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New Jersey Physicians United Reciprocal Exchange v. Boynton & Boynton, Inc.

United States District Court, Third Circuit

January 28, 2014



FREDA L. WOLFSON, District Judge.

Before the Court is the Motion of Boynton & Boynton and Kevin Byrne ("Defendants") to Dismiss Counts I (Lanham Act), II (state law libel), V (state law slander), and VIII (New Jersey Insurance Trade Practices Act) of the Complaint of New Jersey Physicians United Reciprocal Exchange ("NJ PURE" or "Plaintiff") for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6).

For the reasons that follow, this Court finds that Plaintiff's Second Amended Complaint (i) states a claim under the Lanham Act in Count I, (ii) states a claim for state law libel in Count II, (iii) states a claim for state law slander in Count V, and (iv) fails to state a claim under the New Jersey Insurance Trade Practices Act in Count VIII. Accordingly, Count VIII of the Second Amended Complaint is dismissed, and Defendants' motion to dismiss Counts I, II, and V is denied.

I. Background

Plaintiff is a New Jersey not-for-profit reciprocal interinsurance exchange in the business of selling malpractice insurance to physicians and other potential policyholders. [Second Amended Complaint, ¶ 1]. According to the allegations in the Second Amended Complaint, Defendant Boynton & Boynton is an insurance broker in the business of soliciting, advertising, and obtaining clients for competitors of Plaintiff in the medical malpractice liability insurance market. [ Id. at ¶ 2]. Defendant Byrne is an employee of Boynton & Boynton. [ Id. at ¶ 3]. Does 1-10 are as yet unidentified individuals whom Plaintiff expects discovery shall reveal to have been responsible for the unlawful conduct of Defendant Boynton & Boynton in an as yet unspecified manner. [ Id. at ¶ 4].

Plaintiff alleges that Defendants have and continue to knowingly make false or misleading written and oral statements to the public critiquing Plaintiff's business operations and insurance services. Specifically, Defendants are alleged to have libeled and slandered Plaintiff in oral and email exchanges between Defendant Byrne and two specifically identified prospective clients of Plaintiff and to have engaged in unfair competitive practices by issuing "Marketplace Updates" to Plaintiff's prospective clients which offer misleading or false comparisons of Plaintiff's financials with those of for-profit competitors served by Defendants. [ Id. at ¶ 24]. While the Second Amended Complaint discusses the content of the emails and "Marketplace Updates" at length, the core of Plaintiff's allegations is that these documents portray as significant certain of Plaintiff's financial indicators and statistics which are not relevant to the financial health of a not-for-profit reciprocal exchange. Plaintiff's competitors, who are Defendants' clients, are for-profit entities for whom these same indicators and statistics are relevant to financial health. The comparison between Plaintiff's and the competitors' indicators and statistics thus is alleged to give a false or misleading impression of Plaintiff's relative inferiority and undesirability as a malpractice insurer to potential clients. As a result of Defendants' allegedly false and misleading statements, Plaintiff claims that it suffered and continues to suffer harm in the form of lost former clients, delays in obtaining new clients, and lost potential future clients. [Second Amended Complaint, ¶ 20]. To redress its injuries, Plaintiff requests both injunctive relief and money damages. [ Id. at p. 29-30 (a)-(g)].

II. Procedural History

Plaintiff initiated this action by Complaint on September 7, 2012, alleging violation of the Lanham Act and asserting New Jersey State libel, slander, tort, and statutory claims. As originally filed, Plaintiff's Lanham Act claim relied exclusively upon email exchanges between Defendant Byrne, a representative of Boynton & Boynton, and two of Plaintiff's prospective clients. Plaintiff alleged that Defendants had engaged in unfair competitive practices by making disparaging false statements about Plaintiff, particularly that Plaintiff's financial position was inferior to that of its competitors and that such financial weakness made it a less desirable provider of insurance. On September 21, 2012, before any defendant had been served with summons, Plaintiff filed an Amended Complaint, which elaborated upon its existing claims.

Defendants moved to dismiss the Amended Complaint on November 9, 2012. On May 3, 2013, this Court denied Defendants' motion without prejudice and instructed that Plaintiff amend its Complaint to include alleged newly discovered information relevant to its claims. Plaintiff filed the Second Amended Complaint on May 17, 2013, which, inter alia, amended the Lanham Act claim to reference, in addition to the aforementioned email exchange, false or misleading promotional materials created by Defendants and disseminated to Plaintiff's present and potential customers. These "Marketplace Updates" were alleged to have contained false or misleading information. Defendant responded, on June 17, 2013, with the motion to dismiss the Second Amended Complaint for failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6) that is now before the Court.

III. Standard of Review

When reviewing a motion to dismiss on the pleadings for failure to state a claim upon which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6), courts "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." Philips v. County of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008) (citation and quotations omitted). It is well settled that a pleading is sufficient if it contains "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). Under the liberal federal pleading rules, it is not necessary to plead evidence, and it is not necessary to plead all the facts that serve as a basis for the claim. Bogosian v. Gulf Oil Corp., 561 F.2d 434, 446 (3d Cir. 1977). However, "[a]lthough the Federal Rules of Civil Procedure do not require a claimant to set forth an intricately detailed description of the asserted basis for relief, they do require that the pleadings give defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." Baldwin County Welcome Ctr. v. Brown, 466 U.S. 147, 149-50 n. 3 (1984) (quotation and citation omitted).

Accordingly, a district court, in weighing a motion to dismiss, asks "not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claim.'" Bell Atlantic v. Twombly, 550 U.S. 544 (2007) (quoting Scheuer v. Rhodes, 416 U.S. 232, 236, 94 (1974)). As the Third Circuit has stated, "a claim requires a complaint with enough factual matter (taken as true) to suggest the required element. This does not impose a probability requirement at the pleading stage, but instead simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of the necessary element." Phillips, 515 F.3d at 234 (quoting Bell Atlantic Corporation v. Twombly, 550 U.S. 544, 547 (2007)) (internal quotation marks omitted). In other words, "only a complaint that states a plausible claim for relief survives a motion to dismiss." Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009). A court need not credit either "bald assertions" or "legal conclusions" in a complaint when deciding a motion to dismiss. In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1429-30 (3d Cir. 1997). The defendant bears the burden of showing that no claim has been presented. Hedges v. U.S., 404 F.3d 744, 750 (3d Cir. 2005) (citing Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1409 (3d Cir. 1991)). Moreover, in deciding a motion to dismiss, the Court may consider the allegations in the complaint, exhibits attached to the complaint, matters of public record, and documents that form the basis of Plaintiff's claim. Lum v. Bank of Am., 361 F.3d 217, 222 n. 3 (3d Cir. 2004).

IV. Jurisdiction

This Court has jurisdiction over the matter pursuant to 28 U.S.C. § 1331 because Count I of the Complaint for relief under the Lanham Act, § 43, codified at 15 U.S.C. § 1125(a), raises a question of federal law. This Court has supplemental jurisdiction over ...

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