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KBT CORP. v. CERIDIAN CORP.

June 2, 1997

KBT CORPORATION, INC. and W. CODY ANDERSON, Plaintiffs,
v.
CERIDIAN CORPORATION and ARBITRON COMPANY, Defendants.



The opinion of the court was delivered by: JOYNER

 JOYNER, J.

 JUNE 2, 1997

 This lawsuit was filed on November 12, 1996, in the Court of Common Pleas of Philadelphia County, and was removed to this Court pursuant to a Joint Notice of Removal filed one month later. Subject matter jurisdiction is proper under 28 U.S.C. § 1332. Before the Court is Defendants' Motion to Dismiss Pursuant to Rules 12(b)(6), 9(b) and 9(g) of the Federal Rules of Civil Procedure, or Alternatively, Motion for More Definite Statement Pursuant to Rules 9(f), 9(g) and 12(e) of the Federal Rules of Civil Procedure, and Motion to Dismiss Plaintiffs' Claim for Punitive Damages (the "Motion to Dismiss"). For the following reasons, the Motion to Dismiss is granted in part and denied in part.

 BACKGROUND

 At all times relevant to this action, Plaintiff W. Cody Anderson ("Anderson") was the sole shareholder of Plaintiff KBT Communications, Inc. ("KBT"), a Pennsylvania corporation with its principal place of business in Philadelphia. KBT, in turn, owned WHAT-AM ("WHAT"), a radio broadcasting station with a listening audience in the Philadelphia metropolitan area. *fn1" Plaintiffs describe WHAT as "ethnically oriented in that its broadcasting and programming are primarily directed to the ethnic tastes, desires and preferences of the African-American radio listening audience in [Philadelphia]." Compl., P 9.

 Defendant Ceridian Corporation ("Ceridian") was at all times relevant to this action a Delaware corporation having its principal place of business in Minnesota. Defendant Arbitron Company ("Arbitron") was a Maryland corporation having its principal places of business in New York and Maryland. According to Plaintiffs, Arbitron merged into and became a part of Ceridian on June 27, 1994. Plaintiffs nonetheless name both Ceridian and Arbitron as parties, thus we will use the plural "Defendants" throughout this Memorandum.

 Plaintiffs allege the following facts, which must be taken as true for present purposes. KBT derives its income by selling WHAT's air time to individuals, corporations and organizations wishing to advertise on the station. Defendants conduct surveys to determine the habits, trends and compositions of radio listening audiences in particular markets. The results of the surveys are published in quarterly reports that Defendants sell to advertisers and advertising agencies across the country. Defendants have achieved virtual "monopoly status within the industry with respect to the content of said reports" as "almost 90% of all advertising purchases are placed based upon the rankings and ratings of [Defendants'] reports." Compl., PP 15, 16.

 Defendants gather information for their surveys by employing a method known as the "diary method" whereby individuals make written notations of their listening habits throughout the day. This method, however, has been "well-known and admitted by the defendants for many years ... [and] scientifically confirmed to be extremely biased and inaccurate in reflecting the habits of the African-American listening audience." Compl., P 22. In fact, in the early 1970's, Defendants admitted as much in an out-of-court settlement of a lawsuit asserting this very claim. As part of this settlement, Defendants agreed to begin gathering information for their surveys through telephone polling. Under this methodology, stations whose programming was geared towards the African-American community "rose to top positions within their markets." Compl., P 24. After several years, however, Defendants reverted to the diary method and stations such as and including WHAT again dropped in their respective rankings. These ratings declines had a direct and negative impact on the amount of advertising time purchased from WHAT and therefore on the income earned by KBT.

 Thus, in this action, Plaintiffs claim that Defendants have compiled surveys using a method they knew to be biased and unreliable, and have therefore knowingly published false and misleading information regarding the listening trends and patterns of Philadelphia's African-American community generally and of WHAT's listening audience in particular. Plaintiffs seek damages for their alleged lost advertising revenue under five Pennsylvania common law theories: trade disparagement, intentional interference with prospective business relationships, interference with business relationships, fraud, and negligence. Plaintiffs also assert a separate claim for punitive damages. We now decide whether Plaintiffs have stated claims upon which relief may be granted.

 DISCUSSION

 Standard for Motion to Dismiss

 In considering a Rule 12(b)(6) motion, a court must primarily consider the allegations contained in the complaint, although matters of public record, orders, items appearing in the record of the case and exhibits attached to the complaint may also be taken into account. Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993). The Court must accept as true all of the allegations in the pleadings and must give the plaintiff the benefit of every favorable inference that can be drawn from those allegations. Schrob v. Catterson, 948 F.2d 1402, 1405 (3d Cir. 1991); Markowitz v. Northeast Land Co., 906 F.2d 100, 103 (3d Cir. 1990). A complaint is properly dismissed only if it appears certain that the plaintiff cannot prove any set of facts in support of its claim which would entitle it to relief. Ransom v. Marrazzo, 848 F.2d 398, 401 (3d Cir. 1988).

 Plaintiff Anderson's Claims

 Defendants move to dismiss all of Anderson's claims because he claims only damages that are derivative of harm to KBT. It is well-settled that a shareholder, director, officer or employee does not have standing as an individual to bring an action against third parties for damages that are derivative of harm to the corporation. Temp-Way Corp. v. Continental Bank, 139 Bankr. 299, 316-17 (E.D.Pa.), aff'd, 981 F.2d 1248 (3d Cir. 1992); Chrysler Credit Corp. v. B.J.M., Jr., Inc., 834 F. Supp. 813, 838 (E.D.Pa. 1993). Plaintiffs respond that Anderson's claims fall within the exception that allows an individual to recover for an injury that is separate and distinct from that incurred by the corporation. See Temp-Way Corp., 139 Bankr. at 317; eds Adjusters, Inc. v. Computer Sciences Corp., 818 F. Supp. 120, 121 (E.D.Pa. 1993).

 We are not persuaded by either of Plaintiffs' two arguments that Anderson's claims fall within this exception. Plaintiffs argue first that Anderson has "suffered economic injury directly to himself which is separate and distinct" because he was at all relevant points KBT's only stockholder. Pls.' Mem. at 10. Plaintiffs cite no authority for this proposition, however, nor is logic in their favor. That Anderson was KBT's sole stockholder means simply that he was the only person to suffer harm derivative of KBT's, not that this harm was in any way separate or distinct from that of the corporation. Plaintiffs argue next that Defendants have harmed Anderson's "status and reputation in the radio industry." Id. Nothing in the Complaint suggests that Anderson asserts such a claim, however, or seeks to recover for any such injuries. Anderson's claims as they now stand are plainly derivative and must be dismissed accordingly. We turn now to KBT's claims.

 Count One: Trade Disparagement

 In Pennsylvania, a commercially disparaging statement is defined as one "which is intended by its publisher to be understood or which is reasonably understood to cast doubt upon the existence or extent of another's property in land, chattels or intangible things, or upon their quality ... if the matter is so understood by its recipient." Menefee v. Columbia Broadcasting Sys., Inc., 458 Pa. 46, 329 A.2d 216, 220 (Pa. 1974)(quoting Restatement of Torts § 629 (1938)); see also Guardian Life Insurance Company of America v. American Guardian Life Assurance Company, 943 F. Supp. 509, 526 (E.D.Pa. 1996)(quoting same). To state a claim for trade disparagement, a plaintiff must allege 1) a disparaging statement of fact that is untrue or a disparaging statement of opinion that is incorrect; 2) that no privilege attaches to the statement; and 3) that the plaintiff suffered a direct pecuniary loss as a result of the disparagement. U.S. Healthcare v. Blue Cross of Greater Philadelphia, 898 F.2d 914, 924 (3d Cir. 1990).

 A. Disparaging Statements

 KBT does not plead any allegedly disparaging statements with particularity, ...


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