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Assembly Technology Inc. v. Samsung Techwin Co.

February 23, 2010

ASSEMBLY TECHNOLOGY INC.
v.
SAMSUNG TECHWIN CO., LTD.



The opinion of the court was delivered by: O'neill, J.

MEMORANDUM

Assembly Technology Inc. ("ATI") alleges that Samsung Techwin Co. tortiously interfered with ATI's contract with a group of third party consultants. On November 16, 2009, I dismissed ATI's amended complaint and granted leave to amend. On December 4, 2009, ATI filed a second amended complaint. Presently before me is Samsung's motion to dismiss the second amended complaint, ATI's response and Samsung's reply. I heard oral argument on February 1, 2010. For the following reasons I will grant Samsung's motion to dismiss.

BACKGROUND

Samsung manufactures and sells high-speed chip mounting machinery. ATI developed and operated software used by Samsung in the manufacturing process and provides consulting services in connection therewith. Moe Tehrani, ATI's president, was employed by Samsung for a period of five years. In 1999, he was encouraged by Samsung to start his own company. As an incentive, Samsung promised to award Tehrani all of its United States-based research and development projects related to semiconductor equipment. As a condition to receiving the exclusive rights to this work, ATI would be prohibited from working for any other company. Shortly thereafter Tehrani founded ATI.

In 2002, ATI contracted with Roy Lee Epp and Advanced Micro Concept (collectively, "consultants") to provide consulting services to ATI. The contracts memorializing the agreement were drafted by Samsung and signed by the consultants and ATI. The consultants continued their business relationship with ATI through January 2, 2007. At all times relevant hereto, the consultants were at-will employees of ATI.*fn1

For the first six years of the relationship between ATI and Samsung, Samsung funded ATI's annual budget. Beginning in 2005, however, the two parties entered into a series of annual agreements that detailed the financial arrangement for the upcoming year. Each agreement set forth the research and development projects to be handled by ATI and fixed ATI's costs, expenses and salaries for the year. Those agreements also fixed the salaries to be paid to the consultants. In 2006, the parties memorialized their agreement in two contracts. The agreement commenced on January 2, 2006 and was to expire fourteen months later. Samsung paid ATI the full amount due--$578,360--for work performed under that contract.

In late 2006, the parties began discussing the 2007 version of the contract. As part of those discussions, Samsung suggested that ATI reduce its project budget by 60%, inclusive of salaries. In December 2006, apparently before the parties could come to an agreement regarding the 2007 version of the ATI-Samsung contract, Samsung advised ATI that the consultants intended to resign from ATI. On January 2, 2007, the consultants formally notified ATI of their resignation. Samsung received a copy of the consultants' resignation letter.

Negotiation of the ATI-Samsung agreement proceeded through the "winter of 2006/2007." However, in "late winter/early spring of 2007," ATI learned that Samsung would not renew the ATI-Samsung agreement. Instead, Samsung hired the consultants to perform the work that theretofore had been performed by ATI.

STANDARD OF REVIEW

Federal Rule of Civil Procedure 12(b)(6) permits a court to dismiss all or part of an action for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). Typically, "a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations," though plaintiff's obligation to state the grounds of entitlement to relief "requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). "Factual allegations must be enough to raise a right to relief above the speculative level on the assumption that all of the allegations in the complaint are true (even if doubtful in fact)." Id., citations omitted. The complaint must state "'enough facts to raise a reasonable expectation that discovery will reveal evidence of' the necessary element." Wilkerson v. New Media Tech. Charter School Inc., 522 F.3d 315, 321 (3d Cir. 2008) (quoting Twombly, 550 U.S. at 556). The Court of Appeals has recently made clear that after Ashcroft v. Iqbal, --- U.S. ---, 129 S.Ct. 1937, 1955, 173 L.Ed. 2d 868 (2009), "conclusory or 'bare-bones' allegations will no longer survive a motion to dismiss: 'threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.' Iqbal, 129 S.Ct. at 1949. To prevent dismissal, all civil complaints must now 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). The Court of Appeals also set forth a two part-analysis for reviewing motions to dismiss in civil actions in light of Twombly and Iqbal: "First, the factual and legal elements of a claim should be separated. The District Court must accept all of the complaint's well-pleaded facts as true, but may disregard any legal conclusions. Second, a District 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 *5 (quoting Iqbal, 129 S.Ct. at 1950). The Court of Appeal explained, "a complaint must do more than allege the plaintiff's entitlement to relief. A complaint has to 'show' such an entitlement with its facts." Id., citing Phillips v. County of Allegheny, 515 F.3d 224, 234-35 (3d Cir. 2008). "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.'" Iqbal, 129 S.Ct. at 1949.

DISCUSSION

I. Legal Standard

A. Absence of Privilege or Justification

In order to state a claim for tortious interference with a business relationship, the plaintiff must allege:

(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 privilege or justification on the part of the defendant; and (4) the occasioning of actual legal damage as a result of the defendant's conduct.

CGB Occupational Therapy, Inc. v. RHA Health Services Inc., 357 F.3d 375, 384 (3d Cir. 2004) (citing Crivelli v. General Motors Corp., 215 F.3d 386, 394 (3d Cir. 2000) and Pawlowski v. Smorto, 588 A.2d 36, 39-40 (Pa. Super. Ct. 1991)).

Disposition of the present motion turns on whether ATI has adequately pled the absence of privilege or justification on the part of the defendant. Samsung argues that the business competitor's privilege applies here. The business competitor's privilege is a qualified privilege for a business to interfere with a competitor's business relationships. See, e.g., Phillips v. Selig, 959 A.2d 420, 431 (Pa. Super. Ct. 2008) (applying the business competitor's privilege). The contours of the privilege are set forth in Section 768 of Restatement (Second) of Torts which provides:

(1) One who intentionally causes a third person not to enter into a prospective contractual relation with another who is his competitor or not to continue an existing contract terminable at will does not interfere improperly with the other's relation if

(a) the relation concerns a matter involved in the competition between the actor and the other and

(b) the actor does not employ wrongful means and

(c) his action does not create or continue an unlawful restraint of trade and

(d) his purpose is at least in part to advance his interest in ...


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