Free Answer to Complaint - District Court of California - California

Case 3:08-cv-00929-W-AJB

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PHILLIP C. SAMOURIS, ESQ. (Bar No. 163303) [email protected] HIGGS, FLETCHER & MACK LLP 401 West A Street, Suite 2600 San Diego, CA 92101-7913 TEL: 619.236.1551 FAX: 619.696.1410 Attorneys for Defendant and Counterclaimant ASSET MARKETING SYSTEMS INSURANCE SERVICES, LLC

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA

THE REVOLUTION FMO LLC, MARK LINDSEY, and TY J. YOUNG, Plaintiffs, v. ASSET MARKETING SYSTEMS INSURANCE SERVICES, LLC, Defendant. ASSET MARKETING SYSTEMS INSURANCE SERVICES, LLC, Counterclaimant, v. THE REVOLUTION FMO, LLC; MARK LINDSEY, an individual; TY J. YOUNG, an individual; and HENRY JOHN WIENIEWITZ III, a.k.a. TRAE WIENIEWITZ, an individual, Counterdefendants.

CASE NO. 08 CV 0929 W (AJB) ANSWER TO COMPLAINT BY DEFENDANT ASSET MARKETING SYSTEMS INSURANCE SERVICES, LLC AND COUNTERCLAIM FOR: 1) Breach of Contract; 2) Misappropriation of Trade Secret; 3) Copyright Infringement; 4) Trademark Infringement; and 5) Unfair Competition

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Defendant ASSET MARKETING SYSTEMS INSURANCE SERVICES, LLC ("AMS"), for its answer to the complaint of plaintiffs, The Revolution FMO, LLC, Mark Lindsey and Ty J. Young, filed on May 27, 2008 (the "Complaint"), states as follows: SUMMARY OF CLAIMS 1. In response to paragraph 1 of the Complaint, AMS denies each and every allegation contained therein. 2. In response to paragraph 2 of the Complaint, AMS is informed and believes

that Mark Lindsey and Ty Young are the founders and principals of plaintiff The Revolution FMO, LLC ("Revolution"). AMS denies each and every remaining allegation set forth in this paragraph. 3. In response to paragraph 3 of the Complaint, AMS denies each and every

allegation set forth in this paragraph. JURISDICTION AND VENUE 4. In response to paragraph 4 of the Complaint, AMS admits that jurisdiction and venue are proper in this Court, but deny the remaining allegations of this paragraph. 5. In response to paragraph 5 of the Complaint, AMS admits that jurisdiction

and venue are proper in this Court, but deny the remaining allegations of this paragraph. 6. In response to paragraph 6 of the Complaint, AMS admits that jurisdiction

and venue are proper in this Court, but deny the remaining allegations of this paragraph. THE PARTIES 7. In response to paragraph 7 of the Complaint, AMS admits the allegations of this paragraph. 8. In response to paragraph 8 of the Complaint, AMS lacks sufficient

knowledge or information to form a belief as to the truth of the allegations contained therein, and on that basis denies each and every allegation contained therein. 9. In response to paragraph 9 of the Complaint, AMS admits the allegations of

this paragraph.

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10.

In response to paragraph 10 of the Complaint, AMS admits the allegations

of this paragraph. GENERAL ALLEGATIONS 11. In response to paragraph 11 of the Complaint, AMS lacks sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and on that basis denies each and every allegation contained therein. AMS is informed and believes that the Programs to Premium training seminars referenced in this paragraph were developed, promoted, and presented by AMS, and that the bulk of the written materials utilized in connection with those programs were authored by AMS personnel, including Maura Lenehan and Joseph Anzalone, some of which were taken from the sales processes previously created by Michael Botkin of AMS. 12. In response to paragraph 12 of the Complaint, AMS refers to and

incorporates herein by reference its response to paragraph 11, above. 13. In response to paragraph 13 of the Complaint, AMS admits that the agents

who license material from AMS and receive marketing support from AMS remain independent and are not employees of AMS. In that general capacity, Lindsey and Young remained independent agents and were not employees of AMS. AMS lacks sufficient knowledge or information to form a belief as to the truth of the remaining allegations, and on that basis denies each and every remaining allegation of this paragraph. 14. In response to paragraph 14 of the Complaint, AMS admits that Lindsey,

Young and AMS had discussions concerning the program in February 2006, but denies each and every remaining allegation of this paragraph. 15. In response to paragraph 15 of the Complaint, AMS admits that Lindsey,

Young and AMS had discussions concerning a training program, that AMS promoted the programs at its own expense and encouraged the agents with whom it had a relationship to attend the programs, and that Lindsey and Young assisted AMS in presenting the programs. AMS denies each and every remaining allegation contained therein.

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16.

In response to paragraph 16 of the Complaint, AMS admits that it paid for

all marketing and other expenses for the programs. AMS further admits that it paid a certain amount to Lindsey and Young in connection with their work on the programs which they received without complaint or further demand, until the instant dispute arose. AMS denies each and every remaining allegation contained in this paragraph. 17. In response to paragraph 17 of the Complaint, AMS admits that Lindsey and

Young entered into a Nondisclosure Agreement with AMS on or about June 22, 2006, and that the agreement speaks for itself. AMS denies each and every remaining allegation contained in this paragraph. 18. In response to paragraph 18 of the Complaint, AMS admits that the

Programs to Premium training seminar was repeatedly offered by AMS to the agents with whom AMS had a relationship, that AMS encouraged those agents to attend those programs, and that many of these agents did in fact attend the programs. AMS further admits that in connection with these programs, AMS identified and promoted Lindsey and Young as trainers to the agents and producers under contract with AMS. AMS denies each and every remaining allegation contained in this paragraph. 19. In response to paragraph 19 of the Complaint, AMS denies that Lindsey and

Young conducted the programs. AMS paid for all marketing and other expenses related to the programs and encouraged the agents with whom it had a relationship to attend the programs. AMS also paid a certain amount to Lindsey and Young in connection with their work on the programs which they received without complaint or further demand, until the instant dispute arose. Lindsey and Young assisted AMS in presenting the programs. AMS admits the remaining allegations of this paragraph. 20. In response to paragraph 20 of the Complaint, AMS denies the allegations

of this paragraph. 21. In response to paragraph 21 of the Complaint, AMS admits that it paid

Lindsey and Young approximately $162,500 each in connection with the programs. AMS denies each and every remaining allegation of this paragraph.
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22.

In response to paragraph 22 of the Complaint, AMS denies the allegations

set forth in this paragraph. 23. In response to paragraph 23 of the Complaint, AMS lacks sufficient

knowledge or information form a belief as to the truth of the allegations contained therein, and on that basis denies each and every allegation contained therein. 24. In response to paragraph 24 of the Complaint, AMS lacks sufficient

knowledge or information form a belief as to the truth of the allegations contained therein, and on that basis denies each and every allegation contained therein. 25. In response to paragraph 25 of the Complaint, AMS lacks sufficient

knowledge or information form a belief as to the truth of the allegations contained therein, and on that basis denies each and every allegation contained therein. 26. In response to paragraph 26 of the Complaint, AMS admits that the parties

had some discussion regarding Lindsey and Young's plans, but denies each and every remaining allegation set forth in this paragraph. 27. In response to paragraph 27 of the Complaint, AMS admits that the parties

began negotiating the terms of a proposed relationship but that an agreement was never reached or memorialized. AMS denies all of the remaining allegations of this paragraph. 28. In response to paragraph 28 of the Complaint, AMS admits that the parties

began negotiating the terms of a proposed relationship but that an agreement was never reached or memorialized. AMS denies all of the remaining allegations of this paragraph. 29. In response to paragraph 29 of the Complaint, AMS admits that the parties

began negotiating the terms of a proposed relationship but that an agreement was never reached or memorialized. AMS denies all of the remaining allegations of this paragraph. 30. In response to paragraph 30 of the Complaint, AMS admits that the parties

began negotiating the terms of a proposed relationship but that an agreement was never reached or memorialized. AMS denies all of the remaining allegations of this paragraph.

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31.

In response to paragraph 31 of the Complaint, AMS lacks sufficient

knowledge or information form a belief as to the truth of the allegations contained therein, and on that basis denies each and every allegation contained therein. 32. In response to paragraph 32 of the Complaint, AMS denies each and every

allegation in this paragraph. 33. In response to paragraph 33 of the Complaint, AMS admits that it sent the

March 21 Letter. AMS denies each and every remaining allegation of this paragraph, including specifically the allegation that the Letter contained false, misleading or defamatory information. AMS is informed and believes and thereupon alleges that Lindsey and Young were using training and sales materials which contained serious violations of the Financial Industry Regulatory Authority ("FINRA") standards. Moreover, pursuant to the Advertisements of Life Insurance and Annuities Model Regulation drafted by the National Association of Insurance Commissioners which has been adopted in a majority of states, insurers are responsible for all such advertisements and related materials, regardless of who wrote them. Thus, the March 21 Letter is privileged pursuant to Cal. Civ. Code. §47(c). 34. In response to paragraph 34 of the Complaint, AMS denies that it printed

and assembled all of the written materials distributed to the attendees of the Programs to Premium programs. AMS is informed and believes and thereupon alleges that Lindsey and Young distributed some written materials directly to attendees without AMS' involvement which contained violations of FINRA standards. AMS' personnel asked Lindsey and Young to provide a copy of these materials to AMS for compliance review purposes, but Lindsey and Young refused to provide these materials. AMS denies each and every remaining allegation contained in this paragraph. 35. In response to paragraph 35 of the Complaint, AMS admits that Lindsey and

Young requested on or about March 26, 2008, that they be released from their FMO contracts with AMS, thereby severing their relationship with AMS. AMS denies each and every remaining allegation of this paragraph.
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36.

In response to paragraph 36 of the Complaint, AMS lacks sufficient

knowledge and information to form a belief as to the truth of the allegations contained therein, and on that basis deny each and every allegation contained therein. AMS is informed and believes and thereupon alleges that Plaintiffs, either directly and/or through a surrogate, solicited the attendees of the P2P programs and other AMS' producers, agents and/or employees which Plaintiffs learned about and met through AMS to leave AMS and join Revolution, despite the fact that Plaintiffs duly promised to not engage in such solicitations. 37. In response to paragraph 37 of the Complaint, AMS denies each and every

allegation contained in this paragraph. 38. In response to paragraph 38 of the Complaint, AMS denies each and every

allegation contained in this paragraph. 39. In response to paragraph 39 of the Complaint, AMS denies each and every

allegation contained in this paragraph. 40. In response to paragraph 40 of the Complaint, AMS admits that it has

asserted that the Nondisclosure Agreements prohibit Plaintiffs from soliciting any producer under contract with AMS which Plaintiffs have learned about or otherwise come in contact with through the Programs to Premium program and/or confidential AMS lists and records for a period of five years after termination of the agreement. AMS is informed and believes and thereupon alleges that this agreement is proper and enforceable under California law, including Gordon v. Landau, 49 Cal.2d 690, 694 (1958). The Nondisclosure Agreements do not restrain Plaintiffs from engaging in a lawful profession, trade or business. AMS denies each and every remaining allegation of this paragraph. 41. In response to paragraph 41 of the Complaint, AMS lacks sufficient

knowledge or information to form a belief as to the truth of the allegations contained therein, and on that basis denies each and every allegation contained therein. The Complaint does not identify with specificity the "training materials" or copyrighted works at issue in the Complaint. Unless and until Plaintiff specifically identifies these materials,
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AMS cannot respond to these allegations. Since the filing of the Complaint, Plaintiffs' counsel has informed AMS' counsel that the alleged copyrighted works at issue in the Complaint are the works allegedly covered under Copyright Registration Nos. TX 0006844042, TX 0006844044, and TX 0006844051. AMS informed and believes that these materials consist of three manuals, the "Basic Training", the "Boot Camp", and the "Special Ops" manuals, copies of which were provided by Plaintiffs' counsel and are attached hereto as Exhibits A--C (Bates labeled REV 0001 to REV 0103). AMS is informed and believes and thereupon alleges that the bulk of these materials were authored by AMS' employees, including Maura Lenehan and Joseph Anzalone, some of which were taken from the sales process previously created by Michael Botkin of AMS. AMS denies all remaining allegations of this paragraph. 42. In response to paragraph 42 of the Complaint, AMS admits that it registered

the mark "PROGRAMS TO PREMIUM" with the United States Patent and Trademark Office and that it claims ownership of the mark "PROGRAMS TO PREMIUM". AMS denies each and every remaining allegation of this paragraph. 43. In response to paragraph 43 of the Complaint, AMS denies each and every

allegation of this paragraph. 44. In response to paragraph 44 of the Complaint, AMS denies each and every

allegation of this paragraph. FIRST CLAIM FOR RELIEF (Copyright Infringement) 45. In response to paragraph 45, AMS refers to and incorporates herein by reference its response to paragraphs 1 through 44, as set forth at length. 46. In response to paragraph 46 of the Complaint, AMS denies each and every

allegation of this paragraph. 47. In response to paragraph 47 of the Complaint, the Complaint does not

identify with specificity the alleged copyrighted works. Based on the foregoing, AMS

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lacks sufficient knowledge or information to form a belief as to the truth of the allegations contained therein, and on that basis denies each and every allegation contained therein. 48. In response to paragraph 48 of the Complaint, AMS lacks sufficient

knowledge or information to form a belief as to the truth of the allegations contained therein, and on that basis denies each and every allegation contained therein. 49. In response to paragraph 49 of the Complaint, AMS lacks sufficient

knowledge or information to form a belief as to the truth of the allegations contained therein, and on that basis denies each and every allegation contained therein. 50. In response to paragraph 50 of the Complaint, AMS lacks sufficient

knowledge or information to form a belief as to the truth of the allegations contained therein, and on that basis denies each and every allegation contained therein. 51. In response to paragraph 51 of the Complaint, AMS lacks sufficient

knowledge or information to form a belief as to the truth of the allegations contained therein, and on that basis denies each and every allegation contained therein. 52. In response to paragraph 52 of the Complaint, AMS lacks sufficient

knowledge or information to form a belief as to the truth of the allegations contained therein, and on that basis denies each and every allegation contained therein. 53. In response to paragraph 53 of the Complaint, AMS lacks sufficient

knowledge or information to form a belief as to the truth of the allegations contained therein, and on that basis denies each and every allegation contained therein. 54. In response to paragraph 54 of the Complaint, AMS denies each and every

allegation contained in this paragraph. 55. In response to paragraph 55 of the Complaint, AMS denies each and every

allegation contained in this paragraph. 56. In response to paragraph 56 of the Complaint, AMS denies each and every

allegation contained in this paragraph. 57. In response to paragraph 57 of the Complaint, AMS denies each and every

allegation contained in this paragraph.
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58.

In response to paragraph 58 of the Complaint, AMS denies each and every

allegation contained in this paragraph. 59. In response to paragraph 59 of the Complaint, AMS denies each and every

allegation contained in this paragraph. 60. In response to paragraph 60 of the Complaint, AMS denies each and every

allegation contained in this paragraph. 61. In response to paragraph 61 of the Complaint, AMS denies each and every

allegation contained in this paragraph. SECOND CLAIM FOR RELIEF (Trademark Infringement/False Designation of Origin) 62. In response to paragraph 62, AMS refers to and incorporates herein by reference its responses to paragraphs 1 through 61, as set forth herein. 63. In response to paragraph 63 of the Complaint, AMS denies each and every

allegation contained in this paragraph. AMS marketed and promoted the Programs to PremiumTM training seminar as its own training program. Indeed, the Complaint repeatedly alleges as much. Stated differently, AMS has consistently used the Programs to PremiumTM mark to identify its seminar ­ a seminar that AMS promoted and presented--not Plaintiffs. Also in connection with AMS' Programs to PremiumTM seminars, AMS prepared training materials and, on September 1, 2006, AMS filed a trademark application with the USPTO for "Programs to Premium"TM in International Classes 009, 016, 035 and 041 for a variety of financial training and marketing goods and services. The USPTO registered this trademark on May 27, 2008, Registration No. 3,436,876 (Exhibit F). Based on the foregoing, the Programs to PremiumTM mark belongs to AMS. Plaintiffs have no right to use it. 64. In response to paragraph 64 of the Complaint, AMS denies each and every

allegation contained in this paragraph. 65. In response to paragraph 65 of the Complaint, AMS denies each and every

allegation contained in this paragraph.
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66.

In response to paragraph 66 of the Complaint, AMS denies each and every

allegation contained in this paragraph. 67. In response to paragraph 67 of the Complaint, AMS denies each and every

allegation contained in this paragraph. 68. In response to paragraph 68 of the Complaint, AMS denies each and every

allegation contained in this paragraph. 69. In response to paragraph 69 of the Complaint, AMS denies each and every

allegation contained in this paragraph. 70. In response to paragraph 70 of the Complaint, AMS admits that it filed for

and obtained a trademark registration for the Programs to Premium trademark (Exhibit F). AMS denies all remaining allegation contained in this paragraph. 71. In response to paragraph 71 of the Complaint, AMS lacks sufficient

knowledge or information to admit or deny the allegations contained in this paragraph. As set-forth above, AMS is the proper and rightful owner of the mark. 72. In response to paragraph 72 of the Complaint, AMS lacks sufficient

knowledge or information to admit or deny the allegations contained in this paragraph. 73. In response to paragraph 73 of the Complaint, AMS denies each and every

allegation contained in this paragraph. 74. In response to paragraph 74 of the Complaint, AMS denies each and every

allegation contained in this paragraph. 75. In response to paragraph 75 of the Complaint, AMS denies each and every

allegation contained in this paragraph. 76. In response to paragraph 76 of the Complaint, AMS denies each and every

allegation contained in this paragraph.

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THIRD CLAIM FOR RELIEF (Trademark Dilution) 77. In response to paragraph 77, AMS refers to and incorporates herein by reference its responses to paragraphs 1 through 76, as set forth herein. 78. In response to paragraph 78 of the Complaint, AMS denies each and every

allegation contained in this paragraph. 79. In response to paragraph 79 of the Complaint, AMS denies each and every

allegation contained in this paragraph. 80. In response to paragraph 80 of the Complaint, AMS denies each and every

allegation contained in this paragraph. 81. In response to paragraph 81 of the Complaint, AMS denies each and every

allegation contained in this paragraph. 82. In response to paragraph 82 of the Complaint, AMS denies each and every

allegation contained in this paragraph. 83. In response to paragraph 83 of the Complaint, AMS denies each and every

allegation contained in this paragraph. 84. In response to paragraph 84 of the Complaint, AMS denies each and every

allegation contained in this paragraph. 85. In response to paragraph 85 of the Complaint, AMS denies each and every

allegation contained in this paragraph. 86. In response to paragraph 86 of the Complaint, AMS denies each and every

allegation contained in this paragraph. 87. In response to paragraph 87 of the Complaint, AMS denies each and every

allegation contained in this paragraph. 88. In response to paragraph 88 of the Complaint, AMS denies each and every

allegation contained in this paragraph.

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FOURTH CLAIM FOR RELIEF (Defamation) 89. In response to paragraph 89, AMS refers to and incorporates herein by reference its responses to paragraphs 1 through 88, as set forth herein. 90. In response to paragraph 90 of the Complaint, AMS denies each and every

allegation contained in this paragraph. 91. In response to paragraph 91 of the Complaint, AMS denies each and every

allegation contained in this paragraph. 92. In response to paragraph 92 of the Complaint, AMS denies each and every

allegation contained in this paragraph. 93. In response to paragraph 93 of the Complaint, AMS denies each and every

allegation contained in this paragraph. 94. In response to paragraph 94 of the Complaint, AMS denies each and every

allegation contained in this paragraph. 95. In response to paragraph 95 of the Complaint, AMS denies each and every

allegation contained in this paragraph. FIFTH CLAIM FOR RELIEF (Trade Libel) 96. In response to paragraph 96, AMS refers to and incorporates herein by reference its responses to paragraphs 1 through 95, as set forth herein. 97. In response to paragraph 97 of the Complaint, AMS denies each and every

allegation contained in this paragraph. 98. In response to paragraph 98 of the Complaint, AMS denies each and every

allegation contained in this paragraph. 99. In response to paragraph 99 of the Complaint, AMS denies each and every

allegation contained in this paragraph. 100. In response to paragraph 100 of the Complaint, AMS denies each and every

allegation contained in this paragraph.
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101.

In response to paragraph 101 of the Complaint, AMS denies each and every

allegation contained in this paragraph. 102. In response to paragraph 102 of the Complaint, AMS denies each and every

allegation contained in this paragraph. SIXTH CLAIM FOR RELIEF (Intentional Interference With Prospective Economic Advantage) 103. In response to paragraph 103, AMS refers to and incorporates herein by reference its responses to paragraphs 1 through 102, as set forth herein. 104. In response to paragraph 104 of the Complaint, AMS lacks sufficient

knowledge or information to form a belief as to the truth of the allegations contained therein, and on that basis AMS denies each and every allegation contained therein. 105. In response to paragraph 105 of the Complaint, AMS denies each and every

allegation contained in this paragraph. 106. In response to paragraph 106 of the Complaint, AMS denies each and every

allegation contained in this paragraph. 107. In response to paragraph 107 of the Complaint, AMS denies each and every

allegation contained in this paragraph. 108. In response to paragraph 108 of the Complaint, AMS denies each and every

allegation contained in this paragraph. SEVENTH CLAIM FOR RELIEF (Unfair Competition) 109. In response to paragraph 109, AMS refers to and incorporates herein by reference its responses to paragraphs 1 through 108, as set forth herein. 110. In response to paragraph 110 of the Complaint, AMS denies each and every

allegation contained in this paragraph, except that AMS admits that California Business & Professions Code §17200 exists and that it speaks for itself. 111. In response to paragraph 111 of the Complaint, AMS denies each and every

allegation contained in this paragraph.
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112.

In response to paragraph 112 of the Complaint, AMS denies each and every

allegation contained in this paragraph. 113. In response to paragraph 113 of the Complaint, AMS denies each and every

allegation contained in this paragraph. 114. In response to paragraph 114 of the Complaint, AMS denies each and every

allegation contained in this paragraph. 115. In response to paragraph 115 of the Complaint, AMS denies each and every

allegation contained in this paragraph. EIGHTH CLAIM FOR RELIEF (Declaratory Relief) 116. In response to paragraph 116, AMS refers to and incorporates herein by reference its responses to paragraphs 1 through 115, as set forth herein. 117. In response to paragraph 117 of the Complaint, AMS denies the allegations

contained in this paragraph, except that AMS admits that Rule 57 of the Federal Rules of Civil Procedure and 28 U.S.C. §§2201 and 2202 exist and they speak for themselves. 118. In response to paragraph 118 of the Complaint, AMS admits the allegations

contained in this paragraph, except that plaintiffs have not identified with specificity their alleged copyrighted works. 119. In response to paragraph 119 of the Complaint, AMS admits the allegations

contained in this paragraph, except that plaintiffs have not identified with specificity their alleged copyrighted works. 120. In response to paragraph 120 of the Complaint, AMS disputes each and

every allegations contained in this paragraph. AMS refers to and incorporates herein by reference its response to paragraph 40, above, as set forth at length. 121. In response to paragraph 121 of the Complaint, AMS admits the allegations

contained in this paragraph.

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122.

In response to paragraph 122 of the Complaint, AMS disputes each and

every allegations contained in this paragraph. AMS refers to and incorporates herein by reference its response to paragraph 40, above, as set forth at length. 123. In response to paragraph 123 of the Complaint, AMS lacks sufficient

knowledge or information to form a belief as to the truth of the allegations contained therein, and on that basis denies each and every allegation contained therein. 124. In response to paragraph 124 of the Complaint, AMS lacks sufficient

knowledge or information to form a belief as to the truth of the allegations contained therein, and on that basis denies each and every allegation contained therein. 125. In response to paragraph 125 of the Complaint, AMS lacks sufficient

knowledge or information to form a belief as to the truth of the allegations contained therein, and on that basis denies each and every allegation contained therein. AFFIRMATIVE DEFENSES FIRST AFFIRMATIVE DEFENSE (Failure to State a Claim) 126. The Complaint, and each and every purported cause of action therein, fail to state facts sufficient to constitute a valid claim against AMS. SECOND AFFIRMATIVE DEFENSE (Estoppel) 127. Plaintiffs engaged in activities with respect to the transactions which are the subject of the Complaint, and by reason of said activities and conduct are estopped from asserting any claims for damages or seeking any other relief against AMS. For example, and without limitation, AMS' trademark use of the words "Programs to Premium," and its copyright claims to the related material, have been open, continuous and extensive for years prior to the filing of this action, to the knowledge of Plaintiffs, with no attempt on Plaintiffs' part to obtain a judicial determination of its alleged rights. AMS has relied to its detriment upon Plaintiffs' acquiescence and delay and have continued their use of these words as a mark and invested substantial sums in promotion and advertising of said mark
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and creation of said material. For these reasons, Plaintiffs are estopped to allege that any act of AMS now constitutes an infringement of Plaintiffs' alleged rights. THIRD AFFIRMATIVE DEFENSE (Waiver) 128. Plaintiffs have engaged in conduct and activities sufficient to constitute a waiver of any alleged breach of duty, negligent act, omission or any other conduct, if any, as set forth in the Complaint. FOURTH AFFIRMATIVE DEFENSE (Detrimental Reliance) 129. Plaintiffs are barred by reason of the acts, omissions, representations and courses of conduct of Plaintiffs, which AMS was led to rely upon to its detriment, thereby barring any claims asserted by Plaintiffs under the Doctrine of Equitable Estoppel. FIFTH AFFIRMATIVE DEFENSE (Laches) 130. Plaintiffs waited an unreasonable period of time before asserting their claims, if any, against AMS and is thus barred from asserting such claims under the Doctrine of Laches. SIXTH AFFIRMATIVE DEFENSE (Complete Performance) 131. AMS has appropriately, completely and fully performed and discharged any and all obligations and legal duties arising out of the matters alleged in the Complaint. SEVENTH AFFIRMATIVE DEFENSE (No Damage) 132. If Plaintiffs suffered any loss, damage or injury, which is expressly denied, such loss, damage or injury was not caused, either legally or proximately, by any act or omission of AMS.

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EIGHTH AFFIRMATIVE DEFENSE (Failure to Exercise Ordinary Care) 133. Plaintiffs failed to exercise ordinary care, caution, and prudence to avoid the injuries, losses, or damages alleged in the Complaint and thereby directly and proximately caused and contributed to such injuries, losses, or damages. NINTH AFFIRMATIVE DEFENSE (Failure to Mitigate) 134. Plaintiffs are barred from relief because they have failed to take reasonable and necessary steps to mitigate any alleged damages. TENTH AFFIRMATIVE DEFENSE (Comparative Fault) 135. Plaintiffs' claims are barred, in whole or in part, by the doctrine of comparative negligence or fault. Any and all events, happenings, injuries, and damages, if any, alleged in the Complaint were proximately caused and contributed to by the negligence, fault, and misconduct of Plaintiffs. ELEVENTH AFFIRMATIVE DEFENSE (Intervening Fault or Cause) 136. Any alleged damages and/or injuries to Plaintiffs were either caused, in whole or in part, by parties other than AMS and over whom AMS had no control or responsibility. TWELFTH AFFIRMATIVE DEFENSE (Acceptance) 137. Plaintiffs consented to and approved all of the acts and omissions about which Plaintiff now complains. THIRTEENTH AFFIRMATIVE DEFENSE (Consent) 138. AMS alleges that Plaintiffs, by their acts and conduct, have consented to all conduct as alleged on the part of AMS.
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FOURTEENTH AFFIRMATIVE DEFENSE (Unclean Hands) 139. AMS alleges that by virtue of the unlawful, immoral, careless, negligent and other wrongful conduct, Plaintiffs should be barred from recovery against AMS by the equitable doctrine of unclean hands. FIFTEENTH AFFIRMATIVE DEFENSE (Uncertainty) 140. AMS alleges that the claims for relief in said Complaint, and each of them, are uncertain and ambiguous as to Plaintiffs' claim for damages against AMS. SIXTEENTH AFFIRMATIVE DEFENSE (A Claim For Punitive Damages Unconstitutional) 141. AMS alleges that any award of punitive damages against AMS will violate their rights under the due process clauses of the California and United States Constitutions. SEVENTEENTH AFFIRMATIVE DEFENSE (Apportionment) 142. AMS alleges that it is not responsible or liable in any way for the damages or loss alleged in the Complaint. However, if AMS is found to be liable or responsible for any or all of the alleged damages or loss, AMS alleges that its liability, if any, is not the sole proximate cause of the damages and loss, and that the damages awarded to the Plaintiffs, if any, should be apportioned according to the respective fault and legal responsibility of all parties, persons and entities, and their agents, servants, and employees who contributed to and/or caused such damage or loss according to the proof presented at the time of trial. EIGHTEENTH AFFIRMATIVE DEFENSE (State Law Claims Preempted) 143. Plaintiffs' state law claims are preempted by federal law.

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NINETEENTH AFFIRMATIVE DEFENSE (Privilege) 144. AMS' conduct was privileged pursuant to Cal. Civ. Code. §47. TWENTIETH AFFIRMATIVE DEFENSE (Additional Affirmative Defenses May Be Available) 145. AMS alleges that it currently has insufficient knowledge or information upon which to determine whether additional affirmative defenses may be available to it which have not yet been asserted in this Answer and, therefore, reserve the right to assert additional affirmative defenses based upon subsequent discovery, investigation and analysis.

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PRAYER FOR RELIEF ON COMPLIANT WHEREFORE, AMS prays for judgment against plaintiffs on the Complaint as follows: A. B. That plaintiffs take nothing against AMS; That the Court enter a judicial declaration as follows: (1) AMS is the

exclusive owner of all rights in the "Programs to Premium"TM trademark and that Plaintiffs have no trademark rights in those words; (2) plaintiffs are not entitled to ownership of the materials attached hereto as Exhibit A--C; (3) plaintiffs are required to transfer their copyright registrations of these materials, if any, to AMS; (4) paragraph 3 of the Nondisclosure Agreements is valid and enforceable under California law; (5) plaintiffs' solicitation of AMS' agents whom plaintiffs learned about through AMS' Programs to PremiumTM training seminars and use of AMS' trade secrets in competition with AMS should be and is enjoined, either by an issuance of an injunction or otherwise; and (6) plaintiffs solicitation of AMS' agents whom plaintiffs learned about through AMS' Programs to PremiumTM training seminars, or other use of AMS' trade secret information in competition with AMS constitutes a breach of the Nondisclosure Agreements, and otherwise violates legitimate rights of AMS; C. D. and proper. For attorney fees and costs of suit herein incurred; and For such other and further relief against plaintiff as the Court may deem just

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COUNTERCLAIM Defendant and counterclaimant, Asset Marketing Systems Insurance Services, LLC (hereinafter "AMS"), for its counterclaims for relief against plaintiffs and counterdefendants, The Revolution FMO, LLC, Mark Lindsey, and Ty J. Young, and its counterclaims against counterdefendant Henry John Wieniewitz III, a.k.a. Trae Wieniewitz ("Weiniewitz"), respectfully alleges as follows: I. PARTIES 1. AMS is a Delaware limited liability company having its principal place of business in San Diego, California, within this judicial district. 2. AMS is informed and believes, and thereon alleges, that plaintiff and

counterdefendant The Revolution FMO, LLC ("Revolution"), is a California limited liability company with its principle place of business at 22736 Vanowen Street, Ste. 300, West Hills, CA 91307. 3. AMS is informed and believes, and based thereon alleges, that plaintiff and

counterdefendant Mark Lindsey ("Lindsey") is an individual residing in California and doing business as an insurance agent at 22736 Vanowen Street, Ste. 300, West Hills, CA 91307, and is a founder and principal of Revolution. 4. AMS is informed and believes, and based thereon alleges, that plaintiff and

counterdefendant Ty J. Young ("Young") is an individual residing in Georgia and doing business as an insurance agent at 100 Galleria Parkway NW, Ste. 1050, Atlanta, GA 30339, and is a founder and principal of Revolution. 5. AMS is informed and believes, and based thereon alleges, that

counterdefendant Wieniewitz is an individual residing in Tennessee and doing business as an insurance agent at 9050 Executive Park Drive, Financial Plaza, Ste. 106A, Knoxville, TN 37923, and at all relevant times mentioned herein was acting as an agent for and on behalf of Revolution, Lindsey and Young, as well as for his own benefit.
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II. JURISDICTION AND VENUE AS AGAINST PLAINTIFFS AND COUNTERDEFENDANTS, REVOLUTION, LINDSEY AND YOUNG 6. This Counterclaim is for copyright infringement arising under the Copyright Act of 1976, 17 U.S.C. §§ 101, et seq., and for trademark infringement arising under the Lanham Act, 15 U.S.C. §§ 1051, et seq., and related claims of unfair competition against defendants. This Court has jurisdiction of this action under 28 U.S.C. §§ 1331, 1338(a) and 1338(b), and this Court's pendent jurisdiction. This Court has supplemental jurisdiction over the state claims pursuant to 28 U.S.C. §1367. 7. Personal jurisdiction and venue are proper in this judicial district under 28

U.S.C. § 1391 because a substantial part of the events giving rise to the claims asserted herein occurred in this judicial district, in particular, the agreements at issue between the parties were executed and delivered within the County of San Diego. Moreover, the parties have agreed that any dispute arising under their agreements shall be resolved solely in a court of competent jurisdiction located in the County of San Diego. Thus, each party has submitted to the jurisdiction and venue of this Court. III. JURISDICTION AND VENUE AS TO COUNTERDEFENDANT WIENIEWITZ 8. This counterclaim against Wieniewitz arises out of the same common

nucleus of operative facts which are at issue in the counterclaims against plaintiffs (Revolution, Lindsey, and Young), such that this Court has supplemental jurisdiction over the counterclaim against Wieniewitz. As set forth below, AMS alleges that plaintiffs Revolution, Lindsey, and Young have entered into Nondisclosure Agreements with AMS which prohibit them from soliciting insurance agents under contract with AMS which plaintiffs have learned about or otherwise come in contact with through AMS' Programs to Premium training programs and/or AMS' lists and records for a period of five years after termination of the parties relationship. Despite these promises, AMS is informed
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and believes and thereupon alleges that plaintiffs have improperly solicited such agents both directly and indirectly, through Wieniewitz, in breach of their contractual obligations to AMS. AMS further alleges that Wieniewitz has also entered into an agreement with AMS which prohibits Wieniewitz from soliciting insurance agents under contract with AMS which Wieniewitz has learned about or otherwise come in contact with through AMS and/or AMS' confidential lists and records. Thus, AMS' claims against Wieniewitz arise out of the same common nucleus of operative facts which are at issue in the counterclaims against plaintiffs, such that this Court has supplemental jurisdiction over AMS' claims against Wieniewitz pursuant to 28 U.S.C. §1367. 9. Personal jurisdiction and venue are proper in this judicial district with

respect to the claims against Wieniewitz under 28 U.S.C. § 1391 because a substantial part of the events giving rise to the claims asserted herein occurred in this judicial district, in particular, the agreements at issue between the parties were executed and delivered within the County of San Diego. Moreover, the parties have agreed that any dispute arising under their agreements shall be resolved solely in a court of competent jurisdiction located in the County of San Diego. Thus, each party has submitted to the jurisdiction and venue of this Court. IV. FACTS COMMON TO ALL CLAIMS FOR RELIEF 10. AMS is a field marketing organization ("FMO") which provides marketing support and training to independent insurance agents throughout the United States. To that end, AMS creates, among other things, seminar-based programs to generate leads for sale of insurance products, including invitations to attract people to the programs, scripts for the programs, and outlines and other material to be distributed at the programs. AMS continually updates its programs and creates new programs for various segments of the public and provides training to the agents. AMS incurs great expense and time to create, modify, implement, test and train its programs and related marketing solutions.

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11.

AMS licenses its programs to insurance professionals throughout the

country (the "System Subscribers"). AMS receives a commission override from the sale of Insurance Products made by the System Subscribers and other agents under contract with AMS. AMS extensively markets its products and services to independent insurance agents through advertisements in national publications, through its Internet site at www.assetmarketingsystems.com, and through telephone solicitations and associated recruiting efforts. AMS incurs great expense and time to recruit qualified, independent agents to contract with AMS. 12. The identity of AMS' contracted producers and AMS' records and lists with

respect to those individuals has independent economic value from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use, especially competing field marketing organizations or FMOs. In light of the foregoing, AMS undertakes efforts that are reasonable under the circumstances to maintain the secrecy of the identity and contact information of AMS' contracted producers and its records related to those producers, including, without limitation, requiring System Subscribers and others to sign nondisclosure agreements, by which they agree that AMS' list of contracted agents is proprietary and confidential to AMS, and that they further agree not to solicit those producers on behalf of a competing FMO. 13. In December 2003, AMS conceived and developed a program entitled TEN

SMART IDEASTM to guide and assist salespersons in their efforts to identify and meet persons who may have interest in or need for life, annuity and long-term products ("Insurance Products") including, but not limited to, a copyrighted invitation and workbook and related handout (collectively referred to herein as the "TEN SMART IDEASTM System"). 14. On January 25, 2005, AMS filed a trademark application with the United

States Patent and Trademark Office ("USPTO") for "SMART IDEAS FOR A SLIGHTLY CRAZY WORLD"TM in International Classes 009, 016, 035, 036 and 041 for a variety of financial training and marketing goods and services, U.S. Trademark
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Application Serial No. 78-553410. The USPTO registered this trademark on July 31, 2007, Registration No. 3,272,831. 15. On July 26, 2006, AMS filed a trademark application with the USPTO for "SMART IDEAS"TM in International Classes 009, 016, 035, 036 and 041 for a variety of financial training and marketing goods and services, U.S. Trademark Application Serial No. 78-938384. The USPTO registered this trademark on January 15, 2008, Registration No. 3,370,855. V. LINDSEY AND YOUNG 16. Lindsey and Young were System Subscribers of AMS. As a result of AMS' training and guidance, the insurance sales revenue of Lindsey and Young increased greatly from the time they initially contracted with AMS. 17. On or about February of 2006, Lindsey, Young and AMS began to discuss

an arrangement whereby Lindsey and Young would help train other agents under contract with AMS. Although the parties discussed this arrangement and exchanged draft agreements, no agreement was ever finalized or memorialized. Even so, AMS developed, promoted and offered training seminars to its contracted producers entitled Programs to PremiumTM from about September 2006 to February 2008, during which Lindsey and Young provided training. AMS promoted the programs at its own expense and encouraged its qualified, contracted agents to attend the programs. Lindsey and Young assisted AMS in presenting the programs. AMS paid $162,500 to Lindsey and $162,500 to Young in connection with their work on the programs which they received without complaint or further demand. 18. In AMS' efforts to advertise its Programs to PremiumTM seminars, AMS

identified and promoted Lindsey and Young as experts and successful insurance agents to AMS contracted agents, thereby promoting the image and reputation of Lindsey and Young in the eyes of the AMS' network of agents. Before AMS engaged in this activity, Lindsey and Young repeatedly assured AMS that they would not use this opportunity to
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solicit AMS' contracted agents to join a competing FMO or otherwise use the opportunity to compete against AMS. To that end, both Lindsey and Young signed a "Nondisclosure Agreement" wherein they agreed that AMS' list of agents, clients, employees and others with whom AMS does, or has done, business with is proprietary confidential information to AMS, and further promising that during the term of the agreement, and for five years after termination of the agreement, that Lindsey and Young would not directly or indirectly solicit, divert or take away AMS' contracted agents for themselves or on behalf of a competitor of AMS. True and correct copies of the Nondisclosure Agreements signed by Lindsey and Young are attached hereto as Exhibits D and E. 19. Also in connection with AMS' Programs to PremiumTM seminars, AMS

prepared training materials and, on September 1, 2006, AMS filed a trademark application with the USPTO for "Programs to Premium"TM in International Classes 009, 016, 035 and 041 for a variety of financial training and marketing goods and services. The USPTO registered this trademark on May 27, 2008, Registration No. 3,436,876 (Exhibit F). 20. On or about February 2008, Lindsey and Young notified AMS that they

intended to create a competing FMO (Revolution). Although the parties discussed and negotiated various terms whereby the parties would continue to cooperate with each other in some manner, the parties were unable to reach an agreement in this regard. 21. On or about March 26, 2008, Lindsey and Young demanded that AMS

terminate the parties' contracts. AMS is informed and believes, and based thereon alleges, that shortly before Lindsey and Young terminated the relationship, they began to directly and indirectly solicit AMS' contracted agents and employees to leave AMS and join their newly formed FMO, Revolution, in direct violation of their representations to AMS and their Nondisclosure Agreements. 22. AMS is informed and believes, and based thereon alleges, that Lindsey and

Young, through their newly formed FMO, Revolution, have offered, and continue to offer, monetary incentives to their affiliated insurance agents to recruit AMS' contracted agents to Revolution. As a result, AMS is informed and believes, and based thereon alleges, that
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Wieniewitz, acting on behalf of Lindsey, Young and Revolution, has directly solicited, and will continue to directly solicit, AMS' contracted agents (including the same qualified agents who had participated in AMS' Programs to PremiumTM training seminars) to leave AMS and join Lindsey and Young's new FMO, Revolution, all with the knowledge, consent and assistance of Lindsey and Young. 23. AMS is informed and believes, and based thereon alleges, that Lindsey and

Young, through their newly formed FMO, Revolution, have used, and continue to use, testimonials that were supposedly given by AMS' System Subscribers who had participated in AMS' Programs to PremiumTM training seminars, to market and promote Lindsey and Young's new FMO, Revolution, in violation of their representations to AMS and their Nondisclosure Agreements. 24. AMS is informed and believes, and based thereon alleges, that Lindsey

continued to use AMS' copyrighted marketing material as well as the TEN SMART IDEASTM trademark, thereby infringing AMS' trademark and copyright. VI. FIRST CLAIM FOR RELIEF (Breach of Contract) 25. AMS realleges and incorporates herein by reference the obligations in Paragraphs 1 through 24, as set forth herein. 26. AMS is informed and believes, and based thereon alleges, that Lindsey and

Young have breached the terms of their Nondisclosure Agreements by directly and indirectly soliciting AMS' System Subscribers and employees to leave AMS and join their newly created FMO, Revolution. 27. Lindsey also entered into a licensing agreement with AMS, whereby AMS

granted Lindsey permission to utilize AMS' TEN SMART IDEASTM System, including invitations and marketing material, as well as the TEN SMART IDEASTM trademark. That agreement was terminated on or about March 26, 2008. Thereafter, Lindsey had no further right to use any of AMS' materials. Despite the foregoing, AMS is informed and
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believes, and based thereon alleges, that Lindsey continued to use and/or copy AMS' marketing materials and continued to use the TEN SMART IDEASTM mark (the "Mark"), in breach of the terms of the licensing agreement. 28. AMS is informed and believes, and based thereon alleges, that Wieniewitz

has breached the Agent Nondisclosure Agreement dated July 22, 2005, which was duly entered into by AMS and Wieniewitz, a copy of which is attached hereto as Exhibit G, by soliciting and continuing to solicit AMS' System Subscribers and by otherwise using confidential information provided by AMS to improperly solicit AMS' System Subscribers to leave AMS and join Revolution. AMS is informed and believes and thereupon alleges that Wieniewitz engaged in this improper activity at the behest and for the benefit of Lindsey, Young and/or Revolution. 29. AMS has fulfilled all of its obligations under the agreements identified

above. To the extent AMS has not fulfilled any obligations under those agreements, AMS' performance was duly excused or waived by the conduct of counterdefendants. 30. As a proximate result of these breaches of contract, AMS has suffered, and

will continue to suffer, actual damages in a sum to be proven at trial. As a further proximate result of these breaches of contract described above, counterdefendants have been or will be unjustly enriched. 31. AMS alleges that unless and until enjoined and restrained by order of this

Court, counterdefendants will continue to breach the contracts, causing great and irreparable injury to AMS' business, and will allow counterdefendants to gain a commercial advantage over AMS. 32. AMS has no adequate remedy at law for the injuries being suffered and

which may continue in the future. Counterdefendants will continue to breach the contract at issue, and AMS, thus, will be required to maintain a multiplicity of judicial proceedings to protect its interests.

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VII. SECOND CLAIM FOR RELIEF (Misappropriation of Trade Secret) (Cal. Civ. Code §§ 3426, et seq.) 33. AMS realleges and incorporates herein by reference the allegations in

Paragraphs 1 through 32, as set forth herein. 34. As set forth above, the identity of AMS' contracted producers and AMS'

records and lists with respect to those individuals has independent economic value from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use, especially competing FMOs. In light of the foregoing, AMS undertakes efforts that are reasonable under the circumstances to maintain the secrecy of the identity and contact information of AMS' contracted producers and its records related to those producers, including, without limitation, requiring System Subscribers and others to sign nondisclosure agreements, by which they agree that AMS' list of contracted agents is proprietary and confidential to AMS, and that they further agree not to solicit those producers on behalf of a competing FMO. Based on the foregoing, this information constitutes a trade secret under California law. 35. Lindsey, Young, and Wieniewitz have misappropriated this trade secret by

using it to solicit AMS' contracted producers for the benefit of Revolution, and to the detriment of AMS, despite the fact that each of them have promised to not use this confidential information to aid in soliciting AMS' producers. 36. AMS is informed and believes and thereupon alleges that Revolution has

misappropriated this trade secret by using this confidential information without AMS' express or implied consent, and that at the time of using this trade secret information, Revolution knew or had reason to know that its knowledge of the trade secret was derived from or through persons (Lindsey, Young and/or Wieniewitz) who owed a duty to AMS to maintain the secrecy or otherwise limit the use of the information.

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37.

As a proximate result of the use by counterdefendants of AMS' confidential

information, trade secrets, and agent lists, AMS will suffer actual damages in a sum to be proven at trial. As a further proximate result of the actual and/or threatened misappropriation described above, counterdefendants have been or will be unjustly enriched by wrongfully obtaining business that would have otherwise been retained by AMS. 38. AMS is informed and believes and thereupon alleges that the

aforementioned acts and conduct of counterdefendants were willful, oppressive and malicious and that counterdefendants misappropriated AMS' confidential information, trade secrets, and agent lists with the intent to injure AMS' business and improve their own. AMS is, therefore, entitled to punitive and exemplary damages, as provided under California law. 39. AMS alleges that unless and until enjoined and restrained by order of this

Court, counterdefendants' misappropriation of AMS confidential and proprietary information and wrongful use of substantive information will continue, causing great and irreparable injury to AMS' business, and will allow counterdefendants to gain a commercial advantage over AMS. 40. AMS has no adequate remedy at law for the injuries being suffered and

which may continue in the future. Counterdefendants will continue to misappropriate and wrongfully and unlawfully utilize AMS' confidential information, trade secrets, and agent lists, and AMS, thus, will be required to maintain a multiplicity of judicial proceedings to protect its interests. 41. As a result of counterdefendants' misappropriation of AMS' confidential

information, trade secrets, and agent lists, AMS has been forced to retain the law firm of Higgs, Fletcher & Mack LLP to represent its interests and preserve and protect it confidential information, trade secrets, and agent lists. Accordingly, AMS is entitled to payment of reasonable attorneys' fees and costs of suit incurred herein pursuant to Civil Code §§ 1717 and 3426.4, as well as the terms of the parties' agreements.
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VIII. THIRD CLAIM FOR RELIEF (COPYRIGHT INFRINGEMENT) (17 U.S.C. § 501) 42. AMS realleges and incorporates herein by reference the allegations in paragraphs 1 through 41, as set forth herein. 43. AMS is the author and exclusive owner of the TEN SMART IDEASTM

System, including copyrighted program invitations. 44. 45. AMS holds a valid United States copyright in the program invitations. AMS has complied in all respects with the provisions of the Copyright Act

and filed applications to register the program invitations with the United States Copyright Office. 46. AMS duly revoked its licensing agreement with Lindsey, whereby Lindsey

was permitted to use the program invitation. 47. Despite the foregoing, AMS is informed and believes and that basis alleges

that Lindsey has copied, distributed, and made use of and continues to make use of the program invitation (or substantially similar materials) as well as other TEN SMART IDEASTM program materials in connection with Lindsey's business, without the consent or permission of AMS. 48. AMS is informed and believes, and on that basis alleges, that Lindsey has

copied and made use of and continues to make use of both the individual protectable expressive elements of the TEN SMART IDEASTM System and the expressive manner in which AMS selected, arranged and combined the protectable and non-protectable elements of the works. 49. Lindsey unquestionably had access to the program material by virtue of

Lindsey's prior relationship with AMS--conducting seminars using the TEN SMART IDEASTM material under license from AMS.

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50.

Lindsey's past and current use of the works and other TEN SMART

IDEASTM program materials (or substantially similar materials) constitutes copyright infringement in violation of 17 U.S.C. § 501(a). 51. AMS is informed and believes, and on that basis alleges, that Lindsey has

derived and continues to derive benefits, finan