NEW JERSEY PHYSICIANS UNITED RECIPROCAL EXCHANGE v. BOYNTON & BOYNTON, INC. et al

Filing 39

OPINION filed. Signed by Judge Freda L. Wolfson on 1/28/2014. (jjc)

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
___________________________________
:
NEW JERSEY PHYSICIANS UNITED
:
RECIPROCAL EXCHANGE,
:
:
Plaintiff,
:
:
Civil Action No. 12-05610 (FLW)(TJB)
v.
:
:
OPINION
BOYNTON & BOYNTON, INC.,
:
KEVIN BYRNE, DOES 1-10,
:
:
Defendants.
:
___________________________________ :

WOLFSON, United States District Judge:
Before the Court is the Motion of Boynton & Boynton and Kevin Byrne (“Defendants”)
to Dismiss Counts I (Lanham Act), II (state law libel), V (state law slander), and VIII (New
Jersey Insurance Trade Practices Act) of the Complaint of New Jersey Physicians United
Reciprocal Exchange (“NJ PURE” or “Plaintiff”) for failure to state a claim pursuant to Federal
Rule of Civil Procedure 12(b)(6).
For the reasons that follow, this Court finds that Plaintiff’s Second Amended Complaint
(i) states a claim under the Lanham Act in Count I, (ii) states a claim for state law libel in Count
II, (iii) states a claim for state law slander in Count V, and (iv) fails to state a claim under the
New Jersey Insurance Trade Practices Act in Count VIII. Accordingly, Count VIII of the Second
Amended Complaint is dismissed, and Defendants’ motion to dismiss Counts I, II, and V is
denied.

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I. Background
Plaintiff is a New Jersey not-for-profit reciprocal interinsurance exchange in the business
of selling malpractice insurance to physicians and other potential policyholders. [Second
Amended Complaint, ¶ 1]. According to the allegations in the Second Amended Complaint,
Defendant Boynton & Boynton is an insurance broker in the business of soliciting, advertising,
and obtaining clients for competitors of Plaintiff in the medical malpractice liability insurance
market. [Id. at ¶ 2]. Defendant Byrne is an employee of Boynton & Boynton. [Id. at ¶ 3]. Does
1-10 are as yet unidentified individuals whom Plaintiff expects discovery shall reveal to have
been responsible for the unlawful conduct of Defendant Boynton & Boynton in an as yet
unspecified manner. [Id. at ¶ 4].
Plaintiff alleges that Defendants have and continue to knowingly make false or
misleading written and oral statements to the public critiquing Plaintiff’s business operations and
insurance services. Specifically, Defendants are alleged to have libeled and slandered Plaintiff in
oral and email exchanges between Defendant Byrne and two specifically identified prospective
clients of Plaintiff and to have engaged in unfair competitive practices by issuing “Marketplace
Updates” to Plaintiff’s prospective clients which offer misleading or false comparisons of
Plaintiff’s financials with those of for-profit competitors served by Defendants. [Id. at ¶ 24].
While the Second Amended Complaint discusses the content of the emails and “Marketplace
Updates” at length, the core of Plaintiff’s allegations is that these documents portray as
significant certain of Plaintiff’s financial indicators and statistics which are not relevant to the
financial health of a not-for-profit reciprocal exchange. Plaintiff’s competitors, who are
Defendants’ clients, are for-profit entities for whom these same indicators and statistics are
relevant to financial health. The comparison between Plaintiff’s and the competitors’ indicators
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and statistics thus is alleged to give a false or misleading impression of Plaintiff’s relative
inferiority and undesirability as a malpractice insurer to potential clients. As a result of
Defendants’ allegedly false and misleading statements, Plaintiff claims that it suffered and
continues to suffer harm in the form of lost former clients, delays in obtaining new clients, and
lost potential future clients. [Second Amended Complaint, ¶ 20]. To redress its injuries, Plaintiff
requests both injunctive relief and money damages. [Id. at p. 29-30 (a)-(g)].

II. Procedural History
Plaintiff initiated this action by Complaint on September 7, 2012, alleging violation of
the Lanham Act and asserting New Jersey State libel, slander, tort, and statutory claims. As
originally filed, Plaintiff’s Lanham Act claim relied exclusively upon email exchanges between
Defendant Byrne, a representative of Boynton & Boynton, and two of Plaintiff’s prospective
clients. Plaintiff alleged that Defendants had engaged in unfair competitive practices by making
disparaging false statements about Plaintiff, particularly that Plaintiff’s financial position was
inferior to that of its competitors and that such financial weakness made it a less desirable
provider of insurance. On September 21, 2012, before any defendant had been served with
summons, Plaintiff filed an Amended Complaint, which elaborated upon its existing claims.
Defendants moved to dismiss the Amended Complaint on November 9, 2012. On May 3,
2013, this Court denied Defendants’ motion without prejudice and instructed that Plaintiff amend
its Complaint to include alleged newly discovered information relevant to its claims. Plaintiff
filed the Second Amended Complaint on May 17, 2013, which, inter alia, amended the Lanham
Act claim to reference, in addition to the aforementioned email exchange, false or misleading
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promotional materials created by Defendants and disseminated to Plaintiff’s present and
potential customers. These “Marketplace Updates” were alleged to have contained false or
misleading information. Defendant responded, on June 17, 2013, with the motion to dismiss the
Second Amended Complaint for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6) that
is now before the Court.

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

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

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

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question of federal law. This Court has supplemental jurisdiction over Plaintiff’s remaining New
Jersey state law claims pursuant to 28 U.S.C. § 1367.

V. Lanham Act (Complaint Count I)
Section 43 of the Lanham Act creates a private cause of action for, among others, persons
damaged or likely to be damaged by false or misleading statements about their products
disseminated to the purchasing public. Specifically, the section of the Act upon which the
Plaintiff relies in this case provides that:
(1) Any person who, on or in connection with any goods or services . . . uses in
commerce any word, term, name, symbol, or device, or any combination thereof, or any
false designation of origin, false or misleading description of fact, or false or misleading
representation of fact, which . . .
(B) in commercial advertising or promotion, misrepresents the nature,
characteristics, qualities, or geographic origin of his or her or another person’s
goods, services, or commercial activities,
shall be liable in a civil action by any person who believes that he or she is or is likely to
be damaged by such act.
15 U.S.C. § 1125(a)(1)(B). In the Second Amended Complaint, Plaintiff alleges two distinct
categories of false or misleading representations of fact. Firstly, Plaintiff contends that
Defendants made direct false or misleading representations, via email to Plaintiff’s current and
potential future clients, that NJ PURE’s financial health was inferior to that of its competitors.
[Second Amended Complaint, ¶¶ 25-39]. Secondly, Plaintiff contends that Defendants drafted
and distributed false or misleading “comparative advertisements” to Plaintiff’s current and
potential future clients in the form of “Marketplace Updates,” which deceptively made NJ

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PURE’s finances appear inferior to those of its for-profit competitors. [Second Amended
Complaint, ¶¶ 40-91].
Defendants’ challenge to Plaintiff’s Lanham Act claim is likewise twofold. Firstly,
Defendants assert that the claim regarding Defendants’ email messages fails because Plaintiff
does not allege that Defendants’ statements were disseminated “in commercial advertising or
promotion” to the degree required under the Lanham Act § 43(a)(1)(B). Secondly, Defendants
contend that the claim regarding the “Marketplace Updates” fails because the statements made in
the Updates were “literally true” under Lanham Act jurisprudence and Plaintiff does not allege
that the current and potential future clients who received the Updates were actually mislead, a
judge-made requirement for Lanham Act claims involving “literally true” statements.
A. Commercial Advertising or Promotion
While the Third Circuit has not yet decided the matter, all other Circuits to consider what
standard courts should apply in determining whether representations constitute commercial
advertising or promotion under § 43(a)(1)(B) have adopted some form of the multi-prong test
laid out in Gordon & Breach Science Publishers, S.A. v. American Institute of Physics, 859 F.
Supp. 1521, 1535-36 (S.D.N.Y. 1994).
In order for representations to constitute “commercial advertising or promotion” under
Section 43(a)(1)(B), they must be: (1) commercial speech; (2) by a defendant who is in
commercial competition with plaintiff; (3) for the purpose of influencing consumers to
buy defendant's goods or services. While he representations need not be made in a
“classic advertising campaign,” but may consist instead of more informal types of
“promotion,” the representations (4) must be disseminated sufficiently to the relevant
purchasing public to constitute “advertising” or “promotion” within that industry.
Proctor & Gamble Co. v. Haugen, 222 F.3d 1262, 1273-74 (10th Cir. 2000) (quoting Gordon,
859 F. Supp. at 1535–36); accord LidoChem, Inc. v. Stoller Enterprises, Inc., 500 Fed. Appx.
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373, 379 (6th Cir. 2012); Podiatrist Ass'n, Inc. v. La Cruz Azul De Puerto Rico, Inc., 332 F.3d 6,
19–20 (1st Cir. 2003); Fashion Boutique of Short Hills, Inc. v. Fendi USA, Inc., 314 F.3d 48, 57–
58 (2d Cir. 2002); Porous Media Corp. v. Pall Corp., 173 F.3d 1109, 1121 (8th Cir. 1999);
Coastal Abstract Service, Inc. v. First American Title Ins. Co., 173 F.3d 725, 734–35 (9th Cir.
1999); Seven–Up Co. v. Coca–Cola Co., 86 F.3d 1379, 1384–85 (5th Cir. 1996).
Defendants’ brief in support of the Motion focuses exclusively upon the fourth factor of
the Gordon test. Defendants contend that the two email exchanges cited by Plaintiff are
insufficient to plead that Defendants’ allegedly false or misleading statements were disseminated
among the relevant purchasing public so as to constitute “advertising or promotion” under the
Act. In support of this contention, Defendants direct the Court’s attention to the Court of Appeals
for the First Circuit’s decision in Podiatrist Ass’n, Inc. v. La Cruz Azul, 332 F.3d 6 (1st Cir.
2003). There, the First Circuit interpreted the fourth prong of the Gordon test to require more
than individual incidences of communication between specific parties to allege Lanham act
“advertising or promotion.” Instead “to pass the pleading threshold in a Lanham Act §
43(a)(1)(B) case, a plaintiff at the very least must identify some medium or means through which
the defendant disseminated information to a particular class of consumers.” Id. at 19-20.1
Defendants argue that the emails identified by Plaintiff are mere “individual incidences of
1

The First Circuit’s full reasoning is useful to place its holding in context:
While the Lanham Act's commercial disparagement provision covers more than classic
advertising campaigns, it is nonetheless aimed at specific forms of communication. . . .
To constitute advertising or promotion, commercial speech must at a bare minimum
target a class or category of purchasers or potential purchasers, not merely particular
individuals. . . . Thus, to pass the pleading threshold in a Lanham Act § 43(a)(1)(B) case,
a plaintiff at the very least must identify some medium or means through which the
defendant disseminated information to a particular class of consumers. The plaintiffs'
allegations here lack this critical component; they do not implicate the use of any
particular advertising or promotional medium. This omission opened the Lanham Act
count to dismissal under Rule 12(b)(6).
Podiatrist Association, Inc. v. La Cruz Azul, 332 F.3d 6, 19-20 (1st Cir. 2003).
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communication between specific parties,” and thus do not constitute the required advertising or
promotional “medium” required by at least one circuit court of appeals, and therefore cannot
serve as the basis of a Lanham Act claim.
The scope of Plaintiff’s claim, however, is much broader than Defendants describe.
Plaintiff offers supporting evidence of only two sets of email exchanges between Defendant
Byrne and specifically identified prospective clients of Plaintiff, but alleges a much larger
scheme of libelous and slanderous statements disseminated by email and other media.
Specifically, Plaintiff claims “[o]n information and belief, Defendants have each publicly
distributed additional written and oral commercial advertisements or promotions containing
libelous and slanderous statements substantially similar to the . . . emails from defendant Byrne. .
. . Defendants each intentionally and willfully made false, misleading, and deceptive factual
representations in their commercial advertisements as part of a campaign to discredit NJ PURE’s
business, products and services offered in interstate commerce.” [Second Amended Complaint, ¶
24]. At this early stage of a motion to dismiss, before the parties have engaged in discovery,
Plaintiff is entitled to proceed with such allegations on information and belief. A properly stated
“claim requires a complaint with enough factual matter (taken as true) to suggest the required
element,” in this case sufficiently disseminated commercial advertisement or promotion. Plaintiff
is not, therefore, required to introduce supporting evidence to make it probable that Defendants’
allegedly defamatory emails were disseminated widely enough to constitute “commercial
advertising or promotion,” but rather must simply allege “enough facts to raise a reasonable
expectation that discovery will reveal evidence of the necessary element.” Phillips, 515 F.3d at

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234 (quoting Bell Atlantic Corporation v. Twombly, 550 U.S. 544, 547 (2007)) (internal
quotation marks omitted). The allegations in the Complaint easily cross this threshold.2
B. Consumers Actually Mislead
Defendants acknowledge that the Second Amended Complaint alleges that Defendants
advertised and/or promoted false or misleading information about Plaintiff’s financial condition
and insurance services in “Marketplace Updates” sent to Plaintiff’s potential clients. [Brief in
Support, VIII(B)(2)]. Accordingly, instead of challenging the dissemination of the Updates in
seeking to dismiss the Second Amended Complaint, Defendants argue that Plaintiff has not
sufficiently pleaded another element of a false advertising claim, that any of the prospective
clients were actually mislead.
The Third Circuit has clearly explained that there are two ways to prove a false or
misleading advertising claim under the Lanham Act.
Either the advertisement must be literally false, or it must be literally true but misleading
to the consumer. Castrol Inc. v. Pennzoil Co., 987 F.2d 939, 943 (3d Cir. 1993). If an
advertisement is literally false, the plaintiff does not have to prove actual consumer
deception. Id. If, on the other hand, an advertisement is literally true but misleading, the
plaintiff must prove actual deception by a preponderance of the evidence. Id. If a claim is
literally true, a plaintiff “‘cannot obtain relief by arguing how consumers could react; it
must show how consumers actually do react.’” Id. (quoting Sandoz Pharm. Corp. v.
Richardson–Vicks, Inc., 902 F.2d 222, 228–29 (3d Cir. 1990)).

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Although I now find that Plaintiff has adequately pleaded that the allegedly false or misleading
statements made by Defendants were disseminated sufficiently to Plaintiff’s prospective clients,
a court in this district has recently recognized an alternative basis for denying Defendants’
challenge. In Refundo, LLC v. Drake Enterprises, Ltd., Civ. A. 13-643 JLL, 2013 WL 1750016
(D.N.J. Apr. 22, 2013), the court found that whether a statement was disseminated sufficiently to
the relevant purchasing public to constitute advertising or promotion under the Lanham Act
“raises a question of fact that would be inappropriate to decide on a motion to dismiss.” Accord
Proctor & Gamble Co. v. Haugen, 222 F.3d 1262, 1274 n. 9 (10th Cir. 2000).
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Highmark, Inc., v. UPMC Health Plan, Inc., 276 F.3d 160, 171 (3d Cir. 2001). In the Second
Amended Complaint, Plaintiff seeks relief under both theories, asserting that Plaintiff was
harmed by Defendants’ statements in “Marketplace Updates” that were literally false, or, in the
alternative, based upon true financial data but misleading in their presentation. [¶¶ 41, 51-3, 802]. Defendants contend that all the statements made in the “Marketplace Updates” were literally
true, and that Plaintiff has accordingly failed to state a claim for relief in not alleging “actual
deception” of any current or potential clients.
As a threshold matter, Defendants’ contention that the financial indicator data reproduced
in the “Marketplace Updates” is literally true is a question of fact, not now properly before the
Court. On a Rule 12(b)(6) motion the Court is limited to the factual allegations in the complaint
and supporting essential documents. This Court does not have access to the details of NJ PURE’s
financial records which would be required to verify the veracity of Defendants’ claim of literal
truth, and will not hazard a guess based upon the assertions and counterassertions in the parties’
motion papers. The only question of law now before the Court concerning this aspect of
Plaintiff’s Lanham Act Claim is whether Plaintiff has stated a claim under either the “literally
false” or the “literally true but misleading” theories of recovery.
“In analyzing whether an advertisement or product name is literally false, a court must
determine, first, the unambiguous claims made by the advertisement or product name, and
second, whether those claims are false.” Novartis Consumer Health, Inc. v. Johnson & JohnsonMerck Consumer Pharm. Co., 290 F.3d 578, 586 (3d Cir. 2002) (citing Clorox Co. v. Proctor &
Gamble Commercial Co., 228 F.3d 24, 34 (1st Cir. 2000)). Plaintiff has pleaded that the
unambiguous claims included in Defendants’ “Marketplace Updates” included side-by-side
comparisons of for-profit firm financial data and NJ PURE’s financial data, coupled with
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explanatory paragraphs which explained the significance of the financial indicators in such a way
that was true for Plaintiff’s for-profit competitors, but not true for a non-profit entity such as
Plaintiff. [Second Amended Complaint, ¶ 82; see also ¶¶ 41-81].
Plaintiff has also pleaded that these statements taken together are “literally false.” [Id. at ¶
82]. In this Circuit a “‘literally false’ message may be either explicit or ‘conveyed by necessary
implication when, considering the advertisement in its entirety, the audience would recognize the
claim as readily as if it had been explicitly stated.” Novartis, 290 F.3d 586-87. While Plaintiff
contends that certain of Defendants’ statements — including those in the referenced email
exchanges — are explicitly false, the core of Plaintiff’s claim concerning the comparison of
Plaintiff’s financial data to that of for-profit competitors, alleges falsity by necessary implication.
[See Second Amended Complaint, ¶¶ 45-82]. Stated simply, Plaintiff has pleaded that by
comparing for-profit and not-for-profit insurers in a side-by-side chart listing factors some of
which are not relevant to the evaluation of not-for-profit companies, and by accompanying the
chart with statements about the significance of those factors which are true only for for-profit
companies, the “Marketplace Updates” convey the message that NJ PURE is not a financially
sound insurer as clearly as if it had been stated directly. The Third Circuit’s Lanham Act
jurisprudence recognizes just such a claim. Because I find that Plaintiff has pleaded that
Defendants’ commercial advertisements and promotions are “literally false,” I will not evaluate
the Complaint under the “true but misleading” standard which may also have been pleaded.

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VI. Libel and Slander (Complaint Counts II and V)
Under the New Jersey law of defamation, governing libel and slander claims, to a assert a
cause of action a plaintiff must plead:
(1) a defamatory statement of fact; (2) concerning the plaintiff; (3) which was false; (4)
which was communicated to a person or persons other than the plaintiff; (5) with actual
knowledge that the statement was false or with reckless disregard of the statement’s truth
or falsity or with negligence in failing to ascertain the truth or falsity; and (6) which
caused damage.
Monroe v. Host Marriot Services Corp., 999 F. Supp. 599, 603 (D.N.J. 1998)(citing Feggans v.
Billington, 291 N.J. Super. 382, 391, 677 A.2d 771 (1996)). In support of their Motion to
Dismiss, Defendants contend that Plaintiff has failed to adequately allege the sixth element of a
defamation claim, that Plaintiff was actually caused harm by Defendants’ allegedly false or
misleading statements. Defendants further contend that New Jersey courts are not permitted to
presume damages in defamation cases, so Plaintiff must plead special damages to properly state
a claim.
As an initial matter, Plaintiff clearly pleads damages. The Second Amended Complaint
alleges “[a]s a direct and proximate result of [Defendants’] libelous and slanderous statements
regarding NJ PURE as a business as well as NJ PURE’s products and services, NJ PURE has and
will continue to suffer pecuniary harm in the form of loss of former medical malpractice liability
policyholders, delays in obtaining new medical malpractice policyholders and the loss of
prospective contracts with potential medical malpractice liability policyholders.” [Second
Amended Complaint, ¶ 20]. The only question for the court in reviewing Defendants’ Motion is,
therefore, whether this pleading is sufficient under New Jersey law. In answering this question, I
find the case of W.J.A. v. D.A., 210 N.J. 229 (2012), raised in briefing by Plaintiff, to be
instructive. There, the New Jersey Supreme Court made clear that the doctrine of presumed
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damages still applies in private defamation cases. Id. at 248-49. (“We question why New
Jersey’s longstanding common law tradition of presumed damages—for defamation claims by
private citizens on matters that do not involve public concern—should be altered now . . . . We
are not persuaded that the common law of this state need change to require such victims to
demonstrate compensatory losses in order to proceed with a cause of action.”). Accordingly,
Plaintiff’s claim would proceed even if its alleged damages were found to be nominal,
reputational harm. Id. at 240 (“[a] nominal damages award may be made in a defamation case to
a plaintiff who has not proved a compensable loss.”). It is abundantly clear that the alleged loss
of former, present, and future clients, and reputational harm arising from allegedly misleading
advertisements concerning Plaintiff’s financial health states a claim of at least nominal damages.
In any event, whether Plaintiff can adequately establish compensatory or only nominal damages
is a question of fact not now before the Court. Id. at 249. Defendant’s motion to dismiss Counts
II and V is therefore denied.

VII. Insurance Trade Practices Act (Complaint Count VIII)
Defendants contend that Plaintiff cannot as a matter of law state a claim for unfair
competition in violation of the New Jersey Insurance Trade Practices Act (“ITPA”), N.J.S.A.
17:29B-1, et seq., because that statute does not provide for a private cause action. The law is
indeed well-settled that violations of the ITPA do not give rise to private causes of action. Weiss
v. First Unum Life Ins. Co., 482 F.3d 254, 262 (3d Cir. 2007); Pickett v. Lloyd’s, 131 N.J. 457,
467 (1993); Pierzga v. Ohio Casualty Group of Ins. Cos., 208 N.J. Super. 40, 47 (App. Div.)
certif. denied, 104 N.J. 399 (1986). Accordingly, Plaintiff does not contest that the ITPA cannot

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form the sole basis of its unfair competition claim. Instead, Plaintiff contends that Count VIII
actually seeks relief under the New Jersey state tort law of unfair competition and merely “relies
on the standards promulgated in the ITPA, specifically N.J.S.A. 17:29:B-4(2) and (3), in support
of [that] allegation.” [Brief in Opposition, p. 38].
Plaintiff’s argument that other independent state law causes of action may use violations
of the ITPA’s unfair business practices regulations as support is not totally without precedent.
On at least one occasion, the New Jersey Supreme Court has found that conduct violative of the
ITPA also gives rise to an independent, state common law private cause of action. Pickett, 131
N.J. 457 (1993) (“Although the regulatory framework does not create a private cause of action, it
does declare state policy and we do not think that finding a cause of action for the breach of the
duty of good faith and fair dealing would conflict with that policy.”). The New Jersey Supreme
Court has not specifically addressed whether finding a cause of action for the tort of unfair
competition would conflict with the policy of the ITPA.
In the case at bar, however, Plaintiff’s Complaint clearly alleges violations of and
requests redress “under the New Jersey Insurance Trade Practices Act and specifically N.J.S.A.
17:29B-4(2), (3).” [Second Amended Complaint, ¶ 148; see also Complaint, ¶ 142]. While
Plaintiff has argued in its Opposition that Count VIII actually requests relief under state tort law,
this contention is found nowhere in the Second Amended Complaint. “It is axiomatic that the
complaint may not be amended by the briefs in opposition to a motion to dismiss.” Frederico v.
Home Depot, 507 F.3d 188, 202 (3d Cir. 2007) (quoting Commw. of Pa. ex. rel Zimmerman v.
PepsiCo, Inc., 836 F.2d 173, 181 (3d Cir. 1988)). Accordingly, because the ITPA indisputably
does not create a private cause of action for violations of its unfair practices regulations, and the

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language in the only Complaint now before me asserts no other legal basis for relief, Count VIII
of the Complaint is dismissed.3

Conclusion
For the foregoing reasons, Defendants’ Motion to Dismiss the Second Amended
Complaint is granted in part and denied in part as follows. Defendant’s Motion to Dismiss Count
I of the Second Amended Complaint, asserting a claim of unfair competition under the Lanham
Act is denied. Defendant’s Motion to Dismiss Counts II and V of the Second Amended
Complaint, asserting New Jersey state libel and slander claims respectively, is denied. Count
VIII of the Second Amended Complaint, under the New Jersey Insurance Trade Practices Act,
does not state a claim for relief and is dismissed.
Order to follow.

Dated: ____1/28/2014____

/s/ Freda L. Wolfson
_
The Honorable Freda L. Wolfson
United States District Judge

3

The Court takes note of Plaintiff’s request in briefing for leave to make a curative amendment
in the event that Count VIII should be dismissed, but I disagree with Plaintiff’s cursory
argument that such leave must be granted as of right. [Brief in Opposition, p. 38 n.4]. If Plaintiff
wishes to add a claim for relief based upon the New Jersey state common law tort of unfair
competition, Plaintiff may formally move for leave to amend the Complaint to include such
claim. As it stands, however, Count VIII of the Complaint unequivocally seeks redress under
N.J.S.A. 17:29B-4(2) and (3), a statute which does not provide for a private cause of action.
Count VIII must, therefore, be dismissed.
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