The Ritescreen Company, LLC v. White et al

Filing 70

MEMORANDUM (Order to follow as separate docket entry) re 40 MOTION to Dismiss for Failure to State a Claim of FlexScreen, LLC's Counterclaim filed by The Ritescreen Company, LLC. Signed by Honorable Jennifer P. Wilson on 2/6/2024. (ve)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
THE RITESCREEN COMPANY, LLC, :
:
Plaintiff,
:
:
v.
:
:
MICHAEL J. WHITE and
:
FLEXSCREEN LLC,
:
:
Defendants.
:

Civil No. 1:23-CV-00778

Judge Jennifer P. Wilson

MEMORANDUM
Before the court is a motion filed by Plaintiff, The RiteScreen Company,
LLC (“RiteScreen”), to dismiss the counterclaim raised by Defendant FlexScreen
LLC (“FlexScreen”). (Doc. 40.) For the reasons provided herein, the court will
grant Plaintiff’s motion.
BACKGROUND1
This lawsuit was brought by RiteScreen to remedy allegedly ongoing harms
caused by a former employee, Defendant Michael J. White (“White”), and his new
employer, Defendant FlexScreen LLC (“FlexScreen”). On May 10, 2023,
RiteScreen filed the instant lawsuit alleging claims for violation of the Defend
Trade Secrets Act (“DTSA”) (Count I), violation of the Pennsylvania Uniform
Trade Secrets Act (“PUTSA”) (Count II), breach of contract against White only

1

Because the court is writing for the benefit of the parties, only the necessary information is
included in this Background section. Any additional factual recitation that is necessary for the
discussion of each specific issue is included in the Discussion section of this memorandum.
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(Count III), tortious interference with contract against FlexScreen only (Count IV),
breach of fiduciary duty against White only (Count V), civil conspiracy (Count
VI), unjust enrichment (Count VII), and unfair competition (Count VIII). (Doc. 1.)
On May 16, 2023, the court granted RiteScreen’s motion for a temporary
restraining order (“TRO”). (Doc. 24.) According to the terms of the TRO, certain
provisions would take effect once RiteScreen posted a security bond. (Id. at 14.)2
That bond was posted on June 13, 2023. (Doc. 34.)
On June 9, 2023, FlexScreen filed its verified answer with affirmative
defenses and counterclaims. (Doc. 30.) FlexScreen alleges that, on “the morning
of May 30, 2023, RiteScreen issued a mass e-mail and social media
communication entitled ‘An important update for RiteScreen Customers.’” (Id.
¶ 148.) That communication attached a copy of RiteScreen’s complaint and the
TRO. (Id.) FlexScreen believes that the May 30 communication went “to the
entire window and door screen industry potential customer base, including existing
and potential FlexScreen customers, some who FlexScreen believes are not current
customers of RiteScreen.” (Id. ¶ 149.)
FlexScreen alleges that the communication included false and misleading
statements about FlexScreen, “as it involves the litigation and allegations contained

2

For ease of reference, the court utilizes the page numbers from the CM/ECF header.
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in the Verified Complaint.” (Id. ¶ 150.) Specifically, FlexScreen alleges the
following:
• The Communication states the TRO was issued against the
Defendants “following violations of certain agreements and the
theft of proprietary RiteScreen information and customer data.”
Although the Court has not made any final determination that any
agreements have been violated or that such theft occurred. This
statement misleads third parties to believing such determinations
have been made and suggests that FlexScreen was a party to such
agreements to which it is not party.
• The Communication also states that FlexScreen “chose not to honor
our requests to act in accordance with the agreement we have with
our former employee and failed to assist in assessing the data
breach.” Which is false and misleading in several respects.
• RiteScreen did not attach any of the exhibits to the Complaint
including letters on behalf of FlexScreen consistently stating
FlexScreen’s position on these issues including its position on the
validity of the non-compete and FlexScreen’s position that it did not
have or want any of the alleged RiteScreen information and would
work with RiteScreen to have it returned in the event it somehow
got onto the FlexScreen computer system.
• The Communication repeatedly improperly suggests the FlexScreen
has “stolen” RiteScreen information and is “abusing” such alleged
information when no basis in fact exists for such a statement. On the
contrary, FlexScreen has assured itself it is not in any way using
such alleged information and Mr. White has not worked for
FlexScreen since the TRO issued.
• Finally, the Communication suggests the TRO was valid and in
effect at the time the Communication was issued when in fact it was
not in effect as all condition[s] of the TRO were not met, specifically
RiteScreen cavalierly never posted a bond as required to make the
TRO have force and effect. As a result, the TRO was not in effect
but this communication suggests otherwise.

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(Id.)
FlexScreen alleges that RiteScreen’s communication gives rise to two
counterclaims. In the first (Counterclaim I), FlexScreen alleges business
disparagement and commercial defamation.3 (Doc. 30, p. 18.) In the second
(Counterclaim II), FlexScreen alleges tortious interference with existing and
prospective contractual relationships. (Id. at 20.) RiteScreen argues that both
causes of action should be dismissed for failure to state a claim under Federal Rule
of Civil Procedure 12(b)(6). (Doc. 41, pp. 9–17.)
STANDARD OF REVIEW
In order “[t]o survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible
on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp.
v. Twombly, 550 U.S. 544, 570 (2007)). A claim is plausible on its face “when the
plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.” Id. (quoting
Twombly, 550 U.S. at 556). “Conclusory allegations of liability are insufficient” to
survive a motion to dismiss. Garrett v. Wexford Health, 938 F.3d 69, 92 (3d Cir.
2019) (quoting Iqbal, 556 U.S. at 678–79). To determine whether a complaint

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These are actually two distinct causes of action. Zerpol Corp. v. DMP Corp., 561 F. Supp. 404,
408 (E.D. Pa. 1983).
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survives a motion to dismiss, a court identifies “the elements a plaintiff must plead
to state a claim for relief,” disregards the allegations “that are no more than
conclusions and thus not entitled to the assumption of truth,” and determines
whether the remaining factual allegations “plausibly give rise to an entitlement to
relief.” Bistrian v. Levi, 696 F.3d 352, 365 (3d Cir. 2012).
In considering a motion to dismiss, the court generally relies on the
complaint, attached exhibits, and matters of public record. Sands v. McCormick,
502 F.3d 263, 268 (3d Cir. 2007). The court may also consider “undisputedly
authentic document[s] that a defendant attached as an exhibit to a motion to
dismiss if the plaintiff's claims are based on the [attached] documents.” Pension
Benefit Guar. Corp. v. White Consol. Indus., 998 F.2d 1192, 1196 (3d Cir. 1993).
Moreover, “documents whose contents are alleged in the complaint and whose
authenticity no party questions, but which are not physically attached to the
pleading, may be considered.” Pryor v. Nat’l Collegiate Athletic Ass’n, 288 F.3d
548, 560 (3d Cir. 2002); see also U.S. Express Lines, Ltd. v. Higgins, 281 F.3d 382,
388 (3d Cir. 2002) (holding that “[a]lthough a district court may not consider
matters extraneous to the pleadings, a document integral to or explicitly relied
upon in the complaint may be considered without converting the motion to dismiss
to one for summary judgment”). However, the court may not rely on other parts of
the record in determining a motion to dismiss, or when determining whether a
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proposed amended complaint is futile because it fails to state a claim upon which
relief may be granted. Jordan v. Fox, Rothschild, O'Brien & Frankel, 20 F.3d
1250, 1261 (3d Cir. 1994).
DISCUSSION
A. FlexScreen fails to state a claim for commercial disparagement or
defamation
1. Commercial disparagement
To state a commercial disparagement claim under Pennsylvania law, a
plaintiff must allege the following: “1) that the disparaging statement of fact is
untrue or that the disparaging statement of opinion is incorrect; 2) that no privilege
attaches to the statement; and 3) that the plaintiff suffered a direct pecuniary loss as
the result of the disparagement.” Synygy, Inc. v. Scott-Levin, Inc., 51 F. Supp. 2d
570, 579 (E.D. Pa. 1999), aff'd sub nom, 229 F.3d 1139 (3d Cir. 2000).
Regarding the commercial disparagement claim, RiteScreen points out that,
under Pennsylvania law, a “disparaging statement is one which the publisher
intends should be understood, or which the recipient reasonably should understand
as tending to cast doubt upon the quality of another’s land, chattels or intangible
things.” Synygy, 51 F. Supp. 2d at 579. In essence, under Pennsylvania law,
disparaging statements can only raise a cause of action for commercial
disparagement where they address the quality of a plaintiff’s goods or services.

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Unisource Worldwide, Inc. v. Heller, No. CIV. A. 990266, 1999 WL 374180 (E.D.
Pa. June 9, 1999).
FlexScreen does not address this argument squarely. Instead, it addresses
the argument in passing in a footnote. (Doc. 48, p. 8 n.2.) FlexScreen cites no
specific language of RiteScreen to show that its communication addressed the
quality of goods or services that FlexScreen provides. (Id.) Instead, it merely
asserts that RiteScreen’s communication “demeans FlexScreen’s character in the
Communication, [and] also implies that FlexScreen may not be able to deliver on
its products as a result of the lawsuit and TRO and that FlexScreen does not have
adequate services.” (Id.)
FlexScreen has waived its arguments as to this claim. In the Third Circuit,
“arguments raised in passing (such as, in a footnote), but not squarely argued, are
considered waived.” John Wyeth & Bro. Ltd. v. CIGNA Int'l Corp., 119 F.3d 1070,
1076 n.6 (3d Cir. 1997). Because FlexScreen has waived its argument for
commercial disparagement, the court will dismiss this claim.
2. Defamation
A plaintiff raising a claim for defamation under Pennsylvania must plead the
following:
(1) The defamatory character of the communication. (2) Its publication
by the defendant. (3) Its application to the plaintiff. (4) The
understanding by the recipient of its defamatory meaning. (5) The
understanding by the recipient of it as intended to be applied to the
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plaintiff. (6) Special harm resulting to the plaintiff from its publication.
(7) Abuse of a conditionally privileged occasion.
I.M. Wilson, 500 F. Supp. 3d at 422–23 (quoting 42 Pa. Cons. Stat. § 8343).
RiteScreen argues that, because its statements were fair reports of the instant
lawsuit, they cannot constitute defamatory communications. (Doc. 41, p. 12.)
Instead, “[o]ut-of-court statements made by parties to a proceeding enjoy a
qualified privilege provided those statements are a fair and accurate report of
statements made or pleadings filed in the proceeding and the individual does not
make his report with the sole purpose of causing harm to the person defamed.”
I.M. Wilson, 500 F. Supp. 3d at 423 (cleaned up).
RiteScreen argues that the present situation is similar to I.M. Wilson, where
the court held that a party’s one-page summary of its complaint and motion for
preliminary injunction were not made “for the sole purpose” of harming its
counterpart. Id. at 423–24. RiteScreen also faults FlexScreen’s claim insofar as it
rests on the fact that the communication suggests that the TRO was valid and in
effect despite no bond having been posted. (Doc. 41, p. 16.) It points out that
courts within this circuit have held that similar arguments are not persuasive. (Id.)
Indeed, the court in I.M. Wilson addressed and rejected the same argument
FlexScreen raises in this respect. 500 F. Supp. 3d at 424.

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FlexScreen counters that RiteScreen’s communication is not protected by
fair reporting privilege. (Doc. 48, pp. 5–6.)4 FlexScreen argues that “[i]f the reader
could conclude that the [allegedly defamatory publication] carries with it a
materially greater ‘sting,’ then the fair report privilege has been abused and is thus
forfeited.” (Id. at 6–7 (quoting Wilson v. Slatalla, 970 F. Supp. 405, 418 (E.D. Pa.
1997)).) Such is the case here, FlexScreen argues, for three reasons. (Id. at 7–8.)
The first is that, at the time of the communication, the TRO had not gone
into effect, because RiteScreen had yet not posted a bond, and the court had made
no findings of fact. (Id. at 7.) Second, the communication includes false
statements, such as (a) that the TRO was issued due to “violations of certain
agreements and the theft of” proprietary “‘information and customer data’ without
any qualifiers,” (b) that FlexScreen chose not to honor RiteScreen’s request to act
in accordance with RiteScreen’s agreement with White, and (c) that FlexScreen
failed to assist RiteScreen in assessing the data breach. (Id.) Third, the
communication falsely states that FlexScreen “has ‘stolen’ RiteScreen information
and is ‘abusing’ such alleged information when no basis in fact exists for an
allegation.” (Id.)

FlexScreen also asserts that RiteScreen’s reliance on I.M. Wilson is mistaken, implying that
RiteScreen has misquoted the case. (Doc. 48, p. 6 n.1.) FlexScreen asserts, without explanation,
that “the plain language in those opinions does not support that interpretation.” (Id.) Upon
review, the court finds that RiteScreen’s quotation is correct. So, too, are its representation of
the facts and holding of I.M. Wilson and the other cases it cites.
4

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FlexScreen’s arguments fail. Regarding the first, RiteScreen was accurate in
communicating that this court had entered the TRO and mentioning some of the
TRO’s pertinent terms. This accuracy is not changed by the fact that, at the time of
its communication, RiteScreen had not yet posted the bond that was required for
the TRO to have legal effect. I.M. Wilson, 500 F. Supp. 3d at 424. FlexScreen
argues to the contrary, but without any authority to support its position. But, as
RiteScreen points out, FlexScreen stipulated to abiding by the terms of the TRO
even before RiteScreen posted its security bond. (Doc. 26, p. 8; Doc. 49, p. 5.)
Even without this stipulation, RiteScreen’s references were fair reporting. The fact
that the court had not yet made findings of fact is not material.
Regarding FlexScreen’s second argument, the communication was likewise
fair and accurate. In its communication, RiteScreen represented its position that
the TRO was issued due to violations in RiteScreen’s agreements and theft of its
proprietary property. It further alleged that FlexScreen had declined to honor the
contracts that RiteScreen sought to vindicate. That is the position that RiteScreen
expressed in its complaint, and RiteScreen’s claims in this suit formed the basis of
the TRO. FlexScreen implies that RiteScreen was obligated to include
“qualifiers,” presumably to ensure that readers understood that any alleged “theft”
of RiteScreen’s information was due to White’s conduct and not that of
FlexScreen. The court does not find that RiteScreen’s communication provided
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exaggerated additions or embellishments. RiteScreen’s communication does not
carry a materially greater sting than its complaint, which was attached to the
communication. (Doc. 30, ¶ 150; Doc. 30-2.) The same is true with respect to
RiteScreen’s allegations that FlexScreen failed to assist RiteScreen in assessing its
data breach.
As in I.M. Wilson, there appears to be no love lost between the two
companies. But that does not mean that RiteScreen’s communication went beyond
the bounds of the fair-reporting exception. RiteScreen’s communication reiterated
the same allegations from its publicly-filed complaint and motion for TRO. The
TRO was issued due to alleged violations of RiteScreen’s covenant and
confidentiality agreements with White. Therefore, as stated in RiteScreen’s
communication, the TRO was issued due to RiteScreen’s allegations of “violations
of certain agreements and the theft of” proprietary information and customer data.
As alleged in RiteScreen’s complaint and supported in the exhibits attached
therein, RiteScreen contacted FlexScreen and put it on notice that White’s
employment with FlexScreen may be in violation of his contract with RiteScreen.
(Doc. 1, ¶ 40; Doc. 1-4.) RiteScreen further alleged, and provided exhibits to
support, that FlexScreen failed to meaningfully respond to RiteScreen’s
allegations. (Doc. 1, ¶ 41–42; Doc. 1-6.) RiteScreen demanded that FlexScreen
cease and desist in employing White. (Doc. 1-4.) Instead of doing so, FlexScreen
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pointed out what it perceived to be deficiencies in RiteScreen’s contract, which
could make the purported agreements unenforceable. (Doc. 1-6.) In short,
RiteScreen’s communication, as addressed by FlexScreen’s first and second
arguments, cannot form the basis of a defamation counterclaim. They constitute
fair reporting.
Lastly, FlexScreen argues that RiteScreen’s communication “falsely states
that FlexScreen has ‘stolen’ RiteScreen information and is ‘abusing’ such alleged
information,” though no basis of fact exists for such an allegation. (Doc. 48, p. 7.)
In making this argument, FlexScreen does not rely on the language of RiteScreen’s
communication—instead, it relies on the conclusory assertions and legal
conclusions from its counterclaims. The reason for this is understandable;
RiteScreen’s communication does not plausibly support FlexScreen’s claims.
RiteScreen argues that FlexScreen is trying to plead defamation by innuendo.
(Doc. 41, pp. 12–13.) But, it argues, FlexScreen has failed to meet the operative
standard under Livingston v. Murray, 612 A.2d 443 (Pa. Super. Ct. 1992). (Id.)
FlexScreen does not respond to this argument, so the court deems FlexScreen to
have waived it. For the foregoing reasons, the court will dismiss Count I insofar as
it raises a claim for defamation.

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B. FlexScreen fails to state a claim for tortious interference with
existing and prospective contractual relationships
Under Pennsylvania law, there are four prongs to a claim of intentional
interference with prospective contractual relations: “(1) a prospective contractual
relation [exists]; (2) the purpose or intent to harm the plaintiff by preventing the
relation from occurring; (3) the absence of privilege or justification on the part of
the defendant; and (4) the occasioning of actual damage resulting from the
defendant's conduct.” Kachmar v. SunGard Data Sys., Inc., 109 F.3d 173,184 (3d
Cir. 1997). RiteScreen asserts that FlexScreen’s pleadings fail to meet the first two
prongs. (Doc. 41, p. 18.)
Regarding the first prong, a prospective or existing contractual relationship
must be “of some substance, some particularity, before an inference can arise as to
its value to the plaintiff and the defendant’s responsibility for its loss.” Int’l
Diamond Imps., Ltd. v. Singularity Clark, L.P., 40 A.3d 1261, 1275 n.14 (Pa.
Super. Ct. 2012). RiteScreen points out that when the basis for the claim is an
existing relationship, a plaintiff must specify the relationship with “definite,
exacting identification.” (Doc. 41, p. 19 (quoting Kelly-Springfield Tire Co. v.
D’Ambro, 596 A.2d 867, 872 (Pa. Super. Ct. 1991)).) FlexScreen has provided no
such identification. (Id.) Nor has it pleaded sufficient facts to allege interference
of prospective relations, according to RiteScreen. (Id. at 20.)

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FlexScreen counters that, at this stage, it need not list the prospective
business relationships with which RiteScreen interfered. (Doc. 48, p. 10–11 (citing
Kachmar, 109 F.3d at 184; Wurth Baer Supply Co. v. Strouse, 627 F. Supp. 3d 422
(M.D. Pa. Sep. 9, 2022); E. Frank Hopkins Seafood, Co., Inc. v. Olizi, No. 2:17CV-01558, 2017 WL 2619000 (E.D. Pa. June 16, 2017); Aetna, Inc. v. Health
Diagnostic Lab. Inc., No. 15-1868, 2015 WL 9460072, at *6 (E.D. Pa. Dec. 28,
2015).)
FlexScreen is correct insofar as it is not required to produce a list of
company names at this stage. But, as RiteScreen correctly points out in its reply,
each case on which FlexScreen relies is meaningfully distinct from this case.
(Doc. 49, pp. 7–9.) In Kachmar, the issue was not the identification of a
contractual counterparty but whether the relationship had progressed to the point of
being a valid prospect. 109 F.3d at 184–85. In Aetna, the plaintiff provided
extensive details about the contracts that were impacted including the pertinent
terms. 2015 WL 9460072, at *6.
FlexScreen has made no such substantial or particular allegations as to its
impacted contractual relations. Instead, it has made vague and conclusory
statements about the existence of existing and prospective relationships and how
they were impacted. (Doc. 30, ¶ 165.) Additionally, in the other cases on which
FlexScreen relies, the plaintiffs had provided details about the specific contractual
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relationships with which defendants had interfered. See Wurth, 627 F. Supp. 3d at
436 (denying dismissal of tortious interference because plaintiff had provided
details about the allegedly affected contractual relations, identifying customers by
specific details and identifiers other than their names); Olizi 2017 WL 261900, at
*5 (denying motion to dismiss where plaintiff pleaded the existence of specific
customers who, enticed by defendant with specific confidential information, were
induced to contract with defendant instead of plaintiff). Plaintiffs in each of these
cases provided far more detailed allegations than FlexScreen has provided in this
case.
FlexScreen has not adequately pleaded any substance or particularity with
respect to current or prospective contractual relations with which RiteScreen
allegedly interfered. Instead, FlexScreen’s allegations read as a succinct statement
primarily consisting of legal conclusions. Because FlexScreen has not met the
pleading standard, the court will dismiss this count.
CONCLUSION
For the reasons stated herein, the court will dismiss FlexScreen’s
counterclaims without prejudice. An appropriate order will follow.
s/Jennifer P. Wilson
JENNIFER P. WILSON
United States District Judge
Middle District of Pennsylvania
Dated: February 6, 2024
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