SlackPass, Inc. v. Frosted, Inc.
1:23-cv-06393
| S.D.N.Y. | Apr 1, 2025Background
- LaunchPass (SlackPass, Inc.) is a provider in the online chat community monetization market, offering tools for paid community management on platforms like Slack and Discord.
- Whop (Frosted, Inc.) is a newer competitor, led by Cameron Zoub and Steven Schwartz, that allegedly sought to gain market share through aggressive tactics, including acquiring a competitor (Hyper), soliciting LaunchPass customers, and misusing LaunchPass’s systems.
- LaunchPass alleges Whop infiltrated its systems, made misleading comparative claims about pricing, poached staff, and directly offered below-market deals to induce customer migration.
- The lawsuit includes claims under federal and state antitrust laws (predatory pricing, attempted monopolization), the Computer Fraud and Abuse Act (CFAA), the Lanham Act (false advertising), and various common law torts.
- Defendants moved to dismiss the amended complaint under Rule 12(b)(6). The court grants in part and denies in part the motion, allowing certain claims to proceed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Predatory Pricing | Whop sold below cost to drive LaunchPass out and recoup later | LaunchPass failed to allege Whop’s prices were below cost | Dismissed; LaunchPass didn’t plausibly allege below-cost or recoupment |
| Attempted Monopolization | Whop tried to allocate the market and exclude LaunchPass | No plausible monopoly power or anticompetitive conduct | Sufficiently pleaded; claim survives motion to dismiss |
| CFAA (Computer Fraud) | Whop accessed areas of LaunchPass’ systems without authorization | Access was through customer logins, so not unauthorized | Survives; alleged conduct plausibly exceeds authorized access under CFAA |
| Lanham Act (False Advertising) | Whop made false/misleading statements about LaunchPass’s pricing and quality | No plausible falsity/materiality/causation | Survives; LaunchPass plausibly pleaded falsity, materiality, and injury |
| Commercial Disparagement | Whop’s statements disparaged LaunchPass’s services | Lacked required special damages pleading | Dismissed; insufficient special damages allegations |
| Defamation | Whop impugned LaunchPass’s reputation with false customer support claims | Statements were about quality/cost, not reputation | Survives; statements can reasonably imply defamation |
| Tortious Interference | Whop intentionally diverted LaunchPass customers using improper means | No specific relationships cited; no malice shown | Survives; sufficient at this stage that ongoing business relationships alleged |
| Unfair Competition | Whop gained customers and insights by misappropriating confidential info | No special damages, conduct lawful competition | Survives; allegations of bad faith and appropriation sufficient |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (establishing plausibility pleading standard for Rule 12(b)(6) motions)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (articulating the plausibility standard for surviving a motion to dismiss)
- Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209 (setting out predatory pricing standards under the antitrust laws)
- Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447 (elements for attempted monopolization under Sherman Act §2)
- Eastman Kodak Co. v. Image Tech. Servs., Inc., 504 U.S. 451 (fact-intensive inquiry required for defining relevant market in antitrust cases)
- Van Buren v. United States, 593 U.S. 374 (interpreting the Computer Fraud and Abuse Act’s scope)
- Groden v. Random House, Inc., 61 F.3d 1045 (statements of opinion are not actionable under the Lanham Act)
- Kirch v. Liberty Media Corp., 449 F.3d 388 (elements for tortious interference with business relationships)