NPK Response and Counterclaims

8/12/2019 NPK Response and Counterclaims

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Page 1 - NPK, LLCS, OREGON GLOBAL DISTRIBUTION, INC.S, RICHARD

ROWES, RENY TOWNSENDS, AND ORION TANGS ANSWER ANDAFFIRMATIVE DEFENSES TO YETI'S AND HEAGLES SECONDAMENDED COMPLAINT AND COUNTERCLAIMS

Rene E. Rothauge, OSB #[email protected] M. Edelson, OSB #[email protected] Alexander, OSB #[email protected] M. Colton, OSB #065774

[email protected], HERBOLD, GLADE& MEHLHAF, P.C.

1211 SW Fifth Avenue, Suite 3000Portland, OR 97204-3730Tel: (503) 295-3085Fax: (503) 323-9105

Attorneys for Defendants NPK, LLC andOregon Global Distribution, Inc.

Robert B. Miller, OSB #[email protected] VOORHEES & LAURICK PC732 NW 19th AvenuePortland, OR 97209Tel: (503) 224-0055Fax: (503) 222-5290

Attorneys for Defendants Orion Tang,Richard Rowe, and Reny Townsend

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF OREGON

PORTLAND DIVISION

YETI ENTERPRISES INCORPORATED,an Oregon corporation, and ALEXANDER J.HEAGLE

Plaintiffs/Counterclaim-Defendants,

vs.

NPK, LLC, f/k/a N.P.K. DISTRIBUTORS,LLC, an Oregon limited liability company,OREGON GLOBAL DISTRIBUTION,INC., an Oregon corporation, RICHARDROWE, an individual, RENY TOWNSEND,

an individual, and ORION TANG, anindividual,

Defendants/Counterclaim-Plaintiffs.

CV No.: 3:13-cv-01203-ST

NPK, LLCS, OREGON GLOBALDISTRIBUTION, INC.S, RICHARD

ROWES, RENY TOWNSENDS, ANDORION TANGS ANSWER AND

AFFIRMATIVE DEFENSES TO YETISAND HEAGLES SECOND AMENDED

COMPLAINT AND COUNTERCLAIMS

Case 3:13-cv-01203-ST Document 92 Filed 06/30/14 Page 1 of 90


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NPK, LLC, f/k/a N.P.K. DISTRIBUTORS,LLC, an Oregon limited liability company,OREGON GLOBAL DISTRIBUTION,INC., an Oregon corporation, RICHARD

ROWE, an individual, RENY TOWNSEND,an individual, and ORION TANG, anindividual,

Counterclaim-Plaintiffs,

vs.

NICHOLAS JACKSON, an individual;JESSICA LILGA, an individual;FREQ WATER, INC., an Oregon corporation,

Additional Counterclaim-Defendants.

NPK, LLC (NPK), Oregon Global Distribution (OGD), Richard Rowe (Rowe),

Reny Townsend (Townsend), and Orion Tang (Tang), and collectively Defendants,

respond to Yeti Enterprises Incorporateds (Yetis) and Alexander J. Heagles (Heagle)

second amended complaint as follows:

ANSWER

I. PARTIES, JURISDICTION AND VENUE

1. Defendants admit that Yeti is a corporation incorporated under the laws of the

state of Oregon with its principal place of business in Medford, Oregon, and engages in the

business of manufacturing and selling plant washes. Defendants are without knowledge or

information sufficient to form a belief as to the truth of the remaining allegations in paragraph 1

of the second amended complaint, and therefore deny them.

2. Defendants admit the allegations in paragraph 2 of the second amended complaint

for the purpose of jurisdiction only.

3. In response to the allegations in paragraph 3 of the second amended complaint,

defendants admit that NPK is an Oregon limited liability company with its principal place of



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business in Medford, Oregon, and sells and distributes horticulture products. Defendants also

admit that Rowe, Townsend, Tang, and Nicholas Jackson (Jackson) co-founded NPK.

Defendants further admit that Rowe is NPKs President, Townsend is NPKs Senior Vice

President, and Tang is NPKs Vice President of Operations. Defendants deny all remaining

allegations in paragraph 3 of the second amended complaint.


defendants admit that OGD is an Oregon corporation with its principal place of business in

Medford, Oregon. Defendants also admit that Rowe, Townsend, and Tang co-founded OGD.

Defendants further admit that Rowe is OGDs President, Townsend is OGDs Senior Vice

President, and Tang is OGDs Vice President of Operations. Defendants deny all remaining



defendants admit that Rowe is a resident of Medford, Oregon. Defendants also admit that Rowe

is a co-founder and the President of NPK and OGD. Defendants deny all remaining allegations

in paragraph 5 of the second amended complaint.


defendants admit that Townsend is a resident of Medford, Oregon. Defendants also admit that

Townsend is a co-founder and the Senior Vice President of NPK and OGD. Defendants deny all

remaining allegations in paragraph 6 of the second amended complaint.


defendants admit that Tang is a resident of Medford, Oregon. Defendants also admit that Tang is

a co-founder and the Vice President of Operations of NPK and OGD. Defendants deny all


8. Defendants deny the allegations in paragraph 8 of the second amended complaint.

9. Defendants admit the allegations in paragraph 9 of the second amended complaint

for the purpose of jurisdiction only.



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10. Defendants admit the allegations in paragraph 10 of the second amended

complaint for the purpose of venue only.

II. GENERAL ALLEGATIONS

11. Defendants are without knowledge or information sufficient to form a belief as to

the truth of the allegations in paragraph 11 of the second amended complaint, and therefore deny

them.



them.



them.



them.


defendants admit that Yeti and NPK entered into a distribution agreement dated November 11,

2010 (the Distribution Agreement), attached as exhibit A to the second amended complaint.

Defendants further state that the Distribution Agreement attached as exhibit A to the second

amended complaint speaks for itself. Defendants deny all remaining allegations in paragraph 15

of the complaint.


defendants admit that a tote is a plastic vessel that contains 260 gallons of liquid. Defendants

further state that the Distribution Agreement speaks for itself. Defendants deny all remaining



defendants state that the Distribution Agreement attached as exhibit A to the second amended



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complaint speaks for itself. Defendants deny all remaining allegations in paragraph 17 of the

second amended complaint.


defendants state that the Distribution Agreement attached as exhibit A to the second amended

complaint speaks for itself. Defendants deny all remaining allegations in paragraph 18 of the



defendants admit that pursuant to the Distribution Agreement attached as exhibit A to the second

amended complaint, NPK bottled, labeled, marketed, and physically distributed three plant

washes: Mighty Wash, PM Wash, and Power Wash. Defendants deny all remaining




them.


defendants admit that NPK and Yeti met in February 2012 to discuss the parties ongoing

business activities. Defendants also admit that in February 2012, Yeti and NPK executed an

agreement titled Yeti Final Proposal, attached as exhibit A-12 to the second amended

complaint. Defendants further state that the Yeti Final Proposal speaks for itself. Defendants

deny all remaining allegations in paragraph 21 of the second amended complaint.


defendants state that the Yeti Final Proposal speaks for itself. Defendants are without

knowledge or information sufficient to form a belief as to the truth of the remaining allegations

in paragraph 22 of the second amended complaint, and therefore deny them.


defendants admit that the U.S. Patent and Trademark Office granted NPK a trademark for

Mighty Wash, U.S. Trademark Registration No. 4,121,193. Defendants further state that



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U.S. Trademark Registration No. 4,121,193 and any associated application materials speak for

themselves. Defendants deny all remaining allegations in paragraph 23 of the second amended

complaint.






complaint.


defendants admit that on March 29, 2012, the U.S. Environmental Protection Agency (EPA)

issued a Stop Sale, Use, or Removal Order to NPK, which prohibited NPKs sale, use, or

distribution of Mighty Wash, PM Wash, and Power Wash (the Stop Sale Order),

attached as exhibit E to the second amended complaint. Defendants further state that the Stop

Sale Order attached as exhibit E to the second amended complaint speaks for itself. Defendants



defendants admit that on April 9, 2012, NPK emailed EPA regarding the Stop Sale Order.

Defendants further state that the email speaks for itself. Defendants deny all remaining



defendants admit that on April 9, 2012, EPA emailed NPK regarding the Stop Sale Order.




defendants admit that on April 9, 2012, EPA emailed NPK regarding the Stop Sale Order.



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defendants admit that after EPA issued its Stop Sale Order, NPK changed its labels and

advertising for Mighty Wash, PM Wash, and Power Wash. Defendants further state that

the labels and advertising speak for themselves. Defendants also admit that EPA sent NPK a

letter regarding Authorization to Sell and Distribute Mighty Wash, PM Wash, and Power

Wash dated June 21, 2012 (the EPA Authorization Letter). A true and correct copy of EPA

Authorization Letter is attached to NPKs Answer as Exhibit 1. Defendants further state that

EPA Authorization Letter speaks for itself. Defendants deny all remaining allegations in

paragraph 29 of the second amended complaint.


defendants admit that after EPA issued its Stop Sale Order, NPK changed its labels and

advertising for Mighty Wash, PM Wash, and Power Wash. Defendants further state that

the labels and advertising speak for themselves. Defendants also admit that EPA sent NPK an

EPA Authorization Letter dated June 21, 2012, which is attached to NPKs Answer as Exhibit 1.

Defendants further state that EPA Authorization Letter speaks for itself. Defendants deny all



defendants admit that on March 29, 2012, EPA issued a Stop Sale Order, which prohibited

NPKs sale, use, or distribution of Mighty Wash, PM Wash, and Power Wash, attached as

exhibit E to the second amended complaint. Defendants further state that the Stop Sale Order

attached as exhibit E to the second amended complaint speaks for itself. Defendants deny all

remaining allegations in paragraph 31 of the complaint.


defendants admit that NPK applied to the U.S. Patent and Trademark Office for registration of

PM Wash, U.S. Trademark Serial No. 85782754. Defendants further state that U.S.



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Trademark Serial No. 85782754 and any associated application materials speak for themselves.

Defendants deny all remaining allegations in paragraph 32 of the second amended complaint.



Power Wash, U.S. Trademark Registration No. 4,346,896. Defendants further state that U.S.

Trademark Registration No. 4,346,896 and any associated application materials speak for


complaint.



them.

35. Defendants deny the allegations in paragraph 35 of the second amended

complaint.


defendants admit that on January 2, 2013, Rowe and Tang had a meeting with Heagle.

Defendants also admit that Rowe provide Heagle a copy of EPA Authorization Letter dated

June 21, 2012. Defendants deny all remaining allegations in paragraph 36 of the second

amended complaint.


defendants admit that Stack and Multiply were not Yeti products. Defendants are without




defendants admit that at the January 2, 2013 meeting between Rowe, Tang, and Heagle, Rowe

and Tang did not have any knowledge of any customers confusing Stack and Multiply with

Yeti. Defendants are without knowledge or information sufficient to form a belief as to the truth



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of the remaining allegations in paragraph 38 of the second amended complaint, and therefore

deny them.


defendants admit that NPK authorized placement of an advertisement titled From the Creators

of Mighty Wash, attached as exhibit D to the second amended complaint, in the December 2012

issue ofMaximum Yieldmagazine. Defendants are without knowledge or information sufficient

to form a belief as to the truth of the remaining allegations in paragraph 39 of the second

amended complaint, and therefore deny them.


defendants admit that in February 2012, Yeti and NPK executed an agreement titled Yeti Final

Proposal, attached as exhibit A-12 to the second amended complaint. Defendants further state

that the Yeti Final Proposal speaks for itself. Defendants deny all remaining allegations in



defendants admit that on January 28, 2013, Yeti sent NPK a demand letter. A true and correct

copy of Yetis demand letter is attached to NPKs Answer as Exhibit 2. Defendants further state

that Yetis demand letter speaks for itself. Defendants deny all remaining allegations in



defendants admit that the U.S. Patent and Trademark Office granted NPK a trademark for the

Power Button mark U.S. Trademark Registration No. 4,400,010. Defendants further state that



complaint.


defendants admit that Yeti and NPK had a meeting on February 11, 2013, and at that meeting



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Yeti and NPK attempted to resolve their pending business disputes. Defendants deny all




them.


defendants admit that on February 21, 2013, Townsend sent an email with an unsigned

attachment titled Settlement Agreement and Amendment to Distribution Agreement, attached

as exhibit G to the second amended complaint. Defendants further state that the email and its

attachment, attached as exhibit G to the second amended complaint, speak for themselves.



complaint.


complaint.



them.


complaint.


complaint.


complaint.



them.



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them.



them.



them.


complaint.


complaint.


complaint.


complaint.


complaint.


defendants deny that NPK uses Yetis Marks as defined by Yeti. Defendants further deny the



defendants admit that NPK filed a complaint for tortious interference with contractual relations

against Yeti in Jackson County Circuit Court, Case No. 13CV01641, later stipulated to a

voluntarily dismissal without prejudice, and the Distribution Agreement attached as exhibit A to

the second amended complaint contains an exclusive venue provision for Multnomah County.



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Defendants further state they are without knowledge or information sufficient to form a belief as

to the truth of the remaining allegations in paragraph 62 of the second amended complaint, and

therefore deny them.

III.

CLAIMS FOR RELIEF

FIRST CLAIM FOR RELIEF

(By Yeti Against All Defendants)

Trademark Infringement and Unfair Competition 15 U.S.C. 1125(a)


defendants incorporate by reference each and every response set forth above.


complaint.


complaint.


defendants deny that NPK used Yetis Marks as defined by Yeti. Defendants are without




complaint.


complaint.


complaint.


complaint.



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complaint.


complaint.


complaint.

SECOND CLAIM FOR RELIEF


False Advertising 15 U.S.C. 1125(a)




complaint.


complaint.


complaint.


complaint.


complaint.


complaint.


complaint.


complaint.



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complaint.


complaint.THIRD CLAIM FOR RELIEF


Common Law Infringement and Unfair Competition




defendants deny that NPK unlawfully used any marks owned by Yeti. Defendants are without


contained in paragraph 86 of the second amended complaint, and therefore deny them.


defendants deny that NPK misappropriated any marks owned by Yeti. Defendants are without


contained in paragraph 86 of the second amended complaint, and therefore deny them.


complaint.


complaint.


complaint.


complaint.


complaint.



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FOURTH CLAIM FOR RELIEF

(By Yeti NPK, Rowe, Townsend and Tang)

(Fraud Federal Trademark Registration)

(Count 1)




complaint.


complaint.



them.


complaint.


complaint.

(Count 2)




complaint.


complaint.



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the truth of the allegations in paragraph 102 of the second amended complaint, and therefore

deny them.


complaint.


complaint.

(Count 3)




complaint.


complaint.



deny them.


complaint.


complaint.

(Count 4)




complaint.



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complaint.



deny them.


complaint.


complaint.

FIFTH CLAIM FOR RELIEF

(By Yeti Against NPK, Rowe, Townsend and Tang)

(Common Law Fraud)




defendants admit that on March 29, 2012, EPA issued a Stop Sale Order to NPK, which

prohibited NPKs sale, use, or distribution of Mighty Wash, PM Wash, and Power Wash.

Defendants deny the remaining allegations in paragraph 118 of the second amended complaint.


complaint.


complaint.


complaint.


complaint.



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SIXTH CLAIM FOR RELIEF

(By Yeti Against NPK)

(Breach of Contract)

(Count 1)




defendants admit that Yeti and NPK executed a Distribution Agreement dated November 11,

2010, attached as exhibit A to the second amended complaint. Defendants further state that the

Distribution Agreement attached as exhibit A to the second amended complaint speaks for itself.



complaint.


complaint.


complaint.


complaint.

(Count 2)








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complaint.


complaint.


complaint.


complaint.

(Count 3)









complaint.


complaint.


complaint.


complaint.



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(Count 4)









complaint.


complaint.


complaint.


complaint.

(Count 5)

(in the Alternative)




defendants admit that Yeti and NPK had a meeting on February 11, 2013, and at that meeting,

Yeti and NPK attempted to resolve their pending business disputes. Defendants deny all



complaint.



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complaint.


complaint.


complaint.


complaint.

(Count 6)





complaint.


complaint.


complaint.


complaint.


complaint.


complaint.


complaint.



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(Count 7)





complaint.


complaint.


complaint.


complaint.


complaint.

(Count 8)





complaint.


complaint.


complaint.


complaint.



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complaint.


complaint.(Count 9)





complaint.


complaint.


complaint.


complaint.


complaint.


complaint.

(Count 10)





complaint.



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complaint.


complaint.


complaint.


complaint.


complaint.


complaint.

SEVENTH CLAIM FOR RELIEF


(Breach of Implied Covenant of Good Faith and Fair Dealing)







Defendants deny all remaining allegations in paragraph 191 of the complaint.


complaint.






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Distribution Agreement attached as exhibit A to the complaint speaks for itself. Defendants



complaint.


complaint.


complaint.

EIGHTH CLAIM FOR RELIEF


(Declaratory Judgment ORS Chapter 28)



198. Defendants admit that there is a controversy between the parties. Defendants

deny all remaining allegations contained in paragraph 198 of the second amended complaint.

199. Defendants admit the allegations in paragraph 199 of the second amended

complaint for the purpose of venue only.


complaint.

NINTH CLAIM FOR RELIEF


Cybersquatting 15 U.S.C. 1125(d)





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deny them.


complaint.


complaint.


complaint.


complaint.


defendants admit that the 40 internet domain names listed in paragraph 204 of the second

amended complaint do not contain the legal name of any defendant. Defendants deny all



complaint.



deny them.


complaint.


complaint.


complaint.



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complaint.


complaint.


complaint.


complaint.


complaint.


complaint.


complaint.


complaint.


complaint.


complaint.

TENTH CLAIM FOR RELIEF


Declaratory Judgment of Non-infringement





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defendants admit that there is a controversy between the parties. Defendants deny all remaining



defendants admit that there is a controversy between the parties. Defendants deny all remaining



defendants state that the allegations in count II of the thirteenth claim for relief of defendants

amended counterclaims speak for themselves. Defendants deny all remaining allegations in



defendants state that the allegations in count II of the thirteenth claim for relief of defendants

amended counterclaims speak for themselves. Defendants deny all remaining allegations in



complaint.


complaint.



deny them.


complaint.



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ELEVENTH CLAIM FOR RELIEF


Declaratory Judgment of Invalidity of Federal Trademark Registration

(Count 1 U.S. Reg. No. 4,121,193)








complaint.


complaint.


complaint.






complaint.


complaint.



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(Count 2 U.S. Reg. No. 4,241,438)








complaint.


complaint.


complaint.






complaint.


complaint.

(Count 3 U.S. Reg. No. 4,346,896)





Power Wash, U.S. Trademark Registration No. 4,346,896. Defendants further state that



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complaint.


complaint.


complaint.



Power Wash, U.S. Trademark Registration No. 4,346,896. Defendants further state that



complaint.


complaint.

(Count 4 U.S. Reg. No. 4,400,010)








complaint.


complaint.



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complaint.






complaint.


complaint.

TWELFTH CLAIM FOR RELIEF

(By Yeti and Heagle Against NPK, Rowe and Tang)

Breach of Confidentiality and Non-Disclosure Contract




defendants admit that Heagle and Rowe executed a confidentiality contract dated September 9,

2010. Defendants also admit that Heagle and Tang executed a confidentiality contract dated

September 9, 2010. Defendants further admit that Yeti and NPK executed a confidentiality

agreement dated January 8, 2013. Defendants further state that the confidentiality contracts and

the confidentiality agreement speak for themselves. Defendants deny all remaining allegations



defendants admit that Heagle and Rowe executed a confidentiality contract dated September 9,

2010. Defendants also admit that Heagle and Tang executed a confidentiality contract dated

September 9, 2010. Defendants further admit that Yeti and NPK executed a confidentiality

agreement dated January 8, 2013. Defendants further state that the confidentiality contracts and



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the confidentiality agreement speak for themselves. Defendants deny all remaining allegations



complaint.


complaint.


complaint.


complaint.


complaint.

THIRTEENTH CLAIM FOR RELIEF

(By Yeti and Heagle Against All Defendants)

Misappropriation of Trade Secrets ORS 646.461




complaint.


complaint.


complaint.


complaint.


complaint.



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complaint.


complaint.


complaint.


complaint.


complaint.


complaint.

276. Except as specifically admitted, defendants deny each and every allegation in the


AFFIRMATIVE AND ADDITIONAL DEFENSES

277. Defendants assert the following affirmative defenses, without assuming any

burden that would otherwise rest with plaintiff.

FIRST AFFIRMATIVE DEFENSE

(Failure to State a Claim)

278. Plaintiffs first amended complaint and the purported causes of action set forth

therein fail to state a claim against defendants upon which relief can be granted.

///

///

///



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SECOND AFFIRMATIVE DEFENSE

(Failure to Allege Fraud with Particularity)

279. Some or all of plaintiffs claims fail to allege fraud with particularity.

THIRD AFFIRMATIVE DEFENSE(Laches)

280. Some or all of plaintiffs claims are barred by the doctrine of laches. Plaintiff

waited an unreasonable length of time to bring its trademark infringement claims. Plaintiff was

aware that NPK continuously used the trademarks for Mighty Wash, PM Wash, Power

Wash, the Power Button, and the Frequency Logo (NPKs Marks) for more than two

years. Plaintiff failed to inform NPK of, or enforce, its purported ownership of NPKs Marks.

Plaintiffs delay in bringing its trademark claims prejudiced NPK because of its substantial

investment in promotion and advertising of NPKs Marks.

FOURTH AFFIRMATIVE DEFENSE(Estoppel, Waiver, and Acquiescence)

281. Some or all of plaintiffs claims are barred by the doctrines of estoppel, waiver,

and acquiescence. NPKs Marks had been in open, continuous, and extensive use by NPK for

more than two years prior to the filing of the first amended complaint, to the knowledge of

plaintiff, with no attempt on plaintiffs part to obtain a judicial determination of its alleged rights

with respect to NPKs use of its marks. NPK has relied to its detriment upon plaintiffs

acquiescence and delay, continued use of its marks, and invested substantial sums in promotion

and advertising of said marks. For these reasons, plaintiff is estopped to allege that any acts of

defendants now constitute an infringement of plaintiffs alleged trademark rights.

FIFTH AFFIRMATIVE DEFENSE

(Abandonment)

282. Some or all of plaintiffs claims are barred because plaintiff has abandoned rights

in the marks by either discontinuing its use of the marks with express or implied intent not to

continue use, or failing to exercise adequate quality control over the goods sold under the

trademarks.



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SIXTH AFFIRMATIVE DEFENSE

(Plaintiff is Not the True Owner of the Marks)

283. Some or all of plaintiffs claims are barred because plaintiff is not the true owner

of NPKs Marks by virtue of either NPK being the first to use its marks in the marketplace,

consumers associating NPKs Marks with NPK, NPKs registration of the Mighty Wash,

Power Wash, and Power Button marks with the U.S. Patent and Trademark Office, or

agreement between NPK and Yeti.

SEVENTH AFFIRMATIVE DEFENSE

(Continuous Prior Use)

284. Some or all of plaintiffs claims are barred by the doctrine of continuous prior

use.

EIGHTH AFFIRMATIVE DEFENSE

(Good Faith)

285. Some or all of plaintiffs state law claims are barred by the doctrine of good faith.

NINTH AFFIRMATIVE DEFENSE

(Unclean Hands)

286. Some or all of plaintiffs claims are barred by the doctrine of unclean hands

because plaintiff engaged in conduct including, but not limited to, committing or conspiring to

commit tortious conduct against defendants, knowingly filing an application for registration of

the mark That Stuff Mighty Wash with the U.S. Patent and Trademark Office, Serial No.

85806351, after NPK already registered its marks for Mighty Wash, refusing to supply NPK

with plant washes and adding obligations to NPK that the parties never agreed to or bargained

for in order for Yeti to supply NPK with plant washes pursuant to the Yeti-NPK 10-year

Distribution Agreement and its amendments.

TENTH AFFIRMATIVE DEFENSE

(Statute of Limitations)

287. Some or all of plaintiffs claims are barred by statute of limitations.



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ELEVENTH AFFIRMATIVE DEFENSE

(Repudiation)

288. Some or all of plaintiffs claims are barred because plaintiff repudiated the

Distribution Agreement and its amendments, the purported February 11 Agreement, and/or any

purported confidentiality contracts or agreements.

TWELFTH AFFIRMATIVE DEFENSE

(Payment)

289. Some or all of plaintiffs claims are barred by the doctrine of payment.

THIRTEENTH AFFIRMATIVE DEFENSE

(Accord and Satisfaction)

290. Some or all of plaintiffs claims are barred by the doctrine of accord and

satisfaction.

FOURTEENTH AFFIRMATIVE DEFENSE

(Waiver)

291. Some or all of plaintiffs contract-related claims are barred by the doctrine of

waiver.

FIFTEENTH AFFIRMATIVE DEFENSE

(Fraudulent Inducement)

292. Some or all of plaintiffs contract-related claims are barred because of plaintiffs

fraudulent inducement.

SIXTEENTH AFFIRMATIVE DEFENSE

(Ambiguity)

293. Some or all of plaintiffs contract-related claims are barred because any purported

contract terms were too ambiguous for the contract to be enforceable.

SEVENTEENTH AFFIRMATIVE DEFENSE(Mistake)

294. Some or all of plaintiffs claims are barred by the doctrine of mistake.



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EIGHTEENTH AFFIRMATIVE DEFENSE

(Commercial Impossibility or Impracticability)

295. Some or all of plaintiffs claims are barred by the doctrine of commercial

impossibility or impracticability.

NINETEENTH AFFIRMATIVE DEFENSE

(Unconscionable Contract or Terms)

296. Some or all of plaintiffs claims are barred because of an unconscionable contract

or unconscionable contract terms.

TWENTIETH AFFIRMATIVE DEFENSE

(Failure of Consideration)

297. Some or all of plaintiffs claims are barred by the doctrine of failure of

consideration because plaintiff refused to supply contractual goods to NPK.

TWENTY-FIRST AFFIRMATIVE DEFENSE

(Immaterial Breach)

298. Some or all of plaintiffs claims are barred because any alleged breach of contract

was an immaterial breach.

TWENTY-SECOND AFFIRMATIVE DEFENSE

(Sufficiency of Notice)

299. Some or all of plaintiffs claims are barred because of insufficient notice of any

alleged violations or breaches.

TWENTY-THIRD AFFIRMATIVE DEFENSE

(Failure to Mitigate)

300. Some or all of plaintiffs claims are barred because plaintiff failed to mitigate its

damages.

TWENTY-FOURTH AFFIRMATIVE DEFENSE(Fair Use)

301. Some or all of plaintiffs claims are barred by the doctrine of fair use.



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TWENTY-FIFTH AFFIRMATIVE DEFENSE

(Reasonable Belief)

302. Some or all of plaintiffs claims are barred because defendants believed and had

reasonable grounds to believe that any alleged use of a domain name was a fair use or otherwise

lawful.

TWENTY-SIXTH AFFIRMATIVE DEFENSE

(Preemption)

303. Some or all of plaintiffs claims are barred by the doctrine of preemption.

TWENTY-SEVENTH AFFIRMATIVE DEFENSE

(Contributory or Comparative Fault)

304. Some or all of plaintiffs claims are barred by the doctrines of contributory of

comparative fault.

TWENTY-EIGHTH AFFIRMATIVE DEFENSE

(Additional Defenses)

305. Defendants may have additional defenses that cannot now be articulated due to

the generality of plaintiffs pleadings and the fact that discovery is ongoing. Accordingly,

defendants expressly reserve the right to supplement the foregoing and to plead any and all

additional defenses available under the law.

DEMAND FOR JURY TRIAL

306. Defendants demand a jury trial in this action.

WHEREFORE, having fully answered plaintiffs second amended complaint and having

asserted affirmative and additional defenses, defendants respectfully pray for judgment as

follows:

A. That plaintiffs claims against defendants be dismissed in their entirety and with

prejudice;

B. That plaintiffs take nothing;

C. That the Court enter judgment in defendants favor;



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D. That defendants recover reasonable attorney fees, expenses, and costs; and

E. For any other just relief.

COUNTERCLAIM

NPK, Rowe, Townsend, and Tang (collectively Counterclaim-Plaintiffs) allege as

follows:

INTRODUCTION

1. Yeti and Counterclaim-Defendants collaborated in a plot to destroy NPK. Their

plot was recently exposed in Nicholas Jacksons prison telephone call recordings. While

incarcerated for 14 months on battery and assault charges unrelated to this case, Jackson engaged

in more than one thousand hours of telephone calls that were recorded by the Oregon

Department of Corrections. These recordings reveal a conspiracy to destroy NPK, which

involved NPKs supplier (Yeti), one of NPKs members (Nicholas Jackson), a former NPK

employee (Jessica Lilga), and others to be named later in this action.

THE PARTIES

Counterclaim-Plaintiffs

2. NPK is a limited liability company incorporated under the laws of Oregon with its

principal place of business in Medford, Oregon. NPK is engaged in the business of

manufacturing, distributing, and marketing garden supplies and materials.

3. Rowe is an individual who resides in Medford, Oregon, and is NPKs President.

4. Townsend is an individual who resides in Medford, Oregon, and is NPKs Senior

Vice President.

5. Tang is an individual who resides in Medford, Oregon, and is NPKs Vice

President of Operations.

Counterclaim-Defendants

6. Yeti is a corporation incorporated under the laws of Oregon with its principal

place of business in Central Point, Oregon.



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7. Yeti is engaged in the business of manufacturing and selling plant washes which

are used by consumers to prevent pest infestation and mold growth, and to clean plant parts.

8. Alexander J. Heagle (Heagle) is an individual who, at all relevant times, resided

in Oregon. Heagle is the president and majority owner of Yeti. At all relevant times, Heagle

was acting either in his individual capacity or as an agent of Yeti. Further discovery will inform

when he was acting as an individual and/or as a Yeti officer.

9. Nicholas Jackson (Jackson) is an individual who, at all relevant times, resided

in Oregon. Jackson is a member of NPK and is facing expulsion from NPK pursuant to

consolidated pending Jackson County Circuit Court Case Nos. 13CV07673 and 13CV04521.

10. Jessica Lilga (Lilga) is an individual who, at all relevant times, resided in

Oregon. Lilga is a former employee of NPK.

11. Freq Water, Inc. is a corporation incorporated under the laws of Oregon with its

principal place of business in Grants Pass, Oregon.

12. Freq Water, Inc. is engaged in the business of manufacturing and selling plant

washes. These are used by consumers to prevent pest infestation, mold growth, and to clean

plant parts.

13. Heagle, Jackson, and Lilga are at times collectively referred to as Counterclaim-

Defendants.

JURISDICTION AND VENUE

14. This Court has original jurisdiction over Yetis and NPKs trademark claims

under 28 U.S.C. 1331, 1338, and 15 U.S.C. 1120, 1125, the federal declaratory judgment

claims under 28 U.S.C. 2201 and 2202, and 15 U.S.C. 1116(a), and supplemental

jurisdiction over NPKs remaining state law claims pursuant to 28 U.S.C. 1367.

15. Venue is proper in the United States District Court for the District of Oregon

pursuant to 28 U.S.C. 1391 because Counterclaim-Defendants reside in the State of Oregon

and sell products in the State of Oregon. Venue is also proper in the Portland Division pursuant



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to LR 3-2 because the contract at issue contains an exclusive venue provision for Multnomah

County.

GENERAL ALLEGATIONS

I.

The creation of the products and the Yeti-NPK 10-year Distribution Agreement.

16. Yeti manufactured liquid for three plant washes using a formula and process

which it claims includes electronic frequency imprinting. In or around 2009, Yeti began

selling its liquid for the three plant washes under the names That Stuff Plant Wash SpiderMite

Control, That Stuff Spidermite Destroyer, and That Stuff Molds and Mildew Control

Formula.

17. In or around 2009, NPKs members operated a garden store called In and Out

Gardens.

18. Yeti and NPKs members believed there was a budding market for plant wash

products, but that Yetis plant wash sales were not reaching their potential. At that time, Yeti

was primarily a manufacturing company. As a result, Yeti did not have the business, marketing,

or distribution capabilities that were necessary to significantly increase Yetis plant wash sales.

19. NPKs members, however, had business, marketing, and distribution experience.

Accordingly, Yeti agreed to have NPK create a new name, label, brand, and design for the liquid

manufactured by Yeti. Yeti also agreed to have NPK use NPKs experience and contacts to

market and distribute Yetis liquid. In return, Yeti agreed to supply the liquid it manufactured

exclusively to NPK for distribution and sale for a 10-year term.

20. In the fall of 2010, Yeti and NPK memorialized their agreements, in part, by a

series of written agreements. Pursuant to the agreements, NPK designed and created three new

plant wash product brands: Mighty Wash, Power Wash, and PM Wash (collectively

Mighty Wash).

21. On November 11, 2010, NPK and Yeti executed a 10-year distribution agreement

for NPK to bottle, label, market, and physically distribute the liquid that Yeti manufactured and

supplied to NPK. A copy of the Distribution Agreement is attached as Exhibit A to Yetis



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10 shares of Yeti as a bonus sign on. Jackson agreed to join, stating, consider it done my

friend . . . youve got me 110%.

27. During that same telephone call, Heagle and Jackson plotted to recruit Lilga to

their enterprise. Heagle explained, Jessica [Lilga] is coming over tonight and we are going to

talk about the same thing. . . . I talked to Jessica [Lilga] this morning and told her what we need

her to do is keep things nice and smooth, keep your ears open and be a mole for us. Jackson

responded yeah exactly. At the time of this conversation, Lilga was still an NPK employee.

Their plans were also documented in correspondence between Heagle and Jackson.

28. Pursuant to their plan, Yeti and Heagle recruited Lilga to use her position as an

NPK employee to steal NPKs confidential and proprietary business information, and then

become a Yeti employee and assist in the formation of Freq Water.

29. The plan required funding and a sound legal strategy. For funding Yeti, Heagle,

Jackson, and Lilga developed a relationship with Dennis Hunter, a millionaire and successful

businessman from California who wanted to expand his business enterprise into plant washes.

As the plan unfolded, Mr. Hunter also used his attorney Elizabeth Lehrer to relay strategic

objectives to the group and to the attorneys that Yeti later hired to file lawsuits against NPK.

Those lawsuits were designed to acquire NPK information that Yeti could not simply acquire by

theft.

A. The Plan, Part One: Get out of the Yeti-NPK 10-year DistributionAgreement.

30. In order to distribute the liquid directly to consumers, Yeti needed to get out of

the 10-year Distribution Agreement with NPK. Accordingly, and as Heagle explained to

Jackson and Lilga during a telephone call, Heagle had sought legal advice from a very good

attorney, who specializes in breaking down corporations and breaking down contracts . . . his

specialty is breaking corporate [ve]ils.

31. Yeti, Heagle, Jackson, and Lilga then formed a plan to force NPK to accept

onerous contractual modifications, or Yeti would declare NPK to be in breach and terminate the



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Distribution Agreement. For example, Yeti intended to demand systematic increases in the

prices of its liquid, while simultaneously shortening NPKs payment schedule from 45 to 30

days. In a series of recorded telephone conversations, Heagle, Jackson, and Lilga discussed their

plan:

a. On October 19, 2012, Heagle told Jackson that after the first of the year,

he would throw enough contract changes at NPK that t

Documents

NPK Response and Counterclaims