LY BERDITCHEV CORP. v. TRUSS COSMETICS CORP.

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

LY BERDITCHEV, CORP., Civ. No. 22-04242 (KM) (CLW)

Plaintiff,

OPINION

v.

TRUSS COSMETICS CORP. and LOMA

LICENCIAMENTO DE MARCAS LTDA,

Defendants.

KEVIN MCNULTY, U.S.D.J.:

This dispute arises out of the defendants’ submission of purportedly false

reports of trademark infringement to online retailer Amazon. The plaintiff has

sued the defendants for submitting false reports to Amazon once already; that

litigation was settled in April 2021. In June 2022, however, the defendants

allegedly submitted additional false reports of trademark infringement to

Amazon, which resulted in the removal of some of the plaintiff’s product

listings from the Amazon marketplace. The plaintiff brought this action in

response, and the defendants have moved to dismiss the complaint. (DE 10.)1

For the reasons set forth below, the motion to dismiss is DENIED.

1 Certain key items from the record will be abbreviated as follows:

DE = Docket entry in this case

Compl. = Complaint (DE 1)

Mot. = Defendants’ brief in support of motion to dismiss (DE 10-1)

Opp. = Plaintiff’s rief in opposition to motion to dismiss (DE 13)

Resp. = Defendants’ reply brief in further support of motion to dismiss (DE 16)

I. Background

Defendant Loma Licenciamento De Marcas ltda (“Truss Brazil”) is a

business entity organized and existing under the laws of Brazil. (Compl. ¶15.)

Truss Brazil manufactures and distributes hair care products, including

products sold under its registered trademarks. (Id. ¶2.) Defendant TRUSS

Cosmetics Corp. (“Truss USA”) is a Florida-based subsidiary of Truss Brazil.

(Id. ¶14.) Truss USA distributes trademarked Truss products in the United

States. (Id. ¶3.)

Plaintiff LY Berditchev, Corp. (“LYB”) is a New York corporation with a

principal place of business in New Jersey. (Id. ¶13.) LYB’s business consists of

purchasing consumer goods and reselling them at a profit. (Id. ¶29.) LYB

resells products through various channels, including its storefront on the

Amazon marketplace. (Id. ¶4.) LYB has sold products through its Amazon

storefront to hundreds of thousands of consumers. (Id. ¶31.)

The complaint alleges that in early 2021, Truss Brazil and Truss USA

(collectively, “Truss”) submitted false reports to Amazon alleging that LYB’s sale

of Truss products on Amazon violated Truss Brazil’s trademark rights. (Id. ¶6.)

According to LYB, Amazon has a policy of acting on virtually any notice of

intellectual property infringement, whether legitimate or not. (Id. ¶61.) An

intellectual property owner who submits a complaint to Amazon must declare

under penalty of perjury that the information contained in the complaint is

correct, but the company does not independently verify the accuracy of the

complaints it receives. (Id. ¶¶62, 68.) LYB claims that it only sells lawfully

acquired, authentic Truss products through its Amazon storefront and thus its

sales do not violate Truss’s intellectual property rights. (Id. ¶¶58-59.)

In response to the reports submitted by Truss, LYB earlier sued Truss in

this district for defamation, tortious interference with business relations, and

trade libel. (Id. ¶¶7-8.) See LY Berditchev Corp. v. Truss Cosmetics Corp. et al,

2:21-cv-03420. The parties entered into a settlement agreement to resolve that

dispute in April 2021. (Id. ¶9.)

As relevant here, the settlement agreement provides that Truss would “(1)

forever cease submitting, directly or indirectly, Reports to third-party

marketplaces, including Amazon, concerning LYB, LYB’s listings for Truss

Products, and/or Truss products sold by LYB; and (2) prevent its agents,

attorneys, licensees and distributors from submitting, directly or indirectly,

such Reports.” (Id. ¶36.) A liquidated damages clause in the agreement

requires Truss to pay LYB $50,000 per violation of that obligation. (Id. ¶37.)

On June 8, 2022, more than a year after the parties settled the prior

litigation, LYB received a notice from Amazon stating that Amazon had removed

its listings for a Truss product because of a report that “they may violate the

rights owner’s intellectual property.” (Id. ¶¶70-71.) Counsel for LYB contacted

counsel for Truss the following day to discuss the notices in relation to the

2021 settlement agreement. (Id. ¶82.) Counsel for Truss took the position that

the filing of the complaints referenced in the notices did not violate the terms of

the settlement agreement because the complaints did not target LYB

specifically. (Id. ¶83.) LYB received another message from Amazon two days

later notifying it that its listings for a different Truss product had been removed

based on a report of intellectual property infringement. (Id. ¶76.)

LYB alleges that the “false reports are part of an ongoing and continuous

course of conduct by [Truss] to interfere [with LYB’s] ability to resell Truss

products.” (Id. ¶81.) Moreover, according to LYB these efforts have succeeded.

LYB’s listings for certain Truss products have been suspended, resulting in an

immediate loss of revenue. (Id. ¶86.) The complaints have also damaged LYB’s

metrics and caused it to lose the Amazon “buy box” feature, which allows

consumers to add a product to their cart directly from the product page, on

many of its product listings. (Id. ¶97.)

LYB commenced this action in June 2022, seeking monetary and

injunctive relief, as well as a declaratory judgment. The complaint raises claims

of breach of contract, defamation, and tortious interference with business

relations. In August 2022, Truss moved to dismiss the entire complaint

pursuant to Fed. R. Civ. P. 12(b)(6).

II. Legal standard

Rule 12(b)(6) provides for the dismissal of a complaint if it fails to state a

claim upon which relief can be granted. The defendant, as the moving party,

bears the burden of showing that no claim has been stated. Animal Science

Products, Inc. v. China Minmetals Corp., 654 F.3d 462, 469 n.9 (3d Cir. 2011).

For the purposes of resolving a Rule 12(b)(6) motion to dismiss, the court must

accept the facts alleged in the complaint as true and draw all reasonable

inferences in favor of the plaintiff. New Jersey Carpenters & the Trustees

Thereof v. Tishman Const. Corp. of New Jersey, 760 F.3d 297, 302 (3d Cir.

2014).

The Federal Rules of Civil Procedure do not require that a complaint

contain detailed factual allegations. See Fed. R. Civ. P. 8(a). Nevertheless, “a

plaintiff’s obligation to provide the ‘grounds’ of his ‘entitlement to relief’

requires more than labels and conclusions, and a formulaic recitation of the

elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S.

544, 555 (2007); see Phillips v. Cnty. of Allegheny, 515 F.3d 224, 232 (3d Cir.

2008) (Rule 8 “requires a ‘showing’ rather than a blanket assertion of an

entitlement to relief.” (citation omitted)). Thus, the complaint’s factual

allegations must be sufficient to raise a plaintiff’s right to relief above a

speculative level, so that a claim is “plausible on its face.” Twombly, 550 U.S.

at 570. That facial-plausibility standard is met “when the plaintiff pleads

factual content that allows the court to draw the reasonable inference that the

defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662,

678 (2009) (citing Twombly, 550 U.S. at 556).

III. Discussion

A. Breach of contract

Count 1 of the complaint alleges that Truss violated its obligation under

the settlement agreement to cease filing reports to Amazon “concerning [LYB],

[LYB’s] listings for Truss products, and/or Truss products sold by [LYB].”

(Compl. ¶44.) Truss argues that this count should be dismissed because the

complaint shows that the reports submitted by Truss to Amazon in June 2022

were not specific to LYB or LYB’s listings for Truss products. (Mot. 18-21.)

Much of Truss’s argument is premised on more than ten pages of

background information it included in its moving brief regarding the Amazon

platform and Amazon’s policies for third-party sellers. (Mot. 1-16.) This

information is extrinsic to the complaint and cannot be considered at the

motion to dismiss stage. Cf. In re Rockefeller Ctr. Properties, Inc. Sec. Litig., 184

F.3d 280, 287 (3d Cir. 1999) (discussing the “narrowly defined types of

material” a court can consider on a motion to dismiss). Nonetheless, because

Truss’s argument is more comprehensible in light of this background

information, I will provide a brief summary here.

According to Truss, every product sold on the Amazon platform has a

dedicated “Product Detail Page” (“PDP”), and each PDP is associated with a

unique Amazon Standard Identification Number, or “ASIN.” (Mot. 1-2.) Amazon

does not allow multiple ASINs for the same product to exist on its platform, nor

does it allow a specific product to be sold on the Amazon platform anywhere

aside from the product’s dedicated PDP. (Id.) As a result, every third-party

seller who wishes to offer a specific product must list its offer on the same PDP

and associate it with the same ASIN. Pursuant to Amazon’s “Duplicate ASIN

creation policy,” creating a new ASIN when the product already exists in

Amazon’s catalog is prohibited and can result in a seller’s privileges being

temporarily suspended or permanently removed. (Id. 3.)

Truss claims that it recently learned that an unknown party had created

“duplicate listings” for nineteen Truss products sold on Amazon. (Id. 5.) In

other words, Truss products were apparently being offered on Amazon under

ASINs that were duplicative of preexisting ASINs for those products, in violation

of Amazon’s “Duplicate ASIN creation policy.” According to Truss, when a rights

owner reports allegations of trademark infringement to Amazon, the owner has

the option of reporting a specific third-party seller offer or just reporting the

offending PDP/ASIN. (Id. 9.) Truss claims that the reports it submitted in June

2022 cited the entire PDP/ASIN for nineteen Truss products, rather than

targeting LYB’s offers for any of those products. Consequently, Truss argues,

LYB has failed to plausibly allege that Truss breached its obligations under the

settlement agreement. (Id. 12.)

Although Truss insists that the complaint “clearly shows that the actions

taken by Truss were not specific to” LYB, that is far from clear. (Mot. 18-19.)

Truss points out that the notifications LYB received from Amazon regarding the

reports, which LYB reproduced in the complaint, contain what is referred to as

“[t]he rights owner communication about the alleged violation.” That section of

the notifications reads as follows:2

Rights owner communication:

The identified listings are using our client’s trademark unlawfully

in the title and descriptions.

ASIN: B08B4VCFLX

Violation type: Intellectual property (Product Detail Page, Product

Packaging, Word Mark, Logo & Design)

Intellectual property number: 4738823

Complaint ID: 10193520851

(Compl. ¶¶70, 76.) Truss argues that the “rights owner communication” section

of the notifications demonstrates that the reports Truss submitted to Amazon

pertained to an entire product detail page, rather than a specific seller’s listing.

(Mot. 19.) That is not self-evident, however. The notifications refer to “identified

listings” as well as “Product Detail Pages.” In addition, the notifications state

elsewhere that Amazon “received a report from a rights owner alleging that one

or more of [LYB’s] listings may be violating the intellectual property rights of

others.” (Compl. ¶¶70, 76.) (Emphasis added.)

In the absence of a developed factual record concerning Amazon’s report-

filing policies and infringement notification procedures, I cannot say whether

Truss’s interpretation of the notifications are correct, i.e. whether Truss

2 The notifications LYB received on June 8, 2022 and June 11, 2022 are almost

identical, except for the ASINs and Complaint IDs listed.

reported entire PDP/ASINs for infringement or whether Truss targeted LYB’s

listings. Resolution of this issue requires discovery.

In any event, even if Truss did report entire product detail pages for

trademark infringement and did not identify LYB’s listings specifically, it is not

clear that such behavior would not violate the terms of the parties’ settlement

agreement. The agreement prohibits Truss from submitting reports to Amazon

“concerning LYB, LYB’s listings for Truss Products, and/or Truss products sold

by LYB.” (Compl. ¶36.) The agreement defines a “report” as “a request to

remove and or/delist Truss Products for violation(s) of Truss’s intellectual

property or Amazon’s policies, including authenticity, packaging, condition, or

description of Truss products.” (Id. ¶36.) LYB argues that this language was

intended to prevent Truss from submitting any reports related to LYB,

including reports against an entire product detail page that contains LYB’s

listings. (Opp. 10.) Truss, on the other hand, takes the position that the

language prohibits only the submission of reports that directly target LYB’s

listings.

Settlement agreements are interpreted in accordance with basic contract

principles. See In re Diet Drugs (Phentermine/Fenfluramine/Dexfenfluramine)

Prod. Liab. Litig., 706 F.3d 217, 223 (3d Cir. 2013) (citing In re Cendant Corp.

Prides Litig., 233 F.3d 188, 193 (3d Cir. 2000)). Thus, when interpreting a

provision in a settlement agreement, the “polestar” is the intention of the

parties as revealed by the language used. See Biovail Corp. Int'l v. Hoechst

Aktiengesellschaft, 49 F. Supp. 2d 750, 774 (D.N.J. 1999) (citing Halper v.

Halper, 164 F.3d 830, 840 (3d Cir. 1999)). When the language of the provision

is “clear and unambiguous, its meaning ‘must be determined from the four

corners’” of the agreement. In re Diet Drugs, supra (quoting Glenn Distribs. Corp.

v. Carlisle Plastics, Inc., 297 F.3d 294, 300 (3d Cir.2002)). If the language is

ambiguous, however, “a court may look to extrinsic evidence to resolve the

ambiguity and determine the intent of the parties.” Glenn Distribs., 297 F.3d at

300. Contract language is ambiguous where it is “susceptible of more than one

meaning,” or “if it is subject to reasonable alternative interpretations.” United

States v. Pantelidis, 335 F.3d 226, 235 (3d Cir. 2003) (citations omitted).

While Truss insists on a narrow construction of the relevant provision,

LYB argues that the provision was “meant to be broad,” so that Truss would no

longer interfere with LYB’s relationship with Amazon or its merchant account.

(Opp. 9.) LYB explains that the agreement does not prohibit Truss from raising

concerns of trademark infringement with LYB individually or in state or federal

court; it merely takes “the Amazon reporting tools off the table” because Truss

“could not be trusted to use these tools in good faith.” (Id.) LYB argues that this

was a critical provision of the settlement agreement and that it never would

have entered into the agreement without this commitment by Truss. (Id.)

Courts in this district have routinely denied motions to dismiss breach of

contract claims where the meaning of contract terms is uncertain and

discovery will aid the Court in ascertaining the parties’ objective intent. See,

e.g., Blackberry Ltd. v. PCS Wireless LLC, No. 15-1070 (KM), 2016 WL 1313161,

at *4 (D.N.J. Apr. 4, 2016); S. Gas, Inc. v. Exxonmobil Oil Corp., No. 09-CV-

6236, 2016 WL 816748, at *9 (D.N.J. Feb. 29, 2016); Biovail, 49 F. Supp. 2d at

775. I will follow suit here, as it is too early to determine whose interpretation

of the relevant provision is correct, and LYB has “set forth a compelling

argument” that Truss’s “narrow interpretation would conflict with what it

asserts was the purpose of the [s]ettlement [a]greement.” Biovail, supra.

Moreover, discovery is necessary to determine whether Truss did in fact report

entire product detail pages to Amazon or whether it reported LYB’s listings

specifically. For both reasons, I will allow LYB’s breach of contract claim to

proceed. The motion to dismiss Count 1 is denied.

B. Declaratory judgment

In Count 2, Truss seeks a declaration that LYB has not infringed any

valid intellectual property rights of Truss. Truss argues that LYB is not entitled

to declaratory relief because there is no controversy between the parties. (Opp.

22.)

“The Declaratory Judgments Act provides that a court ‘may’ declare the

rights and other legal relations of any interested party seeking such

declaration.” Zimmerman v. HBO Affiliate Grp., 834 F.2d 1163, 1170 (3d Cir.

1987) (citing 28 U.S.C. § 2201). To warrant issuance of a declaratory judgment,

“[t]here must be a substantial controversy between parties having adverse legal

interests of sufficient immediacy and reality.” Id. “The fundamental test is

whether the plaintiff seeks merely advice or whether a real question of

conflicting legal interests is presented for judicial determination.” Id.

The complaint demonstrates that LYB does not simply seek advice about

whether its activities constitute trademark infringement. To the contrary, LYB

has been accused of infringement and seeks to clear its name of these

accusations. The complaint alleges that, as a result of the reports submitted by

Truss in June 2022, LYB’s listings for certain Truss products have been

suspended and it is no longer permitted to use the Amazon “buy box” feature

on some of its product listings. (Compl. ¶¶86, 97.) A declaration that LYB has

not infringed on Truss’s trademarks might prompt Amazon to permit LYB to

resume selling the de-listed Truss products and to use the “buy box” feature

once again. Accordingly, the dispute is of “sufficient immediacy and reality” to

warrant issuance of a declaratory judgment. See Home Racer LLC v. AKRacing

Am., Inc., No. 2081854CVMIDDLEBROOK, 2021 WL 3419239, at *2 (S.D. Fla.

May 12, 2021) (denying motion to dismiss plaintiff’s claim for a declaration that

its sale of products on Amazon did not constitute trademark infringement or

counterfeiting). See also Square One Ent. Inc. v. Partnerships & Unincorporated

Associations Identified in Schedule "A", No. 20 C 5685, 2021 WL 1253450, at *3

(N.D. Ill. Apr. 5, 2021) (denying motion to dismiss counterclaims for declaratory

judgment because “a claim that a defendant sells counterfeit goods is serious

and can affect the defendant's business beyond the particular case”).

The controversy as alleged is sufficiently concrete to set forth a viable

claim for a declaratory judgment. The motion to dismiss Count 2 is denied.

C. Tortious interference with business relations

In Count 3 of the complaint, LYB asserts that Truss intentionally and

improperly interfered with LYB’s business relationship with Amazon by

notifying Amazon that LYB was selling infringing products. (Compl. ¶¶107-

120.) Truss argues that this claim fails because the complaint does not allege

sufficient facts to show that Truss acted willfully and because Truss’s reports

to Amazon are protected by the New Jersey litigation privilege and the Noerr-

Pennington doctrine. (Mot. 26-29.) As Truss argues that the litigation privilege

and Noerr-Pennington doctrine also prevent LYB from succeeding on its

defamation claim, I will reserve analysis of those issues for Parts III.E and III.F

of the opinion.

“The common law cause of action for tortious interference with a

prospective economic advantage ‘protects the right to pursue one's business,

calling, or occupation free from undue influence or molestation.’” Trans USA

Prod., Inc. v. Howard Berger Co., No. CIV. A. 07-5924 (JAP), 2008 WL 3154753,

at *7 (D.N.J. Aug. 4, 2008) (quoting Lightning Lube, Inc. v. Witco Corp., 4 F.3d

1153, 1167 (3d Cir. 1993)). To state a claim for tortious interference under New

Jersey law, a plaintiff must allege: (1) an “existing or reasonable expectation of

economic benefit or advantage; (2) the defendant's knowledge of that

expectancy; (3) the defendant's wrongful, intentional interference with that

expectancy; (4) the reasonable probability that the plaintiff would have received

the anticipated economic benefit in the absence of interference; and (5)

damages resulting from the defendant's interference.” Trans USA, supra, at *7-

8 (citing Lightning Lube, supra).

Truss argues that LYB’s tortious interference claim fails on the third

element, as LYB’s allegations “do not assert any intentional acts by Truss” to

interfere with LYB’s relationship and Truss did not target LYB specifically.

(Mot. 28.) I have already addressed the latter argument and have concluded

that it is not suitable for resolution on a motion to dismiss. As to the former

argument, the complaint alleges that Truss submitted the June 2022 reports

not because it had a good faith belief that LYB was infringing on its

trademarks, but for the anticompetitive purpose of impeding LYB’s ability to

lawfully resell Truss products. (Compl. ¶93.) This allegation is made plausible

by the facts included in the complaint regarding Amazon’s procedure for

handling trademark infringement reports, as well as LYB’s prior suit against

Truss for filing false reports, which ended in a settlement. Of course, discovery

may reveal that Truss filed the June 2022 reports as a legitimate means to

protect its trademark, but at this time I must take the facts alleged in the

complaint as true. Doing so, I find that LYB has stated a claim for tortious

interference with business relations. The motion to dismiss Count 3 on

grounds other than immunity/privilege, see infra, is denied.

D. Defamation

In Count 4 of the complaint, LYB asserts that Truss defamed LYB by

publishing false statements about it to Amazon. (Compl. ¶¶121-135.) Again,

Truss responds that its reports “unambiguously did not accuse [LYB] of

anything but rather w[ere] referencing two ASINs”—an argument that I will

reject at this stage of the litigation. (Mot. 24-25.) Truss argues in addition that

the complaint fails to allege the actual defamatory statements that it made to

Amazon, and that the litigation privilege and Noerr-Pennington doctrine shield

Truss from liability on the basis of the reports.

“To establish defamation under New Jersey law, a plaintiff must show

[that] the defendant (1) made a false and defamatory statement concerning the

plaintiff, (2) communicated the statement to a third party, and (3) had a

sufficient degree of fault. Mangan v. Corp. Synergies Grp., Inc., 834 F. Supp. 2d

199, 204 (D.N.J. 2011) (citing Singer v. Beach Trading Co., 379 N.J. Super. 63,

79 (App. Div. 2005)). “A defamatory statement is one that is false and 1) injures

another person's reputation; 2) subjects the person to hatred, contempt or

ridicule; or 3) causes others to lose good will or confidence in that person.”

Dendrite Int'l, Inc. v. Doe No. 3, 342 N.J. Super. 134, 158 (App. Div. 2001)

(citing Romaine v. Kallinger, 109 N.J. 282, 289 (1988)).

Although LYB’s defamation claim is brought under New Jersey law, the

federal pleading standard governs the sufficiency of the claim. See Mangan,

834 F. Supp. at 203. Under Fed. R. Civ. P. 8, “pleadings are to be ‘liberally

construed,’ and alerting the defendant of the allegations made against him is

generally sufficient.” Id. (citing Palladino ex rel. U.S. v. VNA of S. N.J., Inc., 68 F.

Supp. 2d. 455, 475 (D.N.J.1999)). Thus, “[a]ccording to Rule 8, a defamation

pleading does not need to cite precise defamatory statements, it must only

provide notice to the other party of the allegations made against him.” Cristelli

v. Filomena II, Inc., No. CIV. A. 99-2862 JEI, 1999 WL 1081290, at *3 (D.N.J.

Dec. 1, 1999).

Here, LYB reproduced the notifications it received from Amazon about

Truss’s reports in the complaint. Those notifications are representative of the

content of the reports; they reveal that Truss informed Amazon of infringing

activities, which then caused Amazon to determine that LYB’s listings “may

violate [Truss’s] intellectual property.” (Compl. ¶76.) That is sufficient to put

Truss on notice of the claim against it.

Moreover, LYB points out that it is not privy to the full reports submitted

by Truss to Amazon. (Opp. 16.) For this reason as well, I will allow the claim to

proceed to discovery. The motion to dismiss Count 4 on grounds other than

immunity/privilege, see infra, is denied.

E. Litigation privilege

I now turn to Truss’s immunity/privilege defenses, beginning with the

litigation privilege. “The litigation privilege generally protects an attorney from

civil liability arising from words [the attorney] has uttered in the course of

judicial proceedings.” Loigman v. Twp. Comm. of Twp. of Middletown, 185 N.J.

566, 579 (2006). The privilege applies to any communication “‘(1) made in

judicial or quasi-judicial proceedings; (2) by litigants or other participants

authorized by law; (3) to achieve the objects of the litigation; and (4) that have

some connection or logical relation to the action.’” Id. at 585 (quoting Hawkins

v. Harris, 141 N.J. 207, 216 (1995).

Truss argues that the reports it submitted to Amazon in June 2022 are

shielded by the litigation privilege and thus cannot serve as the basis for

liability for defamation or for tortious interference with business relations.

(Mot. 25, 27.) I disagree, as the reports were neither made in connection

with a judicial or quasi-judicial proceeding, nor were they made to achieve the

objects of the litigation.

True, “New Jersey law does not limit the privilege to statements made in

a courtroom during trial but extends the privilege to such statements made

during settlement negotiations, private conferences with an attorney regarding

litigation, and discussions between an investigator-defendant and a witness

made during the course of a personal injury litigation.” Source Ent. Grp. v.

Baldonado & Assocs., P.C., No. CIV A 06-2706 JBS, 2007 WL 1580157, at *7

(D.N.J. May 31, 2007). See Hawkins, 141 N.J. at 216; Ruberton v. Gabage, 280

N.J. Super. 125, 132–34 (App. Div. 1995); Middlesex Concrete Prods. &

Excavating Corp. v. Carteret Indus. Ass'n, 68 N.J. Super. 85, 92 (App. Div.

1961). Here, however, these reports were made before this litigation

commenced and long after the prior litigation between the parties had been

resolved. They were therefore not made in connection with any judicial

proceeding. See D & D Assocs., Inc. v. Bd. of Educ. of N. Plainfield, No. CIV.A.

03-1026MLC, 2007 WL 4554208, at *21, n.13 (D.N.J. Dec. 21, 2007), aff'd, 552

F. App'x 110 (3d Cir. 2014) (declining to “extend the privilege to all situations

where the relationship between the parties is contentious or adversarial, and it

is possible that one of the parties will commence an action in the future.”)

In addition, Truss’s reports to Amazon were not made to achieve the

object of the present litigation. Taking the facts alleged in the complaint as

true, the reports were made to interfere with LYB’s business relationship with

Amazon. But even if the reports were made for the legitimate purpose of

reporting infringement, the privilege still would not apply, as it is not an object

of the present litigation to enjoin LYB from infringing activities or to obtain

damages from LYB for past infringement. The lawsuit at hand was commenced

by LYB, not by Truss, and Truss has not raised any counterclaims for

trademark infringement.

In a case involving a similar set of facts, another court in this district

rejected the counterclaim defendant’s argument that it was immune from

liability for statements made to Amazon about the counterclaim plaintiff’s

alleged intellectual property infringement because the statements were “not

sent in connection with a judicial proceeding and not intended to achieve the

objects of any litigation.” See Hotaling & Co., LLC v. LY Berditchev Corp., No.

20-cv-16366, 2022 WL 1134851, at *2-3 (D.N.J. Apr. 18, 2022) (quotation

omitted). There, unlike here, the counterclaim defendant had brought claims

based on the allegedly infringing activities of the counterclaim plaintiff. Even

so, the Court declined to apply the litigation privilege because it was not

evident that the counterclaim defendant was “contemplating litigation at the

time the statements at issue were made.” Id. at *3. Given that Truss has not

brought any claims against LYB based on LYB’s allegedly infringing activities, it

is even more apparent that the litigation privilege does not apply in this case.

The litigation privilege is therefore rejected as a basis for dismissal of Count 3

or Count 4.

F. Noerr-Pennington doctrine

A cousin of the litigation privilege, the Noerr-Pennington doctrine “shields

constitutionally protected conduct from civil liability, absent certain

exceptions.” Campbell v. Pennsylvania Sch. Boards Ass'n, 972 F.3d 213, 218

(3d Cir. 2020). “Rooted in the First Amendment and fears about the threat of

liability chilling political speech, the doctrine was first recognized in two

Supreme Court cases holding federal antitrust laws inapplicable to private

parties who attempted to influence government action—even where the

petitioning had anticompetitive effects.” A.D. Bedell Wholesale Co. v. Philip

Morris Inc., 263 F.3d 239, 250 (3d Cir. 2001). Since then, the doctrine has been

applied on a limited basis outside of the antitrust context. Ontel Prod. Corp. v.

Zuru LTD., No. 17CV3658PGSLHG, 2017 WL 4444198, at *2 (D.N.J. Oct. 5,

2017) (citing We, Inc. v. City of Philadelphia, 174 F.3d 322, 326–27 (3d Cir.

1999)). “The immunity reaches not only to petitioning the legislative and

executive branches of government,” but also to petitioning the judiciary. A.D.

Bedell, supra.

“Generally, in order to receive Noerr–Pennington immunity, [a defendant]

must have petitioned the government for redress.” Ontel Prod., 2017 WL

4444198, at *2 (citing AD Bedell, 263 F.3d at 250). Truss argues, however, that

courts in other jurisdictions have applied the doctrine to defendants who

submitted intellectual property infringement notices to Amazon on the ground

that such notices are equivalent to conduct incidental to a lawsuit, including a

pre-suit demand letter. (Mot. 26.) In line with those decisions, Truss urges the

Court to consider the reports it submitted to Amazon in June 2022 as

protected petitioning activity that cannot serve as the basis for liability.

Truss relies on two unpublished cases from the Ninth Circuit in which

the Noerr-Pennington doctrine was applied to bar claims based on infringement

notices sent to Amazon. See Hard2Find Accessories, Inc. v. Amazon.com, Inc.,

691 F. App'x 406, 407 (9th Cir. 2017); Fitbit, Inc. v. Laguna 2, LLC, No. 17-CV-

00079-EMC, 2018 WL 306724, at *9 (N.D. Cal. Jan. 5, 2018). These out-of-

circuit cases are not binding on this Court, nor are they even binding on courts

in the Ninth Circuit. See Ninth Circuit Rule 36-3(a) (“Unpublished dispositions

and orders of this Court are not precedent.”) In any event, these cases are at

odds with a more recent Ninth Circuit decision in which the Court refused to

apply the Noerr-Pennington doctrine to infringement complaints sent to

Amazon. Thimes Solutions, Inc. v. TP Link USA Corp., No. 21-55407, 2022 WL

1125628, at *2 (9th Cir. Apr. 15, 2022). The Court reasoned that, although the

doctrine has been extended to “encompass prelitigation settlement demands

and cease-and-desist letters sent to potential defendants,” there is “no

justification to apply” it to communications “delivered solely to a third party

and which did not propose or threaten litigation.” Id.

Another recent decision from within Ninth Circuit came to the same

conclusion as Thimes. In Golden Eye Media USA, Inc. v. Trolley Bags UK Ltd,

the U.S. District court for the Southern District of California explained:

Amazon is a corporation; it is not part of the government. As a

result, there is no constitutionally protected right to “petition”

Amazon for a redress of grievances. Plaintiff's lawsuit, alleging that

Defendants’ petitioning conduct was unlawful does not infringe on

any of Defendants’ constitutionally protected rights. Even though

Defendants have a constitutionally protected right to petition the

government (via the courts), see, e.g., Citizens United v. Fed.

Election Comm'n, 558 U.S. 310, 341-42, 130 S.Ct. 876, 175

L.Ed.2d 753 (2010) (concluding that corporations have speech

rights under the First Amendment), they do not have a

constitutionally protected right to petition Amazon or have that

petitioning conduct save them from liability in a lawsuit regarding

that petitioning conduct.

525 F. Supp. 3d 1145, 1241 (S.D. Cal. 2021), motion to certify appeal granted,

No. 3:18-CV-02109-BEN-LL, 2021 WL 2072382 (S.D. Cal. May 24, 2021), and

aff'd sub nom. Golden Eye Media USA, Inc. v. Evo Lifestyle Prod. Ltd., No. 2021-

2096, 2022 WL 2232517 (Fed. Cir. June 22, 2022).

I find the reasoning of Golden Eye and Thimes persuasive. In the absence

of Third Circuit authority to the contrary, I will not extend Noerr-Pennington

immunity to Truss’s infringement reports to Amazon. Amazon is not the

government; there is no right to petition Amazon with which a civil lawsuit

would interfere; and in this particular case, the reports cannot be conceived of

as pre-litigation communications because Truss has not filed infringement

claims against LYB in any court. See Ontel Prod., 2017 WL 4444198, at *3

(Noerr-Pennington doctrine did not apply to false allegations of patent

infringement made to Walmart where defendants never “petitioned the

government for any redress for purported interference with ‘intellectual

property rights’”).

Even assuming arguendo that Noerr-Pennington has some application,

LYB might still invoke an exception to that doctrine for “sham” litigation that

seeks to “take advantage ‘of governmental process—as opposed to

the outcome of that process—as an anticompetitive weapon.’” Campbell, 972

F.3d at 218 (quoting Cheminor Drugs, Ltd. v. Ethyl Corp., 168 F.3d 119, 123 (3d

Cir. 1999)) (emphasis in original). At this stage of the litigation, I must accept

as true LYB’s allegation that Truss’s accusations of infringement “were for the

improper purpose of suppressing competition” (Compl. ¶115.) Accordingly, even

if Truss had a constitutionally protected right to petition Amazon, I would not

dismiss LYB’s claims on the ground of Noerr-Pennington immunity at this time.

See Otsuka Pharm. Co. v. Torrent Pharms. Ltd., Inc., 118 F. Supp. 3d 646, 657

(D.N.J. 2015) (inquiry into whether litigation is a sham turns upon inherently

factual issues of reasonableness and intent “which cannot be resolved in the

context of a motion to dismiss, and prior to discovery”). Noerr-Pennington is

therefore rejected as a basis for dismissal of Count 3 or Count 4.

E. Damages

Finally, Truss makes two arguments related to the sufficiency of the

allegations regarding damages. First, Truss argues that the pleadings “do not

set forth . . . how [LYB] was injured” (Mot. 24) and asserts that LYB’s damages

are “speculative in nature” (Resp. 4). I disagree. In a section of the complaint

entitled “Harm to plaintiff,” LYB outlines how it has been harmed by Truss’s

actions. It explains that its “listings related to Truss products were suspended,

resulting in an immediate loss of revenue;” its “performance metrics were

irreparably damaged;” and it lost the buy box feature on many of its product

listings. (Compl. ¶¶86-97.) That LYB did not allege the specific dollar amounts

lost does not render its damages speculative. See Tessmar v. Grosner, 23 N.J.

193, 203, 128 A.2d 467, 472 (1957) (damages are speculative where there is

uncertainty “as to the fact of damage and not as to its amount”).

Second, Truss argues in its reply brief that LYB has not shown that

Truss’s actions were the sole cause of any damages. (Resp. 4-6.) Although this

argument was not raised in Truss’s moving papers, I will address it.

To start, Truss does not indicate which of LYB’s claims its causation

argument applies to, but based on the cases Truss cites, it appears that the

argument may be directed towards the breach of contract claim. A breach of

contract claim under New Jersey law requires “(1) the existence of a valid

contract between the parties; (2) failure of the defendant to perform its

obligations under the contract; and (3) a causal relationship between the

breach and the plaintiff's alleged damages.” Mid-Am. Salt, LLC v. Morris Cnty.

Coop. Pricing Council, 964 F.3d 218, 226 (3d Cir. 2020) (citing Sheet Metal

Workers Int'l Ass'n Local Union No. 27, AFL-CIO v. E.P. Donnelly, Inc., 737 F.3d

879, 900 (3d Cir. 2013)).

Truss argues that the Court should apply the “but for” test of causation,

which requires the non-breaching party to show that but for the breach, the

damages alleged would not have been suffered. (Resp. 6.) Yet Truss has not

cited any New Jersey authority to support this argument; all of the cited cases

are from the Federal Circuit.3 Moreover, as Truss itself recognizes, causation is

generally a question of fact, not suitable for resolution on a motion to dismiss.

(Id. 5.) Even assuming arguendo that the but-for test applies, discovery is

necessary to ascertain whether other forces caused Amazon to remove LYB’s

listings for Truss products, or whether Truss’s actions were the but-for cause

of this injury. In the meantime, LYB’s claims will not be dismissed for failure to

allege damages.

IV. Conclusion

For the reasons set forth above, the motion to dismiss (DE 10) is

DENIED. An accompanying order will issue.

Dated: January 19, 2023

/s/ Kevin McNulty

______________________________

KEVIN MCNULTY

United States District Judge

3 Actually, certain of the cases Truss names are not accompanied by a full

citation, and the Court is not inclined to track down the jurisdiction or jurisdictions,

from which they issued. The analysis is not affected.