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listing elements of common law trademark infringement claim
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CIVIL ACTION NO. 03-CV-812
January 26, 2004.
MEMORANDUM ORDER
Presently before the Court is Defendant, Phillip J. Canella, III's ("Canella") Motion to Dismiss Counts One, Two, Three, Eight, Nine, Ten and Twelve of Plaintiff's Amended Complaint ("Canella's Mot. to Dismiss") (Docket No. 13), and Defendant Joseph V. Pinto's ("Pinto") Motion to Dismiss Counts 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, and 12 of Plaintiff's Amended Complaint ("Pinto's Mot. to Dismiss") (Docket No. 14), documents in support thereof, and Plaintiff, First American Marketing Corporation's ("FAMC") Briefs in Opposition to the Motion(s) to Dismiss (Docket Nos. 15, 16). For the following reasons Defendants' motions will be denied.
I. Background
Plaintiff provides estate planning and annuity services to senior citizens under the trade name "Senior Informational Services" ("SIS"). (Am. Compl. ¶ 1.) On May 10, 1996, FAMC registered the name "Senior Informational Services" with the Corporations Bureau of the Pennsylvania Department of State. (Id. ¶ 17.) Plaintiff has invested substantial sums of money in advertising to publicize its trade name throughout Pennsylvania and has now used the mark and its abbreviation SIS for six years. (Id. ¶ 18.) Currently, SIS has over 5,000 senior citizen clients and FAMC has sponsored seminars, job fairs, and "senior fests" to promote the products and services of SIS. (Id. ¶ 20.) Plaintiff alleges that by virtue of the "substantial use, sales, advertising, and promotion of its name throughout Pennsylvania" the trade name has become distinctive of SIS's marketing services and has an excellent reputation among actual and potential purchasers and users of its services. (Id. ¶ 21.)
Defendant Canella uses the mark "American Senior Information Services" and the abbreviation "ASIS" to market services similar to those of SIS. (Joint Case Report at 2, Am. Compl. ¶ 3.) Plaintiff asserts that Canella's use of the mark, because of its similarity to SIS, causes intentional confusion, mistake or deception among purchasers of these products. (Id.) Plaintiff also alleges that in conjunction with Defendant Pinto, Defendant contacts Plaintiff's customers, and makes defamatory statements convincing them to terminate their relationship with FAMC and switch to Defendant's product. (Am. Compl. ¶ 26.) Pinto was employed by FAMC from 1999 through 2000 as in-house counsel. (Id. ¶ 27.) During this time he prepared trust and other documents for Plaintiffs clients. In January, 2001, Defendant Pinto became "outside counsel" for Plaintiff and continued to provide services for some of Plaintiff's clients. (Id. ¶ 28.) Plaintiff alleges that Pinto gave Canella a list of FAMC's clients, (Am. Comp. ¶ 29), and the two Defendants have used Pinto's familiar name to attract Plaintiff's clients.
Based on these allegations, Plaintiff filed a twelve-count Amended Complaint charging Canella with violations of federal and state unfair competition laws, false advertising, defamation, fraud, negligent misrepresentation, civil conspiracy, and unauthorized practice of law. Plaintiff has charged Pinto with misappropriation of trade secrets, breach of fiduciary duty/duty of loyalty, interference with contractual relations and prospective economic advantage, and civil conspiracy. In response, Defendant Canella has filed a Motion to Dismiss Counts One, Two, Three, Eight, Nine, Ten and Twelve for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). Defendant Pinto has filed a Motion to Dismiss all but Count Eleven of the Amended Complaint for failure to state a claim.
Plaintiff admits that counts one through four, eight through ten, and count twelve are directed only at Defendant Canella. (Pl.'s Brief in Opp. to Pinto's Mot. to Dismiss at 2.) We disregard Defendant Pinto's arguments with regard to these claims which are made only against Canella.
II. Jurisdiction
We have jurisdiction to hear this case under 28 U.S.C. § 1331, 1332. Since this case involves claims of trademark infringement and unfair competition arising under the Lanham Act, 15 U.S.C. § 1125(a), we have appropriate subject matter jurisdiction. The claims arising under state law are "so related to claims in the action within such original jurisdiction that they form part of the same case or controversy," 28 U.S.C.A. § 1367, such that we have proper supplemental jurisdiction over these claims as well. In addition, the matter is also properly before the Court on grounds of diversity jurisdiction because the parties are citizens of different states and the amount in controversy exceeds $75,000. 28 U.S.C. § 1332.
III. Motion to Dismiss Standard
The purpose of a Rule 12(b)(6) motion to dismiss is to test the sufficiency of a complaint, not to resolve disputed facts or decide the merits of the case. Tracinda Corp. v. Daimlerchrysler AG, 197 F. Supp.2d 42, 53 (D. Del. 2002). A court should not dismiss a case for failure to state a claim unless the plaintiff can prove no set of facts in support of the claim that would entitle it to relief. See US v. Marisol, Inc., 725 F. Supp. 833, 836 (M.D. Pa. 1989). see also Trump Hotels Casino Resorts. Inc. v. Mirage Resorts Inc., 140 F.3d 478, 483 (3d Cir. 1998) ("A complaint should be dismissed only if, after accepting as true all of the facts alleged in the complaint, and drawing all reasonable inferences in the plaintiff's favor, no relief could be granted under any set of facts consistent with the allegations"); Diaz-Ferrante v. Rendell, 1998 WL 195683, at *3 (E.D. Pa. March 30, 1998) ("a Rule 12(b)(6) motion does not serve to question a plaintiffs well-pled facts, but rather tests the legal foundation of the plaintiff's claims"). Thus, the court's inquiry is directed towards whether the plaintiff's allegations constitute a claim under Fed.R.Civ.P. 8(a). Though the "plain statement" rule of 8(a) is construed quite liberally, the court need not credit a plaintiff's "bald assertions" or "legal conclusions" when deciding a motion to dismiss. Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997). Finally, the court should not look to whether plaintiff will "ultimately prevail," it should only consider whether plaintiff should be allowed to offer evidence in support of their claims. In re Burlington Coat Factory Secs. Litig., 114 F.3d 1410, 1420 (3d cir. 1997).
IV. Discussion of Claims Made Against Canella
a. Unfair Competition Under Federal and State Laws
Defendant Canella alleges that the Amended Complaint fails to sufficiently state any claim of unfair competition arising from infringement on the mark "Senior Informational Services" because Plaintiff has not alleged and cannot prove that the mark has attained "secondary meaning" or distinctiveness, nor is it "confusingly similar" as a matter of law with the term "American Senior Information Services." In order to prove unfair competition and trademark infringement under Federal unfair competition law, 15 U.S.C. § 1125(a)(1)(A), Pennsylvania trademark infringement law, 54 PA. CONS. STAT. § 1123, and Pennsylvania common law, a Plaintiff must demonstrate that: (1) it has a valid and legally protectable mark; (2) it owns the mark; and (3) the defendant's use of the mark to identify goods or services causes a likelihood of confusion. Scott Fetzer Co. v. Gehring, 288 F. Supp.2d 696, 703 (E.D. Pa. 2003) (stating that the elements for these three claims are identical except that the federal claims require an effect on interstate commerce); Gideons Int'l, Inc. v. Gideon 300 Ministries. Inc., 94 F. Supp.2d 566, 580 (E.D. Pa. 1999) ("The test for common law trademark infringement and unfair competition is essentially the same as the test for infringement and unfair competition under the Lanham Act."). Thus, we will analyze the sufficiency of the pleadings for these claims together.
15 U.S.C. § 1125(a)(1)(A) states:
Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which-is likely to cause confusion, or to cause mistake, or to deceive as to 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, . . ., shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.
54 PA. CONS. STAT. § 1123(a) states that:
any person who shall — (1) use, without the consent of the registrant, any reproduction, counterfeit, copy or colorable imitation of a mark registered under this chapter in connection with the sale, offering for sale or advertising of any goods or services in a manner likely to cause confusion or mistake or to deceive as to the source of origin of such goods or services; or
(2) reproduce, counterfeit, copy or colorably imitate any such mark and apply such reproduction, counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used in connection with the sale or other distribution in this Commonwealth of such goods or services; shall be liable to a civil action by the registrant for any or all of the remedies provided in section 1125 (relating to remedies), except that under paragraph (2) the registrant shall not be entitled to recover profits or damages unless the acts have been committed with the intent to cause confusion or mistake or to deceive.
1. Distinctiveness and Secondary Meaning
Plaintiff states that its mark is distinctive and has acquired a secondary meaning. A mark's validity and legal protectability, are proven where a mark was federally registered and has become "incontestable" under the Lanham Act, 15 U.S.C. § 1058, 1065. Fisons Horticulture. Inc. v. Vigoro Indus., Inc., 30 F.3d 466, 472 (3d Cir. 1994). "A trademark becomes incontestable after the owner files affidavits stating that the mark has been registered, that it has been in continuous use for five consecutive years, and that there is no pending proceedings and there has been no adverse decision concerning the registrant's ownership or right to registration." Id. at 472 n. 7. However, as is the case here, if the mark has not been federally registered its validity depends on either inherent distinctiveness or "proof of secondary meaning." Id. (citingFord Motor Co. v. Summit Motor Prods. Inc., 930 F.2d 277, 291-93 (3d Cir. 1991), cert. denied, 502 U.S. 939(1991)).
A mark can be classified by its distinctiveness. The Supreme Court has applied five categories of "generally increasing distinctiveness" to classify trademarks: (1) generic; (2) descriptive; (3) suggestive; (4) arbitrary; or (5) fanciful. Two Pesos. Inc. v. Taco Cabana, 505 U.S. 763, 768 (1992). "The latter three categories of marks, because their intrinsic nature serves to identify a particular source of a product, are deemed inherently distinctive and are entitled to protection." Id. Generic marks are not registrable as trademarks. Id. Similarly, "[m]arks which are merely descriptive of a product are not inherently distinctive," and cannot be protected unless they acquire distinctiveness or "secondary meaning." Id. at 769. "Secondary meaning exists when the mark 'is interpreted by the consuming public to be not only an identification of the product or services, but also a representation of the origin of those products or services.'"Commerce Nat'l Ins. Servs., Inc. v. Commerce Ins. Agency. Inc., 214 F.3d 432, 438 (3d Cir. 2000) (quoting Scott Paper Co. v. Scott's Liquid Gold. Inc., 589 F.2d 1225, 1231 (3d Cir. 1978).
The mark SIS has not been federally registered. Defendant contends that it is merely descriptive and that "Plaintiff fails to allege that its mark is distinct or that it has acquired secondary meaning at the time that Defendant Canella began using the mark 'American Senior Information Services." (Def. Canella's Mem. of Law in Supp. of his Mot. to Dismiss Counts One, Two, Three, Eight, Nine, Ten and Twelve of Pl.'s Am. Compl. ("Canella Mem.") at 5.) Plaintiff responds that it has alleged both distinctiveness and secondary meaning. The Amended Complaint clearly states that:
[b]y virtue of SIS's substantial use, sales, advertising, and promotion of its name throughout Pennsylvania, the trade name has become distinctive of SIS's marketing services and have come to serve to identify and indicate the source of SIS's services to consumers and purchasers and SIS has developed for itself and its services substantial goodwill and an excellent reputation among actual and potential purchasers and users of its services.
(Am. Compl. ¶ 21 (emphasis added).) The Complaint also sets forth facts to show that the mark has acquired secondary meaning. In determining whether secondary meaning has been acquired, some factors considered by courts are: (1) the extent of sales and advertising leading to the buyer association; (2) the length of use; (3) the exclusivity of use; (4) the fact of copying; (5) customer surveys; (6) customer testimony; (7) the use of the mark in trade journals; (8) the size of the company; (9) the number of sales; (10) the number of customers; and (11) actual confusion. Commerce, 214 F.3d at 438. The Amended Complaint addresses three of these factors. It alleges the durational strength of the mark stating "FAMC has continuously used the mark Senior Informational Services and its abbreviation SIS for six years." (Am. Compl. ¶ 17.) It also states the extent of sales and advertising leading to buyer association indicating that "FAMC had made and continues to make substantial efforts and expenditures to promote SIS's products and services under its trade name. It generates over a million pieces of mail each year under the SIS name." (Id. ¶ 19.) Finally, the Amended Complaint states that it has over 5,000 senior clients. (Id. ¶ 20.) The fact that the Complaint does not use the term "secondary meaning," is not dispositive. See City of Pittsburgh v. West Penn Power Comp., 147 F.3d 256, 263 (3d Cir. 1998) (courts are "to base rulings not upon the presence of mere words but, rather, upon the presence of a factual situation which is or is not justiciable."). In addition, the fact that Plaintiff did not specifically allege the distinctiveness of the mark at the time Defendant began using "American Senior Information Services" is not significant. Plaintiff pled that its mark is distinctive and/or has acquired "secondary meaning" throughout the use of the mark. For the purpose of assessing a 12(b)(6) motion to dismiss this is sufficient.
2. Likelihood of Confusion
Defendant contends that Plaintiff has not sufficiently pled the third element of a trademark infringement claim because there is no likelihood of confusion as a matter of law between the two competing marks. (Canella Mem. at 5.) However, likelihood of confusion is a question of fact. A H Sportswear Inc. v. Victoria's Secret Stores. Inc., 166 F.3d 197, 201-02 (3d Cir. 1999) (en bane). A plaintiff opposing a motion to dismiss is entitled to the benefit of all reasonable factual inferences, Trump Hotels Casino Resorts. Inc. v. Mirage Resorts. Inc., 140 F.3d 478, 483 (3d Cir. 1998), such that the motion will only be granted if the defendant can establish that "no reasonable factfinder could find a likelihood of confusion on any set of facts that plaintiff could prove." Qwest Communications Int'l v. Cyber-Ouest. Inc., 124 F. Supp.2d 297, 304 (M.D. Pa. 2000).
A likelihood of confusion exists where "the consumers viewing the mark would probably assume that the product or service it represents is associated with the source of a different product or service identified by a similar mark." Fisons, 30 F.3d at 472 (internal citations and quotations omitted). The marks need not be identical and proof of actual confusion is not necessary to establish a likelihood of confusion. Id. at 477. "Where the trademark owner and the alleged infringer deal in competing goods and services, the court need rarely look beyond the mark itself." Interpace Corp. v. Lapp. Inc., 721 F.2d 460, 462 (3d Cir. 1983);see also Fisons, 30 F.3d at 473 ("The closer the relationship between the products, and the more similar their sales contexts, the greater the likelihood of confusion."); Opticians Ass'n of Am. v. Indep. Opticians of Am., 920 F.2d 187, 197 (3d Cir. 1990) (holding that if the overall impression created by the marks is essentially the same, it is "very probable" that the marks are confusingly similar).
In this case, the goods are in direct competition. (Am. Compl. ¶ 23.) Our initial observation is that the marks "Senior Informational Services" and "American Senior Information Services" and their respective abbreviations SIS and ASIS are quite similar. Similarity between marks and the goods marketed usually merits a presumption of a "likelihood of confusion." Fisons, 30 F.3d at 473. Despite the apparent similarity, Defendant suggests that since the mark "Senior Informational Services" is a descriptive, and accordingly "weak" mark, the addition of the prefix "American" is sufficient to create a distinguishable mark. See Qwest, 124 F. Supp.2d at 305. We disagree. In Qwest, the court discusses several instances where the defendant's addition of a word to the plaintiffs mark prevented a finding of confusing similarity. Id. Each of these instances involved the addition of a word to a "common laudatory term" and "hence a weak mark." Id. This is not the case here. The term "Senior Informational Services" is neither a common laudatory term, nor a term highly suggestive of a certain kind of services. It is a mark that has only gained meaning through the promotion of Plaintiff. Thus it is quite plausible "that a consumer could overlook the slight difference . . . and assume that the two sets of products and services 'share a common source, affiliation, connection or sponsorship.'" Id. at 306-07 (quotingLapp, 721 F.3d at 463). We do not believe that no reasonable factfinder could find a likelihood of confusion on any set of facts that Plaintiff could prove. We must therefore deny Defendants' motion with respect to these claims.
b. Defamation
The Amended Complaint alleges that after Defendant Canella gained access to SIS's actual and prospective clients he made untrue accusations regarding SIS and the clients' investments. (Am. Compl. ¶ 71.) Canella argues that Plaintiff's claim of defamation must be dismissed since Plaintiff did not allege that defamation occurred within the statute of limitations. The statute of limitations for defamation is one-year. Evans v. Phila. Newspapers. Inc., 601 A.2d 330, 334-35 (Pa.Super. 1991). The Federal Rules of Civil Procedure usually require that affirmative defenses, such as limitations defenses, be pled in the answer. See Robinson v. Johnson, 313 F.3d 128, 135 (3d Cir. 2002) (citing FED. R. Civ. P. 12(b) ("Every defense . . . shall be asserted in the responsive pleading thereto if one is required, except that the following defenses may at the option of the pleader be made by motion. . . ." The defenses listed in Rule 12(b) do not include limitations defenses.). However, the so-called "Third Circuit Rule" permits a limitations defense to be raised by a motion under Rule 12(b)(6), only if "the time alleged in the statement of a claim shows that the cause of action has not been brought within the statute of limitations." Robinson, 313 F.3d at 135.
In the instant case, it is not apparent from the face of the Amended Complaint that the defamation action has not been brought within the limitations period. Unlike a typical case where a plaintiff alleges an instance of defamation that occurred on a particular day, in this case Plaintiff alleges defamation that occurred over a period of time and to numerous clients. Moreover, Plaintiff alleges that "[a]s a direct and proximate result of Defendant Canella's false and misleading statements, FAMC has been damaged and continues to be damaged." (Am. Compl. ¶ 74 (emphasis added).) While Defendant is correct that this does not mean that Plaintiff continues to be defamed, since Plaintiff has sought an injunction it is not unreasonable to assume that the alleged action by Defendant has continued. Because the pleadings do not indicate that Plaintiff has brought the claim outside the statute of limitations we must deny Defendant's Motion to Dismiss this claim.
c. Fraud
Defendant alleges that the Amended Complaint fails to sufficiently state a cause of action for fraud. Under Pennsylvania law, to plead a cause of action for fraud, the plaintiff must show: (1) a representation; (2) which is material to the transaction at hand; (3) made falsely, with knowledge of its falsity or recklessness at to whether its true or false; (4) with the intent of misleading another into relying on it; (5) justifiable reliance on the misrepresentation; and (6) the resulting injury was proximately caused by the reliance. Gibbs v. Ernst, 647 A.2d 882, 889 (Pa. 1994). Defendant argues that Plaintiff failed to allege that "Canella made a representation with the intent to mislead others into relying on it," and that Plaintiff failed to allege justifiable reliance on Canella's representations. (Canella Mem. at 7.)
Greater particularity in pleading is required whenever fraud is averred. Federal Rule of Civil Procedure 9(b) requires that "[i]n all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity." FED. R. CIV. P. 9(b). This rule has been interpreted to require a plaintiff to plead (1) a specific false representation of material fact; (2) knowledge by the person who made it of its falsity; (3) ignorance of its falsity by the person to whom it was made; (4) the intention that it should be acted upon; and (5) that the plaintiff acted upon it to his damage. Shapiro v. UJB Fin. Corp., 964 F.2d 272, 284 (3d Cir. 1992).
Plaintiff has averred a claim of fraud under Pennsylvania law that satisfies Fed.R.Civ.P. 9(b). The Amended Complaint clearly states that "Canella gained access to SIS's clients by fraudulently representing he was associated with SIS when he used the confusingly similar name ASIS, when he implied he was a managing paralegal associated with SIS, and when he used Pinto's familiar name." (Am. Compl. ¶ 76.) In addition, other averments speak directly to Defendant's fraudulent intent. See (Am. Compl. ¶¶ 10 ("Defendant Canella, with a bad faith intent to profit from SIS's reputation and trade name, has used and trafficked in the name ASIS, which is confusingly similar to SIS's name."), 39 ("Defendant Canella's use of the name ASIS to target SIS's customers was committed with the intent to cause confusion to mistake or to deceive").) Plaintiff has also pled facts sufficient to show justifiable reliance. The Amended Complaint states, "Defendant Canella fraudulently misled FAMC's clients into canceling their accounts with SIS for his own gain," and that "[a]s a direct and proximate result of Defendant Canella's false and misleading statements, FAMC has been damaged and continues to be damaged." (Am. Compl. ¶¶ 77, 78.) While Plaintiff did fail to use the phrase "justifiable reliance," we believe that Plaintiff has averred a cause of action for fraud sufficient to avoid a 12(b)(6) motion to dismiss.
d. Negligent Misrepresentation
Defendant alleges that Plaintiff fails to state a cause of action for negligent misrepresentation because Plaintiff fails to plead that another person justifiably relied on the alleged misrepresentation. (Mot. to Dismiss at 8.). In order to plead a claim of negligent misrepresentation, Plaintiff must allege: (1) a misrepresentation of a material fact; (2) the representor must either know of the misrepresentation, must make the misrepresentation without knowledge as to its truth or falsity or must make the representation under circumstances in which he ought to have known of its falsity; (3) the representor must intend the representation to induce another to act on it; and (4) injury must result to the party acting in justifiable reliance on the misrepresentation. Gibbs, 647 A.2d at 890. In averring the claim of negligent misrepresentation, Plaintiff incorporated the allegations contained in paragraphs 1-78. (Am. Compl. ¶ 79.) Thus the allegations of reliance made in Count Nine (discussed supra) have been incorporated into this cause of action. This is sufficient.
e. Unauthorized Practice of Law
Defendant urges us to dismiss the claim of unauthorized practice of law because Pennsylvania law does not contemplate a private right of action for monetary relief. (Canella Mem. 8-9.) Pennsylvania's statute prohibiting the unauthorized practice of law provides the following remedy:
In addition to criminal prosecution, unauthorized practice of law may be enjoined in any county court of common pleas having personal jurisdiction over the defendant. The Party obtaining such an injunction may be awarded costs and expenses incurred, including reasonable attorney fees, against the enjoined party. A violation of subsection (a) is also a violation of . . . the Unfair Trade Practices and Consumer Protection Law.42 Pa. Cons. Stat. § 2524(c). Pennsylvania courts have inferred a private right of action from this language. Haymond v. Lundy, Nos. 99-5015, 99-5048, 2000 WL 804432 at * 9 (E.D. Pa., June 22, 2000). Defendant now argues that Plaintiff makes no reference to enjoining the Defendant from the unauthorized practice of law. We disagree. In the "Prayer for Relief," Plaintiff asks the Court to grant an injunction restraining Defendants from competing unfairly in anyway with FAMC. (Am. Compl. at 16.) While this statement does not specifically ask to enjoin the "unauthorized practice of law," should the Court find that Defendant did in fact violate 42 PA. CONS. STAT. § 2524(c), such a request can be found implicitly in the sought for relief.
V. Discussion of Counts Against Pinto
All of the claims against Defendant Pinto arise from the allegation that he gave a list of clients to Canella, which Canella used to "scare" SIS customers into purchasing services with his company operating under the name ASIS. (Pl.'s Brief in Opp. to Pinto's Mot. to Dismiss at 2.) Based on this action, FAMC claims that Pinto misappropriated trade secrets, breached his fiduciary duty/duty of loyalty to FAMC, interfered with contractual relations and prospective economic advantage, and engaged in a civil conspiracy with Defendant Canella.
Defendant Pinto argues that Plaintiff makes no specific claim of damages with respect to the claims of misappropriation of trade secrets and breach of fiduciary duty and that these claims should therefore be dismissed. However, it is not necessary to plead specific damages to survive a 12(b)(6) motion for these two claims. The purpose of a Rule 12(b)(6) motion to dismiss is to test the sufficiency of a complaint, not to resolve disputed facts or decide the merits of the case. Tracinda, 197 F. Supp.2d at 53. Plaintiff has sufficiently pled the elements of both claims and pleading specific damages at this juncture is not required. See SI Handling Sys., Inc. v. Heisley, 753 F.2d 1244, 1255 (3d Cir. 1985) (to establish the claim of misappropriation of trade secrets, a plaintiff must prove that: (1) the information constitutes a trade secret; (2) that it was of value to the employer and important in the conduct of his business; (3) that by reason of discovery or ownership the employer had the right to the use and enjoyment of the secret; and (4) that the secret was communicated to the defendant while employed in a position of trust and confidence under such circumstances as to make it inequitable and unjust for him to disclose it to others, or to make use of it himself, to the prejudice of his employer; McDermott v. Party City Corp., 11 F. Supp.2d 612, 626 n. 18 (E.D. Pa. 1998) (the elements a plaintiff must prove for a claim of breach of fiduciary duty are (1) that the defendant negligently or intentionally failed to act in good faith and solely for the benefit of plaintiff in all matters for which he or she was employed; (2) that the plaintiff suffered injury; and (3) that the agent's failure to act solely for the plaintiffs benefit was a real factor in bringing about plaintiff's injuries). The allegations in Plaintiff's Complaint regarding the claims of misappropriation of trade secrets and breach of fiduciary duty are sufficient.
Defendant seeks dismissal of Plaintiff's claim of interference with business relations and prospective economic advantage arguing that Plaintiff has alleged damages with regards to "prospective" customers. (Pinto Mot. to Dismiss at 3.) Defendant argues that he cannot be liable on this claim since he ceased working for Plaintiff in 2001. This argument has no merit. In order to prevail on a claim of interference with business relations under Pennsylvania law, a plaintiff must plead: (1) the existence of a contractual relation; (2) defendant's purpose or intent to harm the plaintiff by preventing the relation from occurring; (3) the absence of any privilege or justification on the part of the defendant; and (4) damages resulting from defendant's conduct. Gundlach v. Reinstein, 924 F. Supp. 684, 693 (E.D. Pa. 1996). To plead interference with prospective economic advantage, the plaintiff must prove the same elements though the contract must be prospective rather than already in existence. (Zions First Nat. Bank. N.A. v. United Health Club. Inc., 704 F.2d 120, 125 (3d Cir. 1983) (citing Restatement (Second) of Torts § 766B (1979)). The Amended Complaint clearly states that "Defendants' action regarding FAMC's actual and prospective customers have interfered with FAMC's contractual relations with actual customers and with FAMC's prospective advantage from both actual and prospective customers." (Am. Compl. ¶ 67.)
III. Conclusion
For the above reasons, we will deny both Defendant's Motions to Dismiss. Plaintiff contends that Canella's Motion was filed only for the purpose of harassing Plaintiff and causing the expenditure of unnecessary legal fees. Plaintiff argues that filing this Motion is sanctionable under Rule 11 of the Federal Rules of Civil Procedure. When making representation to the Court, each attorney certifies:
that to the best of the person's knowledge, information, and belief, formed after an inquiry reasonable under the circumstances, — (1) it is not being presented for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation; (2) the claims, defense, and other legal contentions therein are warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law. . . .
Fed.R.Civ.P. 11(b)(1), (2). "Rule 11 is . . . intended to discourage pleadings that are frivolous, legally unreasonable, or without factual foundation, even though the paper was not filed in subjective bad faith."See Napier v. Unidentified Fed. Agents, 855 F.2d 1080, 1090-1091 (3d Cir. 1988). "Rather, the test is now an objective one of reasonableness."Lieb v. Topstone Indus., Inc., 788 F.2d 151, 157 (3d Cir. 1986). Despite the fact that we have denied Canella's Motion in its entirety, we will not grant Rule 11 sanctions. An appropriate Order follows.
ORDER
AND NOW, this ___ day of January, 2004, under consideration of Defendant Canella's
Motion to Dismiss Pursuant to 12(b)(6) (Docket No. 13) and Defendant Pinto's Motion to
Dismiss (Docket No. 14), and all papers submitted in support thereof and in opposition thereto, it is ORDERED that Defendants' motions are DENIED.
IT IS SO ORDERED.