Bobrick Washroom Equipment, Inc. V Scranton Products, Inc.REPLY BRIEF re MOTION to Dismiss With Prejudice Defendant and Counterclaim Plaintiff Bobrick's CounterclaimM.D. Pa.February 27, 2017 UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA BOBRICK WASHROOM EQUIPMENT, INC., Plaintiff v. SCRANTON PRODUCTS, INC., Defendant Civil Action No. 3:14-CV-00853-RDM Hon. Robert D. Mariani Oral Argument March 23, 2017 DEFENDANT SCRANTON PRODUCTS INC.’S REPLY BRIEF IN SUPPORT OF PARTIAL MOTION TO DISMISS WITH PREJUDICE PLAINTIFF BOBRICK WASHROOM EQUIPMENT, INC.’S COUNTERCLAIM Case 3:14-cv-00853-RDM Document 302 Filed 02/27/17 Page 1 of 28 TABLE OF CONTENTS Page i I. Introduction ...................................................................................................... 1 II. Argument ......................................................................................................... 3 A. Everyday Discovery Disputes Fail to State a Claim for Abuse of Process .............................................................................................. 3 1. The Prelitigation Conduct Alleged by Bobrick Is Not Actionable ................................................................................... 4 2. The Remaining Allegations Fall Short of Pleading a “Perversion” of Legal Process .................................................... 6 3. The Allegations of Improper Purpose Are Inadequate ............. 10 4. Bobrick’s Allegations of Improper Purpose Fail to Satisfy Twombly/Iqbal .............................................................. 13 5. Bobrick’s Claim Should Be Dismissed with Prejudice ............ 15 B. Bobrick’s Unfair Competition Claim Should Be Dismissed .............. 16 C. Bobrick’s Punitive Damages Request Should Be Rejected ................ 19 III. Conclusion ..................................................................................................... 20 Case 3:14-cv-00853-RDM Document 302 Filed 02/27/17 Page 2 of 28 TABLE OF AUTHORITIES Page(s) i FEDERAL CASES1 A.G. Cullen Construction, Inc. v. Travelers Casualty & Surety Co. of America, 2009 WL 382501 (W.D. Pa. Feb. 13, 2009) ......................................................... 6 Acumed LLC v. Advanced Surgical Servs., Inc., 561 F.3d 199 (3d Cir. 2009) ............................................................................... 17 Ashcroft v. Iqbal, 556 U.S. 662 (2009) ............................................................................................ 15 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) ...................................................................................... 14, 15 Bobrick Corp. v. Santana Prods., Inc., 422 F. App’x 84 (3d Cir. 2011) ............................................................................ 6 Boring v. Google Inc., 362 F. App’x 273 (3d Cir. 2010) ........................................................................ 19 BTG International, Inc. v. Bioactive Laboratories, 2016 WL 3519712 (E.D. Pa. June 28, 2016) ........................................................ 6 In re Carpenter, 2013 WL 1953275 (Bankr. W.D. Pa. May 7, 2013) ............................................. 5 City of Phila. v. Beretta U.S.A. Corp., 277 F.3d 415 (3d Cir. 2002) ............................................................................... 18 Edwards v. Wyatt, 2001 WL 1382503 (E.D. Pa. Nov. 6, 2001) ........................................................ 7 Elsevier, Inc. v. Comprehensive Microfilm & Scanning Services, Inc., 2013 WL 1497946 (M.D. Pa. Apr. 10, 2013) ..................................................... 19 1 Per Local Rule 7.8(a), Scranton Products attaches as exhibits to this brief copies of all unpublished decisions cited within this brief. Case 3:14-cv-00853-RDM Document 302 Filed 02/27/17 Page 3 of 28 TABLE OF AUTHORITIES (Continued) Page(s) ii Foster v. City of Phila., 2013 WL 12149716 (E.D. Pa. Sept. 12, 2013) ..................................................... 6 General Refractories Co. v. Fireman’s Fund Ins. Co., 337 F.3d 297 (3d Cir. 2003) ................................................................... 4, 7, 9, 13 Granite State Ins. Co. v. Aamco Transmissions, Inc., 57 F.3d 316 (3d Cir. 1995) ................................................................................. 17 Ickes v. Flanagan, 2008 WL 859183 (W.D. Pa. Mar. 31, 2008) ...................................................... 12 Ketzner v. John Hancock Mut. Life Ins. Co., 118 F. App’x 594 (3d Cir. 2004) ........................................................................ 16 Latuska v. Sethuraman 2016 WL 4082738 (W.D. Pa. July 29, 2016) ..................................................... 19 Lease v. Fishel, 2009 WL 922486 (M.D. Pa. Apr. 3, 2009) ....................................................... 7, 8 Bldg. Materials Corp. of Am. v. Rotter, 535 F. Supp. 2d 518 (E.D. Pa. 2008) .................................................................. 18 Miller v. Cantorna, 2016 WL 2752633 (M.D. Pa. May 11, 2016) ..................................................... 13 Orthovita, Inc. v. Erbe, 2008 WL 423446 (E.D. Pa. Feb. 14, 2008) ........................................................ 16 Peek v. Whittaker, 2014 WL 2154965 (W.D. Pa. May 22, 2014) ................................................ 9, 10 QVC, Inc. v. Your Vitamins, Inc., 753 F. Supp. 2d 428 (D. Del. 2010) .................................................................... 14 Scanvec Amiable Ltd. v. Chang, 80 F. App’x 171 (3d Cir. 2003) .......................................................................... 17 Case 3:14-cv-00853-RDM Document 302 Filed 02/27/17 Page 4 of 28 TABLE OF AUTHORITIES (Continued) Page(s) iii Schwartz v. OneWest Bank, FSB, 2013 WL 6037078 (E.D. Pa. Nov. 13, 2013) ....................................................... 4 Schwartz v. OneWest Bank, FSB, 614 F. App’x 80 (3d. Cir. 2015) ......................................................................... 10 Sheare v. Borough of Olyphant, 2012 WL 2527022 (M.D. Pa. June 29, 2012) ....................................................... 4 Sidhu v. Mann, 2011 WL 900982 (M.D. Pa. Mar. 14, 2011) ........................................................ 4 Synthes (U.S.A.) v. Globus Med., Inc., 2007 WL 1001587 (E.D. Pa. Mar. 29, 2007) ............................................... 1, 5, 6 USX Corp. v. Adriatic Ins. Co., 99 F. Supp. 2d 593 (W.D. Pa. 2000) ................................................................... 18 Waris v. Mackey, 2009 WL 4884204 (E.D. Pa. Dec. 15, 2009) ...................................................... 11 Warren Publ’g Co. v. Spurlock, 645 F. Supp. 2d 402 (E.D. Pa. 2009) .................................................................. 18 Williams v. Borough of Olyphant, 2016 WL 595394 (M.D. Pa. Feb. 12, 2016) ......................................................... 4 York Grp., Inc., v. Pontone, 2013 WL 12142353 (W.D. Pa. May 22, 2013) ................................................... 9 STATE CASES Hardy v. Trs. of Univ. of Pa., 2014 WL 10556361 (Pa. Super. Ct. Dec. 26, 2014) ........................................... 16 Harris v. Brill, 844 A.2d 567 (Pa. Super. Ct. 2004) ...................................................................... 3 Case 3:14-cv-00853-RDM Document 302 Filed 02/27/17 Page 5 of 28 TABLE OF AUTHORITIES (Continued) Page(s) iv Hart v. O’Malley, 647 A.2d 542 (Pa. Super. Ct. 1994) ...................................................................... 9 Lakeview Ambulance & Medical Services, Inc., v. Gold Cross Ambulance & Medical Service, Inc., 1995 WL 842000 (Pa. Ct. Com. Pl. Oct. 18, 1995) ............................................ 16 Pennsylvania State University v. University Orthopedics, Ltd., 706 A.2d 863 (Pa. Super. Ct. 1998) .................................................................... 16 FEDERAL STATUTES Lanham Act ................................................................................................ 3, 8, 13, 19 FEDERAL RULES Fed. R. Civ. P. Rule 12(b)(6) ............................................................................. 11, 14 TREATISES Restatement (Third) of Unfair Competition § 1 (1995) ..................................... 17, 18 Case 3:14-cv-00853-RDM Document 302 Filed 02/27/17 Page 6 of 28 1 I. Introduction Bobrick’s Opposition does not address the fundamental legal defects in its Counterclaim that Scranton Products identified in its Motion. The claim for abuse of process is nothing more than a thinly veiled effort to transform hard-fought litigation into a tort. The unfair competition claim presents the question of whether a federal court should expand this tort to false advertising-beyond the boundaries of what any Pennsylvania appellate court has recognized-a question that Scranton Products believes should be answered in the negative. The Motion should be granted. Although Bobrick cannot dispute that prelitigation conduct does not support a claim for abuse of process, Bobrick insists on emphasizing that conduct nonetheless, claiming that it can serve as evidence of improper purpose. This argument has been made and explicitly rejected. See Synthes (U.S.A.) v. Globus Med., Inc., No. 04-1235, 2007 WL 1001587, at *4 (E.D. Pa. Mar. 29, 2007). Apart from the inactionable prelitigation conduct, Bobrick’s remaining allegations fail to state a claim as a matter of law. Zealous litigation, even if sometimes unsuccessful, is unequivocally not a tort. Nevertheless, Bobrick urges the opposite, trying to make a mountain from a molehill of what are essentially discovery disputes. None of these allegations come close to meeting the standard for “perversion” of the legal process; indeed, none is even a “use” for purposes of Case 3:14-cv-00853-RDM Document 302 Filed 02/27/17 Page 7 of 28 2 abuse of process to begin with. Bobrick tries to save its claim by insisting-in an entirely conclusory fashion-that Scranton Products acted with “improper purpose,” largely surrounding the purported motivations for bringing the lawsuit. But such allegations are not relevant to an abuse of process claim. And the other allegations related to purported improper purpose are far too non-specific and unsupported to remedy this otherwise defective claim. Although Bobrick tries to suggest that Scranton Products is applying an unfairly heightened pleading standard, in fact Scranton Products simply shows that Bobrick fails to meet the normal federal pleading standard under Twombly and Iqbal. Bobrick also argues that any dismissal of its abuse of process claim should be without prejudice, because Scranton Products has recently announced a commercial action relating to its bathroom partitions, and Bobrick would like to take “sufficient discovery” so that it can plead a viable claim. Such fishing expeditions are not grounds for obtaining leave to amend. Because Bobrick presently lacks a factual basis for the claim, the claim must be dismissed. As to its common law unfair competition claim, Bobrick cannot and does not dispute that no Pennsylvania appellate court has ever applied unfair competition to allegations of false advertising. Permitting this claim to go forward, then, would expand the tort beyond the parameters that state appellate courts have thus far set. Case 3:14-cv-00853-RDM Document 302 Filed 02/27/17 Page 8 of 28 3 While Scranton Products acknowledged in its opening brief that there is mixed law, the more persuasive authority is on Scranton Products’ side, and Scranton Products respectfully submits that the better approach is for the federal courts to refrain from expanding the tort to reach conduct never before sustained by a state appellate court as a basis for a common law unfair competition claim. Finally, as Scranton Products argued in its Motion, the request for punitive damages should be dismissed if the Motion is otherwise granted because the only remaining claim-for a violation of the Lanham Act-does not allow for punitive damages. II. Argument A. Everyday Discovery Disputes Fail to State a Claim for Abuse of Process As explained in the Motion, Dkt. 275 at 11-13, Bobrick’s Counterclaim takes disputes of the sort that arise in almost every contentious litigation and insists they can be reconfigured into a tort by tacking on conclusory allegations of “improper purpose.” But abuse of process in Pennsylvania has distinct essential elements. See id. at 9-10.2 Those elements are not met here. 2 Those elements are: (i) “the defendant . . . used a legal process against the plaintiff,” (ii) that action was “primarily to accomplish a purpose for which the process was not designed,” and (iii) “harm has been caused to the plaintiff.” Harris v. Brill, 844 A.2d 567, 572 (Pa. Super. Ct. 2004) (emphasis added) (citation omitted). Case 3:14-cv-00853-RDM Document 302 Filed 02/27/17 Page 9 of 28 4 Accordingly, courts can and do dismiss abuse of process claims on the pleadings, notwithstanding Bobrick’s suggestion that somehow these allegations are immune from adjudication at this stage. See, e.g., General Refractories Co. v. Fireman’s Fund Ins. Co., 337 F.3d 297, 303 (3d Cir. 2003) (affirming dismissal of abuse of process claims on pleadings); Williams v. Borough of Olyphant, No. 3:13- CV-02945, 2016 WL 595394, at *4-5 (M.D. Pa. Feb. 12, 2016) (same); Schwartz v. OneWest Bank, FSB, No. 13-0113, 2013 WL 6037078, at *7 (E.D. Pa. Nov. 13, 2013) (same); Sheare v. Borough of Olyphant, No. 3:11-CV-1639, 2012 WL 2527022, at *8 (M.D. Pa. June 29, 2012) (dismissing abuse of process claim based on prelitigation conduct and initiation, rather than use, of process); Sidhu v. Mann, No. 1:10-cv-2311, 2011 WL 900982, at *4 (M.D. Pa. Mar. 14, 2011) (same). 1. The Prelitigation Conduct Alleged by Bobrick Is Not Actionable Bobrick’s argument regarding prelitigation conduct is a straw man. Scranton Products has not argued that the entire abuse of process claim is “solely” based on prelitigation conduct. Rather, Scranton Products argues that portions of the abuse of process claim are based on prelitigation conduct, and that those portions of that claim must be dismissed on that basis. See Dkt. 275 at 10; General Refractories, 337 F.3d at 308-09 (affirming partial motion to dismiss when some allegations could support abuse of process claim, while others could not as a matter of law). Case 3:14-cv-00853-RDM Document 302 Filed 02/27/17 Page 10 of 28 5 In re Carpenter, Nos. 11-20896-TPA, 11-2252-TPA, 2013 WL 1953275 (Bankr. W.D. Pa. May 7, 2013), is instructive. There, the plaintiff asserted an abuse of process claim on the basis of a Pennsylvania Act 6 bankruptcy notice, arguing that even though the notice predated the alleged misconduct, the prelitigation actions of the defendant were still part “of the foreclosure.” Id. at *10. The court rejected this argument, holding that “a ‘pre-process’ activity . . . is an insufficient basis for a claim of abuse of process.” Id. at *12 (citation omitted). The same is true here-Bobrick’s allegations of prelitigation conduct are simply “an insufficient basis” for a claim. Bobrick’s Opposition does not contest this dispositive proposition. See Dkt. 289 at 3-4; Dkt. 275 at 10. Instead, Bobrick argues, the prelitigation conduct evidences improper purpose rather than setting forth actual incidents in which process was abused. This attempt to bootstrap inactionable prelitigation conduct onto the claim should be rejected. In fact, this exact argument has been advanced-and rejected-within the circuit. In Synthes, 2007 WL 1001587, the defendant brought an abuse of process counterclaim using prelitigation statements by the plaintiff as evidence of an improper purpose, alleging that the defendant had “anti-competitive purposes, [and undertook] efforts to thwart [plaintiff’s] growth, and wrongful efforts to drive [plaintiff] out of business.” Id. at *4 (citation and internal quotation marks Case 3:14-cv-00853-RDM Document 302 Filed 02/27/17 Page 11 of 28 6 omitted). The court rejected this argument on the pleadings, explaining that the relevant inquiry is not whether the defendant had “bad intentions” prior to the litigation, but rather whether it had a primarily improper purpose in its use of legal process after the litigation began.3 Id. The court further confirmed that because the “statements discussed above refer to statements made prior to the litigation. . . . they are not demonstrative of an improper use of process after it has been issued.” Id. Just so here, the allegations of abuse of process based on prelitigation conduct should be dismissed.4 2. The Remaining Allegations Fall Short of Pleading a “Perversion” of Legal Process As to the remaining allegations, Bobrick’s Opposition again misrepresents Scranton Products’ argument. Scranton Products does not argue that there is a 3 Bobrick’s citations in support of this point are unpersuasive. Cf., e.g., A.G. Cullen Construction, Inc. v. Travelers Casualty & Surety Co. of Am., No. 08-1238, 2009 WL 382501, at *3 (W.D. Pa. Feb. 13, 2009) (actual abuse of process analysis does not discuss prelitigation conduct); Foster v. City of Phila., No. 12-5851, 2013 WL 12149716, at *1 n.1 (E.D. Pa. Sept. 12, 2013) (cited statement does not necessarily refer to prelitigation conduct, especially when the beginning of the parties’ dispute began with the litigation); BTG Int’l Inc. v. Bioactive Labs., No. 15-04885, 2016 WL 3519712 (E.D. Pa. June 28, 2016) (statements at issue were arguable admissions of improper purpose). 4 Additionally, while Bobrick urges that the factual history of the litigants should be considered in evaluating Bobrick’s abuse of process claim, this consideration works against Bobrick, as Bobrick and its counsel previously have been admonished for pursuing baseless claims for abuse of process and legal fees, conduct repeated here. See, e.g., Bobrick Corp. v. Santana Prods., Inc., 422 F. App’x 84, 86 n.5 (3d Cir. 2011) (collecting cases). Case 3:14-cv-00853-RDM Document 302 Filed 02/27/17 Page 12 of 28 7 magic number of discovery disputes required to set forth a viable claim. Rather, Bobrick is required to allege facts that would support an allegation of perversion of the legal process. see General Refractories, 337 F.3d at 307. Whether there is a theoretical magic number or not,the allegations in the counterclaim here fail to meet that standard as a matter of law. In other words, the Court need not determine precisely where the line might be to know that the alleged conduct here does not cross it. The clear standard for “perversion” is met only when the use of a legal process “for the purpose for which it was designed becomes so lacking in justification as to lose its legitimate function as a reasonably justifiable litigation procedure.” Id. at 308 (citation and internal quotation marks omitted). The bar here is high-and for good reason. Otherwise, “any party who defended a lawsuit, but eventually lost, could be liable for abuse of process.” Id. at 309. See also Edwards v. Wyatt, No. CIV.A. 01-1333, 2001 WL 1382503, at *5 (E.D. Pa. Nov. 6, 2001) (dismissing an abuse of process claim with allegations that defendant stated misleading facts in a complaint with intent to harass, because “[o]therwise, every person who has ever been the subject of litigation could sue under this tort”). “[P]erversion” under this standard is limited. For example, in Lease v. Fishel, No. 1:07-CV-0003, 2009 WL 922486 (M.D. Pa. Apr. 3, 2009), the plaintiff claimed abuse of process following discovery requests that he alleged were not Case 3:14-cv-00853-RDM Document 302 Filed 02/27/17 Page 13 of 28 8 material to the litigation and were instigated for an improper purpose. The court held that because the alleged abuses of process “at most show[ed] a violation of civil discovery rules,” the plaintiff’s claim must be dismissed. Id. at *7. The same is true here. Bobrick’s counterclaim claims that “other instances” of Scranton Products’ unnamed discovery abuses occurred “at every turn,” but in the end lists only two examples: a dispute over redaction of non-relevant information, and Scranton Products’ use of discovery to develop its damages case. Dkt. 242 at 73-76 (Counterclaim ¶¶ 115-24). In its Opposition, Bobrick adds additional purported examples of so-called “predation”: Scranton Products’ production of chemical composition documentation, allegedly inconsistent interrogatory responses, and an affidavit the accuracy of which Bobrick contests. Dkt. 289 at 12. The new examples are simply more of the same: discovery skirmishes that simply cannot make out an abuse of process claim.5 It makes sense that allegations such as these are inactionable; in point of fact, they do not evidence a “use of process” by Scranton Products at all. As 5 It is notable that Bobrick never moved for sanctions on these alleged discovery violations as surely it would have were the conduct really so egregious as to warrant such a remedy. In response, Bobrick responds that such a motion is premature because it intends to move for attorneys’ fees under the Lanham Act. That is a non-sequitur. The point is that abuse of process is the wrong vehicle altogether. Case 3:14-cv-00853-RDM Document 302 Filed 02/27/17 Page 14 of 28 9 Pennsylvania courts have explained, “[t]he term ‘use’, [sic] in the context of an abuse of process claim, requires that a party actively seek and employ a legal process primarily for the purpose of harming an adverse party.” Hart v. O’Malley, 647 A.2d 542, 551-52 (Pa. Super. Ct. 1994) (emphasis added). Producing documents (even if the other side objects to the timing), responding to discovery (even if the other side objects to the content), and filing an affidavit which was requested by the Court in response to a motion by Bobrick6 are not “uses” of legal process under this standard. See, e.g., General Refractories, 337 F.3d at 310-11 (failing to comply with court orders, failing to seek a stay, and failing to provide copies of subpoenaed documents do not qualify as a “use” for abuse of process); York Grp., Inc. v. Pontone, No. 10-1078, 2013 WL 12142353, at *11-12 (W.D. Pa. May 22, 2013) (holding that alleged misrepresentations made to the court during litigation do not qualify as a “use” of process). Peek v. Whittaker, No. 2:13-cv-01188, 2014 WL 2154965 (W.D. Pa. May 22, 2014), on which Bobrick relies, is distinguishable. In Peek, the defendants’ corporate designee admitted in deposition that the defendants knew, before filing a preliminary injunction motion, that the plaintiff had not downloaded the customer 6 Scranton Products filed the affidavit in question not as an affirmative, offensive act-but in response to the court’s order of December 12, 2014, and Bobrick’s aggressive attempts to serve discovery on matters not relevant to the litigation. Case 3:14-cv-00853-RDM Document 302 Filed 02/27/17 Page 15 of 28 10 databases that defendant alleged. Id. at *6. Yet defendants proceeded to seek and obtain a preliminary injunction anyway, despite knowing there was no basis for it. Id. at *7. That is entirely different from the alleged “uses” here, in which Scranton Products was not affirmatively using legal process, but rather was responding to defensive discovery by submitting written responses and producing documents. Although Bobrick challenged the adequacy (and in some cases the accuracy) of these responses, Scranton Products’ actions were taken defensively. Such actions are simply not “uses” within the meaning of the standard. 3. The Allegations of Improper Purpose Are Inadequate Bobrick’s attempt to resurrect its claim by tacking on conclusory allegations regarding improper purpose likewise fails. For one thing, Bobrick relies on alleged conduct that is irrelevant to the claim. Bobrick repeatedly argues that Scranton Products “prosecuted baseless claims,” that “SP knew all along that its claims against Bobrick lacked any merit,” and that “SP knew these facts before it filed its claims.” Dkt. 289 at 7, 11. But these allegations do not support an abuse of process claim, which is concerned only with the use of process after a claim is filed. Schwartz v. OneWest Bank, FSB, 614 F. App’x 80, 83 (3d. Cir. 2015) (“Under Pennsylvania law, ‘abuse of process is the improper use of process after it has been issued’. . . . merely ‘initiati[ng] ... litigation for a wrongful purpose’ alone is not actionable.”) (internal citations Case 3:14-cv-00853-RDM Document 302 Filed 02/27/17 Page 16 of 28 11 omitted) (second alteration in original). Bobrick’s focus on the justification for bringing the underlying lawsuit is an unsuccessful attempt to mask the inadequacy of its claim. Apparently hoping to avoid scrutiny of what it has actually alleged, Bobrick insists that the “question of improper purpose is . . . unsuitable for resolution under Rule 12(b)(6).” Dkt. 289 at 8. But courts within this Circuit dismiss abuse of process claims when the pleadings rely on vague, conclusory allegations of improper purpose, even where the pleadings also contain detailed factual allegations regarding the use of process. For example, in Waris v. Mackey, the plaintiff pled that the defendants “engaged in improper litigation tactics ‘to extort the property value of Plaintiff’s employment claim’” and “pled many facts showing purported improper litigation tactics.” No. 09-1103 (RBK), 2009 WL 4884204, at *10 (E.D. Pa. Dec. 15, 2009). The court concluded that, although extortion could in theory be an improper purpose sufficient for abuse of process, the plaintiff “did not plead any facts showing the Defendants had a purpose to extort. . . . extortion is a legal conclusion, not a fact.” Id. The same analysis applies here-Bobrick merely concludes that Scranton Products’ purpose in its use of legal process was for “inflicting financial harm,” Case 3:14-cv-00853-RDM Document 302 Filed 02/27/17 Page 17 of 28 12 but does not plead any facts showing that Scranton Products had this purpose.7 See also, e.g., Ickes v. Flanagan, No. 3:2007-143, 2008 WL 859183, at *5 (W.D. Pa. Mar. 31, 2008) (“Other than the bare assertion . . . that the ‘perverse purpose’ of the prosecution was for the benefit of Plaintiff's ‘meddlesome’ neighbor, Plaintiff alleges no facts sufficient to justify allowing this claim to proceed to further stages of litigation.”). Bobrick’s allegations of improper purpose are far too conclusory to satisfy Pennsylvania law. In its Opposition, Bobrick asserts that Scranton Products “simply ignores” the “detailed factual allegations” of improper purpose in Bobrick’s complaint. Dkt. 289 at 9. In fact, it is precisely by examining those so-called “factual allegations” that their patent insufficiency is evident. Bobrick alleges that Scranton Products’ “predatory conduct” in legal proceedings was for the purpose of “stifling legitimate competition,” “silencing Bobrick’s efforts to educate market participants,” and “inflicting financial harm on Bobrick for unfair competitive advantage by increasing Bobrick’s costs.” Dkt. 242 at 41 (Counterclaim ¶ 9). But these are not detailed factual allegations; they are conclusions tracking the language of Third Circuit opinions on abuse of process. 7 As explained supra, the alleged facts involving prelitigation conduct cannot suffice to show improper purpose because there is no relation between that conduct and the purportedly improper litigation tactics. Case 3:14-cv-00853-RDM Document 302 Filed 02/27/17 Page 18 of 28 13 See, e.g., General Refractories, 337 F.3d at 308 (listing “harassment, draining resources, delaying payment, and delaying litigation” as improper purposes that could, if properly pled, satisfy an abuse of process claim). The complaint then runs for 105 paragraphs8 before even mentioning abuse of process again, and the allegations of improper purpose that finally come are similarly nonspecific: Bobrick alleges that Scranton Products used process “to inflict financial harm” and “to prevent Bobrick from competing fairly” in the marketplace. Dkt. 242 at 72 (Counterclaim ¶ 114). An abuse of process claim cannot be sustained under such a vague, generalized allegation of ill intent. See Miller v. Cantorna, No. 4:15-CV-1754, 2016 WL 2752633, at *10 (M.D. Pa. May 11, 2016) (dismissing abuse of process claim when plaintiff made only “vague and unsubstantiated assertion[s]” of improper purpose). 4. Bobrick’s Allegations of Improper Purpose Fail to Satisfy Twombly/Iqbal 8 Bobrick argues that the bulk of the complaint, describing Scranton Products’ alleged acts of false advertising and unfair competition, should stand in as “detailed factual allegations” of improper purpose. But such acts, even if true, do not show that Scranton Products used the legal process in question (that is, the purportedly wrongful discovery tactics) for these purposes. At best, these allegations go to purported reasons for bringing the lawsuit in the first place, which for the reasons described supra fail to support a claim for abuse of process. To that end, Bobrick has effectively admitted these factual allegations are distinct from the claim for abuse of process, recently arguing to the Court that the Lanham Act claims were sufficiently segregated from abuse of process that Scranton Products should have been required to file a premature answer. See Dkt. 283 at 2. Case 3:14-cv-00853-RDM Document 302 Filed 02/27/17 Page 19 of 28 14 Bobrick’s insistence that Scranton Products is seeking to hold Bobrick to a special pleading standard is yet another red herring. Scranton Products’ actual argument is straightforward: not only do Bobrick’s allegations of improper purpose fail to meet the Pennsylvania standard for pleading abuse of process, they also fail to meet the Twombly/Iqbal standard for federal pleading generally.9 To survive a Rule 12(b)(6) motion,10 a plaintiff must provide “more than labels and conclusions,” and “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555. Bobrick’s generalized allegations of improper purpose do not meet this standard. Bobrick insists that “the only plausible explanation” for why, for example, Scranton Products disagreed with Bobrick on the proper scope of discovery is that it was “deliberately prolonging this litigation”; it is this type of 9 Contrary to Bobrick’s argument, expecting Bobrick to plead its complaint up to the Twombly/Iqbal standard is not “impos[ing] a higher burden”, Dkt. 289 at 9, than that normally required under Rule 12(b)(6). See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007) (“[W]e do not require heightened fact pleading of specifics, but only enough facts to state a claim to relief that is plausible on its face. Because the plaintiffs here have not nudged their claims across the line from conceivable to plausible, their complaint must be dismissed.”). 10 Contrary to Bobrick’s suggestion otherwise, Scranton Products was not required to contest the motion to amend in order to preserve future pleadings challenges. To the contrary, in part because motions to amend are “freely granted, even as to claims that are ‘vulnerable to dismissal under Rule 12(b)(6),’” a defendant has every right to wait and bring its motion under Rule 12(b)(6). See QVC, Inc. v. Your Vitamins, Inc., 753 F. Supp. 2d 428, 432 (D. Del. 2010) (citation omitted). Case 3:14-cv-00853-RDM Document 302 Filed 02/27/17 Page 20 of 28 15 pleading the Supreme Court aimed to prevent. See, e.g., Ashcroft v. Iqbal, 556 U.S. 662, 680 (2009) (conclusory allegations that “petitioners ‘knew of, condoned, and willfully and maliciously agreed to subject [him]’ to harsh conditions of confinement” are “not entitled to the assumption of truth.”) (alteration in original). For the same reason, Bobrick’s allegations that Scranton Products’ used legal process “for predatory purposes” such as “inflict[ing] financial harm on Bobrick” are not entitled to a presumption of truth. Dkt. 242 at 72 (Counterclaim ¶ 114). Bobrick’s allegations of improper purpose at best “are ‘merely consistent with’ a defendant’s liability,” but “[they] ‘stop[] short of the line between possibility and plausibility of “entitlement to relief”’” and should be disregarded. Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 557). 5. Bobrick’s Claim Should Be Dismissed with Prejudice In a Hail Mary, Bobrick argues that any dismissal should be without prejudice because Bobrick might conduct future discovery into Scranton Product’s recently initiated commercial action. That is not a proper basis for obtaining leave to amend. Essentially, Bobrick is arguing that even if it does not-and cannot currently-state a claim for abuse of process, it should be allowed discovery to conduct a fishing expedition to discover whether there is some-as-yet-undiscovered abuse of process. While leave to amend is granted liberally, it is granted to allow a plaintiff to replead to state Case 3:14-cv-00853-RDM Document 302 Filed 02/27/17 Page 21 of 28 16 known facts, not to replead in the hopes that it might someday be able to state a claim. See Ketzner v. John Hancock Mut. Life Ins. Co., 118 F. App’x 594, 601 (3d Cir. 2004) (holding that when plaintiff’s request for leave to amend was “grounded only in assertions that further discovery would justify their vague allegations . . . . the District Court [was] correct in refusing to endorse a fishing expedition”). B. Bobrick’s Unfair Competition Claim Should Be Dismissed Bobrick cannot dispute that no Pennsylvania appellate decision has recognized a claim in unfair competition arising out of allegations of false advertising. Instead, Pennsylvania state courts have limited unfair competition to claims involving allegations of misappropriation or passing off. As explained in Pennsylvania State University v. University Orthopedics, Ltd., 706 A.2d 863 (Pa. Super. Ct. 1998), “[t]he gist of the action lies in the deception practiced in ‘passing off’ the goods of one for that of another.” Id. at 867, 870. See also Hardy v. Trs. of Univ. of Pa., No. 381 EDA 204, 2014 WL 10556361, at *6 (Pa. Super. Ct. Dec. 26, 2014) (defining unfair competition generally as “misappropriation”); Orthovita, Inc. v. Erbe, No. 07-2395, 2008 WL 423446, at *11 (E.D. Pa. Feb. 14, 2008) (granting a motion to dismiss a Pennsylvania unfair competition claim that lacked allegations of passing off or misappropriation).11 11 Bobrick’s citation of the 22-year-old trial court decision in Lakeview Ambulance & Medical Services, Inc., v. Gold Cross Ambulance & Medical Service, Inc., No. Case 3:14-cv-00853-RDM Document 302 Filed 02/27/17 Page 22 of 28 17 Consistent with that state law, the Third Circuit noted in Scanvec that “[a] claim of unfair competition under Pennsylvania law requires proof that the defendant has ‘passed off” the goods of one manufacturer or vendor as those of another, thus creating confusion between his own goods, and those of the rival’”. Scanvec Amiable Ltd. v. Chang, 80 F. App’x 171, 180 (3d Cir. 2003) (emphasis added) (citation omitted).12 Scranton Products acknowledged in its opening papers that there is a split of authority on this subject, and that some lower court decisions have expanded an application to false advertising by concluding that Pennsylvania unfair competition law is congruent with the Restatement (Third) of Unfair Competition § 1 (1995), which recognizes a claim for false advertising in unfair competition. Another string of authority, however, has specifically declined to expand the tort in this fashion because § 1 of the Restatement has never been adopted by any Pennsylvania appellate court. See, e.g., Acumed LLC v. Advanced Surgical Servs., 1994-2166, 1995 WL 842000, at *2-3 (Pa. Ct. Com. Pl. Oct. 18, 1995) should not stand for authority that Pennsylvania courts in general have embraced an expanded view of unfair competition. 12 Bobrick’s reliance on Granite State Ins. Co. v. Aamco Transmissions, Inc., 57 F.3d 316 (3d Cir. 1995) is unpersuasive. That case was not even about common law unfair competition at all, much less whether false advertising is covered; rather the case involved the interpretation of the term “unfair competition” in a specific insurance policy. See id. at 319. Moreover, Granite State predates the more recent Scanvec decision. Case 3:14-cv-00853-RDM Document 302 Filed 02/27/17 Page 23 of 28 18 Inc., 561 F.3d 199, 227 (3d Cir. 2009) (“Appellant relies on Restatement (Third) of Unfair Competition § 1 to support its unfair competition allegation but does not cite any state-court appellate decision that has adopted section 1 in Pennsylvania.”); Warren Publ’g Co. v. Spurlock, 645 F. Supp. 2d 402, 429-30 (E.D. Pa. 2009) (discussing the lack of clarity in which standard applies); USX Corp. v. Adriatic Ins. Co., 99 F. Supp. 2d 593, 620 (W.D. Pa. 2000) (Unfair competition is limited in Pennsylvania to “claims designed to protect a business from another’s misappropriation of its business organization.”). See also Bldg. Materials Corp. of Am. v. Rotter, 535 F. Supp. 2d 518, 526 n.4 (E.D. Pa. 2008) (summarizing restrained approach).13 Scranton Products respectfully submits that the better approach is to follow the guidance of Pennsylvania appellate court decisions addressing the issue- rather than reading in an expansion of the common law not reflected in state appellate jurisprudence.14 See City of Phila. v. Beretta U.S.A. Corp., 277 F.3d 415, 13 Bobrick mischaracterizes Building Materials to suggest that court rejected the restrained approach. Judge Brody in fact denied the motion to dismiss simply because “to date. . . no appellate court in Pennsylvania has applied the Restatement (Third) to the common law tort of unfair competition. Therefore, I deny the motion to dismiss Rotter's claim of unfair competition without prejudice to be reasserted at a later stage in litigation with the hope that, in the near future, Pennsylvania courts will provide more guidance on this issue.” Id. at 526 n.4. 14 It is true that Scranton Products asserted a similar claim at the beginning of this litigation, nearly three years ago. But that claim has now been dismissed with Case 3:14-cv-00853-RDM Document 302 Filed 02/27/17 Page 24 of 28 19 421 (3d Cir. 2002) (“it is not the role of a federal court to expand state law in ways not foreshadowed by state precedent.”). Bobrick’s unfair competition claim should be dismissed.15 C. Bobrick’s Punitive Damages Request Should Be Rejected In its Opposition, Bobrick does not contest that punitive damages are unavailable under the Lanham Act. Dkt. 289 at 18-20. If the court dismisses Bobrick’s abuse of process and common law unfair competition claims-as it should-then the request for punitive damages must be dismissed as well.16 prejudice. Having reexamined the underlying state law, Scranton Products has concluded that although one could zealously argue for expansion of the tort, the better approach is not to expand state law without guidance from the state courts. Bobrick’s argument that somehow this suggests the original claim was brought in bad faith is inappropriate and absurd. As Scranton Products acknowledged in its opening brief, and as Bobrick itself admits, the case law on this point is mixed. 15 Elsevier, Inc. v. Comprehensive Microfilm & Scanning Services, Inc., No. 3:10- cv-2513, 2013 WL 1497946 (M.D. Pa. Apr. 10, 2013), on which Bobrick relies, is distinguishable because false advertising was not at issue. In Elsevier, an employee of the defendant admitted to copying microfilm of plaintiff’s academic journals. In other words, the case involved misappropriation-which Scranton Products of course does not contest is included in unfair competition. 16 Even if Scranton Products’ motion is denied, however, the punitive damages claim should be rejected as overly conclusory. See, e.g., Boring v. Google, Inc., 362 F. App’x 273, 283 (3d Cir. 2010) (dismissing a request for punitive damages when the “complaint fails to allege conduct that is outrageous or malicious,” and rejecting the argument that “a claim for punitive damages must always be determined by a jury. . . . courts do indeed dismiss claims for punitive damages in advance of trial”); Latuska v. Sethuraman, No. 3:15-208, 2016 WL 4082738, at *7 (W.D. Pa. July 29, 2016) (dismissing punitive damages request when plaintiff’s Case 3:14-cv-00853-RDM Document 302 Filed 02/27/17 Page 25 of 28 20 III. Conclusion For the foregoing reasons, Scranton Products’ Motion should be granted. DATED: February 27, 2017 Respectfully submitted, MUNGER, TOLLES & OLSON LLP By: /s/ Lisa J. Demsky BRAD D. BRIAN (CA 79001) brad.brian@mto.com (Admitted pro hac vice) LISA J. DEMSKY (CA 186006) lisa.demsky@mto.com (Admitted pro hac vice) 355 South Grand Avenue Thirty-Fifth Floor Los Angeles, California 90071-1560 Telephone: (213) 683-9100 Facsimile: (213) 687-3702 ELLIOTT GREENLEAF, P.C. JOHN G. DEAN (PA 76168) jgd@elliottgreenleaf.com MATTHEW G. BOYD (PA 207366) mgb@elliottgreenleaf.com 201 Penn Avenue, Suite 202 Scranton, Pennsylvania 18503 Telephone: (570) 346-7569 Facsimile: (570) 969-2890 Attorneys for Plaintiff Scranton Products Inc. “allegations regarding their request for punitive damages are conclusory statements and not factual averments sufficient to state a plausible claim”). Case 3:14-cv-00853-RDM Document 302 Filed 02/27/17 Page 26 of 28 21 CERTIFICATE OF COMPLIANCE I hereby certify that this brief complies with the word-count limit set forth in Local Rule 7.8(b)(2) because it is 4,871 words long, including headings and footnotes but excluding the cover page, table of contents, table of authorities, signature block, certificate of service, and this certificate. In preparing this certificate, I relied on the word count generated by Microsoft Word 2010. DATED: February 27, 2017 /s/ Lisa J. Demsky LISA J. DEMSKY Case 3:14-cv-00853-RDM Document 302 Filed 02/27/17 Page 27 of 28 22 CERTIFICATE OF SERVICE I, Lisa J. Demsky, hereby certify that the foregoing PLAINTIFF AND COUNTERCLAIM DEFENDANT SCRANTON PRODUCTS INC.’S BRIEF IN SUPPORT OF PARTIAL MOTION TO DISMISS WITH PREJUDICE DEFENDANT AND COUNTERCLAIM PLAINTIFF BOBRICK WASHROOM EQUIPMENT, INC.’S COUNTERCLAIM was served on all counsel of record on this date through the Court’s electronic filing system. Dated: February 27, 2017 /s/ Lisa J. Demsky LISA J. DEMSKY Case 3:14-cv-00853-RDM Document 302 Filed 02/27/17 Page 28 of 28 EXHIBIT A Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 1 of 247 A.G. Cullen Const., Inc. v. Travelers Cas. and Sur. Co. of..., Not Reported in... © 2017 Thomson Reuters. No claim to original U.S. Government Works. 1 2009 WL 382501 Only the Westlaw citation is currently available. United States District Court, W.D. Pennsylvania. A.G. CULLEN CONSTRUCTION, INC., Arlene Cullen, and Paul Cullen, Plaintiffs, v. TRAVELERS CASUALTY AND SURETY COMPANY OF AMERICA, et al., Defendants. Civil Action No. 08-1238. | No. 07-765. | Feb. 13, 2009. Attorneys and Law Firms David C. Dreifuss, Dreifuss Bonacci & Parker, LLP, Florham Park, NJ, W. Alan Torrance, Jr., Dickie, McCamey & Chilcote, Pittsburgh, PA, for Defendants. Christopher P. Furman, Jerri Ann Ryan, Richard D. Kalson, Danny P. Cerrone, Thorp, Reed & Armstrong, Pittsburgh, PA, for Plaintiffs. MEMORANDUM OPINION NORA BARRY FISCHER, District Judge. I. Introduction *1 On August 6, 2008, this matter was commenced by Plaintiffs A.G. Cullen Construction, Paul Cullen and Arlene Cullen (“Plaintiffs”) in the Allegheny County Court of Common Pleas at Case No. GD 08-16178. (Docket No. 1; Docket No. 1-3). Thereafter, on August 14, 2008, Plaintiffs filed an Amended Complaint. (Docket No. 1-3 at 23). On September 5, 2008, Defendants Travelers Casualty and Surety Company (“Travelers”), Shawn Pikas, David Dreifuss, Joann Bonacci, and Dreifuss, Bonacci, and Parker (collectively “Defendants”) removed the action to this Court pursuant to 28 U.S.C. § 1332(a)(1) and § 1441(a). 1 (Docket No. 1 at 3). Plaintiffs seek damages incurred as a result of Defendants' alleged wrongful use of civil proceedings in the related case of Travelers Cas. & Sur. Co. v. A.G. Cullen Construction, et al., Civ. A. No. 07-765 (W.D.Pa.2007) (the “underlying action”), in violation of 42 Pa. C. S.A. § 8351. (Docket No. 1-3, passim ). Specifically, Plaintiffs claim that Defendants wrongfully and maliciously filed an Emergency Motion for Temporary Restraining Order and Motion for Preliminary Injunction in the underlying action (hereafter “underlying motion” or “emergency motion”). (See Docket No. 1-3 at 44-53; Civ. A. No. 07-765, Docket Nos. 5-6). Currently before the Court is Defendants' Motion to Dismiss the Amended Complaint in its entirety pursuant to Federal Rule of Civil Procedure 12(b)(6). (Docket No. 4). Based on the following, Defendants' Motion [4] is GRANTED, in part, and DENIED, in part. II. Factual Background A. Relevant Facts from the Underlying Action This action arises out of the contractual relationship between Travelers and Plaintiffs pursuant to which Travelers is the surety on performance and payments bonds issued to Plaintiffs in connection with a general construction contract between Plaintiffs and Butler County. (Docket No. 1-3 at 28, ¶¶ 14, 19). 2 In consideration of these bonds, the parties entered into a General Agreement of Indemnity (“GAI”). (Docket No. 1-5 at 4-11). Plaintiffs Arlene Cullen and Paul Cullen are the individual indemnitors under the terms of the bonds and the GAI, while A.G. Cullen Construction, Inc. stands as both Travelers' principal and indemnitor. (Docket No. 1-4 at 36; Docket No. 1-5 at 1, 6). Plaintiffs were awarded a construction contract with Butler County on January 25, 2006, under which Plaintiffs were to serve as the general contractor for the construction of the Butler County prison (the “project”). (Docket No. 1-3 at 29, ¶ 21). Allegedly, due to shipment delays beyond Plaintiffs' control in receiving the steel supply for the project, Plaintiffs claim that they were unable to begin the project on time, thus delaying the overall completion date. (Id. at ¶¶ 23-26). Accordingly, Plaintiffs requested an extension of time in accordance with the terms of their contract with Butler County, to which the County refused. (Id. at 30, ¶¶ 28-30). As a result of this refusal, a dispute arose between Plaintiffs and Butler County wherein each accused the other of being in default on the project. (Civ. A. No. 07-765, Docket No. 82 at 4-5). *2 Plaintiffs claim that Butler County then filed a claim against the performance bond with Travelers and a notice of intent to terminate its contract with Plaintiffs. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 2 of 247 A.G. Cullen Const., Inc. v. Travelers Cas. and Sur. Co. of..., Not Reported in... © 2017 Thomson Reuters. No claim to original U.S. Government Works. 2 (Docket No. 1-3 at 30, ¶ 31). Thereafter, Travelers filed the underlying action with this Court against Plaintiffs on June 6, 2007, claiming, inter alia, that Plaintiffs refused to deposit funds in a trust account in violation of the GAI. (Civ. A. No. 07-765, Docket No. 82 at 5). Subsequently, Travelers filed an Emergency Motion for Temporary Restraining Order and Preliminary Injunction (the “underlying motion”) seeking the enforcement of the terms of GAI. (Docket No. 1-3 at 44-53). Specifically, Travelers sought to have the Court order Plaintiffs to deposit funds collected or received in connection with the project into a trust fund account, to adhere to their contractual obligations, and to prohibit any distributions or withdrawals from the account without the express consent of Travelers pursuant to § 9 of the GAI. (Id.). They further sought an order requiring Plaintiffs to provide Travelers with access to Plaintiffs' books, papers, records, documents, contracts, reports, financial information, accounts, and electronically stored information pursuant to § 10 of the GAI. (Id.). The Court then conducted an evidentiary hearing on Travelers' motion on July 16, 2007. (Civ. A. No. 07-765, Docket No. 34). Thereafter, the Court denied Travelers' motion, without prejudice, but ordered the parties to proceed to mediation to establish the operation and management of the trust fund account. (Civ. A. No. 07-765, Docket No. 40). The mediation was held before a neutral approved by this Court, the Honorable Joseph Del Sole, on August 27, 2007. (Id.; Docket No. 44). As a result, the parties reached an agreement regarding the day-to-day operation and procedures of the trust fund account. Id. In accordance with the agreed upon procedures regarding the trust fund account, Travelers used the deposited funds to make payments to subcontractors and suppliers on the project, in addition to releasing funds to Plaintiffs to pay its own employees and expenses. Id. B. Relevant Language in the Bonds and GAI According to the terms of the GAI, Travelers, as the surety, possesses rights to funds received in connection with the project and has the right to demand that any contract funds owed on the project, for which Travelers as beneficiary may be liable under any bond, be held in a trust. (Docket No. 1-5 at 5). Thus, a trust fund was to be established by Plaintiffs, for the benefit of Travelers, to hold funds received on the project or due to subcontractors and suppliers in connection with the construction of the project. (Id.). The GAI further states that Travelers has the right to open a trust account to hold such funds and that Plaintiffs shall deposit funds received upon a demand made by Travelers. (Id.). Additionally, it provides that Travelers has a collateral security interest in all contract rights, accounts, rights of payment, and general intangibles of Plaintiffs. (Id.). Plaintiffs also agreed that, upon a demand made by Travelers, they would deposit additional sufficient funds to compensate Travelers for any loss suffered due to a default under the agreement. (Id.). *3 The terms of the GAI also provide that Travelers has the right to determine for itself and Plaintiffs whether any claim or demand made on the bonds shall be paid, compromised, or settled. (Docket No. 1-5 at 4). It further states that this determination made by Travelers shall be binding and conclusive upon Plaintiffs and that Travelers will be entitled to immediate reimbursement for any and all losses incurred as a result of Travelers' payments under the bonds. (Id.). C. Plaintiffs' Instant Claims Related to the Underlying Action In late February 2007, before Travelers filed the underlying action, Plaintiffs claim that Travelers “coerced Plaintiffs” to allow Travelers' accountants unabated access for 3 days to Plaintiffs' financial information relating to A.G. Cullen Construction, Inc. (Docket No. 1-3 at 30, ¶ 34). Plaintiffs also claim that as of this point in time, they had satisfied their financial liabilities and that they were continuing to work on the project. (Id.). Thereafter, on or about April 17, 2007, Travelers allegedly informed Plaintiffs that it would not issue them any future bonds and that it would spend two days in Plaintiffs' offices inspecting their financial data. (Id. at 31, ¶¶ 35-36). Travelers subsequently demanded that Plaintiffs send further financial information, to which demand Plaintiffs claim they complied. (Id. at 31, ¶ 38). On or about June 1, 2007, Plaintiffs contend that Travelers' attorneys, Defendants Shawn Pikas, David Dreifuss, and Joann Bonacci, contacted their attorney, Richard Kalson, stating that Travelers was concerned because Plaintiffs had purchased a residence in St. Maarten and “would move there with as much money as possible.” (Id. at 31, ¶ 39). Plaintiffs claim that this was an unfounded rumor with no basis in fact and that the residence was purchased well before the project began. (Id. at 31, ¶ 40-41). Plaintiffs also Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 3 of 247 A.G. Cullen Const., Inc. v. Travelers Cas. and Sur. Co. of..., Not Reported in... © 2017 Thomson Reuters. No claim to original U.S. Government Works. 3 aver that the ownership of the St. Maarten residence was verbally disclosed in Plaintiffs' pre-bond meeting and in a financial statement dated February 22, 2007 completed and provided to Travelers' accountant during his February visit. (Id. at ¶ 40). Further, Plaintiffs state that the property was purchased well before Travelers decided to issue bonding to them. (Id.). In fact, in the pre-bonding period when Travelers was evaluating Plaintiffs' financial records to decide whether to issue bonds to them, Plaintiffs had already paid forty-five percent of the purchase price of the St. Maarten residence. (Docket No. 4-3 at 19: 2-7). Thus, Travelers was aware of this purchase before their relationship began. (Id.). Also, Plaintiffs' attorney, Richard Kalson, repeatedly requested information concerning the person(s) spreading the “rumor” that Plaintiffs were going to flee to St. Maarten with contract funds, but Travelers refused to advise. (Docket No. 1-3 at 31, ¶ 41). As described above, Travelers thereafter filed the underlying action on June 6, 2007 alleging breach of the contract between Plaintiff and Travelers. It then filed a motion to suspend case activity during settlement negotiations on June 8, 2007. (Civ. A. No. 07-765, Docket No. 11). On June 21, 2007, Travelers moved for a hearing on the underlying motion. (Id.; Docket No. 13). A status conference was held on June 28, 2007 wherein the Court addressed the parties' positions as to the motion and the need for a evidentiary hearing. (Id.; Docket No. 23) *4 In support of its motion, Travelers' attorney Defendant Pikas executed a supporting affidavit stating that Travelers was aware of the fact that Plaintiffs owned a residence outside the country and that she heard “rumors” that Plaintiffs were moving documents and money received on the project there. (Docket No. 1-3 at 32, ¶ 44; Docket No. 1-4 at 26). Plaintiffs claim that these statements “were rumor mongering without a factual basis.” (Docket No. 1-3 at 32, ¶ 44). Defendant Dreifuss also executed an affidavit in support of the underlying motion for temporary restraining order and preliminary injunction in which he set forth similar concerns, in addition to concerns about the injury Travelers would suffer if Plaintiffs were not required to deposit funds in a trust account. (Docket No. 1-5 at 36). Specifically, Mr. Dreifuss stated that according to his experience, the situation was “ripe for the surety's indemnitors to seize as much money as they possibly [could] in connection with the bonded projects and to essentially flee to St. Maarten and/or place the money in accounts where the surety would not be able to recover the funds.” (Docket No. 1-3 at 38, ¶ 69). It is Plaintiffs' contention that Travelers' concerns, which served as the basis for its motion, “were at best nothing more than unfounded, unsubstantiated rumors without a basis in fact.” (Docket No. 1-3 at 33, ¶ 46). They further argue that Travelers and its attorneys, the individually named Defendants, maliciously published these false rumors with the intent to harm Plaintiffs. 3 (Docket No. 1-3 at 33, ¶ 47-48). Thus, they maintain that Travelers brought the underlying motion in a grossly negligent manner, without probable cause, and without a legitimate purpose. (Id. at ¶ 49). Further, Plaintiffs claim that this Court terminated the underlying motion in their favor and acknowledged that the only evidence that Plaintiffs may have wrongfully dissipated funds was “unsubstantiated rumors” that Plaintiffs planned to flee to St. Maarten. (Id. at 34, ¶¶ 50-51). With this factual background, Plaintiffs claim damages for wrongful use of civil proceedings, i.e. the prosecution of the underlying motion, against Travelers and individually against each of Travelers' attorneys. III. Procedural History On September 26, 2008, Defendants filed the instant Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) (Docket No. 4) and brief in support (Docket No. 5). Plaintiffs filed their brief in opposition on November 14, 2008. 4 (Docket No. 15). Thereafter, on December 23, 2008, Defendants filed their reply to Plaintiffs' opposition. 5 (Docket No. 22). As the motion has been fully briefed, it is now ripe for disposition. IV. Standard of Review In light of the Supreme Court's decision in Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), a complaint may be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6) if it does not allege “enough facts to state a claim to relief that is plausible on its face.” Phillips v. County of Allegheny, 515 F.3d 224, 234 (3d Cir.2008) (quoting Twombly, 550 U.S. at 570). While Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957), allowed dismissal of a claim only if “no set of facts” could support it, under Twombly, a claim for relief 12(b)(6)) now “requires more Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 4 of 247 A.G. Cullen Const., Inc. v. Travelers Cas. and Sur. Co. of..., Not Reported in... © 2017 Thomson Reuters. No claim to original U.S. Government Works. 4 than labels and conclusions” or “a formulaic recitation of the elements of a cause of action.” Twombly, 550 U.S. at 555. In order to satisfy the requirement of Rule 8(a) (2) that a plaintiff include a “short and plain statement of the claim showing that the pleader is entitled to relief,” a plaintiff must aver sufficient factual allegations in order “to raise a right to relief above the speculative level.” Ayers v. Osram Sylvania, Inc., Civ. A. No. 07-1780, 2008 U.S. Dist. LEXIS 72644, at *6, 2008 WL 4425279, (M.D.Pa. Sept. 24, 2008) (citing Twombly, 550 U.S. at 556). *5 In considering a Rule 12(b)(6) motion, a court accepts all of the plaintiff's allegations as true and construes all inferences in the light most favorable to the non-moving party. Umland v. Planco Fin. Servs., Civ. A. No. 06-4688, 2008 U.S.App. LEXIS 19225, at *10, 2008 WL 4138408, (3d Cir. Sept. 9, 2008) (citing Buck v. Hampton Twp. Sch. Dist., 452 F.3d 256, 260 (3d Cir.2006)). However, a court will not accept bald assertions, unwarranted inferences, or sweeping legal conclusions cast in the form of factual allegations. See In re Rockefeller Ctr. Props., Inc. Sec. Litig., 311 F.3d 198, 215 (3d Cir.2002); Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 n. 8 (3d Cir.1997). A court is not required to consider legal conclusions; rather, it should determine whether the plaintiff should be permitted to offer evidence in support of the allegations. Maio v. Aetna, 221 F.3d 472, 482 (3d Cir.2000). The failure-to-state-a-claim standard of Rule 12(b)(6) seeks to promote judicial economy by eliminating unwarranted discovery and fact-finding. United States ex. rel. Repko v. Guthrie Clinic, P. C., 557 F.Supp.2d 522, 525 (M.D.Pa.2008). Therefore, a plaintiff must put forth sufficient facts that, when taken as true, suggest the required elements of a particular legal theory. See Wilkerson v. New Media Tech. Charter Sch., Inc., 522 F.3d 315 (3d Cir.2008) (citing Phillips, 515 F.3d 224; Twombly, 550 U.S. at 562). Generally, this does not impose a heightened burden on the claimant above that already required by Rule 8, but instead calls for fair notice of the factual basis of a claim while “rais[ing] a reasonable expectation that discovery will reveal evidence of the necessary element.” Weaver v. UPMC, Civ. A. No. 08-411, 2008 U.S. Dist. LEXIS 57988, at * 7, 2008 WL 2942139, (W.D.Pa. July 30, 2008) (citing Phillips, 515 F.3d at 234; and Twombly, 550 U.S. at 556). In evaluating a Rule 12(b)(6) motion, a court “may look beyond the complaint to matters of public record, including court files and records ... and documents referenced in the complaint or essential to a plaintiff's claim which are attached to either the [c]omplaint or the defendant's motion.” Spence v. Brownsville Area Sch. Dist., Civ. A. No. 08-0626, 2008 U.S. Dist. LEXIS 55026, at *7, 2008 WL 2779079, (W.D.Pa. July 15, 2008) (citing Pension Benefit Guar. Corp. v. White Consol. Indus., 998 F.2d 1192, 1196 (3d Cir.1993)). A court may also take judicial notice of adjudicative facts contained in court records, whether requested or not, at any stage of a proceeding. See FED. R.E. 201(b). Additionally, a court may consider “an undisputedly authentic document that a defendant attaches as an exhibit to a motion to dismiss if the plaintiff's claims are based on the document.” Pension Benefit Guar. Corp., 998 F.2d at 1196 (citations omitted). Otherwise, a plaintiff with a legally insufficient claim could survive a motion to dismiss “simply by failing to attach a dispositive document on which it relied.” Id. V. Discussion *6 In this diversity action, this Court must apply the substantive law as decided by Pennsylvania's highest court. Travelers Indem. Co. of Illinois v. DiBartolo, 131 F.3d 343, 348 (3d Cir.1997) (citations omitted). The parties do not dispute the application of Pennsylvania law to this matter. Thus, the Court need not engage in a choice of law analysis. Accordingly, Pennsylvania law will be applied. Plaintiffs assert that Travelers and its attorneys violated 42 Pa.C.S. § 8351, which sets forth the cause of action for malicious use of civil proceedings, through their pursuit of relief by way of the underlying motion. (Docket No. 1-3, 23-43). Specifically, Plaintiffs aver that the underlying motion was filed without probable cause and a proper purpose because Defendants relied upon an unfounded rumor that Plaintiffs were going to flee to St. Maarten with contract funds as the basis for their motion. (Id.). They further claim that the motion was sought simply for the purpose of harassing and humiliating Plaintiffs. (Id. at 33, 35, 37-38, 40, 42). In order to evaluate the sufficiency of Plaintiffs' claim, the Court will now review Pennsylvania law construing the statutory cause of action of malicious use of civil proceedings. A. Malicious Use of Civil Proceedings Under 42 Pa.C.S. §§ 8351-8355, also known as the Dragonetti Act, a party may seek redress for harm caused by another's malicious use of civil proceedings. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 5 of 247 A.G. Cullen Const., Inc. v. Travelers Cas. and Sur. Co. of..., Not Reported in... © 2017 Thomson Reuters. No claim to original U.S. Government Works. 5 U.S. Express Lines Ltd. v. Higgins, 281 F.3d 383, 394 (3d Cir.2002). The Act also covers a claim for abuse of process, commonly confused with malicious prosecution, which is separate and distinct in that it provides relief for the use of a legal process to accomplish a purpose for which it is not intended. Shiner v. Moriarty, 706 A.2d 1228, 1236 (Pa.Super.Ct.1998) (quotation omitted). The tort of malicious use of civil proceedings is to be interpreted and applied broadly against those who use a legal process as a “tactical weapon to coerce a desired result that is not the legitimate object of the process.” Gen. Refractories v. Fireman's Fund Ins., 337 F.3d 297 (3d Cir.2003 (quoting McGee v. Feege, 517 Pa. 247, 535 A.2d 1020, 1026 (Pa.1987)). The Act imposes liability on a party who procures, initiates, or continues civil proceedings against another if: (1) He acts in a grossly negligent manner or without probable cause and primarily for the purpose other than that of securing the proper discovery, joinder of parties or adjudication of the claim in which the proceedings are based; and (2) The proceedings have terminated in favor of the person against whom they are brought. 42 Pa.C.S. § 8351(a). To prevail on this claim, a plaintiff must prove five elements, all of which are in dispute here. They are as follows: 1. The defendant has initiated, procured or continued a civil proceeding against the plaintiff; The proceeding was terminated in plaintiff's favor; *7 There was an absence of probable cause to bring the proceeding; 4. The proceeding was brought for an improper purpose; 5. Plaintiff has suffered damages as a result. 42 Pa.C.S. §§ 8351-8354. The party seeking redress under this Act bears a heavy burden. Higgins, 281 F.3d at 934. As the parties dispute each of the five elements essential to Plaintiffs' claims, 6 the Court will address the instant motion as to each element, in turn. 1. Initiation of a Civil Proceeding Plaintiffs argue that the underlying motion fits the definition of “proceeding” under the Dragonetti Act. (Docket No. 14 at 7). Specifically, they argue that the use of “proceeding” in the Act's verbiage demonstrates that Plaintiffs' claims may be based on any single proceeding, not exclusively actions. (Id. at 8). Thus, a separate proceeding for equitable relief is a proper basis for liability under the Dragonetti Act. (Id. at 10). Defendants contend, however, that the underlying motion is not a proceeding for purposes of the Act because it could not “initiate this lawsuit.” (Docket No. 22 at 3). Defendants attest that a civil action is only commenced upon the filing of a complaint and that a Dragonetti claim cannot be based on a motion. (Id.). They further argue that the motion is not a pleading and that a Dragonetti claim can only arise from the filing of a complaint. (Id.). They also contend that the motion is part of the underlying action as a whole and cannot be treated as a separate proceeding. (Id. at 4-5). As the Act requires that the entire “proceedings” be terminated in Plaintiffs' favor and not just a single filing in a lawsuit, their claim must fail. (Id. at 5) (emphasis in original). Pennsylvania statutory law defines “proceeding” to include “every declaration, petition or other application which may be made to a court under law or usage or under special statutory authority, but the term does not include an action or an appeal.” 42 Pa.C.S. § 102 (2004). Similarly, Black's Law Dictionary provides that a “proceeding” is not only a complete remedy but also a mere procedural step that is part of a larger action or special proceeding. BLACK'S LAW DICTIONARY 2155 (8th ed.2004). Black's specifies that a “judicial proceeding” is as any court proceeding initiated to procure an order or decree, whether in law or equity. Id. In comparison, the Rules of Civil Procedure define a “motion” as an application to a court for an order. FED. R. CIV. P. 7; 7 Moore's Federal Practice § 7.03 (Matthew Bender 3d ed.). Although pleadings are distinct from motions in that they are a statement about claims, both are governed by the same substantive rules. 7 Moore's Federal Practice § 7.03 (Matthew Bender 3d ed.). A review of Pennsylvania case law indicates that separate filings in a lawsuit may, in and of themselves, serve as the basis for a Dragonetti claim. Lerner v. Lerner, 954 A.2d 1229 (Pa.Super.Ct.2008) (court analyzed Dragonetti claim as to a protection from abuse petition). Similarly, Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 6 of 247 A.G. Cullen Const., Inc. v. Travelers Cas. and Sur. Co. of..., Not Reported in... © 2017 Thomson Reuters. No claim to original U.S. Government Works. 6 federal courts construing Pennsylvania law have found that a “proceeding” for purposes of the Dragonetti Act includes “every declaration, petition or other application which may be made to a court under law.” Grimm v. Borough of Norristown, 226 F.Supp.2d 606 (E.D.Pa.2002) (citing Pellegrino Food Prods. Co. v. City of Warren, 136 F.Supp.2d 391, 406 (W.D.Pa.2000) (citing 42 Pa.C.S. § 102))). Additionally, a “proceeding” has been found where a public court record was made of accusations of fraud, despite the fact that the claims were withdrawn. See Krisa v. Equitable Life. Assurance Soc., 109 F.Supp.2d 316, 322 (M.D.Pa.2000) (court analyzed Dragonetti claim relating to withdrawn motion to amend); Pirkle v. Ogontz Controls Co., Civ. A. No. 86-3374, 1992 U.S. Dist. LEXIS 9591, *20-21, 1992 WL 164452,(E.D.Pa. July 8, 1992) (court reviewed Dragonetti claim based on a preliminary injunction proceeding without detailed discussion). *8 Considering the definitions of “proceeding” and motion, and case law construing same, in this Court's estimation, a motion for preliminary injunction is a proceeding for purposes of the Dragonetti Act. 7 It was a separate “proceeding” that sought an equitable order of this Court to enforce the terms of the GAI. A hearing was held on same wherein the Court heard argument and accepted evidence. (Civ. A. No. 07-765, Docket No. 34). Therefore, it may serve as a basis for a malicious use of civil proceedings claim. Accordingly, the Court finds that Travelers' argument that its preliminary injunction motion was not a “proceeding” is without merit. 2. Termination of the Civil Proceeding in Plaintiffs' Favor Defendants also move to dismiss Plaintiffs' claim on the grounds that the underlying motion was not terminated in Plaintiffs' favor because it was partially settled. (Docket No. 5 at 10; Docket No. 22 at 6). Travelers highlights the fact that the motion sought three forms of relief: (1) restraining Plaintiffs from misapplying project funds; (2) requiring them to deposit project funds received into a trust fund account; and (3) directing Plaintiffs to provide Travelers with funds as collateral. (Docket No. 5 at 10-11). As to the first two forms of requested relief, Defendants claim that Travelers received this relief after the underlying motion was filed when Plaintiffs consented to payments. (Id. at 11) (emphasis added). Specifically, as to the second request for relief, the Court ordered the parties to mediate the dispute over the operation of the agreed upon trust fund account, and the mediation resolved the issues pertaining to same. (Id.). Defendants further argue for dismissal on the basis that the parties' “settlement” discussions relating to the issues addressed by the underlying motion took place after the motion was filed and that Plaintiffs' counsel, Richard Kalson, admitted that they were making payments pursuant to the GAI in order to satisfy Travelers. (Id. at 12). They contend that the mediation before the Honorable Joseph Del Sole “settled” the narrow dispute concerning the operation and management of the trust fund account. (Id. at 13). Thus, even though the emergency motion was denied, Travelers obtained the relief it sought in regard to two of its claims; therefore, Plaintiffs' claims here must fail. (Id. at 13-14). Defendants do not address the third element of Travelers' request, i.e. for collateral security. 8 Defendants next argue that the proceeding was not terminated because the underlying action remains pending and a cause of action for malicious use of civil proceedings does not accrue until a party defeats all attempts of the opposing party to obtain relief. (Docket No. 5 at 14-15 (citations omitted)). Therefore, they maintain that Plaintiffs' claims are premature. (Docket No. 5 at 15). In response, Plaintiffs argue that the underlying motion was terminated in their favor by this Court's denial of the motion. (Docket No. 14 at 15). That is, once this Court entered its order, Travelers was “entirely out of court concerning their emergency equitable claims,” and thus, the proceeding was terminated in their favor. (Id.). Plaintiffs further contend that this order was “final” because Travelers “lack[ed] a legal foundation to re-initiate the proceeding,” thereby putting Travelers “wholly out of court.” (Id. at 16). *9 For purposes of the Dragonetti Act, a proceeding is terminated when a final order is entered. Bannar, 701 A.2d 232. If the final order puts the litigant “out of court” for the relief they are seeking, then it is considered terminated. Id. In other words, a proceeding has been terminated when a court enters an adjudication of the claim, the party withdraws the proceeding or when it is dismissed for failure to prosecute. RESTATEMENT (SECOND) OF TORTS § 674 cmt. j. (1977). The determination of whether a proceeding was “terminated” is fact specific and depends Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 7 of 247 A.G. Cullen Const., Inc. v. Travelers Cas. and Sur. Co. of..., Not Reported in... © 2017 Thomson Reuters. No claim to original U.S. Government Works. 7 on the circumstances of the ultimate outcome. Banner, 701 A.2d at 238. Pennsylvania law allows a party to bring a claim for malicious use of civil proceedings based upon a separate action in a pending lawsuit. See Krisa, 109 F.Supp.2d at 322. This Court's order denying the underlying motion (Civ. A. No. 07-765, Docket No. 40) effectively terminated the motion. A plaintiff need not wait until that lawsuit has concluded to bring a claim based on a pleading filed therein. Krisa, 109 F.Supp.2d at 322. Thus, Travelers' argument that the proceeding was not terminated because the underlying suit is still pending fails. Additionally, because the order denying the underlying motion adjudicated the merits of the motion as to the remaining issues not resolved by the mediation, this Court considers it a final order for purposes of Plaintiffs' present claims. (See Civ. A. No. 07-765, Docket No. 40 at 2-3). Accordingly, the Court now turns to whether the motion was terminated in Plaintiffs' favor. The termination of a proceeding as a result of compromise or agreement does not generally constitute a termination favorable to the party against whom the proceeding was brought. Rosenfield, 636 A.2d at 1142 (citing RESTATEMENT (SECOND) OF TORTS § 674 cmt. j. (1977)); D'Elia v. Folino, et al., 933 A.2d 117, 121 (Pa.Super.Ct.2007). Whether a settlement constitutes a termination, and a favorable one at that, depends on the circumstances under which the proceedings were terminated. D'Elia, 933 A.2d at 122. For example, where the parties agree jointly to end the underlying proceeding in a “non-litigious” manner, there can be no favorable termination within the meaning of 42 Pa.C.S. § 8351. Id. at 122-23. In addition, Pennsylvania courts have held that proceedings are not terminated in favor of the party against whom they were brought when the parties agree to settle the issue pursuant to agreement representing a compromise. See Electronic Laboratory Supply Co. v. Cullen, 712 A.2d 304, 310-11 (Pa.Super.Ct.1998). Here, it is somewhat questionable whether the allegedly offending proceeding was completely terminated in Plaintiffs' favor. Although the emergency motion was denied by this Court without prejudice, one of the remedies being sought by Defendants was the establishment of a trust fund account to manage the contract funds. (Civ. A. No. 07-765, Docket No. 5 at 6). Before the Court ruled on said motion, Plaintiffs had begun to make payments to subcontractors on the project, one of the remedies sought by the motion. Furthermore, the parties agreed upon the establishment of the trust fund account and agreed to mediate issues pertaining to its operation and management. In fact, the mediation was fruitful in that the parties settled the issues over the parameters and day-to-day operation of the trust fund account. (Id., Docket No. 44). Therefore, the issues surrounding the operation and management of the trust fund account were not terminated in Plaintiffs' favor as defined by the Dragonetti Act. Rosenfield, 636 A.2d at 1142 (resolution of a proceeding by agreement does not constitute a favorable termination). Nevertheless, this Court denied the emergency motion as to the remaining request for relief, i. e enforcement of § 10 of the GAI, because Travelers had not demonstrated that Plaintiffs were wrongfully dissipating funds given its reliance on unsubstantiated rumors. (Civ. A. No. 07-765, Docket No. 40 at 3). Thus, the underlying motion was partly terminated in Plaintiffs' favor. 3. Probable Cause or Gross Negligence *10 Defendants also argue that their motion seeking injunctive relief was supported by requisite probable cause given Travelers' rights as outlined in the GAI and the representations made by Plaintiffs. (Docket No. 5 at 17). Specifically, Travelers argues that the GAI granted it the right to seek legal action to protect project funds and prevent it from incurring substantial monetary losses if a party was deemed to be in default under the GAI. (Id.). Based upon correspondence from both Butler County and Plaintiffs detailing their construction dispute, Travelers became concerned that it would incur a major loss if Plaintiffs did not abide by the terms of the GAI. (Id. at 18). Therefore, Travelers argues, it was proper to seek legal assistance to enforce the terms of the GAI. (Id.). In response, Plaintiffs contend that Defendants lacked probable and, in the alternative, were grossly negligent in their “utter want of care in their investigation underlying” the motion and their “publication of unfounded, unsubstantiated rumors” to the Court. (Docket No. 14 at 11). Plaintiffs argue that the crux of their case is Defendants' unfounded accusations that Plaintiffs would abscond to St. Maarten with project funds. (Id.). Thus, they claim that Defendants egregiously pursued the underlying proceeding solely for the purpose of humiliating and intimidating the Plaintiffs. (Id. at 12). Plaintiffs further argue that there was no basis in law Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 8 of 247 A.G. Cullen Const., Inc. v. Travelers Cas. and Sur. Co. of..., Not Reported in... © 2017 Thomson Reuters. No claim to original U.S. Government Works. 8 for the underlying motion because the law is clear that injunctive relief is an improper remedy for supposed economic harm. 9 (Id.). Hence, Defendants' attorneys could not have had probable cause in their belief that Travelers would be entitled to relief. (Id.). a. Probable Cause Under the Dragonetti Act, a plaintiff has the burden to show that the defendant lacked probable cause for his action. See 42 Pa.C.S. § 8354(3). A person has probable cause to initiate a proceeding if in doing so “he reasonably believes in the existence of the facts upon which the claim is based” and that under those facts “reasonably believes ... the claim may be valid under existing or developing law.” 42 Pa.C.S. § 8352(1). When the actor reasonably believes in the facts supporting his claim and “believes to this effect in reliance upon the advice of counsel, sought in good faith and given after full disclosure of all relevant facts within his knowledge or information,” then he has probable cause. 10 42 Pa.C.S. § 8352(2). Probable cause may also be found when the attorney of record believes in good faith that the proceeding is not intended to merely harass or maliciously injure the opposition. 42 Pa.C.S. § 8352(3). Indeed, the existence of probable cause will defeat a claim for malicious use of civil proceedings, even if the defendant acted with malice. Am. Int'l. Airways, Inc. v. Am. Int'l. Group, Inc., 816 F.Supp. 1058, 1061 n. 7 (E.D.Pa.1993) (citing Meiksin v. Howard Hanna Co., 590 A.2d 1302, appeal denied, 528 Pa. 644(1991)). However, the failure of the probable cause prong of the statute does not defeat a claim for wrongful use of civil proceedings as the terms of the statute permit a cause of action to be based on lack of probable cause or gross negligence. Bannar, 701 A.2d at 249; 42 Pa.C.S. § 8351(1) (emphasis added). *11 Pennsylvania law further holds that “probable cause is properly determined by the court when there are no material conflicts in the evidence.” Bannar v. Miller, 701 A.2d 242, 248 (Pa.Super.Ct.1997). However, questions of fact arise when material facts central to the issue of whether probable cause existed are disputed. Broadwater v. Sentner, 725 A.2d 779, 782 (Pa.Super.Ct.1999), appeal denied, 562 Pa. 664, 753 A.2d 814 (2000). When the question of probable cause is a mixed question of law and fact, then it cannot be answered as a matter of law by a court. Bannar, 701 A.2d at 249. b. Gross Negligence The clear language of section 8351 of the Act permits a wrongful use of civil proceedings claim to be based on gross negligence. Bannar, 701 A.2d at 249. Therefore, if probable cause is present, a defendant can still be held liable if he acted in a grossly negligent manner. 42 Pa.C.S. § 8351(a)(1); Bannar, 701 A.2d at 249. For purposes of the Dragonetti Act, gross negligence is defined as “the want of even scant scare.” Ratti v. Wheeling Pittsburgh Steel Corp., 758 A.2d 695, 703 (Pa.Super.Ct.2003). Similarly, Black's defines it as the “lack of slight diligence or care” or “a conscious, voluntary act or omission in reckless disregard of a legal duty.” BLACK'S LAW DICTIONARY (8th ed.2004). In order to properly evaluate whether Travelers and its attorneys had probable cause to pursue the underlying motion or if they acted with gross negligence, the Court must review the circumstances surrounding said motion. The Court now turns to these circumstances and describes its understanding of same. As a result of the dispute between Plaintiffs and Butler County, on May 1, 2007, Plaintiff Arlene Cullen wrote a letter to Butler County stating that if Plaintiffs were not paid a disputed withheld retainage, Plaintiffs would suspend work or terminate the construction contract. (Docket No. 1-5 at 14-16). Plaintiffs' subcontractor, Cost Company, received a copy of this letter and subsequently, on May 31, 2007, notified Butler County that it was owed over $1.2 million (Id. at 21). On June 1, 2007, Butler County directed Cost Company to pursue its payment from Travelers (Id. at 20) while counsel for Butler County simultaneously notified Travelers and its counsel Defendant Shawn Pikas of these issues surrounding the project. (Id.). Thereafter, Travelers and Plaintiffs, through their respective counsel, exchanged correspondence regarding Travelers' concerns about the use of project funds. (Civ. A. No. 07-765, Docket No. 34-4, 34-5, 34-6, 34-7, 34-8). A review of those documents reveals that as of May 31, 2007, Plaintiffs were reluctant to assuage Travelers' concerns and to agree to depositing project funds in a trust fund account. (Civ. A. No. 07-765, Docket No. 34-8 at 3). Travelers then initiated the underlying action and filed its motion on June 6, 2007. (Id., Docket Nos. 1-6). Two days later, Travelers filed a motion which was granted to suspend case activity while the parties engaged Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 9 of 247 A.G. Cullen Const., Inc. v. Travelers Cas. and Sur. Co. of..., Not Reported in... © 2017 Thomson Reuters. No claim to original U.S. Government Works. 9 in settlement negotiations. (Id., Docket Nos. 11, 12). However, on June 21, 2007, Travelers moved for a hearing on its request for injunctive relief and informed the Court that the parties were able to agree on distributions to subcontractors but that issues still existed as to the remaining contract funds. (Id., Docket No. 13 at 1-2). On June 28, 2007, this Court held a status conference with counsel wherein Plaintiffs' counsel, Richard Kalson stated that as of that date, Plaintiffs were distributing payments out of the $2 million in project funds at issue to subcontractors. (Docket No. 4-3 at 16: 9-20). Further, Plaintiffs agreed to the creation of the trust fund account and to have all payments due on the project reviewed and signed off by Attorney Kalson. (Civ. A. No. 07-765, Docket No. 32 at 16, 35). Plaintiffs also agreed that they would continue to fulfill their obligations. (Id. at 19:24-25; 20:1-3). *12 Also, at this status conference, Plaintiffs, through counsel, claimed that Travelers calling them “crooks” and having such reports in the newspapers wasn't helping Plaintiffs' efforts to get paid by Butler County. (Docket No. 4-3 at 14:7-13). Counsel further stated that Travelers' accusation that Plaintiffs were going to abscond with $2 million interfered with the continuation of work on the project and that these accusations were unfounded especially because the St. Maarten residence was purchased before Travelers issued them bonding. (Id. at 14:14-20). Despite being asked numerous times, Travelers wouldn't disclose to Plaintiffs who told them that Plaintiffs were going to leave the country. (Id. at 14:19-22). Counsel further asserted that when the Travelers' attorneys became involved and pursued the injunction, Plaintiffs had a $60 million backlog in construction projects. (Id. at 17:23-25; 32: 12-19). The Court then scheduled a hearing on the preliminary injunction request, solely to resolve the issue of handling remaining contract funds and distributing future payments through the operation of the trust fund account. (Id. at 43). A review of the substantive law pertaining to the underlying proceeding is informative to this Court on the issue of whether probable cause existed or if Defendants acted with gross negligence. See Gigli v. Palisades Collection, LLC, Civ. A. No. 06-1428, 2008 U.S. Dist. LEXIS 62684, at * 47, 2008 WL 3853295, (M.D.Pa. Aug. 14, 2008) (citing Broadwater v. Sentner, 725 A.2d 779, 783 (Pa.Super.Ct.1999)). Because Travelers sought emergency injunctive relief in the proceeding at issue, the Court turns to the standard for awarding such relief. It is well-settled law that potential economic harm does not rise to the level of irreparable harm necessary for emergency injunctive relief. See Acierno v. New Castle Cnty., 40 F.3d 645 (3d Cir.1994) (quoting Instant Air Freight Co. v. C.F. Air Freight, Inc., 882 F.2d 797, 801 (3d Cir.1989)) (“In general, to show irreparable harm a plaintiff must ‘demonstrate potential harm which cannot be redressed by a legal or an equitable remedy following a trial.’ Economic loss does not constitute irreparable harm”). However, a breach of trust and/or fiduciary obligation can constitute harm that has no adequate remedy at law. American Express Travel Related Servs. v. Laughlin, 424 Pa.Super. 622, 623 A.2d 854 (Pa.Super. Ct.1993; and F.T. International, Ltd. v. Mason, Civ. A. No. 00-5004, 2000 WL 1514881, at *1 (E.D.Pa. Oct.11, 2000). In fact, in American Express and F.T. International, emergency injunctive relief was awarded upon evidence that the opposing parties concealed or wrongfully dissipated the funds in question. American Express, 424 Pa.Super. 622, 623 A.2d 854. Travelers relied on American Express and F.T. International in support of its request for injunctive relief arguing Plaintiffs were wrongfully dissipating project funds. (See Civ.A. No. 07-765, Docket No. 6 at 17). Specifically, Travelers' counsel argued that Plaintiffs' breach of trust, i.e. breach of the GAI, could not be quantified in terms of monetary damages, as “only specific enforcement of Travelers' rights as a trust beneficiary is sufficient to prevent the numerous harmful impacts that will otherwise arise from a defalcation of the Trust Funds.” (Id.). Travelers further argued that by executing the GAI, Plaintiffs voluntarily agreed to treat funds received on the project as trust funds and that forcing Plaintiffs to limit their use of said funds to a trust purpose would do nothing more than enforce the already existing contractual restrictions. (Id. at 19). Additionally, the relief sought would insure that Plaintiffs would abide by their fiduciary obligation under the GAI that the trust funds only be used for project completion purposes. (Id.). Travelers claimed that this was necessary “in light of [Plaintiffs'] position that they have beneficial ownership” of the project funds and because they refused to give Travelers assurances that they intended to complete the project. (Id.). Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 10 of 247 A.G. Cullen Const., Inc. v. Travelers Cas. and Sur. Co. of..., Not Reported in... © 2017 Thomson Reuters. No claim to original U.S. Government Works. 10 *13 In this Court's estimation, Travelers' knowledge at the time the underlying motion was filed is determinative of whether it had probable cause to pursue the course it took. At that time, Plaintiffs were about to receive payment in excess of $2 million for their work on projects insured by Travelers, money which Plaintiffs described to Travelers as funds in which they had a beneficial interest, despite terms in the GAI to the contrary. (Docket No. 1-4 at 26; Docket No. 1-5 at 14-16). There was also a pending subcontractor claim against Plaintiffs in excess of a $1 million. (Docket No. 1-5 at 17-21). Thus, Travelers was in a position to lose more than $3 million in the event that Plaintiffs did not abide by the terms of the GAI in depositing funds into a trust fund account. However, this Court declined to award the relief sought by Travelers because the evidence presented at the hearing was insufficient to show that Plaintiffs were trying to conceal or wrongfully dissipate funds. (Civ. A. No. 07-765, Docket No. 40 at 3). The Court explained that the only evidence that Plaintiffs may have wrongfully dissipated funds were “unsubstantiated rumors that [they] plan[ned] to flee to St. Maarten,” and this was insufficient to show irreparable harm. (Id.). However, this Court further reasoned that the relief Travelers sought was unwarranted because Plaintiffs had already deposited funds as required into the trust fund opened by Travelers and, after the motion was filed but before the Court ruled upon it, Plaintiffs had paid the subcontractors. 11 (Id.). In viewing the evidence in the light most favorable to Plaintiffs, this Court is unable to conclude as a matter of law whether probable cause existed when Travelers filed the underlying motion or that Travelers and its attorneys were not grossly negligent. To that end, it is difficult for this Court to determine whether Travelers had a reasonable basis for bringing its emergency motion when there is no record evidence as to why it believed Plaintiffs would flee. In fact, Travelers' concerns about Plaintiffs' alleged plan to relocate to St. Maarten with project funds seem unfounded to this Court as the St. Maarten residence was disclosed to Travelers pre-bonding. In support of their argument that Defendants were grossly negligent, Plaintiffs claim that Defendants proffered their allegations to the Court despite their knowledge that they were nothing more than unsubstantiated rumors. 12 (Docket No. 1-3 at 33, ¶ 46). They also claim that Defendants pursued the emergency motion based upon false averments of fact published by the Defendant attorneys, thereby maliciously injuring Plaintiffs. (Id. at 33, ¶ 49). In this Court's estimation, lack of probable cause and gross negligence have been sufficiently pled by Plaintiffs to set forth a claim for malicious prosecution; therefore, this claim should proceed through discovery. 4. Travelers' Primary Purpose Defendants contend that their primary purpose for bringing the emergency motion was to secure a proper adjudication of their claims pursuant to the GAI. (Docket No. 5 at 19). Specifically, they argue that the record amply shows that both before and after the motion was filed, their goal was to secure this Court's determination that they were entitled to enforcement of their rights under the GAI. (Id.). Based upon the correspondence from Plaintiffs, Butler County and various subcontractors, discussed above, Travelers claims it had valid concerns regarding the project funds. (Id.). In addition to these concerns, Travelers also learned the following facts: employees of Plaintiff A.G. Cullen Construction, Inc. were leaving the company; Plaintiffs had made repeated references to their financial distress; and that they had a residence in St. Maarten and may have been moving documents and funds there. (Id. at 20). Travelers claims that it did not rely on these facts in a vacuum, but attempted to resolve the matter with Plaintiffs' counsel, Richard Kalson. (Id.). Despite these attempts, Defendants maintain that Plaintiffs did not affirmatively address Travelers' concerns. (Id.). Additionally, Defendants assert that Plaintiff Arlene Cullen accused Travelers' attorney, Shawn Pikas, of trying to take “her one million dollars they had earned.” (Id.). Based on these facts and its rights under the GAI, Travelers argues that it had a legitimate basis upon which to file its motion seeking an injunction, that is, to ensure that the contract funds were being properly used to complete the project and pay subcontractors. (Id.). *14 Plaintiffs claim that Defendants had no evidence that they would “abscond” to St. Maarten nor that they would not fulfill their payment obligations toward subcontractors. (Docket No. 14 at 12-13). Moreover, they assert that Defendants had every opportunity to address their concerns about the vacation residence prior to issuing bonds to Plaintiffs. (Id. at 13). Plaintiffs' attorney, Richard Kalson, explained to Travelers that their financial situation was the result of Butler County's misconduct, that all project funds were being properly handled, and that the rumor about Plaintiffs' potential flight was false. (Id. at 14). Thus, Plaintiffs argue that Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 11 of 247 A.G. Cullen Const., Inc. v. Travelers Cas. and Sur. Co. of..., Not Reported in... © 2017 Thomson Reuters. No claim to original U.S. Government Works. 11 when Defendants filed their motion, they had no credible evidence to support it. (Id.). Therefore, they maintain that their present claims must survive Defendants' motion to dismiss. (Id.). For purposes of the Dragonetti Act, improper purpose may be inferred from want of probable cause to maintain or continue a proceeding. Buchleitner v. Perer, 794 A.2d 366, 377 (Pa.Super.Ct.2002). Although such an inference is permissible, it is not required. Id. A cognizable cause of action for wrongful use of civil proceedings requires that Defendants have acted “in a grossly negligent manner or without probable cause” and “primarily for an [improper] purpose.” 42 Pa.C.S. § 8351(a) (emphases added). Plaintiffs bear the burden in proving these critical elements. Alberty v. Nationwide Mut. Ins. Co., Civ. A. No. 05-1319, 2006 U.S. Dist. LEXIS 68783, * 13, 2006 WL 2601324 (W.D.Pa. July 7, 2006). Plaintiffs claim that their attorney, Richard Kalson, informed Travelers that Plaintiffs were fulfilling their obligations in the project and that the rumor was blatantly false. (Docket No. 14 at 14). Despite Plaintiffs' requests, Defendants would not disclose the source of the rumor on which they relied. Plaintiffs should be able to probe Travelers' knowledge and/or reliance on the alleged rumor in proceeding to file its motion for emergency relief. As this Court cannot decide mixed questions of fact and law, Bannar, 701 A.2d at 249, allowing Plaintiffs' claims to proceed through discovery will demonstrate whether Travelers and its attorneys acted with a proper purpose and/or whether they were grossly negligent in the pursuit of injunctive relief. 5. Damages Under the Dragonetti Act, when the essential elements of a malicious prosecution claim have been established, a plaintiff is entitled to recover for the following: (1) harm suffered during the course of the proceeding; (2) harm to his reputation by alleged defamatory matter as the basis of the proceedings; (3) expenses, including attorney's fees, that have been incurred in defending against the proceedings; (4) any specific pecuniary loss caused by the proceedings; (5) any emotional distress caused by the proceedings; and (6) punitive damages. 42 Pa.C.S. § 8353; Stone Crushed P'ship v. Jackson, 589 Pa. 296, 299 n. 1, 908 A.2d 875 (Pa.2006). *15 At paragraphs 60, 65, 72, 79, and 87 of their Amended Complaint, Plaintiffs have alleged the following damages: (a) embarrassment, humiliation, and harm to reputation; (b) loss of future business, income, and profits; (c) loss of bonding capacity; (d) attorney's fees and expenses incurred in defense of the wrongful proceedings; (e) all other economic losses resulting from the wrongful proceedings; (f) emotional distress, mental anguish and trauma; and (g) all other damages as permitted by law. (Docket No. 1-3, passim ). Therefore, they demanded judgment in their favor and against Defendants in excess of $25,000 plus costs, attorney's fees, and punitive damages. 13 (Id.). Viewing these allegations in accordance with section 8353 of the Dragonetti Act, this Court finds that Plaintiffs have sufficiently pled potentially recoverable damages. B. Abuse of Process In their brief in opposition to Defendants' motion (Docket No. 14), Plaintiffs also argue that they have alleged sufficient facts to establish a claim for abuse of process. (Docket No. 14 at 16). Specifically, they claim that Defendants pursued the underlying motion “solely for the purpose of humiliating and injuring Plaintiffs via defamatory pleading” and reliance upon unfounded “damaging rumors.” (Id. at 17-18). Therefore, Plaintiffs argue that Defendants' motion to dismiss should be denied because the facts as pled give rise to an alternative theory of liability. (Id.). Defendants first respond by noting that Plaintiffs have not pled a claim for abuse of process in their Amended Complaint. (Docket No. 22 at 16). Second, they argue that any claim for abuse of process must fail because Plaintiffs have not demonstrated that Defendants either perverted the legal process or perverted its purpose in bringing their motion for injunctive relief. (Id. at 19). There is no evidence, Defendants contend, indicating that the underlying motion was used for a purpose other than to obtain equitable relief. (Id.). As before, they maintain that Travelers simply sought enforcement of its purported right to protect the contract funds and to obtain collateral security as delineated in the GAI. (Id. at 20). Pennsylvania common law defines abuse of process as “the legal process against another primarily to accomplish a purpose for which it is not designed.” Werner v. Plater- Zyberk, 799 A.2d 776, 785 (Pa.Super.Ct.2002) (quoting Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 12 of 247 A.G. Cullen Const., Inc. v. Travelers Cas. and Sur. Co. of..., Not Reported in... © 2017 Thomson Reuters. No claim to original U.S. Government Works. 12 Rosen, 627 A.2d at 192); Pellegrino, 136 F.Supp.2d at 407. That is, to demonstrate a cause of action for abuse of process, a plaintiff must show that the defendant (1) used a legal process; (2) primarily to accomplish a purpose for which the process was not designed; and (3) that harm was caused as a result. Id. Abuse of process is separate and apart from malicious use of civil proceedings in that it involves a “perversion of the legal process” after the legal process has been initiated. Gen. Refractories, 337 F.3d at 304; see also United States ex. rel. Magid v. Barry Wilderman, M.D., Civ. A. No. 96-cv-4346, 2005 U.S. Dist. LEXIS 2926, *2, 2005 WL 469590, (E.D.Pa. Feb. 28, 2005). However, both torts are subsumed within the general scope of the Dragonetti Act. U.S. Express Lines Ltd. v. Higgins, 281 F.3d 383 (3d Cir.2002); Gen. Refractories, 337 F.3d at 306-306. Abuse of process will not be found where a defendant has done nothing more than pursue the process to its authorized conclusion, even though it may have been with bad intentions. Hart v. O'Malley, 436 Pa.Super. 151, 647 A.2d 542, 552 (Pa.Super.Ct.1994). This tort usually pertains to situations where one party has coerced another party by means of extortion, attachment, garnishment, or blackmail. Edwards v. Wyatt, Civ. A. No. 01-1333, 2001 WL 1382503, at *4 (E.D.Pa. Nov.6, 2001) (citation omitted). *16 Within the purview of an abuse of process claim, the term “process” is defined as a “document evidencing a command of a court.” 42. Pa.C.S. § 102 (2004). Pennsylvania law further interprets the term “process” to include all of the procedures incident to the litigation process. See Pellegrino, 136 F. Supp.2d at 407 (citing Rosen, 627 A.2d at 192). The emergency motion sought by Defendants was a procedural step of the underlying litigation which requested that this Court order injunctive relief. Thus, the Court finds that Plaintiffs have established that Defendants used a legal process against them, the first element of the tort. For the second element, Plaintiffs claim that Defendants wrongfully pursued the emergency motion “solely for the purpose of humiliating and injuring [them] via defamatory pleadings.” (Docket No. 15 at 17-18; see also Docket No. 1-3 at 33, ¶ 49). They further contend that Defendants' “insistence on presenting unfounded, damaging rumors ... despite [their] knowledge that there was no basis” was done with the “sole intent of harming and defaming Plaintiffs” and/or coercing Plaintiffs to compliance with Travelers' demands. (Docket No. 15 at 18). Viewing these allegations in the light most favorable to Plaintiffs, the Court finds that Plaintiffs have set forth sufficient facts making it plausible that Travelers and its attorneys may have perverted the legal process for an unintended purpose, i.e. to humiliate, harass and coerce. Twombly, 550 U.S. at 562. The Court additionally finds that even though the emergency motion was carried out to unauthorized conclusion, Plaintiffs allegations make it plausible that it was brought in a grossly negligent fashion. C.f. Ickes v. Flanagan, Civ. A. No. 07-143, 2008 U.S. Dist. LEXIS 25683, 2008 WL 907366, (W.D.Pa. March 31, 2008) (abuse of process claim dismissed because there was no evidence of illegitimate objective). For the same reasons as discussed above with regards to Plaintiffs' claimed damages for Defendants' alleged malicious use of civil proceeding, 14 the Court also finds that Plaintiffs have set forth sufficient allegations that they were harmed by Defendants' alleged abuse of process. Accordingly, if Plaintiffs wish to proceed on this theory, they shall file an amended complaint to set forth a claim for abuse of process. VI. Conclusion Based on the foregoing, Defendants Travelers Casualty and Surety Company of America, Shawn A. Pikas, Esquire, David C. Dreifuss, Esquire, Joan Bonacci, Esquire and Dreifuss Bonacci and Parker's Motion to Dismiss [4] Plaintiffs A.G. Cullen Construction, Inc., Arlene Cullen, and Paul Cullen's Amended Complaint [1-3] is GRANTED, in part, and DENIED, in part. It is denied without prejudice as to Plaintiffs' claims for malicious use of civil proceedings. For the above reasons, this Court finds that Plaintiffs are entitled to proceed through discovery. Defendants may reassert their arguments at the summary judgment stage of the litigation. It is granted as to any alleged abuse of process claim. Based on the above reasons, the Court cannot hold at this stage that Plaintiffs do not have a claim for abuse of process. C.f. Finney v. Royal Sun Allegiance Ins. Co., Civ. A. No. 04-1086, 2005 U.S. Dist. LEXIS 18413, *20, 2005 WL 2106576, (W.D.Pa. Aug. 29, 2005) (court granted summary judgement for defendant on abuse of process clause because there was no evidence of improper motive, only sheer speculation). However, to the extent Plaintiffs seek to bring an abuse of process claim, they shall amend their Amended Complaint on or before March 4, 2009. An appropriate order follows. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 13 of 247 A.G. Cullen Const., Inc. v. Travelers Cas. and Sur. Co. of..., Not Reported in... © 2017 Thomson Reuters. No claim to original U.S. Government Works. 13 All Citations Not Reported in F.Supp.2d, 2009 WL 382501 Footnotes 1 As both parties have stated in their respective filings, Travelers has its principal place of business in Connecticut, while the individual Defendants reside in Connecticut and New Jersey and Plaintiffs reside in Pennsylvania. (Docket No. 1 at 2-3). Plaintiffs have claimed damages in excess of $75,000. (Docket No. 1at 3; Docket No. 1-3 at 23-43). As such, the elements for diversity jurisdiction have been met. Furthermore, Plaintiffs have not challenged the removal of this case. 2 For a more detailed recitation of the facts and procedural history of the underlying action through November 4, 2008, see the Court's Memorandum Opinion and Order on the motions to dismiss in that case. (Civ. A. No 07-765, Docket No. 82; Travelers Cas. & Sur. Co. v. A.G. Cullen, et al., Civ. A. No. 07-765, 2008 U.S. Dist. LEXIS 89187, 2008 WL 4816477, (W.D.Pa. Nov. 4, 2008)). 3 The Court notes that while Plaintiffs repeatedly refer to these statements of the Defendants as “defamatory,” and allege that they were published to various media sources, they have not pled a claim for defamation per se. Under Pennsylvania law, a person may recover for defamation (i.e. libel and slander) which has detracted from his reputation, character, or fame by false and malicious statements. Joseph v. Scranton Times L.P., 959 A.2d 322, 334 (Pa.Super.Ct.2008) (citations omitted); 42 Pa.C.S. §§ 8341-8345. The Court notes that 42 Pa.C.S. § 5523(1) sets forth a one-year statute of limitations for defamation actions. As this suit was initially filed on August 6, 2008 and the alleged conduct last occurred in June of 2007, any claims for defamation may be time-barred. Guthrie v. Bradley, Civ. A. No. 06-619, 2008 U.S. Dist. LEXIS 72027, at *42, 2008 WL 4279805, (W.D.Pa. Sept. 15, 2008). 4 Plaintiffs filed two motions for extension of time within which to file an answer to Defendants' motion, which the Court granted making their response due on November 14, 2008. (Docket Nos. 7-10). 5 On November 24, 2008, Defendants filed a motion for extension of time to file their reply and motion for leave to file excess pages, which were granted by the Court. (Docket Nos. 16-19). Defendants filed a second motion for extension of time to file their reply on December 10, 2008, which the Court also granted, making their reply due on December 23, 2008. (Docket No. 20-21). 6 The parties do not dispute that the individually named Defendants, Travelers' attorneys, may be held liable under the Act. Additionally, the Court notes that Pennsylvania law provides that an attorney may be held liable in his individual capacity for initiating a civil proceeding on behalf of his client if it is determined that it was done without probable cause or with gross negligence. Higgins, 281 F.3d at 394 (citing RESTATEMENT(SECOND) OF TORTS § 674 cmt. d (citations omitted); Rosenfield v. Pennsylvania Auto. Ins. Plan, 431 Pa.Super. 383, 636 A.2d 1138, 1141 (Pa.Super.Ct.1994)); see also Banner v. Miller, 701 A.2d 242, 248 (Pa.Super.Ct.1997). 7 In arriving at this conclusion, the Court additionally notes the method by which injunctive relief is procured is akin to a mini trial on the merits. Injunctive relief may be requested in a pleading or by motion, with responses thereto, and may be issued only after a valid adjudication of the merits of the action. 13 Moore's Federal Practice § 65.65 (Matthew Bender 3d ed). When there is a dispute as to the material facts surrounding a request for injunctive relief, an evidentiary hearing is required. Id. 8 The issue over collateral security is still disputed by Travelers and the Cullens in the underlying action. 9 See discussion, infra, at p. 21. 10 Reasonableness is determined on an objective basis. Banner, 701 A.2d at 248. The reasonableness of a party's actions has been held to be question of fact to be decided by a jury. Schmidt v. Currie, 470 F.Supp.2d 477, 483 (E.D.Pa.2005); see also McKibben v. Schmotzer, 700 A.2d 484, 493 (Pa.Super.Ct.1997) (the question as to the existence of probable cause may be submitted to the jury when material facts are in controversy). 11 As noted, the Court also ordered the parties to proceed to mediation to resolve the issue over operation of the trust fund. (Civ. A. No. 07-765, Docket No. 40 at 3). 12 The Court also points out that any and all pleadings submitted by Travelers, through counsel, containing references to Plaintiffs' residence in St. Maarten and Travelers' fears concerning same became immediately accessible to the public through the court's district's online filing system CM/ECF. See https://ecf-live.pawd.circ3.dcn/cgibin/ShowIndex.pl. The Court further notes that after Travelers filed the emergency motion, newspaper articles ensued detailing the allegations made by Travelers. See http://www.post-gazette.com/pg/07159/792523-54.stm; last visited February 13, Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 14 of 247 A.G. Cullen Const., Inc. v. Travelers Cas. and Sur. Co. of..., Not Reported in... © 2017 Thomson Reuters. No claim to original U.S. Government Works. 14 2009; and http://www.pittsburghlive.co m/x/pittsburghtrib/news/cityregion/s-515313.html; last visited February 13, 2008. 13 As this case was initially brought in state court, Plaintiffs have claimed compensatory damages in the amount of $25,000, plus costs, attorney's fees and punitive damages individually against Travelers, each of its attorneys and their law firm. (Docket No. 1-3 at 36-37, 39-40, 42). 14 See discussion infra, Section V(A)(5). End of Document © 2017 Thomson Reuters. No claim to original U.S. Government Works. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 15 of 247 EXHIBIT B Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 16 of 247 BTG International Inc. v. Bioactive Laboratories, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 1 2016 WL 3519712 Only the Westlaw citation is currently available. United States District Court, E.D. Pennsylvania. BTG International Inc., Plaintiff, v. Bioactive Laboratories and Kenneth E. Darnell, Defendants. CIVIL ACTION NO. 15-04885 | Signed 06/28/2016 Attorneys and Law Firms Steven Maniloff, Craig E. Ziegler, Montgomery, McCracken, Walker & Rhoads, LLP, Philadelphia, PA, for Plaintiff. Benjamin E. Leace, Ratner Prestia, Berwyn, PA, Eric W. Schweibenz, Lisa M. Mandrusiak, Robert C. Mattson, Oblon McClelland Maier & Neustadt LLP, Alexandria, VA, for Defendants. MEMORANDUM PAPPERT, District Judge *1 BTG International Inc. (“BTG”) sued Bioactive Laboratories (“Bioactive”) and Kenneth Darnell (“Darnell”) (collectively “Defendants”) for abuse of process after Defendants filed an inter partes petition with the Patent Trial and Appeal Board challenging one of BTG's patents. BTG, a manufacturer of anti-venom medication, alleges that Defendants' purpose in filing that petition was not to challenge the validity of the patent, but instead to extort BTG for money and other forms of relief. Before the Court are Defendants' motion to strike portions of the amended complaint and dismiss for failure to state a claim. Defendants contend initially that the Court lacks personal jurisdiction over them. They also argue that in the event that the Court finds it has personal jurisdiction, it should strike the portions of the amended complaint that disclose settlement discussions in the inter parties review proceeding because such communications are barred by Federal Rule of Evidence 408. Defendants argue that once such portions of the complaint are stricken, the amended complaint should be dismissed for failure to state a claim. Even if the Court declines to strike and dismiss the amended complaint for failure to state a claim, Defendants argue that the Court should grant its motion to dismiss because the Noerr-Pennington doctrine immunizes them from liability. For the reasons that follow, the Court denies the motion in all respects. I. BTG is a pharmaceutical manufacturer whose principal place of business is in West Conshohocken, Pennsylvania. (Am. Compl. ¶¶ 9-10, ECF No. 14.) One of its products is an anti-venom medication, CroFab Crotalidae Polyvalen Immune Fab (Ovine) (“CroFab”), which is sourced from rattlesnake venom. (Id. ¶¶ 10-11.) BTG owns a patent for CroFab, identified as United States Patent No. 8,048,414 (the “'414 Patent”). (Id. ¶ 3.) Darnell is a rattlesnake venom extractor and merchant who operates his business through Bioactive, a sole proprietorship whose principal place of business is at Darnell's home in Gordon, Alabama. (Id. ¶¶ 12-13.) He is a patent lawyer, 1 though has worked as a rattlesnake venom extractor and merchant for the past 35 years. (Id. ¶ 14.) Darnell and Bioactive do not own any patents, manufacture anti-venom medication or compete with BTG in the anti-venom industry. (Id. ¶ 14.) Darnell has promoted the medicinal properties of rattlesnake venom and has specifically invoked BTG's name and the CroFab product as part of his “campaign to oppose rattlesnake conservation laws that will hurt his venom business.” (Id. ¶ 22.) In particular, Darnell opposed laws banning “rattlesnake roundups” and “efforts to place the eastern diamondback rattlesnake on the threatened species list.” (Id. ¶¶ 23-24.) According to BTG, rattlesnake roundups are “like bloody state fairs at which rattlesnakes captured by locals[,] sometimes by gassing ... are brought in for a bounty, milked for venom, and then usually butchered for their meat and skins.” 2 (Id.) In his campaign against conservation laws, Darnell stated “to the press and others” that: (1) 95-percent of the world's supply of western diamondback rattlesnake venom used to make anti-venom medication is collected at Texas rattlesnake roundups; (2) the venom collected at the roundups is used to create CroFab; and (3) if Texas lawmakers continue to Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 17 of 247 BTG International Inc. v. Bioactive Laboratories, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 2 regulate the roundups, “we may see emergency rooms with people waiting for treatment but no medication to treat them.” (Id.¶ 26.) *2 BTG sought to distance itself from Darnell's anti- conservation efforts because it “did not do business directly with [Darnell or Bioactive].” (Id. ¶ 25.) BTG opposes inhumane venom extraction methods and stated to the Texas Parks and Wildlife Department (“TPWD”) in 2010 that “venom [for CroFab] is produced under strict laboratory protocols and outside venom sources cannot be used.” (Id. ¶¶ 25, 27(a).) BTG stated that it “never purchases snakes from snake farmers, from private collections, or at rattlesnake roundups.” (Id. ¶ 27(a).) It maintained that “Darnell has repeatedly and inaccurately invoked BTG's name and its purported need for Defendants' venom to produce CroFab [as a way] to bolster his opposition to snake conservation measures.” (Id. ¶ 27(c).) In 2014, BTG learned that some of the venom used to produce CroFab had been indirectly supplied by Bioactive through Biotoxins, an intermediary located in Florida. (Id. ¶ 27(d).) BTG maintained that it opposed rattlesnake roundups and gassing. (Id. ¶ 27(e).) It amended the terms and conditions for its purchase orders to state that “no venom sold to BTG has been produced or acquired at snake roundups, by gassing ... or sourced from entities or individuals who are snake farmers, private collectors, or who engage in gassing or ... any other harmful or inhumane methods of venom collection.” (Id.) Darnell claimed that BTG's statements were defamatory and damaged his business. (Id. ¶ 28.) He threatened to sue BTG in three letters that he and/or his lawyer sent to various BTG officers or employees. (Id. ¶ 28.) Darnell sent the first letter on February 26, 2014 to Matthew Gantz at BTG's office in Pennsylvania, alleging that BTG has been “profoundly dependent” on various venoms extracted by Darnell since 2008. (Id. ¶ 29.) The letter stated that BTG's “untrue statements constitute libel and are unacceptable,” and that BTG “will be held to account” for its actions. (Id.) Darnell and Bioactive's attorney, James R. Bowles, sent a second letter on September 15, 2014 to Louise Makin, the Chief Executive Officer of BTG's parent company in London, BTG International Ltd. (Id. ¶ 30.) Bowles stated in the letter that BTG has been “determined to destroy” Defendants' reputation and that “[t]he reckless disregard for the truth on the part of BTG has diminished and severely affected [ ] Darnell's ability to produce Western Diamondback venom.” (Id. ¶ 30(b).) Bowles asserted that because of BTG's “libelous and slanderous actions,” Darnell has “suffered loss of reputation, has been held up to untold scorn and ridicule and has suffered substantial financial loss even as he continued to contribute to BTG beneficial venom inventories and actually facilitating the efforts of BTG to produce the CroFab product.” (Id. ¶¶ 30(e), (g).) Bowles stated that public disclosure of the matter would “be extremely embarrassing ... and will be of interest to the Financial Times of London.” (Id. ¶ 30(j).) Bowles sent a third letter on October 7, 2014 to Neil Payne of BTG at BTG's Pennsylvania office. (Id. ¶ 31.) Bowles wrote that “[b]efore proceeding with legal action, I would like to know if BTG is interested in discussing a possible settlement of ... Darnell's claim.” (Id. ¶ 31(c).) Darnell also informed third parties of his intent to sue BTG and requested emails from the TPWD related to his threatened lawsuit. (Id. ¶¶ 32-33.) Darnell and Bioactive never sued BTG for defamation, libel or slander. (Id. ¶ 34.) Instead, on May 29, 2015, Defendants filed an inter partes review (“IPR”) petition with the Patent Trial and Appeal Board (“PTAB”) against BTG challenging the CroFab '414 Patent. (Id. ¶ 34.) According to BTG, IPR is a trial proceeding “before the PTAB to review the patentability of one or more claims in an issued United States patent.” (Id. ¶ 35.) The proceeding is designed to “provid[e] quick and cost effective alternatives to litigation,” not “tools for harassment.” (Id. ¶ 36 (citing H.R. Rep. No. 112-98, pt. 1, at 48).) *3 BTG alleges that the IPR petition “is virtually identical (including original typos) to an IPR petition challenging BTG's '414 Patent filed by a BTG competitor ... and terminated pursuant to a settlement.” (Id.) After receiving the petition, counsel for BTG called Defendants' counsel to ask “what his clients were trying to accomplish.” (Id. ¶ 40.) Defendants' counsel “responded with words to the effect of ‘well, we simply want to benefit the public by taking down a bad patent’ and then laughed-making it clear and obvious to BTG that [D]efendants' IPR petition has nothing to do with the '414 Patent claims and everything to do with using the expense and inconvenience of defending an IPR proceeding to extort money damages and other redress Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 18 of 247 BTG International Inc. v. Bioactive Laboratories, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 3 from BTG.” (Id.) BTG also claims that approximately one year prior to initiating the IPR proceeding Darnell stated that he “ha[s] no information concerning the validity of the BTG patent in question.” (Id. ¶ 39.) BTG alleges that “the extortionate nature of the IPR proceeding is further evidenced by the terms of a “Proposed Settlement Term Sheet” (the “Proposed Settlement”), which Bioactive's counsel sent to BTG's Pennsylvania office on June 15, 2015. (Id. ¶ 41.) In exchange for discontinuing the IPR action, the Proposed Settlement requested the following from BTG: 1. Issuance of [a] public press release from BTG's website announcing non-confidential details of settlement between [Bioactive] and BTG, including recognition of Ken Darnell and value of venom products offered by [Bioactive] in connection with CroFab product; 2. BTG shall make a one-time lump-sum [sic] to [Bioactive] in the amount of $3.5 [m]illion; 3. Mutual worldwide covenant not to sue for 15 years by and between [Bioactive] and BTG (and their affiliates) with the exception of any potential claims arising from this settlement agreement; 4. Agreement by BTG to retain a clinician to be mutually selected by the parties for purposes of improving/replacing current CroFab product in order to demonstrably reduce the effect of recurrent coagulopathy; 5. Agreement by BTG to enter into a supply agreement with [Bioactive] wherein [Bioactive] will supply a minimum of 1000 [sic] grams of each of C. adamateus venom and C. atrox venom annually between and including calendar years 2016 and 2028 at a guaranteed cost to BTG of $150/gram of C. atrox venom and $300/gram of C. adamanteus venom for the term of the contract[.] (Id., Ex. F.) BTG alleges that the Proposed Settlement “makes no reference to any of the specific claims of the '414 Patent, and does not seek to modify any claims of that Patent as a compromise to sustain the validity of the '414 Patent-which would be a legitimate object of a settlement demand in a real, non-sham IPR proceeding.” (Id. ¶ 43.) On December 14, 2015, BTG's counsel sent a letter to the Court stating that the PTAB denied Defendants' IPR petition because it was “not persuaded that [Bioactive Laboratories] has established a reasonable likelihood that it would prevail on any of its various challenges.” (Pl.'s Dec. 14, 2015 Letter, ECF No. 22 (internal quotation marks omitted).) Defendants responded with a letter to the Court on January 15, 2016 stating that it had requested rehearing with the PTAB. (Defs.' Jan. 15, 2016 Letter, ECF No. 24.) BTG refused the Settlement Proposal and filed this lawsuit against Defendants on August 28, 2015. (ECF No. 1.) BTG filed an amended complaint on October 13, 2015 alleging a common law abuse of process claim and seeking compensatory damages for “litigation and operational expenses and other damages.” (Am. Compl. ¶ 48.) In its amended complaint, BTG alleges that Defendants' petition is a “sham, meritless, and copycat.” (Id. ¶ 38.) It claims that Bioactive and Darnell are using the IPR proceeding “as a threat and a club to extort and coerce millions of dollars of alleged compensatory damages” from BTG, and are “abusing the IPR process primarily to accomplish” that goal. (Id.) *4 On October 30, 2015 Defendants filed a motion to dismiss for lack of personal jurisdiction pursuant to Federal Rules of Civil Procedure (“F.R.C.P.”) 12(b)(2), and in the alternative to strike, pursuant to F.R.C.P. 12(f), the portions of the amended complaint that mention the Proposed Settlement. (Defs.' Mot. to Strike and Dismiss (“Defs.' Mot.”), ECF No. 16.) They also contend that if the Court exercises jurisdiction and strikes the references to the Proposed Settlement, the amended complaint should be dismissed for failure to state a claim pursuant to F.R.C.P. 12(b)(6) and because they are immune from liability under the Noerr-Pennington doctrine. (Id. at 9- 17.) Defendants assert that Federal Rule of Evidence (“F.R.E.”) 408 governs the terms of the Proposed Settlement and that all references to the Proposed Settlement's provisions in the amended complaint should be stricken. (Id. at 5-9.) Defendants argue that “[o]nce the Settlement Paragraphs are stricken [from the amended complaint] ... it is apparent that BTG has” not alleged facts sufficient to state a claim for relief. (Id. at 9- 10.) Defendants also claim that even if the Court finds that BTG has alleged sufficient facts to state a claim, Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 19 of 247 BTG International Inc. v. Bioactive Laboratories, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 4 the amended complaint can “be separately dismissed ... because [the IPR petition] is protected by the Noerr- Pennington doctrine.” (Id. at 14 (citation omitted).) In response, BTG argues that the Court has personal jurisdiction over Defendants because they “directed several letters and e-mails to BTG personnel in Pennsylvania.” (Id. at 23.) BTG further contends that it has pleaded sufficient facts to make out an abuse of process claim, that F.R.E. 408 permits use of the Proposed Settlement in its amended complaint and the Noerr-Pennington doctrine does not immunize Defendants. (Pl.'s Opp. to Defs.' Mot. (“Pl.'s Opp.”) at 11- 20, ECF No. 17.) The Court heard oral argument on the motion on June 21, 2016. (ECF No. 28.) II. When reviewing a motion to dismiss for lack of personal jurisdiction under Rule 12(b)(2), the Court “must accept all of the plaintiff's allegations as true and construe disputed facts in favor of the plaintiff.” Pinker v. Roche Holdings Ltd., 292 F.3d 361, 368 (3d Cir. 2002) (citation omitted). A motion to dismiss for lack of personal jurisdiction “is inherently a matter which requires resolution of factual issues outside the pleadings,” i.e., “whether in personam jurisdiction actually lies.” Time Share Vacation Club v. Atl. Resorts, Ltd., 735 F.2d 61, 66 n.9 (3d Cir. 1984). When this defense is raised, “the burden falls upon the plaintiff to come forward with sufficient facts to establish that jurisdiction is proper.” Mellon Bank PSFS, Nat'l Ass'n v. Farino, 960 F.2d 1217, 1223 (3d Cir. 1992). To meet this burden, the plaintiff must submit evidence that shows with reasonable particularity the existence of sufficient contacts between the defendant and the forum state to support jurisdiction. See Provident Nat'l Bank v. Cal. Fed. Sav. & Loan Ass'n, 819 F.2d 434, 437 (3d Cir. 1987). The plaintiff may not “rely on the bare pleadings alone;” rather, the plaintiff “must sustain its burden of proof in establishing jurisdictional facts through sworn affidavits or other competent evidence.” Time Share Vacation Club, 735 F.2d at 66 n.9 (citing Int'l Ass'n of Machinists & Aerospace Workers v. Nw. Airlines, Inc., 673 F.2d 700 (3d Cir. 1982)). Pursuant to Rule 4(e), a district court may exercise personal jurisdiction over defendants who are not residents of the forum state to the extent it would be permissible under that state's law. Pennsylvania's long-arm statute permits a court to exercise personal jurisdiction “to the fullest extent allowed under the Constitution of the United States and ... based on the most minimum contact with this Commonwealth allowed under the Constitution of the United States.” 42 Pa. Cons. Stat. § 5322(b). Therefore, in order to exercise personal jurisdiction over Darnell and Bioactive, the Court must determine whether, under the Due Process Clause, these defendants have “certain minimum contacts with ... [Pennsylvania] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.” O'Connor v. Sandy Lane Hotel Co., 496 F.3d 312, 316-17 (3d Cir. 2007) (citing Int'l Shoe Co. v. Wash., 326 U.S. 310, 316 (1945)). A. *5 The Due Process Clause recognizes two types of personal jurisdiction: general and specific. General jurisdiction is proper when a defendant's contacts with the forum state are “continuous and systematic,” regardless of whether those contacts are related to the plaintiff's cause of action. See Remick v. Manfredy, 238 F.3d 248, 255 (3d Cir. 2001). Specific jurisdiction exists when the “non-resident defendant has ‘purposefully directed’ his activities at a resident of the forum and the injury arises from or is related to those activities.” Gen. Elec. Co. v. Deutz, 270 F.3d 144, 150 (3d Cir. 2001) (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985)). In this case, BTG argues that the Court has both specific and general jurisdiction over the Defendants. (Pl.'s Opp. at 23-24.) To show that specific jurisdiction exists, a plaintiff must satisfy three requirements. First, show that the defendant “purposefully directed his activities at the forum.” Marten v. Godwin, 499 F.3d 290, 296 (3d Cir. 2007) (citing Burger King Corp., 471 U.S. at 472) (internal quotation marks omitted). Under this requirement, “[p]hysical entrance is not required.” O'Connor v. Sandy Lane Hotel, Co., 496 F.3d 312, 317 (3d Cir. 2007) (citing Grand Entm't Group, Ltd. V. Star Media Sales, Inc., 988 F.2d 476, 482 (3d Cir. 1993) (“Mail and telephone communications sent by the defendants into the forum may count toward the minimum contacts that support jurisdiction.”)). Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 20 of 247 BTG International Inc. v. Bioactive Laboratories, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 5 “[C]ontacts with a state's citizens that take place outside the state are not purposeful contacts with the state itself.” Id. (citation omitted). Second, the plaintiff must show that the claim “arise[s] out of or relate[s] to at least one of those specific activities.” Id. (citing Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 (1984)) (internal quotation marks omitted). In assessing the relatedness of the claim to the activities directed at the forum, some courts have employed a “but-for” causation standard. Id. at 319. That standard is satisfied “when the plaintiff's claim would not have arisen in the absence of the defendant's contacts.” Id. (citation omitted). The Third Circuit Court of Appeals, however, has held that “specific jurisdiction requires a closer and more direct causal connection than that provided by the but-for test.” Id. at 323. It stated that “[t]he causal connection can be somewhat looser than the tort concept of proximate causation, [ ] but it must nonetheless be intimate enough to keep the quid pro quo proportional and personal jurisdiction reasonably foreseeable.” Id. (citation omitted). Third, as discussed infra Section II.B, a court may consider “additional factors to ensure that the assertion of jurisdiction otherwise comport[s] with fair play and substantial justice.” Id. (citing Burger King Corp., 471 U.S. at 476) (internal quotation marks omitted). In Vizant Techs., LLC v. Whitchurch, 97 F. Supp. 3d 618, 623 (E.D. Pa. 2015), Vizant had its principal place of business in Pennsylvania. Defendants were two former employees at a Vizant office in Georgia. See id. After their termination, defendants made several threatening phone calls to the company and sent disparaging and intimidating letters and emails to Vizant leaders, board members and counsel. See id. at 625-27. Vizant initially sought to enjoin defendants' conduct by filing an action in Georgia state court. See id. at 626. After Vizant filed a notice of voluntary dismissal, defendants continued to make filings in that action and threatened Vizant officers in Pennsylvania through e-mails and letters. See id. at 626- 27. Vizant then sued defendants in our Court alleging, among other things, abuse of process. Specifically, they alleged that the defendants' continued filings in the Georgia action were “made with the ulterior motive of furthering [their] efforts to extract money from Vizant and constitute the willful use of legal process that is not proper in the regular conduct of those legal proceedings.” Id. at 634 (internal quotation marks omitted). *6 The court held that it had personal jurisdiction over defendants “under the traditional jurisdictional test.” Id. The court stated that since defendants engaged in the litigation and threatened litigation “with the purpose of extorting money from Vizant, a Pennsylvania-based company, [ ] their conduct was ‘purposefully directed’ at Pennsylvania.” Id. at 635 (citing Marten, 499 F.3d at 296). The abuse of process claim “ar[o]se out of or relate[d] to” the threats of litigation, directed at various company personnel in Pennsylvania, which furthered a “scheme ... to extort money from Vizant.” Id. at 635. Here, Defendants purposefully engaged in conduct directed at this forum by sending letters to BTG in Pennsylvania threatening legal action and aiming “to extort money from BTG.” (Am. Compl. ¶¶ 28-32.) The letters, which BTG attached to its amended complaint, are directly related to Defendants' alleged extortion scheme and abuse of process through the filing of the IPR petition. (Id., Exs. A-C.) In Darnell's February 26, 2014 letter to Gantz at BTG's Pennsylvania office, he states that BTG “puts out to the public ... inaccurate information concerning venom supply” and that “[t]hese untrue statements constitute libel and are unacceptable.” (Am. Compl., Ex. A at 3-4.) Darnell also said that if BTG “stonewalled” him, that “you will quickly find that I am not going to put up with the behavior some at BTG must consider appropriate and BTG will be held to account.” (Id. at 4-5.) In the second letter sent to BTG's Pennsylvania office on September 15, 2014, Bowles refers to previous correspondence sent to BTG's parent company in London in which he accused BTG of engaging in “libelous and slanderous actions” based on the statements it made to distance itself from Darnell. In his letter, Bowles writes: “I believe my letter ... clearly sets out a cause of action and thus any further explanation appears to be unnecessary.” (Id., Ex. C.) He states that “[b]efore proceeding with legal action, I would like to know if BTG is interested in discussing a possible settlement .... If so, I am prepared to extend a settlement proposal for your consideration. If BTG is not interested in settlement negotiations, I have been authorized to proceed with legal action.” (Id.) In addition to the February 16 and September 15, 2014 letters, Defendants mailed the Proposed Settlement to BTG in Pennsylvania. (Id. ¶ 41.) Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 21 of 247 BTG International Inc. v. Bioactive Laboratories, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 6 As in Vizant, the Defendants' actions here were made in continuance of its “scheme to extort money from” BTG and were “purposefully directed” at the forum. Vizant, 97 F. Supp. 3d at 635; see also Grand Entm't Grp., Ltd., 988 F.2d at 482 (holding that mail and telephone correspondence can count towards the minimum contacts analysis). B. If the Court determines that Defendants have met the test for minimum contacts, jurisdiction is presumed constitutional and the Defendants must come forward with “a compelling case that the presence of some other considerations would render jurisdiction unreasonable.” O'Connor, 496 F.3d at 324 (citing Burger King Corp., 471 U.S. at 477) (internal quotation marks omitted). The factors that a court must consider are “the burden on the defendant, the forum State's interest in adjudicating the dispute, the plaintiff's interest in obtaining convenient and effective relief, [and] the interstate [and international] judicial system's interest in obtaining the most efficient resolution of controversies.” Id. In their motion, Darnell and Bioactive contend that litigating in Pennsylvania would be unduly burdensome since they are both domiciled in Alabama and that Pennsylvania has little interest in resolving the case since the underlying conduct -the filing of the IPR petition-took place in Virginia. (Defs.' Mot. at 25.) They also argue that BTG is a large corporation with an international presence and would not be burdened by litigating elsewhere. (Id.) *7 Darnell and Bioactive have failed to make a “compelling case” to override the presumption of constitutionality that comes with a showing of minimum contacts. Due process only requires a “reasonable”-not a “convenient” or the “best” forum. O'Connor, 496 F.3d at 325 (“Pennsylvania may not be the best forum-it may not even be a convenient one. But when minimum contacts exist, due process demands no more than a reasonable forum.”). Further, Defendants purposefully and voluntarily engaged in conduct directed at the forum. See Vetrotex Certainteed Corp. v. Consol. Fiber Glass Prod. Co., 75 F.3d 147, 151 (3d Cir. 1996) (“Specific jurisdiction is invoked when the cause of action arises from the defendant's forum related activities [ ] such that the defendant should reasonably anticipate being haled into court there.”) (citations and internal quotation marks omitted). Pennsylvania also has a legitimate interest in protecting its residents from the extortion allegedly perpetrated by out-of-state individuals and entities. See Penn Mut. Life Ins. Co. v. BNC Nat. Bank, No. 10-00625, 2010 WL 3489386, at *6 (E.D. Pa. Sept. 2, 2010) (finding personal jurisdiction because “Pennsylvania has an interest in protecting the rights of its citizens from fraudulent misrepresentations by out-of-state actors”). Since Defendants have minimum contacts with the forum and exercising jurisdiction “comport[s] with fair play and substantial justice,” the Court finds that it has personal jurisdiction. 3 III. Federal Rule of Civil Procedure 12(f) provides that “the court may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” Motions to strike are disfavored and usually will be denied “unless the allegations have no possible relation to the controversy and may cause prejudice to one of the parties, or if the allegations confuse the issues in the case.” River Road Dev. Corp. v. Carlson Corp. Ne., No. 89- 7037, 1990 WL 69085, at *3 (E.D. Pa. May 23, 1990); see also 5C CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 1382 (3d ed. 2004) (“There appears to be general judicial agreement, as reflected in the extensive case law on the subject, that [Rule 12(f) motions] should be denied unless the challenged allegations have no possible relation or logical connection to the subject matter of the controversy and may cause some form of significant prejudice to one or more of the parties to the action.”). The standard for striking a complaint or a portion of a complaint is “strict and only allegations that are so unrelated to the plaintiffs' claims as to be unworthy of any consideration should be stricken.” Johnson v. Anhorn, 334 F. Supp. 2d 802, 809 (E.D. Pa. 2004). Striking a complaint “is a drastic remedy to be resorted to only when required for the purposes of justice.” Id. (citation and internal quotation marks omitted). A. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 22 of 247 BTG International Inc. v. Bioactive Laboratories, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 7 Defendants contend that F.R.E. 408 bars all reference to the Proposed Settlement in BTG's amended complaint and that such allegations should be stricken pursuant to F.R.C.P 12(f). (Defs.' Mot. at 6-9.) They argue that “BTG is unequivocally using the substance of the Proposed Settlement Term Sheet in an attempt to prove liability for its alleged abuse of process claim,” which falls “squarely” within the scope of F.R.E. 408. (Id. at 5, 8.) Defendants contend that since F.R.E. 408 only allows the disclosure of settlement communications in “limited, specified [circumstances],” none of which are applicable here, the Court should grant its motion. (Id. at 8.) *8 BTG argues that F.R.E. 408 does not bar discussion of the Proposed Settlement in the amended complaint because it is being used for a permissible purpose. “BTG is not offering the term sheet, or the discussions among counsel surrounding the term sheet, to either ‘prove or disprove the validity or amount’ of any claim that was asserted in the IPR proceeding.” (Pl.'s Opp. at 17.) Rather, BTG contends that it is using the Proposed Settlement “as evidence of an independent wrong, i.e., the Defendants' use of their filing of the IPR petition to extort from BTG the payment of millions of dollars in so-called ‘damages' for alleged claims entirely unrelated to the IPR proceeding.” (Id.) B. Federal Rule of Evidence 408 provides: (a) Prohibited Uses. Evidence of the following is not admissible- on behalf of any party-either to prove or disprove the validity or amount of a disputed claim or to impeach by a prior inconsistent statement or a contradiction: (1) furnishing, promising, or offering-or accepting, promising to accept, or offering to accept-a valuable consideration in compromising or attempting to compromise the claim; and (2) conduct or a statement made during compromise negotiations about the claim-except when offered in a criminal case and when the negotiations related to a claim by a public office in the exercise of its regulatory, investigative, or enforcement authority. (b) Exceptions. The court may admit this evidence for another purpose, such as proving a witness's bias or prejudice, negating a contention of undue delay, or proving an effort to obstruct a criminal investigation or prosecution. Because it is “generally believed that settlement negotiations will be inhibited if the parties are aware their statements may later be used as admissions of liability,” Rule 408 serves to protect the freedom of discussion during negotiations and encourage settlement. Ciolli v. Iravani, 625 F. Supp. 2d 276, 285 (E.D. Pa. 2009). The application of the rule, however, “is limited to evidence concerning settlement or compromise of a claim, where the evidence is offered to establish liability, or the validity or amount of the claim.” Affiliated Mfrs., Inc. v. Aluminum Co. of Am., 56 F.3d 521, 526 (3d Cir. 1995). In the “paradigmatic Rule 408 case,” for example, “a plaintiff who slipped and fell outside the defendant's home would be barred from introducing evidence that the defendant had offered to settle the case for $10,000.” Herman v. Allentown, 985 F. Supp. 569, 577 (E.D. Pa. 1997). Without the protection of Rule 408, the plaintiff could “parlay” the defendant's offer “into proof of liability which would discourage the defendant from ever even considering settling the case.” Id. Rule 408 does not bar the introduction of settlement discussions if offered for “another purpose,” such as to show a party's knowledge or intent. FED. R. EVID. 408; see Ciolli, 625 F. Supp. 2d at 288 (“[I]t is true that courts will admit settlement evidence pursuant to FRE 408 for purposes of demonstrating knowledge or intent.”); Benson v. Giant Food Stores, LLC, 2011 WL 6747421, at *5 (E.D. Pa. Dec. 22, 2011) (“However, the restriction of Rule 408 does not always apply.”). The Advisory Committee Notes to the Rule reflect an intent “to retain the extensive case law finding Rule 408 inapplicable when compromise evidence is offered for a purpose other than to prove the validity, invalidity, or amount of a disputed claim.” Fed. R. Evid. 408 advisory committee notes (2006) (collecting cases). For example, “Rule 408 is inapplicable if offered to show that a party made fraudulent statements in order to settle a litigation.” Id. The Third Circuit “has not expressly addressed the situation in this case in which a plaintiff seeks to introduce evidence of settlement negotiations in an action raising a Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 23 of 247 BTG International Inc. v. Bioactive Laboratories, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 8 claim different from the one that was the subject of the negotiations.” Ciolli, 625 F. Supp. 2d at 287. Identifying a situation in which F.R.E. 408 prohibits settlement discussions from a previous case is “necessarily a sui generis determination.” Lo Bosco v. Kure Eng'g Ltd., 891 F. Supp. 1035, 1039 (D.N.J. 1995) (granting a motion to strike references to settlement in underlying action because “where the same parties are involved, or the same set of facts give rise to the claim, it may weigh in favor of a determination that the cases are too closely related to permit a settlement proposal in one to be admitted in the other”). *9 Defendants rely on Ciolli to support their position that BTG is using the Proposed Settlement for a prohibited purpose under F.R.E. 408. (Defs.' Mot. at 7- 9.) In that case, Anthony Ciolli sued Heidi Iravani and her attorneys for abuse of process and wrongful initiation of civil proceedings. Ciolli, 625 F. Supp. 2d at 281-83. Iravani had sued Ciolli in district court in Connecticut over harassing internet posts. Id. During negotiations in that lawsuit, Iravani's counsel told Ciolli's lawyers, among other things, that they wanted “nothing from Ciolli but only wanted concessions from [another defendant] in exchange for Ciolli's dismissal.” Id. at 284 (internal quotation marks omitted). Ciolli alleged that defendants were “using [him] as a hostage in order to secure a deal,” and included the substance of those settlement negotiations in the complaint he filed in our Court. 4 Id. at 284-85. The defendants sought to strike portions of Ciolli's complaint, arguing that F.R.E. 408 barred Ciolli's use of the settlement discussions. Id. at 285. The court granted the motion, holding that F.R.E. 408 prohibited inclusion of settlement discussions in the complaint because “Ciolli's claims ... are essentially causes of action asserting the invalidity of the claims in the Connecticut Litigation.” Id. at 288. The court stated that “Ciolli is attempting to use evidence of settlement negotiations to prove the invalidity of the negotiated claim, albeit in support of his allegations in this case.” Id. Relevant to the court's holding was that “Ciolli's wrongful initiation of civil proceedings and abuse of process claims [were] sufficiently related to the Connecticut Litigation as to require the inadmissibility of settlement evidence from that suit.” Id. at 287-88. The court rejected Ciolli's argument that he was using the evidence for a permissible purpose-“namely, to establish the intent, motivation, knowledge state of mind, and good faith of Defendants”-because it found instead that he was “merely attempting to repackage evidence that is so obviously related to liability in order to skirt the bounds of FRE 408.” Id. The court also stated that exclusion is “preferred” when the applicability of F.R.E. 408 is “a close call.” Id. InBenson v. Giant Food Stores, LLC, 2011 WL 6747421, at *6 (E.D. Pa. Dec. 22, 2011), defendants filed a motion for attorneys' fees and expenses because of plaintiffs' “unreasonable and vexatious conduct” during a lawsuit in which a jury ultimately found in defendants' favor. In support of their motion, defendants relied on statements that plaintiffs made during the settlement discussions, including certain written statements made in a “settlement brochure.” Id. at *2-3. Plaintiffs “rel[ied] heavily on Ciolli” to support their argument that the court should not consider such settlement discussions. Id. at *6. The court disagreed, holding that Ciolli “is distinguishable.” Id. It stated that “Rule 408 does not provide a blanket protection against any and all use of statements made during settlement negotiations.” Id. Rather, Rule 408 only bars those statements used to “prove liability for ... a claim that was disputed.” 5 Id. at *5. The settlement discussions in Benson did not relate to liability in the underlying action but instead were “being offered as evidence of a fraudulent statement by a party in order to settle litigation; therefore, the Rule does not require exclusion of the evidence.” Id. (citing Inline Connections Corp. v. AOL Time Warner Inc., 470 F. Supp. 2d 435, 440 (D. Del. 2007); FED. R. EVID. 408 advisory committee notes (2006)). Thus, the critical inquiry in assessing the admissibility of settlement discussions is whether the “abuse of process [allegations] are essentially causes of action asserting the invalidity of the claims in the [underlying action],” Ciolli, 625 F. Supp. 2d at 288, or are instead “being used to prove something completely different.” Herman, 985 F. Supp. at 577 (holding that admission of settlement discussions were permissible because they were being used as evidence of discrimination, not as evidence of the validity of the underlying claim). *10 Benson is more applicable to the facts of this case than Ciolli. Rule 408 should not be read to effectively immunize Darnell and Bioactive from their alleged conduct in the IPR process. Such an interpretation would Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 24 of 247 BTG International Inc. v. Bioactive Laboratories, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 9 not only contravene Rule 408's text, but also could allow a party to easily insulate itself from an abuse of process claim by labeling as settlement discussions its purportedly improper and possibly illegal demands. 6 Id. Here, BTG does not reference the Proposed Settlement in its amended complaint “either to prove or disprove the validity ... of a disputed claim,” FED. R. EVID. 408, i.e., to demonstrate the invalidity of the underlying IPR petition by demonstrating the legitimacy of its '414 Patent. Indeed, an abuse of process claim is not dependent on whether the underlying litigation involved a valid claim. See Lerner v. Lerner, 954 A.2d 1229, 1238 (Pa. Super. Ct. 2008) (citation omitted) (stating that the elements of abuse of process in Pennsylvania are: (1) defendant used a legal process; (2) to accomplish a purpose for which the process was not designed; and (3) harm has been caused to plaintiff as a result). Rather, BTG includes the terms of the Proposed Settlement as evidence of Defendants' improper use of the IPR proceeding. See Providence Town Ctr. LP v. Raymours Furniture Co., No. 09-3902, 2009 WL 3821935, at *4 (E.D. Pa. Nov. 13, 2009) (stating that settlement negotiations may be admitted to show “knowledge, intent, or good faith”) (citation omitted). Defendants rely on the policy rationale underpinning F.R.E. 408 to support their argument that the Court should strike all references to the Proposed Settlement terms. (Defs.' Mot. at 8; Oral Arg. 36:17-25.) Defendants cite to the statement in Ciolli that “[i]f parties were permitted to take the content of these negotiations and use them in subsequent litigation for wrongful initiation of civil proceedings or abuse of process, then counsel would put themselves and their clients at risk of suit in every settlement conference in which they participate....” (Def.'s Mot. at 8 (citing Ciolli, 625 F. Supp. 2d at 288).) While a purpose of F.R.E. 408 is to allow parties to engage in frank discussion about their claims or defenses, FED. R. EVID. 408 advisory committee notes (1972), the Advisory Committee's desire to encourage settlement does not override the Rule's express statement that settlement discussions are permissible in some circumstances, e.g., if they are offered for a purpose other than to prove liability or the validity of an underlying claim. FED. R. EVID. 408. Defendants' argument prioritizes a purpose of the Rule over its text, eviscerating the line between permissible and impermissible uses of settlement discussions. Further, Defendants contend that pursuant to Ciolli, the Proposed Settlement should be stricken because “the IPR petition is directly related to [the] abuse of process claim.” (Oral Arg. 51:19-20.) Whether two actions are “related,” however, is not dispositive of whether F.R.E. 408 bars the settlement discussions-indeed, an abuse of process claim will always be “related” to some extent to the underlying claim. The court in Ciolli cited to Herman for the proposition that the “relatedness of the actions [is] important in determining whether settlement evidence from one [action] could be admitted in the other.” 625 F. Supp. 2d at 287 (citation omitted). Herman, however, involved a discrimination claim, not an abuse of process claim. Id. at 570-74. Further, the court in Herman only discussed the “relatedness” of the actions as way to assess whether plaintiff was using the settlement discussions to prove the validity of the underlying claim pursuant to Rule 408(a): “The settlement agreement relates to the Plaintiff's original termination. The [present] lawsuit relates to the Defendant's failure to rehire the Plaintiff. Thus, the settlement is not being offered into evidence to prove the validity of the claim that it settled.” Id. at 577. While Defendants correctly state that the admissibility of settlement discussions in one lawsuit cannot be used in another if the two actions are “sufficiently related,” 625 F. Supp. 2d at 287-88, “relatedness” is not a separate standard to measure the admissibility of settlement discussions from the one provided by F.R.E. 408. It is merely a way to evaluate whether or not the settlement discussions are being used to establish liability in the underlying action. *11 Since BTG uses the Proposed Settlement terms to show Defendants' alleged improper use of the IPR petition, not as evidence of the petition's invalidity, Rule 408 does not require exclusion of the settlement discussion. C. Rule 408 “is a rule of evidence and does not govern pleadings.” Steak Umm Co., LLC v. Steak 'Em Up, Inc., No. 09-2857, 2009 WL 3540786, at *3 (E.D. Pa. Oct. 29, 2009). Thus, even if the Proposed Settlement were inadmissible under F.R.E. 408, “it is not so irrelevant as Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 25 of 247 BTG International Inc. v. Bioactive Laboratories, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 10 to warrant striking any part of [BTG's] complaint.” Id.; see also Horse Soldier, LLC v. Tharpe, No. 13-2892, 2014 WL 5312823, at *7 (E.D. Pa. Oct. 17, 2014) (“Assuming arguendo that Horse Soldier's averments ... fall within the scope of Rule 408, the court declines to apply the rule at this juncture. Such argument must be resolved at later stages of litigation.”). A number of courts have held that it is inappropriate to strike settlement material pursuant to F.R.C.P. 12(f) because such allegations are not “immaterial, impertinent [or] scandalous.” See, e.g., Horse Soldier, LLC, 2014 WL 5312823, at *8; Providence, 2009 WL 3821935, at *5; but see Ciolli, 625 F.Supp.2d at 284-89; Bergman v. Jefferson-Pilot Life Ins. Co., No. 03-4459, 2003 WL 23142155, at *1 (E.D. Pa. Dec. 30, 2003). IV. Defendants largely predicate their motion to dismiss for failure to state a claim on the presumption that the Court will grant the motion to strike the references to the Proposed Settlement: “Once the Settlement Paragraphs are stricken ... it is apparent that BTG has neither plead facts sufficient to raise a right to relief above the speculative level nor alleged enough facts to state a claim to relief that is plausible on its face for abuse of process under Pennsylvania law.” (Defs.' Mot. at 10-11.) During oral argument, however, counsel maintained that even if the amended complaint was considered in its entirety, BTG has still not pleaded sufficient facts to state a claim for abuse of process. (Oral Arg. 19:24 -22:5.) A. To survive a motion to dismiss under Rule 12(b)(6), a plaintiff must plead factual allegations sufficient “to raise a right to relief above the speculative level ... on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). The “mere possibility of misconduct” is not enough. Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). The court must construe the complaint in the light most favorable to the plaintiff. See Connelly v. Lane Constr. Corp., 809 F.3d 780, 790 (3d Cir. 2016) (citations omitted). A court should “consider only the allegations in the complaint, exhibits attached to the complaint, matters of public record, and documents that form the basis of a claim.” Lum v. Bank of Am., 361 F.3d 217, 221 n.3 (3d Cir. 2004). Whether a complaint states a plausible claim for relief is a context-specific task that “requires the reviewing court to draw on its judicial experience and common sense.” Iqbal, 556 U.S. at 679 (citation omitted). Under Twombly and Iqbal, a court reviewing the sufficiency of a complaint must take three steps. See Connelly, 809 F.3d at 787. First, it must “tak[e] note of the elements [the] plaintiff must plead to state a claim.” Id. (quoting Iqbal, 556 U.S. at 675). Second, it should identify allegations that, “because they are no more than conclusions, are not entitled to the assumption of truth.” Id. (quoting Iqbal, 556 U.S. at 679). Finally, “[w]hen there are well-pleaded factual allegations, [the] court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.” Id. (quoting Iqbal, 556 U.S. at 679). B. *12 To establish a claim for abuse of process, BTG must demonstrate: (1) Defendants used a legal process against it; (2) primarily to accomplish a purpose for which it was not designed; and (3) BTG has been harmed as a result. Lerner, 954 A.2d 1229 (citing Shiner v. Moriarty, 706 A.2d 1228, 1236 (Pa. Super. Ct. 1998), appeal denied, 729 A.2d 1130 (1998)). “The gravamen of abuse of process is the perversion of the particular legal process for a purpose of benefit to the defendant, which is not an authorized goal of the procedure.” Id. In evaluating the primary purpose prong of an abuse of process claim, “there must be an act or threat not authorized by the process, or the process must be used for an illegitimate aim such as extortion, blackmail, or to coerce or compel the plaintiff to take some collateral action.” Al Hamilton Contracting Co. v. Cowder, 644 A.2d 188, 192 (Pa. Super. Ct. 1994) (citation omitted). In its amended complaint, BTG sets forth the history between it and Defendants prior to the filing of the IPR petition. The amended complaint details the multiple letters sent by Darnell or on his behalf to BTG, alleging it of “libelous and slanderous actions.” (Am. Compl. ¶¶ 29- 32.) After failing to get the response he was seeking, Darnell initiated the IPR proceeding “primarily ... to Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 26 of 247 BTG International Inc. v. Bioactive Laboratories, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 11 coerce and extort from BTG public recognition for Darnell ... payments totaling $9.35 million, and other redress for alleged defamation, slander, libel and business tort claims.” (Id. ¶ 47.) BTG alleges that the true purpose of an IPR proceeding is to provide an alternative to challenge the “patentability of one or more claim,” not to provide parties with “tools for harassment.” (Id. ¶ 35 (citation omitted).) Defendants' counsel's allegedly sarcastic comments to BTG's counsel about the reasons for initiating the IPR proceeding-i.e., “to benefit the public by taking down a bad patent”- suggest that the IPR petition “ha[d] nothing to do with the '414 Patent claims and everything to do with using the expense and inconvenience of defending an IPR proceeding.” (Id. ¶ 40.) BTG alleges that the Proposed Settlement, which “makes no reference to any of the specific claims of the '414 Patent,” also demonstrates “[t]he extortionate nature of the IPR proceeding.” (Id. ¶¶ 41, 43.) BTG has accordingly alleged sufficient facts to demonstrate that Defendants were using the IPR petition for an improper purpose-specifically, “as a threat and a club to extort and coerce millions of dollars of alleged compensatory damages and other redress from BTG that is simply unavailable in an IPR proceeding for unrelated defamation, slander, libel and business tort claims.” (Id. ¶ 38); see Triester v. 191 Tenants Ass'n, 415 A.2d 698, 702 (Pa. Super. Ct. 1979) (“The classic example [of an abuse of process claim] is the initiation of a civil proceeding to coerce the payment of a claim completely unrelated to the cause of action sued upon.”). Defendants' contend that the amended complaint fails to state a claim because they “have standing to file an IPR directed to BTG's '414 Patent, and the petition is proper.” (Defs.' Mot. at 11.) Whether or not Defendants' had standing to file the IPR petition is irrelevant to whether or not they used that process for an improper purpose. Defendants further contend that the Proposed Settlement is similar to other settlement offers in patent disputes because such claims “are often resolved with other business concessions, and it is naïve of BTG to assert [otherwise].” (Id. at 14.) The propriety of the Proposed Settlement, however, is not an issue appropriately resolved at this stage of the litigation. V. *13 Lastly, Defendants contend that the Court could “separately dismiss [ ]” BTG's amended complaint because Defendants' filing of the IPR petition was protected by the Noerr-Pennington doctrine. (Defs.' Mot. at 14-17.) They argue that pursuant to that doctrine, government petitions such as the IPR petition “are immune from claims such as abuse of process unless the challenged action is established to be a sham.” (Id. at 15.) They contend that since “the IPR petition is not a sham, Bioactive's actions are protected by the Noerr-Pennington doctrine.” (Id. at 17.) BTG argues that the filing of the IPR petition was a sham because Defendants instituted that proceeding “without probable cause and regardless of the merits of the case.” (Pl.'s Opp. at 13 (citing Prof'l Real Estate Inv'rs, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 56 (1993)) (internal quotation marks omitted).) It contends that since it has included sufficient factual allegations to establish that the filing of “the IPR proceeding was objectively baseless and designed to harm BTG,” the Noerr-Pennington doctrine does not shield Defendants from liability. The Noerr-Pennington doctrine is premised on the First Amendment right to petition the government and originated with the United States Supreme Court's decisions in Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127 (1961), and United Mine Workers v. Pennington, 381 U.S. 657 (1965). The doctrine “protects parties who petition the government for redress from claims arising in response to that petitioning.” Tr. of U. of Pa. v. St. Jude Child. Res. Hosp., 940 F. Supp. 2d 233, 239 (E.D. Pa. 2013) (citations omitted). The Supreme Court of the United States has stated that the doctrine does not protect the party if the initiation of the action “is a mere sham to cover...an attempt to interfere directly with the business relationships of [another]....” Noerr, 365 U.S. at 144. Though Noerr- Pennington immunity arose in the antitrust context, the Third Circuit has extended the doctrine to other areas. See We, Inc. v. City of Phila., 174 F.3d 322, 326-27 (3d Cir. 1999). In Columbia Pictures, the Supreme Court articulated a two-pronged test to determine if a party's conduct constituted a “sham.” First is the objective test, which is met if the lawsuit is “objectively baseless in the sense that no reasonable litigant could realistically expect success on the merits.” 508 U.S. at 60. An action is “objectively Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 27 of 247 BTG International Inc. v. Bioactive Laboratories, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 12 baseless” if the litigant did not have probable cause to initiate the legal proceedings. St. Jude Child. Res. Hosp., 940 F. Supp. 2d at 245. The court only proceeds to the second prong if the objective test is met. See Columbia Pictures, 508 U.S. at 60. The second prong-a subjective test-is met if the lawsuit “conceals an attempt to interfere directly with the business relationships of [another] through the use [of] the governmental process- as opposed to the outcome of that process-as a[ ] weapon.” Id. at 60-61 (citations and internal quotation marks omitted). In essence, the sham exception applies when it can be shown that a defendant “is simply using the petition process as a means of harassment.” King v. Twp. of E. Lampeter, 17 F. Supp. 2d 394, 413 (E.D. Pa. 1998). Whether a petition is a sham “is generally a question of fact for the jury [.]” In re Flonase Antitrust Litig., 795 F. Supp. 2d 300, 310 (E.D. Pa. 2011) (citations omitted); see also Kravco Co. v. Valley Forge Ctr. Assocs., No. 91-4932, 1992 WL 97926, at *3 (E.D. Pa. Apr. 30, 1992) (“Whether or not the acts of the defendants fit the sham exception is a factual issue....”). A court should only rule on the objective baselessness prong as a matter of law “[w]here there is no dispute over the predicate facts of the underlying [petitions].” Columbia Pictures, 508 U.S. at 60- 61. The burden falls on the party invoking the exception to show that the conduct constitutes a sham. In re Flonase, 795 F. Supp. 2d at 311. *14 Courts have denied motions to dismiss where a plaintiff alleges sufficient facts in the complaint to show that the filing of the underlying action was a sham. See, e.g., Rochester Drug Co-op., Inc. v. Braintree Labs., 712 F. Supp. 2d 308, 321 (D. Del. 2010) (denying motion to dismiss because certain elements of Noerr-Pennington are “better addressed at the summary judgment stage upon a developed record”); Alternative Electrodes, LLC v. Empi, Inc., 597 F. Supp. 2d 322, 331 (E.D.N.Y. 2009) (denying motion to dismiss because plaintiff alleged that “the litigation was both subjectively and objectively baseless and plausibly supports this claim with the assertion that there could be no valid patent claim”). BTG alleges that in his April 21, 2014 letter Darnell stated that he “ha[s] no information concerning the validity of the BTG patent in question.” (Am. Compl. ¶ 39, Ex. E.) BTG further alleges that Defendants' “meritless IPR petition ... is virtually identical (including original typos) to an IPR petition challenging BTG's '414 Patent filed by a BTG competitor ... and terminated pursuant to a settlement.” (Id. ¶ 34.) As further evidence of a sham BTG relies upon the terms of the Proposed Settlement, which are unrelated to the '414 Patent, and cites to the PTAB's denial of Defendants' IPR petition. (Pl.'s Dec. 14, 2015 Letter, ECF No. 22.) In that opinion, the PTAB stated that it was “not persuaded that [Bioactive] has established a reasonable likelihood that it would prevail” on any of its 22 claims. (Id.) When viewed in the light most favorable to BTG, these facts are sufficient to establish that Defendants' initiation of the IPR petition was a sham. See Rochester Drug Co- op., 712 F. Supp. 2d at 321 (“The court is satisfied that plaintiffs have alleged facts sufficient to establish that Braintree's suit ... was both objectively and subjectively baseless.”). Though Defendants provide a number of responses to BTG's allegations, they are factually disputed and are not properly dealt with at this stage of the case. They contend, for example, that: (1) they had a legitimate business reason for filing the IPR petition, (Oral Arg. 57:3-18); (2) the Proposed Settlement terms are normal negotiating terms in IPR proceedings because changes to the patent itself “are only negotiated between the patent owner and the USPTO,” (Defs.' Reply at 5-6, ECF No. 18); and (3) they did not just copy and refile an IPR petition, but added a number of new claims. (Oral Arg. 11:22-12:2.) BTG contests each of those assertions. Accordingly, they are issues that are best resolved after the parties have taken discovery and presented to the Court at summary judgment with a complete record or to a jury at trial. An appropriate Order follows. All Citations Slip Copy, 2016 WL 3519712 Footnotes Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 28 of 247 BTG International Inc. v. Bioactive Laboratories, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 13 1 Though the amended complaint states that Darnell is a “patent lawyer,” Darnell stated in a previously filed declaration and his counsel stated during oral argument that he is a patent agent with the United States Patent and Trademark Office. (Darnell Decl. ¶ 9, ECF No. 6-3; Oral Arg. 19:10-13; 106:24-25, ECF No. 28.) 2 “Gassing” is a method whereby collectors “introduc[e] gasoline and/or the associated vapors into winter dens to drive snakes from the den to be harvested.” TEXAS PARKS & WILDLIFE, SNAKE HARVEST WORKING GROUP FINAL REPORT 1 (2016), http://tpwd.texas.gov/huntwild/wild/wildlife_diversity/nongame/media/TPWD-SHWG-Report.pdf. 3 Because the Court finds it has specific jurisdiction, it is unnecessary to determine whether general jurisdiction exists. 4 Ciolli initially filed his complaint in the Philadelphia County Court of Common Pleas. Ciolli, 625 F. Supp. 2d at 282. Defendants removed to our Court on diversity grounds. Id. 5 Although the text of Rule 408 has changed slightly since Benson was decided in 2011, the Advisory Committee did “no[t] inten[d] to change any result in any ruling on evidence admissibility.” FED. R. EVID. 408 advisory committee notes (2011). The changes were “stylistic only” and were done to make the Rule “more easily understood.” Id. Specifically, the Advisory Committee revised the Rule in 2011 to replace “liability for..a claim” with “validity...of a disputed claim,” which it stated “makes the Rule flow better and easier to read.” Id. “No change in current practice or in the coverage of the Rule [was] intended.” Id. 6 Indeed, Defendants in this case labeled their Proposed Settlement as “Confidential Subject to F.R.E. 408.” (Am. Compl., Ex. F) End of Document © 2017 Thomson Reuters. No claim to original U.S. Government Works. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 29 of 247 EXHIBIT C Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 30 of 247 Edwards v. Wyatt, Not Reported in F.Supp.2d (2001) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 1 2001 WL 1382503 Only the Westlaw citation is currently available. United States District Court, E.D. Pennsylvania. John Joseph EDWARDS, Plaintiff, v. Aaron Wesley WYATT, Defendant. No. CIV.A. 01-1333. | Nov. 6, 2001. MEMORANDUM AND ORDER J.M. KELLY, J. *1 Presently before the Court is Motion To Dismiss Defendant's Counterclaims filed by Plaintiff, John Joseph Edwards, and a Motion For Extension Of Time In Which To Respond To Plaintiff's Motion To Dismiss Defendant's Counterclaims filed by Defendant, Aaron Wesley Wyatt. Plaintiff further filed a motion for Rule 11 sanctions to be imposed on Defendant's counsel, Ira Silverstein. In this diversity action, Plaintiff filed suit against Defendant alleging breach of contract, promissory estoppel and fraudulent misrepresentation. Defendant filed an answer and asserted counterclaims, alleging abuse of process and intentional infliction of emotional distress. For the following reasons, Defendant's Motion For Extension is denied and Plaintiff's Motion To Dismiss Defendant's Counterclaims is granted. GENERAL BACKGROUND The alleged facts giving rise to the bitter and acrimonious relationship between the parties are as follows. Plaintiff Edwards is the former president of Pilot Air Freight Corporation (“Pilot”), a company which was in need of refinancing and additional outside investment in order to remain financially stable. In 1994, Richard Philips (“Philips”), Pilot's attorney at the time, secured outside investment from Defendant Wyatt and structured a refinancing of the company's banking arrangements. Eventually, Philips and Wyatt became members of Pilot's Board of Directors and acquired rights to secure outstanding shares of the company. In addition, Philips became Pilot's chief executive officer (“CEO”) while Edwards, retaining his position as director of Pilot, entered into a three-year employment agreement with the company. The relationship between the three men, however, soon disintegrated in the face of disagreements and struggle for power over the company, eventually leading to Edward's termination in 1995. Edwards, being denied his salary and bonuses due to him under his employment agreement, petitioned for chapter 11 bankruptcy which was converted into a Chapter 7 liquidation. Early in 1998, while the bankruptcy proceedings were ongoing, Edwards and Wyatt entered into a Settlement Agreement in an attempt to resolve past differences. The two also entered into a Consulting Agreement in which Edwards was to assist Wyatt with the sale of a public offering of Pilot. In addition, Wyatt allegedly made the following three oral financial promises: (1) that he would help Edwards gain maximum value for the sale of his stock in Pilot; (2) that he would help Edwards regain monies owed to Edwards by Pilot, including past salary, bonuses, and retained earnings; and (3) that he would not enter into any agreement with Phillips to settle the bankruptcy sale proceeding without including Edwards in settlement discussions. According to Edwards, Wyatt made these promises to “ensure that Edwards remained aligned with him and unaligned with Phillips throughout the course of the bankruptcy sale proceeding.” Pl.'s Compl. ¶ 41. Wyatt valued the collaboration with Edwards because he was in the midst of a battle with Phillips for control of Pilot, a corporation which Wyatt's investment advisors believed could be worth more than $100 million. Although Edwards' Pilot stock was legally controlled by the bankruptcy trustee at this time, the trustee regularly solicited Edwards' views on actions relating to the disposition of the stock because it was well known that there was going to be a surplus estate in which the debtor would retain a significant monetary interest. During the course of the bankruptcy sale proceeding, Wyatt and Phillips submitted competing bids for the purchase of Edwards' Pilot stock and other assets. One week before the hearing on the final sale of Edwards' Pilot stock, Wyatt told Edwards to be sure that Edwards' bankruptcy counsel expressed a preference for Wyatt's bid in order to enhance Wyatt's chance of success in purchasing Edwards' assets. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 31 of 247 Edwards v. Wyatt, Not Reported in F.Supp.2d (2001) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 2 *2 On October 30, 1998, the day of the scheduled proceeding, Wyatt and Phillips informed the bankruptcy court that they had entered into a separate settlement agreement. They had joined together to offer a joint bid of $5,200,000.00 plus settlement of all claims between Wyatt, Phillips, Pilot, and the bankruptcy estate of Edwards. Edwards was not included in settlement discussions or the final agreement. Edwards objected to the joint bid as an illegal collusive effort to control the sale price for his assets in the bankruptcy court. On December 15, 1998, the Bankruptcy Court rejected the objection and permitted the sale of Edwards' assets controlled by the trustee. Edwards received approximately $3,000,000.00 from the sale of these assets. On December 29, 1999, Edwards filed a complaint against Wyatt, asserting claims of breach of contract, promissory estoppel and fraudulent misrepresentation in the District Court for the District of Columbia. On January 18, 2001, the D.C. District Court, finding no personal jurisdiction over the Defendant, ordered that the case be transferred to this Court. Subsequently, on July 31, 2001, this Court denied Wyatt's Motion to Dismiss. By stipulation, Wyatt was granted a week's extension to answer the complaint by August 24, 2001. On August 24, 2001, Ira Silverstein 1 was admitted pro hac vice to this Court and took over as lead counsel for Wyatt. Along with the answer, Wyatt asserted affirmative defenses and two counterclaims against Edwards and his counsel, Stephen Braga, claiming abuse of process and intentional infliction of emotional distress. I. DEFENDANT'S MOTION FOR EXTENSION OF TIME A. Facts On September 18, 2001, Plaintiff's counsel, Stephen Braga, by way of Federal Express, served on Defendant's counsel, Ira Silverstein, two items: (1) advance notification of Motion for Sanctions Under Rule 11; and (2) a copy of the Plaintiff's Motion To Dismiss Defendant's Frivolous Counterclaims, filed on September 17, 2001. No cover letter was enclosed. Silverstein never responded to either items and missed the October 5, 2001 deadline to reply to Plaintiff's Motion to Dismiss. On October 12, 2001, Braga e-mailed Silverstein inquiring as to whether the Defendant was withdrawing his counterclaims and whether he intended to oppose the motion to dismiss. Two days later, Silverstein replied, requesting an extension to respond to Plaintiff's Motion to Dismiss. He explained that he failed to respond because he did not realize that the set of papers he received on September 18, 2001 contained two separate items. He stated that he was assuming, based on the top page of the package, that the whole package was the pre-filing notice required under Federal Rule of Civil Procedure 11(c)(1) (A). B. Standard of Review and Discussion *3 Courts have discretion to grant extensions where the movant shows the delay was the result of “excusable neglect.” In re Cendant Corp. Prides Lit., 189 F.R.D. 321, 323-324 (D.N.J.1999). Federal Rule of Civil Procedure 6(b)(2) states: When by these rules or by notice given thereunder ... an act is required ... to be done at or within a specified time, the court for cause shown may at any time in its discretion ... upon motion made after the expiration of the specified period permit the act to be done where the failure to act was the result of excusable neglect. In determining what constitutes excusable neglect, courts are to consider all relevant circumstances surrounding the delay. In re Cendant Corp. Prides Lit., 189 F.R.D. at 324 (citing Pioneer Invest. Serv. Co. v. Brunswick Assoc. Ltd. Partnership, 507 U.S. 380, 395, 113 S.Ct. 1489, 123 L.Ed.2d 74 (1993)). Relevant factors include the following: (1) the danger of prejudice to the nonmovant; (2) the length of the delay and its potential impact on judicial proceedings; (3) the reason for the delay, including whether it was within the reasonable control of the movant, and whether the movant acted in good faith. Id. Other factors include: (1) whether the inadvertence reflected professional incompetence such as ignorance of the rules of procedure; (2) whether an asserted inadvertence reflects an easily manufactured excuse incapable of verification by the court, and; (3) complete lack of diligence. Id. (citing Dominic v. Hess Oil V.I. Corp., 841 F.2d 513, 517 (3d Cir.1988). Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 32 of 247 Edwards v. Wyatt, Not Reported in F.Supp.2d (2001) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 3 This is a clear case of neglect, but not of excusable neglect. Although Plaintiff's counsel might have clarified the situation by inserting a cover letter with the package, Defendant's counsel could not have reasonably assumed that the whole package related solely to the Rule 11 notification. The Rule 11 notification is only one page long and it clearly references the Plaintiff's Motion to Dismiss Defendant's Counterclaims. Furthermore, even if Defendant's counsel were to be believed, his actions amount to complete lack of diligence. He should have reviewed the documents sent to him. The simple act of leafing through the documents would have revealed that the Motion to Dismiss Defendant's Counterclaims was filed with this Court. The Court will not excuse such blatant lack of diligence by counsel. Therefore, the Court denies the Defendant's Motion. II. PLAINTIFF'S MOTION TO DISMISS DEFENDANT'S COUNTERCLAIMS Having denied the Defendant's Motion For An Extension, the Court may treat Plaintiff's Motion To Dismiss as uncontested and summarily dismiss the Defendant's Counterclaims under Local Civil Rules 7.1(c). Rule 7.1(c) expressly states that in the absence of a timely response, the motion, with the exception of a summary judgment motion, may be granted as uncontested. In light of Plaintiff's Rule 11 Motion seeking sanctions against Defendant's counsel for the filing of frivolous counterclaims, however, the Court will address the merits of the counterclaims. A. Facts *4 For the purposes of this Motion, Wyatt's assertions underlying his counterclaims will be accepted as true. First, Wyatt claims Edwards sought to terrorize him by bringing this action in a jurisdiction to which Wyatt has no connection and by including irrelevant, immaterial and scandalous allegations in the complaint. Secondly, it is alleged that Edward's counsel, Steven Braga, threatened to depose Wyatt's wife in an effort to coerce a settlement and attempted to meet with her ex parte by writing directly to her. Lastly, Wyatt complains of Edward's intent to inquire into Wyatt's net worth. B. Standard Of Review A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of the complaint. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). A court must determine whether the party making the claim would be entitled to relief under any set of facts that could be established in support of his or her claim. Hishon v. King & Spalding, 476 U.S. 69, 73 (1984) (citing Conley, 355 U.S. at 45-46); see also Wisniewski v. Johns-Manville Corp., 759 F.2d 271, 271 (3d Cir.1985). In considering a motion to dismiss, all allegations in the complaint must be accepted as true and viewed in the light most favorable to the non-moving party. Rocks v. City of Philadelphia, 868 F.2d 644, 645 (3d Cir.1989) (citations omitted). C. Discussion 1. Abuse of process The tort of abuse of process is the improper use of legal process after it has been issued. McGee v. Feege, 517 Pa. 247, 255, 535 A.2d 1020 (1987). “The term ‘process' has been interpreted in Pennsylvania to encompass all of the procedures incident to the litigation process, including discovery proceedings, the noticing of depositions and the issuing of subpoenas.” Pellegrino Food Products Co., Inc. v. City of Warren, 136 F.Supp.2d 391, 407 (W.D.Pa.2000). To state a cause of action for the tort of abuse of process, the complainant must allege the following: (1) that the tortfeasor used a legal process against the complainant; (2) that the use of legal process was primarily to accomplish a purpose for which the process was not designed; and (3) that Complainant suffered harm as a result. Hart v. O'Malley, 436 Pa.Super. 151, 647 A.2d 542, 551 (Pa.Super.Ct.1994). There is simply no claim for abuse of process “where the defendant has done nothing more than carry out the process to its authorized conclusion, even though with bad intentions.” Schmidheiny v. Weber, --- F.Supp.2d ----, No. Civ.A. 01-377, 2001 WL 1172693, at *10 (E.D.Pa. July 31, 2001) (citations omitted). “That judicial process was initiated with a bad motive is not enough; an allegation of coercive use of the process is required.” Id. “Abuse of process usually pertains to situations involving extortion by means of attachment, execution or garnishment, and blackmail by means of an arrest or criminal prosecution.” Id. The only “process” here is the initial complaint and the summons requiring Wyatt to respond to the Complaint. First, Wyatt complains of Edwards' initial choice to Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 33 of 247 Edwards v. Wyatt, Not Reported in F.Supp.2d (2001) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 4 bring this action in the District Court for the District of Columbia, a forum which was inconvenient to him. Wyatt may have suffered inconvenience but there was no abuse of any process. The initial complaint and summons were used for their intended purposes, to initiate action against Wyatt. That the D.C. district court found no personal jurisdiction over Wyatt is irrelevant. The legal process here was carried out to its authorized conclusion and the case was properly transferred to this Court. *5 Similarly, there is no abuse of process where Edwards included “irrelevant, immaterial and scandalous allegations” in the ad damnum clause of the Complaint. Plaintiff is entitled to state the facts as he sees them in his Complaint, within the bounds of the law. That Wyatt felt harassed and outraged by the allegations contained in the Complaint is not relevant to the tort of abuse of process. Otherwise, every person who has ever been the subject of litigation could sue under this tort. Wyatt further alleges that Edwards and Braga attempted to coerce a settlement by frightening and harassing Wyatt's wife. Again, there is no legal process which is being abused. Although legal process relating to discovery, such as subpoenas, come under the abuse of process tort, here there was no such coercive legal process. Counsel merely wrote a letter seeking to gather facts. As such, the issue of marital privilege need not be addressed until and unless the Plaintiff actually seeks to compel the deposition or testimony of the wife as to the communications between herself and Wyatt. Lastly, Wyatt complains of Edward's inquiry into his net worth. Again, there is no legal process being used here. Braga merely wrote a letter stating Plaintiff's intent to inquire into Wyatt's net worth. Even if there was some legal process being used, “when punitive damages are alleged, the weight of authority requires that a defendant disclose his financial condition in pretrial discovery without requiring a prima facie showing of punitive damages to justify the discovery.” Caruso v. Coleman Co., 157 F.R.D. 344, 348 (E.D.Pa.1994). Hence, there is no abuse of process under any set of circumstances. 2. Intentional Infliction of Emotional Distress Pennsylvania courts follow the Restatement formulation of the tort of intentional infliction of emotional distress. Pavlik v. Lane Limited/Tobacco Exporters Int'l, 135 F.3d 876, 890 (3d Cir.1998). The Restatement states, “One who by extreme and outrageous conduct intentionally or recklessly causes severe emotional distress to another is subject to liability for such emotional distress, and if bodily harm to the other results from it for such bodily harm.” Restatement (Second) of Torts § 46 (West 2001). The conduct must be “so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, as to be regarded as atrocious, and utterly intolerable in a civilized community.” Pavlik, 135 F.3d at 890. Furthermore, a threshold requirement for this tort is an allegation of physical harm. Hart, 647 A.2d at 554 (citing Kazatsky v. King David Mem'l Park, 515 Pa. 183, 527 A.2d 988 (1987)). Here, Wyatt has utterly failed to allege any physical injury or harm. The Counterclaim alleges only that Wyatt suffered financial harm and emotional stress. As such, although Edwards' litigation tactics are not so extreme and outrageous as to go beyond all possible bounds of decency, the Court need not discuss this point any further. The Counterclaim of intentional infliction of emotional distress will be dismissed because Defendant failed to allege physical harm. *6 Accordingly, Plaintiff's Motion To Dismiss Defendant's Counterclaims is granted. III. RULE 11 SANCTION Under Federal Rule of Civil Procedure 11(c), the Court may impose appropriate sanctions on attorneys who violate Rule 11(b), which states: By presenting to the court (whether by signing, filing, submitting, or later advocating) a pleading, written motion, or other paper, an attorney or unrepresented party is certifying 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, defenses, and other legal contentions therein are warranted by existing law or by a nonfrivolous argument for the Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 34 of 247 Edwards v. Wyatt, Not Reported in F.Supp.2d (2001) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 5 extension, modification, or reversal of existing law or the establishment of new law; (3) the allegations and other factual contentions have evidentiary support or, if specifically so identified, are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery; and (4) the denials of factual contentions are warranted on the evidence or, if specifically so identified, are reasonably based on a lack of information or belief. District courts retain broad discretion in determining the appropriate sanctions under Rule 11. Langer v. Monarch Life Ins. Co., 966 F.2d 786, 810 (3d Cir.1992). The range of sanctions include, a warm friendly discussion on the record, a hard-nosed reprimand in open court, compulsory legal education, monetary sanctions, or other measures appropriate to the circumstances. Whatever the ultimate sanction imposed, the district court should utilize the sanction that furthers the purposes of Rule 11 and is the least severe sanction adequate to such purpose. Id. “[T]he purpose of sanctions is to deter future violations, and [sic] monetary sanctions should not be more severe than those necessary to deter repeated violations of the rule.” Giangrasso v. Kittatinny Reg'l High Sch. Bd. of Educ., 865 F.Supp. 1133, 1141 (D.N.J.1994). Here, as the Court ruled above, Defendant's Counterclaims are clearly baseless. As such, the Court finds it appropriate to impose Rule 11 sanctions against Defendant's counsel, Ira Silverstein. Silverstein had twenty-one days in which to withdraw the frivolous Counterclaims, yet he failed to act, even under the threat of sanctions. Related to his failure to withdraw the counterclaims is Silverstein's failure to file an answer to Plaintiff's Motion to Dismiss Defendant's Counterclaims in a timely manner. Based on the above and the fact that this is Silverstein's first misconduct in this case, the Court will, at this time, merely admonish counsel's behavior for the record. Although Silverstein's conduct may have resulted from a complete lack of diligence rather than bad motive, the Court will not excuse such blatant lack of diligence. Silverstein is on notice that the Court may choose to impose more severe sanctions should he engage in any further misconduct in this case. ORDER *7 AND NOW, this day of November, 2001, in consideration of the Motion For An Extension Of Time To Respond To Plaintiff's Motion to Dismiss Defendant's Counterclaims (Doc. No. 13) filed by the Defendant, Aaron Wesley Wyatt and the Response of the Plaintiff, John Joseph Edwards, thereto and the Motion to Dismiss Defendant's Counterclaims (Doc. No. 12) filed by Plaintiff, John Joseph Edwards, it is ORDERED: 1. Defendant's Motion For Extension Of Time To Respond to Plaintiff's Motion To Dismiss Defendant's Counterclaims is DENIED. 2. Plaintiff's Motion To Dismiss Defendant's Counterclaims is GRANTED. 3. Plaintiff's Motion For Rule 11 Sanctions against Ira Silverstein, Esq., Defendant's counsel, is GRANTED. Ira Silverstein, Esq., is ADMONISHED that he has violated Federal Rule of Civil Procedure 11(b) and that any future violations may result in further sanctions. All Citations Not Reported in F.Supp.2d, 2001 WL 1382503 Footnotes 1 Ira Silverstein was Wyatt's counsel during the time the parties were negotiating the bankruptcy situation and was allegedly deeply involved in the negotiations and meetings between the parties which eventually led to the filing of this lawsuit. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 35 of 247 Edwards v. Wyatt, Not Reported in F.Supp.2d (2001) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 6 End of Document © 2017 Thomson Reuters. No claim to original U.S. Government Works. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 36 of 247 EXHIBIT D Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 37 of 247 Elsevier, Inc. v. Comprehensive Microfilm & Scanning..., Not Reported in... 107 U.S.P.Q.2d 1056 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 1 2013 WL 1497946 Only the Westlaw citation is currently available. United States District Court, M.D. Pennsylvania. ELSEVIER, INC., et al., Plaintiffs v. COMPREHENSIVE MICROFILM & SCANNING SERVICES, INC. et al., Defendants v. Princeton Micro Scan Corp., Franklin Crawford, Anthony Destephen, and John Doe Nos. 1-10, Third-Party Defendants. No. 3:10-cv-2513. | April 10, 2013. Attorneys and Law Firms Laura Scileppi, Samantha Morrissey, William Dunnegan, Dunnegan LLC, New York, NY, Paige F. MacDonald- Matthes, Obermayer Rebmann Maxwell & Hipple LLP, Harrisburg, PA, for Plaintiffs. Gerard J. Martillotti, Philadelphia, PA, for Defendants. MEMORANDUM OPINION ROBERT D. MARIANI, District Judge. *1 The present dispute is before the Court upon the Motions for Summary Judgment of Plaintiffs, Defendants, and Third Party Defendants. For the reasons set forth below, each of the motions will be denied. BACKGROUND 1 Plaintiffs Elsevier Inc., Elsevier Science Inc., Elsevier B.V., Elsevier Science B.V., Elsevier Ltd., Mosby, Inc., John Wiley & Sons, Inc., John Wiley & Sons, Ltd., Wiley Periodicals, Inc., Wiley-Liss, Inc., Blackwell Publishing, Ltd., and American Chemical Society (collectively, “Plaintiffs”) filed an original Complaint in this matter on December 10, 2010, alleging violations of the Copyright Act, 17 U.S.C. § 501, the Lanham Act, 15 U.S.C. § 1114(a) and 15 U.S.C. § 1117. (See Defs.' SMF at ¶ 1, ECF Dkt. 89-2; Pls.' Ans. to SMF at ¶ 1, ECF Dkt. 102.) Plaintiffs then filed an Amended Complaint, which included the original federal claims in addition to a supplemental common law claim for unfair competition. (See Defs.' SMF at ¶ 2; Pls.' Ans. to SMF at ¶ 2.) On May 17, 2011, Defendants Comprehensive Microfilm & Scanning Services, Inc. (“Comprehensive”) and James A. Wasilewski (“Wasilewski”) (together, “Defendants” or the “Comprehensive Parties”) were granted permission to add Third-Party Defendants, specifically Princeton Micro Scan Corporation, Franklin Crawford and Anthony DeStephen (collectively, “Third Party Defendants” or the “Princeton Parties”). (See Defs.' SMF at ¶ 3; Pls.' Ans. to SMF at ¶ 3.) The Initial Action This matter concerns the illicit reproduction of printed materials allegedly subject to copyright and trademark restrictions. Plaintiffs alleged that Defendants violated Plaintiffs' copyright and trademark rights when Defendants copied unprocessed microfilm with images of hard-bound journals for the Princeton Parties, so that the Princeton Parties could profit from the sale of the original printed materials to various buyers. Franklin Crawford (“Crawford”) was president of Princeton Micro Scan Corporation (“Princeon Micro Scan”) and Anthony DeStephen (“DeStephen”) was an employee. (See Defs.' SMF at ¶¶ 7-8; Pls.' Ans. to SMF at ¶¶ 7-8.) DeStephen served as an employee from the 1970s until 2001, when he began to work for Princeton Micro Scan as a contractor for the corporation until 2010. (See Defs.' SMF at ¶ 8; Pls' Ans. to SMF at ¶ 8.) From 2001 until 2010, DeStephen continued to perform services for Princeton Micro Scan, although his exact status as a partner or contractor is unclear from the record, and constitutes a matter of dispute. (See Defs.' SMF at ¶ 8; Pls.' Ans. to SMF at ¶¶ 7-8.) It is acknowledged by Plaintiffs and Defendants that DeStephen admitted to “engaging in acts of copyright infringement, including a scheme of making deals with hundreds of libraries to provide the library with a microfilm version of a journal in exchange for the paper journal, wherein he would take apart the binding of the paper journal, photograph each page at Princeton Micro Scan with the Princeton resources, send film for processing and then sell the paper journals to Educo Periodicals and Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 38 of 247 Elsevier, Inc. v. Comprehensive Microfilm & Scanning..., Not Reported in... 107 U.S.P.Q.2d 1056 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 2 Periodical Service Company.” (See Defs.' SMF at ¶ 9; Pls.' Ans. to SMF at ¶ 9.) *2 DeStephen testified that he was only paid for hard copies of the journals and only made “one microfilm copy for each hard copy journal that he obtained from the various libraries” with which he conducted business. (See Defs.' SMF at 10.) Plaintiffs, however, argue that DeStephen was personally compensated for the sale of the print journals (see Pls.' Ans. to SMF at ¶ 10), and that Princeton Micro Scan would make a master copy of a journal for future use (see Pls.' Ans. to SMF at ¶ 10). Defendants assert that “[i]n exchange for the hard copy of a journal, [the Princeton Parties] would take the one set of Microfilm copies produced and return it to the library that provided the paper journal.” (See Defs.' SMF at ¶ 11.) Defendants further assert that “[t]he libraries were the original owners of the paper journals.” (See Defs.' SMF at ¶ 11.) Plaintiffs assert that Defendants received unprocessed microfilm from the Princeton Parties, and made copies at their request. (See Pls.' Ans. to SMF at ¶ 11.) Plaintiffs and Defendants dispute the number of copies made of each journal, although the parties do not dispute that where more than one copy was made it was not distributed to the public, but was retained by Princeton Micro Scan for future duplication. (See Defendants SMF at ¶¶ 11-12; Pls.' Ans. to SMF at ¶¶ 11-12). Defendants assert that they “worked entirely under the supervision, direction and control of Princeton Micro Scan Corporation in regards to processing microfilm for Princeton.” (See Defs.' SMF at ¶ 19.) This is disputed by Plaintiffs. (See Pls.' Ans. to SMF at ¶ 19.) Plaintiffs and Defendants agree that Princeton Micro Scan “controlled what microfilm would be processed by Defendants and all film was sent directly from Princeton to Defendants after original microfilm was created at Princeton [Micro Scan].” (See Defs.' SMF at ¶ 19(1); Pls.' Ans. to SMF at ¶ 19(i).) They further agree that “Defendants did not keep anything from the transaction, [and] returned all original film and microfilm produced directly to Princeton Micro Scan Corporation.” (See Defs.' SMF at ¶ 19(ii); Pls.' Ans. to SMF at ¶ 19(ii).) Defendants assert that they were unaware of the contents of the microfilm provided to them by the Third Party Defendants, and that they did not know that the reproduction of the unprocessed microfilms constituted possible illicit activity because they were unaware of the presence of any trademarks or copyright protections. (See Defs.' SMF at ¶ 35.) Specifically, Defendants assert that they were never provided with “documentation or titles identifying the material that Princeton sent to Defendants for processing or microfilm” (see Defs.' SMF at ¶ 24), and that the “film materials were unidentifiable and had no accompanying identifying documentation as to the source” (see Defs.' SMF at ¶ 31). Defendants assert that DeStephen concealed the fact that the microfilms he provided to them contained copyrighted material and registered trademarks. (See Defs,' SMF at ¶ 31.) *3 Plaintiffs argue, however, that Defendants had the ability to know the contents of the microfilm. (See Pls.' Ans. to SMF at ¶ 35.) Plaintiffs assert that “DeStephen did not conceal the contents of the microfilm from Defendants.” (See Pls.' Ans. to SMF at ¶ 29.) The parties dispute whether Defendants generally perform quality checks on the materials they are reproducing, and whether such checks would involve an inspection of the content of the materials. (See Pls.' Ans. to SMF at ¶¶ 34- 35.) Plaintiffs and Defendants both agree, however, that DeStephen was aware that he was sending copyrighted materials to Defendants, although it is unclear as to whether any other person at Princeton Micro Scan was similarly aware. (See Defs.' SMF at ¶ 30; Pls. Ans. to SMF at ¶ 30.) Defendants maintain that they had no information that would indicate that the materials were subject to copyright or trademark restrictions (see Defs.' SMF at ¶ 35), but Plaintiffs argue that the materials contained copyright and trademark notices (see Pls.' Ans. to SMF at ¶ 35). Plaintiffs and Defendants agree that DeStephen “admitted to knowingly engaging in direct acts of copyright and trademark infringement, entered into a settlement agreement with the Plaintiffs on April 16, 2010, wherein he agreed to pay publishers $100.00, and to completely cooperate with the publishers in providing information in relation to the prosecution of the issues or claims related to the case filed against him, however, the publishers retained their rights to refile claims against Mr. DeStephen if he materially breaches his obligations to cooperate with publishers.” (See Defs.' SMF at ¶ 36; Pls.' Ans. to SMF at ¶ 36.) Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 39 of 247 Elsevier, Inc. v. Comprehensive Microfilm & Scanning..., Not Reported in... 107 U.S.P.Q.2d 1056 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 3 It is admitted by both Plaintiffs and Defendants that on November 1, 2010, Plaintiffs entered into a Release Agreement (“Release Agreement”) with Princeton Micro Scan Corporation and Robert S. Chaykowsky, the executor of the Estate of Franklin Crawford, in which a release was executed in exchange for a guaranteed minimum of $1,000,000.00 resulting from the sale of a commercial building owned by the Princeton Parties. (See Defs.' SMF at ¶ 39; Pls. Ans. to SMF at ¶ 39.) The terms and scope of the Release Agreement are the subject of disagreement between Plaintiffs and Defendants. The parties agree, however, that “Plaintiffs entered into this agreement prior to initiating” the present litigation. (See Defs.' SMF at ¶ 41; Pls.' Ans. to SMF at ¶ 41.) They further agree that “[a]t the time of the Release Agreement's execution, Plaintiffs had obtained the affidavit and declaration of Anthony DeStephen and were aware of Defendants actions as a third party.” (See Defs.' SMF at ¶ 41; Pls.' Ans. to SMF at ¶ 41.) “Plaintiffs agreed to the provisions and signed off on the release while represented by counsel.” (See Defs.' SMF at ¶ 41; Pls.' Ans. to SMF at ¶ 41.) “There was no evidence of fraud or mistake in the agreement and the agreement led to a dismissal of claims pending in the litigation for which it was created.” (See Defs.' SMF at ¶ 41; Pls.' Ans. to SMF at ¶ 41.) Critically, the parties disagree, though, as to whether Defendants are protected by the Release Agreement. (See Defs.' SMF at ¶ 42; Pls.' Ans. to SMF at ¶ 42.) The Third Party Action *4 The Princeton Parties assert that beginning in 2004, “DeStephen began sending microfilm to Comprehensive ... and James Wasilewski to be processed and duplicated.” (See Third-Party Defs.' SMF at ¶ 1, ECF Dkt. 94 (hereinafter “Princeton's SMF”).) The identity of the exact parties engaged in the packing of the materials is subject to dispute. (See Third-Party Pls.' Ans. to Third- Party Defs.' SMF at ¶ 2, ECF Dkt. 113 (hereinafter, “Ans. to Princeton's SMF”.) The Comprehensive and Princeton Parties agree that Wasilewski received personal checks from DeStephen for his services, and that records were kept on ledgers that have since been discarded. (See Princeton's SMF at ¶¶ 3-9; Ans. to Princeton's SMF at ¶¶ 3-9.) It is agreed between the Comprehensive and Princeton Parties that Wasilewski's contact person was DeStephen (see Princeton's SMF at ¶ 10), but they disagree as to whether DeStephen was acting in “concert” with the other Third Party Defendants. (See Ans. to Princeton's SMF at ¶ 10). The Princeton Parties assert that “DeStephen never misrepresented the content of the film he sent to Wasilewski to duplicate” (see Princeton's SMF at ¶ 11); however, this is denied by the Comprehensive Parties (see Ans. to Princeton's SMF at ¶ 11.) Both the Comprehensive and Princeton Parties agree that in 2004, at the commencement of their business relationship, Wasilewski asked DeStephen “if copying the materials from libraries was illegal.” (See Princeton's SMF at ¶ 12; Ans. to Princeton's SMF at ¶ 12.) Both the Comprehensive and the Princeton Parties concur that DeStephen told Wasilewski that “we've been doing it for years” (see Princeton's SMF at ¶ 13; Ans. to Princeton's SMF at ¶ 13), but they do not agree as to the meaning of that statement. The Princeton Parties contend that they never concealed the content of the microfilm (see Princeton's SMF at ¶ 14), but this is also denied by the Comprehensive Parties (see Ans. to Princeton's SMF at ¶ 14). The Princeton Parties maintain that Wasilewski “regularly examined the microfilm he created for his customers for quality control” (see Princeton's SMF at ¶ 15); however, the Comprehensive Parties assert that such inspections were only carried out if the customer paid an additional fee for such an inspection and Wasilewski “did the actual filming of the images” (see Ans. to Princeton's SMF at ¶ 15). The Comprehensive Parties also contend that “a quality control check does not include a review of the content of the images.” (See Ans. to Princeton's SMF at ¶ 15.) The Comprehensive Parties assert that “[t]he images are reduced to the size of a postage stamp, and there can be up to 50,000 images in a processing run and it is impossible to read these images with a naked eye based on size and content.” (See Ans. to Princeton's SMF at ¶ 15.) Although both the Comprehensive and Princeton Parties agree that “Wasilewski had the ability to examine the microfilm he copied for DeStephen” (see Princeton's SMF at ¶ 16), the Comprehensive Parties argue that the quality control did not include a content search nor did the Princeton Parties pay for such quality control checks (see Ans. to Princeton's SMF at ¶ 16). STANDARD Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 40 of 247 Elsevier, Inc. v. Comprehensive Microfilm & Scanning..., Not Reported in... 107 U.S.P.Q.2d 1056 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 4 *5 Through summary adjudication the court may dispose of those claims that do not present a “genuine issue as to any material fact.” FED. R. CIV. P. 56(a). “As to materiality, ... [o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248,106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). The party moving for summary judgment bears the burden of showing the absence of a genuine issue as to any material fact. Celotex Corp. v. Catrett, 477 U.S. 317,323,106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). Once such a showing has been made, the non-moving party must offer specific facts contradicting those averred by the movant to establish a genuine issue of material fact. Lujan v. Nat'l Wildlife Fed'n, 497 U.S. 871, 888, 110 S.Ct. 3177, 111 L.Ed.2d 695 (1990). “Inferences should be drawn in the light most favorable to the non-moving party, and where the non-moving party's evidence contradicts the movant's, then the non-movant's must be taken as true.” Big Apple BMW, Inc. v. BMW of N. Am., Inc., 974 F.2d 1358, 1363 (3d Cir.1992), cert. denied 507 U.S. 912, 113 S.Ct. 1262, 122 L.Ed.2d 659 (1993). DISCUSSION Plaintiffs and Defendants have filed cross-motions for summary judgment, and Third Party Defendants have filed an additional motion for summary judgment. Each motion is addressed individually. I. Defendants' Motion for Summary Judgment (Doc. 89) Defendants' Motion for Summary Judgment (Doc. 89) asks the Court to address the following questions: (1) whether the provisions of a Release Agreement entered into between Plaintiffs and the Princeton Parties extend to Defendants so as to insulate them from liability in this case; (2) whether Defendants' activities with regard to the reproduction of microfilm constitutes fair use under 17 U.S.C. § 108 of the Copyright Act, in that Defendants may qualify for exceptions typically afforded to libraries and archives; (3) whether Plaintiffs have provided any evidence in support of their argument that the reproductive actions of Defendants constitute “use in commerce” and create consumer “confusion” among trademarks, thus violating 15 U.S.C. §§ 1114 and 1117 of the Lanham Act; and (4) whether Plaintiffs state a claim for unfair competition under Pennsylvania law. A. Release and Covenant Not to Sue Defendants argue that they are not subject to suit in this matter because all claims against them have been released as part of an earlier Release Agreement between Plaintiffs and the Princeton Parties (see Release Agreement, ECF Dkt. 114-1). In support of their argument, Defendants argue that “Plaintiffs willingly entered into a settlement agreement with the Third Party Defendants and the parties jointly created and agreed on a Release Agreement.” (See Defs.' Br. in Supp. Mot. for Summ. J. at 3, ECF Dkt. 90.) Defendants further argue that the Plaintiffs in the present case agreed in their Release Agreement with Princeton Micro Scan “to settle all claims in the case for approximately one million dollars or the percentage of the sales proceeds of the actual building that Princeton Microscan operated from once a sale was finalized.” (See Defs.' Br. in Supp. Mot. for Summ J. at 4.) Defendants insist that “[s]pecifically included in the Release Agreement was a provision that was jointly signed by the parties that acted to release future claims against the Defendants in this case.” (See Defs.' Br. in Supp. Mot. for Summ. J. at 4.) *6 Defendants further argue that “in the Release [A]greement between Plaintiffs and Third Party [D]efendants was an agreement that Plaintiffs agree not to engage any third party in any proceedings for copyright infringement arising out of the actions of the Princeton parties ....” (See Defs.' Br. in Supp. Mot. for Summ J. at 4.) On the other hand, Plaintiffs argue that Defendants' interpretation of the Release Agreement is incorrect and that nothing within the four corners of the Release Agreement prevents Plaintiffs from pursuing the present action. The parties dispute several sections of the Release Agreement, both with regard to their meaning and applicability. Paragraph 8 of the Release Agreement states, in pertinent part, that Plaintiffs: [H]ereby release, remise, and forever discharge the Princeton Parties, Leslie Crawford, Mark Crawford[,] ... Grant Crawford, and Robert S. Chaykowsky, their Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 41 of 247 Elsevier, Inc. v. Comprehensive Microfilm & Scanning..., Not Reported in... 107 U.S.P.Q.2d 1056 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 5 current and former employees, officers, directors and shareholders, as well as their heirs, predecessors, successors, assigns and all past, present, and future agents, accountants, attorneys, guardians and representatives (“Princeton Releasees”) of and from all debts, obligations, reckonings, promises, covenants, agreements, contracts, controversies, suits, actions, causes of action, judgments, damages, claims or demands, in law or in equity, whether known or unknown, foreseen or unforeseen, asserted or unasserted, which the Publishing Releasors ever had, now have or herein can, shall, or may have against the Princeton Releasees from the beginning of the world until the date of this Release. (See Release Agreement at ¶ 8, ECF Dkt. 111, Exh. 3.) At the outset, the Court notes that Paragraph 8 is directed exclusively to Plaintiff's release of “the Princeton Parties, Leslie Crawford, Mark Crawford [,] and Robert S. Chaykowsky, their current and former employees, officers, directors and shareholders, as well as their heirs, predecessors, successors, assigns and all past, present, and future agents, accountants, attorneys, guardians and representatives ....“ (See Release Agreement at ¶ 8.) Importantly, the Court is unable to determine, and the parties dispute, whether Defendants in the present action are or were “agents” of any of the released parties named in the Release Agreement. The language of Paragraph 8 is insufficiently clear to permit this Court to grant summary judgment. Trial in this matter is therefore necessary to determine whether the Defendants, or either of them, was an “agent” of any of the released parties identified in Paragraph 8. What is clear, however, is that Defendants were not included by name in the language of the Release Agreement even though the present litigation had already commenced at the time of its execution. (See Defs.' SMF at ¶ 41; Pls.' Ans. to SMF at ¶ 41.) Paragraph 9 of the Release Agreement is irrelevant to Defendants defenses. That paragraph provides that: *7 The Princeton Parties and all of their predecessors, successors, heirs, assigns, present, and future agents, accountants, guardians, representatives, employees, attorneys, trustees, independent contractors, and fiduciaries (“Princeton Releasors”) hereby release, remise, and forever discharge the Publishers and all of their predecessors, successors, heirs, assigns, parents, holding companies, subsidiaries, affiliates, divisions, past, present, and future agents, accountants, guardians, representatives, employees, officers, directors, attorneys, shareholders, trustees, independent contractors, and fiduciaries (“Publishing Releasees”) of and from all debts, obligations, reckonings, promises, covenants, agreements, contracts, controversies, suits, actions, causes of action, judgments, damages, claims or demands, in law or in equity, whether known or unknown, foreseen or unforeseen, asserted or unasserted, which the Princeton Releasors ever had, now have or hereinafter can, shall, or may have against the Publishing Releasees from the beginning of the world until the date of this Release. (See Release Agreement at ¶ 9.) The clear language of this provision does not in any way preclude Plaintiffs from raising claims against Defendants. The language serves to prevent the Princeton Parties from asserting claims against various persons or entities associated with Plaintiffs. It does not serve to prevent Plaintiffs from raising claims against any person or entity, and simply works to prevent the Princeton Parties from asserting claims against Plaintiffs and their associates. Similarly, Paragraph 19 of the Release Agreement does not release Defendants. That section provides: Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 42 of 247 Elsevier, Inc. v. Comprehensive Microfilm & Scanning..., Not Reported in... 107 U.S.P.Q.2d 1056 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 6 Except as may be ordered by a court of competent jurisdiction, the Publishers covenant and agree not to assist or engage any third party in any investigation or proceeding regarding claims of copyright infringement arising out of the actions of the Princeton Parties, except as required by court order or subpoena as to which prompt notice will be provided to the Princeton Parties. (See Release Agreement at ¶ 19.) New York law requires that any release be made in clear, unequivocal language that demonstrates intent to release a party from liability. Bank of Amer. Nat. Trust & Savings Assoc. v. Gillaizeau, 766 F.2d 709, 713 (2d Cir.1985) ( “New York law requires that a release contain an explicit, unequivocal statement of a present promise to release defendant from liability”)). Similarly, Pennsylvania law requires that “the effect of a release must be determined from the ordinary meaning of its language.” Hanselman v. Consolidated Rail Corp., 158 Pa.Cmwlth. 568, 632 A.2d 607, 609 (Pa.Commw.Ct.1993) (citing Wolbach v. Fay, 488 Pa. 239, 412 A.2d 487 (Pa.1980)). In the present matter, the proper application of the terms of Paragraph 19 to Defendants demonstrates that Plaintiffs agreed not to “assist or engage” any third party with regard to prosecuting claims of copyright or trademark infringement arising from the actions underlying the Release Agreement. Not only is it sufficiently clear to the Court that Paragraph 19 has narrow application, but it is clear that the Release does not relieve Defendants from liability in the “clear, unequivocal language” required under New York law or in the plain language required in Pennsylvania. Plaintiffs are not “engaging” or “assisting” any third party through their present actions, for it is the Plaintiffs themselves who are pursuing the immediate claims. We find the language clear and unequivocal in not presenting a release of the Defendants or a bar to a suit being brought against them by Plaintiffs. The express language of the Release Agreement demonstrates that the parties could not have intended to release Defendants or bar a suit against them where they used language to create an exception to the Plaintiffs' obligations which would be triggered by a Court order or the service of a subpoena. Nothing in the language of Paragraph 8, where specific parties who are to be released from liability are named, demonstrates that Defendants were intended to be included as named parties to the Release Agreement 2 , and the language of Paragraph 19 does nothing to alter this interpretation. *8 Finally, Paragraph 15 of the Release Agreement contains the following language: This Settlement Agreement shall be binding on and inure to the benefit of the parties and their respective heirs, agents, guardians, representatives, predecessors, successors, assigns, parents, holding companies, subsidiaries, affiliates, divisions, employees, officers, directors, attorneys, shareholders, trustees, independent contractors, and fiduciaries. (See Release Agreement at ¶ 15.) Paragraph 15's usage of the terms “agents” and “independent contractors” clearly refers only to the “independent contractors” identified in earlier provisions of the Release Agreement, including Paragraph 9. “Independent contractors” are not released in Paragraph 8, which is the applicable provision governing Plaintiffs' discharge of liability with regard to specifically named entities and persons. Thus, even if Defendants constituted “independent contractors,” they would not be released because Paragraph 9, in which the “independent contractor” language is used, cannot be read in any way so as to constitute a release by Plaintiffs in favor of Defendants. Accordingly, Paragraph 15 does not apply to Defendants. B. Library Use Exception Under 17 U.S.C. § 108 of the Copyright Act The essential rights owed to a copyright owner are detailed in 17 U.S.C. § 106. As noted by Plaintiffs, Section 106(1) provides a copyright owner with the exclusive right “to reproduce the copyrighted work in copies or phonorecords.” See Pls.'s Br. in Opp. to Mot. for Summ. J. at 8, ECF Dkt. 103 (quoting 17 U.S.C. § 106(1)). As a defense to its reproduction activities, Defendants raise 17 U.S.C. § 108, which provides an exception for fair use Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 43 of 247 Elsevier, Inc. v. Comprehensive Microfilm & Scanning..., Not Reported in... 107 U.S.P.Q.2d 1056 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 7 duplications of copyrighted materials by “libraries and archives.” Section 108(a) provides a narrow exception to “a library or archives, or any of its employees acting within the scope of their employment, to reproduce no more than one copy or phonorecord of a work....” See 17 U.S.C. § 108(a). “Libraries house copyrighted books and journals in their collections, provide intellectual access to them through catalogs and indexes, and make them available to users.” Laura N. Gasaway, Amending the Copyright Act for Libraries and Society: The Section 108 Study Group, 70 Alb, L.Rev. 1331, 1331 (2007). Under Section 108(a), the library exception only applies if: (1) the reproduction or distribution is made without any purpose of direct or indirect commercial advantage; (2) the collections of the library or archives are (i) open to the public, or (ii) available not only to researchers affiliated with the library or archives or within the institution of which it is a part, but also to other persons doing research in a specialized field .... See 17 U.S.C. § 108(a)(1)-(2). The record indicates that there is disagreement as to whether Comprehensive or Wasilewski can claim the library fair use exception because the nature of Defendants' relationship to the “libraries” for which the microfilm was provided is a matter of dispute. In addition, there is a factual dispute as to whether Wasilewski was an employee of a “library” or an “archives,” and as to whether he was acting within the scope of his employment with such an institution. Both parties fail to provide any undisputed factual evidence to support their arguments that Defendants may or may not take advantage of the protections afforded under Section 108. Importantly, there is an additional factual dispute as to whether the institutions that provided the original print journals would constitute “libraries” or “archives” as the terms are defined by statute, as the record contains no evidence to substantiate the parties' respective positions. *9 Further, Section 108 is only applicable if “(1) the reproduction or distribution is made without any purpose of direct or indirect commercial advantage.” See 17 U.S.C, § 108(a)(1). In the present matter, Defendants admit that they charged money for the processing and reproduction of microfilm, and did so for several years. (See Defs.' SMF at ¶ 19(iii).) Given this admission, the record tends to indicate that Defendants engaged in the act of reproducing microfilm and did so for commercial profit. Finally, the Court notes that Defendants admit that they often made more than one copy of a microfilm. (See Defs.' SMF at ¶ 12.) Thus, the one-to-one reproduction ratio touted by Defendants in support of their defense that their activity constituted an even swap is belied by their own admission that they made additional copies for future reproduction activities. Because numerous issues of material fact as to whether Defendants can take advantage of the library fair use exception under Section 108 remain, the Court will not enter summary judgment. C. Whether Defendants' Activities Constitute “Use in Commerce” As Applied to 15 U.S.C. §§ 1114 and 1117 of the Lanham Act Defendants argue that Plaintiffs have failed to state a claim under 15 U.S.C. §§ 1114 and 1117, because Plaintiffs have failed to produce any evidence demonstrating that the alleged acts by Defendants constitute “use in commerce” as defined by 15 U.S.C. § 1127 of the Lanham Act or that they created “consumer confusion.” Under 15 U.S.C. § 1114: “(1) Any person who shall, without the consent of the registrant (a) use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive; ... shall be liable in a civil action by the registrant for the remedies hereinafter provided.” See 15 U.S.C. § 1114. The Supreme Court has construed Section 1114 to require a plaintiff to demonstrate that the defendant's actual conduct is “likely to cause confusion, or to cause mistake, or to deceive” the public about the origin of goods or services. See KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 543 U.S. 111, 111-112, 125 S.Ct. 542,543 U.S. 111, 125 S.Ct. 542, 160 L.Ed.2d 440 (2004). The Supreme Court further explained that “a plaintiff claiming infringement of an incontestable mark must show likelihood of consumer confusion as part of the prima facie case.” See id. at 112. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 44 of 247 Elsevier, Inc. v. Comprehensive Microfilm & Scanning..., Not Reported in... 107 U.S.P.Q.2d 1056 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 8 Defendants contend that “[c]onsumer confusion is at the heart of trademark law.” See Defs.' Br. in Supp. Mot. for Summ. J. at 25, ECF Dkt. 90. They further contend that in the present case, “Plaintiffs have failed to make a prima facie case for consumer confusion, since the trademarks on microfilm were sent back to the original purchasers of the journals bearing those marks.” See id . Defendants argue that the “libraries were the ultimate consumers of microfilm as well as the owners of the hard copy journals.” See id. at 26. Defendants also assert that the “[I]ibraries received one exact microfilm copy of a journal they once owned in hard copy form and had no confusion as to the origin of the microfilm or that the mark or marks were associated with any other company or entity, since they were aware that the one microfilm copy was provided in exchange for the one hard copy.” See id. *10 Defendants' argument cannot succeed for several reasons. First, Defendants admit that they routinely produced more than one copy of each microfilm in the course of their processing activities-activities for which they were admittedly paid. Plaintiffs and Defendants admit that one copy was sent to the library while another was provided to the Third Party Defendants for their archives. Thus, the argument that a one-to-one reproduction of a journal containing registered marks was nothing more than an even swap is without merit. This further undermines the argument that the reproductions were not made for “use in commerce,” which resulted in commercial gain by Defendants. Further, Defendants cannot merely assert that there is no confusion because they sent identical marks back to the original owners of the hard copies. Such a determination must be made at trial. Defendants argue that because “the price of the microfilm goods were free for customers as an exchange rather than” as an actual purchase, Defendants could not have “adopted” or “used” the marks as if they were attempting to create market confusion. (See Defs.' Br. in Supp. Mot. for Summ. J. at 20.) Simply put, Defendants posit that they did not “use” or “adopt” the marks because they engaged in a one-to-one swap with the original hard-bound journals, and the original owners received the microfilm copies containing the original marks thus eliminating any potential confusion. (See Defs.' Br. in Supp. Mot. for Summ. J. at 24, ECF Dkt. 90.) A resolution of this argument, however, would require the Court to engage in a factual analysis that must be reserved for a jury. Federal courts in Pennsylvania have held in cases treating the use of identical marks that there is a presumption of a likelihood of confusion. See First Am. Mktg. Corp. v. Canella, 2004 WL 250537, at *5 (E.D.Pa. Jan.26, 2004) (“Similarity between marks and the goods marketed usually merits a presumption of a likelihood of confusion”); Fisions Horticulture, Inc. v. Vigoro Indus., Inc., 30 F.3d 466, 482 (3d Cir.1994) (“One need only look at the marks themselves to conclude that they are so similar that one can only wonder how an ordinary customer of the goods could be anything but confused by the parties' indistinguishable use of the FAIRWAY mark. The packaging of the products, the prominent use of the word ‘Fairway,’ and the inclusion of a triangular flag rising from a tree centered on a golfing green, are, for all intents and purposes, virtually identical as to both products. Under Ford Motor Co. and Opticians Association of America, this similarity all but creates a presumption of the requisite likelihood of confusion.”); Opticians Ass'n of Am. v. Indep. Opticians of Am., 920 F.2d 187, 195 (3d Cir.1990) ( “Thus, likelihood of confusion is inevitable, when, as in this case, the identical mark is used concurrently by unrelated entities”); U.S. Jaycees v. Philadelphia Jaycees, 639 F.2d 134, 142 (3d Cir.1981) (“We perceive that there is a great likelihood of confusion when an infringer uses the exact trademark ....”). *11 In the present matter, however, there is an issue of fact as to whether the “marks” contained on the microfilm were “used” because Defendants deny that they knew that such marks existed at the time of reproduction. Further, Defendants assert that there could be no confusion because the reproduced microfilm contained the exact marks found on the hard bound journals and were returned to the libraries that provided the originals. In the Third Circuit, the unauthorized use of a trademark will infringe the trademark holder's rights if the use is likely to confuse an “ordinary customer” with regard to source of the goods or services. See Ford Motor Co. v. Summit Motor Prods., Inc., 930 F.2d 277, 293 (3d Cir.1991)). In the present matter, the facts presented are particularly appropriate for a jury because the jury is in the most advantageous position to determine whether the “ordinary customer” would be confused by the use of the mark. Here, the jury should be given the ability to determine the likelihood of confusion based upon the marks, if any, as they are contained on both the original Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 45 of 247 Elsevier, Inc. v. Comprehensive Microfilm & Scanning..., Not Reported in... 107 U.S.P.Q.2d 1056 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 9 journals and the duplicated microfilm versions. The jury should also be permitted to evaluate whether the marks, if any, were visible to Defendants. Defendants posit that they did not act willfully, and thus did not “use” or “adopt” the marks, and that they had no knowledge that they were reproducing material protected by federally registered trademarks. The Court on summary judgment does not resolve factual disputes concerning the willfulness of the parties. In particular, whether a conversation between Wasilewski and DeStephen, in which Wasilewski inquired as to whether the reproduction of the microfilms might be illegal, confirms or vitiates Defendants' claims of lack of knowledge presents a dispute of material fact. DeStephen's answer that “we've been doing it for years” is sufficiently susceptible to more than one interpretation to create a further dispute of material fact. Likewise, whether Wasilewski drew any particular conclusion from that answer and whether such a conclusion should be believed are matters for trial. Given the factual disagreement on these material issues, the Court cannot make a determination as to whether Defendants engaged in trademark infringement, and if they did, whether their actions constitute innocent infringement under 15 U.S.C. § 1114(2)(A). 3 Similarly, the Court will not decide issues of fact with regard to Wasilewski's billing practices or as to the destruction of Defendants' records relating to its dealings with the Princeton Parties. Finally, 15 U.S.C. § 1117 provides for damages and costs for “violations of a mark registered in the Patent and Trademark Office, a violation under section 1125(a) or (d) of this title, or a willful violation under section 1125(c) of this title....” See 15 U.S.C. § 1117. 4 As a result of the factual disputes set forth in the record with regard to the underlying substantive claims, including the willfulness of the parties, the Court will not enter summary judgment with regard to damages or injunctive relief as permitted under Section 1117. D. Unfair Competition Under Pennsylvania Law *12 Pennsylvania law defines unfair competition as the “passing off” of rivals' goods as one's own, which creates confusion as to the authenticity of the goods in question. See M.D. v. Claudio, 714 F.Supp.2d 508, 521 (E.D.Pa.2010) (citing Scanvec Amiable Ltd. v. Chang, 80 F. App'x 171, 180 (3d Cir.2003)); see also Goebel Brewing Co. v. Esslingers, Inc., 373 Pa. 334, 95 A.2d 523, 526 (Pa.1953) (“underlying principle of law of unfair competition is to prevent substitution by deception”). Pennsylvania courts have also recognized unfair competition “where there is evidence of, among other things, trademark, trade name, and patent rights infringement, misrepresentation, tortious interference with contract, improper inducement of another's employees, and unlawful use of confidential information.” See Synthes (U.S.A.) v. Globus Med., Inc., No. 04-1235, 2005 WL 2233441, at *8 (E.D.Pa. Sept.14, 2005)). “If the defendant's action produces confusion in the public mind, it constitutes unfair competition for which equity affords relief.” Goebel Brewing Co., 95 A.2d at 527. Defendants argue that they “did not pass off any goods as the Plaintiffs” and that they are not “rivals” of Plaintiffs. See Defs.' Br. in Supp. Mot. for Summ. J. at 31. In order to grant summary judgment on the unfair competition claim, the Court would be required to make findings of fact similar to those required under the federal claims, including an evaluation of the presence of marks that may create consumer confusion and the willfulness of the Defendants. On the facts presented, the Court will not strain to presume a likelihood of confusion, but will reserve the issue for trial. II. Plaintiffs' Motion for Summary Judgment (Doc. 95) Plaintiffs' Motion for Summary Judgment (Doc. 95) asks the Court to determine: (1) that there are no factual disputes regarding the ownership of the copyrights (see Pls.' Br. in Supp. Mot. for Summ J. at 2-4, ECF Dkt. 96); (2) that there are no disputes that Defendants unlawfully infringed these copyrights (see Pls.' Br. in Supp. Mot. for Summ. J. at 4-7); (3) that Defendants' affirmative defenses fail as a matter of law (see Pls.' Br. in Supp. Mot for Summ. J. at 9); and (4) that at least minimum statutory damages should be awarded under 17 U.S.C. § 504(c) (see Pls.' Br. in Supp. Mot. for Summ J. at 22). Earlier in this memorandum's treatment of Defendants' Motion for Summary Judgment, the Court detailed the numerous factual disputes that prevented the award of summary judgment. To find in Plaintiffs' favor on the present motion, the Court would be required to resolve identical facts to those it refused to address in Defendants' Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 46 of 247 Elsevier, Inc. v. Comprehensive Microfilm & Scanning..., Not Reported in... 107 U.S.P.Q.2d 1056 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 10 motion. Thus, for the same reasons as set forth above, the Court will decline to award summary judgment in favor of Plaintiffs. In addition, the Court notes that Plaintiffs' Brief in Support of its Motion for Summary Judgment makes no attempt to identify any facts that are undisputed in the record. *13 Although the parties do not dispute that Plaintiffs own the exclusive copyrights to the journals in question, there are substantial factual disputes with regard to the questions of alleged infringement and Defendants proffered defenses. In particular, the Court may not engage in the resolution of disputed facts to determine the “use” or “adoption” of marks (see, supra, 17-19), the knowledge and willfulness of Defendants in engaging in alleged illegal activities (see, supra, 19-20), whether Defendants or the institutions for which microfilm copies were made may avail themselves of the fair use exception under Section 108 of the Copyright Act (see, supra, 15-16), and whether Defendants constitute “agents” under the terms of the Release Agreement (see, supra, 10-12). The very core of Plaintiffs' arguments requires findings of fact. Accordingly, the factual issues set forth in Plaintiffs' Motion for Summary Judgment with regard to both its claims and arguments in opposition to Defendants' affirmative defenses must be decided at trial. III. Third Party Defendants' Motion for Summary Judgment (Doc. 91) Third Party Defendants Motion for Summary Judgment asks the Court to determine: (1) whether Wasilewski knew that he was making copies of copyrighted materials (Third Party Defs.' Br. in Supp. of Mot. for Summ. J. at 2, ECF Dkt. 92) (hereinafter, “Princeton's Brief”); (2) whether the Princeton Parties had a duty to disclose the copyrighted nature of the materials (see Princeton's Brief at 7); (3) whether the Princeton Parties misrepresented the contents of the microfilm (see Princeton's Brief at 8); and (4) whether the Princeton Parties concealed the contents of the microfilm from Defendants (see Princeton's Brief at 10). Each of these questions requires an implicit requirement that the Court decide disputed issues of material fact; accordingly, the Court will refrain from granting the Princeton Parties' Motion for Summary Judgment, and will reserve the disputed issues for trial. In particular, the Court will not engage in a factual analysis as to what Wasilewski knew with regard to the possible illegality of his actions, or whether anyone misrepresented or concealed the contents of the microfilm. Defendants insist that they did not know that the material was copyrighted, but Plaintiffs and the Princeton Parties assert otherwise. These are issues more appropriately decided by a jury than a Court at the summary judgment stage. CONCLUSION For the reasons set forth in this memorandum opinion, Defendants' Motion for Summary Judgment, Plaintiffs' Motion for Summary Judgment, and Third-Party Defendants' Motion for Summary Judgment will be denied. All Citations Not Reported in F.Supp.2d, 2013 WL 1497946, 107 U.S.P.Q.2d 1056 Footnotes 1 This section is written in narrative form as a result of the inability of the Court to discern even substantial agreement among the parties with regard to undisputed issues of material fact. The state of the record in this case shows that, almost without exception, there is a dispute of material fact as to Plaintiffs' claims, Defendants' defenses, and Third Party Defendants' defenses as well. “Whether a party is seeking summary judgment or opposing it, Rule 56(c)(1) requires the party to support its position by either; (1) citing to appropriate evidentiary materials in the record; or (2) showing how the materials cited by the opposing party do not establish the absence or presence of a genuine dispute of fact.” Moore's Federal Rules Pamphlet § 56.4[3][c] (2013). Findings of fact are unnecessary at the summary judgment stage. See id. at § 56.8[2][b]. 2 By the above statement, we do not contradict our earlier determination that whether the Defendants, or either of them, were “agents” of the named released parties remains an issue in dispute and for trial. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 47 of 247 Elsevier, Inc. v. Comprehensive Microfilm & Scanning..., Not Reported in... 107 U.S.P.Q.2d 1056 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 11 3 “Innocent infringers” under 15 U.S.C. § 1114(2)(A) are subject only to injunction. 4 In addition to recovery of defendant's profits, monetary damages, and costs of the action, a person or entity who is found to be a trademark infringer is subject to treble damages for “intentional” use of a mark or designation. 15 U.S.C. § 1117(b). End of Document © 2017 Thomson Reuters. No claim to original U.S. Government Works. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 48 of 247 EXHIBIT E Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 49 of 247 Foster v. City of Philadelphia, Slip Copy (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 1 2013 WL 12149716 Only the Westlaw citation is currently available. United States District Court, E.D. Pennsylvania. James H. Foster et al, Plaintiffs, v. City of Philadelphia et al, Defendants. CIVIL ACTION NO. 12-5851 | Filed 09/12/2013 Attorneys and Law Firms Jacob U. Ginsburg, Haines & Associates, Philadelphia, PA, for Plaintiffs. James H. Foster, Philadelphia, PA, pro se. Joseph J. Santarone, Jr., Marshall Dennehey Warner Coleman & Goggin, Nicholas Campellone, Steven N. Cherry, Mintzer Sarowitz Zeris Ledva Meyers, Regina Lawrence, City of Philadelphia Law Dept., Philadelphia, PA, for Defendants. ORDER Hon. Petrese B. Tucker, C. J. *1 AND NOW, this ____ day of September, 2013, upon consideration of Plaintiffs' Motion to Dismiss Defendant Alfred Jefferson's Amended Counterclaim (Doc. 51) and Defendant's Response thereto (Doc. 55), IT IS HERE BY ORDERED AND DECREED that Plaintiffs' Motion to Dismiss is GRANTED IN PART AND DENIED IN PART. Plaintiffs' Motion is GRANTED with respect to Counts III (Continuing Trespass) and IV (Private Nuisance) of Defendant's Amended Counterclaim. Counts III and IV of Defendant's Amended Complaint are DISMISSED WITH PREJUDICE. Plaintiffs' Motion is GRANTED IN PART with respect to Count II (Defamation) of Defendant's Amended Counterclaim. References to alleged defamatory statements made by Plaintiff Foster to unnamed “other persons” contained in Paragraphs fifty-seven (57) through sixty-two (62) and sixty-six (66) of the Amended Counterclaim are hereby STRICKEN AS IMMATERIAL AND IMPERTINENT. Plaintiffs' Motion is otherwise DENIED. 1 *2 IT IS FURTHER ORDERED that Plaintiffs shall have fourteen (14) days from the date of this Order to file a responsive pleading to Defendant Alfred Jefferson's Counterclaim. All Citations Slip Copy, 2013 WL 12149716 Footnotes 1 Because the Court has already provided an extended recitation of the facts and applicable standard of review in this case in its earlier Order (Doc. 25), the Court relies on these earlier recitations in its order sub judice. I. DISCUSSION A. Jefferson's Amended Counterclaim Adequately Alleges an Abuse of Process Claim against Foster To state a claim for abuse of process under Pennsylvania law, a plaintiff must allege that “the defendant (1) used a legal process against the plaintiff, (2) primarily to accomplish a purpose for which the process was not designed, and (3) harm has been caused to the plaintiff.” Naythons v. Stradley, Ronon, Stevens & Young, LLP, 2008 WL 1914750 at *3 (E.D. Pa. Apr. 30, 2008) aff'd sub nom. Naythons v. Stradley, Ronan, Stevens & Young LLP, 339 Fed.Appx. 165 (3d Cir. 2009) (quoting Hart v. O'Malley, 647 A.2d 542, 551 (Pa. Super. Ct. 1994) aff'd, 676 A.2d 222 (Pa. 1996)); see also Clausi v. Stuck, 2013 PA Super 222 (Pa. Super. Ct. Aug. 2, 2013). Only the second element is in question here. Jefferson has adequately alleged that Foster utilized a legal process against Jefferson by filing the Complaint in this case. (Am. Countercl. at ¶ 38.) Jefferson has also adequately alleged harm resulting from any potential abuse of process. (Id. at ¶¶ 44, 49, 51-52.) To demonstrate a defendant used a legal process primarily to accomplish a purpose for which the process was not designed, a plaintiff “must show some definite act or threat not authorized by the process, or aimed at an objective Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 50 of 247 Foster v. City of Philadelphia, Slip Copy (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 2 not legitimate in the use of the process ...” Lerner v. Lerner, 954 A.2d 1229, 1238 (Pa. Super. Ct. 2008). Even where a defendant possesses probable cause to utilize a given legal process, an abuse of process claim is still viable if the primary purpose of defendant's actions differ from the intended purpose of the process. Id. Therefore, it is the misuse of a legal process by a defendant that lies at the heart of any abuse of process claim. Id. (quoting Rosen v. American Bank of Rolla, 627 A.2d 190, 192 (Pa. Super Ct. 1993)); see also Gen. Refractories Co. v. Fireman's Fund Ins. Co., 337 F.3d 297, 306-307 (3d Cir. 2003) (noting Pennsylvania law construes abuse of process claims broadly and is concerned with a defendant's use of a legitimate legal process to coerce or cause an illegitimate result.) Jefferson's Amended Counterclaim ascribes several potential impermissible motives to Foster's filing of the Complaint in this matter. Jefferson alleges Foster filed the Complaint with numerous falsehoods and misrepresentations of fact in an effort to embarrass or otherwise demean him. (Am. Countercl. at ¶¶ 39-44.) Jefferson also alleges Foster filed the Complaint in retaliation for, or to gain negotiating leverage in, earlier lawsuits brought by Jefferson against Foster. (Id. at ¶¶ 28-29, 45.) Finally, Jefferson alleges Foster filed the Complaint in this action specifically to entice third-parties to commence lawsuits against Jefferson. (Id. at ¶¶ 48-51.) If true, each of these allegations would be an improper purpose for commencing the lawsuit against Jefferson. See, e.g., Shiner v. Moriarty, 706 A.2d 1228, 1236 (Pa. Super Ct. 1998) (“Pursuing litigation primarily to harass and cause injury to the adverse party is an objective not authorized by the [...] action [...] [and] support[s] a common law claim of abuse of process.”). Merely possessing an improper motive, however, is insufficient to support an abuse of process claim under Pennsylvania law; the improper motive must be the primary reason for a defendant's misuse of legal process. Rosen, 627 A.2d at 192 (citing Restatement (Second) of Torts § 682, cmt. b (1977)). “It is not enough that the process employed was used with a collateral purpose in mind.” Hart, 647 A.2d at 552. Liability results only when a defendant's claimed reason for utilizing a particular legal process “becomes so lacking in justification as to lose its legitimate function as a reasonably justifiable litigation procedure.” Gen. Refractories, 337 F.3d at 308; see also Hart, 647 A.2d at 552 (“There is no liability where the defendant has done nothing more than carry out the process to its authorized conclusion, even though with bad intentions.”). At the motion to dismiss stage, the Court is unable to say that Foster's motives in bringing claims against Jefferson were not primarily for improper purposes. Jefferson alleges Foster admitted his conspiracy claims were groundless and Foster brought this lawsuit for purposes of leverage and revenge. (Am. Countercl. at ¶¶ 28-30.) When read against the factual history of the litigants, these are facts that could support a plausible abuse of process claim. A plaintiff's complaint must only plead facts sufficient “to raise a reasonable expectation that discovery will reveal evidence of the necessary element.” McTernan v. City of York, PA, 564 F.3d 636, 646 (3d Cir. 2009). In making this sufficiency determination, this Court is required to interpret a plaintiff's well-pled factual allegations “in the light most favorable to plaintiff.” Argueta v. U.S. Immigration & Customs Enforcement, 643 F.3d 60, 74 (3d Cir. 2011). Drawing all reasonable inferences in favor of Jefferson, the Amended Counterclaim is sufficient to permit the abuse of process claim to proceed to discovery. Whether Jefferson can ultimately demonstrate Foster's primary purpose in pursuing this litigation is for another day. B. Jefferson's Amended Counterclaim Adequately Alleges Defamation Pennsylvania law requires a plaintiff asserting a defamation claim to adequately allege “(1) the defamatory character of the communication; (2) its publication by the defendant; (3) a reference to the plaintiff; (4) a recipient's understanding of the communication's defamatory character and its application to plaintiff; (5) special harm resulting from the publication; and (6) abuse of any conditional privilege.” In re Philadelphia Newspapers, LLC, 690 F.3d 161, 173-74 (3d Cir. 2012), as corrected (Oct. 25, 2012), cert. dismissed, 133 S. Ct. 1001 (U.S. 2013); see also 42 Pa.C.S. § 8343(a). Plaintiff bears the burden of proving each of these elements in asserting a prima facie claim for defamation. 42 Pa.C.S. § 8343(a). Once a plaintiff has made a prima facie showing, the burden shifts to defendant to assert an affirmative defense. 42 Pa.C.S. §§ 8343(b)(1)-(3); see also Hudak v. Times Pub. Co., Inc., 534 F. Supp. 2d 546, 560 (W.D. Pa. 2008). A court may grant a defendant's motion to dismiss asserting an affirmative defense only when the facts needed to support the defense are clear from the face of the complaint. Leveto v. Lapina, 258 F.3d 156, 161 (3d Cir. 2001); accord DeMary v. Latrobe Printing & Pub. Co., 762 A.2d 758, 761-762 (Pa. Super. Ct. 2000) (holding even when affirmative defences are properly raised in preliminary objections, a trial court's scope of review is limited to the factual allegations contained in the complaint). 1. Statements from Foster to Unnamed Others Fail to State a Claim for Defamation In order to state a claim for defamation, a plaintiff must identify the alleged defamatory communication and to whom it was made. Woodward v. ViroPharma Inc., 2013 WL 1485110 at * 4 (Pa. Super. Ct. Apr. 3, 2013); Jaindl v. Mohr, 637 A.2d 1353, 1358 (Pa. Super. Ct. 1994) (“A complaint for defamation must, on its face, identify exactly to whom Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 51 of 247 Foster v. City of Philadelphia, Slip Copy (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 3 the allegedly defamatory statements were made.”). Allegations of statements made to unidentified “other persons” are insufficient as a matter of law to demonstrate publication of the defamatory statements. Moses v. McWilliams, 549 A.2d 950, 960 (Pa. Super Ct. 1988). The Amended Counterclaim makes numerous references to Foster's publication of defamatory statements to “others” without further description or identification. (See Am. Countercl. at ¶¶ 57-62, 66.) These vague allegations are clearly insufficient to establish publication of a defamatory statement by Foster. Therefore, to the extent that Jefferson's Amended Counterclaim alleges defamation on the basis of statements to unidentified others, those claims must be dismissed. References to statements made by Foster to unidentified others contained in paragraphs 57 through 62 and 66 of the Amended Counterclaim will be stricken as immaterial and impertinent pursuant to Fed. R. Civ. P. 12(f). 2. Statements from Foster to Bank, Ascolese, and McClanahan State a Prima Facie Case for Defamation Foster does not contest that the Amended Counterclaim adequately alleges a prima facie claim of defamation for statements he allegedly made to Bank, Ascolese, and McClannahan. (Pls.' Mot. Dismiss Am. Countercl. at 10). Instead, Foster asserts his statements to Bank, Ascolese, and McClannahan were protected by judicial privilege and he is entitled to an affirmative defense under 42 Pa.C.S. § 8343(b)(2). For the reasons that follow, the Court finds that the judicial privilege does not protect Foster from liability at this stage of the litigation. Where a defamatory publication is made subject to a recognized privilege, and the privilege is not abused, the publisher will not face liability for the publication of defamatory material. Johnson v. Res. for Human Dev., Inc., 860 F. Supp. 218, 222 (E.D. Pa. 1994) (quoting Elia v. Erie Ins. Exch., 634 A.2d 657, 660 (Pa. Super. Ct. 1993)). In Pennsylvania, communications made in judicial proceedings are strictly protected by the judicial privilege. Post v. Mendel, 507 A.2d 351, 355 (Pa. 1986). The judicial privilege “permits all suiters, however bold and wicked, however virtuous and timid, to secure access to the courts of justice to present whatever claims, true or false, real or fictitious, they seek to adjudicate.” Bochetto v. Gibson, 860 A.2d 67, 71 (Pa. 2004); see also Pawlowski v. Smorto, 588 A.2d 36, 41 (Pa. Super. Ct. 1991) (motive of speaker not relevant to determination of whether judicial privilege applies). The Supreme Court of Pennsylvania has held the judicial privilege to be practically absolute; however, the privilege it limited to “communications which are issued in the regular course of judicial proceedings and which are pertinent and material to the redress or relief sought.” Id. (quoting Post 507 A.2d at 354) (emphasis in original). Over-publication of defamatory statements is a narrow exception to the judicial privilege. Giusto v. Ashland Chem. Co., 994 F. Supp. 587, 594 (E.D. Pa. 1998) (citing Johnson, 860 F. Supp. at 223); see also Bochetto, 860 A.2d at 72 (citing Pawlowski, 588 A.2d at 41 n. 3). Over-publication occurs “where a statement initially privileged because made in the regular course of judicial proceedings is later republished to another audience outside of the proceedings.” Pawlowski, 588 A.2d at 41 n.3. Though not immediately clear from the face of the Amended Counterclaim, Foster asserts, and Jefferson does not challenge, that the publication at issue is the Complaint in this matter. (Pls.' Mot. Dismiss Am. Countercl. at 10; Defs.' Res. Opp'n at 13-15). As a pleading submitted to a court for consideration, publication of the Complaint to this Court by Foster is clearly protected by judicial privilege. Bochetto, 860 A.2d at 72. Had the Amended Counterclaim alleged Bank, Ascolese, and McClanahan merely retrieved documents from public records, Jefferson could not allege a claim for defamation based upon that publication. Id. at 860 A.2d at 73 n. 16 (citing Nixon v. Warner Communications, Inc., 435 U.S. 589, 597 (1978)). The Amended Counterclaim, however, alleges Foster went beyond a mere filing with the court. Jefferson has made numerous factual allegations relating to Foster's republication of the defamatory statements in the Complaint to Bank, Ascolese, and McClannahan outside of normal judicial proceedings. (See Am. Countercl. at ¶¶ 47, 49, 57-62, 66, 68.) Foster's republication of the allegedly defamatory Complaint, if true, would clearly constitute an extrajudicial act that was in no way related to Foster's claims in this case. For that reason, the judicial privilege would not protect Foster from liability for any publications made to Bank, Ascolese, and McClannahan. Bochetto, 860 A.2d at 73. C. Jefferson's Amended Counterclaim Fails to Adequately Allege Continuing Trespass and Private Nuisance Claims Against Foster The Court need not spend significant time on Jefferson's tort claims for continuing trespass and private nuisance because they are barred under the gist of the action doctrine. The gist of the action doctrine prevents a plaintiff from duplicating actions that sound in contract by recasting them as actions that sound in tort. J.J. DeLuca Co., Inc. v. Toll Naval Associates, 56 A.3d 402, 413-414 (Pa. Super. Ct. 2012), reargument denied (Dec. 20, 2012). If the parties' obligations to each other are grounded in the terms of a contract, and not social policy, the action cannot sound in tort. Id. at 413. The gist of the action doctrine has been applied in Pennsylvania under limited circumstances for causes of action in tort: Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 52 of 247 Foster v. City of Philadelphia, Slip Copy (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 4 (1) arising solely from a contract between the parties; (2) where the duties allegedly breached were created and grounded in the contract itself; (3) where the liability stems from a contract; or (4) where the tort claim essentially duplicates a breach of contract claim or the success of which is wholly dependent on the terms of a contract. Id. Since the express terms of the commercial lease agreement dictate the parties' obligations to each other in the event of a lease termination, Jefferson's tort claims must be dismissed. Foster, individually, and his businesses have a lease agreement with Jefferson since at least 1999. (Am. Countercl. at Exh. A-B). The lease agreement governs how the parties agree to act before, during, and upon expiration of the lease agreement. (Id.) The lease agreement grants rights and privileges to both parties, including rights and privileges gained and lost upon a default. (Id.) In fact, the lease agreement speaks precisely to how Foster must act in the situation complained of by Jefferson. (Id. at Exh. B. ¶¶ 9(c); 10(h); 15(c)). Because the lease agreement controls the precise situation complained of in Jefferson's tort claims, the gist of the action doctrine requires the Court to dismiss those claims. D. The Court Need Not Reach Jefferson's Allegations Relating to Piercing the Corporate Veil Because the Court will dismiss Counts III and IV of the Amended Counterclaim, the only remaining Count wherein Jefferson has claimed a need to pierce the corporate veil is Count I, abuse of process. Since Foster and the related corporate entities all filed suit against Jefferson, there is no need to pierce the corporate veil. Each counter defendant is individually responsible for their own abuse of a legal process, if such abuse occurred. The Court does note, however, wholly conclusory allegations of failure to observe corporate formalities, such as those alleged upon information and belief in the Amended Counterclaim, are entirely insufficient, and will not serve as the basis to pierce the corporate veil. McLaren v. AIG Domestic Claims, Inc., 853 F. Supp. 2d 499, 509 (E.D. Pa. 2012); Partners Coffee Co., LLC v. Oceana Servs. & Products Co., 700 F. Supp. 2d 720, 737-38 (W.D. Pa. 2010). End of Document © 2017 Thomson Reuters. No claim to original U.S. Government Works. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 53 of 247 EXHIBIT F Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 54 of 247 Gregg v. LoneStar Transp., LLC, Not Reported in F.Supp.3d (2015) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 1 2015 WL 1003911 Only the Westlaw citation is currently available. United States District Court, W.D. Pennsylvania. Joan F. GREGG, Executrix of the Estate of Donald J. Gregg, Sr., Deceased, Plaintiff, v. LONESTAR TRANSPORTATION, LLC, a Texas limited liability company, Defendant. Civil Action No. 3:14-44. | Signed March 6, 2015. Attorneys and Law Firms Kevin D. Persio, Smorto, Persio, Webb & McGill, Ebensburg, PA, for Plaintiff:. Timothy A. Montgomery, John T. Pion, Pion, Nerone, Girman, Winslow & Smith, Pittsburgh, PA, for Defendant. MEMORANDUM OPINION AND ORDER KIM R. GIBSON, District Judge. 1. INTRODUCTION *1 This matter comes before the Court upon consideration of Defendant's motion for more definite statement and for partial dismissal of complaint (ECF No. 3). For the reasons that follow, the Court will grant in part and deny in part Defendant's motion. 2. BACKGROUND a. Procedural background Plaintiff, Joan F. Gregg, Executrix of the Estate of Donald J. Gregg, Sr., initially filed a Complaint against Defendant LoneStar Transportation, LLC, in the Court of Common Pleas of Cambria County, Pennsylvania, at No. 2014-885. (ECF No. 1 at 1). The action was removed from the Court of Common Pleas to this Court pursuant to the provisions of 28 U.S.C. § 1441 et seq. (Id. at 2). b. Factual background The Complaint asserts that Donald J. Gregg (“Gregg”) was operating a 1998 Peterbilt truck in a proper and prudent manner on August 29, 2013, at approximately 7:20 a.m. (ECF No. 1-2 at 2). Gregg was travelling in a westerly direction on SR 422 near the SR 219 North Exit ramp, in Cambria Township, Cambria County, PA. (Id.). At the same place and time, John Edwards (“Edwards”), a properly authorized agent and/or employee of LoneStar, was operating a 2007 Peterbilt truck with a trailer attached thereto, which was transporting a windtower blade. (Id.) The Complaint alleges that at all times relevant thereto, Edwards was acting within the scope and course of his employment duties for LoneStar, and was acting in furtherance of LoneStar's business activity of transporting the windtower blade for profit. (Id.). The Complaint further alleges that at that place and time, Charlie E. Johns (“Johns”), a properly authorized agent and/or employee of LoneStar, was operating a Red Dodge Ram Model 1500 pickup truck, which acted as an escort vehicle for the LoneStar truck and windtower blade. (Id. at 3). The Complaint asserts that Johns was acting within the scope and course of his employment duties for LoneStar, and was acting in furtherance of LoneStar's business activity of transporting the windtower blade for profit. (Id.). Plaintiff asserts that LoneStar, acting through its duly authorized employees and/or agents who were acting in the scope and course of their employment duties for LoneStar, negligently, carelessly, and/or recklecssly operated LoneStar's truck from SR 219 South Exit Ramp onto the section of SR 422 that is located under the SR 219 overpass/bridge, blocking all four lanes of traffic for several minutes, at a time when extremely dense fog had settled under the bridge. (Id.). Plaintiff alleges that the windtower blade being transported by the LoneStar truck was virtually impossible to see for drivers travelling westbound on SR 422 because of its white color and the extremely dense fog that had settled in the area of the bridge. (Id. at 3-4). The Complaint alleges that Gregg encountered the dangerous condition caused by the LoneStar truck as a direct and proximate result of the conduct of LoneStar, acting through its duly authorized employees and/or agents who were acting in the scope and course of their employment duties for LoneStar. (Id. at 7). Gregg was subjected to and/or faced with a sudden emergency, forcing Gregg to attempt to avoid a collision with the LoneStar truck blocking all four lanes of traffic and both berms. (Id. at 7-8). As a result, Gregg lost control Case 3:14-cv-00853- DM Document 302-1 Filed 02/27/17 Page 55 of 247 Gregg v. LoneStar Transp., LLC, Not Reported in F.Supp.3d (2015) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 2 of his truck and collided and/or impacted the bridge embankment/abutment. (Id. at 8). The Complaint states that Gregg was killed and his widow and children suffered and/or sustained other damages. (Id. at 8). *2 Plaintiff brings a wrongful death action pursuant to 42 Pa.C.S.A. § 8301 at Count I of the Complaint. (ECF No. 1-2 at 2). Plaintiff alleges that LoneStar violated the mandates of 67 Pa.Code § 179.1 et seq., including, but not limited to 67 Pa.Code § 179.10(6)(ii). (Id. at 8). The Complaint alleges that LoneStar's violation of 67 Pa.Code 179.10(6)(ii) was the direct and proximate cause of the collision, and the resulting injuries, death and other damages. (Id. at 11). Plaintiff brings a survival action pursuant to 42 Pa.C.S.A. § 8302 at Count II of the Complaint, on the basis that Gregg suffered serious personal injuries as a result of the collision, suffered a pecuniary loss resulting from his inability to deliver the load of shale and other deliveries he was scheduled to make on August 20, 2013, and suffered pecuniary loss in the amount of the damage sustained to his truck. (Id. at 14-15). Count III of the Complaint alleges that the conduct of LoneStar, acting through its duly authorized employees and/or agents who were acting in the scope and course of their employment duties for LoneStar, was intentional, willful, outrageous, reckless and deliberately indifferent to the health, safety and welfare of motorists travelling westbound on SR 422. (Id. at 16). Plaintiff asks for punitive damages based on LoneStar's alleged outrageous conduct in operating the LoneStar truck that measured approximately 160 feet in length from a place of safety on the South exit ramps of SR 219 into a place where an extremely dangerous condition was created by the truck. (Id. at 16-17). Plaintiff finally asserts that LoneStar engaged in outrageous conduct by its manner of training its employees, agents and/or drivers on the laws and regulations governing motor vehicles in the Commonwealth of Pennsylvania. (Id. at 18). 3. STANDARD OF REVIEW a. Motion to dismiss A pleading that states a claim for relief must contain a short and plain statement of the grounds for the court's jurisdiction, a short and plain statement of the claim showing that the pleader is entitled to relief, and a demand for the relief sought. Fed.R.Civ.P. 8(a). A party may ask that a complaint or portion of a complaint be dismissed for failure to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). In determining the sufficiency of the complaint, a district court must conduct a two-part analysis. First, the court should separate the factual and legal elements of a claim. Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir.2009). The court must accept all of the complaint's well-pleaded facts as true, but may disregard any legal conclusions. Threadbare recitals of the elements of a cause of action do not suffice. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Second, the court must determine whether the factual matters averred are sufficient to show that the plaintiff has a “plausible claim for relief.” Fowler, 578 F.3d at 211 (quoting Iqbal, 556 U.S. at 679). The complaint need not include “detailed factual allegations.” Phillips v. Cnty. of Alleg hen y, 515 F.3d 224, 231 (3d Cir.2008) (quoting Twombly, 550 U.S. at 555). *3 A complaint must present sufficient “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 556). In determining whether a plaintiff has shown a “plausible claim for relief” the Court must conduct a “context specific” inquiry that requires it to “draw on its judicial experience and common sense.” Id. at 679. The relevant record under consideration includes the complaint and any “document integral to or explicitly relied upon in the complaint.” U.S. Express Lines, Ltd. v. Higgins, 281 F.3d 383, 388 (3d Cir.2002) (citing In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir.1997)). If a complaint is vulnerable to dismissal under Rule 12(b) (6), the district court must permit a curative amendment, irrespective of whether a plaintiff seeks leave to amend, unless such amendment would be inequitable or futile. Phillips, 515 F.3d at 236 (citing Grayson v. Mayview State Hosp., 293 F.3d 103, 108 (3d Cir.2002); see also Shane v. Fauver, 213 F.3d 113, 115 (3d Cir.2000) (“[L]eave to amend generally must be granted unless the amendment would not cure the deficiency.”)). b. Motion for more definite statement Case 3:14-cv-00853- DM Document 302-1 Filed 02/27/17 Page 56 of 247 Gregg v. LoneStar Transp., LLC, Not Reported in F.Supp.3d (2015) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 3 A party may move for a more definite statement of a pleading “which is so vague or ambiguous that the party cannot reasonably prepare a response.” Fed.R.Civ.P. 12(e). “The class of pleadings that are appropriate subjects for a motion under Rule 12(e) is quite small-the pleading must be sufficiently intelligible for the court to be able to make out one or more potentially viable legal theories on which the claimant might proceed.” Sun Co., Inc. (R & M) v. Badger Design & Constructors, Inc., 939 F.Supp. 365 (E.D.Pa.1996) (quoting 5A Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1376 (1990)). The motion is appropriate when the pleading is “so vague or ambiguous that the opposing party cannot respond, even with a simple denial, in good faith, without prejudice to [itself].” Id. (citing Hicks v. Arthur, 843 F.Supp. 949, 954 (E.D.Pa.1994)). A motion for a more definite statement “is directed to the rare case where because of the vagueness or ambiguity of the pleading the answering party will not be able to frame a responsive pleading.” Schaedler v. Reading Eagle Publication, Inc., 370 F.2d 795 (3d Cir.1967). 4. ANALYSIS a. LoneStar's arguments LoneStar has filed a motion for partial dismissal and for a more definite statement. (ECF No. 3). In its brief in support thereof, LoneStar argues that Plaintiff's Complaint fails to allege facts to support claims of recklessness and for punitive damages, and that those claims should therefore be dismissed. (ECF No. 4 at 5). LoneStar further asserts that the language “including, but not limited to” in paragraphs 11, 22 and 22(a) and other allegations in subparagraphs 22(h), 22(j) and 22(k) are so vague and ambiguous that Plaintiff should be ordered to replead those paragraphs or that this language should be deemed stricken from the complaint. (Id. at 8). b. Motion for partial dismissal *4 Since this Court is sitting in diversity jurisdiction, the Pennsylvania standard governing punitive damages applies here. Punitive damages are an “extreme remedy” available only in the most exceptional matters. Phillips v. Cricket Lighters, 584 Pa. 179, 883 A.2d 439, 445 (Pa.2005). Under Pennsylvania law, “[p]unitive damages may be awarded for conduct that is outrageous, because of the defendant's evil motive or his reckless indifference to the rights of others.” Feld v. Merriam, 506 Pa. 383, 485 A.2d 742, 747 (Pa.1984), citing Chambers v. Montgomery, 411 Pa. 339, 192 A.2d 355 (Pa.1963). Punitive damages “are proper only in cases where the defendant's actions are so outrageous as to demonstrate willful, wanton or reckless conduct.” Hutchison ex rel. Hutchison v. Luddy, 582 Pa. 114, 870 A.2d 766, 770 (Pa.2005). In order to support a claim for punitive damages, a plaintiff must establish that “(1) a defendant had a subjective appreciation of the risk of harm to which plaintiff was exposed and that (2) he acted, or failed to act, as the case may be, in conscious disregard of that risk.” Id. at 124, 870 A.2d 766; see also Ditzler v. Wesolowski, No. 3:05-cv-325, 2007 WL 2253596, at *4 (W.D.Pa. Aug.3, 2007). The Court must consider the actor's state of mind in determining whether punitive damages should be awarded. Feld, 485 A.2d at 748. The instant Complaint alleges that LoneStar's agent was negligent in operating his truck. (ECF No. 1-2 at 14). Plaintiff alleges that LoneStar's agent acted outrageously in “operating a truck that measured 160 feet in length from a place of safety on the South exit ramp of SR 219 into a place where an extremely dangerous condition was created by the LoneStar truck on SR 422 at a time when extremely dense fog had settled in the area of the bridge ...” (ECF No. 1-2 at 17). Plaintiff alleges that the sudden emergency situation created by LoneStar's agent prohibited motorists from having an adequate opportunity to react to the dangerous condition. (Id.). Plaintiff further asserts that the outrageous nature of the conduct was “even more willful, wanton, reckless, and deliberately indifferent to Gregg because of the availability of at least one escort vehicle that LoneStar had at said place and time,” which had the opportunity to perceive the extremely dense fog and take preventative measures. (Id.). The Court is mindful of the fact that punitive damages are an extreme remedy under Pennsylvania law. Plaintiff has failed to allege sufficient facts to establish a plausible claim that LoneStar's agent had a subjective appreciation of the risk to other motorists and acted in conscious disregard of that risk in operating his truck. Plaintiff has not alleged sufficient facts to establish that LoneStar's agent knew of the risks involved in operating his truck in the manner alleged, nor that he acted in conscious disregard of that risk. The Court also finds that Plaintiff has failed to allege sufficient facts to state a plausible claim for punitive Case 3:14-cv-00853- DM Document 302-1 Filed 02/27/17 Page 57 of 247 Gregg v. LoneStar Transp., LLC, Not Reported in F.Supp.3d (2015) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 4 damages for LoneStar's direct negligence in training its employees. The Complaint merely asserts that LoneStar was negligent in training its employees regarding the laws of the Commonwealth of Pennsylvania. (Id. at 18, 485 A.2d 742). The Complaint fails to allege any further facts to suggest that such training was so outrageous as to establish a plausible claim for punitive damages. Since punitive damages are an “extreme remedy,” additional facts would need to be pled in order to support Plaintiff's claim. *5 Therefore, Defendant's motion to dismiss Plaintiff's claims of recklessness and for punitive damages are granted. The Court finds that it is in the interest of justice to grant leave to amend to allow Plaintiff to address the deficiencies outlined above. c. Motion for more definite statement Defendant argues that the phrase “including, but not limited to” contained in paragraphs 11, 22 and 22(a), and other allegations found in subparagraphs 22(h), 22(j), and 22(k) are so “vague and ambiguous” that they must be repled. (ECF No. 4 at 8). Language akin to the language used in the instant Complaint was considered in Pozarlik v. Camelback Associates, Inc., in which the complaint had alleged that the defendant had been negligent in failing to exercise reasonable care at the property, “including but not limited to” twelve different theories, as well as “such other negligence, if any, that will be ascertained during discovery.” Pozarlik v. Camelback Associates, Inc., 2011 WL 6003841, at *3 (M.D.Pa. Nov.30, 2011). The court found that the defendant could not be expected to answer such vague and sweeping allegations, which could incorporate potentially innumerable state and federal laws. Pozarlik, at *4. Here, the Defendant relies heavily on the persuasiveness of Pozarlik to request a repleading of paragraph 11, which states that: “LoneStar, acting through its duly authorized employees and/or agents ... violated the mandates of 67 Pa.Code § 179.1 et. seq., including, but not limited to 67 Pa.Code § 179.10(6)(ii), [when] operating the LoneStar truck....” (ECF No.1-2 at ¶ 11). While there is some ambiguity in paragraph 11, the statement does not rise to the level of ambiguity found in Pozarlik. Unlike in Pozarlik, the language found in paragraph 11 permits only a limited number of additional claims, under one specific section of the law. Defendant should be able to adequately respond to the limited number of claims that may arise under 67 Pa.Code § 179.1 et. seq. Therefore, the Court finds that Plaintiff should not be required to give a more definite statement in paragraph 11. Paragraph 22 and subparagraph 22(a) of the Complaint allege the following: LoneStar ... engaged in conduct that was negligent, careless and/or reckless in the following particulars, including, but not limited to: a. Failing to abide by the laws and regulations governing motor vehicles and permitted motor vehicles in the Commonwealth of Pennsylvania, including, but not limited to 67 Pa.Code § 179.10(6) (ii). (ECF No. 1-2 at ¶ 22). This Court finds that Plaintiff should be granted leave to replead paragraph 22 and subparagraph 22(a). The allegation is overly broad, as it merely specifies 67 Pa.Code § 179.10(6)(ii), but leaves open the possibility of numerous other claims being brought under other laws of the Commonwealth of Pennsylvania. The vague nature of the allegation makes it difficult for Defendant to prepare a response to these claims. Thus, the Court finds that Plaintiff should provide a more definite statement in this paragraph. *6 Defendant finally asserts that Plaintiff should give a more definite statement in subparagraphs 22(h), (j) and (k). Subparagraphs (h) and (j) use the language “[i]n otherwise” with regards to LoneStar's conduct. The Court finds that Plaintiff need not replead these paragraphs. The use of the language “in otherwise” does not render the allegations so vague and ambiguous as to make it impossible for LoneStar to respond to the claims. Finally, subparagraph (k) alleges that Defendant was negligent in: Training and instructing its employees, agents and/or drivers that the laws and regulations governing motor vehicles and permitted motor vehicles in the Commonwealth of Pennsylvania required said employees, agents and/ or drivers to proceed from an area where no danger to motorists existed into an area where an extremely Case 3:14-cv-00853- DM Document 302-1 Filed 02/27/17 Page 58 of 247 Gregg v. LoneStar Transp., LLC, Not Reported in F.Supp.3d (2015) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 5 dangerous condition would exist for motorists. (ECF No.1-2 at ¶ 22(k)). The Court does not find that this allegation is so vague or ambiguous that Defendant cannot respond to it. Therefore, the Court will not require Plaintiff to provide a more definite statement in this subparagraph. 5. CONCLUSION For the aforementioned reasons, the Court will grant Defendant's motion for partial dismissal. Defendant's motion for a more definite statement will be granted in part and denied in part. Plaintiff is given leave to amend its complaint in order to address the deficiencies outlined above. An appropriate order follows. ORDER OF COURT AND NOW, this 6th day of March, 2015, upon consideration of Defendant's motion for partial dismissal of complaint and for a more definite statement (ECF No. 3), it is HEREBY ORDERED AS FOLLOWS: 1. Defendant's motion for partial dismissal is GRANTED. 2. Defendant's motion for a more definite statement is GRANTED IN PART AND DENIED IN PART. Plaintiff is granted 21 days from the date of this order to file an amended complaint. All Citations Not Reported in F.Supp.3d, 2015 WL 1003911 End of Document © 2017 Thomson Reuters. No claim to original U.S. Government Works. Case 3:14-cv-00853- DM Document 302-1 Filed 02/27/17 Page 59 of 247 EXHIBIT G Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 60 of 247 Hardy v. Trustees of University of Pennsylvania, Not Reported in A.3d (2014) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 1 2014 WL 10556361 Only the Westlaw citation is currently available. NON-PRECEDENTIAL DECISION- SEE SUPERIOR COURT I.O.P. 65.37 Superior Court of Pennsylvania. Leland HARDY and the Business Institute for Continuing Education in Professional Sports (B.I.C.E.P.S.), Appellants v. TRUSTEES OF the UNIVERSITY OF PENNSYLVANIA, Aresty Institute of Executive Education, Wharton School of University of PA and Kenneth L. Shropshire, Appellees. No. 381 EDA 2014. | Filed Dec. 26, 2014. Appeal from the Order Dated December 4, 2013, in the Court of Common Pleas of Philadelphia County, Civil Division at No.: April Term, 2007, No. 002178. BEFORE: GANTMAN, P.J., BENDER, P.J.E., and PLATT, J. * MEMORANDUM BY PLATT, J.: *1 Appellants, Leland Hardy and The Business Institute for Continuing Education in Professional Sports (B.I.C.E.P.S.), appeal from the trial court's final December 4, 2013 order and prior orders, which collectively dismissed their complaint for intentional interference with business relationships, misappropriation of trade secrets, breach of contract, and related claims with prejudice. We affirm. The trial court summarized the factual and procedural history of this case as follows: In 1998-1999, Hardy developed the B.I.C.E.P.S. Program (“Program”), an alleged novel and cutting edge concept to provide direct, customized business education for professional athletes in a business school setting. Hardy, an alumnus of the Wharton School, presented the Program to the Wharton School seeking aid in launching the program. Negotiations between [Appellants] and the Wharton School continued during the years 1999, 2000, and 2001. Hardy named the Program[,] “The Wharton Institute for Professional Athletes,” and developed a three-day course curriculum with the assistance of Kenneth Shropshire, the Academic Director of the Wharton Institute for Professional Athletes. Hardy provided the Wharton School with $55,000 to cover various costs to initiate the Program. On April 5, 2002, [Appellants] and the Wharton School reached agreements and the Program was presented at the Wharton School on July 17-19, 2002. Thereafter, Hardy initiated an aggressive promotional effort, which resulted in a content license and weblinking agreement with the Wharton School and a preliminary agreement with AIC Corporation to sponsor the [P]rogram's activities. In order to assist the sponsoring by the AIC Corporation, the Wharton School touted the success of the [P]rogram and the relationship between B.I.C.E.P.S. and the Wharton School. On April [15], 2003, [Appellants] entered into a second agreement[,] which provided that the Program would be offered, in the same form as previously, at the Wharton School on June 3-6[,] 2003. [Appellants] allege the Wharton School without any warning repudiated the April 15, 2003 agreement. In the meantime, [t]he Wharton School entered into an agreement with the National Football League and the National Football [League] Players Association to provide an education business program at the Wharton School to the league's athletes. The Wharton School's program took place on April 6-8, 2005 and was chaired by Shropshire. [Appellants] allege that the Wharton School [p]rogram contained a virtually identical curriculum as their [P]rogram. On April 18, 2007, [Appellants] commenced an action by writ of summons against the Trustees of the University of Pennsylvania, The Aresty Institute of Executive Education of [t]he Wharton School of the University of Pennsylvania, [t]he Wharton School of the University of Pennsylvania and Kenneth Shropshire (collectively referred to as [Appellees] ). On June 28, 2007, [Appellants] filed their complaint alleging claims for breach of contract, misrepresentation/ fraud, theft of ideas, conversion, unjust enrichment, misappropriation of trade secrets, unfair competition, intentional interference with prospective business Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 61 of 247 Hardy v. Trustees of University of Pennsylvania, Not Reported in A.3d (2014) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 2 relationships, punitive damages and violations of the Uniform Trade Secrets Act. *2 Appellees filed preliminary objections to the complaint for lack of personal jurisdiction and legal insufficiency. On February 21, 2008, after oral argument, the [trial] court sustained the preliminary objections as they pertained to the claims for misrepresentation/fraud, theft of ideas, conversion, misappropriation of trade secrets, punitive damages and violations of the Uniform Trade Secrets Act. The [trial] court granted [Appellants] leave to amend the claim for tortious interference with prospective contractual relations. An amended pleading was never filed. On February 28, 2008, [Appellees] filed a motion seeking clarification/reconsideration of the [trial] court[']s order dated February 21, 2008 regarding [Appellants'] claims for unjust enrichment and unfair competition. On March 3, 2008, the [trial] court denied [Appellees'] motion for clarification/reconsideration. On January 21, 2009, the [trial] court granted [Appellees] permission to file any and all motions that they deemed necessary and proper regarding the sufficiency of the allegations in [Appellants'] complaint that dealt with either [Appellants'] right to recover damages and or any limitations on [Appellants'] right to recover damages. In accordance with said order, [Appellees][,] on February 3, 2009, filed a motion to dismiss the claims for unjust enrichment and unfair competition. On July 16, 2009, the [trial] court granted the motion to dismiss as it pertained to the unfair competition claim only and denied the motion as it pertained to the unjust enrichment claim. On August 4, 2010, [Appellees] filed a renewed motion to dismiss the claim for unjust enrichment. On September 16, 2010, the [trial] court granted the motion and the claim for unjust enrichment was dismissed. On September 29, 2010, [Appellants] filed a motion for reconsideration of [the trial] court's order dated September 16, 2010. On October 7, 2010, the motion for reconsideration was denied. On January 13, 2011, [Appellees] filed a motion [for] summary judgment. On March 8, 2011, the motion for summary judgment was denied. On February 3, 2012, the parties filed a joint motion for extraordinary relief. On February 7, 2012, the [trial] court granted the motion for extraordinary relief and dismissed the remaining claim for breach of contract.... (Trial Court Opinion, 7/30/12, at 1-4). Appellants timely filed an appeal on March 6, 2012. On July 29, 2013, this Court quashed the appeal because the “count of intentional interference with prospective contractual relations ... [was] never specifically dismissed ... [or] disposed of, and [consequently] the February 6, 2012 order is not a final, appealable order.” (Hardy et al. v. Trs. of the Univ. of PA, et al., 1558 EDA 2012, unpublished memorandum at *3 (Pa.Super. filed July 29, 2013)). On November 27, 2013, the parties filed a joint motion for extraordinary relief. The trial court granted the motion and dismissed the remaining count of intentional interference with business relationships on December 4, 2013. Appellants timely appealed on December 20, 2013. 1 *3 Appellants raise the following issues for our review: 1. [Whether] [t]he [trial] [c]ourt erred as a matter of law in granting [Appellees'] [p]reliminary [o]bjections in finding that [Appellants'] claim for misrepresentation/ fraud was barred by the “gist of the action” doctrine[?] 2. [Whether] [t]he [trial] [c]ourt erred as a matter of law in granting [Appellees'] [p]reliminary [o]bjections as to [Appellants'] conversion claim in finding that [Appellees'] did not commit conversion because they had retained a property interest in the program in question[?] 3. [Whether] [t]he [trial] [c]ourt erred as a matter of law in granting [Appellees'] [p]reliminary [o]bjections as to [Appellants'] claim for misappropriation of trade secrets by finding that [Appellants'] had failed to establish that the program in question constituted a trade secret[?] 4. [Whether] [t]he [trial] [c]ourt erred as a matter of law in granting [Appellees'] [p]reliminary [o]bjections as to [Appellants'] claim for violation of the Uniform Trade Secrets Act by finding that the information [Appellants'] sought to protect did not meet the definition of trade secret[?] 5. [Whether] [t]he [trial] [c]ourt erred as a matter of law in granting [Appellees'] [m]otion to [d]ismiss, a motion Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 62 of 247 Hardy v. Trustees of University of Pennsylvania, Not Reported in A.3d (2014) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 3 not authorized under Pennsylvania law, and dismissing [Appellants'] count for unfair competition[?] 6. [Whether] [t]he [trial] [c]ourt erred as a matter of law in granting [Appellees'] [r]enewed [m]otion to [d]ismiss, a motion not authorized under Pennsylvania law, and dismissing [Appellants'] count for unjust enrichment[?] (Appellants' Brief, at 8) (footnote omitted). 2 It is well-settled that: In reviewing a trial court's grant of preliminary objections, the standard of review is de novo and the scope of review is plenary. The salient facts are derived solely from the complaint and pursuant to that standard of review, the court accepts all well-pleaded material facts in the complaint, and all inferences reasonably deduced therefrom must be accepted as true. Martin v. Rite Aid of PA, Inc., 80 A.3d 813, 814 (Pa.Super.2013) (citation omitted). Since the Rules of Civil Procedure do not recognize a[m]otion to [d]ismiss as a separate motion, we will characterize it as a motion for summary judgment. When reviewing a grant of a motion for summary judgment, our review is plenary. We will not disturb the trial court's order absent an error of law or abuse of discretion. Where there is no genuine issue of material fact and the moving party is entitled to relief as a matter of law, summary judgment may be entered. Lastly, we will view the record in the light most favorable to the non-moving party, and all doubts as to the existence of a genuine issue of material fact must be resolved against the moving party. Long v. Ostroff, 854 A.2d 524, 527-28 (Pa.Super.2004), appeal denied, 871 A.2d 192 (Pa.2005) (citations, brackets, and quotation marks omitted). *4 In their first issue, Appellants argue that the trial court erred in dismissing their claim for misrepresentation and fraud under the gist of the action doctrine where breach of contract is not the gist of the current action. (See Appellants' Brief, at 20-33). We disagree. The gist of the action doctrine forecloses tort claims (1) arising solely from the contractual relationship between the parties; (2) when the alleged duties breached were grounded in the contract itself; (3) where any liability stems from the contract; and (4) when the tort claim essentially duplicates the breach of contract claim. Indalex Inc. v. Nat'l Union Fire Ins. Co. of Pittsburgh, PA, 83 A.3d 418, 425 (Pa.Super.2013), appeal denied, 99 A.3d 926 (Pa.2014) (citation and quotation marks omitted). Here, the record reflects that Appellants' contend that (1) Appellees misappropriated the concept embodied in the B.I.C.E.P.S. Program, disclosing it to the National Football League (NFL) and NFL Players Association (NFLPA), and marketing it as their own; (2) violated the confidentiality provision contained in the parties' April 2002 agreement; and (3) used the confidentiality agreement as a means to commit tortious acts against Appellants. (See Appellants' Brief, at 21, 24-26). All of these alleged acts of misrepresentation and fraud arose in the course of the parties' contractual relationship. Moreover, the parties' agreements created Appellees' duties regarding the B.I.C.E.P.S. Program. (See Agreement, 4/05/02; Agreement, 4/15/03). Based on the foregoing, we conclude that the trial court properly determined that the gist of Appellants' misrepresentation and fraud action sound in contract. (See Trial Court Opinion, 2/21/08, at 4-5); see also Indalex Inc., supra at 425. Accordingly, the trial court did not err as a matter of law and properly dismissed the misrepresentation and fraud claim under the gist of the action doctrine. See Indalex Inc., supra at 425; Martin, supra at 814. Appellants' first issue does not merit relief. In their second issue, Appellants argue that the trial court erred in dismissing their claim for conversion on the basis that under the contract, Appellees retained a property Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 63 of 247 Hardy v. Trustees of University of Pennsylvania, Not Reported in A.3d (2014) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 4 interest in the intellectual material. (See Appellants' Brief, at 33-39). We disagree. It is well-settled that: Conversion is defined as the deprivation of another's right of property in, or use or possession of, a chattel, or other interference therewith, without the owner's consent and without lawful justification. When such an act occurs, the plaintiff may bring suit if he had an immediate right to possession of the chattel at the time it was converted. Bank of Landisburg v. Burruss, 524 A.2d 896, 898 (Pa.Super.1987), appeal denied, 532 A.2d 436 (Pa.1987) (citations and quotation marks omitted). Here, Appellants contend that Appellees “interfered with their use and benefit of the ideas and concepts generated and owned by Leland Hardy, thereby depriving them of the ability to use those ideas and concepts for profit.” (Appellants' Brief, at 35 (record citations omitted)). *5 However, our independent review of the record reflects that the “curriculum for the three[-]day B.I.C.E.P.S. Program was developed by [Appellant], Leland Hardy, with the aid and assistance of [Appellee], Kenneth Shropshire[.]” (Complaint, 6/28/07, at 4 ¶ 9). Furthermore, “[n]egotiations and discussions continued [between the parties] with respect to the specific details of the B.I.C.E.P.S. Program at [Appellee,] Wharton, including ... curriculum[.]” (Id. at 5 ¶ 11). Moreover, the 2002 and 2003 agreements state that, “[Appellee,] Wharton retains all rights, title, and interest in and to all materials developed by Wharton.” (Agreement, 4/05/02, at unnumbered page 4; Agreement, 4/15/03, at unnumbered page 4). Additionally, Appellant, Leland Hardy, acknowledged that “Licensor [Appellee, Trustees of the University of Pennsylvania] owns all right, title and interest in the Licensor [c]ontent....” (Content License and Weblinking Agreement, 7/27/02, at 7 ¶ 9.1). Therefore, the trial court properly determined that Appellees retained a property interest in the intellectual material, which they had developed. (See Trial Ct. Op., 2/21/08, at 5-6); see also Bank of Landisburg, supra at 898. Accordingly, the trial court did not err as a matter of law and properly dismissed the conversion claim. See Martin, supra at 814; Bank of Landisburg, supra at 898. Appellants' second issue lacks merit. In their third and fourth issues, Appellants argue that the trial court erred in dismissing their claim for misappropriation of trade secrets by finding that the B.I.C.E.P.S. Program is not a trade secret. (See Appellants' Brief, at 40-47). We disagree. The determinative question in these claims is the interpretation of section 5302 of the Uniform Trade Secrets Act (UTSA). 12 Pa.C.S.A. §§ 5301-5308. “Questions of statutory construction are questions of law; therefore, our review is de novo.” Betts Ind., Inc. v. Heelan, 33 A.3d 1262, 1265 (Pa.Super.2011) (citation omitted). UTSA defines a trade secret as: Information, including a ... program ... that: (1) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use. (2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. 12 Pa.C.S.A. § 5302. It is well-settled that: ... Some factors which a court may consider in determining whether information qualifies as a trade secret include: (1) the extent to which the information is known outside the owner's business; (2) the extent to which it is known by employees and others involved in the owner's business; (3) the extent of measures taken by the owner to guard the secrecy of the information; (4) the value of the information to the owner and to his competitors; (5) the amount of effort or money expended by the owner in developing the information; and (6) the ease or difficulty with which the information could be properly acquired or duplicated by others. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 64 of 247 Hardy v. Trustees of University of Pennsylvania, Not Reported in A.3d (2014) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 5 *6 Iron Age Corp. v. Dvorak, 880 A.2d 657, 663 (Pa.Super.2005) (citation omitted). Here, the record reflects that Appellants promoted the B.I.C.E.P.S. Program to the NFLPA and specified that “The Wharton School has created a program ... [and] presents B.I.C.E.P.S.....” (Complaint, 6/28/07, Marketing Brochure, at Exhibit F) (emphases added). Moreover, the information was generally known and marketed to the public. Appellants presented and promoted the program and its materials to increase exposure to target markets. (See id. at 6-7 ¶¶ 14-17 (describing promotional efforts and efforts to obtain increased exposure); and Marketing Brochure, at Exhibit F). Furthermore, Appellants failed to show that they made reasonable efforts to maintain the B.I.C.E.P.S. Program's secrecy. (See Complaint, 6/28/07, at 6-7 ¶¶ 14-17). Therefore, the trial court properly determined that the B.I.C.E.P .S. Program is not a trade secret because: (a) the information was well within the public domain, (b) no measures were taken to ensure the secrecy of the information, and (c) the relative ease in which one could properly acquire and duplicate the information.... One would only have to enroll in the course in order to access all of the alleged “secret” information. (Trial Ct. Op., 2/21/08, at 6-7); see also 12 Pa.C.S.A. § 5302; Iron Age Corp., supra at 663. Accordingly, the trial court did not err as a matter of law and properly dismissed the misappropriation of trade secrets claims. See Betts Ind., Inc., supra at 1265; Martin, supra at 814. See also 12 Pa.C.S.A. § 5302; Iron Age Corp., supra at 663. Appellants' third and fourth issues lack merit. In their fifth issue, Appellants argue that the trial court erred in dismissing their claim for unfair competition where it found that Appellants “lacked the necessary ownership interest to allege a claim for unfair competition.” (Appellants' Brief, at 47; see id . at 50-52). Additionally, Appellants argue that Appellees “lacked any authority to file their motion [to dismiss]....” (Id. at 49). We disagree. 3 It is well-settled that “[a] claim of unfair competition encompasses trademark infringement, but also includes a broader range of unfair practices, which may generally be described as a misappropriation of the skill, expenditures and labor of another.” PA State Univ. v. Univ. Orthopedics, Ltd., 706 A.2d 863, 867 (Pa.Super.1998) (citation omitted). Additionally, “[t]he gist of the action lies in the deception practiced in ‘passing off’ the goods of one for that of another.” Id. at 870 (citation omitted). Here, because we have concluded that the trial court properly determined that Appellees retained a property interest in the intellectual material, the claim of unfair competition fails for Appellants' lack of the requisite ownership. (See Trial Ct. Op., 7/30/12, at 4); see also PA State Univ., supra at 867, 870. *7 Moreover, Appellants have failed to support their claim that Appellees have “passed off the program as their own creative design, thereby deceiving and confusing their consumers....” (Appellants' Brief, at 50). The record reflects that Appellees created the program. (See Complaint, 6/28/07, at 4-5 ¶¶ 9, 11; Marketing Brochure, at Exhibit F). They retained an intellectual property interest in the program. (See Agreement, 4/05/02, at unnumbered page 4; Content License and Weblinking Agreement, 7/27/02, at 7 ¶ 9.1; Agreement, 4/15/03, at unnumbered page 4). Appellees marketed their 2005 program as “business education ... to assist players in preparing for their post-playing career.... It focuses on personal investments as well as entrepreneurial opportunities for players transitioning from their football careers.” (Complaint, 6/28/07, News Release, at Exhibit O). Additionally, there is no non-compete clause in any of the parties' agreements, therefore, no unfair competition. (See Agreement, 4/05/02; Content License and Weblinking Agreement, 7/27/02; Agreement, 4/15/03). Accordingly, the trial court did not err as a matter of law and properly dismissed the unfair competition claim. See Long, supra at 527-28; PA State Univ., supra at 867. Appellants' fifth issue lacks merit. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 65 of 247 Hardy v. Trustees of University of Pennsylvania, Not Reported in A.3d (2014) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 6 In their final issue, Appellants argue that the trial court erred in dismissing their claim for unjust enrichment and refusing to find that “the conduct of the parties at issue goes well beyond the scope of their agreements.” (Appellants' Brief, at 53; see id. at 52-59). Additionally, Appellants argue that Appellees “lacked any authority to file their motion [to dismiss]....” (Id. at 54; see id. at 53-54). We disagree. 4 It is well-settled that “[a]n action based on unjust enrichment is an action which sounds in quasi-contract or contract implied in law. A quasi-contract imposes a duty, not as a result of any agreement ... but in spite of the absence of an agreement....” Discover Bank v. Stucka, 33 A.3d 82, 88 (Pa.Super.2011) (citations and quotation marks omitted). Additionally, “the doctrine of unjust enrichment is inapplicable when the relationship between parties is founded upon a written agreement or express contract, regardless of how harsh the provisions of such contracts may seem in the light of subsequent happenings.” Wilson Area Sch. Dist. v. Skepton, 895 A.2d 1250, 1254 (Pa.2006) (citations and quotation marks omitted). Here, the record reflects that three distinct contracts govern the parties' relationship. (See Complaint, 6/28/07, at 5-8 ¶¶ 13, 16, 19; Agreement, 4/05/02; Content License and Weblinking Agreement, 7/27/02; Agreement, 4/15/03). Therefore, the trial court properly determined that an express written contract existed between the parties. (See Trial Ct. Op ., 7/30/12, at 4-5); see also Discover Bank, supra at 88; Wilson Area Sch. Dist., supra at 1254. Accordingly, the trial court did not err as a matter of law and properly dismissed the unjust enrichment claim. See Long, supra at 527-28; Discover Bank, supra at 88; Wilson Area Sch. Dist., supra at 1254. Appellants' sixth issue lacks merit. *8 Order affirmed. All Citations Not Reported in A.3d, 2014 WL 10556361 Footnotes * Retired Senior Judge assigned to the Superior Court. 1 Pursuant to the court's March 8, 2012 order, Appellants timely filed a Rule 1925(b) statement on March 29, 2012. The court entered its Rule 1925(a) opinion on July 30, 2012. After Appellants timely appealed the December 4, 2013 order, the court did not order Appellants to file a Rule 1925(b) statement, but it entered its Rule 1925(a) opinion on January 2, 2014, in which it relied on its July 30, 2012 opinion. See Pa.R.A.P.1925. 2 Appellants note that, in effect, questions three and four raise identical issues, thus, “Appellants' will address these issues only once under question three.” (Appellants' Brief, at 8 n. 1). Accordingly, we also will review these claims as a single issue. 3 Appellees filed their motion to dismiss in accordance with the trial court's January 21, 2009 order, which specifically granted them permission to file “any and all motions ... regarding the sufficiency of allegations in [Appellants'] complaint that deal with either [Appellants'] right to recover damages and/or any limitations on [Appellants'] right to recover damages.” (Order, 1/21/09, at unnumbered pages 1-2). 4 See footnote 4, supra (quoting Order, 1/21/09, at unnumbered pages 1-2). End of Document © 2017 Thomson Reuters. No claim to original U.S. Government Works. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 66 of 247 EXHIBIT H Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 67 of 247 Ickes v. Flanagan, Not Reported in F.Supp.2d (2008) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 1 2008 WL 859183 Only the Westlaw citation is currently available. United States District Court, W.D. Pennsylvania. Don R. ICKES, Plaintiff, v. Tim FLANAGAN, Roland Trombetto, Commonwealth of Pennsylvania, Defendants. Civil Action No. 3:2007-143. | March 31, 2008. Attorneys and Law Firms Don Ickes, Fishertown, PA, pro se. Tracey A. Wilson, Office of the Attorney General, Pittsburgh, PA, for Defendants. MEMORANDUM OPINION and ORDER OF COURT GIBSON, District Judge. *1 Presently before the Court is Defendants' Motion to Dismiss Plaintiff's complaint for failure to state a claim upon which relief could be granted pursuant to Federal Rule of Civil Procedure 12(b) (6) (Document No. 4) together with the briefs submitted by the parties in abetment and in opposition, respectively. Plaintiff's complaint, commenced in state court and removed to federal jurisdiction by Defendants on June 14, 2007, asserts six counts for relief predicated upon the actions of two state game officials in the spring of 1999. After removing the action, Defendants filed the instant motion and brief on July 19, 2007. On August 16, 2007, Plaintiff filed a response and brief (styled a memorandum of law). Scheduling and discovery conferences have been held and, the grant of Plaintiff's motion to amend notwithstanding, Defendants' Rule 12(b)(6) motion is now poised for disposition. From what the Court can decrypt from Plaintiff's complaint, it seems that Plaintiff was the target of a protean conspiracy perpetrated by, among others, the FAA, the Pennsylvania Game Commission, various Bedford County deer hunters and Plaintiff's officious neighbor, aimed at depriving Plaintiff of his Constitutionally protected civil rights. 1 To briefly summarize the facts giving rise to Plaintiff's complaint as well as the Court is able, on April 2, 1999, Plaintiff was approached by Defendants Timothy Flanagan (“Flanagan”) and Roland Trombetto (“Trombetto”) and asked to identify himself. Plaintiff refused to do so and directed the officers to convey all questions to his attorney. The officers again requested that Plaintiff identify himself, and Plaintiff again refused. On May 14, 1999, two citations were issued charging Plaintiff with violation of 34 Pa.C.S. § 904, “Resisting or interfering with an officer.” 2 On August 5, 1999, a district justice convicted Plaintiff on the first citation, fining him $800 plus costs, but dismissed the second citation as a continuation of the same offense. Plaintiff appealed the decision to the Pennsylvania Court of Common Pleas, where a judge upheld the conviction and sentence. On May 24, 2002, Plaintiff's conviction was reversed by the Commonwealth Court, holding the statute on which Plaintiff was convicted to be unconstitutional. The decision of the Commonwealth Court was unanimously affirmed by the Pennsylvania Supreme Court on May 4, 2005. The Supreme Court recently announced a new standard when ruling on a Rule 12(b)(6) motion in Bell Atlantic Corp. v. Twombly, --- U.S. ----, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). On February 5, 2008, the Third Circuit issued an opinion that contains an extended analysis of the standard promulgated in Twombly. See Phillips v. County of Allegheny, 515 F.3d 224 (3d Cir.2008). Accordingly, a discussion of the applicable standard when deciding a Rule 12(b)(6) motion as stated in those two cases is appropriate here. Certain aspects of the analysis remain intact. The court still must “accept as true all allegations in the complaint and all reasonable inferences that can be drawn therefrom, and view them in the light most favorable to the non- moving party.” Rocks v. City of Philadelphia, 868 F.2d 644, 645 (3d Cir.1989); D.P. Enters., Inc. v. Bucks County Cmty. Coll., 725 F.2d 943 (3d Cir.1984). The Court need not credit bald assertions or legal conclusions. In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1429-30 (3d Cir.1997) (citation omitted). In addition to the allegations contained in the pleadings, the Court may Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 68 of 247 Ickes v. Flanagan, Not Reported in F.Supp.2d (2008) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 2 also review “matters of public record, orders, exhibits attached to the complaint and items appearing in the record of the case.” Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1384-85 n. 2 (3d Cir.1994) (citation omitted). Furthermore, in deciding a rule 12(b) (6) motion, the Court may review “undisputably authentic document[s] that a defendant attaches as an exhibit to a motion to dismiss if the plaintiff's claims are based on the document.” Steinhardt Group v. Citicorp, 126 F.3d 144, 145 (3d Cir.1997). *2 In Twombly, supra, 1968-69, the distinction came when the Supreme Court criticized the oft-quoted “no set of facts” language from Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957), that had served as the standard for dismissing a claim under Rule 12(b)(6) for fifty years. The crux of the censure of the Conley standard is that it is overly inclusive and unworkable. As the Third Circuit observed in Phillips v. County of Allegheny, 515 F.3d 224 (3d Cir.2008), “The Conley language was problematic because, for example, it could be viewed as requiring judges to speculate about undisclosed facts.” Id. at 232. The Supreme Court further stated, “On such a focused and literal reading of Conley's ‘no set of facts,’ a wholly conclusory statement of claim would survive a motion to dismiss whenever the pleadings left open the possibility that a plaintiff might later establish some ‘set of [undisclosed] facts' to support recovery.” Twombly, supra, at 1968 (alteration in original). The Third Circuit also noted, parenthetically, that “literal compliance” with Conley “could consist simply of giving the names of the plaintiff and the defendant, and asking for judgment.” Phillips, supra, at 233, (citing Geoffrey C. Hazard, From Whom No Secrets Are Hid, 76 Tex. L.Rev. 1665, 1685 (1998) (cited for related proposition in Twombly, 127 S.Ct. at 1969)). This is not to say, as the Supreme Court was careful to point out, that there is now a heightened pleading standard or a probability requirement. Id., citing Twombly, 127 S.Ct. at 1964, 1965, 1973 n. 14, 1974. It remains an acceptable statement of the standard, for example, that courts ‘accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief.’ “ Phillips, supra, at 233 (citations omitted). There is, however, another hurdle erected by Twombly that a party aspiring to defeat a Rule 12(b)(6) dismissal must overcome. Although the Court stresses that it is not adopting a heightened pleading standard, the Court does seem to introduce “plausibility” as an element to the standard for notice pleading. Twombly, 127 S.Ct. at 1974. “The Court explained that a plaintiff must ‘nudge [his or her] claims across the line from conceivable to plausible’ in order to survive a motion to dismiss.” Phillips, supra, at 234, quoting Twombly, 127 S.Ct. at 1974. Furthermore, the Third Circuit has held that Twombly is not to be read so narrowly as to limit its holding on plausibility to the antitrust context in which it arose. Phillips, supra. The “plausibility” requirement relates to the “showing” requirement of Rule 8, which requires notice of a claim and its grounds, as distinguished from “a pleader's ‘bare averment that he wants relief and is entitled to it.’ “ Id., (quoting Twombly, 127 S.Ct. at 1965 n. 3.) Even a well-pleaded complaint alleging facts the proof of which seem improbable can survive a Rule 12(b) (6) attack if the “[f]actual allegations [are] enough to raise a right to relief above the speculative level.” Phillips, supra, at 234 (quoting Twombly, 127 S.Ct. at 1965). The Supreme Court's Twombly formulation does not impose a probability requirement at the pleading stage, but it does insist that the pleader make some showing sufficient to justify moving the case beyond the pleadings to the next stage of litigation. Phillips, supra, at 234-35 (citing Twombly, 127 S.Ct. at 1965). *3 For purposes of clarity, the Court will group Plaintiff's claims into three groups and address them in the same sequence: 1) infliction of severe emotional distress, conspiracy and failure to train, supervise and discipline (Counts Four and Five, respectively), 2) Civil Rights violations (Count Three, alleging violations of the First, Fourth, Fifth, Sixth, Eighth, Ninth and Fourteenth Amendments, and Count Six) and 3) malicious prosecution and abuse of process (Counts One and Two, respectively). With respect to the first group, the Court finds that these claims are all time-barred by the applicable statutes of limitations. Each state law tort asserted by Plaintiff is subject to a two year statute of limitations. 42 Pa.C.S. § 5524. The instances giving rise to the claims happened in 1999, a full eight years before the commencement of Plaintiff's civil action. Plaintiff's only argument that the statute should not operate to dismiss his claims as time- Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 69 of 247 Ickes v. Flanagan, Not Reported in F.Supp.2d (2008) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 3 barred is that these claims were a continuing violation of rights that did not end until the final disposition of his case by the Pennsylvania Supreme Court in May 2005. That is simply an inaccurate statement. “The two-year period begins as soon as the injury is sustained.” Mest v. Cabot Corporation, 449 F.3d 502, 510 (3d Cir.2006) (citing Bohus v. Beloff, 950 F.2d 919, 924 (3d Cir.1991)). “[L]ack of knowledge, mistake or misunderstanding do not toll the running of the statute of limitations.” Id. (quoting Pocono Int'l Raceway, Inc. v. Pocono Produce, Inc., 503 Pa. 80, 468 A.2d 468, 471 (Pa.1983)). “For the statute of limitations to run, a plaintiff need not know the ‘exact nature’ of his injury, as long as it objectively appears that the plaintiff ‘is reasonably charged with the knowledge that he has an injury caused by another.’ “ Id. at 510-511 (citing Ackler v. Raymark Indus., Inc., 380 Pa.Super. 183, 551 A.2d 291, 293 (Pa.Super.1988)). For a claim to be actionable, a Plaintiff is required to exercise reasonable diligence in ascertaining the nature and cause of his injury. Reasonable diligence must be established by showing that Plaintiff “pursued the cause of his injury with those qualities of attention, knowledge, intelligence and judgment which society requires of its members for the protection of their own interests and the interests of others.” Cochran v. GAF Corp., 542 Pa. 210, 666 A.2d 245, 250 (Pa.1995) (internal quotation marks and citations omitted). Plaintiff's reliance on the continuing violation doctrine is misplaced. “A continuing violation is occasioned by continual unlawful acts, not continual ill effects from an original violation.” Cowell v. Palmer Twp., 263 F.3d 286, 293 (3d Cir.2001) (quoting Ocean Acres Ltd. v. Dare County Bd. of Health, 707 F.2d 103, 106 (4th Cir.1983)). The injuries upon which Plaintiff's claims of infliction of severe emotional distress, conspiracy and failure to train, supervise and discipline are based all occurred in 1999. For this reason the Court finds that those claims are time-barred by the applicable statutes of limitations. *4 As to the Civil Rights Claims, claims brought pursuant to 42 U.S.C. § 1983 are subject to state statutes of limitations governing personal injury actions. See Owens v. Okure, 488 U.S. 235, 249-50, 109 S.Ct. 573, 102 L.Ed.2d 594 (1989); Sameric Corp. of Del., Inc. v. City of Philadelphia, 142 F.3d 582, 599 (3d Cir.1998). As discussed above, the statute of limitations for personal injury actions in Pennsylvania is two years. 42 Pa.C.S. § 5524. All of Plaintiff's Civil Rights Claims are predicated on discrete acts, each of which occurred in 1999. As such, the analysis advanced above is equally germane to Plaintiff's § 1983 claims. “The limitations period for purposes of § 1983 claims begins to run ‘from the time when the plaintiff knows or has reason to know of the injury which is the basis of the § 1983 action.’ ” Fullman v. Pennsylvania Department of Corrections, 2008 WL 410116 at *1 (3d Cir. Feb.15, 2008) (quoting Genty v. Resolution Trust Corp., 937 F.2d 899, 919 (3d Cir.1991). Dismissal of a complaint for failure to state a claim on statute of limitations grounds is proper if the untimeliness of the complaint makes it facially invalid. See Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1384 n. 1 (3d Cir.1994). “As the Supreme Court has recognized, statutes of limitations are not ‘simply technicalities,’ but rather, ‘fundamental to a well-ordered judicial system.’ ” Lipschultz v. Logan Assistance Corporation, 50 Fed.Appx. 528, 529 (3d Cir.2002) (citing Board of Regents v. Tomanio, 446 U.S. 478, 487, 100 S.Ct. 1790, 64 L.Ed.2d 440 (1980)). Here, Plaintiff's claims for infliction of severe emotional distress, conspiracy and failure to train, supervise and discipline as well as Plaintiff's Civil Rights Claims arose in 1999, but Plaintiff's civil action was not filed until 2007, well beyond the two-year statute of limitations applicable to those claims. For this reason, those claims must be dismissed as time-barred. The third group of claims, malicious prosecution and abuse of process, must also be dismissed. As an initial matter, the Court must point out that a claim of malicious prosecution and a claim of abuse of process are not concomitantly cognizable for the same conduct; each being a distinct claim and the two being mutually exclusive. “A § 1983 claim for [ ] abuse of process lies where prosecution is initiated legitimately and thereafter is used for a purpose other than that intended by the law.” Williams v. Fedor, 69 F.Supp.2d 649, 673 (M.D.Pa.1999), aff'd mem., 211 F.3d 1263 (3d Cir.2000). “The gravamen of that tort is not the wrongfulness of the prosecution, but some extortionate perversion of lawfully initiated process to illegitimate ends.” Heck v. Humphrey, 512 U.S. 477, 486 n. 5, 114 S.Ct. 2364, 129 L.Ed.2d 383., 512 U.S. 477, 114 S.Ct. 2364, 129 L.Ed.2d 383 (1994). “If prosecution or process is initiated without probable cause and with a bad motive, malicious use of process lies. If prosecution is initiated legitimately and thereafter is used for a purpose other than that intended by the law, [ ] abuse of process lies.” Jennings v. Shuman, 567 F.2d 1213, 1217 (3d Cir.1977). “ ‘[T]here is no action for abuse of process Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 70 of 247 Ickes v. Flanagan, Not Reported in F.Supp.2d (2008) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 4 when the process is used for the purpose for which it is intended, but there is an incidental motive of spite or an ulterior purpose of benefit to the defendant ....‘ ” Rosen v. Am. Bank of Rolla, 426 Pa.Super. 376, 627 A.2d 190, 192 (Pa.1993) (quoting Restatement (Second) of Torts § 682 cmt. b (1977)). *5 Petitioner inexorably asserts that the prosecution against him was initiated without probable cause. Indeed, even in his claim for abuse of process, Plaintiff asserts, “The criminal process was thus commenced and continued for the perverse purpose of furthering the illicit agenda of meddlesome neighbors.” Complaint, ¶ 31 (emphasis added). As stated above, to sustain a viable claim for abuse of process the prosecution must have been initiated legitimately. Plaintiff therefore nullifies his abuse of process claim in the very paragraphs meant to support it. Even if the Court were to ignore that inherent inconsistency, however, Plaintiff's abuse of process claim would still fail. Other than the bare assertion quoted above that the “perverse purpose” of the prosecution was for the benefit of Plaintiff's “meddlesome” neighbor, Plaintiff alleges no facts sufficient to justify allowing this claim to proceed to further stages of litigation. Moreover, it is the process that must be perverted to sustain the claim, not the purpose. See Gen. Refactories Co. v. Fireman's Fund Ins. Co., 337 F.3d 297, 304 (3d Cir.2003); Rosen, 627 A.2d at 192. Furthermore, Plaintiff's allegation that the process was perverted for the benefit of his neighbor is insufficient to establish the claim for another reason. In order to establish a claim for abuse of process, a plaintiff must show evidence of an act or threat unauthorized by the process or aimed at an illegitimate objective. See McGee v. Feege, 517 Pa. 247, 535 A.2d 1020, 1023 (Pa.1987). This Plaintiff has failed to do. Consequently, Plaintiff has failed to state a claim for abuse of process upon which relief can be granted, and that claim is therefore dismissed. 3 To show malicious prosecution, Plaintiff must show that the prosecution was initiated without probable cause and with a bad motive. Plaintiff contends “[t]he case against me was commenced without the charging officer having probable cause to reasonably believe that a cognizable crime had been committed by me on April 02, 1999.” Complaint, ¶ 24. 4 Plaintiff, however, fails to offer any facts to support this allegation beyond his bare assertions, other than the reversal of his conviction on appeal, the holding of which was based on the constitutionality of the statute and not on the presence or absence of probable cause. Moreover, termination of the proceedings in Plaintiff's favor does not conclusively establish the absence of probable cause. See Wainauskis v. Howard Johnson Co., 339 Pa.Super. 266, 488 A.2d 1117, 1122 (Pa.Super.1985). Probable cause existed at the time that Plaintiff's case was commenced, contrary to his argument, as the proceedings were premised on a Pennsylvania statute that was valid and enforceable as of the time the citations were issued and the process initiated. In exercising the duties attendant to their office, state actors can not reasonably be expected to predict changes in the law and conform their conduct accordingly. Plaintiff has likewise failed to make allegations sufficient to support a finding of malice or bad motive. See Hugee v. Pa. R.R. Co., 376 Pa. 286, 101 A.2d 740, 742 (Pa.1954). The Court therefore finds that Plaintiff's claim for malicious prosecution is untenable. *6 For all of the foregoing reasons, Defendant's motion is granted. An appropriate Order follows. AND NOW, this 31st day of March, 2008, in accordance with the foregoing Memorandum Opinion, IT IS HEREBY ORDERED THAT the Defendants' Motion to Dismiss (Document No. 4) is GRANTED WITH PREJUDICE as to all counts. IT IS FURTHER ORDERED THAT all current Defendants are dismissed as parties. IT IS FURTHER ORDERED THAT the Clerk of Court shall not close this case as the Plaintiff is still within his April 7, 2008 deadline for filing an amended Complaint to add another proposed defendant, Marcia Claar, only. All Citations Not Reported in F.Supp.2d, 2008 WL 859183 Footnotes Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 71 of 247 Ickes v. Flanagan, Not Reported in F.Supp.2d (2008) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 5 1 Plaintiff also seems to suggest that the Pennsylvania Attorney General's Office may be in on it, too. The Court notes, however, that only two Game Officers and the Commonwealth are named as defendants, with leave to amend granted to add Plaintiff's neighbor, Marcia Claar, as a defendant. 2 At the time the citations were issued, the text of 34 Pa.C.S. § 904 read: When an officer is in the performance of any duty required by this title, it is unlawful for any person to resist or interfere in any manner or to any degree or to refuse to produce identification upon request of the officer. A violation of this section is a summary offense of the first degree. 3 The Court further notes that Plaintiff's abuse of process claim may also be time-barred by the statute of limitations, as it is not required to sustain a claim for abuse of process that the proceedings be terminated in Plaintiff's favor, therefore making the claim actionable in 1999. See Rose v. Bartle, 871 F.2d 331, 350-52 (3d Cir.1989). 4 Plaintiff's complaint has two paragraphs numbered 24. The quoted passage is from the first paragraph 24. End of Document © 2017 Thomson Reuters. No claim to original U.S. Government Works. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 72 of 247 EXHIBIT I Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 73 of 247 In re Carpenter, Slip Copy (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 1 2013 WL 1953275 Only the Westlaw citation is currently available. United States Bankruptcy Court, W.D. Pennsylvania. In re Mary V. CARPENTER, Debtor. Mary V. Carpenter, Plaintiff v. US Bank, N.A. and Five Brothers Mortgage Company Services and Securing, Inc. and Safeguard Properties, LLC, Defendant. Bankruptcy No. 11-20896-TPA. | Adversary No. 11-2252-TPA. | May 7, 2013. Attorneys and Law Firms Gary W. Short, Esq., for the Plaintiff, Mary V. Carpenter. Scott M. Hare, Esq., for the Defendant, U.S. Bank, N.A. George A. Miller, Esq., for the Defendant, Five Brothers Mortgage Company Services and Securing, Inc. Joseph J. Santoro, Esq., for the Defendant, Safeguard Properties, LLC. MEMORANDUM OPINION Related to Doc. No. 78 THOMAS P. AGRESTI, Chief Judge. *1 Before the Court for decision is the Motion to Dismiss (“Motion”) the Second Amended Complaint 1 (“SAC”) filed by Defendant Safeguard Properties, LLC (“Safeguard”) at Doc. No. 78. The Motion argues that all of the eight counts in the SAC naming Safeguard as a defendant should be dismissed pursuant to Fed.R.Civ.P. 12(b)(1) (lack of subject matter jurisdiction) and/or Fed.R. Civ.P. 12(b)(6) (failure to state a claim upon which relief may be granted). 2 The Motion has been fully briefed and argued. For the reasons set forth below, the Motion will be granted in part, and Counts II and VI of the SAC will be dismissed as against Safeguard. Count VIII of the SAC will also be dismissed as against Safeguard, but the effect of that dismissal will be delayed for 30 days to give the Debtor a chance to rectify its deficiencies. The Motion will be denied in all other respects, and Safeguard will be directed to file its answer. APPLICABLE STANDARD A motion to dismiss under Rule 12(b)(1) challenges the court's subject matter jurisdiction: “At issue in a Rule 12(b)(1) motion is the court's ‘very power to hear the case.’ “ Petruska v. Gannon University, 462 F .3d 294, 302 (3d Cir.2006) (quoting Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir.1977)). When jurisdiction is challenged under Rule 12(b)(1), the plaintiff bears the burden of proving that the court has jurisdiction. See Hedges v. United States, 404 F.3d 744, 750 (3d Cir.2005) (citing Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1409 (3d Cir.1991)). If the court concludes that it does not have subject matter jurisdiction over the case, it must dismiss the action. Fed .R. Civ.P. 12(h)(3). Beeman v. United States, 2013 WL 1314467 *1 (W.D.Pa. March 28, 2013) The standard to be applied in deciding a motion to dismiss under Rule 12(b)(6) is more complex. The late Chief Judge Lancaster of the District Court recently explained the approach to be followed: In considering a Rule 12(b)(6) motion, we must be mindful that federal courts require notice pleading, as opposed to the heightened standard of fact pleading. Federal Rule of Civil Procedure 8(a)(2) requires only “ ‘a short and plain statement of the claim showing that the pleader is entitled to relief,’ in order to ‘give the defendant fair notice of what the ... claim is and the grounds on which it rests.’ “ Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 74 of 247 In re Carpenter, Slip Copy (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 2 L.Ed.2d 929 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). To survive a motion to dismiss, a complaint must contain sufficient facts that, if accepted as true, state “a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 570). A claim has facial plausibility when a plaintiff pleads facts that allow the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Iqbal, 556 U.S. at 678. However, the court is “ ‘not bound to accept as true a legal conclusion couched as a factual allegation.’ “ Id. (quoting Twombly, 550 U.S. at 555). *2 Therefore, when deciding a motion to dismiss under Rule 12(b)(6), we must conduct a three-step inquiry. Santiago v. Warminster Twp., 629 F.3d 121, 130 (3d Cir.2010). First, we must “ ‘tak[e] note of the elements a plaintiff must plead to state a claim.’ “ Id. (quoting Iqbal, 556 U.S. at 675). Next, we must identify the allegations that “are no more than conclusions [and] are not entitled to the assumption of truth.” Id.; Iqbal, 556 U.S. at 679. Finally, “where there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement of relief.” Id. (internal quotation omitted). We may not dismiss a complaint merely because it appears unlikely or improbable that plaintiff can prove the facts alleged or ultimately prevail on the merits. Twombly, 550 U.S. at 563 n. 8. Instead, we must ask whether the facts alleged raise a reasonable expectation that discovery will reveal evidence of the necessary elements. Id. at 556. In the end, if, in view of the facts alleged, it can be reasonably conceived that the plaintiff could, upon a trial, establish a case that would entitle him to relief, the motion to dismiss should not be granted. Id. at 563 n. 8. In deciding a Rule 12(b)(6) motion, a court must consider only the complaint, exhibits attached to the complaint, matters of public record, and undisputedly authentic documents if the complainant's claims are based upon these documents. Mayer v. Belichick, 605 F.3d 223, 230 (3d Cir.2010); Fed.R. Civ.P. 10(c) (“A copy of a written instrument that is an exhibit to a pleading is a part of the pleading for all purposes.”). Merrill v. State Farm Fire & Casualty Co., 2013 WL 588515 *2-3 (W.D.Pa. February 13, 2013). FACTUAL ALLEGATIONS The basic facts as alleged in the SAC, accepted as true for purposes of deciding the Motion, are not complicated. In 1989 the Debtor executed a mortgage on her residence, property located at 2607 South Braddock Avenue in Pittsburgh (hereinafter, “the Real Property” or “the Residence”). SAC at ¶ 6. At some point thereafter, the mortgage was assigned to Defendant U.S. Bank, N.A. (“Bank”). The Debtor fell behind on her mortgage payments in 2010 and on September 7, 2010 the Bank sent her a notice of intention to foreclose, pursuant to the requirement of 41 P.S. § 403, commonly known as an Act 6 notice. SAC at ¶ 7. Thereafter, but before a foreclosure action was commenced, the Bank employed a process server to determine whether the Debtor was residing at the Real Property. SAC at ¶ 8. He reported that the Debtor was receiving mail at the Real Property, including tax bills, although the phone line had been disconnected. 3 SAC Exhibit 3. The Bank also employed Safeguard and the remaining Defendant, Five Brothers Mortgage Company Services and Securing, Inc. (“Five Brothers”), to assist with the planned foreclosure. In late December 2010, or early January 2011, while the Debtor was at work, representatives of Safeguard and Five Brothers “broke into” the Real Property and changed the locks. SAC at ¶ 9. All of the personal property therein, including furniture, clothing and family memorabilia which belonged to the Debtor and her two children, was removed from the Residence and taken away in four trucks. 4 SAC at ¶¶ 9, 10. In addition, a vehicle and a motorcycle were removed from the premises. SAC at ¶ 9. A notice was left on the back door with Five Brothers' name and a telephone number to call. Id. At approximately 8:30 P.M. that same day, the Debtor arrived at the Residence and discovered that she was locked out. SAC at ¶ 11. She called the Five Brothers telephone number but got a recording. Id. Being locked out of the Residence, she spent the night at her sister's home. Id. *3 The next day, the Debtor had several telephone conversations with Five Brothers and the Bank. She was Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 75 of 247 In re Carpenter, Slip Copy (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 3 told there had been a mistake and was given an “access code” for the lock box that had been placed on the door, and she was thus able to get into the Residence at that point. SAC at ¶ 13. The Debtor was also told that she should make a list of the missing personal property and it would be returned. Id. The Bank filed a foreclosure action in the Allegheny County Court of Common Pleas on January 11, 2011. SAC at ¶ 14. A few days later, the Debtor got a call from Five Brothers to make arrangements for the return of her car. Shortly after that, the car, the motorcycle, two boxes of items, a television, 5 and a table and chair set were returned. The Debtor asked the person who returned these items what had happened to the rest of her personal property and was told that he did not know. SAC at ¶ 15. The Debtor has not lived at the Residence since the removal of her personal property, she says initially that was due to the lack of furniture, with some vandalism that was done to the Residence later adding a further reason for absenting herself from it. She has instead been living elsewhere, while continuing to pay for the utilities on the Property. The Debtor filed her bankruptcy petition on February 18, 2011, and the within adversary proceeding was filed on May 17, 2011. Only the Bank and Five Brothers were originally named as Defendants. Safeguard was added as a Defendant only in the SAC. DISCUSSION The SAC contains ten Counts, but only the first eight name Safeguard as a Defendant. Counts I through III are causes of action under the Bankruptcy Code, while Counts IV through VIII are state common law tort claims. There is no dispute that these state law claims are governed by Pennsylvania law, and as to them, the Debtor asserts the Court has jurisdiction on the basis of diversity of citizenship under 28 U.S.C. § 1332. The Court will discuss the Motion below with respect to each of the eight Counts. (1) Count I-Turnover of Personal Property The Debtor brings Count I pursuant to 11 U.S.C. § 542(a), which provides in relevant part: ... an entity, other than a custodian, in possession, custody, or control, during the case, of property that the trustee may use, sell, or lease under section 363 of this title, or that the debtor may exempt under section 522 of this title, shall deliver to the trustee, and account for, such property or the value of such property, unless such property is of inconsequential value or benefit to the estate. 11 U.S.C. § 542(a). Safeguard argues that Count I of the SAC fails to adequately allege that Safeguard had possession of the personal property to state a claim under this provision. As a starting point, the Court must determine when the Defendants were required to have had possession of estate property for a claim of turnover to be stated under Section 542(a). There is not a unanimous view among the courts on this point. Some courts, viewing a turnover action as essentially an in rem proceeding, require the plaintiff to show that the defendant had possession of the property at the time the turnover action adversary proceeding was filed. See, e.g., Hager v. Gibson, 109 F.3d 201 (4th Cir.1997). However, other courts, relying upon the statutory language of the “property or the value of such property,” permit a turnover action to be brought against a defendant who held property belonging to the debtor at any time after the bankruptcy case was filed, whether or not the defendant still possessed the property at the time the turnover action itself was brought. See, e.g., Matter of USA Diversified Products, Inc, 100 F.3d 53 (7th Cir.1996). The Parties have not pointed to any binding authority from the Third Circuit on this issue. The Court finds that, for purposes of deciding the Motion, the best course is to assume application of the broader view, without necessarily thereby deciding the issue conclusively. See, In re Mushroom Transp. Co., Inc., 366 B.R. 414, 439 (Bankr.E.D.Pa.2007); Horne v. Farrell, 560 F.Supp. 219, 227 (M.D.Pa.1983) (where unsettled state of law made it unclear whether plaintiff had stated a cause of action, motion to dismiss would be denied). Thus, the SAC will be sufficient to withstand the Motion as to Count I if it can be read to allege that Safeguard had possession of any of the Debtor's personal property at any time since the filing of the bankruptcy case. *4 In that regard, the Debtor concedes that the SAC does not make an explicit allegation. to that effect. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 76 of 247 In re Carpenter, Slip Copy (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 4 The SAC alleges the personal property was taken from the Residence by representatives of Five Brothers and Safeguard in late December 2010 or early January 2011 and loaded into trucks. SAC at ¶ 9-10. Although some of that property was subsequently returned to the Debtor, much of it was never returned, those items being detailed in the SAC at ¶ 15 and Exhibit 4. Assuming the allegations in the SAC to be true for purposes of the Motion, it is clear that this missing property was in the possession of Five Brothers and Safeguard as of the time it was removed from the Residence, and its whereabouts thereafter are not known by the Debtor. The Debtor argues that a natural inference from the allegations that are made would be that those Defendants continued to have actual or constructive possession or control over the property as of the time the bankruptcy petition was filed, which was less than two months later. Safeguard counters by arguing that the fact that only some of the personal property was returned to Debtor should lead to the inference that the returned property was the only property of the Debtor still in the possession of Five Brothers/Safeguard at the time of the return. In other words, Safeguard appears to be suggesting that the Court draw the inference that the remaining personal property had already been disposed of by that time. See Safeguard Response at 2-3. In deciding the Motion, the Court is required to draw all inferences in the SAC in the light most favorable to the Debtor. See, Torres v. Davis, 2012 WL 6019090 *2 (3d Cir.2012). The mere fact that only some of the personal property was returned does not, in the Court's view, compel a conclusion that the remaining property was no longer in the possession or control of Five Brothers/ Safeguard. The Court notes that the SAC alleges that when the Debtor asked the Five Brothers representative who returned some of the property about the still-missing property, she was only told “he did not know anything about that.” SAC at ¶ 15. Had the Debtor been told the property had already been disposed of at that time, perhaps the Debtor's proposed inference would not be reasonable. That did not happen, however, and, in short, the inference which the Debtor seeks the Court to draw is thus a reasonable one, and is at least as plausible as the inference suggested by Safeguard. The Court therefore adopts this as an inference drawn from the facts as alleged, and finds that Count I survives the Motion. 6 (2) Count II-Turnover of Real Property The Debtor is in a far weaker position as to Count II. The Court agrees that the initial action of entering the Residence and changing the locks on it was a taking of possession and control of the Real Property by Safeguard, and a concomitant deprivation of the Debtor's possession and control. That status was swiftly changed the very next day, however, when the Debtor was given the access code that allowed her to gain entry to the Residence. At the very least, the Debtor had joint possession of the Real Property from that time forward, or in other words, from well before the filing of her bankruptcy petition. *5 In fact, the allegations in the SAC lead the Court to conclude that the Debtor effectively had regained exclusive possession and control of the Real Property within a day of the wrongful entry. There is no allegation that Safeguard or the other Defendants ever returned to the Real Property thereafter (except to return some of the personal property to the Debtor). Moreover, once she was given the access code, the Debtor was certainly in a position to have the locks changed again on the Residence had she wanted to ensure the Defendants' exclusion from it. While this would have been an expense to her, she could have recovered it as damages, as indeed she has pled it as an anticipatory damage in Paragraph 19(c) of the SAC. In the absence of an allegation that the Debtor could not afford to have the locks changed, or that she was somehow otherwise prevented from doing so, the Court must view her failure to do so as a voluntary choice not to take an easy step that would have obviated any question about her exclusive possession and control of the Residence. The Debtor argues that because the Residence was empty once the personal property had been taken, that rendered it uninhabitable, such that she could not live in it and therefore did not have possession. The Court cannot accept that argument. Nothing that any of the Defendants did made the Residence “uninhabitable” as that term is understood in the law. See, e.g., Velez v. Cisneros, 850 F.Supp. 1257 (E.D.Pa.1994) (habitability is a legal term of art meaning that the premises are free from serious defects to health and safety); Pugh v. Holmes, 405 A.2d 897, 905 (Pa.1979) (in context of implied warranty of habitability, defect must be of a nature and kind which will prevent the use of the dwelling for its intended purpose to provide premises fit for habitation by its dwellers.) Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 77 of 247 In re Carpenter, Slip Copy (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 5 There is absolutely no indication that the Residence was uninhabitable in the legal sense after the personal property was removed. The fact that the Debtor voluntarily chose to stay elsewhere cannot be equated to a lack of possession on her part for purposes of this turnover action. Count II must therefore be dismissed for failure to state a claim upon which relief can be granted. (3) Count III-Violation of Automatic Stay The Parties agreed that Count III is entirely dependent on the viability of Counts I and II in that the improper continued retention of any of the Debtor's property after the bankruptcy filing would also be a violation of the automatic stay, and remediable under 11 U.S.C. § 362(k). Since Count I, as to turnover of personal property, will remain part of the case, the Motion must be denied as to Count III. It should be recognized, however, that a violation of the automatic stay based on continued possession of the Real Property is precluded as a result of the dismissal of Count II discussed immediately above, and this will be noted in the accompanying Order on the Motion. (4) Count IV-Conversion; Count V-trespass *6 Because these two Counts are similar and elicited similar objections by Safeguard, they will be treated together. Safeguard originally raised two grounds under Rule 12(b)(1) for the dismissal of the conversion claim in Count IV and the trespass claim in Count V. First, Safeguard argued that the Court lacks the subject matter jurisdiction to make a final decision on the claims in those Counts based on the decision in Stern v. Marshall, ---U.S. ----, 131 S .Ct. 2594 (2011). That ground has now been rendered moot because the District Court has directed that this Court will only preside over the case through the pretrial process, with the case to then be transferred to the District Court for trial and decision. See, Memorandum and Order of November 30, 2012, Doc. No. 5 in Carpenter v. U.S. Bank, N.A., et. al. # 2:12-cv-00021-GL. Safeguard also raised a Stern issue with respect to the remaining Counts VI through VIII, and those are likewise moot as well for the same reason and will not be discussed further. Safeguard's second argument under Rule 12(b)(1) is a challenge to whether diversity jurisdiction exists to hear these state law claims . 7 Pursuant to 28 U.S.C. § 1332(a) (1), district courts have diversity jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between citizens of different states. There is apparently no dispute that the second, or diversity, condition is met since the Debtor is a citizen of Pennsylvania, while Safeguard was incorporated in Delaware and has its principal place of business in Ohio. See SAC at ¶¶ 1, 4. 8 Safeguard contends, however, that the first condition is not met because the SAC does not contain sufficient allegations to meet the $75,000 amount in controversy requirement. Safeguard argues that although the Debtor has alleged total damages of $222,117.60, only $72,117.60 of those are compensatory damages, the balance consisting of anticipated punitive damages. Safeguard acknowledges that a calculation for punitive damages may be included in determining the amount in controversy, but only when the allegations of punitive damages are made in good faith and when state law would permit recovery of such damages. Safeguard argues that the Debtor cannot meet that standard here because the SAC lacks an allegation of malicious, wanton, reckless, willful, or oppressive conduct sufficient to support an award of punitive damages. Safeguard also points out that the Debtor has variously valued her missing personal property as $15,000 (SAC at ¶ 19(a)), $44,126 (SAC at Exhibit 4), and $1,090 (original bankruptcy petition Schedule B). Safeguard argues that the doctrine of judicial estoppel prevents the Debtor from contradicting the valuation of $1,090. It notes that under Supreme Court precedent the Debtor would be very unlikely to ever get more than ten times that amount in punitive damages because of Constitutional due process concerns, leaving her well below the $75,000 threshold. See, BMW of North Am., Inc. v. Gore, 517 U.S. 559 (1996). *7 The Debtor counters by arguing that, unless it appears to a legal certainty that she cannot recover it, the amount she claims in the SAC controls for purposes of diversity jurisdiction when considering the Motion. She argues that compensatory damages of over $71,000 have been alleged, meaning she only need recover punitive damages of $3,182.41 or more to exceed the diversity amount. She argues that under Pennsylvania law punitive damages are potentially awardable in any intentional tort action, including conversion and trespass. As to the Safeguard argument that she is bound by the $1,090 figure in her original Schedule B, Debtor correctly points out that Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 78 of 247 In re Carpenter, Slip Copy (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 6 Safeguard ignores the fact that the same Schedule also showed a claim of $150,000 against the Bank and its agents for conversion, which claim would include the value of the missing property within it, and that in any event she filed an Amended Schedule B on March 7, 2012, in which she claimed a value of $15,000 in the missing property and increased the value of the claim against the Bank and its agents to $185,293. When the diversity jurisdiction of a court is challenged in a motion to dismiss, the court must apply the “legal certainty” test. As stated by the Third Circuit: In determining whether the amount in controversy exceeds $75,000, the Court generally accepts the plaintiff's good faith allegations ... However, the case may be dismissed for failure to meet the amount in controversy requirement if it appears to a “legal certainty” that the claim is for less than the jurisdictional amount ... It necessarily follows that whether the claims are for less than the jurisdictional amount depends on what damages a plaintiff could conceivably recover under state law.... When punitive damages are recoverable, they are properly considered in determining whether the jurisdictional amount has been satisfied ... but when a claim for punitive damages is frivolous, “such damages are unavailable as a matter of law” and “that claim must be stricken from the amount in controversy.” Onyiuke v. Cheap Tickets, Inc., 435 Fed. Appx. 137, 139 (3d Cir.2011) (citations omitted). One way of restating this legal certainty test is that a complaint will be dismissed for failure to meet the amount in controversy requirement only if the court finds that no reasonable jury could award that amount. 14AA C. Wright and A. Miller, Federal Practice and Procedure, Jurisdiction § 3702 (4th Ed.2012). The sum claimed by the plaintiff generally controls if the claim is “apparently made in good faith.” St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288 (1938). The question whether a plaintiff's claims pass the legal certainty standard is a threshold matter that should involve the Court in only “minimal scrutiny” of the claims. Suber v. Chrysler Corp., 104 F.3d 578, 583 (3d Cir.1997). When that standard is applied here, the Court concludes that it cannot be demonstrated to a legal certainty at this time that the Debtor will not recover $75,000 or more on her conversion claim. To start with, the Court rejects Safeguard's argument that the Debtor is bound by the principle of judicial estoppel to a value of only $1,090 for the missing personal property. That argument is based on a selective, and somewhat disingenuous, reading of the original Schedule B filed by the Debtor. Although the Debtor did list only $1,090 in tangible personal property on Schedule B, she also showed in Item (35) (“Other personal property of any kind”) a claim of $150,000 against U.S. Bank and its agents for conversion, trespass, etc. 9 The Court has no difficulty finding that the value of the removed and missing personal property itself was intended to be encompassed within the overall $150,000 amount claimed. Furthermore, when the Debtor amended her Schedule B on March 7, 2012, she increased the amount shown as “furnishings” from $20 to $15,000, with an accompanying Appendix “A” making clear that the new amount represented the fair market value of the personal property that was taken. The $15,000 figure also matches the amount alleged in the SAC at ¶ 19(a) for the property loss. *8 The diversity jurisdiction/amount in controversy analysis therefore starts from a basis that the Debtor will be able to show a loss of $15,000 for the personal property that was taken and not returned, which would be a bare minimum of recoverable damages for the state law tort claims. 10 But, the Debtor has alleged other damages as well, see SAC at ¶¶ 19(b)-(k). For purposes of determining if the diversity threshold is met, some of these damages can clearly be added to the base amount of $15,000 representing the value of the missing property. These would include damages for a necessary window repair ($250), lock replacement ($250) and motorcycle repair ($300). The Debtor also claims damages for the loss of use of her residence for approximately 24 months and the expense of maintaining another place to live during that same period. The Court is less certain that these amounts ($867.40 and $500 respectively, per month) would be recoverable, but it does seem likely that at least something for damages for inconvenience could be recovered if the Debtor succeeds on her claim. A cautious estimate of $200 per month adds $4,800 to the compensatory damage amount. The Debtor also seeks damages for anguish and humiliation arising from the entry into her house and the removal of her personal property. It appears that such damages may well be available here. See, e.g., Little v. York County Earned Income Tax Bureau, 481 A.2d 1194, 1201-02 (Pa.Super.2004) (citing with approval Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 79 of 247 In re Carpenter, Slip Copy (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 7 Restatement (2d) Torts § 905, Comment d, to the effect that one who has a cause of action for tort may be entitled to recover for the form of mental distress known as humiliation as an element of damages. 11 This same Restatement provision, at Comment e, provides that “fear and anxiety” may also be a proper item of damages, for example, for someone who has been tortuously and wantonly evicted from her home and worries for several hours about securing shelter. Given the facts as alleged in the SAC, and the likely availability of damages for humiliation and anxiety if the Debtor proves her case, the Court will “estimate” a value of $7,500 for such damages for purposes of determining whether diversity jurisdiction exists. To sum up, while taking a very conservative approach to the estimation of reasonable damage claim in the aggregate, the Court has little difficulty in finding a minimum of $28,100 in compensatory damages to be in dispute in this matter. That, of course, is still short of the $75,000 statutory threshold for diversity jurisdiction. But the Court has yet to consider the possibility of punitive damages and it now turns to that subject. In Golden ex. rel. Golden v. Golden, 382 F.3d 348 (3d Cir.2004) the court held that claims for punitive damages may be aggregated with claims for compensatory damages to meet the amount in controversy threshold unless the punitive damage claims are patently frivolous and without foundation. Id. at 355. Punitive damage claims are per se “patently frivolous and without foundation” if they are unavailable as a matter of state substantive law. Id. “If appropriately made, therefore, a request for punitive damages will generally satisfy the amount in controversy requirement because it cannot be stated to a legal certainty that the value of the plaintiff's claim is below the statutory minimum.” Id. The Golden court went on to discuss when Pennsylvania law permits punitive damages to be awarded and concluded that it does so for conduct that is outrageous because of the “defendant's evil motive or his reckless indifference to others.” Id. at 356, citing Restatement (2d) Torts § 908(2). In other words, as long as the SAC alleges conduct that is at least recklessly tortuous, that should be sufficient to allow for the possibility of punitive damages to be considered in determining whether the diversity amount in controversy threshold has been met. *9 Safeguard argues that the SAC does not adequately plead a claim for punitive damages, but the Court finds that it does. Just as a general impression, the basic scenario alleged in the SAC-the unauthorized and unlawful entry into the dwelling of another and the removal of all her personal property-would certainly seem to qualify as something that might be found to support a punitive damage award against the offending parties. Furthermore, the SAC does include allegations that the conversion was “reckless, in wanton disregard of Carpenter's rights, and was outrageous,” while the trespass was done “intentionally,” “without her consent,” and done without “privilege,” “legal justification,” or “authority.” SAC at ¶¶ 35, 39. The SAC also alleges at Paragraph 12 that, before they took the actions complained of, the Defendants had reason to know that the Debtor was residing at the Residence, which supports an allegation going beyond mere negligence. Furthermore, Pennsylvania law allows the award of punitive damages in both conversion and trespass claims. See, Francis J. Bernhardt, III, P.C. v. Needleman, 705 A.2d 875 (Pa.Super.1997) (conversion liability provided basis for imposing punitive damages); Kirkbride v. Lisbon Contractors, Inc., 560 A.2d 809 (Pa.Super.1989) (approving punitive damage award based on a trespass to land). The Court thus finds that, pursuant to Golden, the possibility of punitive damages is not patently frivolous and without foundation in the present case, and that such damages may be considered when determining whether the amount in controversy requirement has been met. Considering only the conservative minimum of $28,100 in compensatory damages as discussed above, and the appropriate claim for punitive damages, the Debtor would therefore need to recover $46,900 in punitive damages to meet the amount in controversy threshold. This is a factor of roughly 1.7 times the compensatory damages, well within the range that other courts in this District have allowed to proceed when faced with similar challenges to the existence of diversity jurisdiction. For instance, in Johnson v. State Farm Life Ins. Co., 695 F.Supp.2d 201 (W.D.Pa.2010) the plaintiff made a compensatory damage claim of only $10,000 under a whole life policy issued by the defendant. The defendant argued that it appeared to a legal certainty that the plaintiff could not meet the amount in controversy requirement because, even assuming a 3:1 ratio for punitive damages, the amount in controversy would fall well below the $75,000 threshold. The court Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 80 of 247 In re Carpenter, Slip Copy (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 8 rejected that argument, finding that although punitive damages must be in proportion to general damages, “it does not necessarily follow that punitive damages should be limited to a 3:1 ratio, particularly given [plaintiff's] allegation in the Complaint that [defendant's] conduct was outrageous and in bad faith.” Id. at 207. It is apparent that the plaintiff in Johnson would have needed to recover punitive damages of at least $65,000, a ratio of at least 6.5:1, to reach the $75,000 level, yet her case was permitted to proceed. Similarly, the diversity threshold was found to be met in Hamm v. Allstate Prop. & Casualty Ins. Co., 2012 WL 5451523 (W.D.Pa.2012) where compensatory damages of $22,080 were alleged and the plaintiffs relied upon the possibility of punitive damages to reach $75,000, meaning a ratio of at least 2.4:1. *10 The Court thus finds that a needed ratio of approximately 1.7:1 between punitive and actual damages in the present case is not unreasonable for purposes of determining whether the amount in controversy requirement is met. Furthermore, the Debtor has also alleged other compensatory damages on top of the ones the Court has considered in arriving at $28,100 as a conservative minimum amount of compensatory damages. If any of those other damages were allowed, it would only serve to increase the compensatory damage “base,” further lowering the amount and ratio of punitive damages that would need to be recovered to reach the threshold. 12 To sum up, the Court finds that it cannot say with legal certainty that the Debtor will be unable to recover at least $75,000 in this action. The Motion will therefore be denied as to Counts IV and V. (5) Count VI-Malicious Abuse of Process The Court will deny the Motion as to Count VI insofar as it alleges a lack of diversity subject matter jurisdiction pursuant to Rule 12(b)(1). The reasons for such denial are spelled out in the previous discussion under Counts IV and V and will not be repeated in detail here. The Court need only note that Pennsylvania law would permit an award of punitive damages if a malicious abuse of process claim were proven. See, Barnett v. Reed, 51 Pa. 190 (1865) (in a malicious abuse of process action, “vindictive” damages may be given when actual malice exists, or a formed design to injure and oppress). Thus, the diversity amount in controversy threshold is met as to this claim as well for the reasons outlined above. The Motion also seeks the dismissal of Count VI pursuant to Rule 12(b)(6) for failure to state a claim upon which relief can be granted. Safeguard argues that an action for abuse of process 13 requires a plaintiff to demonstrate that the defendant (1) used a legal process against the plaintiff, (2) primarily to accomplish a purpose for which the process was not designed, and (3) harm has been caused to the plaintiff. See Hart v. O'Malley, 647 A.2d 542, 551 (Pa.Super.1994). According to Safeguard, the Debtor fails to meet these requirements because she has not alleged that Safeguard used legal process against her in connection with the entry onto the real Property and the removal of the personalty, and she has not alleged any improper purpose. Finally, Safeguard notes that in Paragraph 7b of her Response to the Motion, the Debtor admits that Safeguard did not employ any “legal process” against her and it says that this is a judicial admission. The Debtor, by contrast, seeks to portray the actions of Safeguard here as part of the “foreclosure,” even though that action was not filed in state court until after the events which are the subject of the SAC occurred. The Debtor asserts that the “process” of the foreclosure actually began in September 2010 when the Bank sent out the Act 6 Notice 14 of its intention to foreclose, and says that Safeguard was hired by the Bank as part of this process. The Debtor seeks to characterize the trespass into her Residence and the conversion of her personal property as a perversion of the foreclosure process. The Debtor admits that Safeguard itself was not a party to any legal proceeding involving her until it was sued in this adversary, but says that a non-party “stranger” to a legal proceeding can be liable for the tort by participating in it, inciting or inducing another to commit a trespass, citing Shane v. Gulf Ref. Co., 173 A. 738 (Pa.Super.1934) (both constable and judgment creditor found liable for levy improperly made on plaintiff's goods). *11 The Court finds the argument of Safeguard to be the more persuasive on this point. The only way that Count VI can survive dismissal is if the Debtor can show that a legal proceeding of some kind was in effect and was somehow “used” in conjunction with the improper entry and the taking of the personal property. It is clear, however, that no foreclosure action had yet been filed when the entry was made and the property was taken- that did not happen until a week or two later. The only other possible candidate for an existing “process” that the Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 81 of 247 In re Carpenter, Slip Copy (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 9 Court has been pointed to is the Act 6 Notice that was sent out by the Bank to the Debtor on September 7, 2010. For purposes of the abuse of process tort, the concept of “process” is broadly interpreted under Pennsylvania law, but nevertheless there are limits to it: In Pennsylvania, “ ‘[t]he word process as used in the tort of abuse of process has been interpreted broadly, and encompasses the entire range of procedures incident to the litigation process,’ “ Shiner, 706 A.2d at 1237 (quoting Rosen, 627 A.2d at 192), “including discovery proceedings, the noticing of depositions and the issuing of subpoenas.” Pellegrino Food Prods. Co., Inc. v. City of Warren, 136 F.Supp.2d 391, 407 (W.D.Pa.2000) (citing Rosen, 627 A.2d at 192); see also McGee, 517 Pa. 247, 535 A.2d 1020 (finding meritless petitions for stay, to open or strike judgment, and other motions sufficient to establish abuse of process); Shiner, 706 A.2d at 1237 (finding that petitions for stays in state and bankruptcy courts, reconsideration of the denial of the stay, an injunction, and to strike a confessed judgment, as well as challenges before a zoning board, constitute “use of a legal process” for purposes of an abuse of process claim). While we agree that some of the alleged uses of legal process, such as failing to comply with court orders, failing to seek a stay, and failing to provide copies of subpoenaed documents, as well as contacting the asbestos litigation counsel, do not constitute use of a legal process for purposes of an abuse of process claim, we disagree that the Complaint does not contain any of the necessary allegations. Gen. Refractories Co. v. Fireman's Fund Ins. Co., 337 F.3d 297, 310 (3d Cir.2003). See also, Restatement (2d) Torts, § 682, Reporter's Notes (1977). As indicated previously, the Act 6 Notice was sent pursuant to the requirements of 41 P.S. § 403, which provides in relevant part: (a) Before any residential mortgage lender may accelerate the maturity of any residential mortgage obligation, commence any legal action including mortgage foreclosure to recover under such obligation, or take possession of any security of the residential mortgage debtor for such residential mortgage obligation, such person shall give the residential mortgage debtor notice of such intention at least thirty days in advance as provided in this section. 41 P.S. 403 (a). A plain reading of this statutory language indicates that the giving of notice is a precondition of a foreclosure action, but does not of itself commence a foreclosure proceeding. (“Before any residential mortgage lender may ... commence any legal action ....“ (emphasis added)). See also, e.g., In re Rodriguez, 218 B.R. 764 (E.D.Pa.1998) (describing notice required by this provision as a “precondition for initiating a foreclosure action or taking any other step toward obtaining possession of a debtor's residential real estate”). See also, Pa.R. Civ.P. 1143 (action in foreclosure is “commenced” by the filing of a complaint). *12 The Court has not been directed to, nor has it found on its own, any case law directly on point deciding whether an Act 6 Notice constitutes “process” under the applicable standard. Somewhat analogous is Liles v. Am. Corrective Counseling Servs., Inc., 131 F.Supp.2d 1114 (S.D.Iowa 2001) where the court, applying Iowa law, found that a document entitled “Official Notice” that had been sent to the plaintiff by the defendant was not “process” that could support an abuse of process claim. The defendant was a private company that had contracted as an independent contractor with a county prosecutor to run a “bad check restitution program.” The Official Notice received by the plaintiff indicated that a “criminal complaint” had been received against her for a dishonored check she had written, indicated a balance due, and stated that criminal prosecution would not be pursued if she paid it within 30 days. The “Official Notice” form included a scale- of-justice emblem and the words “County Attorney Bad Check Restitution Program,” but there was nothing on it to indicate it was issued by a court. The Liles court granted the defendant's motion to dismiss, finding that, without the involvement of a court in the issuance of the Official Notice, the threat of criminal prosecution was insufficient to constitute “legal process” as required by the tort. In Carney v. Rotkin, Schmerin & McIntyre, 206 Cal.App.3d 1513, 254 Cal.Rptr. 478 (Cal.App.2d Dist.1988) the defendant law firm sent the plaintiff a notice that falsely stated that a court had issued a bench Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 82 of 247 In re Carpenter, Slip Copy (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 10 warrant against her, and that it would be enforced unless she made a payment on a judgment by a stated deadline. The court dismissed an abuse of process claim, finding that the mere giving notice of some proceeding is not process for purposes of the tort. The court noted that, in making the false statement, the defendant did not “take any action pursuant to the authority of the court.” Id., 254 Cal.Rptr. at 486. In Lexecon, Inc. v. Milberg Weiss Bershad Hynes & Lerach, 845 F.Supp.1377, 1386 (D.Ariz.1993) the court held that “pre-process activities” do not meet the requirement to state a claim for abuse of process because “an actual use of suit” is required. The Court here finds that Count VI must be dismissed for failure to state a claim upon which relief can be granted. There are two reasons for this conclusion. First, and as a matter of first impression as far as it knows, the Court finds that an Act 6 Notice is not “process” for purposes of an abuse of process claim under Pennsylvania law. It is not “incident” to the litigation process, Gen. Refractories, supra, it is merely a precondition to invoking the litigation process. No court is involved in the issuance of an Act 6 Notice, nor does the issuance of such notice thereby compel the issuing party to subsequently invoke the litigation process-it may change its mind and not do so. Perhaps the best description of an Act 6 Notice is that of a “pre-process” activity, Lexecon, supra, which is an insufficient basis for a claim of abuse of process. *13 Second, even if the Court were to assume arguendo that the Act 6 Notice was process, there is no allegation in the SAC that the Notice was “used” to effect the entry and removal of the property. The Notice had been sent 2-3 months earlier, and there are no allegations that the Defendants used the Notice as a basis or justification for their entry onto the Debtor's Real Property. 15 The second part of the quotation from Gen. Refractories as set forth above makes clear that the mere existence of legal process at the time of an alleged offense is not sufficient to state an abuse of process claim; the plaintiff must also show that the process was “used” somehow in the offense. The Debtor here has failed to do that, and after argument on the matter, it does not appear that the problem could be corrected by a curative filing. Therefore, Count VI will be dismissed. (6) Count VII-Invasion of Privacy Again, for the same reasons as was done with Count VI, the Court will deny the Motion as to Count VII insofar as it alleges a lack of subject matter jurisdiction pursuant to Rule 12(b)(1). The Court will only further note here that Pennsylvania law would permit an award of punitive damages if an invasion of privacy claim were proven. See, G.J.D. by G.J.D. v. Johnson, 713 A.2d 1127 (Pa.1998) (approving punitive damage award on invasion of privacy and intentional infliction of emotional distress claims). Thus, the diversity threshold is met as to this claim as well for the reasons set forth previously. Safeguard also seeks the dismissal of Count VII under Rule 12(b)(6) for failure to state a claim upon which relief can be granted. In support of that position, Safeguard makes two arguments. First, it argues that there is a one-year statute of limitations for bringing an action for invasion of privacy, pointing to 42 Pa.C.S.A. § 5523(1), and noting that the alleged invasion here occurred in late December 2010/early January 2011, while Safeguard was not joined as a party to the action until the SAC was filed on December 26, 2012. The Debtor acknowledges the one-year statute for this claim, but points to 11 U.S.C. § 108(a), which provides that, if applicable nonbankruptcy law sets a time for commencing an action, and that time has not yet expired when the petition was filed, then the trustee may commence such action within two years of the order for relief. Debtor notes that her petition was filed within the one-year period after the property was taken, and that Safeguard was added as a party within two years of the petition date. The Court finds the Debtor to be correct on this question. Even though Section 108(a) is phrased so as to apply only to actions commenced by the “trustee,” that has been construed in the Chapter 13 context to include actions brought by the debtor. See, In re McConnell, 390 B.R. 170 (Bankr.W.D.Pa.2008) where the court concluded that a Chapter 13 debtor should also get the benefit of the two year extension as provided in Section 108(a) because the debtor was essentially acting the same as a Chapter 11 debtor-in-possession (who expressly has the powers of a trustee under 11 U.S.C. § 1107(a)) by virtue of 11 USC § 1306(b). The Court agrees with that conclusion and adopts it here. Count VII is thus not barred by the statute of limitations. *14 The second reason advanced by Safeguard for dismissing Count VII under Rule 12(b)(6) is that it fails to Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 83 of 247 In re Carpenter, Slip Copy (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 11 allege facts sufficient to establish an “intentional intrusion on the seclusion of the plaintiff's private concerns which was substantial and highly offensive to a reasonable person,” citing Pro Golf Mfg., Inc. v. Tribune Review Newspaper Co., 809 A.2d 243 (Pa.2002). Safeguard relies on several cases which it says establish that what is alleged to have happened here cannot meet that standard. The cases relied upon by Safeguard are, however, factually quite distinct from what happened here. In Boring v. Google, 362 Fed.App. 273 (3d Cir.2010) the defendant took pictures of the plaintiff's property, which was on a private road, for use on the internet Google “Street View” program. The only actual “intrusion” that occurred was that the truck taking the photographs pulled into the plaintiff's driveway, and the court found that no reasonable person of ordinary sensibilities could be shamed, humiliated, or have suffered mentally as a result of that. In Pacitti v. Durr, 2008 WL 793875 (W.D.Pa.2008), affirmed 310 Fed.App. 526 (3d Cir.2010) the court found it inconceivable for a reasonable fact finder to conclude that an entry into a condominium unit at a time when the unit was under construction, coupled with the engagement in a short conversation about the nature of the renovations going on, could be “highly offensive.” The Debtor argues that she had a reasonable expectation of privacy in the interior of her home, and states that her pictures, letters, memorabilia, etc. that were taken and never returned can be accurately characterized as part of her private affairs. She notes that the only case cited by Safeguard involving the intrusion into the interior of a residence, Pacitti, involved a unit that was under construction, and that the resulting intrusion consisted only of a brief conversation. The tort of invasion of privacy-intentional intrusion upon seclusion, is exposited in Restatement(2d) Torts § 652B (1977), which states the general rule that one who intentionally intrudes upon the solitude or seclusion of another or his private affairs or concerns is subject to liability if the intrusion would be highly offensive to a reasonable person. Among the cases cited in support of that general rule is one that closely parallels what happened in the present matter. In Ford Motor Co. v. Williams, 132 S.E.2d 206 (Ga.Ct.App.1963), reversed on other grounds by 134 S.E.2d 32 (Ga.1963) an agent acting on behalf of Ford entered the plaintiff's home when no one was there and removed personal property belonging to her. The court found that though this action would constitute a trespass, it could also constitute an invasion of privacy. The court reached that conclusion even though the plaintiff was not present at the time of the entry (just as the Debtor in the instant case was not). Another instructive case is Robison v. Litton Loan Servicing, L .P. 2011 WL 1135369 (D.Colo.2011), where a mortgage servicer and its agents were alleged, inter alia, to have invaded the privacy of the plaintiff by entering her house while she was absent from it to “winterize” it and change the locks. The plaintiff alleged that she was eventually given the access code so she could get into the house, and when she did she discovered that several items were missing. The defendants moved for summary judgment as to all claims. The court denied summary judgment on the invasion of privacy claim because there were factual issues going to a consent defense raised by the defendants based on language in a deed of trust. The court went on to say that even if consent were shown, issues of fact would remain as to whether the defendant's conduct was reasonable and appropriate under the circumstances. Thus, by implication, the Robison court found that an entry into the premises of another can constitute an invasion of privacy. See also, D. Elder, Privacy Torts § 2.5 at fn. 26 (2012) (collecting cases in which physical intrusions destroying the “privacy and sanctity” of the home have been the basis for invasion of privacy claims). *15 Taking the allegations in the SAC as true, the Court finds that a person of ordinary sensibilities could have been highly offended, shamed, humiliated or suffered emotionally from having her residence entered unlawfully and all the contents thereof, including those of the most private nature, removed without her knowledge or consent. The Court additionally finds that such person could be highly offended, etc., even if she was not present at the time of the entry and removal. The allegations of Count VII are therefore sufficient to withstand a motion to dismiss. (7) Count VIII-Intentional Infliction of Emotional Distress Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 84 of 247 In re Carpenter, Slip Copy (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 12 The Court will deny the Rule 12(b)(1) motion to dismiss Count VIII for lack of subject matter jurisdiction for the reasons previously stated. In addition to that, Safeguard seeks the dismissal of Count VIII under Rule 12(b)(6) for failure to state a claim upon which relief can be granted. Safeguard raises two arguments in that regard. First, it argues that the facts as alleged by the Debtor are not sufficiently “outrageous” to support an intentional infliction of emotional distress (“IIED”) claim. Second, it argues that the Debtor has failed to argue any resulting physical harm, which it says is a sine qua non of an IIED claim. The Pennsylvania Supreme Court has not expressly recognized a cause of action for IIED, however it has discussed such claim and what elements would need to be shown by a plaintiff, assuming the cause of action were to be formally recognized. See, Reedy v. Evanson, 615 F.3d 197, 231-32 (3d Cir.2010) (discussing Pennsylvania case law on IIED). Despite this lack of formal recognition by the Pennsylvania Supreme Court, federal courts in Pennsylvania have generally proceeded under the assumption that IIED is a potential common law tort claim under the law of this Commonwealth, and the Court will do likewise here. In order for the Debtor to prevail on an IIED claim, she must demonstrate intentional, outrageous or extreme conduct by the Defendants that caused her severe emotional distress. The conduct must be “so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency and to be regarded as atrocious, and utterly intolerable in a civilized community.” Id . (quoting Field v. Phila. Elec. Co., 565 A.2d 1170 (Pa.Super.1989)). Perhaps to guard against a perceived potential for abuse inherent in an IIED claim, the courts have imposed a very demanding standard before such claim is allowed. As one court stated: “[t]he conduct must be so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized society.” ... “[C]ourts have been chary to allow recovery for a claim of intentional infliction of emotional distress .” ... It is “not [ ] enough that the defendant has acted with intent which is tortuous or even criminal, or that he has intended to inflict emotional distress, or even that this conduct has been characterized by ‘malice,’ or a degree of aggravation that would entitle the plaintiff to punitive damages for another tort.” ... The tort is instead “reserved by the courts for only the most clearly desperate and ultra extreme conduct.” *16 Messer v. First Fin. Fed. Credit Union of Md., 2012 WL 3104604 *3 (E.D.Pa.2012) (footnotes and citations omitted). Under Pennsylvania law, it is for the Court to determine in the first instance whether a defendant's conduct can be reasonably regarded as so extreme and outrageous as to permit recovery. Id. See also, Corbett v. Morgenstern, 934 F.Supp. 680, 684 (E.D.Pa.1996). The Messer court noted that a number of courts, both federal and state, have suggested that activities associated with a residential foreclosure might, in egregious circumstances, support an IIED claim under Pennsylvania law. See, Messer, 2012 WL 3104064 *3, cases cited in fn. 27. None of the cases cited, however, ultimately allowed an IIED claim under the facts presented. 16 In Messer itself, the allegations were that the defendant had repossessed and sold the plaintiff's car without legal justification, sent her a single notification letter informing her of the repossession and redemption policy, and thereafter fabricating loan documents to support the repossession. The court found that such actions were possibly fraudulent, and certainly disgraceful, but not sufficiently extreme and outrageous as to support an IIED claim. The allegations in the present case certainly go beyond what happened in Messer, or any of the cases cited therein where the theoretical possibility of an IIED claim in connection with foreclosure activity was recognized. The analogy of the home as “castle” is a longstanding one in Anglo-American jurisprudence, and perhaps calls for special sensitivity when allegations are made going to an invasion of the home. The Court finds that, for purposes of the Motion, and based on the facts as framed in the SAC, it is at least plausible that a reasonable jury could conclude that the activities attributed to the Defendants in unlawfully entering the Debtor's residence and removing all of her personal property was sufficiently outrageous to support a liability under an IIED claim. See, e.g., Corr. Med. Care, Inc., v. Gray, 2008 WL 248977 *13 (E.D.Pa.2008) (denying motion to dismiss IIED claim because complaint alleges activities, one of which was Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 85 of 247 In re Carpenter, Slip Copy (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 13 multiple trespasses of the home, that might give rise to liability). Even though Count VIII pleads sufficiently outrageous facts to state a claim against the defendants for IIED, it founders on another required element of the tort, i.e., that Debtor must plead and prove some resulting manifestation of injury accompanying the alleged distress. The Debtor herself acknowledges that the SAC does not contain any such allegations. She says, however, that if necessary she can further amend her complaint to allege that she has suffered headaches, loss of appetite, insomnia and depression following the events at her Real Property. If the mere lack of allegation of an injury were the only impediment to the continued existence of the IIED claim, the Court would grant the Debtor leave to file a further amendment. See, Connelly v. Steel Valley School Dist., 706 F.3d 209, 217 (3d Cir. January 24, 2013) (if a complaint is vulnerable to a dismissal under Rule 12(b)(6), the court must permit a curative amendment unless an amendment would be inequitable or futile). But there is more to it than that; the Debtor also has a medical proof problem that cannot be ignored. *17 In Kazatsky v. King David Memorial Park, Inc., 527 A.2d 988 (Pa.1987), a leading Pennsylvania Supreme Court case discussing IIED, the court stated: It is basic to tort law that an injury is an element to be proven. Given the advanced state of medical science, it is unwise and unnecessary to permit recovery to be predicated on an inference based on the defendant's “outrageousness” without expert medical confirmation that the plaintiff actually suffered the claimed distress. Moreover, the requirement of some objective proof of severe emotional distress will not present an unsurmountable obstacle to recovery. Those truly damaged should have little difficulty in procuring reliable testimony as to the nature and extent of their injuries. We therefore conclude that if section 46 of the Restatement is to be accepted in this Commonwealth, at the very least, existence of the alleged emotional distress must be supported by competent medical evidence. In this case no such evidence was presented and the record further reflects that neither Mr. nor Mrs. Kazatsky sought medical assistance. Id. at 995. Thus, the Debtor would not only have to allege that she suffered harm as a result of the Defendants' actions, she would also have to provide medical proof to establish the harm and link it to the Defendants' actions. At the oral argument on the Motion, however, Debtor's attorney conceded that she never sought medical treatment for any of the consequences she is prepared to allege in a further amendment of her complaint, nor does she have a medical expert at this time who will provide the necessary medical testimony. Any permission for a further amendment to allege harm would therefor be futile given the present circumstances. The Court is therefore prepared to dismiss Count VIII for failure to state a claim. In recognition that, however unlikely, it might still be possible for the Debtor to secure the necessary medical proof, the Court will not make such dismissal effective for a period of thirty days. If, in the meantime, the Debtor supplies the Court and opposing counsel with a medical expert report confirming the existence of a medically recognized injury as a result of Safeguard's alleged actions in this regard and files a motion seeking leave to further amend her complaint to allege harm in Count VIII based on this expert medical opinion, the Court will stay that dismissal while such motion is considered. CONCLUSION For all of the foregoing reasons, the Motion will be GRANTED in part and DENIED in part. An appropriate Order follows this Opinion. All Citations Slip Copy, 2013 WL 1953275 Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 86 of 247 In re Carpenter, Slip Copy (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 14 Footnotes 1 The pleading at issue in the Motion was mistitled by the Debtor as “Adversary Complaint.” See Doc. No. 75. It is actually the second amended complaint (see the previous two versions of the initial pleading at Doc. Nos. 1 and 34). To avoid any possible confusion caused by the mistitle, the Court will refer to the pleading at issue as the Second Amended Complaint or “SAC” in this Memorandum Opinion and in the accompanying Order. 2 These Rules are incorporated into bankruptcy procedure pursuant to Fed.R.Bankr.P. 7012(b). 3 Lest the Debtor be placed under any misapprehension, the Court wishes to make clear that it is assuming she was actually living at the Residence in the time period leading up to and including the events complained of solely for the sake of deciding the Motion, and in keeping with the requirement to view the factual allegations in the light most favorable to her. The mere fact that she was receiving mail at the Residence, while some evidence of her residing there, may not be sufficient of itself to carry the day if the issue is placed in dispute at trial. 4 Attached to the SAC as Exhibit 4 is a 6-page document which the Debtor describes as a “partial list” of the missing property. 5 Although not expressly stated in the SAC, the two boxes and television that were returned were then apparently left at the Residence because the Debtor alleges she returned there on March 10, 2011, and found them to again be missing. SAC at ¶ 16. The Debtor acknowledged at oral argument on the Motion that she has no evidence that any of the Defendants took these items a second time, but asks the Court to draw that inference because they continued to have access to the Residence at that time by way of the lockbox that had been placed on it. 6 The Court could direct the Debtor to file a third amended complaint to expressly allege, upon information and belief, that the property in question was in the possession or control of Safeguard when the bankruptcy was filed. However, the Debtor, through no fault of her own, does not know for sure what happened to the missing property and is clearly relying on the inference that the property remained in the possession and control of the last parties known to have had it. Requiring an amendment in these circumstances would elevate form over substance. 7 The Court notes that the SAC did not plead supplemental jurisdiction under 28 U.S.C. § 1367(a) as an alternative basis for subject matter jurisdiction of the state law claims in Counts IV through VIII. Since these state law claims and the allowed federal question claims in Counts I and III appear to derive from a “common nucleus of operative facts”, and might ordinarily be expected to be tried in one judicial proceeding, supplemental jurisdiction might exist. See, MCI Telecomms. Corp. v. Teleconcepts, Inc., 71 F.3d 1086, 1102 (3d Cir.1995). In any event, given the Court's conclusion as to diversity jurisdiction, it has not considered supplemental jurisdiction as an alternative. 8 The other two Defendants were also incorporated in and have their principal place of business in states other than Pennsylvania. 9 At argument the Debtor explained that at the time of the original filing, she believed that because she no longer possessed the missing property she could not claim it directly on Schedule B but was required to make it part of her conversion claim. 10 Although it should not be necessary to say so, the Court notes that it has by no means concluded that the Debtor will ultimately succeed on this or any of her claims. The Court's analysis is based on accepting the allegations in the SAC as true and drawing all reasonable inferences in a light most favorable to the Debtor. 11 The comment further notes that the state of mind of humiliation may come from the deliberate trespass to land or destruction or dispossession of chattels. In fact, “Illustration 5” set forth in Comment d is a fair approximation of what the Debtor alleges happened to her: “A wantonly dispossesses B of household furniture to the knowledge of B's neighbors. B is entitled to damage for humiliation.” Restatement (2d) Torts, § 905, Comment d. 12 It should be noted that the Debtor also seeks attorney fees and she cites a statutory basis for an award of such fees for violation of the automatic stay, pursuant to 11 U.S.C. § 362(k). See SAC at ¶¶ 19(k), 31. The Court takes judicial notice that Debtor's counsel recently filed an interim fee application seeking attorney fees of $24,900, the vast majority of which are related to the prosecution of this adversary proceeding. See Doc. No. 79 in the main case. Although that application has not yet been granted, it does provide some sense of the potential attorney fees involved. While the possibility of an award of attorney fees may normally be “counted” in determining the amount in controversy, Hamm, supra, the Court will not do so here for a couple of reasons. First, the only basis for an award of attorney fees stated in the SAC falls under a federal question claim, Count III, and it would seem that the possibility of attorney fees should thus not be counted with respect to the diversity claims. Second, the debtor has not argued that attorney fees should be counted to reach the diversity threshold. 13 The common law tort of abuse of process is to be distinguished from two related torts. The tort of malicious prosecution concerns the initiation of a criminal proceeding against the plaintiff without probable cause and for a malicious or improper Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 87 of 247 In re Carpenter, Slip Copy (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 15 purpose. The tort of wrongful use of civil proceedings, which has been codified under Pennsylvania law at 42 Pa.C.S.A. § 8351 (the Dragonetti Act) concerns the procurement, initiation or continuation of civil proceedings against another with a grossly negligent manner or without probable cause. Both malicious prosecution and wrongful use of civil proceedings actions require as an element that the underlying proceedings in question have been terminated in favor of the plaintiff. Abuse of process, by contrast, concerns the perversion of a process after it is issued. See, e.g., Hart v. O'Malley, 647 A.2d 542, 551 (Pa.Super.1994) (action for wrongful use of civil proceedings has to do with wrongful initiation of such process, while abuse of process is improper use of process after it has been issued). As distinguished from these related torts, abuse of process does not require a showing that the underlying proceeding terminated in the plaintiff's favor, or that there was a lack of probable cause. Brown v. Johnston, 675 F.Supp. 287, 2909-91 (W .D.Pa.1987). 14 A so-called Act 6 Notice is required pursuant to 41 P.S. § 403 which provides that before a mortgagee may take certain actions regarding a residential mortgage it must provide the debtor notice of such intention at least 30 days in advance. Id. at § 403(a). The notice must be in writing and sent by registered or certified mail. Id., § 402(b). The notice must contain certain information designed to inform debtors of their rights. Id., § 403(c). A form of the Act 6 Notice is found at 10 Pa.Code § 7.4. 15 In fact, the SAC alleges that the day after the entry the Debtor spoke to someone from the Bank and was told that Safeguard and Five Brothers were not supposed to have entered the residence or taken any personal property, only to see if it was occupied. SAC at ¶ 13. This contention, effectively that of a mistake, is not consistent with the theory that the Defendants were relying on the authority of any legal process to do what they did. 16 Among the circumstances addressed in the cases cited by the Messer court were false representations that a judgment had been obtained against a debtor, sending a notice of intention to foreclose when there was no right to foreclose, threatening immediate foreclosure while knowing that foreclosure could not occur without a hearing, untrue statements that a debtor's account were past due as a result of delinquent payments, and a false listing of a plaintiff as a mortgagor in a sheriff sale advertisement. End of Document © 2017 Thomson Reuters. No claim to original U.S. Government Works. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 88 of 247 EXHIBIT J Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 89 of 247 Kauffman v. Barbagello, Not Reported in F.Supp.2d (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 1 2013 WL 6388487 Only the Westlaw citation is currently available. United States District Court, M.D. Pennsylvania. Carl R. KAUFFMAN, III, Plaintiff v. Officer Daniel BARBAGELLO, et al., Defendants. No. 1:13-cv-00659. | Dec. 5, 2013. Attorneys and Law Firms Alina Dusharm, Stone Duncan & Linsenbach, PC, Dillsburg, PA, for Plaintiff. Christopher P. Gerber, Sheryl L. Brown, Siana, Bellwoar & McAndrew, LLP, Chester Springs, PA, for Defendant. MEMORANDUM YVETTE KANE, District Judge. *1 Presently pending before the Court is Defendants' motion to dismiss Plaintiff's complaint for failure to state a claim upon which relief can be granted. (Doc. No. 12.) The motion has been fully briefed and is ripe for disposition. For the reasons that follow, the Court will grant Defendants' motion in part and deny in part. I. BACKGROUND 1 On March 21, 2012, at approximately 10:00 p.m., Plaintiff Carl Kauffman was riding his motorcycle east on Route 30 after attending an evening class at the Franklin County Career and Technology Center. (Doc. No. 1 ¶¶ 11-12.) As the car traveling in front of him made a left turn, Plaintiff “casually passed on the right hand side.” (Id. ¶ 12.) Defendant Daniel Barbagello, a Patrolman First Class for the Cumberland Township Police Department, observed Plaintiff as he passed on the left side of the car and turned around to follow him. (Id. ¶ 13.) Defendant Barbagello signaled for Plaintiff to pull over, and Plaintiff pulled over in the parking lot at the top of a hill. (Id. ¶¶ 14- 15.) When Defendant Barbagello approached Plaintiff, he asked: “Were you trying to run from me?” (Id. ¶ 16.) Plaintiff replied in the negative and explained that he “was just looking for a safe place to pull over.” (Id. ¶ 17.) Over the next several minutes, Defendant Barbagello “interrogated Plaintiff about his drug and alcohol abuse, and seemingly tried to trick him into giving answers that would suggest his guilt.” (Id. ¶ 20.) Plaintiff complied with Defendant Barbagello's requests and explained that he neither used drugs nor was drunk. (Id. ¶ 21.) At some point, Defendant Barbagello called for back up, and Defendant John Doe I arrived at the scene shortly thereafter. (Id. ¶ 22.) Defendants Barbagello and John Doe I searched Plaintiff's pockets, but they found nothing incriminating. (Id. ¶¶ 23-24.) Defendants Barbagello and John Doe I then began asking Plaintiff to perform sobriety tests. (Id. ¶ 25.) Plaintiff attempted to comply with each request but “became nervous because of the way he was being treated.” (Id. ¶ 26.) First, Defendant Barbagello asked Plaintiff “to take ten steps heel to toe.” (Id . ¶ 27.) Plaintiff complied with this request “without any problems,” but Defendant Barbagello “accused Plaintiff of failing the test because he took ten steps instead of three steps, as he claims he directed him to take.” (Id. ¶ 28.) Plaintiff apologized for mishearing the instruction. (Id. ¶ 29.) During this time, Plaintiff “began to tear up from the stress of the long work day and frustration at not knowing what to do to prove his innocence.” (Id. ¶ 30.) Defendants Barbagello and John Doe I “began accusing and bullying Plaintiff, stating that because he was nervous and starting to cry, ‘there [was] something wrong with [him].’ ” (Id. ¶ 31.) Despite passing other sobriety tests, Defendants Barbagello and John Doe I administered a pen light test because Plaintiff appeared “teary-eyed and stressed.” (Id. ¶ 32.) They informed Plaintiff that he failed the test “because his eyes were red.” (Id. ¶ 33.) Defendants Barbagello and John Doe I then told Plaintiff that he had failed a sufficient number of tests to warrant his arrest and asked Plaintiff to take a Portable Breath Test, which Plaintiff passed. (Id. ¶¶ 35-36.) One defendant, who was not specifically identified in Plaintiff's complaint, then commented that Plaintiff “must be on drugs.” (Id. ¶ 37.) Defendants Barbagello and John Doe I then instructed Plaintiff to call someone to pick him up. (Id. ¶ 38.) Plaintiff explained that no one was available to pick him up because “[h]is wife and three children were already sleeping and he Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 90 of 247 Kauffman v. Barbagello, Not Reported in F.Supp.2d (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 2 could not wake up his wife to pack up all their children to come get him.” (Id. ¶ 39.) *2 Because Plaintiff had no one to call to pick him up, Plaintiff alleges that the officers handcuffed him and “pushed him into the back of the squad car.” (Id. ¶ 41.) Defendant Barbagello, however, informed Plaintiff that he was not under arrest. (Id. ¶ 42.) Plaintiff asked if he could leave, but Defendant Barbagello said, “No.” (Id. ¶ 43.) Defendants Barbagello and Doe I then drove Plaintiff to the nearest Pennsylvania State Police Barracks to conduct a drug recognition evaluation. (Id. ¶ 44.) After arriving at the barracks, one of the defendants read Plaintiff his Miranda rights, and Defendant John Doe II “subjected [him] to another hour's worth of testing, where he retook several of the same tests he had taken while pulled over ....” (Id. ¶ 45-46.) During this series of testing, the officers “again bullied and attempted to trick Plaintiff into failing the tests.” (Id. ¶ 47.) Plaintiff, in an attempt to ensure that he complied with the officers' instructions, “began repeating their commands.” (Id. ¶ 48.) This repetition angered Defendant Doe II. (Id. ¶¶ 49, 51.) “At this point, Plaintiff became scared because the Defendants were clearly angry at him and he was afraid he was going to fail the tests.” (Id. ¶ 52.) Plaintiff began to cry again. (Id. ¶ 53.) Defendant Doe II told Plaintiff that “[t]here was something wrong with [him] if [he was] scared.” (Id. ¶ 54.) None of the tests indicated that Plaintiff had drugs or alcohol in his system. (Id. ¶ 55.) Nevertheless, Plaintiff alleges that Defendants Barbagello, Doe I, and Doe II refused to allow him to leave the scene. (Id. ¶ 56.) Rather, they informed him that he could either go to jail or go to the hospital. (Id. ¶ 57.) Plaintiff chose to go to the hospital, where he waited approximately one hour before he was told to take a urine test, which came back negative for drug use. (Id. ¶¶ 58-60.) The officers then attempted to involuntarily commit Plaintiff under Section 302 of the Pennsylvania Mental Health Procedures Act. (Id . ¶ 61.) A doctor interviewed Plaintiff but refused to involuntarily commit him under Section 302. (Id. ¶ 62.) At this point, “Plaintiff had been held for about [five] hours,” and it was approximately 3:00 a.m. (Id. ¶ 63.) At some point, the officers left the scene and an unnamed defendant issued Plaintiff a citation for passing in a “No Passing Zone.” (Id. ¶ 77; Doc. No. 3.) The doctor informed Plaintiff that the officers had instructed him not to allow Plaintiff to ride his motorcycle. (Doc. No. ¶¶ 64.) Plaintiff then called the Pennsylvania State Police to obtain more information, and Defendant Barbagello returned his call. (Id. ¶¶ 65-66.) Defendant Barbagello “still seemed irritated and [was] unwilling to answer Plaintiff's questions.” (Id. ¶ 66.) Plaintiff asked him for the location of his keys and helmet, but Defendant Barbagello refused to answer this question, and instead told him, “I wouldn't ride for about a day.” (Id. ¶¶ 67-68.) Plaintiff then asked: “If I walk up and get my bike and ride it home, will you arrest me?” (Id. ¶ 69.) Defendant Barbagello told him he could not answer that question. (Id. ¶ 70.) After Plaintiff again asked for the location of his keys, Defendant Barbagello told him that he put them in his helmet. (Id. ¶ 71.) *3 Before leaving, Plaintiff again attempted to call the Pennsylvania State Police Barracks to inquire whether he could drive his motorcycle. (Id. ¶ 72.) The police, however, would not answer his question. (Id. ¶ 73.) Plaintiff then drove his motorcycle home. (Id. ¶ 74.) After spending most of his night held in police custody, Plaintiff was unable to go to work the next morning, and instead was forced to call off work. (Id. ¶ 75.) The next day, Plaintiff contacted Defendant Cumberland Township to speak to someone about his treatment and spoke with the on-duty supervisor. (Id. ¶ 78.) The supervisor informed Plaintiff that he would need to speak to Defendant Timothy Biggins, a Sergeant for the Township Police Department, who would be in the office on March 23, 2012. (Id. ¶ 79.) Plaintiff called back on March 23, 2012 but was unable to speak to Defendant Biggins. (Id. ¶ 80.) The next day, Plaintiff called and left another message for Defendant Biggins. (Id. ¶ 81.) After not hearing back, Plaintiff then contacted Defendant Don Boehs, the Chief of Police. (Id. ¶ 82.) Defendant Boehs did not answer the call or subsequently return Plaintiff's call. (Id. ¶ 83.) On April 2, 2012, Defendant Biggins called Plaintiff back and “became irritated and told Plaintiff that he already knew what happened from speaking to Defendant Barbagello.” (Id. ¶ 84.) Plaintiff attempted to file a complaint with the Police Department, but Defendant Biggins refused to accept any complaint. (Id. ¶ 85.) Defendant Biggins informed Plaintiff that Defendant Barbagello did nothing wrong and that he would have handled the situation the same way. (Id. ¶ 87.) Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 91 of 247 Kauffman v. Barbagello, Not Reported in F.Supp.2d (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 3 Approximately one year later, Plaintiff initiated this action by filing a civil rights complaint against Defendants Barbagello, Biggins, Boehs, Cumberland Township, John Doe I, and John Doe II. (Doc. No. 1.) In the complaint, Plaintiff alleges the following: (1) that Defendants Barbagello, Doe I, and Doe II violated his right to be free from unreasonable searches and seizures under the Fourth Amendment; (2) that all defendants violated his right to substantive due process under the Fifth and Fourteenth Amendments; (3) that Defendants Biggins, Doe I and Doe II failed to intervene when Defendant Barbagello violated his right to be free from excessive force; (4) that Defendants Biggins, Boehs, and Cumberland Township failed to train officers; (5) false arrest and false imprisonment against all individual defendants under Pennsylvania law; (6) abuse of process against all individual defendants under Pennsylvania law; and (7) intentional infliction of emotional distress against all individual defendants under Pennsylvania law. II. STANDARD OF REVIEW A motion to dismiss pursuant to Rule 12(b)(6) tests the legal sufficiency of the complaint. Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir.1993). In reviewing a motion to dismiss, a court may “consider only the allegations in the complaint, exhibits attached to the complaint, matters of public record, and documents that form the basis of a claim.” Lum v. Bank of Am., 361 F.3d 217, 221 n. 3 (3d Cir.2004). The motion will only be properly granted when, taking all factual allegations and inferences drawn therefrom as true, the moving party is entitled to judgment as a matter of law. Markowitz v. Ne. Land Co., 906 F.2d 100, 103 (3d Cir.1990). *4 The burden is on the moving party to show that no claim has been stated. Johnsrud v. Carter, 620 F.2d 29, 33 (3d Cir.1980). Thus, the moving party must show that Plaintiff has failed to “set forth sufficient information to outline the elements of his claim or to permit inferences to be drawn that those elements exist.” Kost, 1 F.3d at 183 (citations omitted). A court “need not credit a complaint'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). Although the 12(b)(6) standard does not require “detailed factual allegations,” there must be a “ ‘showing,’ rather than a blanket assertion of an entitlement to relief.... [F]actual allegations must be enough to raise a right to relief above the speculative level.” Phillips v. Cnty. of Allegheny, 515 F.3d 224, 231-32 (3d Cir.2008) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). Put otherwise, a civil complaint must “set out ‘sufficient factual matter’ to show that the claim is facially plausible.” Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir.2009) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009)). III. DISCUSSION A. Count I: Fourth Amendment claims against Defendants Barbagello, Doe I, and Doe II In Count I, Plaintiff alleges that Defendants Barbagello, Doe I, and Doe II violated his right to be free from unreasonable searches and seizures, and subjected him to unlawful arrest and detention in violation of the Fourth Amendment to the United States Constitution. (Doc. No. 1 ¶¶ 91-100.) 2 Defendant Barbagello argues that the stop of Plaintiff was lawful, and therefore Plaintiff's claims that Defendants unlawfully seized, searched, arrested, and detained him in contravention of the Fourth Amendment must be dismissed as a matter of law. (Doc. No. 15 at 25- 26.) 1. Unlawful seizure A seizure under the Fourth Amendment occurs when, “taking into account all of the circumstances surrounding the encounter, the police conduct would ‘have communicated to a reasonable person that he was not at liberty to ignore the police presence and go about his business.’ ” Kaupp v. Texas, 538 U.S. 626, 629, 123 S.Ct. 1843, 155 L.Ed.2d 814 (2003) (citation omitted). The United States Supreme Court has established numerous context-based circumstances in which a “seizure” under the Fourth Amendment is effected, including “ ‘the threatening presence of several officers, the display of a weapon by an officer, some physical touching of the person of the citizen, or the use of language or tone of voice indicating that compliance with the officer's request might be compelled.’ ” Id. (citation omitted). Traffic stops constitute seizures for Fourth Amendment purposes. Whren v. United States, 517 U.S. 806, 809-10, 116 S.Ct. 1769, 135 L.Ed.2d 89 (1996). “[A] traffic stop will be deemed a reasonable ‘seizure’ when an objective review of the facts shows that an officer possessed specific, articulable facts that an individual was violating a traffic Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 92 of 247 Kauffman v. Barbagello, Not Reported in F.Supp.2d (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 4 law at the time of the stop.” United States v. Delfin-Colina, 464 F.3d 392, 398 (3d Cir.2006). *5 When an officer conducts a lawful stop of a motorist for an observed traffic infraction, the officer may question the motorist “on matters reasonably related in scope to the justification for the stop of the vehicle.” Padilla v. Miller, 143 F.Supp.2d 453, 467 (M.D.Pa.1999) (citing Berkemer v. McCarty, 468 U.S. 420, 439, 104 S.Ct. 3138, 82 L.Ed.2d 317 (1984)). A lawful traffic stop is analogous to a Terry stop, which allows an officer who “lack [s] probable cause to make an arrest but ha[s] a reasonable basis to suspect an individual ... [to] briefly detain that person in order to conduct an inquiry ‘reasonably related in scope to the justification for [the stop].’ ” Id. (quoting Terry v. Ohio, 392 U.S. 1, 29, 88 S.Ct. 1868, 20 L.Ed.2d 889 (1968)); Delfin-Colina, 464 F.3d at 397. An officer may conduct a pat-down search of the stopped motorist “where the officer is able to point to specific and articulable facts which, taken together with rational inferences from those facts, warrant that intrusion.” United States v. Moorefield, 111 F.3d 10, 13 (3d Cir.1997). However, “[a] seizure that is justified solely by the interest in issuing a warning ticket to the driver can become unlawful if it is prolonged beyond the time reasonably required to complete that mission.” Illinois v. Caballes, 543 U.S. 405, 407, 125 S.Ct. 834, 160 L.Ed.2d 842 (2005). The Court finds that Plaintiff's allegations that Defendants Barbagello and Doe I detained, handcuffed, and transported him to the Pennsylvania State Police Barracks after he passed the Portable Breath Test state a claim for unlawful seizure under the Fourth Amendment. See James v. City of Wilkes-Barre, 700 F.3d 675, 681- 82 (3d Cir.2012) (“[A] seizure results from ‘coercive pressure from state actors resulting in a significant, present disruption of the targeted person's freedom of movement ... [and] typically involves an almost complete restriction of movement ... (as when a police officer tells a suspect to get in the back of the squad car but declines to handcuff him).” Id. (citations omitted). Here, after Defendants Barbagello and Doe I finished conducting roadside sobriety tests which revealed that Plaintiff was not under the influence of alcohol, they nonetheless refused to allow Plaintiff to leave on his own. (Doc. No. 1 ¶¶ 35-40.) During the traffic stop, Defendants Barbagello and Doe I outnumbered Plaintiff, and he claims their behavior intimidated him such that he “began to tear up from the stress.” (Id. ¶ 30.) Although Defendants Barbagello and Doe I gave Plaintiff the option to have someone else come pick him up, their words and actions as set forth in Plaintiff's complaint make clear that Plaintiff was not free to leave on his own accord. (Id. ¶¶ 38-39). As alleged, Defendants Barbagello's and Doe I's conduct, even before they handcuffed Plaintiff, “present[ed] a disruption of [Plaintiff's] freedom of movement.” James, 700 F.3d at 681. Defendants went on to handcuff Plaintiff and place him in the back of a police cruiser. (Doc. No. 1 ¶ 41.) In this context, such conduct may convey to a reasonable person that he is not “free to decline the officers' requests” that he be taken to the Pennsylvania State Police Barracks. See United States v. Wilson, 413 F.3d 382, 386 (3d Cir.2005). By first refusing to allow Plaintiff to leave the site of the traffic stop on his own accord, and then placing him in the back of the police car in handcuffs for transport to the police barracks, Defendants effected a “complete restriction of [Plaintiff's] movement” amounting to a seizure. James, 700 F.3d at 681. *6 Defendant Barbagello argues that Plaintiff's Fourth Amendment claims fail as a matter of law under the doctrine of Heck v. Humphrey, which holds that “civil tort actions are not appropriate vehicles for challenging the validity of outstanding criminal judgments [and] applies to Section 1983 damages actions that necessarily require the plaintiff to prove the unlawfulness of his conviction.” 512 U.S. 477, 486, 114 S.Ct. 2364, 129 L.Ed.2d 383 (1994); (Doc. No. 15 at 25-26.) However, Heck is inapposite here, because Plaintiff does not challenge the citation he received for unlawful passing, but rather the prolonged stop, including being handcuffed, transported to the Pennsylvania State Police Barracks, and subjected to sobriety tests and an involuntary mental health evaluation. Plaintiff sets forth sufficient facts to support a claim that Defendant Barbagello unlawfully seized him in violation of the Fourth Amendment. The Court will therefore deny Defendant Barbagello's motion to dismiss Plaintiff's claim that Defendant Barbagello violated Plaintiff's Fourth Amendment right to be free from unlawful seizure. 2. Unlawful search Plaintiff also asserts that Defendants Barbagello, Doe I, and Doe II unlawfully searched him in violation of the Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 93 of 247 Kauffman v. Barbagello, Not Reported in F.Supp.2d (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 5 Fourth Amendment. (Doc. No. 1 at 14.) Although police officers may conduct a “frisk” of a person when they have “specific and articulable facts which, taken together with rational inferences from those facts, reasonably warrant that intrusion,” officers may not perform a full search of a person without probable cause. Terry v. Ohio, 392 U.S. 1, 21, 88 S.Ct. 1868, 20 L.Ed.2d 889 (1968). Plaintiff alleges that after Defendant Doe I arrived at the scene of the traffic stop, both he and Defendant Barbagello asked Plaintiff, “What is in your pockets? Let me check.” (Id. ¶ 23.) Defendants then checked Plaintiff's pockets but “found nothing incriminating,” which Plaintiff alleges violated his Fourth Amendment right to be free from unreasonable search. (Id. ¶ 14, 24.) The Court finds that Plaintiff's allegation that Defendants Barbagello and Doe I searched his pockets states a claim for unlawful search under the Fourth Amendment. Defendant Barbagello makes no specific arguments as to why his and Defendant Doe I's conduct in checking Plaintiff's pockets did not constitute a violation of Plaintiff's Fourth Amendment right to be free from an unlawful search. Instead, Defendant Barbagello appears to rely generally on the concept that Heck precludes Plaintiff from asserting any Fourth Amendment claims. (Doc. No. 15 at 17-18.) As discussed in Section III.A.1, Heck does not require Plaintiff's Fourth Amendment claims to be dismissed. Plaintiff asserts that Barbagello and Doe I performed a full search of his pockets without seeking his consent. (Doc. No. 1 ¶¶ 23-24.) Taking the facts as alleged in Plaintiff's complaint as true, Plaintiff has adequately stated facts to support a violation of the Fourth Amendment's protection again unreasonable searches. Defendant Barbagello's motion to dismiss Plaintiff's Fourth Amendment unlawful search claim is therefore denied. 3. Unlawful arrest *7 Plaintiff asserts a claim for unlawful arrest under the Fourth Amendment against Defendants Barbagello, Doe I, and Doe II. (Doc. No. 1 at 14.) “To state a claim for false arrest under the Fourth Amendment, a plaintiff must establish: (1) that there was an arrest; and (2) that the arrest was made without probable cause.” James v. City of Wilkes-Barre, 700 F.3d 675, 680 (3d Cir.2012) (citation omitted). Defendant Barbagello argues that Plaintiff was not arrested and relies on the holdings in Whitmill v. City of Philadelphia and Owens v. County of Delaware, which respectively held that placing a person in a police vehicle for transportation does not necessarily effect an arrest, and handcuffing a person does not necessarily effect an arrest. Whitmill v. City of Phila., 29 F.Supp.2d 241, (E.D.Pa.1998); Owens v. Cty. of Del., No. 95-4282, 1996 WL 476616, at *10 (E.D.Pa. Aug.15, 1996). (See also Doc. No. 23 at 3.) a. Whether Plaintiff was arrested In determining whether police formally arrested an individual, “the reasonableness of the intrusion is the touchstone, balancing the need of law enforcement officials against the burden on the affected citizens and considering the relation of the policeman's actions to his reason for stopping the suspect.” United States v. Edwards, 53 F.3d 616, 619 (3d Cir.1994). The Court uses a “totality of the circumstances” standard in measuring the reasonableness of police conduct against the intrusion on the person allegedly arrested. United States v. Sharpe, 470 U.S. 675, 685, 105 S.Ct. 1568, 84 L.Ed.2d 605 (1984). When a police officer's words and actions would convey to a reasonable person that he “was being ordered to restrict his movement,” the Court will find that the police made a “show of authority,” which may result in a seizure and formal arrest under the Fourth Amendment. California v. Hodari D., 499 U.S. 621, 628, 111 S.Ct. 1547, 113 L.Ed.2d 690 (1991). The Court finds that under the totality of the circumstances, Plaintiff's allegations fulfill the first prong of the unlawful arrest analysis. (See Doc. No. 1 ¶¶ 35-45.) Plaintiff alleges that he was not allowed to leave the scene of the traffic stop on his own accord. (Id. ¶ 43.) At no time was he considered a suspect in a violent crime, thus lessening the reasonableness of Defendants' decision to handcuff him for their own safety. See Whitmill, 29 F.Supp.2d 241, 242 (E.D.Pa.1998); (Doc. No. 1 ¶ 42.) Further, Defendants Barbagello and Doe I had already searched Plaintiff's pockets and had not found any weapons or other instrumentalities that could cause harm. (Id. ¶ 24.) Although any one of the steps Defendants Barbagello and Doe I took to detain Plaintiff and restrain his movement might not rise to the level of formal arrest alone, under the totality of the circumstances, Plaintiff alleges facts adequate to establish that Defendants Barbagello and Doe I arrested him. The Court will thus proceed to the second prong of the false arrest analysis. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 94 of 247 Kauffman v. Barbagello, Not Reported in F.Supp.2d (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 6 b. Whether Plaintiff's arrest was without probable cause *8 In order for Defendants Barbagello's and Doe I's warrantless arrest of Plaintiff to be lawful, it must be based on probable cause. Wright v. City of Phila., 409 F.3d 595, 601 (3d Cir.2005). Officers have probable cause for an arrest if “at the moment the arrest was made ... the facts and circumstances within [the officers'] knowledge and of which they had reasonably trustworthy information were sufficient to warrant a prudent man in believing that [the suspect] had committed or was committing an offense.” Beck v. Ohio, 379 U.S. 89, 91, 85 S.Ct. 223, 13 L.Ed.2d 142 (1964). The Court must determine whether “the objective facts available to the officers at the time of arrest were sufficient to justify a reasonable belief that an offense was being committed.” United States v. Glasser, 750 F.2d 1197, 1205 (3d Cir.1984). The Court finds that Plaintiff's allegations indicate Defendants Barbagello and Doe I did not have probable cause to arrest him, and thereby satisfy the second prong of the unlawful arrest analysis. As Plaintiff argues, the fact that Defendants Barbagello and Doe I were willing to release Plaintiff if someone was available to pick him up by the side of the road indicates that Defendants did not have information giving them a “fair probability” that Plaintiff committed or was committing a crime. (Doc. No. 1 ¶ 38.) Further, Plaintiff had already passed a Portable Breath Test, which showed that he was not under the influence of alcohol. (Id. ¶ 36.) When directly asked about drug and alcohol use, Plaintiff told Defendant Barbagello that he did not use drugs and was not drunk. (Id. ¶ 21.) From the facts as pled, Defendants Barbagello and Doe I appear to have based their assumption that Plaintiff was under the influence of drugs or alcohol on Plaintiff's becoming upset, crying, and developing red eyes during the traffic stop. (Id. ¶¶ 31-33.) However, the fact that Plaintiff became upset during a traffic stop is insufficient “to warrant a prudent man in believing that [Plaintiff] had committed or was committing [the] offense” of driving under the influence. Beck, 379 U.S. at 91. Accordingly, Plaintiff's allegations satisfy both prongs of the unlawful arrest analysis, and Defendant Barbagello's motion to dismiss Plaintiff's unlawful arrest claim is denied. 4. Unlawful detention Plaintiff asserts that the prolonged stop to which he was subjected, including his transport to the Pennsylvania State Police Barracks and later, to the hospital, constitute unlawful detention in violation of the Fourth Amendment. (Doc. No. 1 at 14.) To assert unlawful detention under the Fourth Amendment, Plaintiff must allege that he was seized within the meaning of the Fourth Amendment, and that police officers did not have probable cause to seize him. See James v. City of Wilkes- Barre, 700 F.3d 675, 682 (3d Cir.2012). As discussed in Section III.A.1 and III.A.3.b above, Plaintiff alleges facts adequate to support his claims that he was unlawfully seized within the meaning of the Fourth Amendment, and that Defendants did not have probable cause to arrest him. Plaintiff has therefore alleged facts adequate to state a claim for unlawful detention under the Fourth Amendment, and consequently Defendant Barbagello's motion to dismiss Plaintiff's unlawful detention claim will be denied. B. Count II: Fifth and Fourteenth Amendment substantive due process claims against all defendants *9 Plaintiff claims that all Defendants violated his Fifth and Fourteenth Amendment rights to substantive due process when they engaged in “egregious conscious shocking mistreatment” under color of state law. (Doc. No. 1 ¶ 102.) “In a due process challenge to executive action, the threshold question is whether the behavior of the governmental officer is so egregious, so outrageous, that it may fairly be said to shock the contemporary conscience.” Benn v. Universal Health Sys., Inc., 371 F.3d 165, 174 (3d Cir.2004.) Whether conduct “shocks the conscience' is a matter of law for the courts to decide.” Id. (citing Rochin v. California, 342 U.S. 165, 172, 72 S.Ct. 205, 96 L.Ed. 183 (1952)). “Involuntary commitment under the [Pennsylvania Mental Health Procedures Act] does not in itself violate substantive due process.” Benn, 371 F.3d at 174. Plaintiff alleges that all defendants forced him to undergo a mental health evaluation pursuant to Section 302 of the Pennsylvania Mental Health Procedures Act (MHPA) in violation of his constitutional right to substantive due process. (Doc. No. 1 ¶¶ 57-62.) Plaintiff brings his claim against all defendants, but from the facts as pled, only Defendants Barbagello, Doe I, and Doe II were involved in transporting Plaintiff to the hospital and submitting him to a mental health evaluation. (See id. ¶¶ 44, 55-56 (placing Barbagello, Doe I, and Doe II as the only defendants at the police barracks when “Defendants” told Plaintiff, “you can go to jail or you can go to the hospital.”)) (Id. ¶ 57.) Because Plaintiff's Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 95 of 247 Kauffman v. Barbagello, Not Reported in F.Supp.2d (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 7 substantive due process claim is based on his being subjected to a mental health evaluation for involuntary commitment, Plaintiff cannot adequately state a claim for violation of his substantive due process rights against any defendants who were not involved in his involuntary mental health evaluation. The Court therefore finds that Plaintiff's substantive due process claims in Count II against Defendants Sergeant Biggins, Chief Don Boehs, and Cumberland Township should be dismissed as a matter of law. Further, although Plaintiff captions Count II as “Violation of Fifth and Fourteenth Amendment Right to Substantive Due Process,” he limits his arguments to Fourteenth Amendment jurisprudence. (Doc. No. 1 ¶¶ 102-109; Doc. No. 22 at 10-12.) Because Plaintiff advances no specific arguments regarding his claim that his Fifth Amendment right to substantive due process was violated, he has not sufficiently stated a claim under the Fifth Amendment, and the Court finds that Plaintiff's Fifth Amendment claim should be dismissed as to all defendants. 1. Plaintiff's Fourteenth Amendment substantive due process claims against Defendants Barbagello, Doe I, and Doe II Plaintiff alleges that Defendants Barbagello, Doe I, and Doe II's conduct in forcing him to choose between jail or the hospital, and subsequently submitting him for an involuntary mental health evaluation, was “conscience shocking” because he had not exhibited behavior indicating mental instability. (Doc. No. 1 ¶ 107.) The MHPA allows peace officers who observe an individual behaving in such a way that gives an officer “reasonable grounds to believe that [the individual] is severely mentally disabled and in need of immediate treatment,” to submit that individual to a mental health evaluation by medical personnel who are to determine whether that individual should be involuntarily committed. 50 Pa. Stat. Ann. tit. 50 § 7302(a)(2). The MHPA further provides civil and criminal immunity for peace officers participating in an involuntary commitment process, so long as their conduct is without “willful misconduct or gross negligence.” 50 Pa. Stat. Ann. § 7114(a). Thus, the MHPA shields the conduct of Defendants Barbagello, Doe I, and Doe II in submitting Plaintiff for a mental health evaluation unless Plaintiff establishes that Defendants engaged in “willful misconduct or gross negligence.” Id. *10 The Third Circuit looks to Pennsylvania law to determine what constitutes “willful misconduct” and “gross negligence” under the MHPA. See, e.g., Doby v. DeCrescenzo, 171 F.3d 858, 875 (3d Cir.1999). “Willful misconduct” occurs “when the danger to the plaintiff, though realized, is so recklessly disregarded that, even though there be no actual intent, there is at least a willingness to inflict injury, a conscious indifference to the perpetration of the wrong.” Id. (citations omitted). Gross negligence is characterized by “facts indicating more egregiously deviant conduct than ordinary carelessness, inadvertence, laxity, or indifference.... The behavior of the defendant must be flagrant, grossly deviating from the ordinary standard of care.” Id. (citations omitted). Plaintiff has not met the pleading standard for willful misconduct or gross negligence here. Plaintiff conclusorily pleads that Defendants were “without evidence of an intent or threat [by Plaintiff] to harm himself or others,” and that “Defendants forced Plaintiff to submit to mental evaluation without any evidence of a clear and present danger, and with no threats made by Plaintiff to himself or others.” (Doc. No. 1 ¶¶ 105, 107.) Plaintiff has not specifically pled that Defendants engaged in willful misconduct or gross negligence in subjecting him to a mental health evaluation, such that their conduct would not be shielded by the qualified immunity protection of the MH PA. Accordingly, the Court finds that Plaintiff's substantive due process claims should be dismissed without prejudice. Plaintiff may file an amended complaint with the proper pleading for a substantive due process claim under the MHPA. C. Count III: Excessive Force-Failure to Intervene claims against Defendants Doe I, Doe II, and Biggins Plaintiff asserts a “failure to intervene” claim against Defendants Doe I, Doe II, and Biggins for their alleged failure to intervene to prevent Defendant Barbagello's alleged use of excess force. (Doc. No. 1 ¶¶ 111-114.) The Fourth Amendment prohibits police officers from using excess force when making an arrest. Abraham v. Raso, 183 F.3d 279, 288 (3d Cir.1999). Further, officers have “a duty to take reasonable steps to protect a victim from another officer's use of excessive force ... if there is a realistic and reasonable opportunity to intervene.” Smith v. Mensinger, 293 F.3d 641, 650-51 (3d Cir.2002). Plaintiff has not alleged any facts to support a claim that Defendant Barbagello used excessive force, nor has he Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 96 of 247 Kauffman v. Barbagello, Not Reported in F.Supp.2d (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 8 specifically brought a claim against Defendant Barbagello for excessive force. (See Doc. No. 1 ¶¶ 111-116.) Because Plaintiff has not pled facts to support a claim of excessive force against Defendant Barbagello, he cannot support claims against Defendants Doe I, Doe II, and Biggins for failure to intervene and protect him from excessive force. Accordingly, the Court finds that Defendants' motion to dismiss Plaintiff's “excessive force-failure to intervene” claim will be granted as to Defendants Biggins, Doe I, and Doe II. D. Count IV: Monell liability against Defendants Biggins, Boehs, and Cumberland Township *11 In Count IV, Plaintiff brings a Monell claim pursuant to Section 1983 against Defendants Biggins, Boehs, and Cumberland Township for failure to train and supervise Defendants Barbagello and Doe I, whom Plaintiff alleges violated his Fourth, Fifth, and Fourteenth Amendment rights. 3 (Doc. No. 1 at 19.) Under the Monell doctrine, “[l]ocal governing bodies ... can be sued directly under § 1983 for monetary, declaratory, or injunctive relief where ... the action that is alleged to be unconstitutional implements or executes a policy statement, ordinance, regulation, or decision officially adopted and promulgated by that body's officers.” 436 U.S. 658, 690, 98 S.Ct. 2018, 56 L.Ed.2d 611 (1978). A municipality cannot be liable solely on the basis of respondeat superior, but will be liable if Plaintiff shows “that the municipality itself supported the violation of rights alleged.” Andrews v. City of Phila., 895 F.2d 1469, 1480 (3d Cir.1990) (citing Monell, 436 U.S. at 692-95)). To establish that a municipality supported the violation of rights alleged, Plaintiff must show the “execution of a government's policy or custom, whether made by its lawmakers or by those whose edicts or acts may fairly be said to represent official policy, inflicts the injury.” Monell, 436 U.S. at 694. To establish public policy or custom, Plaintiff must show that a “a policymaker is responsible either for the policy or, through acquiescence, for the custom” or that “authorized policymakers approved a subordinate's decision and the basis for it ....” Id. at 1480-81 (citations omitted). If the policy or custom “does not facially violate federal law,” then mere negligence will not suffice to establish causation, and Plaintiff must “demonstrat[e] that the municipal action was taken with deliberate indifference as to known or obvious consequences.” Kelly v. Borough of Carlisle, 622 F.3d 248, 263 (3d Cir.2010) (citations omitted). Determining who is a “policymaker” for Monell purposes is a matter of state law, and in Pennsylvania, a policymaker is an official with “final and unreviewable” policymaking authority “in the particular area of municipal business in question.” Hill v. Borough of Kurtztown, 455 F.3d 255, 245 (3d Cir.2006). However, “[a]n employee who lacks policymaking authority can still bind the municipality if a municipal policymaker delegated power to the employee or ratified his decision.” Kelly, 622 F.3d 248, 264 (citations omitted). But, “[s]imply going along with discretionary decisions made by one's subordinates ... is not a delegation to them of the authority to make policy.” Id. 1. Plaintiff's Monell claims against Defendant Sergeant Biggins Plaintiff alleges that under Monell, Defendant Biggins is liable for violations of Plaintiff's Fourth, Fifth, and Fourteenth Amendment rights. (Doc. No. 1 at 19.) Plaintiff asserts that a supervisor at the Cumberland Township Police Department told him that Defendant Biggins supervised Defendant Barbagello, that Plaintiff attempted to contact Defendant Biggins by phone for several days without success, and that when he finally spoke to him, Defendant Biggins “became irritated and told Plaintiff that he already knew what happened from speaking to Defendant Barbagello.” (Id. ¶¶ 79-81, 84.) Further, Plaintiff asserts that he tried to file a complaint with Defendant Biggins which he refused to accept, and that Biggins told Plaintiff that he would have handled the traffic stop precisely as Defendant Barbagello did. (Id. ¶¶ 85-87.) *12 The Court finds that Plaintiff has not alleged facts to support a Monell claim against Defendant Biggins. He has not pled facts to establish that Defendant Biggins is a “policymaker” for Monell purposes, or that Defendant Biggins delegated policymaking authority to Barbagello. Instead, he pleads that Defendant Biggins's conduct establishes Monell liability because “Defendants have not provided proper training and/or supervision of their officers so that they are fully equipped to react properly in the field while protecting the rights and liberties of United States Citizens.” (Id. ¶ 120.) This statement is merely a legal conclusion. Merely pleading that a named Defendant approved of a subordinate officer's actions without asserting facts to establish that Defendant exercised policymaking authority or delegated Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 97 of 247 Kauffman v. Barbagello, Not Reported in F.Supp.2d (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 9 that authority to the subordinate cannot establish a claim under Monell. Kelly, 622 F.3d at 264. Therefore, because Plaintiff's Monell claim against Defendant Biggins does not assert that he is a policymaker for a public entity or that he either delegated policymaking authority to Defendant Barbagello or ratified his conduct, the Court will grant Defendant Biggins's motion to dismiss Plaintiff's Monell claim. 2. Plaintiff's Monell claim against Defendant Chief Don Boehs Plaintiff asserts that Defendant Don Boehs, Chief of the Cumberland Township Police Department, is liable under Monell for failing to train and supervise Defendants Barbagello and Doe I. (Doc. No. 1 at 19.) Plaintiff alleges that he contacted Defendant Boehs, but Boehs did not answer and did not return his voicemail. (Id. ¶¶ 82-83.) The Court's analysis of Plaintiff's Monell claim against Defendant Boehs is identical to that brought against Defendant Biggins. Plaintiff has not set forth any facts to establish that Defendant Boehs acted as a policymaker for Cumberland Township, as required to establish Monell liability. Further, Plaintiff does not assert any facts that would establish Defendant Boehs delegated power to a subordinate or ratified a subordinate's actions. Accordingly, the Court will dismiss Plaintiff's Monell claim against Defendant Boehs. 3. Plaintiff's Monell claim against Cumberland Township Plaintiff alleges that Defendant Cumberland Township failed to train and supervise Defendants Barbagello and Doe I. (Doc. No. 1 at 19.) To establish Monell liability for a municipality such as Cumberland Township, Plaintiff must show that the municipality set forth a policy or custom that facially violated constitutional or other federal law, or that “municipal action was taken with deliberate indifference as to known or obvious consequences.” Kelly, 622 F.3d at 263 (3d Cir.2010) (citations omitted). Plaintiff must identify a Cumberland Township policy or custom amounting “to deliberate indifference to the rights of people with whom the police come in contact,” which generally “requires proof of a pattern of underlying constitutional violations.” Carswell v. Borough of Homstead, 381 F.3d 235, 244 (3d Cir.2004) (citations omitted). It is possible, but difficult, to prove deliberate indifference without establishing a pattern of underlying constitutional violations. Id. In addition to establishing “deliberate indifference,” Plaintiff must show “that the [alleged] inadequate training caused the constitutional violation,” as well as “a direct causal link between a municipal policy or custom and the alleged constitutional violation.” Id. at 244-45 (citations omitted). *13 The Court finds that Plaintiff's allegations do not establish “deliberate indifference” on behalf of Cumberland Township, or “a direct causal link between a municipal policy or custom and the alleged constitutional violation.” Id. Plaintiff asserts that “Defendant Cumberland Township has a policy, practice, and/or custom of unlawful violations of a citizens' [sic] civil rights” based on the conduct of Defendants Barbagello and Doe I during the traffic stop, Defendant Biggins's behavior when Plaintiff spoke to him about the incident (including Biggins's statement that he agreed with Barbagello's conduct), his refusal to accept Plaintiff's citizen's complaint, and his condonation of “the actions of Defendants through policies and practices, verbal encouragement, and/or lack of acknowledgment of the incident.” (Doc. No. 1 ¶ 119.) First, Defendant Biggins's statement to Plaintiff that he agreed with Defendant Barbagello's conduct is inadequate to establish municipal liability under Monell. See Kelly, 622 F.3d at 264. Second, although Plaintiff's complaint points to specific incidents which he believes stemmed from Cumberland Township's policy or custom, he does not identify other instances of detention, drug and alcohol testing, or involuntary mental health evaluation that show an underlying pattern of constitutional violations by the police department. He also has not pled facts that would establish a direct, causal connection between a Cumberland Township policy or custom and alleged constitutional violations. Plaintiff's assertion that “Defendant Cumberland Township has a policy, practice, and/or custom of unlawful violations of a citizens' civil rights” is merely a legal conclusion, which the Court need not credit. Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir.1997). Accordingly, the Court finds that Defendant Cumberland Township's motion to dismiss Plaintiff's Monell claim will be granted. E. Count V: State law claims for false arrest and imprisonment against all individual defendants Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 98 of 247 Kauffman v. Barbagello, Not Reported in F.Supp.2d (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 10 In Count V, Plaintiff brings pendent state law claims against all individual defendants for false arrest and imprisonment. 4 (Doc. No. 1 at 21.) Under Pennsylvania law, “false arrest” and “false imprisonment” share a common definition in certain contexts. See Gagliardi v. Lynn, 446 Pa. 144, 285 A.2d 109, 110 (Pa.1971) (“Detainment and confinement constitute the gravamen of the civil wrong committed by an individual who illegally asserts or employs authority over another while purportedly enforcing the law. This civil wrong can be denominated as either false arrest or false imprisonment.”) Id. When a defendant allegedly acts “for the purpose of securing the administration of the law without actual legal justification, ‘false arrest’ is synonymous with false imprisonment.” Id. at 111. False arrest/imprisonment requires “(1) the detention of another person, and (2) the unlawfulness of such detention.” Renk v. City of Pittsburgh, 537 Pa. 68, 641 A.2d 289, 293 (Pa.1994). “A police officer may be held liable ... for false imprisonment when a jury concludes that he did not have probable cause to make an arrest.” Id. 1. False arrest and imprisonment claims against Defendants Boehs and Biggins *14 Plaintiff pleads that only Defendants Barbagello, Doe I, and Doe II were involved directly in his physical detention. (See Doc. No. 1 ¶¶ 14, 22, 46) (pleading that Defendants Barbagello, Doe I, and Doe II physically detained Plaintiff.) (See also id. ¶¶ 82-87) (pleading Defendants Boehs's and Biggins's involvement was limited to telephone calls after the detention concluded.) Because Plaintiff has not pled any facts to establish that Defendants Boehs and Biggins participated in his alleged unlawful detention, he has failed to state a state law claim for false arrest against them. Accordingly, the Court will dismiss Plaintiff's state law claims for false arrest and imprisonment against Defendants Boehs and Biggins. 2. False arrest and imprisonment claims against Defendants Barbagello, Doe I, and Doe II Plaintiff also alleges that Defendants Barbagello, Doe I, and Doe II are liable in their individual capacities for false arrest and imprisonment. (Doc. No. 1 at 21.) Plaintiff avers that the following occurred: Defendant Barbagello pulled him over in a traffic stop, questioned him about drug and alcohol use, and called for Defendant Doe I as back up. (Id. ¶¶ 14, 20, 22.) Defendant Doe I then assisted Defendant Barbagello in searching Plaintiff's pockets, handcuffing him, transporting him from the traffic stop to the nearest police barracks in a police car, reading him his Miranda rights, subjecting him to further sobriety testing, and finally submitting him for an involuntary mental health evaluation. (Id. ¶¶ 14, 20, 23-25, 40-45, 56-61.) Plaintiff alleges that Defendant Doe II performed sobriety tests on him at the police barracks and, along with Defendants Barbagello and Doe I, told Plaintiff that he could not leave the barracks after the tests concluded, and that he must choose between spending the night in jail or in the hospital. (Id. ¶¶ 46, 56-57.) As discussed in Section A.1.3, Plaintiff adequately stated a claim under the Fourth Amendment to the United States Constitution for unlawful arrest against Defendants Barbagello, Doe I, and Doe II. Because “Pennsylvania state law false arrest claims and federal constitutional false arrest claims are co-extensive both as to elements of proof and elements of damages,” the Court finds that Plaintiff adequately asserts state law claims for false arrest and imprisonment against Defendants Barbagello, Doe I, and Doe II. Maiale v. Youse, No. 03-5450, 2004 WL 1925004, at *12 (E.D.Pa. Aug.27, 2004). Accordingly, the Court will not dismiss Plaintiff's claims of false arrest and imprisonment against Defendants Barbagello, Doe I, and Doe II. F. Count VI: State law claims for abuse of process against all individual defendants Plaintiff alleges that all individual defendants are liable for abuse of process under Pennsylvania state law. (Doc. No. 1 at 22.) Abuse of process is “the use of legal process against another ‘primarily to accomplish a purpose for which it is not designed.’ ” Rosen v. Am. Bank of Rolla, 426 Pa.Super. 376, 627 A.2d 190, 192 (Pa.Super.Ct.1993) (citations omitted). The crux of an abuse of process claim is the “improper use of process after it has been issued, that is, a perversion of it.” McGee v. Feege, 517 Pa. 247, 535 A.2d 1020, 1023 (Pa.1987) (citations omitted). Under Pennsylvania law, “abuse of process” and “malicious use of process” are similar to, but ultimately distinct from one another. See, e.g., id. The critical difference between the two claims is that “[m]alicious use of civil process has to do with the wrongful initiation of such process, while abuse of civil process is concerned with a perversion of a process after it is issued.” Id. (citations omitted). *15 Here, Plaintiff pleads that the individual defendants abused legal process by, “unlawfully, willfully and Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 99 of 247 Kauffman v. Barbagello, Not Reported in F.Supp.2d (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 11 intentionally abus[ing] the procedure of drug and alcohol testing, mental evaluation, and involuntary [evaluation under MHPA Section] 302 without probable cause and despite recurring indications the Plaintiff had done nothing wrong.” (Doc. No. 1 ¶ 132; Doc. No. 22 at 18.) He further alleges that “[t]hough there was no probable cause to detain [him],” Defendants used every possible avenue to hold Plaintiff.” (Doc. No. 22 at 18.) Although it is not stated directly, Plaintiff's claim appears to allege that Defendants Barbagello, Doe I, Doe II, Biggins, and Boehs all initiated drug, alcohol, and mental health evaluations while knowing there was no basis for these tests, and with the specific purpose of causing him harm. (See Doc. No. 22 at 18.) Because Plaintiff's claim is based on the alleged wrongful initiation of actions related to his arrest rather than on the perversion of legal process already underway, it appears it would have been properly raised as a malicious use of process rather than abuse of process claim. As pled, Plaintiff's complaint does not state a claim for abuse of process under Pennsylvania law. At no point does Plaintiff precisely allege what process individual Defendants perverted when they conducted drug and alcohol testing on him and submitted him to an involuntary mental health evaluation, as is required to establish a prima facie case for abuse of process. See McGee, 535 A.2d at 1023. Accordingly, Plaintiff fails to state a claim for state law abuse of process, and the Court finds that Plaintiff's abuse of process claims should be dismissed. G. Count VII: State law claim for intentional infliction of emotional distress against all individual defendants Plaintiff brings state law claims of intentional infliction of emotional distress (“IIED”) against all individual defendants for their conduct relating to Plaintiff's detention on March 21-22, 2012. (Doc. No. 1 at 23.) To establish an IIED claim, Plaintiff must show: (1) extreme and outrageous conduct; (2) done intentionally or recklessly; (3) that causes emotional distress; and (4) the distress is severe. Chuy v. Phila. Eagles Football Club, 595 F.2d 1265, 1273 (3d Cir.1979). The conduct must “go beyond all possible bounds of decency, and ... [be] regarded as atrocious, and utterly intolerable in a civilized society.” Dull v. W. Manchester Twp. Police Dep't., 604 F.Supp.2d 739, 756 (M.D.Pa.2009) (citations omitted). Further, to succeed on an IIED claim, Plaintiff must show “some type of resulting physical harm due to the defendant's outrageous conduct.” Reedy v. Evanson, 615 F.3d 197, 231 (3d Cir.2010). Plaintiff has not alleged any facts to show that individual defendants' conduct extended “beyond all possible bounds of decency,” or that he experienced “physical harm due to the defendant[s'] outrageous conduct.” Id.; Dull, 604 F.Supp.2d at 755. Instead, he advances several conclusory statements, such as “Defendants conduct was extreme and outrageous, beyond all possible bounds of decency and utterly intolerable in a civilized society,” and “[t]he actions of the Defendants were the cause of Plaintiff's distress.” (Doc. No. 1 ¶¶ 137-38.) Because Plaintiff has not pled facts showing that he experienced physical harm from Defendants' allegedly outrageous conduct, he has not properly stated a claim for IIED. 5 See Reedy, 615 F.3d at 231. Accordingly, the Court finds that Plaintiff's state law claims for intentional infliction of emotional distress should be dismissed as to all individual defendants. H. Qualified immunity *16 Defendants Biggins, Boehs, and Barbagello assert that they are entitled to qualified immunity for all claims brought against them in their official capacities. (Doc. No. 15 at 31.) Qualified immunity protects “government officials performing discretionary functions” by “shield[ing them] from liability for civil damages insofar as their conduct does not violate clearly established statutory or constitutional rights of which a reasonable person would have known.” Harlow v. Fitzgerald, 457 U.S. 800, 818, 102 S.Ct. 2727, 73 L.Ed.2d 396 (1982). Qualified immunity shields the government officials from facing lawsuits. Saucier v. Katz, 533 U.S. 194, 200, 121 S.Ct. 2151, 150 L.Ed.2d 272 (2001). To determine whether an official is entitled to qualified immunity, the Court must decide, in either order, whether, “taken in the light most favorable to the party asserting the injury ... the facts alleged show the officer's conduct violated a constitutional right,” and “whether the right was clearly established” at the time of the official's conduct, in that a reasonable officer would have known his conduct was unlawful. Id. at 201; Egolf v. Witmer, 526 F.3d 104, 110 (3d Cir.2008) (citations omitted). Plaintiff alleges that Defendant Barbagello violated his Fourth Amendment rights against unlawful seizure, search, detention, and arrest, and that Defendants Barbagello, Boehs, and Biggins violated his Fifth and Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 100 of 247 Kauffman v. Barbagello, Not Reported in F.Supp.2d (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 12 Fourteenth Amendment substantive due process rights. (Doc. No. 1 at 14, 16.) Because the Court finds that Plaintiff's Fourteenth Amendment claims against Defendants Boehs and Biggins should be dismissed, as should Plaintiff's Fifth Amendment substantive due process claims against all Defendants, Plaintiff has no remaining constitutional claims against Defendants Boehs and Biggins, and thus there is no need for a qualified immunity discussion with respect to these Defendants. However, Plaintiff adequately states claims for unlawful seizure, search, arrest, and detention against Defendant Barbagello under the Fourth Amendment. See Section III.A. Therefore, the Court must determine whether Defendant Barbagello can assert qualified immunity in response to Plaintiff's Fourth Amendment claims. 1. Whether officers violated a constitutional right Taking the facts as alleged by Plaintiff as true, the Court has determined that Plaintiff has adequately stated claims for unlawful seizure, search, arrest, and detention under the Fourth Amendment against Defendant Barbagello. See Section III.A.1-4. The Court will therefore assess whether Defendant Barbagello's conduct violated clearly established law such that every “reasonable official would have understood that what he is doing violates that right.” Anderson v. Creighton, 483 U.S. 635, 107 S.Ct. 3034, 97 L.Ed.2d 523 (1987). The Court need not rely on a precedential case that is factually identical, but “existing precedent must have placed the statutory or constitutional question beyond debate.” Ashcroft v. al-Kidd, ---U.S. ----, ----, 131 S.Ct. 2074, 2083, 179 L.Ed.2d 1149 (2011) (citations omitted). *17 Considering the facts in the light most favorable to Plaintiff, Defendant Barbagello has not established that his conduct did not violate any clearly established right. Defendant Barbagello merely states that “no right was violated” by his conduct, and that his stop of Plaintiff was lawful. (Doc. No. 15 at 33.) Such conclusory statements are insufficient to meet the pleading burden for qualified immunity. See Thomas v. Independence Twp., 463 F.3d 285, 293-94 (3d Cir.2006) (“[T]he burden of pleading qualified immunity rests with the defendant, not the plaintiff.... [P]laintiff has no obligation to plead a violation of clearly established law in order to avoid dismissal on qualified immunity grounds.”). Id. at 293. a. Unlawful seizure and qualified immunity Plaintiff has stated a claim for unlawful seizure against Defendant Barbagello based on Defendant Barbagello's conduct after Plaintiff passed the Portable Breath Test, which indicated that he was not under the influence of alcohol. (Doc. No. 1 ¶ 36.) As discussed in Section III.A.1, the Supreme Court and the Third Circuit have long established the lawful bounds of a traffic stop, and delineated the standard for when a stop becomes an unlawful detention or seizure. See, e.g., Illinois v. Caballes, 543 U.S. 405, 407, 125 S.Ct. 834, 160 L.Ed.2d 842 (2005). The Court thus finds that a reasonable police officer should have known that by disrupting Plaintiff's freedom of movement by refusing to allow him to leave the scene of the traffic stop, handcuffing him, transporting him to police barracks, and submitting him to further sobriety tests and a mental health evaluation, Defendant Barbagello effected a seizure of Plaintiff. See James v. City of Wilkes-Barre, 700 F.3d 675, 681 (3d Cir.2012). The Court will deny Defendant Barbagello's motion to dismiss on the basis of qualified immunity as to Plaintiff's Fourth Amendment unlawful seizure claim. b. Unlawful search and qualified immunity Plaintiff alleges that Defendant Barbagello, along with Defendant Doe I, performed a full search of Plaintiff's pockets in violation of his Fourth Amendment right to be free from unlawful searches. (Doc. No 1 ¶ 24; Doc. No. 22 at 13.) As discussed in Section III.A.2, the Supreme Court has clear, long-established precedent establishing warrantless searches as per se unreasonable. See Terry v. Ohio, 392 U.S. 1, 30, 88 S.Ct. 1868, 20 L.Ed.2d 889 (1968) (delineating the bounds between a “stop and frisk” requiring only reasonable, articulable suspicion, and a warrantlesss search, requiring probable cause). There is no question that a reasonable officer would know that he cannot perform a full search of an individual's person without a warrant or probable cause. Berkemer v. McCarty, 468 U.S. 420, 439, 104 S.Ct. 3138, 82 L.Ed.2d 317 (1984). Thus, Defendant Barbagello is not entitled to qualified immunity with regard to Plaintiff's unlawful search claim. Accordingly, the Court will deny Defendant Barbagello's motion to dismiss Plaintiff's unlawful search claim on the basis of qualified immunity. c. Unlawful arrest and qualified immunity *18 As discussed in Section III.A.3, under the facts as pled, Defendant Barbagello's refusal to allow Plaintiff to leave on his own accord after he passed the Portable Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 101 of 247 Kauffman v. Barbagello, Not Reported in F.Supp.2d (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 13 Breath Test constituted an unlawful restraint of Plaintiff's freedom of movement rising to the level of an arrest without probable cause. Courts use a totality of the circumstances test and a reasonableness standard to determine whether a police officer's conduct in restricting the movement of an individual constitutes an arrest. United States v. Edwards, 53 F.3d 616, 619 (3d Cir.1994). A reasonable officer would know that in refusing to allow Plaintiff to leave on his own, handcuffing him, transporting him to the Pennsylvania State Police Barracks, and reading him his Miranda rights, he exerted control and will over Plaintiff rising to the level of arrest. See id. Warrantless arrests are unlawful if the arresting officer lacks probable cause. Carroll v. United States, 267 U.S. 132, 156, 45 S.Ct. 280, 69 L.Ed. 543 (1925). At this time, Defendant Barbagello has not established that he had probable cause to arrest Plaintiff. Defendant Barbagello merely asserts that his actions “were reasonable under the circumstances and there is no clearly established right to indicate otherwise,” which does not meet the pleading requirement for a motion to dismiss based on qualified immunity. Accordingly, at this time the Court cannot conclude that Defendant Barbagello is entitled to qualified immunity on Plaintiff's claim of unlawful arrest under the Fourth Amendment. The Court therefore will deny Defendant Barbagello's motion to dismiss Plaintiff's unlawful arrest claim against him on the basis of qualified immunity. d. Unlawful detention and qualified immunity Defendant Barbagello also asserts that he is entitled to qualified immunity on Plaintiff's Fourth Amendment unlawful detention claim. (Doc. No. 15 at 25-26.) As discussed in Section III.A, a claim for unlawful detention under the Fourth Amendment requires Plaintiff to establish that he was subjected to a Fourth Amendment seizure without probable cause. See James v. City of Wilkes-Barre, 700 F.3d 675, 682 (3d Cir.2012). Plaintiff has alleged facts sufficient to support his claim for unlawful seizure under the Fourth Amendment. See Sections III.A.1; III.A.3.b. The Court has also found that as the moving party, Defendant Barbagello failed to establish that he had probable cause to arrest Plaintiff. See Section III.H.1.c. Thus, the Court's analysis of Defendant Barbagello's motion to dismiss Plaintiff's Fourth Amendment claim for unlawful detention on the basis of qualified immunity is identical to that for Defendant Barbagello's motion to dismiss Plaintiff's Fourth Amendment claims for unlawful seizure and, to the extent it relates to probable cause, that for unlawful arrest. Accordingly, for the same reasons outlined above in the Court's qualified immunity discussion pertaining to unlawful seizure and probable cause for arrest, the Court will deny Defendant Barbagello's motion to dismiss Plaintiff's Fourth Amendment claim for unlawful detention. I. Defendants' motion to dismiss Plaintiff's punitive damages claim *19 Plaintiff prays for punitive damages against all individual Defendants. (Doc. No. 1 at 25.) However, all federal constitutional claims against Defendants Boehs and Biggins have been dismissed, leaving Plaintiff's Fourth Amendment claims against Defendants Barbagello, Doe I, and Doe II as the only remaining federal constitutional claims at this stage. Accordingly, punitive damages pursuant to Section 1983 would only be available to Plaintiff as to Defendants Barbagello, Doe I, and Doe II in their individual capacities. For federal civil rights complaints brought under Section 1983, punitive damages are available “when the defendant's conduct is shown to be motivated by evil motive or intent, or when it involves reckless or callous indifference to the federally protected rights of others.” Smith v. Wade, 461 U.S. 30, 45, 103 S.Ct. 1625, 75 L.Ed.2d 632 (1983). Considering the facts in the light most favorable to Plaintiff, a jury could find that Defendants Barbagello, Doe I, and Doe II acted with reckless indifference as to Plaintiff's Fourth Amendment rights, because as police officers, they should have known that their conduct in detaining, handcuffing, and transporting Plaintiff to police barracks, as well as subjecting him to drug testing and an involuntary mental evaluation, violated Plaintiff's Fourth Amendment rights to be free from unlawful seizure, search, arrest, and detention. See, e.g., Brewer v. Hayman, No. 06- 6294, 2009 WL 2139429, at *8 (D.N.J. July 10, 2009) (denying Defendants' motion for summary judgment on punitive damages claim stemming from alleged Fourth Amendment violations by police officers). Id. Because it is possible for a jury to find that Defendants Barbagello, Doe I, and Doe II were recklessly indifferent to Plaintiff's Fourth Amendment rights, the Court will not dismiss Plaintiff's claim for punitive damages against Defendants Barbagello, Doe I, and Doe II at this stage. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 102 of 247 Kauffman v. Barbagello, Not Reported in F.Supp.2d (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 14 Plaintiff has also stated state law claims against Defendants Barbagello, Doe I, and Doe II for false arrest and imprisonment. (Doc. No. 1 at 21.) Under Pennsylvania law, “the assessment of punitive damages is proper whenever a party's actions are of such an outrageous nature as to demonstrate intentional, willful, wanton or reckless conduct resulting from either an evil motive or because of a reckless indifference to the rights of others.” Angelopoulos v. Lazarus PA Inc., 884 A.2d 255, 262 (Pa.Super.Ct.2005) (citation omitted). In this instance, it is possible for a jury to find that Defendants Barbagello, Doe I, and Doe II acted with reckless indifference to Plaintiff's right to be free from false arrest and imprisonment. See id. Thus, the Court will deny Defendants Barbagello, Doe I, and Doe II's motion to dismiss Plaintiff's claim for punitive damages for his state law claim of false arrest and imprisonment. IV. CONCLUSION Upon review of Plaintiff's complaint, the exhibits attached thereto, and the parties' briefs relating to Defendants' motion to dismiss, the Court will grant Defendants' motion in part, and deny in part. A. Surviving claims *20 The Court finds that in Count I, Plaintiff sufficiently alleges facts to state claims for violations of the Fourth Amendment against Defendants Barbagello, Doe I, and Doe II. Further, the Court finds that Defendant Barbagello is not at this time entitled to qualified immunity with regard to Plaintiff's Fourth Amendment claims. Additionally, the Court finds that Plaintiff sufficiently alleges facts in Count V to state a claim for state law false arrest and imprisonment against Defendants Barbagello, Doe I, and Doe II. Finally, the Court will not dismiss Plaintiff's claims for punitive damages against Defendants Barbagello, Doe I, and Doe II at this time. B. Claims that will be dismissed The Court finds that Plaintiff fails to allege sufficient facts in Count V to plead state law false arrest and imprisonment claims against Defendants Boehs and Biggins. Accordingly, Plaintiff's Count V claims for false arrest and imprisonment against Defendants Boehs and Biggins will be dismissed. Plaintiff also fails to allege facts sufficient to support the following: Fifth and Fourteenth Amendment substantive due process claims in Count II; excessive force-failure to intervene pursuant to 42 U.S.C. § 1983 in Count III; Monell liability claims in Count IV; and state law abuse of process and intentional infliction of emotional distress claims in Counts VI and VII. Accordingly, Plaintiff's claims in Counts II, IV, VI, and VII will be dismissed as to all defendants. Plaintiff's Count II Fourteenth Amendment substantive due process claims against Defendants Barbagello, Doe I, and Doe II will be dismissed without prejudice, and Plaintiff will have the opportunity to file an amended complaint with respect to these claims. An order consistent with this memorandum follows. ORDER AND NOW, on this 5th day of December 2013, IT IS HEREBY ORDERED THAT Defendants' motion to dismiss (Doc No. 12) is GRANTED IN PART and DENIED IN PART as follows: 1. The motion is GRANTED to the extent it seeks to dismiss Counts III, IV, VI, and VII against all Defendants; 2. The motion is GRANTED to the extent it seeks to dismiss the allegations raised against Defendants Boehs and Biggins in Count V, and DENIED to the extent that it seeks to dismiss the allegations raised against Defendants Barbagello, Doe I, and Doe II in Count V; 3. The motion is GRANTED with respect to the Fourteenth Amendment due process allegations in Count II against Defendants Barbagello, Doe I, and Doe II without prejudice to Plaintiff's ability to amend; 4. The motion is GRANTED to the extent it seeks to dismiss the Fourteenth Amendment due process allegations in Count II against Defendants Boehs, Biggins, and Cumberland Township; 5. The motion is GRANTED to the extent it seeks to dismiss the Fifth Amendment due process allegations in Count II against all Defendants; Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 103 of 247 Kauffman v. Barbagello, Not Reported in F.Supp.2d (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 15 6. The motion is DENIED to the extent it seeks to dismiss Count I against Defendants Barbagello, Doe I, and Doe II; *21 7. The motion is DENIED to the extent it seeks to dismiss the claims against Defendant Barbagello on the basis of qualified immunity, and is DENIED AS MOOT to the extent it seeks to dismiss the claims against Defendants Boehs and Biggins on the basis of qualified immunity; 8. The motion is DENIED to the extent that it seeks to dismiss Plaintiff's prayer for punitive damages against Defendants Barbagello, Doe I, and Doe II, and is DENIED AS MOOT to the extent it seeks to dismiss Plaintiff's prayer for punitive damages against Defendants Boehs and Biggins; and 9. The Clerk of Court is directed to TERMINATE Defendants Biggins, Boehs, and Cumberland Township from this action. All Citations Not Reported in F.Supp.2d, 2013 WL 6388487 Footnotes 1 In stating the relevant facts, the Court must accept Plaintiff's factual allegations as true and “consider only the allegations in the complaint, exhibits attached to the complaint, matters of public record, and documents that form the basis of a claim.” Lum v. Bank of Am., 361 F.3d 217, 221 n. 3 (3d Cir.2004). 2 Defendants Doe I and II have not offered a response to Plaintiff's complaint. 3 Per the caption on Plaintiff's complaint, he brings suit against all Defendants in their individual and official capacities. (Doc. No. 1.) However, a claim based on Monell asserts municipal, rather than individual liability. 436 U.S. 658, 690, 98 S.Ct. 2018, 56 L.Ed.2d 611. Thus, the Court will construe Plaintiff's Count IV claim as brought against Defendants Biggins and Boehs in their official rather than individual capacities. 4 Federal courts have jurisdictional power to hear state law claims when a Plaintiff asserts “a claim ‘arising under [the] Constitution, the Laws of the United States, and Treaties made ...’ and the relationship between that claim and the state claim permits the conclusion that the entire action before the court comprises but one constitutional case.” United Mine Workers of America v. Gibbs, 383 U.S. 715, 725, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966) (quoting U.S. Const. Art. III, Section 2). “The state and federal claims must derive from a common nucleus of operative fact.” Id. 5 Plaintiff cites Toney v. Chester County Hospital for the proposition that “no physical impact” is required to state a claim for intentional infliction of emotional distress. 36 A.3d 83, 100 (Pa.2011). (Doc. No. 22 at 23.) However, Toney involved a claim for negligent infliction of emotional distress, which requires a plaintiff to meet a different standard than that of intentional infliction of emotional distress. Id. Therefore, Toney is irrelevant to Plaintiff's claim. End of Document © 2017 Thomson Reuters. No claim to original U.S. Government Works. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 104 of 247 EXHIBIT K Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 105 of 247 Lakeview Ambulance and Medical Services, Inc. v. Gold..., Not Reported in A.2d... 1996-1 Trade Cases P 71,311 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 1 1995 WL 842000 Court of Common Pleas of Pennsylvania, Mercer County. LAKEVIEW AMBULANCE AND MEDICAL SERVICES, INC. v. GOLD CROSS AMBULANCE AND MEDICAL SERVICE, INC. and Ottaway Newspapers, Inc. No. 1994-2166. | Oct. 18, 1995. OPINION FORNELLI, Presiding Judge. *1 Before this Court are Defendant Gold Cross and Defendant Ottaway Newspapers' preliminary objections to Plaintiff's complaint. The complaint alleges defamation, unfair competition, unfair trade practices, and anti-trust violations. These arise from Plaintiff's attempt to enter the Grove City business community and provide ambulance services to the citizens of that area. Plaintiff alleges Defendant Gold Cross embarked on a campaign to block expansion into the area, and sought to have Plaintiff's advanced life support license denied. Plaintiff alleges that Defendant Gold Cross made false and defamatory statements to the Allied News Newspaper, a division of Defendant Ottaway by stating that Plaintiff had committed medicare fraud; violated state regulations and state legislation; operated without a license; and made misrepresentations to the public regarding the quality of the services it provided. Plaintiff also alleges it was defamed in the Sharon Herald, also a division of Defendant, Ottaway. Defendant Ottaway has filed preliminary objections seeking to strike Counts five and six of the Complaint. Defendant Gold Cross has filed preliminary objections in the nature of a demurrer to Counts two, four, seven, eight, 1 nine, ten, and eleven. Gold Cross also seeks to strike Plaintiff's request for attorney's fees. DEFENDANT GOLD CROSS' DEMURRER TO COUNT SEVEN (UNFAIR COMPETITION) When ruling on a demurrer a court is to resolve all doubts against the moving party. “A preliminary objection on the ground of legal insufficiency of the pleading, in the nature of a demurrer, admits all well-pleaded material facts as well as all reasonable inferences deducible therefrom, but not conclusions of law or unjustified inferences, with all doubts resolved against the moving party.” Standard Pennsylvania Practice 2d Section 25:64 citing Aetna Electroplating Co. v. Jenkins, 335 Pa.Super. 283, 484 A.2d 134 (1984); Hicks v. Southeastern Pa. Transportation Authority, 139 Pa.Commw. 54, 590 A.2d 31 (1991) appeal denied 529 Pa. 626, 600 A.2d 541. “Where factual or legal issues remain to be examined, based upon the pleadings, such a preliminary objection must be denied.” Id. at Section 25:63 citing Price v. Musselman, 343 Pa.Super. 90, 493 A.2d 1389 (1985). A demurrer is not to be sustained, and the pleading dismissed, unless the law is clear that no recovery is possible. Id. at Section 25:70 citing Cianfrani v. Commonwealth, State Employees' Retirement Bd., 505 Pa. 294, 479 A.2d 468 (1984). “... (T)he court should not deal with questions of law unless and until the resolution of the law is essential to a proper disposition of the matters being litigated.” Id. at Section 25:69, citing Broido v. Kinneman, 375 Pa. 568, 101 A.2d 647 (1954). Defendant Gold Cross argues that a common law cause of action for unfair competition does not exist in Pennsylvania for the factual situation alleged. Unfair competition is conduct which is contrary to honest, industrial and commercial practices. The doctrine of unfair competition extends to the misappropriation for the commercial advantage of a benefit or a property right belonging to another. International Society for Krishna Consciousness, Inc. v. Stadium Authority of Pittsburgh, 479 F.Supp. 792 (W.D.Pa.1979). *2 Those in business need to be assured that competitors will not be permitted to engage in conduct which falls below the minimum standard of fair dealing. Thus, the doctrine of unfair competition provides the legal basis Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 106 of 247 Lakeview Ambulance and Medical Services, Inc. v. Gold..., Not Reported in A.2d... 1996-1 Trade Cases P 71,311 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 2 for business competitors to insist on fair play in the market in which they are involved. Testing Systems, Inc. v. Magnaflux Corp., 251 F.Supp. 286 (E.D.Pa.1966); Philadelphia Dairy Products, Inc. v. Quaker City Ice Cream Co., 306 Pa. 164, 159 A. 3 (1932). What constitutes unfair competition as opposed to fair competition is predicated in the balance to be struck between the public's interest in free competition and the protectable interests of the business person and the purchaser. The question of unfairness in competition is primarily a question of fact. See Summary of Pa.Jurisprudence, Commercial Law, Section 18:3 (1994); Pennsylvania Dutch Co. v. Pennsylvania Amish Co., 68 D & C 2d 379 (1974). Cases have stated that the elements of a cause of action for unfair competition under Pennsylvania common law are identical to those under the federal Lanham Act, 15 USCA § 1051. The Lanham Act, however, addresses only patent and trademark actions. The Supreme Court did state in Goebel Brewing Co. v. Esslingers, Inc., 373 Pa. 334, 95 A.2d 523 (1953), that common law liability for unfair trade/competition does exist, and that courts of chancery have jurisdiction to award relief. Goebel, however, concerned trade marks and tradenames. It has also been said that unfair competition does not extend to discouragement of setting up competitive businesses where there is no appreciable deception intended to confuse one's goods for another's goods. See Spring Steels, Inc. v. Malloy, 400 Pa. 354, 162 A.2d 370 (1960); Ad-Lee Co. v. Meyer, 294 Pa. 498, 944 A. 540 (1928). No case has been found addressing the availability of a cause of action for unfair competition between two competing businesses providing services to the public. Many cases exist under the Sherman Anti-Trust Act, 15 USCA § 1 et. seq.; patents & trademarks; companies luring away another company's employees; and agreements made in restraint of trade. But the holdings of these cases are insufficient of themselves to compel a holding that the tort of unfair competition applies to the case at bar. Turning to the Restatement 3d, Unfair Competition, Section 1 states that liability may exist for unfair competition pursuant to a catch-all phrase in subsection (a): ... or from other acts or practices of the actor determined to be actionable as an unfair method of competition, taking into account the nature of the conduct and its likely effect on both the person seeking relief and the public ... Comment (g) states: if a competitor interferes with the commercial relations of another by engaging in defamation or by establishing or maintaining an unlawful restraint of trade, the conduct also includes unfair competition. *3 a competitor who diverts business from another by means of fraudulent misrepresentations or through the wrongful use of confidential information, for example, may in some circumstances be subject to liability for unfair competition even if the conduct is not specifically actionable under the rules relating to deceptive marketing or the appropriation of trade secrets. The Restatement, thus suggests that a cause of action for unfair competition could be brought under the facts alleged in Plaintiff's complaint. 2 Carl A. Colteryahn Dairy, Inc. v. Schneider Dairy, 415 Pa. 276, 203 A.2d 469 (1964) dealt a competitor luring away former employees. The court there stated, “making of false and misleading representations by former employees so as to play on sympathies of customers and influence them so they can be obtained by new employer is unfair competition.” Id. at 284, 203 A.2d at 473. Although a former employee is not involved in the case sub judice, this holding represents an extension of unfair competition beyond trade secrets and product misidentification. Thus, it appears that the tort of unfair competition can extend to the facts presented in the Plaintiff's complaint. It should also be noted Plaintiff has alleged in Count Seven the tort of commercial disparagement. See Complaint, paragraph 44. A cause of action for commercial disparagement does exist in Pennsylvania. This tort Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 107 of 247 Lakeview Ambulance and Medical Services, Inc. v. Gold..., Not Reported in A.2d... 1996-1 Trade Cases P 71,311 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 3 requires a plaintiff to establish direct pecuniary loss, and is distinguishable from defamation. “... (An) action for defamation serves to protect one's character and reputation while a cause of action for disparagement protects one's economic interests by providing a remedy for one who suffers pecuniary loss from slurs affecting the marketability of his goods.” Summary of Pennsylvania Jurisprudence, Commercial Law, Section 18:6 (1994). Presumably, such an analysis would also apply to the marketability of one's services. The Plaintiff has also alleged commercial disparagement in Count 8, which by stipulation of the parties will be dismissed. Therefore, Defendant's Demurrer to Count Seven must be denied. When a party files a preliminary objection in the nature of a demurrer, and the pleadings provide a cause of action under any theory of law, even though alternative theories, the preliminary objection will be overruled. Standard Pa.Prac.2d, Section 25:70 citing Packler v. State Employees' Retirement Bd., 470 Pa. 368, 368 A.2d 673 (1977), on remand 33 Pa.Commw. 452, 382 A.2d 158, aff'd 487 Pa. 51, 408 A.2d 1091. DEFENDANT GOLD CROSS' DEMURRER AS TO COUNTS NINE, TEN, & ELEVEN (COMMON LAW ANTI-TRUST VIOLATIONS) All parties in this case agree there is no statutory authority in Pennsylvania for an anti-trust action. 3 As stated above the Pennsylvania Fair Trade Act was repealed in 1976. Since that time there has been no case law on the subject. The Defendant relies on this absence of case law in urging that such a law no longer exists. The Plaintiff takes the position that since there has been no case law stating that no such action exists, it therefore exists. *4 Fleeting dicta references are located in case law regarding the existence of a common law action of anti-trust in Pennsylvania. See Shuman v. Bernie's Drug Concessions, Inc. [1963 TRADE CASES ¶ 70,641], 409 Pa. 539, 187 A.2d 660 (1963) and Schwartz et al., v. Laundry & Linen Supply Driver's Union, et. al., 339 Pa. 353, 14 A.2d 438 (1940) both mention the existence of such a law. Shuman states that price-fixing was “illegal under Sherman Anti-Trust and unlawful at common law”. Shuman at 542, 187 A.2d at 662-663. Schwartz states that a party's conduct was “invalid at common law, and in so far as it affects interstate commerce, under the Sherman Anti-Trust Act”; and that the Sherman Act is “merely the application of the common law doctrine concerning the restraint of trade ...” Schwartz at 358-359, 14 A.2d at 440. However, no case has ever been decided on the basis of a common law cause of action for anti-trust. Cooper v. Delaware Valley Medical Center, 539 Pa. 620, 654 A.2d 547 (1995), dealt with the tortious interference of business relationships. At the lower court level an anti- trust cause of action was dismissed on demurrer. The demurrer was not appealed. Id. at ----, 654 A.2d at 549. Collins v. Main Line Board of Realtors [1973-1 TRADE CASES ¶ 74,488], 452 Pa. 342, 304 A.2d 493 (1973) cert. denied, 414 U.S. 979, dealt with agreements made in restraint of trade. As in Swartz, supra, the court stated that the Sherman Act “... is merely the application of the common law doctrine concerning the restraint of trade to the field of interstate commerce.” Id. at 349, 304 A.2d at 496 (citing Schwartz ). Other cases have recognized a common law anti-trust cause of action, but only in the limited circumstances of trademarks, trade secrets, or restraint of trade pursuant to statute. 4 See Conti v. Anthony's Shear Perfection, Inc., 350 Pa.Super. 606, 504 A.2d 1316 (1986); Fidelity Fund, Inc. v. DiSanto, 347 Pa.Super. 112, 500 A.2d 431 (1985); and Sun Drug Co. v. West Penn Realty Co., 439 Pa. 452, 268 A.2d 781 (1970). Therefore, no authority has been found holding that there exists in Pennsylvania a common law action for anti- trust violations when a competing public service business is attempting to prevent another business from entering its market area. In the absence of such law, Defendant's demurrers must be granted. A court will sustain a preliminary objection in the nature of a demurrer, and dismiss a pleading without leave to amend where it clearly appears that the defective pleading cannot be remedied to state a cause of action. Standard Pennsylvania Practice 2d Section 25:79 citing Hohensee v. Shapp, 39 Pa.Commw. 48, 395 A.2d 636 (1978) aff'd 493 Pa. 222, 425 A.2d 744, cert denied 454 U.S. 847. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 108 of 247 Lakeview Ambulance and Medical Services, Inc. v. Gold..., Not Reported in A.2d... 1996-1 Trade Cases P 71,311 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 4 DEFENDANT GOLD CROSS' MOTION TO STRIKE REQUEST FOR ATTORNEY'S FEES Defendant Gold Cross has moved to strike Plaintiff's request for attorney's fees in the Complaint. Plaintiff relies on 42 Pa.C.S.A. Section 2503(7) and (9) in support of its claim of right to recover attorney's fees. This reliance is misplaced. These subsections provide an award of attorney's fees as a sanction for conduct during the pendency of the matter and for bad faith in bringing of an action. *5 There has been no allegation of improper conduct by Defendant Gold Cross during the pendency of this case. Since the Defendants are not responsible for bringing the action, they cannot be penalized for bringing an action in bad faith. Therefore, Defendant's Motion to Strike will be granted. 5 DEFENDANT GOLD CROSS' DEMURRER AS TO COUNTS TWO AND FOUR Defendant, Gold Cross, demurs to Counts two and four, which set forth allegations of Plaintiff's right to recover punitive damages for defamation. Since Gold Cross suggests the Plaintiff be made to more properly plead them in Counts one and three of the Complaint, we will view Defendant's demurrer as being in the nature a Motion to Strike. As with Defendant, Ottaway's, objection infra, Plaintiff is pleading in these courts an additional basis of recovery against Defendant Gold Cross. Malice must be specifically plead separate and apart from the allegations of defamation in order to recover punitive damages against the defendant. Therefore, Defendant's Demurrer/ Motion to Strike will be denied. DEFENDANT OTTAWAY'S MOTION TO STRIKE Defendant Ottaway's Motion to Strike Counts five and six will be granted in part. The Plaintiff may not incorporate into these Counts against Defendant Ottaway facts which are relevant only to the causes of action against Defendant Gold Cross. As to the request for punitive damages, the Plaintiff is pleading an additional basis of recovery against Defendant Ottaway, and malice must be pleaded separately from defamation in order to recover punitive damages against the Defendant. Therefore, the remainder of Defendant's Motion will be denied. ORDER AND NOW, this 18th day of Oct., 1995, Defendant Gold Cross' demurrer as to Counts Two and Four are denied. Defendant Gold Cross' demurrer as to Count Seven is denied. Count eight is dismissed, as per the stipulation of the parties. Defendant Gold Cross' demurrers as to Counts Nine, Ten and Eleven are granted. Defendant Gold Cross' Motion to Strike the claim for attorney's fees is granted. Defendant Ottaway's Motion to Strike Counts Five and Six is granted to the extent they allege facts relevant only to causes of action against Defendant Gold Cross. Defendant Ottaway's Motion to Strike Plaintiff's claims for punitive damages is denied. All Citations Not Reported in A.2d, 1995 WL 842000, 1996-1 Trade Cases P 71,311 Footnotes 1 Prior to oral argument on these objections, the parties entered into a stipulation to dismiss Count eight, regarding violations of unfair trade practices and consumer protection laws. Therefore, Count eight of Plaintiff's Complaint will be dismissed. 2 Comment (g) does go on to point out that common law liability has been supplemented by the Unfair Trade Practices Act, 73 Pa.C.S.A. 201, and that Pennsylvania adopted that Act. But Pennsylvania later repealed that Act in 1976. 73 Pa.C.S.A. 201 reappealed by Act 14, PL 29, February 26, 1976. 3 If such a statute existed, it would not necessarily be preempted by federal law since federal anti-trust laws allow coincident state regulation of competition, as long as it furthers a state objective and does not necessitate the violation of federal Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 109 of 247 Lakeview Ambulance and Medical Services, Inc. v. Gold..., Not Reported in A.2d... 1996-1 Trade Cases P 71,311 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 5 laws in order to comply with state law. See Indiana Grocery v. Super Value Stores, Inc. [1988-2 TRADE CASES ¶ 68,388], 864 F.2d 1409, (7th Cir.1989); Storer Cable Com. v. City of Montgomery, Ala. [1992-2 TRADE CASES ¶ 70,031], 806 F.Supp. 1518 (M.D.Ala.1992). 4 The tort of intentional interference with prospective contractual relations comes close to affording the relief sought by the Plaintiff in this case. However, in order to recover under this theory, the Plaintiff must point to identifiable persons who would have contracted for its services, since there is no cognizable relationship with the community at large. See generally, Summary of Pennsylvania Jurisprudence 2d Torts Section 17:6. In addition, a business can in goodwill make efforts to protect its own contract with a third party by interfering with a prospective contract. 5 Since the demurrer to Counts 9, 10 & 11 will be granted, the claim for attorney's fees therein will be thereby moot. End of Document © 2017 Thomson Reuters. No claim to original U.S. Government Works. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 110 of 247 EXHIBIT L Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 111 of 247 Latuska v. Sethuraman, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 1 2016 WL 4082738 Only the Westlaw citation is currently available. United States District Court, W.D. Pennsylvania. Richard F. Latuska and Annette E. Latuska, Plaintiffs, v. Venkat Sethuraman, Naheed Shahdid, Defendants and Third-Party Plaintiffs, Bureau Veritas North America, Inc. Defendant and Third-Party Plaintiff, v. Mike Hoffer and Heritage Homes, LLC, Lezzer Truss Systems, Inc. and MiTek USA, Inc. f/k/a MiTek Industries, Inc., Third-Party Defendants. CIVIL ACTION NO. 3:15-208 | Signed 07/29/2016 Attorneys and Law Firms Matthew B. Taladay, Hanak, Guido and Taladay, Dubois, PA, James A. McGovern, Marshall, Dennehey, Warner, Coleman & Goggin, Kurt F. Fernsler, Robert M. Palumbi, Babst, Calland, Clements & Zomnir, P.C., Pittsburgh, PA, Jay L. Edelstein, Kelly L. Czajka, Edelstein Law, LLP, Philadelphia, PA, for Plaintiff/ Third-Party Defendants. Ronald J. Chleboski, Matthew J. Lautman, Houston Harbaugh, Samantha L. Brutout, Dingess Foster Luciana Davidson & Chleboski LLP, Pittsburgh, PA, for Defendants and Third-Party Plaintiffs. MEMORANDUM OPINION KIM R. GIBSON, UNITED STATES DISTRICT JUDGE I. Introduction *1 This action comes before the Court upon motions to dismiss filed by Bureau Veritas North America, Inc. and Mike Hoffer. (ECF Nos. 9, 20.) For the reasons that follow, Mr. Hoffer's motion to dismiss will be denied, without prejudice, as moot. Bureau Veritas North America, Inc.'s motion to dismiss will be GRANTED. However, Plaintiffs, Richard E. Latuska and Annette E. Latuska, will be granted leave to file an amended complaint as set forth in the Order. II. Jurisdiction The Court has diversity jurisdiction over this matter pursuant to 28 U.S.C. § 1332(a)(1), as there is complete diversity of citizenship between the parties, and the amount in controversy in the state proceeding exceeds $75,000, exclusive of interest and costs. Venue is proper under 28 U.S.C. § 1391(b)(2) because a substantial portion of the events giving rise to the claims occurred in the Western District of Pennsylvania. III. Background This case arises from the construction of a new home. The following facts are alleged in the complaint, which the Court will accept as true for the sole purpose of deciding the pending motion. In early 2009, Venkat Sethuraman and Naheed Shahid engaged Heritage Homes, LLC to construct a new residence. (ECF No. 1-2 ¶ 10.) A zoning permit was issued by Sandy Township to Mr. Sethuraman on April 22, 2009, for the construction of the new home. (Id. ¶ 11.) Guardian Inspection Services, Inc., which operates with Bureau Veritas North America, Inc., approved the building plans and issued a construction permit on April 27, 2009. (Id. ¶¶ 7, 12.) Heritage Homes, LLC commenced construction of the home in July 2009. (Id. ¶ 13.) At all times during the construction process, Bureau Veritas North America, Inc., as a service agency for Sandy Township, was charged with the duty of conducting all required inspections. (Id. ¶ 14.) Bureau Veritas North America, Inc. issued a final certificate of occupancy, dated August 2, 2010, to Mr. Sethuraman and Ms. Shahid. (Id. ¶ 15.) Mr. Sethuraman and Ms. Shahid, who occupied the home for approximately six months, moved out in February 2011 and listed the property for sale. (Id. ¶ 16.) On or about October 12, 2011, Richard F. Latuska and Annette E. Latuska entered into a written agreement to purchase Mr. Sethuraman and Ms. Shahid's property for $950,000.00. (Id. ¶¶ 17-18.) Prior to the sale, Mr. Sethuraman and Ms. Shahid provided a disclosure statement to Mr. and Ms. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 112 of 247 Latuska v. Sethuraman, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 2 Latuska. (Id. ¶¶ 19-20.) In the disclosure statement, Mr. Sethuraman and Ms. Shahid denied the following: (1) any problems with the home, including structural items or any other component problems; (2) any water damage, leakage or other problems with water, such as the roof, ice, downspouts, or gutters; and (3) any material defects to the property, dwelling, or fixtures. (Id. ¶ 21.) Mr. and Ms. Latuska engaged the services of Minich Home Inspections to complete a residential home inspection, which was limited to a visual inspection. (Id. ¶¶ 23-24.) The inspection report, dated October 22, 2011, did not identify any latent or obvious structural defects or deficiencies within the home. (Id.) Small moisture stains were discovered around the master bath shower. (Id. ¶ 24.) Mr. Sethuraman and Ms. Shahid's real estate agent advised Mr. and Ms. Latuska that the moisture problems arose because Mr. Sethuraman and Ms. Shahid used the bathroom as a steam room. (Id. ¶ 26.) The real estate agent assured Mr. and Ms. Latuska that Mr. Sethuraman and Ms. Shahid had denied experiencing leakage or other water issues. (Id.) Based upon the inspector's recommendation, the shower door was caulked before Mr. and Ms. Latuska signed the agreement of sale. (Id. ¶¶ 25, 27.) *2 After Mr. and Ms. Latuska settled with Mr. Sethuraman and Ms. Shahid on December 19, 2011, they moved into the home on January 13, 2012. (Id. ¶¶ 29-30.) A few months later, Mr. and Ms. Latuska began to have problems with water marks in the master bathroom. (Id. ¶ 31.) Mr. and Ms. Latuska attempted to remedy the problem by not leaving the shower door open while turning on the shower, re-caulking the door, and minimizing their use of the shower. (Id.) When the ceramic tile in the master bathroom began to crack at the grout lines, Mr. and Ms. Latuska ceased using the shower. (Id. ¶ 32.) In July 2014, Mr. and Ms. Latuska hired William Morelock of Morelock Construction to repair the ongoing water problems in the master bathroom. (Id. ¶ 33.) After removing tiles, the dry wall, and the shower floor, Mr. Morelock discovered serious and extensive structural deficiencies, which continue to date. (Id. ¶¶ 33-34.) Specifically, the home has severe, consistent, and building- wide defects and building code violations that impact its structural viability and safety. (Id. ¶ 35.) After the home was deemed uninhabitable, Mr. and Ms. Latuska were forced to live in a renal home from March 2015 until July 2015. (Id. ¶¶ 36-37.) In July 2015, Mr. and Ms. Latuska were required to find a new rental home, where they expected to remain while structural repairs were completed. (Id. ¶¶ 37-38.) Mr. and Ms. Latuska filed a seven-count complaint in the Court of Common Pleas of Clearfield County on July 13, 2015, and Mr. Sethuraman and Ms. Shahid removed the action to this Court on August 13, 2015. (See ECF Nos. 1, 1-2 at 4.) Mr. and Ms. Latuska assert four claims against Mr. Sethuraman and Ms. Shahid: (1) violation of the real estate seller disclosure law, (ECF No. 1-2 ¶¶ 43-57); (2) fraudulent misrepresentation, (id. ¶¶ 58-64); (3) violation of the Unfair Trade Practices and Consumer Protection Law (“the UTPCPL”), (id. ¶¶ 65-70); and (4) breach of contract, (id. ¶¶ 71-80). Mr. and Ms. Latuska assert three claims against Bureau Veritas North America, Inc.: (1) intentional misrepresentation, (id. ¶¶ 81-97); (2) negligence, (id. ¶¶ 98-117); and (3) violation of the UTPCPL, (id. ¶¶ 118-126). In their answer, filed on August 31, 2015, Mr. Sethuraman and Ms. Shahid asserted cross-claims against Bureau Veritas North America, Inc. for negligence, intentional misrepresentation, violation of the UTPCPL, and contribution. (ECF No. 7 ¶¶ 20-38.) On September 1, 2015, Bureau Veritas North America, Inc. filed an answer and included cross-claims against Mr. Sethuraman and Ms. Shahid for contribution and indemnification. (ECF No. 8 ¶¶ 1-5.) On September 14, 2015, Mr. Sethuraman and Ms. Shahid filed a third-party complaint against Heritage Homes, LLC and Mike Hoffer. (ECF No. 11.) Mr. Sethuraman and Ms. Shahid asserted a claim against Heritage Homes, LLC for breach of contract and included claims against Mr. Hoffer for third-party beneficiary/ breach of contract and negligence. (Id. ¶¶ 27-47.) On April 7, 2016, Bureau Veritas North America, Inc. filed a third-party complaint against Heritage Homes, LLC, Lezzer Truss Systems, Inc., and MiTek USA, Inc. f/k/a MiTek Industries, Inc. (“MiTek”). (ECF No. 35.) Bureau Veritas North America, Inc. asserted claims against each additional defendant for negligence and contribution. (Id. ¶¶ 23-54.) MiTek filed an answer on June 8, 2016, and included cross-claims against Mr. Sethuraman and Ms. Shahid, Bureau Veritas North America, Inc., Mr. Hoffer, Heritage Homes, LLC, and Lezzer Truss Systems, Inc. for contribution and indemnification. (ECF No. 50 at 8.) On June 23, 2016, Lezzer Truss Systems, Inc. filed an answer and asserted cross-claims against MiTek, Mr. Sethuraman Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 113 of 247 Latuska v. Sethuraman, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 3 and Ms. Shahid, Heritage Homes, LLC, Mr. Hoffer, and Bureau Veritas North America, Inc. for contribution and indemnification. (ECF No. 55 ¶¶ 19-22.) *3 There are three motions to dismiss pending in this matter. First, Bureau Veritas North America, Inc. has filed a motion to dismiss Mr. and Ms. Latuska's UTPCPL claim and their requests for attorneys' fees and punitive damages. (ECF No. 9.) Bureau Veritas North America, Inc.'s motion has been fully briefed and is ripe for disposition. (See ECF Nos. 9, 10, 12, 13.) Second, Mr. Hoffer filed a motion to dismiss Mr. Sethuraman and Ms. Shahid's third-party complaint against him. (ECF No. 20.) After Mr. Hoffer's motion was fully briefed (see ECF Nos. 20, 21, 28), an early neutral evaluation session was held, at which time Mr. and Ms. Latuska's claims against Mr. Sethuraman and Ms. Shahid were resolved, and Mr. Sethuraman and Ms. Shahid's claims against Mr. Hoffer were resolved (see ECF No. 32). In a joint motion to amend the scheduling order, the parties confirmed the settlement. (See ECF No. 48 ¶ 5.) In light of the settlement between Mr. Sethuraman and Ms. Shahid and Mr. Hoffer, the Court will dismiss, without prejudice, Mr. Hoffer's motion to dismiss Mr. Sethuraman and Ms. Shahid's third-party complaint against him. (ECF No. 20.) Third, MiTek filed a motion to dismiss Bureau Veritas North America, Inc.'s third-party complaint against it. MiTek's motion has not been fully briefed and is not yet ripe for disposition. (ECF No. 60.) Accordingly, the Court will address only Bureau Veritas North America, Inc.'s motion to dismiss at this time. IV. Standard of Review Bureau Veritas North America, Inc. moves to dismiss Mr. and Ms. Latuska's UTPCPL claim and their requests for attorneys' fees and punitive damages pursuant to Rule 12(b)(6). The Federal Rules of Civil Procedure require that a complaint contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” FED. R. CIV. P. 8(a)(2). Rule 12(b)(6) allows a party to seek dismissal of a complaint or any portion of a complaint for failure to state a claim upon which relief can be granted. Although the federal pleading standard has been “in the forefront of jurisprudence in recent years,” the standard of review for a Rule 12(b)(6) challenge is now well established. Fowler v. UPMC Shadyside, 578 F. 3d 203, 209 (3d Cir. 2009). In determining the sufficiency of a complaint, a district court must conduct a two-part analysis. First, the court must separate the factual matters averred from the legal conclusions asserted. See id. at 210. Second, the court must determine whether the factual matters averred are sufficient to show that plaintiff has a “ ‘plausible claim for relief.’ ” Id. at 211 (quoting Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009)). The complaint need not include “ ‘detailed factual allegations. ’ ” Phillips v. County of Allegheny, 515 F. 3d 224, 231 (3d Cir. 2008) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). Moreover, the court must construe the alleged facts, and draw all inferences gleaned therefrom, in the light most favorable to the non-moving party. See id. at 228 (citing Worldcom, Inc. v. Graphnet, Inc., 343 F. 3d 651, 653 (3d Cir. 2003)). However, “legal conclusions” and “[t]hreadbare recitals of the elements of a cause of action ... do not suffice.” Iqbal, 556 U.S. at 678. Rather, the complaint must present sufficient “ ‘factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.’ ” Sheridan v. NGK Metals Corp., 609 F. 3d 239, 262 n.27 (3d Cir. 2010) (quoting Iqbal, 556 U.S. at 678). Ultimately, whether a plaintiff has shown a “plausible claim for relief” is a “context-specific” inquiry that requires the district court to “draw on its judicial experience and common sense.” Iqbal, 556 U.S. at 679. The relevant record under consideration includes the complaint and any “document integral to or explicitly relied upon in the complaint.” U.S. Express Lines, Ltd. v. Higgins, 281 F. 3d 383, 388 (3d Cir. 2002) (citing In re Burlington Coat Factory Sec. Litig., 114 F. 3d 1410, 1426 (3d Cir. 1997)). If a complaint is vulnerable to dismissal pursuant to Rule 12(b)(6), the district court must permit a curative amendment, irrespective of whether a plaintiff seeks leave to amend, unless such amendment would be inequitable or futile. Phillips, 515 F. 3d at 236; see also Shane v. Fauver, 213 F. 3d 113, 115 (3d Cir. 2000). V. Discussion Bureau Veritas North America, Inc. has filed a motion to dismiss Mr. and Ms. Latuska's UTPCPL claim in Count VII of their complaint and their requests for attorneys' fees and punitive damages in Counts V and VI of their complaint. The Court will separately address Bureau Veritas North America, Inc.'s arguments. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 114 of 247 Latuska v. Sethuraman, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 4 A. Mr. and Ms. Latuska's UTPCPL Claim *4 Bureau Veritas North America, Inc. argues that Count VII of Mr. and Ms. Latuska's complaint must be dismissed because they lack standing to sue under the UTPCPL. (ECF No. 10 at 3-5.) Specifically, Bureau Veritas North America, Inc. contends that the UTPCPL applies only to protect those parties who leased or purchased goods and services from the defendant in question. (Id. at 3-4.) Asserting that Mr. and Ms. Latuska failed to allege that it entered into a consumer transaction with it, Bureau Veritas North America, Inc. requests that Count VII be dismissed. (Id. at 4-5.) In response, Mr. and Ms. Latuska argue that a plaintiff need not be in direct privity with a defendant to file a UTPCPL claim because the statute extends to third parties who are intended purchasers or reasonably foreseeable consumers. (ECF No. 13 at 7-8.) Mr. and Ms. Latuska claim that Bureau Veritas North America, Inc. made representations in the inspection reports and certificate of occupancy as to the quality and safety of the home. (Id. at 12.) Contending that their complaint contains sufficient facts to support a finding that Bureau Veritas North America, Inc. made false and misleading representations, Mr. and Ms. Latuska maintain that they have standing to file a UTPCPL claim. (Id.) The UTPCPL is Pennsylvania's consumer protection law. Bennett v. A.T. Masterpiece Homes at Broadsprings, LLC, 40 A.3d 145, 151 (Pa. Super. Ct. 2012). Its purpose is to prevent “ ‘[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce,’ ” as defined by the statute. Id. (quoting 73 Pa. Stat. Ann. § 201-3). The Pennsylvania Supreme Court has stated that the UTPCPL should be liberally construed to give effect to its legislative goal of consumer protection. Id. (citing Pennsylvania ex rel. Creamer v. Monumental Props., Inc., 329 A.2d 812 (Pa. 1974)). The UTPCPL provides a private right of action as follows: Any person who purchases or leases goods or services primarily for personal, family or household purposes and thereby suffers any ascertainable loss of money or property, real or personal, as a result of the use or employment by any person of a method, act or practice declared by section 3 of this act, may bring a private right of action to recover actual damages or one hundred dollars ($100), whichever is greater. 73 Pa. Stat. Ann. § 201-9.2(a). This language establishes that the private right of action under the UTPCPL is limited to anyone who purchases or leases goods or services for primarily personal, family, or household purposes. The question here is whether Mr. and Ms. Latuska “purchase[d] ... goods or services” within the meaning of the statute. Based upon relevant case law interpreting this statute, the Court concludes that they did not. The UTPCPL's “reach is expansive.” Trunzo v. Citi Mortg., 876 F. Supp. 2d 521, 543 (W.D. Pa. 2012). Its private right of action has been construed to apply not only to those circumstances where the unfair or deceptive conduct induced the consumer to make the initial purchase, but also to unfair or deceptive practices which occur after entering an agreement and which were not a basis for the original agreement. Id. (holding that liability can be imposed upon a mortgage assignee under the UTPCPL provided that the plaintiff advances specific allegations of wrongdoing against the assignee, not simply against the original lender) (citing In re Smith, 866 F.2d 576 (3d Cir. 1989) (noting that a more limited reading “would insulate all kinds of practices from the [UTPCPL]”)). See also Behr v. Fed. Home Loan Mortg., No. 1:14-CV-291, 2015 U.S. Dist. LEXIS 116919, at *16-17, 2015 WL 5123656 (W.D. Pa. July 29, 2015) (holding that liability could be imposed against a lender based upon an underlying mortgage and related mortgage financing services). *5 In applying a liberal construction of the UTPCPL, the United States Court of Appeals for the Third Circuit has held that a plaintiff need not be in direct privity with a defendant to bring a claim for damages under the statute. Katz v. Aetna Casualty & Surety Co., 972 F.2d 53, 56 (3d Cir. 1992) (citing Valley Forge Towers S. Condominium v. Ron-Ike Insulators, Inc., 574 A.2d 641, 645 (Pa. Super. Ct. 1990) (stating that there was no “express requirement that there be strict technical privity between the party suing and the party sued”)). Rather, standing also extends to “those specifically intended to rely upon the fraudulent conduct, and those whose reasonable reliance was specially foreseeable.” Valley Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 115 of 247 Latuska v. Sethuraman, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 5 Forge Towers S. Condominium, 574 A.2d at 647. Standing does not, however, extend to “a plaintiff lacking any commercial dealings with the defendant.” Katz, 972 F.2d at 56. Similarly, standing does not extend to an assignee of a purchaser. Gemini Physical Therapy & Rehab. v. State Farm Mut. Auto. Ins. Co., 40 F.3d 63, 65 (3d Cir. 1994). In their complaint, Mr. and Ms. Latuska allege that Guardian Inspection Services, Inc., which operates with Bureau Veritas North America, Inc., approved the building plans and issued a construction permit on April 27, 2009. (ECF No. 1-2 ¶¶ 7, 12.) Mr. and Ms. Latuska aver that Bureau Veritas North America, Inc. was charged with the duty of conducting all required inspections. (Id. ¶ 14.) Mr. and Ms. Latuska further allege that Bureau Veritas North America, Inc. issued a final certificate of occupancy, dated August 2, 2010, to Mr. Sethuraman and Ms. Shahid. (Id. ¶ 15.) In asserting their claims against Bureau Veritas North America, Inc., Mr. and Ms. Latuska maintain that Bureau Veritas North America, Inc. failed to inspect, ignored, or failed to report the home's code violations and material defects. (Id. ¶¶ 88, 90.) Mr. and Ms. Latuska further aver that Bureau Veritas North America, Inc. engaged in willful misconduct because it intentionally overlooked or ignored serious structural defects and deliberately concealed known facts or failed to make any reasonable investigation to determine the condition of home. (Id. ¶¶ 91-92, 121.) Mr. and Ms. Latuska have failed to allege that they purchased any goods or services from Bureau Veritas North America, Inc. The Court recognizes that Mr. and Ms. Latuska need not be in direct privity with Bureau Veritas North America, Inc. because, as subsequent purchasers of the home, their reasonable reliance upon Bureau Veritas North America, Inc.'s inspection and certificate of occupancy was “specially foreseeable.” Valley Forge Towers S. Condominium, 574 A.2d at 647. However, Mr. and Ms. Latuska have failed to allege that they had “any commercial dealings with the defendant.” Katz, 972 F.2d at 56. Specifically, Mr. and Ms. Latuska have not alleged that they had to “give up something of significant value in order to consummate the transaction.” Johnson v. Metlife Bank, N.A., No. 11-CV-800, 2011 U.S. Dist. LEXIS 107460, at *13, 2011 WL 4389152 (E.D. Pa. Sept. 21, 2011). Thus, in accordance with well-settled law, standing does not extend to Mr. and Ms. Latuska. The Court finds that Mr. and Ms. Latuska's reliance upon Barker v. Hostetter, No. 13-CV-5081, 2014 U.S. Dist. LEXIS 51688, 2014 WL 1464319 (E.D. Pa. Apr. 15, 2014), is unpersuasive. The plaintiffs in Barker were “prospective purchasers,” not subsequent purchasers, of lots that the defendants were developing for residential use. 2014 U.S. Dist. LEXIS 51688, at *91, 2014 WL 1464319 (emphasis added). Because the plaintiffs alleged that the defendants withheld material information from them and misrepresented facts about the sewage system and water supply on the lots, the court concluded that although the plaintiffs did not purchase lots directly from the defendants, “[a]s prospective purchasers, [they] were specifically intended to rely upon the representations in the [public offering statement].” Id. at *91. Not only is Barker factually distinguishable because Mr. and Ms. Latuska were subsequent purchasers of the home, but the court in Barker also did not address the Third Circuit's holding in Katz that standing under the UTPCPL does not extend to plaintiffs lacking commercial dealings with the defendant. Similarly, Mr. and Ms. Latuska's reliance upon In re Smith, 866 F.2d 576 (3d Cir. Pa. 1989), and Behr, No. 1:14-CV-291, 2015 U.S. Dist. LEXIS 116919, is unconvincing because both decisions involved the imposition of liability against a lender based upon an underlying mortgage and related mortgage financing services. *6 Because Mr. and Ms. Latuska have failed to allege that they purchased goods or services from, or had any commercial dealings with, Bureau Veritas North America, Inc., the Court will grant Bureau Veritas North America, Inc.'s motion to dismiss Count VII of Mr. and Ms. Latuska's complaint. See, e.g., Katz, 972 F.2d at 57 (explaining that “[a]lthough Valley Forge Towers held that strict privity is not always an element of the private cause of action, there is no indication that the court would have extended the private cause of action to a plaintiff lacking any commercial dealings with the defendant” and concluding that the plaintiffs had “conducted no business whatsoever” with the defendants); Gemini Physical Therapy & Rehab., 40 F.3d at 65 (concluding that the plaintiff lacked standing because “its complaint does not allege that it is a purchaser or consumer of goods or services from [the defendant]”); Country Classics at Morgan Hill Homeowners' Ass'n v. Country Classics at Morgan Hill, LLC, 780 F. Supp. 2d 367, 376 (E.D. Pa. 2011) (granting motion to dismiss because the plaintiff did not allege that it contracted Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 116 of 247 Latuska v. Sethuraman, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 6 with any party to provide goods or services for the unit owners' benefits or that it was a third-party beneficiary of any contract entered into by the defendant); Bracciale v. Nationwide Mut. Fire Ins. Co., No. 92-CV-7190, 1994 U.S. Dist. LEXIS 198, at *9, 1994 WL 7707 (E.D. Pa. Jan. 12, 1994) (granting motion to dismiss because the plaintiff, who “conducted no business with [the defendant],” was not a purchaser under the UTPCPL); Schwarzwaelder v. Fox, 895 A.2d 614, 620 (Pa. Super. Ct. 2006) (holding that “[the plaintiffs] purchased nothing from [the defendant] and cannot claim an attendant cause of action under the UTPCPL”). Cf. Johnson v. MetLife Bank, N.A., 883 F. Supp. 2d 542, 548 (E.D. Pa. 2012) (finding that the plaintiff had standing based upon evidence “that he had commercial dealings with [the defendant], that [the defendant] misled him during those commercial dealings knowing that he might rely on the misrepresentations, and that he ultimately made a purchase as a result of the misrepresentations”). B. Mr. and Ms. Latuska's Requests for Attorneys' Fees and Punitive Damages Bureau Veritas North America, Inc. argues that Mr. and Ms. Latuska's requests for attorneys' fees and punitive damages in Counts V and VI of their complaint must be dismissed. (ECF No. 10 at 5-6.) Bureau Veritas North America, Inc. contends that Mr. and Ms. Latuska are not entitled to punitive damages because they failed to allege that it engaged in outrageous behavior. (Id. at 6.) Bureau Veritas North America, Inc. also asserts that Mr. and Ms. Latuska failed to cite to any contract, statute, or legal principle that would require it to pay the attorneys' fees requested in Counts V and VI. (Id. at 5.) In response, Mr. and Ms. Latuska contend that Bureau Veritas North America, Inc. engaged in outrageous behavior by failing to inspect the home or report the building code violations and acted with reckless indifference by issuing the occupancy certificate. (ECF No. 13 at 15.) Mr. and Ms. Latuska further argue that the building-wide defects and code violations were so severe and numerous that they would have been open and obvious to Bureau Veritas North America, Inc. (Id. at 16.) Regarding attorneys' fees and costs, Mr. and Ms. Latuska first note that Section 908(2) of the Restatement (Second) of Torts provides that the nature and extent of the harm must be considered in awarding punitive damages. (Id. at 18.) Asserting that they are entitled to punitive damages, Mr. and Ms. Latuska claim that their attorneys' fees and costs “are relevant to the nature and extent of the harm [they] suffered.” (Id. at 19 (emphasis omitted).) Punitive damages are an “extreme remedy” available only in the most exceptional matters. Phillips v. Cricket Lighters, 883 A.2d 439, 445 (Pa. 2005). Under Pennsylvania law, “[p]unitive damages may be awarded for conduct that is outrageous, because of the defendant's evil motive or his reckless indifference to the rights of others.” Feld v. Merriam, 485 A.2d 742, 747 (Pa. 1984). Punitive damages “are proper only in cases where the defendant's actions are so outrageous as to demonstrate willful, wanton or reckless conduct.” Hutchison ex rel. Hutchison v. Luddy, 870 A.2d 766, 770 (Pa. 2005). To establish a claim for punitive damages, a plaintiff must demonstrate that “(1) a defendant had a subjective appreciation of the risk of harm to which plaintiff was exposed and that (2) he acted, or failed to act, as the case may be, in conscious disregard of that risk.” Id. at 772; see also Ditzler v. Wesolowski, No. 3:05-CV-325, 2007 U.S. Dist. LEXIS 56736, at *10, 2007 WL 2253596 (W.D. Pa. Aug. 3, 2007). *7 In Counts V and VI of their complaint, Mr. and Ms. Latuska assert claims against Bureau Veritas North America, Inc. for intentional misrepresentation and negligence. (ECF No. 1-2 ¶¶ 81-117.) In support of their claims, Mr. and Ms. Latuska state that Bureau Veritas North America, Inc. had a duty to review the building plans and specifications for compliance with the construction code and all other pertinent regulations, to perform ongoing construction inspections, to report to the owner to assure compliance with the construction code and all pertinent building standards, and to issue written stop orders when a code violation was detected. (Id. ¶¶ 83, 85, 89, 101-103, 105.) Mr. and Ms. Latuska allege that Bureau Veritas North America, Inc. issued a certificate of occupancy despite “blatant and obvious” code violations. (Id. ¶ 108.) Mr. and Ms. Latuska also aver that Bureau Veritas North America, Inc. “knew or should have known of the defects,” (id. ¶ 109), that would have been “glaring, open[,] and obvious to an inspector,” (id. ¶¶ 88, 109). In their claim for intentional misrepresentation, Mr. and Ms. Latuska state that Bureau Veritas North America, Inc. intentionally overlooked or ignored the home's structural defects and that its lack of inspections and/or failure to report known construction defects constitutes willful misconduct. (Id. ¶¶ 91-92, 96.) Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 117 of 247 Latuska v. Sethuraman, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 7 Accepting the allegations of Mr. and Ms. Latuska's complaint as true, this Court finds that Mr. and Ms. Latuska have not alleged sufficient facts to establish a plausible claim for punitive damages against Bureau Veritas North America, Inc. While the facts alleged support Mr. and Ms. Latuska's claims for intentional misrepresentation and negligence, they do not rise to the level of outrageous conduct required under Pennsylvania law to warrant punitive damages. Rather, Mr. and Ms. Latuska's allegations regarding their request for punitive damages are conclusory statements and not factual averments sufficient to state a plausible claim for relief. Based upon the allegations in the complaint, Mr. and Ms. Latuska have failed to satisfy the pleading requirements of the rules of procedure to set forth a plausible claim for relief for punitive damages in Counts V and VI against Bureau Veritas North America, Inc. The Court will therefore grant Defendants' motion to dismiss the punitive damages claim in Counts V and VI of the complaint. See, e.g., Boring v. Google Inc., 362 Fed. Appx. 273, 283 (3d Cir. Pa. 2010) (affirming the trial court's decision to grant the defendant's motion to dismiss the plaintiffs' claim for punitive damages because the complaint “fails to allege conduct that is outrageous or malicious” and “there are no facts suggesting that [the defendant] acted maliciously or recklessly or that [the defendant] intentionally disregarded the [plaintiffs'] rights”); McCullough v. Peeples, No. 3:14-CV-123, 2015 U.S. Dist. LEXIS 27683, at *17, 2015 WL 1000223 (W.D. Pa. Mar. 5, 2015) (granting motion to dismiss the plaintiff's claim for punitive damages where the plaintiff alleged that the defendant's actions “constituted outrageous conduct and demonstrated wanton and reckless indifference to the [plaintiff's] safety” and “evidenced conscious acts of an unreasonable character and demonstrated disregard of a risk”); Gregg v. Lonestar Transp., LLC, No. 3:14-CV-44, 2015 U.S. Dist. LEXIS 27680, at *10-11, 2015 WL 1003911 (W.D. Pa. Mar. 6, 2015) (granting motion to dismiss the plaintiff's claim for punitive damages because the plaintiff failed to allege sufficient supporting facts); Allegrino v. Conway E & S, Inc., No. 09-CV-1507, 2010 U.S. Dist. LEXIS 106734, at *38-39, 2010 WL 6634484 (W.D. Pa. Oct. 6, 2010) (dismissing the plaintiff's request for punitive damages because it was “pled in a conclusory fashion”). As discussed above, Mr. and Ms. Latuska have argued that they are entitled to attorneys' fees and costs because Section 908(2) of the Restatement (Second) of Torts provides that the nature and extent of the harm must be considered in awarding punitive damages. (ECF No. 13 at 18-19.) In support of their argument, Mr. and Ms. Latuska state that “while not statutorily authorized as independent taxable costs in the Courts for intentional misrepresentation and negligence, it is appropriate to consider attorney[s'] fees expended ... as an element of the compensatory losses and punitive damages award.” (Id. at 19.) Accordingly, because Mr. and Ms. Latuska have conceded that attorneys' fees and costs are recoverable only as an element of an award for punitive damages, and because the Court will dismiss Mr. and Ms. Latuska's claims for punitive damages in Counts V and VI, the Court will also dismiss their claims for attorneys' fees and costs in Counts V and VI. See, e.g., Sloan & Co. v. Liberty Mut. Ins. Co., 653 F.3d 175, 186 (3d Cir. 2011) (“[T]he ‘settled’ law of Pennsylvania is that ‘attorneys[’] fees are recoverable from an adverse party to a cause only when provided for by statute, or when clearly agreed to by the parties.' ”) (quoting Fidelity-Phila. Trust Co. v. Phila. Transp. Co., 173 A.2d 109, 113 (Pa. 1961)). C. Leave to Amend *8 The law is well settled that, “if a complaint is subject to a Rule 12(b)(6) dismissal, a district court must permit a curative amendment unless such an amendment would be inequitable or futile.” Phillips, 515 F. 3d at 245. Likewise, Federal Rule of Civil Procedure 15 embodies a liberal approach to amendment and directs that “leave shall be freely given when justice so requires” unless other factors weigh against such relief. Dole v. Arco Chem. Co., 921 F. 2d 484, 486-87 (3d Cir. 1990). Factors that weigh against amendment include “undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc.” Foman v. Davis, 371 U.S. 178, 182 (1962). Amendment is futile “if the amended complaint would not survive a motion to dismiss for failure to state a claim upon which relief could be granted.” Alvin v. Suzuki, 227 F. 3d 107, 121 (3d Cir. 2000). A district court may therefore “properly deny leave to amend where the amendment would not withstand a motion to dismiss.” Centifanti v. Nix, 865 F. 2d 1422, 1431 (3d Cir. 1989); Davis v. Holder, 994 F. Supp. 2d 719, 727 (W.D. Pa. 2014). In light of these legal principles favoring the opportunity to amend a deficiently pleaded complaint, Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 118 of 247 Latuska v. Sethuraman, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 8 the Court will grant Mr. and Ms. Latuska leave to amend their complaint. VI. Conclusion For the reasons stated above, the Court will deny, without prejudice, Hoffer's motion to dismiss as moot. The Court will grant Bureau Veritas North America, Inc.'s motion to dismiss. However, Plaintiffs, Richard E. Latuska and Annette E. Latuska, will be granted leave to file an amended complaint as set forth in the Order. An appropriate order follows. ORDER AND NOW, this 29th day of July, 2016, upon consideration of Bureau Veritas North America, Inc.'s motion to dismiss (ECF No. 9) and Mike Hoffer's motion to dismiss (ECF No. 20), IT IS HEREBY ORDERED as follows: 1. Bureau Veritas North America, Inc.'s motion to dismiss (ECF No. 9) is GRANTED. Plaintiffs' requests for punitive damages and for attorneys' fees and costs in Counts V and VI of their complaint are dismissed. Plaintiffs' Unfair Trade Practices and Consumer Protection Law claim in Count VII of their complaint is also dismissed. 2. Mike Hoffer's motion to dismiss (ECF No. 20) is DENIED, without prejudice, as moot. IT IS FURTHER ORDERED that Plaintiffs, Richard F. Latuska and Annette F. Latuska, are granted 21 days from July 29, 2016, to file an amended complaint. All Citations Slip Copy, 2016 WL 4082738 End of Document © 2017 Thomson Reuters. No claim to original U.S. Government Works. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 119 of 247 EXHIBIT M Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 120 of 247 Lease v. Fishel, Not Reported in F.Supp.2d (2009) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 1 2009 WL 922486 Only the Westlaw citation is currently available. United States District Court, M.D. Pennsylvania. David R. LEASE, Plaintiff v. Douglas FISHEL et al., Defendants. Civil Action No. 1:07-CV-0003. | April 3, 2009. Attorneys and Law Firms Don A Bailey, Harrisburg, PA, Sheri D. Coover, Law Office of Sheri D. Coover, Carlisle, PA, for Plaintiff. Devon M. Jacob, Frank J. Lavery, Jr., Lavery, Faherty, Young & Patterson, P.C., David L. Schwalm, Thomas, Thomas & Hafer, LLP, Harrisburg, PA, James E. Chiaruttini, Stock and Leader, Sean E. Summers, Barley Snyder Senft & Cohen, LLC, York, PA, Ronald H. Pollock, Jr., Lancaster, PA, Christopher P. Gerber, Siana, Bellwoar & McAndrew, LLP, Exton, PA, Eric M. Brown, Siana, Bellwoar & Mc Andrew LLP, Chester Springs, PA, for Defendants. MEMORANDUM YVETTE KANE, Chief Judge. *1 Before the Court are Rule 12(b)(6) Motions to Dismiss filed by Defendants Brian Coffey (“Coffey”) (Doc. No. 23); George A. Taughinbaugh (“Taughinbaugh”) and Ron Plank (“Plank”) (Doc. No. 25); Ronald Balutis (“Balutis”), Timothy Beard (“Beard”), and Hamilton Township (Doc. No. 28); and David Ogle (“Ogle”) and Douglas Fishel (“Fishel”) (Doc. No. 40). Additionally, Defendants Plank and Taughinbaugh have filed a motion for sanctions against Plaintiff's counsel pursuant to Rule 11 of the Federal Rules of Civil Procedure. (Doc. No. 27.) Finally, Plaintiff's counsel, Don Bailey, has moved to withdraw from the case due to irreconcilable differences that have developed with the Plaintiff. (Doc. No. 56.) These motions are ripe for disposition, and the Court will consider them together in this Memorandum. For the following reasons, Plank and Taughinbaugh's motion to dismiss and motion for sanctions will be granted, Lease will be required to file an amended complaint with the Court, the remaining motions to dismiss will be denied as moot, and Mr. Bailey will be allowed to withdraw as counsel for the Plaintiff. I. BACKGROUND A. Factual Background The allegations in this complaint arise out of a land development dispute between Defendant Hamilton Township and the Plaintiff David R. Lease (“Lease”). (Doc. No. 1 ¶ 8.) Lease alleges that the Defendants have acted unlawfully together to intimidate and retaliate against him because he “vigorously and successfully defended his rights ....” in resolving the dispute with Hamilton Township in state court. (Id. ¶ 19.) Many of the Defendants have no apparent connection to each other, but Lease alleges that their retaliatory conspiracy “to harm or otherwise injure the plaintiff” in furtherance of the interests of Hamilton Township is “evidenced by all of the defendants' individual unlawful actions.” (Id.) B. Procedural Background This case comes before the Court in an unusual procedural posture, in that the alleged retaliation and conspiracy has already been the subject of one action before this Court (involving some of the same parties and events that underlie the present complaint), captioned as Lease v. Tyler, at docket number 1:05-CV-00618 (“Lease I”). Before commencing the present action, Lease sought leave to file a second amended complaint in Lease I to include the claims presented in the instant action. (Lease I, Doc. No. 44.) The Court denied this request as untimely (Lease I, Doc. No. 54), and Lease commenced the present case on January 2, 2007. (Doc. No. 1.) The Court ultimately granted summary judgment for the Defendants in Lease I on June 30, 2008, (Lease I, Doc. No. 82), after the present motions to dismiss were already ripe. C. Standard of Review The Supreme Court's recent opinion in Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), has altered the standard of review for a motion to dismiss pursuant to Rule 12(b)(6). Phillips v. County of Allegheny, 515 F.3d 224, 230 (3d Cir.2008). In construing the Rule 12(b)(6) standard generally, the Court Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 121 of 247 Lease v. Fishel, Not Reported in F.Supp.2d (2009) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 2 required the plaintiff to provide more than a formulaic recitation of a claim's elements that amounted to mere labels and conclusions. Twombly, 127 S.Ct. at 1964-65. Additionally, the Court held that the complaint's “factual allegations must be enough to raise a right to relief above the speculative level.” Id. The Third Circuit has held that this language in Twombly applies generally to all motions brought under Rule 12(b)(6) and summed up the Twombly standard as follows: “stating ... a claim requires a complaint with enough factual matter (taken as true) to suggest the required element. This does not impose a probability requirement at the pleading stage, but instead simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of the necessary element.” Phillips, 515, F.3d at 234 (internal quotations and citations omitted). After Twombly, it is still true that “courts accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief.” Id. at 232 (quoting Pinker v. Roche Holdings Ltd. ., 292 F.3d 361, 374 n. 7 (3d Cir.2002)). III. COMPLAINT DEFICIENCIES *2 All of the Defendants have moved to reform or strike the complaint in this case, either to remove allegations that do not comply with Rules 8 and 10 of the Federal Rules of Civil Procedure or requesting a more definite statement. (See Doc. No. 23 ¶ 13; Doc. No. 26 at 13; Doc. No. 29 at 15; Doc. No. 40 ¶ 15.) The Court agrees that the complaint must be amended. Rule 8 requires that pleadings contain “a short and plain statement of the claim showing that the pleader is entitled to relief, Fed.R.Civ.P. 8(a)(2), and further requires that each allegation must be “simple, concise, and direct,” Fed.R.Civ.P. 8(d)(1). Rule 10 additionally prescribes that “[a] party must state its claims or defenses in numbered paragraphs, each limited as far as practicable to a single set of circumstances,” and that “if doing so would promote clarity, each claim founded on a separate transaction or occurrence ... must be stated in a separate count or defense.” Fed. R Civ. P. 10(b). The present complaint does not satisfy Rules 8 and 10. Most glaringly, Paragraph 1, included under the title “Introductory Statement,” effectively takes up 8 of the complaint's 18 pages. (Doc. No. 1 ¶ 1 at 1-8.) The mash of allegations in this introductory statement read more like a novel than a legal pleading and frequently digress into improper argumentative detail. See Burks v. City of Philadelphia, 904 F.Supp. 421, 424 (E.D.Pa.1995). This single numbered paragraph also includes many of the most pertinent allegations against each Defendant, which is clear from Lease's own briefs citing it repeatedly to set out the procedural and factual history of the case. (See Doc. No. 33 at 2; Doc. No. 42 at 2-3.) The use of this meandering “Introductory Statement” violates Rules 8 and 10 and does not comport with Plaintiffs' obligations, especially given the multiple defendants and separate transactions that Lease is trying to articulate as the bases for his relief; the result is a confusing mess that reduces efficiency and will complicate issues as the case goes forward. Further, because it seems that several critical allegations are made in the introductory statement that are not made elsewhere in the complaint, it is not even possible to simply strike paragraph 1 and rely on other sections of the complaint. Even if the Court were to rely on the remainder of the complaint, other portions of the complaint suffer from the same deficiencies. (See Doc. No. 1 ¶ 23.) Additionally, since the complaint was filed, the Court has issued a memorandum and order granting summary judgment to the defendants in Lease I. (Lease I, Doc. No. 82.) Some of the allegations and issues in the present case overlap with Lease I, especially with respect to Defendant Coffey-sued specifically for his role with Kevin Tyler and Douglas Fishel in the same events taking place on March 17, 2004 that the Court determined did not violate Lease's constitutional rights-and the plaintiff may be precluded from litigating them again. Because the Court's summary judgment order in Lease I was not available when the present complaint was filed, the Plaintiff should re-assess the viability of the claims and allegations made in this action to ensure the Court has not already preclusively determined these issues. *3 As the Court will require Lease to submit an amended complaint, the pending motions to dismiss will be denied as moot. The Court will review the claims made against Plank and Taughinbaugh, see Burks, 904 F.Supp. at 424, however, because they are the subject of a Rule 11 motion for sanctions that must be addressed before proceeding with the litigation to guide counsel in their future filings in this matter. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 122 of 247 Lease v. Fishel, Not Reported in F.Supp.2d (2009) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 3 IV. PLANK AND TAUGHINBAUGH: MOTION TO DISMISS Though the complaint itself frequently fails to distinguish between Defendants, there does not appear to be any dispute that the claims against Defendants Plank and Taughinbaugh in the instant action solely arise from an inspection of Lease's property conducted during discovery in Lease I. (See Doc. No. 26 at 2; Doc. No. 33 at 2.) Lease alleges that this was an “unlawful search ... under the guise of discovery (in [Lease I] ). This search was conducted by the defendants Taughinbaugh and Plank asserting a right to do so pursuant to this court's authority in the pending case .... There was virtually no probable cause, or factual basis for this search either.” (Doc. No. 1 ¶ 1 at 3.) Suspecting that Plank and Taughinbaugh had iniquitous motives during the inspection, Lease's counsel queried them about their purpose for the inspection. (Id. at 6.) In response, “[b]oth Mr. Plank ... and Mr. Taughinbaugh, ... literally blurted out ... that the so- called ‘view’ was about showing that Lease was “stealing electricity from his tenants.” (Id.) Lease contends that this inspection was a fishing expedition “irrelevant to the pending federal action,” and that it was undertaken in cooperation with Hamilton Township “to retaliate against him for litigating against Hamilton Township and ... for filing [Lease I] ....” (Id.) Based on these allegations, Lease asserts claims against Plank and Taughinbaugh for violations of his First and Fourth Amendment rights under 42 U.S.C. § 1983, conspiracy to deprive him of his rights, and abuse of legal process “as a matter of federal and state law.” (Id. at 18.) It seems Lease also believes that this conduct amounts to defamation, but admits the statute of limitations on those claims has expired. (Id. at 17.) The Defendants argue that these claims are frivolous and were advanced in violation of Rule 11 of the Federal Rules of Civil Procedure. (Doc. No. 27.) The Court will evaluate each claim in turn. A. 42 U.S.C. § 1983 1. State Action To make out a prima facie case under § 1983, the plaintiff must demonstrate that a person acting under color of law deprived him of a federal right; the statute itself is not a source of substantive rights. Marran v. Marran, 376 F.3d 143, 155 (3d Cir.2004) (citing Berg v. County of Allegheny, 219 F.3d 261, 268 (3d Cir.2000)). Initially, there is no indication in the complaint that Defendants were acting under color of state law. 1 The Court agrees with Plank and Taughinbaugh that neither litigation between private parties nor conducting discovery pursuant to the rules of civil procedure amounts to action under color of law. (See Doc. No. 26 at 12-13.) Lease seems to concede this point in his brief, arguing instead that the § 1983 claim is appropriate because Plank and Taughinbaugh were acting in a conspiracy with public officials. (Doc. No. 33 at 7.) *4 A private party can still be liable under § 1983 if he or she willfully participates in a joint conspiracy with state officials to deprive a person of a constitutional right. Abbott v. Latshaw, 164 F.3d 141, 147-48 (3d Cir.1998) (citing Dennis v. Sparks, 449 U.S. 24, 27-28, 101 S.Ct. 183, 66 L.Ed.2d 185 (1980)). Despite this, mere conclusory allegations of concerted action in the complaint are insufficient to plead the requisite conspiracy. See id. at 148 (citing Fries v. Helsper, 146 F.3d 452, 458 (7th Cir.1998) (“[M]ere allegations of joint action or a conspiracy do not demonstrate that the defendants acted under color of state law and are not sufficient to survive a motion to dismiss.... Nothing in the complaint demonstrates the existence of any joint action, concerted effort, or even a general understanding between Judge Kinney and the defendants.”) Lease contends that “[t]he complaint has sufficiently pled that Plank and Taughinbaugh were working in concert with their attorneys and also with township officials to deny the Plaintiff his constitutional rights.” (Doc. No. 33 at 8.) The Court disagrees. There is no question that the complaint is peppered with bald allegations of conspiracy. For instance, Lease alleges that “the defendants cooperated in efforts to retaliate against him for litigating against Hamilton Township,” and “the defendants unlawfully cooperated together ... to further the unlawful retaliatory interests of Hamilton Township which was to harm or otherwise injure the plaintiff ....” (Doc. No. 1 ¶¶ 1, 19.) These allegations are conclusory and insufficient to show conspiracy or survive the motion to dismiss. Lease further contends “[t]his retaliatory behavior is evidenced by all of the defendants' individual unlawful actions.” (Id. ¶ 19.) The only alleged unlawful action undertaken by Plank and Taughinbaugh is their conduct during the Rule 34 inspection in Lease I, and, even taken as true, the allegations describing that conduct do not show any conspiracy undertaken Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 123 of 247 Lease v. Fishel, Not Reported in F.Supp.2d (2009) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 4 with Hamilton Township or the other Defendants. Like in Fries, nothing in the complaint can be construed to support a general understanding between Hamilton Township and Plank and Taughinbaugh. As such, any claims against Plank and Taughinbaugh for conspiracy to violate Lease's rights pursuant to § 1983 are dismissed. 2. Plank and Taughinbaugh's Inspection Even assuming arguendo that Plank and Taughinbaugh could be considered state actors, it is troubling that Lease has asserted claims for constitutional violation at all solely from the inspection of his building pursuant to Rule 34 of the Federal Rules of Civil Procedure, which provides in pertinent part: A party may serve on any other party a request within the scope of Rule 26(b) ...; to permit entry onto designated land or other property possessed or controlled by the responding party, so that the requesting party may inspect, measure, survey, photograph, test, or sample the property or any designated object or operation on it. *5 Fed.R.Civ.P. 34(a)(2). Rule 26(b) provides a broad scope for discovery requests: “[p]arties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense .... Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence.” Fed.R.Civ.P. 26(b). Here, there is no question that Lease had commenced an action against Plank, which entitled Plank to inspect Lease's property in accordance with the rules of discovery. It is clear that Lease consented to the Rule 34 inspection, allowed him onto his property, and was accompanied by his counsel during the inspection. (See Doc. No. 1 ¶ 1.) Though Lease refers to him only as a “co-conspirator,” Taughinbaugh himself appears to have only been along on the inspection as a non-testifying expert witness to assist Plank. (Doc. No. 26 at 2.) Most problematic of all, Lease, though accompanied by counsel who had become “suspicious of the [inspection] of [Plank and Taughinbaugh] as they went beyond the activities of the underlying issues [in Lease I],” (Doc. No. 33 at 2), never stopped the inspection or sought the Court's intervention, available under Rule 37, to limit any improper discovery. Despite all of this, Lease argues that the inspection violated his First and Fourth Amendment rights. a. Fourth Amendment The Fourth Amendment protects against unreasonable searches or seizures. See, e.g., United States v. Sharpe, 470 U.S. 675, 683, 105 S.Ct. 1568, 84 L.Ed.2d 605 (1985). Lease cites to no authority that suggests an overbroad discovery inspection conducted pursuant to the Rules of Civil Procedure can constitute a violation of the Fourth Amendment. (See Doc. No. 33 at 5.) It is clear, even taking the allegations as true, that the Fourth Amendment is not implicated in this case and Plaintiff provides no authority from which the Court might find otherwise. See United States v. Int'l Bus. Mach. Corp., 83 F.R.D. 97, 101-102 (D.C.N.Y.1979) (“When a subpoena duces tecum in a civil case is challenged, it would appear the protection sought resides in the Federal Rules of Civil Procedure, not the fourth amendment.... It strains common sense and constitutional analysis to conclude that the fourth amendment was meant to protect against unreasonable discovery demands made by a private litigant in the course of civil litigation” (emphasis added).) Further, were it implicated, the inspection in question was conducted pursuant to the rules of civil procedure, which also provide limitations on the scope and character of civil discovery. These safeguards help ensure that civil discovery does not run afoul of the Fourth Amendment and provide litigants with tools to protect themselves from overbroad requests. Rule 34, for instance, only provided Plank with the right to “request ... to permit entry,” and also provided Lease with the ability to object to such a request. Fed.R.Civ.P. 34. Accordingly, this inspection was reasonable, especially in light of the fact that Lease and his counsel neither opposed any part of the inspection as it occurred nor sought a protective order from this Court. The allegation that Plank and Taughinbaugh “literally blurted out with responses that the so-called ‘view’ was about showing that Lease was ‘stealing electricity from his tenants” does not alter this determination or give Lease license to ignore the recognized discovery safeguards in favor of pursuing new § 1983 claims. b. First Amendment *6 Lease claims Plank and Taughinbaugh violated his First Amendment rights by retaliating against him for petitioning the government, both in litigating against Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 124 of 247 Lease v. Fishel, Not Reported in F.Supp.2d (2009) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 5 Hamilton Township to get approval for his subdivision plan and also for pursuing his claims in Lease I. (Doc. No. 1 ¶ 1 at 7.) “In order to plead a retaliation claim under the First Amendment, a plaintiff must allege: (1) constitutionally protected conduct, (2) retaliatory action sufficient to deter a person of ordinary firmness from exercising his constitutional rights, and (3) a causal link between the constitutionally protected conduct and the retaliatory action.” Thomas v. Independence Tp., 463 F.3d 285, 296 (3d Cir.2006). The key inquiry in whether a cognizable First Amendment claim has been stated is whether the alleged retaliatory conduct was sufficient to deter a person of ordinary firmness from exercising his First Amendment rights. Id. This claim would have the Court assume that an uncontested discovery inspection conducted by a defendant-to defend himself against, inter alia, an extant First Amendment retaliation claim-can be a viable ground to bring a separate First Amendment retaliation claim and also constitutes sufficient retaliatory action to deter a person from exercising his constitutional rights. Plank and Taughinbaugh argue that “certainly, the law does not support such an absurd result.” (Doc. No. 26 at 9.) The Court agrees. Further, the factual allegations in the complaint do not raise a right to relief above a speculative level on this claim against Plank and Taughinbaugh. Beyond bald, generalized assertions, the only pertinent allegations concerning the required elements of a First Amendment retaliation claim for Plank and Taughinbaugh involve the discovery inspection and the alleged comment that Lease was stealing electricity. The Court finds that these allegations are not sufficient to raise a reasonable expectation that discovery will reveal evidence of the required elements of First Amendment retaliation as set out above. B. Abuse of Process Lease alleges that “the defendants Plank and Taughinbaugh have violated plaintiff's rights under Pennsylvania law i.e. [sic] they have abused legal process both as a matter of federal and state law ....” (Doc. No. 1 at 18.) In the only other mention of “abuse of process” in the complaint, Lease seems to suggest that there has been an abuse of process because the statute of limitations had run on any potential defamation claim: “Plank and Taughinbaugh have not only defamed the plaintiff, but are further abusing legal process and violating his rights in this regard, both as a matter of federal law and as a matter of state law, the statute of limitations on defamation and false light representation having expired.” (Doc. No. 1 ¶ 38.) Plank and Taughinbaugh did not initiate any legal proceeding against Lease, so this claim must be brought under the Pennsylvania common law tort for abuse of process. See McGee v. Feege, 517 Pa. 247, 535 A.2d 1020, 1023 (Pa.1987) ( “malicious use of civil process has to do with the wrongful initiation of such process, while abuse of civil process is concerned with ... process after it is issued.”) The abuse of process tort has been described as “the improper use of process after it has been issued, that is, a perversion of it.” General Refractories Co. v. Fireman's Fund Ins. Co., 337 F.3d 297, 304 (3d Cir.2003) (quoting McGee, 535 A.2d at 1023). The word “process” is defined broadly enough to include, inter alia, discovery proceedings. Rosen v. American Bank of Rolla, 426 Pa.Super. 376, 627 A.2d 190, 192 (Pa.Super.Ct.1993). To establish abuse of process, the plaintiff must show that “the defendant (1) used a legal process against the plaintiff, (2) primarily to accomplish a purpose for which the process was not designed; and (3) harm has been caused to the plaintiff.” Lerner v. Lerner, 954 A.2d 1229, 1237 (Pa.Super.Ct.2008) (quoting Shiner v. Moriarty, 706 A.2d 1228, 1236 (Pa.Super.Ct.1998)). There is no action for abuse of process when the process is used for the purpose for which it is intended, but there is an incidental motive of spite or an ulterior purpose of benefit to the defendant. Rosen, 627 A.2d at 192; see also Shiner, 706 A.2d at 1236 (“[T]here is no liability where the defendant has done nothing more than carry out the process to its authorized conclusion, even though with bad intentions.”) Finally, while parties who employ legal process primarily intending to burden or cause litigation expense to their adversaries can be liable under this standard, such behavior must “become so lacking in justification as to lose its legitimate function as a reasonably justifiable litigation procedure.” General Refractories, 337 F.3d at 302. The court should ask whether a legal process has been used “as a tactical weapon to coerce a desired result that is not the legitimate object of the process.” Id. at 305. *7 Based on the alleged conduct discussed above, the Court finds that the factual allegations in the complaint do not raise a right to relief on this claim above the speculative level. The discovery request was seemingly legitimate in itself, as Lease and his counsel consented and never sought a protective order from the Court. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 125 of 247 Lease v. Fishel, Not Reported in F.Supp.2d (2009) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 6 The allegations are also insufficient to show that the primary purpose of the discovery inspection was to accomplish a goal for which the discovery process was not designed. Though Lease alleges that his electricity use was not material in Lease I (Doc. No. 1 ¶ 32), the entire dispute arose over damaged electric meters on Lease's property (See Lease I, Doc. No. 6 ¶ 14), and it is far from clear that a Rule 34 inspection to evaluate such matters would have been outside the scope of Rule 26. There are also no other allegations concerning the Defendants that show abusive conduct during the Lease I litigation that would help raise a reasonable expectation that discovery would reveal evidence of this necessary element. In General Refractories, for instance, there were allegations that the defendants “intentionally withheld critical documents, ignored court orders, permitted false testimony at depositions and misrepresented facts to opposing counsel and the court.” General Refractories, 337 F.3d at 301; see also In re Finney, 184 Fed. Appx. 285, 289-290 (3d Cir.2006). As discussed above, the allegations in the present complaint fall far short of such conduct, and at most show a violation of civil discovery rules. See Flores v. Emerich & Fike, 416 F.Supp.2d. 885, 907 (E.D.Cal.2006) (“[A civil discovery violation,] on its own, does not constitute an abuse of process. Moreover, there were adequate remedies to enforce the discovery rules in the prior case. It is impermissible to sue for prior violations of discovery rules in a subsequent lawsuit.”). The claim will be dismissed. V. PLANK AND TAUGHINBAUGH: MOTION FOR SANCTIONS A. Rule 11 Along with their motion to dismiss, Plank and Taughinbaugh seek sanctions against Lease and his counsel, Don Bailey, for filing the complaint in this action. (Doc. No. 27.) Plank and Taughinbaugh argue that Mr. Bailey has violated Rule 11(b)(2) in that the relief sought in the complaint is not warranted by existing law or the non-frivolous argument for the extension, modification or reversal of existing law. (Id. ¶ 7.) Rule 11 provides in pertinent part: (b) Representations to the Court. By presenting to the court a pleading, written motion, or other paper -whether by signing, filing, submitting or later advocating it-an attorney or unrepresented party 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, cause unnecessary delay, or needlessly increase the cost of litigation; *8 (2) the claims, defenses, and other legal contentions are warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law; (3) the factual contentions have evidentiary support, or, if specifically so identified, will likely have evidentiary support after a reasonable opportunity for further investigation or discovery; and (4) the denials of factual contentions are warranted on the evidence or, if specifically so identified, are reasonably based on belief or a lack of information. Fed.R.Civ.P. 11(b). It is clear that the central purpose of Rule 11 is to deter baseless filings, streamline litigation, and curb abuses of the judicial system. See Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 393-394, 110 S.Ct. 2447, 110 L.Ed.2d 359 (1990). As the rule sets out, the standard for testing an attorney's conduct is that of what was reasonable under the circumstances, which is defined as an “objective knowledge or belief at the time of the filing that the claim was well-grounded in law and fact.” See Ford Motor Co. v. Summit Motor Products, Inc. 930 F.2d 277, 289 (3d Cir.1991). “To comply with this standard, counsel must conduct a reasonable investigation of the facts and a normally competent level of legal research to support the presentation.” Simmerman v. Corino, 27 F.3d 58, 62 (3d Cir.1994) (quoting Pensiero v. Lingle, 847 F.2d 90, 96 (3d Cir.1994)). When assessing an attorney's compliance, the court should consider: “(1) the amount of time available to the signer for conducting relevant factual and legal investigation; (2) the necessity for reliance on a client for underlying factual information; (3) whether the case was referred to the signer by another member of the bar; and (4) the plausibility of the legal position advanced.” Pensiero, 847 F.2d at 95. Bad faith is not required before imposition of sanctions, Martin v. Brown, 63 F.3d 1252, 1264 (3d Cir.1995), and “the Rule does not recognize a ‘pure heart and empty head’ defense.” See In re Cendant Corp. Derivative Action Litigation, 96 F.Supp.2d. 403 at 405 (citing Gaiardo v. Ethyl Corp., 835 F.2d 479, 482 (3d Cir.1987)). Rule 11 is intended only Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 126 of 247 Lease v. Fishel, Not Reported in F.Supp.2d (2009) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 7 for exceptional circumstances, however, and should not be imposed merely because the party failed to prevail on an argument or motion. Teamsters Local Union No. 430 v. Cement Exp. Inc., 841 F.2d 66, 70 (3d Cir.1988); Gaiardo, 835 F.2d at 483. It is not intended to chill an attorney's enthusiasm or creativity in pursuing factual or legal theories and the district court should avoid using hindsight to test counsel's conduct at the time the pleading was submitted. See Gaiardo, 835 F.2d at 484. The ultimate Rule 11 inquiry is thus “whether at the time he filed the complaint, counsel ... could reasonably have argued in support of his legal theory.” Pensiero, 847 F.2d at 96 (citing Teamsters Local Union, 841 F.2d at 70). *9 To the extent Plank and Taughinbaugh argue that sanctions should be imposed because Mr. Bailey filed this separate action against them in contravention of the Court's order in Lease I, (See Doc. No. 31 at 8), that argument must be rejected. Mr. Bailey's attempt to amend his complaint in Lease I was rejected by this Court, but on grounds of untimeliness and unfair prejudice to Defendants in that action; the Court did not address the issue of whether the amendments were futile. (See Lease I, Doc. No. 54 at 3.) Additionally, as discussed above, the Court's ultimate disposition of Lease I was not available to Mr. Bailey when he originally filed the present action or when he submitted briefs in opposition to the pending motions to dismiss. As partially set out above, there are serious issues with this pleading, however, as it pertains to Plank and Taughinbaugh. 2 Mr. Bailey has brought claims which arise solely out of a discovery inspection that took place in August 2005. The Court notes that Mr. Bailey has largely articulated the correct elements and standard for the claims he has brought in his opposition to the motion to dismiss and motion for sanctions. (See Doc. Nos. 33. 42.) But, Mr. Bailey pursues frivolous arguments in applying these standards to a civil discovery inspection by Plank and Taughinbaugh. For instance, Mr. Bailey neither explains why the Fourth Amendment should apply in the context of civil discovery between private parties nor attempts to justify how its violation could justify a separate cause of action. In fact, he does not even bother to cite a single case in support of such a claim (nor has the Court's own research located any). Instead, Mr. Bailey relies on unsupported, questionable arguments, claiming that the search was only conducted “under the guise of discovery” and that Plank and Taughinbaugh “had no basis in fact for this filing [sic] expedition beyond an unlawful desire to injure Lease and prevent this litigation from succeeding.” (Doc. No. 33 at 2.) The Court is unaware that a defendant could unlawfully desire that litigation brought against him not succeed, though Mr. Bailey makes this argument at various points. He even involves opposing counsel, arguing that Plank and Taughinbaugh “violated his First Amendment rights to petition the government. They did this through their lawyers as participates [sic] in the litigation.” (Doc. No. 33 at 2.) Of course, the Court does not suggest that civil discovery is never used for improper purposes. Mr. Bailey has never contested, however, that Lease consented to the Rule 34 inspection, allowed Plank and Taughinbaugh onto the property, and was even accompanied by Mr. Bailey during the inspection. (See Doc. No. 1 at 6.) Further, it is clear from the complaint and record that even though Mr. Bailey claims to have “become suspicious” as the inspection took place, he neither took action to stop the inspection at the time nor properly notified the Court about any perceived discovery abuses. Under these circumstances the Court must assume the inspection complied with the rules, because Mr. Bailey never even attempted to utilize the Rule 37 method prescribed by the rules to protect litigants from overbroad discovery requests. From the record of Lease I, it appears the issue was only first raised in the aforementioned motion to amend almost a year after the offending inspection had taken place. (See Lease I, Doc. No. 44.) Mr. Bailey's decision to bring completely separate claims against Plank and Taughinbaugh for this dispute-properly resolved by the mechanisms provided for in the discovery rules-is an abuse of the judicial system and is not warranted by existing law. *10 The Court finds that Mr. Bailey has advanced these claims against Plank and Taughinbaugh without a reasonable inquiry under the circumstances. The claims are not warranted by existing law or by nonfrivolous argument for extending, modifying, or creating new law. As such, Mr. Bailey has violated Rule 11(b). 3 B. Appropriate Sanctions If Rule 11(b) has been violated, the Court has discretion to tailor a sanction to the particular facts of the case. Cendant Corp., 96 F.Supp.2d. at 407-08. The Court Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 127 of 247 Lease v. Fishel, Not Reported in F.Supp.2d (2009) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 8 may impose appropriate sanctions “on any attorney, law firm, or party that violated the rule or is responsible for the violation.” Fed.R.Civ.P. 11(c)(1). The court can impose monetary sanctions such as attorney fees or penalties, or non-monetary sanctions, which can include: oral or written reprimands, publication of the sanctioning opinion, referral of the matter to the state bar for disciplinary proceedings, an order barring an attorney from appearing for a period of time, compulsory legal education, or dismissal of baseless claims. Doering v. Union County Board of Chosen Freeholders, 857 F.2d 191, 194 (3d Cir.1988) (citing Gaiardo, 835 F.2d at 482)); see also Langer v. Monarch Life Ins. Co., 966 F.2d 786, 810 (3d Cir.1992). But, an appropriate sanction must be limited to the least severe sanction that suffices to deter repetition of the conduct or comparable conduct by others similarly situated. Fed.R.Civ.P. 11(c)(4); Langer, 966 F.2d at 810. In assessing the appropriateness of monetary sanctions as opposed to non-monetary sanctions, courts have considered: “(1) the willfulness of counsel's conduct; (2) whether the conduct was part of a pattern; (3) whether counsel engaged in past similar conduct; (4) whether the conduct was intended to injure; (5) what effect the conduct had on the time or expense of litigation; and (6) the type of sanction sufficient to deter a repetition of such conduct.” Cendant Corp., 96 F.Supp.2d. at 407- 08 (citing Shepherdson v. Nigro, 179 F.R.D. 150, 153 (E.D.Pa.1998)). Plank and Taughinbaugh request that the Court order Mr. Bailey to pay the costs to defend this action, including reasonable attorney fees. Plank and Taughinbaugh argue with some force that Mr. Bailey brought these claims against them in bad faith to harass and injure them. (See Doc. No. 31 at 9.) Indeed, arguing in support of amending his Lease I complaint with these new claims, Mr. Bailey spent nearly six pages (over half of his brief) detailing his frustrations with the defendants' discovery objections (See Lease I, Doc. No. 45 4-10.) Despite this, the Court cannot conclude that bringing these separate claims was a willful violation of Rule 11 or necessarily done with intent to injure. One troubling consideration is the many times that Mr. Bailey has already been sanctioned for similar conduct in this and other courts. See, e.g ., Conklin v. Warrington Township, No. 05-CV-1707, 2006 WL 2246415 (M.D.Pa.2006); Beam v. Bauer, 383 F.3d 106 (3d Cir.2004); Beam v. Downey, 151 Fed. Appx. 142 (3d Cir.2005). Failing to utilize the proper discovery procedures to resolve this dispute has also taken a lot of additional time and effort, both for Plank and Taughinbaugh and the Court. Finally, the Court must note the character of the litigation (from Lease I until now), which seems from the filings to have devolved into fractiousness between counsel, particularly Mr. Bailey and counsel representing Plank and Taughinbaugh. See Langer, 966 F.2d at 811-12. *11 Considering the above, the Court finds that reasonable attorney fees and costs are the least severe sanctions that suffice to deter repetition of this conduct. Counsel for Plank and Taughinbaugh are directed to submit a detailed fee petition with affidavits outlining background, hourly billing rates, and the time spent in defending the instant complaint and litigating the motion for sanctions so that the Court can calculate the “lodestar” figure. See Doering, 857 F.2d at 195. VI. CONCLUSION For the foregoing reasons, Plank and Taughinbaugh's motion to dismiss and motion for sanctions will be granted. The Court will require Plaintiff Lease to amend his complaint to resolve violations of Rule 8 and 10 of the Federal Rules of Civil Procedure, and the remaining motions to dismiss will be denied as moot. An order consistent with this memorandum will follow. ORDER AND NOW, this 3rd day of April 2009, upon consideration of the Defendants' motions to dismiss (Doc. Nos.23, 25, 28, 40), Defendant Ron Plank and George A. Taughinbaugh's motion for sanctions (Doc. No. 27), and Don Bailey's motion to withdraw (Doc. No. 56), and for the reasons set forth in this Court's Memorandum Opinion filed herewith, IT IS HEREBY ORDERED THAT: 1. Defendant Plank and Taughinbaugh's motion to dismiss (Doc. No. 25) and motion for sanctions (Doc. No. 27) are GRANTED. 2. Don Bailey's motion to withdraw as counsel for the Plaintiff (Doc. No. 56) is GRANTED. 3. Counsel for Defendants Plank and Taughinbaugh shall submit affidavits setting forth each attorney's educational background, work experience, specializations and their Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 128 of 247 Lease v. Fishel, Not Reported in F.Supp.2d (2009) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 9 current hourly billing rate. These attorneys shall also submit an exhibit detailing the hours expended and work performed in defending the instant complaint and litigating the motion for sanctions. This documentation shall be submitted within twenty (20) days from the date of this order. 4. Plaintiff is permitted to file objections to the hourly rate and hours expended by the Defendants. These objections shall be filed within fifteen (15) days of the filing of Plank and Taughinbaugh's affidavits and exhibits. These objections may be filed by Don Bailey or through substitute counsel now that Mr. Bailey has been granted leave to withdraw as Plaintiff's counsel. 5. Taking into account the Court's disposition of the prior related lawsuit in this matter and the deficiencies with the present complaint identified in the Court's Memorandum Opinion, Plaintiff shall submit an amended complaint that complies with Rules 8 and 10 of the Federal Rules of Civil Procedure within twenty (20) days from the date of this order. 6. The Defendants' remaining motions to dismiss (Doc. Nos.23, 28, 40) are DENIED AS MOOT. All Citations Not Reported in F.Supp.2d, 2009 WL 922486 Footnotes 1 Indeed, in Lease I, the Court determined that Plank was not a state actor when granting summary judgment in his favor. (See Lease I, Doc. No. 82 at 18.) 2 Nothing in this discussion should be construed as a determination on the pending claims against the other Defendants in this litigation. 3 Plank and Taughinbaugh also seek sanctions against Plaintiff Lease himself. (Doc. No. 31 at 10.) Because the Rule 11 violation in this case is primarily based on meritless legal claims and contentions, the Court finds that sanctioning Lease himself is not warranted under the circumstances. Further, Plank and Taughinbaugh seek monetary sanctions, which cannot be awarded against a represented party for violating Rule 11(b)(2). Fed.R.Civ.P. 11(c)(5)(A). End of Document © 2017 Thomson Reuters. No claim to original U.S. Government Works. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 129 of 247 EXHIBIT N Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 130 of 247 McCullough v. Peeples, Not Reported in F.Supp.3d (2015) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 1 2015 WL 1000223 Only the Westlaw citation is currently available. United States District Court, W.D. Pennsylvania. Michael McCullough, Plaintiff, v. Derek PEEPLES, Horizon Freight System, Inc., Randall S. McMurty and Theresa Jung t/d/b/a TJ Transport, Defendants. Civil Action No. 3:14-123. | Signed March 5, 2015. Attorneys and Law Firms Gary M. Lang, Justin T. Papciak, Feldstein Grinberg Lang & McKee, P.C., Pittsburgh, PA, for Plaintiff. Donald H. Smith, Mannion & Gray, Jeffrey A. Ramaley, Zimmer Kunz, Pittsburgh, PA, for Defendants. MEMORANDUM OPINION KIM R. GIBSON, District Judge. I. Synopsis *1 This diversity case arises from personal injuries sustained by Plaintiff Michael McCullough following a traffic accident. Presently before the Court is a motion to dismiss (ECF No. 9) Plaintiff's complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, filed by Defendants Derek Peeples and Horizon Freight System, Inc. (collectively “Defendants”). 1 Defendants contend that Plaintiff's complaint fails to state a claim upon which relief can be granted for negligence, and, in the alternative, that the complaint fails to state a claim for punitive damages. (See ECF No. 9). Plaintiff opposes the motion. (See ECF No. 23). For the reasons stated below, Defendants' motion to dismiss will be denied in part and granted in part. II. Jurisdiction The Court has diversity jurisdiction pursuant to 28 U.S.C. § 1332. Venue is proper under 28 U.S.C. § 1391(b). III. Background Plaintiff initiated this case after sustaining injuries from a multi-vehicle traffic accident that occurred on State Route 22 in Jackson Township, Cambria County, Pennsylvania. (ECF No. 1 ¶ 10). The Court accepts the following allegations from the complaint as true for the sole purpose of deciding the pending motion. On February 3, 2014, while Defendant Derek Peeples (“Peeples”) was operating an 18 wheel semi-trailer truck owned by Defendant Horizon Freight System, Inc. (“Horizon”) in a westbound lane of State Route 22, the truck “jackknifed,” blocking the westbound lanes of State Route 22. (Id. ¶¶ 10, 11). Shortly after Defendant Peeples' truck jackknifed, Plaintiff, who was operating a snow plow owned by the Pennsylvania Department of Transportation, observed Peeples' truck jackknifed across the westbound lanes of State Route 22 and brought the snow plow to a complete stop. (Id. ¶ 12). Shortly after coming to a complete stop, Plaintiff's snow plow was struck in the rear by an 18 wheel semi-trailer truck operated by Defendant Randall McMurty (“McMurty”) and owned by Defendant Theresa Jung t/d/b/a TJ Transport (“Jung”). (Id. ¶ 13). The force of the impact caused the snow plow to overturn. (Id. ¶ 14). As a result of the accident, Plaintiff sustained numerous injuries. (Id. ¶ 2). On June 12, 2014, Plaintiff filed a four-count complaint, asserting a claim for negligence and a claim for punitive damages against each of the four defendants. (Id. ¶¶ 15- 40). On August 8, 2014, Defendants filed a motion to dismiss the complaint pursuant to Rule 12(b)(6). (ECF No. 9). Defendants contend that Counts I and II of the complaint should be dismissed because Plaintiff has failed to allege proximate causation between defendants' conduct and Plaintiff's injuries. (Id.). Alternatively, Defendants argue that the punitive damages claims in Counts I and II should be dismissed because Plaintiff's claims are for ordinary negligence. (Id.). Both parties have submitted briefs, and the matter is now ripe for disposition. (See ECF Nos. 10, 23). IV. Standard of Review *2 Defendants have moved to dismiss Counts I and II of Plaintiff's complaint pursuant to Rule 12(b)(6). (See ECF No. 9). The Federal Rules of Civil Procedure require that a complaint contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 131 of 247 McCullough v. Peeples, Not Reported in F.Supp.3d (2015) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 2 Fed.R.Civ.P. 8(a)(2). Rule 12(b)(6) allows a party to seek dismissal of a complaint or any portion of a complaint for failure to state a claim upon which relief can be granted. Although the federal pleading standard has been “in the forefront of jurisprudence in recent years,” the standard of review for a Rule 12(b)(6) challenge is now well established. Fowler v. UPMC Shadyside, 578 F.3d 203, 209 (3d Cir.2009). In determining the sufficiency of a complaint, a district court must conduct a two-part analysis. First, the court must separate the factual matters averred from the legal conclusions asserted. See Fowler, 578 F.3d at 210. Second, the court must determine whether the factual matters averred are sufficient to show that plaintiff has a “plausible claim for relief.” Id. at 211 (quoting Ashcroft v. Iqbal, 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009)). The complaint need not include “detailed factual allegations.” Phillips v. County of Allegheny, 515 F.3d 224, 231 (3d Cir.2008) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). Moreover, the court must construe the alleged facts, and draw all inferences gleaned therefrom, in the light most favorable to the non-moving party. See id. at 228 (citing Worldcom, Inc. v. Graphnet, Inc., 343 F.3d 651, 653 (3d Cir.2003)). However, “legal conclusions” and “[t]hreadbare recitals of the elements of a cause of action ... do not suffice.” Iqbal, 556 U.S. at 678. Rather, the complaint must present sufficient “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Sheridan v. NGK Metals Corp., 609 F.3d 239, 263 n. 27 (3d Cir.2010) (quoting Iqbal, 556 U.S. at 678). Ultimately, whether a plaintiff has shown a “plausible claim for relief” is a “context specific” inquiry that requires the district court to “draw on its judicial experience and common sense .” Iqbal, 556 U.S. at 679. The relevant record under consideration includes the complaint and any “document integral or explicitly relied on in the complaint.” U.S. Express Lines, Ltd. v. Higgins, 281 F.3d 383, 388 (3d Cir.2002) (citing In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir.1997)). If a complaint is vulnerable to dismissal pursuant to Rule 12(b)(6), the district court must permit a curative amendment, irrespective of whether a plaintiff seeks leave to amend, unless such amendment would be inequitable or futile. Phillips, 515 F.3d at 236; see also Shane v. Fauver, 213 F.3d 113, 115 (3d Cir.2000). V. Discussion Defendants seek dismissal of Count I-which asserts a claim for negligence and a claim for punitive damages against Defendant Peeples-and Count II-which asserts a claim for negligence and a claim for punitive damages against Defendant Horizon-of Plaintiff's complaint. Because both Counts involve similar claims, the Court will first address the negligence claims against both Defendants and then will address the punitive damages claims against both Defendants. A. Negligence Claims *3 Regarding Plaintiff's negligence claims, Defendants assert that the negligence claims should be dismissed as a matter of law because their conduct was not the proximate cause of Plaintiff's injuries. (See ECF No. 10 at 2). Defendants argue that Defendant Peeples' conduct was too remote in time from the occurrence of Plaintiff's injuries, that Plaintiff's injuries were not a foreseeable result of Defendants' conduct, that Defendants' conduct was not “in continuous and active operation up to the time of the harm,” and that Defendant McMurtry's conduct was a superseding cause, without which, Plaintiff's injuries would not have occurred. (ECF No. 10 at 4). To state a claim for negligence under Pennsylvania law, a party must allege four elements: a duty or obligation recognized by law; a breach of that duty; a causal connection between the actor's breach of the duty and the resulting injury; and actual loss or damage suffered by the complainant. See Lux v. Gerald E. Ort Trucking, Inc., 887 A.2d 1281, 1286 (Pa.Super.2005). In the present case, Defendants contend that Plaintiff has failed, as a matter of law, to allege the existence of the causation element, arguing that their conduct was not the “legal cause of Plaintiff's alleged harm.” (ECF No. 10 at 4). The parties are not presently disputing the other elements. To establish the causation element in a negligence claim, a plaintiff must allege that the defendant's breach of his legal duty was both the proximate and actual cause of injury. Reilly v. Tiergarten Inc., 430 Pa.Super. 10, 633 A.2d 208, 210 (Pa.Super.1993). Thus, a plaintiff must show the existence of two types of causation: cause in fact (“but for cause”) and legal cause (“proximate cause”). Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 132 of 247 McCullough v. Peeples, Not Reported in F.Supp.3d (2015) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 3 Kalgren v. Huber, No. 3:2005-cv-7, 2007 WL 674605, at *4 (W.D.Pa. Mar.1, 2007) (citing Summers v. Giant Food Stores, Inc., 743 A.2d 498, 509 (Pa.Super.999)). Cause in fact is “proof that the alleged injury would not have occurred ‘but for’ a certain act or presence of a condition and has been described as a de minimus standard that is separate and apart from the legal causation standard of being a ‘substantial factor.’ “ Kalgren, 2007 WL 674605, at *4 (citing Mahon v. W.C.A.B., 835 A.2d 420, 428-29 (Pa.Commw.2003) and Takach v. B.M. Root Co., 279 Pa.Super. 167, 420 A.2d 1084, 1086-87 (Pa.Super.1980)). In the present case, Defendants contest only the existence of legal, or proximate, causation, asking the Court to exercise its “gate-keeper function with respect to causation.” (See ECF No. 10 at 2, 5). Pennsylvania courts have defined proximate causation as a “wrongful act which was a substantial factor in bringing about the plaintiff's harm.” Dudley v. USX Corp., 606 A.3d 916, 923 (Pa.Super.1992) (citations omitted). “Proximate cause does not exist when the causal chain of events resulting in plaintiff's injury is so remote as to appear highly extraordinary that the conduct could have brought about the harm.” Id. When determining whether legal causation exists, a court must consider “whether the negligence, if any, was so remote that as a matter of law, [the actor] cannot be held legally responsible for [the] harm which subsequently occurred.” Reily v. Tiergarten Inc., 430 Pa.Super. 10, 633 A.2d 208, 210 (Pa.Super.1933) (citations omitted). Thus, the Court must determine “whether the injury would have been foreseen by an ordinary person as the natural and probable outcome of the act complained of.” Id. (citing Merritt v. City of Chester, 344 Pa.Super. 505, 496 A.2d 1220, 1221 (Pa.Super.1985)). *4 A party's negligence is the proximate cause of another's injury if: “(a) his conduct is a substantial factor in bringing about the harm, and (b) there is no rule of law relieving the actor from liability because of the manner in which his negligence has result in harm.” Kalgren, 2007 WL 674605, at *4-5 (citing Wisniewski v. Great Atlantic & Pacific Tea Co., 226 Pa.Super. 574, 323 A.2d 744, 748 (Pa.Super.1974)). To determine whether an actor's conduct is a substantial factor in causing harm to another, courts consider several factors, including: (a) the number of other factors which contribute in producing the harm and the extent of the effect which they have in producing it; (b) whether the actor's conduct has created a force or series of forces which are in continuous and active operation up to the time of the harm, or has created a situation harmless unless acted upon by other forces for which the actor is not responsible; and (c) lapse of time. Willard v. Interpool, Ltd., 758 A.2d 684, 688 (Pa.Super.2000) (quoting American Truck Leasing, Inc. v. Thorne Equipment Co. ., 400 Pa.Super. 530, 583 A.2d 1242, 1243 (Pa.Super.1991)); see also Restatement (Second) of Torts § 433. Thus, this Court must decide whether Defendants' conduct, even if a factual or “but for” cause of Plaintiff's injuries, was so trivial that “no ordinary mind would think of it as a case for which a defendant should be held responsible.” Herman v. Welland Chemical, Ltd., 580 F.Supp. 823, 827 (M.D.Pa.1984) (quoting Ford v. Jefferies, 474 Pa. 588, 379 A.2d 111, 114 (Pa.1977)). 1. Count I-Negligence Claim Against Defendant Peeples Applying the standard set forth above, the Court finds that Plaintiff's complaint sufficiently alleges proximate causation to withstand Defendants' motion to dismiss the negligence claim against Defendant Peeples. First, Plaintiff alleges that Defendant Peeples' conduct was one of only two factors contributing to Plaintiff's injuries-the other factor being Defendant McMurtry's conduct. Next, the amount of time which elapsed between Defendant Peeples' conduct and Plaintiff's harm was minimal. Specifically, Plaintiff alleges that his collision with Defendant McMurtry happened “within minutes” of Defendants' negligent conduct in blocking the westbound lanes of traffic, which caused Plaintiff to come to a complete stop on the highway. (ECF No. 1 ¶ 2). Furthermore, the complaint alleges that Defendant Peeples' conduct created a series of forces that were in continuous and active operation up to the time of Plaintiff's harm. Specifically, Plaintiff alleges that Defendant Peeples was driving his truck negligently and that, as a result of his negligent conduct, the truck jackknifed across the westbound lanes of traffic and that within minutes, Plaintiff stopped his snow plow and was then struck in the rear by Defendant McMurtry's truck. Thus, the complaint alleges sufficient facts showing that Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 133 of 247 McCullough v. Peeples, Not Reported in F.Supp.3d (2015) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 4 Defendant Peeples' conduct was a substantial factor in causing harm to Plaintiff to survive the motion to dismiss. *5 Defendants also contend that Defendant McMurtry's conduct constitutes a superseding cause that excuses Defendants from liability. (See ECF No. 10 at 4). Defendants argue that, without Defendant McMurtry's intervening act, Plaintiff would not have been injured. Defendants assert that “it should indeed appear to the court highly extraordinary that Peeples' conduct” would have caused Plaintiff's harm without the intervening negligent act. (Id .) Defendants also argue that Plaintiff's injuries are not foreseeable by an “ordinary person” as a result of Peeples' conduct. “A superseding cause is an act of a third person or other force which by its intervention prevents the actor from being liable for harm to another which his antecedent negligence is a substantial factor in bringing about.” Flickinger's Estate v. Ritsky, 452 Pa. 69, 305 A.2d 40, 41 n. 2 (Pa.1973) (citing Restatement (Second) of Torts § 440 (1965)). Under Pennsylvania law, the “mere happenstance” of an intervening negligent act will not relieve the original actor from liability. Herman v. Welland Chemical, Ltd., 580 F.Supp. 823, 828 (M.D.Pa.1984). An intervening act will not be a superseding cause, and thus will not relieve the original actor from liability, if the original actor, at the time of his negligent act, “should have realized that another person's negligence might cause harm; or, if a reasonable man would not regard the occurrence of the intervening negligence as highly extraordinary; or, if the intervening act is not extraordinarily negligent.” Id. (emphasis in original) (citations omitted). Contrary to Defendants' arguments, Plaintiff's complaint sufficiently alleges facts to state a plausible claim for relief. At this stage in the litigation, the Court accepts the allegations in the complaint as true and construes the facts in favor of Plaintiff, the non-moving party. Here, Plaintiff has alleged sufficient facts to show a causal connection between the actions or inactions of Defendant Peeples and the injuries sustained by Plaintiff. Among other things, Plaintiff alleges that Defendant Peeples negligently operated his 18 wheel semi-trailer truck in an unsafe manner and at an unsafe speed, under the circumstances, which caused the truck to jackknife. (ECF No. 1 ¶ 15(i)). Plaintiff alleges that Peeples failed to take appropriate and adequate action to move the truck to a position where it was not blocking the westbound lanes of State Route 22. (Id. ¶ 15(h)). Plaintiff alleges that Peeples failed to warn oncoming motorists that the westbound lanes of State Route 22 were blocked. (Id. ¶ 15(l)). Accepting Plaintiff's allegations as true, this Court finds that Plaintiff has alleged sufficient facts to show that Defendant Peeples' conduct was a substantial factor in causing Plaintiff's injuries and that such injuries were a foreseeable result of Defendant Peeples' negligent conduct. Thus, the facts, as alleged, establish proximate causation as to Defendant Peeples. See Kalgren v. Huber, No. 3:2005-cv-07, 2007 WL 674605, at *6 (W.D.Pa. Mar.1, 2007). *6 In sum, having evaluated the allegations of the complaint under the applicable test for establishing proximate cause, the Court finds that Plaintiff has alleged sufficient facts to establish a plausible negligence claim sufficient to withstand Defendants' motion to dismiss. Accordingly, Defendants' motion to dismiss the negligence claim in Count I of the complaint is denied at this time, without prejudice to Defendants raising the issue of proximate causation at a later stage in this litigation. 2. Count II-Negligence Claim Against Defendant Horizon Defendants also seek to dismiss Plaintiff's negligence claims against Defendant Horizon in Count II of the complaint for failure to state a claim upon which relief can be granted. Under Pennsylvania law, “an employer is vicariously liable for the negligent acts of his employee which cause injuries to a third-party, provided that such acts were committed during the course of and within the scope of the employment.” Valles v. Albert Einstein Medical Center, 758 A.2d 1238, 1244 (Pa.Super.2000). In his complaint, Plaintiff alleges that Defendant Horizon is a corporation engaged in the business of interstate transportation of goods. (ECF No. 1 ¶ 5). Plaintiff alleges that Defendant Peeples was an agent and employee of Defendant Horizon and that, during his employment, while “operating an 18 wheel semi-trailer truck owned by Defendant Horizon,” the truck jackknifed across the westbound lanes of State Route 22. (Id. ¶¶ 5, 10, 11). Plaintiff alleges numerous facts concerning Defendant Horizon's negligent conduct. (Id. ¶¶ 26(a)-(q)). Based on these allegations, together with the allegations contained in Count I of the complaint, this Court finds that Plaintiff Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 134 of 247 McCullough v. Peeples, Not Reported in F.Supp.3d (2015) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 5 has alleged sufficient facts to state a plausible claim for negligence against Defendant Horizon. Accordingly, Defendants' motion to dismiss Plaintiff's negligence claim against Defendant Horizon in Count II of the complaint is denied. B. Punitive Damages Claims Defendants also argue that the punitive damages claims in Counts I and II of Plaintiff's complaint should be dismissed because “Plaintiff's claims are for ordinary negligence, nothing more.” (ECF No. 10 at 5). In Pennsylvania, “[p]unitive damages may be awarded for conduct that is outrageous, because of the defendant's evil motive or his reckless indifference to the rights of others.” Hutchison v. Luddy, 582 Pa. 114, 870 A.2d 766, 770 (Pa.2005) (citations omitted). Because the purpose of punitive damages is to punish a tortfeasor for his outrageous conduct and to deter other similar conduct, the actor's state of mind is vital when considering whether to impose punitive damages. Id. “The act, or failure to act, must be intentional, reckless, or malicious.” Id. The Pennsylvania Supreme Court has explained that, punitive damages must be supported by sufficient evidence that “(1) a defendant had a subjective appreciation of the risk of harm to which the plaintiff was exposed and that (2) he acted, or failed to act, as the case may be, in conscious disregard for that risk.” Id.; see also Courtney v. Ivanov, No. 3:13-cv-227, 2014 WL 4097351, at *7 (W.D.Pa. Aug.18, 2014). 1. Count I-Punitive Damages Claim Against Defendant Peeples *7 Defendants assert that Plaintiff's punitive damages claim must be dismissed because Plaintiff's complaint fails to allege sufficient facts to show that the actions of Defendants constituted outrageous conduct or demonstrated wanton and reckless indifference to the safety of Plaintiff. (ECF No. 9 ¶¶ 6-7). Defendants argue that Plaintiff's allegations state a claim for “ordinary negligence, nothing more,” and that “a court may not award punitive damages merely because a tort has been committed.” (ECF No. 10 at 7). Accepting the allegations of Plaintiff's complaint as true, this Court finds that Plaintiff's complaint has not alleged sufficient facts to establish a plausible claim for punitive damages against Defendant Peeples. Punitive damages are not an appropriate remedy for mere negligence; rather, in order to justify punitive damages, the negligent conduct needs to be “so egregious that it may fairly be described as outrageous.” Ditzle v. Wesolowsi, No. 3:05-cv-325, 2006 WL 2546857, at *2 (W.D.Pa.2006); Young v. Westfall, No. 4:06-cv-2325, 2007 WL 675182, at *2 (M.D.Pa. Mar.1, 2007). “[P]untitive damages are appropriate for torts sounding in negligence when the conduct goes beyond mere negligence and into the realm of behavior which is willful, malicious or so careless as to indicate wanton disregard for the rights of the parties injured.” Hutchison, 870 A.2d at 770; see also Young, 2007 WL 675182 at *2. In his complaint, Plaintiff alleges, among other things, that Peeples operated his “18 wheel semi-trailer truck at an excessive rate of speed under the circumstances ... thereby causing it to jackknife” (ECF No. 1 ¶ 15(f)); that Peeples failed to have the truck under “proper control so as to be capable of bringing it to a stop within the assured clear distance ahead, thereby causing it to jackknife” (id. ¶ 15(g)); and that Peeples operated his truck “in a manner demonstrating careless disregard for the safety of persons” and “in a careless and negligent manner under the circumstances, specifically given the weather conditions” (id. ¶ 15(j), (k)). While these facts support a claim for negligence, they do not rise to the level of outrageous conduct required under Pennsylvania law to warrant punitive damages. Plaintiff also alleges that Peeples' actions “constituted outrageous conduct and demonstrated wanton and reckless indifference to the safety of the Plaintiff,” (id. ¶ 23), and “evidenced conscious acts of an unreasonable character and demonstrated disregard of a risk known to him or so obvious to him that he must have been aware of it, and so great as to make it highly probable that harm would follow” (id. ¶ 24). However, these allegations are conclusory statements and not factual averments sufficient to state a plausible claim for relief. Thus, based on in the allegations in the complaint, Plaintiff has failed to satisfy the pleading requirements of the rules of procedure to set forth a plausible claim for relief for punitive damages in Count I against Defendant Peeples. Therefore, Defendants' motion to dismiss the punitive damages claim in Count I of the complaint is granted, but Plaintiff will be granted leave to file an amended complaint. 2. Count II-Punitive Damages Claim Against Defendant Horizon Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 135 of 247 McCullough v. Peeples, Not Reported in F.Supp.3d (2015) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 6 *8 Defendants also argue that Plaintiff has failed to allege sufficient facts to establish a plausible claim for punitive damages against Defendant Horizon. Although Pennsylvania has adopted § 908 of the Restatement of Torts for punitive damages, “it has not adopted the standard of § 909 of the Restatement of Torts which limits an employer's liability for punitive damages imposed for the torts of his employee.” Delahanty v. First Pennsylvania Bank, N.A., 318 Pa.Super. 90, 464 A.2d 1243, 1264 (Pa.Super.1983). Instead, under Pennsylvania law, a principal may be held vicariously liable for its agent's punitive damages if the agent's actions were clearly outrageous, the actions were committed during and within the scope of the agent's duties, and the actions were done to further the principal's interests. See Loughnab v. Consol-Pennsylvania Coal Co. ., 6 F.3d 88, 101 (3d Cir.1993) (citing Delahanty, 464 A.2d at 1264). In his complaint, Plaintiff alleges that Defendant Horizon is a corporation engaged in the business of interstate transportation of goods. (ECF No. 1 ¶ 5). Plaintiff also asserts that Defendant Peeples was an agent and employee of Defendant Horizon, and that during his employment, while “operating an 18 wheel semi-trailer truck owned by Defendant Horizon,” the truck jackknifed across the westbound lanes of State Route 22. (Id. ¶¶ 5, 10, 11). Additionally, Plaintiff alleges numerous facts regarding Defendant Horizon's failure to “establish or promulgate, or if established and promulgated failed, to enforce sufficient policies protocols and procedures” regarding state regulations on driving time and the maintenance of drivers and vehicles, and regarding Defendant Horizon's failure to adequately train, monitor, and assign driving responsibilities to Defendant Peeples. (Id. at ¶ 26, 464 A.2d 1243). Plaintiff alleges that Defendant Horizon's actions constituted outrageous conduct and demonstrated wanton and reckless indifference to the safety of Plaintiff. (Id. ¶¶ 28-29). Based on the allegations in the complaint, the Court finds that Plaintiff has failed to state a plausible claim for punitive damages against Defendant Horizon. See Courtney v. Ivanov, No. 3:13-cv-227, 2014 WL 4097351, at *7 (W.D.Pa. Aug.18, 2014). Like the claims against Defendant Peeples, Plaintiff has failed to sufficiently allege facts establishing outrageous conduct beyond ordinary negligence to warrant a claim for punitive damages. Therefore, Defendants' motion to dismiss the punitive damages claim against Defendant Horizon is granted. Plaintiff will be granted leave to file an amended complaint as to the punitive damages claim against Defendant Horizon. VI. Conclusion For the foregoing reasons, Plaintiff has alleged sufficient facts to state a plausible claim for relief against both Defendant Peeples and Defendant Horizon for claims of negligence. However, Plaintiff has failed to state a plausible claim for punitive damages against either Defendant. Therefore, Defendants' motion to dismiss Counts I and II of Plaintiff's complaint is denied as to the negligence claims and is granted as to the claims for punitive damages. Plaintiff will be granted leave to amend the complaint. *9 An appropriate order follows. ORDER AND NOW, this 5th day of March 2015, upon consideration of the motion to dismiss Counts I and II of the complaint (ECF No. 9) filed by Defendants Derek Peeples and Horizon Freight System, Inc., and for the reasons set forth in the accompanying memorandum, IT IS HEREBY ORDERED that Defendants' motion to dismiss is DENIED in part and GRANTED in part. Plaintiff's punitive damages claims against Defendant Peeples in Count I and against Defendant Horizon in Count II are dismissed. Plaintiff is granted leave to file an amended complaint as to the punitive damages claims in Counts I and II within twenty-one (21) days of the date of this order. All Citations Not Reported in F.Supp.3d, 2015 WL 1000223 Footnotes Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 136 of 247 McCullough v. Peeples, Not Reported in F.Supp.3d (2015) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 7 1 Defendants Randall S. McMurtry and Theresa Jung responded to the complaint by filing an answer, and they are not involved in the pending motion to dismiss. Therefore, all references to “Defendants” in this memorandum opinion are to Defendants Peeples and Horizon only, and not to Defendants McMurtry and Jung. End of Document © 2017 Thomson Reuters. No claim to original U.S. Government Works. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 137 of 247 EXHIBIT O Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 138 of 247 Orthovita, Inc. v. Erbe, Not Reported in F.Supp.2d (2008) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 1 KeyCite Yellow Flag - Negative Treatment Distinguished by Roberts Technology Group, Inc. v. Curwood, Inc., E.D.Pa., September 23, 2015 2008 WL 423446 Only the Westlaw citation is currently available. United States District Court, E.D. Pennsylvania. ORTHOVITA, INC., Plaintiff v. Erik M. ERBE, Defendant. Civil Action No. 07-2395. | Feb. 14, 2008. Attorneys and Law Firms Amanda M. Kessel, David J. Wolfsohn, Woodcock Washburn, LLP, Edward S. Mazurek, Michael J. Ossip, Sarah Elise Pontoski, Morgan Lewis & Bockius LLP, Philadelphia, PA, for Plaintiff. Michael O'Hayer, West Chester, PA, for Defendant. MEMORANDUM AND ORDER GENE E.K. PRATTER, District Judge. *1 Employee loyalty and post-employment competition against the former employer spawn many disputes. This is one of them. Orthovita, Inc., a company in the medical technology field, asserted thirteen claims 1 against its former Chief Science Officer, Dr. Erik M. Erbe. As described in greater detail in this Memorandum, Orthovita believes Dr. Erbe's disloyal conduct while in the company's employ was so extensive as to justify a host of claims, subjecting him to both money damages and equitable remedies. Dr. Erbe has moved to dismiss all the claims against him except the claims for breach of contract and for violation of the Computer Fraud and Abuse Act. Dr. Erbe argues that (1) the gist of the action doctrine requires dismissal of Counts II-V, IX, X, XII and XIII; (2) Counts II, III, IV and V are not viable and lack necessary supporting factual allegations; (3) Counts VI and VII (trademark infringement) must fail because Dr. Erbe has not used Orthovita's CORTOSS product name in marketing products or in any manner that could confuse potential investors or buyers; (4) Count VIII (promissory estoppel) must be dismissed because neither party disputes the existence of a valid employment contract; and (5) Count X (breach of fiduciary duty) must be dismissed because Pennsylvania law does not impose such a duty on corporate officers or employees. For the reasons set forth below, Dr. Erbe's Motion to Dismiss is granted as to Counts V (unfair competition) and X (breach of fiduciary duty), but denied in all other respects. I. LEGAL STANDARD To decide a Rule 12(b)(6) motion, the Court may look only to the facts alleged in the complaint and its attachments. Jordan v. Fox, Rothschild, O'Brien & Frankel, 20 F.3d 1251, 1261 (3d Cir.1994). The Court must accept as true all well-pleaded allegations in the complaint and view them in the light most favorable to the plaintiff. Angelastro v. Prudential-Bache Sec., Inc., 764 F.2d 939, 944 (3d Cir.1985). A Rule 12(b)(6) motion will be granted only if it is certain that no relief could be granted under any set of facts that could be proved by the plaintiff. Ransom v. Marrazzo, 848 F.2d 398, 401 (3d Cir.1988). II. FACTUAL BACKGROUND A. Orthovita and Its Products Orthovita, a Pennsylvania corporation, develops, manufactures and markets high-tech, synthetic-based biomaterial products for use in spinal surgery. Orthovita has five key commercial product groups: VITOSS Bone Graft Substitute, VITAGEL Surgical Hemostat, CORTOSS Bone Augmentation Material, ALIQUOT Delivery System, and IMBIBE Needles, Syringes and Disposable Delivery Systems. All of its products are regulated by the U.S. Food and Drug Administration (“FDA”). CORTOSS, the product at the center of this litigation, is a glass ceramic polymeric composite engineered specifically to mimic the characteristics of human bone. According to Orthovita, CORTOSS may be used in surgical procedures to aid in the repair of bones, including the spine. Orthovita's CORTOSS trademark received federal Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 139 of 247 Orthovita, Inc. v. Erbe, Not Reported in F.Supp.2d (2008) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 2 protection on November 5, 2002 in connection with bioactive bone augmentation material. B. Dr. Erbe's Employment with Orthovita *2 Orthovita hired Dr. Erik Erbe as Director, Technical Operations on May 22, 1995. In October of 1996, Orthovita promoted him to the position of Vice President, Research and Development. Orthovita again promoted Dr. Erbe on May 1, 2002, when he became Chief Science Officer overseeing research and development for all Orthovita products, preparing patent applications, and testifying as an expert witness regarding Orthovita products. Orthovita asserts that in this role, Dr. Erbe had access to the company's research and development plans, testing procedures, and patent prosecution strategies. On April 23, 2003, Dr. Erbe entered into an employment agreement with Orthovita. See, Amended Compl., Ex. A. The agreement required Dr. Erbe to maintain the confidentiality of the company's business. It included provisions related to confidential information, intellectual property, and non-competition. In addition, the agreement required that Dr. Erbe provide Orthovita with all new ideas he had for undeveloped intellectual property. C. Behavior Prior to Dr. Erbe's Termination 2 On the weekend of April 29, 2007, Dr. Erbe called an “urgent” meeting with Charanpreet Bagga, Dr. Joshua D. Auerbach, and Dr. Philip Maurer 3 to discuss his plans for a company called Augmented Spinal Technologies (“AST”). According to Orthovita, Dr. Erbe planned to incorporate AST and use the new company to develop and/or market a bioactive bone augmentation material similar to CORTOSS in competition with Orthovita. During the meeting, Dr. Erbe showed a PowerPoint presentation that Orthovita asserts was largely copied from its corporate materials. Dr. Erbe presented a detailed plan for developing AST's business, including information about the products it will develop and market. The presentation materials used the word “CORTOSS” in relation to Dr. Erbe's description of plans regarding the development and marketing of bioactive bone augmentation material. The PowerPoint also contained images found in Orthovita's Technical Information Package about CORTOSS. Dr. Erbe then traveled to Berlin, Germany to attend a meeting, ostensibly on behalf of Orthovita. While in Germany, on May 3, 2007, Dr. Erbe met with Bess Weatherman, a director of Kyphon, Inc., a direct competitor of Orthovita. Prior to the meeting, Dr. Erbe told Ms. Weatherman that he wanted to discuss “confidential information” with her. Amended Compl. ¶ 71. During the meeting, Dr. Erbe showed Ms. Weatherman the same PowerPoint presentation. On the same trip, Dr. Erbe also met with Dr. Rudolph Bertagnoli, an orthopedic spine surgeon who serves as a consultant to Orthovita. Dr. Erbe again showed the AST PowerPoint presentation. Following his trip to Berlin, Dr. Erbe did not report to work on May 7-9 or May 11, 2007, although he went to work for a brief period on May 10. Orthovita avers that instead of working Dr. Erbe met with various potential investors and medical advisors to present the AST PowerPoint. Potential investors included Sean Carney of Warburg Pincus LLP, Richard Emmitt of The Vertical Group, and Susan Locktov and Mary Bowman, formerly of Bowman & Associates. Orthovita asserts that during meetings with these individuals, Dr. Erbe revealed Orthovita's confidential information and trade secrets with respect to CORTOSS. *3 On May 8, 2007, accordingly to Orthovita, Dr. Erbe again spoke with Dr. Auerbach. He sought information from Dr. Auerbach regarding the time line to secure intellectual property before proceeding with an anatomy study. On May 14, 2007, Dr. Erbe attended a meeting regarding Orthovita's future goals. Management analyzed and discussed CORTOSS's intellectual property, future development of CORTOSS, and steps for the development of Orthovita's intellectual property portfolio. Orthovita asserts that Dr. Erbe did not affirmatively contribute to the meeting. Following this planning meeting, Dr. Erbe indicated that he was unhappy about issues concerning royalty payments he claimed he was due and that he anticipated that the company's Board of Directors would terminate his employment at its next meeting. D. Dr. Erbe's Computer Use Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 140 of 247 Orthovita, Inc. v. Erbe, Not Reported in F.Supp.2d (2008) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 3 Orthovita asserts that unbeknownst to the company at this time, Dr. Erbe engaged in a deliberate campaign of deleting from the Orthovita computer system files used in the normal course of the company's business. Further, Orthovita alleges that between November 2006 and May 2007, Dr. Erbe inserted 13 flash drives into his company laptop computer to copy Orthovita files. By using flash drives, after his termination Dr. Erbe was able to retain on his home computer Orthovita's proprietary formula for CORTOSS, 4 development plans and strategies, and Orthovita's operating procedures relating to the development, testing and manufacture of products. While he was still a company officer, from March through May 2007, Dr. Erbe allegedly tried to hide his copying of files by deleting more than 5,500 files from his company laptop. In addition, some of the flash drives Dr. Erbe inserted into his computer were U3 Cruzer Micro USB flash drives. These drives use U3 technology, which is able to run software on computers so that once a file has been downloaded or deleted, no trace evidence/artifacts of the downloaded or deleted file will remain on the computer hard drive. After his termination, according to Orthovita, Dr. Erbe allegedly delayed returning his laptop to Orthovita. E. Dr. Erbe's Termination On May 16, 2007, Orthovita informed Dr. Erbe that his employment was terminated without cause pursuant to Section 5.4(a) of his employment agreement. See, Amended Compl., Ex. A. Because the agreement required 30 days notice prior to termination, Orthovita set the effective date for his termination as June 15, 2007. Dr. Erbe continued to receive his full pay and benefits through that date. The Amended Complaint alleges that Dr. Erbe's termination was the result of his failure to report for work May 7-9 and 11, 2007 and his lack of insight or contributions at the May 14, 2007 management meeting. Amended Compl. ¶ 51. See also, id. ¶¶ 45-53. Orthovita avers that this behavior demonstrated Dr. Erbe's alleged lack of loyalty to the company and his inappropriate preoccupation with royalty payment issues. *4 On June 15, 2007, after learning the extent of Dr. Erbe's behavior prior to his termination (i.e. the multiple meetings with competitors and potential AST investors), Orthovita sent Dr. Erbe another notice of termination informing him of his termination for cause, effective immediately. III. DISCUSSION A. Pennsylvania's Gist of the Action Doctrine Dr. Erbe asserts that Pennsylvania's gist of the action doctrine supports dismissal of Counts II-V, IX, X, XII and XIII. He maintains that each of these counts presents a state tort claim for conduct which, if proven, would violate specific provisions of the employment agreement. Therefore, according to Dr. Erbe, his alleged conduct justifies the breach of contract claim in Count I, but renders the other specific counts redundant of the basic contract claim. See, Brief in Support of Def.'s Motion to Dismiss (“Motion”) at 6. Under the gist of the action doctrine, a plaintiff is barred from recasting a breach of contract claim as a tort claim. eToll, Inc. v. Elias/Savion Adver., Inc., 811 A.2d 10, 14 (Pa.Super.Ct.2002). The gist of the action doctrine bars tort claims: (1) arising solely from a contract between the parties; (2) where the duties allegedly breached were created and grounded in the contract itself; (3) where the liability stems from a contract; or (4) where the tort claim essentially duplicates a breach of contract claim or the success of which is wholly dependent on the terms of a contract. Id. at 19 (internal citations omitted). “When a plaintiff alleges that the defendant committed a tort in the course of carrying out a contractual agreement, Pennsylvania courts examine the claim and determine whether the ‘gist’ or gravamen of it sounds in contract or tort; a tort claim is maintainable only if the contract is ‘collateral’ to conduct that is primarily tortuous.” Caudill Seed & Warehouse Co., Inc. v. Prophet 21, Inc., 123 F.Supp.2d 826, 833 (E.D.Pa.2000) (quoting Sunquest Info. Sys., Inc. v. Dean Witter Reynolds, Inc., 40 F.Supp.2d 644, Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 141 of 247 Orthovita, Inc. v. Erbe, Not Reported in F.Supp.2d (2008) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 4 651 (W.D.Pa.1999)). “[I]f the claim essentially alleges a breach of duties that flow from an agreement between the parties, the claim is contractual in nature, whereas if the duties allegedly breached were of a type imposed on members of society as a matter of social policy, the claim is essentially tort-based.” Id. (cited with approval by Wilmington Fin., Inc. v. Am. One Fin., Inc., 2007 U.S. Dist. LEXIS 55738, at *6 (E.D.Pa. July 31, 2007)). Notwithstanding the efficacy of the doctrine, a court should be slow to dismiss claims under the gist of the action doctrine. Federal civil procedure allows parties to plead multiple claims as alternative theories of liability. See, e.g., Berger & Montague v. Scott & Scott, 153 F.Supp.2d 750, 754 (E.D.Pa.2001) (rejecting a challenge under the gist of the action doctrine and allowing a plaintiff to pursue claims for both breach of contract and conversion). In fact, F.R.C.P. 8(e)(2) expressly states: *5 A party may set forth two or more statements of a claim or defense alternatively or hypothetically, either in one count or defense or in separate counts or defenses. When two or more statement are made in the alternative and one of them if made independently would be sufficient, the pleading is not made insufficient by the insufficiency of one or more of the alternative statements. A party may also state as many separate claims or defenses as the party has regardless of consistency and whether based on legal, equitable, or maritime grounds. Fed.R.Civ.P. 8(e)(2). “This permissive pleading rule has been applied to cases involving both contract claims and other claims related [to] the same facts.” Interwave Technology Inc. v. Rockwell Automation, Inc., 2005 U.S. Dist. LEXIS 37980, at *37 (E.D.Pa. December 30, 2005). Dr. Erbe's invocation of the gist of the action doctrine requires that the Court consider the theories underlying Orthovita's various claims. i. Counts II, III, IV and V-Misappropriation, Inevitable Disclosure, and Unfair Competition Dr. Erbe asserts that Counts II, III, IV and V of the Amended Complaint (common law misappropriation, statutory misappropriation, inevitable disclosure and unfair competition 5 ) are all subsumed by the parties' contractual undertaking. Dr. Erbe specifically points to paragraph 2.0 of his employment agreement, concerning “confidential information,” to support this argument. See, Amended Compl., Ex. A. Dr. Erbe notes that the contract requires him to “maintain the secrecy of Orthovita's confidential and trade secret information for a period of three years after his termination from employment.” Motion at 8. Thus, he argues that Counts II, III, IV and V all are merely variations of the contract claim that he violated paragraph 2.0 of the employment agreement. a. Common Law and Statutory Misappropriation (Counts II and III) Although Dr. Erbe argues that his duty to refrain from misappropriating trade secrets arises only through his employment contract, “Pennsylvania law ... imposes a common law duty on an employee not to use or disclose trade secrets obtained in the course of a confidential employment relationship.” Freedom Med.. Inc. v. Gillespie, 2007 U.S. Dist. LEXIS 63720, at *65 (E.D.Pa.2007). Pennsylvania law also imposes such a duty by statute, 12 Pa.C.S.A. § 5302. The Amended Complaint asserts that Dr. Erbe had “intimate” knowledge of Orthovita's inner workings and confidential strategies. See, e.g., Amended Compl. ¶ 33. At this juncture in the litigation, it is too soon to know whether the common law or statutory prohibition against misappropriation will address a broader scope of Orthovita secrets or greater duties than the contract obligation. Accordingly, when viewed in the light most favorable to Orthovita, the pleadings allege that Dr. Erbe had a confidential relationship with his former employer which, depending on the facts developed during the course of litigation, could “give rise to independent duties to refrain from disclosing or misappropriating trade secrets.” Freedom Med., 2007 U.S. Dist. LEXIS 63720, at *66 (allowing a claim for misappropriation to move forward following a challenge under the gist of the action doctrine). Therefore, the Court will not apply the gist of the action doctrine to dismiss these Counts at this time. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 142 of 247 Orthovita, Inc. v. Erbe, Not Reported in F.Supp.2d (2008) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 5 b. Inevitable Disclosure (Count IV) *6 Orthovita asserts that Dr. Erbe had access to company trade secrets as a direct result of his employment. Accordingly, the company argues that it would be impossible for Dr. Erbe to work for AST or any other biomaterials company either as a direct employee or as a consultant without drawing directly from and using his knowledge of Orthovita's confidential information and trade secrets. Hence, the claim is that he will inevitably disclose Orthovita's confidential information. Dr. Erbe asserts that his employment contract's confidentiality requirements fully protect Orthovita from any potential disclosure of the company's confidential information and trade secrets. Accordingly, Dr. Erbe seeks dismissal of Orthovita's inevitable disclosure claim under the gist of the action doctrine. The Pennsylvania Supreme Court in Air Prods. & Chems., Inc. v. Johnson, 296 Pa.Super. 405, 442 A.2d 1114, 1119-20 (Pa. Super Ct.1982), recognized that the inevitable disclosure doctrine provides for an equitable remedy and does not emanate from a tort. This equitable remedy applies when there is no restrictive covenant in place to protect a former employer's trade secrets. Id. Orthovita asserts that certain of its trade secrets are not protected by the employment contract, so the company is entitled, under Air Products & Chemicals, to invoke the inevitable disclosure doctrine to protect those trade secrets and to prevent Dr. Erbe from working or consulting with certain entities. Indeed, Orthovita points to Dr. Erbe's Motion to support its argument that it may not be fully protected by the employment agreement. In his Motion, Dr. Erbe indicates that he will contest the scope of the employment agreement. Compare, Motion at 13, n. 5 with Amended Compl. ¶¶ 22, 43. The possible reach of the agreement's purported restrictive covenant could well be one of the points of contention Dr. Erbe may raise. In addition, it is conceivable that the alleged inevitable disclosure relates to information or circumstances not covered by the employment agreement. Thus, this claim cannot be dismissed on the basis of the gist of the action doctrine at this time. ii. Count IX-Conversion Dr. Erbe argues that the conversion claim in Count IX must be dismissed under the gist of the action doctrine because the employment agreement subsumes it as well. Orthovita alleged in Count IX that Dr. Erbe “unlawfully and willfully converted for his own use Orthovita's confidential information, propriety information and trade secrets,” and that, as a result, he has realized or will realize profits from the conversion. Amended Compl. ¶¶ 191-92. Dr. Erbe asserts that “the duty to maintain confidentiality, and to refrain from disclosure of sensitive information, is imposed by the parties' contract ... preventing Plaintiff's attempt to recast the claim as one sounding in tort.” Motion at 8. When a plaintiff has a property interest in the thing that is the subject of a conversation claim, the gist of the action doctrine does not bar recovery under a conversion theory even though the property may also be the subject of a contract. See, Berger, 153 F.Supp.2d at 753-54 (holding that conversion claim was not barred when plaintiff had property interest in proceeds that were both the subject of the breach of contract and conversion claims). Orthovita has alleged that it has a property interest in its trade secrets, confidential information and computer files. That property properly can be the subject of both a breach of contract claim and a conversion claim. *7 Of course, even if the gist of the action doctrine could be used here, ultimately, the broad federal pleading possibilities allow the company to plead both causes of action as alternative theories of liability. See, Berger, 153 F.Supp.2d at 754 (“[As Rule 8(e)(2) ] allows [a plaintiff] to plead two or more alternative claims against [a defendant] for either breach of contract or conversion, regardless of their consistency, and whether based on legal, equitable or other grounds, Defendant's motion to dismiss the claim for conversion must, at this juncture, be denied.”). Accordingly, at this stage in the litigation, Orthovita may pursue the alternative claims for breach of contract and conversion. iii. Counts X and XII-Breach of Fiduciary Duty and Breach of Duty of Loyalty Dr. Erbe argues that the claims for breach of fiduciary duty (Count X) and breach of duty of loyalty (Count XII) also must be dismissed under the gist of the action doctrine. He acknowledges that “superficially, these claims rest upon alleged duties imposed by law as a matter of social policy,” but as framed in this case, Dr. Erbe emphasizes that “the breaches alleged ... are all breaches for specific duties contained in the contract.” Motion at 9. Paragraph 2.0 of the employment contract restricts the use of confidential Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 143 of 247 Orthovita, Inc. v. Erbe, Not Reported in F.Supp.2d (2008) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 6 information while paragraph 3.0 addresses Dr. Erbe's duty to refrain from competing with the company. See, Amended Compl., Ex. A. Thus, according to Dr. Erbe, breaches of the fiduciary duty and of the duty of loyalty are properly considered breaches of the employment contract. Assuming that as an officer of the company Dr. Erbe owed a fiduciary duty to his employer, 6 Orthovita asserts that the duty extends well beyond the limited obligations of the employment contract. The Third Circuit Court of Appeals held in Bohler-Uddeholm Am., Inc. v. Ellwood Group Inc., 247 F.3d 79 (3d Cir.2001), that obligations arising under a fiduciary duty are imposed “as a matter of social policy, rather than by mutual consensus.” Id. at 105. Such “larger social policies [are] embodied in the law of torts rather than the terms of the contract.” Id. Although Dr. Erbe asserts that Orthovita is seeking redress for his alleged misuse of confidential information and his supposed breach of his duty not to compete with his former employer, the Amended Complaint asserts a broader cause of action under the breach of fiduciary duty claim, including generalized harm from “acts and omissions.” Amended Compl. ¶ 201. Because the Court must view all well-pleaded allegations in the Amended Complaint in the light most favorable to Orthovita at this time, the Court finds that the gist of the breach of fiduciary duty claim is the tort ascribed to Dr. Erbe's failure to abide by the social policy embracing an employee's fiduciary duty, not the collateral (in this specific aspect of the dispute) employment contract. 7 *8 Similarly, a claim for breach of the duty of loyalty is defined by “larger social policies embodied in the law of torts.” So long as such fiduciary duties extend beyond the limits of an employment contract due to the parties' relative positions, the gist of the action doctrine will not bar a claim for breach of loyalty. See e,., Murphy v. Mid East Oil Co., 2007 WL 527715, at *6-7 (W.D.Pa. Feb.14, 2007). As an officer and agent of the company, any duty of loyalty owed by Dr. Erbe to Orthovita would flow from the parties' positions, not merely the terms of the employment contract. The gist of the action doctrine does not bar such claims. iv. Count XIII-Fraud Dr. Erbe maintains, essentially without explanation, that the Court should dismiss the fraud claim under the gist of the action doctrine. Dr. Erbe merely states that the fraud claim encompasses the same breaches of loyalty as those alleged in Counts X and XII. Orthovita argues that because Dr. Erbe fraudulently misrepresented that he remained a loyal employee, the company did not terminate his employment but continued to allow him to participate in meetings involving Orthovita's business strategy. See, Amended Compl. ¶¶ 234-35. The company alleges that Dr. Erbe affirmatively took steps to hide his plot to steal Orthovita's secrets and proprietary information, thus deliberately harming the company. Id. ¶ 44. Pennsylvania courts “generally invoke the gist of the action doctrine to bar a tort claim where the defendant has negligently or intentionally breached a contract.” Greater Philadelphia Health Servs. II Corp. v. Complete Care Servs., L.P., 2000 WL 33711052, at *2 (Pa.Com.Pl. Nov.20, 2000). However, courts have not invoked the doctrine to bar tort suits “when the defendant not only breached the contract, but also made representations about the breach with the intent to deceive the plaintiff, such that the unsuspecting plaintiff continued the contractual relationship or failed to assert its contractual rights against the defendant.” Id. See also, Am. Guarantee & Liab. Ins. Co. v. Fojanini, 90 F.Supp.2d 615, 623 (E.D.Pa.2000) (holding that plaintiffs' fraud claim was not barred by the gist of the action doctrine because plaintiffs “were duped into spending large amounts of time and energy on [defendant's] behalf in reliance upon representations made by [defendant] that [it] had its financial house in order.”); Northeastern Power Co. v. Balcke-Durr, Inc., 1999 U.S. Dist. LEXIS 13437, *37 (E.D.Pa.1999) (holding that the gist of the action doctrine does not bar plaintiff's tort claim because the fraud claim went beyond mere failure to perform under the contract and asserted that defendant made “specific promises and representations that were allegedly made knowingly and/or recklessly with the intent to deceive and defraud [the plaintiff]”). Because Orthovita expressly asserts that Dr. Erbe made misrepresentations which resulted in his continued employment and access to proprietary information, such facts, if proven, are analytically separate from the breach of the contract claim itself. 8 Orthovita's fraud claim against Dr. Erbe reaches beyond the bounds of the employment contract and will not be dismissed on the basis of the gist of the action doctrine. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 144 of 247 Orthovita, Inc. v. Erbe, Not Reported in F.Supp.2d (2008) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 7 B. Counts II, III, IV and V-Misappropriation of Trade Secrets, Inevitable Disclosure, and Unfair Competition *9 Dr. Erbe asserts that even if they survive application of the gist of the action doctrine, Orthovita's claims for misappropriation of trade secrets, inevitable disclosure, and unfair competition should be dismissed as non-viable. Dr. Erbe first argues that the common law and statutory misappropriation claims must be dismissed because Orthovita asserts that Dr. Erbe disclosed trade secrets “to AST,” but, as Dr. Erbe notes, even Orthovita admits that AST is not yet a legal entity. See, Amended Compl. ¶ 57. However, Dr. Erbe neglects to address Orthovita's allegations that he disclosed trade secrets to potential AST consultants and investors. Accordingly, even if Dr. Erbe could not have revealed information to a non-existent entity, he still could have misappropriated Orthovita information to reveal it to the individuals outside of Orthovita as identified in the Amended Complaint. Dr. Erbe next argues that the Court should dismiss these counts because they lack specific supporting facts. Dr. Erbe seeks to invoke Bell Atlantic Corp., et. al. v. Twombly, et. al., --- U.S. ----, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), a case concerning alleged Sherman Act violations in which the Supreme Court adopted a pleading standard to require that a complaint allege facts plausibly suggesting the existence of prohibited conduct, not merely consistent with such alleged conduct. Id. at 1966. A formulaic recitation of the elements of a cause of action is not sufficient under this standard. Id. In addition, Dr. Erbe again asserts that “no disclosure of trade secrets has taken place, as the only person or entity alleged to have received such disclosures is AST, an entity admitted not to exist.” Motion at 12. Thus, he again neglects to address the allegations that he revealed confidential information to specific individuals in preparation for the incorporation and development of AST. Orthovita disputes the applicability of Twombly. Indeed, while Twombly arguably raises the specificity standard for certain types of pleadings, it remains to be seen whether heightened pleading requirements will be demanded beyond the reach of the causes of action specifically at issue in Twombly. At least one court in the wake of Twombly, when deciding whether a plaintiff has properly pled a claim for misappropriation of trade secrets, has continued to apply the same notice pleading standard for misappropriation claims rather than to require greater specificity. See, Givemepower Corp. v. Pace Compumetrics, Inc., 2007 U.S. Dist. LEXIS 59371, at *26 (S.D.Cal. Aug. 14, 2007) (finding that a plaintiff properly pled misappropriation claim and recognizing that so long as the complaint describes “the trade secret with sufficient particularity to separate it from matters of general knowledge ... and to permit the defendant to ascertain at least the boundaries within which the secret lies ..., one who seeks to protect his trade secrets from wrongful use or disclosure does not have to spell out the details of the trade secret to avoid a demurrer to a complaint.”) (internal citations omitted). Without commenting upon the possible propriety of applying Twombly beyond Sherman Act cases, the Court sees particularly cautionary reasons for declining to apply it here. As Orthovita argues, a plaintiff alleging misappropriation of trade secrets need not plead the details of its trade secrets in a publicly filed complaint, inasmuch as such disclosure would destroy the essential “secrecy” of the claimed trade secret. “[C]ourts are in general agreement that trade secrets need not be disclosed in detail in a complaint alleging misappropriation for the simple reason that such a requirement would result in public disclosure of the purported trade secrets.” Pennfield Precision, Inc. v. EF Precision, Inc., 2000 U.S. Dist. LEXIS 11971, at *10 (E.D.Pa. Aug. 15, 2000) (denying motion to dismiss trade secrets claim). *10 Using conventional pre-Twombly analysis, Orthovita also asserts that it has sufficiently pled the trade secrets at issue to survive a motion to dismiss these claims, as well as the inevitable disclosure claim and unfair competition claim. Orthovita has alleged that Dr. Erbe provided confidential information and trade secrets related to CORTOSS to potential AST investors during a series of presentations. See, Amended Compl. ¶¶ 54, 59, 60-65, 70-76, 79-80, 99-101. In addition, the company asserts that many of these potential investors are associated with Orthovita's direct competitors. Id. ¶¶ 65-66, 68, 71. Accordingly, the Court finds that Orthovita has met its threshold of pleading what types of trade secrets were revealed and to whom, thus meeting the applicable pleading requirements. Dr. Erbe makes a final argument aimed at the dismissal of Orthovita's inevitable disclosure claim. He asserts that while Orthovita's repetition of the term “inevitable” may, at first glance, argue against dismissal at this time, in actuality, alleged inevitability is not sufficient to survive dismissal. The Amended Complaint does not allege that Dr. Erbe actually has taken employment with any competitor of Orthovita and does not allege what, if any, trade secret information Dr. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 145 of 247 Orthovita, Inc. v. Erbe, Not Reported in F.Supp.2d (2008) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 8 Erbe is believed to have misappropriated. Accordingly, the Court perceives that what Dr. Erbe is arguing is that without some plausible, identifiable link to future conduct, empty allegations of inevitable disclosure should not survive. If this is what Dr. Erbe argues, on the surface there is much to recommend his logic. However, Orthovita responds by noting that at this stage, the Court must take all of its allegations as true and thus may not rely solely on the absence of an allegation that Dr. Erbe is now actively employed with a competing company to dismiss the claim. Orthovita asserts that under the inevitable disclosure doctrine it is entitled to bring claims to ensure that Dr. Erbe is unable to follow through on what might now only be a mere plan for an unincorporated entity. Under the inevitable disclosure doctrine, a former employer is entitled to enjoin even anticipated employment or other business activity that would result in inevitable disclosure in order to protect the former employer's confidential and proprietary information from disclosure. See generally, Air Prods. And Chems ., Inc. v. Johnson, 296 Pa.Super. 405, 442 A.2d 1114, 1119-20 (Pa.Super.Ct.1982) (cited with approval by Sweetzl, Inc. v. Hawk Hill Cookies, 1995 U.S. Dist. LEXIS 13495, at *37-38 (E.D.Pa.1995)). Essentially, Orthovita is arguing that it should not have to wait for the fleeting moment in time when its ex-employee has signed on to a competitor's roster but before actual disclosure has taken place to file a claim because the “inevitable disclosure” cause of action exists so that the vulnerable ex- employer need not be so precariously poised and may file suit earlier in the sequence of likely inevitable events. At least at this juncture, the Court agrees, and Orthovita's claim for inevitable disclosure survives. *11 As for Orthovita's claim for unfair competition, neither Dr. Erbe nor Orthovita addresses the legal requirements of such a claim. In the Amended Complaint, Orthovita alleges that Dr. Erbe “wrongly and unfairly competed with Orthovita by creating AST while still employed by Orthovita, revealing Orthovita's trade secrets and proprietary information to AST and potential consultants for AST and investors in AST, and diverting corporate opportunities to AST while employed by Orthovita.” ¶ 148. “If Dr. Erbe is permitted to own and operate AST, or own, operate, consult or work for any other biomaterials business, Orthovita will suffer irreparable injury that can only be avoided by enjoining” Dr. Erbe from conducting such activities. Id. ¶ 152. As far as the Court can discern, these quoted allegations form the upshot of the unfair competition claim. “A claim of unfair competition under Pennsylvania law requires proof that the defendant has ‘passed off’ the goods of one manufacturer or vendor as those of another, thus creating confusion between his own goods, and those of the rival.” Scanvec Amiable, Ltd. v. Chang, 8 Fed. Appx. 171, 180 (3d Cir.2003) (citing 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 that of another”)). The “underlying principle of law of unfair competition is to prevent substitution by deception.” Winthrop Chemical Co. v. Weinberg, 60 F.2d 461, 463 (3d Cir.1932). Accordingly, the “law of unfair competition also requires that a company, entering a field already occupied by a rival of established reputation, ‘must do nothing which will unnecessarily create or increase confusion between his goods or business and the goods or business of the rival .’ ” Penn. State Univ., 706 A.2d at 870-871 (quoting Gamlen Chemical Co. v. Gamlen, 79 F.Supp. 622, 636 (W.D.Pa.1948)). 9 In Count V of the Amended Complaint, by which Orthovita brings its unfair competition claim, Orthovita does not accuse Dr. Erbe of passing its goods off as his own or fostering confusion between his goods and those of his former employer. 10 Orthovita simply accuses Dr. Erbe of misappropriation and misuse of its trade secrets and other confidential information. Accordingly, Orthovita has failed to proffer allegations in the Amended Complaint sufficient to warrant relief for unfair competition under even the most generous reading of the Count that is meant to articulate that claim. Therefore, Orthovita's claims for misappropriation of trade secrets and inevitable disclosure survive dismissal at this time. Orthovita's claim for unfair competition is dismissed without prejudice should Orthovita properly seek leave to amend that Count. C. Counts VI and VII-Trademark Infringement and Violation of § 32 of the Lanham Act Dr. Erbe argues that Orthovita's trademark infringement claims must be dismissed because Orthovita has not alleged that AST has developed any products, much less that it is marketing such products. In addition, Dr. Erbe claims that Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 146 of 247 Orthovita, Inc. v. Erbe, Not Reported in F.Supp.2d (2008) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 9 Orthovita's allegations regarding the AST PowerPoint 11 presentation demonstrate that any use of the CORTOSS name in the document does not infringe on Orthovita's trademark because the use does not cause likelihood of confusion and does not contain a false description of the origin of any product. See, Motion at 14. *12 Orthovita asserts that Dr. Erbe's use of the trademark CORTOSS in the AST PowerPoint presentation violated trademark law, specifically 15 U.S.C. § 1125. See, Amended Compl. ¶ 154. In addition, Orthovita alleges that Dr. Erbe “used an exact copy or colorable imitation of the mark CORTOSS in connection with the sale, offering for sale, distribution and/or advertising of his products and services, which is likely to cause confusion, mistake and/or deceive members of the public in violation of 15 U.S.C. § 1114.” Amended Compl. ¶ 177. Longstanding conventional case law holds that the essence of a trademark infringement claim is the passing off of the goods of one as those of another. See, Am. Steel Foundries v. Robertson, 269 U.S. 372, 46 S.Ct. 160, 70 L.Ed. 317 (1925). The elements necessary to establish Orthovita's claims under Sections 1114 and 1125 of the Lanham Act are similar. See, A & H Sportwear, Inc. v. Victoria's Secret Stores, Inc., 237 F.3d 198, 210 (3d Cir.2000). Pursuant to 15 U.S.C. § 1114, “[t]o prove a trademark infringement, a plaintiff must show that: (1) the mark is valid and legally protectable; (2) the mark is owned by the plaintiff; and (3) the defendant's use of the mark to identify goods or services is likely to create confusion concerning the origin of the goods or services.” Fisions Horticulture, Inc. v. Vigoro Industries, Inc., 30 F.3d 466, 472 (3d Cir.1994). Under 15 U.S.C. § 1125(a), a plaintiff must show that (1) the mark is valid, legally protectable and owned by the plaintiff, and (2) the defendant's use of the mark to identify goods or services causes a likelihood of confusion concerning the origin of the goods or services. See, 15 U.S.C. § 1125(a). Dr. Erbe asserts that Orthovita makes only one specific allegation regarding the PowerPoint presentation: that he showed the presentation “to investors and potential investors and other medical advisors.” See, Amended Compl. ¶ 65. Accordingly, Dr. Erbe argues that there is no allegation that the PowerPoint presentation has been used to market any products, so it is implausible that any potential investors were likely to be confused as to the origin of goods which did not yet exist. Dr. Erbe argues that Counts VI and VII should be dismissed because “it is exceedingly implausible” that investors to whom he made his AST PowerPoint presentations about CORTOSS were “likely to be confused.” Motion at 15. However, he does not further elaborate. In response, Orthovita notes that Dr. Erbe “does not challenge the fact that Orthovita has specifically alleged that it owns the CORTOSS mark, that the CORTOSS mark is valid and legally protectable, or that [Dr.] Erbe in fact used the CORTOSS mark in connection with a PowerPoint presentation to potential investors for a start-up competitive entity, AST.” Opposition at 16. Assuming these allegations and all reasonable inferences arising therefrom as true, Orthovita urges the Court to find that Dr. “Erbe used the CORTOSS mark without Orthovita's permission 1) in connection with the ‘offering for sale’ and ‘advertising’ of goods (in satisfaction of 15 U.S.C. § 1114); and 2) ‘in connection” with goods in commerce (in satisfaction of 15 U.S.C. § 1125).” Id. See, BIEC Int'l, Inc. v. Global Steel Servs., Ltd., 791 F.Supp. 489, 537-38 (E.D.Pa.1992) (“the Lanham Act explicitly prohibits [a defendant] from suggesting that its clients can pass their products off as what has become known in the industry [under a trademark].”); Software Publishers Assoc. v. Scott & Scott, LLP, 2007 U.S. Dist. LEXIS 2666, at *22 (N.D.Tex. Jan. 11, 2007) (use of mark in connection with business “for purposes of trading upon the goodwill” of mark is sufficient allegation of use in commerce to withstand a motion to dismiss). *13 The law does not require as a prerequisite to trademark infringement that goods already have been manufactured. Section 1114 prohibits unauthorized use of a registered trademark “in connection with the sale, offering for sale, distribution, or advertising of goods or services.” 15 U.S.C. § 1114. Therefore, “[a]n offering to sell without more will suffice to establish liability.” Levi Strauss & Co. v. Shilon, 121 F.3d 1309, 1312 (9th Cir.1997). In fact, in Levi Strauss, the court upheld an injunction even where there was insufficient evidence to prove any goods had yet been produced or sold. Id. See also, Vuitton Et Fils S.A. v. Crown Handbags, 492 F.Supp. 1071, 1077 (S.D.N.Y.1979) (because of possibility of injury to plaintiff, injunction is appropriate even if defendant has not yet sold any infringing goods) . Orthovita directs the Court to the BIEC case where the defendants left their former employer to form a competing entity that advertised the flag-ship product of their former employer in an effort to mislead consumers about the Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 147 of 247 Orthovita, Inc. v. Erbe, Not Reported in F.Supp.2d (2008) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 10 source of that product. 791 F.Supp. at 534-37. Instead of suggesting that they could manufacture a product like that of their former employer, the defendants asserted they could manufacture the exact product. Id. at 537. The defendants distributed the promotional materials only weeks after leaving the plaintiff company's employ and well before they had the opportunity to manufacture any products. Id. The BIEC court found that the misleading references to the former employer's product warranted a preliminary injunction. Id. at 538. Orthovita argues that it is not unreasonable to assume that presentations asserting that Dr. Erbe was authorized to sell CORTOSS or a CORTOSS-like product were certainly likely to confuse viewers. “There is nothing inherently implausible about the Chief Science Officer ... of a company claiming to have the right to sell a product offered by his company. Nor is it inherently implausible that a departing Chief Science Officer might have the blessing of his former employer to promote one of his former employer's products .” Opposition at 18-19. To believe Dr. Erbe's attack on the claim is to presume that the viewers of his presentation could not be confused about the “origin, source, sponsorship or approval of Erbe's bioactive bone augmentation materials.” Id. at 19. Because at this stage in the litigation the Court must take as true all well-pleaded allegations, the Court will not substitute its own evaluation of the presentation or opine as to whether someone may or may not have been confused. The plausibility or implausibility of these conclusions will surely be determined or at least aided by discovery. Accordingly, as to the question of whether there are a set of facts under which relief could be granted to Orthovita for the trademark claims, the Court finds that there are. D. Count VIII-Promissory Estoppel *14 Dr. Erbe asserts that the Court must dismiss Orthovita's promissory estoppel claim because Orthovita has pled a breach of contract claim that seeks the same relief. Count I of the Amended Complaint asserts a claim for breach of contract and incorporates Exhibit A, a copy of the written employment contract between Orthovita and Dr. Erbe. See, Motion at 15. Through the doctrine of promissory estoppel, a promise that is not supported by consideration may be enforced by the courts to “remedy a manifest injustice.” Cardamone v. University of Pittsburgh, 253 Pa.Super. 65, 384 A.2d 1228, 1233 (Pa.Super.Ct.1978). Promissory estoppel should not be used to supplement or modify a written, enforceable contract. The doctrine applies in situations where parties failed to satisfy the “formal requirements of contract formation ... and where justice would be served by enforcing a promise.” Carlson v. Arnot-Ogden Memorial Hosp., 918 F.2d 411, 416 (3rd Cir.1990). Logically, a promissory estoppel claim can proceed only where a contract is absent. Iverson Baking Co., Inc. v. Weston Foods, Ltd., 874 F.Supp. 96, 102 (E.D.Pa.1995) (“[I]f the courts finds that a contract exists, the promissory estoppel claim must fail.”) When parties have formed an enforceable contract, “relief under a promissory estoppel claim is unwarranted.” Carlson v. Arnot-Ogden Memorial Hosp., 918 F.2d 411, 416 (3d Cir.1990). However, it is permissible to plead breach of contract and promissory estoppel in the alternative. See, MLEA, Inc. v. Atl. Recycled Rubber, Inc., 2005 U.S. Dist. LEXIS 42260, at *12 (E.D.Pa. May 19, 2005). Thus, the promissory estoppel claim must fail only if and when the court finds that a valid contract exists. Id. Orthovita certainly has pleaded the existence of an employment agreement, and at oral argument this counsel explained candidly that Dr. Erbe does not deny its existence. On this basis, and assuming no issues contrary to these fundamental facts, the promissory estoppel claim likely will not survive. See, Lim v. New York Life Insur. Co., 1998 U.S. Dist. LEXIS 318, at *3 (E.D.Pa. January 13, 1998) (holding that a promissory estoppel claim could not survive a motion to dismiss where a plaintiff plead the existence of a contract, and the defendant did not deny its existence). However, Dr. Erbe has expressed in his motion papers an intent to challenge the scope of the employment contract. 12 The Court also notes that Dr. Erbe has not yet answered the Amended Complaint or raised whatever affirmative defenses he intends. Accordingly, the contract may not provide for all promises at issue in this case. See, Kraus Indust. v. Moore, 2007 U.S. Dist. LEXIS 68869, at *25 (E.D.Pa. September 18, 2007) (the existence of a contract will not bar a promissory estoppel claim “when the alleged promise is distinct from the original contract” (citation omitted)). Because it is permissible to plead breach of contract and promissory estoppel in the alternative, and it is not yet ascertainable whether the parties agree on the scope of the employment contract or the contours of the parties' dispute, the promissory estoppel claim survives dismissal. E. Count X-Breach of Fiduciary Duty Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 148 of 247 Orthovita, Inc. v. Erbe, Not Reported in F.Supp.2d (2008) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 11 *15 Orthovita asserts that Dr. Erbe breached his fiduciary duty to the company while acting as an officer and an agent of Orthovita. Amended Compl. ¶ 39. Dr. Erbe counters that the Court should dismiss the breach of fiduciary duty claim (Count X) because Pennsylvania law does not strictly impose a fiduciary duty on corporate officers or employees, but rather imposes such a duty only on corporate directors. (Motion at 16-17.) In support of his position, Dr. Erbe cites Pennsylvania Business Corporation Law, 15 Pa.C.S. § 512, which sets forth the relative, but arguably different, duties of corporate officers and directors under Pennsylvania law. As for the duties for directors and officers, the statute provides as follows: § 512 Standard of care and justifiable reliance (a) DIRECTORS.-A director of a domestic corporation shall stand in a fiduciary relation to the corporation and shall perform his duties as a director ... in good faith ... and with such care ... as a person of ordinary prudence would use under similar circumstances. * * * (c) OFFICERS.-Except as otherwise provided in the articles, an officer shall perform his duties as an officer in good faith, in a manner he reasonably believes to be in the best interests of the corporation and with such care, including reasonable inquiry, skill and diligence, as a person of ordinary prudence would use under similar circumstances.... 15 Pa.C.S. §§ 512(a), (c). Orthovita quotes a portion of the “Fiduciary Duty” section of the Chapter of Domestic Business Corporations Law relating to “Officers, Directors and Shareholders,” 15 Pa.C.S. § 1712, in an attempt to challenge Dr. Erbe's position. That section reads: Officers.-Except as otherwise provided in the bylaws, an officer shall perform his duties as an officer in good faith, in a manner he reasonably believes to be in the best interests of the corporation and with such care, including reasonable inquiry, skill and diligence, as a person of ordinary prudence would use under similar circumstances. A person who so performs his duties shall not be liable by reason of having been an officer of the corporation . Id. This quoted portion, which concerns officers, uses nearly identical language to that found in 15 Pa.C.S. § 512, and thus lacks any direct mention of a “fiduciary relationship.” Orthovita did not include the portion of the statute regarding directors, which also uses nearly identical language as that in 15 Pa.C.S. § 512, and thus does include the phrase “fiduciary relationship. Pennsylvania courts have explained that 15 Pa.C.S. § 1712(a) “imposes a fiduciary duty on a corporate director while Section 1712(c) provides that a corporate officer must act ‘in good faith.’ ” Santoro v. Morse, 781 A.2d 1220, 1231 (Pa.Super.Ct.2001). See also, Village of Camelback Property Owners Assoc., Inc. v. Carr, 371 Pa.Super. 371 Pa.Super. 452, 538 A.2d 528, 536 (Pa.Super.1988). *16 Nonetheless, Orthovita endeavors to bolster its position by citation to Seaboard Indus., Inc. v. Monaco, 442 Pa. 256, 276 A.2d 305, 308 (Pa.1971) (“The controlling principles of equity are well settled. Officers and directors of a corporation are deemed to stand in a fiduciary relation to the corporation.”). However, Seaboard deals with another section of Pennsylvania law entirely, namely, 15 P.S. § 1408, which is no longer Pennsylvania law. Dr. Erbe, as an officer who is not a director of the corporation, had no fiduciary duty to Orthovita under Pennsylvania law. Accordingly, Orthovita's claim in its Amended Complaint for breach of fiduciary duty is not a claim upon which relief could be granted. IV. CONCLUSION For the reasons set forth above, the Court denies the Motion to Dismiss as to Counts II-IV, VI-VIII, IX, and XII-XIII, grants the Motion as to Count X (Breach of Fiduciary Duty) and grants the Motion as to Count V (unfair competition), all as set forth above. An appropriate Order consistent with this Memorandum follows. ORDER AND NOW, this 14th day of February 2008, upon consideration of Defendant's Motion to Dismiss (Docket No. 22), Defendant's Brief in Support of the Motion to Dismiss (Docket No. 23), and Plaintiff's Response in Opposition (Docket No. 26), as set forth in Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 149 of 247 Orthovita, Inc. v. Erbe, Not Reported in F.Supp.2d (2008) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 12 the accompanying Memorandum, IT IS HEREBY ORDERED that the Motion is GRANTED as to Count X (breach of fiduciary duty), GRANTED as to Count V (unfair competition), and DENIED as to Counts II-IV, VI- VIII, IX, and XII-XIII. All Citations Not Reported in F.Supp.2d, 2008 WL 423446 Footnotes 1 The array of claims is as follows: breach of contract (Count I), misappropriate of trade secrets-common law (Count II), misappropriation of trade secrets-12 Pa.C.S.A. § 5302 (Count III), inevitable disclosure (Count IV), unfair competition (Count V), trademark infringement-15 U.S.C. § 1125 (Count VI), violation of § 32 of the Lanham Act-15 U.S.C. § 1114 (Count VII), promissory estoppel (Count VIII), conversion (Count IX), breach of fiduciary duty (Count X), violation of the Computer Fraud and Abuse Act-18 U.S.C. § 1030 (Count XI), breach of duty of loyalty (Count XII), and fraud (Count XIII). 2 Orthovita asserts that the initial decision to terminate Dr. Erbe's employment was based on his lack of loyalty to the company as demonstrated by his repeatedly missing work in May 2007, his failure to affirmatively contribute to a May 14, 2007 management meeting, and his preoccupation with royalty payments. Orthovita discovered Dr. Erbe's additional alleged disloyal activities (i.e. alleged meetings with representatives from competitors and potential AST investors) after giving him 30 days' notice as called for under his employment contract. 3 Mr. Bagga is Orthovita's former Vice President of Product Development. He worked on the development of CORTOSS and ALIQUOT products. Drs. Auerbach and Mauer are orthopedic spine surgeons who serve as consultants to Orthovita and assist with product development. 4 According to Orthovita, this formula is not in the public domain. 5 The Court does not analyze the unfair competition claim under the gist of the action doctrine because the Court has concluded that Count V fails to state a claim under even the most generous reading of Orthovita's pleading. See, infra § III.B. 6 See, infra, § III.E. 7 But see, infra § III.E. 8 Dr. Erbe has cited Interwave Tech. Inc. v. Rockwell Automation, Inc., 2005 U.S. Dist. LEXIS 37980 (E.D.Pa.2005). That case dealt with both fraud in the inducement of a contract and fraud that expressly overlapped a breach of contract claim. Accordingly, the Court held that “for purposes of the motion to dismiss, the plaintiff must allege facts in the complaint that if proven, would amount to fraud in the inducement to enter into the contract, with such facts being analytically separable from allegations of breaches in the performance of the contract.” Id. at *40. In this case, as in Interwave, the fraud claim reaches beyond the confines of mere breach of contract (ever so slightly) due to Dr. Erbe's alleged fraudulent representations about his breach of the contract. Accordingly, this claim can survive dismissal under the gist of the action doctrine, even as defined by the strict limitations of Interwave. 9 As has been alluded to above, Orthovita has presented no evidence that AST is an independent business entity rather than simply Dr. Erbe's idea. In fact, Orthovita admits in its Amended Complaint that Dr. Erbe merely “plans to incorporate an entity called Augmented Spinal Technologies (“AST”).” Amended Compl. ¶ 57. Accordingly, AST cannot yet be considered a company entering the field already occupied by Orthovita. 10 Orthovita makes such allegations only in relation to its trademark infringement claims (Counts VI and VII). If Orthovita wishes to pursue a claim for unfair competition based on Dr. Erbe allegedly using the Orthovita or CORTOSS names in such a manner “that people in the trade of the purchasing public perceive[d] the word or name as standing for the business of a particular company,” see, Penn. State Univ., 706 A.2d at 871, then Orthovita would need to amend Count V to support such a reading of its unfair competition claim. As stated currently, Orthovita's unfair competition claim fails to support such a reading. 11 Dr. Erbe requested that the Court consider the contents of the AST PowerPoint presentation slides when ruling on the Motion to Dismiss. Orthovita did not attach the PowerPoint slides to the Amended Complaint (Docket No. 19), however, and Dr. Erbe did not attach it to his Motion. In fact, the PowerPoint slides were attached only to Orthovita's June 14, 2007 Motion for Leave to File Complaint and Other Documents under Seal (Docket No. 2). It is well settled that “a district court ruling on a motion to dismiss may not consider matters extraneous to the pleadings.” In re Burlington Coat Factory Sex. Litig., 114 F.3d 1410 1426 (3d Cir.1997) (citations omitted). Accordingly, the Court did not consider the contents of the AST PowerPoint. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 150 of 247 Orthovita, Inc. v. Erbe, Not Reported in F.Supp.2d (2008) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 13 12 See, Motion at 13 n. 5. End of Document © 2017 Thomson Reuters. No claim to original U.S. Government Works. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 151 of 247 EXHIBIT P Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 152 of 247 Parks Miller v. Cantorna, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 1 2016 WL 2752633 Only the Westlaw citation is currently available. United States District Court, M.D. Pennsylvania. Stacy Parks Miller, Plaintiff, v. Bernard Cantorna, et. al., Defendants. Case No. 4:15-CV-1754 | Signed 05/11/2016 Attorneys and Law Firms Bruce L. Castor, Jr., Lance Rogers, Rogers Castor, Ardmore, PA, for Plaintiff. Mary Lou Maierhofer, Margolis Edelstein, Hollidaysburg, PA, Kathleen V. Yurchak, Goodall & Yurchak, P.C., Philip M. Masorti, Stephanie G. Vanhorn, Masorti Law Group, PC, State College, PA, J. Timothy Hinton, Haggerty, McDonnell & O'Brien, Scranton, PA, Jacob C. Cohn, Gordon & Rees, Philadelphia, PA, Jarad W. Handelman, Elliott Greenleaf, P.C., Harrisburg, PA, for Defendants. MEMORANDUM OPINION Matthew W. Brann, United States District Judge I. BACKGROUND *1 On August 25, 2015, the current District Attorney of Centre County, Stacy Parks Miller, hereinafter “Parks Miller,” filed a thirteen count complaint against twelve defendants in the Court of Common Pleas of that county. It was removed to this Court two weeks later. In response to the motions to dismiss filed by all Defendants, Parks Miller filed an amended complaint. 1 All of the various defendants next filed motions to dismiss the amended complaint. This Memorandum Opinion deals with the motion filed by Defendant Bernard Cantorna, hereinafter “Cantorna,” an attorney practicing in Centre County. The motion has been fully briefed, and I held oral argument on the motions on March 3, 2016. The matter is now ripe for disposition. For the reasons that follow, I will grant the motion in its entirety. II. DISCUSSION a. Motion to Dismiss Standard of Review Under Federal Rule of Civil Procedure 12(b)(6), a defendant may file a motion to dismiss for “failure to state a claim upon which relief can be granted.” Such a motion “tests the legal sufficiency of a pleading” and “streamlines litigation by dispensing with needless discovery and factfinding.” 2 “Rule 12(b)(6) authorizes a court to dismiss a claim on the basis of a dispositive issue of law.” 3 This is true of any claim, “without regard to whether it is based on an outlandish legal theory or on a close but ultimately unavailing one.” 4 Beginning in 2007, the Supreme Court of the United States initiated what some scholars have termed the Roberts Court's “civil procedure revival” by significantly tightening the standard that district courts must apply to 12(b)(6) motions. 5 In two landmark decisions, Bell Atlantic Corporation v. Twombly and Ashcroft v. Iqbal, the Roberts Court “changed... the pleading landscape” by “signal[ing] to lower-court judges that the stricter approach some had been taking was appropriate under the Federal Rules.” 6 More specifically, the Court in these two decisions “retired” the lenient “no-set-of-facts test” set forth in Conley v. Gibson and replaced it with a more exacting “plausibility” standard. 7 Accordingly, after Twombly and Iqbal, “[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.' +” 8 “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” 9 “Although the plausibility standard does not impose a probability requirement, it does require a pleading to show more than a sheer possibility that a defendant has acted unlawfully.” 10 Moreover, “[a]sking for plausible grounds...calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of [wrongdoing].” 11 Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 153 of 247 Parks Miller v. Cantorna, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 2 *2 The plausibility determination is “a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” 12 No matter the context, however, “[w]here a complaint pleads facts that are 'merely consistent with' a defendant's liability, it 'stops short of the line between possibility and plausibility of entitlement to relief.' +” 13 When disposing of a motion to dismiss, a court must “accept as true all factual allegations in the complaint and draw all inferences from the facts alleged in the light most favorable to [the plaintiff].” 14 However, “the tenet that a court must accept as true all of the allegations contained in the complaint is inapplicable to legal conclusions.” 15 “After Iqbal, it is clear that conclusory or 'bare-bones' allegations will no longer survive a motion to dismiss.” 16 “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” 17 As a matter of procedure, the United States Court of Appeals for the Third Circuit has instructed that: Under the pleading regime established by Twombly and Iqbal, a court reviewing the sufficiency of a complaint must take three steps. First, it must tak[e] note of the elements [the] plaintiff must plead to state a claim. Second, it should identify allegations that, because they are no more than conclusions, are not entitled to the assumption of truth. Finally, [w]hen there are well- pleaded factual allegations, [the] court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief. 18 b. Facts Alleged in the Amended Complaint The procedural dictate when faced with a motion to dismiss is that the court is to accept the facts alleged as true. “Rule 12(b)(6) does not countenance...dismissals based on a judge's disbelief of a complaint's factual allegations.” 19 However, courts “are not bound to accept as true a legal conclusion couched as a factual allegation.” 20 That said, the following is a recitation of the allegations according to Parks Miller. Parks Miller has been District Attorney of Centre County since 2009. During the pendency of an investigation of an inmate allegedly attempting to contract someone to murder one of the assistant district attorneys in the office, Parks Miller, together with defense counsel for a second inmate, acting as a prison informant, devised a plan to move the informant to another prison as part of the investigation into the murder attempt. Parks Miller and the informant's defense counsel decided that they needed what the parties alternately and curiously refer to as a “pretend” or “fake” order granting the informant release on bail. Another defendant in this civil matter, a former employee of Parks Miller, accused Parks Miller of forging the signature of Judge Pamela Ruest on the pretend bail order. A grand jury investigation against Parks Miller was ultimately undertaken. The grand jury in due course cleared Parks Miller of wrongdoing. *3 The following paragraphs from the amended complaint comprise the allegations against Defendant Bernard Cantorna. ¶16 Defendant Cantorna is a close confidant of Centre County Solicitor Glantz. They are business partners and have shared the same office space for many years. ¶17 In September of 2013, Attorney Cantorna served as defense counsel for an aggravated child abuse case, prosecuted personally by District Attorney Parks Miller on behalf of the Commonwealth and the people of Centre County. ¶18 Cantorna's so-called child abuse experts performed so poorly on cross-examination that the last purported expert left without permission before testifying, having watched the skill demonstrated by a relentless District Attorney Parks Miller in front of the jury. ¶20 In retaliation for his defeat, defendant Cantorna began filing document with actual malice and a reckless disregard for the truth, and initiated an/or advanced a false, defamatory, and unethical attack against District Attorney Parks Miller. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 154 of 247 Parks Miller v. Cantorna, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 3 ¶21 All of this was intended and motivated as retribution for her doing her job resulting in the conviction of Cantorna's child-abusing client. ¶97 The scheme [the accusation of forgery by the former employee] brought about through Defendant Cantorna's dual relationships with the Lawyer Defendants, and the County Solicitor, Defendant Louis Glantz, chief legal advisor to the County Commissioners, and the County Administrator, Defendant Timothy Boyde. ¶111 At a January 20, 2015 Commissioners meeting, Bernard Cantorna, Esq., a close friend, business partner, and office suit-mate to solicitor Glantz appeared at a public meeting of the Centre County Commissioners covered by the press along with Defendant Andrew Shubin, posing as a member of the “concerned public,” and he, Solicitor Glantz, and other Defendants lied to the public by definitively stating “for sure” that there was no investigation underway into the alleged forgery, when the matter had already been referred to by the DA herself, and accepted by the OAG. (emphasis in original) ¶114 For example, the following quotes were taken from a January 21, 2015 article printed in The Progress News, entitled “Centre Co. DA accused of forgery”:… C. Defendant Cantorna orally republished the false criminal accusations of Defendants Shutt and Masorti: Cantorna said he learned a former paralegal from the DA's office has executed an affidavit accusing Parks Miller of actions that constitute at least one felony and one misdemeanor criminal offense. “As I understand it, these allegations have been filed with the Bellefonte Police Department and accuse District Attorney Stacy Parks Miller of forging Judge Pamela A. Ruest's signature and filing that forged document with the Prothonotary in the official court file,” Cantorna said. “I am enclosing with this letter, an affidavit of your former employee. I am aware there are emails which appear to confirm the filing of a false document with the Prothonotary and confirm Ms. Parks Miller's direction of these activities.” Cantorna asked the commissioner to take a stand and do something, and to have a special prosecutor investigate the allegations. After a lengthy discussion, the commissioners voted 3-0 to do just that. *4 “Generally, consideration of a motion to dismiss under Rule 12(b)(6) is limited to consideration of the complaint itself.” 21 Typically, to consider materials outside the complaint, it must be converted to a motion for summary judgment. 22 However, “[c]onsideration of materials outside the complaint is not entirely foreclosed on a 12(b)(6) motion.” 23 It is permissible to consider full text of documents partially quoted in complaint. 24 It is also permissible to consider documents relied upon by plaintiff in drafting the complaint and integral to the complaint. 25 “However, before materials outside the record may become the basis for a dismissal, several conditions must be met.” 26 “For example, even if a document is “integral” to the complaint, it must be clear on the record that no dispute exists regarding the authenticity or accuracy of the document.” 27 It must also be clear that there exist no material disputed issues of fact regarding the relevance of the document. 28 I find that all of the conditions noted above are met. I will therefore consider the statements below made by Cantorna at the January 20, 2015 Centre County Commissioners meeting for purposes of this motion to dismiss without converting it into a motion for summary judgment. The statements are, as follows: Thank you. For those who don't know me, I am - my name is Bernie Cantorna. I'm an attorney. I work with a law firm called Bryant & Cantorna. I'm here as an attorney and a member of the Centre Count bar and on behalf of other members, including Andrew Schubin [sic] and others. He specifically is involved in the issues that I'm bringing before you. As you probably know, many in Centre County government know, and many in the legal community know there have been serious allegations of potential criminal activity lodged against the District Attorney. Those allegations have been made by a former County employee, a woman who was the former paralegal of Stacy Parks Miller, the elected District Attorney. The reason I am here is to ask you, the highest elected County officials, to take some action to investigate these allegations and insure that there's an independent investigation done and any necessary legal action is taken. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 155 of 247 Parks Miller v. Cantorna, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 4 I believe you have that under the - under Pennsylvania statutes that allow the appointment of an independent prosecutor in the case of allegations of criminal activity against a District Attorney, and I believe you have the resources and the authority and should act. My understanding - and in your packet is some of the information that is, again, known in the legal community and in some places of Centre County government, I presume - is an affidavit of your County's former employee where she indicates that she was asked by our District Attorney to obtain copies of orders signed by Judge Pamela Ruest. The reason those orders were requested was so that a fake order could be constructed that looked like an order out of Judge Ruest's office so that the font and formatting and the characters of that letter would match something coming out of her office. This paralegal in her sworn statement indicates that she did, in fact, draft a fake bail order in a pending criminal case and brought that document up to the District Attorney's office, sat in Stacy Parks Miller's office as she practiced the Judge's signature and then witnessed her affix the Judge's signature to that bail piece. *5 She goes on to allege that she was directed to file that bail piece in the official court record at the prothonotary's office and did so, returning to the District Attorney's office. She references in her affidavit e-mails that seem to confirm what she is saying. There is - looking at those allegations, they would support a finding of probable cause, if true, that the District Attorney engaged in the act of forgery and what lawyers would call conspiracy to file false documents at the courthouse. They're very, very serious allegations, and honestly, I believe that they are calling into question the credibility of our justice system, and if the public doesn't have faith in that system, it cannot operate. It cannot operate. This Board may be the only entity investigating these claims other than, as I understand it, potentially the District Attorney's Office. You need to be made aware of the fact that there have been threats of criminal prosecution against what, in fact, would be whistleblower, a former County employee coming forward with allegations of very serious misconduct, if true, and that she is being threatened with prosecution for false swearing and theft by the actual person who is being accused, so I would say it's unprecedented for a prosecutor to investigate allegations that they had committed a crime. Under Pennsylvania Statutes, an independent prosecutor can be appointed. I've given you those statutes. I've shown you that authority. You as a Board have the resources, the ability and the authority to do something to insure that there's an independent investigation done and that someone does the work to find the truth of these allegations and take any action that's appropriate, wherever, wherever that - the chips may fall. In that packet, I've enclosed what is alleged to be a forged order, a sworn affidavit of your former employee, multiple exemplars of what are authentic documents signed by Judge Pamela A. Ruest and then statutes that both define criminal activity, including misconduct and authority for how this County - how you could act, should you choose to do so. What I'm specifically asking is that you review these issues and authorize the appointment of independent counsel to investigate those allegations and take any legal action necessary to restore confidence in our judicial system. I think that's about it. 29 Later, when asked if the Commissioners should petition the court for review, Cantorna replied: Probably, it would be somebody to get to the bottom to find the truth here, whatever you want to call it. I would let the solicitor figure it out. 30 As a result of these allegations, Plaintiff filed the instant amended complaint against several defendants, including Cantorna. Parks Miller brings eight claims specifically against Cantorna - breach of fiduciary duty Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 156 of 247 Parks Miller v. Cantorna, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 5 of loyalty/duty of loyalty, defamation/false light, injurious falsehood, common law abuse of process, negligence, intentional and/or negligent infliction of emotional distress, concerted tortious conduct, and conspiracy. c. The counts against Cantorna i. Breach of Fiduciary Duty of Loyalty/Duty of Loyalty Pennsylvania has adopted the Restatement (Second) of Agency approach to breach of fiduciary duty/duty of loyalty. 31 “Unless otherwise agreed, an agent is subject to a duty not to act or to agree to act during the period of his agency for persons whose interests conflict with those of the principal in matters in which the agent is employed.” 32 *6 Employing this well-settled law to the case at bar, there is simply no basis upon which this Court could find that Cantorna is an agent of Parks Miller such that he has a duty toward her. Fiduciary duty is “a confidential relationship between two parties [that] can give rise to fiduciary duties owed by one to the other.” 33 There is no evidence that Cantorna was in a confidential relationship with Parks Miller such that this burden should be or could be placed on him. Parks Miller's pleading evidences the opposite, in fact. Her pleading continues for a rambling 311 paragraphs, much of which is filled with vitriol and extraneous background information, seemingly designed to evince a completely unnecessary motive. In those paragraphs, she makes it clear that Cantorna regularly appears in a professional capacity as a criminal defense attorney. “To impose upon an attorney a duty of care to the adverse party would place the attorney in a position where his own interest would conflict with the interests of his client and prevent him from exerting a maximum effort on behalf of the client.” 34 In her briefs, Parks Miller clarifies her claim of breach of fiduciary duty in that she asserts Cantorna aided and abetted a breach of fiduciary duty by Defendant Michelle Shutt, the former paralegal of Parks Miller who asserted that she witnessed Parks Miller forge Judge Ruest's signature on the pretend bail order. “Under Pennsylvania law, the elements that must be proven in order to maintain a claim for aiding and abetting a breach of fiduciary duty are: (1) a breach of a fiduciary duty owed to another; (2) knowledge of the breach by the aider and abettor; and (3) substantial assistance or encouragement by the aider and abettor in effecting that breach.” 35 “In other words”, “[i]n order to be found liable for aiding and abetting a breach of a fiduciary duty, one must demonstrate that the party knew that the other's conduct constituted a breach of a fiduciary duty and gave substantial assistance or encouragement to the other in committing that breach.” 36 Parks Miller has failed to plead facts sufficient to conclude that there is factual support for her contention that Cantorna encouraged Shutt to forward two emails to her personal account prior to her departure from Parks Miller's office to work for co-defendant, Philip Masorti. Given that the complaint was originally filed in the Court of Common Pleas, with a demanding fact pleading standard 37 , I find that her claims do not even survive the lesser plausibility standard permitted in federal court. *7 In sum, “a claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” 38 Moreover, “[a]sking for plausible grounds...calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of [wrongdoing].” 39 “Determining whether a complaint states a plausible claim for relief [is] a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” 40 The most Parks Miller has plead in support of her aiding and abetting claim is that she “recite[d] the elements of a cause of action, and then ma[de] a blanket assertion of an entitlement to relief under it.” 41 “[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 “shown” -- “that the pleader is entitled to relief.” +” 42 The Court can discern no basis upon which to impose a duty springing from Cantorna to Parks Miller. Nor may Parks Miller's alternate theory that Cantorna aided and abetted Shutt in a breach of duty survive. The Breach of Fiduciary Duty of Loyalty/Duty of Loyalty count, Count I, will therefore be dismissed as to Defendant Cantorna. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 157 of 247 Parks Miller v. Cantorna, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 6 ii. Defamation/False Light 1. Defamation The allegedly defamatory statements at issue from Cantorna are those cited above at the January 20, 2015 Commissioner's meeting and those that he wrote in a letter regarding the affidavit executed by Michelle Shutt and the corresponding Bellefonte Police Department investigation. This area of law is well-settled. “Whether a challenged statement is capable of defamatory meaning is a question of law for the court to determine in the first instance.” 43 “To state a cause of action for defamation, a complaint must contain averments of fact which, if proven, would establish, (1) the defamatory character of the communication; (2) its publication by the defendant; (3) a reference to the plaintiff; (4) a recipient's understanding of the communication's defamatory character and its application to plaintiff; (5) special harm resulting from the publication; and (6) abuse of any conditional privilege.” 44 “Additionally, because [plaintiff] was a local public official 45 , [s]he must aver that defendants acted with “actual malice” ; that is, knowledge or reckless disregard of the falsity of the objectionable statements.” 46 Some statements are considered to be per se defamatory in Pennsylvania. “Statements by a defendant imputing to the plaintiff a criminal offense, punishable by imprisonment, or conduct incompatible with the plaintiff's business constitute slander per se.” 47 However, a complaint cannot survive if there is a privilege attached to the communication. In explaining the sixth element of defamation, abuse of a privilege, the Superior Court of Pennsylvania 48 has explained privilege, as follows: However, a publisher of defamatory matter is not liable if the publication was made subject to a privilege, and the privilege was not abused. Restatement § 593. “Communications made on a proper occasion, from a proper motive, in a proper manner, and based upon reasonable cause are privileged.” Beckman v. Dunn, 276 Pa.Superior Ct. 527, 536, 419 A.2d 583, 587 (1980); see also Baird v. Dun & Bradstreet, Inc., 446 Pa. 266, 275, 285 A.2d 166, 171 (1971). An occasion giving rise to a conditional privilege occurs when (1) some interest of the publisher of the defamatory matter is involved; (2) some interest of the recipient of the matter, or a third party, is involved; or (3) a recognized interest of the public is involved. Beckman v. Dunn, supra at 536, 419 A.2d at 587. Although the defendant in a defamation action ordinarily bears the burden of establishing a privilege to publish defamatory matter, 42 Pa.C.S.A. § 8343(b)(2), where a conditional privilege is evidenced, as here, in the plaintiff's complaint, the plaintiff will be nonsuited unless he can prove abuse of the privilege. Baird v. Dun & Bradstreet, Inc., supra at 275, 285 A.2d at 171; Rankin v. Phillippe, 206 Pa.Superior Ct. 27, 32, 211 A.2d 56, 58 (1965). *8 The allegations advanced by Parks Miller do not constitute a plausible claim. Parks Miller has not alleged facts of “[t]he defamatory character of the communication.” 49 “It is the function of the trial court to determine whether a challenged publication is capable of a defamatory meaning.” 50 Providing truthful, neutral information about an ongoing investigation is not defamatory and certainly cannot be considered to be done with 'actual malice, as there is no falsity in the statements. “[T]he plaintiff must focus on the editorial process and prove a false publication attended by some degree of culpability.” 51 “If the court determines that the challenged publication is not capable of a defamatory meaning, there is no basis for the matter to proceed to trial.” 52 What Parks Miller has alleged are all truthful statements, and moreover, they are relatively innocuous true statements. Her pleadings demonstrate this. There was a pretend bail order docketed with the prothonotary; a former employee did accuse Parks Miller of forging the order; and an investigation resulted. None of what Cantorna is alleged to have said or written has been false. Moreover, speaking truthfully as to an investigation of an alleged crime committed by a district attorney is certainly of public interest. In contrast, the following statement in the matter of Fox v. Kahn was found to be slanderous of a district attorney in a case from Delaware County, Pennsylvania: “This is as to law and justice. We had a murder down here in Trainer and the District Attorney picked up a young weak-minded Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 158 of 247 Parks Miller v. Cantorna, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 7 fellow and got a confession out of him; it was a simple way he got it, he put him in a room by himself and beat it out of him with a telephone Book.” 53 The defendant there admitted he knowingly made the statement at a public meeting and that it was untrue. Here, there is a marked difference between the statements made in Fox, where the defendant falsely stated that a district attorney physically abused a suspect in order to obtain a confession, and the factual, rather bland statements of Cantorna. Nothing Cantorna said is untrue, nor do Cantorna's statements have a defamatory connotation. Accordingly, the defamation claim against Cantorna will be dismissed. iii. Defamation/False Light False Light I will dismiss the false light claim, as well. Pennsylvania recognizes the tort of false light invasion of privacy, and has adopted the Restatement (Second) of Torts definition of it. § 652E. Publicity Placing Person In False Light One who gives publicity to a matter concerning another that places the other before the public in a false light is subject to liability to the other for invasion of his privacy, if (a) the false light in which the other was placed would be highly offensive to a reasonable person, and (b) the actor had knowledge of or acted in reckless disregard as to the falsity of the publicized matter and the false light in which the other would be placed. “Significantly, unlike the law of defamation, false light invasion of privacy offers redress not merely for the publication of matters that are provably false, but also for those that, although true, are selectively publicized in a manner creating a false impression.” 54 “It is not, however, necessary to the action for invasion of privacy that the plaintiff be defamed.” 55 “It is enough that he is given unreasonable and highly objectionable publicity that attributes to him characteristics, conduct or beliefs that are false, and so is placed before the public in a false position.” 56 “When this is the case and the matter attributed to the plaintiff is not defamatory, the rule here stated affords a different remedy, not available in an action for defamation.” 57 *9 “In order to prevail on this theory of false light invasion of privacy, appellant must show discriminate publication of true statements, that is, appellees must have created a false impression by knowingly or recklessly publicizing selective pieces of true information.” 58 “[I]t applies only when the defendant knows that the plaintiff, as a reasonable man, would be justified in the eyes of the community in feeling seriously offended and aggrieved by the publicity.” 59 In sum, the tort of false light is committed when someone tells part of a story, and selects the worst parts of the story to make another look bad. In that context, I do not find that Parks Miller has stated a claim that Cantorna placed her in a false light or that truthful information about an ongoing investigation would have been highly offensive to a reasonable person. The information Cantorna is alleged to have publicized about Parks Miller was truthful, concise, and not selective. His remarks were not edited down to place Parks Miller in a false light. Moreover, at the commissioner's meeting, he consistently used derivatives of the word “alleged” to make it clear that there was no proof of a crime against Parks Miller, only that Michelle Shutt had alleged a crime. Most importantly, however, the information disseminated was of legitimate concern to the public. “Additionally, [plaintiff's] stature in the community as a public figure resulted in a relinquishment of insulation from scrutiny of [her] public affairs.” 60 In Santillo v. Reedel, the Superior Court of Pennsylvania explained that confirming an investigation about a criminal allegation of a candidate for magisterial district justice was of legitimate public concern. The Santillo court stated As candidate for district justice, he sought a position that would enable him to judge the conduct of others and determine whether that conduct was in conformity with the law. A claim that he violated the law was relevant and newsworthy. Whether or not Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 159 of 247 Parks Miller v. Cantorna, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 8 the substance of the complaint was true, Reedel and Piermatteo's confirmation of the complaint and the ensuing investigation presented a matter of public concern, therefore, appellant's claim of publicity to private life must fail. 61 While the fact scenario in the case at bar concerns publicity surrounding a criminal investigation of an elected district attorney, and not a candidate for district justice, the holding can be extrapolated to engender the same result. Accordingly, the false light claim will be dismissed as to Bernard Cantorna. iv. Injurious Falsehood “[I]njurious falsehood, is the false and malicious representation of the title or quality of another's interest in goods or property.” 62 Pennsylvania has adopted RESTATEMENT (SECOND) OF TORTS § 623A dealing with injurious falsehood. 63 The comment to this section states, in part, Injurious falsehood. The general principle stated in this Section is applied chiefly in cases of the disparagement of property in land, chattels or intangible things or of their quality. … The rule is not, however, limited to them. It is equally applicable to other publications of false statements that do harm to interests of another having pecuniary value and so result in pecuniary loss. *10 As delineated above, in light of the fact that Parks Miller has not alleged any false statements by Cantorna, I cannot permit this claim to survive the motion to dismiss. v. Abuse of Process “[A]n action for abuse of process is the improper use of process after it has been issued, that is, a perversion of it.” 64 “The tort of “abuse of process” is defined as the use of legal process against another “primarily to accomplish a purpose for which it is not designed”.” 65 “To establish a claim for abuse of process it must be shown that the defendant (1) used a legal process against the plaintiff, (2) primarily to accomplish a purpose for which the process was not designed; and (3) harm has been caused to the plaintiff.” 66 “The significance of [the word 'primarily'] is that there is no action for abuse of process when the process is used for the purpose for which it is intended, but there is an incidental motive of spite or an ulterior purpose of benefit to the defendant.” 67 This claim, likewise, cannot survive the motion to dismiss, as Parks Miller simply has not stated a claim of abuse of process as to Cantorna. Curiously, the amended complaint itself does not plead any sort of abuse of process. For the first time, in her brief opposing the motion to dismiss, Parks Miller makes a vague and unsubstantiated assertion that “Here, the DA has alleged that Cantorna has abused a number of litigation tactics primarily to accomplish purposes for which they were not designed, resulting in severe harm.” 68 However, as the United States Supreme Court has warned, “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice” 69 to state a claim. Parks Miller next moves to argue that “The most salient example is Cantorna's perversion of the RTKL (right to know law) to generate speculation that the DA was “fixing” cases with the judiciary in an effort to drive the DA from office and cripple her ability to do her job in the eyes of the public.” First, Parks Miller does not allege in the amended complaint that Cantorna has used the right to know law to obtain information about Parks Miller. Second, Parks Miller provides no legal support to suggest that any court has ever determined that making use of the right to know law is, or should be, considered 'legal process.' Finally, counsel stated several times in oral argument that his client is not bringing a right to know law claim in this Court, as Parks Miller has a separate claim based on the right to know law pending in the Court of Common Pleas of Centre County. Accordingly, because there are no factual allegations upon which this claim could rest, the abuse of process claim will also be dismissed as to Cantorna. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 160 of 247 Parks Miller v. Cantorna, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 9 vi. Negligence The negligence claim against Cantorna is probably the least comprehensible claim in the amended complaint. In Pennsylvania, the elements of negligence are standard -- duty, breach, causation, and damages. 70 “It is well established that in determining the existence of a duty of care, it must be remembered that the concept of duty amounts to no more than “the sum total of those considerations of policy which led the law to say that the particular plaintiff is entitled to protection” from the harm suffered...To give it any greater mystique would unduly hamper our system of jurisprudence in adjusting to the changing times.” 71 “The determination of whether a duty exists in a particular case involves the weighing of several discrete factors which include: (1) the relationship between the parties; (2) the social utility of the actor's conduct; (3) the nature of the risk imposed and foreseeability of the harm incurred; (4) the consequences of imposing a duty upon the actor; and (5) the overall public interest in the proposed solution.” 72 *11 Because neither the amended complaint nor the briefs make clear how Cantorna could possibly be deemed to have a duty of care toward Parks Miller, as there are no citations to case law to support a legal duty springing from Cantorna to Parks Miller, I asked counsel to clarify at oral argument. Counsel argued that the lawyer defendants have a duty because they did not return documents Michelle Shutt gave to them; defense attorneys should realize there is no forgery if there is no mens rea; and defense attorneys should have understood handwriting analysis. The Plaintiff provided no legal support for these propositions. I can find none. As the most recent issue of the THE BENCHER magazine concisely advises, “Do not invent law.” 73 That seems a wise admonition. The Pennsylvania Superior Court in Campo v. St. Luke's Hospital 74 explained how to determine if a duty should be established. When considering the question of duty, it is necessary to determine “whether a defendant is under any obligation for the benefit of the particular plaintiff...and, unless there is a duty upon the defendant in favor of the plaintiff which has been breached, there can be no cause of action based upon negligence.” Tri-County Big Brothers, 692 A.2d at 584 (quoting Hoffman v. Sun Pipe Line Co., 394 Pa.Super. 109, 113-15, 575 A.2d 122, 125 (1990)). “Whether a duty exists is ultimately a question of fairness. The inquiry involves a weighing of the relationship of the parties, the nature of the risk and the public interest in the proposed solution.” Brandjord v. Hopper, 455 Pa.Super. 426, 429-31, 688 A.2d 721, 723 (1997) (citing Cruet v. Certain-Teed Corp., 432 Pa.Super. 554, 556-58, 639 A.2d 478, 479 (1994)). “Our duty analysis depends on many factors and is 'necessarily rooted in public policy considerations, i.e., our ideas of history, morals, justice, and society in general in determining where the loss should fall.' ” Althaus v. Cohen, 710 A.2d 1147, 1152 (Pa. Super. 1998), appeal granted, 556 Pa. 701, 729 A.2d 1124 (1998), (quoting Gardner v. Consolidated Rail Corp., 524 Pa. 445, 455, 573 A.2d 1016, 1020 (1990)). Moreover, duty, as a concept, is a flexible notion. “In determining the existence of a duty of care, it must be remembered that the concept of duty amounts to no more than 'the sum total of those considerations of policy which led the law to say that the particular plaintiff is entitled to protection' from the harm suffered.” Troxel v. A.I. Dupont Institute, 450 Pa.Super. 71, 82, 675 A.2d 314, 319-320 (1996), quoting Gardner by Gardner v. Consolidated Rail Corp., 524 Pa. 445, 454-455, 573 A.2d 1016, 1020 (1990), quoting Sinn v. Burd, 486 Pa. 146, 164, 404 A.2d 672, 681 (1979). Furthermore, “duty is only a word with which we state our conclusion that there is or is not to be liability; it necessarily begs the question....” Id. “To give it any greater mystique would unduly hamper our system of jurisprudence in adjusting to the changing times.” Id. Huddleston v. Infertility Center of America, Inc., 700 A.2d 453, 457-58 (Pa. Super. 1997). Finally, a duty arises only when one engages in conduct which foreseeably creates an unreasonable risk of harm to others. Id. at 457. It is “[o]nly when the question of foreseeability is undeniably clear may a court rule as a matter of law that a particular defendant did not have a duty to a particular plaintiff.” Tri-County Big Brothers, 692 A.2d at 584; Hoffman, 575 A.2d at 125. See Palsgraf v. Long Island Railroad Co., 248 N.Y. 339, 162 N.E. 99 (1928). Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 161 of 247 Parks Miller v. Cantorna, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 10 I find no basis upon which to support finding of a duty from Cantorna to Parks Miller. His only involvement with this matter is the above cited statements that he made in a public meeting. Her negligence claim as to him is merely a reformulated defamation claim. Because there is no duty, this count cannot survive a motion to dismiss. 75 Therefore, the negligence claim will be dismissed as to Cantorna. vii. Intentional and Negligent Infliction of Emotional Distress 1. NIED *12 “[T]the cause of action for negligent infliction of emotional distress is restricted to four factual scenarios: (1) situations where the defendant had a contractual or fiduciary duty toward the plaintiff; (2) the plaintiff was subjected to a physical impact; (3) the plaintiff was in a zone of danger, thereby reasonably experiencing a fear of impending physical injury; or (4) the plaintiff observed a tortious injury to a close relative.” 76 The only possible basis for this claim is based on the first element, and as stated above, there is no fiduciary duty running from Cantorna to Parks Miller. Accordingly, the claim of negligence infliction of emotional distress will be dismissed as to Cantorna. 2. IIED “One who by extreme and outrageous conduct intentionally or recklessly causes severe emotional distress to another is subject to liability for such emotional distress, and if bodily harm to the other results from it, for such bodily harm.” 77 Likewise, I cannot find that Parks Miller has alleged any “extreme or outrageous conduct” on the part of Cantorna, nor would discovery aid her in amending her complaint as to him, as his statements were all truthful and benign. As she has failed to state a claim for intentional infliction of emotional distress as to Cantorna, this claim will be dismissed. viii. Concerted Tortious Conduct “[C]oncerted tortious action, as defined in Section 876 of the Restatement (Second) of Torts, is a recognized civil cause of action under Pennsylvania law.” 78 This section states § 876. Persons Acting in Concert For harm resulting to a third person from the tortious conduct of another, one is subject to liability if he (a) does a tortious act in concert with the other or pursuant to a common design with him, or (b) knows that the other's conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other so to conduct himself, or (c) gives substantial assistance to the other in accomplishing a tortious result and his own conduct, separately considered, constitutes a breach of duty to the third person. In her brief, Parks Miller makes it clear that this claim is based on subsection (a) of the Restatement. 79 Because all of the underlying torts have been dismissed as to Cantorna, this claim will be dismissed, as well. ix. Conspiracy “[A]bsent a civil cause of action for a particular act, there can be no cause of action for civil conspiracy to commit that act.” 80 As noted above, in light of the fact that all of the other underlying claims have been dismissed, this claim will also be dismissed. III. CONCLUSION Defendant's motion to dismiss will be granted. Moreover, as explained below, the Court will deny Parks Miller further opportunity to amend her complaint, thereby foreclosing her ability to submit a third iteration of what is quite evidently an irrepealably flawed pleading. Federal Rule of Civil Procedure 15(a), which governs a plaintiff's ability to amend her complaint, instructs that after the window for amendment as a matter of course has closed, a plaintiff may amend her complaint “only with the opposing party's written consent or the court's leave.” “The decision to grant or deny leave to Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 162 of 247 Parks Miller v. Cantorna, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 11 amend a complaint is committed to the sound discretion of the district court.” 81 “Factors the trial court may appropriately consider in denying a motion to amend include undue delay, undue prejudice to the opposing party, and futility of amendment.” 82 For instance, “if the proposed change clearly is frivolous or advances a claim or defense that is legally insufficient on its face, the court may deny leave to amend.” 83 *13 As it applies to the instant matter, Parks Miller has already amended her complaint once as a matter of course pursuant to Rule 15. Having occurred after the various defendants filed their first motions to dismiss, that amendment effectively rendered those motions moot. To allow Parks Miller a third bite at the apple would contravene fundamental notions of justice for the following reasons. First, the unjustifiable delay associated with further amendment and subsequent motions practice would significantly prejudice Defendant Cantorna here. To the extent that the defendants in this matter represent the public or work in private legal practice, a speedy resolution of this politically charged dispute is both efficient and proper. No defendant, whether a representative of the people or a private advocate, should be forced to endure the looming specter of such accusations, particularly where those charges have been judged deficient as a matter of law by a federal tribunal. Moreover, Parks Miller has already enjoyed the benefit of responding with an amended complaint after reading and considering the arguments raised in the first round of defendants' motions to dismiss. Based upon my review of the claims asserted therein, a third version of the complaint would fare no better; any non-futile allegations that Parks Miller could possibly make should have already been advanced. With the likelihood that Parks Miller could plead an adequate complaint so low at this stage, I find that the certainty of substantial prejudice to this Defendant outweighs any interest Parks Miller might have in filing a further amended complaint. Nor would discovery remedy the deficiencies in the complaint. A missing piece common to several of the asserted claims in this action is proof of publication. Accordingly, at this juncture, reasonable research and diligence should have already led Plaintiff to discover any published statements made by Cantorna. The Court, however, already possesses and has thoroughly considered the complete statements of Cantorna as reproduced above. Discovery simply would not be a fruitful endeavor for the kinds of claims that Parks Miller has chosen to advance. Ultimately, I find that this determination also adheres to the dictates of the federal rules. As amended Federal Rule of Civil Procedure 1 now instructs, “the just, speedy, and inexpensive determination of every action” is the responsibly of both judges and litigants. Permitting amendment merely for the sake of amendment at this point would only further squander valuable time and resources of the Court and the parties. I am unwilling to so indulge Plaintiff. All Citations Slip Copy, 2016 WL 2752633 Footnotes 1 ECF No. 25. 2 In re Hydrogen Peroxide Litigation, 552 F.3d 305, 316 n.15 (3d Cir. 2008) (Scirica, C.J.) (quoting Szabo v. Bridgeport Machines, Inc., 249 F.3d 672, 675 (7th Cir. 2001) (Easterbrook, J.)). Neitzke v. Williams, 490 U.S. 319, 326-27 (1989). 3 Neitzke, 490 U.S. at 326 (citing Hishon v. King & Spalding, 467 U. S. 69, 73 (1984)). 4 Neitzke, 490 U.S. at 327. 5 Howard M. Wasserman, THE ROBERTS COURT AND THE CIVIL PROCEDURE REVIVAL , 31 Rev. Litig. 313 (2012). 6 550 U.S. 544 (2007); 556 U.S. 662, 678 (2009). Wasserman, supra at 319-20. 7 Iqbal, 556 U.S. at 670 (citing Conley v. Gibson, 355 U.S. 41 (1957)) (“[a]cknowledging that Twombly retired the Conley no-set-of-facts test”). 8 Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570). 9 Iqbal, 556 U.S. at 678. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 163 of 247 Parks Miller v. Cantorna, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 12 10 Connelly v. Lane Const. Corp., No. 14-3792, 2016 WL 106159, at *3 (3d Cir. Jan. 11, 2016) (Jordan, J.) (internal quotations and citations omitted). 11 Twombly, 550 U.S. at 556. 12 Iqbal, 556 U.S. at 679. 13 Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 557 (internal quotations omitted)). 14 Phillips v. Cnty. of Allegheny, 515 F.3d 224, 228 (3d Cir. 2008) (Nygaard, J.). 15 Iqbal, 556 U.S. at 678 (internal citations omitted). 16 Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009) (Nygaard, J.). 17 Iqbal, 556 U.S. at 678. 18 Connelly, 2016 WL 106159, at *4 (internal quotations and citations omitted). 19 Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974) 20 Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986) 21 Faulkner v. Beer, 463 F.3d 130, 134 (2d Cir. 2006). 22 See id. and Fed. R. Civ. P. 12(d). 23 Faulkner, 463 F.3d at 134. 24 San Leandro Emergency Med. Group Profit Sharing Plan v. Philip Morris Cos., 75 F.3d 801, 808-09 (2d Cir. 1996). 25 Cortec Indus., Inc. v. Sum Holding L.P., 949 F.2d 42, 47-48 (2d Cir. 1991). 26 Faulkner, 463 F.3d at 134. 27 Id, See also e.g., Kaempe v. Myers, 367 F.3d 958, 965 (D.C.Cir. 2004); Alternative Energy, Inc. v. St. Paul Fire and Marine Ins. Co., 267 F.3d 30, 33 (1st Cir. 2001). 28 Faulkner, 463 F.3d at 134. 29 ECF No. 38-1 at 5-9. 30 Id. at 17. 31 See Reading Radio, Inc. v. Fink, 833 A.2d 199 (Pa. Super. Ct. 2003). 32 Restatement (Second) of Agency § 394 (1958). 33 PTSI, Inc. v. Haley, 2013 PA Super 130, 71 A.3d 304, 311 (2013). 34 Aetna Electroplating Co. v. Jenkins, 335 Pa. Super. 283, 287, 484 A.2d 134, 137 (1984). 35 Synthes, Inc. v. Emerge Med., Inc., 25 F. Supp. 3d 617, 674-75 (E.D. Pa. 2014) citing Reis v. Barley, Snyder, Senft & Cohen, 667 F.Supp.2d 471, 492 (E.D. Pa. 2009). 36 Id. citing Bd. of Trs. of Teamsters Local 863 Pension Fund v. Foodtown, Inc., 296 F.3d 164, 174 (3d Cir. 2002) (claim for aiding and abetting breach of fiduciary duties under ERISA); see also RESTATEMENT (SECOND) TORTS § 876, cmt. to subsection (b) (1979) (“If the encouragement or assistance is a substantial factor in causing the resulting tort, the one giving it is himself a tortfeasor and is responsible for the consequences of the other's act.”). 37 See Hellmann v. Kercher, 2008 U.S. Dist. LEXIS 54882, *4, 2008 WL 1969311 (W.D. Pa. May 5, 2008) (Lancaster, J.). 38 Iqbal, 556 U.S. at 678. 39 Twombly, 550 U.S. at 556. 40 Iqbal, 556 U.S. at 663-664. 41 Hellmann, supra. 42 Iqbal, supra, citing Fed. R. Civ. P. 8(a). 43 Feldman v. Lafayette Green Condo. Ass'n, 806 A.2d 497, 500 (Pa. Commw. Ct. 2002). 44 Smith v. Wagner, 403 Pa. Super. 316, 321, 588 A.2d 1308, 1311 (1991) citing 42 Pa.C.S. § 8343(a). See also: Agriss v. Roadway Express, Inc., 334 Pa.Super. 295, 304, 483 A.2d 456, 461 (1984). 45 Counsel has conceded, both in his papers and at oral argument, that Parks Miller is a public figure, subject to the 'actual malice' standard. 46 New York Times v. Sullivan, 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686 (1964); Curran v. Philadelphia Newspapers, Inc., 497 Pa. 163, 439 A.2d 652 (1981). 47 Brinich v. Jencka, 2000 PA Super 209, 757 A.2d 388, 397 (2000) citing RESTATEMENT (SECOND) OF TORTS § 570(a), (c). 48 Chicarella v. Passant, 343 Pa. Super. 330, 337, 494 A.2d 1109, 1112-13 (1985). 49 Tucker v. Philadelphia Daily News, 848 A.2d 113, 123 (Pa. 2004), citing 42 Pa.C.S. § 8343(a). Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 164 of 247 Parks Miller v. Cantorna, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 13 50 Green v. Mizner, 692 A.2d 169, 172 (Pa. Super. Ct. 1997) citing Maier v. Maretti, 448 Pa.Super. 276, 671 A.2d 701, 704 (1995); Livingston v. Murray, 417 Pa.Super. 202, 612 A.2d 443, 446, alloc. den., 533 Pa. 601, 617 A.2d 1275 (1992). 51 Herbert v. Lando, 441 U.S. 153, 176, 99 S.Ct. 1635, 1648, 60 L.Ed.2d 115 (1979). 52 Thomas Merton Center v. Rockwell International Corp., 442 A.2d 213, 215-16 (Pa. 1981). 53 Fox v. Kahn, 421 Pa. 563, 565, 221 A.2d 181, 182 (1966). 54 Krajewski v. Gusoff, 2012 PA Super 166, 53 A.3d 793, 806 (2012). 55 Restatement (Second) Torts § 652E Cmt. b (Relation to defamation.). 56 Id. 57 Id. 58 Krajewski v. Gusoff, 2012 PA Super 166, 53 A.3d 793, 807 (2012). 59 Restatement (Second) Torts § 652E Cmt. c (Highly offensive to a reasonable person). 60 Neish v. Beaver Newspapers, Inc., 398 Pa. Super. 588, 598, 581 A.2d 619, 624-25 (1990) (internal citations omitted). 61 Santillo v. Reedel, 430 Pa. Super. 290, 295, 634 A.2d 264, 266 (1993). 62 Pro Golf Mfg., Inc. v. Tribune Review Newspaper Co., 570 Pa. 242, 247, 809 A.2d 243, 246 (2002). 63 Id. 64 Rosen v. Am. Bank of Rolla, 426 Pa. Super. 376, 381, 627 A.2d 190, 192 (1993). 65 Id. citing Restatement (Second) of Torts, § 682. 66 Id. 67 Id. 68 Pl.'s Br. ECF No. 50 at 29. 69 Iqbal, 556 U.S. at 678. 70 See Williams v. Syed, 782 A.2d 1090 (Commw. Ct. 2001). 71 Althaus ex rel. Althaus v. Cohen, 562 Pa. 547, 552, 756 A.2d 1166, 1168-69 (2000) (internal citation omitted). 72 Id. at 553. 73 Gabriela Acosta, Caitlin Barnes, Bren Chambers, Caitlin Wain, and Tessie Smith, The View from WAY Behind the Bench, THE BENCHER, March/April 2016, at 21. 74 Campo v. St. Luke's Hosp., 2000 PA Super 155, ¶ 10, 755 A.2d 20, 24 (2000). 75 “ If the court finds no duty of care is owed, the negligence count is decided as a matter of law.” 57A Am. Jur. 2d Negligence § 74, citing Mans v. Peoples Bank of Imboden, 340 Ark. 518, 10 S.W.3d 885 (2000). 76 Toney v. Chester Cty. Hosp., 2008 PA Super 268, ¶ 14, 961 A.2d 192, 197-98 (2008) aff'd, 614 Pa. 98, 36 A.3d 83 (2011) 77 Britt v. Chestnut Hill Coll., 429 Pa. Super. 263, 272, 632 A.2d 557, 561 (1993) citing Restatement (Second) of Torts, § 46(1). 78 Sovereign Bank v. Valentino, 2006 PA Super 338, ¶ 30, 914 A.2d 415, 427 (2006). 79 Pl.'s Br. ECF No. 50 at 33. 80 Pelagatti v. Cohen, 370 Pa. Super. 422, 432, 536 A.2d 1337, 1342 (1987). 81 Coventry v. U.S. Steel Corp., 856 F.2d 514, 518 (3d Cir. 1988). 82 Averbach v. Rival Mfg. Co., 879 F.2d 1196, 1203 (3d Cir. 1989) (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)). 83 Ross v. Jolly, 151 F.R.D. 562, 565 (E.D. Pa. 1993) (citing 6 Wright, Miller, & Kane, Federal Practice & Procedure: Civil 2d § 1487). See also Vosgerichian v. Commodore Int'l Ltd., No. Civ. A. 92-CV-4867, 1998 WL 966026, at * 3 (E.D. Pa. Nov 6, 1998) aff'd sub nom Vosgerichian v. Commodore Int'l, 191 F.3d 446 (3d Cir. 1999). End of Document © 2017 Thomson Reuters. No claim to original U.S. Government Works. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 165 of 247 EXHIBIT Q Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 166 of 247 Peek v. Whittaker, Not Reported in F.Supp.3d (2014) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 1 2014 WL 2154965 Only the Westlaw citation is currently available. United States District Court, W.D. Pennsylvania. Stephen M. PEEK, et al., Plaintiffs, v. Thomas WHITTAKER, et al., Defendants. No. 2:13-cv-O1188. | Signed May 22, 2014. Attorneys and Law Firms Stanley M. Stein, Stanley M. Stein, P.C., Pittsburgh, PA, for Plaintiffs. Michael K. Parrish, John J. Richardson, Matthew Fergus, Goehring Rutter & Boehm, Pittsburgh, PA, for Defendants. OPINION MARK R. HORNAK, District Judge. *1 This case is the latest skirmish in the on-going battle between two carpet-cleaning rivals, and is the federal court spill-over of their hotly-contested Pennsylvania state court lawsuit. Plaintiffs Stephen Peek (“Mr.Peek”), Paul Offutt (“Mr.Offutt”), and Clear Floor Care, LLC (“Clear Floor Care”), a company organized and owned by the individual Plaintiffs, filed this suit against Defendants Thomas Whittaker (“Mr.Whittaker”) and R.E. Whittaker Company (“Whittaker Co.”) 1 , alleging violations of the Dragonetti Act, 42 Pa. Cons.Stat. § 8351 et seq., the Pennsylvania Uniform Trade Secrets Act, 12 Pa Cons.Stat. § 5301 et seq. (“PUTSA”), and the Lanham Act, 15 U.S.C. § 1051 et seq., as well as claims for unfair competition, abuse of process, and fraud. Plaintiffs assert that Mr. Whittaker and his company improperly sued them in Pennsylvania state court without probable cause, obtained a preliminary injunction (“PI”) against their business from that court on the basis of knowingly false testimony and affirmative misrepresentations in and to that court, and then publicized that injunction in the carpet-cleaning world in an effort to further stifle Plaintiffs' ability to compete. Pending before the Court is Defendants' Motion to Dismiss pursuant to Fed.R.Civ.P. 12(b)(6). ECF No. 8. The Court has had the benefit of two oral arguments on the Motion. See ECF Nos. 13, 25. Having considered those arguments, the Amended Complaint (“AC”), ECF No. 14, the parties' briefs, ECF Nos. 9, 11, Plaintiffs' response, ECF No. 12, the parties' supplemental briefs filed at the Court's request, ECF Nos. 16, 18, and Plaintiffs' reply, ECF No. 20, the Court will grant in part and deny in part the Motion to Dismiss. I. BACKG ROUND This protracted litigation campaign has been waged by the parties over more than half a decade with heaping amounts of steadfast resolve. The Court will now briefly recount the tale of the various stages of this multi- jurisdictional clash. 2 For the purposes of the disposition of Defendants' Motion to Dismiss, the essential facts, viewed in the light most favorable to the Plaintiffs, are as follows. Whittaker Co. sells commercial carpet-cleaning machines and fluids to individuals and businesses. AC ¶ 9. Mr. Whittaker is the chief operating officer and majority shareholder of Whittaker Co. Id. ¶ 7. Mr. Offutt was a Whittaker Co. employee from June 21, 2007 to June 21, 2008, when he was terminated. Id. ¶¶ 11, 15. After his termination, Mr. Offutt began discussing the idea of starting a similar carpet-cleaning machine and fluid sales business with Mr. Peek, a Georgia businessman. Id. ¶¶ 18, 12. Unbeknownst to Mr. Peek, Mr. Offutt also discussed the prospect of such a business with Paul Stephenson (“Mr.Stephenson”), another former employee of Whittaker Co. who had been terminated. Id. ¶¶ 19, 10, 16. In furtherance of his discussions with Mr. Peek and Mr. Stephenson, Mr. Offutt contacted several carpet-cleaning machine manufacturers, including an Austrian company called RotoWash. Id. ¶ 20. *2 On October 22, 2008, Whittaker Co. filed suit against Peek, Stephenson, and Offutt on its home turf in the Court of Common Pleas of Lawrence County, Pennsylvania. Id. ¶ 21. That complaint set forth ten (10) causes of action against them. 3 Id. ¶ 22. Just about all of the counts involved the central allegation that they were using trade Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 167 of 247 Peek v. Whittaker, Not Reported in F.Supp.3d (2014) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 2 secret information that belonged to Whittaker Co. to start a competing business, while the others stemmed from the alleged violation of restrictive covenants pertaining to Mr. Offutt's and Mr. Stephenson's terms of employment with Whittaker Co. Id. ¶ 24; ECF No. 14-4 at 5. Then, on January 13, 2009, Whittaker Co. filed a second Lawrence County lawsuit, this time against Clear Floor Care-an LLC organized and solely owned by Offutt and Peek- related to the same allegations of misappropriation of trade secrets and breach of contracts. 4 Id . ¶ 25. Whittaker Co. then filed a petition for a PI seeking to prevent Clear Floor Care and the individual defendants in the original lawsuit from competing in the carpet-cleaning business. Id. ¶ 26, The state court held a multi-day hearing on the petition, during which Whittaker Co. presented testimony from a number of witnesses supporting its claim that the defendants there stole trade secret information from Whittaker Co. and were using it in competition against them. Id. ¶¶ 27-28. One of the witnesses called by Whittaker Co. was a computer expert named John Sloane (“Mr.Sloane”), who represented that he had investigated the allegation that Mr. Stephenson used external data storage devices to copy a confidential customer list from Whittaker Co.'s computer network. Id. ¶¶ 29-32; ECF No. 9-1 at 21. Mr. Sloane testified that immediately after Mr. Stephenson was terminated, he (Mr. Stephenson) attached an external hard drive (known as a Passport) and a thumb drive both of which Mr. Sloane said were capable of downloading from the network all of the information in Whittaker Co.'s customer databases-to his company laptop computer. Id. f 30. Whittaker Co. also claimed that Mr. Stephenson stole trade secret information when he took with him a number of legal pads he had used to take notes during his employment with the company. Id. ¶ 38. Whittaker Co. further argued at the hearing that the defendants were attempting to use the chemical formulas for its carpet-cleaning fluids-which Whittaker Co. maintained, along with the identity of the manufacturer of the fluids (Scott Labs), were trade secrets-for their own carpet-cleaning fluids. Id. ¶¶ 34-36. Whittaker Co. professed that the identity of its equipment manufacturer, RotoWash, was also a trade secret, and that it was the only authorized distributor of RotoWash machines in the United States, Canada, and Mexico. Id. ¶ 37. In his PI opinion, Lawrence County Common Pleas Judge Dominick Motto concluded that the defendants “engaged in a conspiracy to unlawfully utilize confidential information and trade secrets obtained while Stephenson and Offutt were employed by [Whittaker Co.] and use this information to the advantage of all defendants by engaging in a business competing with [Whittaker Co.].” ECF No. 14-4 at 27. Judge Motto also decided that the defendants misappropriated trade secrets and other property of Whittaker Co. and unlawfully interfered with Whittaker Co.'s business and contractual relationships, and that Mr. Offutt breached the terms of his employment agreement with Whittaker Co. Id. at 27-28. As a result, he entered a PI prohibiting Clear Floor Care and Offutt, Peek, and Stephenson from (1) engaging in any activity that directly or indirectly competed with the business of Whittaker Co., (2) soliciting Whittaker Co.'s customers or employees in any way, and (3) using or disclosing Whittaker Co.'s trade secrets. Id. at 2-3. The PI also enjoined Mr. Offutt from violating the non-competition provisions of his employment agreement with Whittaker Co. Id.; AC ¶ 39. Plaintiffs appealed the PI to the Pennsylvania Superior Court, which adopted the lower court's findings and affirmed the injunctive order. Id. ¶¶ 56-60; ECF No. 9-1. *3 When the case returned to the Lawrence County court for post-PI proceedings, the parties engaged in a substantial amount of discovery. Id. ¶ 61-62. The defendants in that court notably took the depositions of Mr. Whittaker, several other key Whittaker Co. employees, and the computer experts hired by Whittaker Co. Id. ¶ 62. On the strength of the record developed by that discovery, the defendants moved for summary judgment. Id. ¶ 63. Judge Motto granted the motion and dismissed both of Whittaker Co.'s complaints in their entirety. Id. ¶ 64; ECF No. 14-6 at 29. In his summary judgment Opinion, Judge Motto concluded that there was “no evidence that any defendant obtained a compilation of [Whittaker Co.'s] customers and customer data.” ECF No. 14-6 at 15. Judge Motto reached his decision due to an admission by Mr. Whittaker at his deposition (confirmed by Whittaker Co.'s corporate designee at his own deposition) that Mr. Stephenson's laptop did not have access to the databases that contained customer data and could not download or copy information from those databases. Id. at 15- 16. Additionally, the Passport and thumb drive Mr. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 168 of 247 Peek v. Whittaker, Not Reported in F.Supp.3d (2014) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 3 Stephenson attached to his laptop contained nothing that could be “considered to be trade secret or confidential.” Id. at 16. 5 Judge Motto also found no evidence to support Whittaker Co.'s assertion that Mr. Stephenson's note pads contained any customer lists or other protected information. Id. at 18. As to Whittaker Co.'s other claims of trade secret misappropriation, Judge Motto decided that the identity of Scott Labs as Whittaker Co.'s chemical products manufacturer was not a trade secret and was in fact well known, that the formula for the cleaning fluid Whittaker Co. used in its machines belonged to Scott Labs, not Whittaker Co., and that Whittaker Co. did not even know the formula. Id. at 18-20. In conclusion, Judge Motto wrote, “[Whittaker Co.] has failed to show the existence of any trade secret misappropriated by any [d]efendant,” Id. at 22. After it was established that there was no actionable breach of contract or breach of fiduciary duty by Offutt or Stephenson, Judge Motto held the remaining counts of the complaint “must fail once it is determined that there does not exist evidence that any of the [d]efendants misappropriated any trade secrets or confidential information and that there is no evidence of any damages suffered by [p]laintiff as the result of any conduct of the [d]efendants.” Id. at 26. Judge Motto also observed that “the record presently before the [c]ourt is much different that [sic] the record upon which the [c]ourt relied in issuing its preliminary injunction.” Id. at 28. After the grant of summary judgment in their favor by Judge Motto 6 , Clear Floor Care, Mr. Peek, and Mr. Offutt filed this action against Whittaker Co. and Mr. Whittaker in this Court. The AC contains the following allegations: *4 - Defendants filed both complaints and the PI petition “without probable cause and for an improper purpose,” knowing that their trade secret misappropriation claims were false. AC ¶¶ 73-74. - Defendants “knew when they presented evidence at the preliminary injunction hearing of the existence or ownership of a trade secret, that such evidence was false.” AC ¶ 65. - Mr. Whittaker and other Whittaker Co. employees knew that Mr. Stephenson could not access customer databases from his laptop and that the formulas for their fluids and the identity of the manufacturer of those fluids were not their trade secrets when the company made contrary representations at the hearing. Id. ¶¶ 66, 68-69. - Defendants knowingly and intentionally presented this false evidence and testimony to the Lawrence County court to obtain a PI preventing Plaintiffs from starting a business that would have competed with Whittaker Co. Id. ¶¶ 67, 73. - Immediately following the grant of the PI, Defendants sent copies of the PI order- which contained false information-to third- party carpet manufacturers and customers to persuade them not to do business with Plaintiffs. Id. ¶¶ 77-79. - On the basis of the PI, Mr. Whittaker successfully persuaded Scott Labs not to sell cleaning fluids to Clear Floor Care. Id. ¶ 80. Plaintiffs contend that the Defendants' actions establish liability under the Dragonetti Act for initiating civil proceedings with an improper purpose and without probable cause, PUTSA for filing a trade secret misappropriation action in bad faith and for an improper purpose, the Lanham Act for false advertising, and for unfair competition, abuse of process, and fraud. II. DISCUSSION A. Standard of Review To survive a motion to dismiss under Fed.R.Civ.P. 12(b) (6), a complaint must allege “enough facts to state a claim for relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). “The District Court must accept the complaint's well-pleaded facts as true, but may disregard any legal conclusions.” Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir.2009) (citing Ashcroft v. Iqbal, 556 U.S. 662, 663, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009)). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678. In short, a motion to dismiss should be granted only if a party does not allege facts which could, if established at trial, entitle him to relief. See Fowler, 578 F.3d at 211. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 169 of 247 Peek v. Whittaker, Not Reported in F.Supp.3d (2014) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 4 B. Dragonetti Act The Dragonetti Act, which codifies the common law cause of action for malicious use of civil proceedings, establishes liability on a person who “takes part in the procurement, initiation, or continuation of civil proceedings against another” and in doing so “acts in a grossly negligent manner or without probable cause and primarily for a purpose other than that of securing the proper discovery, joinder of parties or adjudication of the claim in which the proceedings are based.” 42 Pa. Cons.Stat. § 8351(a), (a)(1). The proceedings in question must have terminated in favor of the person against whom they were brought. Id. § 8351(a)(2). Probable cause exists if the person who initiates the action reasonably believes in the existence of the facts upon which the claim is based, and either: *5 (1) Reasonably believes that under those facts the claim may be valid under the existing or developing law; (2) Believes to this effect in reliance upon the advice of counsel, sought in good faith and given after full disclosure of all relevant facts within his knowledge and information; or (3) Believes as an attorney of record, in good faith that his procurement, initiation or continuation of a civil cause is not intended to merely harass or maliciously injure the opposite party. 42 Pa. Const. Stat. § 8352. The existence of probable cause does not automatically defeat a Dragonetti Act claim. Buchleitner v. Perer, 794 A.2d 366, 377-78 (Pa.Super.Ct.2002). “The clear language of Section 8351 permits a cause of action to be based on gross negligence or lack of probable cause.” Bannar v. Miller, 701 A.2d 242, 249 (Pa.Super.Ct.1997). Once a plaintiff has shown either a lack of probable cause or gross negligence by the defendant, he must also demonstrate that the underlying action was filed primarily for an improper purpose. Schmidt v. Currie, 470 F.Supp.2d 477, 480 (E.D.Pa.2005), aff'd, 217 Fed. Appx. 153 (3d Cir.2007); 42 Pa. Cons.Stat. § 8354(4). Therefore, “a party seeking redress under [Dragonetti] bears a heavy burden.” U.S. Express Lines, Ltd. v. Higgins, 281 F.3d 383, 394 (3d Cir., 2002). A court may decide the existence of probable cause, gross negligence, or improper purpose as a matter of law on a motion to dismiss “when the facts are not in dispute.” Schmidt, 217 Fed. Appx. at 155; Higgins, 281 F.3d at 395-96. The first Lawrence County complaint asserted causes of action against Mr. Offutt for breach of contract and breach of fiduciary duty as well as claims arising from his alleged role in the misappropriation of trade secrets. The former claims related to the terms of Mr. Offutt's employment contract with Whittaker Co.-namely, a two- year post-employment restrictive covenant and a two- year confidentiality agreement. ECF No. 14-6 at 21. At summary judgment, Judge Motto found no indication that Mr. Offutt breached any fiduciary duty he owed to Whittaker Co. Id. at 23. But regarding the breach of contract claim, he wrote, “[t]here is ... evidence that clearly shows that Offutt intended to ignore the provisions of the agreement and enter into competition against [p]laintiff. However, the Court enjoined Offutt from doing so before [p]laintiff suffered any damages and before Offutt engaged in any meaningful competition.” Id. at 21. Because the PI had at that point lasted beyond the two years required by Mr. Offutt's employment agreement, Judge Motto dismissed the breach of contract claim. Id. at 21-23. Since there was plainly some evidence that Mr. Offutt was engaging in behavior potentially violative of his non-compete agreement with Whittaker Co., the Court concludes that the Defendants were neither grossly negligent nor lacking in probable cause in bringing a claim for breach of contract against Mr. Offutt. The AC admits that Mr. Offutt was engaged in conversations with Mr. Peek and Mr. Stephenson about forming a competing company and contacted carpet- cleaning machine manufacturers, including RotoWash, the company from which Whittaker Co. bought its machines. AC ¶¶ 18-20. Judge Motto did not dismiss the breach of contract claim because it lacked merit; he did so because the PI's prohibition on competition had prevented Mr. Offutt from violating the non-compete and at that point had eclipsed the duration for which Mr. Offutt had agreed not to compete. “The issue presented in a Dragonetti Act claim is whether there was probable cause to initiate or continue the underlying suit, and not whether there existed probable cause for each and every claim presented.” Bobrick Corp., v. Santana Prods., Inc., 698 F.Supp.2d 479, 494 (M.D.Pa.2010). Because Defendants had probable cause to bring their breach of contract claim against Mr, Offutt and the AC does not plead that (or how) they were grossly negligent in doing so, the Court Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 170 of 247 Peek v. Whittaker, Not Reported in F.Supp.3d (2014) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 5 will grant Defendants' motion to dismiss the Dragonetti Act claim with respect to Mr. Offutt. *6 On the other hand, the fact that probable cause existed as to at least one claim against Mr. Offutt does not necessarily extinguish the Dragonetti Act claims of Mr. Peek and Clear Floor Care. See Buchleitner, 794 A.2d at 377-78 (allowing a Dragonetti Act claim to proceed where the plaintiff was dismissed from the underlying action on summary judgment but the three other defendants in the case were not). Unlike Mr. Offutt, all of Whittaker Co.'s claims against Mr. Peek and Clear Floor Care were premised on the allegation that they misappropriated and used Whittaker Co.'s trade secrets and confidential information. 7 Judge Motto dismissed all claims against them “[f]or all of the reasons set forth as to why [p]Iaintiff cannot sustain at this juncture a cause of action as to ... the misappropriation of trade secrets and confidential information.” ECF No. 14-6 at 27. The allegation that Plaintiffs misappropriated trade secrets and confidential information is exactly what the AC contends Defendants lacked any probable cause to rest a legally actionable claim upon. The AC specifically avers that Defendants had no probable cause to bring suit against Plaintiffs because Defendants knew that what they represented to the court to be trade secrets were not, and because Defendants knew Mr. Stephenson could not have even downloaded the customer databases that they stated, through expert testimony at the PI hearing, he stole. Plaintiffs support these allegations with deposition testimony from Mr. Whittaker and Whittaker Co.'s corporate designee admitting the latter, as well as the conclusions of Judge Motto on summary judgment that Defendants presented no evidence of any misappropriation of trade secrets, despite their many allegations of such behavior by Plaintiffs. See Ciolli v. Iravani, 625 F.Supp.2d 276, 293-94 (E.D.Pa.2010). The AC suggests that the reason there was such disparity between Judge Motto's findings in his PI opinion and his conclusions at summary judgment was that Defendants' allegations in the state court complaints and their evidence and testimony at the PI hearing were knowingly false. The AC also alleges an improper purpose-that Defendants brought the state court lawsuits to obstruct Plaintiffs' ability to establish a competing business. 8 See Prof ‘l Real Estate Investors v. Columbia Pictures Indus., 508 U.S. 49, 74, 113 S.Ct. 1920, 123 L.Ed.2d 611 (1993) (recognizing the suppression of competition as an improper purpose for bringing an antitrust action). Finally, the Lawrence County court proceedings terminated in favor of Plaintiffs on summary judgment. 9 Taking all the facts alleged in the AC as true, the Court concludes that it establishes a plausible basis for a violation of the Dragonetti Act as to Mr. Peek and Clear Floor Care. Therefore, the Court will deny the motion to dismiss the Dragonetti Act claims of those Plaintiffs, but will grant it as to Mr. Offutt. C. Abuse of Process The common law tort of abuse of process is often confused with malicious prosecution under the Dragonetti Act, but the two are “separate and distinct.” Werner v. Plater- Zyberk, 799 A.2d 776, 785 (Pa.Super.Ct.2002) (citing Hamilton Contracting Co. v. Cowder, 434 Pa.Super. 491, 644 A.2d 188, 191 (Pa.Super.Ct.1994)). Abuse of process is the “use of legal process as a tactical weapon to coerce a desired result that is not the legitimate object of the process.” McGee v. Feege, 517 Pa. 247, 535 A.2d 1020, 1026 (Pa.1987), superseded by statute on other grounds, Dragonetti Act, P.L. 1296, No. 232, § 1, as recognized in Northwestern Nat'l. Cas. Co. v. Century III Chevrolet, Inc., 863 F.Supp. 247 (W.D.Pa.1999). To state a proper claim for abuse of process under Pennsylvania law, a plaintiff must allege that: (1) the defendant used a legal process against the plaintiff; (2) the action was primarily to accomplish a purpose for which the process was not designed; and (3) harm was caused to the plaintiff. Rosen v. Am. Bank of Rolla, 426 Pa.Super. 376, 627 A.2d 190, 192 (Pa.Super.Ct.1993). *7 A claim for abuse of process does not lie where the defendant simply had cruel intentions or “acted from spite or with an ulterior motive.” Cowder, 644 A.2d at 192 (citing Rosen v. Tesoro Petroleum Corp., 399 Pa.Super. 226, 582 A.2d 27, 32-33 (Pa.Super.Ct.1999)). “There must be an act or threat not authorized by the process, or the process must be used for an illegitimate aim such as extortion, blackmail, or to coerce or compel the plaintiff to take some collateral action.” Id. If the defendant simply carries out the process to its conclusion, even with malicious intent, there is no liability for abuse of process. Id. (citations omitted). The Court concludes that in alleging Defendants obtained a PI with knowingly false evidence for the purpose of hampering Plaintiffs' ability to compete in the carpet- Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 171 of 247 Peek v. Whittaker, Not Reported in F.Supp.3d (2014) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 6 cleaning industry, which caused harm to Plaintiffs' reputation and future business prospects, Plaintiffs have made out a valid claim for abuse of process. 10 Courts applying Pennsylvania law have previously recognized a baseless petition for a PI as an actionable abuse of process. See Levert v. Phila. Int'l Records, 2005 WL 2789099, at *4-5 (E.D.Pa. Oct.26, 2005). 11 That is precisely what Plaintiffs aver occurred in state court. At oral argument, Defendants responded (similar to their contention as to the Dragonetti Act claim) that Judge Motto's summary judgment opinion demonstrated they at least had a legitimate purpose in requesting a PI as to Mr. Offutt-to prevent him from violating the non compete clause in his employment agreement. 12 However, the test for an abuse of process claim is whether the legal process in question was used “primarily not exclusively to achieve a goal unauthorized by the procedure in question,” Id. (citing Gen. Refractories Co. v. Fireman's Fund Ins. Co., 337 F.3d 297, 305 (3d Cir.2003). Because Plaintiffs allege that the primary aim of Defendants' petition for a PI was to foreclose Plaintiffs' ability to establish a foothold in the carpet-cleaning marketplace by dishonest means, a possibly legitimate alternative or secondary purpose is not enough at this juncture to extinguish the abuse of process claim as to any Plaintiff, even Mr. Offutt. Accordingly, the Court will deny the motion to dismiss to the extent that it seeks to dispose of Plaintiffs' claim for abuse of process. D. PUTSA At Count II of the AC, Plaintiffs levy a claim under Section 5305 of PUTSA. Pursuant to Section 5305, a court may award reasonable attorney's fees, expenses and costs to “the prevailing party” (1) if a claim of misappropriation is made in bad faith; (2) a motion to terminate an injunction is made or resisted in bad faith; or (3) willful and malicious misappropriation exists. 12 Pa. Cons.Stat. § 5305. Plaintiffs contend that in the state court lawsuits, Defendants made bad faith claims for misappropriation of trade secrets, and that they are now entitled to an award of attorney's fees, expenses, and costs under Section 5305 as a result of having to defend those suits. *8 Plaintiffs have not pointed the Court to any case law indicating that Section 5305 creates a standalone cause of action for attorney's fees, expenses, and costs to be recovered in a separate lawsuit, and the Court has not located any such cases in its own research. Instead, courts have routinely considered Section 5305 claims on a motion following either summary judgment or trial in the proceedings where the alleged bad faith conduct occurred. 13 The Court concludes that the language of Section 5305 is plain-it allows a court to award attorney's fees, expenses, and costs to “the prevailing party” on a PUTSA claim in that litigation under the circumstances delineated in subsections (1) through (3). Plaintiffs had an opportunity after the Lawrence County court granted summary judgment to move for such an award under Section 5305 14 , and they conceded at oral argument that they did not do so. As they have proffered nothing to this Court showing that they may recover such an award as a separate standalone claim in separate litigation, the Court concludes that Count II does not state a valid claim for relief and will grant the motion to dismiss as to Count II. 15 E. Lanham Act The Court next considers Plaintiffs' claim under Section 1125(a) of the Lanham Act. Section 1125(a)(1) provides: Any person who, 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- (A) 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, service, or commercial activities by another person, or (B)in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities, 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. 15 U.S.C. § 1125(a)(1). Plaintiffs allege that Defendants swiftly sent copies of Judge Motto's PI to their customers and to third party businesses. They claim that because that PI was predicated on Defendants' knowingly false Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 172 of 247 Peek v. Whittaker, Not Reported in F.Supp.3d (2014) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 7 evidence and testimony, Defendants disseminated false and misleading information in commerce about their own products and about Plaintiffs' commercial activities and business dealings, violating Section 1125(a). The Supreme Court has addressed the scope and application of Section 1125(a): The Lanham Act was intended to make “actionable the deceptive and misleading use of marks,” and “to protect persons engaged in ... commerce against unfair competition.” 15 U.S.C. § 1127. While much of the Lanham Act addresses the registration, use, and infringement of trademarks and related marks ... 15 U.S.C. § 1125(a) is one of the few provisions that goes beyond trademark protection. As originally enacted, [Section 1125(a) ] created a federal remedy against a person who used in commerce either “a false designation of origin, or any false description or representation” in connection with “any goods or services.” (internal citation omitted). [Section 1125(a) ] “does not have boundless application as a remedy for unfair trade practices,” Alfred Dunhill, Ltd. v. Interstate Cigar Co., 499 F.2d 232, 237 (2d Cir.1974). “[B]ecause of its inherently limited wording, [Section 1125(a) ] can never be a ‘federal codification’ of the overall law of ‘unfair competition’... (internal citation omitted), but can apply only to certain unfair trade practices prohibited by its text. *9 Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23, 28-29, 123 S.Ct. 2041, 156 L.Ed.2d 18 (2003). Courts have commonly recognized that Section 1125(a) provides two bases of liability one under § 1125(a) (1)(A) for “false representations concerning the origin, association, or endorsement of goods or services through the wrongful use of another's distinctive mark, name, trade dress, or other device (‘false association’),” and the other under § 1125(a)(1)(B) for “false representations in advertising concerning the qualities of goods or services (‘false advertising’).” Serbin v. Ziebart Int'l Corp., Inc., 11 F.3d 1163, 1173 (3d Cir.1993) (quoting Waits v. Frito-Lay, Inc., 978 F.2d 1093, 1098-99 (9 th Cir.1992)). While the AC does not specify which type of claim it is asserting, it is apparent to the Court from the factual averments in the AC (and the absence of any allegations related to wrongful use of a trademark or other device) that Plaintiffs seek relief pursuant to § 1125(a)(1)(B) for false advertising. To adequately plead a false advertising claim under § 1125(a)(1) (B), a plaintiff must allege the following; (1) The defendant has made false or misleading statements as to his own product or another's; (2) There is actual deception or at least a tendency to deceive a substantial portion of the intended audience; (3) The deception is material in that it is likely to influence purchasing decisions; (4) The advertised goods traveled in interstate commerce; and (5) There is a likelihood of injury to the plaintiff in terms of declining sales, loss of good will, etc. Pernod Ricard USA, LLC v. Bacardi U.S.A., Inc., 653 F.3d 241, 248 (3d Cir.2011) (citing Warner-Lambert v. Breathasure, 204 F.3d 87, 91-92 (3d Cir.2000). While Plaintiffs' claim may not be a textbook Lanham Act cause of action, the Court has not found, nor been presented with, any case law suggesting that Section 1125(a) contains any sort of prohibition or limitation that would preclude this false advertising claim. Plaintiffs allege that in the state court complaints and at the PI hearing, Defendants made knowingly false statements about their own products-namely that they and information about their origin and manufacture were trade secrets that Plaintiffs misappropriated to start a competing business. According to the AC, those false statements were the basis for Judge Motto's issuance of a PI against Plaintiffs. Defendants then publicized (“advertised”) the PI (which included factual recitations based on allegedly false statements), sending it, as is, to their customers and third party businesses. 16 Plaintiffs contend that Defendants took that action, premised on the PI and cloaked with apparent judicial imprimatur, with the intent to deceive Plaintiffs' prospective customers and business partners (including RotoWash), that the false statements contained in the Order did then deceive the recipients and influenced their purchasing decisions, and that Defendants' actions irreparably hurt Plaintiffs' fledgling business and cost them customers and a substantial amount of good will as they expended resources to correct the false information Defendants had spread. The Court is cognizant of the Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 173 of 247 Peek v. Whittaker, Not Reported in F.Supp.3d (2014) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 8 Supreme Court's admonition that Section 1125(a) does not have “boundless application,” but concludes that Plaintiffs' false advertising claim plausibly states a cause of action for the type of unfair trade practice contemplated by the text of the statute. 17 Therefore, the Court will deny the motion to dismiss as to the Lanham Act count. 18 F. Unfair Competition *10 At Pennsylvania common law, unfair competition is customarily defined as “the ‘passing off of a rival's goods as one's own.” Giordano v. Claudio, 714 F.Supp.2d 508, 521 (E.D.Pa.2010) (citing Scanvec Amiable Ltd. v. Chang, 80 Fed. Appx. 171, 180 (3d Cir.2003)). However, unfair competition is not limited to that definition. Carl A. Colteryahn Dairy, Inc. v. Schneider Dairy, 415 Pa. 276, 203 A.2d 469, 473 (Pa.1964), Instead, “Pennsylvania courts have recognized a cause of action for the common law tort of unfair competition where there is evidence of, among other things, trademark, trade name, and patent rights infringement, misrepresentation, tortious interference with contract, improper inducement of another's employees, and unlawful use of confidential information.” Synthes (U.S.A.) v. Globus Med., Inc., 2005 WL 2233441, at *8 (E.D.Pa. Sept.14, 2005) (citations omitted). “The phrase contextually is limited to claims designed to protect a business from another's misappropriation of its business organization or its expenditure of labor, skill, or money, i.e., injury to reputation, product, manner of doing business, identification and so forth.” USX Corp. v. Adriatic Ins. Co., 99 F.Supp.2d 593, 620 (W.D.Pa.2000) (citing Granite State Ins. Co. v. Aamco Transmissions, Inc., 57 F.3d 316, 320 (3d Cir.1995)). Unfair competition may not be used as “a virtual catch-all for any form of wrongful business conduct.” Id. at 619. The Pennsylvania cause of action for unfair competition is also “coextensive” with the definition of unfair competition contained in the Restatement (Third) of Unfair Competition. Giordano, 714 F.Supp.2d at 521-22 (citations omitted). Section 2 of the Restatement describes the general principle of “Deceptive Marketing,” which is included in the Third Restatement's definition: One who, in connection with the marketing of goods or services, makes a representation relating to the actor's own goods, services, or commercial activities that is likely to deceive or mislead prospective purchasers to the likely commercial detriment of another ... is subject to liability to the other ... Restatement (Third) of Unfair Competition § 2 (1995). This language is nearly identical to that contained in Section 1125(a) of the Lanham Act, and the comments to Section 2 continually cite that federal statutory provision as a basis for the definition and parameters of deceptive marketing. Id. cmts. b, c, f. As stated above, Pennsylvania courts have included “misrepresentation” and resulting injury to “reputation” and “manner of doing business” in the definition of unfair competition. Plaintiffs allege just such a course of conduct and consequent injury to them in the AC. Additionally, Plaintiffs have adequately stated a claim under Section 1125(a) of the Lanham Act, which appears to be a near analog to the Third Restatement's definition of deceptive marketing. On that basis, the Court concludes that Plaintiffs have stated a plausible claim for unfair competition and will deny the motion to dismiss as to Count IV. G. Fraud *11 To establish a claim for fraud or intentional misrepresentation, Plaintiffs must adequately plead the following elements: (1) a representation; (2) which is material to the transaction at hand; (3) made falsely, with knowledge of its falsity or recklessness as to whether it is true or false; (4) with the intent of misleading another into relying on it; (5) justifiable reliance on the misrepresentation; and (6) resulting injury proximately caused by the reliance. Bortz v. Noon, 556 Pa. 489, 729 A.2d 555, 560 (Pa.1999) (citations omitted). The Federal Rules of Civil Procedure implement a heightened pleading requirement for fraud Plaintiffs must state with particularity the circumstances constituting the fraud, but may allege generally conditions of the mind such as malice, intent, and knowledge. Fed.R.Civ.P. 9(b). The fraud claim contained in the AC comes to court with significant flaws. Nowhere does the AC aver that Plaintiffs themselves were the recipients of Defendants' alleged misrepresentations in the state court complaints or at the PI hearing. Nor does it state that Plaintiffs relied, justifiably or not, on any of those alleged misrepresentations. Instead, according to the AC, Defendants “intended that such information be Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 174 of 247 Peek v. Whittaker, Not Reported in F.Supp.3d (2014) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 9 relied upon by the Court and others”-presumably the customers and other businesses Defendant sent the PI to and “[t]he [j]udge before whom such false testimony was given did rely on it to the detriment of Plaintiffs.” AC ¶¶ 107-08. To sufficiently plead a claim of fraud, a plaintiff must assert that he was the recipient of the misrepresentation, reasonably relied on that misrepresentation, and was damaged as a proximate result of his reliance. Joyce v. Erie Ins. Exch., 74 A.3d 157, 167 (Pa.Super.Ct.2013). As one Pennsylvania court has noted, “It is the fundamental principal [sic] of the law of fraud, regardless of the form of the relief sought, that in order to secure redress, the representee must have relied upon the statement or representation as an inducement to his action or injurious change of position.” Silverman v. Bell Sav. & Loan Ass'n., 367 Pa.Super. 464, 533 A.2d 110, 114 (Pa.Super.Ct.1987) (quoting 37 Am.Jur.2d Fraud & Deceit § 23 (1968)). Under the facts as alleged by Plaintiffs, they neither received misrepresentations from Defendants nor relied upon them in any way. Therefore, they have not stated a plausible claim for fraud. See Joyce, 74 A.3d at 167 (dismissing a fraud claim where the plaintiff failed to allege that the defendant made any misrepresentation to him, or that he relied on any such misrepresentation, but instead claimed that the defendant deceived the federal government, a federal jury, and a federal court in a criminal case against him). The Court will grant the motion to dismiss the fraud count. III. CONCLUSION According to the Plaintiffs' allegations, throughout the underlying state court proceedings, honesty was a lonely word. 19 Based on them, Counts I, III, IV and V of the Amended Complaint may proceed to the next stages of litigation, and for the reasons stated in this Opinion, the Motion to Dismiss is granted in part and denied in part as follows: *12 1) As to the Dragonetti Act claim (Count I), the Court grants the Motion to the extent that Mr. Offutt's claim is dismissed and denies the Motion in all other respects; 2) The Court grants the Motion as to the PUTSA claim (Count II); 3) The Court denies the Motion as to the Lanham Act claim (Count III); 4) The Court denies the Motion as to the claim for unfair competition (Count IV); 5) The Court denies the Motion as to the claim for abuse of process (Count V); and 6) The Court grants the Motion as to the claim for fraud (Count VI). An appropriate Order will follow. All Citations Not Reported in F.Supp.3d, 2014 WL 2154965 Footnotes 1 The Court has jurisdiction over this case under 28 U.S.C. § 1332(a), as there is complete diversity between the parties and the amount in controversy is greater than $75,000, For purposes of diversity jurisdiction, the citizenship of a limited liability company (“LLC”) such as Clear Floor Care is determined by the citizenship of each of its members, “traced through however many layers of partners or members there may be.” Zambelli Fireworks Mfg. Co., Inc. v. Wood, 592 F.3d 412, 419-20 (3d Cir.2010). To adequately plead diversity, an LLC plaintiff must include the identity and citizenship of each of its members in the complaint. See Celestial Cmty. Dev. Corp., Inc. v. City of Phila., 901 F.Supp.2d 566, 581- 82 (E.D.Pa.2012). After much jousting on the subject, Plaintiffs filed a declaration at the Court's direction to establish the identity and citizenship of each of the members of Clear Floor Care along with signed declarations from each of its members. ECF No. 26. As both LLC members (Mr. Peek and Mr. Offutt) are citizens of Georgia, and none of the Defendants are Georgia citizens, the Court is satisfied that complete diversity has been properly pled. 2 The case as pled falls within this Court's diversity jurisdiction under 28 U.S.C. § 1332(a), It does not seek to review or call into question the validity of a state-court judgment, so the Rooker-Feldman doctrine does not stand in its way. See Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284, 125 S.Ct. 1517, 161 L.Ed.2d 454 (2005); Great W. Mining & Mineral Co. v. Fox Rothschild LLP, 615 F.3d 159, 167 (3d Cir.2010) (“When the source of the injury is the defendant's actions (and not the state court judgments), the federal suit is independent.”) Nor, if the facts as pled have Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 175 of 247 Peek v. Whittaker, Not Reported in F.Supp.3d (2014) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 10 legs, is this simply a case of “sour grapes,” which Defendants correctly point out is not a viable standalone cause of action in our jurisprudential system. ECF No. 9 at 3. While the conduct of litigation in a state court is at the core of this lawsuit, neither party has pointed to, nor can the Court divine, any prudential, abstention, federalism or comity principle that would counsel this Court's declination of its statutory jurisdiction. Cf. Farneth v. Wal-Mart Stores, Inc., 2013 WL 6859013 (W.D.Pa. Dec.30, 2013) (jurisdiction declined on comity grounds). 3 Those causes of action were: breach of contract (against Offutt and Stephenson), breach of fiduciary duty (against Offutt and Stephenson), aiding and abetting breach of fiduciary duty (against Peek), misappropriation of trade secrets (against Offutt, Stephenson, and Peek), tortious interference with contractual relations (against all three), tortious interference with business relationships (against all three), tortious interference with employee relationships (against all three), unjust enrichment (against all three), conversion (against all three), and civil conspiracy (against all three). ECF No. 14-1. 4 The complaint against Clear Floor Care asserted causes of action for aiding and abetting breach of fiduciary duty, misappropriation of trade secrets, tortious interference with contractual relations, tortious interference with business relationships, tortious interference with employee relationships, unjust enrichment, conversion, and civil conspiracy. ECF No. 14-2. By the Court's count, this second wave of litigation meant that the state court had to wade through eighteen (18) theories of recovery, against four (4) defendants, all arising from the establishment of exactly one (1) new carpet- cleaning business. This case now piles on six (6) more claims, for an even two dozen. 5 Which would be precisely contrary to the content and plain implication of Mr. Sloane's testimony at the PI hearing. 6 It does not appear that any appeal was taken from that Order. 7 Defendants' supplemental memorandum suggests otherwise, claiming that Mr. Offutt's actions in starting Clear Floor Care with Mr. Peek gave Defendants probable cause for their claims for tortious interference with a contractual relationship against Mr. Peek and Clear Floor Care. ECF No. 15 at 4. However, with the exception of the breach of contract and breach of fiduciary duty claims against Mr. Offutt and Mr. Stephenson, Judge Motto dismissed all of the remaining claims on the grounds that “there is simply no evidence that [d]efendants engaged in any prohibited conduct” related to misappropriation of trade secrets. ECF No. 14-6 at 27. It is plain to the Court from Judge Motto's Opinion that his rationale for dismissing all of the claims against Mr. Peek and Clear Floor Care was the complete lack of evidence that they had stolen or used any trade secrets or confidential information belonging to Whittaker Co. That is enough for the Dragonetti Act claims of Mr. Peek and Clear Floor Care to proceed, at least at this point. Whether they will survive a summary judgment motion, or a trial, may be another matter. 8 An improper purpose may also be inferred if the action is filed without probable cause. Logan v. Salem Baptist Church of Jenkintown, 2010 WL 3364203, at *8 (E.D.Pa. Aug.17, 2010). 9 See Logan, 2010 WL 3364203, at *8 (“The focus [for the purpose of the termination of proceedings requirement under the Dragonetti Act] is not on the result of a preliminary ex parte hearing, but the ultimate outcome of the case.”) 10 While the paragraphs in the AC supporting Count V do not discuss the preliminary injunction but rather the filing of the Lawrence County lawsuits as an “abuse of the litigative process,” the claim does contain an incorporation clause at ¶ 100, so the PI allegations elsewhere in the AC are subsumed within that count. The Court notes that it would have been much clearer pleading-wise to fortify the abuse of process claim itself with the proper allegations, but concludes that the factual averments incorporated by reference into that claim are sufficient to clear the Twombly/Iqbal bar. 11 In Levert, the plaintiffs moved for summary judgment as to the defendants' counterclaim for abuse of process on the grounds that plaintiffs sought an unfounded PI against the sale of an album of unreleased O'Jays songs. 2005 WL 2789099 at *4. The court in Levert concluded that genuine issues of material fact existed as to whether the plaintiffs* primary purpose for seeking the injunction was “not legitimate.” Id. at *5. 12 Defendants again attempted to extend that argument to the other Plaintiffs by contending that they also requested a PI to prevent tortious interference with Mr. Offutt's contract by Mr. Peek and Clear Floor Care. The Court is not moved by that argument for the same reasons articulated as to the Dragonetti Act claim, supra n. 8. 13 See Ozburn-Hessey Logistics, LLC v. 721 Logistics, LLC, 2014 WL 1364506, at *13 (E.D.Pa. Apr.7, 2014); Danois v. i3 Archive Inc., 2013 WL 3556083, at *27 (E.D.Pa. July 12, 2013); Krafft v. Downey, 68 A.3d 329 (Pa.Super.Ct.2013); Hill v. Best Med. Int'l, Inc., 2011 WL 6749036 (W.D.Pa. Dec.22, 2011); Youtie v. Macy's Retail Holding, Inc., 653 F.Supp.2d 612, 630-31 (E.D.Pa.2009). In Arora Eng'rs, Inc. v. George, 2009 WL 6997067 (Pa.Com.Pl. Dec.1, 2009), the plaintiff's complaint asked for attorney's fees under Section 5305, and the court recognized that PUTSA “does provide for attorney's fees” in denying the defendant's motion to strike that request. However, in that case, plaintiffs made a request for attorney's fees in conjunction with a claim for a violation of PUTSA, and invoked Section 5305(3) the “willful and malicious misappropriation” language to request attorney's fees. Here, Plaintiffs make no separate claim of a violation of PUTSA along with their request for attorney's fees under Section 5305(1). Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 176 of 247 Peek v. Whittaker, Not Reported in F.Supp.3d (2014) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 11 14 Although the Court notes that the state court complaints, while containing claims for misappropriation of trade secrets, do not reference PUTSA. 15 This does not foreclose the possibility that certain of the costs and expenses incurred in defending an allegedly baseless lawsuit may be recoverable damages in another asserted claim. 16 In their supplemental memorandum, Plaintiffs argue that by disseminating the preliminary injunction to such entities, Defendants waived any applicable state law litigation privilege which would bar a claim grounded on statements made in connection with the initiation and prosecution of a lawsuit. As that issue was not raised in Defendants' Motion to Dismiss, the Court need not address it here. 17 Plaintiffs cite to Encompass Ins. Co. of Mass. v. Giampa, 522 F.Supp.2d 300 (D.Mass.2007), as an analogy to the Lanham Act claim in this case. In Giampa, the defendants asserted a § 1125(a)(1)(B) counterclaim for false advertising on the premise that the plaintiff filed a complaint against them without a good faith basis for doing so and then repeated false and misleading allegations from the complaint, as well as other falsehoods, in a press release about the suit that it issued. 522 F.Supp.2d at 306-07, 310. While the Giampa court dismissed the Lanham Act claim because of its failure to allege that defendants competed with plaintiff or had suffered a competitive injury as a result of plaintiff's actions, Plaintiffs in this case argue that “it is clear that the court would not have done so if the counterclaimants would have been able to allege that they were competitors of the party that issued the press release.” ECF No. 18 at 5. The Court is somewhat unconvinced of the clarity of that presumption, but it is worth noting that the allegations in this case that Defendants lied to a court and disseminated an order from that court, carrying the seal and authority of that court and containing findings of fact and conclusions of law based largely on allegedly false statements are far different, more precise, and far more serious than those in Giampa. 18 The Court has conducted a searching review of the AC and found no specific averment that the goods Whittaker Co. allegedly made false representations about traveled in interstate commerce, as required by the fourth prong of the Third Circuit test for a false advertising claim under 15 U.S.C. § 1125(a)(1)(B), cited supra, p. 17. That said, the plain implication of Whittaker's assertions in the PI proceeding regarding the heritage of its chemical products and Austrian-produced carpet-cleaning devices likely fulfill this requirement. Just to be sure, within ten (10) days of the issuance of this Opinion, Plaintiffs shall file a declaration with the Court setting forth the factual basis for concluding (if at all) that such goods have traveled in interstate commerce. The Court will assess the sufficiency of that declaration, and if it concludes that the declaration does not adequately and plausibly assert that such goods traveled in interstate commerce, it will then dismiss the Lanham Act claim. 19 WILLIAM MARTIN JOEL, Honesty, on 52 nd Street (Columbia Records 1978). End of Document © 2017 Thomson Reuters. No claim to original U.S. Government Works. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 177 of 247 EXHIBIT R Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 178 of 247 Schwartz v. OneWest Bank, FSB, Not Reported in F.Supp.2d (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 1 2013 WL 6037078 Only the Westlaw citation is currently available. United States District Court, E.D. Pennsylvania. James E. SCHWARTZ, Plaintiff v. ONEWEST BANK, FSB, Defendant. Civil Action No. 13-0113. | Nov. 13, 2013. Attorneys and Law Firms H. Peter Nelson, Grim Biehn & Thatcher, Perkasie, PA, for Plaintiff. Brett L. Messinger, Arthur R. Armstrong, Duane Morris LLP, Martin C. Bryce, Jr., Rachel Keene, Daniel J.T. Mckenna, Ballard Spahr Andrews and Ingersoll, L.L.P., Philadelphia, PA, for Defendant. MEMORANDUM OPINION NITZA I. QUIÑONES ALEJANDRO, District Judge. INTRODUCTION *1 On March 1, 2013, OneWest Bank, FSB (“Defendant” or “OneWest”), filed a motion to dismiss the amended complaint [ECF 10] pursuant to the provision of Federal Rule of Civil Procedure (Rule) 12(b) (6) for failure to state a claim. On March 29, 2013, James E. Schwartz (“Plaintiff” or “Schwartz”) formally opposed the motion [ECF 13]. On July 18, 2013, this matter was reassigned to the undersigned [ECF 19]. By order dated September 25, 2013 [ECF 20], this Court notified the parties that it was converting pursuant to Rule 12(d), the motion to dismiss and the answer, into cross-motions for summary judgment as to Counts I and II only of the amended complaint and directed the parties to file supplemental briefs in support of their respective position. On October 7, 2013, Plaintiff filed a supplemental brief [ECF 26]. Defendant filed its supplemental brief on October 15, 2013 [ECF 27], and stated that it is “agreeable to the entry of an order confirming that the Mortgage covers only Parcel A.” Accordingly, judgment on Counts I and II only is entered in favor of Plaintiff. In light of this ruling, the remaining matter before the Court is Defendant's motion to dismiss Counts III through VIII of the amended complaint. 1 As to these counts, Plaintiff asserts that OneWest's foreclosure action and the subsequent sheriff's sale listings of a specific real estate property belonging to Plaintiff violated Pennsylvania's Fair Credit Extension Uniformity Act, 73 Pa. Con. Stat. § 2270.1, et seq., (“FCEUA”), and the Unfair Trade Practices and Consumer Protection Law, 73 Pa. Con. Stat. § 201-1, et seq., (“UTPCPL”). Plaintiff further contends that said foreclosure action and sheriff's sale listings give rise to claims of slander of title, abuse of process, and intentional interference with existing and/or prospective contractual relations. For the reasons set forth, this Court grants Defendant's motion to dismiss Counts III through VIII. BACKGROUND For the purpose of ruling on Defendant's motion to dismiss, this Court accepts as true the following summary of the relevant allegations in Plaintiff's amended complaint and attachments: Schwartz is the owner of two parcels of land in Bucks County (hereinafter, referred to as “Parcel A” and “Parcel B”), which he acquired by deed in July 1996. Parcel A is identified as Bucks County Tax Map Parcel No. 44-014-084, and Parcel B is identified as Bucks County Tax Map Parcel No. 44-014-087. On March 14, 2007, Schwartz obtained a loan from IndyMac Bank, FSB, (IndyMac Bank) in the amount of $375,000, and executed a note and a mortgage as security for the loan. In March 2009, OneWest acquired the assets and operations of IndyMac Bank from the Federal Deposit Insurance Corporation. The mortgage executed by Schwartz was recorded by IndyMac Bank on November 25, 2009, and assigned to OneWest on January 3, 2010. The assignment was recorded on February 4, 2010. In the interim, OneWest filed a mortgage foreclosure action against Schwartz in Bucks County Court of Common Pleas, 2 averring that Schwartz had defaulted on the mortgage encumbering the property subject to the mortgage identified as Tax Map Parcel No. 44-014- Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 179 of 247 Schwartz v. OneWest Bank, FSB, Not Reported in F.Supp.2d (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 2 084 (Parcel A). See Complaint, Exhibit A. In addition, “Exhibit A” attached to the Mortgage document also referenced Tax Map Parcel No. 44-014-084, as the encumbered property. However, within the metes and bounds description of the property, reference is made to “two adjoining tracts of land constituting one farm.” See Defendant's Motion to Dismiss, Exhibit A to Exhibit C. 3 *2 Schwartz failed to respond to the mortgage foreclosure complaint, and on February 2, 2010, OneWest filed a praecipe to enter judgment by default. Following the entry of the default judgment, a sheriff's sale was scheduled for May 14, 2010, which listed the foreclosed property as “Tax Parcel # 44-14-84” (Parcel A). See Amended Complaint, Exhibit 2 (the “Initial Sheriffs Sale Notice”). For unknown reasons, the sheriff's sale was cancelled and re-listed several times During the course of the mortgage foreclosure proceedings, counsel for OneWest advised Schwartz's then counsel that it was OneWest's position that the mortgage encumbered two parcels, Parcels A and B. Specifically, by letter dated October 29, 2010, OneWest's foreclosure counsel wrote “the Mortgage was intended to, and does, encumber both of the two parcels described in plaintiff's writ of execution....” See Amended Complaint, Exhibit 4. This contention was repeated in emails to Schwartz's counsel on February 9, 2011, and July 20, 2011. See Amended Complaint, Exhibit 5. On January 24, 2013, a notice of sale was issued rescheduling the sheriff's sale for February 8, 2013. Like the Initial Sheriff's Sale Notice, this notice referenced only “TAX PARCEL # 44-14- 84” (Parcel A). However, unlike the Initial Sheriffs Sale Notice, the January 24, 2013 Notice included a description of the property involved which referenced “two adjoining tracts of land constituting one farm.” This language was identical to that contained in Exhibit A attached to the Mortgage. Schwartz alleges that on August 12, 2010, he entered into an Agreement of Sale for both parcels with Schmidt Properties, LLC (“Schmidt”), intending to transfer the parcels under a short sale and to use the proceeds to pay off the mortgage with OneWest. Plaintiff contends that he was unable to close the transaction due to unspecified actions of OneWest. Schwartz further alleges that sometime in 2011, he applied to sell the development rights to both parcels to Tinicum Township as part of a land conservancy program. He claims that the transaction failed because OneWest refused to subordinate its mortgage to the conservation easement Tinicum Township would place on the property in conjunction with the sale of the development rights. LEGAL STANDARD When considering a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6), the court “must accept all of the complaint's well-pleaded facts as true, but may disregard any legal conclusions.” Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir.2009). The court must then determine “whether the facts alleged in the complaint are sufficient to show that the plaintiff has a ‘plausible claim for relief.’ ” Id. at 211 (quoting Ashcroft v. Iqbal, 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009)). The complaint must do more than merely allege the plaintiff's entitlement to relief; it must “show such an entitlement with its facts.” Id. (citations omitted). “[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, 556 U.S. at 679 (quoting Fed.R.Civ.P. 8(a)) (alterations in original). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. at 678 (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements do not suffice.” Id. To survive a motion to dismiss under Rule 12(b)(6), “a plaintiff must allege facts sufficient to ‘nudge [his]claims across the line from conceivable to plausible.’ ” Phillips v. County of Allegheny, 515 F.3d 224, 234 (3d Cir.2008) (quoting Twombly, 550 U.S. at 570). *3 In deciding motions to dismiss, “courts generally consider only the allegations contained in the complaint, exhibits attached to the complaint, and matters of public record.” Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir.1993) (citations omitted); see also Sands v. McCormick, 502 F.3d 263, Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 180 of 247 Schwartz v. OneWest Bank, FSB, Not Reported in F.Supp.2d (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 3 268 (3d Cir.2007). The court may consider “undisputedly authentic document[s] that a defendant attaches as an exhibit to a motion to dismiss if the plaintiff's claims are based on the [attached] document[s].” Pension Benefits, 998 F.2d at 1196. Documents whose contents are alleged in the complaint and whose authenticity no party questions, but which are not physically attached to the pleading, may also be considered. Pryor v. Nat'l Collegiate Athletic Ass'n, 288 F.3d 548, 560 (3d Cir.2002) (citation omitted); see also U.S. Express Lines, Ltd. v. Higgins, 281 F.3d 383, 388 (3d Cir.2002) (“Although a district court may not consider matters extraneous to the pleadings, a document integral to or explicitly relied upon in the complaint may be considered without converting the motion to dismiss into one for summary judgment.”) (internal quotation omitted). DISCUSSION Plaintiff's Slander of Title Claim At Count III of the amended complaint, Plaintiff asserts a claim for slander of title based on Defendant's alleged false representations of its interest in Parcel B. Plaintiff relies on the following assertions in support of his contentions: (1) statements made in Defendant's legal filings in the mortgage foreclosure action; (2) statements made by Defendant's foreclosure counsel in a letter and in two emails to Plaintiff's foreclosure counsel during the course of the mortgage foreclosure action; and (3) representations made in the sheriffs sale notices of 2010 and 2011. Defendant rebuts Plaintiff's slander of title claim and argues that the claim fails since it is based entirely upon representations that are subject to an absolute privilege. 4 Disparagement or slander of title is the false and malicious representation of the title or quality of another's interest in goods or property. Forman v. Cheltenham National Bank, 348 Pa.Super. 559, 502 A.2d 686, 688 (Pa.Super.1985). To assert a claim for slander of title, a plaintiff must allege: (1) a publication of a false statement; (2) the publisher either intends the publication to cause pecuniary loss or reasonably should recognize that the publication will result in pecuniary loss; (3) a pecuniary loss does in fact result; and (4) the publisher either knows that the statement is false or acts in reckless disregard of its truth or falsity. Pro Golf Manufacturing, Inc. v. Tribune Review Newspaper Company, 570 Pa. 242, 809 A.2d 243, 246 (Pa.2002). Under Pennsylvania law, it is well-settled that “[a]ll communications pertinent to any stage of a judicial proceeding are accorded an absolute privilege which cannot be destroyed by abuse ... Thus, statements by a party, a witness, counsel, or a judge cannot be the basis of a defamation action whether they occur in the pleadings or in open court.” Binder v. Triangle Publications, Inc., 442 Pa. 319, 275 A.2d 53, 56 (Pa.1971); see also Triester v. 191 Tenants Assoc., 272 Pa.Super. 271, 415 A.2d 698, 702 (Pa.Super.1979) (recognizing extension of absolute privilege to claim for slander of title). This absolute privilege “extends not only to communications made in open court, but also encompasses pleadings and even less formal communications such as, preliminary conferences and correspondence between counsel in furtherance of the client's interest.” Richmond v. McHale, 35 A.3d 779, 785 (Pa.Super.2012) (citations omitted). In addition, the existence of the privilege does not depend upon the motive of the defendant in making the alleged statement. Greenberg v. Aetna Ins. Co., 427 Pa. 511, 235 A.2d 576, 578 (Pa.1967). All reasonable doubts as to whether the alleged communications were pertinent and material to the relief or redress sought are to be resolved in favor of pertinency and materiality. Id. at 577-578. *4 Here, Plaintiff alleges that Defendant slandered the title to Parcel B by filing the mortgage foreclosure action and seeking to foreclose on the property described in the mortgage document attached to the complaint. Because all representations made in pleadings are subject to an absolute privilege, the representations made in the mortgage foreclosure complaint cannot form the basis of a claim for slander of title. Plaintiff's argument is, therefore, without merit. Next, Plaintiff contends that Defendant slandered the title to Parcel B by communications made by OneWest's foreclosure counsel to Plaintiff's counsel “in the Foreclosure Action.” In the correspondences, attached as Exhibits 4 and 5 to the amended complaint, OneWest's foreclosure counsel advised Plaintiff's counsel that OneWest believed both parcels were intended to be encumbered by the mortgage, as evidenced by its reference to the “two adjoining tracts.” It is clear from the content and timing of the statements, however, that these were made in connection with counsel's Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 181 of 247 Schwartz v. OneWest Bank, FSB, Not Reported in F.Supp.2d (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 4 representation of OneWest in the judicial foreclosure proceeding; to wit: the October 29, 2010 letter identifies the foreclosure action by caption in the subject line of the letter, and the email correspondences specifically refer to the October 29, 2010 letter. Further, in the amended complaint, Plaintiff acknowledged that these correspondences were made “in the Foreclosure Action.” See Amended Complaint ¶¶ 43 and 44. Based upon these arguments and acknowledgment, this Court finds that the communications are absolutely privileged and cannot form the basis of a claim for slander of title. See Smith v. Griffiths, 327 Pa.Super. 418, 476 A.2d 22, 25 (Pa.Super.1984) (affirming application of absolute privilege to written communications of attorney on behalf of his client during the course of judicial proceedings). Plaintiff also contends that Defendant slandered the title to Parcel B by “schedul[ing] a sheriff sale ....” Amended Complaint ¶¶ 24 and 28. Specifically, Plaintiff points to two sheriff's sale notices, attached to the amended complaint as Exhibits 2 and 3, which he contends Defendant “lists both of Mr. Schwartz's properties” for sale. Even assuming OneWest was responsible for the language contained in the sheriff's sale notices, the notices were posted in connection with and as a result of the state court's entry of judgment in the foreclosure action. Because each of the representations on which Plaintiff's slander claim is based was made in the course of and in connection to a judicial proceeding, i.e., the foreclosure action, the representations are absolutely privileged and cannot support a claim for slander of title. 5 Plaintiff's Fair Credit Extension Uniformity Act Claim At Count IV, Plaintiff asserts a claim under Pennsylvania's Fair Credit Extension Uniformity Act (the “FCEUA”), 73 Pa. Con. Stat. § 2270.1, et seq., which prohibits unfair or deceptive acts or practices with regard to the collection of debts. In support of his FCEUA claim, Plaintiff relies upon the same representations and conduct on which his slander of title claim is based. Because these representations are subject to an absolute privilege (see supra discussion), these cannot form the basis of Plaintiff's claim under the FCEUA. See e.g., Moses v. McWilliams, 379 Pa.Super. 150, 549 A.2d 950, 957-58 (Pa.Super.1988) (recognizing the extension of absolute privilege by Pennsylvania courts to torts other than defamation). *5 Notwithstanding, Plaintiff contends that Defendant engaged in unfair or deceptive debt collection practices “[b]y attempting to foreclose upon” Parcel B. Plaintiff fails, however, to allege facts that could be deemed unfair or deceptive debt collection acts or practices. At best, Plaintiff points to the commencement of the mortgage foreclosure action as constituting Defendant's wrongful debt collection action. Notably, Plaintiff provides no legal support for his contention that a lender's commencement of foreclosure proceedings constitutes an unfair or deceptive debt collection practice. Assuming that the commencement of a foreclosure action could constitute an unfair or deceptive debt collection practice, a review of OneWest's mortgage foreclosure complaint shows that OneWest merely sought to foreclose on the property identified in the mortgage document attached to the foreclosure complaint. See Foreclosure Complaint, Exhibit C to Defendant's Motion to Dismiss (“The premises subject to said mortgage is described in the mortgage attached as Exhibit A and is known as 118 Hollow Horn Road, Erwinna, Pennsylvania 18920.”). OneWest did not make any representations in that pleading as to its rights in Parcel B, but rather simply asserted rights in the property identified in the mortgage. This court filing cannot be deemed deceptive or improper. Plaintiff's Unfair Trade Practices and Consumer Protection Law Claim At Count V, Plaintiff asserts a claim under the Unfair Trade Practices and Consumer Protection Law (the “UTPCPL”), 73 Pa. Con. Stat. § 201-1, et seq. The UTPCPL prohibits “unfair methods of competition” and “unfair or deceptive acts or practices” in the conduct of trade or commerce. 73 Pa. Con. Stat. § 201-3. The UTPCPL provides various definitions of unfair practices, including a catch-all provision. See Id. § 201- 2(4). 6 “The statute creates a private right of action in persons upon whom unfair methods of competition and unfair or deceptive acts or practices are employed and who, as a result, sustain an ascertainable loss.” Hunt v. U.S. Tobacco Co., 538 F.3d 217, 221 (3d Cir.2008) (internal quotations omitted). Thus, to assert a viable claim under the UTPCPL, a plaintiff must allege, inter alia, “that he justifiably relied on the defendant's wrongful conduct or representation and that he suffered Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 182 of 247 Schwartz v. OneWest Bank, FSB, Not Reported in F.Supp.2d (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 5 harm as a result of that reliance.” Id. at 224 (finding “the justifiable-reliance standing requirement to apply to all substantive subsections of the Consumer Protection Law ....”) (emphasis in original). As the basis of his UTPCPL claim, Plaintiff alleges that Defendant made “false and/or misleading statements of fact concerning the applicability of the Mortgage Copy,” engaged in “fraudulent conduct which created a likelihood of confusion and/or misunderstanding regarding the impact of the Mortgage Copy,” and engaged “in acts of fraudulent conduct concerning the applicability of the Mortgage Copy.” See Amended Comp. ¶ 80. The only facts alleged in support of these otherwise bald contentions, however, are those relating to the statements made by Defendant in the course of the foreclosure action. For the reasons discussed above, all of these alleged representations are subject to an absolute privilege and cannot, therefore, form the basis of liability under the UTPCPL. *6 Further, nowhere in the amended complaint does Plaintiff allege facts as to how he justifiably relied upon Defendant's alleged misrepresentations to his detriment. Plaintiff does not allege any action he undertook to his detriment in reliance upon Defendant's purported misrepresentations as to the encumbrance of Parcel B. Having failed to allege any such facts, Plaintiff's claim is dismissed. See Hunt, 538 F.3d at 227. In addition, Defendant argues that Plaintiff's UTPCPL claim is barred by the economic loss doctrine because it is based entirely upon a contract, i.e., the mortgage, and Plaintiff's only alleged losses are economic in nature. Plaintiff counters that his UTPCPL claims are not barred by the economic loss doctrine because these claims are based on Defendant's alleged misrepresentations as to Defendant's interest in Parcel B made in court filings, the sheriff's sale notices, and the correspondence from Defendant's counsel, and are, therefore, independent of the mortgage. The economic loss doctrine provides that “no cause of action can be maintained in tort for negligence or strict liability where the only injury was an ‘economic loss'- that is, loss that is neither physical injury nor damage to tangible property.” 2-J Corp. v. Tice, 126 F.3d 539, 541 (3d Cir.1997). Within the Third Circuit, this doctrine has been expanded and applied in multiple contexts, including claims brought under the UTPCPL. See Werwinski v. Ford Motor Co., 286 F.3d 661 (3d Cir.2002) (holding that plaintiff's UTPCPL claim was barred by the economic loss doctrine). In Werwinski, the Third Circuit held that Pennsylvania law made no exception to the economic loss doctrine for intentional tort or UTPCPL claims. Id. at 674. The court further held that where the allegedly fraudulent misrepresentations concerned the subject of a contract, the tort claims are clearly intertwined with, rather than extraneous to, the contract claims. Id. at 678. Thus, the court concluded that the economic loss doctrine barred such claims. Id. 7 Similarly, resolution of Plaintiff's claims turns on the construction of the language of the mortgage with regard to the encumbered property. Specifically, any claims based on the alleged misrepresentations as to Defendant's interest in Parcel B are necessarily interwoven with the mortgage itself. Because Plaintiff's UTPCPL claim is dependent upon a determination as to whether the mortgage also encumbered Parcel B, the claim is inextricably tied in with the mortgage and, thus, barred by the economic loss doctrine. In addition, Plaintiff has alleged nothing more than purely economic loss. He does not allege any injury to himself or to his tangible property. As such, this claim cannot be maintained in tort and Plaintiff's UTPCPL claim is barred. Plaintiff's Abuse of Process Claim At Count VI, Plaintiff asserts a claim for abuse of process. “The gist of an action for abuse of process is the improper use of process after it has been issued, that is, a perversion of it.” McGee v. Feege, 517 Pa. 247, 535 A.2d 1020, 1023 (Pa.1987) (citations omitted). An abuse of process is “use of legal process as a tactical weapon to coerce a desired result that is not the legitimate object of the process.” Id. at 1026. In order to state a cause of action for abuse of process, a plaintiff must allege that the defendant used a legal process to accomplish a purpose for which the process was not designed. Rosen v. American Bank of Rolla, 426 Pa.Super. 376, 627 A.2d 190, 192 (Pa.Super.1993). It is not enough that the defendant had bad or malicious intentions or that the defendant acted from spite or with an ulterior motive. Rosen v. Tesoro Petroleum Corp., 399 Pa.Super. 226, 582 A.2d 27, 32-33 Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 183 of 247 Schwartz v. OneWest Bank, FSB, Not Reported in F.Supp.2d (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 6 (Pa.Super.1990). Rather, there must be an act or threat not authorized by the process, or the process must be used for an illegitimate aim such as extortion, blackmail, or to coerce or compel the plaintiff to take some collateral action. Id. “[T]here is no liability where the defendant has done nothing more than carry out the process to its authorized conclusion, even though with bad intentions.” Shaffer v. Stewart, 326 Pa.Super. 135, 473 A.2d 1017, 1019 (Pa.Super.1984); see also Rosen, 627 A.2d at 192 (“ ‘[T]here is no action for abuse of process when the process is used for the purpose for which it is intended, but there is an incidental motive of spite or an ulterior purpose of benefit to the defendant ....’ ”) (quoting Restatement (Second) of Torts § 682 cmt. b). “Liability is reached when the utilization of the procedure for the purpose for which it was designed becomes so lacking in justification as to lose its legitimate function as a reasonably justifiable litigation procedure.” Gen. Refractories Co. v. Fireman's Fund Ins. Co., 337 F.3d 297, 308 (3d Cir.2003). *7 Here, Plaintiff alleges that Defendant engaged in an abuse of process by “filing the foreclosure action” and, therein, “attempt[ing] to unlawfully gain ownership of South 20 Parcel,” i.e., Parcel B. Amended Comp. ¶ 83. As pled, this claim fails as a matter of law because such a claim cannot be based upon the commencement of legal proceedings, but rather must be based upon the “improper use of process after it has been issued.” McGee, 535 A.2d at 1023 (emphasis added); see also In re Larsen, 532 Pa. 326, 616 A.2d 529, 592-93 (Pa.1992) (“Abuse of process differs from malicious prosecution in that the gist of the tort is not commencing an action or causing process to issue without justification, but misusing, or misapplying process justified in itself for an end other than that which it was designed to accomplish.”). At most, Plaintiff has alleged that Defendant commenced the underlying foreclosure action for an improper purpose, although he has never objected to the foreclosure action as it relates to Parcel A. Such allegation is insufficient to support a claim for abuse of process. See Rosen v. Tesoro Petroleum Corp., 399 Pa.Super. 226, 582 A.2d 27, 33 (Pa.Super.1990) (affirming dismissal of abuse of process claim where plaintiff merely alleged that defendant commenced litigation for a wrongful purpose). Plaintiff's abuse of process claim is, therefore, dismissed. Tortious Interference with Existing and Prospective Contracts At Counts VII and VIII, Plaintiff alleges that Defendant tortiously interfered with an existing agreement of sale with Schmidt and/or a prospective contract with Tinicum by engaging in conduct aimed at preventing the sales. To maintain an action for intentional interference with contractual relations, whether existing or prospective, a plaintiff must allege the following: (1) the existence of a contractual, or prospective contractual relation between the complainant and a third party; (2) purposeful action on the part of the defendant, specifically intended to harm the existing relation, or to prevent a prospective relation from occurring; (3) the absence of a privilege or justification on the part of the defendant; and (4) the occasioning of actual damage as a result of the defendant's conduct. Advent Systems Ltd. v. Unisys Corp., 925 F.2d 670, 673 (3d Cir.1991); Ira G. Steffy & Son, Inc. v. Citizens Bank of Pennsylvania, 7 A.3d 278, 288-89 (Pa.Super.2010); Pelagatti v. Co hen, 370 Pa.Super. 422, 536 A.2d 1337, 1343 (Pa.Super.1987) (citing Thompson Coal Co. v. Pike Coal Co., 488 Pa. 198, 412 A.2d 466, 471 (Pa.1979)). In support of his tortious interference claims, Plaintiff relies upon the same facts as those underlying his other claims, i.e., the alleged misrepresentations made during the course of the foreclosure action as to the encumbrance of Parcel B. As previously stated, these representations are absolutely privileged, and, therefore, cannot provide any basis for a tortious interference claim. See Pelagatti, 536 A.2d at 1343 (affirming the dismissal of tortious interference claims that were based upon representations made in the course of litigation on the basis that those communications were absolutely privileged). The claims are, therefore, dismissed. CONCLUSION *8 For the foregoing reasons, this Court grants Defendant's motion to dismiss Counts III through VIII of the amended complaint. Two orders consistent with this memorandum follow. ORDER Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 184 of 247 Schwartz v. OneWest Bank, FSB, Not Reported in F.Supp.2d (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 7 AND NOW, this 13th day of November 2013, upon consideration of Defendant's Motion to Dismiss First Amended Complaint [ECF 10], Plaintiff's Answer to Motion to Dismiss First Amended Complaint [ECF13], and the allegations contained in the First Amended Complaint [ECF 7], it is hereby ORDERED that Defendant's motion with respect to Counts III through VIII of the First Amended Complaint is GRANTED, and Counts III through VIII are hereby DISMISSED. A memorandum opinion setting forth the reasons for this Order is filed herewith. All Citations Not Reported in F.Supp.2d, 2013 WL 6037078 Footnotes 1 Procedurally, on December 10, 2012, Plaintiff filed a complaint against Defendant in the Court of Common Pleas Bucks County [ECF 1]. Defendant removed the matter on January 9, 2013, pursuant to 28 U.S.C §§ 1332 and 1441 arguing the court's diversity jurisdiction [ECF 1]. On January 15, 2013, Defendant filed a motion to dismiss the complaint [ECF 6], In response, on February 5, 2013, Plaintiff filed an amended complaint [ECF 7], which precipitated the instant motion to dismiss. 2 While Plaintiff did not attach a copy of the foreclosure action complaint to his amended complaint, this Court may consider the foreclosure complaint because: (1) it is a publicly available document and Plaintiff has referenced it in his amended complaint; and (2) Defendant has attached a copy of the foreclosure complaint to its motion, as Exhibit C. 3 Plaintiff attached an identical copy of the mortgage to his amended complaint as Exhibit 1. 4 In his sur-reply, Plaintiff contends that the slander of title claim is also based upon the incorrect description of the encumbered property in the assignment of the mortgage from IndyMac to OneWest. Plaintiff's amended complaint, however, contains no such allegations or, more importantly, facts to support such a claim. 5 Moreover, the first sheriff's sale notice attached to Plaintiff's Amended Complaint merely identifies the tax parcel number for Parcel A as being the subject of the sheriff's sale. See Exhibit 2. As such, the initial notice provides, at most, what Plaintiff has admitted was true, i.e., Parcel A was properly the subject of a sheriff's sale. While the notice for the February 8, 2013 sheriff's sale references “two adjoining tracts” and the tax parcel number for Parcel A, it merely parrots the language contained in the mortgage and attached to the foreclosure complaint. Compare Exhibit 3 and Exhibit 1. As such, the representation, even if deemed to be that of Defendant, does not meet the requirements for slander. 6 Plaintiff has not identified which of the specifically enumerated unfair practices Defendant has allegedly engaged. Plaintiff, instead, alleges generally fraudulent misrepresentations. As such, this Court assumes Plaintiff brings his claim under the catchall provision, which precludes “any other fraudulent or deceptive conduct which creates a likelihood of confusion or of misunderstanding.” 73 Pa. Con. Stat. § 201-2(4)(xxi). 7 Plaintiff's argument that this Court should not follow the Third Circuit's decision in Werwinski because it has been rejected by various state courts in Pennsylvania is misplaced as Werwinski is the law of this Circuit and, therefore, binding on this Court. End of Document © 2017 Thomson Reuters. No claim to original U.S. Government Works. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 185 of 247 EXHIBIT S Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 186 of 247 § 1General Principles, Restatement (Third) of Unfair Competition § 1 (1995) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 1 Restatement (Third) of Unfair Competition § 1 (1995) Restatement of the Law - Unfair Competition October 2016 update Restatement (Third) of Unfair Competition Chapter 1. The Freedom to Compete § 1 General Principles Comment: Statutory Note Case Citations - by Jurisdiction One who causes harm to the commercial relations of another by engaging in a business or trade is not subject to liability to the other for such harm unless: (a) the harm results from acts or practices of the actor actionable by the other under the rules of this Restatement relating to: (1) deceptive marketing, as specified in Chapter Two; (2) infringement of trademarks and other indicia of identification, as specified in Chapter Three; (3) appropriation of intangible trade values including trade secrets and the right of publicity, as specified in Chapter Four; or from other acts or practices of the actor determined to be actionable as an unfair method of competition, taking into account the nature of the conduct and its likely effect on both the person seeking relief and the public; or (b) the acts or practices of the actor are actionable by the other under federal or state statutes, international agreements, or general principles of common law apart from those considered in this Restatement. Comment: a. The freedom to compete. The freedom to engage in business and to compete for the patronage of prospective customers is a fundamental premise of the free enterprise system. Competition in the marketing of goods and services creates incentives to offer quality products at reasonable prices and fosters the general welfare by promoting the efficient allocation of economic resources. The freedom to compete necessarily contemplates the probability of harm to the commercial relations of other participants in the market. The fundamental rule stated in the introductory clause of this Section promotes competition by insuring that neither new entrants nor existing competitors will be subject to liability for harm resulting solely from the fact of their participation in the market. The freedom to compete implies a right to induce prospective customers to do business with the actor rather than with the actor's competitors. This Section permits a seller to seek to divert business not only from competitors generally, but also from a particular competitor. This Section is applicable to harm incurred by persons with whom the actor directly competes and to harm incurred by other persons affected by the actor's decision to enter or continue in business. Thus, the actor is not subject to liability to indirect competitors or to employees or suppliers of others who may be harmed by the actor's presence in the market. Liability is imposed under this Section, and under this Restatement generally, only in connection with harm resulting from particular methods of competition determined to be unfair. The principle embodied in this Section is often loosely described as a “privilege” to compete. That characterization, however, is sometimes taken to imply that any intentional interference in the commercial relations of another is prima facie tortious, with the burden on the actor to establish an applicable privilege as an affirmative defense. There is as yet Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 187 of 247 § 1General Principles, Restatement (Third) of Unfair Competition § 1 (1995) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 2 no consensus with respect to the allocation of the burdens of pleading and proof under the general tort of intentional interference with prospective economic relations. See Restatement, Second, Torts § 767, Comment k. However, in the case of harm resulting from competition in the marketplace, the privilege rationale appears inconsistent with the basic premise of our free enterprise system. Rather than adopting the view that such harm is prima facie tortious subject to a competitive privilege, this Restatement rejects the privilege rationale in favor of a general principle of non-liability. A person alleging injury through competition must therefore establish facts sufficient to subject the actor to liability under one or more of the rules enumerated in this Section. This Section does not preclude the imposition of liability when the actor's participation in the market is itself unlawful. One who engages in a particular business or trade in violation of a statute prohibiting such activity, either absolutely or without prescribed permission, may be subject to liability to others engaged in the business or trade if one of the purposes of the enactment is to protect the others against unauthorized competition and the recognition of a private right of action is not inconsistent with the legislative intent. This result is an application of the general principles relating to the imposition of tort liability for violations of legislative enactments that do not explicitly authorize a private cause of action. See Restatement, Second, Torts § 874A. Intentional interference with another's commercial relations by means other than the actor's participation in the market is not within the scope of this Section. Such conduct may subject the actor to liability under the general rules on interference with prospective economic relations stated in Restatement, Second, Torts § 766B. Illustrations: 1. A, the owner of a bakery, employs B, a baker, and sells products made with ingredients purchased from C, a supplier. D opens a competing bakery and A is compelled to go out of business. D is not subject to liability to A, B, or C. 2. A and B are competing distributors of shoes. A induces C not to purchase B's house. A's interference is not within the scope of this Restatement. A may be subject to liability to B for intentionally interfering with B's prospective economic relations under the rule stated in Restatement, Second, Torts § 766B. 3. A federal statute prohibits A, a governmental corporation, from selling electricity outside a designated geographic area. B, a private utility company, commences an action seeking to enjoin sales by A in localities served by B that are outside the designated area. If the court concludes that a purpose of the statute is to protect private utilities from competition by A and that the recognition of a private remedy is not inconsistent with the legislative intent, A may be subject to liability to B. b. “Subject to liability”; “harm”. This Restatement uses the words “subject to liability” to denote the fact that the actor's conduct is such as to make it liable to another if the conduct is the legal cause of the other's injury and the actor has no defense applicable to the particular claim. See Restatement, Second, Torts § 5. The phrase carries no implications with respect to the remedies available to the injured party. In particular, it does not imply that the injured party is entitled to monetary relief. The word “harm” as used in this Restatement denotes the existence of loss or detriment in fact, whether or not the loss or detriment results from an invasion of a legally protected interest. See id., § 7. c. Motives of the actor. Several cases recite, mostly in dicta, that one who engages in competition solely or primarily for the purpose of causing harm to another is subject to liability to the other, apparently without regard to the nature of the actor's business methods. The prior Restatement of this topic incorporated a narrow version of this principle, requiring both a malicious motive and an intention on the part of the actor to terminate the business after the infliction of harm. Restatement of Torts § 709. However, both the case law and the prior Restatement declined to invoke the rule when the actor's conduct was directed at least in part to the advancement of its own competitive interests. This proposition necessitated a distinction between “good faith” competition, which would not subject the actor to liability even if motivated in part by ill will toward the other, and “simulated competition” that was undertaken merely as a means of inflicting harm. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 188 of 247 § 1General Principles, Restatement (Third) of Unfair Competition § 1 (1995) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 3 The rule purporting to impose liability upon one who engages in business solely for the purpose of harming another has had little practical effect. When harm results from the actor's participation in a bona fide business or trade, courts are quick to find a concurrent commercial motive sufficient to preclude the imposition of liability even in the face of evidence of genuine ill will. When the rule has been invoked to support the imposition of liability, the actor's conduct has typically involved unfair methods of competition sufficient in themselves to subject the actor to liability. In the absence of such misconduct, the rule invites misuse by affording a colorable claim through which an established business can restrict legitimate competition and harass new entrants in the market. The public benefits derived from competition are independent of the actor's motivation, and even an intention to withdraw from the market will not ordinarily threaten the public interest in light of the opportunity for entry by others. Under the rule stated in this Section, an actor who causes harm to another merely by engaging in a business or trade is not subject to liability regardless of motive. Liability is thus determined by an analysis of the business methods employed by the actor and not by the actor's motivation. Although a malicious motive is not sufficient in itself to subject an actor to liability, a competitor motivated by ill will may be tempted to pursue impermissible means of competition in order to insure or enhance the harm to another. Evidence of such ill will may therefore justify close scrutiny of the actor's methods under the various rules enumerated in this Section. The actor's motives may also be relevant to the application of rules of liability outside the scope of this Restatement, including state and federal antitrust laws. Illustration: 4. A, a manufacturer of medicines, quarrels with B, a newspaper publisher, because of B's articles ridiculing A's medicines. A, after threatening to drive B out of business, establishes a competing newspaper. A's newspaper is successful and B is eventually forced to cease publication. A is not subject to liability to B. d. Deceptive marketing. Competitive markets cannot operate efficiently unless consumers have access to information about the goods and services offered by competing sellers. Much of the information available to prospective purchasers is provided by sellers in the form of advertising. If the message that it communicates is accurate, advertising can function as a convenient, low-cost source of information that assists consumers to choose intelligently among competing products. False or deceptive advertising, however, can result in improvident expenditures or force consumers to spend additional resources in an effort to acquire more reliable information. Deceptive advertising also threatens harm to other sellers who are thereby deprived of the opportunity to compete on the merits of their goods and services. Recognition of a right of action for deceptive marketing in favor of other sellers, however, raises complex issues. It is often difficult to establish a clear nexus between the misrepresentations of one seller and injury to the business relations of another seller. Further, unless the cause of action for deceptive advertising is carefully circumscribed, it may inhibit the dissemination of useful information and function as a barrier to vigorous competition. The scope of liability for deceptive advertising must also reflect the constitutional protection afforded to commercial speech. The rules stated in Chapter Two describe the circumstances in which a seller may be subject to liability for injuries to the commercial relations of other sellers resulting from the use of deceptive representations in the marketing of goods or services. e. Trademark infringement. A trademark is a word, name, symbol, device, or other designation used by a manufacturer or seller to identify its goods or services and distinguish them from goods or services manufactured or sold by others. The protection of trademarks and other indicia of origin or sponsorship is a fundamental feature of the law of unfair competition. By indicating the source or sponsorship of the goods or services with which they are used, trademarks communicate to prospective purchasers information relating to the quality and other characteristics of the product. The deceptive use of another's trademark can be seen as a form of deceptive marketing, and the protection of trademarks thus implicates many Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 189 of 247 § 1General Principles, Restatement (Third) of Unfair Competition § 1 (1995) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 4 of the interests identified in Comment d. The recognition of rights in trademarks also serves to protect and encourage investments in good will by insuring the trademark owner an opportunity to capture the benefits of a favorable reputation created through expenditures on quality, service, or promotion. The rules governing the protection of trademarks must also be responsive to the public interest in fostering vigorous competition. In defining protectable subject matter and in delineating the scope of exclusive rights, the law cannot neglect the legitimate interests of other competitors. In some cases the recognition of exclusive rights in favor of a particular seller may undermine the ability of other sellers to communicate useful information to consumers or deprive competitors of access to product features necessary for effective competition. The scope of exclusive rights in trademarks must also accommodate the interest in free expression. The rules governing the acquisition and protection of rights in trademarks and related subject matter are stated in Chapter Three. f. Appropriation of trade values. An important function of the law of unfair competition is to delimit the circumstances in which a person may prohibit the appropriation by another of intangible business assets created through an investment of time, money, or effort. The law of trademarks and the general proscription against passing off, for example, prohibit the appropriation of another's good will through misrepresentations relating to source. Other appropriations can be more direct, as when a competitor utilizes the work-product of another in competition with the creator. The federal patent and copyright statutes offer a complex regime of protection for some intangible assets, but the common law also imposes limitations on the appropriation of intangible assets. The recognition of rights in intangible business assets generally proceeds from the premise that protection is necessary in order to insure adequate incentive for the investment of resources necessary to produce such assets. This incentive rationale is frequently augmented by references to the perceived unjust enrichment resulting from an appropriation of the fruits of another's investment. The recognition of exclusive rights in intangible business assets, however, must also take account of the anticompetitive consequences inherent in restrictions on the free flow of ideas and information. Thus, in many instances the incentive and unjust enrichment rationales may be outweighed by the advantages of unrestricted imitation and dissemination as embodied in the concept of a public domain. The common law has generally accorded rights against the appropriation of intangible business assets only when the recognition of rights is supported by additional interests justifying protection, and then only when the scope of the resulting rights can be clearly defined. In the case of trade secrets, for example, the owner's rights reflect the protection traditionally accorded confidential relationships as well as the interest in security against wrongful physical intrusions. Appropriation of the commercial value of another's name or likeness implicates interests in privacy and personal autonomy. The recognition of rights in intangible assets must also reflect the appropriate relationship between common law and legislation and the permissible sphere of state authority in light of the extensive regime of federal intellectual property law. Rules relating to the appropriation of intangible business assets, including the protection of trade secrets and the recognition of a right of publicity, are stated in Chapter Four. g. Unfair methods of competition. A primary purpose of the law of unfair competition is the identification and redress of business practices that hinder rather than promote the efficient operation of the market. Certain recurring patterns of objectionable practices form the basis of the traditional categories of liability specifically enumerated in Subsection (a)(1)-(3). However, these specific forms of unfair competition do not fully exhaust the scope of statutory or common law liability for unfair methods of competition, and Subsection (a) therefore includes a residual category encompassing other business practices determined to be unfair. It is impossible to state a definitive test for determining which methods of competition will be deemed unfair in addition to those included in the categories of conduct described in the preceding Comments. Courts continue to evaluate competitive practices against generalized standards of fairness and social utility. Judicial formulations have broadly Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 190 of 247 § 1General Principles, Restatement (Third) of Unfair Competition § 1 (1995) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 5 appealed to principles of honesty and fair dealing, rules of fair play and good conscience, and the morality of the marketplace. The case law, however, is far more circumscribed than such rhetoric might indicate, and courts have generally been reluctant to interfere in the competitive process. An act or practice is likely to be judged unfair only if it substantially interferes with the ability of others to compete on the merits of their products or otherwise conflicts with accepted principles of public policy recognized by statute or common law. As a general matter, if the means of competition are otherwise tortious with respect to the injured party, they will also ordinarily constitute an unfair method of competition. A competitor who interferes with the business of another by acts or threats of violence directed at the other, for example, is subject to liability for unfair competition. So also is one who interferes by instituting or threatening to institute groundless litigation against a competitor. Similarly, if a competitor interferes with the commercial relations of another by engaging in defamation or by establishing or maintaining an unlawful restraint of trade, the conduct also constitutes unfair competition. Liability for unfair competition under the residual rule stated in Subsection (a), however, is not limited to conduct that is otherwise tortious with respect to the party seeking relief. Thus, interference in the commercial relations of a competitor resulting from unlawful threats directed at customers of the competitor will also constitute unfair competition. In assessing the propriety of the actor's conduct, a primary consideration is the social utility of the conduct as a means of competition. If the conduct is likely to interfere in a substantial manner with the ability of prospective purchasers to choose on the merits of the competing products, it will ordinarily be considered unfair. In some circumstances, for example, a court may conclude that a failure to disclose to prospective consumers particular information that is crucial to an intelligent purchasing decision constitutes unfair competition. Some applications of the residual rule of liability specified in Subsection (a) can be seen as extensions of the established categories of unfair competition. A competitor who diverts business from another by means of fraudulent misrepresentations or through the wrongful use of confidential information, for example, may in some circumstances be subject to liability for unfair competition even if the conduct is not specifically actionable under the rules relating to deceptive marketing or the appropriation of trade secrets. However, in determining whether it is appropriate to conclude that an act or practice is unfair despite the fact that a restrictive element of traditional doctrine precludes the imposition of liability under an established category of unfair competition, careful consideration must be given to the nature of the restriction. If the restriction expresses an important policy of the law against the imposition of liability in such circumstances, the conduct should not be actionable as unfair competition. A person seeking relief under the residual rule stated in Subsection (a) bears the burden of establishing that the method of competition employed by the actor is unfair. The use of equitable remedies has contributed to the development of the law by facilitating the condemnation of practices not previously determined to be unlawful. A person likely to be damaged by the unfair competition of another may obtain an injunction against a continuation of the conduct. The court may also award appropriate monetary relief. Liability at common law for acts of unfair competition has been supplemented by the widespread enactment of the Unfair Trade Practices and Consumer Protection Act, which commonly prohibits “unfair methods of competition and unfair or deceptive acts or practices.” See the Statutory Note following this Section. The private right of action available under many of these statutes has been pursued primarily as an alternative to traditional contract and tort actions by disappointed purchasers attracted by the generous remedial provisions of the Act. In a number of jurisdictions, however, competitors also have standing to seek redress under the Act for harm to their commercial relations. Application of the Act in this latter context has thus far been generally limited to conduct falling within the traditional categories of unfair competition law. However, the broad substantive standards embodied in many of these statutes provide a flexible statutory counterpart to the general common law proscription against unfair competition. Illustrations: Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 191 of 247 § 1General Principles, Restatement (Third) of Unfair Competition § 1 (1995) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 6 5. A manufactures a computer designed for use by school children. B, a manufacturer of a competing product, sends letters to wholesalers and distributors stating that A's computer infringes a patent owned by B. The letters contain a threat to institute an infringement action against anyone who markets A's product. B knows that A's product does not infringe the patent and has no intention of commencing the threatened litigation. B is subject to liability to A. 6. A is the local distributor for a brand of wall paneling. B, a builder, makes a contract to install wall paneling in a school being constructed by C, a school district. C requests B to solicit bids for the wall paneling from suppliers. B then arranges to become the local distributor for a brand of paneling similar to that sold by A. Without informing A of this fact, B obtains a bid from A but alters A's figures to increase the price before submitting A's bid, together with its own lower bid, to C. C awards the supply contract to B. B is subject to liability to A. 7. A is involved in a dispute with B, a former licensee, concerning the use by B of a trade name similar to A's. A files a change of address form under B's name at the local post office, listing its own address as the new address of B's business. As a result of the diversion of mail, B loses the opportunity to bid on several contracts. A is subject to liability to B. h. Liability under other rules. The succeeding Chapters of this Restatement treat the common law and statutory rules governing liability for the specific forms of unfair competition enumerated in Subsection (a)(1)-(3). Other conduct undertaken to advance the competitive interests of the actor may result in liability under the various federal and state statutes regulating aspects of the competitive process beyond those considered in this Restatement. The federal copyright and patent statutes, for example, prohibit the unauthorized appropriation of another's writings and discoveries. Federal and state statutes afford private remedies against price discrimination, and state “sales below cost” statutes subject a seller to liability to competitors for other specified pricing practices. Similarly, if the actor's conduct threatens to reduce or eliminate competition, liability may arise under federal and state antitrust law. A competitor may also be subject to liability to other participants in the market if its methods of competition violate generally applicable principles of tort and contract law. A seller who seeks to improve its position in the market through physical violence to the person or property of a competitor, for example, may be subject to liability under traditional rules of tort law. If the actor has made an enforceable promise not to compete with another, competition may subject it to liability under general principles of contract law. Unreasonable interference with the use of real property owned by a competitor may be actionable under rules relating to nuisance. Statements derogatory to the personal reputation of a competitor or to the quality of its goods or services may be actionable as defamation or disparagement. As the other party's economic relations approach the status of formal contract rights, the freedom of a competitor to interfere with those expectancies is also circumscribed by the protection afforded in tort against intentional interference with contracts. See Restatement, Second, Torts §§ 766-774A. The freedom to compete embodied in this Section extends only to interference with prospective economic relations and does not insulate the actor from liability for intentional interference with a competitor's contract rights. The characterization of economic relations as prospective or contractual, however, is itself influenced by the policies underlying recognition of the freedom to compete. Many cases, for example, recognize a right to induce a third person to terminate a contract with a competitor if the agreement is terminable at will. The rules in this Restatement relating to liability for unfair methods of competition supplement rather than displace these general principles of common law. Illustration: 8. A and B are engaged in the sale of gasoline and convenience foods on adjoining properties. In order to block the view of B's premises from a nearby highway, A constructs a wall 14 feet in height at the boundary of the properties and places a sign marked “Exit Only” near the entrance to B's property. A may be subject to liability to B under general principles of tort law relating to nuisance. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 192 of 247 § 1General Principles, Restatement (Third) of Unfair Competition § 1 (1995) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 7 Statutory Note The Unfair Trade Practices and Consumer Protection Act was developed by the Federal Trade Commission and published by the Council of State Governments in 1967. The current version appears at 29 Suggested State Legislation 141 (1970). The Act has served as the basis for widespread state legislation. Every state has now adopted legislation of general applicability proscribing unfair or deceptive acts or practices in trade. In some states the proscription extends to a specific list of prohibited activities; in others the statutes refer to “false, misleading, or deceptive” acts. In a number of jurisdictions the statutes incorporate the language in § 5(a)(1) of the Federal Trade Commission Act, 15 U.S.C.A. § 45(a)(1), prohibiting “unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.” Although in several jurisdictions the Unfair Trade Practices and Consumer Protection Act relies exclusively on enforcement by public officials, in the vast majority of states private actions may also be maintained. In many of these states the private action is limited to consumers or other purchasers injured as a result of a seller's unfair or deceptive acts or practices. In a significant number of jurisdictions, however, the statutory language is sufficiently broad to accommodate actions by competitors seeking redress for harm to their commercial relations resulting from the unfair or deceptive acts of competing sellers. Judicial decisions in a number of states recognize a private right of action on behalf of injured competitors. The Unfair Trade Practices and Consumer Protection Act or an analogous statute is in effect as follows: Alabama ............................................. ALA. C. § 8-19-1 et seq. Alaska ................................................ ALASKA S. § 45.50.471 et seq. Arizona ............................................... ARIZ. R.S.A. § 44-1521 et seq. Arkansas ............................................. ARK. C.A. § 4-88-101 et seq. California ........................................... CAL. Bus. & Prof.C. § 17000 et seq. Colorado ............................................ COLO. R.S.A. § 6-1-101 et seq. Connecticut ........................................ CONN. G.S.A. § 42-110a et seq. Delaware ............................................ DEL. C., tit. 6, § 2511 et seq. Dist. of Columbia ............................... D.C. C.A. § 28-3901 et seq. Florida ................................................ FLA. S.A. § 501.201 et seq. Georgia ............................................... GA. C.A. § 10-1-390 et seq. Hawaii ................................................ HAW. R.S. § 480-1 et seq. Idaho .................................................. IDAHO C.A. § 48-601 et seq. Illinois ................................................. ILL. C.S., ch. 815, § 505/1 et seq. Indiana ............................................... IND. A.S. § 24-5-0.5-1 et seq. Iowa ................................................... IOWA C.A. § 714.16 Kansas ................................................ KAN. S.A. § 50-623 et seq. Kentucky ............................................ KY. R.S. § 367.110 et seq. Louisiana ............................................ LA. S.A. § 51:1401 et seq. Maine ................................................. ME. R.S.A., tit. 5, § 206 et seq. Maryland ............................................ MD. Com.L. C.A. § 13-301 et seq. Massachusetts ..................................... MASS. G.L.A., ch. 93A, § 1 et seq. Michigan ............................................ MICH. C.L.A. § 445.901 et seq. Minnesota ........................................... MINN. S.A. § 325F.68 et seq. Mississippi .......................................... MISS. C.A. § 75-24-1 et seq. Missouri .............................................. MO. R.S. § 407.010 et seq. Montana ............................................. MONT. C.A. § 30-14-101 et seq. Nebraska ............................................ NEB. R.S. § 59-1601 et seq. Nevada ............................................... NEV. R.S.A. § 598.0903 et seq. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 193 of 247 § 1General Principles, Restatement (Third) of Unfair Competition § 1 (1995) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 8 New Hampshire .................................. N.H. R.S.A. § 358-A:1 et seq. New Jersey ......................................... N.J. S.A. § 56:8-1 et seq. New Mexico ....................................... N.M. S.A. § 57-12-1 et seq. New York ........................................... N.Y. Gen.Bus.L. § 349 et seq. North Carolina ................................... N.C. G.S. § 75-1.1 et seq. North Dakota ..................................... N.D. Cent.C. § 51-15-01 et seq. Ohio .................................................... OHIO R.C. § 1345.01 et seq. Oklahoma ........................................... OKLA. S.A., tit. 15, § 751 et seq. Oregon ................................................ OR. R.S. § 646.605 et seq. Pennsylvania ....................................... PA. S.A., tit. 73, § 201-1 et seq. Puerto Rico ........................................ P.R. L.A., tit. 10, § 257 et seq. Rhode Island ...................................... R.I. G.L.A. § 6-13.1-1 et seq. South Carolina ................................... S.C. C.A. § 39-5-10 et seq. South Dakota ..................................... S.D. Comp. L.A. § 37-24-1 et seq. Tennessee ............................................ TENN. C.A. § 47-18-101 et seq. Texas .................................................. TEX. Bus. & Com.C. § 17.41 et seq. Utah ................................................... UTAH C.A. § 13-11-1 et seq. Vermont ............................................. VT. S.A., tit. 9, § 2451 et seq. Virginia ............................................... VA. C.A. § 59.1-196 et seq. Washington ........................................ WASH. R.C.A. § 19.86.010 et seq. West Virginia ...................................... W.VA. C.A. § 46A-6-101 et seq. Wisconsin ........................................... WIS. C.A. § 100.20 Wyoming ............................................ WYO. S.A. § 40-12-101 et seq. Reporters' Note This Section describes the circumstances in which a person may be subject to liability for harm to the commercial interests of others resulting from the operation of a trade or business. It reaffirms the general freedom to compete embodied in the former statement of the rule, Restatement of Torts § 708 (1938), but abandons the exception relating to competition motivated by ill will contained in § 709. The rule of former § 710 relating to competition in violation of legislative restrictions is discussed in Comment a. Comment a. The freedom to compete for the business of prospective customers recognized in this Section is in accord with the general rules limiting liability for intentional interference with the prospective economic relations of others stated in Restatement, Second, Torts §§ 766B, 768. The view that all intentional interference with the economic relations of others is prima facie tortious has long been subject to criticism. “It is silly to say all the leading cigarette companies are committing prima facie torts every day by trying to take business away from each other; that they could start suits for damages or injunctions and force the defendant to establish justification. … Of course, in nine hundred and ninety-nine cases out of a thousand, the tort is justified; but is it worth while to take all this trouble to march up the hill and then march down again?” Chafee, Unfair Competition, 53 Harv.L.Rev. 1289, 1304 (1940). The Restatement, Second, of Torts, in discussing the general principles of liability for intentional interference with economic relations, recognizes that the requirements for establishing a prima facie case and for setting up an affirmative defense based on privilege remain unsettled. “The result is that there is little consensus on who has the burden of raising the issue of whether the interference was improper or not and subsequently of proving that issue ….” Restatement, Second, Torts § 767, Comment k. With respect to interference resulting from business competition, however, it suggests that “the question of whether the actor was competing with the other for the prospective business of a third party might be treated as a matter of culpability (cf. § 768), for which the burden of pleading and proving would be on the plaintiff.” Id.; cf. § 768, Comment a. See, e.g., Allied Financial Services, Inc. v. Foremost Insurance Co., 418 F.Supp. 157 (D.Neb.1976) Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 194 of 247 § 1General Principles, Restatement (Third) of Unfair Competition § 1 (1995) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 9 (general allegation that by competing with plaintiff and employing others to do so defendant caused the plaintiff to lose commissions does not state a cause of action); Katz v. Kapper, 7 Cal.App.2d 1, 5, 44 P.2d 1060, 1062 (1935) (sustaining a demurrer to a complaint that failed to charge defendants “with making any effort to deprive plaintiff of his trade except by transferring the same to themselves”); cf. A.F. Arnold & Co. v. Pacific Professional Insurance, Inc., 27 Cal.App.3d 710, 716, 104 Cal.Rptr. 96, 100 (1972) (“On the other hand, it is necessary to avoid a situation where every bona fide competitor might find himself put to justifying the conduct of his business at the whim of a rival. … Where only a bona fide competitive situation is alleged, and no more, no cause of action would seem to exist.”) (dictum). The problem of allocating burdens of pleading and proof with respect to liability for intentional interference with economic relations was considered at length in Top Service Body Shop, Inc. v. Allstate Insurance Co., 283 Or. 201, 582 P.2d 1365 (1978). Rejecting the prima facie tort approach, the court concluded that “such a claim is made out when interference resulting in injury to another is wrongful by some measure beyond the fact of the interference itself.” Id. at 1371. This view was subsequently adopted in Leigh Furniture and Carpet Co. v. Isom, 657 P.2d 293 (Utah 1982), requiring plaintiff to prove that the interference was done for an improper purpose or by improper means. See also, e.g., Gregg v. U.S. Industries, Inc., 887 F.2d 1462 (11th Cir.1989) (plaintiff must show that the interference was unjustified) (Florida law); Flintridge Station Associates v. American Fletcher Mortgage Co., 761 F.2d 434 (7th Cir.1985) (same) (Indiana law); Machine Maintenance & Equipment Co. v. Cooper Industries, Inc., 661 F.Supp. 1112 (E.D.Mo.1987) (plaintiff must show absence of justification; competition is a justification) (Missouri law); Nesler v. Fisher & Co., 452 N.W.2d 191 (Iowa 1990) (plaintiff must show that the interference was improper); Wagenseller v. Scottsdale Memorial Hosp., 147 Ariz. 370, 710 P.2d 1025 (1985) (en banc); Blake v. Levy, 191 Conn. 257, 464 A.2d 52 (1983); M & M Rental Tools, Inc. v. Milchem, Inc., 94 N.M. 449, 612 P.2d 241 (App.1980). But see Ocean State Physicians Health Plan, Inc. v. Blue Cross & Blue Shield, 883 F.2d 1101 (1st Cir.1989), cert. denied 494 U.S. 1027, 110 S.Ct. 1473, 108 L.Ed.2d 610 (1990) (justification is a defense) (Rhode Island law); Thompson v. Allstate Insurance Co., 476 F.2d 746 (5th Cir.1973) (same) (Alabama law); Alyeska Pipeline Service Co. v. Aurora Air Service, Inc., 604 P.2d 1090 (Alaska 1979) (prima facie case established by showing intentional interference with contract terminable at will). The latter case is criticized in Dobbs, Tortious Interference with Contractual Relationships, 34 Ark.L.Rev. 335 (1980). Illustration 1 is based on Illustration 1 to former § 708. The rule precluding the imposition of liability for harm resulting from the mere fact of competition is sometimes traced to the Schoolmasters' Case, Y.B. Hilary 11, H.IV, f. 47, pl. 21 (1410), in which two masters of a long-established grammar school were held to have no cause of action against an interloper who opened a rival school. “If I have a mill and my neighbor constructs another mill, as a result of which the profit of my mill is diminished, I state no action against him ….” Id. For a more recent application of this principle, see RCM Supply Co. v. Hunter Douglas, Inc., 686 F.2d 1074 (4th Cir.1982) (damage award reversed because of the failure to instruct the jury on the “competitive privilege”). Illustration 2 is taken from Illustration 2 to Restatement, Second, Torts § 768. Illustration 3 is based on Hardin v. Kentucky Utilities Co., 390 U.S. 1, 88 S.Ct. 651, 19 L.Ed.2d 787 (1968). See Smalley Transportation Co. v. Moed's Transfer Co., 373 So.2d 55 (Fla.App.1979), permitting recovery of damages in an action by a competitor against a carrier operating without the required state approval. See also National Bank of Detroit v. Wayne Oakland Bank, 252 F.2d 537 (6th Cir.1958); Commercial State Bank v. Gidney, 174 F.Supp. 770 (D.D.C.1959), affirmed 278 F.2d 871 (D.C.Cir.1960). On the principles governing the recognition of a private right of action for the violation of a statutory duty, see Cort v. Ash, 422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d 26 (1975); Touche Ross & Co. v. Redington, 442 U.S. 560, 99 S.Ct. 2479, 61 L.Ed.2d 82 (1979). Cases involving private actions brought by competitors to enforce professional licensing statutes have yielded inconsistent results. Compare Massachusetts Society of Optometrists v. Waddick, 340 Mass. 581, 165 N.E.2d 394 (1960), and Delaware Optometric Corp. v. Sherwood, 36 Del.Ch. 223, 128 A.2d 812 (1957), with Burden v. Hoover, 9 Ill.2d 114, 137 N.E.2d 59 (1956). See Callmann, Unfair Competition, Trademarks, and Monopolies § 16.04 (4th ed.). Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 195 of 247 § 1General Principles, Restatement (Third) of Unfair Competition § 1 (1995) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 10 Comment c. The Reporter's Explanatory Notes to Restatement of Torts § 709, which imposed liability on “[o]ne who engages in a business primarily for the purpose of causing loss of business to another and with the intention of terminating the business when that purpose is accomplished,” conceded that “[t]he cases in which liability was actually imposed are very few.” Restatement of Torts (Tent. Draft No.17 1938). The Section was based primarily on the decisions in Tuttle v. Buck, 107 Minn. 145, 119 N.W. 946 (1909), and Dunshee v. Standard Oil Co., 152 Iowa 618, 132 N.W. 371 (1911). In Tuttle, the court sustained an order overruling a demurrer to a complaint alleging that the defendant banker “wrongfully, unlawfully, and maliciously” attempted to destroy the business of plaintiff, a barber, by establishing, “for the sole and only purpose of injuring the trade of the plaintiff,” a competing shop staffed with a salaried barber under an agreement whereby all income was to be paid to the defendant. In an Illustration to § 709 based on the case, the agreement was described as one in which the employee retained all receipts, thereby minimizing the defendant's competitive interest. See § 709, Illustration 1. In Dunshee, the court held that a wholesale oil dealer who had entered the retail market in order to drive out a retailer who had ceased doing business with the wholesaler was subject to liability if “there was no real purpose or desire to establish a competing business, but, under the guise or pretense of competition, to accomplish a malicious purpose to ruin the [plaintiff] or drive it out of business, intending themselves to retire therefrom when their end had been secured.” 152 Iowa at 626, 132 N.W. at 374. See also Memphis Steam Laundry-Cleaners, Inc. v. Lindsey, 192 Miss. 224, 5 So.2d 227 (1941); Boggs v. Duncan-Schell Furniture Co., 163 Iowa 106, 143 N.W. 482 (1913) (condemning “simulated competition”). Liability in each of the foregoing cases, however, might instead be justified by the nature of the defendant's conduct. In Dunshee there was evidence of passing off and other improper interference with orders to the plaintiff from its customers; in Boggs the injury to plaintiff resulted primarily from the defendant's false advertising; in Memphis Steam Laundry-Cleaners the defendant's actions might well have been unlawful under antitrust law. Even the complaint in Tuttle v. Buck alleged the making of “false and malicious reports and accusations” by the defendant. Discussions questioning the utility of inquiries into the actor's motives include Dobbs, Tortious Interference with Contractual Relationships, 34 Ark.L.Rev. 335, 347-50 (1980); Perlman, Interference with Contract and Other Economic Expectancies: A Clash of Tort and Contract Doctrine, 49 U.Chi.L.Rev. 61, 94-97 (1982); Myers, The Differing Treatment of Efficiency and Competition in Antitrust and Tortious Interference Law, 77 Minn.L.Rev. 1097 (1993). “The defendant's state of mind in engaging in competition does not alone provide a basis for liability.” Augat, Inc. v. Aegis, Inc., 409 Mass. 165, 177, 565 N.E.2d 415, 422 (1991) (citing Restatement Third, Unfair Competition § 1, Comment c (Tent. Draft No.1 (1988))). “Problems inherent in proving motivation or purpose make it prudent for commercial conduct to be regulated for the most part by the improper means alternative, which typically requires only a showing of particular conduct.” Leigh Furniture and Carpet Co. v. Isom, 657 P.2d 293, 307 (Utah 1982) (dictum). But see Deauville Corp. v. Federated Dept. Stores, Inc., 756 F.2d 1183 (5th Cir.1985) (evidence of intent to harm should be submitted to the jury); Delaware Valley Transplant Program v. Coye, 722 F.Supp. 1188 (D.N.J.1989) (malicious intent is relevant) (dictum); Alyeska Pipeline Service Co. v. Aurora Air Service, Inc., 604 P.2d 1090 (Alaska 1979) (applying the ill will standard to interference with a contract terminable at will). In its statement of the rule protecting competitors from liability for intentional interference with the prospective contractual relations of another, Restatement, Second, Torts § 768 requires that the actor's “purpose is at least in part to advance his interest in competing with the other.” This language, and much of the accompanying commentary, is taken from the statement of the rule in Restatement of Torts § 768. Comments to both sections presume, however, that “[i]f the business diverted by the actor relates to his competition with his competitor, his conduct will ordinarily be directed, at least in part, to the improvement of his position in the competition.” The rule stated in this Section can be said to go beyond that of Restatement, Second, Torts § 768 by eliminating in such circumstances the necessity of an inquiry into the actor's motives. Illustration 4 is based on Illustration 2 to Restatement of Torts § 709, which was derived from Beardsley v. Kilmer, 236 N.Y. 80, 140 N.E. 203 (1923). See Miller Chemical Co. v. Tams, 211 Neb. 837, 843, 320 N.W.2d 759, 763 (1982). “The Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 196 of 247 § 1General Principles, Restatement (Third) of Unfair Competition § 1 (1995) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 11 fact that hatred or desire for revenge was part of the reason is insufficient to make interference improper if the conduct is directed at least in part to advancement of his own competitive interest and social benefits arising therefrom.” See also Katz v. Kapper, 7 Cal.App.2d 1, 44 P.2d 1060 (1935); Candalaus Chicago, Inc. v. Evans Mill Supply Co., 51 Ill.App.3d 38, 9 Ill.Dec. 62, 366 N.E.2d 319 (1977); United Wild Rice, Inc. v. Nelson, 313 N.W.2d 628 (Minn.1982). Comment g. Judicial definitions of “unfair competition” are collected in McCarthy, Trademarks and Unfair Competition § 1.04. An act or practice that is determined to be unfair under this Section also constitutes a “wrongful means” of interference with the prospective contractual relations of a competitor under the rule in Restatement, Second, Torts § 768. See also id. § 767, Comment c. Cases adjudicating claims of unfair competition brought by competitors under the Unfair Trade Practices and Consumer Protection Act include McLaughlin Ford, Inc. v. Ford Motor Co., 192 Conn. 558, 473 A.2d 1185 (1984); McDonald's Corp. v. Gunvill, 441 F.Supp. 71 (N.D.Ill.1977), affirmed 622 F.2d 592 (7th Cir.1980) (Illinois law); M & W Gear Co. v. AW Dynamometer, Inc., 97 Ill.App.3d 904, 53 Ill.Dec. 721, 424 N.E.2d 356 (1981); Roustabouts, Inc. v. Hamer, 447 So.2d 543 (La.App.1984); Datacomm Interface, Inc. v. Computerworld, Inc., 396 Mass. 760, 489 N.E.2d 185 (1986); Doliner v. Brown, 21 Mass.App.Ct. 692, 489 N.E.2d 1036 (1986); Princeton Graphics Operating, L.P. v. NEC Home Electronics, Inc., 732 F.Supp. 1258 (S.D.N.Y.1990) (New York law); Nordstrom, Inc. v. Tampourlos, 107 Wash.2d 735, 733 P.2d 208 (1987). Cases decided under the Act sometimes appeal to the Federal Trade Commission's unfairness criteria first announced in its Statement of Basis and Purpose of Trade Regulation Rule 408, Unfair or Deceptive Advertising and Labeling of Cigarettes in Relation to the Health Hazards of Smoking, 29 Fed.Reg. 8324, 8355 (1964), quoted in Federal Trade Commission v. Sperry & Hutchinson Co., 405 U.S. 233, 244 n.5, 92 S.Ct. 898, 905 n.5, 31 L.Ed.2d 170 (1972). The criteria were reformulated in an FTC Statement of Policy, Dec. 17, 1980. See Trade Reg.Rep. (CCH) ¶13,203. Cases on physical interference include Evenson v. Spaulding, 150 Fed. 517 (9th Cir.1907); Standard Oil Co. v. Doyle, 118 Ky. 662, 82 S.W. 271 (1904). On the institution of legal proceedings against a competitor in bad faith as a form of unfair competition, see T.N. Dickinson Co. v. LL Corp., 227 U.S.P.Q. 145 (D.Conn.1985). On defamation and disparagement as unfair competition, see Hayes v. Irwin, 541 F.Supp. 397 (N.D.Ga.1982), affirmed 729 F.2d 1466 (11th Cir.), cert. denied 469 U.S. 857, 105 S.Ct. 185, 83 L.Ed.2d 119 (1984). On unlawful restraints of trade as unfair competition, see Natural Design, Inc. v. Rouse Co., 302 Md. 47, 485 A.2d 663 (1984); Ron Tonkin Gran Turismo, Inc. v. Wakehouse Motors, Inc., 46 Or.App. 199, 611 P.2d 658 (1980). See also C.E. Services, Inc. v. Control Data Corp., 759 F.2d 1241 (5th Cir.), cert. denied 474 U.S. 1037, 106 S.Ct. 604, 88 L.Ed.2d 583 (1985) (allegations of predatory pricing); SuperTurf, Inc. v. Monsanto Co., 660 F.2d 1275 (8th Cir.1981) (allegation of collusion between architect and bidder). Illustration 5 is based on Emack v. Kane, 34 Fed. 46 (C.C.Ill.1888). See, e.g., Gardiner v. Gendel, 727 F.Supp. 799 (E.D.N.Y.1989), affirmed 976 F.2d 746 (Fed.Cir.1992); Sparks v. McCrary, 156 Ala. 382, 47 So. 332 (1908). Cf. Brandt Consolidated, Inc. v. Agrimar Corp., 801 F.Supp. 164 (C.D.Ill.1992) (cause of action stated under § 43(a) of the Lanham Act). Illustration 6 is based on Kinco, Inc. v. Schueck Steel, Inc., 283 Ark. 72, 671 S.W.2d 178 (1984). On the use of confidential information as an unfair means of competition, see, e.g., Michigan Avenue National Bank v. State Farm Insurance Cos., 83 Ill.App.3d 507, 39 Ill.Dec. 42, 404 N.E.2d 426 (1980); Adler, Barish, Daniels, Levin and Creskoff v. Epstein, 482 Pa. 416, 393 A.2d 1175 (1978), cert. denied 442 U.S. 907, 99 S.Ct. 2817, 61 L.Ed.2d 272 (1979); Island Air, Inc. v. LaBar, 18 Wash.App. 129, 566 P.2d 972 (1977). Illustration 7 is based on Kelite Products, Inc. v. Binzel, 224 F.2d 131 (5th Cir.1955). See Newark Hardware & Plumbing Supply Co. v. Stove Manufacturers Corp., 136 N.J.L. 401, 56 A.2d 605 (Sup.Ct.), affirmed 137 N.J.L. 612, 61 A.2d 240 (Ct.Errors & App.1948), imposing liability on a retailer who knowingly accepted and sold scarce merchandise consigned to a competing retailer but inadvertently delivered to the defendant. Compare M & M Rental Tools, Inc. v. Milchem, Inc., 94 N.M. 449, 612 P.2d 241 (App.1980), declining to impose liability on a seller who took an incoming call at a Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 197 of 247 § 1General Principles, Restatement (Third) of Unfair Competition § 1 (1995) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 12 competitor's office and, after identifying himself to the caller, made the sale for his own account. Cf. Nifty Foods Corp. v. Great Atlantic & Pacific Tea Co., 614 F.2d 832 (2d Cir.1980) (interference with advantageous relationships by a competitor is actionable only if the conduct is criminal or fraudulent) (New York law); Azar v. Lehigh Corp., 364 So.2d 860 (Fla.App.1978) (upholding a temporary restraining order enjoining a real estate broker from soliciting customers on the premises of a motel operated by a competing real estate developer who had invited prospective purchasers to the area at its own expense). Comment h. State unfair competition statutes of general applicability are collected in International Trademark Association, State Trademark and Unfair Competition Law. Limitations on the enforceability of promises not to compete are discussed in Restatement, Second, Contracts §§ 186-188. Illustration 8 is based on Hutcherson v. Alexander, 264 Cal.App.2d 126, 70 Cal.Rptr. 366 (1968). See generally Restatement, Second, Torts §§ 822-831. Case Citations - by Jurisdiction C.A.3 C.A.7 D.Ariz. S.D.Iowa, D.Kan. W.D.Ky. D.Md. D.Mass. D.Minn. E.D.Mo. D.N.H. D.N.J. D.N.M. E.D.Pa. W.D.Pa. E.D.Wis. Alaska Ariz. Hawaii La. Mass. Mo.App. N.Y.Sup.Ct.App.Div. N.Y.Sup.Ct. Ohio App. Vt. C.A.3 Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 198 of 247 § 1General Principles, Restatement (Third) of Unfair Competition § 1 (1995) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 13 C.A.3, 2009. Cit. and quot. in disc. Manufacturer of surgical implants and related devices and its exclusive distributor sued former distributor that allegedly made unauthorized sales of manufacturer's products after its distributorship was terminated. The district court granted summary judgment for manufacturer and distributor on former distributor's counterclaim for unfair competition. Affirming that portion of the decision, this court held that former distributor failed to show that its commercial relations were harmed by an incident at a hospital in which distributor “loudly accused” former distributor of illegally selling manufacturer's products, and that letters manufacturer sent to customers informing them that it only would insure and warrant products sold by authorized dealers such as distributor were not actionable, because they did not mention former distributor by name and were not defamatory under Pennsylvania law. Acumed LLC v. Advanced Surgical Services, Inc., 561 F.3d 199, 227. C.A.7 C.A.7, 1994. Cit. in disc. (citing § 1 of T.D. No. 1, 1988. § 1 has since been revised; see Official Text). An insurer that had promised to indemnify an ambulance service for liability resulting from the infliction of advertising injury alleged that it did not have a duty under Wisconsin law to defend the insured against a wide-ranging antitrust and tort suit brought by a competitor ambulance service. District court granted insurer a declaratory judgment, holding that there was no duty and that the term “unfair competition” should be narrowly limited to acts of trademark infringement. Reversing, this court held that since part of competitor's suit alleged conduct within the scope of the insurance policy and none of the exclusions was applicable, insurer violated its duty to defend. The allegations that insured disseminated false information about competitor and campaigned to get the public to call 911 and ask for insured constituted charges of either defamation, product disparagement, or unfair competition. Curtis-Universal v. Sheboygan E.M.S., Inc., 43 F.3d 1119, 1124. D.Ariz. D.Ariz.2015. Com. (g) quot. in case quot. in disc. Financial advisor and his insurance agency brought claims for, among other things, unfair competition against competitor and former agency employees who left to work for competitor, alleging that defendants committed computer fraud, trespass, conversion, and other illegal acts in an effort to gain an unfair competitive advantage over plaintiff. This court granted, with leave to amend, defendants' motion to dismiss plaintiffs' claim for unfair competition, holding that Arizona did not appear to recognize a common-law claim for unfair competition as alleged in plaintiffs' complaint. The court noted that, although Restatement Third of Unfair Competition § 1 specified that methods of unfair competition that could potentially give rise to liability included a residual category encompassing unfair business practices, the Arizona Supreme Court had held that the universal test for unfair competition was whether the public was likely to be confused. Joshua David Mellberg LLC v. Will, 96 F.Supp.3d 953, 961, 962. D.Ariz.1997. Quot. in sup. Two rivals provided telecommunications services in the same metropolitan area through construction and operation of local fiber-optic cable systems that connect consumers with long-distance companies. One of these “competitive access providers” (CAPs) entered into an exclusive agreement with the city power company. That CAP sued the city for injunctive and monetary relief after the city placed a moratorium on any use of the power company's facilities for fiber-optic construction until other CAPs were allowed equal access. The rival CAP intervened in the suit, alleging that the contracting CAP violated federal and state antitrust laws and engaged in tortious interference and unfair competition. This court denied both CAPs' motions for summary judgment, holding, inter alia, that, pursuant to the Restatement analysis, the rival CAP stated a viable unfair-competition claim. The court followed the Restatement's broad approach of finding that “unfair competition” reaches beyond the field of trademarks or trade secrets. Brooks Fiber Communications v. GST Tucson Lightwave, 992 F.Supp. 1124, 1131. S.D.Iowa, Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 199 of 247 § 1General Principles, Restatement (Third) of Unfair Competition § 1 (1995) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 14 S.D.Iowa, 2015. Cit. but not fol., subsecs. (a) and (b) quot. in disc., com. (g) quot. in disc. and cit. in case cit. in disc. Telecommunications company brought an unfair-competition claim against local-exchange carriers in connection with defendants' revenue-sharing agreements with free-conferencing-service companies. This court granted in part defendants' motion to dismiss, holding that plaintiff failed to state a claim for unfair competition under Iowa law, because plaintiff failed to allege that defendants or the free-conferencing-service companies were plaintiff's competitors, or that defendants were responsible for product confusion. The court rejected plaintiff's request that it adopt the definition of unfair competition found in Restatement Third of Unfair Competition § 1, which defined the tort in broader terms than Iowa law, noting that the Iowa Supreme Court had set forth the elements of the tort without looking to the Restatement. Qwest Communications Co. v. Aventure Communications Technology, LLC, 86 F.Supp.3d 933, 1007-1008,1010. D.Kan. D.Kan.2014. Cit. in case quot. in sup.; subsecs. (a)(1)-(a)(3) quot. in case quot. in sup.; com. (g) quot. in sup. and quot. in case quot. in sup. In a dispute between two solar-panel companies that arose from the parties' competing discussions with city about leasing and installing their products on city's buildings, defendant filed counterclaims, alleging that plaintiffs made false representations to city about their products in an effort to dissuade city from doing business with defendant. This court denied plaintiffs' motion to dismiss defendant's counterclaims, holding that defendant sufficiently alleged that plaintiffs engaged in unfair competition in violation of Missouri law by, among other things, engaging in “deceptive marketing,” as defined by Restatement Third of Unfair Competition §§ 1 and 2. Energy Consumption Auditing Services, LLC v. Brightergy, LLC, 49 F.Supp.3d 890, 898-901. D.Kan.2001. Cit. in sup., cit. in case cit. in sup., quot. in ftn., subsec. (a) quot. in sup. Aircraft navigational instrument provider sued competitor for Lanham Act violations and unfair competition, among other claims, alleging that defendant improperly obtained plaintiff's trade secrets, altered documents to misrepresent Federal Aviation Administration's position on plaintiff's products, and provided altered documents to plaintiff's customers. This court overruled defendant's motion to dismiss plaintiff's unfair-competition claim, predicting that Kansas Supreme Court would apply the general principles outlined in Restatement Third of Unfair Competition and allow an unfair-competition claim based on misuse of trade secrets and other confidential business information. Airport Systems Intern., Inc. v. Airsys ATM, Inc., 144 F.Supp.2d 1268, 1269, 1270, 1272. W.D.Ky. W.D.Ky.2001. Subsec. (a) cit. in disc. Promoters of cable channel devoted to motor vehicles sued broadcasters for, in part, unfair competition, after defendants, which had expressed an interest in plaintiffs' idea and met with plaintiffs to obtain additional information, refused to invest in plaintiffs' project and instead invested in a similar channel. Granting defendants' motion for summary judgment, this court held, inter alia, that plaintiffs' unfair-competition claims arising from the misappropriation and use of plaintiffs' trade-secret information by defendants were preempted by the Kentucky Uniform Trade Secrets Act. Auto Channel, Inc. v. Speedvision Network, LLC, 144 F.Supp.2d 784, 790. D.Md. D.Md.2012. Cit. and quot. in sup., cit. in ftn.; com. (g) quot. in sup. (general cite). As part of a wider action, nonexclusive franchisee dealership for truck manufacturer brought various claims against competing dealership and its owner, alleging, among other things, that competing dealership and owner engaged in unfair competitive behavior by making disparaging remarks about franchisee to its customers. Denying competing dealership and owner's motion to dismiss franchisee's unfair-competition claim, this court rejected their argument that franchisee failed to allege that their actions were accompanied by the taint of fraud or deception, concluding that misleading or deceptive conduct was not a necessary element of every unfair-competition claim. Paccar Inc. v. Elliot Wilson Capitol Trucks LLC, 905 F.Supp.2d 675, 690-692. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 200 of 247 § 1General Principles, Restatement (Third) of Unfair Competition § 1 (1995) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 15 D.Mass. D.Mass.2004. Com. (a) cit. in disc. Sales representative for manufacturer of party goods sued manufacturer for unfair competition, inter alia, alleging that defendant withheld plaintiff's rightfully earned commissions, thereby interfering with his business and usurping his client. This court granted defendant summary judgment, holding that defendant was not liable for unfair competition, since parties properly defined scope of contractual rights and obligations and defendant engaged in business practices that were specifically authorized by contract. The parties' contract stated that plaintiff would be defendant's exclusive representative within plaintiff's territory, but that defendant had authority to remove account when it became too large for an independent contractor. Aisenberg v. Hallmark Marketing Corp., 337 F.Supp.2d 257, 263. D.Minn. D.Minn.2014. Cit. but not fol., cit. in cases cit. in disc.; subsec. (b) quot. in disc. Long-distance carrier, which delivered long-distance calls to telephone numbers assigned to free-conferencing-service companies through a local-exchange carrier, sued companies, alleging, among other things, that defendants engaged in unfair competition by causing the local-exchange carrier to violate statutes and abuse its regulatory status. This court granted in part defendants' motion to dismiss, holding that plaintiffs failed to identify an underlying tort in support of its claim for unfair competition. This court declined to predict that the Minnesota Supreme Court would permit unfair-competition claims predicated on statutory violations, and accordingly rejected plaintiff's argument that, under Restatement Third of Unfair Competition § 1, such a claim could be based on a violation of a state statute. Qwest Communications Co., LLC v. Free Conferencing, 990 F.Supp.2d 953, 974-976. E.D.Mo. E.D.Mo.2009. Cit. in sup. Owner of federally registered trademark used to identify the source of various metrology products brought federal and state trademark claims and a state unfair-competition claim against competitor, alleging that competitor's unapproved use of its mark could deceive buyers as to the source, affiliation, or connection of competitor's products. Denying competitor's motion to dismiss, this court, inter alia, rejected competitor's argument that a Missouri unfair-competition claim could only be based on the misuse of trade secrets. The court noted that under both statutory and common law, unfair competition was established by showing that one party was passing off its product as that of another so that the public was deceived regarding the source of the goods, and that numerous Missouri unfair- competition cases concerned the alleged unfair use of trade names as opposed to trade secrets. Hubbs Mach. & Mfg., Inc. v. Brunson Instrument Co., 635 F.Supp.2d 1016, 1018, 1019. D.N.H. D.N.H.1996. Com. (g) cit. in headnote and quot. in sup. Manufacturer of ball bearings sued competitors, alleging, in part, a state-law claim of unfair competition. The court held that plaintiff's allegations concerning competitors' false advertising stated an actionable claim for unfair competition under the common law of New Hampshire, and denied defendants' cross-motion insofar as it posited otherwise. The court stated that liability for deceptive marketing practices existed independent of specific statutory authority and that state consumer protection statutes provided supplemental, rather than exclusive, remedies for unfair competition. Pacamor Bearings, Inc. v. Minebea Co., Ltd., 918 F.Supp. 491, 492, 501. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 201 of 247 § 1General Principles, Restatement (Third) of Unfair Competition § 1 (1995) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 16 D.N.J. D.N.J.2009. Com. (g) quot. in ftn. Holder of patents for a neuropathic pain drug sued generic-drug manufacturer, alleging patent infringement; manufacturer asserted various counterclaims. This court denied holder's motion to dismiss manufacturer's antitrust and unfair-competition counterclaims, noting that, when an antitrust plaintiff sufficiently alleged federal antitrust violations in its pleadings, it was fair to say that the conduct stated a claim under the much broader common-law tort of unfair competition; therefore, manufacturer's state-law unfair-competition counterclaims survived to the same extent, and for the same reasons, as its federal antitrust counterclaims. In re Gabapentin Patent Litigation, 649 F.Supp.2d 340, 350. D.N.J.1999. Com. (g) quot. in part in disc. Drug manufacturer brought action against competitors, asserting various business torts. Denying defendants' motions to dismiss, the court held, in part, that even though plaintiff was arguably a third-party beneficiary of a consent decree entered earlier by the Federal Trade Commission (FTC), plaintiff lacked standing to enforce it, since government did not explicitly authorize third-party enforcement, and such authorization was required in order to overcome the presumption that government was acting solely in the public interest; that, despite plaintiff's lack of standing with respect to the FTC decree, its allegations of antitrust violations survived the motion to dismiss; and that antitrust violations, if proven, could support a finding that defendants engaged in unfair competition. Biovail Corp. Intern. v. Hoechst Aktiengesellschaft, 49 F.Supp.2d 750, 777. D.N.M. D.N.M.2014. Subsec. (a) cit. and quot. in sup., cit. in cases cit. and quot. in sup.,; com. (g) cit. and quot. in sup., cit. in case quot. in sup. Cancer-treatment facility filed, inter alia, an unfair-competition claim against corporation that owned hospitals and insurance companies, alleging, among other things, that defendant misrepresented plaintiff's provider status to patients and coerced patients to switch to physicians at its hospitals. Denying in part defendant's motion for summary judgment, this court held that plaintiff alleged sufficient facts to form the basis of an unfair-competition claim. The court determined that there was no indication that the New Mexico Supreme Court would conclude that plaintiff's claim was preempted by the Unfair Practices Act, or that it should not follow Restatement Third of Unfair Competition § 1, given that the supreme court had previously followed other Restatement provisions in the absence of controlling New Mexico law. New Mexico Oncology and Hematology Consultants, Ltd. v. Presbyterian Healthcare Services, 54 F.Supp.3d 1189, 1233-1236. D.N.M.2010. Cit. and quot. in sup., com. (a) cit. in sup., Rptr's Note quot. in ftn. Buyer of endodontic equipment sued sellers for breach of contract and unfair trade practices; sellers brought various counterclaims sounding in contract and tort. Granting in part and denying in part buyer's motion for summary judgment on sellers' counterclaims, this court held, in determining that New Mexico law applied, that sellers' counterclaims of unfair competition, violation of the New Mexico Unfair Practices Act, and unlawful misappropriation fell into the category of torts. The court noted that, with respect to sellers' claim for common-law unfair competition, the categories at issue in this case were false advertising, trademark infringement, and trademark dilution. Guidance Endodontics, LLC v. Dentsply Intern., Inc., 708 F.Supp.2d 1209, 1225, 1249. E.D.Pa. E.D.Pa.2014. Quot. in sup., cit. in ftn., cit. in case cit. in ftn. Law firm filed, inter alia, an unfair-competition claim against competitor that purchased from marketing company the exclusive rights to advertise on the exterior of regional buses, alleging that defendant acquired and used confidential information about plaintiff from the daughter of defendant's partner,who worked at marketing company. Denying in part defendant's motion to dismiss, this court held that plaintiff adequately stated a claim for unfair competition. Citing Restatement Third of Unfair Competition § 1, the Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 202 of 247 § 1General Principles, Restatement (Third) of Unfair Competition § 1 (1995) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 17 court considered plaintiff's allegation that daughter provided competitively sensitive information regarding plaintiff's advertising budget and practices, and determined that plaintiff could have been able to establish that this constituted an appropriation of plaintiff's intangible trade values and could harm its commercial relations. Larry Pitt & Associates v. Lundy Law, LLP, 57 F.Supp.3d 445, 455, 456. E.D.Pa.2012. Cit. in sup., quot. in ftn. Distributor of chemical products brought a common-law unfair-competition claim, inter alia, against agent of manufacturer of fumed silica product, alleging that defendant, in collusion with manufacturer and another distributor, improperly misappropriated and misused plaintiff's confidential market reports and lists of actual and prospective clients and customers. Denying defendant's motion to dismiss this claim, this court held that plaintiff sufficiently stated a claim for unfair competition by asserting that defendant lulled it into the belief that the parties had an agreement for an exclusive distributorship, and that, once in plaintiff's confidence, defendant became privy to confidential and valuable information that was shared with manufacturer and the other distributor and then used to lure clients away from plaintiff. ITP, Inc. v. OCI Co., Ltd., 865 F.Supp.2d 672, 683. E.D.Pa.2011. Cit. in ftn. (general cite). In a contract dispute over the development of a sonar system, seller of sonar-processing modules brought a counterclaim for, inter alia, unfair competition against subcontractor hired by manufacturer to work on the sonar system. This court dismissed that counterclaim, holding that, because seller did not allege that customers were actually misled by subcontractor's website into thinking that subcontractor and manufacturer were the sole creators and designers of the sonar system, seller failed to state a claim under Pennsylvania law for unfair competition through false advertising. The court found, in addition, that seller failed to state a cognizable claim even under the slightly expanded definition of unfair competition in the Restatement Third of Unfair Competition. KDH Electronic Systems, Inc. v. Curtis Technology Ltd., 826 F.Supp.2d 782, 807. E.D.Pa.2011. Cit. in ftn., com. (g) quot. in ftn. Trash-compactor distributor sued supplier, with whom it had a nonexclusive distribution agreement, alleging that supplier engaged in unfair competition under both the Lanham Act and the common law when it falsely informed city that it could buy compactors without soliciting bids from distributors. Denying defendant's motion to dismiss as to unfair competition, this court held that plaintiff sufficiently pled a violation of the Lanham Act by alleging that defendant made false or misleading statements as to its own product when it convinced city that city had to buy compactors directly from defendant. Noting that several Pennsylvania courts had applied Restatement Third of Unfair Competition § 1 in analyzing unfair-competition claims, this court nevertheless concluded that it could deny defendant's motion to dismiss the common-law claims without determining the scope of those claims, because the parties seemingly agreed that liability under the Lanham Act could serve as a basis for common-law liability, and defendant offered no additional arguments beyond those used in opposing the Lanham Act claim. TriState HVAC Equipment, LLP v. Big Belly Solar, Inc., 836 F.Supp.2d 274, 288. E.D.Pa.2010. Cit. in sup., quot. in ftn., com. (g) quot. in sup. Editor of an academic journal brought defamation and other claims against professor who sought authorship credit for an article that was published in the journal; professor counterclaimed, alleging that editor deliberately misrepresented that professor would receive authorship credit if he made sufficient contributions to the article. This court denied in part editor's motion to dismiss professor's counterclaims, holding, as to one of those counterclaims, that, whether it was asserted under a theory of commercial disparagement or unfair competition, it was not barred by the statute of limitations. The court noted that the Pennsylvania common-law tort of unfair competition was coextensive with the definition set forth in Restatement Third of Unfair Competition § 1. Giordano v. Claudio, 714 F.Supp.2d 508, 521, 522. E.D.Pa.2009. Subsec. (a) cit. and quot. in sup., com. (g) quot. in sup. and cit. in ftn. Manufacturer of ion-exchange resins brought a claim for common-law unfair competition, inter alia, against competitor, three of competitor's employees, and manufacturer's former employees who had been hired by competitor. This court denied defendants' motions for summary judgment as to the unfair-competition claim, holding that a genuine issue of material fact existed as to whether competitor's employees knowingly participated in a scheme with plaintiff's former employees to misappropriate plaintiff's Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 203 of 247 § 1General Principles, Restatement (Third) of Unfair Competition § 1 (1995) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 18 proprietary business information for competitor's benefit; while this claim would be preempted under the state uniform trade-secret statute to the extent the information at issue was determined to be trade-secret information, the claim could otherwise rest on confidential information that did not qualify for such status. Bro-Tech Corp. v. Thermax, Inc., 651 F.Supp.2d 378, 417, 418. E.D.Pa.2009. Quot. in disc., cit. in case quot. in disc. Magazine publisher sued book publisher for copyright infringement and common-law unfair competition, alleging, among other things, that the name of defendant's book, “Famous Monster Movie Art of Basil Gogos,” suggested an affiliation with the name of plaintiff's magazine, “Famous Monsters of Filmland.” This court granted summary judgment for defendant, holding, inter alia, that plaintiff had abandoned its “Famous Monsters of Filmland” mark. In making its decision, the court noted that, while Pennsylvania trial courts had recently begun to apply the definition of unfair competition set forth in Restatement Third of Unfair Competition § 1, in this case it was appropriate to analyze plaintiff's common-law claim for unfair competition as if it were a Lanham Act claim of unfair competition. Warren Pub. Co. v. Spurlock, 645 F.Supp.2d 402, 430, 431. E.D.Pa.2008. Cit. and quot. in ftn., com. (g) quot. in ftn. Roofing-materials manufacturer sued attic-ventilation-products inventor and his corporations, alleging breach of contract, inter alia. This court denied without prejudice plaintiff's motion to dismiss defendants' unfair-competition counterclaim, with the hope that when the motion was reasserted Pennsylvania courts would have provided more guidance on the controlling law for the claim. The court noted that, while, according to the Third Circuit, a claim of unfair competition under Pennsylvania law required proof of “passing off,” the Pennsylvania Court of Common Pleas, as well as the federal Eastern District of Pennsylvania, had in recent years applied the Restatement Third's definition of unfair competition when faced with a Pennsylvania state-law unfair-competition claim; to date, however, no Pennsylvania appellate court had applied the Restatement Third. Building Materials Corp. of America v. Rotter, 535 F.Supp.2d 518, 526. E.D.Pa.2003. Cit. in sup., quot. in ftn., com. (g) cit. and quot. in sup. Manufacturer of radio frequency tags brought tortious-interference claim, inter alia, in federal antitrust and state-law action against competitor for competitor's alleged interference in supply agreement between manufacturer and electronics supplier. Trial court entered judgment on jury verdict for manufacturer on tort claims. This court held, inter alia, that where competitor was otherwise liable for tortious interference, it was not entitled to judgment as a matter of law on unfair-competition claim. ID Security Systems Canada, Inc. v. Checkpoint Systems Inc., 249 F.Supp.2d 622, 688, 689. E.D.Pa.1997. Cit. in headnote, quot. in sup., cit. in disc., com. (g) quot. in disc. Fuel oil dealers sued electric utility for, inter alia, tortious interference with contract and unfair competition, alleging that utility offered and made cash payments to developers and contractors whose customers already heated with fossil oil in an effort to persuade them to convert those residences to electric heating systems. Utility moved for summary judgment. Denying the motion, the court held, in part, that material factual issues existed as to whether utility offered the conversion grants as a means of extolling the virtues of electric heating systems through the use of promotional incentives, or whether the grants constituted an improper method of interference. Summary judgment was equally inappropriate on dealers' claim for unfair competition, since questions remained as to whether utility's actions violated federal antitrust statutes. Yeager's Fuel v. Penn. Power & Light, 953 F.Supp. 617, 629, 668. W.D.Pa. W.D.Pa.2015. Cit. in sup. (general cite). Manufacturer of protective packaging and reflective insulation brought claims for, among other things, unfair competition against distributor of specialty building products in connection with defendant's alleged improper use of plaintiff's trademarks. After a bench trial, this court held that defendant was liable to plaintiff on plaintiff's federal and state-law claims for unfair competition. In making its decision, the court noted that the Pennsylvania common-law tort of unfair competition was coextensive with the definition set forth in the Restatement Third of Unfair Competition. Covertech Fabricating, Inc. v. TVM Bldg. Products, Inc., 124 F.Supp.3d 489, 538. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 204 of 247 § 1General Principles, Restatement (Third) of Unfair Competition § 1 (1995) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 19 E.D.Wis. E.D.Wis.2014. Cit. in sup. Manufacturer of a patch used to cover large incisions made during abdominal surgery sued competitor and plaintiff's former director who left to form competitor, seeking to assert claims for, among other things, misappropriation of trade secrets, tortious interference with contract, and unfair competition. This court denied defendants' motion for summary judgment on plaintiff's claims for misappropriation of trade secrets and tortious interference, and further denied the motion as to the unfair-competition claim, holding that, although the parties did not discuss what type of unfair-competition claim was issue here, they agreed that the fate of the unfair-competition claim depended on the outcome of the trade-secret misappropriation and tortious-interference claims. The court noted that Restatement Third of Unfair Competition § 1 listed at least three distinct acts that gave rise to liability for unfair competition under the common law. Starsurgical Inc. v. Aperta, LLC, 40 F.Supp.3d 1069, 1085. Alaska Alaska, 2012. Stat. Note cit. in ftn. Buyer of used motor home sued seller, among others, for, inter alia, violation of Alaska's Unfair Trade Practices and Consumer Protection Act (UTPA), after he discovered that the motor home was a different model year than seller had represented. The trial court entered judgment on a jury verdict finding that defendant did not violate UTPA. Reversing as to the UTPA claim, this court held that judgment should have been entered in favor of plaintiff, because the elements of a case for misrepresentation under UTPA-a statute which mirrored the Federal Trade Commission Act's prohibition on unfair or deceptive acts or practices in trade-were that defendant made a material misrepresentation, and that that misrepresentation caused plaintiff damage, and those elements were established by the jury in the special verdict; specifically, the jury found that defendant misrepresented the model year of the motor home, that defendant knew or should have known that the statement was false or misleading, and that the misrepresentation was a legal cause of harm to plaintiff. Borgen v. A & M Motors, Inc., 273 P.3d 575, 583. Ariz. Ariz.2014. Com. (g) quot. in disc. Public-relations company brought unfair-competition and other claims against its former president and her competing company, alleging that defendants learned confidential and trade-secret information about plaintiff and intended to steal and exploit that information and plaintiff's customers to gain a competitive advantage. The trial court granted defendants' motion to dismiss, finding that the Arizona Uniform Trade Secrets Act (AUTSA) preempted plaintiff's common-law tort claims arising from the alleged misuse of confidential information even as to information not asserted to rise to the level of a trade secret. The court of appeals reversed in part. Agreeing with the result reached by the court of appeals, this court reversed the trial court's dismissal of plaintiff's unfair-competition claim and remanded that claim to that court, holding that the AUTSA did not displace common-law claims based on alleged misappropriation of confidential information that was not a trade secret. In making its decision, the court noted that it did not decide whether Arizona recognized a common-law claim for unfair competition, and that a claim for unfair competition under the Restatement Third of Unfair Competition did not fully exhaust the scope of statutory or common-law liability for unfair methods of competition. Orca Communications Unlimited, LLC v. Noder, 236 Ariz. 180, 184, 337 P.3d 545, 549. Hawaii Hawaii, 1999. Com. (g) at 9-11 cit. in ftn. Unsuccessful bidders on school-bus transportation contracts brought, inter alia, unfair competition claim against competitors, alleging that defendants, acting in concert, controlled and operated shell corporations to circumvent state agency's bidding rules and specifications. The trial court entered judgment Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 205 of 247 § 1General Principles, Restatement (Third) of Unfair Competition § 1 (1995) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 20 for defendants. Affirming in part, this court held, inter alia, that, although defendants' conduct constituted unfair competition, there was insufficient evidence to show a dangerous probability of success in the relevant county or state school-bus markets to sustain plaintiffs' attempt-to-monopolize claim. Robert's Hawaii School Bus v. Laupahoehoe, 91 Hawai'i 224, 982 P.2d 853, 884. La. La.1995. Com. (g) cit. in sup. The Gulf Coast Bank sued the Gulf Coast Bank and Trust Company for trade-name infringement, alleging that defendant's corporate name was deceptively similar to plaintiff's in violation of Louisiana's Trademark Act. Trial court granted defendant summary judgment and intermediate appellate court affirmed. This court reversed and remanded, holding that where one relies on secondary meaning to establish the distinctiveness of its name, one need not prove fraud to enjoin another from using its trade name, but must show that there is a likelihood of consumer confusion created by defendant's use of the trade name. The court stated that the basis of unfair competition has evolved from one of free trade, concerned primarily with the prevention of fraudulent practices, to one of fair trade, with its primary function being to prevent consumer confusion. Gulf Coast Bank v. Gulf Coast Bank & Trust Co., 652 So.2d 1306, 1318. Mass. Mass.1991. Com. (c) cit. in sup. (citing § 1 of T.D. No. 1, 1988. § 1 has since been revised; see Official Text). A manufacturer and its subsidiary sued a competitor and the competitor's founder, alleging, inter alia, that in hiring away the subsidiary's general manager and then engaging him in a secret effort to recruit several of the subsidiary's other key employees, defendants knowingly joined in the general manager's breach of his duty to the subsidiary. The trial court held for plaintiffs. Following transfer of the defendants' interlocutory appeal to the supreme judicial court on its own motion, this court remanded, rejecting, as an independent basis for liability, the trial court's conclusion that defendants intended to cripple the subsidiary to ease defendants' entry into the market. The court noted that defendants' motives for engaging in the competition were, by themselves, insufficient to establish a basis for liability. Augat, Inc. v. Aegis, Inc., 409 Mass. 165, 565 N.E.2d 415, 422. Mo.App. Mo.App.2012. Cit. but dist. Mortgage business operated by former wife sued former husband and his competitor company, alleging unfair competition based upon company's use of deceptive advertising practices to pass itself off as wife's business and to trade on that business's established reputation. The trial court entered judgment on a jury verdict for plaintiff. Affirming, this court rejected defendants' argument that, because plaintiff's action was brought for the use of certain phrases commonly used in its advertisements, the action fell under the trade name or identifying phrases theory of liability set forth in Restatement Third of Unfair Competition § 1, and thus plaintiffs had to prove a secondary meaning to the unfair phrases at issue. The court held that the allegations were based on Restatement § 4, not § 1, because plaintiff specifically claimed that defendants were using plaintiff's distinctive marketing in an effort to pass off plaintiff's services as its own, and plaintiff presented significant evidence at trial that showed that rather than simply incorporating the use of particular phrases, defendants also incorporated the content, syntax, and message used by plaintiff in its advertising. American Equity Mortg., Inc. v. Vinson, 371 S.W.3d 62, 64, 65. Mo.App.2008. Com. (g) cit. and quot. in sup. Trade organization representing orthodontists sought injunctive relief against publisher of directories listing businesses and professionals by category, alleging that publisher's listings for general dentists under the heading of “orthodontists” were false and misleading. The trial court granted defendant's motion to dismiss. Affirming, this court held, inter alia, that plaintiff failed to state a claim for common-law unfair competition. The court reasoned that it was not misleading or deceptive for a general dentist who performed orthodontist Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 206 of 247 § 1General Principles, Restatement (Third) of Unfair Competition § 1 (1995) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 21 services to be listed under the heading “Dentists-Orthodontists,” because a general dentist in Missouri was not required to undertake any additional specialized training to perform orthodontic services. American Ass'n of Orthodontists v. Yellow Book USA, Inc., 277 S.W.3d 686, 692, 694. N.Y.Sup.Ct.App.Div. N.Y.Sup.Ct.App.Div.2012. Subsec. (1)(a) cit. in sup. Vehicle repair shop that was not a member of a direct repair program offered by automobile insurer sued insurer, alleging that insurer violated a state statute that prohibited deceptive acts or practices by engaging in conduct that misled plaintiff's customers into believing that they had to have their vehicles repaired at shops that were members of defendant's program. The trial court denied in part defendant's motion for summary judgment. Affirming as modified, this court held, among other things, that the allegation that defendant's deceptive practices diverted plaintiff's customers to competing businesses, resulting in over $5 million in lost business sales, constituted an allegation of a direct injury sufficient to confer standing on plaintiff under the statute. North State Autobahn, Inc. v. Progressive Ins. Group Co., 953 N.Y.S.2d 96, 106. N.Y.Sup.Ct. N.Y.Sup.Ct.2006. Com. (a) cit. in disc. State Insurance Department denied borough president's administrative appeals of its decisions to withhold certain records, filed by automobile insurers pursuant to state's anti-redlining statute, that president requested under Freedom of Information Law. This court annulled the denials, holding that department failed to demonstrate that the records qualified for the “trade secret” exemption. The court reasoned that the records could not be used by competitors to obtain an unfair advantage because they lacked information regarding pricing, profits, losses, or actual marketing plans, and that department did not apply any unique or proprietary methods to analyze the data, which could be obtained by the public by other means. Markowitz v. Serio, 11 Misc.3d 439, 445, 812 N.Y.S.2d 841, 846, reversed 39 A.D.3d 247, 833 N.Y.S.2d 444 (1st Dept.2007). Ohio App. Ohio App.2003. Cit. in ftn. §§ 1-5. Insurer sought declaratory judgment that it did not have duty to defend insured based on policy exclusion in underlying trade-dress and patent-infringement suit. Trial court granted insured partial summary judgment on duty-to-defend claim, and awarded attorney's fees incurred in instant and underlying actions. Affirming in part, this court held, inter alia, that policy exclusion for intentional conduct did not relieve insurer of duty to defend underlying action even though underlying complaint alleged intentional conduct, where complaint also alleged unintentional conduct, underlying plaintiff could have prevailed on Lanham Act or common-law claims without showing intentional conduct, and proof of intent was required only to justify request for enhanced attorney's fees. Westfield Cos. v. O.K.L. Can Line, 155 Ohio App.3d 747, 757, 804 N.E.2d 45, 53. Vt. Vt.2002. Com. (g) quot. in sup. Owners of advertisement-based newspaper sued former operators of paper for conversion and unfair competition, alleging misappropriation of business assets. The trial court entered judgment on jury verdict for owners. Modifying conversion award and affirming, this court held, inter alia, that evidence that former operators took business assets such as customer lists, bookkeeping records, and office equipment supported unfair-competition claim based on misappropriation. Maguire v. Gorruso, 174 Vt. 1, 800 A.2d 1085, 1091. Restatement of the Law - Unfair Competition © 1995-2016 American Law Institute. Reproduced with permission. Other editorial enhancements © Thomson Reuters. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 207 of 247 § 1General Principles, Restatement (Third) of Unfair Competition § 1 (1995) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 22 End of Document © 2017 Thomson Reuters. No claim to original U.S. Government Works. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 208 of 247 EXHIBIT T Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 209 of 247 Sheare v. Borough of Olyphant, Not Reported in F.Supp.2d (2012) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 1 2012 WL 2527022 Only the Westlaw citation is currently available. United States District Court, M.D. Pennsylvania. Jacqueline SHEARE and Trevor R. Sheare, Plaintiffs, v. BOROUGH OF OLYPHANT and Officer Lewis Kline, Defendants. Civil Action No. 3:11-CV-1639. | June 29, 2012. Attorneys and Law Firms Harry T. Coleman, Law Office of Harry Coleman, Carbondale, PA, for Plaintiffs. Patrick J. Boland, III, Marshall, Dennehey, Warner, Coleman & Goggin, Scranton, PA, for Defendants. MEMORANDUM A. RICHARD CAPUTO, District Judge. *1 Presently before the Court is the Motion to Dismiss Plaintiffs' Amended Complaint (Doc. 15) filed by Defendants Borough of Olyphant (“Olyphant”) and Officer Lewis Kline. Jacqueline Sheare (“Mrs.Sheare”) alleges that she was falsely arrested for criminal trespass after money went missing from her sister's home. According to Mrs. Sheare, Officer Kline commenced criminal proceedings against her based on numerous known falsehoods that were necessary to establishing probable cause. As such, Mrs. Sheare and her husband commenced this action asserting a 42 U.S.C. § 1983 false arrest claim against Officer Kline and a Monell claim against Olyphant. Plaintiffs also assert state law claims for abuse of process, intentional infliction of emotional distress, and loss of consortium. Defendants have moved to dismiss the action in its entirety. Because Plaintiffs have adequately stated claims for false arrest, intentional infliction of emotional distress, and loss of consortium, Defendants' motion will be granted in part and denied in part. BACKGROUND The facts as alleged in the Amended Complaint (Doc. 14) are as follows: The Sheares are residents of Susquehanna County, Pennsylvania. (Am. Compl., ¶ 1) Olyphant is a political subdivision of the Commonwealth of Pennsylvania. (Id. at ¶ 2.) Olyphant manages law enforcement in the borough through the Olyphant Police Department, and Lewis Kline is an officer with the department. (Id. at ¶¶ 3-7.) In early November 2010, Mrs. Sheare made plans with her sister Kathleen Zinskie, to travel together to Elizabethtown, Pennsylvania to visit their sister Colleen. (Id. at ¶ 12.) They were all then to travel together to Maryland for a family gathering at their sister Mary's home. (Id.) Around noon on November 7, 2010, Mrs. Sheare arrived at Kathleen's home in Olyphant. (Id. at ¶ 20.) She saw both of the family's trucks in the driveway and assumed they were home. (Id. at ¶ 21.) She then went in the unlocked garage and knocked on the interior door. (Id. at ¶ 22.) Finding no one home, she assumed they were running errands. (Id. at ¶ 23.) She used the bathroom and then sat on a couch and read a magazine, waiting for their return. (Id. at ¶ 24.) Prior to November 7, 2010, Kathleen's sister would routinely welcome Mrs. Sheare into her home. (Id. at ¶ 13.) And, on November 7, 2010, Mrs. Sheare had express permision to enter the Zinskie home. (Id.) About thirty minutes later, Mrs. Sheare's nephew, Nicholas Zinskie, came home and told her that Kathleen and her husband had already left for Elizabethtown and had left a note for her on the garage door. (Id. at ¶ 25.) They went out to the garage and Mrs. Sheare then read the note and left. (Id. at ¶ 26.) She met up with Kathleen, Colleen, and their husbands in Elizabethtown. (Id. at ¶ 28.) They all left for Maryland that evening. (Id. at ¶ 31.) *2 A few days later, Kathleen called Mrs. Sheare to ask her if she had been in the upstairs of the Zinskie home or seen any money lying around. (Id. at ¶ 35.). Mrs. Sheare told her she had not. (Id.) Kathleen then told her $1,000 was missing from an envelope in her husband Harry's office. (Id.) Case 3:14-cv-00853- DM Document 302-1 Filed 02/27/17 Page 210 of 247 Sheare v. Borough of Olyphant, Not Reported in F.Supp.2d (2012) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 2 About a week later, Officer Kline called Mrs. Sheare and asked her some questions about the missing money. (Id. at ¶¶ 38-39) He then asked her to come to the police station for an interview. (Id. at ¶ 40.) When she arrived, she was taken into an interview room and was advised she could leave at any time. (Id. at ¶ 41.) Officer Kline immediately confronted Mrs. Sheare, accusing her of lying repeatedly about her relationship with her sister, how frequently she was at the Zinskie home, and even what magazine she had read while waiting for them to return home. (Id. at ¶¶ 44-45.) He told Mrs. Sheare he was good friends with Harry Zinskie and that he knew she had taken the money. (Id. at ¶ 46.) He also said that Nicholas Zinskie had stated that he first saw Mrs. Sheare as she was exiting the garage, and that she seemed to be in a hurry. (Id. at ¶ 53.) Officer Kline said that if she did not return the money, she would be charged with a felony that would hurt her employment with the United States Postal Service. (Id. at ¶ 47.) Mrs. Sheare continually denied taking anything from the Zinskie home. (Id. at ¶ 49.) Due to Officer Kline's threatening and abusive manner, Mrs. Sheare was extremely shaken up by the interview. (Id. at ¶¶ 57-58.) The next day, she was taken to the hospital and underwent a cardiac catherization after experiencing chest pain. (Id. at ¶ 58.) Several days later, she was charged with criminal trespass under 18 Pa.C.S. § 3503(A) (1)(i). (Id. at ¶ 62.) The charge was later dismissed by an Assistant Lackawanna County District Attorney prior to a preliminary hearing. (Id.) In the Affidavit of Probable Cause completed by Officer Kline, he states that he was called to the Zinskie home on November 15, 2010 on a reported theft of money and that both Mr. and Mrs. Zinskie suspected Mrs. Sheare of the theft. (Doc. 17, Br. Supp. Mot. Dismiss Am. Compl., Ex. 1.) The Affidavit also states that Nicholas Zinskie arrived home on November 7, 2010 to find Mrs. Sheare walking out of the garage. (Id.) After being asked where his parents were, Nicholas pointed to a “rather prominent note” on the garage door. (Id.) Officer Kline further states in the Affidavit that the Zinskies both told him repeatedly that Mrs. Sheare “did not have their permission to enter the residence on Sunday, 11/7/10.” (Id.) The Sheares initiated this action in August of 2011. (Doc. 1.) In the complaint, Mrs. Sheare alleged a false arrest claim against Officer Kline and a Monell claim against Olyphant, both under 42 U.S.C. § 1983 (Counts One and Two). She also alleged abuse of process and intentional infliction of emotional distress under state law (Counts Three and Four). Finally, her husband alleged loss of consortium against Officer Kline and Olyphant (Count Five). Olyphant and Officer Kline then filed a motion to dismiss. (Doc. 7.) The Court granted the motion to dismiss the federal claims and declined to exercise supplemental jurisdiction over the remaining state law claims. (Doc. 13.) Subsequently, Plaintiffs filed an Amended Complaint asserting the same five causes of action. On February 27, 2012, Defendants filed a motion to dismiss the Amended Complaint. (Doc. 15.) The motion has been briefed and is ripe for review. LEGAL STANDARD *3 Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of a complaint, in whole or in part, for failure to state a claim upon which relief can be granted. See Fed.R.Civ.P. 12(b)(6). When considering a Rule 12(b) (6) motion, the Court's role is limited to determining if a plaintiff is entitled to offer evidence in support of their claims. See Semerenko v. Cendant Corp., 223 F.3d 165, 173 (3d Cir.2000). The Court does not consider whether a plaintiff will ultimately prevail. See id. A defendant bears the burden of establishing that a plaintiff's complaint fails to state a claim. See Gould Elecs. v. United States, 220 F.3d 169, 178 (3d Cir.2000). “A pleading that states a claim for relief must contain ... a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a). The statement required by Rule 8(a)(2) must give the defendant fair notice of what the ... claim is and the grounds upon which it rests. Erickson v. Pardus, 551 U.S. 89, 93, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007) (per curiam) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). Detailed factual allegations are not required. Twombly, 550 U.S. at 555. However, mere conclusory statements will not do; “a complaint must do more than allege the plaintiff's entitlement to relief.” Fowler v. UPMC Shadyside, 578 F.3d 203, 211 (3d Cir.2009). Instead, a complaint must “show” this entitlement by alleging sufficient facts. Id. “While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations.” Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1950, 173 L.Ed.2d 868 (2009). Case 3:14-cv-00853- DM Document 302-1 Filed 02/27/17 Page 211 of 247 Sheare v. Borough of Olyphant, Not Reported in F.Supp.2d (2012) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 3 As such, the inquiry at the motion to dismiss stage is “normally broken into three parts: (1) identifying the elements of the claim, (2) reviewing the complaint to strike conclusory allegations, and then (3) looking at the well-pleaded components of the complaint and evaluating whether all of the elements identified in part one of the inquiry are sufficiently alleged.” Malleus v. George, 641 F.3d 560, 563 (3d Cir.2011). Dismissal is appropriate only if, accepting as true all the facts alleged in the complaint, a plaintiff has not pleaded “enough facts to state a claim to relief that is plausible on its face,” Twombly, 550 U.S. at 570, meaning enough factual allegations “ ‘to raise a reasonable expectation that discovery will reveal evidence of’ ” each necessary element. Phillips v. County of Allegheny, 515 F.3d 224, 234 (3d Cir.2008) (quoting Twombly, 550 U.S. at 556). “The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Iqbal, 129 S.Ct. at 1949. “When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.” Iqbal, 129 S.Ct. at 1949. *4 In deciding a motion to dismiss, the Court should consider the allegations in the complaint, exhibits attached to the complaint, and matters of public record. See Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir.1993). The Court may also consider “undisputedly authentic” documents when the plaintiff's claims are based on the documents and the defendant has attached copies of the documents to the motion to dismiss. Id. The Court need not assume the plaintiff can prove facts that were not alleged in the complaint, see City of Pittsburgh v. W. Penn Power Co., 147 F.3d 256, 263 & n. 13 (3d Cir.1998), or credit a complaint's “ ‘bald assertions' ” or “ ‘legal conclusions.’ ” Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir.1997) (quoting In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1429-30 (3d Cir.1997)). DISCUSSION Defendants seek to dismiss Plaintiffs' Amended Complaint in its entirety for failure to state a claim upon which relief can be granted. The Court will address the sufficiency of each Count of Plaintiffs' Amended Complaint in seratim. I. False Arrest Pursuant to 42 U.S.C. § 1983 Defendants seek to dismiss Mrs. Sheare's false arrest claim and assert that the claim lacks facial plausibility. Pennsylvania's criminal trespass statute, 18 Pa.C.S.A. § 3503, states, in pertinent part, that a person is guilty of criminal trespass if, “knowing that he is not licensed or privileged to do so, he enters, gains entry by subterfuge or surreptitiously remains in any building or occupied structure or separately secured or occupied portion thereof.” 18 Pa.C.S.A. § 3503(a)(1)(i). A “crucial element” of the crime of criminal trespass is “the lack of permission or privilege to enter.” Commonwealth v. McBride, 528 Pa. 153, 158, 595 A.2d 589, 591 (1991). Section 1983 of Title 42 of the United States Code provides: Every person who, under color of any statute, ordinance, regulation, custom, or usage, of any State ..., subjects, or causes to be subjected, any citizen of the United States ... to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress.... In order to bring a successful § 1983 claim, a plaintiff must demonstrate (1) that the challenged conduct was committed by a person acting under color of state law, and (2) that the conduct deprived the plaintiff of a right, privilege, or immunity secured by the Constitution or federal law. See Carter v. City of Philadelphia, 989 F.2d 117, 119 (3d Cir.1993). In Count One, Mrs. Sheare alleges that Officer Kline violated her Fourth Amendment rights under 42 U.S.C. § 1983 by falsely arresting her. The central issue in determining liability in a § 1983 action based on a claim of false arrest is “whether the arresting officers had probable cause to believe the person arrested had committed the offense.” Dowling v. City of Phila., 855 F.2d 136, 141 (3d Cir.1988). Whether the person actually committed the charged offense is irrelevant, id., as is the outcome of the Case 3:14-cv-00853- DM Document 302-1 Filed 02/27/17 Page 212 of 247 Sheare v. Borough of Olyphant, Not Reported in F.Supp.2d (2012) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 4 prosecution of the state court charges. See Roa v. City of Bethlehem, 782 F.Supp. 1008, 1015 (E.D.Pa.1991). *5 It is well-settled that probable cause to arrest generally exists when a police officer makes an arrest pursuant to a warrant which meets the requirements of the Fourth Amendment. See Baker v. McCollan, 443 U.S. 137, 144, 99 S.Ct. 2689, 61 L.Ed.2d 433 (1979). A section 1983 plaintiff who challenges the validity of a warrant by asserting that law enforcement agents submitted a false affidavit to the issuing judicial officer must satisfy the two-part test developed by the Supreme Court in Franks v. Delaware, 438 U.S. 154, 155-56, 98 S.Ct. 2674, 57 L.Ed.2d 667 (1978). See Lippay v. Christos, 996 F.2d 1490, 1502, 1504 (3d Cir.1993). This is true whether the alleged falsehood is an affirmative misrepresentation or a material omission. See, e.g., United States v. Frost, 999 F.2d 737, 742-43 n. 2 (3d Cir.1993). Under Franks and its progeny, the plaintiff must prove, by a preponderance of the evidence, (1) that the affiant knowingly and deliberately, or with a reckless disregard for the truth, made false statements or omissions that create a falsehood in applying for a warrant; and (2) that such statements or omissions are material, or necessary, to the finding of probable cause. See Franks, 438 U.S. at 171-72; Frost, 999 F.2d at 742-43. Here, unlike the Sheares' original complaint, Plaintiffs have adequately alleged facts supporting the false arrest claim. Under the Franks test, the Sheares allege Officer Kline “knowingly stated deliberate falsehoods” and “acted with a reckless disregard for the truth.” The specific falsehoods alleged by Mrs. Sheare are that Officer Kline misrepresented in the Affidavit of Probable Cause that: (1) Plaintiff did not have their permission to enter the residence on Sunday, November 7, 2010; (2) Plaintiff said she did not have permission to enter and remain in the residence; (3) Plaintiff entered the Zinskie residence without permission in the summer of 2010; and (4) he was informed by Kathleen Zinskie that Plaintiff lacked permission to enter the Zinskie residence. (Am. Compl., ¶¶ 44, 65.) And, these false facts all concern a crucial element of the criminal trespass statutethe permission or privilege of Mrs. Sheare to enter the Zinskie residencewhich was necessary to Officer Kline's finding of probable cause. In addition, Officer Kline raises the defense of qualified immunity in moving to dismiss Plaintiffs' Amended Complaint. Under the doctrine of qualified immunity, government officials are immune from suit for damages where their conduct did not violate “clearly established statutory or constitutional rights of which a reasonable person would have known.” Pearson v. Callahan, 555 U.S. 223, 231, 129 S.Ct. 808, 172 L.Ed.2d 565 (2009) (internal quotations omitted) (quoting Harlow v. Fitzgerald, 457 U.S. 800, 818, 102 S.Ct. 2727, 73 L.Ed.2d 396 (1982)). Qualified immunity protects government officials whether they have made a mistake of law, a mistake of fact, or a mistake based on mixed questions of law and fact. Id. To determine whether qualified immunity applies, a court must examine “whether the facts that a plaintiff has alleged or shown make out a violation of a constitutional right” and “whether the right at issue was ‘clearly established’ at the time of defendant's alleged misconduct.” Id. at 232 (internal citations omitted). A court may exercise its discretion in choosing which prong to address first, considering the circumstances of the particular case. Id. at 236. *6 As detailed above, the Court has already concluded that Mrs. Sheare has plausibly alleged that the Affidavit of Probable Cause contained material misrepresentations that, if otherwise not included, would not have established probable cause. As a result, because Mrs. Sheare alleged that at the time Officer Kline completed the Affidavit “he knew facts that should have changed his assessment of probable cause, the complaint adequately alleges that Defendant [Kline] did not act reasonably but, rather, unreasonably disregarded known, exculpatory information.” Anderson v. Goga, No. 11-528, 2011 WL 4737569, at *7 (W.D.Pa. Oct.5, 2011); see also Lippay, 996 F.2d at 1504. The Court, therefore, will not dismiss Mrs. Sheare's claim against Officer Kline at this stage based on qualified immunity, and she will be permitted to proceed on her false arrest claim. II. Monell Claim Defendants seek dismissal of Mrs. Sheare's failure to train claim against Olyphant. In Monell v. Dep't of Soc. Serv., 436 U.S. 658, 690-91, 98 S.Ct. 2018, 56 L.Ed.2d 611 (1978), the Supreme Court held that a municipality will not be found liable for the unconstitutional acts of a state actor unless the conduct that caused the harm was pursuant to a government policy, custom, or practice. Instead, a § 1983 claim against a municipality requires the Case 3:14-cv-00853- DM Document 302-1 Filed 02/27/17 Page 213 of 247 Sheare v. Borough of Olyphant, Not Reported in F.Supp.2d (2012) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 5 plaintiff to: (1) identify a policy or custom that deprived him of a federally protected right, (2) demonstrate that the municipality, by its deliberate conduct, acted as the “moving force” behind the alleged deprivation, and (3) establish a direct causal link between the policy or custom and the plaintiff's injury. See Bd. of Cnty. Comm'rs v. Brown, 520 U.S. 397, 404, 117 S.Ct. 1382, 137 L.Ed.2d 626 (1997). Alternatively, “[i]n the absence of an unconstitutional policy, a municipality's failure to properly train its employees and officers can create an actionable violation of a party's constitutional rights under § 1983.” Reitz v. County of Bucks, 125 F.3d 139, 145 (3d Cir.1997) (citing City of Canton v. Harris, 489 U.S. 378, 388, 109 S.Ct. 1197, 103 L.Ed.2d 412 (1989)). “The inadequacy of police training may serve as the basis for § 1983 liability only where the failure to train amounts to deliberate indifference to the rights of persons with whom the police come into contact.” City of Canton, 489 U.S. at 388. Thus, failure to train can be the basis for liability if the failure reflects a deliberate or conscious choice by the municipality. See id. at 389. To attach liability to a municipality, the identified deficiency in the training program must be closely related to the ultimate injury. See id. at 391. Proving that an injury could have been avoided if a police official had better or more training is not enough to show municipal liability. See id. Otherwise, “[s]uch a claim could be made about almost any encounter resulting in injury.” Id. Additionally, “adequately trained officers occasionally make mistakes; the fact that they do says little about the training program or the legal basis for holding the city liable.” Id. at 391. “Failure to train ... municipal employees can ordinarily be considered deliberate indifference only where the failure has caused a pattern of violations.” See Berg v. County of Allegheny, 219 F.3d 261, 276 (3d Cir.2000) (per curiam) (citing Bd. of Cnty. Comm'rs, 520 U.S. at 408-09). And, as the Supreme Court recently emphasized, “[a] municipality's culpability for a deprivation of rights is at its most tenuous where a claim turns on a failure to train.” Connick v. Thompson, ---U.S. ----, 131 S.Ct. 1350, 1359, 179 L.Ed.2d 417 (2011). *7 Here, Plaintiffs allege that Olyphant “does not adequately train its officers in the preparation of and in the advancement of criminal proceedings,” (Am. Compl., ¶ 75), and “does not adequately train its officers that they may only charge a person with a crime if there is probable cause to believe that a person committed the crime.” (Id. at ¶ 76.) Based on this lack of training, Olyphant “has been subject to numerous lawsuits concerning its officers and their lack of proper and adequate training.” (Id.) In addition, Plaintiffs assert that “Defendant Borough does not train its police officers at all and instead simply utilizes the Chief of Police without assuring that the Department uses its police powers appropriately and Constitutionally and provide adequate training and oversight to its police officers.” (Am. Compl., ¶ 77). The allegations in the Amended Complaint are insufficient to state a Monell claim against Olyphant for its failure to adequately train its police officers. First, Plaintiffs do not identify “any history of cognate violations allegedly committed by [Olyphant] employees.” Halterman v. Tullytown Borough, No. 10-7166, 2011 WL 2411020, at *8 (E.D.Pa. June 14, 2011). Instead, Plaintiffs simply allege that Olyphant has been subject to “numerous lawsuits” without facts identifying that these suits were similarly related to the Borough's alleged failure to train its officers that a suspect may only be charged with a crime if supported by probable cause. Furthermore, Plaintiffs fail to set forth any non-conclusory allegations of “deliberate indifference for purposes of failure to train.” Connick, 131 S.Ct. at 1360. Rather, the allegations of deliberate indifference are “little more than a ‘naked assertion,’ or ‘a formulaic recitation of the elements of a cause of action.’ ” Dempsey v. Bucknell Univ., No. 11-1679, 2012 WL 1569826, at *24 (M.D.Pa. May 3, 2012) (quoting Iqbal, 129 S.Ct. at 1949). Ultimately, Plaintiffs' Monell claim is based on the “if they had trained better, this would not have happened” variety that the Court previously found insufficient in dismissing Plaintiffs' original complaint. As such averments are insufficient to state a Monell claim, Count Two will be dismissed. And, because Plaintiffs have previously been given leave to amend the Monell claim, it will be dismissed with prejudice. 1 III. Abuse of Process Claim Officer Kline seeks to dismiss Mrs. Sheare's abuse of process claim because she fails to allege any facts that he perverted the legal process after process was initiated. To state a claim for abuse of process under Pennsylvania law, “the plaintiff must allege that the defendant: (1) used a legal process against the plaintiff; (2) primarily to accomplish a purpose for which the process was Case 3:14-cv-00853- DM Document 302-1 Filed 02/27/17 Page 214 of 247 Sheare v. Borough of Olyphant, Not Reported in F.Supp.2d (2012) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 6 not designated, and (3) harm has been caused to the plaintiff.” Douris v. Schweiker, 229 F.Supp.2d 391, 404 (E.D.Pa.2002). *8 According to the Pennsylvania Supreme Court: The gist of an action for abuse of process is the improper use of process after it has been issued, that is, a perversion of it. An abuse is where the party employs it for some unlawful object, not the purpose which it is intended by the law to effect; in other words, a perversion of it ... On the other hand, legal process, civil or criminal, may be maliciously used so as to give rise to a cause of action where no object is contemplated ... other than its proper effect and execution. Malicious use of civil process has to do with the wrongful initiation of such process, while abuse of civil process is concerned with a perversion of a process after it is issued. McGee v. Feege, 517 Pa. 247, 253, 535 A.2d 1020, 1023 (1987) (citing Publix Drug Co. v. Breyer Ice Cream Co., 347 Pa. 346, 350, 32 A.2d 413 (1943)) (internal citations omitted) (emphasis added). “ ‘There is no cause of action for abuse of process if the claimant, even with bad intentions, merely carries out the process to its authorized conclusion.’ ” Douris, 229 F.Supp.2d at 404 (quoting Cameron v. Graphic Mgmt. Assocs., Inc., 817 F.Supp. 19, 21 (E.D.Pa.1992)). Here, Plaintiffs fail to state a claim for abuse of process under Pennsylvania law. In particular, the allegations against Officer Kline all encompass events that transpired before criminal proceedings commenced against Mrs. Sheare on November 21, 2010-the day with which she was charged with criminal trespass. (Am. Compl., ¶ 62.) Specifically, Plaintiffs allege that on November 17, 2010 Officer Kline called Mrs. Sheare and asked her to come to the police station. (Id. at ¶ 40.) At the station, Officer Kline accused Mrs. Sheare of stealing the money, and he also informed her that he was good friends with Harry Ziniskie. (Id. at ¶ 46.) And, based on this information, Plaintiffs aver “that Defendant Kline advanced criminal charges here as an attempt to wrongfully recover money from the Plaintiff that was allegedly taken from the Zinskie home.” (Id.) These allegations are not that the legal process was abused after criminal proceedings were commenced against Mrs. Sheare. Instead, the Plaintiffs argue that the criminal proceedings were wrongfully or maliciously initiated without justification. Thus, because Plaintiffs claim is based on the alleged improper commencement of criminal action against her and not on “the pervasion of process after it issued,” Plaintiffs fail to state an abuse of process claim. And, because the facts as alleged all relate to Officer Kline's conduct before the criminal charges were filed, no claim for abuse of process could be stated on these facts, and the abuse of process claim will be dismissed with prejudice. IV. Intentional Infliction of Emotional Distress Claim In order to state a claim for intentional infliction of emotional distress (“IIED”) in Pennsylvania, the plaintiff must establish four elements: (1) the conduct of the defendant was intentional or reckless; (2) the conduct was extreme and outrageous; (3) the conduct caused emotional distress; and (4) the distress was severe. See Walker v. N. Wales Borough, 395 F.Supp.2d 219, 232 (E.D.Pa.2005) (citing Chuy v. Phila. Eagles Football Club, 595 F.2d 1265, 1273 (3d Cir.1979)). For a plaintiff to recover for IIED, “the conduct must be so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized society.” Cox v. Keystone Carbon Co., 861 F.2d 390, 395 (3d Cir.1988) (quoting Buczek v. First Nat'l Bank of Mifflintown, 366 Pa.Super. 551, 531 A.2d 1122, 1125 (1987)). *9 While “mere allegations of criminal conduct are insufficient to establish that a person acted in an extreme or outrageous manner,” United States ex rel. Magid v. Wilderman, No. 96-4346, 2005 WL 469590, at *5 (E.D.Pa. Feb.28, 2005), and “the filing of false charges and false arrest are generally not found so extreme and outrageous,” Griffin v. Municipality of Kingston, No. 08-2290, 2009 WL 1794775, at *11 (M.D.Pa. June 23, 2009), allegations that a plaintiff was arrested by officers, knowing that the accusations against the accused were false, and knowing that they lacked probable cause are “types of allegations that have survived a motion to dismiss in other cases in Pennsylvania.” Dempsey v. Bucknell Univ., No. 11-1679, 2012 WL 1569826, at *24 (M.D.Pa. May 3, 2012) (citing Walker, 395 F.Supp.2d at Case 3:14-cv-00853- DM Document 302-1 Filed 02/27/17 Page 215 of 247 Sheare v. Borough of Olyphant, Not Reported in F.Supp.2d (2012) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 7 232; Banyas v. Lower Bucks Hosp., 293 Pa.Super. 122, 437 A.2d 1236 (Pa.Super.1981)). Here, Mrs. Sheare alleges that Officer Kline commenced criminal charges against her knowing that they were false and without probable cause. (Am. Compl., ¶¶ 51, 62.) And, as a result of these criminal accusations, Mrs. Sheare is alleged to have suffered severe distress. (Id. at ¶¶ 57-59, 83, 437 A.2d 1236.) While Mrs. Sheare will face a more exacting burden at later stages in this litigation, the allegations that Officer Kline commenced criminal proceedings against Mrs. Sheare knowing that the information was false and without probable cause are sufficient to support a claim that Officer Kline's conduct was extreme and outrageous. See Dempsey, 2012 WL 1569826, at *24. And, although Mrs. Sheare will have to produce objective proof of emotional distress at summary judgment or trial, see id. (citing Bougher v. Univ. of Pittsburgh, 882 F.2d 74, 80 (3d Cir.1989)), these allegations at the motion to dismiss stage are sufficient to allow her to proceed on her IIED claim. Thus, Officer Kline's motion to dismiss the IIED claim will be denied. V. Loss of Consortium Claim Defendants also seek dismissal of Mr. Sheare's loss of consortium claim because it is merely derivative of Mrs. Sheare's other claims. A loss of consortium claim is intended to compensate one for the “ ‘loss of the services, society, and conjugal affection of one's spouse.’ ” Adam C. v. Scranton Sch. Dist., No. Civ.A.07- 532, 2011 WL 996171, at *7 (M.D.Pa. Mar. 7, 2011) (quoting Smalls v. Pittsburgh-Corning Corp., 843 A.2d 410, 417 (Pa.Super.2004)). A claim for loss of consortium, however, is derivative of the validity of the injured spouse's claim. See Jensen v. United States, No. Civ.A.09-2977, 2009 WL 4117357, at *3 (E.D.Pa. Nov.24, 2009). But, given that Mrs. Sheare's § 1983 false arrest and IIED claims will be permitted to proceed, Defendants' request to dismiss the derivative consortium claim will be denied. See, e.g., Watson v. Haverford Police Dep't, No. 10-6731, 2012 WL 1900629, at *18 (E.D.Pa. May 25, 2012). CONCLUSION *10 For the above stated reasons, Plaintiffs will be permitted to proceed on the § 1983 false arrest claim, the IIED claim, and the loss of consortium claim. However, the Monell and abuse of process claims will be dismissed with prejudice. An appropriate order follows. All Citations Not Reported in F.Supp.2d, 2012 WL 2527022 Footnotes 1 Moreover, because it is well-settled that “a municipality is immune from punitive damages under 42 U.S.C. § 1983,” City of Newport v. Fact Concerts, Inc., 453 U.S. 247, 271, 101 S.Ct. 2748, 69 L.Ed.2d 616 (1981); Smith v. Borough of Dunmore, 633 F.3d 176, 183 (3d Cir.2011), Plaintiffs request for punitive damages against Olyphant fails to state a claim. And, to the extent that Plaintiffs' Amended Complaint asserts a Monell claim against the Olyphant Police Department, it fails to state a claim because “a police department is merely a subunit of the local government and is not amenable to suit under § 1983.” Golya v. Golya, No. 05-100, 2007 WL 2301085, at *9 (M.D.Pa. Aug.9, 2007). End of Document © 2017 Thomson Reuters. No claim to original U.S. Government Works. Case 3:14-cv-00853- DM Document 302-1 Filed 02/27/17 Page 216 of 247 EXHIBIT U Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 217 of 247 Sidhu v. Mann, Not Reported in F.Supp.2d (2011) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 1 2011 WL 900982 Only the Westlaw citation is currently available. United States District Court, M.D. Pennsylvania. Gurpartap Singh SIDHU, Plaintiff, v. Rupinder MANN, Defendant. No. 1:10-cv-2311. | March 14, 2011. Attorneys and Law Firms Kevin J. Fitzgerald, Fitzgerald Law Office, Olyphant, PA, for Plaintiff. Larry A. Weisberg, McCarthy Weisberg Cummings, P.C., Harrisburg, PA, for Defendant. MEMORANDUM AND ORDER JOHN E. JONES III, District Judge. *1 THE BACKGROUND OF THIS ORDER IS AS FOLLOWS; Pending before the Court is a Motion to Dismiss (“Motion”) filed by Defendant Rupinder Mann (“Defendant”) on January 1, 2011. (Doc. 6). For the reasons that follow, we will grant the Motion. However, we shall grant the Plaintiff leave to amend Count I of his complaint. I. PROCEDURAL HISTORY The plaintiff, Gurpartap Singh Sidhu (“Plaintiff”), initiated the instant action by filing a complaint in the United States District Court for the Middle District of Pennsylvania on November 8, 2010. (Doc. 1). Defendant filed a Waiver of Service in accordance with Fed.R.Civ.P. 4 on December 2, 2010. (Doc. 4). Thereafter, Defendant timely filed the pending Motion to Dismiss. (Doc. 6). The Motion has been fully briefed by the parties and is therefore ripe for disposition. II. STANDARD OF REVIEW In considering a motion to dismiss pursuant to Rule 12(b) (6), courts “accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief.” Phillips v. County of Allegheny, 515 F.3d 224, 231 (3d Cir.2008) (quoting Pinker v. Roche Holdings Ltd., 292 F.3d 361, 374 n. 7 (3d Cir.2002)). In resolving a motion to dismiss pursuant to Rule 12(b)(6), a court generally should consider only the allegations in the complaint, as well as “documents that are attached to or submitted with the complaint, ... and any matters incorporated by reference or integral to the claim, items subject to judicial notice, matters of public record, orders, [and] items appearing in the record of the case.” Buck v. Hamption Twp. Sch. Dist., 452 F.3d 256, 260 (3d Cir.2006). A Rule 12(b)(6) motion tests the sufficiency of the complaint against the pleading requirements of Rule 8(a). Rule 8(a)(2) requires that a complaint contain a short and plain statement of the claim showing that the pleader is entitled to relief, “in order to give the defendant fair notice of what the claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 545, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). While a complaint attacked by a Rule 12(b)(6) motion to dismiss need not contain detailed factual allegations, it must contain “sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal, --- U.S. ----, ----, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). To survive a motion to dismiss, a civil plaintiff must allege facts that ‘raise a right to relief above the speculative level ....” Victaulic Co. v. Tieman, 499 F.3d 227, 235 (3d Cir.2007) (quoting Twombly, 550 U.S. at 555). Accordingly, to satisfy the plausibility standard, the complaint must indicate that defendant's liability is more than “a sheer possibility.” Iqbal, 120 S.Ct. at 1949. “Where a complaint pleads facts that are ‘merely consistent with’ a defendant's liability, it ‘stops short of the line between possibility and plausibility of entitlement to relief.’ ” Id. (quoting Twombly, 550 U.S. at 557). *2 Under the two-pronged approach articulated in Twombly and later formalized in Iqbal, a district court must first identify all factual allegations that constitute nothing more than “legal conclusions” or “naked assertions.” Twombly, 550 U.S. at 555, 557. Such Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 218 of 247 Sidhu v. Mann, Not Reported in F.Supp.2d (2011) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 2 allegations are “not entitled to the assumption of truth” and must be disregarded for purposes of resolving a 12(b) (6) motion to dismiss. Iqbal, 129 S.Ct. at 1950. Next, the district court must identify “the ‘nub’ of the ... complaint -the well-pleaded, nonconclusory factual allegation[s].” Id. Taking these allegations as true, the district judge must then determine whether the complaint states a plausible claim for relief. See id. However, “a complaint may not be dismissed merely because it appears unlikely that the plaintiff can prove those facts or will ultimately prevail on the merits.” Phillips, 515 F.3d at 231 (citing Twombly, 127 S.Ct. 1964- 65, 1969 n. 8). Rule 8 “does not impose a probability requirement at the pleading stage, but instead simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of the necessary element.” Id. at 234. III. FACTUAL ALLEGATIONS Plaintiff and Defendant are husband and wife and have been parties to a divorce action filed in Cumberland County, Pennsylvania since February 2006. (Doc. 1 ¶ 5- 6). Plaintiff resides in Wisconsin, and Defendant resides in Pennsylvania. (Id. ¶ 3-4). Plaintiff alleges that Defendant wrongfully filed two criminal ex parte actions in India. (Id. ¶ 13, 15). The first action, a dowry claim filed April 16, 2006, alleged that Plaintiff abused the dowry laws of India. (Id. ¶ 13). The second action, a fraud claim filed October 17, 2008, alleged that Plaintiff committed fraud in his applications and documentation in pursuit of his medical degree and professional license. (Id. ¶ 15). Plaintiff's complaint consists of two counts: Abuse of Process (Count I) and Tortious Interference with Perspective [sic, hereinafter “Prospective”] Business Interests (Count II). With respect to Count I, Plaintiff alleges two wrongful uses of the Indian courts. First, that Defendant filed the fraud action to wrongfully prevent Plaintiff from completing his medical education and obtaining a medical license. (Id. ¶ 19). Second, that Defendant filed both actions to secure leverage in the divorce negotiations. (Id. ¶ 20). With respect to Count II, Plaintiff alleges that Defendant filed the fraud action for the purpose of preventing Plaintiff from obtaining employment as a physician thereby interfering with a prospective business relationship. (Id. ¶ 22-23). IV. DISCUSSION A. Choice of Law Where jurisdiction over a plaintiff's tort actions are based upon diversity of citizenship, the District Court shall apply the state choice-of-law rules in the jurisdiction in which the court sits to determine which state's substantive law governs the dispute. Garcia v. Plaza Oldsmobile Ltd., 421 F.3d 216, 219 (3d Cir.1994). Pennsylvania law requires that we determine what type of conflict, if any, exists between the competing bodies of law. Id. (citing Kuchinic v. McCrory, 422 Pa. 620, 222 A.2d 897, 899-900 (Pa.1966)). Where there is no difference between the laws of the forum state and those of the foreign jurisdiction, the result is a false conflict, and the court need not decide the choice of law issue. Lucker Mfg. v. Home Ins. Co., 23 F.3d 808, 813 (3d Cir.1994). However, where the governmental interests of both states would be impaired by the application of another state's substantive law, the result is a true conflict, and the law of the state having the most significant contacts or relationships with the particular issue shall apply. Garcia, 421 F.3d at 220. *3 In this case, three bodies of law are potentially applicable. Wisconsin law and Pennsylvania law are clearly implicated because the parties are domiciled in these states. However, Indian law is also implicated because Defendant allegedly used the Indian court system to commit the torts at issue herein. Therefore, to the extent that the laws of India, Wisconsin, and Pennsylvania are in conflict, we must decide which jurisdiction has the most significant relationship to the dispute to determine which substantive law applies. In evaluating which state's connection to the claim is most significant, courts should consider a number of factors including: (1) the place where the injury occurred; (2) the place where the conduct causing the injury occurred; (3) the domicile of the parties; and (4) the place where the relationship between the parties is centered. RESTATEMENT (SECOND) OF CONFLICTS OF LAW § 145 (1971). The relative importance of the factors to the claim determines the weight the court should give to each of these factors. Id. With respect to the abuse of process claim, generally the local law of the jurisdiction where the offending proceeding has occurred will govern the dispute unless another jurisdiction has a more significant relationship to the claim. See RESTATEMENT (SECOND) OF CONFLICTS OF LAW § 155 (1971). Here, the offending Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 219 of 247 Sidhu v. Mann, Not Reported in F.Supp.2d (2011) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 3 proceedings are ongoing in India. However, accepting the truth of the facts asserted in the complaint, the Defendant commenced these proceedings for the purpose of influencing the divorce action currently pending in Pennsylvania state court. Therefore, situs of the relevant relationship between the parties and any injury to Plaintiff's interest in the divorce is Pennsylvania. We find that these factors are more significant than the location of the injury-causing conduct because the alleged conduct was, in effect, an attempt to manipulate the Pennsylvania legal system. Therefore, we find that Pennsylvania has the most significant relationship to the claim for abuse of process, and Pennsylvania substantive law will govern this claim. With respect to the claim for interference with a prospective business interest, the allegedly tortious conduct again occurred in India, but it appears the conduct was intended to harm Plaintiff in the United States wherever he intends to pursue employment as a physician. Based on allegations of Defendant's intent, the location of the injury would appear to be the most significant factor affecting the claim. However, as discussed below, Plaintiff fails to identify exactly what business interest was impaired by Defendant's actions. We are therefore unable to identify where Plaintiff has suffered harm, and consequently we are unable to determine which substantive law governs the dispute. Moreover, because the law in both Pennsylvania and Wisconsin requires the claimant to identify a prospective contractual relationship, 1 the complaint is deficient under either analysis, and we need not decide the choice of law issue for this claim. B. Abuse of Process Claim *4 In Pennsylvania, to state a claim for abuse of process, a plaintiff must allege that the defendant used a legal process primarily to accomplish a purpose for which it was not designed and that the plaintiff has suffered harm from such use. Werner v. Plater-Zyberk, 799 A.2d 776, 785 (Pa.Super.Ct.2002). Use of the legal process requires more than the mere initiation of proceedings. See Ace v. Argonaut Ins. Co., 307 Pa.Super. 200, 452 A.2d 1384, 1385 (Pa.Super.Ct.1982) (distinguishing abuse of process from malicious prosecution). “The usual case of abuse of process is one of some form of extortion, using the process to put pressure upon the other to compel him to pay a different debt or to take some other action or refrain from it ...” Rosen v. Tesoro Petroleum Corp., 399 Pa.Super. 226, 582 A.2d 27, 33 (Pa.Super.Ct.1990). However, there exists no cause of action where the defendant had an ulterior motive for pursuing the claim if the process is used for the purpose for which it was intended. Id. As stated above, Plaintiff's abuse of process claim rests upon two separate incidents. First, Plaintiff asserts that Defendant used the fraud action to prevent Plaintiff from completing his medical education and obtaining his medical license. Second, Plaintiff asserts that Defendant used both of the criminal actions to secure leverage in the divorce. We shall address each of these claims individually. With respect to the claim that Defendant used the fraud action to prevent Plaintiff from obtaining his medical license, we find that Plaintiff has failed to state a claim upon which relief may be granted for two reasons. First, abuse of process requires that a defendant use, rather than merely initiate proceedings against the plaintiff. See Ace, 452 A.2d at 1385. Even if Defendant did commence the fraud action maliciously and without legal justification, the complaint does not allege that she subsequently used the process in a manner designed to coerce Plaintiff into abandoning his medical training. Second, wrongful and malicious conduct alone is not sufficient to establish a claim for abuse of process. The process must be used for a purpose for which it was not designed. See Rosen, 582 A.2d at 33. Here, to the extent that Defendant attempted to prevent Plaintiff from securing his medical license, she used the fraud action in exactly the manner it was designed, to prevent an allegedly unqualified individual from entering the medical profession. Her ill-will toward Plaintiff is immaterial. With respect to the claim that Defendant used the criminal actions to secure leverage in the Pennsylvania divorce action, we again find Plaintiff's complaint deficient. In order to state a claim for abuse of process, Plaintiff must allege some harm caused by Defendant's actions. Werner, 799 A.2d at 785. In his Brief in Opposition to the Motion to Dismiss, Plaintiff states, “Plaintiff has incurred substantial legal fees, has been precluded from securing his medical degree, has been precluded from enjoying the revenues he would have earned as a practicing physician, he has foregone the use and enjoyment of various pieces of marital property ...” (Doc. 10 at 8). These harms, however, are not alleged in the complaint as an element of the Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 220 of 247 Sidhu v. Mann, Not Reported in F.Supp.2d (2011) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 4 abuse of process claim. Although Plaintiff does allege that he was precluded from obtaining his medical license and practicing as a physician in paragraph twenty three of his complaint, these harms relate specifically to Count II and are not incorporated by reference into Count I. We acknowledge that if Plaintiff is able in good faith to allege particularized facts demonstrating the harms alleged in his brief, the complaint may withstand a subsequent motion to dismiss. We will therefore grant Defendant's Motion to Dismiss with respect to Count I of the complaint, but we will grant Plaintiff leave to amend this claim. C. Interference with Prospective Business Relations Claim *5 Under both Pennsylvania and Wisconsin law, the claimant must identify the prospective contractual relationship with which the defendant is alleged to have interfered. See InfoSA GE, Inc. v. Mellon Ventures, L.P., 896 A.2d 616, 627 (Pa.Super.Ct.2006); Anderson v. Regents of the Univ. of Cal., 203 Wis.2d 469, 554 N.W.2d 509, 518 (Wis.Ct.App.1996). As noted by the Pennsylvania Supreme Court, however, “[d]efining a ‘prospective contractual relation’ is admittedly problematic.... It is 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 (Pa.1979). The prospective relationship need not be certain, but it must be reasonably likely as measured by an objective standard. InfoSAGE, 896 A.2d at 627 (finding that a prospective financing contract was not reasonably likely where Plaintiff presented an attractive investment opportunity but was not presently engaged in negotiations with potential investors). Plaintiff alleges that Defendant's actions were intended to interfere with Plaintiff completing his medical education and thereby prevent him from securing employment as a physician. At this stage, Plaintiff's prospective employment contract is only theoretically possible rather than reasonably likely. Plaintiff has not identified any medical institution with whom he has entered into employment negotiations, and it is entirely possible that Plaintiff would be denied a medical degree, a professional license, or employment regardless of Defendant's alleged interference. Therefore, we find that Plaintiff has failed to allege sufficient facts to raise a plausible claim for interference with a prospective business relation. We will grant Defendant's Motion to Dismiss with respect to Count II of the complaint. V. CONCLUSION For the reasons set forth in this memorandum, the Defendant's Motion shall be granted. The complaint shall be dismissed, but Plaintiff shall be granted leave to amend Count I. An appropriate order shall issue. NOW, THEREFORE, IT IS HEREBY ORDERED THAT: 1. The Motion to Dismiss (Doc. 6) is GRANTED. 2. The Complaint (Doc. 1) is DISMISSED in its entirety but with leave to amend Count I only within ten (10) days of the date of this Order. Failure to file an Amended Complaint within ten (10) days of this Order will result in dismissal of this case. All Citations Not Reported in F.Supp.2d, 2011 WL 900982 Footnotes 1 See InfoSA GE, Inc. v. Mellon Ventures, L.P., 896 A.2d 616, 627 (Pa.Super.Ct.2006); Anderson v. Regents of the Univ. of Cal. ., 203 Wis.2d 469, 554 N.W.2d 509, 518 (Wis.Ct.App.1996); see also RESTATEMENT (SECOND) OF TORTS S § 766B (1979). End of Document © 2017 Thomson Reuters. No claim to original U.S. Government Works. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 221 of 247 EXHIBIT V Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 222 of 247 Synthes (U.S.A.) v. Globus Medical, Inc., Not Reported in F.Supp.2d (2007) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 1 2007 WL 1001587 Only the Westlaw citation is currently available. United States District Court, E.D. Pennsylvania. SYNTHES (U.S.A.), et al., Plaintiffs v. GLOBUS MEDICAL, INC., et al., Defendants. Civil Action No. 04-1235. | March 29, 2007. Attorneys and Law Firms Anthony B. Haller, Matthew J. Siembieda, Scott E. Coburn, Blank Rome LLP, Diane Siegel Danoff, Dechert Price & Rhoads, Jeffrey S. Edwards, Kevin M. Flannery, Robert W. Ashbrook, Jr., Robert C. Heim, Jacob Gantz, Dechert L.L.P., Norman E. Greenspan, Blank Rome Comisky & McCauley, Philadelphia, PA, for Plaintiffs. Frederick A. Tecce, John P. McShea, McShea Tecce PC, Anthony J. Dimarino, III, A.J. Dimarino, III P.C., Philadelphia, PA, for Defendants. MEMORANDUM STENGEL, J. *1 The plaintiffs in this case have moved to strike two of the defendants' affirmative defenses and to dismiss five of the defendants' counterclaims. For the following reasons, I will grant this motion in part and deny it in part. I. BACKGROUND 1 The plaintiffs have asked me to bar the defendants from employing their ninth 2 and fifty-first 3 affirmative defenses which relate to the disbanded “Return on Investment Program (‘ROI’)” of the plaintiffs. They contend that this is the third time that the defendants have tried to inject this theory into the case notwithstanding my previous rulings against it. The plaintiffs also seek the dismissal of Counts I through IV 4 of the defendants' counterclaims because they rely upon statements which I previously found to be incapable of a defamatory meaning, and upon the plaintiffs' conduct in this litigation. II. DISCUSSION Rule 12(f) of the Federal Rules of Civil Procedure provides that the court may order stricken from any pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter. While motions to strike are generally disfavored, they do serve a useful purpose by eliminating insufficient defenses and saving the time and expense which would otherwise be spent in litigating issues that would not affect the outcome of the case. United States v. Union Gas Co., 743 F.Supp. 1144, 1150 (E.D.Pa.1990); see also McInerney v. Moyer Lumber & Hardware, Inc., 244 F.Supp.2d 393, 402 (E.D.Pa.2002) (the purpose of a motion to strike is to clean up the pleadings, streamline litigation, and avoid unnecessary forays into immaterial matters); Cameron v. Graphic Mgmt. Assoc., Inc., 817 F.Supp. 19, 22 (E.D.Pa.1992) (the court may grant a motion to strike a legally insufficient defense so the parties to the suit do not needlessly waste time and money in preparation of trial). A motion to strike under Rule 12(f) is the primary procedure for objecting to an insufficient affirmative defense. Union Gas, 743 F.Supp. at 1150; United States v. Marisol, Inc., 725 F.Supp. 833, 836 (M.D.Pa.1989). The court, however, should not grant a motion to strike a defense unless the insufficiency of the defense is clearly apparent. Cipollone v. Liggett Group, Inc., 789 F.2d 181, 188 (3d Cir.1986). An affirmative defense is insufficient if as a matter of law it cannot succeed under any circumstances, In re Sunrise Sec. Litig., 818 F.Supp. 830, 840 (E.D.Pa.1993), and the moving party is prejudiced by the presence of the allegations in the pleading. Great West Life Assurance Co. v. Levithan, 834 F.Supp. 858, 864 (E.D.Pa.1993); see also Miller v. Group Voyagers, Inc., 912 F.Supp. 164, 168 (E.D.Pa.1996) (motions to strike will generally be denied unless the material bears no possible relation to the matter at issue and may result in prejudice to the moving party); North Penn Transfer, Inc. v. Victaulic Co. of America, 859 F.Supp. 154, 158 (E.D.Pa.1994) (same). Finally, a motion to strike should not be granted when the sufficiency of the defense depends upon disputed issues of fact or unclear questions of law. Marisol, 725 F.Supp. at 836. *2 Here, the defendants have included veiled references to the plaintiff's disbanded ROI program and violations of the Medicare Criminal Fraud and Abuse Statute (the Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 223 of 247 Synthes (U.S.A.) v. Globus Medical, Inc., Not Reported in F.Supp.2d (2007) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 2 “Anti-Kickback provision”) 5 in both their ninth and fifty-first affirmative defenses. Given my earlier decisions regarding this issue, it is the defendants' continued characterization of the ROI program as involving illegal activity which I find most troubling. For example, the defendants allege that the plaintiffs' damages are not a result of the defendants' actions but of the plaintiffs' own actions when they failed “to act reasonably, appropriately, lawfully, and in accordance with its duties and obligations under applicable laws, regulations, and statutes, including but not limited to Synthes' violation of federal statutes aimed at protecting the public and healthcare consumers, or Synthes' discontinuance of its violation of those federal statutes.” (emphasis added). The defendants further allege that the plaintiffs' revenues were adversely affected, not by the defendants, but “by the existence or termination of an unlawful program of paying money or unrestricted research grants to physicians to use its products.” (emphasis added). In an earlier decision, I struck all paragraphs related to the plaintiffs' ROI program as superfluous and immaterial with respect to the defendants' counterclaims. See Synthes, et al. v. Globus Medical, et al., 2005 U.S. Dist. LEXIS 19962, *32 (E.D.Pa. September 14, 2005): The mere fact the Anti-Kickback provision prohibits Synthes' conduct does not mean that the same conduct cannot provide a basis for civil liability under another state or federal statute. The question then is whether the underlying conduct violates Pennsylvania state law. I find that it does not. Absent the Anti-Kickback implications, the underlying conduct itself-i.e., sponsoring conferences, providing research grants, and offering promotional incentives-is not inherently unfair or tortious. Id. at *18. The defendants properly contend that my earlier decision struck references to the ROI program only with respect to their counterclaims. They argue that these references should be allowed to support affirmative defenses because they prove that when the ROI program existed, the plaintiffs' sales increased, and when the program was discontinued, the plaintiffs' revenues decreased. However, the language of these affirmative defenses is in direct contradiction to my earlier decision regarding the defendants' counterclaims. Allowing the two affirmative defenses to stand as currently written would threaten to confuse the matters that are legitimately in dispute, and inflict substantial prejudice upon the plaintiffs. The defendants' newly-added fifty-third 6 affirmative defense accomplishes what the ninth and fifty-first affirmative defenses attempt without the characterization of the ROI program as unlawful or violative of federal and/or state law. Thus, I will strike the defendants' ninth and fifty-first affirmative defenses in their entirety. *3 Next, Synthes again asks that I dismiss four of Globus' counterclaims to the extent that they are grounded on certain statements. The purpose of a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) is to test the legal sufficiency of a Complaint. Sturm v. Clark, 835 F.2d 1009, 1011 (3d Cir.1987). The court may grant a motion to dismiss only where it appears beyond a reasonable doubt that the non-moving party can prove no set of facts in support of his claim that would entitle him to relief. Carino v. Stefan, 376 F.3d 156, 159 (3d Cir.2004) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). In deciding a motion to dismiss, the court must construe the complaint liberally, accept all factual allegations in the complaint as true, and draw all reasonable inferences in favor of the non-moving party. Id.; see also D.P. Enters. v. Bucks County Cmty. Coll., 725 F.2d 943, 944 (3d Cir.1984). Three of the four statements in question here were determined to be incapable of defamation in a previous Memorandum of this court. See Synthes, et al. v. Globus, et al., 2005 U.S. Dist. LEXIS 19962 (E.D.Pa. May 14, 2005). In addition, I found that these statements could not serve as the basis for Globus' claims of defamation, trade libel, tortious interference with prospective contractual relationships, and unfair competition. These statements, properly characterized as bluster, are currently found in the twenty-second paragraph of the Amended Answer to the Third Complaint (Document # 144), filed on September 5, 2006: Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 224 of 247 Synthes (U.S.A.) v. Globus Medical, Inc., Not Reported in F.Supp.2d (2007) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 3 1) [A Synthes representative] in an effort to dissuade Walden from leaving Synthes, told Mr. Walden that Synthes was planning to “drop a bomb” on Globus; 2) As a means of influencing a prominent former Synthes Regional Manager in sales, Daniel Pontecorvo, to reconsider his decision to leave Synthes and form a distributorship for Globus products, a Synthes division President told Mr. Pontecorvo that the judge assigned to this action was “wired” in favor of Synthes, and that Synthes was going to “crush” Globus in litigation costs and expenses; 3) [A Synthes representative] expressed to others that the chairman and majority owner of Synthes, Hanjorg Wyss, had a personal vendetta against David Paul; furthermore, since Mr. Wyss has a estimated net worth of $5 billion, he would spare no expense in attempting to drown Globus in legal fees and drive it out of business. Nevertheless, I found that Globus had, in fact, pleaded sufficient facts to support these four counterclaims separate and apart from the three non-defamatory statements. That finding has not changed. Thus, I will deny the portion of Synthes' motion which seeks the dismissal of the four counterclaims. The fourth statement now in question, “Mr. Wyss told others that he would not rest until the doors at Globus were closed,” was first added by Globus in its Answer filed on August 4, 2006 (Document # 138), and retained in its Amended Answer filed on September 5, 2006 (Document # 144). Like the other three, this statement also cannot reasonably be construed as defamatory because it is merely an expression of Synthes' anticipated actions, and does not suggest that the speaker is aware of undisclosed facts that may be defamatory. Thus, this fourth statement likewise cannot serve as the basis for Globus' four counterclaims. *4 Accordingly, because these four statements are irrelevant to any of Globus' counterclaims, I will strike them as superfluous, immaterial, and so unrelated to Globus' claims as to be unworthy of any consideration. Lakits, 258 F.Supp. at 409. Synthes also asks that I dismiss Globus' abuse of process counterclaim as one that fails to state a claim upon which relief may be granted. 7 The tort of abuse of process is defined as the use of the legal process against another “primarily to accomplish a purpose for which it is not designed.” See Restatement (Second) of Torts § 682 (1977); see also Gen. Refractories Co. v. Fireman's Fund Ins. Co., 337 F.3d 297, 304 (3d Cir.2003). The Supreme Court of Pennsylvania has said that “the gist of an action for abuse of process is the improper use of process after it has been issued, that is, a perversion of it.” McGee v. Feege, 517 Pa. 247, 535 A.2d 1020, 1023 (Pa.1987) (emphasis added). Generally speaking then, to recover under this theory, a counterclaim-plaintiff must show that the counterclaim-defendant used the legal process in a way that constituted a perversion of that process and caused harm to the counterclaim-plaintiff. This requires that the plaintiff offer some proof of a “definite act or threat not authorized by the process, or aimed at an objective not legitimate in the use of the process.” Godshalk v. Borough of Bangor, 2004 U.S. Dist. LEXIS 7962, at *13 (E.D.Pa. May 5, 2004). There is no cause of action for abuse of process if the counterclaim-defendant, even with bad intentions, merely carries out the process to its authorized conclusion. Id. at *14. Further, that judicial process was initiated with a bad motive is not enough; an allegation of coercive use of the process is required. Internet Billions Domain v. Venetian Casino Resort, LLC, 2002 U.S. Dist. LEXIS 11805, at *3 (E.D.Pa. May 31, 2002). In its abuse of process counterclaim, Globus alleges that Synthes has abused and perverted the process of the instant litigation in that “subsequent to the issuance of the process, Synthes has perversely, coercively, and improperly used the process.” See ¶ 124. It further alleges that the abuse “has been undertaken in bad faith and with unlawful or ulterior purpose,” namely, “anti-competitive purposes, efforts to thwart Globus' growth, and wrongful efforts to drive Globus out of business.” See ¶ 126-127. After carefully reviewing the entire Amended Answer filed on September 5, 2006, I uncovered no allegation which would satisfy the requirements of a claim of abuse of process. Even the stricken statements discussed above refer to statements made prior to the litigation. As such, they are not demonstrative of an improper use of process after it has been issued. Further, as shown above, there can be no cause of action for abuse of process if Synthes, even with bad intentions, merely carries out the process to its authorized conclusion. Globus points to no post-Complaint litigation conduct which gives rise to a claim of abuse of process. Moreover, I find no Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 225 of 247 Synthes (U.S.A.) v. Globus Medical, Inc., Not Reported in F.Supp.2d (2007) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 4 perversion of the process or evidence that Synthes has used this litigation as a tactical weapon to coerce a desired result. Gen. Refractories Co., 337 F.3d at 307 (quoting McGee, 535 A.2d at 1026)). The Third Circuit has held that an abuse of process claim would be valid where a party “intentionally withheld critical documents, ignored court orders, permitted false testimony at depositions and misrepresented facts to opposing counsel and the court. Id. at 301. Without some proof of such a definite act or threat not authorized by the process, or aimed at an objective not legitimate in the use of the process, Globus' abuse of process counterclaim must fail. I will dismiss it in its entirety. *5 Synthes requests that I strike two particular paragraphs of the Amended Answer which allege the improper use of the litigation. In paragraph 57, Globus alleges: Counterclaim Defendants' Third Amended Complaint is objectively baseless, and has been brought for improper purposes. Counterclaim Defendants have used this litigation to stifle competition from Globus by, among other things, attempting to deter people from dealing with Globus by informing customers, investors, and others that Globus would not survive this litigation. In paragraph 78, Globus alleges: Synthes has wrongfully and intentionally attempted to thwart Globus' rise in the spinal implant device business by engaging in a continuous course of conduct involving disseminating false and malicious information about Globus' personnel and products, employing a scorched earth litigation strategy in connection with an objectively baseless litigation aimed at intimidating and stifling Globus, wrongfully obtaining trade secret and other confidential information from Globus, and unfairly competing in the spinal implant device business by, inter alia, making false and disparaging statements concerning Globus and its products. Because I find that Globus' counterclaims contain no factual allegations that Synthes has used, or even attempted to use, this litigation for any purpose other than to assert its rights and protect its interests, the two above paragraphs in Globus' Amended Answer are irrelevant to any of Globus' remaining counterclaims. Accordingly, I will strike them as superfluous, immaterial, and so unrelated to Globus' claims as to be unworthy of any consideration. Lakits, 258 F.Supp. at 409. An appropriate Order follows. ORDER AND NOW, this 29th day of March, 2007, upon consideration of the plaintiffs' motion to strike certain of the defendants' affirmative defenses and to dismiss the defendants' counterclaims (Document # 143), the defendants' response thereto (Document # 145), the plaintiffs' reply (Document # 148), and after a hearing on the motion with all parties present, it is hereby ORDERED that the motion is GRANTED in part and DENIED in part, in accordance with the Memorandum. All Citations Not Reported in F.Supp.2d, 2007 WL 1001587 Footnotes 1 I write for the parties, who are familiar with the facts and procedural history of this case, and therefore include only the background information that is relevant to the disposition of this motion. 2 The defendants' ninth affirmative defense: “Synthes' claims against Defendants and the alleged damages it seeks are barred in whole or in part by Synthes' failure to act reasonably, appropriately, lawfully, and in accordance with its duties and obligations under applicable laws, regulations, and statutes, including but not limited to Synthes' violation of federal Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 226 of 247 Synthes (U.S.A.) v. Globus Medical, Inc., Not Reported in F.Supp.2d (2007) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 5 statutes aimed at protecting the public and healthcare consumers, or Synthes' discontinuance of its violation of those federal statutes.” 3 The defendants' fifty-first affirmative defense: “Plaintiffs' alleged damages, if any, are unrelated to defendants' conduct, and, to the extent they exist at all, may have resulted from various other factors, including, but not limited to, the fact that for several years before defendant Globus was formed, Synthes' sales revenues were affected, in part, by the existence or termination of an unlawful program of paying money or unrestricted research grants to physicians to use its products.” 4 Count I alleges defamation; Count II alleges trade libel; Count III alleges tortious interference with prospective contractual relationships; and Count IV alleges unfair competition. 5 See 42 U.S.C. § 1320a-7b. 6 The defendants' fifty-third affirmative defense: “Synthes' alleged losses were directly and proximately caused by factors unrelated to Globus or any of the allegations against Globus, which factors include, but are not limited to, the alleged discontinuation of the Return on Investment program in or about February 2003, market forces, and/or Synthes' own actions and business strategies.” 7 Synthes originally brought this claim as a request to dismiss the four counterclaims to the extent they were based on allegations of an allegedly wrongful use of the litigation process. After the motion was filed, Globus filed its Amended Answer and included an additional counterclaim for abuse of process. In its reply, Synthes properly re-focused its claim as a request to dismiss the newly-added counterclaim. End of Document © 2017 Thomson Reuters. No claim to original U.S. Government Works. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 227 of 247 EXHIBIT W Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 228 of 247 Williams v. Borough of Olyphant, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 1 2016 WL 595394 Only the Westlaw citation is currently available. United States District Court, M.D. Pennsylvania. Chelsea Williams and Nicholas Williams, Plaintiffs, v. Borough of Olyphant, et al., Defendants. 3:13-CV-02945 | Filed 02/12/2016 Attorneys and Law Firms Harry T. Coleman, Law Office of Harry Coleman, Carbondale, PA, for Plaintiffs. Michael Zicolello, Schemery & Zicolello, Williamsport, PA, Paul Gregory Lees, Marshall, Dennehey, Warner, Coleman & Goggin, Allentown, PA, for Defendants. MEMORANDUM OPINION Robert D. Mariani, United States District Judge I. INTRODUCTION *1 On December 9,2013, Plaintiffs Chelsea Williams and Nicholas J. Williams filed a Complaint against Defendants John Gilgallon, Dean Argenta, and the Borough of Olyphant (“Olyphant Defendants”). (Doc. 1). Plaintiffs filed an Amended Complaint on March 14, 2014 against the Olyphant Defendants, also adding as defendants Officer Katie Fallon, Officer Mackey, and the Borough of Dickson City. (Doc. 10). Upon consideration of a Motion to Dismiss the Amended Complaint filed by the Olyphant Defendants (Doc. 17), a Motion to Dismiss the Amended Complaint filed by Dickson City (Doc, 29), and related briefs, United States Magistrate Judge Carlson issued a Report and Recommendation of February 24, 2015 (Doc, 46). The Court adopted the Report and Recommendation by way of Order dated March 30, 2015 (Doc. 48). Relevant to this Opinion, the Court dismissed Counts XIII and XIV of Plaintiffs' Amended Complaint with leave to amend, (see Doc. 48), because they alleged federal common law abuse of process claims though no such federal common law claim exists, (see Doc. 46 at 6, n.1). Plaintiffs filed a Second Amended Complaint on April 13, 2015 (Doc. 49). On April 29, 2015, the Olyphant Defendants 1 filed a Motion to Dismiss Count IX, and only Count IX, of the Second Amended Complaint (Doc. 54). Count IX is stylized as “Abuse of Process (State)” by “Chelsea Williams v. Defendants.” (Doc. 49 at 28). Defendant's Motion (Doc. 54) has been fully briefed and is ripe for decision. For the reasons set forth below, the Court will grant the Motion to Dismiss (Doc. 54) with respect to the Borough of Olyphant and dismiss Count IX with prejudice. The Court will grant the Motion with respect to Defendant Argenta with leave to amend to allege a claim for malicious prosecution. II. FACTUAL ALLEGATIONS Because the Court writes primarily for the parties, who are at this point in the litigation well versed in the factual averments made by Plaintiffs, the Court will only briefly summarize the relevant allegations. After Plaintiffs' wedding and reception on June 23, 2012, Plaintiffs and other family members arrived at the home of Plaintiff Chelsea Williams' sister on Susquehanna Avenue in Olyphant. (Doc. 49 at ¶¶ 13, 18-25). A family dispute arose at the house, prompting a neighbor to contact the police. (Id. at ¶ 26). Defendant Argenta, an officer of the Olyphant Police Department, was the first officer to arrive on scene. (Id. at ¶¶ 27-28). According to the Second Amended Complaint, Defendant Argenta made no inquiry as to what had occurred, instead approaching Plaintiff Nicholas Williams and hitting him “with his police baton in the left leg area.” (Id. at ¶¶ 31-32). Plaintiffs further allege that Defendant Argenta shouted profanities at Plaintiff Nicholas Williams, dragged him from a vehicle, slammed him against a car, and handcuffed him. (Id. at ¶¶ 34-36). While handcuffed, Plaintiff Nicholas Williams alleges that he was subjected to further taunting and beating by Defendant Argenta, and was then tasered by either Defendant Argenta, or by one of the two Dickson City police officers who had arrived on the scene, Defendants Fallon and Mackey. (Id. at ¶¶ 29, 37-42). *2 While attempting to prevent further assault to her husband, Plaintiff Chelsea Williams alleges that she was thrown from the area where she was standing by Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 229 of 247 Williams v. Borough of Olyphant, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 2 Defendant Argenta. (Doc. 49 at ¶¶ 50-51). When she then kneeled down to assist her husband, it is alleged that Defendant Argenta threw her into a nearby bush. (Id. at ¶ 52). When she emerged from the bush, she was restrained by her sister. (Id. at ¶¶ 53-54). Defendant Argenta allegedly approached her, grabbed her from her sister, stating “you want some of this too” and slamming her against a police car. (Id. at 54). The top of Plaintiff Chelsea Williams' wedding dress had fallen down and Defendant Argenta allegedly refused to allow her to fix it, ordering her not to move; when she attempted to fix her dress, she alleges that she was tasered by either Defendant Argenta or Defendants Fallon and Mackey. (Id. at ¶ 55). The Second Amended Complaint further alleges that, when another officer attempted to intervene on behalf of Plaintiff Chelsea Williams to prevent her arrest, noting that she had done nothing wrong and that it was her wedding day, Defendant Argenta stated, “no she's fucking going,” and that she was then transported to the Olyphant Police Department headquarters for booking. (Id. at ¶¶ 56-58). At the police department, she alleges that she passed a breathalyzer test with a score of 0.00. (Doc. 49 at ¶ 59). During later transport to the City of Scranton, Defendant Argenta is alleged to have further taunted her by chanting the wedding march. (Id. at ¶ 63). According to the Complaint, Plaintiff Chelsea Williams was held at the Lackawanna County Courthouse overnight and was charged by Defendant Argenta with disorderly conduct, resisting arrest, and obstruction of law enforcement activities under the Pennsylvania Crimes Code. (Id. at ¶ 64-65). Defendant Argenta later withdrew the criminal charges on August 14, 2012. (Id. at ¶ 69). Plaintiff Chelsea Williams was pregnant at the time of her June arrest, and, upon experiencing abnormal bleeding and reporting to an emergency room the day after the arrest, was informed by medical personnel that she had miscarried. (Id. at ¶¶ 71-74). III. STANDARD OF REVIEW A complaint must be dismissed under Federal Rule of Civil Procedure 12(b)(6), if it does not allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). The plaintiff must aver “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “Though a complaint 'does not need detailed factual allegations,... a formulaic recitation of the elements of a cause of action will not do.”' DelRio-Mocci v. Connolly Prop, Inc., 672 F.3d 241, 245 (3d Cir. 2012) (citing Twombly, 550 U.S. at 555). In other words, “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Covington v. Int'l Ass'n of Approved Basketball Officials, 710 F.3d 114, 118 (3d Cir. 2013) (internal citations and quotation marks omitted). A court “take[s] as true all the factual allegations in the Complaint and the reasonable inferences that can be drawn from those facts, but ... disregard[s] legal conclusions and threadbare recitals of the elements of a cause of action, supported by mere conclusory statements.” Ethypharm S.A. France v. Abbott Laboratories, 707 F.3d 223, 231, n.14 (3d Cir. 2013) (internal citations and quotation marks omitted). Twombly and Iqbal require [a district court] to take the following three steps to determine the sufficiency of a complaint: First, the court must take note of the elements a plaintiff must plead to state a claim. Second, the court should identify allegations that, because they are no more than conclusions, are not entitled to the assumption of truth. Finally, where there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement for relief. Connelly v. Steel Valley Sch. Dist, 706 F,3d 209, 212 (3d Cir. 2013). “[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, 556 U.S. at 679 (internal citations and quotation marks omitted). This “plausibility” determination will be a “context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 230 of 247 Williams v. Borough of Olyphant, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 3 *3 However, even “if a complaint is subject to Rule 12(b)(6) dismissal, a district court must permit a curative amendment unless such an amendment would be inequitable or futile.” Phillips v. Cnty. of Allegheny, 515 F.3d 224, 245 (3d Cir. 2008). [E]ven when plaintiff does not seek leave to amend his complaint after a defendant moves to dismiss it, unless the district court finds that amendment would be inequitable or futile, the court must inform the plaintiff that he or she has leave to amend the complaint within a set period of time. Id. IV. ANALYSIS Defendants argue that the Plaintiffs' abuse of process claim in Count IX should be dismissed as to the remaining two Olyphant Defendants, Dean Argenta and the Borough of Olyphant. With respect to the Borough, Defendants' argue that the Count should be dismissed because the Borough is not liable for the alleged intentional tort of Defendant Argenta under the Pennsylvania Political Subdivision Tort Claims Act, 42 Pa. Cons. Stat. Ann. § 8541, et seq. (Brief in Support of Motion to Dismiss, Doc. 55 at 5-6). Plaintiffs “concede[ ] that the Motion to Dismiss of the Borough of Olyphant relative to the abuse of process claim should be granted.” (Brief in Opposition to Motion to Dismiss, Doc. 56 at 12). The Court agrees that the Borough of Olyphant may not be held liable for Defendant Argenta's alleged intentional tort of abuse of process and will therefore dismiss this count with prejudice as to the Borough of Olyphant. The Court will now consider the Olyphant Defendants' challenge to Count IX as it pertains to Defendant Argenta. “The tort of 'abuse of process' is defined as the use of legal process against another 'primarily to accomplish a purpose for which it is not designed.”' Rosen v. Am. Bank of Rolla, 627 A.2d 190, 192 (Pa. Super. Ct. 1993) (quoting Restatement (Second) of Torts, § 682). The gravamen of the misconduct for which the liability stated [under this tort] is imposed is not the wrongful procurement of legal process or the wrongful initiation of criminal or civil proceedings; it is the misuse of process, no matter how properly obtained, for any purpose other than that which it was designed to accomplish. Id. (quoting Restatement (Second) of Torts, § 682, cmt. a) (emphasis added). To succeed on an abuse of process claim, the plaintiff must show some definite act or threat not authorized by the process, or aimed at an objective not legitimate in the use of the process ... ; and there is no liability where the defendant has done nothing more than carry out the process to its authorized conclusion, even though with bad intentions. Lernerv. Lerner, 954 A.2d 1229, 1238 (Pa. Super. Ct. 2008) (quoting Shiner v. Moriarty, 706 A.2d 1228, 1236 (Pa. Super. Ct. 1998)) (internal alterations omitted). When read as a whole, the portions of the Second Amended Complaint pertaining to Plaintiff Chelsea Williams focus on the allegations that Defendant Argenta used excessive force in his interactions with her, that he wrongfully initiated criminal charges against her, and that these events caused her physical and emotional harm, It is in that context that the Court reads her abuse of process claim, which, after realleging all previous allegations, reads in its entirety: *4 114. Defendant Argenta used criminal legal process against the Plaintiff Chelsea Williams resulting in her arrest. 115. Defendant Argenta's purpose in using such legal process was primarily to accomplish a purpose for which it was not designed. Specifically, the filing of the criminal charges here were merely a tool to mask the conduct of Argenta on June 23, 2012 and designed to intimidate the Plaintiff Chelsea Williams. There was no conduct by the Plaintiff Chelsea Williams on June 23, 2012 that would evenly remotely approach criminal conduct. The later withdrawal of all charges against Mrs. Williams confirms this fact. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 231 of 247 Williams v. Borough of Olyphant, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 4 116. The use of such legal process proximately caused damage to Plaintiff Chelsea Williams. (Doc. 49 at ¶¶ 114-16). Plaintiff Chelsea Williams appears to confuse two separate and distinct actions; abuse of process and malicious use of process. The crux of an abuse of process claim is the “improper use of process after it has been issued, that is, a perversion of it,” McGee v. Feege, 517 Pa. 247, 535 A.2d 1020, 1023 (Pa. 1987) (citations omitted). Under Pennsylvania law, “abuse of process” and “malicious use of process” are similar to, but ultimately distinct from one another. Kauffman v. Barhagello, No. 1:13-cv-00659, 2013 WL 6388487, at *14 (Dec. 5, 2013 M.D. Pa. 2013). As the Supreme Court of Pennsylvania characterized the two torts: The gist of an action for abuse of process is the improper use of process after it has been issued, that is, a perversion of it: Mayer v. Walter, 64 Pa. 283; Annotation, 80 A.L.R. 581. “An abuse is where the party employs it for some unlawful object, not the purpose which it is intended by the law to effect; in other words, a perversion of it ... On the other hand, legal process, civil or criminal, may be maliciously used so as to give rise to a cause of action where no object is contemplated ... other than its proper effect and execution”; Mayer v. Walter, supra, p. 285; Johnson v. Land Title B. & T. Co., 329 Pa. 241, 241, 242,198 A. 23. McGee v. Feege, 535 A.2d 1020, 1023 (Pa. 1987) (citing Publix Drug Co. v. Breyer Ice Cream Co., 32 A.2d 414, 415 (Pa. 1943)) (emphasis added). The allegations of Plaintiff Chelsea Williams contained in the Second Amended Complaint appear to better fit the tort of malicious criminal prosecution; they do not appear to involve process being perverted in some unlawful way, as required to state a claim for the tort of abuse of process, but simply allege that criminal process was initiated for malicious or unlawful purposes. A malicious prosecution claim under Pennsylvania law requires proof that the defendant “instituted proceedings against the plaintiff (1) without probable cause, (2) with malice, and (3) the proceedings must have terminated in favor of the plaintiff.” Kelley v. Gen. Teamsters, Chauffeurs, and Helpers, Local Union 249, 544 A.2d 940, 941 (Pa, 1988), Here, Plaintiffs' believe that Chelsea Williams has stated a claim for abuse of process “because Argenta initiated criminal proceedings against [her] without probable cause,” (Doc, 56 at 11) (emphasis added), reciting a specific element from a different tort. Along these same lines Plaintiffs further argue that Argenta did so “solely to mask his constitutionally improper conduct in the use of excessive force against both Nicholas Williams and Chelsea Williams.” (Id.). Thus, Plaintiff Chelsea Williams' claim is based on the alleged wrongful initiation of criminal proceedings against her by Defendant Argenta, not on the perversion of a legal process already underway. *5 Plaintiff Chelsea Williams cannot sustain a claim for abuse of process and the Court will dismiss this Count with prejudice. These allegations, while insufficient for the tort of abuse of process, do state a cause of action for malicious criminal prosecution. Plaintiffs will be granted time to amend their Complaint to recast their allegations as a cause of action for malicious prosecution against Defendant Argenta with respect to Chelsea Williams, should the Plaintiffs so wish. V. CONCLUSION For the foregoing reasons, the Court will grant the Motion to Dismiss (Doc. 54) with respect to the Borough of Olyphant and dismiss Count IX with prejudice. The Court will grant the Motion with respect to Defendant Argenta and dismiss Count IX with leave to amend to allege a claim for malicious prosecution. A separate Order follows. All Citations Slip Copy, 2016 WL 595394 Footnotes 1 By way of previous Order, this Court dismissed Defendant John Gilgallon from the action. (Doc. 48 at 1). As such, the remaining Olyphant Defendants are Dean Argenta and the Borough of Olyphant. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 232 of 247 Williams v. Borough of Olyphant, Slip Copy (2016) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 5 End of Document © 2017 Thomson Reuters. No claim to original U.S. Government Works. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 233 of 247 EXHIBIT X Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 234 of 247 York Group, Inc. v. Pontone, Slip Copy (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 1 2013 WL 12142353 Only the Westlaw citation is currently available. United States District Court, W.D. Pennsylvania. The York Group, Inc., Milso Industries Corporation, and Matthews International Corporation, Plaintiffs, v. Scott Pontone, Harry Pontone, Pontone Casket Company, LLC and Batesville Casket Company, Inc., Defendants. No. 10-1078 | Filed 05/22/2013 Attorneys and Law Firms Brian T. Himmel, David B. Fawcett, III, Reed Smith LLP, Pittsburgh, PA, Danielle J. Marlow, Steven I. Cooper, Reed Smith LLP, New York, NY, for Plaintiffs. Mindy J. Shreve, DeForest Koscelnik Yokitis Skinner & Berardinelli, A. Patricia Diulus-Myers, Jackson Lewis P.C., Pittsburgh, PA, Valeria Calafiore Healy, Healy LLC, New York, NY, John R. Maley, Larry A. Mackey, Barnes & Thornburg LLP, Indianapolis, IN, Kathleen M. Anderson, Barnes & Thornburg LLP, Fort Wayne, IN, for Defendants. MEMORANDUM OPINION AND ORDER CONTI, District Judge I. Introduction *1 Pending before the court is a motion for judgment on the pleadings filed by plaintiffs Matthews International Corporation (“Matthews”), The York Group (“York”), and Milso Industries Corporation (“Milso” and together with Matthews and York, “plaintiffs”). (ECF No. 390.) On August 16, 2010, plaintiffs filed a five-count complaint against defendants Scott Pontone and Batesville Casket Company, Inc. (“Batesville”) for alleged violations of state laws related to wrongful solicitation of plaintiffs' employees and customers. (ECF No. 1.) On the same day, plaintiffs filed a motion for preliminary injunction, based upon Scott Pontone and Batesville “improperly soliciting Plaintiffs' customers, goodwill, and business opportunities.” (ECF No. 2 ¶ 7.) On September 10, 2010, Batesville filed an answer to the complaint. (ECF No. 25.) On December 9, 2010, plaintiffs filed a motion to withdraw the motion for preliminary injunction. (ECF No. 48.) On December 14, 2010, the court granted the motion to withdraw. (ECF No. 50.) On February 28, 2011, plaintiffs filed an amended complaint naming Scott Pontone, Harry Pontone, Pontone Casket Company, LLC (“Pontone Casket” and together with Scott Pontone and Harry Pontone, the “Pontone defendants”) and Batesville as defendants. (ECF No. 70.) On April 20, 2011, Batesville filed an answer to the amended complaint. (ECF No. 96.) On April 25, 2012, Batesville filed counterclaims against plaintiffs alleging, among other things, counterclaims for abuse of process and malicious prosecution. (ECF No. 236.) On May 16, 2012, plaintiffs filed a motion to dismiss Batesville's claims for abuse of process and malicious prosecution and a brief in support of the motion. (ECF Nos. 247, 248.) On the same day, plaintiffs filed an answer to Batesville's counterclaims. (ECF No. 249.) On June 11, 2012, Batesville filed a response in opposition to plaintiff's motion to dismiss. (ECF No. 261.) On the record at a hearing held on August 14, 2012, the court granted plaintiffs' motion to dismiss Batesville's claims for abuse of process and malicious prosecution. With respect to the claim for abuse of process, the court explained: The courts have noted that where an abuse of process claim asserts the process abused with the litigation itself and the continuation of the pending legal proceedings as a whole, that the abuse of process claims raised in the counterclaims are not ripe for adjudication. ... And as the Court reads the basis for the counterclaim that was asserted by Batesville in this case, it has to do with initiation of the lawsuit and proceeding with the lawsuit to improperly limit Batesville in the marketplace. And there is a reference to using-seeking a preliminary injunction and an expedited discovery, but there's no averment that those processes were used for purposes for which they were not designed. Rather, the Court's view is the view of the counterclaim as a whole, is that it rests generally on the nature of the Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 235 of 247 York Group, Inc. v. Pontone, Slip Copy (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 2 Plaintiff's having initiated the proceeding, this lawsuit, and proceeding with the lawsuit. *2 And so the Court would find that it's-based on Access Financial, Citizens Bank, Giordano, the rationale of those courts, that this claim is not ripe. So it's not dismissed on the merits, but would be dismissed without prejudice. (H.T. 8/14/12 (ECF No. 337) at 6-7.) On August 17, 2012, the Pontone defendants each filed an answer to the amended complaint. (ECF Nos. 305, 306, 307.) On the same day, they filed counterclaims against plaintiffs. (ECF No. 308.) On September 10, 2012, plaintiffs filed an answer to the counterclaims filed by the Pontone defendants. (ECF No. 327.) On October 2, 2012, the Pontone defendants filed amended counterclaims against plaintiffs alleging claims for breach of contract, breach of implied covenant of good faith and fair dealing, tortious interference with prospective business advantage, unjust enrichment, unfair competition, misappropriation of name, image, and likeness, defamation, abuse of process, intrusion upon seclusion, false and misleading advertising, and seeking, among other things, declaratory and injunctive relief. (ECF No. 333.) On November 30, 2012, plaintiffs filed an answer to the amended counterclaims filed by the Pontone defendants. (ECF No. 388.) On the same day, plaintiffs filed a motion for judgment on the pleadings seeking dismissal of the Pontone defendants' claims for abuse of process. (ECF No. 390.) On January 18, 2012, the Pontone defendants filed a response in opposition to plaintiffs' motion for judgment on the pleadings. (ECF No. 436.) On February 13, 2013, after receiving leave of court, plaintiffs filed a reply brief in further support of their motion for judgment on the pleadings. (ECF No. 451.) On February 23, 2013, after receiving leave of court, the Pontone defendants filed a sur-reply brief in opposition to the motion for judgment on the pleadings filed by plaintiffs. (ECF No. 454.) On March 14, 2013, the Pontone defendants filed a Notice Regarding Plaintiffs' Partial Rule 12(C) Motion in which they argued plaintiffs' motion for judgment on the pleadings was rendered moot in light of plaintiffs on March 8, 2013 filing a motion for summary judgment with respect to, among other counterclaims, the counterclaims for abuse of process. (ECF No. 492.) On March 18, 2013, plaintiffs filed a response to the Pontone defendants' notice arguing the notice was filed “without basis in procedural or substantive law.” (ECF No. 495.) Plaintiffs' motion for judgment on the pleadings and the submissions related to the motion for judgment on the pleadings are now before the court. II. Factual Allegations in the Amended Counterclaims, which are assumed to be true for the purpose of ruling on the motion for judgment on the pleadings 1 *3 Harry Pontone is Scott Pontone's father. (ECF No. 333 ¶ 24.) They are residents of New York. (Id.) Pontone Casket is a New York limited liability corporation formed by Scott Pontone. (Id. ¶ 25.) Since June 24, 2010, Pontone Casket has been engaged in the business of marketing and selling caskets manufactured by Batesville to licensed independent funeral homes in the New York Metropolitan area. (Id.) Batesville is the industry leader in the manufacture and distribution of death care products and has been for many decades. (Id. ¶ 39.) Matthews is a corporation located in Pittsburgh, Pennsylvania. (ECF No. 333 ¶ 26.) York is a corporation located in Pittsburgh, Pennsylvania and is a wholly owned subsidiary of Matthews. (Id. ¶ 27.) Milso is a wholly- owned subsidiary of York. (Id. ¶ 28.) The New York metropolitan casket market is a key market for the sale and marketing of caskets because it has the largest concentration of funeral homes in the country. (ECF No. 333 ¶ 35.) The three primary casket suppliers in the casket industry are Batesville, Matthews, and Aurora Casket Company. (Id. ¶ 36.) Batesville and Matthews are the primary casket suppliers in the New York Metropolitan area. (Id.) Matthews entered the casket business in 2001 when it acquired York. (Id. ¶ 45.) At the time of the acquisition, York was the second largest casket and funerary product manufacturer in the United States after Batesville. (Id.) Matthews became the second largest casket manufacturer in the country because of its acquisition of York. (ECF No. 333 ¶ 46.) Following the York acquisition, Matthews acquired other smaller casket suppliers and distributors. (Id.) These acquisitions increased Matthew's dominant market share in certain key regions and eliminated smaller competitors. (Id.) Milso Industries (“Old Milso”) was one of the smaller casket suppliers and distributors acquired by Matthews. (Id. ¶ 47.) Prior to the acquisition in 2005, Old Milso was a successful family-run business based in Brooklyn, New York. (Id. ¶ 49.) Old Milso was founded by Harry Pontone's family in 1931. (Id.) After becoming a licensed Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 236 of 247 York Group, Inc. v. Pontone, Slip Copy (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 3 funeral director, Harry Pontone operated Old Milso first with his eight brothers and then with his son, Scott Pontone. (ECF No. 333 ¶ 46.) According to the Pontone defendants, Harry Pontone is considered a “living legend” in the casket industry. (Id. ¶ 52.) In 2005, Matthews offered to purchase the assets of Old Milso. (Id. ¶ 54.) The offer was accepted based upon Matthews' promise that following the acquisition, Harry Pontone and Scott Pontone would operate Old Milso without interference. (Id.) After Matthews purchased Old Milso's assets, Harry Pontone and Scott Pontone were appointed officers and directors of Matthews' casket business, which was being operated through York and Milso. (Id.) On or about May 28, 2005, York and one of its subsidiaries, Midnight Acquisitions, agreed to purchase Old Milso's assets by entering into an asset purchase agreement (“APA”). (ECF No. 333 ¶ 55.) Midnight was renamed Milso Industries Corporation (“Milso”) pursuant to the APA. (Id.) Under the terms of the APA, York and various members of the Pontone family, including Scott Pontone and Harry Pontone, entered into key employee employment agreements (“KEEAs”). (Id. ¶ 58.) Pursuant to the APA and the KEEAs, following the sale of Old Milso's assets to York, Scott Pontone became the executive vice president and a member of the board of directors of York and Milso, and Harry Pontone became the president and a member of the board of directors of York and Milso. (Id. ¶ 59.) Scott Pontone's KEEA provided that he would automatically succeed his father as president of Milso and York. (Id. ¶ 60.) In the APA, Scott Pontone and Harry Pontone agreed “to defer receipt of a substantial monetary amount and to condition receipt of that amount on the achievement of various financial targets” in exchange for autonomy in leading and operating York and Milso. (ECF No. 333 ¶ 61.) *4 According to the Pontone defendants and unbeknownst to them at the time, Joseph Bartolacci (“Bartolacci”), the chief executive officer of Matthews, and other officers of Matthews and its subsidiaries had no intention of fulfilling their contractual obligations to Harry Pontone and Scott Pontone; instead, they intended to oust them from them from York and Milso. (Id. ¶ 62.) Although Scott Pontone and Harry Pontone worked to build the businesses of York and Milso, Bartolacci and the other officers of Matthews continually interfered with their work and impeded their progress. (Id. ¶ 64.) As a result of the interference by Bartolacci and the other officers of Matthews, Scott Pontone and Harry Pontone “were forced to assert their rights through a legal proceeding against York.” (Id. ¶ 65.) The lawsuit filed by Scott Pontone and Harry Pontone ended in an out-of- court settlement in 2007 (the “2007 settlement”) in which York agreed to make an accelerated earn-out payment to Scott Pontone and Harry Pontone. (Id. ¶ 66.) According to the Pontone defendants, Matthews had a pre-existing obligation under the APA to make the earn-out payments to Scott Pontone and Harry Pontone because of its contractual breaches. (ECF No. 333 ¶ 66.) Despite the pre-existing obligation, plaintiffs insisted that in return for making the earn-out payment to Scott Pontone and Harry Pontone, Scott Pontone resign from York and Milso and relinquish his right to succeed his father as president. (Id.) According to the Pontone defendants, the settlement agreement was the first time Scott Pontone and Harry Pontone were exposed to Matthews' strategy of abusing legal process in order to obtain results to which Matthews was not otherwise entitled. (Id. ¶ 67.) In connection with the 2007 settlement, Scott Pontone agreed to an amendment to his KEEA and the APA. (Id. ¶ 68.) The amendment included a three-year non-compete provision. (Id.) In exchange for Scott Pontone's agreement to not compete against plaintiffs, York agreed to pay him $300,000 per year for the three years the noncompete clause was applicable. (ECF No. 333 ¶ 67.) According to the Pontone defendants, the noncompete clause lapsed in May 2010. (Id. ¶ 70.) At that time, Scott Pontone was legally entitled to reenter the casket industry and solicit customers. (ECF No. 333 ¶ 70.) As part of the 2007 settlement, Harry Pontone agreed to a substantial reduction in his base salary and guaranteed compensation. (Id. ¶ 70.) Following the 2007 settlement, Matthews worked to diminish Harry Pontone's ability to operate in full capacity as the chairman of the board of directors of York, as a member of the board of directors of Milso, and as a member of the executive committee of both York and Milso. (Id. ¶¶ 73, 75.) For example, Harry Pontone was not kept current on the meetings and activities of the board of directors. (Id. ¶ 75.) During the same time period and despite his “exceptional performance,” Harry Pontone did not receive bonus compensation from plaintiffs. (Id. ¶ 77.) Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 237 of 247 York Group, Inc. v. Pontone, Slip Copy (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 4 According to the amended counterclaims, Matthews “has spent millions of dollars over the last several years on the ruthless pursuit of vexatious litigation in an unlawful attempt to preserve and further increase its dominant share of the market for the sale of caskets to independent funeral homes in the New York Metropolitan area.” (ECF No. 333 ¶ 1.) The Pontone defendants allege that Bartolacci created a business strategy for Matthews in which it does not compete in the industry based upon “product design, service, innovation or leadership;” instead, Matthews seeks to acquire regional casket firms and then to use exclusionary and anti-competitive practices, including filing “sham litigation” to preserve its market share in the casket industry. (Id. ¶¶ 3-4.) According to the Pontone defendants, “[b]y entangling its key competitors in expensive litigation, Matthews seeks to intimidate potential and existing competitors by demonstrating it will stop at nothing to prevent them from taking away its market share.” (Id. ¶ 5.) Matthews' sham- litigation strategy also works to “force its competitors, under the cover of settlement negotiations, to agree to restrict their competition with Matthews in order to avoid the costs of Matthews' sham litigation.” (Id. ¶ 6.) Bartolacci's business strategy for Matthews involves using the discovery process to gain access to competitively sensitive information from its direct competitors to which it would not otherwise be privy. (Id. ¶ 7.) With respect to the present lawsuit, the Pontone defendants assert that in February 2010 executives of Matthews planned to sue Scott Pontone after the expiration of the noncompete provision in his KEEA even if his actions upon reentry to the New York casket market did not violate that provision. (Id. ¶¶ 10-11.) The Pontone defendants assert Matthews would have filed the present lawsuit “regardless of the facts, on whatever pretext Matthews could dream up.” (Id.) According to the Pontone defendants, Matthews made numerous claims in the complaint filed in this case based upon “allegations for which Matthews had no basis whatsoever” and “to punish and intimidate those who had the audacity to compete with it.” (ECF No. 333 ¶¶ 12, 13.) The Pontone defendants allege that Matthews' purposes in filing and litigating the lawsuit currently before the court are: *5 • To distract and harass Scott and Pontone Casket, thereby limiting their effectiveness in soliciting casket purchases by independent funeral homes in the New York market; • To intimidate Harry and any manufacturer or distributor of caskets that otherwise would be pleased to hire him to assist in building or expanding its New York market casket business; • To punish Batesville for undertaking a business relationship with Scott and Pontone Casket, thus deterring Batesville from further competitive acts and potentially intimidating Batesville into limiting the extent of its competition or else facing the unreasonable financial burden of having to defend against Matthews' sham litigation; and • To issue subpoenas, depose witnesses, and seek discovery solely in order to obtain Scott Pontone's and Pontone Casket's confidential, proprietary, and trade secret information by seeking injunctive relief solely for the purpose of obtaining expedited discovery. (ECF No. 333 ¶¶ 9, 270.) The Pontone defendants allege that plaintiffs abused legal process to accomplish these goals by • filing this litigation without a reasonable factual basis to do so; • declining to gather discovery from customers in issue in this litigation; • filing a motion for a preliminary injunction without a factual basis and for the improper purpose of engaging in a fishing expedition and imposing inordinate costs of expedited and broad ranging discovery on the defendants; • continuing to prosecute this litigation despite Matthews' and other witnesses denial of all allegations of wrongful conduct; • repeatedly making false statements of fact to the Court, including by falsely representing to the Court positions or statements taken by the Pontone Defendants; • submitting untrue testimony of its executives, including its General Counsel, to preserve legal positions when those positions were about to put an end to this litigation; Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 238 of 247 York Group, Inc. v. Pontone, Slip Copy (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 5 • violating a Court order requiring the sequestration of a witness, resulting in the witness changing his testimony to ensure that the Court would give credit to Matthews newly advanced legal position to preserve continuation of this litigation; • repeatedly misrepresenting the law to the Court, requiring the defendants to have to spend substantial time and resources to respond to these misstatements; • repeatedly filing vexatious motions in front of the wrong Court and without any standing to do so, even after the Court expressly told Matthews' counsel that it had no jurisdiction to decide certain discovery motions relating to nonparties; and • using the discovery process for purposes unrelated to the litigation, including for purposes of obtaining the confidential and proprietary information of its competitors and to obtain information about Scott Pontone's personal telephone calls. (ECF No. 333 ¶¶ 122-35, 282; ECF No. 436 at 6-7.) The Pontone defendants allege plaintiffs brought “baseless claims in the instant lawsuit” in support of their counterclaims for breach of implied covenant of good faith and fair dealing (counterclaim counts three and four), tortious interference with prospective business advantage (counterclaim counts five and six), unjust enrichment (counterclaim counts seven and eight), unfair competition (counterclaim counts nine and ten), and abuse of process (counterclaim counts thirteen and fourteen). (Id. ¶¶ 191, 199, 205, 213, 220, 227, 234, 241, 268-78.) *6 Plaintiffs dispute the pertinent factual and conclusory allegations made by the Pontone defendants with respect to their amended counterclaims. (ECF No. 388.) III. Standard of Review The court must decide, as a matter of law, whether the amended counterclaims for abuse of process asserted by the Pontone defendants can be dismissed by a motion for judgment on the pleadings. DiCarlo v. St. Mary Hosp., 530 F.3d 255, 262 (3d Cir. 2008). [A] Rule 12(c) motion is designed to provide a means of disposing of cases when the material facts are not in dispute between the parties and a judgment on the merits can be achieved by focusing on the content of the competing pleadings.... The motion ... only has utility when all material allegations of fact are admitted or not controverted in the pleadings and only questions of law remain to be decided by the district court. 5C CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 1367, at 206-08 (3d ed. 2004). Courts disfavor motions for judgment on the pleadings and apply a very restrictive standard when ruling on such motions. See Id. § 1368 at 222-23. When a motion for judgment on the pleadings alleges the claimant's failure to state a claim upon which relief can be granted, the appropriate standard for deciding such a motion is the same as the standard used to decide a motion pursuant to Rule 12(b)(6). Bangura v. Phila., 338 Fed.Appx. 261, 264 (3d Cir. 2009); Turbe v. Gov't of V.I., 938 F.2d 427, 428 (3d Cir. 1991); Rose v. Bartle, 871 F.2d 331, 342 (3d Cir. 1989). A motion to dismiss tests the legal sufficiency of the complaint or counterclaim-complaint. Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993). In deciding a motion to dismiss, the court is not opining on whether the claimant will be likely to prevail on the merits; rather, when considering a motion to dismiss, the court accepts as true all well-pled factual allegations in the complaint or counterclaim-complaint and views them in a light most favorable to the claimant. U.S. Express Lines Ltd. v. Higgins, 281 F.3d 383, 388 (3d Cir. 2002). While a complaint or counterclaim-complaint does not need detailed factual allegations to survive a Federal Rule of Civil Procedure 12(b)(6) motion to dismiss, it must provide more than labels and conclusions. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). A “formulaic recitation of the elements of a cause of action will not do.” Id. (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). “Factual allegations must be enough to raise a right to relief above the speculative level” and “sufficient to state a claim for relief that is plausible on its face.” Id. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 667 (2009) (citing Twombly, 550 U.S. at 556). Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 239 of 247 York Group, Inc. v. Pontone, Slip Copy (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 6 The plausibility standard is not akin to a “probability requirement,” but it asks for more than a sheer possibility that a defendant has acted unlawfully.... Where a complaint pleads facts that are “merely consistent with” a defendant's liability, it “stops short of the line between possibility and plausibility of ‘entitlement to relief.’ ” Iqbal, 556 U.S. at 667 (quoting Twombly, 550 U.S. at 556) (internal citations omitted). Two working principles underlie Twombly. Iqbal, 556 U.S. at 667. First, with respect to mere conclusory statements, a court need not accept as true all the allegations contained in a complaint. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. (citing Twombly, 550 U.S. at 555). Second, to survive a motion to dismiss, a claim must state a plausible claim for relief. Id. at 679. “Determining whether a complaint states a plausible claim for relief will...be a context- specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id. “But where 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.’ ” Id. (quoting FED. R. CIV. P. 8(a)(2)). A court considering a motion to dismiss may begin by identifying allegations that are not entitled to the assumption of truth because they are mere conclusions. *7 While legal conclusions can provide the framework of the complaint, they must be supported by factual allegations. When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief. Id. The court may grant a plaintiff leave to amend a complaint under Federal Rule of Civil Procedure 15, which provides: “The court should freely give leave [to amend] when justice so requires.” FED. R. CIV. P. 15. Rule 15, however, “does not permit amendment when it would be futile. Futility “ ‘means that the complaint, as amended, would fail to state a claim upon which relief could be granted.’ ” Kenny v. United States, 489 Fed.Appx. 628, 633 (3d Cir. 2012) (citing Burtch v. Millberg Factors, Inc., 662 F.3d 212, 231 (3d Cir. 2011)). “The standard for deciding whether claims are futile for the purpose of granting leave to amend a complaint is the same as a motion to dismiss.” Markert v. PNC Fin. Servs. Grp., Inc., 828 F.Supp.2d 765, 771 (E.D. Pa. 2011). “[I]f the court determines that plaintiff has had multiple opportunities to state a claim but has failed to do so, leave to amend may be denied.” See 6 CHARLES A. WRIGHT, ARTHUR R. MILLER & MARY KAY KANE, FEDERAL PRACTICE AND PROCEDURE § 1487 (2d ed. 2010). IV. Discussion A. Plaintiffs did not waive the defense of failure to state a claim upon which relief can be granted. 2 The Pontone defendants argue that plaintiffs filing a Rule 12(c) motion for judgment on the pleadings based upon failure to state a claim upon which relief can be granted after the close of fact discovery is improper. (ECF No. 454 at 2.) They explain that “[p]lantiffs had many opportunities to challenge the sufficiency of the Pontone Defendants' Abuse of Process Counterclaims” and “[i]f Plaintiffs desired to do so, they were required to bring such motion together with their first Rule 12 Motion ... in which they specifically address the Abuse of Process Counterclaims.” (Id.) In support of their argument, the Pontone defendants cite Federal Rule of Civil Procedure 12(g)(2), which provides: *8 Limitation on Further Motions. Except as provided in Rule 12(h)(2) or (3), a party that makes a motion under this rule must not make another motion under this rule raising a defense or objection that was available to the party but omitted from its earlier motion. FED. R. CIV. P. 12(g)(2). Essentially, the Pontone defendants argue that plaintiffs waived the defense of failure to state a claim upon which relief can be granted because plaintiffs did not raise the defense in their Rule 12(f) motion to strike the amended counterclaims (ECF No. 339), in which they argued, among other things, that the allegations contained in the abuse of process counterclaims with respect to settlement discussions should be stricken from the counterclaim-complaint. The Pontone defendants' argument does not have merit. Rule 12(h)(2), which is an exception to Rule 12(g)(2), provides: (2) When to Raise Others. Failure to state a claim upon which relief can be granted, to join a person required by Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 240 of 247 York Group, Inc. v. Pontone, Slip Copy (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 7 Rule 19(b), or to state a legal defense to a claim may be raised: (A) in any pleading allowed or ordered under Rule 7(a); (B) by a motion under Rule 12(c); or (C) at trial. FED. R. CIV. P. 12(h)(2). Under this provision and according to the advisory committee notes to Rule 12, the defense of failure to state a claim upon which relief can be granted is not waived by a party's failure to raise the defense prior to the close of fact discovery or by failing to raise the defense in another motion relating the claims in issue. The advisory committee notes to Rule 12(h)(2) provide: It is to be noted that while the defenses specified in subdivision (h)(1) are subject to waiver as there provided, the more substantial defenses of failure to state a claim upon which relief can be granted, failure to join a party indispensable under Rule 19, and failure to state a legal defense to a claim (see Rule 12(b)(6), (7), (f)), as well as the defense of lack of jurisdiction over the subject matter (see Rule 12(b) (1)), are expressly preserved against waiver by amended subdivision (h)(2) and (3). FED. R. CIV. P. 12(h)(2) advisory committee's notes (1966) (emphasis added). It follows that plaintiffs did not waive the defense of failure to state a claim upon which relief can be granted by filing their motion for judgment on the pleadings after the close of fact discovery or failing to raise the defense in their motion to strike under Rule 12(f). Rule 12 does not mandate the denial of plaintiffs' motion and the Pontone defendants did not cite any authority in support of a contrary result. Under those circumstances, the court finds plaintiffs may raise the defense of failure to state a claim upon which relief can be granted in their Rule 12(c) motion for judgment on the pleadings. 3 B. Scott Pontone and Harry Pontone failed to state a claim for abuse of process upon which relief can be granted. 4 *9 Under Pennsylvania law, the elements of a claim for abuse of process are: “(1) the use of a legal process; (2) primarily to accomplish a purpose for which the process was not designed; (3) a harm resulting therefrom.” Rosen v. Am. Bank of Rolla, 627 A.2d 190, 192 (Pa. Super. Ct. 1993). “To recover under a theory of abuse of process, plaintiff must show that the defendant used the legal process against him in a way that constituted a perversion of that process and caused harm to the plaintiff.” In re Finney, 184 Fed.Appx. 285, 289 (3d Cir. 2006) (citing Gen. Refractories Co., v. Fireman's Fund Ins. Co., 337 F.3d 297, 304 (3d Cir 2003)). “ ‘The term ‘use,’ in the context of an abuse of process claim requires that a party actively seek and employ a legal process.' ” Gen. Refractories, 337 F.3d at 311 (quoting Hart v. O'Malley, 647 A.2d 542, 551-52 (Pa. Super. Ct. 1994)). “ ‘The word process as used in the tort of abuse of process has been interpreted broadly, and encompasses the entire range of procedures incident to the litigation process.’ ” Shiner v. Moriarty, 706 A.2d 1228, 1237 (Pa. Super. Ct. 1998) (quoting Rosen, 627 A.2d at 192). Process includes, among others, “ ‘discovery proceedings, the noticing of depositions and the issuing of subpoenas.’ ” Gen. Refractories, 337 F.3d at 310 (quoting Pellegrino Food Prods. Co., Inc. v. Warren, 136 F.Supp.2d 391, 407 (W.D. Pa. 2000)). The use of a legal process for purposes of an abuse of process claim does not include “failing to comply with court orders, failing to seek a stay, and failing to provide copies of subpoenaed documents.” Gen. Refractories, 337 F.3d at 310. Pennsylvania state courts have explained the act of perversion as “ ‘an act or threat not authorized by the process, or the process must be used for an illegitimate aim such as extortion, blackmail, or to coerce or compel the plaintiff to take some collateral action.’ ” Giordano v. Claudio, 714 F.Supp.2d 508, 533 (E.D. Pa. 2010) (quoting Al Hamilton Contracting Co. v. Cowder, 644 A.2d 188, 192 (Pa. Super. 1994)). “A ‘perversion’ of legal process occurs when a party uses the process ‘primarily to accomplish a purpose for which the process was not designed.’ ” Gen. Refractories, 337 F.3d at 304 (quoting Dumont Television & Radio Corp. v. Franklin Elec. of Phila., 154 A.2d 585, 587 (Pa. 1959)). The Third Circuit Court of Appeals has instructed that the Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 241 of 247 York Group, Inc. v. Pontone, Slip Copy (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 8 court must look at the legal process used and decide whether it was used primarily “to benefit someone in achieving a purpose which is not the authorized goal of the procedure in question,” Werner v. Plater-Zyberk, 799 A.2d 776, 785 (2002) (emphasis added), not whether it was used to achieve a purpose or advantage unrelated or “collateral” to the entire underlying litigation proceeding. Gen. Refractories, 337 F.3d at 305. “ ‘The significance of [the word ‘primarily’] is that there is no action for abuse of process when the process is used for the purpose for which it is intended, but there is an incidental motive or spite or an ulterior purpose of benefit to the defendant.' ” Id. at 305 n.2 (quoting Rosen, 627 A.2d at 192). The court of appeals commented: We pause to add a note of caution. We recognize that causing financial and emotional injury to, as well as weakening the resolve of, opposing parties in the context of ongoing litigation are somewhat nebulous concepts, and when utilizing most litigation procedures an attorney is aware of the possibility that his actions could have one of these results. We do not, here, mean to predict that the Supreme Court of Pennsylvania would allow for liability simply because an attorney acts with these possibilities in mind. Rather, the point of liability is reached when “the utilization of the procedure for the purpose for which it was designed becomes so lacking in justification as to lose its legitimate function as a reasonably justifiable litigation procedure.” [Nienstedt v. Wetzel, 651 P.2d 876, 882 (Ariz. Ct. App. 1982)]. Only at that point could the legal process be considered to have been perverted. Gen. Refractories, 337 F.3d at 308. Unlike a claim for wrongful use of civil proceedings, “a claim for abuse of process does not include an element that proceedings have terminated.” Access Fin. Lending Corp. v. Keystone State Mortg. Corp., No. 96-191, 1996 WL 544425, at *3 (W.D. Pa. Sept. 4, 1996). Federal courts within the Third Circuit applying Pennsylvania law have found, however, that where an abuse of process claim asserts the process abused was the initiation and continuation of the pending legal proceedings as a whole, abuse of process claims raised in counterclaims are not ripe for adjudication. In Access Financial, the court held: *10 The assertion, by way of a counterclaim, that the underlying litigation as a whole constitutes an abuse of process fails to state a claim which is ripe for adjudication. By definition, a lawsuit in its entirety cannot constitute an abuse of process when it has not yet been concluded. Access Fin., 1996 WL 544425, at *5; accord Giordano, 714 F.Supp.2d at 533-34 (finding “since the Amended Counterclaim refers only to [plaintiff's] initiation of the lawsuit and not to any discrete portions of the lawsuit (such as a subpoena or a discovery request), we cannot adjudicate [defendants'] abuse of process claim until the completion of [plaintiff's] lawsuit”); Citizens Bank of Pa. v. Exec. Car Buying Servs., Inc., No. 10-478, 2010 WL 4687922, at *5 (D.N.J. Nov. 10, 2010) (applying Pennsylvania law and finding even if defendants had adequately plead an abuse of process claim, such a claim would be dismissed as premature because it was based on the filing of the lawsuit, which was pending). To state a claim for abuse of process, the alleged abusive process must be “completed so that the factfinder can determine the primary reason for its use. Hence, that process, whether it allegedly encompasses the entire litigation, or a portion thereof, must have been completed.” Access Fin., 1996 WL 544425, at *6 n.3. The overarching allegation in the amended counterclaims is that the present lawsuit is part of plaintiffs' business strategy to use expensive and “vexatious litigation in an unlawful attempt to preserve and further increase its dominant share of the market for the sale of caskets to independent funeral homes in the New York Metropolitan area.” (ECF No. 333 ¶ 1.) The Pontone defendants repeatedly allege that the lawsuit pending before the court is baseless, improper, a “sham,” and an attempt by plaintiffs to use expensive and vexatious litigation to preserve market share by forcing the Pontone defendants to agree to refrain from competing with Matthews in the casket industry. (Id. ¶¶ 4, 6, 9, 12.) As discussed above, the initiation and continuation of pending litigation cannot support a claim for abuse of process. The abuse of process counterclaims based upon these allegations will be dismissed because they are unripe. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 242 of 247 York Group, Inc. v. Pontone, Slip Copy (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 9 The Pontone defendants support their allegations that the initiation and continuation of the lawsuit presently before the court is an abuse of legal process by pointing to specific acts by the plaintiffs taken in the course of this case “intended to increase the cost of litigation.” (ECF No. 333 ¶¶ 126-135.) They describe those actions, including making false representations to the court, filing motions, and conducting discovery, as “EVIDENCE OF THE ABUSIVE NATURE OF THIS LITIGATION.” (ECF No. 333 at 27.) Specific acts taken during the course of litigation, as opposed to the filing and continuation of the litigation as a whole, may support a cause of action for abuse of process. See e.g. Giordano, 714 F.Supp.2d at 533-34. The court will address each of the acts allegedly taken by plaintiffs against Scott Pontone and Harry Pontone to determine whether any act constitutes a “use of process,” and if so, whether there are factual allegations sufficient for a plausible finding that a perversion of the implicated process occurred. 1. Filing a motion for a preliminary injunction 5 (ECF No. 333 ¶¶ 117, 128, 269) *11 The Pontone defendants allege plaintiffs filed the motion for preliminary injunction (ECF No. 2) “without a factual basis and for the improper purpose of engaging in a fishing expedition and imposing inordinate costs of expedited and broad ranging discovery on the defendants.” (ECF No. 333 ¶ 128.) Plaintiffs filed a motion for preliminary injunction against Scott Pontone and Batesville on August 16, 2010 alleging, among other things, that they would suffer irreparable harm if the court did not enjoin Scott Pontone from breaching his KEEA. (ECF No. 2.) The filing of a motion for preliminary injunction is a “use of process.” Hart, 647 A.2d at 551 n.2 (“A preliminary injunction is a process in civil litigation.”). Scott Pontone could allege a claim for abuse of process based upon the perversion of that process. Harry Pontone, however, cannot base his claim for abuse of process upon the filing of the motion because he was not a named defendant in the motion and, thus, legal process was not used against him. See Naythons v. Stradley, Ronan, Stevens & Young LLP, 339 Fed.Appx. 165, 167 (3d Cir. 2009) (“Under Pennsylvania law, the District Court correctly dismissed Naythons's claims of abuse of process and wrongful use of civil proceedings. Stradley did not “use legal process” against Naythons. Naythons was the arbitrator in the state proceeding, not a party to the action, and the fact that he was named as a respondent in one of the state court petitions is of no import.”). Having concluded filing a motion for preliminary injunction is a use of legal process, the court must determine whether Scott Pontone set forth factual allegations sufficient for a plausible claim that plaintiffs perverted the process with an improper purpose. Filing a motion to drain an opposing party's resources may constitute a perversion of that process. Gen. Refractories, 337 F.3d at 308-09. This factor, however, does not end the court's inquiry. The court must be satisfied that plaintiffs filed the motion for preliminary injunction primarily to drain Scott Pontone's resources as opposed to achieving the legitimate legal purpose of such a motion, i.e., seeking the court's intervention to prevent irreparable harm. At this stage of the proceedings, the court cannot determine there is a plausible claim that the primary reason plaintiffs filed the motion for preliminary injunction was for an improper purpose. Although the motion for preliminary injunction was withdrawn and technically the legal process with respect to the filing of the motion ended, the legal and factual issues raised in the motion for preliminary injunction are still pending before the court. Plaintiffs in the amended complaint allege a claim substantially identical to the claim in the motion for preliminary injunction, i.e., Scott Pontone breached the APA and KEEA and caused them harm. (ECF No. 70 ¶¶ 123-32, 196(a)(i).) Scott Pontone argues the motion for preliminary injunction was filed “without a factual basis” and solely for the purpose of causing him harm. It follows that the court cannot assess the validity of this argument, i.e., whether the motion was filed “without a factual basis,” without assessing the validity of the claims contained in the amended complaint. At this stage in the proceedings, such an analysis would be premature. For those reasons, the abuse of process claim based upon the filing of the motion for preliminary injunction against Scott Pontone is unripe and will be dismissed without prejudice. Scott Pontone may assert the claim if the issues raised in the amended complaint are resolved in a manner which would implicate abuse of process. 2. Repeatedly making false statements of fact to the Court, including by falsely representing Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 243 of 247 York Group, Inc. v. Pontone, Slip Copy (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 10 to the Court positions or statements taken by the Pontone Defendants (ECF No. 333 ¶¶ 130); Submitting untrue testimony of its executives, including its General Counsel, to preserve legal positions when those positions were about to put an end to this litigation (Id. ¶ 131); and Repeatedly misrepresenting the law to the Court, requiring the defendants to have to spend substantial time and resources to respond to these misstatements (Id. ¶ 133) Scott Pontone's and Harry Pontone's allegations that throughout the proceedings related to the lawsuit presently before the court plaintiffs made false statements of fact, submitted untrue testimony, and misrepresented the law are too general to support a claim for abuse of process because they do not identify a legal process used; rather, the allegations support Scott Pontone's and Harry Pontone's claims that the underlying proceedings as a whole are actionable because they are baseless and intended to stymie the Pontone defendants' ability to compete in the casket industry. If plaintiffs filed the amended complaint without factual basis, they would have to make false representations to the court in order to maintain their case and avoid dismissal. To the extent Scott Pontone's and Harry Pontone's claims for abuse of process are based upon plaintiffs making false statements of fact, submitting untrue testimony, and misrepresenting the law throughout the litigation, the claims must be dismissed for failing to identify a legal process used by plaintiffs other than the filing and continuation of the litigation presently before the court. 3. Violating a Court order requiring the sequestration of a witness, resulting in the witness changing his testimony to ensure that the Court would give credit to Matthews' newly advanced legal position to preserve continuation of this litigation (ECF No. 333 ¶ 132) *12 The Third Circuit Court of Appeals has concluded that if faced with the issue, the Pennsylvania Supreme Court would find the use of a legal process for purposes of a state law abuse of process claim does not include “failing to comply with court orders.” Gen. Refractories, 337 F.3d at 310. It follows that to the extent Scott Pontone and Harry Pontone rely upon plaintiffs violating a court order to support their claims for abuse of process, those claims must fail because violating a court order cannot support a claim for abuse of process as a matter of law. Id. 4. Repeatedly filing vexatious motions in front of the wrong Court and without any standing to do so, even after the Court expressly told Matthews' counsel that it had no jurisdiction to decide certain discovery motions relating to nonparties (ECF No. 333 ¶ 134) Filing a motion is a use of legal process. The Pontone defendants' allegations with respect to plaintiffs filing “vexatious motions,” however, are conclusory and insufficient to state a claim for relief under Iqbal and Twombly, which require “more than labels and conclusions.” Twombly, 550 U.S. at 554. Although the Pontone defendants allege the motions were filed to increase the cost of litigation, the amended counterclaims do not identify which motions are in issue, or why they were vexatious. The general allegation that plaintiffs “[r]epeatedly filed vexatious motions” supports Scott Pontone's and Harry Pontone's unripe claims for abuse of process based upon the initiation and continuation of the litigation currently pending before this court, but it does not support a claim for abuse of process solely based upon filing the motions for an improper purpose. 6 5. Using scorched earth discovery tactics to gain access to competitively sensitive information from its direct competitors that Matthews and its lawyers CEO should not be permitted to access. For instance, in this case, after putting at issue 37 New York funeral home customers, Matthews has repeatedly sought to use legal process to gain confidential information regarding what these customers were doing with other defendants, including by incredibly seeking to intrude upon these customers private telephone calls with the defendants (ECF No. 333 ¶ 7) Using the discovery process for purposes unrelated to the litigation, including for purposes of obtaining the confidential and proprietary information of its competitors (Id. ¶¶ 135) The allegations that plaintiffs used “discovery tactics” and that “Matthews has repeatedly sought to use legal process to gain confidential information” are too vague to support Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 244 of 247 York Group, Inc. v. Pontone, Slip Copy (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 11 a plausible claim for abuse of process. “ ‘The term ‘use,’ in the context of an abuse of process claim requires that a party actively seek and employ a legal process.' ” Gen. Refractories, 337 F.3d at 311 (quoting Hart, 647 A.2d at 551-52). Alleging that a plaintiff used “discovery tactics” and “sought to use legal process” without identifying specific processes used, e.g. filing a motion or making a request for production, is insufficient to state a plausible claim for relief under Iqbal and Twombly. Under those circumstances, Scott Pontone and Harry Pontone failed to set forth factual allegations sufficient to support a plausible claim for abuse of process based upon the use of “discovery tactics” and “legal process.” 6. Issuing subpoenas, including by subpoena to nonparties, depose witnesses, and seek discovery solely in order to obtain the Pontone defendants' confidential, proprietary, and trade secret information (Id. ¶¶ 270, 282) *13 Noticing a deposition and issuing a subpoena are uses of legal process. The Pontone defendants' allegations with respect to plaintiffs issuing subpoenas, deposing witnesses, and seeking discovery, however, are conclusory and insufficient to state a claim for relief under Iqbal and Twombly. Although the Pontone defendants in the amended counterclaims allege plaintiffs' purpose in seeking discovery was to obtain confidential information to which they would not otherwise be privy, they do not identify the subpoenas or depositions used to accomplish this purpose. A reading of the amended counterclaims suggests the Pontone defendants did not identify the subpoenas and depositions in issue because their claims as stated are based upon the “sham” litigation as a whole, which includes the entire discovery phase of the proceedings. Under those circumstances, and in light of the general and conclusory nature of the allegations, Scott Pontone and Harry Pontone failed to state a claim for relief based upon plaintiffs issuing subpoenas, deposing witnesses, and seeking discovery. 7. Declining to gather discovery from customers in issue in this litigation (Id. ¶¶ 122-24) To the extent Scott Pontone and Harry Pontone seek to support their claims of abuse of process by alleging that plaintiffs declined to gather discovery, this allegation does not implicate the active use of any legal process, such as a motion, a notice of deposition, or an issuance of a subpoena. Under those circumstances, the allegation that plaintiffs declined to gather discoverable materials from customers in issue in this litigation does not support a claim for abuse of process. C. Factual Allegations with respect to the “Baseless Litigation” in other claims Plaintiffs argue that along with Scott Pontone's and Harry Pontone's abuse of process claims based upon the initiation and continuation of the litigation presently before the court, “those aspects of the Pontone Defendants' Amended Counterclaims which are based on allegations of Plaintiffs' improper motives in bringing the instant action, are not viable and must be dismissed.” (ECF No. 390 at 1.) As mentioned above, the Pontone defendants allege plaintiffs “bringing baseless claims in the instant lawsuit” in support of their counterclaims for breach of implied covenant of good faith and fair dealing (counterclaim counts three and four), tortious interference with prospective business advantage (counterclaim counts five and six), unjust enrichment (counterclaim counts seven and eight), unfair competition (counterclaim counts nine and ten), and abuse of process (counterclaim counts thirteen and fourteen). (Id. ¶¶ 191, 199, 205, 213, 220, 227, 234, 241, 268-78.) To the extent the resolution of these claims involves a determination with respect to the validity of the claims asserted by plaintiffs against the Pontone defendants in this litigation, those claims in that respect are premature. The Pontone defendants at this time cannot rely upon the invalidity of any claim presently pending before the court as a basis for recovery in this case. Allegations with respect to the current lawsuit being “baseless” are conclusory and will not be afforded any weight by the court. V. Conclusion Based upon the foregoing, Harry Pontone and Scott Pontone failed to state claims for abuse of process upon which relief may be granted. To the extent the amended counterclaims set forth claims for abuse of process relating to this lawsuit, those claims are based upon the filing and continuation of the lawsuit presently pending before the court. The allegations with respect to individual legal processes used by plaintiffs are too general to state a claim Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 245 of 247 York Group, Inc. v. Pontone, Slip Copy (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 12 for relief under Iqbal and Twombly. The counterclaims for abuse of process will be dismissed without prejudice, and the allegations with respect to the current lawsuit being “baseless” will be disregarded at this time because they cannot serve as a basis for relief while the lawsuit is ongoing. 7 VI. Order *14 AND NOW, this 22 nd day of May, 2013, upon consideration of the motion for judgment on the pleadings filed by plaintiffs (ECF No. 390) and the submissions by the parties related to the motion, IT IS HEREBY ORDERED that the motion for judgment on the pleadings is GRANTED. The amended counterclaims set forth in counts thirteen and fourteen are dismissed without prejudice. IT IS FURTHER ORDERED that at this time the allegations with respect to the current lawsuit being “baseless” will not be afforded any weight by the court. All Citations Slip Copy, 2013 WL 12142353 Footnotes 1 The motion for judgment on the pleadings filed by plaintiffs based upon the defense of failure to state a claim and the briefing filed in response to the motion reference only the factual allegations set forth in the amended counterclaims. For that reason, the court provides a recitation of the factual allegations contained in the amended counterclaims and does not refer to other pleadings filed in this case. The recitation for purpose of clarity also includes references to conclusions which need not be accepted as true for the purposes of resolving the instant motion. Snyder v. Daughtery, 899 F.Supp.2d 391, 400 (W.D. Pa. 2012) (“When reviewing a motion for judgment on the pleadings, a court must view the facts in the plaintiff's complaint as true and draw all reasonable inferences in the plaintiff's favor.”) (emphasis added); see Ashcroft v. Iqbal, 556 U.S. 662, 667 (2009) (conclusory statements need not be accepted as true when determining whether the claimant failed to state a claim). 2 In the Pontone defendants' Notice Regarding Plaintiffs' Partial Rule 12(c) Motion, they argue that in light of plaintiffs filing a motion for summary judgment with respect to the abuse of process counterclaims, the motion for judgment on the pleadings is moot. (ECF No. 492 at 1-2.)They explain: • Because a Rule 56 Motion permits both the moving and nonmoving parties to go beyond the pleadings, and to rely on “particular parts of materials in the record,” Fed. R. Civ. P. 56(c), Plaintiffs' Rule 56 Motion supersedes and renders Plaintiffs' pending Rule 12(c) Motion moot. • Accordingly, the Pontone Defendants respectfully submit that Plaintiffs' Rule 12(c) Motion should be denied for the additional reasons that it is now moot. (Id. at 2.) The court has not ruled on plaintiffs' motion for summary judgment or reviewed the exhibits with respect to that motion in consideration of plaintiffs' motion for judgment on the pleadings. The Pontone defendants, furthermore, do not cite any authority for their argument that the filing of a motion for summary judgment renders the motion for judgment on the pleadings moot. Under those circumstances, the court declines to find the motion for judgment on the pleadings moot. 3 The Pontone defendants argue filing a Rule 12(c) motion for judgment on the pleadings after the close of discovery is improper. (ECF No. 454 at 2-3 n.2.) They argue they should be granted leave to amend the amended counterclaims “because the ‘the fact of the lateness of this motion is a result of [Plaintiffs'] strategic decision to file a delayed motion under Rule 12(c) and not Rule 12(b)(6).’ ” (Id.) (quoting Lapella v. Atlantic City, No. 10-2454, 2012 WL 2962411, at *11 (D.N.J. July 18, 2012)). The Pontone defendants' argument ignores the procedural posture of this case. This action was initiated by plaintiffs on August 16, 2010. (ECF No. 1.) The amended counterclaims were filed more than two years later -October 2, 2012-towards the end of a contentious and litigious discovery process. (ECF No. 33.) Plaintiffs' answer to the amended counterclaims and their motion for judgment on the pleadings were filed two months later on November 30, 2012. (ECF No. 390.) The delay, if any, caused by plaintiffs filing a motion for judgment on the pleadings under Rule 12(c), instead of a motion to dismiss under Rule 12(b)(6), is de minimis in light of the history of this case and is not a basis upon which to deny plaintiffs' motion for judgment on the pleadings. In contrast to this case, in Lapella, the defendants did not file their motion for judgment on the pleadings until five months after the plaintiff filed her amended complaint. Lapella, 2012 WL 2962411, at *2, *11. The Pontone defendants are not prohibited from filing a motion for leave to file second amended counterclaims. As noted in the background section, Batesville raised certain counterclaims, which are similar to those raised by the Pontone defendants. The court dismissed those counterclaims without prejudice. Even if Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 246 of 247 York Group, Inc. v. Pontone, Slip Copy (2013) © 2017 Thomson Reuters. No claim to original U.S. Government Works. 13 the Pontone defendants are permitted to file second amended counterclaims for abuse of process, in the interests of judicial efficiency, the court may sever the second amended counterclaims for abuse of process and consider them, if appropriate, with any similar or related claims filed by Batesville. FED. R. CIV. P. 42(b); see infra note 7. 4 Plaintiffs argue that “[i]n ruling on Batesville's Counterclaims, this Court clearly determined that any claims for which abuse of process allegations form the general basis are not ripe for adjudication and must be dismissed without prejudice.” (ECF No. 390 at 6.) Plaintiffs argue under the law of the case doctrine, that the Pontone defendants' counterclaims for abuse of process should likewise be dismissed because they are unripe for adjudication. (Id.) The Pontone defendants respond that the court's ruling on August 14, 2012 did not preclude the filing of counterclaims for abuse of process; rather, “the Court simply ruled on what was presented before her for decision.” (ECF No. 436 at 4-5.) The Third Circuit Court of Appeals has described the law of the case doctrine as follows: “ ‘[W]hen a court decides upon a rule of law, that decision should continue to govern the same issues in subsequent stages in the same case.’ ” In re Pharmacy Benefit Managers Antitrust Litig., 582 F.3d 432, 439 (3d Cir. 2009) (quoting Arizona v. California, 460 U.S. 605, 618, 103 S.Ct. 1382, 75 L.Ed.2d 318 (1983)). In the absence of extraordinary circumstances, this Court should generally adhere to its own prior rulings arising out of the same case. See, e.g., id. Benjamin ex rel. Yock v. Dep't of Pub. Welfare of Pa., 701 F.3d 938, 948-49 (3d Cir. 2012). Under the law of the case as set forth on the record on August 14, 2012 and as discussed below, claims for abuse of process based upon the initiation and continuation of the litigation as a whole are unripe for adjudication. Batesville's counterclaim for abuse of process was dismissed on that basis. The ruling did not preclude the filing of all abuse of process counterclaims; rather, it set forth the court's view that the law in Pennsylvania requires the dismissal of counterclaims for abuse of process based upon the initiation and continuation of litigation as a whole. The court will undertake an independent review of the factual allegations set forth in Scott Pontone's and Harry Pontone's abuse of process counterclaims to determine whether they should likewise be dismissed on this basis. 5 Scott Pontone and Harry Pontone allege plaintiffs “use the ruse of litigation to seek to impose settlements in which the competitor is required to limit or completely end its competitive activities.” (ECF No. 333 ¶¶ 99, 100.) To the extent Scott Pontone and Harry Pontone attempt to set forth claims for abuse of process based upon the 2007 settlement among Scott Pontone, Harry Pontone, and plaintiffs, the claims are barred by the two-year statute of limitations. 42 PA. CONS. STAT. § 5524(1). 6 The court notes that plaintiffs, counsel for plaintiffs, Reed Smith LLP, and Pontone defendants have filed motions for costs in the course of this litigation claiming the opposing party's discovery motions were baseless. (See e.g. ECF Nos. 239, 255, 381.) 7 The court notes the Pontone defendants did not file a motion for leave to amend the amended counterclaims. If the Pontone defendants file a motion for leave to file second amended counterclaims and their second amended counterclaims set forth abuse of process claims upon which relief may be granted, the court is inclined to sever those claims from the other counterclaims asserted in this case under Federal Rule of Civil Procedure 42(b) in order to promote the expeditious resolution of the claims currently pending before the court. FED. R. CIV. P. 42(b) (“For convenience, to avoid prejudice, or to expedite and economize, the court may order a separate trial of one or more separate issues, claims, crossclaims, counterclaims, or third-party claims.”). End of Document © 2017 Thomson Reuters. No claim to original U.S. Government Works. Case 3:14-cv-00853-RDM Document 302-1 Filed 02/27/17 Page 247 of 247
