NASA MACHINE TOOLS, INC. v. FAMA Technology Inc. et al
Filing
124
OPINION. Signed by Magistrate Judge Michael A. Hammer on 12/27/2019. (ams, )
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
____________________________________
:
:
:
Plaintiffs,
:
:
v.
:
:
FAMA TECHNOLOGY INC., et al.,
:
:
Defendants.
:
____________________________________:
NASA MACHINE TOOLS INC.,
I.
Civil Action No. 18-2872 (MCA) (MAH)
OPINION
INTRODUCTION
This matter comes before the Court on Nasa Machine Tools Inc.’s (“Nasa”) Motion for
Leave to File a Second Amended Complaint. D.E. 102. Pursuant to Federal Rule of Civil
Procedure 78 and Local Civil Rule 78.1, the Court decides this motion without oral argument. For
the reasons set forth below, the Court will grant Nasa’s motion.
II.
BACKGROUND 1
Nasa manufactures computer numerical control machines (CNCs). First Am. Compl.,
D.E. 50, Oct. 31, 2018, ¶ 7. From approximately 2011 to 2017, Nasa had an agreement with
FAMA Technology Inc. (“FAMA”) and Farzad Ahmadpour (“Ahmadpour”), the owner of
FAMA, to service the CNCs that Nasa sold to customers. Id. at ¶ 9. This relationship, Nasa
alleges, afforded FAMA access to Nasa's proprietary information and trade secrets. Id. at ¶ 10.
Sometime in mid-2016, Nasa engaged FAMA to help design and install a probing system, called
1
Because the Court writes for the parties, the Court briefly summarizes the pertinent facts. The
Court also assumes as true the factual allegations in the complaint for the purpose of this motion.
See Batoff v. State Farm Ins. Co., 977 F.2d 848, 851-52 (3d Cir. 1992).
the “Vision System,” for Nasa’s CNCs for delivery to Customer 1. Id. at ¶¶ 13-15. Nasa
contends that the parties orally agreed that FAMA would assign the software rights to Nasa, and
that Nasa would pay FAMA $22,100 for the installment of the Vision System on each CNC. Id.
Nasa claims that for the period of approximately July 2016 to September 2017, the Vision
System was installed on eight CNCs that Nasa sold to Customer 1, for which Nasa paid FAMA
$184,300. Id. at ¶ 15.
According to Nasa, in late 2017, Ahmadpour notified NASA that FAMA would no
longer conduct business with Nasa, and that Ahmadpour and FAMA would market and sell their
own CNCs with the Vision System. Id. at ¶ 18. Nasa alleges that in or around January 2017,
Defendants formed ProCut Technologies, LLC (“ProCut”) to manufacture and sell CNCs and
began selling CNCs to at least one of Nasa's customers. Id. at ¶ 17. Nasa also alleges that
Defendants attempted to advertise or market ProCut's CNCs to Customer 1, made derogatory
statements about Nasa's quality, and caused Nasa to lose potential sales to existing customers,
including Customer 1. Id. at ¶¶ 20-22. Further, Nasa complains that Defendants have refused to
provide the Vision System software to Nasa, thereby preventing Nasa from marketing or selling
the Vision System. Id. at ¶ 19. Instead, Nasa alleges, ProCut now markets the Vision System
software as its own. Id. at ¶ 22.
On January 23, 2018, Nasa filed the Complaint in the instant action against Defendants,
claiming breach of an oral contract, tortious interference with existing and prospective
contractual or economic relationships, unfair trade practices, misappropriation of confidential
information, misappropriation of trade secrets, fraudulent misrepresentation, unjust enrichment,
and punitive damages. Compl., Jan. 23, 2018, D.E. 1. Defendants removed the action to this
Court on February 28, 2018. D.E. 1. Defendants moved to dismiss Nasa’s Complaint, which
2
District Judge Madeline Cox Arleo denied on October 22, 2018. D.E. 49. Judge Arleo,
however, directed Nasa to re-plead its counts for breach of contract and fraudulent
misrepresentation with the requisite specificity, and on October 31, 2018, Nasa filed its First
Amended Complaint. First Am. Compl, D.E. 50, Oct. 31, 2018.
Nasa now moves for leave to file a Second Amended Complaint to: (1) re-define the
“Vision System,” changing the definition from a software-only system to a combined software
and hardware system; (2) add additional allegations in support of Nasa’s claims; (3) add a claim
for trade libel; and (4) add a claim for defamation. Defendants argue that the Court should deny
Nasa’s motion to amend because the amendment is the result of undue delay and bad faith, and
permitting the amendment would cause Defendants to suffer undue prejudice. With respect to
the defamation claim, Defendants maintain that the amendment would be futile as it is brought
beyond the one-year statute of limitations.
III.
ANALYSIS
The first issue for the Court is whether Federal Rule of Civil Procedure 15 or 16 governs
Plaintiff’s motion to amend. Karlo v. Pittsburgh Glass Works, LLC, Civ. No. 10-1283, 2011 WL
5170445, at *2 (W.D. Pa. Oct. 31, 2011). Rule 15 states, in pertinent part, “a party may amend
its pleading only with the opposing party’s written consent or the court’s leave. The court should
freely give leave when justice so requires.” Fed. R. Civ. P. 15(a)(2). “Rule 16, on the other
hand, requires a party to demonstrate ‘good cause’ prior to the Court amending its scheduling
order.” Karlo, 2011 WL 5170445, at *2 (citing Fed. R. Civ. P. 16(b)(4)).
There is a recognized tension between Rule 15 and Rule 16 that has not been directly
resolved by the United States Court of Appeals for the Third Circuit. See Race Tires America,
Inc. v. Hoosier Racing Tire Corp., 614 F.3d 57, 84 (3d. Cir. 2010); Graham v. Progressive
3
Direct Ins. Co., 271 F.R.D. 112, 118 (W.D. Pa. 2010). However, courts “within the Third
Circuit have consistently reached the same conclusion: a party seeking to amend the pleadings
after the deadline set by the Court must satisfy the requirements of Rule 16(b)(4)—i.e., they
must show ‘good cause.’” Karlo, 2011 WL 5170445, at *2 (citing Fed. R. Civ. P. 16(b)(4))
(emphasis added).
Here, Nasa filed its pleading after the deadline set by this Court, and, therefore, the Court
must consider Rule 16. The operative Order instructed that any motion to amend the pleadings
be filed by February 25, 2019. Pretrial Scheduling Order, Nov. 20, 2018, D.E. 59. Nasa filed
the instant motion on September 13, 2019. Motion for Leave to File Plaintiff’s Second Am.
Compl., Sept. 13, 2019, D.E. 102. Because Nasa filed the present motion nearly seven months
after the February 25, 2019 filing deadline, the Court must first determine whether, under Rule
16, good cause exists to adjust the deadline to permit Nasa to file its motion. If there is good
cause to amend, the Court will then turn to Rule 15 to determine whether to permit Nasa to file
its amended pleading as justice so requires. Home Semiconductor Corp. v. Samsung Electronics
Co., Ltd., Civ. No. 13-2033, 2019 WL 2135858, at *2 (D. Del. 2019) (stating, “only after having
found the requisite showing of good cause will the court consider whether the proposed
amendment pleading meets the 15(a) standard.”).
A. Rule 16(b)(4)
Rule 16 of the Federal Rules of Civil Procedure authorizes courts to enter schedules of
proceedings. The pretrial scheduling order allows a court to take “judicial control over a case
and to schedule dates for completion by the parties of the principal pretrial steps.” Harrison
Beverage Co. v. Dribeck Imps., Inc., 133 F.R.D. 463, 469 (D.N.J. 1990) (quoting Fed. R. Civ. P.
16 advisory committee’s note (1983 Amendment)); see also Newton v. A.C. & S., Inc., 918 F.2d
4
1121, 1126 (3d Cir. 1990) (stating the purpose of Rule 16 is to provide for judicial control over
cases, streamline proceedings, maximize efficiency of the court system, and actively manage the
timetable of case preparation to expedite speedy and efficient disposition of cases).
A scheduling order must, among other things, “limit the time to join other parties, amend
the pleadings, complete discovery, and file motions.” Fed. R. Civ. P. 16(b)(3)(A). The
requirement of a deadline for amending pleadings in the pretrial scheduling order “assures that at
some point . . . the pleadings will be fixed.” Fed. R. Civ. P. 16(b) advisory committee’s note
(1983 Amendment); see also Harrison, 133 F.R.D. at 469 (“The careful scheme of reasonable
framing and enforcement of scheduling orders for case management would thus be nullified if a
party could inject amended pleadings upon a showing of less than good cause after scheduling
deadlines have expired.”). Under Rule 16, “[a] schedule may be modified only for good cause
and with the judge’s consent.” E. Minerals & Chems. Co. v. Mahan, 225 F.3d 330, 340 (3d Cir.
2000).
The burden is on the moving party to show “good cause” for its failure to comply with
the applicable scheduling order, and, accordingly, for the Court to allow its proposed amended
pleading. Prince v. Aiellos, Civ. No. 09–5429, 2012 WL 1883812, at *6 (D.N.J. May 22, 2012)
(quoting Graham v. Progressive Direct Ins. Co., 271 F.R.D. 112, 118 (W.D. Pa. 2010)); see also
Race Tires, 614 F.3d at 84 (affirming the trial court’s holding that “Rule 16(b)(4) focuses on the
moving party’s burden to show due diligence”). Whether “good cause” exists under Rule 16
hinges to a large extent on the diligence of the moving party. GlobespanVirata, Inc. v. Texas
Instruments, Inc., Civ. No. 03–2854, 2005 WL 1638136, at *3 (D.N.J. July 12, 2005) (quoting
Rent–A–Ctr. v. Mamaroneck Ave. Corp., 215 F.R.D. 100, 104 (S.D.N.Y. 2003)). Put succinctly,
“[a]bsent diligence, there is no ‘good cause.’” Chancellor v. Pottsgrove Sch. Dist., 501 F. Supp.
5
2d 695, 702 (E.D. Pa. 2007); see also Fed. R. Civ. P. 16(b), advisory committee’s note (1983
Amendment) (“[T]he court may modify the schedule on a showing of good cause if it cannot
reasonably be met despite the diligence of the party seeking the extension.”).
When examining a party’s diligence, courts typically ascertain whether the movant
possessed, or through the exercise of reasonable diligence should have possessed, the knowledge
necessary to file the motion to amend before the deadline expired. See Stallings ex rel. Estate of
Stallings v. IBM Corp., Civ. No. 08–3121, 2009 WL 2905471, at *16 (D.N.J. Sept. 8, 2009)
(denying plaintiffs’ motion to amend because they “had sufficient information to state the
proposed claims well in advance of the Scheduling Order deadline”); Kennedy v. City of Newark,
Civ. No. 10–1405, 2011 WL 2669601, at *2 (D.N.J. July 7, 2011) (“The most common basis for
finding a lack of good cause is the party’s knowledge of the potential claim before the deadline
to amend has passed.”). If a movant had the knowledge necessary to file a motion to amend
prior to the expiration of the Court’s deadline set forth in the scheduling order, and if the movant
can provide no satisfactory explanation for the delay, the Court may, in its discretion, deny the
motion. See Dimensional Communs., Inc. v. OZ Optics, Ltd., 148 Fed. App’x. 82, 85 (3d Cir.
2005) (upholding trial court’s finding that the movant could not show “good cause” because they
were in possession of the facts underlying the proposed counterclaim well before the deadline for
amendment).
Nasa argues that it has good cause for seeking to amend after the expiration of the
deadline. Nasa maintains that it did not learn about the January 23, 2018 and January 19, 2018
e-mails, which form the basis of the instant amendments, until April 11, 2019. Specifically,
Nasa contends that on April 11, 2019, Defendants produced third-party discovery in response to
Defendants’ subpoena, including: (1) a January 23, 2018 e-mail, in which Nasa claims
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Defendants make defamatory statements about Nasa to Customer 1; 2 and (2) an e-mail exchange
between Defendants’ counsel, Neil A. Benchell, Esq., and Customer 1 dated January 16 and
January 19, 2018. 3 Nasa contends that had these emails been produced in any of Defendants’
prior productions on January 4, 2019, January 30, 2019, and February 20, 2019, Nasa would
have been able to move to amend by the Court’s deadline for doing so. Nasa argues that it
further delayed in moving to amend because discovery was stayed from April 15, 2019 to July
2
As alleged in the proposed amended pleading,
In the January 23 Email, Defendant Ahmadpour states, among other
things, that: (i) Plaintiff is “incapable of making good machines;”
(ii) Plaintiff “cannot even service their own products;” (iii) it took
Defendant Ahmadpour “almost 5 years to convince Plaintiff to make
AC machines;” (iv) Plaintiff lacks knowledge and are “scared of any
changes or improvements;” (v) “there are some inherent problems”
with Plaintiff’s machines; and (vi) Plaintiff’s machines are “inferior.”
Prop. Second Am. Compl., ¶ 29, D.E. 102-3. See Decl. of John Choi ("Choi Decl."), Ex. 6, D.E.
102-3 (January 23, 2018 e-mail from Farzad Ahmadpour to Mike Mills).
3
In a January 16, 2017, e-mail from Mr. Benchell to Scott Seewald, Senior Counsel at Arconic
Inc., senior counsel for Customer 1, Mr. Benchell wrote in part:
Recently, Howmet employees have refused to respond to FAMA's communications,
indicating at least in case that there were legal issues precluding Howmet from working
with FAMA. However, we are unaware of any legal issues involving FAMA which
would prevent it from continuing its ongoing relationship with Howmet. . . . I look
forward to hearing what you find, and how we can assist in resolving any outstanding
legal issue.
On January 19, 2019, Mr. Seewald responded in part:
I shared your request with my business colleagues and it appears there is no legal issue.
Rather, Howmet does not have any business need for FAMA's services at this time. My
understanding is that there is not currently and has never been a contractual relationship
between Howmet and FAMA and any part interaction between FAMA and Howmet was
through FAMA's role as a subcontractor to one of Howmet's suppliers.
Choi Decl., Ex. 5, D.E. 102-3.
7
11, 2019, shortly after Nasa obtained these emails, so that the parties could focus on settlement.
However, Nasa raised its intention to amend in both its June 21, 2019 settlement letter to the
Court and in the parties’ July 10, 2019 status report to the Court. Given that Nasa did not know
of the existence of the pertinent emails until April 11, 2019, only four days before the Court
stayed discovery, and that Nasa raised its intention to amend to the Court in June and again in
July, as soon as the stay was lifted, the Court finds that Nasa has demonstrated good cause
pursuant to Rule 16 to modify the February 25, 2019 deadline for filing any motion to amend the
pleadings. 4
B. Rule 15
Having determined that Nasa has demonstrated good cause to amend under Rule 16, the
Court must now address whether Nasa has satisfied Rule 15. Home Semiconductor, Civ. No. 132033, 2019 WL 2135858, at *2. Under Rule 15 of the Federal Rules of Civil Procedure, a
plaintiff may amend his or her complaint once as of right, and “courts may grant subsequent
amendments ‘when justice so requires.’” Fraser v. Nationwide Mut. Ins. Co., 352 F.3d 107, 116
(3d Cir. 2003) (quoting Fed. R. Civ. P. 15(a)). Further, “leave to amend should be freely given
when justice so requires, including for a curative amendment unless such an amendment would
be inequitable or futile.” Free Speech Coalition, Inc. v. Att’y Gen. of U.S., 677 F.3d 519, 545 (3d
Cir. 2012). The Court may deny leave to amend the pleadings only when there is (1) undue
delay, (2) bad faith or dilatory motive, (3) undue prejudice, (4) repeated failures to cure
4
The Court notes that Defendants do not raise any specific arguments with respect to whether
Nasa has shown good cause for modifying the deadline by which a motion to amend may be
filed. Instead, Defendants generally argue that Nasa has unduly delayed in seeking to amend its
pleading. The Court will discuss this argument, infra, under the Rule 15 analysis.
8
deficiencies, or (5) futility of amendment. Foman v. Davis, 371 U.S. 178, 182 (1962); Long v.
Wilson, 393 F.3d 390, 400 (3d Cir. 2004).
Defendants argue that Nasa has unduly delayed in seeking to amend its pleading and that
permitting the amendment at this late juncture, near the end of fact discovery, will cause
Defendants prejudice. Defendants also contend that Nasa’s proposed amendment to add
allegations concerning Defendants’ counsel is brought in bad faith and solely for purposes of
harassment. Finally, Defendants maintain that Nasa’s defamation claim is futile because it is
barred by a one-year statute of limitations. The Court will take each argument in turn.
1. Undue Delay
While delay alone is insufficient to justify denial of leave to amend, “at some point, ...
delay will become ‘undue,’ placing an unwarranted burden on the court ... [and] an unfair burden
on the opposing party.” Adams v. Gould Inc., 739 F.2d 858, 864 (3d Cir. 1984). When a party
fails to take advantage of previous opportunities to amend, without adequate explanation, leave
to amend is properly denied. Id. “[T]he question of undue delay requires that we focus on the
movant’s reasons for not amending sooner.” Cureton v. Nat’l Collegiate Athletic Ass’n, 252
F.3d 267, 273 (3d Cir. 2001). “Indeed, amendments may be made during trial, after the close of
testimony, or even after judgment.” Ajax Enterprises v. Fay, Civ. No. 04-4539, 2007 WL
766335, *2 (D.N.J. Mar. 7, 2007) (citing Wright, Miller & Kane, Federal Practice and Procedure
Civil 2d § 1494, at 51–52). “Leave to amend a complaint should only be denied because of
undue delay if the delay causes the non-moving party to be prejudiced.” Cincerella v. Egg
Harbor Tp. Police Dept., Civ. No. 06-1183, 2007 WL 2682965, at *2 (D.N.J. Sept. 6, 2007).
Defendants argue that the Court should deny Nasa’s motion to amend because Nasa
waited until two months before the close of discovery to move to amend its pleading, and
9
because Nasa has known since December 2018 that Defendants objected to Nasa’s definition of
the Vision System. Defendants also maintain that the addition of the trade libel claim is a
product of undue delay and if Nasa had moved to amend sooner discovery would be completed
in a timely manner. These arguments fail. There is nothing in the facts before this Court which
indicates that Nasa’s failure to amend the Complaint earlier in the litigation is the product of
“undue delay.”
The Court does not find evidence of undue delay for several reasons. First, as set forth
earlier, Nasa did not receive the January 2018 e-mails underpinning at least some of the proposed
amendments until April 2019, when a third-party produced them. Further, the parties attempted
to settle the case between April and July 2019. Nasa's restraint in moving to amend during the
settlement efforts hardly strikes the Court as unreasonable. And during that process, Nasa made
clear its intention to move to amend if necessary. Finally, Nasa’s proposed amendment
concerning the definition of the Vision System actually brings the definition in line with
Defendants’ understanding of that definition from the outset of this litigation. Accordingly, the
Court cannot find Nasa’s amendment at this time is the product of undue delay.
2. Prejudice to Defendants
While the question of undue delay and bad faith focuses on a plaintiff’s motive for not
amending earlier, the issue of prejudice focuses on the effect on the defendant. Adams, 739 F.2d
at 868. In deciding whether the proposed amendment would unfairly prejudice a defendant,
courts consider whether permitting the amendment would (1) require defendant to expend
significant additional resources to conduct discovery and prepare for trial, (2) significantly delay
resolution of the dispute, or (3) prevent a party from bringing a timely action in another
jurisdiction. Long v. Wilson, 393 F.3d 390, 400 (3d Cir. 2004). The factors have been
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interpreted to mean that “‘prejudice to the non-moving party is the touchstone for the denial of
an amendment.’” Lorenz v. CSX Corp., 1 F.3d 1406, 1414 (3d Cir. 1993) (quoting Cornell &
Co. v. Occupational Safety & Health Review Comm’n, 573 F.2d 820, 823 (3d Cir. 1978)).
The Court is not persuaded by Defendants’ argument that they will be prejudiced if Nasa
is permitted to amend. Although Defendants argue that permitting the amendments will result in
discovery being extended, add expense, and delay the final adjudication of the merits of Nasa’s
claims against them, mere inconvenience in defending a suit does not constitute undue prejudice.
See Harrison Beverage, 133 F.R.D. at 468. It is also unclear exactly what additional discovery
the amendments will require, since the underlying allegations and attendant discovery have been
known to the parties for months. For example, Defendants have been aware of the January 19,
2018 and January 23, 2018 e-mails since at least April 11, 2019, when they received the e-mails
from the third party and produced them to Nasa. Discovery on these and related issues have
been proceeding since that time, save during the stay. To be sure, the Court recently resolved
discovery disputes between the parties, largely in Nasa’s favor, on these very e-mails.
Additionally, the Court is not persuaded that Defendants will suffer any prejudice by
permitting Nasa to amend its definition of Vision System because as Defendants concede, Nasa
is now accepting Defendants’ definition. Moreover, Nasa has represented that it will not amend
the definition of Vision System in its discovery requests. And to be clear, the Court does not
require Defendants to supplement or re-answer written discovery requests based on the amended
definition. Accordingly, written discovery on this issue appears to be complete. See Reply,
Sept. 30, 2019, D.E. 108, at 3. Moreover, any prejudice Defendants might suffer by Nasa’s
amendment at this time can be cured by an extension of the deadline to complete discovery.
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3. Bad Faith
Whether a party has acted in bad faith in moving to amend the pleadings focuses on the
movant’s motives for not amending the pleading earlier in the litigation. Adams, 739 F.2d at
868. “[T]here generally must... be some extrinsic evidence to indicate that a litigant acted in bad
faith before a motion to amend will be denied on this ground.” See Diallo v. ALO Enters. Corp.,
Civ. No. 12-3762, 2013 WL 3772827, at *3 (D.N.J. July 17, 2013) (citations omitted).
Measured against the high standard to find bad faith, Defendants' arguments plainly fail.
Defendants argue that in seeking to amend the complaint to add the January 19, 2018 email from
Mr. Benchell, supra note 3, Plaintiff is acting in bad faith. But a review of the amended pleading
does not, as Defendants seem to suggest, allege that Defense counsel sold Defendants' services in
the January 19, 2018 e-mail. See also Reply Brief, D.E. 108, at 7-8 ("Nowhere in the proposed
amendments does Plaintiff say that the January 19 Email shows that 'Defendants' counsel was
selling Defendants' service.'") (quoting Def. Opp'n Brf. at 7).
Moreover, Defendants offer no extrinsic evidence of bad faith. They attempt to import
various discovery disputes that have arisen between the parties over the course of this litigation.
And while there have been numerous such disputes, over which this Court has presided and
frequently resolved, nothing about those disputes suggests bad faith. Accordingly, the Court
declines to find that Nasa’s motion to amend was made in bad faith.
4. Futility
A court will consider an amendment futile if it “is frivolous or advances a claim or
defense that is legally insufficient on its face.” Harrison Beverage, 133 F.R.D. at 468 (citations
omitted). To determine whether an amendment is insufficient on its face, the Court employs the
standard applied to Rule 12(b)(6) motions to dismiss. In re Burlington Coat Factory Sec. Litig.,
12
114 F.3d 1410, 1434 (3d Cir. 1997). Under this standard, the question before the Court is not
whether the movant will ultimately prevail, but whether the complaint sets forth “enough facts to
state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007); see Harrison Beverage, 133 F.R.D. at 468 (“‘Futility’ of amendment is shown when the
claim or defense is not accompanied by a showing of plausibility sufficient to present a triable
issue.”). A two-part analysis determines whether this standard is met. Fowler v. UPMC
Shadyside, 578 F.3d 203, 210 (3d Cir. 2009) (citing Ashcroft v. Iqbal, 556 U.S. 662, 629 (2009)).
First, a court separates the factual and legal elements of a claim. Fowler, 578 F.3d at
210. All well-pleaded facts set forth in the pleading and the contents of the documents
incorporated therein must be accepted as true, but the Court may disregard legal conclusions. Id.
at 210–11; West Penn Allegheny Health Sys., Inc. v. UPMC, 627 F.3d 85, 97 n.6 (3rd Cir. 2010);
see also Iqbal, 556 U.S. at 678 (noting that a complaint is insufficient if it offers “labels and
conclusions,” a “formulaic recitation of the elements of a cause of action,” or “naked assertions”
devoid of “further factual enhancement”) (alterations omitted) (internal quotations marks
omitted)).
Second, as stated above, a court determines whether the plaintiff's facts are sufficient “to
state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570; accord Fowler,
578 F.3d at 211. As the Supreme Court instructed in Iqbal, “[a] claim has facial plausibility
when the plaintiff pleads factual content that allows the court to draw the reasonable inference
that the defendant is liable for the misconduct alleged.” 556 U.S. at 678. Although the
plausibility standard is not a “probability requirement,” the well-pleaded facts must do more than
demonstrate that the conduct is “merely consistent” with liability so as to “permit the court to
infer more than the mere possibility of misconduct.” Id. at 678–79 (citations omitted) (internal
13
quotation marks omitted). This “context-specific task ... requires the reviewing court to draw on
its judicial experience and common sense.” Id. at 679.
a. Relation Back
Defendants argue that Nasa’s amendment to add a claim for defamation is futile because
it is barred by the one-year statute of limitations for defamation. Nasa maintains that its
amendment is timely because it relates back to the filing of the original Complaint.
A proposed amended claim relates back to the date of the original Complaint when the
new claim arises out of the same “conduct, transaction or occurrence” as the original claim and
are against the same parties. See N.J. Ct. R. 4:9-3; Fed. R. Civ. P. 15(c)(1)(B). The Court finds
that Nasa’s amendment is not futile as Nasa provides sufficient facts to demonstrate that the
defamation claim relates back to the original Complaint.
The original complaint filed on January 23, 2018 alleged the following:
20. Upon information and belief, instead, Defendant Ahmadpour, on behalf
of and as co-owner of Defendant Procut, independently solicited Plaintiff’s
customers, including Customer 1, in an effort to sell Procut CNCs and the
Software.
32. Nevertheless, Defendants intentionally and improperly interfered with
Plaintiff’s contractual relation by preventing Plaintiff and Customer 1 from
accessing Software and instead, soliciting Customer 1 to purchase Procut
CNCs, thereby preventing full performance of Plaintiff’s contractual
obligations.
Compl., Feb. 28, 2018, D.E. 1. Nasa’s claim for defamation clearly arises out of the same
“conduct, transaction or occurrence” as the original claims. The defamation claim derives from
Ahmadpour’s January 23, 2018 email to Customer 1, which stated in pertinent part that: (1)
"Nasa is incapable of making good machines and cannot even service their own products[;]" (2)
"Due to their lack of knowledge they are scared of any changes or improvements[;]" (3) "I spent
a huge amount of time developing their new AC machines and constantly helping them to get the
14
best performance on the machine, but unfortunately there are some inherent problems that I just
did not want my name to be attached to their inferior machines." Choi Decl., Ex. 6, D.E. 102-3.
Mr. Ahmadpour concluded the e-mail by asking Customer 1 to "let me know if you are still
interested to improve your vision systems and if I can offer any help in the future." Id. The
defamation claim therefore arose out of the same series of events that form the basis of events
plead in paragraphs 20 and 32, specifically, Defendants' alleged efforts to replace Nasa with
themselves as Customer 1's supplier. Therefore, it "constitutes the same matter more fully or
differently laid" and "the gist of the action or basic subject of the controversy remains the same."
Fable v. Doros, Dkt. No. A-2576-17T4, 2018 WL 6816385, *2 (N.J. Super. Ct. App. Div. Dec.
28, 2018) (internal citation omitted). Accordingly, the Court finds that Nasa’s proposed claims
relate back to the original Complaint.
Having determined that Nasa’s defamation claim relates back to the filing of the original
Complaint, the Court will now turn to determining whether Nasa adequately pleads the elements
of both defamation and trade libel claims.
b. Defamation and Trade Libel
To show defamation under New Jersey law, Plaintiff must demonstrate that Defendants
(1) made a false and defamatory statement about Plaintiff, (2) which they communicated to a
third party, and (3) had a requisite degree of fault. Reed v. Scheffler, 218 F. Supp. 3d 275, 281–
82 (D.N.J. 2016). A claim for trade libel requires Plaintiff to show (1) that Defendants
published; (2) with malice; (3) false allegations with respect to Plaintiff’s business or product;
and special damages. Wolfe v. Gooding & Company, Inc., Civ. No. 14-4728, 2017 WL 3977920,
at *2 (D.N.J. Sept. 11, 2017).
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Here, Nasa asserts that Mr. Ahmadpour’s statements in the January 23, 2018 email are
actionable under the torts of defamation and trade libel. Nasa alleges in Count Eleven of its
proposed amended pleading, for defamation, that Mr. Ahmadpour made false and defamatory
statements about Nasa in his January 23, 2018 email to Customer 1, which he knew to be false.
Prop. Am. Compl., ¶¶ 114-121. In Count Ten, for trade libel, Nasa alleges that Mr. Ahmadpour
made the false and defamatory statements with malice because they were competitors and after
two months of unsuccessfully attempting to sell its products to Customer 1, Defendants sought to
stop Customer 1 from dealing with Nasa and to begin dealing with Defendants instead. Nasa
asserts that Mr. Ahmadpour sent the January 23, 2018 email to Customer 1 despite Customer 1’s
January 19, 2018 email to Defendants’ attorney that any past interaction between Customer 1
and FAMA was solely through FAMA’s role as subcontractor for one of Customer 1’s suppliers.
Nasa also alleges that as a result of the email, Nasa lost anticipated orders from Customer 1 and
generally suffered a diminution in business. Id. at ¶¶ 96-113. The Court finds that Nasa
adequately alleges facts sufficient to support claims for both defamation and trade libel;
therefore, permitting the amendment would not be futile. 5
5
Despite Defendants’ contention to the contrary, a single email can constitute both a claim for
defamation and a claim for trade libel. See Dairy Stores, Inc. v. Sentinel Publishing Co., Inc.,
104 N.J. 125, 133-34 (1986). In a case such as this, where Nasa claims that Defendants'
statement harmed both Nasa’s reputation and interfered with its contractual relations with
Customer 1, one statement may indeed form the basis for both claims. Accordingly, the Court
finds that permitting the amendment would not be futile.
16
IV.
CONCLUSION
For the foregoing reasons, the Court grants Nasa’s Motion for Leave to File a Second
Amended Complaint. An Order accompanies this Opinion.
s/ Michael A. Hammer___________
Hon. Michael A. Hammer
United States Magistrate Judge
Dated: December 27, 2019
17
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