Rafaelian et al v. Rafaelian Caruolo et al

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
CAROLYN RAFAELIAN,
INDIVIDUALLY and as trustee of
THE CAROLYN A. RAFAELIAN
TRUST 2004, and derivatively on
behalf of CINERAMA JEWELRY, INC.
and PENTAGON PROPERTIES, INC.
Plaintiffs,
v.
REBECCA RAFAELIAN CARUOLO,
individually and in her role as trustee
of THE REBECCA RAFAELIAN QSST
1994 TRUST and THE REBECCA
RAFAELIAN CARUOLO TRUST 2009,
PRODUCTIVE COLLABORATION,
LLC, CINERAMA JEWELRY, INC.,
and PENTAGON PROPERTIES, INC.
Defendants.
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C.A. No. 26-cv-293-MSM-AEM
MEMORANDUM AND ORDER
Mary S. McElroy, United States District Judge.
Before the Court are the Motions to Dismiss of defendants Rebecca Rafaelian
(ECF No. 13), Pentagon Properties, Inc. (ECF No. 23), Productive Collaboration, LLC
(ECF No. 25), and Cinerama Jewelry, Inc. (ECF No. 27). For the following reasons,
the Court GRANTS Defendant Productive Collaboration, LLC’s Motion to Dismiss on
the plaintiffs’ Lanham Act claims and REMANDS the remaining state-law claims to
Rhode Island Superior Court.
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I. 	BACKGROUND
This case arises out of a commercial dispute over the assets owned by the
Rhode Island-based jewelry companies—Cinerama and Pentagon Properties. 	The
plaintiff, Carolyn Rafaelian, brings this action on behalf of: (1) herself; (2) as trustee
of the Carolyn A. Ferlise QSST 1994 Trust; (3) as trustee of the Carolyn A. Rafaelian
Trust 2004; (4) derivatively on behalf of Cinerama Jewelry, Inc.; and (5) derivatively
on behalf of Pentagon Properties, Inc. (collectively “Plaintiffs”) against the following
defendants: 	(1) 	Carolyn’s 	sister, 	Rebecca 	Rafaelian 	Caruolo 	in 	her 	individual
capacity; (2) Rebecca, as trustee of the Rebecca Rafaelian Caruolo QSST 1994 Trust;
(3) the Rebecca Rafaelian Caruolo Trust 2009; (4) Productive Collaboration, LLC; (5)
Cinerama Jewelry, Inc.; and (6) Pentagon Properties, Inc. (collectively “Defendants”).
(ECF No. 1-1 at 4-5.)
Plaintiffs allege that Defendants have misappropriated the assets and real
estate of the companies Cinerama and Pentagon, which their late father founded in
the 1960s.
Id. at 5-19. Specifically, Plaintiffs allege that—as minority shareholders—
they cannot prevent Defendants from misusing corporate assets that Plaintiffs and
Defendants both own.
	Id. 	Plaintiffs also contend that Defendants have used the
assets of both Cinerama (referred to by the parties as “the Factory”) and Pentagon in
order to support a business named Air & Anchor, which is controlled through a
separate entity named Productive Collaboration, LLC.
	Id. Plaintiff Carolyn
herself
appears to have used these same corporate resources in the past in conjunction with
her jewelry company—Alex + Ani.
Id.
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Based on Defendants’ alleged misuse of Cinerama and Pentagon’s assets,
which include a physical warehouse in Cranston Rhode Island and a variety of
supplies used to make jewelry, Plaintiffs contend that—as shareholders—they cannot
prevent Air & Anchor from engaging in uncompetitive business deals with these
companies, such as a lease agreement with below-market rent.
Id.
Defendants’ alleged misconduct has prompted Plaintiffs to seek relief from this
Court based on the following theories: (1) Rebecca committed a breach of her fiduciary
duties (Caryolyn brings this claim in her individual capacity and on behalf of the
other Plaintiffs); (2) Rebecca wasted Cinerama and Pentagon’s assets through her
business arrangement Air & Anchor (Caryolyn brings this claim in her individual
capacity and on behalf of the other Plaintiffs); (3) both Air & Anchor and Rebecca
converted corporate assets; (4) a breach of contract between Cinerama and Pentagon
took place in their lease agreement; (5) a breach of contract took place between
Cinerama and Air & Anchor in their lease agreement; (6) state law civil liability exists
for crimes and offenses based on Rebecca’s conversion of corporate assets; (7)
Rebecca’s actions constitute a misappropriation of a corporate opportunity; (8)1 Air &
Anchor aided and abetted in breaching a fiduciary duty to Pentagon and Cinerama;
(9) 	Air 	& 	Anchor 	violated 	the 	Lanham 	Act 	based 	on 	theories 	of 	false
association/designation of origin and false advertising; (10) Defendants intentionally
interfered with Plaintiffs’ prospective economic advantage; (11) Defendants’ actions
1 Plaintiffs erroneously numbered this claim as a repeated count VII in their
Complaint. ECG No. 1-1 at 23.
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require the appointment of a temporary and permanent receiver for Air & Anchor;
(12) Defendants’ actions require a preliminary and permanent injunction preventing
them from associating with Pentagon and Cinerama; and (13) Air & Anchor’s actions
with Cinerama unjustly enriched them.
Id. at 20-26.
With respect to this matter’s procedural history, Plaintiffs originally filed this
action in state court. Shortly thereafter, Defendants removed it to this Court arguing
that the Court possesses federal question jurisdiction to resolve this dispute based on
the existence of count nine—Plaintiffs’ claim that Air & Anchor violated the Lanham
Act. 	(ECF No. 1 at 3.) 	Other than a request for damages in conjunction with their
Lanham Act claim, no other basis for federal jurisdiction exists.
	See generally ECF
No. 1-1. Defendants now move to dismiss.
II. 	MOTION TO DISMISS STANDARD
When evaluating a motion to dismiss, the Court accepts all of the plaintiff’s
well-pleaded factual allegations as true and will draw all reasonable inferences when
reviewing these allegations in that litigant’s favor.
	A.G. ex rel. Maddox v. Elsevier,
Inc., 732 F.3d 77, 80 (1st Cir. 2013) (cleaned up). While Rule 8(a)(2) only requires a
plaintiff’s complaint to contain “a short and plain statement of the claim showing that
the pleader is entitled to relief[,]” the Court will not accept a complaint that
constitutes “a mechanistic recital of the elements.”
	Id. (citing Fed. R. Civ. P. 8(a(2))
(cleaned up). Instead, the plaintiff’s complaint must contain enough facts that state
a facially plausible claim for relief.
Id.
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Critically, “[c]onducting a plausibility inquiry is a context-specific task that
requires the reviewing court to draw on its judicial experience and common sense.”
Id. (cleaned up). “For a claim to withstand a motion to dismiss, it need not show that
recovery is plausible, but it must show more than a sheer possibility of liability.”
Id.
(cleaned up).
III. 	DISCUSSION
Defendants’ Motions to Dismiss presents a threshold issue that—from this
Court’s perspective—would allow the Court to resolve this dispute in its entirety.
Defendant Productive Collaboration, LLC argues that Plaintiffs have failed to
plausibly 	allege 	a 	violation 	of 	the 	Lanham 	Act. 	(ECF 	No. 	25-1 	at 	11-14.)
Consequently, the Court’s dismissal of this claim—Plaintiff’s exclusive basis for
jurisdiction in federal court—would allow the remainder of this action to proceed in
state court.
	See Redondo Const. Corp. v. Izquierdo, 662 F.3d 42, 49 (1st Cir. 2011)
(explaining that courts dismissing federal claims before trial should also dismiss the
remaining state-law claims without prejudice so that the plaintiff may file them in
state court). 	Because of the dispositive nature of this issue, and that fact that
Plaintiffs have failed to plausibly allege a violation of the Lanham Act, the Court
limits its evaluation of Defendants’ Motions to Dismiss to this issue.
A. The Lanham Act
Congress passed the Lanham Act to combat a variety of conduct including
trademark infringement, false advertising, and trademark dilution.
See 15 U.S.C. §
1127. 	Primarily, the Lanham Act provides an individual with federal statutory
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protection for trademarks.
	See Clemente Properties, Inc. v. Pierluisi-Urrutia, 165
F.4th 1, 12 (1st Cir. 2026). Despite its role in the intellectual property space, litigants
may also bring claims under the Lanham Act even though the dispute does not
involve a trademark.
Id. at 13.
Here, Plaintiffs appear to allege two non-trademark violations of the Lanham
Act—false association in violation of § 1125(a)(1)(A) and false advertising in violation
of § 1125(a)(1)(B).2 The Court will evaluate each theory in turn.
B. False Association
Plaintiffs 	first 	allege 	that 	Productive 	Collaboration, 	LLC 	violated 	§
1125(a)(1)(A) of the Lanham Act based on a theory of false association/designation of
origin. 	(ECF No. 1-1 at 23-24.) 	To state a claim under this theory, plaintiffs must
plausibly allege facts that show a likelihood of consumer confusion about the
“affiliation, connection, or association of such person with another person, or as to the
origin, sponsorship, or approval of his or her goods, services, or commercial activities
by another person.”
Am. Bd. of Internal Med. v. Salas Rushford, 114 F.4th 42, 64 (1st
Cir. 2024). 	“Claims under this subsection typically involve attempts to appropriate
the goodwill associated with a competitor, for example, by misappropriating a
trademark or falsely implying an endorsement.”
Id. (citing
Flynn v. AK Peters, Ltd.,
377 F.3d 13, 19 (1st Cir. 2004)) (cleaned up). 	When evaluating these claims, courts
2 Confusingly, Plaintiffs appear to allege violations of two provisions of the Lanham
Act (based on two separate theories) within a single Count in their Amended
Complaint. (ECF No. 1-1 at 23-24.)
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consider the likelihood of consumers mistaking one party’s goods or services with that
of another.
Id.
Here, Plaintiffs have failed to plausibly allege facts that could show that
Productive Collaboration, LLC (operating as Air & Anchor) has likely created
consumer confusion regarding the affiliation, connection, or association of its goods
(the jewelry it sells) with that of another (the goods located at Cinerama). 	While
Plaintiffs take issue with Productive Collaboration’s
use of Cinerama’s goods—as
shown by their separate count for conversion—Plaintiffs’ Amended Complaint fails
to plausibly allege that Productive Collaboration, LLC has made false statements or
misrepresentations regarding the
source of its jewelry and its relationship with
Cinerama or Pentagon. Indeed, Defendants’ allegedly improper business relationship
with these companies forms the basis of Plaintiffs’ lawsuit.
Id. at 65 (noting that the
Lanham Act prohibits only false or misleading descriptions or representations of
fact
and that plaintiffs must allege a misrepresentation of fact in order to avoid dismissal).
Notwithstanding 	Plaintiffs’ 	objection 	to 	Productive 	Collaboration, 	LLC’s
decision to market its relationship with Cinerama and Pentagon, Plaintiffs’ Amended
Complaint fails to plausibly allege that Productive Collaboration, LLC has created
consumer confusion regarding its relationship with either Cinerama, Pentagon, or
Alex + Ani. On the contrary, Plaintiff only takes issue with true, factual statements
regarding Productive Collaboration, LLC’s relationship with these companies and
seeks to end their relationship itself, rather than to prevent Productive Collaboration,
LLC from falsely claiming that it has associated with either of these companies or
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falsely marketing that the goods that Productive Collaboration, LLC uses originates
from these sources. 	Based on the lack of plausible allegations regarding consumer
confusion contained in Plaintiffs’ Amended Complaint, the Court dismisses Plaintiffs’
claim for false association.
Id. at 65.
C. False Advertising
Plaintiffs 	next 	allege 	that 	Productive 	Collaboration, 	LLC 	violated 	§
1125(a)(1)(B) of the Lanham Act based on a theory of false advertising. (ECF No. 1-
1 at 23-24.) Section 1125(a)(1)(B) prevents “commercial advertising or promotion that
“misrepresents the nature, characteristics, qualities, or geographic origin of his or her
or another person’s goods, services, or commercial activities.”
	Am. Bd. of Internal
Med., 144 F.4th at 64-65.
Here, similar to their false association claim, Plaintiffs appear to take issue
with Productive Collaboration, LLC’s
truthful statements about their association
with Cinerama and Pentagon. (ECF No. 1-1 at 23-24.) However, when plaintiffs seek
to recover based on true statements in the false advertising context, courts require
them to “shoulder the additional burden” of demonstrating that these true statements
nevertheless have a likelihood of confusing consumers into believing a factual
misrepresentation.
	Am. Bd. of Internal Med., 144 F.4th at 65. What’s more, in this
context, plaintiffs must also show how consumers
actually reacted to the challenged
advertisements rather than allege how they
could have reacted to them.
	Id. (citing
Clorox Co. P.R. v. Proctor & Gamble Com. Co, 228 F.3d 24, 33 & 33n.6 (1st Cir. 2000)).
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Even assuming that Plaintiffs’ Amended Complaint plausibly alleges facts
demonstrating 	that 	Productive 	Collaboration, 	LLC 	released 	misleading
advertisements 	regarding 	its 	relationship 	with 	Cinerama 	and 	Pentagon, 	their
Amended Complaint omits any allegation showing how consumers actually reacted
to these advertisements. 	As a result, the Court dismisses Plaintiffs’ claim for false
advertising as well.
Id.
Nevertheless, Plaintiffs resist the idea that their Amended Complaint fails to
state a claim for a violation of the Lanham Act. Yet in response to the argument that
Productive Collaboration, LLC’s statements convey only truthful, factual remarks,
Plaintiffs have failed to either: (1) direct the Court to a single allegation within their
Amended Complaint that alleges a falsehood about Cinerama, Pentagon, or Alex +
Ani; or (2) provide the Court with any binding authority that would allow its claim to
avoid dismissal in this context. (ECF No. 28 at 8-9.)
Instead, Plaintiffs contend that the truth or falsity of these statements create
a “factual inquiry” that prevents this Court from dismissing its Lanham Act claim in
the context of a motion to dismiss.
	Id. 	Conveniently, Plaintiffs also fail to
acknowledge recent First Circuit precedent where that Court determined that trial
courts may dismiss Lanham Act claims when they fail to plausibly allege that a
statement is false or misleading.
	See Am. Bd. of Internal Med., 144 F.4th at 65
(affirming the dismissal of a Lanham Act claim and citing additional authority where
a plaintiff failed to adequately allege a misleading representation of fact).
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Even more concerning, Plaintiffs also fail to reckon with: (1) their “additional
burden” to show that the Amended Complaint alleges how Productive Collaboration,
LLC has used “literally true” statements to mislead or confuse consumers into
believing a false representation of fact; and (2) in the context of their false advertising
claim, the requirement that their Amended Complaint must show how consumers
actually 	reacted 	to 	the 	advertisement 	in 	question.
	Id. 	Therefore, 	Plaintiffs’
arguments against dismissal fail to meaningfully alter the Court’s conclusion.
Based on the Court’s dismissal of Plaintiffs’ Lanham Act claim, it has no
further 	basis 	for 	federal 	jurisdiction 	and 	declines 	to 	exercise 	supplemental
jurisdiction over the remaining state-law claims.
	See 28 U.S.C. § 1367(c)(3);
Penate
v. Hanchett, 944 F.3d 358, 369-70 (1st Cir. 2019) (noting that the elimination of all
federal claims before trial will usually direct the court toward declining to exercise
jurisdiction over the remaining state-law claims). Here, this case has not progressed
beyond the pleadings stage, and it contains several substantive state-law issues
concerning the functionality and operation of closely held companies within the state
of Rhode Island. 	As a result, the Court declines to exercise jurisdiction over the
remaining state-law claims and remands them to the court where Plaintiffs originally
filed.
IV. 	CONCLUSION
For these reasons, the Court GRANTS Defendant Productive Collaboration,
LLC’s Motion to Dismiss Plaintiffs’ claim for a violation of the Lanham Act (ECF No.
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25) and REMANDS Plaintiffs’ remaining state-law claims to the Rhode Island
Superior Court for Newport County, sitting in the City of Newport.
IT IS SO ORDERED.
_________________________________
Mary S. McElroy
United States District Judge
October 8, 2026
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