Editor's Pick Luxury LLC v. Red Points Solutions SL

Background

Editor’s Pick Luxury LLC (EPL) sued Red Points Solutions SL and Red Points, Inc. over reports that Red Points sent to Shopify between September 2021 and August 2022. Red Points used software to identify alleged intellectual-property violations for its clients. It reported that nine products sold through EPL’s Shopify storefront violated the intellectual property of four Red Points clients. Shopify removed those listings. EPL alleged that the reports were false, that Red Points’ software indiscriminately reported violations, and that EPL suffered lost sales and reputational damage. Shopify warned that it might close EPL’s entire storefront, but the storefront remained open.

EPL asserted claims for defamation, declaratory judgment, tortious interference with contract and business relations, prima facie tort, and false advertising under the Lanham Act. Red Points moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which asks whether the complaint alleges enough facts to plausibly support legal relief.

Court’s Analysis

Defamation

The court held that EPL did not plead facts sufficient to overcome the common-interest privilege. That privilege can protect communications between parties who share an interest in the subject, including business interests. The court reasoned that Shopify had an interest in preventing intellectual-property infringement, while Red Points had an interest in protecting its clients’ intellectual property. EPL alleged that Red Points acted with actual malice, meaning a high awareness that its statements were probably false or serious doubts about their truth. But the court found those allegations conclusory and unsupported by specific facts. It therefore dismissed the defamation claim.

Declaratory judgment

The court dismissed the declaratory-judgment claim because its resolution of the defamation and interference claims would resolve the legal issues underlying that request. A separate declaration was therefore unnecessary.

Tortious interference

The court dismissed both interference claims. For the contract-interference claim, EPL did not adequately allege an actual breach of its contract with Shopify or that Red Points directly caused such a breach. Shopify had removed nine listings but had not terminated EPL’s storefront. The court also noted evidence that EPL continued to sell products from four Red Points clients.

For interference with business relations, EPL did not adequately allege the required wrongful conduct or malice. The court found that the allegations did not sufficiently show that Red Points acted out of malice rather than economic self-interest in protecting its clients’ brands and intellectual property. The court also found that EPL had not sufficiently alleged the necessary injury to its continuing relationship with Shopify.

Prima facie tort

The court held that the prima facie tort claim could not proceed because it relied on the same facts as EPL’s defamation and interference claims. The court also found that EPL had not plausibly alleged that Red Points acted solely out of malice toward EPL and had not pleaded special damages, which are specific, particularized losses rather than an unexplained round-number estimate.

Lanham Act false advertising

The court dismissed EPL’s false-advertising claim because the alleged reports to Shopify were not sufficiently disseminated to the relevant purchasing public. The court also found that Shopify was not EPL’s consumer and that EPL had not shown the required direct connection between any deception and harm to EPL’s consumers or sales. The alleged reports therefore did not satisfy the requirements for a false-advertising claim under the Lanham Act.

Attorneys’ fees

Red Points requested attorneys’ fees under New York’s anti-SLAPP statute. The court denied that request, relying on decisions holding that the statute’s substantial-basis standard conflicts with the standards governing motions to dismiss and summary judgment in federal court.

Disposition

The court granted Red Points’ motion to dismiss. It dismissed EPL’s complaint without prejudice, denied Red Points’ request for attorneys’ fees, and granted EPL leave to file a first amended complaint. EPL was ordered to file that amended complaint by October 13, 2023.