Addison Whitney, LLC v. Cashion

2017 NCBC 109

Opinion

Addison Whitney, LLC v. Cashion, 2017 NCBC 109.

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE SUPERIOR COURT DIVISION MECKLENBURG COUNTY 17 CVS 1956

ADDISON WHITNEY, LLC,

Plaintiff,

v.

BRANNON CASHION; VINCENT ORDER AND OPINION BUDD; RANDALL SCOTT; ON PLAINTIFF’S RENEWED ANDREW CUYKENDALL; AMY BAYNARD; JENNIFER RODDEN; PARTIAL MOTION TO DISMISS and LEADERBOARD BRANDING, LLC,

Defendants.

1. This is the Court’s third opinion in this dispute between Plaintiff Addison

Whitney, LLC and six of its former high-level officers and employees. In response to

the complaint, Defendants assert five counterclaims, most of which rest on

allegations that Addison Whitney is defaming them and improperly attempting to

stifle their new business, Leaderboard Branding, LLC. Addison Whitney moves to

dismiss four of the counterclaims pursuant to Rule 12(b)(6) of the North Carolina

Rules of Civil Procedure. Having considered the motion, the briefs supporting and

opposing the motion, and the parties’ arguments at the hearing on November 8, 2017,

the Court GRANTS in part and DENIES in part the motion to dismiss.

Littler Mendelson, P.C., by Michael Scott McDonald, Allan H. Neighbors, IV, Stephen D. Dellinger, Elise Hofer McKelvey, and Steven A. Nigh, for Plaintiff.

Van Hoy, Reutlinger, Adams & Dunn, PLLC, by G. Bryan Adams, III, for Defendants.

Conrad, Judge. I. BACKGROUND

2. The Court does not make findings of fact on a Rule 12(b)(6) motion to

dismiss. The following factual summary is drawn from relevant allegations in the

counterclaims. Additional background, including the allegations in Addison

Whitney’s complaint, appears in Addison Whitney, LLC v. Cashion, 2017 NCBC

LEXIS 51 (N.C. Super. Ct. Jun. 9, 2017).

3. Addison Whitney, a North Carolina company, “is engaged in the business

of verbal branding, visual branding, branding strategy, and research and analysis.”

(Answer to 2d Am. Compl. and Countercl. [“Countercl.”] ¶¶ 8, 10, ECF No. 80.)

Addison Whitney is a subsidiary of inVentiv Health, Inc. (“inVentiv”). (Countercl.

¶ 26.)

4. Individual Defendants Brannon Cashion, Vincent Budd, Randall Scott,

Andrew Cuykendall, Amy Baynard, and Jennifer Rodden are former officers and

employees of Addison Whitney. (Countercl. ¶¶ 11–16.) The individual Defendants

tendered their resignations on January 21, 2017. (Countercl. ¶¶ 11–16.) After

resigning, the individual Defendants created Leaderboard Branding, LLC to compete

with Addison Whitney. (Countercl. ¶ 7.)

5. In the weeks leading up to his resignation, Cashion discussed the

possibility of a management buyout of Addison Whitney with Dan Jones, an employee

of “one of the private equity sponsors” of inVentiv. (Countercl. ¶ 26.) These

discussions were “positive and productive” although no formal offers or proposals were tendered. (Countercl. ¶ 26.) Cashion also informed Jones “that he and several

other employees were considering leaving Addison Whitney.” (Countercl. ¶ 26.)

6. On January 20, 2017, Jones opined that the management buyout would

not work because “‘95 % plus’ of such deals are never successfully completed.”

(Countercl. ¶ 28.) The individual Defendants resigned from Addison Whitney the

next day, prompting Jones to contact Cashion again. (See Countercl. ¶¶ 29, 32.)

Jones encouraged Cashion to speak directly with inVentiv’s CEO, Mike Bell, to

propose a management buyout. (Countercl. ¶ 32.)

7. Cashion did so. (See Countercl. ¶ 32.) On January 23, the two men had an

uneasy conversation, in which Cashion tried to assure Bell that the individual

Defendants wished “to negotiate in good faith.” (Countercl. ¶ 33.) Bell responded

that they were “holding Addison Whitney hostage,” and he warned that “things could

escalate into ‘thermonuclear warfare’ and alternately threatened a ‘nuclear option.’”

(Countercl. ¶ 33.) Despite their differences, Bell invited Cashion to discuss the

possibility of a management buyout in person. (Countercl. ¶ 33.)

8. Cashion met with Bell and other executives in Boston on January 25, and

Addison Whitney made a formal buyout proposal. (Countercl. ¶¶ 34–35.) The

individual Defendants submitted their counteroffer the following afternoon, on

January 26. (Countercl. ¶ 36.) A few hours later, Addison Whitney cut off

discussions, and “the Individual Defendants began receiving cease and desist letters

from Addison Whitney’s counsel.” (Countercl. ¶ 37.) 9. According to Defendants, the end of the buyout negotiations marked the

beginning of a campaign by Addison Whitney to punish the individual Defendants

and to stifle their new business. On January 30, 2017, Addison Whitney initiated

this action against the individual Defendants, followed a few days later by a motion

for a preliminary injunction. (See Compl., ECF No. 1; Mot. for TRO and/or Prelim.

Inj., ECF No. 5.1.) Addison Whitney sought to enjoin Defendants from using,

disclosing, or otherwise misappropriating its confidential information and trade

secrets; from soliciting or encouraging employees to leave the company; and from

competing against Addison Whitney. (See Mot. for TRO and/or Prelim. Inj.) On

March 15, 2017, the Court granted the motion with respect to misappropriation of

trade secrets and confidential information but denied it in all other respects. See

generally Addison Whitney, LLC v. Cashion, 2017 NCBC LEXIS 23 (N.C. Super. Ct.

Mar. 15, 2017).

10. After this ruling, Addison Whitney created a press release, which

Defendants allege “was incomplete, misleading, deceptive and was not a fair and

accurate description of the” Court’s March 15 Order and Opinion. (Countercl. ¶ 51.)

According to Defendants, the press release includes statements “designed to malign

the reputations of the Defendants in their trade or profession, to imply that they had

committed crimes, and to damage their ability to secure potential customers for their

business.” (Countercl. ¶ 52.) In addition, Addison Whitney initiated “a targeted pay

per click Google AdWords campaign,” such that when any person “conducts a Google

search on the internet for the Defendants or Leaderboard, the first item that appears on the search results is a link” that directs to the press release. (Countercl. ¶ 53.)

Addison Whitney published the press release on May 1, 2017, after which the

AdWords campaign became active. (Countercl. ¶ 55.)

11. Addison Whitney has since “discourag[ed] its clients and other companies

seeking branding services . . . from engaging in business with the Defendants.”

(Countercl. ¶ 66.) Several prospective customers have decided not to do business with

Defendants, citing the press release and internet search results associated with

Addison Whitney’s AdWords campaign. (Countercl. ¶ 86; see also Countercl. ¶¶ 87–

92.)

12. Defendants further allege that a company affiliated with Addison Whitney

launched satellite litigation as part of a plan “to force the Defendants to fight

litigation on two fronts.” (Countercl. ¶ 65.) This second lawsuit, filed by inVentiv

Health Communications, Inc. (“IHC”) in Ohio, alleges that Rodden has violated a non-

compete agreement contained in IHC’s “Code of Ethics and Business Conduct.”

(Countercl. ¶ 59.) The Ohio court awarded IHC a temporary restraining order

prohibiting Rodden “from engaging in competition against IHC.” (Countercl. ¶ 63.)

13. On April 28, 2017, Defendants filed their answer along with counterclaims

for abuse of process, defamation, tortious interference with prospective business

relations, violation of N.C. Gen. Stat. § 75-1.1, and violation of the North Carolina

Wage and Hour Act. Addison Whitney moved to dismiss all of the counterclaims

except for the Wage and Hour Act claim. (See Pl.’s Partial Mot. to Dismiss, ECF No.

47.) On July 13, 2017, the Court granted leave for Addison Whitney to amend its complaint, granted leave for Defendants to amend the counterclaims, and denied the

motion to dismiss as moot “without prejudice to Plaintiff’s right to challenge the

amended counterclaims through a future Rule 12 motion.” (Or. Grant. Mot. to Am.

at ¶ 3.b, ECF No. 75.)

14. After Defendants filed their amended counterclaims, Addison Whitney

renewed its motion to dismiss on August 16, 2017. The motion has been fully briefed,

and the Court held a hearing on November 8, 2017. The motion is ripe for

determination.

II. ANALYSIS

15. A motion to dismiss under Rule 12(b)(6) “tests the legal sufficiency” of the

claims for relief. Concrete Serv. Corp. v. Inv’rs Grp., Inc., 79 N.C. App. 678, 681, 340

S.E.2d 755, 758 (1986). In deciding a Rule 12(b)(6) motion, the Court must treat the

well-pleaded allegations of the counterclaims as true and view the facts and

permissible inferences “in the light most favorable to” the non-moving party. Ford v.

Peaches Entm’t Corp., 83 N.C. App. 155, 156, 349 S.E.2d 82, 83 (1986); see also Sutton

v. Duke, 277 N.C. 94, 98, 176 S.E.2d 161, 163 (1970). “[T]he court is not required to

accept as true any conclusions of law or unwarranted deductions of fact.” Oberlin

Capital, L.P. v. Slavin, 147 N.C. App. 52, 56, 554 S.E.2d 840, 844 (2001). The motion

should be granted only (1) when the defendant’s pleading on its face reveals that no

law supports the counterclaim; (2) when the pleading on its face reveals the absence

of fact sufficient to make a good claim; or (3) when some fact disclosed in the pleading necessarily defeats the counterclaim. See Jackson v. Bumgardner, 318 N.C. 172, 175,

347 S.E.2d 743, 745 (1986).

A. Abuse of Process

16. The tort of abuse of process is narrow in scope. It “consists in the malicious

misuse or perversion of a civil or criminal writ to accomplish some purpose not

warranted or commanded by the writ.” Barnette v. Woody, 242 N.C. 424, 431, 88

S.E.2d 223, 227 (1955). A claim for abuse of process requires two “essential

elements”: “the existence of an ulterior purpose” and “an act in the use of the process

not proper in the regular prosecution of the proceeding.” Id. at 431, 88 S.E.2d 227–

28; see also Stanback v. Stanback, 297 N.C. 181, 201, 254 S.E.2d 611, 624 (1979).

17. According to Defendants, Addison Whitney initiated this action for the

ulterior purpose of “stifling and impeding the Defendants’ ability to lawfully compete

against it.” (Countercl. ¶ 43.) Defendants point to the fact that, after initiating suit,

Addison Whitney immediately sought to enjoin them from competing against Addison

Whitney for a period of one year. (Countercl. ¶ 44.) After the Court denied this

request, Defendants contend, Addison Whitney took additional steps to stifle

competition. Addison Whitney publicized aspects of the Court’s preliminary-

injunction Order—the portions enjoining the misappropriation of trade secrets—

through a press release and Google AdWords campaign targeted toward potential

customers of Defendants. (Countercl. ¶ 52.) In addition, an affiliate of Addison

Whitney, IHC, filed a separate lawsuit in Ohio against Rodden and obtained a temporary restraining order prohibiting her “from engaging in competition against

IHC.” (Countercl. ¶ 63.)

18. Addison Whitney does not dispute that these allegations, taken as true,

show an ulterior purpose. Rather, it urges the Court to dismiss the claim because

none of the allegedly wrongful acts constitute “an act not proper in the regular

prosecution of the proceeding.” (Mem. of Law in Supp. of Pl.’s Renewed Partial Mot.

to Dismiss 6 [“Mem. in Supp.”], ECF No. 82.)

19. The Court agrees. “The gist of an action for abuse of process is the improper

use of the process after it has been issued.” Mfrs. & Jobbers Fin. Corp. v. Lane, 221

N.C. 189, 196, 19 S.E.2d 849, 853 (1942) (emphasis added). “Regular and legitimate

use of process, though with a bad intention, is not a malicious abuse of process.”

Melton v. Rickman, 225 N.C. 700, 704, 36 S.E.2d 276, 278 (1945). Rather, the

complainant must allege the commission of “some wilful act” as a means “to gain

advantage . . . in respect to some collateral matter.” Stanback, 297 N.C. at 201, 254

S.E.2d at 624. Typically, the requisite acts involve the misuse of procedures such as

“discovery, subpoenas, and attachment.” Simon v. Navon, 71 F.3d 9, 15 (1st Cir.

1995) (citations omitted); see also Hewes v. Wolfe, 74 N.C. App. 610, 614, 330 S.E.2d

16, 19 (1985) (act requirement satisfied by malicious filing of notices of lis pendens);

cf. DDM&S Holdings, LLC v. Doc Watson Enters., LLC, 2016 NCBC LEXIS 88, *9–

10 (N.C. Super. Ct. Nov. 10, 2016) (following Hewes and finding “preservation of

evidence letter” to satisfy act requirement). 20. Defendants have alleged nothing of the sort. Rather, Defendants rely on

three specific acts that are not a misuse of legal process: (1) Addison Whitney’s motion

for preliminary injunction in this lawsuit; (2) the press release and Google AdWords

campaign; and (3) IHC’s Ohio lawsuit against Rodden.

21. Defendants’ reliance on Addison Whitney’s motion for a preliminary

injunction is misplaced because “[t]here is no abuse of process where [the process] is

confined to its regular and legitimate function in relation to the cause of action stated

in the complaint.” Stanback, 297 N.C. at 201, 254 S.E.2d at 624 (quoting Mfrs. &

Jobbers Fin. Corp., 221 N.C. at 196–97, 19 S.E.2d at 853).

22. Addison Whitney’s original complaint asserted claims for misappropriation

of trade secrets, breach of certain non-solicitation agreements, and breach of fiduciary

duty. (See Compl. ¶¶ 111–46, 155–65.) Pursuing injunctive relief is regular and

proper in the course of an action based on these claims. See, e.g., N.C. Gen. Stat. § 66-

154(a) (“actual or threatened misappropriation of a trade secret may be preliminarily

enjoined”); Horner Int’l Co. v. McKoy, 232 N.C. App. 559, 570, 754 S.E.2d 852, 860

(2014) (affirming “the trial court’s grant of a preliminary injunction” for a

misappropriation of trade secrets claim); Wade S. Dunbar Ins. Agency, Inc. v. Barber,

147 N.C. App. 463, 471, 556 S.E.2d 331, 336 (2001) (holding “that the trial court

correctly granted a preliminary injunction enforcing the non-compete, non-

solicitation, and non-disclosure provisions of the employment agreement”); Lake

House Acad. for Girls LLC v. Jennings, 2011 NCBC LEXIS 41, at *1, 21–23 (N.C. Super. Ct. Oct. 13, 2011) (granting motion for preliminary injunction based on claim

for breach of fiduciary duty).

23. Defendants insist, however, that Addison Whitney’s motion was improper

because it knew it had no basis to enjoin Defendants from starting a competing

business. To support their argument, Defendants note that the Court denied Addison

Whitney’s motion in part. (See Defs.’ Resp. in Opp’n to Pl.’s Renewed Partial Mot. to

Dismiss 4 [“Defs.’ Resp.”], ECF No. 91.) But the test for abuse of process is not

whether a party succeeds or fails on the merits of its claim. And to the extent Addison

Whitney sought an injunction that was too broad, Defendants received their remedy

when the Court denied that aspect of the motion. See, e.g., Sara Lee Corp. v. Pro

Sports Inc., No. 1:03-CV-00276, 2004 U.S. Dist. LEXIS 4194, at *13–14 (M.D.N.C.

Mar. 12, 2014) (denying motion to add claim for abuse of process as futile based on

allegation that party was “asserting a claim of a greater trademark right than it

actually has”).

24. Defendants’ reliance on Addison Whitney’s press release and Google

AdWords campaign also fails because those acts do not involve “the use of the legal

process” at all. Stanback, 297 N.C. at 201, 254 S.E.2d at 624 (emphasis added); see

also Legal Process, Black’s Law Dictionary (10th ed. 2014) (“A summons or writ, esp.

to appear or respond in court”). Even taking Defendants’ allegations as true, out-of-

court acts designed to generate negative publicity about a litigant are not the type of

acts that give rise to a claim for abuse of process. Indeed, the Court is not aware of

any authority for the proposition that “the filing of a complaint plus the generation of unfavorable publicity may constitute abuse of process.” Holiday Magic, Inc. v.

Scott, 282 N.E.2d 452, 457 (Ill. App. Ct. 1972) (applying Illinois law).

25. In Holiday Magic, the plaintiffs alleged that the defendants had filed a

previous lawsuit with the goal of generating sufficient adverse publicity to “kill”

plaintiffs’ business. Id. at 453. To accomplish that goal, the defendants widely

publicized their complaint and “caused a series of articles to appear in one of

Chicago’s major daily newspapers.” Id. at 454. The Illinois Court of Appeals affirmed

the dismissal of plaintiffs’ claim for abuse of process on the ground that these actions

cannot “be construed as constituting any improper use, or even any use, of the process

of the court.” Id. at 456.

26. The Court finds this reasoning persuasive and consistent with North

Carolina law. See Williams v. Imeni, No. 5:16-CV-516-FL, 2017 U.S. Dist. LEXIS

77791, at *22 (E.D.N.C. May 23, 2017) (applying North Carolina law and holding that

acts of “extortion and harassment were not acts ‘in the use of the legal process’”). It

is also consistent with numerous decisions of other courts. See, e.g., Ancier v. Egan,

No. 14-00294 JMS-RLP, 2014 U.S. Dist. LEXIS 167319, at *19 (D. Haw. Dec. 3, 2014)

(“press conference” and “media campaign” insufficient); Sands v. Living Word

Fellowship, 34 P.3d 955, 961 (Alaska 2001) (“publicization” of “public allegations and

documents” insufficient); Beacon Journal Publ’g Co. v. Zonak, Poulos & Cain, No.

79AP-123, 1979 Ohio App. LEXIS 11795, at *6–7 (Ohio Ct. App. Sept. 25, 1979) ( “out-

of-court press conferences” insufficient “even though some other actionable tort might

be committed by such action”); see also Analytic Sys. Corp. v. Holmgren, No. 82 Civ. 2448 (RWS), 1983 U.S. Dist. LEXIS 16560, at *4 (S.D.N.Y. June 1, 1983) (“The mere

dissemination of information concerning a lawsuit does not constitute process.”).

27. Addison Whitney has cited no case law to the contrary. Accordingly, the

allegations related to Addison Whitney’s press release and AdWords campaign, even

if conducted for a wrongful purpose, are insufficient to satisfy the act requirement.

28. Nor does the Ohio lawsuit against Rodden satisfy the act requirement. The

Ohio lawsuit was filed by IHC, not Addison Whitney. Although Defendants allege

that Addison Whitney and IHC are affiliated, they have not alleged any legally

sufficient basis to impute IHC’s actions to Addison Whitney. (See Countercl. ¶ 59.)

Defendants cite no case law holding that the act requirement may be satisfied by the

actions of a third party. See Stanback, 297 N.C. at 201, 254 S.E.2d at 624 (holding

that act requirement is satisfied when “the defendant committed some wilful act”

(emphasis added)).

29. Finally, the Court notes that Defendants also allege a second ulterior

purpose for this lawsuit: that Addison Whitney “intends to use this litigation as a

vehicle for learning confidential competitive information about the Defendants’

business.” (Countercl. ¶ 49.) “Evil purpose alone is not sufficient,” however, and

Defendants do not allege any act in furtherance of this ulterior purpose. Melton v.

Rickman, 225 N.C. 700, 704, 36 S.E.2d 276, 278 (1945).

30. The Court therefore concludes that Defendants have not adequately

alleged an act in the use of the legal process not proper in the regular prosecution of

the proceeding. Defendants’ claim for abuse of process is dismissed with prejudice. B. Defamation

31. To state a claim for defamation, “a plaintiff must allege that the defendant

caused injury to the plaintiff by making false, defamatory statements of or concerning

the plaintiff, which were published to a third person.” Boyce & Isley, PLLC v. Cooper,

153 N.C. App. 25, 29, 568 S.E.2d 893, 897 (2002). “Although every defamation must

be false, not every falsehood is defamatory.” Renwick v. News & Observer Pub. Co.,

310 N.C. 312, 319, 312 S.E.2d 405, 410 (1984). “North Carolina has long recognized

the harm that can result from false statements that impeach a person in that person’s

trade or profession—such statements are deemed defamation per se.” Kingsdown,

Inc. v. Hinshaw, 2016 NCBC LEXIS 15, at *51 (N.C. Super. Ct. Feb. 17, 2016)

(quoting Nguyen v. Taylor, 219 N.C. App. 1, 8, 723 S.E.2d 551, 557–58 (2012)).

32. Claims for defamation are subject to heightened pleading requirements.

The claimant must recite the defamatory statement verbatim “or with sufficient

particularity to enable the court to determine whether the statement was

defamatory.” Stutts v. Duke Power Co., 47 N.C. App. 76, 84, 266 S.E.2d 861, 866

(1980). In addition, the claimant “must state the time and place of the alleged

defamatory communication.” Esancy v. Quinn, No. 5:05CV26, 2006 U.S. Dist. LEXIS

8479, at *13 (W.D.N.C. Feb. 10, 2006); see also N.C. R. Civ. P. 9(f). In other words,

the relevant pleading must allege “who said what to whom, as well as when and

where the defamatory statements were made.” Gosnell v. Reid, No. 5:14CV179-RLV,

2015 U.S. Dist. LEXIS 96878, at *21 (W.D.N.C. July 24, 2015), aff’d by Gosnell v.

Catawba Cty., 646 F. App’x 318 (4th Cir. 2016). 33. Defendants base their defamation claim on two courses of conduct by

Addison Whitney: (1) that agents or employees of Addison Whitney stated to “its own

customers” and to companies that might “be interested in conducting business with

the Defendants that Defendants cannot be trusted to maintain the confidentiality of

the customers’ and companies’ sensitive business information”; and (2) that Addison

Whitney’s press release and Google AdWords search campaign mischaracterized the

Court’s preliminary-injunction Order. (Countercl. ¶¶ 72, 74.) Addison Whitney urges

the Court to dismiss the claim on the ground that these allegations are not sufficiently

particular. (Mem. in Supp. 8–9; Reply in Supp. of Pl.s’ Partial Mot. to Dismiss 6, ECF

No. 92.)

34. The first allegation—that Addison Whitney’s agents or employees stated

that Defendants cannot be trusted with confidential information—is facially

inadequate. Defendants do not identify the agents or employees who made the

allegedly defamatory statements, do not identify the individuals to whom the

statements were made, and fail to allege when or where the statements were made.

(See Countercl. ¶ 74.) The allegation lacks meaningful particularity and cannot

support the defamation claim. See, e.g., Wynn v. Tyrrell Cty. Bd. of Educ., No.

COA16-1130, 2017 N.C. App. LEXIS 358, at *8–9 (N.C. Ct. App. 2017) (unpublished)

(affirming dismissal of defamation claim when the plaintiff failed to identify “which

members of the Board made the allegedly defamatory statement” and did “not even

hint at the time or the place of the alleged defamatory statements”). 35. The allegations regarding Addison Whitney’s press release and Google

AdWords campaign, however, are sufficiently particular to state a claim for

defamation. Defendants expressly quote the allegedly false statements. (Counctercl.

¶¶ 52–53 (“Evidence further showed that the defendants accessed servers for the

purposes of furthering their competing business.”).) In addition, Defendants allege

that Addison Whitney is the speaker, the press release was made public “on May 1,

2017,” the “Google AdWords campaign went ‘live’ after issuance of the press release,”

and specific customers received the press release and internet ads. (Councercl. ¶¶ 55,

86, 87.) Thus, Defendants have alleged “who said what to whom, as well as when and

where the defamatory statements were made.” Gosnell, 2015 U.S. Dist. LEXIS

96878, at *21.

36. In its motion, Addison Whitney makes no argument—and the Court

therefore renders no decision—regarding whether the quoted statement is, in fact,

defamatory. Instead, Addison Whitney briefly argues that the defamation claim is

too “vague” and allowing it to proceed “would be chilling Addison Whitney’s free

speech rights guaranteed by the First Amendment and North Carolina’s Declaration

of Rights free speech protection.” (Mem. in Supp. 15.) In support, Addison Whitney

cites a federal district court case that dismissed a defamation claim on the ground

that the allegedly defamatory statement was “not subject to objective verification.”

Balt. Sports & Soc. Club, Inc. v. Sport & Soc., LLC, 228 F. Supp. 3d 544, 551 (D. Md.

2017) (quotation marks omitted). This rationale is inapplicable because the press

release quotation appears to be a factual statement subject to objective verification. 37. Accordingly, to the extent based on allegations related to the press release

and the associated Google AdWords campaign, Defendants’ defamation claim is

stated with sufficient particularity and is not so vague as to require dismissal on First

Amendment grounds. The Court denies Addison Whitney’s motion to dismiss the

claim for defamation.

C. Tortious Interference with Prospective Economic Advantage

38. Tortious interference with prospective economic advantage occurs when a

defendant, without justification, “induce[s] a third party to refrain from entering into

a contract with [the] [p]laintiff” that the third party would have entered into but for

the defendant’s interference. DaimlerChrysler Corp. v. Kirkhart, 148 N.C. App. 572,

585, 561 S.E.2d 276, 286 (2002). Thus, “an action for tortious interference with

prospective economic advantage may be based on conduct which prevents the making

of contracts.” Owens v. Pepsi Cola Bottling Co., 330 N.C. 666, 680, 412 S.E.2d 636,

644 (1992).

39. This claim is closely related to Defendants’ claim for defamation. As

alleged, Addison Whitney “has damaged and interfered with Defendants’ ability to

enter into business relationships” by issuing and publicizing the allegedly false press

release. (Countercl. ¶ 85.) According to Defendants, several prospective customers

“have cited the results of Addison Whitney’s Google AdWords campaign and the

information contained therein as their reason for not going forward with doing

business with the Defendants.” (Countercl. ¶ 86.)

40. Addison Whitney maintains, first, that the Court should dismiss this claim

because Defendants do not identify any specific customers or contracts. (Mem. in Supp. 10–11.) The Court disagrees. Defendants have identified six specific

companies, along with details regarding the business opportunities discussed with

each. (Defs.’ Resp. 19.) For example, according to Defendants, one “pharmaceutical

company in Massachusetts . . . was on the verge of committing to do business with

the Defendants” before discovering internet search results associated with Addison

Whitney’s Google AdWords campaign. (Countercl. ¶ 87.) As a result, “Defendants

lost this business opportunity.” (Countercl. ¶ 87.) These allegations, although not

highly detailed, are sufficient for purposes of Rule 12(b)(6).

41. Next, Addison Whitney argues that its conduct was justified as a matter of

law. According to Addison Whitney, Defendants are its competitors, and it is entitled

to take action “to maintain its relationships with its own customers.” (Mem. in Supp.

13 (emphasis omitted).)

42. The North Carolina Supreme Court has held that a defendant’s “actions

are privileged” when “acting for a legitimate business purpose.” Peoples Sec. Life Ins.

Co. v. Hooks, 322 N.C. 216, 221, 367 S.E.2d 647, 650 (1988). This includes ordinary

competition. Indeed, “[n]umerous authorities have recognized that competition in

business constitutes justifiable interference in another’s business relations and is not

actionable so long as it is carried on in furtherance of one’s own interests and by

means that are lawful.” Id.

43. In this circumstance, the Court cannot conclude that Addison Whitney’s

conduct was justified, as a matter of law, due to a competitive privilege. Specifically,

there is an open question as to whether Addison Whitney interfered with Defendants’ business relations “by means that are lawful.” Id. The Court has held that

Defendants’ defamation claim may proceed, and Defendants have alleged that some

third parties chose not to do business with Defendants because of the allegedly

defamatory press release and AdWords campaign. As a result, Defendants have

sufficiently alleged that Addison Whitney acted without justification. See K&M

Collision, LLC v. N.C. Farm Bureau Mut. Ins. Co., 2017 NCBC LEXIS 109, at *23

(N.C. Super. Ct. Nov. 21, 2017) (“[D]ismissal at the pleading stage is inappropriate

where questions of fact remain as to Defendants’ justification for interfering with

Plaintiff’s business relations.”); see also Cornelius v. DeLuca, 709 F. Supp. 2d 1003,

1020 (D. Idaho 2010) (“An act that is independently wrongful, such as defamation,

shows an absence of justification.”).

44. For these reasons, the Court denies Addison Whitney’s motion with respect

to the claim for tortious interference with prospective economic advantage.

D. Section 75-1.1

45. Finally, Addison Whitney asks the Court to dismiss Defendants’ section

75-1.1 claim “[b]ecause [if] Defendants’ abuse of process, defamation, and tortious

interference claims fail to state a claim upon which relief can be granted, so too does

their unfair and deceptive trade practices claim.” (Mem. in Supp. 16.) Thus,

according to Addison Whitney, if one of Defendants’ claims for abuse of process,

defamation, or tortious interference with prospective economic advantage survives,

then Defendants’ section 75-1.1 claim must also survive. Having denied the motion

to dismiss the claims for defamation and tortious interference, the Court also denies

the motion to dismiss Defendants’ section 75-1.1 claim. III. CONCLUSION

46. For these reasons, the Court GRANTS in part and DENIES in part

Addison Whitney’s Rule 12(b)(6) motion as follows:

a. The Court grants the motion as to the claim for abuse of process. The

claim is DISMISSED with prejudice.

b. The Court DENIES the motion as to the claim for defamation to the

extent it is based on allegations related to Addison Whitney’s press release

and Google AdWords campaign.

c. The Court DENIES the motion to dismiss the claims for tortious

interference with prospective economic advantage and unfair or deceptive

trade practices.

This the 1st day of December, 2017.

/s/ Adam M. Conrad Adam M. Conrad Special Superior Court Judge for Complex Business Cases