Northstar Alarm Services v. Alder Home Protection

Filing 68

MEMORANDUM DECISION AND ORDER denying 34 Motion to Dismiss Counterclaim for Failure to State a Claim. Signed by Judge David Nuffer on 1/9/19 (alt)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH, CENTRAL DIVISION
NORTHSTAR ALARM SERVICES, LLC,
Plaintiff,

MEMORANDUM DECISION AND
ORDER DENYING MOTION TO
DISMISS COUNTERCLAIM

v.

Case No. 2:17-cv-01097-DN

ALDER HOME PROTECTION,
d/b/a ALDER HOLDINGS, LLC,

District Judge David Nuffer

Defendant.

Plaintiff NorthStar Alarm Services LLC (“NorthStar”) filed a motion (“Motion”) 1 to
dismiss the amended counterclaim (“Counterclaim”) 2 of Defendant Alder Home Protection
(“Alder”) under Fed. R. Civ. P. 12(b)(6) for failure to state a claim upon which relief can be
granted. Because the Counterclaim adequately states a claim for relief, the Motion1 is DENIED.
BACKGROUND
“To survive a motion to dismiss, a complaint must allege facts that, if true, state a claim
to relief that is plausible on its face. A claim is facially plausible when the allegations give rise to
a reasonable inference that the defendant is liable.” 3 Accepting Alder’s well-pleaded factual

1

Plaintiff’s Motion to Dismiss Defendant’s Amended Counterclaim for Failure to State a Claim (“Motion”), docket
no. 34, filed September 27, 2018; see Memorandum Opposing Motion to Dismiss Defendant’s Amended
Counterclaim for Failure to State a Claim, docket no. 49, filed October 18, 2018; Reply Memorandum in Support of
Plaintiff’s Motion to Dismiss Defendant’s Amended Counterclaim for Failure to State a Claim, docket no. 58, filed
November 9, 2018.
2

Defendant’s Answer to Plaintiff’s Amended Complaint and Amended Counterclaim (“Counterclaim”), docket
no. 30, filed September 13, 2018.
3

elm

Mayfield v. Bethards, 826 F.3d 1252, 1255 (10th Cir. 2016) (citation and internal quotation marks omitted).

allegations as true, and “view[ing] them in the light most favorable to” Alder, 4 the relevant facts
for purposes of this Motion are as follows.
Alder is a residential security and home automation company with thousands of
customers throughout the United States. 5 NorthStar is also in the business of selling and
installing electronic security services and equipment. 6 MX Security LLC (“MX”) is an agent of
NorthStar and subject to NorthStar’s control. 7 Alder and NorthStar are direct competitors. 8
NorthStar and MX have knowingly engaged in an intentional and targeted campaign to
damage Alder’s reputation, goodwill, and business relationships by, among other things,
disseminating materially false, disparaging, and damaging information about Alder in connection
with the commercial advertisement and promotion of NorthStar’s products and services. 9 For
example, NorthStar and MX have affirmatively and dishonestly solicited the cancellation and
breach of Alders’ customers’ contracts; 10 intentionally lied and caused confusion about their
relationship to and association with Alder and Alder’s products and services; 11 falsely stated that
Alder had gone out of business or was going out of business; 12 wrongfully accused Alder of
being an unlawful “scam company”; 13 and made other misrepresentations regarding the nature,

4

Id.

5

Counterclaim, supra note 2, ¶¶ 7, 17, at 13, 15.

6

Id. ¶ 10, at 14.

7

Id. ¶¶ 11-13, at 14.

8

Id. ¶ 14, at 14.

9

Id. ¶¶ 15-16, 19, 25-30, 64-65, 71-72, 77-78, 85-86, at 14-17, 26-28.

10

Id. ¶¶ 20(a), 20(l), 33-60, 99-100, at 15-25, 30.

11

Id. ¶¶ 20(b), 20(j), 20(n)-20(o), 29, 33-34, 42, 45, 49-50, 57, 80, 93-94, at 15-18, 20-22, 25, 27, 29.

12

Id. ¶¶ 20(c), 20(m)-20(n), 54, 60, at 15-16, 24-25.

13

Id. ¶ 20(c), at 15; see id. ¶ 87, at 28.

2

availability, safety, efficacy, quality, and status of Alder’s products and services. 14 Such false and
misleading representations have caused, and continue to cause, Alder to lose many customers
and suffer damages. 15
Alder is suing NorthStar and MX for (1) tortious interference with contractual relations,
(2) tortious interference with economic relations, (3) unfair competition under the Lanham Act, 16
(4) defamation, (5) unfair competition under Utah law, and (6) civil conspiracy.
DISCUSSION
Alder has adequately stated claims for tortious interference.
To recover damages for tortious interference, a plaintiff must prove (1) that the defendant
intentionally interfered with the plaintiff’s existing or potential economic relations, (2) by
improper means, and (3) thereby caused injury to the plaintiff. 17
NorthStar argues that Alder’s tortious interference claims should be dismissed because
Alder has not satisfied the improper-means requirement. 18 Specifically, NorthStar argues that the
Counterclaim does not “allege that the statements . . . made by NorthStar (or MX) were in fact
false or anything more than mere puffery.” 19

14

Id. ¶¶ 20(d)-20(h), 20(k), 35-36, 39-41, 44-45, 47-48, 53-54, 56, 58, at 15, 18-25.

15

Id. ¶¶ 33-61, 67, 74, 81-82, 88-89, 95, 102, at 17-30.

16

15 U.S.C. § 1125(a).

17

Eldridge v. Johndrow, 2015 UT 21, ¶ 13-14, 345 P.3d 553.

18

Motion, supra note 1, at 15.

19

Id.

3

NorthStar’s argument fails for at least two reasons. First, Alder has affirmatively alleged
that the statements at issue were false. 20 And, second, Alder is not required to allege that the
statements were “more than mere puffery.”
Accordingly, the Motion will be denied as to Alder’s tortious interference claims.
Alder has adequately stated claims for unfair competition.
Alder has asserted claims for unfair competition under federal and state law. NorthStar
argues that both 21 claims should be dismissed because Alder has not alleged that NorthStar’s
statements: (1) proximately caused Alder damage; 22 (2) were likely to cause confusion as to
NorthStar’s association with Alder; 23 or (3) falsely represented the nature, characteristics, or
qualities of Alder’s or NorthStar’s goods or services. 24
NorthStar’s argument is incorrect. Alder has adequately alleged that NorthStar’s conduct
and statements: (1) were the cause of injury to Alder; 25 (2) caused or were likely to cause
confusion regarding NorthStar’s association with Alder; 26 and (3) falsely 27 represented the
nature, characteristics, and qualities of Alder’s and NorthStar’s goods and services. 28
Consequently, the Motion will be denied as to Alder’s unfair competition claims.

20

See, e.g., Counterclaim, supra note 2, ¶¶ 15, 20-21, 33-61, 63, 78, at 14-27.

21

NorthStar seeks the dismissal of Alder’s unfair competition claim under state law on the same grounds that
NorthStar seeks the dismissal of Alder’s unfair competition claim under federal law. See Motion, supra note 1,
at 14-15.

22

Id. at 6-8.

23

Id. at 6, 8-10.

24

Id. at 6, 10-13.

25

See sources cited supra note 15.

26

See sources cited supra note 11.

27

See sources cited supra notes 9-15.

28

See sources cited supra notes 11 and 14.

4

Alder has adequately stated a claim for defamation.
NorthStar asserts that Alder’s defamation claim should be dismissed because “Alder
alleges no facts that NorthStar made any statement to suggest that Alder’s business or conduct
was either lawful or unlawful.” 29 This assertion is incorrect. Alder has affirmatively alleged that
NorthStar falsely represented to Alder’s customers that Alder “was an unlawful ‘scam
company.’” 30 As a result, the Motion will be denied as to Alder’s defamation claim.
Alder has adequately stated a claim for civil conspiracy.
NorthStar requests the dismissal of Alder’s civil conspiracy claim because, according to
NorthStar, “Alder has failed to state a claim for any tort which could form the basis for a claim
of civil conspiracy.” 31 This request will be denied because, as explained above, Alder has
adequately stated underlying claims for tortious interference, unfair competition, and
defamation—each of which may form the basis for Alder’s civil conspiracy claim.
ORDER
THEREFORE, IT IS HEREBY ORDERED that the Motion 32 is DENIED.
Signed January 9, 2019.
BY THE COURT:

David Nuffer
United States District Judge

29

Motion, supra note 1, at 14.

30

Counterclaim, supra note 1, ¶ 20(c), at 15.

31

Motion, supra note 1, at 16; see Estrada v. Mendoza, 2012 UT App 82, ¶ 13, 275 P.3d 1024 (“The claim of civil
conspiracy requires, as one of its essential elements, an underlying tort.” (citation and internal quotation marks
omitted)).
32

Docket no. 34, filed September 27, 2018.

5