Reserve Real Estate Group, Inc. v. Precision Wound Care LLC

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF PENNSYLVANIA

RESERVE REAL ESTATE GROUP, : CIVIL ACTION NO. 1:25-CV-641

INC. d/b/a MEDTEK SOLUTION, :

: (Judge Neary)

Plaintiff & :

Counterclaim :

Defendant :

:

v. :

:

PRECISION WOUND CARE LLC, :

and GARY RYAN, as managing :

member and individually, :

:

Defendants, :

Counterclaim :

Plaintiffs & :

Third-Party :

Plaintiffs :

:

v. :

:

GABE DIETRICH and SOPHIA :

MATSANGAKIS, :

:

Third Party :

Defendants :

MEMORANDUM

This case arises from a hotly disputed contract termination between

companies working in the wound care industry. Plaintiff and counterclaim

defendant Reserve Real Estate Group d/b/a MedTek Solution (“MedTek”) and third

party defendants Gabe Dietrich and Sophia Matsangakis (collectively, the “MedTek

Parties”) move: (1) to dismiss the first amended counterclaims and third party

complaint (the “FAC”) filed by defendants, counterclaim plaintiffs, and third-party

plaintiffs Precision Wound Care LLC (“Precision”) and Gary Ryan (collectively, the

“Precision Parties”), (2) to strike certain paragraphs of the FAC as well as the FAC’s

request for punitive damages and references to allegedly “malicious, willful,

wanton, and reckless” conduct, and (3) to stay discovery pending resolution of these

motions. (Docs. 53, 63, 66). Additionally, in their reply brief, the MedTek parties

challenge this courts subject matter jurisdiction on the basis of Federal Rule of Civil

Procedure 17. (Doc. 83). The court, concluding it has subject matter jurisdiction

over the counterclaims, will grant in part and deny in part the MedTek Parties’

motion to dismiss, will deny the motion to strike, and will deny the motion to stay

discovery as moot.

I. Factual Background & Procedural History

a. Complaint and FAC

As alleged in the complaint,1 MedTek is the fictious name of a Pennsylvania

corporation that assists medical equipment manufacturers with locating medical

providers who need the manufacturers’ products and with selling those products to

the providers. (Doc. 2-1 ¶¶ 12-14). The manufacturer and provider contract directly

with each other, the manufacturers ship the products directly to the providers, and

the providers pay the manufacturers directly, with MedTek providing contract

management services and receiving a referral commission from the manufacturers.

(Id. ¶¶ 13-15). Typically, the providers pay for the products through reimbursements

1 The court includes the allegations from MedTek’s complaint only for the

purpose of providing context to the dispute. The allegations are not considered for

purposes of the pending motion to dismiss.

from insurance companies, Medicare, or Medicaid, though they are obligated to pay

for the products regardless of the reimbursement status. (Id. ¶¶ 18-19). As is also

typical in the industry, MedTek relies on sales representatives who are independent

contractors to solicit providers and then sell the manufacturers products to the

providers on behalf of MedTek. (Id. ¶¶ 20-21). MedTek regularly communicates with

the sales representatives to ensure timely payment is made to the manufacturers, as

MedTek receives a commission from the manufacturer, and in turn pays a

commission to the sales representatives. (Id. ¶¶ 23-25).

Gabe Dietrich is the president of MedTek and Sophia Matsangakis is its

managing partner. (Id. ¶¶ 10-11). On August 9, 2024, MedTek entered into an

independent contractor agreement with the Andelle Group LLC, a Wyoming

company that also operates in the wound care industry and is owned and managed

by Gary Ryan. (Id. ¶¶ 26-27). On October 3, 2024, MedTek entered into an

independent contractor agreement with Precision, a Delaware limited liability

company also owned and managed by Ryan, and signed by Ryan, which superseded

the agreement between MedTek and Andelle. (Id. ¶¶ 28-29). Under the terms of the

agreement, Precision would sell and market products from manufacturers with

whom MedTek had a relationship in exchange for a commission. (Id. ¶ 31). The

October 3 agreement included, among other provisions, that the parties agreed to

comply with all applicable laws and that “no part of the Fees, pricing, or

consideration paid hereunder is intended for the recommending or arranging for

impermissible referral of business or the ordering of items or services; nor are the

payments intended to induce illegal referrals of business.” (Id. ¶¶ 36-37).

On February 7, 2025, Dietrich sent an email to Ryan regarding provider

accounts that had past due balances owed to manufacturers and inquired as to

when the providers would pay. (Id. ¶¶ 42-43). Dietrich followed up with Ryan by

email on February 12, 2025, inquiring about specific accounts with past due

balances. (Id. ¶ 44). The next day, Ryan allegedly responded that each provider

intended to pay and that he “would also be willing to make some good faith

payments/escrow on [the providers’] behalf if it is a manageable amount as I have

confidence in the providers as well.” (Id. ¶ 45). Dietrich responded on February 19,

2025, that Ryan’s suggested payments on the providers’ behalf “would be a

compliance violation and completely unacceptable. MedTek would need to

terminate our contract immediately if there were any such activities taking place or

we were made aware of such activities.” (Id. ¶ 46). Ryan indicated that it was “an

idea, not fully thought out at all or discussed with anyone else.” (Id. ¶ 47). However,

MedTek alleges it uncovered that Ryan had indeed made this offer directly to one

provider, and on March 17, 2025, it terminated its agreement with Precision. (Id. ¶¶

48-49). Additionally, the termination letter sent from MedTek to Precision stated

that “[d]ue to the nature of this termination and in accordance with the terms of

your Agreement, no further commissions or payments will be due or owing to your

company.” (Id. ¶ 58).

On March 18, 2025, Ryan emailed all Precision sales representatives

informing them of the contract termination due to an alleged violation of law, that

MedTek was withholding commissions owed to them, and that MedTek and Sophia

“have essentially stolen from us.” (Id. ¶¶ 65-68). Since then, Ryan has allegedly

contacted Precision sales representatives and told them not to work for MedTek

and has told providers they do not have to pay the manufacturers. (Id. ¶¶ 71-77).

MedTek filed a writ of summons in the Court of Common Pleas of

Cumberland County on March 24, 2025. (Doc. 2-1 at ECF 4). On April 9, 2025,

MedTek filed a complaint in the same court. (Doc. 2-1 at ECF 8-45). Precision

removed the case to this court on April 10, 2025. (Doc. 2). MedTek alleges nine

state-law claims against the Precision Parties: (1) breach of contract, (2) breach of

covenant of good faith and fair dealing, (3) unjust enrichment (in the alternative), (4)

tortious interference with contract, (5) tortious interference with prospective

contractual relations, (6) negligence (in the alternative), (7) defamation/libel, (8)

misappropriation of trade secrets under Pennsylvania Uniform Trade Secrets Act,

and (9) permanent injunctive relief.2 (Doc. 2-1 ¶¶ 83-184).

The Precision Parties then filed an answer, counterclaims, and a third-party

complaint against MedTek, Dietrich, and Matsangakis. (Doc. 14). On May 22, 2025,

the Precision Parties filed the FAC. (Doc. 53). As relevant to the pending motions,

2 MedTek filed a motion (Doc. 7) for preliminary injunction on April 10, 2025,

but later requested (Doc. 37) to withdraw that motion, which the court granted on

May 8, 2025. (Doc. 41).

the allegations in the FAC present a starkly different picture underlying the

formation of the October 3 contract, its termination, and subsequent events.

According to the Precision Parties, Reserve Real Estate was incorporated in

Pennsylvania on August 3, 2023, and registered MedTek Solution as a fictious name

on July 26, 2024. (Doc. 53 ¶¶ 19, 23). This is despite the complaint stating that

Dietrich and Matsangakis have been doing business as MedTek for three to four

years and that Matsangakis has held herself out to the public as the managing

partner of MedTek since mid to late 2019. (Id. ¶¶ 24-26). Dietrich and Matsangakis

used MedTek, a fraudulent company, to conduct business in the wound care

industry, including to contract with Precision. (Id. ¶ 27). They did so to avoid

liability and risk while advancing their personal interests, and comingled personal

funds with the nonexistent MedTek entity. (Id. ¶ 30).

Ryan has been involved in the wound care industry since 2023, and is the sole

owner of two companies, Andelle Group LLC, and Precision. (Id. ¶¶ 34-35). Ryan

found success in the industry and Precision hired numerous sales representatives

who benefited from Precision’s provider contacts. (Id. ¶¶ 36-37). In May 2024,

Dietrich and Matsangakis approached Ryan about contracting to sell products to

providers. (Id. ¶ 39). Dietrich and Matsangakis represented to Ryan that they owned

a company with significant experience in the wound care industry and had

numerous relationships with manufacturers offering favorable commissions. (Id. ¶

40). They did not inform Ryan that MedTek was a fake company with little sales,

and that MedTek did not employ anyone who sold products. (Id.)

Following negotiations, in June 2024, Ryan received a contract from MedTek

that he executed on behalf of Andelle, and which Matsangakis executed on behalf of

the nonexistent MedTek. (Id. ¶ 42). Ryan was immediately successful, and in August

2024, Ryan and Matsangakis executed a second contract between MedTek and

Andelle, which expanded the number of products to sell providers and superseded

the previous contract. (Id. ¶¶ 43-45). In October 2024, MedTek entered into an

independent contractor agreement with Precision, which superseded the previous

contract between MedTek and Andelle, and with any obligations now being owed to

Precision. (Id. ¶¶ 46-47). The October 2024 contract provided that Precision would

be paid a commission based on a commission schedule and on the quantity of

products sold each month, with payment to Precision occurring within ten days of

MedTek’s receipt of payment from the manufacturers. (Id. ¶¶ 52-54). The contract

contains termination provisions, providing that either party may terminate the

contract with or without cause by giving the other thirty days prior written notice.

(Id. ¶ 55). “Cause” is not defined, though for terminations without cause, the

contract states that MedTek shall pay Precision “any amounts owed under Section

3(a) hereof as of the date of termination or expiration.” (Id. ¶¶ 56-57).

Precision claims it was MedTek’s top performing independent contractor,

selling tens of millions of products on MedTek’s behalf. (Id. ¶¶ 58, 61). Precision

often waited months to receive its commission following a sale, as providers

typically waited to receive a reimbursement before paying. (Id. ¶ 59). MedTek

looked for ways to get out of paying commissions to increase its own profit margins.

(Id. ¶ 62). Precision provides examples of its sales representatives who sold millions

of dollars in product and for whom MedTek withheld or still owes commissions to

Precision. (Id. ¶¶ 63-68).

On March 17, 2025, Dietrich emailed Ryan stating that MedTek was

terminating the October 2024 agreement because Ryan “engaged in behavior that is

in violation of federal regulatory provisions” and which violated the agreement. (Id.

¶¶ 69-70). The alleged violation did not occur, as Ryan did not make a payment to a

provider or even offer to pay a provider, and this violation was a pretext to

terminate the agreement and get out of paying Precision the millions of dollars in

commissions it was owed. (Id. ¶¶ 71-76). Around the same time, the MedTek parties

began attempting to steal Precision’s sales representatives by communicating

directly with them and stating that the Precision Parties could not be trusted, that

the contract was terminated for compliance violations, and that MedTek would pay

commissions directly. (Id. ¶¶ 77-105). The Precision Parties believe that the MedTek

Parties have also communicated similarly disparaging comments to providers and

manufacturers. (Id. ¶ 106).

The Precision Parties raise seven counterclaims: (1) breach of contract; (2)

breach of the covenant of good faith and fair dealing; (3) violations of the

Pennsylvania Commissioned Sales Representative Act (“PCSRA”); (4) fraud; (5)

tortious interference with existing contractual relations; (6) defamation; and (7)

unjust enrichment (in the alternative). (Id. at ECF 52-64, ¶¶ 98-168).

After the MedTek Parties filed motions to dismiss, strike, and stay discovery,

(Docs. 43, 46), the Precision Parties filed the FAC, which raised the same seven

claims contained in their original pleading. (Doc. 53). The MedTek Parties renewed

their motions. (Docs. 63, 65)

b. The MedTek Parties’ Emergency Letter

During the briefing of their motions, the MedTek Parties filed an emergency

letter under seal on the docket. (Doc. 70). In the letter, the MedTek Parties sought

an emergency stay of all proceedings because they discovered that Gary Ryan is a

pseudonym, and that Ryan’s real name is Karen Kazaryan. (Id.) Kazaryan was

previously convicted in federal court in California of offenses unrelated to this

matter, has been released from incarceration, and was not under court supervision

at any time relevant to this suit. See Case No. 2:13-CR-56-GHK, Central District of

California. The Precision Parties responded under seal and provided the court with

a copy of a name change decree from the Los Angeles County Superior Court dated

May 29, 2025, approving a change from Karen Kazaryan to Gary K. Ryan and of a

social security card bearing the name “Gary K. Ryan” issued on May 30, 2025. (Doc.

74). The MedTek Parties argue that, because Gary Ryan was not Ryan’s name at the

time of the filing of the counterclaim, he does not have standing to bring the

counterclaim and that this court lacks jurisdiction over it. (Doc. 70).

Briefing has completed, (Docs. 64, 66, 77, 79, 83, 84), and the matters are ripe

for the court’s disposition.

II. Legal Standard

a. Subject Matter Jurisdiction

Subject matter jurisdiction is a federal court’s authority to hear a case.

Generally, subject-matter jurisdiction arises through the assertion of a federal

question or through the diversity of the parties. If a case, as presented by the

plaintiff, does not meet the requirements of subject-matter jurisdiction or if it is

otherwise barred by law, then the court must dismiss the plaintiff's action.

Importantly, the court has “an independent obligation to determine whether

subject-matter jurisdiction exists even in the absence of a challenge from the

defendant.” Arbaugh v. Y&H Corp., 546 U.S. 500, 514 (2006). Federal courts cannot

exercise jurisdiction where Congress has not given it, even if all parties assume

subject matter jurisdiction exists. Hartig Drug Co. Inc. v. Senju Pharm. Co. Ltd., 836

F.3d 261, 267 (3d Cir. 2016).

b. Motion To Dismiss

Rule 12(b)(6) of the Federal Rules of Civil Procedure provides for the

dismissal of complaints that fail to state a claim upon which relief may be granted.

When ruling on a motion to dismiss under Rule 12(b)(6), the court must “accept all

factual allegations as true, construe the complaint in the light most favorable to the

plaintiff, and determine whether, under any reasonable reading of the complaint,

the plaintiff may be entitled to relief.” Phillips v. County of Allegheny, 515 F.3d 224,

233 (3d Cir. 2008) (quoting Pinker v. Roche Holdings, Ltd., 292 F.3d 361, 374.7 (3d

Cir. 2002)). In addition to reviewing the facts contained in the complaint, the court

may also consider “exhibits attached to the complaint, matters of public record, as

well as undisputedly authentic documents if the complainant’s claims are based

upon these documents.” Mayer v. Belichick, 605 F.3d 223, 230 (3d Cir. 2010) (citing

Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d

Cir. 1993)).

Federal notice and pleading rules require the complaint to provide “the

defendant fair notice of what the . . . claim is and the grounds upon which it rests.”

Phillips, 515 F.3d at 232 (alteration in original) (quoting Bell Atl. Corp. v. Twombly,

550 U.S. 544, 555 (2007)). To test the sufficiency of the complaint, the court conducts

a three-step inquiry. Santiago v. Warminster Township, 629 F.3d 121, 130 (3d Cir.

2010). In the first step, “the court must ‘tak[e] note of the elements a plaintiff must

plead to state a claim.’” Id. at 130 (alteration in original) (quoting Ashcroft v. Iqbal,

556 U.S. 662, 675 (2009)). Next, the factual and legal elements of a claim must be

separated; well-pleaded facts are accepted as true, while mere legal conclusions

may be disregarded. Id. at 131-32; see Fowler v. UPMC Shadyside, 578 F.3d 203,

210-11 (3d Cir. 2009). Once the court isolates the well-pleaded factual allegations, it

must determine whether they are sufficient to show a “plausible claim for relief.”

Iqbal, 556 U.S. at 679 (citing Twombly, 550 U.S. at 556). A claim is facially plausible

when the plaintiff pleads facts “that allow[] the court to draw the reasonable

inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at

678. If the court concludes that a complaint should be dismissed, it “must permit a

curative amendment, unless an amendment would be inequitable or futile.”

Phillips, 515 F.3d at 236.

c. Motion To Strike

Under Federal Rule of Civil Procedure 12(f), the court may strike from a

pleading “any redundant, immaterial, impertinent, or scandalous matter.” FED. R.

CIV. P. 12(f). District courts have “considerable discretion” in resolving a Rule 12(f)

motion. Krisa v. Equitable Life Assurance Soc’y, 109 F. Supp. 2d 316, 319 (M.D. Pa.

2000) (quoting N. Penn. Transfer, Inc. v. Victaulic Co. of Am., 859 F. Supp. 154, 158

(E.D. Pa. 1994)). In general, such a motion will be denied unless the allegations are

severely prejudicial to one of the parties and unrelated to the plaintiff’s claims. Id.;

see also 5C CHARLES ALAN WRIGHT ET AL., FEDERAL PRACTICE & PROCEDURE § 1382

(3d ed. 2016). A party is prejudiced when the challenged pleading “confuses the

issues” or places an undue burden on the responding party. Karpov v. Karpov,

307 F.R.D. 345, 348 (D. Del. 2015).

d. Motion To Stay Discovery

Whether to stay discovery is within the court’s discretion. Commonwealth v.

Navient Corp., 348 F. Supp. 3d 394, 401 (M.D. Pa. 2018). A stay of discovery may be

appropriate “while evaluating a motion to dismiss where, if the motion is granted,

discovery would be futile,” Mann v. Brenner, 375 F. App’x 232, 239 (3d. Cir. 2010)

(collecting cases), and that “a stay is proper where the likelihood that such motion

may result in a narrowing or an outright elimination of discovery outweighs the

likely harm to be produced by the delay.” 19th Street Baptist Church v. St. Peters

Episcopal Church, 190 F.R.D. 345, 349 (E.D. Pa. 2000). Nevertheless, “[t]here is

nothing in the Federal Rules of Civil Procedure that mandates that discovery should

not proceed before a motion to dismiss is decided.” Navient Corp., 348 F. Supp. 3d

at 401(emphasis added).

III. Discussion

The MedTek Parties seek to dismiss the FAC on numerous grounds,

including subject matter jurisdiction, to strike numerous paragraphs of the FAC as

well as the FAC’s request for punitive damages and references to allegedly

“malicious, willful, wanton, and reckless” conduct, and to stay discovery pending

the resolution of these motions. (Docs. 63, 65).

a. Rule 17 and Subject Matter Jurisdiction

As an initial matter, the MedTek Parties challenge this court’s subject matter

jurisdiction in their reply brief, arguing that the court lacks subject matter

jurisdiction over Ryan’s counterclaim because Federal Rule of Civil Procedure 17

requires that “[a]n action must be prosecuted in the name of the real party in

interest,” FED. R. CIV. P. 17(a)(1), and Gary Ryan was named Karen Kazaryan at the

time the counterclaim was filed. (Doc. 83). Their logic follows that Ryan lacks

standing to bring the counterclaim, and this court lacks subject matter jurisdiction.

A review of Rule 17’s other provisions that go uncited in the MedTek Parties’

reply brief reveals the evident nonjurisdictional nature of Rule 17. Section (c) of

Rule 17 states that a “court may not dismiss an action for failure to prosecute in the

name of the real party in interest until, after an objection, a reasonable time has

been allowed for the real party in interest to ratify, join, or be substituted into the

action. After ratification, joinder, or substitution, the action proceeds as if it had

been originally commenced by the real party in interest.” FED. R. CIV. P. 17(c). If

Rule 17 implicated the court’s subject matter jurisdiction, dismissal could neither

require a prior objection nor the opportunity to fix the defect. Instead, numerous

courts to have considered the issue have found that Rule 17 concerns the merits

rather than jurisdiction. See Int’l Transp. Mgmt. Corp. v. Brooks Fitch Apparel

Grp., LLC, 2022 WL 102252 * 10 (D. N.J. Jan. 10, 2022) (collecting cases).

Here, Karen Kazaryan was the real party in interest3 at the time the

counterclaim was filed in the name of pseudonym Gary Ryan. The MedTek Parties

objected, and pursuant to Rule 17(c), Ryan provided information that his name was

legally changed from Karen Kazaryan to Gary Ryan, thereby ratifying that Ryan is

the real party in interest bringing the counterclaim. The court thus rejects the

challenge to its subject matter jurisdiction.

b. Motion To Dismiss

i. Veil Piercing

The FAC seeks to pierce the corporate veil to allege claims against Reserve

Real Estate, Dietrich, and Matsangakis. (Doc. 53 at 21-37). The MedTek Parties

argue that such veil-piercing is improper here where the Precision Parties have

3 Even if the court agreed that Ryan could not bring the counterclaim under

the name Gary Ryan, Precision is also a counterclaim and third-party plaintiff, so

the counterclaim would proceed with Precision as the sole party.

failed to allege that MedTek failed to follow corporate formalities, where Reserve

Real Estate operates under the fictious name “MedTek Solution,” and where the

Precision Agreement binds MedTek and Precision, not Dietrich and Matsangakis

individually. (Doc. 64 at 8-22). The Precision Parties respond that it only seeks to

pierce the corporate veil with respect to its breach of contract and breach of the

covenant of good faith and fair dealing claims and that the MedTek Parties have

used the corporate form purposefully and with the intent to commit fraud against

the Precision Parties. (Doc. 79 at 12-20).

Piercing the corporate veil “allow[s] a court to disregard the corporate form

and assess one corporation’s liability against another.” Commonwealth v. Golden

Gate Nat’l Senior Care LLC, 194 A.3d 1010, 1034 (Pa. 2018). Pennsylvania law

affords a strong presumption against piercing the corporate veil. Lumax Indus., Inc.

v. Aultman, 669 A.2d 893, 895 (Pa. 1995). Certain “specific, unusual circumstances

[may] call for an exception.” Zubik v. Zubik, 384 F.2d 267, 273 (3d Cir. 1967). These

circumstances include where doing so would “prevent fraud, illegality, or injustice,

or when recognition of the corporate entity would defeat public policy or shield

someone from liability for a crime,” id. at 272, or where “one in control of a

corporation uses that control, or uses the corporate assets, to further his or her own

personal interests,” Ashley v. Ashley, 393 A.2d 637, 641 (Pa. 1978).

Rather than existing as an independent cause of action, a request to pierce

the corporate veil “is a means of imposing liability established in an underlying

cause of action, such as tort or breach of contract, against another.” Golden Gate,

194 A.3d at 1035. Under an alter ego theory, courts in our circuit examine the

following factors to determine whether veil-piercing is appropriate: “gross

undercapitalization, failure to observe corporate formalities, nonpayment of

dividends, insolvency of debtor corporation, siphoning of funds from the debtor

corporation by the dominant stockholder, nonfunctioning of officers and directors,

absence of corporate records, and whether the corporation is merely a facade for

the operations of the dominant stockholder.” Pearson v. Component Tech. Corp.,

247 F.3d 471, 484–85 (3d Cir. 2001). Mere “averments reciting elements of the veil-

piercing test, without any supporting facts, constitute legal conclusions. Even under

a notice pleading standard, as interpreted in Twombly, such averments cannot

support a veil-piercing claim.” Cent. Transp., LLC v. Atlas Towing, Inc., 884

F.Supp.2d 207, 217 (E.D. Pa. 2012) (quoting Shenango Inc. v. Am. Coal Sales Co.,

No. 06–149, 2007 WL 2310869, at *4 (W.D. Pa. Aug. 9, 2007).

The Precision Parties fail to meet their “notoriously difficult” burden of

alleging that MedTek operates as “little more than a legal fiction” concocted by

Reserve Real Estate, Dietrich, and Matsangakis. Pearson, 247 F.3d at 485. True, the

FAC does include allegations of some of the factors considered in the alter-ego

analysis—for example, MedTek’s alleged undercapitalization and comingling of

funds (Doc. 53 ¶¶ 30, 113)—but the Precision Parties have not “pled the quantum of

facts necessary to give rise to the reasonable inference that the alter ego test could

be satisfied. 18 KT.TV, LLC v. Entest Biomedical, Inc., No. 3:11-CV-244, 2011 WL

5374515, at *9 (M.D. Pa. Nov. 7, 2011). For example, while the Precision Parties

argue that MedTek is undercapitalized or commingles funds, they do not allege

“facts that would provide a reasonable basis” to support these allegations. J.B. Hunt

Transp., Inc. v. Liverpool Trucking Co., No. 1:11-CV-1751, 2013 WL 3208586, at *3

(M.D. Pa. June 24, 2013). Put simply, the Precision Parties’ “averments cannot

support a veil-piercing claim.” Cent. Transp., LLC, 884 F.Supp.2d at 217. Therefore,

to the extent that the Precision Parties seek to pierce the corporate veil with respect

to their breach of contract and breach of the covenant of good faith and fair dealing

claims, the court holds that they are unable to do so.4

ii. Breach Of Contract

The Precision Parties claim that “MedTek materially breached its

contractual obligations to Precision under the Precision Agreement by: (a) failing to

pay commissions and compensation owed to Precision prior to terminating the

Precision Agreement; (b) failing to pay commissions and compensation owed to

Precision at the time it terminated the Precision Agreement; (c) wrongfully

terminating the Precision Agreement and falsely claiming it was a ‘for cause’

termination; and (d) making misrepresentations under the Agreement.” (Doc. 53 ¶

118). The MedTek Parties seek to dismiss the breach of contract claim against

MedTek, arguing that the Precision Parties fail to allege a duty contained in the

Precision Agreement they have breached. (Doc. 64 at 24-27).

A breach of contract claim under Pennsylvania law requires “(1) the

existence of a contract, including its essential terms; (2) a breach of a duty imposed

by the contract; and (3) resultant damages.” City of Allentown v. Lehigh Cty. Auth.,

4 The remaining counterclaims concern statutory, tort, or equitable claims,

which are not implicated by veil piercing, and are therefore permitted to continue

against Dietrich and Matsangakis.

222 A.3d 1152, 1157 (Pa. Super. Ct. 2019) (quoting Reformed Church of Ascension v.

Theodore Hooven & Sons, Inc., 764 A.2d 1106, 1109 (Pa. Super. Ct. 2000)). The party

alleging contractual breach may recover, “unless the contract provided otherwise,

whatever damages he suffered, provided (1) they were such as would naturally and

ordinarily result from the breach, or (2) they were reasonably foreseeable and

within the contemplation of the parties at the time they made the contract, and (3)

they can be proved with reasonable certainty.” Ferrer v. Trs. of Univ. of

Pennsylvania, 825 A.2d 591, 610 (Pa. 2002) (quoting Taylor v. Kaufhold, 84 A.2d 347,

351 (Pa. 1951)).

The Precision Parties have plausibly alleged a breach of the Precision

Agreement. First, there is no dispute that a contract exists between the parties.

Second, the Precision Parties allege that MedTek breached several of its duties

contained in the Precision Agreement, including, among other things, “failing to

pay commissions and compensation owed to Precision prior to terminating the

Precision Agreement.” (Doc. 53 ¶ 118). Third, the Precision Parties also plausibly

allege damages resulting from MedTek’s alleged breach—for example, the

“commissions and compensation” aforementioned. (Id.). Therefore, MedTek’s

motion to dismiss this claim will be denied.

iii. Breach Of The Covenant Of Good Faith And Fair Dealing

The FAC alleges a breach of the covenant of good faith and fair dealing. (Doc.

53 ¶¶ 121-147). But Pennsylvania law “does not allow an action for breach of the

covenant of good faith and fair dealing separate from a breach of contract claim.”

Landan v. Wal-Mart Real Est. Bus. Tr., 775 F. App’x 39, 42 (3d Cir. 2019); Burton v.

Teleflex Inc., 707 F.3d 417, 432 (3d Cir. 2013) (“under Pennsylvania law, a ‘claim for

breach of the implied covenant of good faith and fair dealing is subsumed in a

breach of contract claim.’”) (quoting LSI Title Agency, Inc. v. Evaluation Servs.,

Inc., 951 A.2d 384, 391-92 (Pa. Super. Ct. 2008)). Therefore, because the Precision

Parties also bring a breach of contract claim, their breach of the covenant of good

faith and fair dealing claim will be dismissed insofar as it is pleaded as a separate

claim. As this case proceeds, the Precision Parties’ arguments on the dismissed

claim may “be addressed in connection with [their] surviving breach of contract

claim.” Davis v. Wells Fargo, 824 F.3d 333, 352 (3d Cir. 2016).

iv. PCSRA

The FAC alleges that MedTek “violated the PCSRA by failing to timely pay

commissions to Precision.” (Doc. 53 ¶ 157). The MedTek Parties argue that the FAC

does not plausibly allege that the MedTek Parties are “principals” or that Precision

is a “sales representative” as defined by the PCSRA and that the Precision

Agreement clearly provides that the Precision Parties are not entitled to the

commissions. (Doc. 64 at 29-30).

The PCSRA mandates that a “principal shall pay a sales representative all

commissions due at the time of termination within 14 days after termination” and

“all commissions that become due after termination within 14 days of the date such

commissions become due.” 43 P.S. §§ 1473–74. Commission is defined as

“[c]ompensation accruing to a sales representative for payment by a principal, the

rate of which is expressed as a percentage of the dollar of orders or sales.” 43 P.S. §

1471. A principal “(1) [e]ngages in the business of manufacturing, producing,

importing or distributing a product for sale to customers who purchase such

products for resale,” “(2) [u]tilizes sales representatives to solicit orders for such

product,” and “(3) [c]ompensates sales representatives, in whole or in part, by

commission.” Id. A sales representative “contracts with a principal to solicit

wholesale orders from retailers rather than consumers and who is compensated, in

whole or in part, by commission.” Id. However, an individual “who places orders or

purchases for his own account for resale or one who is an employee of a principal”

does not qualify as a sales representative. Id. And termination under the PCSRA is

defined as “[t]he end of services performed by the sales representative for the

principal,” which “includes any action that concludes the relationship of the

parties.” Id.

The Precision Parties have plausibly stated a PCSRA claim. The FAC alleges

both that the MedTek Parties are principals who “engage in the business of

distributing skin substitute products for sale to providers who purchase such

products for resale; they utilize Precision, a sales representative, to solicit orders for

such products; and they compensate Precision by commission,” and that Precision

is a sales representative who “contracts with the MedTek Parties to solicit

wholesale orders of skin substitute products from providers rather than consumers

and is compensated by commission” and “is not an employee of MedTek Parties.”

(Doc. 53 ¶¶ 153, 155). While the allegations here straddle the line between well-

pleaded facts and mere legal conclusions, they are sufficient to state a PCSRA claim

at this stage.

v. Fraudulent Inducement

The FAC alleges that “[t]he MedTek Parties made numerous material

misrepresentations and deliberate omissions to Ryan prior to the signing of the

Andelle Agreement and the Precision Agreement with the intent that Ryan and his

companies would rely on these representations.” (Doc. 53 ¶ 161). The MedTek

Parties argue that the fraud claim should be dismissed because (1) the parol

evidence rule does not permit the use of extrinsic evidence to demonstrate

fraudulent inducement, (2) this claim is barred by the gist of the action doctrine,

and, (3) fraud has not been pled with specificity in violation of Federal Rule of Civil

Procedure 9. (Doc. 64 at 34-46).

Fraudulent inducement under Pennsylvania law requires “1) a false

representation; 2) materiality; 3) scienter; 4) justifiable reliance; and 5) damage as a

proximate result.” Piper v. Am. Nat’l. Life Ins. Co., 228 F. Supp. 2d 553, 559 (M.D.

Pa. 2002). Federal Rule of Civil Procedure 9(b) requires a party alleging fraud to

“state with particularity the circumstances constituting fraud or mistake.” FED. R.

CIV. P. 9(b). Therefore, allegations of fraud must be supported “‘with all of the

essential factual background that would accompany the first paragraph of any

newspaper story—that is, the who, what, when, where and how of the events at

issue.’” U.S. ex rel. Moore & Co., P.A. v. Majestic Blue Fisheries, LLC, 812 F.3d 294,

307 (3d Cir. 2016) (quoting In re Rockefeller Ctr. Props., Inc. Sec. Litig., 311 F.3d

198, 217 (3d Cir. 2002)).

The Precision Parties have not met Rule 9(b)’s heightened pleading standard.

True, the FAC alleges a series of “material misrepresentations and deliberate

omissions,” (Doc. 53 ¶ 162), but these allegations lack “the who, what, when, where

and how of the events at issue.” In re Rockefeller Ctr. Props., Inc. Sec. Litig., 311

F.3d at 217. The failure to provide such specificity is fatal to the Precision Parties’

fraudulent inducement claim, and it is therefore dismissed.

vi. Tortious Interference

The FAC alleges that the MedTek Parties tortiously interfered with

Precision’s contractual relations with its sales representatives by, among other

things, “defaming the Precision Parties; lying about the termination of the

Precision Agreement; [and] falsely claiming the Precision Parties committed

unlawful acts” in order to, among other things, poach these representatives and

diminish Precision’s ability to pay these representatives and fund the instant

litigation. (Doc. 53 ¶¶ 170-180).

The MedTek Parties contend that this claim should be dismissed for three

reasons. First, they argue that the Precision Parties’ failure to append the FAC with

a copy of the contracts with sales representatives results in their failure to

adequately plead such contractual relations exist. (Doc. 64 at 46-47). Second, the

FAC fails to allege whether the sales representatives were employees or

independent contractors; if they were the latter, and absent a non-compete

agreement, the alleged communications were permissible under the Precision

Agreement. (Id. at 47-48). And third, “any of the alleged contact between MedTek

and its principals with Precision’s sales representatives would be privileged or

justified and could not constitute tortious interference.” (Id. at 48-49).

To state a claim of tortious interference with contractual relations under

Pennsylvania law, a party must demonstrate “(1) the existence of a contractual, or

prospective contractual relation between the complainant and a third party; (2)

purposeful action on the part of the defendant, specifically intended to harm the

existing relation, or to prevent a prospective relation from occurring; (3) the

absence of privilege or justification on the part of the defendant; and (4) the

occasioning of actual legal damage as a result of the defendant's conduct.” CGB

Occupational Therapy, Inc. v. RHA Health Servs. Inc., 357 F.3d 375, 384 (3d Cir.

2004) (quoting Crivelli v. General Motors Corp., 215 F.3d 386, 394 (3d Cir. 2000)).

With respect to privilege, a plaintiff must show “not only that a defendant acted

intentionally to harm the plaintiff, but also that those actions were improper.”

Salsgiver Commc’ns, Inc. v. Consol. Commc’ns Holdings, Inc., 150 A.3d 957, 964 (Pa.

Super. Ct. 2016) (quoting Empire Trucking Co., Inc. v. Reading Anthracite Coal Co.,

71 A.3d 923, 934 (Pa. Super. Ct. 2013)).

The MedTek Parties’ arguments are insufficient to warrant dismissal. First,

they fail to provide any support for the claim that a failure to attach the contracts

with which a party has allegedly interfered is fatal to a tortious interference claim at

the motion to dismiss stage. Conversely, the FAC sufficiently alleges such contracts

exist and contains, among other things, an alleged screenshot of a text message

from Dietrich to a sales representative asking to see the contract between Precision

and the sales representative. (Doc. 53 ¶ 82). Second, whether the sales

representatives were employees of Precision or independent contractors, and the

purported lack of a non-compete agreement on the permissibility of the MedTek

Parties’ communications under the Precision Agreement, are questions of fact that

are improper to decide on a motion to dismiss. And third, the FAC sufficiently

alleges that the MedTek Parties’ communications were both intentional and

improper. For example, the Precision Parties contend that the MedTek Parties

were “falsely claiming and wrongfully advising sales representatives that they never

had an executed agreement with Precision in order to entice them to leave

Precision.” (Id. ¶ 174). Therefore, this claim survives a motion to dismiss.

vii. Defamation

The FAC alleges that the MedTek Parties made numerous defamatory

statements to sales representatives, manufacturers, and providers that Precision

was engaged in compliance violations and unlawful activities. (Doc. 53 ¶¶ 106, 181-

194). The MedTek Parties argue that the FAC’s defamation claim must be dismissed

because these alleged statements are true (a defense to defamation), expressions of

opinion (which cannot be defamatory), or, at the very least, are privileged. (Doc. 64

at 49-52).

To bring a claim for defamation under Pennsylvania law, a plaintiff must

prove “(1) the defamatory character of the communication; (2) its publication by the

defendant; (3) its application to the plaintiff; (4) an understanding by the reader or

listener of its defamatory meaning; (5) an understanding by the reader or listener of

an intent by the defendant that the statement refers to the plaintiff; (6) special harm

resulting to the plaintiff from its publication; and (7) abuse of a conditionally

privileged position.” 42 Pa. C.S. § 8343(a). A defamatory statement “tends to harm

an individual’s reputation so as to lower him or her in the estimation of the

community or deter third persons from associating or dealing with him or her.”

Moore v. Cobb–Nettleton, 889 A.2d 1262, 1267 (Pa. Super. Ct. 2005) (citation

omitted). A mere statement of opinion, however, is not defamatory. Id.

The FAC adequately alleges a defamation claim. At this stage, it is not

possible to assess the truth of the allegedly defamatory statements; whether the

Precision Parties, in fact, have engaged in compliance violations and unlawful

activities is a quintessential factual issue. Similarly, these factual matters cannot, by

definition, be matters of opinion. And whether communications between the

MedTek Parties, Precision’s sales representatives, manufacturers, and providers

are privileged is also a question of fact. Therefore, the allegations contained in the

FAC sufficiently plead a defamation claim at the motion to dismiss stage.

viii. Unjust Enrichment

The FAC pleads unjust enrichment in the alternative if the Precision

Agreement is invalid or unenforceable. (Doc. 53 ¶¶ 195-199). A plaintiff alleging

unjust enrichment must demonstrate “benefits conferred on defendant by plaintiff,

appreciation of such benefits by defendant, and acceptance and retention of such

benefits under such circumstances that it would be inequitable for defendant to

retain the benefit without payment of value.” Gutteridge v. J3 Energy Grp., Inc., 165

A.3d 908, 917 (Pa. Super. Ct. 2017) (citation omitted). Put differently, the party

claiming unjust enrichment “must show that the party against whom recovery is

sought ‘either wrongfully secured or passively received a benefit that it would be

unconscionable for her to retain.’” Torchia ex rel. Torchia v. Torchia, 499 A.2d 581,

582 (Pa. Super. Ct. 1985) (quoting Roman Mosaic & Tile Co. v. Vollrath, 313 A.2d

305, 307 (Pa. Super. Ct. 1973)). This determination turns “on the unique factual

circumstances of each case.” Gutteridge, 165 A.3d at 917 (citation omitted).

The MedTek Parties argue “[t]he Precision Parties have not alleged an

improper benefit conferred on either MedTek, Dietrich and/or Matsangakis.”5 (Doc.

64 at 54). That is belied by the FAC, which alleges that the benefit is the “many

millions of dollars of revenue” that the Precision Parties allegedly conferred upon

the MedTek Parties, that MedTek has allegedly “failed and refused to pay Precision

the amounts Precision is owed and will be owed as commissions,” and that the

MedTek Parties’ acceptance and retention of this benefit is inequitable such that

the Precision Parties should “receive the amounts [they] are owed and will be

owed.” (Doc. 53 ¶¶ 197-199). Whether these allegations prove to be true will be

uncovered later in this case, but they are sufficient to allege an unjust enrichment

claim at the pleading stage. The MedTek Parties’ motion to dismiss this claim,

therefore, is denied.

ix. Leave to Amend

Federal Rule of Civil Procedure 15 governs the filing of amended pleadings.

See FED. R. CIV. P. 15(a). Rule 15(a) contemplates amendment of an existing

pleading and is intended “to enable a party to assert matters that were overlooked

5 The MedTek Parties also argue that the unjust enrichment claim cannot

stand against Dietrich and Matsangakis because they were not parties to the

Precision Agreement. (Doc. 64 at 53). But this circular argument fails on its face

because unjust enrichment is pled to the extent that the Precision Agreement is

invalid or unenforceable. (Doc. 53 at ¶ 196). If there is no valid and enforceable

contract, then it is of no moment that Dietrich and Matsangakis did not sign that

contract so long as they were unjustly enriched at the Precision Parties’ expense.

or were unknown” when the original pleading was filed. Garrett v. Wexford Health,

938 F.3d 69, 82 (3d Cir. 2019) (quoting 6 CHARLES ALAN WRIGHT & ARTHUR R.

MILLER, FEDERAL PRACTICE AND PROCEDURE § 1473 (3d ed. 2019)).

Under Federal Rule of Civil Procedure 15, leave to amend should be freely

given “when justice so requires.” FED. R. CIV. P. 15(a)(2). Circumstances that weigh

against granting leave include undue delay, bad faith or dilatory motive, repeated

failure to cure deficiencies by amendments previously allowed, undue prejudice to

the opposing party, and futility. See Foman v. Davis, 371 U.S. 178, 182 (1962).

Amendment is considered futile if the pleading, “as amended, would fail to state a

claim upon which relief could be granted.” In re Burlington Coat Factory Sec. Litig.,

114 F.3d 1410, 1434 (3d Cir. 1997). Rule 15 aims to offer the “‘maximum opportunity

for each claim to be decided on its merits rather than on procedural technicalities.’”

United States v. Thomas, 221 F.3d 430, 435 (3d Cir. 2000) (quoting 6 CHARLES ALAN

WRIGHT, ARTHUR R. MILLER & MARY KAY KANE, FEDERAL PRACTICE & PROCEDURE §

1471 (2d ed.1990) (2000 Supp.)).

a. Fraudulent Inducement

The Precision Parties will be granted leave to amend their fraudulent

inducement claim. True, the FAC currently fails to plead “the who, what, when,

where and how of the events at issue.” In re Rockefeller Ctr. Props., Inc. Sec. Litig.,

311 F.3d at 217. But it appears that the Precision Parties will be able to amend their

counterclaim to contain this information such that granting leave to amend will not

be futile. See In re Burlington Coat Factory Sec. Litig., 114 F.3d at 1434. And,

notwithstanding the MedTek Parties’ arguments to the contrary, the parol evidence

rule does not bar the use of extrinsic evidence to prove this fraudulent inducement

claim, nor is this claim barred by the gist of the action doctrine.

Consider first the parol evidence rule, which typically “prevents the use of

extrinsic evidence to nullify, modify, or augment the terms of a contract.”

SodexoMAGIC, LLC v. Drexel Univ., 24 F.4th 183, 213 (3d Cir. 2022). Where the

parol evidence rule applies, “the writing constitutes the agreement between the

parties, and its terms and agreements cannot be added to nor subtracted from by

parol evidence.” Yocca v. Pittsburgh Steelers Sports, Inc., 854 A.2d 425, 436 (Pa.

2004) (quoting Gianni v. Russell & Co., 126 A. 791, 792 (Pa. 1924)). This rule does not

apply, however, in the case of fraud. Id. Extrinsic evidence may be used to support a

claim for fraudulent inducement of integrated contracts6 because such evidence is

being used “to prove a precontractual misrepresentation or concealment – not to

alter or vary the terms of the contract.” SodexoMAGIC, 24 F.4th at 213. This is so

unless the contract contains a so-called “fraud-insulating” clause which “prevent[s]

a party from satisfying the justifiable-reliance element of a fraudulent inducement

claim.” Id. Examples of such clauses include, among other things, “a no-reliance

clause, through which a party expressly disclaims reliance on another party’s

precontractual representations.” Id. at 214. Where the contract contains a fraud-

6 See Restatement (Second) Contracts § 209(1) (“An integrated agreement is a

writing or writings constituting a final expression of one or more terms of an

agreement.”).

insulating clause, the parol evidence rule “precludes fraudulent inducement claims

that depend on a precontractual misrepresentation.” Id.

Here, the parol evidence rule’s fraud exception applies because the Precision

Parties seek to “to prove a precontractual misrepresentation or concealment – not

to alter or vary the terms of the contract.” SodexoMAGIC, 24 F.4th at 213. The sum

of the Precision Parties’ allegations is that the MedTek Parties made a series of

material misrepresentations and omissions that induced them into entering an

agreement they otherwise would not have. (Doc. 53 ¶¶ 161-162, 164). Nor does the

Precision Agreement contain a fraud-insulating clause. SodexoMAGIC, 24 F.4th at

214. Therefore, extrinsic evidence may be used to prove the Precision Parties’

fraudulent inducement claim.

Nor would the gist of the action doctrine bar the Precision Parties’ fraudulent

inducement claim. “Arising out of the concern that tort recovery should not be

permitted for contractual breaches[,]” Addie v. Kjaer, 737 F.3d 854, 865 (3d Cir.

2013), “the [gist of the action] doctrine is designed to maintain the conceptual

distinction between breach of contract claims and tort claims.” eToll, Inc. v.

Elias/Savion Advertising, Inc., 811 A.2d 10, 14 (Pa. Super. Ct. 2002). This policy-

based doctrine addresses “the concern that tort recovery should not be permitted

for contractual breaches” by “preclud[ing] tort suits for the mere breach of

contractual duties unless the plaintiff can point to separate or independent events

giving rise to the tort.” Addie, 737 F.3d at 865-866 (internal citations omitted). This

analysis turns on the nature of the allegations contained the plaintiff’s complaint.

Bruno v. Erie Ins. Co., 106 A.3d 48, 68 (Pa. 2014). If these allegations indicate a

breach of a duty “created by the parties by the terms of the contract,” then the

claim exists as a breach of that contract. Id. But if these allegations indicate a

breach “of a broader social duty owed to all individuals, which is imposed by the

law of torts and, hence, exists regardless of the contract,” then the underlying claim

“must be regarded as a tort.” Id. The “mere existence of a contract between two

parties does not, ipso facto, classify a claim . . . as one for breach of contract.” Id. at

69.

The gist of the action doctrine does not apply to the Precision Parties’

fraudulent inducement claim. This claim does not seek judicial remedy for breach

of the Precision Agreement—the FAC alleges a separate breach of contract claim—

but rather seeks recourse for the harms they have allegedly suffered as a result of

the MedTek Parties’ material misrepresentations and omissions absent which they

would not have contracted with the MedTek Parties. (Doc. 53 ¶¶ 161-162, 164, 166).

This is a quintessential tort claim which exists outside of the contract between the

parties. Bruno, 106 A.3d at 68.

Further, the MedTek Parties have failed to demonstrate that the Precision

Parties’ inadequate fraud allegations were caused by “undue delay, bad faith or

dilatory motive,” nor would the MedTek Parties be unduly prejudiced by granting

such leave to amend. See Foman, 371 U.S. at 182. Permitting the Precision Parties

to amend their fraud claim will further the purpose of Rule 15 to allow for

disposition of this issue on the merits. See Thomas, 221 F.3d at 435.

b. Veil-Piercing

Similarly, the Precision Parties will be granted leave to amend their veil-

piercing theory. The Precision Parties have not, though plausibly could, meet their

“notoriously difficult” burden of alleging that MedTek operates as “little more than

a legal fiction” concocted by Reserve Real Estate, Dietrich, and Matsangakis at the

time of the Precision Contract. Pearson, 247 F.3d at 485.

c. Motion To Strike

The MedTek Parties move to strike paragraphs 1, 2, 5, 7, 8, 10, 27, 28, 29, 30,

31, 41, 62, 63, 64, 77, 110-115, and 123-128 of the FAC as well as the FAC’s request for

punitive damages and references to allegedly “malicious, willful, wanton, and

reckless” conduct. (Doc. 63 at ECF 3-4; Doc. 64 at 55-58).

Federal Rule of Civil Procedure 12(f) provides that “[t]he court may strike

from a pleading an insufficient defense or any redundant, immaterial, impertinent,

or scandalous matter. Doing so, however, is a “drastic remedy” which courts

generally disfavor. Homesite Ins. Co. of Midwest v. Geaith, No. 1:22-CV-1664, 2023

WL 362387, at *1 (M.D. Pa. Jan. 30, 2023); see also Fiorentino v. Cabot Oil & Gas

Corp., 750 F. Supp. 2d 506, 509 (M.D. Pa. 2010) (“Relief under Federal Rule of Civil

Procedure 12(f) is generally disfavored, and will be denied unless the allegations

have no possible relation to the controversy and may cause prejudice to one of the

parties, or if the allegations confuse the issues in the case.”). The moving party

bears the burden of demonstrating “that the challenged matter should be stricken.”

Roamingwood Sewer & Water Ass’n v. Nat’l Diversified Sales, Inc., 509 F. Supp. 3d

198, 204 (M.D. Pa. 2020). Immaterial matter under Rule 12(f) “is that which has no

essential or important relationship to any claims for relief.” Wagner v. Holtzapple,

101 F. Supp. 3d 462, 488 (M.D. Pa. 2015). A pleading contains impertinent matters if

those matters “consist[] of statements that do not pertain, and are not necessary, to

the issues in question.” Id. And scandalous matter “casts a derogatory light on

someone, uses repulsive language, or detracts from the dignity of the court.” Id.

These standards make clear that the motion to strike is improper. The

MedTek Parties did not cite any caselaw to support their assertion that the

paragraphs enumerated above should be stricken. (Doc. 64 at 56-57). Rather, they

merely recite that these paragraphs contain immaterial, impertinent, and

scandalous matters. (See id.) This is not enough to carry the burden of

demonstrating that Rule 12(f)’s “generally disfavored” and “drastic remedy” is

warranted for these paragraphs. See Roamingwood Sewer & Water Ass’n, 509 F.

Supp. 3d at 204; Fiorentino, 750 F. Supp. 2d at 509; Homesite Ins. Co., 2023 WL

362387, at *1.

The MedTek Parties’ motion to strike the FAC’s request for punitive

damages and references to allegedly “malicious, willful, wanton, and reckless”

conduct also fails. They argue that these claims sound in contract, not tort, and thus

punitive damages are inapplicable. (Doc. 64 at 58). That is wrong. Fraudulent

inducement, tortious interference, and defamation are all tort claims for which

punitive damages may be awarded under Pennsylvania law. See Williamsburg

Commons Condo. Ass’n v. State Farm Fire & Cas. Co., 907 F. Supp. 2d 673, 679

(E.D. Pa. 2012) (observing that “punitive damages are available for tort claims”).

With respect to their request to strike the FAC’s references to allegedly “malicious,

willful, wanton, and reckless” conduct, the Medtek Parties have not demonstrated

that these references are immaterial, impertinent, or scandalous, and therefore this

request to strike is denied as well.

d. Motion To Stay Discovery

The MedTek Parties have moved to stay discovery pending the disposition of

their motion to dismiss the FAC. (Doc. 65). Because this memorandum and the

corresponding order of today’s date resolves the motion to dismiss, the MedTek

Parties’ motion to stay discovery is denied as moot.

IV. Conclusion

For the reasons stated above, the court will grant in part and deny in part

the motion to dismiss, will deny the motion to strike, and will deny the motion to

stay discovery as moot. The Precision Parties will be granted leave to amend. An

appropriate order will follow.

/S/ KELI M. NEARY

Keli M. Neary

United States District Judge

Middle District of Pennsylvania

Dated: June 30, 2025