Samsung Display Co., Ltd v. Acacia Research Corporation
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`Doc. 31
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`14-CV-1353 (JPO)
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`OPINION AND ORDER
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
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`SAMSUNG DISPLAY CO., LTD.,
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`Plaintiff,
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`-v-
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`ACACIA RESEARCH CORPORATION,
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`Defendant.
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`J. PAUL OETKEN, District Judge:
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`Plaintiff Samsung Display Company, Ltd. (“SDC”) brought this action against Defendant
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`Acacia Research Corporation (“Acacia”), alleging that Acacia acted unlawfully in initiating,
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`through its affiliate entities, patent infringement lawsuits against SDC customers. SDC asserts
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`six causes of action against Acacia: breach of contract, tortious interference with contractual
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`relations, tortious interference with prospective contractual relations, unfair competition, abuse
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`of process, and prima facie tort. Acacia moves to dismiss the complaint under Federal Rule of
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`Civil Procedure 12(b)(6).
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`I.
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`For the reasons that follow, Acacia’s motion is granted in part and denied in part.1
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`Background
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`A.
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`Factual Background2
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`SDC is a Korea-based corporation, created as a spin-off from Samsung Electronics
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`Company, Ltd. (“SEC”) in April 2012. (Compl. ¶ 2.) Acacia is a Delaware corporation with its
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`1 In light of the parties’ legitimate confidentiality interests, the Court also grants the motions to
`seal at docket numbers 10, 27, and 29.
`2 The facts below are drawn from SDC’s Complaint (filed under seal), unless otherwise noted.
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`1
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`1
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`Gold Charm Ex. 2002
`Samsung v. Gold Charm
`IPR2015-01416
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`principal place of business in Newport Beach, California. It owns and/or controls Acacia
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`Research Group LLC (“ARG”), Innovative Display Technologies LLC (“IDT”), and Delaware
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`Display Group LLC (“DDG”).
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`On March 2, 2011, SEC and Acacia entered into an agreement (the “Option Agreement”),
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`under which Acacia granted SEC licenses and covenants not to sue with respect to certain
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`patents owned by Acacia. (See Declaration of Edward Treska in Support of Motion to Dismiss,
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`Ex. A (“Option Agreement”) (filed under seal).)3 In particular, the Option Agreement provides
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`the following:
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`(Id. § A2.5.)
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`[Acacia] and the Acacia Entities hereby represent,
`warrant, and covenant to Samsung that Samsung’s
`Authorized Third Parties shall be perpetually immune
`from any claim or suit under the Acacia Patents for the
`use . . . of any Samsung Products . . . [and]
`Combination Products . . . .
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`In addition, the Option Agreement requires that Acacia “ensure that the Acacia Entities
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`abide by the terms and conditions of this Option Agreement . . . and [the] Covenant-Not-To-Sue
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`Addendum set forth at Addendum A.” (Id. § 3.1.)
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`The Option Agreement defines “Acacia” as “[Acacia Research Corporation] and its past,
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`present, and current Affiliates,” (id. § 1.1), and “Samsung” as “Samsung Electronics Co., Ltd.
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`and its Affiliates” (id. § 1.8). According to the Complaint, SDC is an affiliate of SEC, and ARG,
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`3 New York law governs the Option Agreement. (Compl. ¶ 14; Option Agreement, § 4.11.)
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`2
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`2
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`2
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`IDT, and DDG are affiliates of Acacia, as the term is defined in the Option Agreement.4
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`(Compl. ¶ 9.)
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`The Complaint alleges that, contrary to express provisions of the Option Agreement,
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`Acacia’s affiliates initiated patent infringement lawsuits against SDC customers for their use of
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`SDC products.5 The Complaint identifies nine lawsuits in particular: four filed by IDT in Texas
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`in June 2013; one filed by IDT, also in Texas, in October 2013; and four filed by DDG and IDT
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`in Delaware in December 2013. These suits, the Complaint charges, amount to a material breach
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`of the Option Agreement.
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`The Complaint claims that, as a result of the lawsuits, SDC has suffered injury in the
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`form of “irreparable harm” to its “goodwill and reputation” among its customers, who relied on
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`SDC’s representations and assurances that they would not be subject to suit by Acacia for their
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`use of SDC products. (Id. ¶¶ 24, 28.) These customers have reportedly “complained to SDC”
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`about the lawsuits and “expressed concern to SDC regarding its intellectual property practices.”
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`(Id. ¶ 24.) The Complaint further alleges that Acacia has maintained its lawsuits notwithstanding
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`written notice from SEC advising Acacia of its material breach and its effect on SDC’s
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`relationship with its customers. (Id. ¶ 25.) Acacia’s initiation of the suits and failure to cure its
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`breach are, the Complaint says, “willful” and “in bad faith.” (Id. ¶¶ 26, 27.)
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`4 Under the Option Agreement, “affiliate” means “any entity, including parent companies and
`majority-owned subsidiaries, now or hereafter acquired or formed that is directly or indirectly
`controlled” by SEC or Acacia. (Option Agreement, § 1.7.)
`5 SDC considers these customers to be “Authorized Third Parties” within the meaning of the
`Option Agreement. (See Compl. ¶ 33; Option Agreement, § A1.5 (“‘Authorized Third Party’
`shall mean a third party . . . that is directly or indirectly authorized by Samsung or its Affiliates
`to exercise any legal rights with respect to a Samsung Product or a Combination Product . . . .”).)
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`3
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`3
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`3
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`B.
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`Procedural History
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`SDC filed its Complaint against Acacia on February 28, 2014. (Dkt. No. 3.) Pursuant to
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`an order by Judge Crotty, the Complaint was filed under seal. (Id.)
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`Acacia filed its motion to dismiss the Complaint on May 6, 2014. (Dkt. No. 17.) On
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`May 22, 2014, SDC filed both an opposition to Acacia’s motion and its own conditional motion
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`for leave to amend the Complaint. (Dkt. Nos. 24, 25.) Acacia filed a combined reply to SDC’s
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`opposition and an opposition to SDC’s motion for leave to amend on June 2, 2014. (Dkt. No.
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`28.) SDC filed a reply in support of its motion for leave to amend on June 12, 2014. (Dkt. No.
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`30.) All filings were made wholly or partially under seal.
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`II.
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`Legal Standard
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`Rule 8(a)(2) of the Federal Rules of Civil Procedure requires that a pleading contain “a
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`short and plain statement of the claim showing that the pleader is entitled to relief.” To survive a
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`motion to dismiss under Federal Rule 12(b)(6), a complaint “must contain sufficient factual
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`matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v.
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`Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570
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`(2007)). The standard of “facial plausibility” is met when “the plaintiff pleads factual content
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`that allows the court to draw the reasonable inference that the defendant is liable for the
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`misconduct alleged.” Id. Plausibility is distinct from probability, and “a well-pleaded complaint
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`may proceed even if it strikes a savvy judge that actual proof of the facts alleged is improbable,
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`and that a recovery is very remote and unlikely.” Nielsen v. Rabin, 746 F.3d 58, 62 (2d Cir.
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`2014) (quoting Twombly, 550 U.S. at 556) (internal quotation marks omitted). At the same time,
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`a court is “not bound to accept as true a legal conclusion couched as a factual allegation.”
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`Twombly, 550 U.S. at 555 (internal quotation mark omitted). “Threadbare recitals of the
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`4
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`elements of a cause of action, supported by mere conclusory statements, do not suffice.” Iqbal,
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`556 U.S. at 678.
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`On a motion to dismiss, a court may properly consider documents attached to the
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`complaint or incorporated in it by reference. Chambers v. Time Warner, Inc., 282 F.3d 147, 152
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`(2d Cir. 2002) (quoting Int’l Audiotext Network, Inc. v. Am. Tel. & Tel. Co., 62 F.3d 69, 72 (2d
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`Cir. 1995)). The court may also rely on documents “integral” to the complaint. Id. (internal
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`quotation marks omitted). The Option Agreement was not attached to SDC’s Complaint, but is
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`referenced therein and is at the core of the parties’ dispute. It is therefore both incorporated by
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`reference in, and integral to, the Complaint. See Stuto v. Fleishman, 164 F.3d 820, 826 n.1 (2d
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`Cir. 1999); Int’l Audiotext Network, 62 F.3d at 72.
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`III. Discussion
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`As noted above, SDC’s Complaint asserts six causes action: breach of contract, tortious
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`interference with contractual relations, tortious interference with prospective contractual
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`relations, unfair competition, abuse of process, and prima facie tort. The Court addresses these
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`in turn.
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`A.
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`Breach of Contract
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`SDC’s first claim is straightforward: Acacia’s failure to ensure its affiliates’ compliance
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`with the covenant not to sue provision amounts to a material breach of the Option Agreement.
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`(Compl. ¶ 23.) Acacia’s breach is alleged to have caused SDC to suffer “monetary loss and loss
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`of goodwill,” in an amount “difficult to ascertain.” (Id. ¶ 34.)
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`Acacia seeks dismissal of this claim on two independent grounds. First, Acacia argues
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`that SDC has failed to plead that Acacia actually breached the Option Agreement. Acacia says
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`that the Option Agreement does not bar it from suing SDC customers for patent infringement
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`5
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`altogether; rather, it precludes suit against SDC customers only for the use of “Samsung
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`Products” or “Combination Products.” (Dkt. No. 18, Memorandum of Law in Support of Motion
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`to Dismiss Complaint, at 5 (“Def. Memo”).) Acacia contends that SDC has failed to identify any
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`particular SDC product accused of infringement in Acacia’s lawsuits. (Id.) Second, Acacia
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`argues, SDC’s pleading is inadequate because its allegations of damages are “conclusory.” (Id.
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`at 6–7.)
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`Neither argument can prevail at this stage. The Complaint alleges a specific and material
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`breach, and in doing so acknowledges the precise content of Acacia’s obligations under the
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`Option Agreement. (See Compl. ¶ 23 (“[The] IDT and DDG lawsuits violate the covenant not to
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`sue provisions of the Option Agreement insofar as they allege SDC’s customers infringe Acacia
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`Patents by their use of SDC products.” (emphasis added)).) The Complaint identifies the
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`relevant Acacia affiliates, the underlying patents at issue, the allegedly unlawful infringement
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`suits, and the contractual provisions allegedly breached. (Id. ¶¶ 3, 15–22, 32–33.) These
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`allegations are sufficient to withstand a motion to dismiss under Rule 12(b)(6).6
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`Likewise, SDC has adequately pleaded damages. SDC has identified specific injury in
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`the form of damage to its goodwill and reputation—and that is satisfactory on a motion to
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`dismiss. See Hard Rock Cafe Int’l, (USA), Inc. v. Hard Rock Hotel Holdings, LLC, 808 F. Supp.
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`6 The cases Acacia offers in support of the contrary conclusion are inapposite, because they
`addressed pleadings that failed to allege essential elements of a breach of contract claim. See
`Orange Cnty. Choppers, Inc. v. Olaes Enterprises, Inc., 497 F. Supp. 2d 541, 554 (S.D.N.Y.
`2007) (dismissing claim for “fail[ing] to allege the specific provision of the [contract] that [the
`counterdefendant] allegedly breached—an essential requirement for a breach of contract claim”);
`King’s Choice Neckwear, Inc. v. Pitney Bowes, Inc., 09-CV-3980, 2009 WL 5033960, at *4–6
`(S.D.N.Y. Dec. 23, 2009), aff’d, 396 F. App’x 736 (2d Cir. 2010) (finding breach of contract
`claim foreclosed by the unambiguous language of the parties’ agreement); Martinez v. Vakko
`Holding A.S., 07-CV-3413, 2008 WL 2876529, at *2 (S.D.N.Y. July 23, 2008) (dismissing
`breach of contract claim for failure to identify “specific provision[] of the contract upon which
`liability [was] predicated”). The Complaint here suffers from no such infirmity.
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`2d 552, 567 (S.D.N.Y. 2011) (“The [counterclaimants] allege that the purported breaches
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`damaged their ‘goodwill, standing and reputation.’ These allegations are sufficient to survive a
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`motion to dismiss.” (citation omitted)) (citing Smith McDonnell Stone & Co. v. Delicato
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`Vineyards, 94-CV-6474, 1995 WL 375918, at *4 (S.D.N.Y. June 22, 1995)). The fact that
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`SDC’s damages are “difficult to ascertain” does not strip its claim of plausibility.
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`B.
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`Tortious Interference with Contractual Relations
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`SDC’s second cause of action is for tortious interference with contractual relations. SDC
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`alleges that it has “particular and existing business relationships” with several customers; that
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`Acacia knew of these relationships; and that Acacia’s breach of the Option Agreement made it
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`impossible for SDC to honor contracts with its customers, to whom it represented and warranted
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`that Acacia and its affiliates would not bring suit against them for patent infringement based on
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`their use of SDC products. (Compl. ¶¶ 36–38.)
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`Tortious interference with contractual relations has five elements: (1) “the existence of a
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`valid contract between the plaintiff and a third party,” (2) “defendant’s knowledge of that
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`contract,” (3) “defendant’s intentional procurement of the third-party’s breach of the contract
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`without justification,” (4) “actual breach of the contract,” and (5) “damages resulting therefrom.”
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`Lama Holding Co. v. Smith Barney, 88 N.Y.2d 413, 424 (1996).
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`SDC does not plead an actual breach of contract on the part of any of its customers.
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`Rather, relying nearly exclusively on Nat’l Football League Props., Inc. v. Dallas Cowboys
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`Football Club, Ltd., 922 F. Supp. 849 (S.D.N.Y. 1996), it contends that a plaintiff need not plead
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`breach; it is enough to allege “that the defendant’s interference made the contract impossible to
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`perform, or that the defendant induced the third party to render performance possible.” Id. at
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`856. (Dkt. No. 24, SDC’s Opposition to Acacia’s Motion to Dismiss (“Pl. Opp.”), at 7–8.)
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`This argument is directly at odds with controlling law. New York law is clear: nothing
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`short of actual breach gives rise to a claim for tortious interference with contractual relations.
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`See, e.g., Baylis v. Marriott Corp., 906 F.2d 874, 877 (2d Cir. 1990) (“Under traditional
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`principles of New York law, a party may not recover for tortious inducement of breach of a
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`contract without proving that the underlying contract has been breached.”); NBT Bancorp v.
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`Fleet/Norstar Fin. Grp., 87 N.Y.2d 614, 620 (1996) (“[The plaintiff] urges that, as a matter of
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`precedent and policy, a defendant’s deliberate interference with plaintiff’s contractual rights that
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`causes damage should be punishable as tortious interference whether or not the contract was
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`actually breached. New York law is to the contrary.”); Lama Holding Co., 88 N.Y.2d at 424
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`(citing NBT Bancorp, 87 N.Y.2d 614).7
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`Moreover, the breach must be committed by the third party, not the plaintiff. See Fonar
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`Corp., 957 F. Supp. at 481 (quoting Jack L. Inselman & Co., 396 N.Y.S.2d at 349).
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`SDC’s failure to plead that any of its customers breached a contract as a result of
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`Acacia’s conduct is fatal to its claim for tortious interference with contractual relations.8 This
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`claim is dismissed.
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`7 See also Fonar Corp. v. Magnetic Resonance Plus, Inc., 957 F. Supp. 477, 481 (S.D.N.Y.
`1997) (“Some courts have stated that in order to make out a claim for tortious interference with
`contract, a party either needs to show that there was a breach of the contract by the third party or
`that the defendant's interference made the contract impossible to perform. However, this
`proposition runs contrary to the rulings of the New York Court of Appeals and the Second
`Circuit. The Court of Appeals, for example, has held that ‘[i]n order for the plaintiff to have a
`cause of action for tortious interference of contract, it is axiomatic that there must be a breach of
`contract by the other party.’”) (quoting Jack L. Inselman & Co. v. FNB Financial Co., 41 N.Y.2d
`1078, 1080 (1977)).
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`8 In any event, SDC’s action sounds more in contract than it does in tort. To the extent that SDC
`is alleging foreseeable injury as a result of Acacia’s breach, SDC may seek to recover for that
`injury on its breach of contract claim. See, e.g., Terwilliger v. Terwilliger, 206 F.3d 240, 248 (2d
`Cir. 2000) (quoting Freund v. Wash. Square Press, Inc., 34 N.Y.2d 379, 382 (1974)).
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`C.
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`Tortious Interference with Prospective Contractual Relations
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`Third, the Complaint alleges that, by causing or allowing its affiliates to initiate and
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`maintain patent infringement lawsuits against SDC’s customers, Acacia committed the tort of
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`interference with prospective contractual relations.9 In particular, the Complaint asserts that
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`SDC has business relationships with its customers that “create an expectancy of future contract
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`rights”; that Acacia knew of these relationships and interfered with them via its affiliates’
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`lawsuits; and that Acacia “used dishonest, unfair and/or improper means” to interfere with
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`SDC’s relationships “and/or acted with the purpose of harming SDC.” (Compl. ¶¶ 41–45.)
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`To state a claim for tortious interference with prospective contractual relations in New
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`York, a plaintiff must show that: “(1) the plaintiff had business relations with a third party; (2)
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`the defendant interfered with those business relations; (3) the defendant acted for a wrongful
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`purpose or used dishonest, unfair, or improper means; and (4) the defendant’s acts injured the
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`relationship.” Catskill Dev., L.L.C. v. Park Place Entm’t Corp., 547 F.3d 115, 132 (2d Cir.
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`2008).
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`Here again, SDC’s Complaint cannot survive a motion to dismiss. Specifically, SDC
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`fails to adequately plead the tort’s third element: that Acacia acted for a wrongful purpose or by
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`means that were dishonest, unfair, or improper.
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`This prong is generally satisfied only where the defendant’s conduct “amount[s] to a
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`crime or an independent tort.” Valley Lane Indus. Co. v. Victoria’s Secret Direct Brand Mgmt.,
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`L.L.C., 455 F. App’x 102, 106 (2d Cir. 2012) (summary order) (quoting Carvel Corp. v. Noonan,
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`9 This tort is also commonly referred to as “tortious interference with prospective economic
`advantage,” Lombard v. Booz-Allen & Hamilton, Inc., 280 F.3d 209, 214 (2d Cir. 2002), or
`“tortious interference with business relations,” Goldhirsh Grp., Inc. v. Alpert, 107 F.3d 105, 106
`(2d Cir. 1997).
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`3 N.Y.3d 182, 190 (2004)) (internal quotation mark omitted). Conduct that is not criminal or
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`tortious is generally “insufficiently ‘culpable’” to form the basis of a claim. Id. (quoting Carvel,
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`3 N.Y.3d at 190). The sole recognized exception to this rule is where a plaintiff shows—or at
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`this stage, alleges—that a defendant acted “for the sole purpose of inflicting intentional harm” on
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`the plaintiff. Id. (quoting Carvel, 3 N.Y.3d at 190) (internal quotation marks omitted).10
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`The Complaint makes no such allegations. It contains a threadbare recitation of the tort’s
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`third element (Compl. ¶ 44), unaccompanied by any allegation that Acacia’s conduct was
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`criminal, independently tortious, or solely motivated by a desire to inflict intentional harm on
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`SDC. Nor does SDC’s opposition to Acacia’s motion to dismiss make any such claims. (Pl.
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`Opp., at 7.)11 Accordingly, SDC fails to state a claim for tortious interference with prospective
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`contractual relations.
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`D.
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`Unfair Competition
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`SDC’s next claim is that Acacia’s conduct amounts to unfair competition under New
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`York common law, § 349 of the General Business Law, and § 43(a) of the Lanham Act, 15
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`U.S.C. § 1125(a). SDC fails to state a plausible claim under any of these theories.
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`10 The Court of Appeals has left open the possibility that more exceptions to the general rule
`might be recognized, see Carvel, 3 N.Y.3d at 190–91, but in none of its filings has SDC asked
`the Court to recognize such an exception here.
`11 In its opposition, SDC contends that the tort’s third element “can be shown by many ways,
`including by ‘civil suits.’” (Pl. Opp., at 9 (quoting Carvel Corp. v. Noonan, 350 F.3d 6, 19 (2d
`Cir. 2003)). That much is true, but whatever the form of the alleged conduct, it must be criminal,
`independently tortious, or motivated solely the purpose of inflicting harm on the plaintiff.
`Carvel Corp., 3 N.Y.3d at 190; accord Hassan v. Deutsche Bank A.G., 515 F. Supp. 2d 426,
`429–30 (S.D.N.Y. 2007), aff’d, 336 F. App’x 21 (2d Cir. 2009); Sidney Frank Importing Co. v.
`Beam Inc., 998 F. Supp. 2d 193, 211–12 (S.D.N.Y. 2014); Darby Trading Inc. v. Shell Int’l
`Trading & Shipping Co., 568 F. Supp. 2d 329, 343–44 (S.D.N.Y. 2008).
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`10
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`The essence of SDC’s unfair competition claim is that Acacia, by means of its affiliates’
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`lawsuits, falsely represented to SDC customers that they do not enjoy immunity from suit for
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`infringement of Acacia patents, and thereby engaged in “deceptive acts and/or practices” in the
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`conduct of its business. (Compl. ¶ 49.) The lawsuits were, moreover, allegedly “baseless” and
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`the product of Acacia’s “bad faith.” (Id. ¶¶ 50–51.)
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`The analysis applied under § 43(a) of the Lanham Act, New York common law, and
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`§ 349 of the General Business Law is “substantially the same.” Avon Products, Inc. v. S.C.
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`Johnson & Son, Inc., 984 F. Supp. 768, 800 (S.D.N.Y. 1997). One element in common among
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`these causes of action is that the defendant’s conduct must be, in some sense, directed towards
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`consumers. Under the Lanham Act and New York common law, a defendant’s material
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`misrepresentations must be made “in the context of commercial advertising or commercial
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`promotion.” Mobius Mgmt. Sys., Inc. v. Fourth Dimension Software, Inc., 880 F. Supp. 1005,
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`1019 (S.D.N.Y. 1994) (Lanham Act); C=Holdings B.V. v. Asiarim Corp., 992 F. Supp. 2d 223,
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`244 (S.D.N.Y. 2013) (“An unfair competition claim under New York common law requires all
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`the elements of a Lanham Act unfair competition claim plus a showing of bad faith.”). This, in
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`turn, requires a plaintiff to allege that, among other things,12 the defendant’s misrepresentations
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`were “disseminated sufficiently to the relevant purchasing public to constitute ‘advertising’ or
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`‘promotion’ within that industry.” Mobius Mgmt. Sys., 880 F. Supp. at 1019–20 (quoting
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`Gordon and Breach Sci. Publishers S.A. v. Am. Inst. of Physics, 859 F. Supp. 1521, 1536
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`(S.D.N.Y. 1994)) (internal quotation mark omitted).
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`12 A plaintiff must also allege that the misrepresentation constitutes commercial speech; that it
`was made by a defendant who is in “commercial competition” with the plaintiff; and that it was
`made “for the purpose of influencing consumers to buy defendant’s goods or services.” Fashion
`Boutique of Short Hills, Inc. v. Fendi USA, Inc., 314 F.3d 48, 56 (2d Cir. 2002) (internal
`quotation mark omitted).
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`11
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`In a similar vein, a plaintiff suing under § 349 of the General Business Law must allege
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`“consumer oriented” conduct on the defendant’s part. Shapiro v. Berkshire Life Ins. Co., 212
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`F.3d 121, 126 (2d Cir. 2000) (quoting Gaidon v. Guardian Life Ins. Co., 94 N.Y.2d 330, 344
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`(1999)) (internal quotation marks omitted). While a defendant’s competitors have standing to
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`bring claims under § 349, “the gravamen of the complaint must be consumer injury or harm to
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`the public interest.” digiGAN, Inc. v. Ivalidate, Inc., 02-CV-420, 2004 WL 203010, at *6
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`(S.D.N.Y. Feb. 3, 2004) (quoting Securitron Magnalock Corp. v. Schnabolk, 65 F.3d 256, 264
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`(2d Cir.1995)) (internal quotation marks omitted).
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`Even assuming that the lawsuits initiated by Acacia’s affiliates qualify as “material
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`misrepresentations” or “deceptive acts,” SDC has failed to state a claim for unfair competition.
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`It has not alleged that Acacia disseminated the fact of its affiliates’ lawsuits in a manner
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`amounting to advertising or promotion within the industry. Nor has it claimed that the harm
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`flowing from Acacia’s conduct was borne by its customers or other consumers. Rather, it alleges
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`harm only to its own goodwill, reputation, and contractual relations with customers. (Compl. ¶
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`52.) As a result, SDC’s claim for unfair competition is dismissed.
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`E.
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`Abuse of Process
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`The Complaint further claims that Acacia’s conduct constituted an abuse of process under
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`New York law.
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`An abuse of process claim consists of three elements: “(1) regularly issued process, either
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`civil or criminal, (2) an intent to do harm without excuse or justification, and (3) use of the
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`process in a perverted manner to obtain a collateral objective.” O’Bradovich v. Vill. of
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`Tuckahoe, 325 F. Supp. 2d 413, 434 (S.D.N.Y. 2004). To make out the first element, a plaintiff
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`must allege that the process unlawfully interfered with the plaintiff’s person or property. Colina
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`v. One E. River Place Realty Co., LLC, 99-CV-5173, 2000 WL 1171126, at *4 (S.D.N.Y. Aug.
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`17, 2000). “[T]he institution of a civil action by summons and complaint is not legally
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`considered process capable of being abused,” and is therefore insufficient to satisfy the first
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`element of abuse of process. PSI Metals, Inc. v. Firemen’s Ins. Co. of Newark, N.J., 839 F.2d
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`42, 43 (2d Cir. 1988) (quoting Curiano v. Suozzi, 63 N.Y.2d 113, 116 (1984)) (internal quotation
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`marks omitted).
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`The Complaint does not allege that Acacia’s affiliates have done any more than initiate
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`civil actions against SDC customers. Nonetheless, relying on O’Bradovich, SDC contends that it
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`has satisfied the first element because Acacia sought to deprive it of property “under color of
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`process.” (Pl. Opp., at 11 (quoting O’Bradovich, 325 F. Supp. 2d at 434 (S.D.N.Y. 2004))
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`(internal quotation marks omitted)).
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`SDC misinterprets O’Bradovich. O’Bradovich correctly explained that “a malicious
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`motive alone does not give rise to a cause of action for abuse of process under New York law;
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`rather, [the] plaintiff must allege misuse of process after it was issued, or that the defendant acted
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`to deprive the plaintiff of property ‘under color of process.’” Id. at 434 (quoting Williams v.
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`Williams, 23 N.Y.2d 592, 595 (1969)). Nothing in O’Bradovich alters the rule that the mere
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`initiation of a suit by summons and complaint is insufficient to sustain a claim for abuse of
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`process. Nor did the court in O’Bradovich see itself as doing so. See id. (“The institution of a
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`civil action by summons and complaint, a process necessary to obtain jurisdiction and begin a
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`lawsuit, is not a sufficient basis for meeting the first element.” (quoting Colina, 2000 WL
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`1171126, at *4) (internal quotation marks omitted); id. (“[Plaintiffs] only allege that the filing of
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`the [lawsuit] was an abuse of process, which, as a matter of law, it cannot be.”).13
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`Again, the Complaint contains no allegation that Acacia’s affiliates did anything more
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`than initiate civil actions by summons and complaint. SDC therefore fails to state a claim for
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`abuse of process.
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`F.
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`Prima Facie Tort
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`Finally, SDC alleges that Acacia’s actions give rise to an action for prima facie tort.
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`“Prima facie tort is a disfavored claim under New York law.” Hall v. City of White
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`Plains, 185 F. Supp. 2d 293, 304 (S.D.N.Y. 2002). It has four elements: “(1) intentional
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`infliction of harm; (2) causing special damages; (3) without excuse or justification; and (4) by an
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`act or series of acts that would otherwise be lawful.” Id. (citing Curiano, 63 N.Y.2d at 117).
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`The “touchstone” of prima facie tort is “disinterested malevolence” on the defendant’s
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`part. Twin Labs., Inc. v. Weider Health & Fitness, 900 F.2d 566, 571 (2d Cir. 1990) (quoting
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`Burns Jackson Miller Summit & Spitzer v. Lindner, 59 N.Y.2d 314, 333 (1983)) (internal
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`13 See also Dahiya v. Kramer, 13-CV-3079, 2014 WL 1278131, at *5 (E.D.N.Y. Mar. 27, 2014)
`(“Read in context . . . O’Bradovich cannot reasonably be read to create an exception to the abuse
`of process doctrine. Instead, O’Bradovich indicates that a plaintiff must allege that the defendant
`acted to deprive the plaintiff of property rather than merely alleging a malicious motive.”).
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` SDC also cites Parkin v. Cornell Univ., 78 N.Y.2d 523 (1991), in which the Court of Appeals
`remarked that “nothing in this Court’s holdings would seem to preclude an abuse of process
`claim based on the issuance of process itself.” Id. at 530. However, as this Court has explained,
`the Court of Appeals has never actually so held, and even after Parkin, the Second Circuit has
`maintained that “[t]he gist of abuse of process is the improper use of process after it is regularly
`issued.” Richardson v. N.Y.C. Health & Hospitals Corp., 05-CV-6278, 2009 WL 804096, at *16
`(S.D.N.Y. Mar. 25, 2009) (quoting Cook v. Sheldon, 41 F.3d 73, 80 (2d Cir. 1994)) (internal
`quotation mark omitted). Because Second Circuit law controls in this Court, Parkin’s dicta
`“does not alter the established law governing malicious abuse of process claims.” Id.; accord
`Mosdos Chofetz Chaim, Inc. v. RBS Citizens, N.A., 14 F. Supp. 3d 191, 213 (S.D.N.Y. 2014);
`Gilman v. Marsh & McLennan Companies, Inc., 868 F. Supp. 2d 118, 131–32 (S.D.N.Y. 2012).
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`quotation marks omitted). That is, a defendant’s conduct must not simply be harmful; it must
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`also be driven by “the sole intent to harm.” Id. Motives such as mere profit or business
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`advantage cannot sustain a prima facie tort claim. Id.
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`The Complaint fails to plead that Acacia acted with “disinterested malevolence.” Rather,
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`it alleges only that Acacia “maliciously intended to harm SDC without excuse or justification.”
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`(Compl. ¶ 63.) This is insufficient to state a claim for prima facie tort. See MaGee v. Paul
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`Revere Life Ins. Co., 954 F. Supp. 582, 588 (E.D.N.Y. 1997) (“Where the plaintiff merely pleads
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`intentional and malicious action, but not that the defendant's ‘sole motivation’ was ‘disinterested
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`malevolence,’ the complaint will be dismissed.”) (quoting Lindner, 59 N.Y.2d at 333).
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`Also fatal to SDC’s claim is the absence of any allegation of special damages. This
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`element requires a plaintiff to allege “suffer[ing] specific and measurable loss” as a result of a
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`defendant’s conduct. Freihofer v. Hearst Corp., 65 N.Y.2d 135, 143 (1985); accord Biosafe-
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`One, Inc. v. Hawks, 639 F. Supp. 2d 358, 369 (S.D.N.Y. 2009), aff’d, 379 F. App’x 4 (2d Cir.
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`2010). The injury alleged here—“irreparable harm to SDC’s goodwill and reputation,” (Compl.
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`¶ 64)—lacks the requisite degree of specificity. Accordingly, SDC’s prima facie tort claim is
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`dismissed.
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`IV. Conclusion
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`For the foregoing reasons, Acacia’s motion to dismiss is DENIED as to the breach of
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`contract claim and GRANTED as to the balance of SDC’s claims.
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`The Court has reviewed SDC’s Proposed Amended Complaint, (Dkt. No. 30, Declaration
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`of Jennifer C. Tempesta in Support of Conditional Motion for Leave to Amend Complaint, Ex. A
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`(filed under seal)), and has determined that amendment here would be futile. See Ruffolo v.
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`Oppenheimer & Co., 987 F.2d 129, 131 (2d Cir. 1993). Accordingly, SDC’s conditional motion
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`for leave to amend its Complaint is DENIED.
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`The Clerk of Court is directed to close the motions at docket numbers 10, 17, 25, 27, and
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`29.
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`SO ORDERED.
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`Dated: December 3, 2014
`New York, New York
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`____________________________________
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` J. PAUL OETKEN
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` United States District Judge
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