of 45

Simon v. E. Kv. Wellllrt: Rights Org., 426 U.S. 26, 40 n. 20, 96 S.Ct. 1917,48
L.Ed.2d 450 (1976»).

Mahon v. TicorTitle lns. Co., 683 F.3d 59, 64 (2d Cir. 2012). As noted by Judge Bissoon, the

court's analysis in Mahon is persuasive and the Court or Appeals lor the Third Circuit has never

adopted the 'juridical link doctrine" which would appear to allow a named class plaintiff to

pursue claims against defendants whose acts may have harmed other class members but not the

named plaintiff herself Bvrd v. Aaron's Inc., 14 F. Supp. 3d 667, 682·83 (W.D. Pa, 2014),

opinion vacatcd in part on other grounds on reconsideration, 2018 WL 1183207 (W.D. Pa.Mar.

7,2018). Therefore, Defendants Fletcher and Kaufhold & Dix should be dismissed from the

case. Defendant Frost, however, sent Ms. Calhoun a Preliminary Patentability Search and

Opinion (Plitt Aff. 11Ex. A) and thus, she has standing to sue him.

Similarly, Robert Susa is not alleged to have signed any comracts with Plaintiff or to

have engaged in any tortious conduct. Plaintiff provides no basis lor piercing the corporate veil

and holding him liable as the "alter ego" of the corporate InventHclp defendants. See Aluminum

Bahrain B.S.C. v. Dahdaleh, 17 F. Supp. 3d 461, 471 (W.D. Pa. 2014); Partners Coffce Co., LLC

v. Oceana Servs. & Prods. Co., 700 F. Supp. 2d 720, 727 (W.D. Pa. 2010). Therefore, !VIr. Susa

should be dismissed Irorn this case without prejudice. If Plaintiff finds evidence to substantiate a

claim against him, she can move to have him rejoined in the case as a defendant.

Personal Jurisdiction

"Once it is challenged, the burden rests upon the plaintiff to establish personal

jurisdiction. A nexus between the defendant, the forum and the litigation is the essential

foundation of in personam jurisdiction." General Elec. Co. v. Deutz AG, 270 F.3d 144, '150 (3d

Cir. 2001) (citation omitted). The court initially must "accept all of the plaintiff's allegations as

16
 Case 2:18-cv-01022-C8-RCf\I1 Document 48 Filed Oll03{19 Page 17 of 45

true and construe disputed facts in favor of the plaintiff," who only needs to establish a "prima

facie case," although the court can reconsider the issue "if it appears that the facts alleged to

SUppOItjurisdiction are in dispute," and can conduct an evidentiary hearing to resolve any

disputed facts. Cmteret Savs. Bank, FA v. Shushan, 954 f,2d 141, 142 & n. 1 (3d Cir. j 992).

Frequently, motions to dismiss based on lack of personal jurisdlctiou are resolved by

reference to affidavits submitted by the parties. However, the Attorney Defendants have not

submitted any affidavits and therefore Plaintiff's allegations must be taken as true. See Miller

Yacht Sales, Inc, 1/, Smith, 384 FJd 93, 97 (3d Cir. 2004).

Specific personal jurisdiction arises from a dcfcndanr's forum related activities and may

be established even where the defendant has not physically appeared in the state but has

"'purposefully directed' his activities at residents of the forum, and the litigation results from

alleged injuries that 'arise out of 01' relate to' those activities." Burger King Corp. v, RlId~ewicz,

471 U.S. 462, 472-73 (1985) (citations omitted). It is claim specific. Remick v, Manfrcdv, 238

F.3d 248, 255 (3d Cir. 2001).

As summarized by the COUlt of Appeals:

The inquiry as to whether sped fic jurisdiction exists has three parts. first,
the defendant must have "purposefully directed [its] activities" at the forum,
Second, the litigation must "arise out 0(' or relate to" at least one of those
activities. Helicollteros [Nacionales de Columbia, S.A. v.llaIr!, 466 U,S, [408,]
414, 104 S.O. 1868 [(1984)]; Grimes v. Vitalink Commc'ns COlp., 17 F.3d 1553,
1559 (3d Cir. 1994). And third, if the prior two requirements are met, a court may
consider whether the exercise of jurisdiction otherwise "cornport]s] with' fair play
and substant ial justice. '"

O'Conl1or v, Shady Lane Hotel Co" Ltd" 496 F.3d 3 I 2,317 (3d Cir. 2007)(quoting Burger

King, 471 U.S. at 472, 476) (footnote omitted).

The Federal Rules ofCivil Procedure authorize a district court to assert personal

17
 Case 218-cv-Ol022-CB-RCM Document 48 Filed 01/03/19 Page 18 of 45

jurisdiction over a non-resident to the extent permissible under the Jaw of the state where the

district court sits. Fed.RCiv.P. 4(k)( I)(A). O'Connor, 496 F.3d at 3\6. Pursuant to

Pennsylvania's long al111statute, 42 Pa. C.S. § 5322(a), a plaintiff can establish specific personal

jurisdiction by showing that a defendant has engaged in forum related activities, including

"[cjausing harm or tortious injury in this Commonwealth by an act or omission outside this

Commonwealth," § 5322(a)(4).

Pennsylvania also authorizes exercise of the jurisdiction of its courts over non-residents

"where the contact is sufficient under the Constitution of the United States," 42 Pa. C.S. § 5308,

and "to the fullest extent allowed under the Constitution of the United States and may be based

on the mOSI minimum contact with this Commonwealth allowed under the Constitution of the

United States." 42 Pa, C.S. § 5322(b). See Kubik v. Letteri, 614 A.2d 1110, 1114 (Pa. \992)

(following Burger King analysis).

Plaintiff alleges that Frost? engaged in the following conduct: he received all or a

substantial portion of his business Irom Inverullelp, a Pennsylvania corporation; he received all

information for Preliminary Patentability Opinions Irom InventHelp directly and he sent his

signed letters io clients back to InventHclp, which then forwarded them to clients.

The Attorney Defendants have not responded to this argument and, as noted above, have

not submitted any affidavits in support of their motion to dismiss for lack of personal

jurisdiction. Therefore, Plaintiff's allegations should be accepted as true. and she has made a

prima facie case ofpurposeful availment by Frost. Tn addition, she raises the absent co-

conspirator doctrine,

7 Although it is never mentioned in the mol ion to dismiss, Frost is a citizen ofFlorida (Am.
Cornpl. "ij39).
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 Case 2 18-cv-Ol022-C8-RCM Document 48 Filed 01/03/19 Page 19 of 45

"Under Pennsylvania law personal jurisdiction of a non-forum co-conspirator may be

asserted ... where a plaintiff demonstrates that substantial acts in furtherance of the conspiracy

occurred in Pennsylvania and that the non-forum co-conspirator was aware or should have been

aware ofthose acts." Santana Prod., Inc. v. Bohrick Washroom Equip., 14 F.Supp.2d 710, 718

(M.D. Pa. 1998). As noted by Judge Ambrose, numerous cases have followed this doctrine and

denied motions to dismiss based on the acts of the eo-conspirators:

SeeCfrl International. loc. v. Marck, Civ. No. 4-4837,2005 \VL 146890 aL *3

(E.D. Pa. Jan. 21, 2005)( denying 11 motion to dismiss where the plaintiff alleged
that the non-forum defendant was part of a conspiracy whose actors committed
acts in Pennsylvania and caused harm in Pennsylvania); Koresko v. Bleiweis, Civ.
No.4- 769,2005 wt, 2436693 at *3 Jl. 3 (E.D. Pa. Sept. 27, 2005) (stating, in an
analysis ofthe existence of specific jurisdiction over various defendants, "[t'[he
Court will consider these contacts as being common to all Defendants, as the
Complaint asserts a conspiracy claim and personal jurisdiction over a non-
Pennsylvania defendant may be asserted if substantial acts in furtherance of the
conspiracy occurred in Pennsylvania and the non-forum co-conspirator was aware
of' or should have been aware of those acts.") (internal quotation marks and
citations omitted); Goodson v. Ma£!gi, 797 F.Supp.2d 604,621 (W'D. Pa. 20J 1)
(citing to Santana, 14 F. Supp. 2d at 718, for the proposition that "[ujnder
Pennsylvania Jaw, personal jurisdiction of a non-forum co-conspirator may be
asserted only where a plaintiff demonstrates that substantial acts in furtherance of
the conspiracy occurred in Pennsylvania and that the nOn-f0J11111 co-conspirator
was aware or should have been aware of those acts."); Massachusetts School of
Law at Andover, Inc. v. American Bar Association, 846 F. Supp. 374,379-80
(E.D. Pa. 1994), aU'd, f07 F.3d 1026, 1042 (3d Cir. 1997) (stating that "f c10-
conspirator jurisdiction is not a separate basis of jurisdiction apart from general or
specific jurisdiction. Rathel', it is based on the same contacts-wuh-thc-Iorurn
analysis just discussed. The difference is that a court looks not only at the
defendant's forum contacts, but at those of the defendant's 'resident' co-
conspirators. The court imputes the contacts of the 'resident' co-conspirator over
whom it has jurisdiction to the 'foreign' co-conspirator to see if there are
sufficient contacts to exercise jurisdiction over the latter. ") citing, Ethanol
Partners v. Wiener. Zuckerhrot Weiss & Brecher, 635 F. Supp. 15, 18 (E.D. Pa.
1985); In re Arthul'Treacher's Franchisec Litig., 92 F.R.o. 398,411 (E.D. Pa.
1981); and Temtex Products, Inc. v. Kramer, 330 Pa. Super. 183,479 A.2d 500,
506 (1984) (stating that, where a cause of action arises from a conspiracy,
"personal jurisdiction over all of the participants in a concerted action may be
maintained where a significant part of the action took place in the forum stare.")
(citations omitted).

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 Case 2:18-cv-01022-CB-RCM Document 48 Filed 01/03/19 Page 20 of 45

Aluminum Balu'nin B.S.C. v. Alcoa, Inc., 866 F. Supp. 2<1525,528-29 (W.D. Pa. 20l2).

The Attorney Defendants contend that the absent co-conspirator doctrine docs not apply

in this case because Plaintiff must point 10 "evidence thar the defendants who are accused of

being co-conspirators were aware of those unlawful acts." (ECF No. 47 at 2.) "However, when

the court does not hold an evidentiary hearing on the motion to dismiss, the plaintiff need only

establish a prima facie case of personal jurisdiction and the plaintiff is entitled to have its

allegations taken as true and HII factual disputes drawn in its favo r." lvlillcr Yaeht Sales, 384

F.3d at 97. Plaintiff has alleged that: I) she received the "Preliminary Patentability Opinion"

signed by Frost directly from Invcrul-lclp's Pittsburgh headquarters. not from Attorney Frost

(Am. COIJlPI. '1"il74-75); 2) pursuant to the February 18,2012 Basic Infonnation Package

Agreement that she signed with InvcntHclp, she authorized Western Inventtlelp to refer her

request 1~1I'a patent opinion and authorized an exchange or information between Frost and

Western TnventHelp (Plitt A ff. 11Exs. B, C); 3) she financed both the Basic Information Package

and Preliminary Patentability Search and Opinion pursuant to a single contract with Universal

Payment Corporation, a Pennsylvania corporation that she contends is part of the TnventHelp

enterprise, thus she paid Frost through Inveutl-lelp and received Frost's opinion from

Inventl-lelp's Pittsburgh headquarters (Am. Compl. 1'135,67-68); 4) Frost "had first-hand

knowledge of hundreds (01' thousands) or customers, referred to (him] by lnventllclp, who did

not receive utility patents and/or complained that InventHelp is a fraud. Yet, [heJ informed Class

Plaintiffs of none of these facts and instead advised them to apply forutility patents and to move

forward with InventHelp's services" (Am. Compl. '1219); 5) Frost receives hundreds or

thousands of clients from Inventblelp and works in tandem with TnventHelp, a Pennsylvania

20
 Case 2:18-cv-01022-CB-RCM Document 48 Filed 01/03/19 Page 21 of 45

corporation (A.m, Compl. '1'1 31-32, 76, 218- J 9); 6) Frost acts in concert with TnventHelp to

defraud Plaintiffs, in schemes that constitute ongoing conspiracies with him playing an integral

role (Am. Comp!. 'i" 7, 9,79, I J 8-19, 121, 133(j,[), 218-19); 7) evidence demonstrates that

lnvenrltelp refers its clients to Frost and lnvcntHclp communicates with these attorneys on

behal f ofTnventHelp customers and transmits letters with legal opinions from him 10 its

customers, such that Frost does not even speak with the Inveutltelp customers for whom he is

preparing provisional patents and patentahility opinions; and 8) Inventtlelp clients sign

acknowledgements explicitly stating that they consent to the exchange ofinfonnation by and

between lnventltclp and the Attorney Defendants such as Frost (Plitt Aff. ITEx. C).

Accepting these allegations as true at this stage of the proceedings, Plaintiff has stated a

prima facie case that Frost was aware of the actionable conduct by the InventHelp Defendants,

and thus he would be an absent co-conspirator for purposes of specific personal jurisdiction.

Therefore, the motion to dismiss for lack of personal jurisdiction should be denied.

Standm'd of Review for Rule l2Cb)(6) Motion

The Supreme Court has issued two decisions that pertain to the standard of review tor

failure to state a claim ujlon which relief could be granted. The Court held that a complaint must

include tactual allegations that "Slate a claim to relief that is plausible on its face." Ashcroft v.

.liIhil.!, 556 U.S. 662,678 (2009) (citing Bell Atl. COIp. Y.Twomblv, 550 U.S. 544, 570 (2007».

"l W[ithout some factual allegation in the complaint. a claimant cannot satisfy the requirement

that he or she provide not only 'fair notice' but also the 'grounds' on which the claim rests."

Philiil}SY.Countv of AlleghenY, 515 r.3d 224,232 (3d Cir, 2008). In determining whether a

plaintiff has met this standard, a COUlt must reject legal conclusions unsupported by factual

allegations, "[tjhreadbare recitals of the elements of a cause of action, supported by mere

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 Case 2:18-cv·01022-CB-RCM Document 48 Filed 01/03/19 Page 22 of 45

conclusory statements;" "labels and conclusions;" and '''naked asscrtionls]' devoid or 'further

factual enhancement.'?' Iqbal, 556 U.S. at 678 (citations omitted). Mere "possibilities" of

misconduct are insufficient. Id. at 679. The Court of Appeals has summarized the inquiry as

follows:

To determine the sufficiency of a complaint, a court must take three steps.

First, the COUlt must "tak]e] note of the clements a plaintiffmust plead to slate a
claim." Ashcroll v. Iqbal, 556 U.S. 662, 129 S.C! 1937, 1947,173 L.Fd.2c1868
(2009). Second, the court should identify allegations that, "because they arc no
more than conclusions, arc not entitled 10 the assumption of truth." Td.at 1950.
Third, "whe]n] there are well-pleaded factual allegations, a court should assume
their veracity and then determine whether they plausibly give rise to an
entitlement for relief." Td.This means that our inquiry is normally broken into
three parts: (1) identifying the elements of the claim, (2) reviewing the complaint
10 strike conclusory allegations, and then (3) looking at the well-pleaded
components of the complaint and evaluating whether all of the clements identified
in part one ofthe inquiry arc sufficiently alleged.

Mallc\IS v. GcOrgC, 641 F.3d 560,563 (3d Cir. 20r I).

The Court of Appeals has explained that: "In deciding a Rule 12(b)(6) motion, a COUlt

must consider only the complaint, exhibits attached to the complaint, matters ofpublic record, as

well as undisputed I)' authentic documents if the complainant's claims are based upon these

documents" Mayer v. Helichick, 605 F.Jd 223, 230 (3d Cir, 2010) (citation omitted). The

TnventHeip Defendants have attached to their motion to dismiss the Basic Information Package

dated February 12, 2012 and the disclosures that were made in connection with that agreement,

the Submission Agreement dated August 2,2013 and the disclosures that were made ill

connection with thai agreement, and the Intromurk Proposal signed on August 2, 2013 (6Cl' No.

30 Exs. A-f). Plaintiff has not disputed thc authenticity of these documents. Moreover, she has

attached other documents to her brief in opposition, namely letters to her lrorn Inventl+elp dated

December 10,2015 and March 8, 2016 and disclosures (Plitt ALI Exs. A-C), and Inveml+elp has

22
 Case 2:18-cv-01022-C6-RCNI Document 48 Filecl 01/03/19 page 23 of 45

not disputed the authenticity of these lcucrs. In her response to the Auorncy Defendants' motion

to dismiss, Plaintiff has attached the Preliminary Patentability Search and Opinion Irom Frost

and her Referral Request (Plitt AfT. II Exs. 1\, C), and the Attorney Defendants have 11(11 disputed

the authenticity ofthese documents. Therefore, all of these documents may all be considered

without converting the motions into motions for summary judgment.

Count 1: ALP1\ Claim

The AlP A provides as follows:

(a) 111Gencral.v-An invention promoter shall have a duty to disclose the

following information to a customer in writing, prior to entering into a contract
for invention promotion services:

(I) the total number of inventions evaluated by the invention promoter for
commercial potential in the past 5 years, as well as the number of those inventions
that received positive evaluations, and the number of those inventions that
received negative evaluations;

(2) the total number or customers who have contracted with the invention
promoter in the past 5 years, not including customers who have purchased trade
show services, research, advertising, (II" other nonmarkcting services from the
invention promoter, or who have defaulted in their payment to the invention
promoter;

(3) the total number of customers known by the invention promoter to

have received a net financial profit as a direct result of the invention promotion
services provided by such invention promoter;

(4) the total number of customers known by the invention promoter to

have received license agreements lor their inventions as a direct result 0[' the
invention promotion services provided by such invention promoter; and

(5) the names and addresses of all previous invention promotion

companies with which the invention promoter or its officers have collectively or
individually been affiliated in the previous 10 years.

(b) Civil Action.--(I) Any customer who enters into a contract with un
invention promoter and who is found by a court to have heen injured by any
material false or fraudulent statement or representation, or any omission of
material fact, by that invention promoter (or any agent, employee, director,
23
 Case 2:18-cv-Ol022-CB-RCM Document 48 Filed 01/03/19 Page 24 of 45

officer, partner, or independent contractor of such invention promoter), or by the

Iailurc of that invention promoter to disclose such information as required tinder
subsection (a), may recover in a civil action against the invention promoter (or the
officers, directors, or partners of such invention promoter), in addition to
reasonable costs and attorneys' fees--

(A) the amount of actual damages incurred by the customer; Of

(E) at the election of the customer at any time before final judgment is
rendered, statutory damages in a sum of not more than S5,000, as the court
considers just.

(2) Notwithstanding paragraph (I), in a case where the customer sustains

the burden of proof, and the court finds, that the invention promoter intentionally
misrepresented or omitted a material fact to such customer, or willfully failed to
disclose such information as required tinder subsection (a), with the purpose of
deceiving that customer, the court may increase damages to not more than three
times the amount awarded, taking into account past complaints made against the
invention promoter that resulted in regulator), sanctions or other corrective actions
based on those records compiled by the Commissioner ofParents under
subsection (d).

35 U.S.C. § 297(a, b).

Plaintiff alleges that the InventHelp Defendants violated both subsection (a)-by making

false disclosures-and subsection (h)-hy making other false and fraudulent statements and

representations. The Inverullelp Defendants argue that their disclosures were accurate and that

subsection (b) is merely the provision by which an individual can sue lor violations for

subsection (a). Neither of these arguments withstands scrutiny.

First, Plaintiff points out that the 2012 and 2013 Wcsrern lnvcnrllclp disclosures do not

reveal the number of customers who received licensing agreements (ECl' No. 30 Ex. C), thai she

never received disclosures from Technosystems Services Corp. and that the various disclosures

24
 Case 2:18-cv-01022-CB-RCM Document 48 Filed Ol{03{19 Page 25 of 45

are not accurate. These allegations are sufficient at this stage of the proceedings. S

Second, the Inventl+elp Defendants have not supported their contention that subsection

(b) is merely a means by which to challenge alleged violations of subsection (a), particularly

because the statutory language uses a disjunctive "01"': "Any customer who enters into a contract

with an invention promoter and who is found by a COUlt to have been injured by any material

false or fraudulent statement or representation, or any omission of material fact, by that invention

promoter (01' any agent, employee, director, officer, partner, or independent contractor of such

invention promoter), or by the failure of that invention promoter to disclose such information as

required under subsection (a).... " That is, any customer injured by an invention promoter's

failure to disclose information as required WIdersubsection (a) may bring suit, 01' any customer

injured by an invention promoter's material false or fraudulent statement or representation may

bring suit. "[C]anons of construction ordinarily suggest that terms connected by a disjunctive be

given separate meanings unless the context dictates otherwise." United State·s v. Urban, 140

F.3d 229, 232 (3d Cir. 1998) (citations omitted). Defendants' arguments should be rejected.

The InventHeip Defendants point out that their agreements contain the following

disclaimers:

The purchase of inventor assistance is a high-risk expenditure.

Full patent protections provide legal protection lor ideas and inventions.
We give no advice as to whether your idea is patentable. Such advice may come
only from a patent attorney or licensed patent agent.

~ InventHeip notes that its disclosures informed Plaintiff that the total number of inventions it
evaluated over the past five years was () because it "docs not attempt. to evaluate inventions and
accepts most inventions for its services." (ECF No. 30 Ex. Fl.) It is far from clear that such
language complies with the requirements of tile AIPA.
25
 Case 2:18-cv-01022-CB-RCM Document 48 Filed 01/03/19 Page 26 of 45

You should treat your ideas as a confidential subject in order to avoid

losing any patent rights you may have.

If you wish patent advice, it is advisable that you seek advice lrom an
independent patent attorney.

Manufacturers or other business organizations may be unwilling to enter

into licensing agreements for, or agree to, pay for the right to commercialize,
unpatentable ideas or products.

(ECF No. 30 Ex. i\ at 2; Ex. D at 5; Ex. F at3.) Plaintiff contends that these disclaimers do not

shield Inventl+clp from the statutes set forth in the Amended Complaint.

Inventllelp cites a case in which Judge Lancaster found, following a bench trial, that:

"Based on the overall, common sense, net impression on a reasonable consumer, defendants do

not falsely represent that their invention-promotion services have helped 'many' of their

customers' invention ideas become profitable products." Federal Trade Comm'n v. Davison

Assoes .. Inc., 431 F. Supp. 2d 548,556 (W.D. Pa, 2006), However, in that same opinion, Judge

Lancaster also found that: I) the defendants falsely represented "both directly and by

implication" that consumers who bought their services stood a reasonably good chance of

realizing financial gain; 2) they falsely represented that they were selective about those to whom

they offered services; 3) they created the false impression that they had selected this consumers

particular idea to the exclusion of many others; 4) they mispresented their track record; 5) they

falsely suggested that certain products they had promoted were profitable; 6) they falsely

represented that they have a vast network of corporations with whom they have an ongoing

special relationship; 7) they falsely represented that their invention marketing services arc

necessary for consumers to license their invention ideas to corporations; and 8) they falsely

represented that they prepared objective and expert analyses of the patentability of consumers'

26
 Case 2:18-cv-01022-CB-RCM Document 48 Filed 01/03/19 Page 27 of 45

invention ideas. ld. at 554, 555, 556, 557. This case is at the pleading stage and Plaintiff has

made many of the same allegations against the Invcntl-lclp Defendants.

The lnventllelp Defendants contend, in effect, that liability under the A IPA may be

circumvented by oralJy giving a layperson every reason to believe thai an invention promoter has

achieved great successes merely by having the individual sign a piece of paper which appears to

satisfy the statute's disclosure requirements indicating otherwise. This Court is unconvinced by

this argument. In any event, this mailer cannot be resolved in the context of a motion to dismiss.

The InventHelp Defendants also contend that Plaintiffs AIJ>A claim is time barred

because it has been more than four years since she signed the Basic Information Package 01)

February 12, 2012 or the Submission Agreement on August 2, 2013. Plaintiff responds that all

of the contracts have been extended and are still in effect.

The parties have correctly stated that the four-year statute of limitations set forth in 2R

U.S.C. § 1658(a) is applicable to An>A claims. See Niiarvee v. Davison Design & Dey., Tne.,

2018 WI, 1072439, at *3 (W.D. Pa. Feb. 27, 20U:l); WVIUl v. Davison Design & Dcy., Ins, 2010

WI.. 891905, at *7 (S.D. Ala. Mar. 8,2010). However, they have not identified the proper

accrual date.

Plaintiff docs not allege that she was aware of the fraudulent disclosures and

misrepresentations when she signed the contracts. On the contrary, had she been on notice of

what she now alleges to be true, she never would have signed them. On the other hand,

Plaintiffs cause of action did not automatically continue to accrue during the term of the

contracts. Rather, the issue is when Plaintiffk.llew or should have known of the fraud. Niiaryee,

2018 Wl. 1072439, at *3-4. As the COlHt stated in Wynn:

The language of § 297(b) providing that "[a)oy customer who enters into a
27
 Case 2:18-cv-01022-CB-RCM Document 48 Filed 01/03/19 Page 28 of 45

contract with an invention promoter and who is found by a court to have been
injured by any material false or fraudulent statement or representation ... or by the
failure or that invention promoter to disclose such information as required under
subsection (a), may recover in a civil action" convinces the undersigned, at this
stage of the proceedings, that a COUlt could legitimately run the four-year
limitations from the point at which a plaintiff discovers (or should have
discovered) she has been injured by the failure to disclose (or the making of false
disclosures) as opposed to the date upon which the promotion contract was
executed. Cr. Barry Aviation Inc. v. Land O'Lakes Municipal Airport C0111m'n,
377 F.3d 682,688 (7th eir. 2004) ("For both RICO claims and § 198) claims, a
cause of action accrues when the plaintiff knew or should have known that it had
sustained an injury. This rule is referred to as the discovery rule because the
accrual date is not determined when the injury occurs but when it is discovered or
should have been discovered."); Cada v. Baxter Healthcare Com., 920 F.2d446,
450 (7th Cir. 1990) ('The rule that postpones the beginning of the limitations
period from the date when the plaintiff is wronged to the date when he discovers
he has been injured is the 'discovery rule' of federal common law, which is read
into statutes oflimitations in federal-question eases ... in the absence ofa contrary
directive from Congress."), celt. denied, 501 U.S. 1261,111 S.C!. 2916,115
L.Ed.2d [079 (1991); Brian Route 50 Auto Sales, Jnc. v. City of Kankakee, 2010
\VL 375597, *4 (C.D. III. 2010) (,Section 1983 claims accrue when a plaintiff
knows or should know that his or her constitutional rights have been violated.
Accrual is the date on which the statute of limitations begins to run. 'It is not the
date on which the wrong that injures the plaintiff occurs, but the date-often the
same, but sometimes later-on which the plaintiff discovers that he has been
injured.' The rule that postpones the beginning of the limitations period from the
date when plaintiff is wronged to the date when he discovers he has been injured
is the 'discovery rule' of federal common law].]").

2010 WL 891905, at"'8 n.S.

Plaintiffhas alleged that the luveutl lclp Defendants had engaged her in an ongoing

contractual relationship and that they continued "stringing her along" with false promises that

they were working to promote her invention for years. She specifically alleges that, as of March

8,2016, she believed-and was explicitly led to believe in a letter issued that date-that

TnventHelp was still fulfilling its contractual and statutory obligations to her and that it would

continue to do so until at least December 2018. (Am. Compl. ~~ 113-14; Plitt Aft: Ex. A.) The

InventHelp Defendants have 110teven suggested that she should have been 011 notice more Ihan

28
 Case 2:18-cv-01022-CB-RCM Document 48 Filed 01/03/19 Page 29 of 45

foul' years prior to the date she filed the Complaint (June l , 20 IS) that she had a cause of action

to pursue. The COUIt cannot conclude based solely on the allegations of (he Amended Complaint

that Plaintiffs claim is time barred. Therefore, with respect to Count I, the motion to dismiss

filed by the lnventl+elp Defendants should be denied.

Count II: UTPCrL Claim

In Count Il, Plaimiffalleges a claim under the UTPCPl. against all Defendants. The

Invcntl-lelp Defendants contend that she cannot state a claim under this statute because her

contracts were not "primarily for personal, family or household purposes." 73 Pa. C.S. § 201-

9.2(a). The Attorney Defendants have incorporated this argument. Plaintiff responds that she

does not run a business and that Inventl-lelp's practices arc targeted at consumers, not businesses.

Defendants reply that it is the purpose of the transaction which matters.

As Judge Bissoon observed in Niiarvee:

a private cause of action under the UTPCPL is restricted to an individual who

"purchases or leases goods or services primarily for personal, family or household
purposes." 73 Pa. C.S.A. § 20J -9.2(a). Pennsylvania courts have been careful to
distinguish between "purchases made (or business reasons, which are not
actionable, from those made for 'personal, family or household usc.'" Baldcrston
v. Medtron.ic Sofamor Danek. Inc., 285 F.3d 238, 242 (3d c-.2002) (citations
omitted). The determination of "whether a purchase is used primarily for
household purposes ." depends on the purpose of the purchase, not the type or
product purchased." Carpenter v. Shu-Bee's, Inc., 2012 WL 2594276, at *2 (r-.D.
Pa. July 5, 2012); see also Morales v. Superior Living Prod., LLC, 2009 WL
3234434, at * I J (E.D. Pa. Sept. 30, 2009), al'l'd, [39S] F. App'x. 812 (3d Cir.
2010) (dismissing the complaint and findi ng that a plaintiff engaged in the
business of bathroom renovation had purchased a bathtub lor his business and not
personal use).

20lS WL 1072439, at *4.

In Niiaryee, Judge Bissoon held that the complaint dearly stated that the plaintiff

purchased the defendant's services for business reasons, namely to bring his invention to the

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market. So 100 here. Plaintiff cites S. Kane &. Son Profit Sharing TlUst v. Marine Midland

Bank, 1996 WL 200603, at *3-4 (E.D. Pa. Apr. 25, 1996). In that case, however, the issue was

whether a purchase of securities constituted a purchase of "goods," not whether the transaction

was primarily for personal, family or household PUl11oses.

The purpose of Plaintiff's purchase of lnventl-lelp's services was 10 bring her "Word of

God Bedding" idea to the market. The fact that Plaintiff docs not run a business does not alter

this analysis. Plaintiff argues that Niiarvce is both distinguishable and wrong, but the

distinctions she cites in the contracts do not the alterthe purpose of the agreement. Therefore,

the UTPCPL does not cover this transaction and with respect to Count 11,the motions to dismiss

should be granted.

Count III: TePA Claim

In Count lll, Plairuitlalleges thai InventHelp violated the TCPA by repeatedly calling her

on her cell phone, The InvcntHclp Defendants contend thai the TCPA does not apply to these

allegations, both because she never indicates thai she provided her cell phone number and

because the calls were not random or automated but occurred within the context of an existing

business relationship. Plaintiff responds that repeatedly calling her cell phone after she requested

that they desist from doing so violates the TCP A and other issues can be determined later.

The Tcr A provides that:

It shall be unluwlul Ior any person within the United States, or any person outside
the United States if the recipient is within the United Slates-

(A) to make any call (other than a call made for emergency purposes or
made with the prior express consent of the called party) using any automatic
telephone dialing system or an artificial or prerecorded voice-

(iii) to any telephone number assigned to a paging service, cellular

telephone service, specialized mobile radio service, or other radio

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 Case 218-cv-01022-CB-RCM Document 48 Filed 01/03/19 Page 31 of 45

common carrier service, 01' any service lor which the called party is
charged for the call, unless such call is made solely to collect a debt owed
t.oor guaranteed by the United States ...

47 U.S.C. § 227(b)(1 )(A). Thus, "a plaintiff must allege that (I) a call was made; (2) the caller

used an Automatic Telephone Dialing System or artificial or prerecorded voice; (3) the telephone

numbercalled was assigned to a cellulartelephone service; and (4) the caller did not have prior

express written consent of the recipient." Richardson v. Verde Energv USA. Inc., 2016 WL

7380708, at *2 (E.D. Pa. Dec. 19,2016).

Plaintiff has alleged that the Invcntl'Iclp Defendants repeatedly called her cell phone

using an automatic dialing system after being told to cease and desist. The TnventHelp

Defendants contend that Plaintiff never provided them with her cell phone number, but this fact

is disputed and, in any event, liability does not depend on Plaintiffhaving provided the number.

They also argue that, because Inventrlelp had an existing relationship with Plaimill, it cannot

have violated the TePA, which was designed to protect against random calls from automated

callers. They cite TlUmper v. Cit: Capital Retail Dank, 79 F. Supp. 3d 511 (D.N.J. 2014), in

which the court dismissed a TePA claim because the complaint did not describe the calls as

prerecorded and stated that they were intended for Enid Gonzales, who had an aeCOUIl\with GE

and thus were not random. But sec Somogyi v. Freedom Mortgage Com., 2018 Wl, 3656158, at

*6 (D.N.J. Aug. 2,2018) (noting that the Tru11lpercase does no! stand for the proposition that it

is impossible for companies to contact their customers using an automatic dialing system in

violation of the TCPA); Sieleman v. Freedom Mortgage COIp., 2018 WL 3656159, at *5 (O.N.J.

Aug. 2,2018) (rejecting the argument that a company that has an "established business

relationship" with a customer cannot violate the TePA-that exception applies 10 calls made to

residential lines, not cell phones). More significantly, the CO\111

of Appeals has rejected the
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argument that the "esrabl ished business relationship" defense applies to calls made to cell

phones, see Gager v. Dell Financial Services. LLC, 727 F.3d 265, 273 (3d Cir. 2013).

Plaintiffhas alleged all that is necessary to state a claim for violation of the TePA.

Therefore, with respect to COUI1l Ill, the motion to dismiss filed by the InventHelp Defendants

should be denied.

Counts 1\1 and \I: Fraud and Negligent Misrepresentation

In Count rv, Plaintiff alleges a claim of fraud and in Count V, she alleges a claim of

negligent misrepresentation against all Defendants. The Invent Help Dcfcndanrs argue that both

claims are barred by the gist of the action doctrine and the integration clauses of the contracts

and that it was unreasonable of Plaintiff to rely on oral represenrations that allegedly directly

contradicted the written agreements. The Attorney Defendants incorporate these arguments.

Plaintiff responds that the gist of this action is fraud, that integration clauses do not bar a claim

of fraudulent inducement and that her reliance was reasonable.

Gist of the Action Doctrine

The Pennsylvania Supreme Court has stated that:

The general governing principle which can be derived from our prior cases
is thai our Court has consistently regarded the nature of the duty alleged to have
been breached, as established by the underlying averments supporting the claim in
a plaintiff's complaint, to be the critical determinative factor in determining
whether the claim is truly one in tort, or for breach of contract. In this regard, the
substance of the allegations comprising a claim in a plaintiffs complaint are of
paramount importance, and, thus, the mere labeling by the plaintiff of a claim as
being in tort, e.g., for negligence, is not controlling. If the facts of a particular
claim establish that the duty breached is one created by the parties by the terms of
their contract-i.e., a specific promise to do something that a party would not
ordinarily have been obligated to do but for the existence of the contract-then
the claim is to be viewed as one for breach of contract. If, however, the facts
establish that the claim involves the defendant's violation of a broader social duty
owed to all individuals, which is imposed by the law O1't0115and, hence, exists
regardless of the contract, then it must be regarded as a tort, Although this duty-

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based demarcation was f rst recognized by our Court over a century and a half
ago, it remains sound, as evidenced by the fact that it is currently employed by the
high Courts of the majority of our sister jurisdictions to differentiate between tort
and conrract actions. We, therefore, reaffirm its applicability as the touchstone
standard for ascertaining the true gist 01' gravamen of a claim pled by a plaintiff in
a civil complaint.

Bruno v. Erie Ins. Co., 106 A.3<148, 68-69 (Pa. 2014) (footnotes and citations omitted). Tn

Bl1lno, the plaintiff homeowners sued their insurer (Eric) alter its adjuster and engineer came to

their home to investigate black mold the I3rUI1OS

found in their basement and told the Brunos that

the mold was harmless, that it had no health consequences and that they should continue to tear

out the paneling in their basement. The Brunos followed this advice but suffered health

problems from mold exposure and eventually the house became uninhabitable such that it bad to

be destroyed. Erie paid the Brunos $5,000, as owed under the insurance policy for testing and

attempted remediation of the mold. The court observed that "the mere existence of a contract

between two parties does not, ipsofacto, classify a Claim by a contracting party Ior injury or loss

suffered as the result of actions of the other party in performing the contract as one Ior breach of

contract" ld. at 69.

The court held that:

Accordingly, whi Ie Erie had contractual obligations under its policy to

investigate whether mold was present, and also to pay lor all property damage
caused by mold, the substance of the Brunos' allegations is not that it failed to
meet these obligations; rather, it is that Erie, during the course of fulfilling these
obligations through the actions of its agents, acted in a negligent manner by
making false assurances regarding the toxicity of the mold and affirmatively
recommending to the Brunos that they continue their renovation efforts, which
caused them to suffer physical harm because of their reasonable reliance on those
assurances. Consequently, these allegations ofnegligence facially concern Erie's
alleged breach of a general social duty, not a breach of any duty created by the
insurance policy itself. The policy in this instance merely served as the vehicle
which established the relationship between the Brunos and Erie, during the
existence of which Erie allegedly committed a tort. We, therefore, reverse the
order of the Superior Court affirming the trial court's dismissal of the Hrunos'
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 Case 2:18-cv·01022-CB·RCM oocument 48 Filed 01/03/19 Page 34 of 45

negligence claim on the basis of its application of the gist of the action doctrine.

Id. at 7t (footnote omitted).

The Court of Appeals has noted that application of this doctrine "frequently requires

courts to engage in a factually intensive inquiry as to the nature of a plaintiff's claims." Addie v.

Kiacr, 737 F.3d 854, 868 (3d Cit'. 2013). "Accordingly, district courts in the Third Circuit

commonly allow contract and tort claims to simultaneously proceed into discovery and defer

evaluating a gist of the action challenge until the sI1l11maJ)'

judgment stage." ApplcAmeriean

Group, LLC v. GnC Design, Inc., 294 F. Supp. 3d 414, 424 (W.D. Pa. 2018), Thus, Plainriff

argues that this issue need not be decided lit this stage of the proceedings. InventHelp contends

that the issue can be resolved on a motion to dismiss when a plaintiffrelies on written contracts.

Jodek Chmitable Trust, R.A. v. Vettical Net Inc., 412 F. Supp. 2d 469, 480 (E.D. Pa. 2006)

(dismissing tort claims because the plaintiff"has 1101 pleaded any facts tending to show that any

of Defendants' acts or omissions constituted a tort, rather than a breach of contract. Absent the

various contracts to which the parties mutually assented, Defendants were under no obligation to

perform, or not to perform, any of the actions that form the basis of Plaintiffs tort claims.")

Plaintiff contends that the gist of this action sounds in tort: although she signed contracts

with Invent Help, she is not merely alleging (hat it failed to perform the duties outlined in the

contracts. Rathel', her claim is that the entire purpose ofTnventHelp is to lure inventors into

signing invention promotion contracts with 110 intention of ever providing such services, but only

to take the inventors' money. She argues that the duties are imposed by social policy, some of

which are explicitly codified in the A11'A and the UTPCPL. See Norfolk S. Rv. Co. v.

Pittsburgh.& W. Va. RR., 870 F3rl 244, 256-57 (3d cu. 2017) (lawsuit involving breach of

contract also sounded in tort and was not barred by the gist of the action doctrine because there
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were fraudulent misrepresentations and omissions with an intent to mislead the plaintiff in order

to secure a lease); Aqua ['harms .. LtC v. Park Irlllat Dmg Corp., 2017 WL 2288287, at *5 (E.D.

Pa. May 17, 2018) (Aqua's claim "rises above an ordinary breach of contract" because the nature

of the action as a whole did not arise solely from the agreement's terms); Prime Energv &

Chem., LLC v. Tucker Arensberg, P.C., 2018 \VL 3541862, at *5 (W.D. Pa. July 23, 2018)

(claim involved broader societal duty owed to all individuals to refrain from fraud and was not

barred),

In this case, the pleadings demonstrate that the case is not solely about Invcntl-lclp's

alleged failure to perform under its contracts, but also a separate societal duty not to act in a

fraudulent manner. Therefore, the gist of the action doctrine does not bar the tort claims,

Defendants also cite the integration clauses in the agreements (Eel' No. 30 Exs. D, F).

Plaintiff responds that the integration clauses do not bar claims of fraudulent inducement that do

not seek to V111)' the terms of written contracts, hut rather allege that the defendant fraudulently

induced the plaintiff' to enter into a contract that otherwise she would not. See Youndt v. first

Nat'l Bank or Port Allegany, 868 A.2d 539,546 (Pa. Super. 2005); Boardakan Rest. LT.Cv.

Gordon Group Holdings, LLC, 2015 \VL 4597970, at '9 (E.D. Pa. July 31,2015). See also FTC,

431 F. Supp. 2<1at 560 (vintcgrarion clauses do not shield defendants where their

misrepresentations have resulted in consumer injury.")

Plaintiff is not attempting to alter the tenus of the written contracts, but rather is alleging

that she was fraudulently induced to sign them. Thus, her claims are not barred.

Finally, TnventHelp argues that Plaintiff fails to plead justifiable reliance because it was

not "reasonable" of her to rely on oral representations that were directly contradicted by written

documents. Mellon Bank Corp. v. First Union Real Estate E(luity & MOItg. T,w., 951 .F.2d 1399,
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 Case 2:18-cv-01022-CB-RCM Document 48 Filed 01{03{19 Page 36 of 45

1412 (3d cu. 1991); Bcnnell v. Itoch [nl'[. [nc., 2012 WL 3627404, at *21 (E.D. Pa. Aug. 23,

2012). However, in those cases, the courts noted that the agreements were between sophisticated

businessmen, which is not the situation here. Plaintiff responds that she has pleaded that

Invent Help created an ovcrarching impression that it was an expert in invention promotion, that

it had relationships with third parties, that it advised her to add a "listening device" to improve

her invention, that it used undue pressure to persuade her to sign the Submission Agreement and

that it sent her letters for years falsely claiming that it was submitting her invention to companies

when it was not in fact doing so. See Hemphill v. Nationstar Mortgage LLC, 2018 WL 4929864.

at * I0 (E.D. Pa. Oct. 10.2018) ("Plaintiff avers that Nationstar pressed her to participate in the

Diversion Program by saying at every turn that her participation would be free 01' charge. She

further alleges that she relied on these statement in deciding to pursue the program. These

allegations are sufficient to slate justifiable reliance.")

Defendants' arguments are unavailing. Therefore, with respect to Counts IV and V, the

motions to dismiss should be denied.

Count VI: Breach of Contract

In Count VI, Plaintiff alleges that all Defendants breached their contractual obligations to

her. The InventHelp Defendants argue that the claim is barred by the statute of limitations.

Plaintiff responds that the contracts have been extended in duration through December 2018 and

that Invcmliclp represented LO her on March 8,2016 that it would continue to work on her behalf

through December 2018. In addition, she notes that the Intromark Proposal stated that it

remained in effect lor 24 months with an automatic three-year renewal or until August 2, 2018.

As with the AfP A claim, the InventHelp Defendants propose to start the funning of the

statute of limitations on the dare Plaintiff signed various contracts, even though she explains that

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 Case 2:18-cv-01022-CB-RCM Document 48 Filed 01/03/19 Page 37 of 45

she had no basis for concluding that breaches were occurring at that time (and presumably would

not have signed agreements if she had so believed). Rather, the issue is when she discovered or

reasonably should have discovered that they were not Iulfilling their contractual obligations to

her. She has plausibly alleged that lnvcntl-lclp kept sending her promises to promote her

invention, "stringing her along" so that she W0111dnot be aware that no such activities were

taking place and she has referred to a March 8, 2016 letter in which lnvcntf-lclp informed her that

her New Product Submission Brochure was mailed to companies on a "Data Batik." (ECF No.

36 Ex. A.) The Court cannot say, based on the allegations of the Amended Complaint and

Plaintiffs submissions, that her claim definitively accrued prior to June I, 2()14 and thus it

cannot be dismissed as untimely. With respect to Count VI, the motion to dismiss tiled by the

lnvcntl-lclp Defendants should be denied.

The Attorney Defendants contend that Plaintiffhad no contractual relationship with

them: frost is alleged to have performed a patent search but Plaintiff never signed a contract to

engage his services, and there arc no specific allegations against the other attorneys at all.

Plaintiff has noted that she checked a box on the Basic Information Package on February 18,

2012 stating that:

1 wish to have a preliminary patentability search and opinion conducted for my

idea, and request thai Western InventHclp refer my request (or this work to a
patent attorney or patent agent to whom it refers its clients' patent work ... I
authorize 1l1Y patent attorney or patent agent and Western InventHclp to share
information regarding my idea and the preliminary patentability search and
opinion. I understand that the patent attorney or patent agent, not Western
InvcntHclp, is responsible for contacting me to obtain any information required to
perform my patent services.

(Plitt A IT. 11Ex. B.) The Preliminary Patentability Search and Opinion Referral Request that she

signed that same date stated that she:

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 Case 2:1B-cv-01022-CB-RCtvI Document 48 Filed Ol{03{19 Page 38 of 45

authorize] d J the exchange of information bet ween your patent auorney and
Western TnventHelp. This includes any information your patent attorney may
require from your file, as well as him sending copies of your preliminary
patentability search and opinion to Western Inventl lelp. You understand that the
patent attorney or patent agent,not Western Invcntblclp, is responsible lor
contacting you to obtain any information required to perform your patent services.

(Plitt AI1'. II Ex. C.) On April 5,20 [2, Frost sent her his Preliminary Patentability Search and

Opinion, which began "in accordance with your request." (Plitt Aff. IT Ex. A).

Under the circumstances, it appears that Ms. Calhoun entered into an agreement with

lnventl-lelp for frost (or some other patent attorney) to perform a preliminary patentability

search and opinion for her, with Inventllel.p acting as the intermediary, and that Frost then did

so. Whether she had a "contract" with Frost cannot be determined based on the pleadings. "An

attorney-client relationship is formed when the client consents to an attorney's providing legal

services." Schwartz v. Industrial VallevTitle Tns. Co., 1997 WL 330366, at *4 (B.D. Pa. June 5,

J 997). Plaintiff consented to having Frost provide legal services for her on February 18, 2012

and an anorncy-clicnt relationship was limned. Therefore, the motion to dismiss this claim as to

Frost should bc denied.

Count Vll: Dutv of Good faith and Fair Dealing

III Count Vll, Plaintiff alleges a claim of breach of the duty of good faith and fair dealing

against all Defendants. The J.nventllelp Defendants contend that Pcnnsyl vania does nol

recognize such an independent cause of action. Plaintiff indicates that she is pleading in the

altenuuive and requests thai this claim be allowed 10 proceed until further facts are uncovered in

discovery.

A number of courts have held that thai Pennsylvania does not recognize an independent

cause of action for breach of the duly or good faith and fair dealing when a breach of contract

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claim is asserted. See Davis v. Wells Fargo, 824 F.3d 333, 352 (Jd Cir. 2016) (citing cases).

Therefore, with respect to Count Vll, the motion to dismiss filed by the Inventl-lelp Defendants

should be granted. However, as explained above, whether Plaintiff' can state a breach of contract

claim against Frost cannot be determined at this stage, When the existence of a contract is

uncertain, a party may plead in the alternative. Vantage Learning (USA), LLC Y. Edgenuitv, Inc.,

246 F. Supp. 3d 1097, 1100 (E.D. Pa. 2017). Therefore, the motion to dismiss this claim filed by

the Att0111CYDefendants should be denied.

CounL VlII: Unjust Emichmcnt

In Count VIIl, Plaintiff alleges a claim of unjust enrichment against all Defendants. The

Inventrlelp Defendants argue that such II claim cannot stand when a plaiutiffalleges a claim of

breach of contract. Plaintiff has not responded to this argument.

"It is well-settled in Pennsylvania that the existence of a contract prevents a party from

bringing a claim for unjust enrichment." Vantage Lea1'lling, (USA) LLC v. Edgenuity, Inc., 246

F. Sup]'. 3d 1097, 1100 (E.D. Pa. 20.17) (footnote omitted). See also Khawaja v. REiMAX

Central, 151 A.3d 626, 633-34 (Pa. Super. 2016); Wayne Movin!! & Storagc ol'NJ, Inc. v.

School Dis!. ol'Phila., 625 F.3d 148, 153 n.1 (3d Cir. 2010).

Plaintiffpleads a claim of breach ol'contract against the InventHelp Defendants based

upon various contracts she signed. Therefore, she cannot simultaneously maintain a claim of

unjust enrichment against them. With respect to Count VIII, rho motion to dismiss filed by the

Inventl-lelp Defendants should be granted.

On the other hand, whether Plaintiff bad a contract with Frost cannot be determined at

this stage of the proceedings. Therefore, with respect to Count Vlll, the motion to dismiss filed

by the Attorney Defendants should be denied.

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Count IX: Breach ofFiduciarv Duty

In COUnL IX, Plaintiff alleges a claim of breach of fiduciary duty. The lnvcnr+lelp

Defendants contend that she had not pleaded a basis for such a claim and that it is barred by the

gist of the action doctrine. The Attorney Defendants incorporate this argument. Plaintiff

responds that the Intrornark Proposal explicitly slated that Intromark would act as her agent in

securing licensing agreements.

The Pennsylvania Supreme Court has held that:

A fiduciary duty is the highest duty implied by law. Miller v. Kevstone

Ins. Co., 535 Pa. 531,636 A.2d 1109, 1116 (1994) (Cappy, J., dissenting). A
fiduciary duty requires a p311,yto act with the utmost good faith in furthering and
advancing the other person's interests, including a duty to disclose all relevant
information. See Basile v. H & R Block, Inc., 563 Pa. 359, 761 A,2d 1115, 1120
(2000); Youngv. Ka:iQ, 443 Pa. 335, 279 A.2d 759, 763 (1971) (,'When the
relationship between persons is one of trust and confidence, the party in whom the
trust and confidence arc reposed must act with scrupulous fairness and good faith
in his dealings with the other and refrain from using his position to the other's
detriment and his own advantage."); Sylvester v. Be(;k, 406 Pa. 607, 178 A.2d
755,757 (1962); tvlcCown v. Fraser, 327 Pa. 561, 192 A. 674,676-77 (1937): In
re Null's Estate, 302 Pa. 64, 153 A. 137 (1930), see also Black's Law Dictionarv
(10th ed. 2014) (defining a fiduciary duty as "a duty to act with the highest degree
of honesty and loyalty toward another person and in the best interest or
the other
person"). This highest duty will be imposed only where the attendant conditions
make it cella in that a fiduciary relationship exists. Leedom v. Palmcr, 274 Pa. 22,
117 A. 410, 412 (1922) ("[T]he evidence to sustain a confidential relation must be
certain; it cannot arise from suspicion or from infrequent or unrelated acrsl.]"); In
re Erdeljac's Estate, 388 Pa. 327, 131 A,2d 97, 100 (1957); Tn re King's Estate,
369 Pa. 523,87 A.2d 469, 472 (1952).

Yencill v. Amcrimise Fin .. Inc., 161 A.3d 811, 819·20 (Pa. 2017) (footnote omitted).

The court noted that some fiduciary relationships exist as a matter of law: principal and

agent, trustee and cestui que trust, attorney and client, guardian and ward and partners are

recognized examples. In other circumstances, fiduciary relationships have been found when

equity compels the COlHt to recognize them:

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 Case 2:18-cv-01022-CB-RCM Documem 48 Filecl 01/03/19 Page 41 of 45

Our courts have found fiduciary duties in circumstances where the relative
position of the parties is such that the one has the power and means to take
advantage of: or exercise undue influence over, the other. The circumstances in
which confidential relationships have been recognized are fact specific and cannot
be reduced to a particular set of facts or circumstances. lin re Estate ofl Scott, 316
A.2d [883,] 885 [(Pa. 1974)]. We have explained that a confidential relationship
"appears when the circumstances make it certain the patties do not deal on equal
terms, but, on the one side there is an overmastering influence, or, on the other,
weakness, dependence or trust, justi fiably reposed].]" Frowen v. Blank, 493 Pa.
137,425 A.2d 412, 416-17 (1981). In these cases, which have typically been
brought in courts of equity, if a confidential relationship was found to exist, then
the burden shifts and the fiduciary has to demonstrate that there has been no
breach of trust. Id. Transactions between persons occupying a confidential
relationship are voidable, and the party seeking to benefit from such a transaction
must demonstrate that his or her actions were at all times "fair, conscientious, and
beyond the reach 0(' suspicion." Young, 279 A.2d at 766; 'Matter of r,state of
Evasew, 526 Pa. 98, 584 A.2d 910, 913 (1990).

Id. at 820-21. Tn Yenchi, the COUlt refused to recognize a fiduciary relationship between a

financial advisor (Holland) and the plaintiffs, to whom he sold insurance policies. Despite

Holland's "vastly superior" position with respect to his knowledge of insurance products, the

Yenchis did not cede decision-making control to Holland and this was dispositive of the issue.

Plaintiff does not allege that she ceded decision-making control to Intromark or any other

entity or individual associated with InventHelp. She quotes a section of the lntromark Proposal

stating that it had "the exclusive right to negotiate, and to execute contracts on Client's behalf for

the sale or licensing of the idea, invention or product." (Am. Compl, ~ 107.) However, she has

omitted the next line, which states that: "INTROMARK shall submit any contract involving the

invention to Client before executing on Client's behalf, and Client shall have the right to accept

or reject any such contract negotiated on his or her behalf before it has been executed by

INTROMARK." (ECF No. 30 Ex. F at 1 ~ 4.) In addition, a breach of fiduciary duty claim is

barred (he by gist of the action doctrine if the fiduciary duty is grounded in contractual

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 Case 2:18-cv-01022-CB-RCIVI Document 48 Filed 01/03/19 Page 42 of 45

obligations. DePuy Svnthes Sales. Inc. v. Globus Medical. Inc., 259 F. Supp. 3d 225, 234 fH.D.

Pa.2017).

Therefore, Plaintiff cannot state a claim for breach of fiduciary duty against Intromark

and with respect to Count IX, the motion to dismiss filed by the Invcmliclp Defendants should

be gran led. On the other hand, she has alleged that Frost, as a patent attorney, had a duty to keep

her confidences and inform her about the fraudulent activity in which luventHelp was engaged.

She has stated a claim for breach of fiduciary duty against Frost and, with respect to CounllX,

the motion to dismiss filed by the Attorney Defendants should be denied.

Statute of Limitations

The moving Defendants contend that all of Plaintiff's claims are barred based on the

applicable statute of limitations, whether the time period is four years (lor the AIPA and breach

of contract claims) or two years (for the tort claims). Plaintiff responds that her claims are timely

because the contracts are still in effect unti I December 2018 and because InvcntHclp kept

reassuring her that it was working on her behalf.

As explained above, the facts are in dispute about when Plaintiff knew or reasonably

should have known that she had actionable claims and she has alleged that she was assured as

recently as March S, 2016 that Invcntl+elp was diligently working to promote her invention. On

the face of the Amended Complaint and the exhibits submitted, it cannot be said that her claims

indisputably accrued prior to June 1,2016, that is, two years before she filed this case.

Therefore, this argument should be rejected.

References to "All Defendants"

Most of Plaintiff's claims are asserted against all Defendants. The lnventl-lelp

Defendants argue that she fails to make specific allegations as to what each entity did or failed to

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do. Plninullrcsponds that Defendants themselves donot distinguish between the various entities

and the same individuals (Renee Hopes and Joy Hinson) signed contracts on behalf or

Inventllelp, Western InvcntHelp and lntromark.

The Court observes that Defendants' own documents contain statements such as the

following:

WESTERN INVENTlON SUBMISSJON CORPORATION (WISC) is the flame

of the corporation contracting 10 perform the invention development services.
WTSe is operating under its registered name, Western TnventHelp. There are no
parent, subsidiary or affiliated companies thai will engage in performing
invention development services under this Contract, except for INVENTION
SUBMISSION CORPORATION, an affiliate, and TECHNOSYSTEMS
SERVICE CORPORATION, an affiliate. Company is also affiliated with
LNTROtvL'\RK INCORPOR.'\TED which attempts to market inventions where
substantial interest has been expressed in accordance with paragraph I.N above.

(ECF No. 30 Ex. D at S, ~ 13.) In addition, Joy Hillson signed contracts 011 behalf of lnverullelp

(Plitt Air. Ex. C), Western Invcntltclp (ECF No. 30 Ex. D at 7) and Intromark (ECF No. 30 Ex.

Fat 3). Renee Hopes signed documents Oil behalfofWestcrnlnvcntHelp (ECF No. 30 Ex. A at

2) and Invcnttlclp (ECF No. 30 Ex. B). Given these facts, Plaintiff cannot be faulted [or

asserting claims against all of these entities together and Defendants' argument should be

rejected.

In summary, Defendants Kyle A. Fletcher and L.aw Office of Kyle A. Fletcher, Kaufhold

& Dix and Robert 1. Susa should be dismissed from the case (Susa without prejudice), Count rr
should be dismissed as to all moving defendants and Counts VII, VIII and IX should be

dismissed as to the Inveru+lelp Defendants but not as to Defendant Frost. The remaining claims

are Counts I and III as to the Invcnrl+clp Defendants, Counts IV, V, VI as to all Defendants and

VII, VIll and [X as to Frost.

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Motion to Strike

III the alternative, the Inventllelp Defendants move to strike paragraph 121 of the

Amended Complaint, which alleges that they "operate a long-term association that exists till'

criminal purposes (e.g., fraudulently inducing potential inventors to enter into contracts that

obligate the. inventors to pay money to Defendants." (Am. Compl, '1121.) Plaintiffresponds

that this allegation is central to the case and should not be stricken.

Rule 12(1) allows the court to "strike from a pleading an insufficient defense or any

redundant, immaterial, impertinent, or scandalous matter." Fed.RiCiv.P. 12(1). "While courts

possess considerable discretion ill weighing Rule 12(1) motions, such motions are not favored

and will generally be denied unless the material bears no possible relation to the matter at issue

and may result ill prejudice to the moving party." I:viillcr v. Group Voyagers, Inc., 912 F. Supp.

164,168 (R.D. Pa. 1996) (citations omitted). Sec also Lakits v. York, 258 F. Supp. 2d 401, 409

(E.D. Pa. 2003).

Plaintiff has alleged that Inventltelp defrauded her and other inventors through a scam of

taking their money and not performing invennon promotion services as promised. Whether such

practices actually occurred and whether the fraud would rise to the level actionable as criminal

activity cannot be determined at (his stage of the proceedings. However, the allegation that

InventHclp's actions were "criminal" is relevant to Plaintiff's case and will result in no greater

"prejudice" to the defendants than the allegations that they committed fraud. Therefore, the

motion to strike should be denied.

For these reasons, it is respectfully recommended that the Motion to Dismiss Plaintiffs

Amended Complaint LInder Rule L2(b)(6) and Motion to Strike Under Rule 12(1) tiled by

Defendants lnvention Submission Corporation d/b/a Invenrllclp, Western Invention Submission

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Corporation d/b/a Western lnvcrnl+elp, Technosysrems Consolidated Corporation,

Tcchnosystcms Service Corporation, Universal Payment Corporation, Inrromark Incorporated

and Robert J. Susa (ECF No. 29) be granted to dismiss Robert J. Susa without prejudice; granted

with respect to Counts II, VIl, Vlll and IX ofthe Amended Complaint; denied with respect to

Counts 1, Ill, IV, Vand VI; and denied as to the motion to strike, It is further recommended that

the motion to dismiss for failure to state a claim and lack of jurisdiction tiled by Defendants Kyle

A. Fletcher, Law Office of Kyle Fletcher, P.C., Thomas frost, Thomas frost, P.A. and Kaufhold

&. Dix (ECF No, 38) he granted to dismiss Kyle A. Fletcher, l.aw Office of Kyle Fletcher, P.C.

and Kaufhold &. Dix but denied as to Thomas Frost and Thomas Frost, V.A.; granted with respect

to Count II of the Amended Complaint and denied with respect to Counts IV, V, VI, Vll, VlU

and IX (which remain as to Thomas Frost and Thomas Frost, P,A.),

Litigants who seck to challenge this Report and Recommendation must seek review by

the district judge by tiling objections by January 17,2019. Any party opposing the objections

shall file a response by January 31, 2019. Failure to file timely objections will waive the right of

appeal.

Respectfully submitted,

slRobert C, Mitchell
ROBERT C. ]vllTCHELL
United States Magistrate Judge

Dated: January 3, 2019

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