Dalmatia Import Group, Inc. v. Foodmatch, Inc. et al

MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM AND FOR LACK OF PERSONAL JURISDICTION LANCASTER'S COUNTERCLAIMS

E.D. Pa.August 29, 2016

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA DALMATIA IMPORT GROUP, INC., and : MAIA MAGEE, : : Plaintiffs, : CIVIL ACTION NO. 16-2767 : v. : : FOODMATCH, INC., LANCASTER FINE : FOODS, INC., EARTH PRIDE ORGANICS, : LLC, and MICHAEL S. THOMPSON, : : Defendants. : MAIA MAGEE’S MOTION TO DISMISS LANCASTER’S COUNTERCLAIMS Pursuant to Federal Rules of Civil Procedure 12(b)(2) and 12(b)(6), Counterclaim Defendant Maia Magee moves to dismiss any counterclaim asserted against her by Lancaster Fine Foods, Inc. (“Lancaster). Ms. Magee is not subject to personal jurisdiction in Pennsylvania. Independently, Lancaster has failed to state any claim against Mr. Magee upon with relief can be granted. A brief and a proposed order accompany this motion. Case 2:16-cv-02767-EGS Document 76 Filed 08/29/16 Page 1 of 3 Respectfully submitted, /s/ Michael S. Nadel Samuel E. Cohen (Pa. ID# 204617) GROSS MCGINLEY, LLP 33 South Seventh Street, PO Box 4060 Allentown, Pennsylvania 18105 (610) 820-5450 Lauren E. Handel FOSCOLO & HANDEL PLLC 75 Washington Valley Road #416 Bedminster, New Jersey 07921 (908) 206-4103 Michael S. Nadel MCDERMOTT WILL & EMERY LLP 500 North Capitol Street, N.W. Washington, D.C. 20001 (202) 756-8000 Attorneys for Counterclaim Defendant Maia Magee Case 2:16-cv-02767-EGS Document 76 Filed 08/29/16 Page 2 of 3 CERTIFICATE OF SERVICE I hereby certify that on August 29, 2016 a true and correct copy of the foregoing was filed electronically using the CM/ECF system. As such, this document was served on all counsel who have consented to electronic service, including as follows: Counsel for Defendant Lancaster Fine Foods, Inc., Earth Pride Organics, and Michael S. Thompson: George J. Krueger, Esq. Brian Berkley, Esq. Alexandra C. Scanlon, Esq. FOX ROTHSCHILD LLP 2000 Market Street, 20th Floor Philadelphia, Pennsylvania 19103 Counsel for Defendant FoodMatch, Inc.: Richard Feldman, Esq. Michael Smith, Esq. ROSENBERG FELDMAN SMITH, LLP 551 Fifth Avenue, Floor 24 New York, New York 10176 /s/ Michael S. Nadel Michael S. Nadel Case 2:16-cv-02767-EGS Document 76 Filed 08/29/16 Page 3 of 3 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA DALMATIA IMPORT GROUP, INC., and : MAIA MAGEE, : : Plaintiffs, : CIVIL ACTION NO. 16-2767 : v. : : FOODMATCH, INC., LANCASTER FINE : FOODS, INC., EARTH PRIDE ORGANICS, : LLC, and MICHAEL S. THOMPSON, : : Defendants. : BRIEF IN SUPPORT OF MAIA MAGEE’S MOTION TO DISMISS LANCASTER’S COUNTERCLAIMS Counterclaim Defendant Maia Magee respectfully submits this brief in support of her motion to dismiss any counterclaim against her brought by Lancaster Fine Foods, Inc. (“Lancaster”). Ms. Magee is not subject to personal jurisdiction in Pennsylvania. Lancaster’s Counterclaims allege no contacts between Ms. Magee and Pennsylvania of any kind, let alone contacts related to the claims Lancaster has alleged. Lancaster does not allege, nor can it, that Ms. Magee entered into a contract in Pennsylvania. Ms. Magee is not, and is not alleged to be, a party to any contract with Lancaster, or even a party to any business relationship with Lancaster. She is merely the president and co-owner of Dalmatia Import Group, Inc. (“Dalmatia”), which is Lancaster’s counterparty to the alleged contracts in this case. Likewise, Lancaster does not allege, nor can it, that Ms. Magee has expressly aimed her allegedly tortious conduct at Pennsylvania, such that Pennsylvania can be said to be the focal point of the tortious activity. Given the absence of such jurisdictional allegations-let alone proof, which is Lancaster’s burden even at the pleading stage-any claim against Ms. Magee should be dismissed. Case 2:16-cv-02767-EGS Document 76-1 Filed 08/29/16 Page 1 of 19 2 Independently, Lancaster’s counterclaims should be dismissed as to Ms. Magee, because Lancaster has not pled facts which, if true, would prove breach of contract, commercial disparagement, or unjust enrichment, or would support a declaratory judgment claim. ISSUES PRESENTED 1. Is Ms. Magee subject to personal jurisdiction in Pennsylvania? 2. Has Lancaster sufficiently pled a claim against Ms. Magee for: a. breach of contract? b. commercial disparagement? c. unjust enrichment? d. declaratory judgment against Ms. Magee? ARGUMENT Lancaster has brought five Counterclaims. (Doc. No. 62). Counts I and II are for breach of contract and are brought against Dalmatia; Count III is for “Trade Slander / Commercial Disparagement” and is brought against Dalmatia; Count IV is for unjust enrichment and is brought against Dalmatia; and Count V seeks a declaratory judgment and is brought against Dalmatia. No claim is expressly brought against Ms. Magee. Each claim is captioned “LFF Fine Foods, Inc. v. Dalmatia Import Group, Inc.” Nevertheless, Lancaster has named Ms. Magee as a party. In the claim for relief, judgment in excess of $1 million is sought against Ms. Magee personally, together with Dalmatia. (Doc. No. 62 at 17). Ms. Magee therefore addresses each claim. Ms. Magee turns first, however, to the absence of personal jurisdiction, which is dispositive of any counterclaim. Case 2:16-cv-02767-EGS Document 76-1 Filed 08/29/16 Page 2 of 19 3 I. THIS COURT LACKS PERSONAL JURISDICTION OVER MS. MAGEE. A. Standard of Review Under Rule 12(b)(2) Federal Rule of Civil Procedure 12(b)(2) provides for dismissal of an action where the district court lacks personal jurisdiction over the defendant. Whether personal jurisdiction may be exercised over a defendant is a question of law. Vetrotex Certainteed Corp. v. Consol. Fiber Glass Prods. Co., 75 F.3d 147, 150 (3d Cir. 1996). In deciding a motion to dismiss for lack of personal jurisdiction, the court generally must take as true the allegations contained in the complaint. Dayhoff Inc. v. H.J. Heinz Co., 86 F.3d 1287, 1302 (3d Cir. 1996). However, the plaintiff ultimately bears the burden of proving, by affidavits or other competent evidence, that the court may properly assert jurisdiction over the defendant. Id.; see also North Penn Gas Co. v. Corning Natural Gas Corp., 897 F.2d 687, 689 (3d. Cir 1990). B. Legal Standard for Personal Jurisdiction There are two distinct theories under which personal jurisdiction may be exercised-- general jurisdiction and specific jurisdiction. “When a state has general jurisdiction over a party, that party can be haled into court in that state ‘regardless of whether the subject matter of the cause of action has any connection to the forum.’” Pennzoil Prods. Co. v. Colelli & Assocs., Inc., 149 F.3d 197, 200 (3d Cir. 1998) (quoting Mellon Bank (East) PSFS, N.A. v. Farino, 960 F.2d 1217, 1221 (3d Cir. 1992)). Specific jurisdiction, on the other hand, “is present only if the plaintiff's cause of action arises out of a defendant's forum-related activities such that the defendant ‘should reasonably anticipate being haled into court’ in that forum.” Remick v. Manfredy, 238 F.3d 248, 255 (3d Cir. 2001) (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980)). Case 2:16-cv-02767-EGS Document 76-1 Filed 08/29/16 Page 3 of 19 4 “Under Federal Rule of Civil Procedure 4(e), a district court may assert personal jurisdiction ‘over non-resident defendants to the extent permissible under the law of the state where the district court sits.’” Id. (quoting Pennzoil Prods., 149 F.3d at 200). Because Pennsylvania's long-arm statute, 42 Pa. Cons. Stat. Ann. § 5322(b), authorizes Pennsylvania courts “to exercise personal jurisdiction over nonresident defendants to the constitutional limits of the due process clause of the fourteenth amendment,” Remick, 238 F.3d at 255, the Court must “look to federal constitutional doctrine to determine [a defendant’s] susceptibility to personal jurisdiction in Pennsylvania,” Vetrotex, 75 F.3d at 150. “Due process requires that the defendant have ‘minimum contacts’ in the forum state.” Remick, 238 F.3d at 255 (quoting Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). These minimum contacts “must have a basis in ‘some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.’” Id. (quoting Asahi Metal Indus. Co. v. Super. Ct. of Cal., 480 U.S. 102, 109 (1987)). In addition to calling for minimum contacts, due process also requires that ‘the exercise of jurisdiction comport with ‘traditional notions of fair play and substantial justice.’” Id. (quoting Int’l Shoe, 326 U.S. at 316). C. Ms. Magee Is Not Subject to Personal Jurisdiction in Pennsylvania. Lancaster’s Counterclaim does not allege that there is general jurisdiction over Ms. Magee in Pennsylvania, nor can it. See Declaration of Maia Magee, attached. Only specific jurisdiction is at issue. Specific jurisdiction “will not lie here on the basis of [Ms. Magee’s] alleged contacts with the forum alone, for … they are far too small to comport with the requirements of due process.” IMO Indus. v. Kiekert AG, 155 F.3d 254, 259 (3d Cir. 1989). Case 2:16-cv-02767-EGS Document 76-1 Filed 08/29/16 Page 4 of 19 5 In support of Lancaster’s assertion of personal jurisdiction over Ms. Magee, Lancaster’s Counterclaim alleges only this: This Court has personal jurisdiction over Magee pursuant to the Pennsylvania Long Arm Statute as Magee has caused harm and/or tortious injury in the Commonwealth and attended business meetings in the Commonwealth. Further, Magee has availed herself by bringing suit in this Court and thus is subject to personal jurisdiction. (Doc. No. 62 ¶ 11). Taking those allegations in turn, starting at the end: Ms. Magee has not brought suit in this Court. She is not a claimant. She is listed as a “Plaintiff” in the caption pursuant to Court Order (Doc. No. 41 at 4). The Second Amended Complaint itself states: “Maia Magee is named as a plaintiff as a result of the Court’s Order consolidating Civil Action 16-2767 and 16-182 (Doc. 41). Ms. Magee does not personally assert any claims against the defendants.” (Doc. No. 53 at 1 n.1 (emphasis added). Dalmatia did not plead Ms. Magee as a party. See id. ¶¶ 14-18. Ms. Magee does not seek any relief. Id. at 47-49. While Dalmatia and each of the Defendants have availed itself of this Court or otherwise submitted to its jurisdiction, Ms. Magee has not. Next, Lancaster has not pled any factual allegations supporting the assertion that Ms. Magee has “attended business meetings in the Commonwealth.” No such meetings are alleged in Lancaster’s Counterclaim, let alone meetings connected to Lancaster’s claims. That leaves Lancaster’s assertion that this Court has jurisdiction over Ms. Magee because she “has caused harm and/or tortious injury in Pennsylvania.” (Doc. 62 ¶ 11). Lancaster apparently relies on 42 Pa. Cons. Stat. Ann. § 5322(a)(4), which provides a basis for personal jurisdiction over any defendant who has caused “harm or tortious injury in this Commonwealth by any act or omission occurring outside of this Commonwealth.” However, “the fact that harm is felt in Pennsylvania from conduct occurring outside Pennsylvania is not sufficient to satisfy Case 2:16-cv-02767-EGS Document 76-1 Filed 08/29/16 Page 5 of 19 6 due process unless the defendant targets Pennsylvania through the tortious conduct.” Santana Prods., Inc. v. Bobrick Washroom Equip., 14 F. Supp. 2d 710, 715 (M.D. Pa. 1998) (citations omitted). The cause of harm, not merely its effect, has to occur within Pennsylvania. Stifel v. Lindhorst, 393 F. Supp. 1085 (M.D. Pa. 1975); see also Schwilm v. Holbrook, 661 F.2d 12, 14 (3rd Cir. 1981) (“When personal jurisdiction over a non-resident defendant is asserted on a basis other than consent, physical presence, or doing business, the claim must arise from a specific forum-related act.”). Lancaster has identified no cause of harm by Ms. Magee that occurred in Pennsylvania. Lancaster apparently hopes to avail itself of the “effects test” of Calder v. Jones, 465 U.S. 783 (1984), in which in which the Supreme Court found personal jurisdiction to be proper over nonresident defendants that committed an intentional tort outside the forum, the unique effects of which caused damage to the plaintiff within the forum. Only one of Lancaster’s counterclaims is for an intentional tort: Lancaster’s claim for “trade libel and slander / commercial disparagement.” Even as to that counterclaim Lancaster cannot satisfy the Calder test, however. In the Third Circuit, for Calder to apply, “the plaintiff must allege facts sufficient to meet a three-prong test.” IMO Indus. v. Kiekert AG, 155 F.3d 254, 256 (3d Cir. 1989). “First, the defendant must have committed an intentional tort.” Id. “Second, the plaintiff must have felt the brunt of the harm caused by that tort in the forum, such that the forum can be said to be the focal point of the harm suffered by the plaintiff as a result of the tort.” Id. “Third, the defendant must have expressly aimed his tortious conduct at the forum, such that the forum can be said to be the focal point of the tortious activity.” Id. Lancaster’s allegations fail the third prong of the test. “[I]n order to make out the third prong of this test, the plaintiff must show that the defendant knew that the plaintiff would suffer Case 2:16-cv-02767-EGS Document 76-1 Filed 08/29/16 Page 6 of 19 7 the brunt of the harm caused by the tortious conduct in the forum, and point to specific activity indicating that the defendant expressly aimed its tortious conduct at the forum.” IMO Indus., 155 F.3d at 266. “The fact that harm is felt in Pennsylvania from conduct occurring outside Pennsylvania is not sufficient to satisfy due process unless the defendant targets Pennsylvania through the tortious conduct.” Santana Prods., Inc. v. Bobrick Washroom Equip., 14 F. Supp. 2d 710, 715 (M.D. Pa. 1998) (citations omitted) Lancaster’s Counterclaim points to no specific activity indicating that Ms. Magee expressly aimed her allegedly tortious conduct at Pennsylvania, nor is there any allegation that Ms. Magee knew that Lancaster would suffer the brunt of the harm in Pennsylvania. Ms. Magee is not alleged to have published her allegedly defamatory statements to anyone in Pennsylvania, nor is she alleged to have intended to reach anyone in Pennsylvania-nor is it even alleged that her statements did reach anyone in Pennsylvania. Consequently, accepting all of Lancaster’s allegations as true, Ms. Magee is not subject to the Court’s personal jurisdiction. See Wm. Rosenstein & Sons Co. v. BBI Produce, Inc., 123 F. Supp. 2d 268, 273-74 (M.D. Pa. 2000). “There is a critical difference between an intentional act which has an effect in the forum and an act taken for the very purpose of having an effect there.” Narco Avionics, Inc. v. Sportsman’s Market, Inc., 792 F. Supp. 398, 408 (E.D. Pa. 1992). Classic textbook examples of the latter category “would be mailing a letter bomb into the forum to a plaintiff with the intent that he be injured upon opening it, or propelling a projectile across the Delaware River from New Jersey into Pennsylvania for the purpose of hitting and injuring someone in this forum.” Id. The First Amended Complaint contains no allegations suggesting the alleged defamatory conduct in this case falls within that category. Activity by a defendant implicating the interests of a Pennsylvania plaintiff, without more, “does not confer jurisdiction in the absence of Case 2:16-cv-02767-EGS Document 76-1 Filed 08/29/16 Page 7 of 19 8 purposeful availment or acts by a defendant targeted at the forum.” Id.; see also Walden v. Fiore, 134 S. Ct. 1115, 1121 (2014) (“the proper question is not where the plaintiff experienced a particular injury or effect but whether the defendant’s conduct connects him to the forum in a meaningful way.”) The Third Circuit’s decision in Remick v. Manfredy, 238 F.3d 248 (3d Cir. 2001), is directly on point. In Remick, the defendant sent two allegedly libelous letters into Pennsylvania. Thus, unlike the instant case, in Remick publication actually occurred in Pennsylvania. Nevertheless, the Third Circuit held the third prong of the test was not satisfied. There was “no indication that the letter was targeted at [the third parties who saw the letter in Pennsylvania] or at anyone in Pennsylvania other than [plaintiff].” Id. at 259. The plaintiff argued that the letters and the charges therein were published throughout the boxing industry, which would include Pennsylvania. However, the Third Circuit found: “Significantly, Remick has not asserted that Pennsylvania has a unique relationship with the boxing industry.” Moreover, “[e]ven if the letter itself, other than merely the charges in the letter as the complaint alleges, were distributed or shared with other persons in the professional boxing community, such persons were apparently located throughout the country. Unlike the defendants in Calder, whose national magazine is published in California more than any other state and whose story focused on California, … it cannot be said that the defendants here expressly aimed their conduct at Pennsylvania so that Pennsylvania was the focal point of the tortious activity.” Id. The same is true here. Lancaster has not alleged any unique relationship between Pennsylvania and the food manufacturing industry. And while Lancaster’s Counterclaim alleges that Ms. Magee “published her statements to [Lancaster’s] peers, business associates, and prospects,” no special focus on Pennsylvania is Case 2:16-cv-02767-EGS Document 76-1 Filed 08/29/16 Page 8 of 19 9 alleged. Indeed, Lancaster not even alleged that any of those “peers, business associates, and prospects” were in Pennsylvania. Recent authority from this district emphasizes that Ms. Magee’s position regarding personal jurisdiction is correct. In Sugartown Worldwide, LLC v. Shanks, No. 14-5063, 2016 U.S. Dist. LEXIS 60239 (E.D. Pa. May 6, 2016), the Court discussed the Calder effects test in light of the Supreme Court’s 2014 decision in Walden, supra.. The Sugartown Court emphasized: “Our Court of Appeals cautions ‘the effects test prevents a defendant from being haled into a jurisdiction solely because the defendant intentionally caused harm that was felt in the forum state if the defendant did not expressly aim his conduct at that state.’” Id. at *15 (quoting IMO, 155 F.3d at 255-56 (3d Cir. 1998)). The Court also relied on the holdings of two other courts of appeals for the propositions that “Walden reinforces that personal jurisdiction may not rest solely on the fact that a defendan’s conduct affected the plaintiff in the forum state,”1 and that an insurance company’s “decision not to defend a case in Ohio, admittedly affecting an Ohio resident and after selling an insurance policy to a company doing business in Ohio, is not purposeful activity under Walden.”2 Id. at *17-*19. Accordingly, the Sugartown Court stated: “Under Walden, we focus our inquiry on [Defendant’s] contacts with Pennsylvania, mindful our conclusion cannot rest on [Plaintiff’s] location in Pennsylvania.” Id. at *20 (emphasis added). The Sugartown Court ultimately found insufficient contacts between the defendant and Pennsylvania: 1 Anzures v. Flagship Restaurant Group, No. 15-1332, 2016 U.S. App. LEXIS 7314, at *11-*12 (10th Cir. Apt. 22, 2016) (citing Rockwood Select Asset Fund XI (6)-1, LLC v. Devine, Millimet & Branch, 750 F.3d 1178, 1180 (10th Cir. 2014) (“Walden teaches that personal jurisdiction cannot be based on interaction with a plaintiff known to bear a strong connection to the forum state.”). 2 Maxitrate Tratamento Termico e Cortroles, v. Super Sys., Inc., 617 Fed. App’x 406, 408-09 (6th Cir. 2015). Case 2:16-cv-02767-EGS Document 76-1 Filed 08/29/16 Page 9 of 19 10 [Plaintiff’s] argument [Defendant] intended to cause harm to [Plaintiff] in Pennsylvania does not, after Walden, create jurisdiction here. While jurisdiction may be appropriate on an alter ego theory, absent an evidentiary basis to find [Defendant] is an alter ego of a defendant over whom we have jurisdiction, we cannot extend due process under Walden to include a [foreign] business owner who has no activity directed to this forum in Pennsylvania. To do so would improperly attribute [Plaintiff’s] address in Pennsylvania to [Defendant] and “mak[e] those connections ‘decisive’ in the jurisdictional analysis.” Id. at *24-*25. Ultimately, the predicate for Lancaster’s claim of jurisdiction over Ms. Magee is the fact that Lancaster is located in Pennsylvania. “If this Court agreed with [Lancaster], then every plaintiff would be able to litigate in its home forum, pursuant to the Calder effects test. Such a broad interpretation of the Supreme Court’s personal jurisdiction jurisprudence is neither logical nor prudent.” Fantis Imports, Inc. v. Hellas Import, Ltd., No. 07-0544, 2008 U.S. Dist. LEXIS 32086, at *20 (D.N.J. Apr. 18, 2008). Accordingly, the claim against Ms. Magee must be dismissed for lack of personal jurisdiction. II. LANCASTER FAILS TO STATE A CLAIM AGAINST MS. MAGEE. A. Standard of Review Under Rule 12(b)(6) A complaint may be dismissed under Rule 12(b)(6) for “failure to state a claim upon which relief can be granted.” Connelly v. Lane Constr. Corp., 809 F.3d 780, 786 (3d Cir. 2016). “To 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.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation and internal quotation marks omitted). “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.” Although the plausibility standard “does not impose a probability requirement,” Bell Atl. Co. v. Twombly, 550 U.S. 544, 556 (2007), it does Case 2:16-cv-02767-EGS Document 76-1 Filed 08/29/16 Page 10 of 19 11 require a pleading to show “more than a sheer possibility that a defendant has acted unlawfully,” Iqbal, 556 U.S. at 678. A complaint that pleads facts “merely consistent with a defendant’s liability ... stops short of the line between possibility and plausibility of entitlement to relief." Id. (citation and internal quotation marks omitted). The plausibility determination is “a context- specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id. at 679. Under the pleading regime established by Twombly and Iqbal, a court reviewing the sufficiency of a complaint must take three steps. Connelly, 809 F.3d at 787. First, it must “tak[e] note of the elements [the] plaintiff must plead to state a claim.” 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. at 679; see also Burtch v. Milberg Factors, Inc., 662 F.3d 212, 224 (3d Cir. 2011) (“Mere restatements of the elements of a claim 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.” Iqbal, 556 U.S. at 679. B. Counts I and II: Breach of Contract A plaintiff must plead the existence of three elements in order to state a claim for breach of contract under Pennsylvania law: (1) the existence of a contract, including its essential terms; (2) a breach of a duty imposed by the contract; and (3) resultant damages. See Bishop v. GNC Franchising LLC, 403 F. Supp. 2d 411, 416 (W.D. Pa. 2005). Lancaster’s first breach of contract counterclaim, Count I, is predicated on Dalmatia breaching an unspecified “agreement” by demanding that Lancaster “alter and amend the agreed upon formulas and recipes, which Lancaster did in the course of its performance” of some Case 2:16-cv-02767-EGS Document 76-1 Filed 08/29/16 Page 11 of 19 12 unspecified arrangement, causing Lancaster to incur costs and damages in excess of $526,050. (Doc. No. 62 ¶¶ 67-70). Whatever contract Lancaster asserts was breached-and, after reading this latest iteration of the Counterclaim, that remains a mystery to Dalmatia-it is clear that nowhere is Ms. Magee, as opposed to Dalmatia, alleged to have entered into any agreement, contract, or arrangement with Lancaster. The allegations in the count do not mention Ms. Magee. The “arrangement” at issue was allegedly between Lancaster and Dalmatia. Id. ¶ 68. It was Dalmatia that allegedly ordered the changes resulting in the alleged damages. Id. ¶ 69. The damages were allegedly the “proximate result of Dalmatia’s breach.” Id. at 70. Lancaster alleges no breach by Ms. Magee. Lancaster’s second breach of contract counterclaim, Count II, is predicated on an alleged breach of “purchase orders,” which Lancaster apparently believes constitute contracts. But the purchase orders were allegedly between Dalmatia and Lancaster. Lancaster does not allege that Ms. Magee was a party to the purchase orders. Lancaster’s theory of “breach” appears to be that Dalmatia somehow “breached” the purchase orders by cancelling them or by withdrawing them. (Doc. No. 62 at ¶¶ 47-52) In any event, Lancaster does not alleged that Ms. Magee breached a purchase order agreement. Ms. Magee is not even mentioned in any factual allegations regarding the purchase orders, nor is she mentioned in the count itself. Id. ¶¶ 71-76. All of the allegations are directed toward Dalmatia. Because Lancaster has failed to allege that Ms. Magee (as opposed to Dalmatia) was a party to any contract or committed any breach, Counts I and II should be dismissed as to Ms. Magee. Case 2:16-cv-02767-EGS Document 76-1 Filed 08/29/16 Page 12 of 19 13 C. Count III: Trade Libel and Slander / Commercial Disparagement Lancaster calls its third Counterclaim “Trade Libel and Slander / Commercial Disparagement.” Those are two different names for the same tort. See, e.g., Brunson Communs., Inc. v. Albriton, Inc., 239 F. Supp. 2d 550, 576 (E.D. Pa. 2002) (“The tort at issue here is variously referred to as ‘trade libel,’ ‘commercial disparagement,’ and ‘injurious falsehood.’”); Rolite, Inc. v. Wheelabrator Envtl. Sys., 958 F. Supp. 992, 1011 (E.D. Pa. 1997) (“commercial disparagement (a.k.a. trade libel)”); Zerpol Corp. v. DMP Corp., 561 F. Supp. 404, 408 (E.D. Pa. 1983) (“But, in addition to charging trade libel, more commonly known as commercial disparagement ....”). Regardless of its label, the publication of a disparaging statement concerning the business of another is only actionable under Pennsylvania law where: (1) the statement is false; (2) the publisher either intends the publication to cause pecuniary loss or reasonably should recognize that publication will result in pecuniary loss; (3) 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 Mfg., Inc. v. Tribune Rev. Newspaper Co., 809 A.2d 243, 246 (Pa. 2002). Lancaster’s Counterclaim fails to satisfy the third element: that “pecuniary loss does in fact result” from the alleged defamation. Id. Lancaster alleges that Ms. Magee’s “false statements were directly injurious to [Lancaster’s] business interests and resulted in significant business losses,” (Doc. No. 62 ¶ 61) and further alleges that “[a]s a result, [Lancaster] suffered substantial damages, including, but not limited to, losses in customer good will, future business prospects, additional charges from subcontractors relating to delay in relocation of the business, payment of two leases, and monetary losses.” But those are conclusory statements. They do nothing more than recite the Case 2:16-cv-02767-EGS Document 76-1 Filed 08/29/16 Page 13 of 19 14 elements of commercial disparagement. See Mallory v. S&S Publishers, No. 14-5702, 2016 U.S. Dist. LEXIS 31065, at *31-*32 (E.D. Pa. Mar. 9, 2016) (“Her allegation of ‘financial loss and lost opportunity’ is conclusory and essentially a repetition of an element of the cause of action.”). The allegations do not contain any purported facts that could bring them into the zone of plausibility. Lancaster does not allege any facts connecting the allegedly defamatory statements to its failure to pay its leases, or to additional charges from subcontractors. Lancaster’s commercial disparagement claim, therefore, does not meet the Twombly and Iqbal standards. Moreover, to state a claim for commercial disparagement, Lancaster must meet a higher pleading standard than that imposed by Twombly and Iqbal. Under Pennsylvania law, a plaintiff claiming commercial disparagement must plead damages with considerable specificity. KDH Elec. Sys., Inc. v. Curtis Tech. Ltd., 826 F. Supp. 2d 782, 806 (E.D. Pa. 2011). Specifically, the plaintiff must set out “the names of customers lost and financial loss resulting from the tort.” Id.; see also Swift Bros. v. Swift & Sons, 921 F. Supp. 267, 276 (E.D. Pa. 1995) (“However, the court notes that Pennsylvania law requires that a plaintiff claiming commercial disparagement plead damages with considerable specificity. Under this rule, the plaintiff ‘must in his complaint set out the names of his lost customers and show by figures how much he has lost financially.’”) (citation omitted); Testing Sys. v. Magnaflux Corp., 251 F. Supp. 286, 290-91 (E.D. Pa. 1966) (discussing the requirement of pleading commercial disparagement damages with particularity). This requirement is in force “[e]ven where the liberal federal pleading rules apply.” Forum Publications, Inc. v. P.T. Publishers, Inc., 700 F. Supp. 236, 243-244 (E.D. Pa. 1988); see also Correctional Med. Care, Inc. v. Gray, No. 07-2840, 2008 U.S. Dist. LEXIS 6596 (E.D. Pa. Jan. 30, 2008) (“Furthermore, plaintiffs have not alleged with any plausibility that pecuniary loss resulted from the email. They have provided no factual allegations of causation and no factual Case 2:16-cv-02767-EGS Document 76-1 Filed 08/29/16 Page 14 of 19 15 allegations of particular customers or contracts lost because of this email.”). Lancaster has plainly not pled with the required particularity. When this issue was previously briefed, Lancaster argued that Ms. Magee’s statements were defamatory per se and that therefore the higher pleading standard from the authority above does not apply. Lancaster cited Bro-Tech Corp. v. Thermax, Inc., 651 F. Supp. 2d. 378, 416 (E.D. Pa. 2009), for the proposition that a plaintiff must only prove general damages. However, Lancaster’s argument was soundly rejected, and Bro-Tech distinguished, in Synthes, Inc. v. Emerge Medical, Inc., in which the court wrote: In a final effort to avoid this outcome, Emerge contends that the litigation letters rise to the level of defamation per se, meaning that it need only prove general damages, which it has done via its expert report. This theory, however, is legally incorrect. “Defamation and disparagement are two distinct torts. . . . While alike in many respects, there are important differences between the two. … These differences are largely explained by the interests the two torts are intended to protect. The action for defamation serves to protect one’s interest in character and reputation. The cause of action for disparagement, on the other hand, protects economic interests by providing a remedy to one who suffers pecuniary loss from slurs affecting the marketability of his goods. Because the tort of disparagement protects against pecuniary loss, the elements of the cause of action are much more stringent than those for defamation.” As Emerge has never alleged defamation in its counterclaim, and the Court will not allow it to amend its counterclaim at this juncture simply because it cannot prove the special damages required for its trade libel claim. . . . The cases on which Emerge relies in an effort to convert its trade libel case into a defamation per se claim are inapposite. In Bro- Tech Corp. v. Thermax, Inc., 651 F. Supp. 2d 378 (E.D. Pa. 2009), the court merely noted that the specific damage requirement was relaxed where the disparagement rises to the level of defamation per se, but suggested that a plaintiff must actually claim defamation per se to take advantage of that rule. Id. at 416. In any event, the court in that case dismissed the commercial disparagement claim for failure to establish damages. Case 2:16-cv-02767-EGS Document 76-1 Filed 08/29/16 Page 15 of 19 16 Moreover, in both Municipal Revenue Serv., Inc. v. Xspand, Inc., 700 F. Supp. 2d 692, 707 (M.D. Pa. 2010) and U.S. Healthcare, Inc. v. Blue Cross of Greater Phila., 898 F.2d 914, 923-24 (3d Cir. 1990), the plaintiffs had actually pled both a defamation claim and a commercial disparagement claim. Nothing in these cases suggested that a commercial disparagement claim may be converted into a defamation claim, even where no defamation claim has been pled, simply because the statement forming the basis of the disparagement claim may rise to the level of defamation. 2014 U.S. Dist. LEXIS 79895, at *49-*51 & n.9 (E.D. Pa. June 11, 2014) (quoting Zerpol, 561 F. Supp. at 408). Just as in Synthes, Lancaster has not pled defamation per se, which is a different tort from commercial disparagement / trade libel. It cannot convert its claim to a defamation per se claim now. This is particular so because all of this was briefed and argued previously. Given the opportunity to amend its claims for a third time, Lancaster still did not bring a cause of action for defamation per se or cure the deficiency that plagued its previous pleading. Lancaster’s Counterclaim identifies no lost customers, no lost sales, and no specific financial loss of any kind. There is no standard under which Lancaster’s commercial disparagement claim can survive. D. Count IV: Unjust Enrichment “Unjust enrichment is … an equitable doctrine with the following elements: benefits conferred on one party by another, appreciation of such benefits by the recipient, and acceptance and retention of these benefits under such circumstances that it would be inequitable or unjust for the recipient to retain the benefits without payment of value.” Allegheny Gen. Hosp. v. Phillip Morris, Inc., 228 F.3d 429, 447 (3d Cir. 2000) (quoting 16 SUMMARY OF PA. JUR. 2D COMMERCIAL LAW § 2.2 (1994) (brackets omitted). When the benefit as provided incidental to Case 2:16-cv-02767-EGS Document 76-1 Filed 08/29/16 Page 16 of 19 17 the performance of a duty, and when the recipient had no reasonable expectation of payment, unjust enrichment and quantum meruit claims fail as a matter of law. Id. at 447-48. Lancaster states no claim for unjust enrichment against Ms. Magee. Lancaster alleges that it “conferred a benefit on Dalmatia,” not Ms. Magee. (Doc. No. 62 ¶ 87). Lancaster alleges that “Dalmatia knowingly accepted and retained the benefits derived from [Lancaster’s] substantial expenditure of time and resources,” not Ms. Magee. Id. ¶ 89. Lancaster alleges: “Dalmatia has failed and refused to repay [Lancaster] for the fair value of the benefit which [Lancaster] has conferred upon Dalmatia.” Lancaster makes no such allegation regarding Ms. Magee. Lancaster alleges: “Dalmatia has been unjustly enriched at [Lancaster’s] expense and [Lancaster] is entitled to recover in quantum meruit for the value of the benefit [Lancaster] conferred upon Dalmatia.” Id. ¶ 91. Again, Lancaster makes no such allegation regarding Ms. Magee. Accepting all of Lancaster’s allegations as true, Lancaster has failed to state a claim for unjust enrichment against Ms. Magee. E. Count V: Declaratory Judgment In Count V, Lancaster asserts that “real and actual controversy exists between the parties and questions have arisen regarding the applicability of the Supply Agreement which ought to be decided by this Court in order to safeguard the rights of the parties, including LFF, which has a substantial present interest in the relief sought.” Id. at 16. The controversy, however, exists between Lancaster and Dalmatia, not Ms. Magee. Ms. Magee is not alleged to be-and is not-a party to the Supply Agreement. She has not invoked, and is not alleged to have invoked, the Supply Agreement. She has not sought relief under the Supply Agreement. Case 2:16-cv-02767-EGS Document 76-1 Filed 08/29/16 Page 17 of 19 18 Ms. Magee is not personally a party to the disputes involving the Supply Agreement and should not be a party to a declaratory judgment proceeding. CONCLUSION Ms. Magee respectfully request that the Court grant her motion to dismiss. She is not subject to jurisdiction in Pennsylvania, and in any event, Lancaster has failed to state any claim against Ms. Magee upon which relief can be granted. Respectfully submitted, /s/ Michael S. Nadel Samuel E. Cohen (Pa. ID# 204617) GROSS MCGINLEY, LLP 33 South Seventh Street, PO Box 4060 Allentown, Pennsylvania 18105 (610) 820-5450 Lauren E. Handel FOSCOLO & HANDEL PLLC 75 Washington Valley Road #416 Bedminster, New Jersey 07921 (908) 206-4103 Michael S. Nadel MCDERMOTT WILL & EMERY LLP 500 North Capitol Street, N.W. Washington, D.C. 20001 (202) 756-8000 Attorneys for Counterclaim Defendant Maia Magee Case 2:16-cv-02767-EGS Document 76-1 Filed 08/29/16 Page 18 of 19 CERTIFICATE OF SERVICE I hereby certify that on August 29, 2016 a true and correct copy of the foregoing was filed electronically using the CM/ECF system. As such, this document was served on all counsel who have consented to electronic service, including as follows: Counsel for Defendant Lancaster Fine Foods, Inc., Earth Pride Organics, and Michael S. Thompson: George J. Krueger, Esq. Brian Berkley, Esq. Alexandra C. Scanlon, Esq. FOX ROTHSCHILD LLP 2000 Market Street, 20th Floor Philadelphia, Pennsylvania 19103 Counsel for Defendant FoodMatch, Inc.: Richard Feldman, Esq. Michael Smith, Esq. ROSENBERG FELDMAN SMITH, LLP 551 Fifth Avenue, Floor 24 New York, New York 10176 /s/ Michael S. Nadel Michael S. Nadel Case 2:16-cv-02767-EGS Document 76-1 Filed 08/29/16 Page 19 of 19 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA DALMATIA IMPORT GROUP, INC., and : MAIA MAGEE, : : Plaintiffs, : CIVIL ACTION NO. 16-2767 : v. : : FOODMATCH, INC., LANCASTER FINE : FOODS, INC., EARTH PRIDE ORGANICS, : LLC, and MICHAEL S. THOMPSON, : : Defendants. : DECLARATION OF MAIA MAGEE IN SUPPORT OF MOTION TO DISMISS COUNTERCLAIMS I, Maia Magee, declare as follows under penalty of perjury: 1. I am the President and the indirect holder of a fifty percent (50%) interest in Dalmatia Import Group, Inc. (“Dalmatia”). Having personal knowledge of the facts stated below, I make this declaration in further support of my motion to dismiss the counterclaims of Lancaster Fine Foods, Inc. asserted against me personally. 2. I own no property in the Commonwealth of Pennsylvania. 3. I have had no business dealings in Pennsylvania other than in my capacity as President and owner of Dalmatia, which contracted with Lancaster Fine Foods, Inc. to manufacture Dalmatia fig spread. 4. Apart from recent visits to Easton, Pennsylvania for purposes of attending the proceedings in this case, I have not been to Pennsylvania at all in the last five years. 5. In my capacity as President of Dalmatia, I visited Beanies of Lancaster and Lancaster Fine Foods on several occasions for purposes of business meetings. As best I recall, I Case 2:16-cv-02767-EGS Document 76-2 Filed 08/29/16 Page 1 of 2 2 went to Lancaster less than ten times between 2007 and 2011. The last time I visited Lancaster was in about April 2011. 6. I also went to Pennsylvania for Thanksgiving dinners with a friend’s family on two occasions at least seven years ago. 7. I have had no other contacts with the Commonwealth of Pennsylvania. I declare under penalty of perjury that the foregoing is true and correct. Dated: August 28, 2016 Case 2:16-cv-02767-EGS Document 76-2 Filed 08/29/16 Page 2 of 2 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA DALMATIA IMPORT GROUP, INC., and : MAIA MAGEE, : : Plaintiffs, : CIVIL ACTION NO. 16-2767 : v. : : FOODMATCH, INC., LANCASTER FINE : FOODS, INC., EARTH PRIDE ORGANICS, : LLC, and MICHAEL S. THOMPSON, : : Defendants. : ORDER Before the court is the motion by Maia Magee to dismiss any counterclaims against her by Lancaster Fine Foods, Inc. Having fully considered the parties’ agreements, the court GRANTS the motion. Maia Magee is not subject to personal jurisdiction in Pennsylvania. Additionally, Lancaster Fine Foods, Inc. has failed to plead any counterclaim against Maia Magee upon which relief can be granted. Accordingly it is ORDERED that the counterclaims of Lancaster Fine Foods, Inc., against Ms. Magee are DISMISSED WITH PREJUDICE. It is further ORDERED that Maia Magee’s name shall be removed from the caption. In the future, Dalmatia Import Group, Inc. shall be listed as the sole plaintiff. SO ORDERED. Case 2:16-cv-02767-EGS Document 76-3 Filed 08/29/16 Page 1 of 1