AGC Networks Inc. v. Relevante Inc. et al
MEMORANDUM ORDER re 17 MOTION to Dismiss Counterclaim filed by AGC Networks Inc. is GRANTED. Signed by Judge Leonard P. Stark on 3/31/15. (ntl)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
AGC NETWORKS, INC.,
RELEVANTE, INC., JOSH HADFIELD,
ANTHONY MILLER, SCOTT SMITH,
RICHARDTARITY, JENNIFER WAGNER,
and EILEEN WAINWRIGHT,
C.A. No. 14-308-LPS
At Wilmington this 31st day of March, 2015:
Having reviewed the motion to dismiss counterclaims filed by Plaintiff AGC Networks,
Inc. ("Plaintiff'), and the papers submitted in connection therewith (D.1. 17, 18, 19, 21, 22),
IT IS HEREBY ORDERED that, for the reasons stated below, the Motion to Dismiss is
GRANTED and the counterclaim asserted by Defendant Relevante, Inc. ("Defendant") is
Background. Plaintiff filed this lawsuit against Defendants for allegedly "execut[ing] an
elaborate scheme to steal AGC's established customers, suppliers, distributors, and vendors, in
addition to AGC's top managers, engineers, and sales associates." (D.I. 18 at 1) The complaint
was filed on March 6, 2014. (D.I. 1) Thereafter, on April 1, 2014, AGC sent letters to some of
its former customers informing them of the complaint and requesting that they preserve
electronically stored information that might be relevant to the issues in this case (the
"Preservation Letters"). (D .I. 18 at 6-7; D .I. 19 Ex. A) Defendant then asserted a counterclaim
against AGC for tortious interference with prospective business activities, alleging that, by
sending the Preservation Letters, Plaintiffs intentionally and wrongfully interfered with
Defendant's business relationships or expectancies with those third parties. (D.I. 16 at 15-19)
AGC has filed a motion to dismiss Defendant's sole counterclaim. (D.I. 17) AGC's
motion is predicated on the contention that the communications on which the tortious
interference claim is based (the Preservation Letters) are subject to the absolute litigation
privilege associated with communications made during the course of judicial proceedings.
Therefore, according to AGC, Defendant has failed to state a claim on which relief may be
Legal Standards. When presented with a motion to dismiss under Federal Rule of Civil
Procedure 12(b)(6), courts conduct a two-part analysis. See Fowler v. UPMC Shadyside, 578
F.3d 203, 210 (3d Cir. 2009). First, courts separate the factual and legal elements of a claim,
accepting "all of the complaint's well-pleaded facts as true, but may disregard any legal
conclusions." Id. at 210-11. This first step requires courts to draw all reasonable inferences in
favor of the non-moving party. See Maio v. Aetna, Inc., 221 F.3d 472, 500 (3d Cir. 2000).
However, the Court is not obligated to accept as true "bald assertions," Morse v. Lower Merion
Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997), ''unsupported conclusions and unwarranted
inferences," Schuylkill Energy Res., Inc. v. Pa. Power & Light Co., 113 F.3d 405, 417 (3d Cir.
1997), or allegations that are "self-evidently false," Nami v. Fauver, 82 F.3d 63, 69 (3d Cir.
Second, courts determine "whether the facts alleged in the complaint are sufficient to
show that the plaintiff has a 'plausible claim for relief."' Fowler, 578 F.3d at 211 (quoting
Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009)). A claim is facially plausible "when the plaintiff
pleads factual content that allows the court to draw the reasonable inference that the defendant is
liable for the misconduct alleged." Iqbal, 556 U.S. at 678. This is a context-specific
determination, requiring the court "to draw on its judicial experience and common sense." Id. at
679. At bottom, "[t]he complaint must state enough facts to raise a reasonable expectation that
discovery will reveal evidence of [each] necessary element" of a claim. Wilkerson v. New Media
Tech. Charter Sch. Inc., 522 F.3d 315, 321 (3d Cir. 2008) (internal quotation marks omitted).
"[W]hen the allegations in a complaint, however true, could not raise a claim of
entitlement to relief, this basic deficiency should ... be exposed at the point of minimum
expenditure of time and money by the parties and the court." Bell Atl. Corp. v. Twombly, 550
U.S. 544, 558 (2007) (internal quotation marks omitted). Finally, although a non-fraud claim
need not be pied with particularity or specificity, that claim must "give the defendant fair notice
of what the ... claim is and the grounds upon which it rests." Id. at 555.
Discussion. The parties agree that Defendant has satisfied the pleading standards of Rule
12(b)(6) so long as the Court finds that the claim for tortious interference with business prospects
is not barred by the Delaware's absolute litigation privilege. That is, application of the absolute
privilege doctrine is the sole issue presented by AGC's motion.
Delaware adheres to the common law rule of "absolute privilege" that "protects from
actions for defamation statements of judges, parties, witnesses and attorneys offered in the course
of judicial proceedings so long as the party claiming the privilege shows that the statements
issued as part of a judicial proceeding and were relevant to the matter at issue in the case."
Barker v. Huang, 610 A.2d 1341, 1345 (Del. 1992). Here, then, the Court must determine
whether: (1) AGC's statements in the Preservation Letters were made during the course of a
judicial proceeding; (2) if so, whether the content of AGC's statements was relevant to this
action; and (3) whether Delaware's absolute privilege doctrine is limited to the tort of
defamation. The Court has concluded it agrees with AGC on all three questions.
First, the statements in the Preservation Letters were made during the course of a judicial
proceeding. Delaware's privilege is "not narrowly confined to intra-courtroom events, but
extends to all communications appurtenant thereto such as conversations between witnesses and
counsel, the drafting of pleadings, and the taking of depositions or affidavits ex parte." Nix v.
Sa1'i'.)'er, 466 A.2d 407, 410 (Del. Super. Ct. 1983) (internal citations omitted). The allegedly
tortious statements in this case were made in the form of the Preservation Letters, which was
correspondence sent to potential third-party witnesses in an effort to preserve evidence. These
statements, therefore, occurred in the course of a judicial proceeding. Hence, "the contacts ...
with [D]efendants' customers in this case were preliminary steps in the preparation of plaintiff's
case and thus were made during the course of a judicial proceeding." Hoover v. Van Stone, 540
F. Supp. 1118, 1123 (D. Del. 1982).
Second, the content of AGC's statements in the Preservation Letters were relevant to this
action. "This requirement ofrelevancy, however, has been liberally construed.[ 1] Strict legal
relevance need not be demonstrated; instead the allegedly defamatory statements must have only
'This liberal construction promotes the "purpose served by the absolute privilege," which
is ''to facilitate the flow of communication between persons involved in judicial proceedings and,
thus, to aid in the complete and full disclosure of facts necessary to a fair adjudication." Hoover,
540 F. Supp. at 1122.
some connection to the subject matter of the pending action." Id. at 1121. As in Hoover,
[t]he disclosure of the existence of the suit in the form letter sent to
[Defendant's] customers and the description of the allegations of
the complaint ... were reasonably calculated to obtain responsive
information concerning each customer's transactions ....
Accordingly, the alleged defamatory statements made in this case
were pertinent to the subject matter of the suit and are absolutely
Id. at 1123-24.
Finally, the Preservation Letters are within the scope of the absolute privilege even
though Defendant has not asserted a defamation claim. Defendant argues that the absolute
privilege only applies to defamation claims, pointing out that in Hoover there was an underlying
defamation claim which is absent here. As the Delaware Supreme Court has explained,
The absolute privilege would be meaningless if a simple recasting
of the cause of action from 'defamation' to 'intentional infliction
of emotional distress' or 'invasion of privacy' could void its effect.
... To the extent that such statements were made in the course of
judicial proceedings, they are privileged, regardless of the tort
theory by which the plaintiff seeks to impose liability.
Barker, 610 A.2d at 1349. The Court is not persuaded that Delaware law protects defamatory
false statements but does not protect non-defamatory truthful 2 statements that meet the other
requirements for application of the absolute litigation privilege.
UNITED STATES DISTRICT JUDGE
As Defendant acknowledges, it "makes no allegations in its counterclaim about the
falsity of any statement or communication made by AGC to its former customers regarding this
litigation." (D.I. 21 at 12)
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