READ v. PROFETA et al

Filing 38

OPINION. Signed by Judge Kevin McNulty on 1/11/2017. (jr)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
PHILIP READ,
•

No. 15-cv-2637 (KM)

.

Plaintiff,
V.

OPINION

PAUL PROFETA; PAUL V. PROFETA
& ASSOCIATES; RADIUS: BRICK
CITY & BEYOND; STEVEN
COLEMAN; and WILLIAM KOHN,
Defendants.
This state-law action arises out of the parties’ collaboration to develop a
magazine focused on redevelopment in Newark, New Jersey. On April 15, 2016,
this Court granted in part and denied in larger part the defendants’ motion to
dismiss the complaint of the plaintiff, Phillip Read. (ECF nos. 23, 24) Mr. Read
filed an amended complaint,’ which the defendants answered. (ECF no. 30) On
behalf of defendants Paul Profeta, Paul V. Profeta and Associates, and Radius:
2
Brick City & Beyond, the Answer asserts a Counterclaim. The Counterclaim
contains five state-law causes of action: malicious abuse of process, tortious
interference with a prospective economic benefit, defamation, tortious
interference with contract, and the tort of false light. Read now moves to
dismiss all five Counts of the Counterclaim for failure to state a claim pursuant
to Fed. R. Civ. P. 12(b)(6). (ECF no. 33)

The Amended Complaint includes all counts that survived the earlier motion to
dismiss and adds an amended version of the dismissed cause of action for breach of
fiduciary duty. (ECF no. 25) My earlier opinion dismissed a cause of action under the
New Jersey RICO statute, N.J. Stat. Ann. § 2C:41-1 et seq. Read has dropped the
NJRICO cause of action from the amended complaint.
For simplicity, the defendants/counterclaim plaintiffs will be referred to
collectively as “Profeta.” Defendant Paul Profeta, the individual, will be referred to as
“Mr. Profeta.” Paul V. Profeta and Associates will be referred to as “Associates.”
Radius: Brick City & Beyond will be referred to as Radius.
2

1

For the reasons explained below, I find that Profeta has stated tort
counterclaims for defamation and false light (Counts 1 and 5). I will dismiss
Profeta’s counterclaims for tortious interference (Counts 2 and 4) and
malicious abuse of process (Count 3).

3
Background
Read, formerly of The Star-Ledger, alleges that he pitched an idea for a
new magazine to defendant Paul Profeta, a business man and owner of
defendant Paul V. Profeta & Associates (“Associates”). The new magazine, to be
called The Downtowner, was to focus on economic development in downtown
Newark, New Jersey. According to Mr. Read, the magazine would fill a gap in
coverage left as a result of diminishing resources at The Star-Ledger. Read
alleges that he met with Newark community leaders and funding sources, and
put together a prototype, from time to time meeting with Mr. Profeta and others
at his firm—including defendants Steven Coleman, the CFO of Associates, and
William Kohn, legal counsel for Associates—to develop plans for the content
and business model of The Downtowner. By Read’s account, Mr. Profeta,
Associates, and various funding sources embraced his nascent magazine,
which, by the end of 2012, was ready for print. (See generally AC ¶j 10—46)4
According to Read, at some point in 2013, Mr. Profeta abruptly stopped
communicating with Read and in August 2013, launched his own Newarkbased magazine called Radius: Brick City & Beyond (“Radius”). (Id.

¶J

49—50)

I refer the reader to the Court’s April 15, 2016 opinion for further background
regarding Read’s claims.
3

The following abbreviations are used herein:
AC

=

Amended Complaint, ECF no. 25

CC

=

Counterclaim, ECF no. 30 at 15—2 1

Br. = Plaintiffs Memorandum in Support to Motion to Dismiss Defendant’s
Counterclaim with Prejudice, ECF no. 33-1
Opp. = Defendants’ Brief in Opposition to Plaintiff’s Motion to Dismiss the
Counterclaim, ECF nos. 35, 36 (identical filings)
Reply = Plaintiffs Reply to the Opposition of Defendants’ to Plaintiffs Motion to
Dismiss the Defendants’ Counterclaim, ECF no. 37 (mistitled as a reply in
opposition to defendant’s motion to dismiss complaint)
2

Mr. Read claims that the staff and funding sources for Radius included persons
and entities previously slated to fund and staff The Downtowner. (Id.

¶

51—53)

Read claims that this series of events amounts to theft of his ideas and work
efforts, “which were worth in excess of $200,000.” (Id.

¶

54)

The defendants’ counterclaim offers a different perspective. After
“thoroughly exploring the feasibility of Read’s business plan,” Mr. Profeta
concluded, and explained to Mr. Read, that Read’s proposed business plan for
The Downtowner was not financially feasible. (CC

¶J

8—9) When Read declined

Mr. Profeta’s counterproposal to follow a “freelance” business model for the
magazine, the two parted ways and separately pursued independent plans to
create a magazine. (Id.

¶ ¶10—11)

The defendants say that Radius is distinct

from the The Downtowner concept in that it is not solely focused on Newark’s
downtown; is distributed free of charge; and is targeted to an affluent market
outside of Newark. (Id.

¶J

13—14) Radius, they say, has been well-received, but

has not had commercial success. Nevertheless, according to Profeta, the
launch of Radius so incensed Read that he has taken to communicating to
third parties that Profeta stole Read’s business plan and magazine concept,
and has “filed and continued to maintain a meritless Complaint” (i.e., this
action) “so as to make room for” The Downtowner in the market. (Id. ¶j 16—19)5

Legal Standard
Mr. Read has moved to dismiss the Counterclaims for failure to state a
claim, pursuant to Fed. R. Civ. P. 12(b)(6). Rule 12(b)(6) provides for the
dismissal of a counterclaim, in whole or in part, if it fails to state a claim upon
which relief can be granted. The plaintiff, as the moving party, bears the
burden of showing that no claim has been stated. Animal Science Products, Inc.

The Downtowner has never been published. I take judicial notice that the
Summer 2016 issue of Radius contained a Publisher’s Note by Mr. Profeta announcing
that the magazine was losing $50,000 per quarterly issue, and that unless he could
rectify that situation, publication would cease at the end of the calendar year. No
further information as to its status is readily available.

3

v. China Minmetals Corp., 654 F.3d 462, 469 n. 9 (3d Cir. 2011). For the
purposes of a motion to dismiss, the facts alleged in the pleading are accepted
as true and all reasonable inferences are drawn in favor of the party asserting
the claim. New Jersey Carpenters & the Trustees Thereof v. Tishman Const.
Corp. of New Jersey, 760 F.3d 297, 302 (3d Cir. 2014).
Federal Rule of Procedure 8(a) does not require that a pleading contain
detailed factual allegations. Nevertheless, “a [pleading party’s] obligation to
provide the ‘grounds’ of his ‘entitlement to relief’ requires more than labels and
conclusions, and a formulaic recitation of the elements of a cause of action will
not do.” Bell Ati. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Thus, a
counterclaim’s factual allegations must be sufficient to raise a defendant’s right
to relief above a speculative level, so that a claim is “plausible on its face.” Id.
at 570; see also West Run Student Housing Assocs., LLC v. Huntington Nat.
Bank, 712 F.3d 165, 169 (3d Cir. 2013). That facial-plausibility standard is met
“when the [party] pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556).
While “[t]he plausibility standard is not akin to a ‘probability requirement’.
it asks for more than a sheer possibility.” Iqbal, 556 U.S. at 678.
Analysis
1. Malicious abuse of process (Count 11
Profeta’s Counterclaims are not titled, but the parties seem to agree that
Counterclaim Count 1 asserts a claim of malicious abuse of process. See
generally LoBiondo v. Schwartz, 199 N.J. 62, 80 & n.5, 89—90 & n.9, 970 A.2d
1007, 1017 n.5 & 1022 n.9 (2009) (noting that malicious abuse of process is
distinct from malicious use of process).
The New Jersey Supreme Court has identified the distinct torts of
malicious prosecution, malicious use of process, and malicious abuse of
process as “a group of closely related torts that, although ancient in origins, are
treated with great caution because of their capacity to chill resort to our courts
by persons who believe that they have a criminal complaint or civil claim
4

against another.” LoBiondo, 199 N.J. at 89, 970 A.2d at 1022. I, too, am wary
of any expansive interpretation that would routinely permit a defendant to take
ordinary denials in its Answer and weaponize them as a tort counterclaim.
6

In that respect, it is particularly important to distinguish malicious abuse of
process, asserted here, from the related tort of malicious use of process.

6

Malicious use of process is the civil analog of malicious prosecution; indeed, the
name malicious prosecution is sometimes used for both. It is the tort that may arise
from the filing of an unfounded complaint simpliciter. A disfavored tort, malicious use
of process is hedged in by substantive protections:
Courts do not favor actions for malicious use of process because of
judicial indulgence accorded a person who resorts to court process for its
intended purpose even though he did not have probable cause to do so.
Because it is often difficult to distinguish between a plaintiff who is naive
and a plaintiff who is a knave, courts protect both indiscriminately by
requiring a plaintiff bringing an action for malicious use of process to
prove not only that the defendant brought the underlying action without
probable cause, but also that it was actuated by malice, has been
terminated favorably to plaintiff, and that plaintiff suffered a special
grievance.
Tedards u. Auty, 232 N.J. Super. 541, 549, 557 A.2d 1030, 1034 (App. Div. 1989)
(citing Penwag Prop. Co., Inc. v. Landau, 76 N.J. 595, 598, 388 A.2d 1265, 1266
(1978)).
The favorable-termination element implies that malicious use of process cannot
be pursued as a counterclaim to the very complaint being challenged:
Favorable termination did not exist when defendant’s counterclaim was
filed in this cause. Though plaintiff had not moved to strike that
counterclaim, it should have been eliminated in the pretrial order. It is
not appropriate to institute a suit or file a counterclaim until the
litigation has terminated in favor of the party who asserts the malicious
prosecution cause of action.
Penwag, 76 N.J. at 597—98, 388 A.2d at 1266. See also Yogo Factory Franchising, Inc.
v. Ying, No. CIV.A. 13-630 JAP TJ, 2014 WL 1783146, at *12 (D.N.J. May 5, 2014)
(dismissing counterclaim for malicious use of process because the claims against the
defendant had “not yet been determined or otherwise terminated in her favor” and
counterclaim for malicious abuse of process because “Defendant’s claim is not for the
misuse of any subsequently issued process, but rather for the filing of a claim against
her at all.”).

Malicious abuse of process, as discussed more fully herein, consists in the
abuse of the court’s processes after the filing of a civil complaint. It does not have
favorable termination as an element, and there is thus no per se rule barring its
assertion as a counterclaim. Nevertheless, the court must be careful not to permit a
counterclaim of malicious use of process to sail under the false flag of malicious abuse
of process.
5

“An action for malicious abuse of process will lie against one who uses a
writ after its issuance solely to coerce or injure the defendant.” Tedards v. Auty,
232 N.J. Super. 541, 549, 557 A.2d 1030, 1034—35 (App. Div. 1989) (citing Ash
v. Cohn, 119 N.J.L. 54, 58, 194 A. 174 (E. & A. 1937)). “The gist of the tort..
is the misuse, or ‘misapplying process justified in itself for an end other than
that which it was designed to accomplish. The purpose for which the process is
used, once it is issued, is the only thing of importance.”’ Baglini v. Lauletta, 338
N.J. Super. 282, 293, 768 A.2d 825, 831 (App. Div. 2001) (quoting Prosser&
Keeton on Torts

§ 121 at 897 (5th ed. 1984)). Therefore, “process has not been

abused unless after its issuance the defendant reveals an ulterior purpose he
had in securing it by committing further acts whereby he demonstrably uses
the process as a means to coerce or oppress the plaintiff.” Tedards, 232 N.J.
Super. at 550, 557 A.2d at 1035.
“Further acts which lend themselves to an abuse of process include
‘attachment, execution, garnishment, sequestration proceedings, arrest of the
person and criminal prosecution and even such infrequent cases as the use of
a subpoena for the collection of a debt.”’ Baglini, 338 N.J. Super. at 294, 768
A.2d at 832 (quoting Prosser & Keeton on Torts, supra,

§ 121 at 899)). That is

not to say, however, that the validity of the original complaint can never be
relevant to a claim of malicious abuse of process: “[W]here there is a genuine
issue as to whether a defendant’s ‘further acts’ were maliciously intended as an
abuse of process, the [counterclaimant] may demonstrate that the
[counterclaim defendant] had secured issuance of the process without reason
or probable cause as evidence that his ultimate intent was to use it for a
purpose ulterior to the one for which it was designed.” Id.
As noted at p.S n.6, supra, malicious abuse of process (unlike malicious
use of process) does not have favorable termination as an element, and
therefore it is possible to assert it as a counterclaim. Possible, but rare; most
commonly, such a counterclaim cannot escape the gravitational pull of the
main claim and establish that some “ulterior purpose” or “further acts” are

6

being pursued. See, e.g., Flyte Tyme Tunes v. Riggers & Razzles, No. CIV. 874211 (CSF), 1988 WL 142403, at *4_5 (D.N.J. Dec. 20, 1988) (“Even if
defendants had some basis for alleging that plaintiffs, in bringing this lawsuit,
had an improper or ulterior motive, they still could not overcome the hurdle of
showing that plaintiffs have committed an act which perverts the use of
process in order to satisfy that ulterior motive.”).
Mr. Read argues that Profeta has failed to allege any “further acts”
whereby process was deployed in a manner not contemplated by law—i.e., in
furtherance of some collateral or ulterior plan. Even the filing of an unfounded
action, he says, is insufficient to support a claim of malicious abuse of process
absent further, ongoing acts of abuse. (Br. 7; Reply 4)
Profeta replies that such further acts are alleged in paragraphs 17
through 19:
17. Thus, Read began to communicate falsely to third-parties that
Profeta had “stolen” Read’s business plan and magazine concept in an
effort to forestall Radius’[s] success and decimate its ability to turn a
profit.
18. Additionally, Read filed and continued to maintain a meritless
Complaint for the same improper purpose, contending without basis that
Profeta had engaged in unlawful acts in connection with the publication
of Radius.
19. Indeed, both prior to and after the issuance of process, Read has
maintained and continued to maintain that Profeta “stole” Read’s
business plan and/or magazine concept and even filed an Amended
Complaint essentially asserting those false claims.
(CC ¶J 17—19)
Profeta contends that these paragraphs plainly aver that “after the filing
of the Complaint, and independent of the filing of the Complaint, plaintiff has
unlawfully used the filing of this action as a vehicle to further defame [Mr.]
Profeta and show him in a false light to others.

.

.

with the intent to coerce

Profeta to cease publication of the Radius.” (Opp. 8 (emphasis in original)). I do
not share Profeta’s view.

7

I read paragraphs 17, 18, and 19 to allege only that, before filing his
Complaint, Mr. Read told others that Mr. Profeta stole his ideas, and that he
did not stop saying so after filing his complaint. (I assume that “process” here
can only refer to the summons that accompanied the complaint.) To begin with,
statements uttered before any complaint was filed are not actionable: “Coercive
action or bad motives or intent prior or leading to the institution of the lawsuit
do not suffice to expose a plaintiff to a cause of action for malicious abuse of
process.” Penwag Prop. Co., Inc. v. Landau, 148 N.J. Super. 493, 499, 372 A.2d
1162, 1165 (App. Div. 1977), aff’d, 76 N.J. 595, 388 A.2d 1265 (1978). The real
problem, however, is more fundamental. Profeta may consider such statements
to third parties (whether pre- or post- filing) to be false or unfair. Regardless,
these oral statements did not involve any use of legal process, did not depend
on legal process, and were not enabled by the filing or issuance of process.
Indeed, the Counterclaim itself seems to imply as much, alleging that after the
Complaint was filed, Read’s statements to others continued much as before.
Perhaps the best support for Profeta’s position is NVR, Inc. v. Davem, No.
15-5059 (NLH/KMW), 2016 WL 7013459, at *4 (D.N.J. Nov. 30, 2016), in
which the court pushed malicious abuse of process very close to the line of
malicious use of process. There, the plaintiff’s action was one to enjoin the
defendant, an ex-employee, from retaining proprietary documents and taking
them to his new employer, plaintiff’s competitor. Judge Hiliman sustained a
counterclaim for malicious abuse of process where the defendant alleged that
the plaintiff’s ulterior motive in pursuing and prolonging the lawsuit was (inter
alia) to get the defendant fired from his new job and to harm the business of its
competitor (i.e., the plaintiff’s new employer, who was not a party to the action).
According to the counterclaim, the plaintiff had no good reason to file suit in
the first place because the defendant had already agreed to return all
proprietary documents prior to filing. Further, the defendant alleged, and the
court seemed to accept, the plaintiff had “continue[d] to litigate th[ej case in a
manner inconsistent with any realistic potential damages recovery.” Id. The

8

court thus upheld a malicious abuse of process claim based on the purpose for
which, and the manner in which, the litigation was pursued post-filing. It so
held, however, despite there having been no additional “process” issued beyond
the original summons and complaint.
NVR is distinguishable. Here, Profeta never plausibly alleges that Read
has used process issued in this action for improper purposes or conducted this
litigation in an improper manner. Profeta’s brief says that Read “has unlawfully
7
used the filing of this action as a vehicle to further defame Profeta.” No factual
allegations support that contention. Read’s assertion in his complaint that
Profeta stole his idea surely cannot constitute a “further act” in furtherance of
an ulterior, improper purpose; that accusation is the very gist of Read’s legal
claims; it is a factual allegation of the injury for which he seeks damages.
Read’s complaint is designed to submit to a finder of fact the proposition that
the defendants misappropriated Read’s intellectual property.
There is no allegation here of abusive pursuit or prolongation of
litigation, as in NVR, that would bespeak some collateral agenda. Nor is there
any indication here, as in NVR, that litigation was instituted as an indirect
means of harming a business competitor who is not a party to the action. The
business competitors here are the plaintiff and the defendants—Read and
Profeta themselves. There can be no rule that a party who sues a business
competitor has ipso facto committed a tort.
What remains is the Counterclaim’s allegation that, post-filing, Read is
still going around telling others that Profeta stole his idea. Read’s alleged
failure to go silent after filing the action cannot in itself establish malicious
abuse of process. This tort is not a means of imposing a defacto litigation gag
order.
Finally, I think the defendants err in characterizing the complaint and
amended complaint—essentially, the entire action—as “process” that was
That a civil complaint can be defamatory is a very problematic proposition
under defamation law. See p.13 n. 11, infra. I will indulge an assumption that, for
these purposes, Profeta is using “defame” in a non-technical sense.
9

“abused.” Pace Judge Hiliman’s holding under the extraordinary circumstances
of NVR, this tort generally has a far narrower focus: the misuse of the court’s
coercive powers or writs. See Jewett v. IDT Corp., No. CIV.A.04-1454 SRC, 2007
WL 2688932, at *7 (D.N.J. Sept. 11, 2007) (“‘[Pjrocess’ does not apply broadly
to all proceedings in a legal action. Rather, it is limited to certain products of
litigation that a court issues, such as a ‘summons, mandate, or writ used by a
court to compel the appearance of the defendant in a legal action or compliance
with its orders.”) (quoting Ruberton v. Gabage, 280 N.J. Super. 125, 131, 654
A.2d 1002, 1005 (App. Div. 1995))). Profeta’s counterclaim for malicious abuse
of process does not allege further acts or a particular court-issued “process”
that Read has abused for ulterior purposes.
For these reasons, I will grant Read’s motion to dismiss Count 1 of the
Counterclaim, without prejudice.
2. Tortious Interference with a Prospective Economic Benefit and with
Contract (Counts 2 and 4)
Count 2 of the Counterclaim alleges that by “intentionally, willfully and
maliciously interfering with Defendants’ business and the publication of
Radius, Read has tortiously interfered with Defendants’ prospective economic
advantage.” (CC

¶

25) In parallel fashion, Count 4 alleges that “Read engaged

in the publication of certain material, derogatory and disparaging remarks to
the quality of Profeta’s and Radius’[s] business and their products of a kind
calculated and intending to prevent others from dealing with or conducting
business with Profeta and Radius.

.

.

.“

(Id.

¶

34). As a result, the defendants

allege, Profeta and Radius “have suffered and continue to suffer irreparable
harm, special damages and damages.” (IcL

¶J

27, 37).

The defendants have failed to label their counterclaims and do not
distinguish between Counts 2 and 4 in their briefing. (See Opp. 9—10) I read
Count 2 to allege tortious interference with a prospective economic benefit and
Count 4 to allege tortious interference with a contract.
Under New Jersey law, a claimant alleging tortious interference with
contractual relations must allege, in addition to an existing contract: “(1) that
10

plaintiff had a reasonable expectation of an economic benefit or advantage; (2)
that defendant knew of plaintiff’s expectancy; (3) that defendant wrongfully and
intentionally interfered with this expectancy; (4) a reasonable probability that
but for defendant’s wrongful interference, plaintiff would have realized the
economic benefit; and (5) that plaintiff was injured as a result of defendant’s
conduct.” Carpet Grp. Int’l v. Oriental Rug Importers Ass’n, Inc., 256 F.Supp.2d
249, 288 (D.N.J. 2003) (citing Printing Mart—Morristown v. Sharp Elecs. Corp.,
116 N.J. 739, 563 A.2d 31(1989), and Fineman v. Armstrong World Industries,
Inc., 980 F.2d 171, 186 (3d Cir. 1992)); Carpet Gip. Int’l v. Oriental Rug
Importers Ass’n, Inc., 256 F. Supp. 2d 249, 288 (D.N.J. 2003).8 Where the
claimant alleges tortious interference with prospective contractual relations, the
requirements are identical except that the claimant must demonstrate a
“reasonable probability” of a prospective, rather than actual, contractual
relation. See Alvord—Polk, Inc. v. F. Schumacher & Co., 37 F.3d 996, 1015 (3d
Cir. 1994).
Read argues that the defendants’ allegations are mere boilerplate
recitations of elements of a claim for tortious interference. Further, he says, the
defendants make no allegation that the defendants had a “reasonable
expectation of economic advantage” (Br. 10—i 1.), as is needed for Count 2, nor
any allegation of a contractual relationship between the defendants and a third
party, as is needed for Count 4 (id. 17). I agree.
The contract or prospective contract clearly identified in the
Counterclaim is the one which might have existed between Read and Profeta.
(See CC

¶J

6—7) But “the rule of tortious interference was not meant to upset

the rules governing the contractual relationship itself. Where a person
interferes with the performance of his or her own contract, the liability is
governed by principles of contract law.” Printing Mart-Morristown, 116 N.J. at
More succinctly, “the elements of a claim for tortious interference with a
contractual relationship are (a) the existence of a contract, (b) intentional interference,
with malice, (c) loss of the contract, and (d) damages.” ThermoLfe Int’l LLC v. Connors,
No. CIV. 2: 13-4399 KM, 2014 WL 1050789, at *3 (D.N.J. Mar. 17, 2014).
S

11

753, 563 A.2d at 38. Under those principles of contract law, interference with
prospective relations does not come into play, because “[bjefore a contract is
formed, either party may withdraw from negotiations without penalty.” Id. I
therefore set aside any claim of interference with Read and Profeta’s own
business dealings.
As to other actual or potential contractual relations, these are the only
potentially relevant allegations:
•

“Read has tortiously interfered with Defendants’ prospective
economic advantage” (CC

•

¶

25); and

Read has made remarks “intending to prevent others from dealing
with or conducting business with Profeta and Radius, or to
otherwise interfere adversely with business relations with others”
that have “played a material and substantial part in leading others
and/or constituting a proximate cause for others to cease dealing
with or not to deal with Profeta and Radius.” (Id.

¶J

34—35)

These allegations essentially recite some of the legal elements of a cause
of action for tortious interference. No actual or potential contract is identified,
or even generally described. There are only vague allegations that Read made
statements to unidentified “third parties” or interfered with Profeta’s
unspecified dealings with unnamed “others.” I do not think that these
allegations sufficiently give notice of what particular benefit the defendants
expected and, but for Read’s “remarks,” would have reaped. The Counterclaims
also fail to allege or demonstrate a “reasonable probability” of an expected
9
benefit. In short, the essential who, what, when, where, and how are lacking.
I accept arguendo Profeta’s contention that the trend in this district is toward
not requiring strictly that a plaintiff “identiir specific lost business opportunities in its
pleading for tortious interference.” (Opp. 9 (quoting N. Star Mgmt., Inc. v. Ins.
Professionals, Inc., No. 12-CV-3839 JAP, 2013 WL 5334412, at *4 (D.N.J. Sept. 23,
2013)). Still, the relevant allegations in the cases cited by Profeta were much more
specific and substantial than those in Profeta’s counterclaim here. See N. Star Mgmt.,
Inc., 2013 WL 5334412, at *1 (plaintiff alleged that, by writing insurance for business
encompassed by an exclusive partnership program between the plaintiff and a nonparty insurer, the defendant intentionally caused the third-party insurer to breach its

9

12

Accordingly, I find that the defendants fail to state a claim for either variety of
tortious interference. I will grant Read’s motion to dismiss on Counts 2 and 4
of the Counterclaim, without prejudice.
3. Defamation (Count 3)
Count 3 of the Counterclaim alleges the tort of defamation. As to Count
3, the motion to dismiss will be denied.
The essential elements of defamation, aside from damages, are “(1) the
assertion of a false and defamatory statement concerning another; (2) the
unprivileged publication of that statement to a third party; and (3) fault
amounting at least to negligence by the publisher.” G.D. v. Kenny, 411 N.J.
Super. 176, 186, 984 A.2d 921, 927—28 (App. Div. 2009), affd, 205 N.J. 275,
15 A.3d 300 (2011) (quoting Leang v. Jersey City Bd. of Educ., 198 N.J. 557,
585, 969 A.2d 1097 (2009)). Profeta alleges only slander (oral defamation), not
libel (written defamation). (See CC

¶

29) Either way, however, a party must at a

minimum “plead facts sufficient to identify the defamatory words, their utterer
and the fact of their publication.” Foy v. Wakefem Food Corp., No. CIV.A 091683(JLL), 2010 WL 147925, at *6 (D.N.J. Jan. 7, 2010) (quoting Zoneraich v.
Overlook Hosp., 212 N.J. Super. 83, 514 A.2d 53,63 (N.J. Super. Ct. App. Div.
1986)).10
Here, Count 3 alleges, inter alia, that Read told third parties that Profeta
stole his magazine concept and business plan “in effort to forestall Radius’ [s]

contract with the plaintiff); Slim CD, Inc. v. Heartland Payment Sys., Inc., No. CIV. A.
06-2256, 2007 WL 2459349, at *3 (D.N.J. Aug. 24, 2007) (plaintiff alleged expectation
of selling its company, notifying defendant that its failure to accept software and
satisfy contractual provisions would undermine the sale, and that the defendant hurt
the potential sale by expressing indifference to the plaintiff’s notices and refusing to
accept software). Unlike Profeta, the claimants in cited cases clearly alleged either an
actual contract or the reasonable probability of a prospective contract.
Although New Jersey imposes a heightened pleading standard whereby a
claimant must allege the specific defamatory words used, in this Court the ordinary
federal pleading standard applies. Mangan v. Corp. Synergies Grp., Inc., 834 F.Supp.2d
199, 204 (D.N.J.20 11) (noting that a plaintiff “must allege the elements of defamation
as applied by New Jersey law to a degree of sufficient specificity to satisfy the
standards outlined in Rule 8.”)
10

13

success and decimate its ability to turn a profit,” and “intending to lower
Defendants’ reputation in the community and/or deter third parties from
associating with them.” (CC

¶J

17, 30) As a result, “Profeta has suffered and

continues to suffer irreparable harm and damages.” (Id.

¶

32).

Read replies that the defendants’ allegations are “a textbook example of a
conclusory claim for defamation.” He argues in addition that the allegations of
defamation are simply a repetition of what Read alleged in his complaint, and
are therefore protected by the litigation privilege. (Br. 1 1_.16).11
The defendants contend that because these statements concern theft, a
crime, they are slanderous

per Se.

And, they say, they have pleaded that Read

communicated accusations of theft to third parties, with knowledge of falsity,
and for the purpose of harming Profeta’s reputation. (Opp. 11) I agree that the
defendants have stated a defamation claim, albeit a thin one.
Turning to the first element, “[a] defamatory statement is one that is false
and injurious to someone’s reputation.” Paul v. United Parcel Seru., No. 05-CV1918 DMC, 2005 WL 3307268, at *2 (D.N.J. Dec. 6, 2005). Whether a
statement is defamatory is a fact-specific question: it requires an analysis of
Read’s argument is good as far as it goes. The litigation privilege would shield
the actual allegations of Read’s complaint. See Hawkins v. Harris, 141 N.J. 207, 216,
661 A.2d 284, 289 (1995) (“The absolute privilege applies to ‘any communication (1)
made in judicial or quasi-judicial proceedings; (2) by litigants or other participants
authorized by law; (3) to achieve the objects of the litigation; and (4) that have some
connection or logical relation to the action.” (quoting Silberg v. Anderson, 50 Cal. 3d
205 (1990)); Rainier’s Dairies v. Raritan Val. Farms, 19 N.J. 552, 563, 117 A.2d 889,
894 (1955) (holding that statements made in complaint filed in quasi-judicial
proceeding had absolute immunity and thus could not serve as basis for libel, just as
statements made in full judicial proceedings would be protected).
11

The defamation Counterclaims seem at times to parrot Read’s complaint.
(Compare CC ¶J 17, 19, 29 (alleging Read told third parties Profeta “stole” Read’s
concept and business plan, and providing no further facts) with AC ¶ 60 (“Defendants
have stolen the Plaintiffs intellectual property for their own gain)) It is clear, however,
that Profeta also bases his defamation claims on accusations of theft that Read
allegedly made outside of legal proceedings. (See, e.g., CC ¶ 17 (“Read began to
communicate falsely to third-parties that Profeta has ‘stolen’ Read’s business plan.
.“) id. ¶ 18 (“Additionally, Read filed and continued to maintain a meritless Complaint
for the same improper purpose. . . .“)) These statements, although they may resemble
allegations made in the Complaint, are extrinsic to the Complaint.
.

14

“(1) the content, (2) the verifiability, and (3) the context” of the allegedly
defamatory statement. Leang v. Jersey City Bd. Of Educ., 969 A.2d 1097, 1113
(N.J. 2009). Factual statements are those capable of verification, i.e., falsifiable
in relation to external realities; statements of opinion thus are not actionable,
because they reflect only one’s state of mind. See Ward v. Zelikovsky, 643 A.2d
972, 979 (N.J. 1994). New Jersey also recognizes a distinction “between
genuinely defamatory communications as opposed to obscenities, vulgarities,
insults, epithets, name-calling, and other verbal abuse.” Id. Only where the
allegedly defamatory statements imply reasonably specific assertions of fact will
the claim be allowed to proceed. See id.
Stating that someone stole something—whether in a criminal or civil
sense—is sufficiently capable of verification or falsification, particularly in the
context of business dealings. Therefore, I think it is appropriate to allow the
parties to develop the factual record on this element.
Second, to adequately allege the communication or publication element,
a plaintiff should “plead facts sufficient to identify the defamer and the
circumstances of publication.” Mangan, 834 F. Supp. 2d at 204 (citing Printing
Mart—Morristown v. Sharp Elecs. Corp., 563 A.2d 31, 46 (N.J.1989)). Count 3 is
vague concerning when, where, and to whom Read allegedly published his
statements. A federal complaint, true, need not always set forth the names of
the specific individuals to whom the allegedly defamatory statements were
made. Most complaints, however, do a little better than this. See Churchill
Downs, Inc. NLR Entm’t, LLC v. Carstanjen, No. CV 14-03342(KM)(MAH), 2015
WL 5854134, at *8 (D.N.J. Oct. 5, 2015) (finding communication element
established where defamatory statements were made to “third parties in the
casino industry”); DiAntonio v. Vanguard Funding LLC, 2015 WL 3629539, at *4
(D.N.J. June 10, 2015) (sufficient to allege that named individuals, in a
particular 6—month period, made the slanderous statement to high-level
officers of plaintiffs new employer, and that he was forced to defend himself as
a result). At this preliminary stage, the allegation that Read made statements

15

“to third parties other than to the Defendants,” as part of a “campaign of
callousness

.

.

.

designed to defame and destroy Profeta’s magazine concept so

as to make room for Read’s ‘Downtowner’.

.

.

.“

will nevertheless suffice. It

conveys the nature of the statements, their purpose, and, at least impliedly, the
business community in which they were made.
The third element of defamation is a sufficient degree of fault.
Defamation requires a showing of actual malice “when the alleged defamatory
statement concerns a public figure or a public official or involves a matter of
public concern,” Senna v. Florimont, 196 N.J. 469, 496, 958 A.2d 427, 443
(2008), but only negligence for a private figure. Costello v. Ocean

Cnty.

Observer, 643 A.2d 1012, 1021 (N.J. 1994); see also New York Times Co. v.
Sullivan, 376 U.s. 254, 279—80, 84 S. Ct. 710, 725—26 (1964).12 Regardless of
which standard applies here—negligence or malice— I am satisfied that
Profeta’s allegations of fault are sufficient. The Counterclaim alleges that “Read
published his statements as statements of fact with negligence, actual
knowledge of and/or in reckless disregard of their falsity,” because he “was
incensed by the launch of Radius.” (id.

¶

16) The statements concerned face-to-

face business dealings between Read and Profeta. (See CC

¶J

6—10) The

necessary implication is that, if they were false, Read would have been in a
position to know that. And knowing falsehood meets even the higher malice
standard. See Senna v. Florimont, 196 N.J. 469, 474, 958 A.2d 427, 430 (2008)
(actual malice means “that the speaker made a false and defamatory statement
either knowing it was false or in reckless disregard of the truth.”).
Finally, I turn to the element of damages. General defamation does

not

have a special or particularized damages element. Slander, however, may

“Whether [the person alleging defamation] is a public figure is ‘a question of law
the court s determination.”’ Costello, 136 N.J. at 612 (quoting Lawrence v. Bauer
Pub. & Printing Ltd., 89 N.J. 451, 462, 446 A.2d 469, 474 (1982)). See generally Senna,
196 N.J. 490—498 (discussing factors to consider in determining whether the actual
malice standard applies). Neither party argues that Profeta is a public figure or that
the parties’ dispute constitutes a matter of public concern and the facts alleged are
otherwise insufficient for the court to rule on this issue at this early stage.
12

for

16

require a showing of special damages: proof of items such as “the loss of
particular customers by name, or a general diminution in its business and
extrinsic facts showing that such special damages were the natural and direct
result of the false publication.” Juliano v. ITT Corp., 1991 WL 10023, at *6
(D.N.J. Jan. 22, 1991).’3
Count 3 alleges that “Profeta has suffered and continues to suffer
irreparable harm and damages.” (CC

¶

32) That statement may not be enough

standing alone. But it must be taken together with Profeta’s background
allegations that “Radius.

.

.

has not been, as of this filing, a commercial

success,” and that Read made his accusations as part of a campaign to “make
room” in the market for The Downtowner. (Id.

¶f

15, 16) In that context, it is

possible to infer an allegation that Read’s statements impaired Radius’s
commercial success. Thus, I find the defendants’ allegations of damages
adequate.
The motion to dismiss is denied as to Count 3 of the Counterclaim.
4. False Light (Count 5)
Finally, Count 5 of the Counterclaim asserts the tort of false light. The
13

The New Jersey Supreme Court has explained:
[S]lander cases generally require proof of special damage—an
economic or pecuniary loss. Charles T. McCormick, Damages 415
(1935). However, if the slander is per se (e.g., accusation of a
crime, a loathsome disease, misfeasance in business, or serious
sexual misconduct, Biondi v. Nassimos, 300 N.J Super. 148, 154,
692 A.2d 103 (App.Div. 1997)), the requirement of proving special
or economic damage in a slander case drops away, Ward, supra,
136 N.J. at 540, 643 A.2d 972. In that case, slander per se, like
libel, permits the jury to consider presumed damages.

WJA. v. D.A., 210 N.J. 229,240,43 A.3d 1148, 1154 (2012).
Because I am satisfied that Profeta has sufficiently alleged damages, I need not
undertake to explore the complexities of special damages or the state of the law on
slander per se. I will note, however, that Profeta argues that Read’s accusation that his
idea was stolen falls into the slander per se category of an imputation of crime. (See
Opp. 11 (citing Hall v. Heavey, 195 N.J. Super. 590, 597, 481 A.2d 294, 298 (App. Div.
1984); Murphy v. JohnsJl’Ianville Prod. Corp., 45 N.J. Super. 478, 488, 133 A.2d 34, 39
(App. Div. 1957))). I am not wholly persuaded that “stealing” Read’s idea necessarily
would be taken by the hearer as an accusation of crime, but I leave that issue for
further factual development.

17

New Jersey Supreme Court has explained the false light tort thus:
The tort of false light has two elements: (1) “the false
light in which the other was placed would be highly
offensive to a reasonable person”; and (2) “the actor had
knowledge of or acted in reckless disregard as to the
falsity of the publicized matter and the false light in
which the other would be placed.” Id. at 294, 537 A.2d
284 (quoting Restatement (Second) of Torts, § 652E).
Leang v. Jersey City Bd. of Educ., 198 N.J. 557, 588—89, 969 A.2d 1097, 1115—
16 (2009). “[A] fundamental requirement of the false light tort is that the
disputed publicity be in fact false, or else at least have the capacity to give rise
to a false public impression as to the plaintiff.” Romaine v. Kallinger, 109 N.J.
282, 294, 537 A.2d 284, 290 (1988) (internal quotation marks and citations
omitted).
False light is a form of defamation, but one that implicates privacy
interests. “There are differing interests protected by the law of defamation and
the law of privacy, which account for the substantive gradations between these
torts.” Id. An action for defamation protects a person’s interest in reputation,
whereas an action for false light protects an individual’s privacy and peace of
mind. Id. Such “substantive gradations,” however, are too factual and subtle to
be dispositive of a motion to dismiss. For the same reasons that the defendants
have stated a claim of defamation, they have also stated a claim of false light.
Read’s argument for dismissal of Count 5 is that Profeta does not allege
that his false statements were made “publicly”. (Br. 19—20; Reply 5—6). It is true
that the false light doctrine quintessentially applies to objectionable falsities
“presented to the general public.” 52 N.J. Prac., Elements of Action

§ 45:1

(20 16-2017 ed.) Profeta correctly points out, however, that in this district false
light claims have survived a motion to dismiss where the statements were
made within a limited circle. See, e.g., Torrey v. New Jersey, No. CIV.A. 131192 PGS T, 2014 WL 941308, at *2o21 (D.N.J. Mar. 11, 2014) (statements
allegedly made to a representative of the sheriff’s office); Gibbs v. Massey, No.
CIV.A.07-3604(PGS), 2009 WL 838138, at *2, 11—12 (D.N.J. Mar. 26, 2009)
(statement made to persons at plaintiffs place of employment). (Opp. 12)
18

Profeta’s allegation that “Read published to third parties certain false
facts

.

.

.

.“

is quite sparse and will need significant bolstering to survive

summary judgment. It is, however, enough for now. As to Count 5, the motion
to dismiss is denied.
Conclusion
For the foregoing reasons, the defendants’ motion to dismiss (No. 33) will
be granted as to Counts 1, 2, and 4, without prejudice to the submission of a
proposed amended counterclaim within 30 days. The motion will be denied as
to Counts 3 and 5. A separate order will issue.

Dated: January 11, 2017

/CL

,/-m,

U(c
/

KEVIN MCNUWfY
United States District Judge”

19