Page:Michael Anthony Jewelers v. Peacock Jewelry.pdf/6

 work from which its designs were copied, and claim that it originated designs that it, in fact, copied from others.” Id. MAJ applied for and fraudulently obtained copyright registrations in at least thirteen charms copied from the Old Mr. Craftsman. See ¶¶ 133, 142, & Exh. C (copies of the registrations). MAJ thereafter marked its charms with the copyright notice and “promoted” and otherwise “advertised” its “original” designs to the consuming public. ¶¶ 146, 148.

As a final part of its scheme to dominate the market in diamond-cut gold charms and to harm its competitors, MAJ sought to enforce those copyrights by engaging in litigation against Peacock and others. According to the amended countercomplaint, such litigation was in bad faith in that MAJ attempted to enforce copyrights that it knew were invalid. ¶¶ 157, 158.

Unlawful Inducements.

In addition to the charges of counterfeiting and copyright misuse, Peacock alleges that MAJ offered certain “unlawful inducements” to its customers and employees in an effort to bolster sales and foster employee loyalty. In terms of the inducements to customers, Peacock asserts: "MAJ offered membership in what was termed its “Million Dollar Club” to customers who purchased at least one million dollars worth of MAJ’s products during any single year. Membership in the Million Dollar Club carried with it certain perquisites, among them, the provision of cocaine and prostitutes by MAJ."

¶ 114. Such perquisites were allegedly offered at dinner or Christmas parties, hosted by either or both of the Paolercios, and by bringing customers to a Connecticut brothel frequented by Michael Paolercio. ¶¶ 115–121.

In terms of the inducements to employees, Peacock alleges that Michael and Anthony Paolercio offered the employees cocaine in lieu of or in addition to their regular salaries. Such perquisites were allegedly offered to induce employees to work late and to foster loyalty to the company. ¶¶ 125–129.

A. Peacock’s Motion to Join

Before turning to MAJ’s motion to dismiss, we first address Peacock’s motion to join Michael and Anthony Paolercio as counter-defendants. According to the amended countercomplaint, Michael Paolercio is the President and Principal Executive Officer of MAJ. ¶ 3. In addition, he owns or controls approximately 1,734,000 shares of MAJ, which represents about 23.7% of its outstanding equity. ¶ 4. Anthony Paolercio is the Executive Vice President and Principal Operating Officer of MAJ. ¶ 5. He owns or controls approximately 1,714,000 shares of the company, which represents about 23.5% of its outstanding equity. ¶ 6. The amended countercomplaint alleges upon information and belief that the two Paolercios make or control all major policy and directional decisions on MAJ’s behalf. ¶ 7.

Initially, MAJ did not oppose Peacock’s motion to join on the assumption that it sought to join the Paolercios solely for the purposes of the RICO counterclaim and solely to the extent that that counterclaim was brought under 18 U.S.C. § 1962(c). At oral argument, however, Peacock’s counsel stated that while one of the purposes of the motion was to satisfy § 1962(c)’s requirement that Peacock allege a RICO “person” separate from the RICO enterprise, it sought to add the Paolercios as counter-defendants in all of the amended counterclaims.

MAJ objects to this broader reading of Peacock’s motion on the basis that it fails to proffer any particular reason for seeking the Paolercio’sPaolercios’ [sic] joinder. While MAJ is correct that the motion does not allege any particular grounds for joining the Paolercios, that observation is counterbalanced by the fact that discovery relating to the counterclaims began only recently and, given that Michael and Anthony Paolercio are alleged to have made all policy and directional decisions on MAJ’s behalf, would encompass essentially the same issues regardless of whether or not they were added as counter-defendants.