GM Photo, LLC v. Focus Camera, Inc.

Background

GM Photo, LLC alleged that Focus Camera, Inc., its chief executive officer Michael Silberstein, and its Director of Amazon Sales Cassie Kirzner falsely reported GM’s Sigma camera-lens listings to Amazon as counterfeit. According to the amended complaint, the reports caused Amazon to suspend the listings, preventing GM from selling the products during the 2022 holiday shopping season. GM alleged lost revenue and reputational harm.

GM asserted six claims: tortious interference with prospective business relations, tortious interference with its contract with Amazon, commercial defamation, trade libel, deceptive acts or practices under Section 349 of the New York General Business Law, and unfair competition. The defendants moved to dismiss all six claims under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint plausibly states a legal claim. GM separately moved to dismiss the defendants’ counterclaim under Section 70-a of the New York Civil Rights Law.

Rulings on GM’s Claims

The court granted the defendants’ motion in part and denied it in part.

* Commercial defamation: The court denied dismissal. GM plausibly alleged that the defendants made specific, false statements of fact by reporting that GM’s Sigma lenses were counterfeit. The allegations also plausibly supported an inference that the defendants knew the reports were false. The court rejected arguments that the reports were opinions, substantially true, protected by a common-interest privilege, or barred by New York’s anti-lawsuit statute.

* Trade libel: The court granted dismissal. Trade libel, also called product disparagement, requires allegations of malice and special damages when the claim attacks a product. The court found that GM relied on a business-reputation theory and did not adequately itemize special damages for a separate product-disparagement claim.

* Tortious interference with business relations: The court denied dismissal. GM plausibly alleged that it had business relations with Amazon customers, that the defendants used wrongful means by knowingly submitting false counterfeit reports, and that the reports caused Amazon to suspend GM’s listings. The court declined to dismiss the claim as duplicative of defamation because the defendants raised that argument for the first time in their reply brief.

* Tortious interference with contract: The court granted dismissal. GM relied on its contract with Amazon, particularly a provision requiring Amazon to defend and indemnify GM against certain third-party claims. The court interpreted that provision as addressing claims arising from Amazon’s operation of an Amazon site, not claims concerning GM’s alleged intellectual-property violations. Because GM did not plausibly allege a breach of the contract, this claim failed.

* Section 349 deceptive practices: The court granted dismissal. Although GM alleged that consumers had fewer choices after its listings were removed, the court found that GM principally sought recovery for its own lost sales and reputational injuries. Those injuries were unique to GM and did not satisfy the requirement that the conduct injure consumers or the public generally.

* Unfair competition: The court granted dismissal. GM did not plausibly allege that the defendants misappropriated GM’s property right or commercial advantage, or took the benefit of GM’s skill, expenditures, and labor. Alleging that the defendants reduced competition through false reports was not enough to state this type of unfair-competition claim.

Counterclaim

The court granted GM’s motion to dismiss the defendants’ counterclaim under Section 70-a of the New York Civil Rights Law. That statute provides a potential claim for fees and other damages when an action involving public participation was brought without a substantial basis in fact and law. The court held that Section 70-a does not apply in federal court because its higher pleading standard conflicts with the Federal Rules of Civil Procedure.

Disposition and Effect

Judge Vernon S. Broderick granted in part and denied in part the defendants’ motion to dismiss the amended complaint. The motion was granted as to trade libel, tortious interference with contract, Section 349 deceptive practices, and unfair competition, and denied as to defamation and tortious interference with business relations. The court granted GM’s motion to dismiss the counterclaim. The defendants were ordered to answer the amended complaint by May 8, 2025, after which the court said it would refer general pretrial proceedings, including discovery, to a designated magistrate judge.