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

Filing 94

OPINION filed. Signed by Magistrate Judge Karen M. Williams on 10/1/2015. (kas, )

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
___________________________________
:
NEW JERSEY PHYSICIANS UNITED
:
Civil Action No. 12-5610 (FLW)(LHG)
RECIPROCAL EXCHANGE,
:
:
OPINION
Plaintiff,
:
:
v.
:
:
BOYNTON & BOYNTON, INC.
:
KEVIN BYRNE; DOES 1-10,
:
:
Defendants.
:
___________________________________ :
:
WHITBOY, INC., D/B/A BOYNTON
:
& BOYNTON,
:
:
Third-Party Plaintiff,
:
:
v.
:
:
JOANNA ELIAS; ERIC POE; AND
:
DOES 1-10,
:
:
Third-Party Defendants.
:
___________________________________ :
:
NEW JERSEY PHYSICIANS UNITED
:
Civil Action No. 13-2286 (FLW)(LHG)
RECIPROCAL EXCHANGE,
:
:
Plaintiff,
:
:
v.
:
:
THE MEDICAL PROTECTIVE
:
COMPANY, INC. D/B/A
:
PRINCETON INSURANCE
:
COMPANY; DOES 1-10,
:
:
Defendants.
:
___________________________________ :

1

WOLFSON, United States District Judge:
This matter comes before the Court on a motion for judgment on the pleadings under
Federal Rule of Civil Procedure 12(c) filed by Plaintiff New Jersey Physicians United Reciprocal
Exchange (“NJ PURE”), and Third-party Defendants Joanna Elias (“Elias”) and Eric Poe (“Poe”)
(collectively “Third-Party Defendants”), seeking dismissal of the First Amended Counterclaim,
Third Party Complaint and Demand for Trial by Jury (“Counterclaim”) filed by Defendant/Thirdparty Plaintiff Whitboy, Inc. d/b/a Boynton and Boynton’s (“Boynton”).
For the following reasons, NJ PURE’s motion to dismiss is denied in part and granted in
part, and Third-Party Defendants’ motion to dismiss is granted. Specifically, NJ PURE’s motion
to dismiss Counts I and II of the counterclaim is denied. NJ PURE’s motion to dismiss Count III
of the counterclaim is denied with respect to Boynton’s claim of tortious interference with its
contract with OB/GYN of North Jersey.

NJ PURE’s motion to dismiss Count III of the

counterclaim is granted with respect to Boynton’s claim of tortious interference with its
prospective economic advantage with OB/GYN of North Jersey, and tortious interference with its
contract and prospective economic advantage with University Radiology Group; Pulmonary &
Allergy Associates; and unknown, prospective customers. Third-Party Defendants’ motion to
dismiss the third-party claims is granted, and the third-party complaint is dismissed.
I.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY
The following facts are drawn from Boynton’s counterclaim and third party complaint, the

allegations of which are assumed as true for the purposes of this motion.
Boynton is an insurance agent that, among other things, brokers the sale of medical
malpractice insurance policies to physicians and other individuals engaged in the provision of
healthcare.

Counterclaim ¶¶ 1, 5, 13.

Plaintiff NJ PURE is a “reciprocal inter-insurance

2

exchange,” that is engaged in the “direct sale of medical malpractice insurance policies that it
produces itself to physicians and other individuals and institutions engaged in the provision of
healthcare.” Counterclaim ¶¶ 2, 6, 14. Third-Party Defendants Elias and Poe were employees of
NJ PURE during the relevant time period asserted in the Counterclaim. Counterclaim ¶¶ 3, 16.
Boynton alleges it is in direct competition with NJ PURE because NJ PURE markets its
medical malpractice insurance policies directly to potential insureds, without the use of a broker.
Counterclaim ¶¶ 15-17. Boynton further alleges NJ PURE made false and misleading statements
that NJ PURE was rated favorably by A.M. Best Company (“A.M. Best”) 1 to several existing and
prospective customers of Boynton, when it has not been so-rated. Counterclaim ¶¶ 24-26.
Specifically, Boynton alleges:
•

On April 25, 2012, NJ PURE, through Poe, emailed a representative of Boynton’s
client, University Radiology Group (“URG”), and represented that NJ PURE had
an A.M. Best Capital Adequacy Ratio (“BCAR”) score of 183.6, which “qualifies
[NJ PURE] for an A++ (Superior) rating.” Counterclaim ¶¶ 27-31.

•

On May 11, 2012, NJ PURE, through Elias, emailed a representative of Boynton’s
client, Pulmonary & Allergy Associates (“PAA”), and represented that NJ PURE
had an A.M. Best Capital Adequacy Ratio (“BCAR”) score of 183.6, which
“qualifies [NJ PURE] for an A++ (Superior) rating.” Counterclaim ¶¶ 32-35. In a
later meeting in May 2012, Elias also allegedly “touted NJ Pure’s rating with A.M.
Best Company” to a representative of PAA. Counterclaim ¶¶ 36-37.

•

At some point in May or June 2012, an unknown employee of NJ PURE verbally
advised Boynton’s client, OB/GYN of North Jersey (“OB/GYN”), “that NJ PURE
had received a favorable rating from A.M. Best Company,” and that “[b]ased upon
[that] solicitation . . . [OB/GYN] left Boynton and began procuring its medical
malpractice insurance coverage through NJ PURE.” Counterclaim ¶¶ 39-40.

•

On various other dates, unknown employees of NJ PURE contacted prospective
and existing clients of Boynton to solicit their medical malpractice business by
1

Boynton alleges that A.M. Best is a well-known company devoted to issuing in-depth
reports and financial strength ratings of insurance companies, and that a favorable rating from
A.M. Best is a “coveted assurance of an insurance company’s financial strength.” See generally
Counterclaim ¶¶ 18-23.
3

providing false and misleading information concerning NJ PURE’s rating with
A.M. Best. Counterclaim ¶ 41.
NJ PURE brought suit against Boynton and Defendant Kevin Byrne (“Byrne”) on
September 7, 2012, and filed an amended complaint on September 21, 2012, and a second amended
complaint on May 17, 2013, alleging Lanham Act violations and common law claims for trade
libel, libel, libel per se, slander, slander per se, tortious interference with prospective contractual
relations, and unfair competition under the Insurance Trade Practices Act (“ITPA”), N.J.S.A.
17:29B-4(2)-(3).
On July 17, 2013, Boynton and Byrne moved to dismiss NJ PURE’s claims for violation
of the Lanham Act, libel, slander, and unfair competition under the ITPA. On January 28, 2014,
the Court dismissed the Complaint only as to the claim of unfair competition under the ITPA, and
denied Boynton’s motion to dismiss the other counts.
On February 28, 2014, Boynton filed a counterclaim against NJ PURE, and a third-party
complaint against Poe and Elias, alleging that Boynton suffered economic injury as a result of NJ
PURE’s false statements that NJ PURE was favorably rated by A.M. Best. On March 21, 2014,
NJ PURE and Third-Party Defendants filed a motion to dismiss Boynton’s counterclaim and thirdparty complaint.
On April 21, 2014, Boynton filed a motion for leave to amend the counterclaim and thirdparty complaint. On September 29, 2014, the Court ordered Boynton’s counterclaims and thirdparty complaint stricken, and referred Boynton’s motion to amend to Magistrate Judge
Bongiovanni. On November 25, 2014, Magistrate Judge Bongiovanni granted Boynton’s motion
to amend its counterclaim and third-party complaint.
On December 10, 2014, Boynton filed its first amended counterclaim and third-party
complaint, in which Boynton asserted four causes of action (in three counts) against NJ PURE:
4

(1) Unfair Competition in violation of the Lanham Act, 15 U.S.C.A. § 1125(a)(1)(A); (2) False
promotion in violation of the Lanham Act, 15 U.S.C.A. § 1125(a)(1)(B); and (3) tortious
interference with (i) contract and (ii) prospective economic advantage. Boynton alleges identical
counts against Elias and Poe in its third-party complaint. On April 23, 2015, NJ PURE and ThirdParty Defendants answered the counterclaim and third-party complaint. On May 29, 2015, NJ
PURE and Third-Party Defendants filed the instant motion to dismiss the counterclaim and thirdparty complaint pursuant to Federal Rule of Civil Procedure 12(c).
II.

STANDARD OF REVIEW
Rule 12(c) of the Federal Rules of Civil Procedure allows a party to move for judgment on

the pleadings “after the pleadings are closed but within such time as not to delay trial.” Fed. R.
Civ. P. 12(c). The applicable standard on a motion for judgment on the pleadings is similar to that
applied on a motion to dismiss pursuant to Rule 12(b)(6). Spruill v. Gillis, 372 F.3d 218, 223 n. 2
(3d Cir. 2004). When reviewing a motion made pursuant to Rule 12(c), a court must take all
allegations in the relevant pleading as true, viewed in the light most favorable to the non-moving
party. Gomez v. Toledo, 446 U.S. 635, 636 n.3 (1980); Mele v. Fed. Reserve Bank of N.Y., 359
F.3d 251, 253 (3d Cir. 2004). All reasonable inferences must be made in the non-moving party’s
favor. See In re Ins. Brokerage Antitrust Litig., 618 F.3d 300, 314 (3d Cir. 2010). “The motion
should not be granted ‘unless the moving party has established that there is no material issue of
fact to resolve, and that it is entitled to judgment in its favor as a matter of law.’” Mele, 359 F.3d
at 253 (quoting Leamer v. Fauver, 288 F.3d 532, 535 (3d Cir. 2002)). Accordingly, in order to
survive a motion for judgment on the pleadings, the non-moving party’s pleading must provide
“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). This standard requires the non-moving party to show “more than a

5

sheer possibility that a defendant has acted unlawfully,” but does not create as high of a standard
as to be a “probability requirement.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
The Third Circuit has required a three-step analysis to meet the plausibility standard
mandated by Twombly and Iqbal. First, the court should “outline the elements a plaintiff must
plead to a state a claim for relief.” Bistrian v. Levi, 696 F.3d 352, 365 (3d Cir. 2012). Next, the
court should “peel away” legal conclusions that are not entitled to the assumption of truth. Id.; see
also Iqbal, 556 U.S. at 678-79 (“While legal conclusions can provide the framework of a
complaint, they must be supported by factual allegations.”). It is well-established that a proper
complaint “requires more than labels and conclusions, and a formulaic recitation of the elements
of a cause of action will not do.” Twombly, 550 U.S. at 555 (internal quotations and citations
omitted). Finally, the court should assume the veracity of all well-pled factual allegations, and
then “determine whether they plausibly give rise to an entitlement to relief.” Bistrian, 696 F.3d at
365 (quoting Iqbal, 556 U.S. at 679). A claim is facially plausible when there is sufficient factual
content to draw a “reasonable inference that the defendant is liable for the misconduct alleged.”
Iqbal, 556 U.S. at 678. The third step of the analysis is “a context-specific task that requires the
reviewing court to draw on its judicial experience and common sense.” Id. at 679. Judgment on
the pleadings pursuant to Rule 12(c) will be granted where the moving party clearly establishes
there are no material issues of fact to be resolved, and that he or she is entitled to judgment as a
matter of law. DiCarlo v. St. Mary Hosp., 530 F.3d 255, 259 (3d Cir. 2008).
III.

DISCUSSION
A. Boynton has Alleged a Prima Facie violation of the Lanham Act against NJ PURE,
but Not Against Third-Party Defendants.
Boynton asserts two different causes of action under the Lanham Act: Count I, “unfair

competition” under 15 U.S.C.A. § 1125(a)(1)(A), and Count II, “false promotion” under 15
6

U.S.C.A. § 1125(a)(1)(B). 2 NJ PURE and Third-Party Defendants move to dismiss Boynton’s
Lanham Act counts on three grounds: (1) lack of prudential standing under the Lanham Act; (2)
failure to allege an actual injury, and (3) failure to allege any statement that is literally false or
misleading and tending to deceive. The motion to dismiss Counts I and II of the counterclaim is
denied because Boynton has standing to pursue its Lanham Act claims against NJ PURE, and it
has sufficiently alleged NJ PURE made literally false or misleading statements that proximately
caused an actual injury to Boynton. The motion to dismiss Counts I and II of the third-party
complaint is granted because Boynton does not have standing to pursue its Lanham Act claims
against Third-Party Defendants.

2

“Section 1125(a) of Title 15 of the United States Code creates two distinct bases of
liability: false association, § 1125(a)(1)(A), and false advertising, § 1125(a)(1)(B).” Knit With v.
Knitting Fever, Inc., No. 12-3219, 2015 U.S. App. LEXIS 15575, at *27 (3d Cir. Sept. 2, 2015).
Specifically, Section 43(a) of the Lanham Act provides:
Any person who, on or in connection with any goods or services, or any container
for goods, 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-(A) is likely to cause confusion, or to cause mistake, or to deceive as to the
affiliation, connection, or association of such person with another person,
or as to the origin, sponsorship, or approval of his or her goods, services, or
commercial activities by another person, or
(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.A. § 1125(a)(1).
7

i.

Boynton has Standing under the Lanham Act to Assert Claims against
NJ PURE, but Not Against Third-Party Defendants.

As a preliminary matter, the Court notes that the parties have expended considerable
briefing on the issue of “prudential standing” under the Lanham Act, focusing specifically on the
multi-factor balancing test articulated by the Third Circuit in Conte Bros. Auto. v. Quaker StateSlick 50, Inc., 165 F.3d 221 (3d Cir. 1998). 3 However, the Supreme Court established a new
analytical framework for determining standing under the Lanham Act and other statutes in
Lexmark International, Inc. v. Static Control Components, Inc., __ U.S. __, 134 S.Ct. 1377, 1384
(2014). No party addresses the Lexmark decision. 4
In Lexmark, the Supreme Court held that, rather than employ the five-factor Conte test to
determine “prudential” standing (a label the Court described as “misleading,” 134 S. Ct. at 1386),
or other tests utilized by different circuits, 5 courts should instead apply (1) the statutory zone-of-

3

Those five factors are “(1) The nature of the plaintiff’s alleged injury: Is the injury of a
type that Congress sought to redress in providing a private remedy for violations of the antitrust
laws? (2) The directness or indirectness of the asserted injury. (3) The proximity or remoteness of
the party to the alleged injurious conduct. (4) The speculativeness of the damages claim. (5) The
risk of duplicative damages or complexity in apportioning damages.” Conte Bros., 165 F.3d at
233 (citations and internal quotation marks omitted).
4

Although no party addresses Lexmark, additional briefing in not necessary on the issue.
In abrogating Conte, the Supreme Court described that test as a “commendable effort to give
content to an otherwise nebulous inquiry,” but found it “slightly off the mark.” Lexmark, 134 S.
Ct. at 1392. The Court observed that Conte’s “first factor can be read as requiring that the
plaintiff’s injury be within the relevant zone of interests and the second and third as requiring
(somewhat redundantly) proximate causation,” but took issue with the Third Circuit’s treatment
of these requirements as factors that could be balanced against each other. Id. Additionally, the
Court found the fourth and fifth factors (relating to damages) were inappropriate considerations
when determining standing. Id. By analyzing the first three factors under Conte, the parties
implicitly addressed the two factors required under Lexmark, and, accordingly, the Court can
consider their arguments within the appropriate context of Lexmark to determine whether Boynton
has standing under the Lanham Act.
5

In Lexmark, the Supreme Court also rejected the direct-competitor test and reasonable
interests test. Id. at 1392-93.
8

interests test and (2) the proximate cause requirement, which, together, “suppl[y] the relevant
limits on who may sue” under, inter alia, the Lanham Act. Id. at 1391. The Court held that under
the statutory zone-of-interests test, to come within the zone of interests protected by §1125(a), “a
plaintiff must allege an injury to a commercial interest in reputation or sales.” Id. at 1390. And,
under proximate causation principles, “a plaintiff suing under §1125(a) ordinarily must show
economic or reputational injury flowing directly from the deception wrought by the defendant’s
advertising; and that that occurs when deception of consumers causes them to withhold trade from
the plaintiff.” Id. at 1392. In other words, to maintain a cause of action for false advertising under
§ 1125(a), “a plaintiff must plead . . . an injury to a commercial interest in sales or business
reputation proximately caused by the defendant’s misrepresentations.” Id. at 1395.
Here, Boynton alleges in its counterclaim that it suffered an economic injury – loss of a
customer – which was proximately caused by NJ PURE’s misrepresentation of its rating by A.M.
Best:
39.
Upon information and belief sometime in May or June 2012, an employee,
representative or agent of NJ PURE, whose identity is presently unknown to
Boynton, acting with the actual and apparent authority of NJ PURE, verbally
advised Boynton’s customer OB/GYN of North Jersey that NJ PURE had received
a favorable rating from A.M. Best Company.
40.
Based upon the solicitation referred to in the preceding paragraph, the
customer left Boynton and began procuring its medical malpractice insurance
coverage through NJ PURE.
Counterclaim ¶¶ 39-40. Based on these allegations, the Court finds that Boynton has standing to
pursue its Lanham Act claims against NJ PURE Boynton has alleged an injury that comes within
the “zone of interests” protected by the Lanham Act – its commercial interest in sales to OB/GYN. 6

6

Relying on the deposition testimony of Byrne, NJ PURE argues that Boynton, as a broker,
is not compensated directly by procurers of medical malpractice insurance, but instead is paid by
insurers based on the premiums Boynton’s generates on their behalf. However, the Court must
9

Lexmark, 134 S. Ct. at 1390. And Boynton avers that this injury was proximately caused by NJ
PURE’s allegedly false and misleading statement to OB/GYN regarding its A.M. Best rating. id.
at 1392. 7
However, with respect to Boynton’s third-party claims, no such loss is alleged. Boynton
alleges that Poe misrepresented NJ PURE’s rating to URG, but that customer is not alleged to have
ceased its business relationship with Boynton. Counterclaim ¶¶ 27-31. Likewise, Boynton alleges
that Elias made similar misrepresentations to PAA in email and in person, but that customer is also
not alleged to have ceased its business relationship with Boynton. Counterclaim ¶¶ 32-38.
Although Boynton alleges that it has suffered “substantial economic damages” as a result of these
statements, Counterclaim ¶¶ 74, 80, it does not allege any loss of sales or damage to its business
reputation that was proximately caused by Third-Party Defendants. Accordingly, Counts I and II
of the third-party complaint are dismissed for lack of standing.

accept Boynton’s allegation that it lost OB/GYN as a customer as true for purposes of this motion.
Mele, 359 F.3d at 253.
7

NJ PURE argues, within the rubric of Conte, that Boynton has failed to allege a
competitive and direct injury, and that Boynton’s damages are too remote because another class
of plaintiffs – other insurance companies – were more directly injured by NJ PURE’s alleged
misrepresentations. These arguments are unavailing. First, the Supreme Court in Lexmark also
rejected application of a “direct-competitor test” for standing under the Lanham Act. 134 S. Ct.
at 1392. As the Court observed: “[t]o be sure, a plaintiff who does not compete with the defendant
will often have a harder time establishing proximate causation. But a rule categorically prohibiting
all suits by noncompetitors would read too much into the Act’s reference to ‘unfair competition’
in §1127.” Id. Second, while Boynton and NJ PURE may not compete in producing insurance
policies, they clearly compete in selling insurance policies – even if direct competition were still
a requirement after Lexmark. Boynton and NJ PURE are clearly in direct competition to sell
medical malpractice insurance in the same market. Whether other entities were more injured by
NJ PURE’s alleged misrepresentations does not affect whether Boynton has standing under the
Lanham Act.
10

ii.

Boynton has Alleged an Actual Injury under the Lanham Act against
NJ PURE.

NJ PURE argues that Boynton cannot recover monetary damages because it does not allege
an “actual injury” under the Lanham Act. A plaintiff seeking only injunctive relief to stop
violations of Section 43(a) of the Lanham Act needs only to plead “a reasonable basis for the belief
that plaintiff is likely to be damaged as a result of the false advertising.” Warner-Lambert Co. v.
BreathAsure, Inc., 204 F.3d 87, 95 (3d Cir. 2000). In order to state a claim under the Lanham Act
to recover monetary damages, Boynton must plead that it was damaged as result of NJ PURE’s
misrepresentation or that NJ PURE profited from that misrepresentation. See 15 U.S.C.A. § 1117.
In other words, Boynton must plead “that the falsification or misrepresentation actually deceives
a portion of the buying public.” U.S. Healthcare, Inc. v. Blue Cross of Greater Phila., 898 F.2d
914, 922 (3d Cir.) (citing Parkway Baking Co. v. Freihofer Baking Co., 255 F.2d 641, 648 (3d Cir.
1958), cert. denied, 498 U.S. 816 (1990). However, “[t]his does not place upon the plaintiff a
burden of proving [or pleading] detailed individualization of loss of sales. Such proof goes to
quantum of damages and not to the very right to recover.” Id. (quoting Parkway Baking, 255 F.2d
at 648); see also Warner-Lambert, 204 F.3d at 92 (“[A] plaintiff seeking damages under § 43(a)
must establish customer reliance but need not quantify loss of sales as that goes to the measure of
damages, not plaintiff’s cause of action.”).
Here, Boynton has alleged that NJ PURE’s misrepresentation actually deceived a portion
of the buying public which profited NJ PURE – Boynton alleges that OB/GYN was deceived by
NJ PURE’s misrepresentation regarding it’s A.M. Best rating, ceased using Boynton as its broker,
and switched its insurance coverage to NJ PURE, all based on that misrepresentation.
Counterclaim ¶¶ 39-40. NJ PURE’s alleged conduct thus led Boynton to seek both injunctive

11

relief and monetary relief under the Lanham Act, Counterclaim ¶ 65(a-e), which are proper
requests for relief here.
iii.

Boynton has Alleged that NJ PURE’s Statements were Literally False
or Misleading and Tending to Deceive.

NJ PURE also argues that Count II of the counterclaim must be dismissed for failure to
allege that NJ PURE’s statements were either literally false, or misleading and tending to deceive.
To allege a Lanham Act violation under 15 U.S.C.A. § 1125(a)(1)(B), Boynton must plead:
(1) the defendant made false or misleading statements about the plaintiff’s [or his
own] product; (2) there is actual deception or a tendency to deceive a substantial
portion of the intended audience; (3) the deception is material in that it is likely to
influence purchasing decisions; (4) the advertised goods traveled in interstate
commerce; and (5) there is a likelihood of injury to the plaintiff.
Pharmacia Corp. v. GlaxoSmithKline Consumer Healthcare, L.P., 292 F. Supp. 2d 594, 598
(D.N.J. 2003) (quoting Highmark, Inc. v. UPMC Health Plan, Inc., 276 F.3d 160, 171 (3d Cir.
2001); see also Trans USA Prods. v. Howard Berger Co., No. 07-5924, 2008 U.S. Dist. LEXIS
25370, at *13-14 (D.N.J. Mar. 28, 2008).
“[L]iability arises under section 43(a)(1)(B) if the defendant makes a commercial message
or statement that is either literally false, or literally true but ambiguous such that it has the tendency
to deceive consumers.” Trans USA Prods., 2008 U.S. Dist. LEXIS 25370 at *12-13 (citing
Novartis Consumer Health, Inc. v. Johnson & Johnson-Merck Consumer Pharms. Co., 290 F.3d
578, 586 (3d Cir. 2002); see also Castrol Inc. v. Pennzoil Co., 987 F.2d 939, 943 (3d Cir. 1993)
(noting “a plaintiff must prove either literal falsity or consumer confusion, but not both”)
(emphasis in original). “[I]f the plaintiff alleges literal falsity, he need not show that the audience
was misled.” Trans USA Prods., 2008 U.S. Dist. LEXIS 25370 at *14 (citing Santana Prods., Inc.
v. Bobrick Washroom Equip., Inc., 401 F.3d 123, 136 (3d Cir.), cert. denied, 546 U.S. 1031
(2005)). “If the advertisement is literally true, the plaintiff must persuade the court that the persons
12

to whom the advertisement is addressed would find that the message received left a false
impression about the product.” Blue Cross of Greater Phila., 898 F.2d at 922-23 (citation and
internal quotation marks omitted).
“When analyzing a challenged advertisement, the court first determines what message is
conveyed.” See id. at 922. In doing so, many district courts within this circuit have applied a socalled “slightly heightened” or “intermediate” pleading standard for false advertising claims under
the Lanham Act, although the Third Circuit has not yet addressed the issue. 8 See, e.g., Trans USA
Prods., 2008 U.S. Dist. LEXIS 25370 at *14-15; Wellness Publ’g v. Barefoot, No. 02-3773, 2008
U.S. Dist. LEXIS 1514, at *44-47 (D.N.J. Jan. 9, 2008); Evco Tech. & Dev. Co. v. Buck Knives,
Inc., No. 05-6198, 2006 U.S. Dist. LEXIS 68549, at *14-19 (E.D. Pa. Sept. 22, 2006); Gallup, Inc.
v. Talentpoint, Inc., No. 00-5523, 2001 U.S. Dist. LEXIS 18560, at *37-39 (E.D. Pa. Nov. 13,
2001); Max Daetwyler Corp. v. Input Graphics, Inc., 608 F. Supp. 1549, 1556 (E.D. Pa. 1985).
As a district court in New Jersey has explained:
[B]ased on [the] fraudulent element necessary in a Lanham Act claim, this Court
has applied an “intermediate” pleading requirement to false advertising claims
asserted under section 43(a)(1)(B) that imposes a pleading standard between those
standard[s] required under Federal Rules of Civil Procedure 8 and 9. This
intermediate approach, first applied in Max Daetwyler Corp. v. Input Graphics,
Inc., 608 F. Supp. 1549 (E.D. Pa. 1985), strikes a balance between application and
outright rejection of Rule 9(b). The slightly heightened pleading requirement is
necessary in Lanham Act claims because, [i]n litigation in which one party is
charged with making false statements, it is important that the party charged be
provided with sufficiently detailed allegations regarding the nature of the alleged
falsehoods to allow him to make a proper defense. Thus, Plaintiff must plead its
8

Groupe SEB USA, Inc. v. Euro-Pro Operating LLC, No. 14-137, 2014 U.S. Dist. LEXIS
44063, at *11 (W.D. Pa. Apr. 1, 2014) (“[T]he Third Circuit has not yet adopted this heightened
pleading standard, and district courts disagree over the applicable standard. Moreover, as other
district courts in this circuit have observed, the standard set forth in [Max Daetwyler Corp. v. Input
Graphics, Inc., 608 F. Supp. 1549 (E.D. Pa. 1985)] was decided prior to the Supreme Court’s
decisions in Twombly and Iqbal as well as the Third Circuit’s decision in Fowler.”) (citations
omitted).
13

Lanham Act claims with more particularity than traditional notice pleading under
Rule 8 but something less than the specificity of Rule 9.
Trans USA Prods., 2008 U.S. Dist. LEXIS 25370 at *14-15 (citations and internal quotation marks
omitted). 9
Assuming arguendo that this intermediate pleading standard is applicable in Lanham Act
false advertising claims, Boynton has clearly satisfied such a standard. Here, Boynton alleges that
in “May or June of 2012” an unknown representative of NJ Pure “verbally advised” a
representative of OB/GYN that “NJ PURE had received a favorable rating from A.M. Best
Company.” 10 Counterclaim ¶ 40. Although Boynton does not allege the exact content of the
statement NJ PURE made to OB/GYN, it has provided a two-month date range, and provided a
specific allegation as to the nature of the statement made and why that statement was false.
Boynton’s allegation rises above the level of specificity that other courts have rejected under the
intermediate pleading standard for false advertising claims under the Lanham Act. See, e.g., Trans
USA Prods., 2008 U.S. Dist. LEXIS 25370 at *16-17 (granting motion to dismiss where complaint
did not identify what devices were sold with counterfeit marks or the time period during which
those products were sold); Barefoot, 2008 U.S. Dist. LEXIS 1514 at *45-47 (dismissing complaint
where allegations did “little more than parrot the relevant statute”); Max Daetwyler, 608 F. Supp.

9

Federal Rule of Civil Procedure 9(b) provides that “[i]n all averments of fraud or mistake,
the circumstances constituting fraud or mistake shall be stated with particularity.”
10

Boynton also alleges that NJ PURE (through Elias and Poe) sent emails to URG and
PAA representing that NJ PURE had a certain BCAR score, and that that score would “qualif[y]”
it for an A++ rating, Counterclaim ¶¶ 27-31, 34-35, and that in May 2012 Elias met with a
representative of PAA and “affirmatively stated that NJ PURE had an official rating with A.M.
Best Company.” Counterclaim ¶¶ 36-37. However, since neither of these communications are
alleged to have resulted in damage to Boynton, the Court need not address whether they
sufficiently plead the literally false or misleading requirement.
14

at 1554, 1556 (finding that allegation that defendants merely “falsely advertised the quality and
nature” of a blade-shaped device for wiping excess ink from printing surfaces “cannot be read as
an allegation that defendants misrepresented the configuration of their blade to make it appear that
the blade was shaped similarly to plaintiffs’ blade.”). Indeed, in contrast to the deficient allegations
in Max Daetwyler, Boynton not only alleges that NJ PURE misrepresented the quality of its
insurance services, but it specifically alleges that NJ PURE misrepresented that NJ PURE had been
rated favorably by A.M. Best. Boynton’s allegation regarding the nature of NJ PURE’s allegedly
literally false or misleading statement – i.e., that in May or June of 2012, NJ PURE falsely
represented that it had (1) a rating from A.M. Best and (2) that that rating was favorable – is
“sufficiently detailed” so as to allow NJ PURE to mount a proper defense. See Trans USA Prods.,
2008 U.S. Dist. LEXIS 25370 at *12-14; Evco Tech., 2006 U.S. Dist. LEXIS 68549 at *14.
B.

Boynton has Alleged a Prima Facie Case of Tortious Interference with
Contract Against NJ PURE, but not Third-Party Defendants.

NJ PURE and Third-party Defendants move to dismiss Count III of the counterclaim and
third-party complaint based on a failure to plead damages with sufficient specificity. 11 Under New
Jersey law, tortious interference with contract (or prospective economic benefit) has four elements:
“(1) a protected interest; (2) malice – that is, defendant’s intentional interference without

11

Boynton has asserted two closely-related, but distinct, causes of action in Count III of its
counterclaim against NJ PURE and Count III of its third-party complaint against Third-Party
Defendants; that is, Boynton alleges both (1) tortious interference with existing contract and (2)
tortious interference with prospective economic advantage. See Church & Dwight Co. v. SPD
Swiss Precision Diagnostics, No. 10-453, 2010 U.S. Dist. LEXIS 133114, at *12-13 (D.N.J. Dec.
16, 2010); Printing Mart-Morristown v. Sharp Electronics Corp., 116 N.J. 739, 750 (1989).
However, the two causes of action have essentially the same elements, differing only with respect
to the “the existence of a contract, rather than merely a reasonable expectation of an agreement.”
Morin v. 20/20 Cos., No. 10-6476, 2012 U.S. Dist. LEXIS 126744, at *30 (D.N.J. Sept. 5, 2012);
McAbee v. Univ. of Med. & Dentistry of N.J. Sch. of Osteopathic Med., No. A-5771-09T1, 2012
N.J. Super. Unpub. LEXIS 1516, at *13-14 (App. Div. June 28, 2012).
15

justification; (3) a reasonable likelihood that the interference caused the loss of the prospective
gain; and (4) resulting damages.” Vosough v. Kierce, 437 N.J. Super. 218, 234 (App. Div. 2014)
(quoting DiMaria Const., Inc. v. Interarch, 351 N.J. Super. 558, 567 (App. Div. 2001), aff’d o.b.,
172 N.J. 182 (2002)), certif. denied, 221 N.J. 218 (2015).
NJ PURE incorrectly argues that “[w]ith regard to [OB/GYN], Boynton has not alleged
any facts that would give rise to a probability that, without interference of NJ PURE, this entity
would have obtained their insurance coverage through Boynton as a broker.” On the contrary,
Boynton alleged that OB/GYN was already a customer of Boynton’s when NJ PURE made its
misrepresentation, and that it ceased to be Boynton’s client and began procuring medical
malpractice insurance directly from NJ PURE based on NJ PURE’s alleged misrepresentation.
Counterclaim ¶ 40. However, while this allegation supports a claim for tortious interference with
an existing contract, it does not support a claim of tortious interference with a prospective
economic advantage. See Fineman v. Armstrong World Indus., 980 F.2d 171, 195 (3d Cir. 1992);
Storis v. GERS Retail Sys., No. 94-4400, 1995 U.S. Dist. LEXIS 7614, at*14-15 (D.N.J. May 31,
1995) (while a plaintiff need not prove “that it had sufficiently concrete prospective contracts with
its customers” in opposition to a motion to dismiss, it must “at least allege specific prospective
contracts that were interfered with” by the defendant). Boynton’s counterclaim fails to identify
any prospective economic advantage it expected from OB/GYN that NJ PURE tortiously
interfered with, and, accordingly, that cause of action is dismissed without prejudice. 12

12

Although Boynton alleges that OB/GYN was its customer, Counterclaim ¶ 40, it alleges
no facts which would show that it expected future economic benefits from OB/GYN, other than
those obtained under its existing contract. Indeed, the Counterclaim provides no allegation
describing what the business relationship OB/GYN had with its former insurance company,
brokered by Boynton, and how Boynton was compensated for brokering that relationship. For
example, Boynton did not allege that it would receive commission payments if OB/GYN renewed
16

Boynton has also not alleged any damage with respect to the misrepresentations that ThirdParty Defendants made to URG and PAA (on behalf of NJ PURE), because there are no allegations
that those entities ceased their relationship with Boynton. Nor is Boynton’s vague allegation that
unknown, prospective customers may have been lost sufficient to survive dismissal. See Graco
Inc. v. PMC Global, Inc., No. 08-1304, 2012 U.S. Dist. LEXIS 188865, at *49-50 (D.N.J. Feb. 15,
2012) (“Economic damages are a substantive element of a tortious interference claim. These
damages must be identified with a certain degree of specificity. ‘[C]laimed loss of . . . unknown
customers’ is insufficient.”) (quoting Eli Lilly and Co. v. Roussel Corp., 23 F. Supp.2d 460, 494
(D.N.J.1998)); Advanced Oral Techs., L.L.C. v. Nutrex Research, Inc., No. 10-5303, 2011 U.S.
Dist. LEXIS 28625, at *10 (D.N.J. Mar. 21, 2011) (“Plaintiff ‘must allege an injury that is more
concrete than lost business of unknown, unsolicited, or hypothetical customers.’”) (quoting
Novartis Pharmaceuticals Corp. v. Bausch & Lomb, Inc., No. 07-5945, 2008 U.S. Dist. LEXIS
92133, at *7 (D.N.J. Nov. 13, 2008)). However, in the event Boynton should learn in discovery
the identity of any prospective customers it lost as a result of NJ PURE’s alleged
misrepresentations, it may amend its pleadings accordingly.
Accordingly, NJ PURE’s motion to dismiss Count III of the counterclaim is granted in part
with respect to Boynton’s claims regarding URG, PAA, and unknown prospective customers, and
tortious interference with prospective economic advantage with OB/GYN, and denied in part with
respect to Boynton’s claim of tortious interference with its contract with OB/GYN. Third-Party
Defendants’ motion to dismiss Count III of the third-party complaint is granted, and all claims
against these individuals are dismissed.

its policy with the insurance company brokered by Boynton. Nor did Boynton allege that it lost
further opportunities to broker new insurance policies for OB/GYN.
17

IV.

CONCLUSION
For the foregoing reasons, NJ PURE’s motion to dismiss is denied in part and granted in

part, and Third-Party Defendants’ motion to dismiss is granted. Specifically, NJ PURE’s motion
to dismiss Counts I and II of the counterclaim is denied. NJ PURE’s motion to dismiss Count III
of the counterclaim is denied with respect to Boynton’s claim of tortious interference with its
contract with OB/GYN of North Jersey.

NJ PURE’s motion to dismiss Count III of the

counterclaim is granted with respect to Boynton’s claim of tortious interference with its
prospective economic advantage with OB/GYN of North Jersey, and tortious interference with its
contract and prospective economic advantage with University Radiology Group; Pulmonary &
Allergy Associates; and unknown, prospective customers. Third-Party Defendants’ motion to
dismiss the third-party claims is granted, and the third-party complaint is dismissed.

Dated: October 1, 2015
/s/ The Honorable Freda L. Wolfson
United States District Judge

18