Opinion

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

ESSEX MOTORS, INC., d/b/a SQUARE

ONE AUTO

Civil Action No. 25-17230 (JXN)(MAH)

Plaintiff,

OPINION

v.

NETFLIX, INC.,

Defendant.

NEALS, District Judge

Life sometimes imitates art. The City of Rahway (“Rahway”) shut down part of Route 27

so Defendant Netflix, Inc. (“Netflix”) could film a scene in the upcoming movie “Bad Day.” The

filming allegedly caused local businesses along Route 27 to suffer a few bad days of sales. Plaintiff

Essex Motors, Inc., d/b/a Square One Auto (“Square One”), a car dealership, is one of those

businesses. Square One sued Netflix for the sales it allegedly lost during the road closure.

Before the Court is Netflix’s motion to dismiss the amended complaint1 (ECF No. 20), and

for sanctions2 (ECF No. 17). The Court has carefully considered the parties’ submissions and

decides this matter without oral argument pursuant to Federal Rule of Civil Procedure3 78 and

Local Civil Rule 78.1. For the reasons set forth below, Netflix’s motion to dismiss (ECF No. 20)

is GRANTED and Netflix’s motion for sanctions (ECF No. 17) is DENIED.

1 To which Square One opposed (ECF No. 24) and Netflix replied (ECF No. 25).

2 To which Square One opposed (ECF No. 22) and Netflix replied (ECF No. 23).

3 “Rule” or “Rules” hereinafter refer to the Federal Rules of Civil Procedure.

I. BACKGROUND

A. Statement of Facts

Square One runs a car dealership in Rahway occupying “several blocks” of St. George

Avenue, a portion of Route 27. (See Am. Compl. § 9, ECF No. 14.) The dealership had entrances

on Maple Avenue and West Hazelwood Avenue—two streets intersecting with Route 27. (/d.)

Because a picture is worth a thousand words, the Court spares words and provides below an outline

of Square One’s footprint.

"On Ave

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Map Maker, AtList, https://www.atlist.com/free-tools/map-maker (last visited July 27, 2026)‘;

(see also Am. Compl. § 9.)

Netflix sought to film scenes for “Bad Day,” an action-comedy movie starring Cameron

Diaz, in Rahway. (See Am. Compl. 1, 6.) On October 10, 2025, Rahway issued Netflix a filming

permit (“Rahway Permit”).° (See Def.’s Ex. A (“Rahway Permit”), ECF No. 20-3.) The Rahway

+ On a motion to dismiss, the Court “may take judicial notice of the distance between two geographical locations.”

Bond v. Solvay Specialty Polymers, USA, LLC, 583 F. Supp. 3d 643, 647 n.3 (D.N.J. 2022).

>“To decide a motion to dismiss, courts generally consider only the allegations contained in the complaint, exhibits

attached to the complaint and matters of public record.” Schmidt v. Skolas, 770 F.3d 241, 249 (3d Cir. 2014) (quoting

Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 Gd Cir. 1993)). “However, an

exception to the general rule is that a ‘document integral to or explicitly relied upon in the complaint’? may be

considered ‘without converting the motion to dismiss into one for summary judgment.’” /d. (quoting Jn re Burlington

Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997)). The “critical” question is “whether the claims in the

Permit authorized the closure of Route 27 between Central Avenue and Grove Street; on Pierpont

Street between West Milton Avenue and Elm Avenue; on Maple Avenue between Jefferson

Avenue and Jacques Avenue; and on Bryant Avenue between West Emerson Avenue and West

Hazelwood Avenue. (/d.) The Rahway Permit allowed Netflix to film at the above locations from

October 16 to 17, 2025, between the hours of 5:00 am to 8:00 am. (/d.) Below is Square One’s

footprint compared to Netflix’s filming locations:

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Map Maker, AtList, https://www.atlist.com/free-tools/map-maker (last visited July 27, 2026); (see

also Rahway Permit.) And on October 15, 2025, the New Jersey Department of Transportation

(“NJDOT”) issued a Highway Occupancy Permit (““NJDOT Permit”) authorizing the closure of

“[bJoth side(s) of Route No. 27” between “milepost 28.00 [and] 29.00” so an “NYC city bus

complaint are ‘based’ on an extrinsic document and not merely whether the extrinsic document was explicitly cited.”

Id. (quoting In re Burlington Coat Factory, 114 F.3d at 1426).

Here, the Amended Complaint expressly seeks to recover based on “manner in which Netflix conducted its business

pursuant to” its permits. (Am. Compl. □ 18.) The Court, accordingly, considers the Rahway Permit in deciding

Netflix’s motion to dismiss.

[could] conduct[] a stunt 270-degree spin on corner of NJ-27 and Maple Avenue in Rahway.”°

(See Def.’s Ex. B (“NJDOT Permit”), ECF No. 20-4.)

Square One claims Netflix closed more roads than those identified in either Permit. (See

Am. Compl. § 12.) In Square One’s telling, the closures actually looked like this:

□ a “al Ave ay

e* by W Milton Ave

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See Map Maker, AtList, https://www.atlist.com/free-tools/map-maker (last visited July 27, 2026);

(see also Am. Compl. § 12 (alleging additional street closures).) According to Square One, Netflix

informed businesses on Route 27 about the closure only a few days before filming, leaving Square

One with little time to prepare. (Am. Compl. § 19.) Square One alleges the closures “completely

and totally impeded” its “ability to conduct business” during filming, “as Square One’s customers

and potential customers had no vehicle access to the Square One facility.” Ud. 12, 14.) And

Square One claims the “manner in which the road closures were enforced were draconian,” as

6 Because Square One expressly seeks to recover based on “manner in which Netflix conducted its business pursuant

to” its permits (Am. Compl. ¥ 18), the Court considers the NJDOT Permit as a document integral to and expressly

relied upon in the Amended Complaint. Schmidt, 770 F.3d at 249.

Square One’s employees were denied access to their own place of work. (Id. ¶ 15.) Due to the

filming-related closures, Square One asserts it lost two days’ worth of business. (Id. ¶ 35.)

B. Procedural History

Square One sued Netflix in New Jersey Superior Court the day before filming, on October

15, 2025. (See Compl., ECF No. 1-1.) The Complaint included a claim for tortious interference

with prospective economic advantage and a request for an injunction against filming. (See id. at

6–8.) The Superior Court judge7 denied Square One’s injunction request the next day. (See Order

on Inj., ECF No. 1-1 at *33–38.) Thereafter, Netflix timely removed. (See Notice of Removal,

ECF No. 1.) On December 12, 2025, Netflix moved to dismiss. (See First Mot. to Dismiss, ECF

No. 13.) In response, Square One filed the Amended Complaint without first seeking leave of

Court. (See Am. Compl.) The Amended Complaint contains only one claim for tortious

interference with prospective economic advantage. (See generally id.)

After Square One filed the Amended Complaint, Netflix moved for sanctions under Rule

11. (See Sanctions Mot., ECF No. 17.) Netflix argues that the “central premise” of Square One’s

Amended Complaint—that the closure led to a “complete lack of access”—was and is

“demonstrabl[y] fals[e].” (Sanctions Moving Br. at 1, ECF No. 17-1.) According to Netflix, Square

One never used Route 27 “for customer ingress and egress.” (Id. at 3.) Indeed, in Netflix’s telling,

Square One blocks its’ Route 27 entrances with bollards, chains, and cars. (See id. at 10–16.)

Instead, Square One customers can only enter the dealership on Maple Avenue or West Hazelwood

Avenue. (See id. at 16–17.) Netflix thus argues closing Route 27 could not have caused a “complete

lack of access,” which Square One’s counsel knew or should have known was false. (See generally

7 The Hon. John M. Deitch, J.S.C.

id.) Square One opposed (Opp’n to Sanctions, ECF No. 22), and Netflix replied (Sanctions Reply,

ECF No. 23).

Because Square One filed an amended pleading without seeking leave of Court, the Court

allowed Netflix to file a motion to dismiss without first requesting a pre-motion conference. (See

Text Order, ECF No. 18.) Netflix so moved on January 9, 2026. (See Second Mot. to Dismiss

(“MTD”), ECF No. 20.) Netflix argues Square One fails to state a tortious interference claim

because (1) “governmental entities and employees possess discretion to issue street closure permits

and cannot be sued for exercising their lawful authority to do so”; and (2) “by definition, a private

business conducting permitted activities does not act tortiously.” (MTD Moving Br. at 9, ECF No.

20-1.) Square One opposed (Opp’n to MTD, ECF No. 24), and Netflix replied (MTD Reply, ECF

No. 25).

II. LEGAL STANDARD

A. Motion to Dismiss

Rule 12(b)(6) governs motions to dismiss for “failure to state a claim upon which relief

can be granted.” To survive a motion to dismiss under Rule 12(b)(6), the complaint must contain

“sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544,

570 (2007)). A claim is facially plausible “when the plaintiff pleads factual content that allows the

court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id.

The Court conducts a three-step inquiry in evaluating a motion to dismiss under Rule

12(b)(6). Malleus v. George, 641 F.3d 560, 563 (3d Cir. 2011). First, the Court identifies “the

elements a plaintiff must plead to state a claim.” Iqbal, 556 U.S. at 675. Second, the Court accepts

all plaintiff’s well-pleaded factual allegations as true and “construe[s] the complaint in the light

most favorable to the plaintiff.” Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009)

(quoting Phillips v. County of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008)). But the Court

disregards “legal conclusions and recitals of the elements of a cause of action supported by mere

conclusory statements.” Davis v. Wells Fargo, 824 F.3d 333, 341 (3d Cir. 2016). Third, the Court

considers “whether the facts alleged in the complaint are sufficient to show that the plaintiff has a

‘plausible claim for relief.’” Fowler, 578 F.3d at 211 (quoting Iqbal, 556 U.S. at 679).

B. Rule 11 Sanctions

Rule 11 “imposes an affirmative duty on parties to conduct a reasonable inquiry into the

factual and legal basis of claims before filing them with the court.” Irene Schneider Fam. Tr. v.

Christiana Tr., No. 23-1980, 2024 WL 4263309, at *8 (D.N.J. Sept. 23, 2024). If a party violates

Rule 11, the Court “may impose an appropriate sanction.” Fed. R. Civ. P. 11(c).

The Rule provides, in relevant part, that:

By presenting to the court a pleading . . . an attorney or unrepresented party certifies

that to the best of the person’s knowledge, information, and belief, formed after an

inquiry reasonable under the circumstances:

(1) it is not being presented for any improper purpose, such as to harass, cause

unnecessary delay, or needlessly increase the cost of litigation;

(2) the claims, defenses, and other legal contentions are warranted by existing law

or by a nonfrivolous argument for extending, modifying, or reversing existing

law or for establishing new law;

(3) the factual contentions have evidentiary support or, if specifically so identified,

will likely have evidentiary support after a reasonable opportunity for further

investigation or discovery; and

(4) the denials of factual contentions are warranted on the evidence or, if

specifically so identified, are reasonably based on belief or a lack of

information.

Fed. R. Civ. P. 11(b). “The lodestar of Rule 11 is thus reasonableness, not bad faith.” Wharton v.

Superintendent Graterford SCI, 95 F.4th 140, 147 (3d Cir. 2024). Rule 11 “imposes an objective

standard of reasonable inquiry.” Id. at 147–48 (quoting Chambers v. NASCO, Inc., 501 U.S. 32,

47 (1991)). The question is “what was reasonable to believe at the time the pleading . . . was

submitted.” Mary Ann Pensiero, Inc. v. Lingle, 847 F.2d 90, 94 (3d Cir. 1988) (citation omitted).

“In other words, courts can sanction lawyers for what they should have known, not just what they

knew.” Wharton, 95 F.4th at 148.

But Rule 11 “is not an appropriate vehicle for resolving legal or factual disputes, or

addressing the strength or merits of a claim.” Dirauf v. Berger, 506 F. Supp. 3d 254, 269 (D.N.J.

2020) (cleaned up) (quoting Strikeforce Techs., Inc. v. WhiteSky Inc., No. 13-1895, 2013 WL

5574643 at *4 (D.N.J. Oct. 9, 2013)), aff’d, 57 F.4th 101 (3d Cir. 2022). Rather, sanctions are

warranted “only in the ‘exceptional circumstance’ where a claim or motion is patently

[unmeritorious] or frivolous.” Ford Motor Co. v. Summit Motor Prods., Inc., 930 F.2d 277, 289

(3d Cir. 1991) (quoting Doering v. Union Cnty. Bd. of Chosen Freeholders, 857 F.2d 191, 194 (3d

Cir. 1988)). “Courts, therefore, have denied sanctions where the law and facts, even if not adopted

by the court, are ambiguous and could be reasonably interpreted in more than one way.” In re

Cendant Corp. Derivative Action Litig., 96 F. Supp. 2d 403, 405 (D.N.J. 2000). Ruling on a

sanctions motion is committed to the Court’s “sound discretion.” Wharton, 95 F.4th at 147.

III. DISCUSSION

A. Square One Fails to State a Tortious Interference Claim

To state a claim for tortious interference with prospective economic advantage, the plaintiff

must show: “(1) the existence of the contract or the prospective economic relationship; (2)

interference which was intentional and with malice; (3) the loss of the contract or prospective gain

as a result of the interference; and (4) damages.” MedWell, LLC v. Cigna Corp., No. 20-10627,

2023 WL 4045089, at *2 (D.N.J. June 16, 2023) (quoting Velop, Inc. v. Kaplan, 301 N.J. Super.

32, 49 (App. Div. 1997)).

i. Prospective Economic Relationship

Identifying a contract or prospective economic relationship “only requires allegations that

show a reasonable expectation of economic advantage.” Id. (citing Weil v. Express Container

Corp., 360 N.J. Super. 599, 613 (App. Div. 2003)). But a “mere allegation of lost business does

not suffice.” Eli Lilly & Co. v. Roussel Corp., 23 F. Supp. 2d 460, 494 (D.N.J. 1998) (citation

omitted). Thus, “the claimed loss of . . . unknown customers cannot, standing alone, state a claim

for tortious interference with prospective business relations.” Id. (alteration in original) (citation

omitted). “A plaintiff need not identify multiple lost business opportunities to establish a cause of

action for tortious interference, but it must identify one.” Austar Int’l Ltd. v. AustarPharma LLC,

425 F. Supp. 3d 336, 358 (D.N.J. 2019). At a minimum, the plaintiff must “identify a single,

specific customer that [the plaintiff] either lost or could have acquired but for [the defendant’s]

conduct.” Am. Millennium Ins. Co. v. First Keystone Risk Retention Grp., Inc., 332 F. App’x 787,

790 (3d Cir. 2009).

Square One merely alleges, in conclusory fashion, that “because Square One is an auto

dealership, if a customer does not access the premises on the date it is looking to buy a vehicle,

they will simply go elsewhere to make the purchase, meaning Square One loses that customer

forever.” (See Am. Compl. at 9.) Square One further asserts it “will suffer not only anticipated

irreparable harm to its business, but also significant damages including lost business, expenses,

sales expenses, employees expenses (due to loss of sales opportunities), and lost new and potential

customers in an amount to be proven at trial, but believed to be in excess of $100,000.” (Id.) But

Square One has not identified “a single, specific customer” it either “lost or could have acquired

but for [Netflix’s] conduct.” Am. Millennium Ins. Co., 332 F. App’x at 790. Instead, Square One

simply alleges it lost “unknown customers.” Eli Lilly, 23 F. Supp. 2d at 494. Accordingly, Square

One’s bare allegation that it lost theoretical customers, “standing alone,” fails to state a claim for

tortious interference upon which relief may be granted. Id.

ii. Intentional and Malicious Conduct

Intentional and malicious conduct does not literally require proof of “ill will toward the

plaintiff.” Printing Mart-Morristown v. Sharp Elecs. Corp., 116 N.J. 739, 751 (1989) (citation

omitted). Rather, malice means “that the harm was inflicted intentionally and without justification

or excuse.” Id. Put differently, the plaintiff must show “defendants acted intentionally and

wrongfully without justification.” Id. at 756. “[M]alicious acts are determined on a case-by-case

basis.” Id. This is a “flexible” standard. Id. at 757. But “the ultimate inquiry is whether the conduct

was ‘both injurious and transgressive of generally accepted standards of common morality or of

law.’” Id. (citation omitted). “The line clearly is drawn at conduct that is fraudulent, dishonest, or

illegal and thereby interferes with a competitor's economic advantage.” Lamorte Burns & Co. v.

Walters, 167 N.J. 285, 307 (2001).

The Amended Complaint does not adequately allege Netflix acted intentionally and

wrongfully without justification. That is because the Rahway and NJDOT Permits gave Netflix

the right to have Route 27 and a few surrounding roads shut down. “As a general matter, a party

cannot be held liable for tortiously interfering with another’s contractual rights when pursuing its

own lawful rights.” Woodmont Props., LLC v. Township of Westampton, 470 N.J. Super. 534, 544

(App. Div. 2022). “That which one has a right to do cannot become a tort when it is done.”

Rothermel v. Int’l Paper Co., 163 N.J. Super. 235, 244 (App. Div. 1978). Accordingly, the bare

fact that Netflix obtained permission to shut down Route 27 was not, by itself, wrongful or

unjustified conduct.8

Square One replies that, while Netflix had permission to shut down Route 27, Netflix (1)

enforced the Permits in a “draconian” manner (Am. Compl. ¶ 15), and (2) exceeded the scope of

the Permits (id. ¶ 12). Neither argument persuades.

To start, the Amended Complaint does not plausibly allege that Netflix enforced the

permits, as opposed to Rahway Police. (See generally id.) While the Amended Complaint asserts

“the over-aggressive restrictions to access [] were on information and belief suggested and required

by Netflix,” (id. ¶ 37), Netflix had the legal right to restrict access to the streets upon which it had

a permit to film. So, the mere fact that Netflix requested that police enforce the Permits does not,

by and of itself, evidence wrongful conduct.

Next, even if the Court takes as true Square One’s threadbare assertion that Netflix closed

more streets than allowed, Square One does not plausibly allege that closing additional streets

caused the dealership to lose business. To state a viable tortious interference claim, the plaintiff

must show that, had the defendant not interfered, “there was a reasonable probability that [the

plaintiff] would have received the anticipated economic benefit.” Walters, 167 N.J. at 306 (quoting

Ideal Dairy Farms, Inc. v. Farmland Dairy Farms, Inc., 282 N.J. Super. 140, 199 (App. Div.

1995)). Here, the Rahway Permit, as written, prevented customers from accessing Square One

directly from Route 27 or indirectly by cutting across Route 27. The Rahway Permit also closed

8 Netflix devotes considerable attention to a public entity’s immunity from suit for issuing a permit. (See, e.g., MTD

Moving Br. at 9.) This point warrants only brief discussion. Under New Jersey law “[a] public entity is not liable for

an injury caused by the issuance . . . of . . . any permit . . . where the public entity or public employee is authorized by

law to determine whether or not such authorization should be issued.” N.J.S.A. 59:2-5. A “public entity” means “the

State, and any county, municipality, district, public authority, public agency, and any other political subdivision or

public body in the State.” N.J.S.A. 59:1-3. Netflix is none of the above. And the Court cannot identify any basis for

Netflix to enjoy the government’s immunity from suit. Cf. Vanchieri v. N.J. Sports & Exposition Auth., 104 N.J. 80,

86 (1986) (“When a public entity provides plans and specifications to an independent contractor, the public contractor

will not be held liable for work performed in accordance with those plans and specifications.”).

part of Maple Avenue, blocking one of the dealership’s two entrances entirely. And the Rahway

Permit intersected with part of West Hazelwood Avenue, leaving Square One’s remaining entrance

between difficult and impossible to reach. Square One does not explain how Netflix closing more

streets than allowed—many of which were nowhere near the dealership—caused Square One to

lose business.

Because the Amended Complaint does not adequately allege lost business, intentional and

wrongful conduct, or causation, Square One’s tortious interference claim is dismissed without

prejudice.

B. Sanctions Are Unwarranted

As discussed above, courts impose sanctions only in exceptional cases. Ford Motor Co.,

930 F.2d at 289. Rule 11 is not “an appropriate vehicle for resolving legal or factual disputes.”

Dirauf, 506 F. Supp. 3d at 269. Sanctions are unwarranted “where the law and facts, even if not

adopted by the court, are ambiguous and could be reasonably interpreted in more than one way.”

In re Cendant, 96 F. Supp. 2d at 405.

Square One claims shutting down Route 27 caused a “complete lack of access” to the

dealership. (Am. Compl. ¶ 36.) Netflix argues this statement is false because Square One did not

have an entrance on Route 27; both entrances to the dealership were on adjoining streets. (See

Sanctions Moving Br.) The Court disagrees. First, Square One does not directly assert it had an

entrance directly on Route 27. And the facts in the Amended Complaint could be reasonably

interpreted more than one way. Blocking Route 27 could block a customer from using Square

One’s side street entrances. While this theory does not give rise to a tortious interference claim, it

neither forms the basis for sanctions. Accordingly, Netflix’s sanctions motion is denied.

IV. CONCLUSION

For the foregoing reasons, Netflix’s motion to dismiss (ECF No. 20) is GRANTED and

Netflix’s motion for sanctions (ECF No. 17) is DENIED. An appropriate Order accompanies this

Opinion.

DATED: 8/4/2026

JU XAVIER NEALS

Untted States District Judge

13