Wagner-Meinert Eng'g v. TJW Indus.
Decision Date | 26 September 2022 |
Docket Number | 1:21-CV-313 DRL-SLC |
Parties | WAGNER-MEINERT ENGINEERING, LLC et al., Plaintiffs, v. TJW INDUSTRIAL, INC. et al., Defendants. TJW INDUSTRIAL, INC., Counterclaim and Third-Party Plaintiff, v. WAGNER-MEINERT ENGINEERING, LLC et al., Counterclaim and Third-Party Defendants. |
Court | U.S. District Court — Northern District of Indiana |
WAGNER-MEINERT ENGINEERING, LLC et al., Plaintiffs,
v.
TJW INDUSTRIAL, INC. et al., Defendants.
TJW INDUSTRIAL, INC., Counterclaim and Third-Party Plaintiff,
v.
WAGNER-MEINERT ENGINEERING, LLC et al., Counterclaim and Third-Party Defendants.
No. 1:21-CV-313 DRL-SLC
United States District Court, N.D. Indiana, Fort Wayne Division
September 26, 2022
OPINION AND ORDER
Daimon R. Leichty Judge, United States District Court
This suit largely concerns two competing commercial and industrial refrigeration businesses. WMI (collectively referring to Wagner-Meinert Engineering, LLC and Wagner-Meinert LLC) says its prior owners left its business only to misappropriate trade secrets for the benefit of a competing business (known as TJW Industrial, Inc.). Not to be outdone, TJW counterclaims against WMI and sues three WMI employees as third-parties (Michael Davidson, Kalen Cartwright, and Matthew Fenn) for defamation and unfair competition. TJW claims that WMI and its employees disparaged its business and engaged in predatory price cutting to run TJW out of the market. Today the court addresses four motions to dismiss-all aimed at the defamation and unfair competition claims. The court grants the motions only in part.
BACKGROUND
These facts emerge from the well-pleaded factual allegations in the crossclaim and third-party complaint because WMI and its employees filed their motions under Federal Rule of Civil Procedure 12(b)(6). The court must accept these allegations as true for purposes of deciding the motion today.
TJW specializes in industrial refrigeration and mechanical systems for customers in the food processing and cold storage industry. TJW was formed by WMI's former employees, and the two companies are engaged in federal and state litigation. TJW alleges that WMI and its employees pursued a targeted, malicious, and defamatory campaign with the express intention of putting TJW out of business and stifling fair competition. TJW says WMI and its three employees defamed TJW and engaged in unfair competition.
A. Allegations Specific to Michael Davidson (WMI's Chief Operating Officer).
TJW alleges that WMI's chief operating officer, Michael Davidson, told his employees at a corporate meeting that he intended to shutter TJW through numerous lawsuits. He directed WMI's sales team to bid everything at or below cost whenever competing with TJW for a project. He thereafter copied a TJW customer on a letter to TJW that referred to their ongoing litigation: “As you likely know, [WMI] is currently involved in litigation against TJW and others regarding the improper use or taking of [WMI's] trade secrets and intellectual property.” TJW claims the letter was sent to undermine its relationship with this customer.
B. Allegations Specific to Kalen Cartwright (WMI's Engineering and Construction Group Leader).
TJW alleges that WMI's engineering and construction group leader, Kalen Cartwright, spoke with a company for which TJW serves as a subcontractor on a project. He informed this contractor that TJW was “under investigation” and that it has been sued for “stealing intellectual property” from WMI. He recommended that the contractor “be aware of” this information in the future. Later, at an industry convention, Mr. Cartwright told another contractor that TJW was facing a “massive lawsuit.”
TJW claims he has made similar statements to other customers and contractors with the aim of harming TJW's reputation and winning future business for WMI.
C. Allegations Specific to Matthew Fenn (WMI's Service Group Leader).
TJW alleges that WMI's service group leader, Matthew Fenn, informed TJW's customer, which had never done business with WMI, that TJW had stolen information from WMI. He advised the customer of the pending lawsuit and implied that the customer should not do business with TJW. TJW claims that the statements, also repeated to other customers and contractors, were designed to sabotage TJW in the marketplace.
D. Allegations Specific to WMI.
TJW claims that WMI coordinated this deliberate scheme to injure TJW's reputation in the marketplace through these so-called defamatory statements and price cutting. TJW says WMI submitted bids with “drastically reduced” pricing to undercut TJW's bids. The company also claims that WMI allowed employees to wear stickers with the initials “TJW” surrounded by a circle with a slash through it at customer job sites.
STANDARD
In reviewing a motion to dismiss, the court accepts all well-pleaded factual allegations as true and draws all reasonable inferences in the plaintiff's favor. Reynolds v. CB Sports Bar, Inc., 623 F.3d 1143, 1146 (7th Cir. 2010). A 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 complaint must contain enough factual matter, accepted as true, to state a plausible claim, not a speculative one. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim must be plausible, not probable. Indep. Trust Corp. v. Stewart Info. Servs. Corp., 665 F.3d 930, 935 (7th Cir. 2012). Whether a claim is sufficiently plausible to survive a motion to dismiss is “a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” McCauley v. City of Chi., 671 F.3d 611, 616 (7th Cir. 2011)
(quoting Iqbal, 556 U.S. at 679). In conducting this inquiry, the court may “consider documents incorporated by reference in the pleadings.” Orgone Cap. III, LLC v. Daubenspeck, 912 F.3d 1039, 1044 (7th Cir. 2019).
DISCUSSION
A. Defamation.
A claim for defamation in Indiana requires a communication that “tend[s] to harm a person's reputation by lowering the person in the community's estimation or deterring third persons from dealing or associating with the person.” Kelley v. Tanoos, 865 N.E.2d 593, 596 (Ind. 2007). The claim protects a party's “reputation interests,” Bonzani v. Goshen Health Sys., Inc., 459 F.Supp.3d 1139, 1155 (N.D. Ind. 2020) (citing Rain v. Rolls-Royce Corp., 626 F.3d 372, 381 (7th Cir. 2010)), and typically requires (1) a false statement made with defamatory imputation, (2) malice, (3) publication, and (4) damages, Dugan v. Mittal Steel USA Inc., 929 N.E.2d 184, 186 (Ind. 2010) (citing Trail v. Boys & Girls Clubs of Nw. Ind., 845 N.E.2d 130, 136 (Ind. 2006)); Kelley, 865 N.E.2d at 597.
The communication must be both defamatory and false. See Kelley, 865 N.E.2d at 596; Ali v. Alliance Home Healthcare, LLC, 53 N.E.3d 420, 428 (Ind.Ct.App. 2016). As relevant here, a communication is defamatory per se when it imputes misconduct in a person's trade, profession, or office. See Dugan, 929 N.E.2d at 186; Kelley, 865 N.E.2d at 596. This is a question of law for the court, viewing the communication in context, according to its plain meaning, without resort to extrinsic facts. See Journal-Gazette Co. v. Bandido's, Inc., 712 N.E.2d 446, 457 (Ind. 1999); Miller v. Cent. Ind. Cmty. Found., Inc., 11 N.E.3d 944, 956 (Ind.Ct.App. 2014); Gatto v. St. Richard Sch., Inc., 774 N.E.2d 914, 923 (Ind.Ct.App. 2002).
For a statement to be actionable, it also must be “clear that it contains objectively verifiable fact regarding the plaintiff.” Meyer v. Beta Tau House Corp., 31 N.E.3d 501, 515 (Ind.Ct.App. 2015). “If the speaker is merely expressing his subjective view, interpretation, or theory, then the statement
is not actionable.” Id. In addition, the published communication must be false when it was made. See Ali, 53 N.E.3d at 431. Truth is a defense to a defamation claim. See Ind. Const. art. I, § 10 (“In all prosecutions for libel, the truth of the matters alleged to be libelous may be given in justification.”); Cmty. Found. of Nw. Ind., Inc. v. Miranda, 120 N.E.3d 1090, 1104 (Ind.Ct.App. 2019).
1. Defamation Claim against Michael Davidson.
TJW alleges Mr. Davidson defamed the company when he informed WMI employees of his intention to “sue TJW out of business” at a company meeting and when he sent a letter, copied to a TJW customer, saying “[a]s you likely know, [WMI] is currently involved in litigation against TJW and others regarding the improper use or taking of [WMI]'s trade secrets and intellectual property.” Mr. Davidson contends that these statements were true. In response, TJW abandons a defamation claim based on the employee meeting and focuses on the letter alone.
Whether the statement about the litigation might carry a defamatory imputation, thereby undermining the integrity of TJW's business, the company has not established that the statement was false. At the time Mr. Davidson made his statement, WMI and TJW were involved in ongoing litigation about the improper use of WMI's trade secrets, as alleged. TJW says this statement will eventually be proven false in the course of the litigation, but whatever a judge or jury may eventually conclude, the statement wasn't false when it was made. See Ali, 53 N.E.3d at 431; see, e.g., Conwell v. Beatty, 667 N.E.2d 768, 774 (Ind.Ct.App. 1996) (“Whether falsities were later discovered as to those facts is immaterial; at the time [the declarant] made the statement, he accurately reported the status of the investigation.”).
TJW also argues that WMI cannot hide behind the protective shield of its complaint to disseminate defamatory statements, citing Assocs. Fin. Servs. Co. v. Bowman, Heintz, Boscia & Vician, P.C., 2001 U.S. Dist. LEXIS 7874, 27 (S.D. Ind. Apr. 25, 2001). See also ABRO Indus. v. 1NEW Trade, Inc., 2017 U.S. Dist. LEXIS 179792, 53 (N.D. Ind. Oct. 30, 2017). But the defense to the defamation claim today is truth, not absolute privilege. Bowman concerned a claim that a company had in bad faith
included false statements in its complaint and then disseminated its complaint to a firm's business associates. See Bowman, 2001 U.S. Dist. LEXIS 7874 at 27. The district...
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