248 F. Supp. 3d 487
S.D.N.Y.2017Background
- Global Packaging Services (Florida) alleges an agreement with Global Printing (Massachusetts) under which Global Packaging would place customers with Global Printing for China-processed packaging and receive commissions (including a $100,000 annual draw). The parties did not attach a written agreement to the record and the agreement’s exact terms are unclear.
- The parties began the arrangement in September 2014, exchanged biweekly payments, and continued until April 2015; commissions allegedly ranged from 20%–45%.
- Plaintiff contends Defendant’s president secretly solicited Plaintiff’s customers during and after the relationship, told them Defendant would replace Plaintiff as their representative, and caused customers to deal directly with Defendant.
- Plaintiff alleges lost commissions (e.g., ~$400,000 from Quten Research Group and >$100,000 from Advanced Frozen Foods) and that Defendant supplied inferior products and refused replacements, harming Plaintiff’s reputation and future business.
- Procedural posture: Plaintiff filed an amended complaint asserting breach of contract, tortious interference (business relations and prospective economic advantage), unjust enrichment, and conversion. Defendant moved to dismiss under Fed. R. Civ. P. 12(b)(6).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of contract: whether Plaintiff plausibly pleaded an enforceable contract and breach | There was an agreement to pay commissions (with $100,000 draw); Plaintiff performed by placing customers and was denied commissions | Defendant contends it performed through April 2015 and Plaintiff cannot recover residual commissions for post-termination sales | Court denied dismissal: complaint plausibly pleads contract formation, performance, breach (for sales during the contract), and damages |
| Tortious interference (business relations / prospective advantage): whether wrongful means or sole-purpose malice was plausibly alleged | Defendant intentionally and improperly solicited Plaintiff’s customers, acted to harm Plaintiff, and caused economic loss | Defendant argued conduct was lawful competition / not independently tortious and thus insufficient for tortious interference | Court dismissed this claim without prejudice for failure to plead wrongful means or other culpable conduct sufficient under New York law |
| Unjust enrichment: whether the claim duplicates contract claim or may proceed alternatively | Plaintiff may plead unjust enrichment in the alternative where contract remedy may be unavailable or incomplete | Defendant argued unjust enrichment duplicates the breach claim and is unavailable because contract governs | Court denied dismissal as to unjust enrichment only to the extent it is pleaded as an alternative (not duplicative) |
| Conversion: whether claim can substitute for contract damages | Plaintiff seeks commissions (monetary recovery) as conversion of funds due | Defendant argued conversion is inappropriate where remedies sound in contract | Court granted dismissal: conversion claim barred because it seeks contract-based recovery |
Key Cases Cited
- Costello v. City of Burlington, 632 F.3d 41 (2d Cir. 2011) (standard for accepting factual allegations on a motion to dismiss)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for complaints)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility and pleading requirements; labels and conclusions insufficient)
- Express Indus. & Terminal Corp. v. N.Y. State Dep’t of Transp., 93 N.Y.2d 584 (1999) (mutual assent and definiteness for contract formation under New York law)
- Carvel Corp. v. Noonan, 3 N.Y.3d 182 (2004) (tortious interference with business relations requires wrongful means or sole-purpose malice)
- State St. Bank & Trust Co. v. Inversiones Errazuriz Ltda., 374 F.3d 158 (2d Cir. 2004) (elements of tortious interference)
- Kirch v. Liberty Media Corp., 449 F.3d 388 (2d Cir. 2006) (discussion of tortious interference standards)
- Johnson v. Nextel Commc’ns, Inc., 660 F.3d 131 (2d Cir. 2011) (elements of breach of contract under New York law)