Riverdale Mills Corp. v. Cavatorta North America, Inc.

Citations: 189 F. Supp. 3d 317; 2016 U.S. Dist. LEXIS 69269; 2016 WL 3030234Docket: CIVIL ACTION NO. 4:15-CV-40132-TSH

Court: District Court, D. Massachusetts; May 26, 2016; Federal District Court

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Plaintiff Riverdale Mills Corporation filed motions to dismiss counterclaims from Defendants Cavatorta North America, Inc. and Metallurgica Abruzzese SPA in a dispute over wire mesh products used in marine traps. Riverdale's dismissal motions were based on Rule 12(b)(6) of the Federal Rules of Civil Procedure, arguing that the counterclaims were protected by litigation privilege and inadequately pled. Additionally, Riverdale sought dismissal under Massachusetts’ anti-SLAPP statute, Mass. Gen. Laws ch. 231, § 59H. 

The court granted Riverdale's motions under Rule 12(b)(6), dismissing the counterclaims without prejudice, allowing Defendants an opportunity to amend their claims. However, the court denied Riverdale's motions under the anti-SLAPP statute. 

Background information reveals that Riverdale's product, "Aquam-esh," competes with Metallurgica's "SEAPLAX," both marketed as "galvanized after welded" (GAW). In 2015, Riverdale discovered that Metallurgica had mistakenly delivered a non-GAW product to customers who ordered SEAPLAX. Riverdale subsequently sued the Defendants for false advertising under the Lanham Act and violations of Massachusetts law, among other claims, leading to a preliminary injunction against the Defendants. 

In response to Riverdale's lawsuit, Cavatorta and Metallurgica filed counterclaims for tortious interference and violations of Chapter 93A, stemming from Riverdale's communications to Cavatorta's customers during the case. These communications included emails from Riverdale's sales vice president, which shared material from the Defendants' filings related to the preliminary injunction.

Emails sent by Riverdale to customers contained brief messages acknowledging the customers' awareness of an ongoing lawsuit and referenced attached materials, indicating that the Plaintiffs' attorney would reach out for further information. One email noted that customers who received mislabeled products should have received compensation, while another described Cavatorta's products as "defective wire." Defendants contended these statements were false and alleged that Riverdale intentionally contacted their customers to induce them to sever business ties with Cavatorta and Metallurgica, claiming Riverdale acted with malice and improper motives, causing harm to Defendants.

Riverdale filed four motions to dismiss the Defendants’ counterclaims under Rule 12(b)(6) and the anti-SLAPP statute. The court's review standard requires that a counterclaim must present sufficient factual matter to establish a plausible claim for relief, avoiding mere labels or naked assertions. The court assumes the truth of well-pled factual allegations and draws inferences in favor of the nonmovant.

Riverdale argued for dismissal of the tortious interference claims based on the litigation privilege, which protects statements made in the context of litigation. This privilege applies to communications relevant to the ongoing litigation, regardless of the parties involved. Riverdale asserted that the emails were pertinent to the case, citing their subject lines and references to the litigation, while Defendants countered that the communications were unnecessary and intended to harm them.

Defendants assert that Riverdale was aware prior to sending emails that the customer-recipients were informed about issues with SEAPLAX mesh and that Defendants were actively addressing these problems. They argue that the emails are irrelevant to the lawsuit since Walsh did not request information from the customers. Riverdale cites Loomis v. Tulip, Inc. to argue that the emails are privileged, as the court in Loomis deemed statements tied to ongoing litigation as privileged due to their relevance to control over inventory. Riverdale claims its emails relate to customer impacts concerning the lawsuit, akin to the communications in Loomis.

Conversely, Defendants reference Encompass Ins. Co. of MA v. Giampa, where a press release containing statements related to ongoing litigation was deemed not privileged because it was addressed to the media, outside judicial control, and exceeded mere restatement of court documents. They argue that Riverdale’s communications to Defendants' customers fall under this reasoning, as they were also not judicially controlled and did not serve the privilege's purpose. Additionally, Defendants contend that Riverdale's awareness of the recipients being their customers lessens the need for advocacy and heightens the concern for reputational damage.

The court finds Riverdale’s emails more similar to the press release in Encompass than the privileged statements in Loomis, noting the recipients were not part of the litigation and many were already aware of the lawsuit. The court also highlights that, although Riverdale claimed the emails served to warn of subpoenas, only two customers were subpoenaed. The privilege does not protect non-essential communications to competitors' customers. Thus, the emails are ruled not privileged, and Riverdale's motion to dismiss based on this claim is denied.

Regarding the claim of intentional interference with business relationships, Riverdale contends that Defendants have not established a prima facie case. For a claim of tortious interference, a plaintiff must prove (1) a business relationship or expected contract, (2) the defendant’s knowledge of that relationship, (3) intentional and malicious interference, and (4) resulting loss. Defendants have sufficiently alleged the first two elements by indicating Riverdale's knowledge of the email recipients being their customers.

Defendants’ counterclaims assert that Riverdale informed their customers of issues such as selling mislabeled products, providing defective wire, and that SEAPLAX traps were deteriorating quickly, along with threats of legal action. These statements suggest an intent to harm Defendants’ customer relationships. However, Defendants fail to specify any actual harm, merely stating they have been harmed without detailing instances like customer terminations or sales declines. This lack of demonstrable harm is critical, rendering their tortious interference claims and those under Chapter 93A insufficient. Consequently, the court grants Plaintiffs’ motions to dismiss the counterclaims without prejudice, allowing Defendants to amend within fourteen days.

Riverdale also invokes the anti-SLAPP statute to dismiss Defendants’ counterclaims. This statute protects individuals from lawsuits that seek to hinder their right to petition government bodies. It allows a party to file a motion to dismiss if the claims against them are based solely on their petitioning activities, which can include any statements made to influence governmental proceedings. The court's review involves two steps: first, the moving party must show that the claims are solely based on petitioning activities; if successful, the burden shifts to the opposing party to prove that the petitioning activities lacked reasonable factual support and caused actual injury. Riverdale contends that Defendants' counterclaims focus on emails that constitute petitioning activity, supporting their motion for dismissal.

Riverdale claims that its email communications constituted "quintessential petitioning activity" aimed at informing customers about forthcoming subpoenas related to a lawsuit, arguing that these communications reflected the allegations in its pleadings. However, the court finds that simply replicating protected statements sent to government entities does not inherently qualify as petitioning activity. The determination of whether a communication is considered petitioning activity varies based on specific facts and circumstances. In this case, despite some overlap with Riverdale's allegations, the context reveals that Riverdale and the Defendants are competitors, and the attached documents included the Defendants' own materials. The emails had a commercial intent, aiming to attract customers by disseminating negative information about the Defendants. This situation parallels the Cadle Co. v. Schlichtmann case, where an attorney's communications were deemed non-petitioning because they served a commercial purpose. Consequently, Riverdale's emails were not classified as petitioning activity, and it did not satisfy the first prong of the anti-SLAPP analysis. As a result, Riverdale's special motions to dismiss are denied, while the Plaintiffs' Rule 12(b)(6) motions are granted, the anti-SLAPP motions are denied, counterclaims are dismissed without prejudice, and the Defendants are allowed to amend their claims within fourteen days.