Opinion
No. CV 06 4021976
October 18, 2007.
MEMORANDUM OF DECISION RE #113, MOTION TO STRIKE
FACTS
On August 16, 2006, the plaintiffs, Henry Baer and Aiza Baer, filed a five-count complaint against the defendant, New England Home Delivery Services, LLC (NEHDS). In counts one through five, respectively, the plaintiffs allege claims for violation of the Connecticut Antitrust Act (Antitrust Act), General Statutes § 35-24 et seq., unfair competition, tortious interference with a business relationship, violation of the Connecticut Unfair Trade Practices Act (CUTPA)General Statutes § 42-110a et seq., and negligence.
The plaintiffs allege the following in the complaint. For many years, they provided delivery services for Bob's Discount Furniture, LLC (Bob's). The defendant is also in the delivery business, and has competed with the plaintiffs for Bob's business. By usurping the plaintiffs' business and corporate opportunities and/or diverting business and profits away from the plaintiffs, the defendant played a role in Bob's discontinuation of business relations with the plaintiffs. The defendant also restrained trade, created a monopoly and/or attempted to create a monopoly, as reflected by Bob's insistence that the plaintiffs work exclusively for Bob's, whereas Bob's did not impose these limitations on the defendant.
According to the plaintiffs, the defendant knew or should have known that the plaintiffs possessed a substantial business relationship with Bob's, and the defendant nevertheless tortiously interfered with that relationship. Additionally, the plaintiffs allege that the defendant's usurpation of business opportunities and diversion of profits from the plaintiffs constituted unfair and deceptive practices, and was also negligent.
The defendant filed a motion to dismiss the complaint on October 12, 2006, which the court denied on June 6, 2007. See Baer v. New England Home Delivery Services, LLC, Superior Court, judicial district of New Haven, Docket No. CV 06 4021976 (June 6, 2007, Cosgrove, J.). On June 29, 2007, the defendant filed a motion to strike all five counts of the complaint, as well as the paragraphs in the prayer for relief related to costs, recovery under CUTPA and recovery under the Antitrust Act. The defendant included a memorandum of law in support of its motion. On July 27, 2007, the plaintiffs filed a memorandum in opposition to the motion.
The defendant moves to strike "for the reason that said Counts fail to state a claim upon which relief can be granted, as more particularly set forth in the accompanying Memorandum of Law." "Our Supreme Court has stated that a motion to strike that does not specify the grounds of insufficiency is fatally defective . . . and that Practice Book § [10-42], which requires a motion to strike to be accompanied by an appropriate memorandum of law citing the legal authorities upon which the motion relies, does not dispense with the requirement of [Practice Book § 10-41] that the reasons for the claimed pleading deficiency be specified in the motion itself." (Internal quotation marks omitted.) Stuart v. Freiberg, 102 Conn.App. 857, 861, 927 A.2d 343 (2007). The plaintiffs have not, however, objected to the form of the defendant's motion, so the court may consider the motion despite its defects. Id. ("If the plaintiffs had not objected to the form of the motion to strike, we would have considered the motion in the form presented to the trial court because Practice Book § 10-41 is not jurisdictional in nature").
DISCUSSION
"The purpose of a motion to strike is to contest . . . the legal sufficiency of the allegations of any complaint . . . to state a claim upon which relief can be granted." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003). "It is fundamental that in determining the sufficiency of a complaint challenged by a defendant's motion to strike, all well-pleaded facts and those facts necessarily implied from the allegations are taken as admitted." (Internal quotation marks omitted.) Violano v. Fernandez, 280 Conn. 310, 318, 907 A.2d 1188 (2006). "The court must construe the facts in the complaint most favorably to the plaintiff." (Internal quotation marks omitted.) Faulkner v. United Technologies Corp., 240 Conn. 576, 580, 693 A.2d 293 (1997). "[I]f facts provable in the complaint would support a cause of action, the motion to strike must be denied." (Internal quotation marks omitted.) Batte-Holmgren v. Commissioner of Public Health, 281 Conn. 277, 294, 914 A.2d 996 (2007). By contrast, "[a] motion to strike is properly granted if the complaint alleges mere conclusions of law that are unsupported by the facts alleged." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, supra, 498.
The defendant contends that the plaintiffs have failed to state a cause of action under the Antitrust Act. In count one, the plaintiffs allege that the defendant was "involved" in restraint of trade, monopolization and an attempt to monopolize, and that the defendant acted with the purpose of restraining trade, substantially lessening competition and creating a monopoly. "Monopolization requires possession and willful acquisition or maintenance of monopoly power . . . Monopoly power is power to fix or control prices or to exclude or control competition in the relevant market . . . Similarly, a finding of attempt to monopolize requires a showing of predatory or anti-competitive conduct directed at accomplishing an unlawful purpose." (Citation and internal quotation marks omitted.) Westport Taxi Service, Inc. v. Westport Transit District, 235 Conn. 1, 16, 664 A.2d 719 (1995). While the plaintiffs apparently accuse the defendant of having some role in Bob's discontinuation of business with the plaintiffs, as reflected by Bob's insistence that the plaintiffs work solely for Bob's, the precise nature of the defendant's alleged involvement in the plaintiffs' business affairs is extremely murky. As the defendant rightly notes, the complaint is devoid of specific allegations that it engaged in monopolistic conduct.
The plaintiffs assert that the court has already addressed the legal sufficiency of this count, as well as other counts, in the June 6, 2007 opinion denying the defendant's motion to dismiss. The plaintiffs are mistaken. The defendant moved for dismissal on the ground that the plaintiffs lacked standing to sue because they were not parties to a delivery contract with Bob's. The arguments that the defendant raised in the motion to strike are entirely distinct from those the defendant raised in the motion to dismiss.
Additionally, the defendant posits that the plaintiffs' failure to allege a "plurality of actors" dooms the plaintiffs' claim. A "plurality of actors" is required to establish a claim for restraint of trade under the Antitrust Act. Shea v. First Federal Savings Loan Ass'n. of New Haven, 184 Conn. 285, 306, 439 A.2d 997 (1981). The allegations that the plaintiffs rely on to establish a plurality merely reflect that Bob's required exclusivity from the plaintiffs, but did not impose the same requirement on the defendant. Although the plaintiffs now assert that this development resulted from Bob's and the defendant acting in concert, the vagueness of the plaintiffs' allegations makes it impossible to determine what role, if any, the defendant played in Bob's decisions. Therefore, the pleadings fail to reflect the required "plurality of actors" necessary to maintain a cause of action for restraint of trade.
The defendant further argues that the plaintiffs have failed to allege that its conduct produced adverse, anti-competitive effects as required under the "rule of reason." The defendant correctly observes that the plaintiffs have not alleged that its conduct constituted any of the per se violations outlined in § 35-28 of the Antitrust Act, such as group boycotts, in connection with their claim that the defendant engaged in restraint of trade. In the absence of a per se violation, "the rule of reason is to be applied to the alleged restraint as it is under federal law." Retail Service Associates v. ConAgra Pet Products Co., 759 F.Sup. 976, 981 (D.Conn. 1991). "In rule of reason cases, the plaintiff bears the initial burden of showing that the alleged combination or agreement produced adverse, anti-competitive effects within the relevant product and geographic markets . . . The plaintiff may satisfy this burden by proving the existence of actual anti-competitive effects, such as reduction of output, increase in price, or deterioration in quality of goods and services." (Internal quotation marks omitted.) Journal Publishing Co. v. Hartford Courant Co., 261 Conn. 673, 689, 804 A.2d 823 (2002). Here, the plaintiffs have alleged none of these things.
The parties dispute whether the geographic market alleged in the complaint is composed of both Maine and Connecticut or consists of Maine alone. Under either interpretation, the plaintiffs have failed to provide adequate allegations of adverse, anticompetitive effects, making this debate irrelevant. The defendant properly notes that at most, the plaintiffs have alleged only injury to themselves, rendering this cause of action legally insufficient. See, e.g., D'Agostino v. Broccoli, Superior Court, judicial district of Hartford, Docket No. CV 05 5001595 (January 12, 2007, Scholl, J.) ("There must be some allegation of public injury to competition; a harmful effect on a more generalized market and not merely on a single supplier or purchaser . . . Such allegations are essential because the antitrust laws were enacted to protect competition, not competitors . . .").
In short, the plaintiffs' nebulous allegations cannot serve as the basis for claims of antitrust violations. See Servpro of Stamford v. Allstate Insurance Co., Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket No. CV 91 0114006 (May 1, 1992, Rush, J.) (dismissing the plaintiffs' Antitrust Act count because the plaintiffs failed to plead "a variety of factual patterns necessary to maintain a claim such as a plurality of actors, possession and willful acquisition or maintenance of monopoly power and specific intent to control prices or destroy competition"). Accordingly, the motion to strike count one is granted.
The defendant also posits that the plaintiffs' tortious interference claim in count three is legally insufficient. In Hi-Ho Tower, Inc. v. Com-Tronics, Inc., 255 Conn. 20, 27, 761 A.2d 1268 (2000), the Connecticut Supreme Court stated: "It is well established that the elements of a claim for tortious interference with business expectancies are: (1) a business relationship between the plaintiff and another party; (2) the defendant's intentional interference with the business relationship while knowing of the relationship; and (3) as a result of the interference, the plaintiff suffers actual loss." Additionally, the Court has explained that "not every act that disturbs a contract or business expectancy is actionable . . . [A]n action for intentional interference with business relations . . . requires the plaintiff to plead and prove at least some improper motive or improper means . . . The plaintiff in a tortious interference claim must demonstrate malice on the part of the defendant, not in the sense of ill will, but intentional interference without justification." (Citations and internal quotation marks omitted.) Daley v. Aetna Life Casualty Co., 249 Conn. 766, 805, 734 A.2d 112 (1999).
According to the defendant, the plaintiffs have not pleaded that the defendant had actual knowledge of the plaintiffs' business relationship with Bob's, nor have the plaintiffs alleged that the defendant had an improper motive or employed improper means. The plaintiffs respond that their allegation that the defendant usurped their business opportunities and/or diverted business from the plaintiffs identifies the defendant's improper means.
The court finds that the defendant's contention that the plaintiffs have not properly pleaded actual knowledge on the defendant's part is well-founded. "Tortious interference requires proof that a defendant intentionally interfered with a known business relationship. It is insufficient to allege and prove that the defendant knew or ought to have known that its practices had a tendency or potential, however strong, to interfere with a competitor's business generally. The defendant must intentionally and knowingly target a specific business relationship or relationships." (Emphasis in original.) RW Group, Inc. v. Pharmacare Management Services, Inc., Superior Court, complex litigation docket at Tolland, No. X07 CV 05 4003840 (April 27, 2006, Sferrazza J.) (41 Conn. L. Rptr. 418, 422). The plaintiffs have not alleged as much here.
Additionally, "the [plaintiffs'] characterization of the defendants' conduct as improper does not make it so. In ruling on a motion to strike, it is only the facts, not the legal conclusions, contained in the complaint that are deemed admitted." Eastlander Group, LLC v. Severin Hills, LLC, Superior Court, complex litigation docket at Waterbury, Docket No. X06 CV04 4003573 (November 8, 2005, Alander, J.). The plaintiffs' allegation that the defendant usurped their business opportunities is a legal conclusion, rather than a factual statement; see Murphy v. Wakelee, 247 Conn. 396, 404, 721 A.2d 1181 (1998) ("To prevail on a claim of usurpation . . . a plaintiff bears the burden of establishing: (1) a fiduciary relationship between the corporation and the alleged wrongdoers; and (2) the existence of a corporate opportunity"); and thus does not satisfy the "improper means" component of the plaintiffs' tortious interference claim.
Moreover, the court finds that the allegation that the defendant diverted business from the plaintiff, standing alone, does not establish impropriety on the defendant's part. See Scutti Enterprises, LLC v. Park Place Entertainment Corp., 322 F.3d 211, 216 (2d Cir. 2003) ("The Restatement [(Second) of Torts § 768 comment e] recognizes that if one competitor `succeeds in diverting business from his competitor by virtue of superiority in matters relating to their competition, he serves the purposes for which competition is encouraged,' while `economic pressure on the third person in matters unrelated to the business in which actor and the other compete is treated as an improper interference'"); cf. McLaughlin Ford, Inc. v. Ford Motor Co., 192 Conn. 558, 571, 473 A.2d 1185 (1984) ("Increased competition alone, resulting from a practice containing none of the hallmarks of traditionally unfair practices, does not constitute a cause of action under CUTPA").
Accordingly, the court finds that count three is legally insufficient and the motion to strike is granted as to this count.
The defendant also moves to strike count two, in which the plaintiffs allege violations of the "laws of unfair competition," and count four, in which the plaintiffs allege CUTPA violations in the form of unfair, deceptive, and/or misleading practices. Count two appears to be a common-law claim. Both parties have eschewed, however, the body of law addressing common-law unfair competition and have instead looked to CUTPA for purposes of formulating their arguments regarding the legal sufficiency of the plaintiffs' unfair competition claim. Accordingly, the court shall treat this count as an additional CUTPA count.
See, e.g., QSP, Inc. v. Aetna Casualty Surety Co., 256 Conn. 343, 371, 773 A.2d 906 (2001) ("In order for a plaintiff to sustain a [common law] cause of action for unfair competition, there must be some evidence in the record that the defendant misappropriated a commercial or business advantage").
Pursuant to General Statutes 42-110b, "[n]o person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce."
It is well settled that in determining whether a practice violates CUTPA we have adopted the criteria set out in the cigarette rule by the federal trade commission for determining when a practice is unfair: (1) [W]hether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise — whether, in other words, it is within at least the penumbra of some common law, statutory, or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial injury to consumers [competitors or other businessmen] . . .
All three criteria do not need to be satisfied to support a finding of unfairness. A practice may be unfair because of the degree to which it meets one of the criteria or because to a lesser extent it meets all three . . . Thus a violation of CUTPA may be established by showing either an actual deceptive practice . . . or a practice amounting to a violation of public policy . . . Furthermore, a party need not prove an intent to deceive to prevail under CUTPA.
(Internal quotation marks omitted.) Journal Publishing Co. v. Hartford Courant Co., supra, 261 Conn. 695-96.
The defendant asserts that with respect to both the CUTPA and unfair competition claims, the complaint is devoid of allegations that satisfy either of the first two prongs of the "cigarette rule." The plaintiffs counter that their complaint alleges practices that come under CUTPA's umbrella. To bolster their position that their CUTPA claim is satisfactory, they rely on their allegations of usurpation and diversion of business, the same two allegations that they relied on in connection with their tortious interference claim. The plaintiffs also cite those allegations in defense of their unfair competition claim, as well as the allegation that the defendant was "involved" in restraint of trade through Bob's insistence that the plaintiffs work only for Bob's.
The court finds that just as the allegations of usurpation and diversion of business are insufficient to maintain a cause of action for tortious interference, they cannot save the plaintiffs' claims for either CUTPA violations or unfair competition. The plaintiffs have not explained how the defendant's alleged diversion of profits was unfair, nor have they described the offensive actions that the defendant engaged in that resulted in its alleged usurpation of their corporate opportunities. In addition, the court notes that the plaintiffs' allegation that Bob's required the plaintiffs to work exclusively for Bob's, whereas the defendant was given more freedom, does not strengthen the plaintiffs' unfair competition claim. The facts alleged reflect Bob's actions, not the defendant's. The plaintiffs' allegations that Bob's had different relationships with the plaintiffs and the defendant do not establish that the defendant somehow acted unfairly.
The defendant further contends that the plaintiffs' allegations of injury in their CUTPA and unfair competition counts do not satisfy the "cigarette rule," asserting that all three prongs outlined in that rule must be met in order for the counts to stand. The defendant has misstated the law, as the plaintiffs are not required to satisfy all three prongs. See Journal Publishing Co. v. Hartford Courant Co., supra, 261 Conn. 695.
The court finds that the plaintiffs' allegations of injury are nevertheless insufficient to maintain claims for CUTPA violations and unfair competition. Regarding their CUTPA claim, the plaintiffs posit in their memorandum that they have satisfied the following three-part test for establishing injury outlined in Williams Ford, Inc. v. Hartford Courant Co., 232 Conn. 559, 592, 657 A.2d 212 (1995): "[The injury] must be substantial; it must not be outweighed by any countervailing benefits to consumers or competition that the practice produces; and it must be an injury that consumers themselves could not reasonably have avoided." The statements that the plaintiffs rely on in their brief to support this assertion (i.e., that the plaintiffs suffered substantial loss and that they were not in a position to reasonably avoid the injury) are not actually included in the complaint. Moreover, the plaintiffs have not even argued that their allegations of injury, standing alone, can form the basis for either their CUTPA or unfair competition claims. Accordingly, the court grants the motion to strike as to counts two and four.
The plaintiffs did not make this argument with respect to their unfair competition claim.
Lastly, the defendant seeks to strike count five, the negligence claim. In that count, the plaintiffs re-allege paragraphs one through six of count one. Paragraph six states that the defendant "acted in such a manner as to be involved with Bob's . . . in discontinuation of Bob's business relations with the plaintiffs, including but not limited to defendant's usurpation of business and corporate opportunities of plaintiffs, and/or defendant's diversion of business and profits away from plaintiffs." The plaintiffs also allege that the "[d]efendant's conduct was negligent, and/or involved defendant's errors, omissions, misleading statements, and/or misstatements" and that "[a]s the result of defendant's negligence and/or any other conduct as set forth herein, plaintiffs have suffered, are suffering, and will continue to suffer injury and damages."
The defendant argues that these allegations are insufficient to state a claim because business competitors do not owe each other a duty of care, the plaintiffs do not allege that the defendant owes them a duty of care, the plaintiffs provide insufficient detail regarding the defendant's alleged omissions or misstatements and the plaintiffs do not allege that they relied on the omissions or misstatements. In response, the plaintiffs merely repeat their allegations and cite Matyas v. Minck, 37 Conn.App. 321, 655 A.2d 1155 (1995), without analysis, apparently for the proposition that their allegations are adequate.
Under Connecticut law, "[a] breach of duty by the defendant and a causal connection between the defendant's breach of duty and the resulting harm to the plaintiff are essential elements of a cause of action in negligence." (Internal quotation marks omitted.) Tarnowsky v. Socci, 271 Conn. 284, 288, 856 A.2d 408 (2004). "[T]here can be no actionable negligence unless there exists a cognizable duty of care." (Internal quotation marks omitted.) Nazami v. Patrons Mutual Ins. Co., 280 Conn. 619, 630, 910 A.2d 209 (2006). Here, the plaintiffs have neither alleged that the defendant owed them a duty of care nor alleged any facts that would give rise to such a duty.
Furthermore, to the extent that the plaintiffs allege negligent misrepresentation, their failure to articulate those statements or omissions that they deem actionable renders the claim legally insufficient. See, e.g., Crosby v. HSBC North American Holdings, Inc., Superior Court, judicial district of Ansonia-Milford, Docket No. CV 06 5000378 (May 16, 2007, Robinson, J.) (granting a motion to strike a negligent misrepresentation claim partly because the plaintiff did not state what representations the defendants allegedly made to her); Muniz v. Kravis, Superior Court, judicial district of Litchfield, Docket No. CV 94 0065789 (September 6, 1995, Pickett, J.) ("As a threshold matter, a plaintiff alleging negligent or intentional misrepresentation should allege the claimed false statements"). Moreover, the plaintiffs do not allege that they relied upon those misstatements or omissions, or even that the misstatements were made to the plaintiffs, and reliance is an essential element of a negligent misrepresentation claim. See CT Page 17165 Mokonnen v. Pro Park, Inc., 96 Conn.App. 625, 633, 901 A.2d 725, cert. denied, 280 Conn. 924, 908 A.2d 1088 (2006) ("[A]n action for negligent misrepresentation requires a plaintiff to prove that (1) the defendant made a misrepresentation and (2) the plaintiff reasonably relied upon that misrepresentation").
Accordingly, the court grants the motion to strike count five.
In conclusion, the court grants the defendant's motion to strike as to all five counts of the complaint and the related prayers for relief.