Franklin Cash Register, Inc. v. Dealzz
| Decision Date | 31 March 2022 |
| Docket Number | 20 C 6258 |
| Parties | FRANKLIN CASH REGISTER, INC. d/b/a GOOD AS NEW ELECTRONICS, Plaintiff, v. AMAZING DEALZZ, et al. Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
Plaintiff Franklin Cash Register, Inc. d/b/a Good as New Electronics (“GNE”) filed suit against Defendants Amazing Dealzz, Caroline Pourtavousi, Shtizel, Inc., Sharone Yerushalami, Yoel Gidanian, and John/Jane Does 1-99 (collectively “Defendants”) for defamation tortious interference, fraud, and civil RICO violations. Before the Court is Defendants' Motion to Dismiss for failure to state a claim under Federal Rules of Civil Procedure 12(b)(6). For the following reasons Defendants' motion (Dkt. 21) is granted in part and denied in part.
The following factual allegations are taken from GNE's Complaint (Dkt. 1) and are assumed true for the purpose of this motion. W. Bend. Mut. Ins. Co. v. Schumacher 844 F.3d 670, 675 (7th Cir. 2016). GNE sells refurbished SharkNinja products on Amazon, an online sales platform. (Dkt. 1 (“Compl.”) at ¶ 7-8, 15, 29). Defendants also sell SharkNinja products via an Amazon storefront. (Id. at ¶¶ 16-20, 33).
Each product listed for sale on Amazon is assigned a unique Amazon Sales Identification Number (“ASIN”), but it is possible to tamper with the ASIN to disassociate it with its assigned product and associate it with a different product. (Id. at ¶ 28). GNE claims that on multiple occasions, beginning on or around January 1, 2020, Defendants tampered with ASINs associated with products on GNE's Amazon storefront to redirect customers to sales listings for different products sold by Defendants. (Id. at ¶ 30). Defendants also purchased products in bad faith from GNE's Amazon storefront and made false claims to Amazon that GNE's products were counterfeit and inauthentic. (Id. at ¶¶ 31-32). Defendants left false reviews of the products and returned them in an attempt to overwhelm GNE's ability to conduct business and interfere with its business relations. (Id.) In response, GNE made multiple “test buys” of SharkNinja products through Defendants' Amazon storefront. (Id. at ¶ 33). In each instance, GNE received different, less valuable products than those it purchased. (Id.) When GNE attempted to return the products, Defendants falsely claimed and reported to Amazon that the goods GNE returned were different from those it had purchased. (Id. at ¶¶ 34-36). As a result of these claims, in addition to those that GNE's products were counterfeit and inauthentic, Amazon removed GNE's listings for various SharkNinja products on multiple occasions. (Id. at ¶ 37). GNE eventually appealed these decisions and was successful in getting the products relisted. (Id. at ¶¶ 39-40). On August 26, 2020, GNE sent Defendants a cease-and-desist letter regarding its false claims and fraudulent activity on Amazon. (Id. at ¶ 46, Ex. D). Despite this and earlier attempts to notify Defendants of their improper conduct, Defendants continue to interfere with GNE's commercial activity on Amazon. (Id. at ¶¶46-47). GNE filed the instant Complaint on October 21, 2020 (Dkt. 1).
Defendants first filed a motion to dismiss for lack of personal jurisdiction and improper venue (Dkt. 11), which was denied by the Court on April 13, 2021. (Dkt. 18). Defendants then sought to file another motion to dismiss, this time pursuant to Rule 12(b)(6) for failure to state a claim. The Court granted leave, and the instant motion was filed (Dkt. 21) on April 29, 2020 seeking dismissal of all of Plaintiff's claims.
When considering a motion to dismiss for failure to state a claim, the Court must construe the complaint “in a light most favorable to the nonmoving party, accept well-pleaded facts as true, and draw all inferences in the non-moving party's favor.” Bell v. City of Chicago, 835 F.3d 736, 738 (7th Cir. 2016). The complaint must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). The plaintiff need not plead “detailed factual allegations, ” but the short and plain statement must “give the defendant fair notice of what ... the claim is and the grounds upon which it rests.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). A complaint must contain sufficient factual matter that when “accepted as true ... ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570).
Plaintiff raises two preliminary issues in its opposition to Defendants' motion: first, that Defendants have exceeded the scope of the Court's order by moving to dismiss all claims (Dkt. 22, Opp. at 4); and second, that the motion is precluded by the Court's denial of Defendants' motion to dismiss for lack of jurisdiction (Opp. at 2).
After denying Defendants' jurisdictional motion (Dkt. 18) the Court held a status conference. At that conference, defense counsel indicated they planned to file a motion to dismiss GNE's RICO claim (Count V). The Federal Rules of Civil Procedure do not foreclose a motion to dismiss under Rule 12(b)(6) when there has been a previous motion to dismiss under Rule 12. See Ennenga v. Starns, 677 F.3d 766, 773 (7th Cir. 2012). The Court thus granted leave for Defendants to file their 12(b)(6) motion. (Dkt. 20). While the Court's oral order was limited to the RICO count based on the representations of counsel, a review of the docket entry reveals that the written order was not so limited and therefore the Court will review the Defendants' motion in its entirety.[1]
Second, the Court's opinion on Defendants' motion to dismiss for lack of personal jurisdiction does not preclude Defendants' current motion. Defendants' earlier motion (Dkt. 11) raised issues of jurisdiction and venue pursuant to Rule 12(b)(2) and 12(b)(3) and did not address whether Plaintiff adequately stated a claim upon which relief could be granted. Any facts presumed to be true in the Court's earlier opinion (Dkt. 18) were presumed true for purposes of that motion and for assessing whether the Court had jurisdiction to hear the case. Defendants' instant motion is brought under a separate subsection of Rule 12 requiring analysis under a different legal standard such that the Court's prior opinion does not preclude any of Defendants' arguments made here.[2]
Count I of Plaintiff's Complaint alleges both defamation and defamation per se. Defamation is the publication of a false statement that “tends to harm a person's reputation to the extent that it lowers that person in the eyes of the community or deters others from associating with that person.” Tuite v. Corbitt, 866 N.E.2d 114, 121 (2006). To bring a successful claim, a plaintiff must normally show that the unprivileged communication of a false statement caused him harm. In Illinois this type of action is called per quod defamation. Some statements, however, are so obviously harmful that injury to the plaintiff's reputation can be presumed and are considered actionable per se. Bryson v. News America Publicans, Inc., 672 N.E.2d 1207 (Ill. 1996).
To adequately plead defamation under Illinois law, GNE “must present facts showing that the defendant made a false statement about the plaintiff, that the defendant made an unprivileged publication of that statement to a third party, and that this publication caused damages.” Green v. Rogers, 917 N.E.2d 450, 459 (Ill. 2009). In a claim for defamation per se, the statement's defamatory character must be so “obvious and apparent on its face” that “injury to the plaintiff's reputation may be presumed.” Tuite, 866 N.E.2d at 121. Five types of statements are defamatory per se, including those that impute the commission of a crime and those that prejudice a party in his or her trade, profession, or business. Muzikowski v. Paramount Pictures, Corp., 322 F.3d 918, 924 (7th Cir. 2003); see also Tuite v. Corbitt, 866 N.E.2d 114 (2006).
To sustain a claim for defamation, GNE is not required by Rule 8 to recite the alleged defamatory statements verbatim. GNE alleges that Defendants published knowingly false statements to Amazon and on the Amazon platform that Plaintiff was listing and selling inauthentic SharkNinja products. GN also alleges that the Defendants made knowingly false statements to Amazon that GNE attempted to defraud Defendants by returning items other than those purchased (through test buys) by GNE. GNE alleges that these statements were published at various times starting on or about January 1 2020, and that these allegations accused GNE of the crime of selling counterfeit goods. (See, e.g., Compl. ¶¶ 34-36, 51-52, 56). This provides the general timing, the content, and the context of the alleged defamatory content necessary for Defendants to fashion a response. See Muzikowski v. Paramount Pictures Corp., 322 F.3d 918, 926 (7th Cir. 2003) (); see also, e.g., Rivera v. Allstate Insurance Company, 140 F.Supp.3d 722 (N.D. Ill. 2015) (); Emery v. Northeast Ill. Regional Commuter R.R. Corp., 2003 WL 22176077 (N.D. Ill. Sept. 18, 2003) () Although Defendants argue that others may have made the statements, the allegations are sufficient at this stage and Defendants will still have an opportunity...
To continue reading
Request your trial