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Square D Co. v. Scott Electric Co.

May 16, 2008

SQUARE D COMPANY, PLAINTIFF,
v.
SCOTT ELECTRIC COMPANY, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Judge Nora Barry Fischer

MEMORANDUM ORDER

This matter is before the Court on Square D Company's Motion to Dismiss Globe Electric's Amended Counterclaims [166], filed by Plaintiff Square D Company on March 24, 2008, in which Square D moves for dismissal of Defendant Globe Electric Supply Company's amended counterclaims sounding in (1) fraudulent misrepresentation and (2) tortious interference with business.

Briefly, the relevant factual and procedural background pertinent to the instant motion are as follows.*fn1 Square D is a leading manufacturer and supplier of electrical distribution products for both consumer and commercial applications and Defendant Globe sells electrical components, including circuit breakers. This case involves the alleged purchase and importation as well as sale and distribution of counterfeit circuit breakers by (among others) Defendant Globe. On November 28, 2007, Plaintiff Square D filed a Second Amended Complaint, in which Plaintiff added two additional defendants: Any Electric, LLC and Steven Mandel. On December 26, 2007, Defendant Globe filed its Verified Answer, Counterclaim and Cross Claim (Docket No. 125), in which it asserted two counterclaims against Plaintiff. Ruling on Square D Company's Motion to Dismiss Globe Electric's Counterclaims (Docket No. 133), on February 15, 2008, the Court issued a Memorandum Order, granting Square D's first motion to dismiss and dismissing without prejudice Globe's counterclaims but granting leave to re-file. On March 10, 2008, Globe filed its Verified Answer, Amended Counterclaim and Cross Claim (Docket No. 159), which precipitated the instant motion to dismiss, the second from Plaintiff Square D as to Globe's counterclaims.

STANDARD

Under Bell Atl. Corp. v. Twombly, 127 S.Ct. 1955 (2007), a claim must be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6) if the Plaintiff fails to allege "enough facts to state a claim to relief that is plausible on its face." Twombly, 127 S.Ct. at 1963 (abrogating "no set of facts" language found in Conley v. Gibson, 355 U.S. 41, 45-46 (1957)). See Phillips v. Count of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008) (declining to read Twombly "so narrowly as to limit its holding on plausibility to the antitrust context" and noting that plausibility is related to the requirement of a Rule 8 "showing").*fn2 As still required post-Twombly, the Court accepts all well-pled material allegations in Defendant's Counterclaim as true and draws all reasonable inferences therefrom in her favor. Id. at 1964-65 & 1969 n.8. See McCliment v. Easton Area School Dist., Civil Action No. 07-0472, 2007 WL 2319768, at *1 (E.D. Pa. Aug. 10, 2007) (citing Graves v. Lowery, 117 F.3d 723, 726 (3d Cir. 1997) ("In determining the sufficiency of the complaint the court must accept all of plaintiffs' well-pled material allegations as true and draw all reasonable inferences therefrom in favor of plaintiffs")). A complaint will be deemed to have alleged sufficient facts if it adequately puts the plaintiff on notice of the essential elements of defendant's claims. Nami v. Fauver, 82 F.3d 63, 65 (3d Cir. 1996). 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). Nor must the court accept legal conclusions set forth as factual allegations. Bell Atlantic Corp., 127 S.Ct. at 1965 (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." Id.

ANALYSIS

In its motion, Plaintiff Square D moves to dismiss with prejudice Globe's counterclaims for misrepresentation and tortious interference with business relations. The Court will address each counterclaim in turn.

1. Misrepresentation

Pennsylvania recognizes three different types of misrepresentation: intentional misrepresentation, negligent misrepresentation, and innocent misrepresentation. Coronado Condominium Ass'n, Inc. v. Iron Stone Coronado, L.P., No. 2691 DEC, TERM 2004, 2005 WL 3036541, at *2 (Pa.Com.Pl. Nov. 7, 2005) (citing Bortz v. Noon, 729 A.2d 555, 560 (Pa. 1999)). While Globe fails to specify the nature of its misrepresentation counterclaim, Globe appears to assert a counterclaim for intentional misrepresentation and the Court will construe it as such.*fn3 (See Docket No. 159 at ¶¶18, 33, & 37).

Under Pennsylvania law, the elements for intentional misrepresentation are equivalent to that of fraud: "(1) a representation; (2) which is material to the transaction at hand; (3) made falsely, with knowledge of its falsity or with 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) injury resulting and proximately caused by the reliance." Freedom Medical Inc. v. Gillespie, 2007 WL 2480056, at *20 (E.D. Pa. 2007) (citing Gibbs v. Ernst, 647 A.2d 882 (Pa. 1994)). As such, the heightened pleading standard under Rule 9(b) applies, to which the Court now turns.*fn4 See Guaranty Towers, LLC v. Cellco Partnership, Civil No. 1:CV-07-0554, 2007 WL 2617651, at *5 (M.D. Pa. Sept. 6, 2007) (applying Rule 9(b) to an intentional misrepresentation claim).

Rule 9(b) requires the following: "In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person's mind may be alleged generally." Fed.R.Civ.P. 9(b). The purpose of Rule 9(b) is "to place the defendants on notice of the precise misconduct with which they are charged, and to safeguard defendants against spurious charges of immoral and fraudulent behavior." Seville Industrial Machinery Corporation v. Southmost Machinery Corporation, 742 F.2d 786, 791 (3d Cir. 1984); see also In re Burlington Coat Factory, 114 F.3d at 1418 ("Rule 9(b)'s heightened pleading standard gives defendants notice of the claims against them, provides an increased measure of protection for their reputations, and reduces the number of frivolous suits brought solely to extract settlements"). To comply with Rule 9(b), the allegations in a complaint must provide the "who, what, when, where, and how: the first paragraph of a newspaper story would satisfy the particularity requirements." Sun Company, Inc., 939 F.Supp. at 369 (citation omitted). For example, a plaintiff may satisfy Rule 9(b)'s particularity requirement by pleading the "date, place or time" of the fraud, or "through alternative means of injecting precision and some measure of substantiation into their allegations of fraud." Lum v. Bank of America, 361 F.3d 217, 223-224 (3d Cir. 2004) (quoting Seville, 742 F.2d at 791).

From a general perspective, Globe's counterclaim for intentional misrepresentation falls far short of the level of specificity required by Rule 9(b). More specifically, as pointed out by Plaintiff Square D, only two paragraphs in Globe's Counterclaim even vaguely resemble an allegation of intentional misrepresentation.*fn5

First, Globe asserts the following against Square D:

PLAINTIFF intentionally misrepresented the foregoing information wrongfully alleging, with no good faith basis, or any basis at all, that GLOBE imported SQUARE D product from China, had documentary evidence in support thereof, which upon production was the same documents as disclosed at the 'settlement conference' and which did not, in any way, ...


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