NE Brands LLC v. Seattle Pacific Industries, Inc.

Background

NE Brands, which manufactured XRAY-brand apparel, sued Seattle Pacific Industries, Inc. (SPI), and Stephen Ritchey, identified as SPI's founder and chief executive officer. NE Brands asserted New York-law claims for intentional interference with business relations and, alternatively, prima facie tort, a claim alleging intentional harm through otherwise lawful conduct.

NE Brands and SPI shared Shopko Stores as a retail customer. According to the complaint, Shopko sold both companies' products. After Ritchey visited a showroom displaying the products, Shopko stopped buying XRAY apparel from NE Brands. A Shopko buyer allegedly told NE Brands that an SPI representative—whom NE Brands believed was Ritchey—said that XRAY apparel looked and felt similar to SPI's products, posed a threat to SPI's sales, and would cause SPI to end its relationship with Shopko if Shopko continued selling XRAY apparel.

Rule 12(b)(6) Standard

The defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint states a legally sufficient claim. The court accepted well-pleaded factual allegations as true and considered whether those allegations plausibly supported relief rather than merely presenting speculation or conclusions.

Tortious-Interference Claim

New York's business-interference claim required allegations that NE Brands had a business relationship with a third party, the defendants interfered with it, the defendants used dishonest, unfair, or improper means or acted solely to injure NE Brands, and the interference harmed the relationship.

The defendants argued that NE Brands did not allege that they acted solely to harm it because SPI may also have been pursuing its own economic interests. The court held that, at the motion-to-dismiss stage, NE Brands did not have to disprove that possibility. The allegation that SPI viewed XRAY apparel as a threat to SPI's products was not necessarily inconsistent with a later finding that the defendants' sole purpose was to harm NE Brands. The court therefore denied the motion to dismiss this claim.

Prima Facie Tort Claim

A prima facie tort claim required allegations of intentional harm, special damages, a lack of excuse or justification, and conduct that would otherwise be lawful. Special damages are specific and measurable losses and must be described in detail rather than stated as a speculative round number.

NE Brands alleged that it suffered at least $1 million but did not provide particularized or itemized losses. NE Brands also did not defend the damages allegation in its opposition brief, instead stating that it intended to seek permission to file an amended complaint with more detail. The court granted the motion to dismiss the prima facie tort claim.

Leave to Amend and Disposition

The court stated that NE Brands may submit a proposed amended complaint to the extent amendment would not be futile. In its conclusion, the court denied the defendants' motion to dismiss the tortious-interference claim and granted the defendants' motion to dismiss the prima facie tort claim. The opinion does not state that either ruling was with or without prejudice.