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The Knit With v. Knitting Fever

August 8, 2012

THE KNIT WITH, PLAINTIFF,
v.
KNITTING FEVER, INC., DESIGNER YARNS, LTD., FILATURA PETTINATA V.V.G. DI STEFANO VACCARI & C., SION ELALOUF, DIANE ELOUF, JEFFREY J. DENECKE, JR., JAY OPPERMAN, AND DEBBIE BLISS, DEFENDANTS. THE KNIT WITH, PLAINTIFF,
v.
EISAKU NORO & CO., LTD., KNITTING FEVER, INC., SION ELALOUF, DIANE ELALOUF, AND JAY OPPERMAN, DEFENDANTS.



The opinion of the court was delivered by: Buckwalter, S.J.

MEMORANDUM

Currently pending before the Court are Plaintiff The Knit With's ("TKW") Motion for Summary Judgment on the Counterclaims of Knitting Fever, Inc. and Defendant Knitting Fever, Inc.'s ("KFI") Motion for Summary Judgment on its Counterclaim for Defamation. For the following reasons, both Motions are denied.

I. FACTUAL AND PROCEDURAL HISTORY

After almost four years of litigation and hundreds of docket entries, the factual background of this case is almost rote to both the parties and the Court, and has been reiterated in several of this Court's prior opinions.*fn1 This matter arises between Plaintiff, TKW, a small, family-owned and operated business retailing specialty yarns and accessories to consumers, and multiple Defendants, including: (a) KFI, a New York corporation that imports and distributes specialty yarns; (b) KFI's officers and directors, including Sion Elalouf, Diane Elalouf, Jay Opperman, and Jeffrey J. Denecke, Jr.; and (c) Filatura Pettinata V.V.G. Di Stefano Vaccari & C. ("Filatura"), Debbie Bliss, Designer Yarns, Inc. ("Designer Yarns"), and Eisaku Noro & Co., Ltd., all of whom are non-U.S. entities that design, manufacture, and/or distribute specialty yarns. At the core of the dispute is Plaintiff's claim that KFI sold designer knitting yarns to TKW, misrepresenting the amount of cashmere in the yarns, and that this practice was part and parcel of a larger racketeering conspiracy.

Following extensive motion practice by both parties, the Court has either dismissed or granted summary judgment on the entirety of Plaintiff's Complaint. The sole claims remaining in this action are KFI's counterclaims for defamation and tortious interference with existing and prospective contracts. Plaintiff originally moved for summary judgment on these counterclaims in June 2010. Via a September 10, 2010 Memorandum and Order, the Court found that the defamation and tortious interference claims survived Plaintiff's initial challenges.

On March 30, 2012, Plaintiff filed a second Motion for Summary Judgment on the Remaining Counterclaims and Defendant KFI filed a Cross-motion for Summary Judgment on only the Defamation Counterclaim. Responses, reply briefs, and sur-reply briefs were filed on April 16, 2012, May 21, 2012, and May 31, 2012, respectively. The Motions are now ripe for judicial consideration.

II. STANDARD OF REVIEW

Summary judgment is proper "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c)(2). A factual dispute is "material" only if it might affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). For an issue to be "genuine," a reasonable fact-finder must be able to return a verdict in favor of the non-moving party. Id.

On summary judgment, the moving party has the initial burden of identifying evidence that it believes shows an absence of a genuine issue of material fact. Conoshenti v. Pub. Serv. Elec. & Gas Co., 364 F.3d 135, 145--46 (3d Cir. 2004). It is not the court's role to weigh the disputed evidence and decide which is more probative, or to make credibility determinations. Boyle v. Cnty. of Allegheny, 139 F.3d 386, 393 (3d Cir. 1998) (citing Petruzzi's IGA Supermkts., Inc. v. Darling-Del. Co. Inc., 998 F.2d 1224, 1230 (3d Cir. 1993)). Rather, the court must consider the evidence, and all reasonable inferences which may be drawn from it, in the light most favorable to the non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citing United States v. Diebold, Inc., 369 U.S. 654, 655 (1962)); Tigg Corp. v. Dow Corning Corp., 822 F.2d 358, 361 (3d Cir. 1987). If a conflict arises between the evidence presented by both sides, the court must accept as true the allegations of the non-moving party, and "all justifiable inferences are to be drawn in his favor." Anderson, 477 U.S. at 255.

Although the moving party must establish an absence of a genuine issue of material fact, it need not "support its motion with affidavits or other similar materials negating the opponent's claim." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). It can meet its burden by "pointing out . . . that there is an absence of evidence to support the nonmoving party's claims." Id. at 325. Once the movant has carried its initial burden, the opposing party "must do more than simply show that there is some metaphysical doubt as to material facts." Matsushita Elec., 475 U.S. at 586. "[T]he non-moving party must rebut the motion with facts in the record and cannot rest solely on assertions made in the pleadings, legal memoranda, or oral argument." Berckeley Inv. Group. Ltd. v. Colkitt, 455 F.3d 195, 201 (3d Cir. 2006). If the non-moving party "fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden at trial," summary judgment is appropriate. Celotex, 477 U.S. at 322. Moreover, the mere existence of some evidence in support of the non-movant will not be adequate to support a denial of a motion for summary judgment; there must be enough evidence to enable a jury to reasonably find for the non-movant on that issue. Anderson, 477 U.S. at 249--50.

Notably, "[t]he rule is no different where there are cross-motions for summary judgment." Lawrence v. City of Phila., 527 F.3d 299, 310 (3d Cir. 2008). As stated by the Third Circuit, "[c]ross-motions are no more than a claim by each side that it alone is entitled to summary judgment, and the making of such inherently contradictory claims does not constitute an agreement that if one is rejected the other is necessarily justified or that the losing party waives judicial consideration and determination of whether genuine issues of material fact exist." Id. (quoting Rains v. Cascade Indus., Inc., 401 F.2d 241, 245 (3d Cir. 1968)).

III. DISCUSSION

At issue in the present case is the viability of Defendant KFI's counterclaims for defamation and tortious interference. Plaintiff contends that it is entitled to judgment on both causes of action because KFI cannot establish all elements necessary to support such claims. Defendant responds that Plaintiff's arguments are meritless and that summary judgment should be entered in its favor on the defamation counterclaim. The Court considers the defamation counterclaim and the tortious interference counterclaim individually.

A. Defamation

The core of Defendant's counterclaim focuses on a September 4, 2008 press release issued in connection with the commencement of the present action. Specifically, James Casale- who is both Plaintiff's counsel and a co-owner of TKW-prepared a press release entitled "Knitting Fever, Inc. Sued for False Advertising of Cashmere Yarns" (the "Press Release"). (Def.'s Mot. Summ. J. Defamation Countercl. ("Def.'s Mot."), Ex. 1.) This Press Release summarized TKW's Complaint and included multiple quoted statements taken from an interview Mr. Casale conducted with himself. On September 4, 2008, Mr. Casale, acting under the guise of a public relations firm called "Communications Specialists," sent both the Press Release and a copy of the Complaint to a group of at least thirteen individuals. (Id.; see also The Knit With v. Knitting Fever, Inc., No. Civ.A.08-4221, Docket No. 168, Ex. 1, Decl. of Sion Elalouf ¶¶ 4--5 & Ex. A, July 12, 2010 ("Elalouf Decl.").) This Press Release made several comments regarding KFI's alleged racketeering activity on which Defendant now bases its cause of action:

* "The lawsuit also alleges Knitting Fever, Inc. is a racketeering or corrupt enterprise and KFI's regular way of doing business is by engaging in racketeering activity."

* "The lawsuit alleges that Knitting Fever's president, Sion Elalouf, has engaged in a pattern of racketeering activity and manages Knitting Fever, Inc. as a racketeering enterprise. The lawsuit claims the individual defendants conspired with Elalouf to cover-up the absence of cashmere in the Cashmerino products. The lawsuit accuses the defendants of reaping illegal profits from the sale of mis-labeled wool products distributed to yarn shops which, in turn, inadvertently sell the improperly spun or improperly labeled yarns to handknitting consumers."

* "[A RICO claim] applies to any circumstance where there is an 'organized' pattern of illicit activity involving certain discrete illegal acts and when the racketeering enterprise results in harm to another's business or property. . . . [T]he elements of a racketeering charge appear to be present but a judge will decide whether that is actually so."

* "'I won't speculate that this is a deliberate scheme,' Casale added. 'In the three cashmerino products, the facts to be presented to the court indicate the absence of cashmere and the presence of a greater quantity of another fiber. Other facts to be laid before the court indicate a number of other things both before and after the development of the Debbie Bliss brand of cashmerino yarns. It is for the court to conclude whether all these facts, taken together indicate a course of deliberate conduct.'"

* "[The Knit With will show] Mr. Elalouf both has engaged in a pattern of racketeering acts and his regular way of managing his business is as a racketeering enterprise."

(Def.'s Mot., Ex. 1.)*fn2

One recipient of the Press Release and Complaint wrote about it extensively on her internet blog entitled www.girlfromauntie.com. (The Knit With v. Knitting Fever, Inc., No. Civ.A.08-4221, Docket No. 168, Ex. 3, Decl. of Joshua Slavitt ("Slavitt Decl.") ¶¶ 3--4 & Ex. A, July 12, 2010.) In the blog, the author remarked that she "received an e-mail from a PR agency [called "Communications Specialists"] with an interesting subject line." (Id., Ex. A.) Following the blogger's long and detailed summary of both the Press Release and the attached Complaint, several readers submitted online responses that made negative comments about KFI. (Id.) Defendant now asserts that these events unequivocally establish Plaintiff's liability for defamation.

In Pennsylvania, the burden of proof for a common law defamation action is set forth by statute:

(a) Burden of plaintiff.-In an action for defamation, the plaintiff has the burden of proving, when ...


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