True Gentlemen's Jerky, Inc. v. 1K1V TGJ Holdings, LLC

Background

True Gentlemen’s Jerky, Inc. sued 1K1V TGJ Holdings, LLC, Hendrik Jordaan, Evans, and One Thousand and One Voices. The order addressed claims that 1K1V and Jordaan intentionally and negligently interfered with True’s prospective economic relations. True alleged that 1K1V and Jordaan aided and abetted Evans’s alleged breach of fiduciary duty to True and interfered with a potential investment by King Hawaiian.

True alleged that Evans first rejected 1K1V’s offer and described King Hawaiian’s offer favorably. After 1K1V resubmitted its offer, Evans allegedly abstained from voting on it, identified himself as the “1K1V director,” and voted against King Hawaiian’s offer unless 1K1V supported it. True also alleged that 1K1V and Jordaan campaigned against the King Hawaiian offer, threatened Evans’s board seat, and influenced Evans’s later negative characterization of the offer.

True separately based its interference claims on a letter from 1K1V’s lawyer to King Hawaiian. The letter accused True of defaulting on promissory notes, which True alleged was false, and at least arguably threatened litigation.

Court’s Analysis

The court held that True adequately pleaded the interference claims against 1K1V and Jordaan. It explained that the alleged appointment of Evans to True’s board and the alleged friendship between Jordaan and Evans, standing alone, would not overcome the business judgment rule. But the court found that True alleged more: Evans’s change in position, his alleged statements favoring 1K1V, the campaign against King Hawaiian’s offer, and the alleged threat to Evans’s board seat plausibly suggested an improper motive or conflict of interest.

The court also held that True plausibly alleged interference based on the letter’s allegedly false accusation of default. The court did not decide whether the letter’s litigation-threat theory was barred by the First Amendment doctrine protecting certain efforts to influence government action, because True had not clearly alleged that the threatened litigation was a sham.

The defendants argued that True could not show causation because True’s board had already rejected King Hawaiian’s initial offer before King Hawaiian withdrew. The court rejected that argument at the pleading stage, finding it plausible that the alleged interference stopped further negotiations that might otherwise have occurred.

The order technically decided only the aiding-and-abetting theory against 1K1V and Jordaan, not True’s direct breach-of-fiduciary-duty claim against Evans. Evans had not yet been properly served. The court gave True an additional eight weeks to serve him, assuming he did not authorize his lawyer to accept service.

Disposition

The court denied the motion to dismiss the claims for intentional and negligent interference with prospective economic relations against 1K1V and Jordaan. It dismissed One Thousand and One Voices without leave to amend because the complaint did not direct allegations against that defendant and True did not make arguments specific to it. The court stated that, if discovery against the remaining defendants revealed a basis for claims against One Thousand and One Voices, True could seek permission to file an amended complaint. An answer from 1K1V and Jordaan was due 14 days after the order.