defect be corrected through an amendment to the caption of this case.
The claims based on events occurring before September 1984 all involve rights and duties running between the two partners and the partnership. These claims include the claims by each partner that the other misused partnership assets; James Swift's claim that Robert Swift diverted business from the partnership; and the dispute between the two partners as to their respective entitlements to partnership assets.
All of these claims must be brought as elements of the outstanding claim for an accounting. As a general rule, actions between partners, or between partners and their partnership, for enforcement of rights and duties deriving from the partnership relationship "may be brought only in an accounting action." Alan R. Bromberg & Larry R. Ribstein, 2 Bromberg and Ribstein on Partnership § 6.08 at 6:102 (1991). This rule has widely been found applicable to actions alleging diversion or misuse of partnership assets, see, e.g., Institutional Management v. Translation Systems, 456 F. Supp. 661, 665 (D. Md. 1978). Although the courts of the Commonwealth of Pennsylvania have not articulated this rule explicitly, they routinely treat claims of partners' breach of partnership obligations as matters to be resolved in equity.
The accounting claim will, of course, be tried to the court, not to a jury. See Kline Hotel Partners v. Aircoa Equity Interests, 729 F. Supp. 740, 743 (D. Colo. 1990) ("[A] partnership accounting is equitable and thus no right to a jury trial attaches"); see also Ross v. Bernhard, 396 U.S. 531, 532-33, 24 L. Ed. 2d 729, 90 S. Ct. 733 (1970) (noting that there is no Seventh Amendment jury trial right for suits in equity or their present-day equivalents). The parties have not yet addressed the question of the respective shares of Swift Brothers' assets to which the partners were entitled. It would appear, however, that, after the satisfaction of any outstanding amounts owed to the partnership's creditors and to the partners, the remaining assets of the partnership would be profits to be divided equally between the former partners, in accordance with their agreement that profits are to be divided equally.
The partnership's property would of course include such items as the cash in the partnership's bank account as of dissolution, its equipment, its real property, its then-existing contracts with clients, and the partnership's goodwill.
The accounting would take into account any items taken or retained by each of the two partners at the partnership's dissolution. As to James Swift, this would include, for instance, any clients that Swift Brothers retained, any supplies not removed by Robert Swift, and the partnership's real estate. As to Robert Swift, Sr., this might include the working supplies, car, and office furniture that he allegedly took upon departure, as well as any clients that he induced (by whatever means) to shift to his business. There may be some difficulties in establishing precisely how many of Swift Brothers' former clients are now clients of Swift and Sons, as Swift and Sons claims not to maintain any records of its customer base, Plaintiff's Exhibits at 3-5, a remarkable, but perhaps not impossible, claim. It will also be necessary to ascertain what the dollar income associated with each client was, as customers are best measured in terms of their contribution to the partnership's income stream.
The allocation of the firm's goodwill between the two partners presents special difficulties. Swift Brothers has not presented any grounds for concluding that James Swift had an exclusive right to continue to use the partnership's name. (Such a right might have been created by agreement between the partners at the establishment of the partnership, for instance, or by agreement upon distribution of the partnership's assets.) Thus, both partners were equally entitled to describe the firms they operated following the partnership's dissolution as successors of Swift Brothers, and so to make use of the goodwill associated with the partnership's name. See Bromberg & Ribstein, supra, at § 7.11-7.12. James Swift in fact continued to use the name Swift Brothers for his business, apparently without objection from Robert Swift, and so may have retained more of the partnership's goodwill than did Robert Swift.
The partnership's customer records also require some discussion. Ordinarily, in the absence of an agreement to the contrary, partners have an equal right to use a partnership's customer records following dissolution. See Bromberg & Ribstein, supra, at § 7.12. In the present case, the plaintiff alleges that Robert Swift, Sr. took the partnership's records in their entirety upon his departure. Robert Swift asserts that it was possible to reconstruct these records from other documents available at the partnership's offices. Even if this is the case, James Swift may be able to argue that he should be compensated for the cost, difficulty, and unreliability of this task.
The accounting will also take into account the claims of pre-dissolution wrongful conduct made by the two partners against one another. This would include James Swift's claim that Robert Swift diverted partnership income and business to his own use, and Robert Swift's claim that James Swift withdrew more money from the partnership than he was entitled to withdraw. These claims are best characterized as breaches of obligations issuing from the partnership relationship (that is, as breaches of fiduciary duties), rather than in terms of the menagerie of economic tort claims made by the plaintiff.
The defendants question whether James Swift can present evidence to support his claim that Robert Swift was diverting income and business from the partnership. It appears that, at least for purposes of the present summary judgment motion, he can. The plaintiff provides two pieces of evidence to support his claim. The first is the affidavit of William Schrope, described above at footnote 3, which states that, nine months before Robert Swift left Swift Brothers, Schrope asked him to arrange for Swift Brothers to clean Schrope's property, but that Robert Swift in fact did the work independently, and billed him for it after leaving Swift Brothers. The second is the affidavit of Larry Johnson describing the "secret jobs" allegedly conducted by Robert Swift. See Affidavit of Larry Johnson, Plaintiff's Exhibits at 49. The defendants assert that the plaintiff has presented no evidence that these jobs were in fact secret. This claim is entirely unconvincing. The affidavit states, for instance, that Robert Swift maintained duplicate sets of books, a claim that amply suffices to indicate that the work in question was intended to be secret from James Swift.
The resolution of some aspects of the accounting claim will require considerable financial expertise, and it is unclear at present what evidence will be presented to dispose of these questions. By agreement of the parties, a firm named Value Management, Incorporated has prepared a report on the value of Swift Brothers as of September 4, 1984. This document, and any additional materials submitted by the parties, will presumably shed some light upon the partnership's assets upon its dissolution. There remain, however, many unanswered financial questions, such as the value of the partnership's goodwill, which will presumably be clarified as this matter proceeds.
III. Events Occurring After Robert Swift's Departure from Swift Brothers
The remainder of the claims in this case consist of a series of economic tort claims -- and a Lanham Act claim, which is essentially the federal equivalent of an economic tort claim -- based upon three alleged incidents or categories of incidents occurring after Robert Swift, Sr.'s departure from Swift Brothers. These are: (1) the advertisements placed by Swift and Sons in the Chestnut Hill Local and the Donnelly Directory; (2) James Swift's reports from his customers that they had been told by Robert Swift, Sr. that James Swift had retired or moved to Chicago and that Swift Brothers was no longer in existence; and (3) Alan Swift's alleged communication of Swift Brothers' customer information to Robert Swift, Sr. These alleged incidents will be discussed in sequence.
A. Swift and Sons' Advertisements
The plaintiff claims that Swift & Sons placed an advertisement in the Chestnut Hill Local that identified the firm as "Swift & Sons, Inc., formerly Swift Brothers," and an advertisement in the Donnelly Directory referring to "25 YEARS OF RELIABILITY, DEPENDABILITY & SERVICE." (The second advertisement is appended to the complaint as Exhibit A; the plaintiff has not provided the court with a copy of the first.) The plaintiff makes claims under the Lanham Act and a number of economic tort claims based upon these two advertisements.
The second advertisement is not false or misleading, and so cannot be actionable under any theory. At the time that the advertisement appeared, Robert Swift had been in the janitorial services business for at least twenty-one years, since Swift Brothers was formed in 1963, and possibly longer, if he had done work in the industry before that date. In any case, the distinction between twenty-one and twenty-five years of experience in the industry would not be meaningful to a reasonable reader.
The first advertisement could be read to be false or misleading, however, in at least one respect. Because it describes Swift and Sons as "formerly" Swift Brothers, it suggests that Swift and Sons is the only successor to the Swift Brothers in which Robert Swift, Sr. was a partner, and that no firm named Swift Brothers still exists. (To the extent that the advertisement suggests only that Swift and Sons is a successor to Swift Brothers, however, it is not actionable.)
The plaintiff have brought two sets of claims based upon this advertisement: a claim under the Lanham Act, and a group of state-law economic tort claims. The two groups of claims will be discussed separately.
1. Lanham Act Claim
The Lanham Act provides that:
Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which
(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, services, or commercial activity, or