STEPHEN J. MURPHY, III, District Judge.
Plaintiff, Dorman Products, Inc. filed a five-count complaint in the United States District Court for the District of Delaware, against Defendant, Dayco Products, LLC. The case was transferred to this Court pursuant to Dayco's Motion to Transfer. The complaint alleges: defamation (Count I), trade disparagement (Count II), tortious interference with a prospective contractual relationship (Count III), unfair competition in violation of Pennsylvania law (Count IV), and unfair competition and false advertising in violation of federal law (Count V). Dayco moves to dismiss counts I, III, and IV. For the following reasons, the Court will partially grant Dayco's motion as to Count I, and fully grant the motion as to Counts III and IV.
Dorman, a Pennsylvania company, is a leading supplier of automotive replacement, hardware and brake parts in the automotive aftermarket. Compl. ¶¶ 1, 15. In 2009, Dorman launched a line of automatic belt tensioners for the automotive aftermarket.
Dayco Products LLC, incorporated in Delaware, is one of the dominant suppliers of automatic belt tensioners used in the manufacture of new automobiles and also supplies the automotive parts aftermarket with automatic belt tensioners. Id. ¶ 17. Dorman alleges that when it entered the automatic belt tensioner market, its automatic belt tensioners "garnered immediate attention" among aftermarket customers because "they provide significant value" at "significantly" lower prices than those charged by Dayco and other suppliers. Id. ¶ 19. Dorman asserts that this created a competitive threat to the high profit margins of other manufacturers, including Dayco. Id. ¶ 23.
Dorman alleges that in response to its entry into the market Dayco prepared, published, and distributed a PowerPoint presentation to customers throughout the United States. Id. ¶ 24. The presentation asserted that Dayco's automatic belt tensioners "are designed and assembled to exacting standards of form, fit, and function," and that tested under the same standards, "eight [of twenty] Dorman tensioner part numbers had failed to meet performance standards."
Dorman asserts that the testing referenced in the Dayco presentation was conducted in-house by Dayco and that Dayco did not rely on SAE standards but instead, used its own specifications, which did not employ reliable scientific testing methodology or statistical analysis. Id. ¶¶ 26, 29, 31. Dorman alleges that, despite this, Dayco's presentation was intentionally designed to mislead aftermarket customers into believing that Dayco tested Dorman's automatic tensioner belts under applicable industry standards, including relevant SAE technical standards. Id. ¶¶ 27-28. Dorman asserts that because aftermarket customers place a high value on SAE standards, this "deception" by Dayco "is likely to influence" aftermarket customers in their purchasing decisions. Id. ¶ 32.
On August 10, 2009, Dayco filed a lawsuit against Dorman in this Court ("Dayco Lawsuit"), alleging claims of trade dress infringement, false advertising, and unfair competition based on Dorman's sale of automatic belt tensioners. In that action, Dayco alleges that Dorman's automatic belt tensioners are inferior to Dayco's. Id. ¶ 34.
On August 13, 2009, an email announcement regarding the Dayco Lawsuit was prepared, published, and distributed by Dayco to customers in the aftermarket throughout the United States. Id. ¶ 37. The email stated that Dayco believed that Dorman imported its belt tensioners from China.
Dorman asserts in the present action that Dayco also provided this email to
Dorman also now alleges that an interview published on Dayco's homepage with Dayco President and SAE member Dennis Walveart, entitled "Differentiate Between Quality and Sub-Standard Parts", was part of an intentional pattern by Dayco to convey that "lower cost, private label aftermarket parts" are of inferior quality to Dayco's "simply because they are less costly" than the original equipment manufacturers' name brands.
Based on these allegations, Dorman has now sued Dayco in a five-count complaint. Dayco moves to dismiss Count I for defamation, Count III for tortious interference with prospective contractual relationships, and Count IV for unfair competition under Pennsylvania Law.
"[W]hen the allegations in a complaint, however true, could not raise a claim of
In assessing a motion brought pursuant to Rule 12(b)(6), the Court must presume all well-pleaded factual allegations in the complaint to be true and draw all reasonable inferences from those allegations in favor of the non-moving party. Bishop v. Lucent Techs., Inc., 520 F.3d 516, 519 (6th Cir.2008). To determine whether Plaintiff has stated a claim, the Court will examine the complaint and any written instruments that are attached as exhibits to the pleading. Fed.R.Civ.P. 12(b)(6) & 10(c). Although the pleading standard is liberal, the court need not accept as true any legal conclusion alleged therein, even if crouched as a factual allegation. Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937, 1945, 173 L.Ed.2d 868 (2009). "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id.
The Federal Rules of Civil Procedure do not require a claimant to set out in detail the facts upon which he bases his claim. To the contrary, all the Rules require is "a short and plain statement of the claim" that will give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests. Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). Although "a complaint need not contain `detailed' factual allegations, its `[f]actual allegations must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true.'" Ass'n of Cleveland Fire Fighters v. Cleveland, Ohio, 502 F.3d 545, 548 (6th Cir. 2007) (quoting Bell Atlantic, 550 U.S. at 555, 127 S.Ct. 1955). Therefore, the Court will grant a motion for dismissal pursuant to Rule 12(b)(6) only in cases where there are simply not "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic, 550 U.S. at 570, 127 S.Ct. 1955. "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not `show[n]'—`that the pleader is entitled to relief.'" Iqbal, 129 S.Ct. at 1950 (quoting Fed.R.Civ.P. 8(a)(2)).
As a preliminary matter, Dorman asserts that the Court should dismiss Dayco's motion in its entirety because Dayco failed to seek Dorman's concurrence before filing a motion to dismiss in accordance with Local Rule 7.1(a). Dorman argues that courts have dismissed motions outright for failure to comply with this rule. See, e.g., Washington v. Randall-Owens, No. 06-12588, 2007 WL 1153042, at *3 (E.D.Mich., Apr. 18, 2007) (denying plaintiff's motion for ex parte discovery for failure to comply with Local Rules 7.1 and 37.1). While parties should comply with all local rules, the Court will not dismiss
Dayco asserts that Dorman has not stated a claim for defamation pursuant to Pennsylvania law, but rather, has only stated a claim for trade disparagement, alleged in Count II of the complaint, that Dayco has not moved to dismiss.
To make out a claim for defamation under Pennsylvania law, a plaintiff must prove: "i) the defamatory character of the communication; ii) its publication by the defendant; iii) its application to the plaintiff; iv) the understanding of the recipient of its defamatory meaning; v) the understanding of the recipient of it as intended to be applied to the plaintiff; vi) special harm resulting to the plaintiff from its publication; and vii) abuse of a conditionally privileged occasion." Moore v. Cobb-Nettleton, 889 A.2d 1262, 1267 (Pa.Super.Ct.2005) (internal citations and quotation marks omitted).
It is for the Court to decide in the first instance whether a statement is capable of defamatory meaning. U.S. Healthcare, Inc. v. Blue Cross of Greater Philadelphia, 898 F.2d 914, 923 (3rd Cir. 1990). Under Pennsylvania law, a defamatory statement is one that "tends to so harm the reputation of another as to lower him in the estimation of the community or to deter third persons from association or dealing with him." Id. at 923 (citing Birl v. Philadelphia Elec. Co., 402 Pa. 297, 167 A.2d 472, 475 (1960)).
The Third Circuit has explained that under Pennsylvania law, a statement directed at the quality of a company's goods, rather than at the company itself, can cross the line from disparagement to defamation when "[the statement] imputes to the corporation fraud, deceit, dishonesty, or reprehensible conduct in its business in relation to said goods or products." U.S. Healthcare, 898 F.2d at 924 (citing Cosgrove Studio, 182 A.2d at 753) (when a competitor's advertisement accused plaintiff, who was engaged in the film development business, of "ruining snapshots, using inferior materials, and printing blurred negatives in order to inflate the cost" of plaintiff's product, the words lowered plaintiff in the estimation of the community and were actionable); Steaks Unlimited, Inc. v. Deaner, 623 F.2d 264, 271 (3rd Cir.1980) (when defendant suggested that plaintiff deceived its customers in regard to both price and quality of products and stated that plaintiff's characterization of products was "total misrepresentation," words were capable of defamatory meaning).
To the extent that Dorman bases its defamation claim on statements made by Dayco that assert or imply only that Dorman's products are inferior, it has failed to state a cause of action. Allegations that another company's products are inferior are "par for the course" in business and are "the most innocuous kind of puffing," generally not capable of misleading the public. U.S. Healthcare, Inc., 898 F.2d at 925 (statement by Blue Cross-Blue Shield asserting that personal choice insurance was "Better than HMO" not actionable as defamation claim by U.S. Healthcare, a leading provider of HMOs); See also Polygram Records, Inc. v. Superior Court, 170 Cal.App.3d 543, 550, 216 Cal.Rptr. 252 (Cal.Ct.App.1985) ("[F]alse statements simply indicating that plaintiff's business goods were of inferior quality... do not accuse plaintiff of dishonesty, lack of integrity or incompetence nor even imply any reprehensible personal characteristic, and are therefore not defamatory."). The statements made in Dayco's email announcement asserting that Dorman's products are inferior, Compl. ¶ 37,
Statements which are capable of being construed as suggesting that Dorman misrepresented the quality of its products, however, are actionable because they "clearly [impute] ... characteristics and conduct which are incompatible with the
Taking all factual allegations as true, which the Court must on a 12(b)(6) motion, Dorman's products comply with SAE standards. Dayco's assertions in its presentation that its products "are designed and assembled to exacting standards" and that tested under the same standards, Dorman products were found to be defective, have the potential of suggesting that Dorman misled the public into believing that their products are in conformance with SAE standards when they are not. The statement further suggests that Dorman misrepresented the quality of its products because, according to Dayco, the products are defective.
Further, several of Dayco's statements impute to Dorman an intent to mislead the public. Dayco's powerpoint presentation allegedly asserts that the resemblance between Dayco and Dorman products is not a coincidence. Compl. ¶ 25; ex. A. Dayco further alleges in the Dayco Lawsuit and in the subsequent email regarding the lawsuit, that Dorman infringed on Dayco's trade dress and that, therefore, Dorman's products may mislead customers into believing that the products are Dayco's. Dayco's argument that the statements are not defamatory because they assert only that Dorman's products may mislead customers, not that Dorman misled customers, is unpersuasive. Asserting that Dorman infringed on Dayco's trade dress, that the resemblance between the two company's products is not a coincidence, and that the products may be "misleading" to customers, has the potential to impute to Dorman an intent to mislead customers.
Therefore, the Court dismisses Dorman's claim for defamation as to statements made by Dayco that assert or imply only that Dorman's products are inferior. This includes statements contained in the Dorman email, ¶ 37,
Dayco asserts that Dorman has pleaded insufficient facts to make out a claim for tortious interference with prospective contractual relationships. Dorman alleges in its complaint that Dayco committed tortious interference by making false and defamatory statements that deterred third persons from associating or dealing with Dorman, and by "intend[ing] to harm Dorman" through unfair competition, improper marketing techniques, and malicious interference with Dorman's prospective contractual relationships with the intent to stop those relationships from forming. Compl. ¶¶ 50, 66-67.
To state a claim for tortious interference with prospective contractual relationships, a plaintiff must plead and prove that: 1) plaintiff had prospective contractual relationships; 2) defendant's purpose or intent was to harm the plaintiff by preventing the relation from occurring; 3) there was an absence of any privilege or justification on the part of the defendant; and 4) actual damage resulted from defendant's conduct. Atlantic Paper Box Co. v. Whitman's Chocolates, 844 F.Supp. 1038, 1047 (E.D.Pa.1994).
Dayco alleges, in particular, that Dorman has failed to properly plead the second element of a tortious interference claim—that the purpose or intent of defendant was to harm the plaintiff. With regards to this element, Pennsylvania courts have held that "it must be emphasized that the tort we are considering is an intentional one: the actor is acting as he does for the purpose of causing harm to the plaintiff." Glenn v. Point Park College, 441 Pa. 474, 272 A.2d 895, 899 (1971). Dorman asserts that Dayco's argument rests on application of the stricter standard of review applicable to fraud claims, while the pleading requirement for "intent" is more liberal. While Dorman is correct in its position that the pleading standard for intent is "more liberal" than the pleading standard for fraud, Dayco's argument does not apply the incorrect standard of review; rather, the defendant flags for the Court the recognition that pleading requirements have increased in recent years under Iqbal and Twombly.
The present case is distinguishable from Fritz v. Charter Twp. of Comstock, 592 F.3d 718, 725-26 (6th Cir.2010). In Fritz, the plaintiff "alleged a set of facts which, if accepted by the trier of facts, would entitle the plaintiff to relief." Id. (plaintiff did not allege specific facts to support claim that defendant threatened business; alleging, even generally, that threats were made was sufficient to put defendant on notice of claim). Dorman has not alleged facts, which—even if taken as true—would entitle it to relief. The statements made by Dayco, do not, on their face, establish, or even give rise to the inference, that Dayco intended to harm any prospective contractual relationship Dorman may have had. The statements could just as plausibly be seen as statements intended to gain an economic advantage over a competitor in the market. Dorman must "plead factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 129 S.Ct. at 1949. A complaint falls short by pleading facts "merely consistent with a defendant's liability." Id.
The parties do not discuss in detail the other elements of the claim. The Court finds, however, that Dorman has also failed to properly allege element one, that there was a prospective business relationship. Under Pennsylvania law, a prospective business relationship requires "something less than a contractual right, something more than a mere hope." Thompson Coal Co. v. Pike Coal Co., 488 Pa. 198, 412 A.2d 466, 471 (1979). Although certainty is not required, there must be a reasonable likelihood or probability of a contractual relationship. Thompson, 412 A.2d at 471 ("There must be something more than mere hope or the innate optimism of the salesman."). This standard requires that there is something more than evidence of an existing current business or contractual relationship. See, e.g. Thompson, 412 A.2d at 472 (finding that there was not a prospective business relationship where evidence showed that the parties had renewed a year-to-year lease for mineral rights for ten consecutive years).
Dorman alleges that "Dorman customers and prospective customers have informed Dorman sales personnel ... that Dayco's claims and allegations ... [have] caused them to decide not to purchase Dorman's automatic belt tensioners." Compl. ¶ 68. Dorman's allegation may fulfill the requirement for the fourth prong, that there was actual harm done by Dayco's statements, but it does not fulfill prong one. Simply alleging that there
Thus, Dorman has failed to plead facts sufficient to make out elements one and two of a claim for tortious interference with a prospective contractual relationship, and the Court dismisses Count III of Dorman's complaint without prejudice.
Count IV of the Complaint asserts a Pennsylvania state claim for common law unfair competition. Dorman alleges that Dayco engaged in unfair competition by making false statements about Dorman's automatic belt tensioners, by tortiously interfering with prospective business relationships, and by intending to create an illegal restraint on competition. Compl. ¶¶ 72, 73, 75.
Dayco argues that Pennsylvania state courts typically limit unfair competition claims to situations in which one company attempts to "pass off" their product as that of another company and to other similarly deceptive conduct. Dorman asserts that Pennsylvania law recognizes numerous bases for a claim of unfair competition, including tortious interference with a contract. Dorman further argues that Pennsylvania law tracks federal Lanham Act claims.
Common law liability for unfair competition is governed by local law. Goebel Brewing Co. v. Esslingers, Inc., 373 Pa. 334, 95 A.2d 523, 525-26 (1953). Pennsylvania state courts have traditionally restricted unfair competition claims to claims where one party is attempting to "pass off" their goods as those of another party. See Pottstown Daily News Publ'g Co. v. Pottstown Broad. Co., 411 Pa. 383, 192 A.2d 657, 662 (1963) ("Unfair competition, as known to the common law, is a limited concept. Primarily, and strictly, it relates to the palming off of one's goods as those of a rival trader."); Penn. State Univ. v. Univ. Orthopedics, Ltd., 706 A.2d 863, 870-71 (Pa.Super.Ct.1998) ("The gist of the action lies in the deception practiced in "passing off" the goods of one for the other."); See also Scanvec Amiable, Ltd. v. Chang, 80 Fed.Appx. 171, 173 (3rd Cir.2003) ("A claim of unfair competition under Pennsylvania law requires proof that the defendant has "passed off" the goods of one manufacturer ... as those of another.").
"Passing off" has traditionally encompassed trademark infringement, and has been extended to encompass certain claims of misappropriation as well as misrepresentation. See Pottstown, 192 A.2d at 662; Jessar Mfg. Corp. v. Berlin, 380 Pa. 453, 110 A.2d 396, 400 (1955); Goebel Brewing Co., 95 A.2d at 526; but cf. Corabi v. Curtis Publ'g Co., 441 Pa. 432, 273 A.2d 899, 918 (1971) (refusing to extend unfair competition to claim of misappropriation of goodwill). There is no allegation here that Dayco attempted to "pass off" its product as Dorman's.
Dorman alleges that Pennsylvania courts have extended the basis for an unfair competition claim to include tortious interference with a contractual relationship and to track the Lanham Act. Although Dorman cites federal court cases for this proposition, it has not cited any state cases to support its argument, nor can the Court find any.
Although the Third Circuit has seemingly extended the grounds for a Pennsylvania unfair competition claim, the Pennsylvania state courts have not. In diversity cases, under the Erie doctrine,
West v. American Tel. & Tel. Co., 311 U.S. 223, 61 S.Ct. 179, 85 L.Ed. 139 (U.S.1940); See Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). Under the Erie doctrine, this Court, sitting in diversity in the Sixth Circuit, is not in a position to extend the law beyond the bounds that the Pennsylvania Supreme Court has set. Therefore, the Court dismisses Dorman's claim for unfair competition under Pennsylvania law, without prejudice.
Dorman requests that the Court grant leave to amend its Complaint as to any counts that are insufficiently pled. While Dorman is correct in asserting that leave to amend is generally granted,
Id. at 486 (internal citations omitted). Dorman has done nothing more than make a bare request in its opposition motion, and therefore, the Court will not grant Dorman leave to amend its complaint. Should Dorman wish to amend its complaint, it must file a proper motion under the federal rules for leave to do so.
