CT Espresso LLC v. Lavazza Premium Coffees Corp.

Background

CT Espresso LLC purchased and resold Lavazza coffee through its Amazon storefront, RLM Coffee. After an earlier dispute about invoices and unauthorized sales, the parties entered into a settlement agreement. The agreement stated that Lavazza would file no further complaints or other adverse notices against CT Espresso or its online outlets, including notices to Amazon, so long as CT Espresso complied with the agreement.

In November 2021, Lavazza ordered coffee from RLM Coffee to check whether it was authentic. CT Espresso alleged that the coffee was authentic but that Lavazza nevertheless submitted seven reports to Amazon stating that RLM Coffee was selling counterfeit Lavazza products. Amazon suspended CT Espresso’s account while the reports were pending. CT Espresso also alleged that its storefront lost Amazon’s “buy box,” through which most Amazon sales occurred, and that it suffered more than $300,000 in losses. Lavazza withdrew the reports on November 24, 2021, after stating that a second check had verified the products’ authenticity.

CT Espresso brought claims for breach of contract, defamation, and trade libel. In its amended complaint, it added claims for tortious interference with a contract and tortious interference with business relations. The defendants moved to dismiss the defamation, trade-libel, and two interference claims, but not the breach-of-contract claim.

Defamation and Trade Libel

The court applied New York law because the parties assumed that New York law governed. It explained that defamation generally concerns false statements about the plaintiff, while trade libel concerns false statements about the plaintiff’s business or products that are calculated to discourage others from dealing with it.

The court held that the accusation that CT Espresso’s products were “counterfeit” denigrated the quality of its goods. CT Espresso therefore had to plausibly allege malice and special damages. Malice in this context required facts supporting an inference that Lavazza knew its statements were false when it made them. The court found insufficient CT Espresso’s allegations that Lavazza’s initial testing must have confirmed authenticity. Those allegations were made only on information and belief and were not supported by specific facts. The fact that Lavazza later recognized that the products were authentic did not by itself show that Lavazza knew the statements were false earlier.

The court also held that CT Espresso had not adequately pleaded special damages for trade libel. Although CT Espresso alleged $25,000 in expired inventory and $300,000 in lost sales, it did not itemize the losses or identify customers who stopped purchasing or decided not to purchase its products. The court therefore dismissed both the defamation and trade-libel claims. It did not decide whether the Amazon reports were privileged because the claims failed for other reasons.

Tortious Interference with a Contract

Under New York law, this claim requires a valid contract between the plaintiff and a third party, the defendant’s knowledge of that contract, intentional and unjustified procurement of a breach, an actual breach, and resulting damages. The court found that CT Espresso had not alleged that Lavazza caused CT Espresso to breach a contract with Amazon. CT Espresso referred generally to a contractual relationship with Amazon but identified no specific provision that was violated and did not allege that Amazon’s contract had been breached. The court dismissed this claim.

Tortious Interference with Business Relations

This claim does not require a contract with the third party, but the plaintiff must plausibly allege that the defendant used criminal or independently wrongful conduct, or acted solely to cause intentional harm. The court found that CT Espresso had not plausibly alleged that Lavazza knew its counterfeiting accusations were false, acted to harm CT Espresso, or committed an applicable tort or crime. The court dismissed this claim as well.

Leave to Amend and Disposition

CT Espresso asked for permission to amend its complaint again. The court denied that request because CT Espresso had already amended once after the original motion to dismiss, had not significantly supplemented its allegations of malice, and had not explained what additional facts would cure the defects.

The court granted the defendants’ August 2 motion to dismiss. It dismissed CT Espresso’s claims for defamation, trade libel, tortious interference with a contract, and tortious interference with business relations. The opinion does not dismiss the breach-of-contract claim because that claim was not among the claims challenged by the motion.