The opinion of the court was delivered by: WILLIAM MARTINI, District Judge
This matter comes before the Court on defendant Vescom
Structures, Inc.'s ("Vescom's") motion to dismiss Counts Three,
Four, Seven and Eight of plaintiff Engineered Framing Systems,
Inc.'s ("EFS's") First Amended Complaint for failure to state a
claim under Federal Rule of Civil Procedure 12(b)(6). Plaintiff
EFS filed an opposition to that motion, as well as a cross-motion
seeking leave to amend its First Amended Complaint. Vescom did
not oppose EFS's motion to amend. There was no oral argument.
Fed.R.Civ.P. 78. For the reasons stated below, defendant's
motion is granted in part and denied in part and plaintiff's
cross-motion is granted. BACKGROUND
EFS is a subcontractor that performs carpenter and laborer
construction work for developers on residential projects. In the
past, EFS contracted with other companies to provide their joist
systems in EFS's designs. Vescom, one of the companies EFS would
contract with from time-to-time, distributes joist systems for
use in residential apartment and condominium construction.
Recently, EFS developed its own proprietary joist system for use
in its designs. As a result, EFS now competes with Vescom for
In 2004, Vescom obtained a judgment in its favor against EFS in
the amount of $577,000. Afterwards, according to EFS, Vescom
began making statements to EFS's customers that disparaged the
quality of EFS's joist systems and suggested that EFS's customers
would have to pay for the judgment via the attachment process.
On March 14, 2005, EFS filed a nine-count Complaint against
Vescom, alleging various causes of action including slander
(Counts One-Four), libel (Count Five), tortious interference with
contractual relations (Count Six), tortious interference with
prospective economic advantage (Count Seven), civil conspiracy
(Count Eight), and RICO violations (Count Nine). Vescom filed a
motion to dismiss all nine counts based on Rules 12(b)(1) and
12(b)(6). EFS opposed that motion and filed a cross-motion to
amend Counts Six-Nine and its jurisdictional allegations. In
response, Vescom filed a motion to strike EFS's cross-motion to
amend. The matter was referred to Magistrate Judge Hedges.
Ultimately, Judge Hedges denied Vescom's motions and granted
EFS's cross-motion to amend because the complaint's deficiencies
could be cured by amendment.
On July 26, 2005, EFS filed an eight count First Amended
Complaint.*fn1 Vescom now seeks to dismiss Counts Three,
Four, Seven and Eight of the First Amended Complaint pursuant to
Rule 12(b)(6). As it did before, EFS opposed that motion and
filed a cross-motion to amend, now seeking to add a ninth count
for product disparagement.
In deciding a motion to dismiss under Federal Rule of Civil
Procedure 12(b)(6) all allegations in the complaint must be taken
as true and viewed in the light most favorable to the plaintiff.
Warth v. Seldin, 422 U.S. 490, 501 (1975); Trump Hotels &
Casino Resorts, Inc., v. Mirage Resorts Inc., 140 F.3d 478, 483
(3d Cir. 1998). In evaluating a Rule 12(b)(6) motion to dismiss
for failure to state a claim, a court may consider only the
complaint, exhibits attached to the complaint, matters of public
record, and undisputedly authentic documents if the plaintiff's
claims are based upon those documents. Pension Benefit Guar.
Corp. v. White Consol. Indus., 998 F.2d 1192, 1196 (3d Cir. 1993). If, after viewing the
allegations in the complaint in the light most favorable to the
plaintiff, it appears beyond doubt that no relief could be
granted "under any set of facts which could prove consistent with
the allegations," a court may dismiss a complaint for failure to
state a claim. Hishon v. King & Spalding, 467 U.S. 69, 73
(1984); Zynn v. O'Donnell, 688 F.2d 940, 941 (3d Cir. 1982).
A motion to amend a complaint is governed by Federal Rule of
Civil Procedure 15(a). Rule 15(a) provides that after a
responsive pleading has been served, a plaintiff may amend the
complaint "only by leave of the court or by written consent of
the adverse party." Fed.R.Civ.P. 15(a). Leave is to be "freely
given when justice so requires." Id. The touchstone regarding
whether leave should be granted is "whether the non-moving party
will be prejudiced if the amendment is allowed." Dole v. Arco
Chem. Co., 921 F.2d 484, 488 (3d Cir. 1990). The policy favoring
liberal amendment of pleadings, however, is not unbounded. James
v. Interstate Credit & Collection, Inc., No. 03-1037, 2005 WL
1806486, at *1 (E.D. Pa. July 29, 2005). Rather, "certain factors
which weigh against amendment, including `undue delay, bad faith
or dilatory motive on the part of the movant, repeated failure to
cure deficiencies by amendments previously allowed, undue
prejudice to the opposing party by virtue of allowance of the
amendment, [and] futility of amendment.'" Id. (quoting Dole,
921 F.2d at 487).
B. Counts Three and Four (Defamation) & Plaintiff's
Cross-Motion to Amend (Product Disparagement)
Counts Three and Four allege that Vescom made an oral,
defamatory statement to two of EFS's customers. Specifically,
Vescom is alleged to have told those customers that "EFS' joist
system was inferior and not engineeringly proper." (First Am.
Compl. ¶¶ 26, 33). Vescom seeks to dismiss Counts Three and Four
on the basis that they fail to state a cause of action for
defamation. Vescom argues that the statement cannot constitute
defamation because it concerns EFS's product, not its reputation,
and as such is properly categorized as product disparagement. EFS
responds that the statements are actionable under both defamation
and product disparagement. As a result, EFS opposes dismissal of
Counts Three and Four, and seeks to amend its complaint to add a
count for product disparagement. The Court agrees with plaintiff
and finds that the statement can support claims for defamation
and product disparagement.
"As a general rule, a statement is defamatory if it is false,
communicated to a third person, and tends to lower the subject's
reputation in the estimation of the community or to deter third
persons from associating with him." Lynch v. New Jersey Educ.
Ass'n, 735 A.2d 1129, 1135 (N.J. 1999) (citing Restatement
(Second) of Torts §§ 558, 559 (1977)).*fn2 As a cause of
action, defamation "affords a remedy for damage to one's
reputation." Diary Stores, Inc. v. Sentinel Publishing Co.,
516 A.2d 220, 224 (N.J. 1986). By contrast, product disparagement
"consists of the publication of matter derogatory to the
plaintiff's title to his property, or its quality, or to his
business in general, or even to some element of his personal
affairs, of a kind calculated to prevent others from dealing with him or otherwise
to interfere with others to his disadvantage." C.R. Bard, Inc.
v. Wordtronics Corp., 561 A.2d 694, 696 (N.J.Super.Ct. Law
Div. 1989). ...