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E. Frank Hopkins Seafood, Co., Inc. v. Olizi

United States District Court, E.D. Pennsylvania

June 15, 2017

E. Frank Hopkins Seafood, Co., Inc., Plaintiff
v.
Elio Olizi; Cheryl Olizi; and Pure Fish Seafood, LLC, Defendants

          MEMORANDUM AND ORDER

          Joyner, J.

         Before the court are Defendants' Motion to Dismiss (Doc. No. 6) and Plaintiff's Response in Opposition thereto (Doc. No. 8). For the reasons set forth in this Memorandum, the Motion is denied in its entirety.

         I. Background

         Plaintiff E. Frank Hopkins Seafood, Co., Inc. (“Hopkins”) is a wholesale seafood distributor located in Philadelphia, Pennsylvania. (Compl. ¶ 3). To facilitate its business, Hopkins has developed and maintains lists of customers and suppliers, order histories for these parties, and pricing strategies. (Compl. ¶¶ 11-13). To protect this information, which is not available to the public, Hopkins limits which employees may access it. (Compl. ¶¶ 15-16). Hopkins' employees are aware of the information's confidentiality. (Compl. ¶ 17).

         Defendant Elio Olizi (“Mr. Olizi”), a resident of New Jersey, was employed by Hopkins until he quit in September 2016. (Compl. ¶¶ 4, 18). Because Mr. Olizi was responsible for negotiating prices with customers, he had access to the aforesaid non-public information and had contact with Hopkins' suppliers and customers, both current and prospective. (Compl. ¶¶ 22-23).

         In August 2016, Mr. Olizi and his wife, Defendant Cheryl Olizi (“Mrs. Olizi”), formed Defendant Pure Fish Seafood, LLC (“Pure Fish”) under the laws of New Jersey. (Compl. ¶ 30). Shortly thereafter, Mr. Olizi terminated his employment with Hopkins without notice. (Compl. ¶ 24). He then worked for Samuels and Son Seafood Co., Inc. (“Samuels”), a regional competitor of Hopkins, for three months. (Compl. ¶¶ 25-26). Upon ceasing his work there, Mr. Olizi sought to return to Hopkins but was denied. (Compl. ¶¶ 27-29).

         Hopkins alleges that Defendants used information that Mr. Olizi obtained as an employee to entice existing and prospective customers of Hopkins to instead contract with Pure Fish. (Compl. ¶¶ 32-38). The Complaint also asserts that several existing customers actually terminated their contracts with Hopkins and became customers of Pure Fish, and that several prospective customers instead contracted with Pure Fish, all due to Defendants' use of Hopkins' confidential information. (Compl. ¶ 40).

         Counsel for Plaintiff corresponded with Mr. Olizi, demanding he cease and desist the alleged unlawful use of Hopkins' confidential information and return all such information to Hopkins. (Compl. ¶¶ 43-44). Mr. Olizi replied through counsel, denying possession of such information. (Compl. 45). In response to the alleged continued possession and use of Hopkins' information by Defendants, Hopkins sent two more letters repeating its demands, which were met with no reply. (Compl. ¶¶ 46-49). Hopkins filed a complaint on April 6, 2017, alleging tortious interference with contractual relations, tortious interference with prospective contractual and business relationships, misappropriation of trade secrets, unfair competition, conversion, civil conspiracy, and accounting. Subsequently, Defendants filed a Motion to Dismiss under Federal Rules of Civil Procedure 12(b)(3), 12(b)(6), and 12(b)(7), and Plaintiff filed a Response in Opposition thereto.

         II. Standard of Review

         A pleading is “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. Pro. 8(a)(2). This is “in order to ‘give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.'” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)); accord Palakovic v. Wetzel, 854 F.3d 209, 219 (3d Cir. 2017). Furthermore, in considering dismissal under Rule 12(b)(6), we “accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief.” Phillips v. County of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008) (citations omitted).

         The complaint “does not need detailed factual allegations, ” but it does need “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555. While “[f]actual allegations must be enough to raise a right to relief above the speculative level, ” all that is required is “a reasonable expectation that discovery will reveal evidence of [the alleged unlawful activity].” Id. at 555-56. In other words, the claim must be “plausible on its face, ” not merely conceivable. Id. at 570.

         In Ashcroft v. Iqbal, the Supreme Court clarified that “[a] claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” 556 U.S. 662, 678 (2009); accord Palakovic, 854 F.3d at 219. After Twombly and Iqbal, the Third Circuit formulated a three-step test:

First, the court must “tak[e] note of the elements a plaintiff must plead to state a claim.” Second, the court should identify allegations that, “because they are no more than conclusions, are not entitled to the assumption of truth.” Finally, “where there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement for relief.”

Burtch v. Milberg Factors, Inc., 662 F.3d 212, 221 (3d Cir. 2011) (quoting Santiago v. Warminster Twp., 629 F.3d 121, 130 (3d Cir. 2010)).

         III. Discussion

         Plaintiff's Complaint alleges seven counts arising from Defendants' alleged taking, retention, and use of Plaintiff's confidential information. Broadly, Defendants argue that Plaintiff failed to sufficiently plead facts in support of essential elements of its claims; that several of Plaintiff's tort claims are preempted by state statute, the elements of which are also not sufficiently pleaded; that Plaintiff failed to join an indispensable party under Federal Rule of Civil Procedure 19, as required by Rule 12(b)(7); and that Plaintiff failed to establish proper venue under 28 U.S.C. § 1391, as required by Rule 12(b)(3). We first address the 12(b)(6) motion with respect to each claim, then we address the 12(b)(7) and 12(b)(3) motions.

         A. Motion to Dismiss for Failure to State a Claim under Federal Rule of Civil Procedure 12(b)(6)

         1. Tortious Interference with Contractual Relations

         The Pennsylvania Supreme Court expressly adopted the following standard for tortious interference with contractual relations:

One who intentionally and improperly interferes with the performance of a contract (except a contract to marry) between another and a third person by inducing or otherwise causing the third person not to perform the contract, is subject to liability to the other for the pecuniary loss resulting to the other from the third person's failure to perform the contract.

Adler, Barish, Daniels, Levin and Creskoff v. Epstein, 393 A.2d 1175, 1183 (Pa. 1978) (quoting Restatement (Second) of Torts § 766 (Am. Law. Inst., Tentative Draft No. 23, 1977)). In their interpretation of this section, Pennsylvania courts have delineated four elements necessary to state such a claim:

(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.

Ira G. Steffy & Son, Inc. v. Citizens Bank of Pa., 7 A.3d 278, 288-89 (Pa. Super. 2010) (footnote omitted) (quoting Strickland v. Univ. of Scranton, 700 A.2d 979, 985 (Pa. Super. 1997)). In their motion, Defendants do not contest element (2); however, they do contend that Plaintiff's Complaint does not demonstrate the existence of a contractual relation, address the lack of privilege or justification on the part of the Defendants, or identify any consequent damage. (Motion to Dismiss, Doc. No. 6, p. 3).[1] The sufficiency of the pleading of those three elements is considered seriatim.

         a. Existence of Contractual Relations

         Where a case is not even in the discovery phase, requiring a plaintiff to list the specific contracts which it alleges have been harmed would be an extreme and unnecessary burden. Aetna, Inc. v. Health Diagnostic Lab. Inc., No. 15-1868, 2015 WL 9460072, at *6 (E.D. Pa. Dec. 28, 2015). Here, Defendants argue that Plaintiff “fails to identify a single existing contractual relationship.” (Motion to Dismiss, Doc. No. 6, p. 3). To the contrary, Plaintiff's Complaint alleges that: Plaintiff maintains a list of current and prospective customers, (Compl. ¶¶ 11-12, 34); a number of Plaintiff's customers have terminated their contracts with Plaintiff in order to contract with Defendants instead, (Compl. ¶ 39); and Defendants solicited Plaintiff's two largest customers, (Compl. ¶ 54). These allegations are more than mere legal conclusions and establish a reasonable expectation that discovery will reveal evidence of this element of the claim.

         b. Absence of Privilege of Justification

         Under Pennsylvania law, a plaintiff must make a prima facie showing that the defendant's interference was unjustified (i.e., improper). Ira G. Steffy & Son, Inc., 7 A.3d at 288 n.13 (citing Triffin v. Janssen, 626 A.2d 571, 574 n.3 (Pa. Super. 1993)). Broadly, “[t]he general issue is ‘whether, upon a consideration of the relative significance of the factors involved, the conduct should be permitted without liability, despite its effect of harm to another.'” Crivelli v. General Motors Corp., 215 F.3d 386, 395 (3d Cir. 2000) (quoting Adler, 393 A.2d at 1184 n.17). To determine impropriety, a defendant's conduct should be assessed with regard to the “‘rules of the game' which society has adopted.” Adler, 393 A.2d at 1184 (quoting Glenn v. Point Park Coll., 272 A.2d 895, 899 (Pa. 1971)). More specifically, courts consider:

(a) the nature of the actor's conduct,
(b) the actor's motive,
(c) the interests of the other with which the actor's conduct interferes,
(d) the interests sought to be advanced by the actor,
(e) the social interests in protecting the freedom of action of the actor and the contractual interests of the other,
(f) the proximity or remoteness of the actor's conduct to the ...

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