Pacific Office Automation, Inc. v. Tracy et al
Filing
32
OPINION & ORDER: Plaintiffs Motion to Dismiss 26 is GRANTED. Defendants' third counterclaim for relief is dismissed with prejudice and without leave to amend. Signed on 11/5/2018 by Judge Marco A. Hernandez. (jp)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
PORTLAND DIVISION
PACIFIC OFFICE AUTOMATION, INC., an
Oregon corporation,
No. 3:17-cv-01484-HZ
OPINION & ORDER
Plaintiff,
v.
DANIEL TRACY, and NORTHWEST
IMAGING ANALYSTS LLC, an Oregon
limited liability company,
Defendants.
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OPINION & ORDER - 1
Everett W. Jack, Jr.
Aaron K. Stuckey
Kaley L. Fendall
Davis Wright Tremaine LLP
1300 SW Fifth Ave., Suite 2400
Portland, Oregon 97201
Attorneys for Plaintiff
Phil J. Nelson
Keith A. Pitt
Slinde Nelson Stanford
111 SW Fifth Ave., Suite 1940
Portland, Oregon 97204
Attorneys for Defendants
HERNÁNDEZ, District Judge:
Plaintiff Pacific Office Automation, Inc. (“POA”) brings claims against Defendants
Daniel Tracy and Northwest Imaging Analysts LLC (“NWIA”) for false designation of origin
and false advertising under the Lanham Act, 15 U.S.C. § 1125(a). Defendants bring
counterclaims against Plaintiff for trade libel, tortious interference with contractual relationships,
and sham litigation. Plaintiff moves to dismiss Defendants’ third counterclaim for sham
litigation. Plaintiff’s Motion to Dismiss [26] is granted.
BACKGROUND
POA is an office equipment and management solutions company that provides office
technology products and related services to a variety of customers. First Am. Compl. ¶ 7, ECF
14. Tracy and his wife, Megan Tracy, are former employees of POA. Id. at ¶ 9. Tracy left POA
and formed NWIA with his wife. Id. NWIA directly competes with POA in Oregon,
Washington, and California. Id. Plaintiff alleges that Defendants intentionally misled customers
into falsely believing that NWIA had businesses relationships or affiliations with certain office
manufacturers in order to divert customers from POA. Id. at ¶ 10. Specifically, Plaintiff alleges
OPINION & ORDER - 2
that Defendants made false and/or misleading statements on their website; used manufacturers’
trade names and trademarks on their website and in other marketing or promotional materials;
and made false representations about being authorized to sell and service certain products to
current and former POA customers. Id. at ¶ 11.
On July 10, 2018, Defendants answered Plaintiff’s First Amended Complaint and
counterclaimed with allegations of trade libel, tortious interference with contractual
relationships, and sham litigation. Answer ¶¶ 38–45, ECF 23. Defendants allege Plaintiff has
“disseminat[ed] various false, misleading and disparaging statements regarding NWIA’s
business, its practices and its principals,” in an attempt to interfere with existing and prospective
business relationships. Id. at ¶¶ 30–31. Additionally, Defendants allege that Plaintiff brings this
lawsuit, knowing it is baseless, as part of an anticompetitive plan to interfere with Defendants’
business relationships and activities. Id. at ¶ 44.
STANDARDS
A motion to dismiss for failure to state a claim may be granted only when there is no
cognizable legal theory to support the claim or when the complaint lacks sufficient factual
allegations to state a facially plausible claim for relief. Shroyer v. New Cingular Wireless Servs.,
Inc., 622 F.3d 1035, 1041 (9th Cir. 2010). A complaint is construed in favor of the non-moving
party, and its factual allegations are taken as true. Daniels–Hall v. Nat’l Educ. Ass’n, 629 F.3d
992, 998 (9th Cir. 2010). “[F]or a complaint to survive a motion to dismiss, the non-conclusory
factual content, and reasonable inferences from that content, must be plausibly suggestive of a
claim entitling the plaintiff to relief.” Moss v. United States Secret Serv., 572 F.3d 962, 969 (9th
Cir. 2009) (internal quotation marks omitted). In short, “only a complaint that states a plausible
claim for relief survives a motion to dismiss.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). “A
claim has facial plausibility when the plaintiff pleads factual content that allows the court to
OPINION & ORDER - 3
draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. at 678.
“[O]nce a claim has been stated adequately, it may be supported by showing any set of facts
consistent with the allegations in the complaint.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 563
(2007). The court, however, need “not assume the truth of legal conclusions merely because they
are cast in the form of factual allegations.” Warren v. Fox Family Worldwide, Inc., 328 F.3d
1136, 1139 (9th Cir. 2003) (quoting W. Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir.
1981). “[A] plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’ 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.
DISCUSSION
Plaintiff moves to dismiss Defendants’ third counterclaim for sham litigation. Plaintiff
argues that sham litigation is not a cognizable claim for relief under federal or state law. In
response, Defendants argue the claim is governed by federal law, yet fail to cite a single case to
support their position that sham litigation may operate as a stand-alone claim. The Court also
finds no cases to support this position. Defendants’ third counterclaim is therefore dismissed
with prejudice.
Defendants also request permission to re-plead this counterclaim “with additional
allegations of antitrust conduct and/or liability, including possible claims under the Sherman
Act.” Defs.’ Resp. at 8. Without further information as to what claim, specifically, Defendants
intend to plead, and what allegations support that claim, the Court cannot properly assess the
viability of this request. The Court therefore declines to grant leave to amend at this point.
Defendants may, however, file a motion to amend their answer.
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CONCLUSION
Defendants’ third counterclaim for relief is dismissed with prejudice and without leave to
amend.
Dated this
day of ______________________, 2018.
MARCO A. HERNÁNDEZ
United States District Judge
OPINION & ORDER - 5
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