American Traffic Solutions, Inc. v. B&W Sensors LLC

Filing 134

MEMORANDUM AND ORDER IT IS HEREBY ORDERED that Defendant's motion for judgment on the pleadings with respect to Counts III and IV of Plaintiff's complaint is DENIED. (Doc. No 80.) Signed by District Judge Audrey G. Fleissig on 3/27/2014. (NCL)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
AMERICAN TRAFFIC SOLUTIONS,
INC.,
Plaintiff,
v.
B&W SENSORS, LLC,
Defendant.

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Case No. 4:13CV0229 AGF

MEMORANDUM AND ORDER
Plaintiff American Traffic Solutions, Inc. (“Plaintiff”) brings this action alleging
ongoing infringement by Defendant B & W Sensors LLC’s (“Defendant”) of Plaintiff’s
patents, U.S. Patent Nos. 8,184,863 (“the ‘863 patent”) and 8,213,685 (“the ‘685 patent”)
(collectively the “patents-in-suit”). In Counts I and II, respectively, Plaintiff asserts that
Defendant’s U.S. Patent No. 8,284,996 (“the ’996 patent”) infringes Plaintiff’s ‘863
patent and its ‘685 patent. In Counts III and IV, respectively, Plaintiff asserts claims for
tortious interference and unfair competition. 1 Now before the Court is Defendant’s
motion for judgment on the pleadings and to dismiss Counts III and IV. For the reasons
set forth below, Defendant’s motion for judgment on the pleadings is denied.

1

Plaintiff originally filed the action in Texas and in the complaint these claims are
asserted under Texas law. The United States District Court for the Eastern District of
Texas granted Defendant’s motion to transfer venue to this District.

BACKGROUND
I. The Allegations
Plaintiff, an Arizona corporation, is engaged in the business of providing,
servicing, and operating video traffic enforcement devices, including red light cameras
and speed detection devices. Plaintiff does not currently practice either the ‘863 or the
‘685 patents and has not commercialized or licensed any of the speed detection systems
described in those patents. Plaintiff does, however, market two other speed detection
systems, RADAR and LiDAR. Plaintiff alleges that these systems directly compete with
Defendant’s system, the Multiple Vehicle Speed Tracking system (“MVST”), described
in Defendant’s ‘996 patent. Plaintiff also alleges that MVST infringes the ‘863 and the
‘685 patents. Plaintiff markets and maintains business relationships and contracts
involving the RADAR and LiDAR systems with municipalities throughout the United
States, including the Saint Louis Metropolitan area.
Defendant is a Missouri limited liability company with a place of business in St.
Louis, Missouri. Defendant also is engaged in the business of providing, servicing, and
operating video traffic enforcement and speed detection devices for municipalities
throughout the United States. Plaintiff acknowledges that the MVST is a direct
competitor of RADAR and LiDAR but denies that it has infringed either the ‘863 or the
‘685 patent.
Plaintiff alleges that it has on-going customer relationships with multiple
municipal governments, has made significant investments in maintaining and cultivating
these relationships, and has entrusted these customers with confidential and sensitive

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competitive information about its research, development, and business such that, in the
absence of Defendant’s interference, there was a reasonable probability that these
customers “would have contracted with [Plaintiff] for speed detection systems based on
their existing relationship with Plaintiff.” Complaint, Doc. No. 1 at ¶ 33. Plaintiff
further alleges that Defendant, upon learning of Plaintiff’s relationships with these
customers, actively recruited those customers by falsely stating that: Plaintiff does not
own video speed detection technology; Plaintiff could not offer or support speed
detection systems and services; and Plaintiff is an expert only in red light cameras and
not video speed detection cameras. See id. at ¶ ¶ 21 & 34. In addition, Plaintiff alleges
that Defendant falsely represented that Defendant, rather than Plaintiff, developed the
patented video speed detection technology, and promoted itself as a superior source of
that technology, and falsely claimed an endorsement of its technology by the Texas
Transportation Institute and Texas A&M University. See id. at ¶¶ 7, 21, 34.
Plaintiff next alleges that Defendant’s intentional interference and wrongful acts
“were neither privileged, nor justified,” because they were “based on false or misleading
information Defendant had provided to [Plaintiff’s] customers,” or “were designed to
wrongfully effect, induct, and contribute to the infringement” of Plaintiff’s patents or
“motivated by the improper purpose of supplying knock-off products that infringe
[Plaintiff’s] patented technology into the market.” Id. at ¶ 35. Further, Plaintiff contends
that Defendant’s acts of interference caused Plaintiff’s customers “to break off their
dealings with [Plaintiff]” and thereby caused damage to Plaintiff’s business, market,
reputation, and goodwill. Id. at ¶¶ 34, 36, 38, 39..
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Finally, Plaintiff alleges that Defendant, in the course of promoting its competing
products to Plaintiff’s customers and prospective customers, made false representations
and deceptive statements concerning Plaintiff and its products, including, among other
things, falsely stating that Plaintiff does not own and cannot offer or support video speed
detection technology. Plaintiff also asserts that these misrepresentations were made to
gain competitive advantage and have caused Plaintiff’s customers to break off their
dealings with Plaintiff and resulted in damage to Plaintiff’s business, market share,
reputation, and goodwill. See id.
II. The Arguments of the Parties
Defendant first argues that Plaintiff’s common law claims for tortious interference
and unfair competition are preempted under federal patent law. Defendant further
contends that Plaintiff has not pled the elements necessary to state a claim for relief on
either count. With respect to Plaintiff’s allegations that Defendant made false
representations in the marketing of MVST, Defendant further contends that Plaintiff is
required and fails to plead fraud with particularity, as set forth in Federal Rule of Civil
Procedure 9(b). Specifically, Defendant argues that compliance with Rule 9(b) is
required because Plaintiff’s tort claims include allegations of fraud or a fraudulent
scheme.
In response, Plaintiff asserts that the tort claims alleged here are not preempted by
federal patent law because they require additional elements of proof apart from those
necessary to demonstrate the alleged infringement. In the alternative, Plaintiff contends
that even if preemption were applicable here, Defendant has waived the preemption
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argument by failing to plead preemption as an affirmative defense. Plaintiff further
argues that it has alleged facts adequate to state a claim for relief with respect to each of
the common law tort claims. Finally, Plaintiff asserts that Rule 9(b) is not applicable to
the claims alleged, but even if it were, that Plaintiff has alleged fraud with sufficient
particularity to satisfy the requirements of Rule 9(b).
APPLICABLE LAW
I. Standard of Review
“After the pleadings are closed–but early enough not to delay trial–a party may
move for judgment on the pleadings.” Fed. R. Civ. P. 12(c). In ruling upon either a Rule
12(c) motion for judgment on the pleadings or a Rule 12(b)(6) motion to dismiss for
failure to state a claim, courts in this Circuit apply the same standard of review. See Bass
v. Anoka County, 2014 WL 683969, at *1 (D. Minn. Feb. 21, 2014) (citing Clemons v.
Crawford, 585 F.3d 1119, 1124 (8th Cir. 2009)). For purposes of either type of motion,
a court must view the allegations of the complaint in the light most favorable to the
plaintiff. See Kottschade v. City of Rochester, 319 F.3d 1038, 1040 (8th Cir. 2003). The
complaint must state “sufficient factual matter, accepted as true, to ‘state a claim to relief
that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A pleading that offers [merely]
‘labels and conclusions’ or ‘naked assertion[s]’ devoid of ‘further factual enhancement’
does not plausibly establish entitlement to relief under any theory.” C.N. v. Willmar
Public Schools, Dist. No. 347, 591 F.3d 624, 634 (8th Cir. 2010) (quoting Iqbal, 556 U.S.
at 678) (internal quotation omitted)). The purpose of this threshold pleading requirement
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is to allow a defendant “to test the legal sufficiency of a complaint so as to eliminate
those actions which are fatally flawed in their legal premises and designed to fail, thereby
sparing litigants the burden of unnecessary pretrial and trial activity.” Flynn v. CTB, Inc.,
No. 1:12–CV–68 SNLJ, 2013 WL 28244, *1 (E.D. Mo. Jan. 2, 2013) (citing Young v.
City of St. Charles, Mo., 244 F.3d 623, 627 (8th Cir. 2001) (internal quotation omitted)).
II. Preemption
A. Preemption as an Affirmative Defense
Federal preemption is an affirmative defense. Wuebker v. Wilbur-Ellis Co., 418
F.3d 883, 886 (8th Cir. 2005) (recognizing that “preemption is an affirmative defense”);
see also Fed. R. Civ. P. 8(c) (noting that “[i]n responding to a pleading, a party must
affirmatively state any avoidance or affirmative defense”); Jacobs Mfg. Co. v. Sam
Brown Co., 19 F.3d 1259, 1266 (8th Cir. 1994). Failure to plead an affirmative defense
may, but will not always, result in waiver of that defense. See First Union Nat. Bank v.
Pictet Overseas Trust Corp., 477 F.3d 616, 622 (8th Cir. 2007) (quotation omitted). The
Eighth Circuit has rejected a formalistic approach to Rule 8(c) and the waiver of
affirmative defenses. Instead it holds that “[w]hen an affirmative defense is raised in the
trial court in a manner that does not result in unfair surprise . . . technical failure to
comply with Rule 8(c) is not fatal.” Id.; see also Sanders v. Dep’t of the Army, 981 F.2d
990, 991 (8th Cir.1992) (concluding that a district court did not abuse its discretion by
allowing an affirmative defense to be raised for the first time on a motion to dismiss).

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B. Patent Law and the Preemption of State Tort Claims
The Supreme Court recognizes three types of preemption: express, field, and
conflict. English v. Gen. Elec. Co., 496 U.S. 72, 78-79 (1990). Pursuant to the doctrine
of conflict preemption, which the parties agree is at issue here, state law is preempted “to
the extent that it actually conflicts with federal law” or where it ‘“stands as an obstacle to
the accomplishment and execution of the full purposes and objectives of Congress.’” Id.
at 79 (quoting Hines v. Davidowitz, 312 U.S. 52, 67 (1941)).
For purposes of patent claims, the Federal Circuit has adopted a “conduct-based”
approach to conflict preemption. See Hunter Douglas, Inc. v. Harmonic Design, Inc.,
153 F.3d 1318, 1335 (Fed. Cir. 1998), overruled on other grounds, Midwest Indus., Inc.
v. Karavan Trailers, Inc., 175 F.3d 1356, 1359 (Fed. Cir. 1999). This approach directs
courts to look to the nature of the conduct alleged in order “[t]o determine whether . . .
state law torts are in conflict with federal patent law and accordingly preempted . . . .” Id.
Courts applying this approach hold that state law tort claims are not preempted
where the state law claims ‘“include additional elements not found in the federal patent
law cause of action and . . . are not an impermissible attempt to offer patent-like
protection to subject matter addressed by federal law.’” Sukumar v. Nautilus, Inc., 829 F.
Supp. 2d 386, 397 (W.D. Va. 2011) (quoting Rodime PLC v. Seagate Tech., Inc., 174
F.3d 1294, 1306 (Fed. Cir. 1999)); see also Dow Chem. Co. v. Exxon Corp., 139 F.3d
1470, 1473 (Fed. Cir. 1998) (holding that a state tort claim such as tortious interference
“is not preempted by the federal patent law, even if it requires . . . adjudicat[ion of] a
question of federal patent law, provided the state law cause of action includes additional
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elements not found in the federal patent law cause of action and is not an impermissible
attempt to offer patent-like protection to subject matter addressed by federal law”).
Applying these principles, courts have held that claims of tortious interference or
unfair competition are not preempted by strict liability patent infringement claims
because the tort claims require proof of knowledge or intent, or other elements that
ensure that the claims are not inconsistent with, or a duplicative method for the
enforcement of patent rights. See, e.g., Cal. Table Grape Comm’n v. RB Sandrini, Inc.,
No. 1:06-cv-00842-OWW-TAG, 2007 WL 1847631, at *27 (E.D. Cal. June 27, 2007)
(rejecting the argument that federal patent law preempts claims for unfair competition
and tortious interference because the state tort claims “have different elements and do not
constitute an impermissible attempt to offer patent-like protection” to unpatented
products); Agrizap, Inc. v. Woodstream Corp., 450 F. Supp. 2d 562, 566 (E.D. Pa. 2006)
(rejecting preemption argument where patent infringement was alleged as basis for unfair
competition and misrepresentation claims, because the tort claims required proof of
elements not required to prove infringement); Cryovac Inc. v. Pechiney Plastic
Packaging, Inc., 430 F. Supp. 2d 346, 359 (D. Del. 2006) (holding that federal patent law
did not preempt a state tortious interference claim where patent infringement provided the
“wrongful conduct” element of interference; tort claim was asserted in conjunction with,
and did not conflict with, patent law and required proof of additional elements, including
mental state and the existence and loss of a business expectancy).

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III. The Tort Claims
As noted above, Plaintiff originally pled its common law tort claims under Texas
law. Defendant now questions Plaintiff’s basis for asserting these claims under Texas
law, and suggests that the alleged tortious acts occurred in Missouri and Tennessee, and
that either Missouri or Tennessee law may be applicable to these claims. However,
Defendant has not briefed the choice of law issue or asserted that the Court’s
determination would be altered by the application of Missouri or Tennessee law rather
than Texas law. In the absence of the parties’ further development of the issue, the Court
presumes that Texas law is applicable. The Court notes, however, that its review of the
Texas and Missouri cases offered by the parties indicates that under the law of either
state, the elements of the torts asserted are substantially identical.
A. Tortious Interference
Under Texas law “[t]he elements of a cause of action for tortious interference with
an existing contract are: (1) the plaintiff had a valid contract; (2) the defendant willfully
and intentionally interfered with the contract; (3) the interference proximately caused the
plaintiff’s injury; and (4) the plaintiff incurred actual damage or loss.” Fisher v. Blue
Cross Blue Shield of Texas., Inc., No. 3:10-cv-2652-L-BK, 2011 WL 11703781, at *9
(N.D. Tex. June 27, 2011) (citation omitted). And the elements of a claim for tortious
interference with a prospective business relationship are: “(1) a reasonable probability
that the plaintiff would have entered into a contractual relationship; (2) an intentional or
malicious act by the defendant that prevented the relationship from occurring with the
purpose of harming the plaintiff; (3) lack of privilege or justification for the act; and (4)
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actual harm or damage incurred as a result of the defendant’s interference.” Id. (citation
omitted).
Under Missouri law, the elements of a claim for tortious interference with a
contract or business expectancy are substantially similar and require: (1) the existence of
a contract or valid business expectancy; (2) defendant’s knowledge of the contract or
business relationship; (3) breach or loss of the expectancy induced or caused by
defendant’s intentional interference; (4) the absence of justification; and (5) damages.
See McGuire v. Tarmac Envt’l. Co., 293 F.3d 437, 441 (8th Cir. 2002); see also Clinch v.
Heartland Health, 187 S.W.3d 10, 15 (Mo. Ct. App. 2006) (citing Rice v. Hodapp, 919
S.W.2d 240, 245 (Mo. 1996)). In this context, Missouri courts apply a “but-for” test of
causation and inquire whether a defendant took active and affirmative steps to induce the
breach or loss; and if so, whether the contract or expectancy would have been performed
absent the defendant’s interference. See McGuire, 293 F.3d at 441.
B. Unfair Competition
Under Texas law, the tort of unfair competition is treated as ‘“the umbrella for all
statutory and non-statutory causes of action arising out of business conduct which is
contrary to honest practice in industrial or commercial matters.’” Taylor Publ’g Co. v.
Jostens, Inc., 216 F.3d 465, 486 (5th Cir. 2000) (citation omitted) (applying Texas law).
A plaintiff alleging unfair competition under Texas law must establish that the defendant
committed an illegal act, which must be, at the very least, an independent tort, that
“interfered with the plaintiff’s ability to conduct its business.” Id. The illegal act need
not, however, amount to a criminal violation. Id. For example, the torts of false
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advertising, business disparagement, and tortious interference with a reasonable business
expectancy have each been held sufficient under Texas law to satisfy the independent tort
element of a claim for unfair competition. Id.
Under Missouri law, the test for unfair competition is “whether the defendant’s
acts are such as are calculated to deceive the ordinary buyer making his purchases under
the ordinary conditions which prevail in the particular trade to which the controversy
relates.” Hubbs Mach. & Mfg., Inc. v. Brunson Instr. Co., 635 F. Supp. 2d 1016, 1018-19
(E. D. Mo. 2009) (applying Missouri law); see also American Equity Mortg., Inc. v.
Vinson, 371 S.W.3d 62, 64 (Mo. Ct. App. 2012) (unfair competition consists of passing
off or attempting to pass off the business of one as the business of another) (citing Nat’l
Motor Club of Mo., Inc. v. Noe, 475 S.W.2d 16, 19-20 (Mo.1972)).
When analyzing unfair competition claims, Missouri courts look to the
Restatement (Third) of Unfair Competition. See Hubbs Mach. & Mfg., Inc, 635 F. Supp.
2d at 1019 (internal citation omitted). Under the Restatement, liability for causing harm
to the commercial relations of another can result from “acts or practices relating to (1)
deceptive marketing; (2) infringement of trademarks and other indicia of identification;
and (3) appropriation of intangible trade values including trade secrets and the right of
publicity.” Id. (citing Restatement (Third) of Unfair Competition § 1 (1995)).
IV. Pleading Requirements Under Rule 9(b)
A. Application to Common Law Torts
Rule 9(b) provides that “all averments of fraud or mistake . . . shall be stated with
particularity.” The heightened pleading requirements of Rule 9(b) do not automatically
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apply to claims of tortious interference or unfair competition. See, e.g., Merrill Lynch,
Pierce, Fenner & Smith, P.C. v. Greystone Servicing Corp., No. 3:06-CV-0575-P, 2007
WL 2729935, at *14 (N.D. Tex. Sept. 18, 2007) (applying Texas law and concluding that
Rule 9(b) should not be applied to claims for tortious interference unless those allegations
are “intertwined” with allegations of fraud). Nevertheless, courts hold that the
heightened pleading standard applies if a claim rests on allegations of fraudulent or
misleading conduct even if fraud is not a required element of the claim. See, e.g.,
Monsanto Co. v. E.I. DuPont de Nemours and Co., No. 4:09CV00686 ERW, 2012 WL
3765059, at *3 (E.D. Mo. Aug. 30, 2012) (noting the application of Rule 9(b) to unfair
competition and related claims based on allegations of false statements); SL Montevideo
Technology v. Eaton Aerospace, L.L.C., 292 F.Supp.2d 1173, 1179 (D. Minn. 2003)
(noting that Rule 9(b) is clear that “all averments of fraud or mistake . . . shall be stated
with particularity”) (emphasis supplied). By contrast, malice, intent, knowledge, and
other conditions of mind are not subject to the particularity requirement and may be
averred generally. See Fed. R. Civ. P. 9(b).
B. Required Particularity
Under Rule 9(b), “the circumstances constituting fraud . . . shall be stated with
particularity.” “Put another way, ‘[w]hen pleading fraud, a plaintiff cannot simply make
conclusory allegations.’” Foam Supplies, Inc. v. The Dow Chemical Co., No.
4:05CV1772 CDP, 2006 WL 2225392, at *13 (E.D. Mo. Aug. 2, 2006) (quoting Roberts
v. Francis, 128 F.3d 647, 651 (8th Cir.1997) (citation omitted)). To satisfy the
requirements of Rule 9(b) the pleadings should contain allegations concerning “the time,
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place, and contents of the alleged fraud; the identity of the person allegedly committing
fraud; and what was given up or obtained by the alleged fraud.” Id. at *14 (internal
quotation omitted).
A plaintiff need “not necessarily plead all of these factors under Rule 9(b), but
must plead ‘enough so that his/her pleadings are not merely conclusory.’” Id. (quoting
Roberts, 128 F.3d 647 at n. 5). In sum, “[t]he special nature of fraud does not necessitate
anything other than notice of the claim; it simply necessitates a higher degree of notice,
enabling the defendant to respond specifically, at an early stage in the case, to potentially
damaging allegations of immoral and criminal conduct.” Abels v. Farmers Commodities
Corp., 259 F.3d 910, 920 (8th Cir. 2001); see also Drobnak v. Andersen Corp., 561 F.3d
778, 783-84 (8th Cir. 2009) (explaining that one alleging fraud as a component of a claim
must plead “the who, what, where, when, and how of the alleged false representation”)
(internal quotation omitted); Axcan Scandipharm, Inc. v. Ethex Corp., 585 F. Supp. 2d
1067, 1084 (D. Minn. 2007) (noting that Rule 9(b) is satisfied if the complaint
sufficiently apprises the defendant “‘of the nature of the claim and the acts . . . relied
upon by the plaintiff’ as constituting the unlawful conduct”) (ellipsis in original) (quoting
5A Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure: Civ. 2d §
1297 (3d ed. 2007)).
DISCUSSION
I. Preemption
As a preliminary matter, the Court holds that Defendant has not waived
preemption as an affirmative defense. A finding of waiver is not justified here inasmuch
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as Defendant raised the preemption defense relatively early in the litigation and in a
manner that has not resulted in unfair surprise and permits Plaintiff to fully respond to the
asserted defense. See First Union Nat. Bank, 477 F.3d at 622.
Upon review of Plaintiff’s allegations in Counts III and IV, the Court further
concludes that neither of those claims is preempted by federal patent law. Although each
claim makes reference to Defendant’s alleged infringing activities, it also requires proof
of an additional element, such as knowledge or causation that is not a part of the patent
claim. See Dow Chem. Co., 139 F.3d at 1473. In addition, the Court finds no indication
that Plaintiff’s pursuit of these claims is an attempt to extend “patent-like protection to
products or processes unpatentable under federal patent law.” Sukumar, 829 F. Supp. 2d
at 397 (internal quotation omitted).
The Court does not agree with Defendant’s assertion that the state tort claims
alleged here are premised solely upon the purported acts of patent infringement. Rather,
Plaintiff asserts associated, but distinct, misconduct related to the alleged infringement.
This associated conduct involves knowing and intentional misrepresentations that
interfered with Plaintiff’s ability to obtain and maintain contracts, customer relationships,
and market share. Where, as here, the act of patent infringement supplies only one
element of the alleged tort, the tort claim is not preempted. See Agrizap, Inc., 450 F.
Supp. 2d at 566. In addition, compensation for such injury is distinguishable from, but
consistent with, the goals of the federal patent laws and therefore, not preempted.
Sukumar, 829 F. Supp. 2d at 397.

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II. Plaintiff has Adequately Alleged its Tort Claims
Defendant also moves for dismissal of Plaintiff’s claims for intentional
interference with a business expectancy and unfair competition on the ground that
Plaintiff fails to state a claim upon which relief can be granted. Upon review of the
pleadings, the Court concludes that Plaintiff has set forth factual allegations sufficient to
plead the required elements of each of those claims.
A. Tortious Interference
Specifically, Plaintiff alleges that it had on-going customer relationships and
contracts as well as a significant investment in maintaining and cultivating these
relationships, and that, in the absence of Defendant’s interference, there was a reasonable
probability that these customers “would have contracted with [Plaintiff] for speed
detection systems based on their existing relationship with Plaintiff.” Doc. No.1 at ¶ 33.
Plaintiff also alleges that Defendant, upon learning of Plaintiff’s relationships with these
customers, actively recruited those customers by way of misrepresentations that “were
neither privileged, nor justified,” because they were “based on false or misleading
information Defendant had provided to [Plaintiff’s] customers,” or “were designed to
wrongfully effect, induct, and contribute to the infringement” of [Plaintiff’s] patents or
“motivated by the improper purpose of supplying knock-off products that infringe
[Plaintiff’s] patented technology into the market.” Id. at ¶ 35. And finally, Plaintiff
alleges that Defendant’s acts of interference caused Plaintiff’s customers “to break off
their dealings with [Plaintiff]” and thereby caused damage to Plaintiff’s business, market,
reputation, and goodwill. Id. at ¶¶ 34, 36, 38, & 39.
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These allegations are more than sufficient to state a cause of action for intentional
interference with a business expectancy or contract. See, e.g., Fisher, 2011 WL
11703781, at *9 (finding under Texas law that plaintiff’s complaint “properly pled a
claim for tortious interference that gives the [d]efendant fair notice of what the claim is
and the grounds upon which it rests”); Clinch v. Heartland Health, 187 S.W.3d 10, 15
(Mo. Ct. App. 2006) (same, under Missouri law).
B. Unfair Competition
With respect to the claim of unfair competition, Plaintiff alleges that Defendant
falsely represented to purchasers and potential purchasers of video speed detection
technology that Plaintiff did not own and could not offer or support such speed detection
systems; and did not have expertise in the field of speed detection cameras. See id. at ¶ ¶
21 & 34. In addition, Plaintiff alleges that Defendant falsely represented that Defendant,
rather than Plaintiff, developed the patented video speed detection technology, and
falsely claimed an endorsement of its technology by the Texas Transportation Institute
and Texas A&M University. See id. at ¶¶ 7, 21, 34. Plaintiff further alleges that, by way
of these representations, Defendant unfairly claimed that it could offer the expertise and
advantages attributable to Plaintiff and its systems, in order to gain a competitive
advantage over Plaintiff in the market for video speed detection systems. The Court
concludes that these allegations are more than sufficient to state a cause of action for
unfair competition. See Taylor Publ’g Co., 216 F.3d at 486 (applying Texas law);
American Equity Mortg., Inc, 371 S.W.3d at 64 (applying Missouri law).

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III. Plaintiff has Pled its Claims with the Required Particularity
Defendant has not offered and the Court has not identified a case in which Rule
9(b)’s heightened pleading requirements were applied to a claim for tortious interference
with a business expectancy. Recognizing however, that Plaintiff’s tort claims both
involve alleged misrepresentations, the Court assumes, without deciding, that Rule 9(b) is
applicable to those allegations.
Applying the heightened pleading standard here, the Court is satisfied that
Plaintiff’s claims for tortious interference and unfair competition are pled with the
requisite particularity. Plaintiff pleads the who (Defendant), what (false statements and
advertising), where (on Defendant’s website and in statements directed to Plaintiff’s
customers), when (since learning of Plaintiff’s relationships with its customers), how
(falsely stating, among other things, that Plaintiff does not own video speed detection
technology, that Plaintiff could not offer or support speed detection systems and services,
and that Plaintiff is only an expert in red light cameras and not speed cameras), and why
(to obtain business from Plaintiff’s long term and prospective customers and to gain an
unfair competitive advantage).2 In so doing, Plaintiff has apprised Defendant “‘of the
nature of the claim and the acts . . . relied upon by the plaintiff’ as constituting the

2

Although the parties have conducted only limited discovery for purposes of the
motion for preliminary injunction, the record already contains additional detail with
respect to these questions. See Doc. No. 2, at 2; Doc. No. 2-8, Ex. 5 (quoting statements
of Defendant’s founder, John Baine, with respect to Defendant’s product); Doc. No. 26,
at 10-11 (providing additional information regarding representations that the Texas
Transportation Institute and Texas A&M University endorsed Defendant’s product over
Plaintiff’s).
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unlawful conduct.” Axcan Scandipharm, 585 F. Supp. 2d at 1084 (internal quotations
omitted).
Defendant argues that these allegations are insufficient because they fail to
identify specific dates and times and the individuals who allegedly made the statements.
The Court does not agree. All particulars are not required, and here the allegations
provide sufficient notice to enable Defendant to respond specifically, at an early stage in
the case, to potentially damaging allegations of misrepresentation. See Abels, 259 F.3d at
920; see also Foam Supplies, Inc, 2006 WL 2225392, at *13.
The Court is satisfied that Defendant has sufficient notice of the factual basis of
Plaintiff’s claims, to permit it adequately to respond. Whether Plaintiff will be able,
through discovery, to develop sufficient detailed evidence regarding the alleged
misrepresentations to survive a motion for summary judgment, is a question for another
day. See Roberts, 128 F.3d at 647 n. 5.
Accordingly,
IT IS HEREBY ORDERED that Defendant’s motion for judgment on the
pleadings with respect to Counts III and IV of Plaintiff’s complaint is DENIED. (Doc.
No 80.)

AUDREY G. FLEISSIG
UNITED STATES DISTRICT JUDGE
Dated this 27th day of March, 2014.

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