AF Gloenco Inc. v. Ushers Machine & Tool Co Inc. et al

Filing 38

MEMORANDUM-DECISION and ORDER - That Gloenco's 16 Motion to Dismiss is GRANTED and Ushers' Sherman Act and abuse of process counterlciams are DISMISSED. That should Ushers wish to do so, it may file an amended counterclaim within then (10) days of the date of this memorandum decision-order. That the parties notify Magistrate Judge Treece in order to schedule further proceedings in accordance with this order. Signed by Judge Gary L. Sharpe on 9/30/2011. (jel, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
____________________________________
AF GLOENCO INC.,
Plaintiff,

1:10-cv-1128
(GLS/RFT)

v.
USHERS MACHINE & TOOL
COMPANY, INC., and DON LINCOLN,
Defendants.
____________________________________
APPEARANCES:
OF COUNSEL:
FOR THE PLAINTIFF:
Fullbright, Jaworski Law Firm
NY Office
666 Fifth Avenue
New York, NY 10103-3198

JOSEPH P. ZAMMIT, ESQ.
TODD R. HAMBIDGE, ESQ.
TRACY J. LEIBOVITZ, ESQ.
CHARLES B. WALKER, ESQ.

FOR THE DEFENDANTS:
Ushers Machine & Tool Co. Inc.,
Lincoln
DuCharme, Harp Law Firm
10 Maxwell Drive, Suite 205
Clifton Park, NY 12065

JOHN W. CLARK, ESQ.
CHERYL L. SOVERN, ESQ.

Gary L. Sharpe
District Court Judge
MEMORANDUM-DECISION AND ORDER
I. Introduction
Plaintiff AF Gloenco Inc. (Gloenco), commenced this action against

defendants Ushers Machine & Tool Company, Inc. (Ushers) and Donald
Lincoln, asserting claims of misappropriation of trade secrets, conversion,
common law unfair competition and unjust enrichment. (Am. Compl. ¶¶ 1833, Dkt. No. 31.) Ushers asserted counterclaims alleging violations of the
Sherman Act,1 abuse of process and tortious interference with prospective
business advantage. (Ans. ¶¶ 57-94, Dkt. No. 12.) Pending is Gloenco’s
motion to dismiss Ushers’ Sherman Act and abuse of process
counterclaims pursuant to Fed. R. Civ. P. 12(b)(6). (Dkt. No. 16.) For the
reasons that follow, the motion is granted.
II. Background
Plaintiff Gloenco, a Delaware corporation operated out of Newport,
New Hampshire, and defendant Ushers, a New York corporation, both
develop and sell precision forged and machined products for various
industries. (Am. Compl. ¶¶ 1, 7, Dkt. No. 31.) The principal customer for
both parties is General Electric. (Ans. ¶ 66, Dkt. No. 12; Dkt. 18 at 2.)
Defendant Donald Lincoln, a former manager of a predecessor of Gloenco,
joined Ushers in 2006. (Ans. ¶ 12, Dkt. No. 12.) In December of 2009,
Gloenco’s President Rick Thomas initiated correspondence with Lincoln to
1

15 U.S.C.A. § 2 (West 2004).

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express Gloenco’s desire to purchase Ushers. (Id. ¶¶ 58-59.) Ushers
contends that similar correspondence continued monthly until June 2010
when Lincoln informed Rick Thomas that he was not interested in selling
Ushers. (Id. ¶¶ 61-62.)
Ushers alleges that because it rebuffed Gloenco’s attempts at
acquisition, Gloenco undertook a concerted effort to diminish Ushers’
market share, damage it’s relationship with General Electric and force
Ushers to agree to being purchased by Gloenco. (Ans. ¶¶ 58-94, Dkt. No.
12.) Specifically, Ushers alleges that once Lincoln told Thomas that he
was not interested in selling the firm, Thomas remarked that he could be
“vindictive” and that they could pursue the sale “the hard way.” (Id. ¶ 63.)
Ushers further contends that Gloenco has no proprietary interest in its
process drawings, and its claims against Ushers are therefore “frivolous,
without any merit” and a “sham.” (Id. ¶ 71.) Gloenco’s only goal in
commencing the present litigation, Ushers argues, was to diminish Ushers’
ability to compete for the business of General Electric. (Id. ¶ 72.)

In an

attempt to further soil Ushers’ business reputation, Gloenco informed
General Electric of its pending civil action against Ushers and falsely
reported that Ushers employees were providing General Electric prints to
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other companies. (Id. ¶ 90.) These allegations of an organized campaign
of “malicious conduct” form the basis of Ushers’ counterclaims against
Gloenco for violations of the Sherman Act, abuse of process and tortious
interference with prospective business advantage. (Ans. ¶¶ 57-94, Dkt.
No. 12.)
III. Standard of Review
The standard of review under Federal Rules of Civil Procedure
12(b)(6) is well established and will not be repeated here. For a full
discussion of the standard, the court refers the parties to its previous
opinion in Ellis v. Cohen & Slamowitz, LLP, 701 F. Supp. 2d 215, 218
(N.D.N.Y. 2010).
IV. Discussion
A.

Attempted Monopolization2
In its first counterclaim, Ushers alleges that Gloenco violated Section

2 of the Sherman Act by “engag[ing] in a course of malicious conduct
designed to improperly obtain an unfair competitive advantage in the
relevant market.” (Ans. ¶ 64, Dkt. No. 12.) Gloenco seeks to dismiss

2

Despite initially arguing that Gloenco violated any or all aspects of Section 2 of the
Sherman Act, Ushers narrows its theory of liability to attempted monopolization only. (Dkt. No.
20 at 1.) The court’s analysis is accordingly narrowed.

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Ushers’ claim of attempted monopolization on the grounds that it is
deficient as to all elements. (Dkt. No. 22 at 3.) The court agrees that
dismissal is appropriate.
Section 2 of the Sherman Act makes it a crime for any person to
“monopolize, or attempt to monopolize, or combine or conspire with any
other person or persons, to monopolize any part of the trade or commerce
among the several States.” 15 U.S.C.A. § 2 (2004). “To establish a claim
for attempted monopolization, a plaintiff must prove: (1) that the defendant
has engaged in predatory or anticompetitive conduct with (2) specific intent
to monopolize and (3) a dangerous probability of achieving monopoly
power.” Tops Mkts., Inc. v. Quality Mkts., Inc., 142 F.3d 90, 99-100 (2d Cir.
1998) (quotation marks and citation omitted). Because it proves
dispositive, the court need only addresses the dangerous probability prong.
The critical inquiry in deciding whether a dangerous probability of
achieving monopoly power3 exists is the economic power of the alleged
monopolizer in the relevant market. Tops Mkts., 142 F.3d at 100. Here,
Ushers fails to adequately define the relevant market or the market power

3

“Monopoly power is the power to fix prices or exclude or restrict competition in a
relevant market.” Hunter Douglas, Inc. v. Comfortex Corp., 44 F. Supp. 2d 145, 151 n.8
(N.D.N.Y. 1999) (citation omitted).

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possessed by Gloenco.
A relevant market must be defined according to both geography and
the product or service at issue. Hunter Douglas, Inc. v. Comfortex Corp.,
44 F. Supp. 2d 145, 151 n.9 (N.D.N.Y. 1999). “The reasonable
interchangeability of use or the cross-elasticity4 of demand between the
product itself and substitutes for it determine the outer boundaries of a
product market.” Chapman v. N.Y. Div. for Youth, 546 F.3d 230, 237 (2d
Cir. 2008) (internal quotation marks omitted) (quoting Brown Shoe Co. v.
United States, 370 U.S. 294, 325 (1962)).
Ushers defines the relevant market in the instant case as “the
business derived from General Electric Company,” or more specifically “the
manufactured parts derived from . . . General Electric Company.” (Dkt. No.
12 at 9; Dkt. No. 20 at 6.) Ushers fails to articulate a geographic boundary
for this market, and does not discuss any possible substitutes, or the lack
thereof, for the products included within it. Ushers’ incomplete definition of
the relevant market is, in itself, grounds for granting Gloenco’s motion to
dismiss. See Chapman, 546 F.3d at 238 (holding that “[w]here the [non-

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“Cross-elasticity of demand exists if consumers would respond to a slight increase in
the price of one product by switching to another product.” AD/SAT, Div. of Skylight, Inc. v.
Associated Press, 181 F.3d 216, 227 (2d Cir. 1999). (citation omitted).

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moving party] fails to define its proposed relevant market with reference to
the rule of reasonable interchangeability and cross-elasticity of demand . . .
the relevant market is legally insufficient and a motion to dismiss may be
granted.”); see also Todd v. Exxon Corp., 275 F.3d 191, 199-200 (2d Cir.
2001) (holding that while “courts hesitate to grant motions to dismiss for
failure to plead a relevant product market” because of the fact-intensive
nature of the inquiry, dismissal is appropriate in cases of “(1) failed
attempts to limit a product market to a single brand, franchise, institution, or
comparable entity that competes with potential substitutes or (2) failure
even to attempt a plausible explanation as to why a market should be
limited in a particular way.”).
Even if “the manufactured parts derived from . . . General Electric
Company” is deemed a sufficiently pled relevant market, Ushers’ failure to
allege facts relating to Gloenco’s market power leaves the court without
any facts upon which to find a plausible claim that there is a dangerous
probability of Gloenco achieving monopoly power. A party’s market power
is determined by analyzing its “market share in light of other market
characteristics, including barriers to entry.” Tops Mkts., 142 F.3d at 100
(citation omitted). While no definitive percentage of market control is
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required, a party’s possession of a “significant market share” may indicate
the presence of a dangerous possibility of achieving monopoly power. H.L.
Hayden Co. v. Siemens Med. Sys., Inc., 879 F.2d 1005, 1017 (2d Cir.
1989) (citation omitted).
Ushers does not attempt to articulate the share of “business derived
from General Electric Company” possessed by either party. Because no
facts relating to Gloenco’s market share or barriers to entry to the market
are adduced, Ushers has failed to plead a plausible claim that there is a
dangerous probability that Gloenco will achieve the ability to fix prices or
exclude competition in the defined market. Accordingly, Gloenco’s motion
to dismiss is granted and Ushers’ Sherman Act claim is dismissed. Should
Ushers wish to do so, it may file an amended counterclaim within ten (10)
days of the date of this memorandum decision-order.
B.

Abuse of Process
Ushers’ second counterclaim alleges that Gloenco committed the tort

of abuse of process by commencing a civil action against Ushers and
disseminating information about that action to General Electric. (Ans. ¶¶
79-87, Dkt. 12.) Gloenco seeks dismissal of Ushers’ counterclaim on the
grounds that both its filing of the lawsuit and its subsequent dissemination
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of information to General Electric were lawful. (Dkt. No. 17 at 13.) The
court agrees.
A valid abuse of process claim is comprised of three elements: “(1)
regularly issued process, either civil or criminal, (2) an intent to do harm
without excuse or justification, and (3) use of the process in a perverted
manner to obtain a collateral objective.” Curiano v. Suozzi, 63 N.Y.2d 113,
116 (1984). In alleging that Gloenco’s purpose for commencing its civil
action was to diminish Ushers’ business reputation, harm the firm
financially and force a sale of the company to Gloenco, Ushers pled
sufficient facts to satisfy the second element at this juncture. (Ans. ¶¶ 8285, Dkt. No. 12.) At issue, then, are the first and third elements.
First, the process issued must involve “an unlawful interference with
one’s person or property.” Curiano, 63 N.Y.2d at 114 (quoting Williams v.
Williams, 23 N.Y.2d 592, 596 (1969)). “[T]he institution of a civil action by
summons and complaint is not legally considered process capable of being
abused.” Curiano, 63 N.Y.2d at 114. Because the process at issue here is
the filing and service of a civil summons and complaint, Gloenco’s
commencement alone cannot support a claim for abuse of process.
As for the improper use of process after it is issued, the Court of
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Appeals of New York has made clear that dissemination of information
relating to a lawsuit does not constitute an interference with “person or
property.” Williams, 23 N.Y.2d at 596. In Williams, defendants filed suit
against plaintiff and circulated copies of the summons and complaint
amongst members of plaintiff’s trade. 23 N.Y.2d at 595. The Court of
Appeals found that, despite plaintiff’s contentions that the underlying suit
was baseless, defendants’ dissemination of information relating to the
action did not constitute abuse of process. Id. at 596. Despite Ushers’
arguments to the contrary, the present case is factually analogous to
Williams, and thus, Ushers has also failed to plead a plausible abuse of
process claim. Gloenco’s motion to dismiss is therefore granted and
Ushers’ abuse of process claim is dismissed.
V. Conclusion
WHEREFORE, for the foregoing reasons, it is hereby
ORDERED that Gloenco’s motion to dismiss (Dkt. No. 16) is
GRANTED and Ushers’ Sherman Act and abuse of process counterclaims
are DISMISSED; and it is further
ORDERED that should Ushers wish to do so, it may file an amended
counterclaim within ten (10) days of the date of this memorandum decision10

order; and it is further
ORDERED that the parties notify Magistrate Judge Treece in order to
schedule further proceedings in accordance with this order; and it is further
ORDERED that the Clerk provide a copy of this Memorandum-Decision
and Order to the parties.
IT IS SO ORDERED.
September 30, 2011
Albany, New York

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