January 5, 2015
JOSEPH BRUNO, et al., Plaintiffs
PAUL CORRADO, et al., Defendants.
ORDER ON MOTION TO DISMISS
Joyce V. Wheeler Justice, Superior Court
Before the court is the defendant's motion to dismiss counts I, IV, and V of plaintiffs' complaint. For the following reasons, the motion is granted in part and denied in part.
The following facts are taken from plaintiffs' complaint. Plaintiff Joseph Bruno is the owner and CEO of Community Pharmacy, a Maine limited partnership that operates multiple pharmacies in Maine. (Compl. ¶¶ 1-3.) Bruno is a licensed Maine pharmacist and the president of the Maine Board of Pharmacy. (Compl. ¶ 9.) Bruno is also a former representative in the Maine House of Representatives, and he currently serves as a Selectman for the Town of Raymond. (Compl. ¶¶ 10-11.) Defendant Paul Corrado is the owner and president of Corrado's, Inc., a Maine corporation that operates a single pharmacy in Corinth, Maine. (Compl. ¶ 4-6.)
Corrado was an employee of Community Pharmacy until he was terminated on September 6, 2011. (Compl. ¶ 7.) After he was terminated, Corrado opened Corrado's Pharmacy, which competes with Community Pharmacy's Corinth location. (Compl. ¶ 8.) Since 2012, the Maine Board of Pharmacy has received multiple complaints about Corrado's Pharmacy, and at least some of these complaints resulted in disciplinary action, including fines, license suspension, and probation. (Compl. ¶¶ 12-13.) Because of Bruno's prior relationship with Corrado, he recuses himself when the Board considers complaints against Corrado's. (Compl. ¶ 15.)
Corrado wrote a letter addressed to Governor Paul LePage, claiming that Bruno "has done everything in his power to put Mr. Corrado out of business" and that he "has used his influence against Mr. Corrado." (Compl. ¶¶ 19-21.) The letter asks the Governor to investigate Bruno and remove him from the Board of Pharmacy. (Compl. ¶ 22.) Corrado disseminated the letter in the Town of Corinth and published it on the internet, including on Facebook. (Compl. ¶ 17.)
Corrado's Pharmacy's agents or employees have accessed confidential and proprietary customer information from Community Pharmacy. (Compl. ¶ 24.) Corrado's made calls to Community Pharmacy's customers telling them that Community Pharmacy of Corinth was closing and telling them that they should switch their prescriptions to Corrado's. (Compl. ¶ 24-25.) At least one of Community Pharmacy's customers switched their prescriptions to Corrado's temporarily, and many others were confused and inquired as to whether Community Pharmacy was closing. (Compl. ¶¶ 26-27.) Corrado himself has come into Community Pharmacy's Corinth Location and told a customer, "I have a pharmacy up the road, you should come check it out." (Compl. ¶ 28.)
1. Standard of Review
On review of a motion to dismiss for failure to state a claim, the court accepts the facts alleged in plaintiffs complaint as admitted. Saunders v. Tisher, 2006 ME 94, ¶ 8, 902 A.2d 830. The court then "examine[s] the complaint in the light most favorable to plaintiff to determine whether it sets forth elements of a cause of action or alleges facts that would entitle the plaintiff to relief pursuant to some legal theory." Doe v. Graham, 2009 ME 88, ¶ 2, 977 A.2d 391 (quoting Saunders, 2006 ME 94, ¶ 8, 902 A.2d 830). "For a court to properly dismiss a claim for failure to state a cause of action, it must appear 'beyond doubt that [the] plaintiff is entitled to no relief under any set of facts that might be proven in support of the claim.'" Dragomir v. Spring Harbor Hosp., 2009 ME 51, ¶ 15, 970 A.2d 310 (quoting Plimpton v. Gerrard, 668 A.2d 882, 885 (Me. 1995)).
2. Count I: Tortious Interference (Bruno and Community Pharmacy v. Paul Corrado and Corrado's, Inc.)
Plaintiffs assert that Corrado and Corrado's Pharmacy are liable for tortious interference with a prospective economic advantage for improperly driving Community Pharmacy's customers to Corrado's Pharmacy. "Tortious interference with a prospective economic advantage requires a plaintiff to prove: (1) that a valid contract or prospective economic advantage existed; (2) that the defendant interfered with that contract or advantage through fraud or intimidation; and (3) that such interference proximately caused damages." Rutland v. Mullen, 2002 ME 98, ¶ 13, 798 A.2d 1104. Defendants argue that the complaint fails to plead interference by fraud or intimidation.
a. Interference by Fraud
The elements of fraud for the purposes of a tortious interference claim are:
(1) making a false representation (2) of a material fact (3) with knowledge of its falsity or in reckless disregard of whether it is true or false (4) for the purpose of inducing another to act or refrain from acting in reliance on it, and (5) the other person justifiably relies on the representation as true and acts upon it to the damage of the plaintiff.
Id. ¶ 14 (quoting Petit u. Key Bank of Maine, 688 A.2d 427, 430 (Me. 1996)). The circumstances surrounding the alleged fraud must be "stated with particularity." Barnes v. McGough, 623 A.2d 144, 146 (Me. 1993). Unlike a fraud claim, however, plaintiffs need only prove a tortious interference claim by a preponderance of the evidence. Petit, 688 A.2d at 433.
Plaintiffs' tortious interference claim is based on allegations that Corrado told Community Pharmacy's customers that Community Pharmacy was closing. The false statement is that the pharmacy was closing, which is a material fact, and Corrado's knowledge of the statement's falsity can be inferred. Corrado allegedly intended to lure Community Pharmacy's customers to his store, and his misrepresentations allegedly succeeded in causing at least one customer to switch her prescriptions to Corrado's temporarily. Contrary to defendants' assertions, these allegations are sufficient to satisfy the elements of fraud for purposes of the tort.
b. Interference by Intimidation
Plaintiffs argue that count I is based on intimidation as well as fraud. Intimidation, for purposes of the tort, "involves unlawful coercion or extortion." Rutland, 2002 ME 98, ¶ 16, 798 A.2d 1104. The case Pombriant v. Blue Cross/Blue Shield of Maine illustrates the type of intimidation required. 562 A.2d 656 (Me. 1989). In that case,
Blue Cross procured the breach of contract between Pombriant and Bennett by the intimidating means of making it clear to Bennett that the only manner in which it could avail itself of Blue Cross's lower rates for the desired insurance would be by using the brokerage services of Johnson ....
Pombriant, 562 A.2d at 659. Although plaintiffs argue that many of Community Pharmacy's customers are elderly and vulnerable, the complaint does not allege that any of its customers were in any way intimidated by Corrado's. The false statement that Community Pharmacy was closing does not amount to "unlawful coercion or extortion." According to the complaint, the only reason Community Pharmacy's customers might have switched their prescriptions to Corrado's is because they thought Community Pharmacy was closing, not because they were pressured into switching.
c. Justifiable Reliance
Defendants argue that plaintiff has failed to sufficiently allege that Community Pharmacy's customers justifiably relied on the alleged misrepresentation that Community Pharmacy was closing. Plaintiff does allege, however, that many customers were confused and at least one customer switched her prescriptions to Corrado's. These allegations are sufficient to establish justifiable reliance.
d. Bruno as Plaintiff
Defendant argues that Bruno lacks standing to assert a tortious interference claim individually. Defendants are correct that there are no allegations in the complaint that defendants interfered with Bruno's personal prospective economic advantage. Bruno can therefore be dismissed as a plaintiff on count I.
3. Count IV: Defamation (Community Pharmacy v. Corrado's, Inc.)
a. Defamatory Statement
To prevail on a defamation claim, a plaintiff must demonstrate the following elements:
(a) a false and defamatory statement concerning another;
(b) an unprivileged publication to a third party;
(c) fault amounting at least to negligence on the part of the publisher; and
(d)either actionability of the statement irrespective of special harm of the existence of special harm caused by the publication.
Morgan v. Kooistra, 2008 ME 26, ¶ 26, 941 A.2d 447. "Whether a false statement conveys a defamatory message is a question of law." 7d.
Plaintiffs' complaint alleges that Corrado told Community Pharmacy customers that the Community Pharmacy store in Corinth was closing. (Compl. ¶ 25.) Defendant argues that this statement was not defamatory.
The Law Court has previously cited the Restatement for guidance on defamation claims. See Rippett v. Bemis, 672 A.2d 82, 86 (Me. 1996). The Restatement (Second) of Torts provides that a partnership may be treated like a corporation for the purposes of a defamation claim. Restatement (Second) of Torts § 562 (1977). "One who publishes defamatory matter concerning a corporation is subject to liability to it:
(a) if the corporation is one for profit, and the matter tends to prejudice it in the conduct of its business or to deter others from dealing with it . . . ."
Restatement (Second) of Torts § 561 (1977). The alleged statement that the Corinth store was closing prejudiced Community Pharmacy in the conduct of its business because it confused Community Pharmacy's customers and caused at least a temporary loss of business. Because the alleged statement relates to the ability to conduct a trade or business, it is actionable per se.See Restatement (Second) of Torts § 573 (1977). Cases from other jurisdictions confirm this result. See Bay Tobacco, LLC v. Bell Quality Tobacco Prods., LLC, 261 F.Supp.2d 483, 501-502 (E.D. Va. 2003) (denying motion to dismiss when complaint alleged defendant published a false statement that plaintiff was "going out of business"); GN Danavox, Inc. u. Starkey Labs., Inc., 476 N.W.2d 172, 176 (Ct. App. Minn. 1991) (upholding punitive damages award for statements in flyer that suggested, among other things, that plaintiff was going out of business).
The cases defendants rely on are distinguishable. In Picard v. Brennan, the Law Court held that a false statement that an employee had been discharged was not defamation per se. 307 A.2d 833, 835 (Me. 1973). The court reasoned that "[a]n employee may be discharged for any one of a multitude of reasons unrelated to his honesty, integrity or occupational skill, or indeed for no reason at all." Id. Thus, a statement that an employee was discharged without stating a reason for the discharge is insufficient to support a claim of defamation. Id.
Picard is distinguishable because a former employee's professional or business interests are much different than an operating business's interests. In Picard, the reason for discharge was critical-the plaintiff would only suffer harm if defendant had said the employee was discharged for misconduct, incompetence, or some other negative reason. By contrast, a false statement that a business is closing is harmful to that business's interests, regardless of the reason it is closing. The necessary consequence of the statement, if believed by customers, is that the business will no longer be able to supply the customers' needs. Customers will become confused and they might switch to competitors, which is precisely what Community Pharmacy alleges has occurred.
Defendant also relies on Kforce, Inc. v. Alden Personnel, Inc., a New York case that involved a defendant who wrote an email to its own business contacts that stated: "Better news is that we have lost lots of competition in the local market with Robert Half and Kforce basically closing their IT divisions in the area." 288 F.Supp.2d 513, 515 (S.D.N.Y. 2003). The court dismissed the defamation claim, stating "[t]he statement is at most an allegation of unprofitability in a particular geographic area." Id. at 518. The case is distinguishable" for several reasons. First, the email was to the defendant's own business contacts, it was not directly made to the competitor's customers, and the email did not tell prospective customers to shop at defendant's business as an alternative. Id. at 515. Second, the court found that it must consider the statement in context and noted that a "less well-established corporation would be more susceptible to harm from a competitor's remarks." Id. at 518. Because Kforce "employ[ed] over 1, 000 recruiting specialists operating in more than 40 markets nationwide", the court found that "damages to Kforce cannot be assumed." Id. Needless to say, Community Pharmacy does not have the type of national presence described in the Kforce case. (Compl. ¶¶ 2-3.) Finally, the court must consider the nature of the business. Community Pharmacy provides prescriptions to people in rural communities. If Community Pharmacy were closing, its customers would need to quickly make arrangements to find another pharmacy to ensure they are able to get their medications. The impact of the false statement on Community Pharmacy's customers is far more immediate than the impact described in Kforce.
b. Identity of the Customers
Defendants argue that plaintiffs have failed to sufficiently identify to whom the alleged defamatory statements were made. Plaintiff alleges that Corrado's employees accessed Community Pharmacy's confidential customer information and contacted its customers to tell them Community Pharmacy was closing. The complaint further alleges that at least one customer switched her prescriptions to Corrado's after being contacted. These allegations are sufficient to survive a motion to dismiss. As acknowledged by defendants' own case, dismissing the claim "would be an unduly harsh sanction for failure to plead specific information not yet clearly required by Maine law." Monahan v. Chapman & Drake, 1999 WL 33117089, at *4 n.3 (D. Me. 1999). Plaintiff will need to identify specific customers to prevail on its defamation claim at trial.
4. Count V: False Light Invasion of Privacy (Community Pharmacy v. Corrado's, Inc.)
Defendants argue that a business entity lacks standing to bring a false light claim. Although there does not appear to be any Maine case on point, the majority of jurisdictions that have addressed the issue appear to limit the cause of action to individuals. See Holomaxx Technologies v. Microsoft Corp., 783 F.Supp.2d 1097, 1107 (N.D. Ca. 2011); Seaton v. TripAduisor, LLC, 728 F.3d 592, 601 (6th Cir. 2013); see also Pan Am Sys., Inc. v. Hardenbergh, 871 F.Supp.2d 6, 18 (D. Me. 2012) ("Plaintiffs concede that a corporation may not bring a false light cause of action . .. ."). Because businesses typically lack privacy rights, the court agrees with these cases that hold that a business entity cannot bring a false light invasion of privacy claim. See Restatement (Second) of Torts § 6521 cmt. c (1977) ("A corporation, partnership or unincorporated association has no personal right of privacy."). Count V is dismissed.
The entry is:
Joseph Bruno is dismissed as a plaintiff from Count I of the complaint;
Count V of the complaint is dismissed; and Defendants' motion to dismiss is denied as to all other counts of the complaint.