Ronaldo Designer Jewelry, Inc. v. Cox

RONALDO DESIGNER JEWELRY, INC. PLAINTIFF v. JAMES B. COX and CATHERINE A. COX d/b/a JC DESIGNS d/b/a WIRE N RINGSand JOHN DOE a/k/a LEROY and JOHN DOES Numbers 1 through 99 DEFENDANTS

NO. 1:17-CV-2-DMB-DAS

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF MISSISSIPPI ABERDEEN DIVISION

March 18, 2019

ORDER

Before the Court is Ronaldo Designer Jewelry Inc.'s second motion to dismiss. Doc. #104.

IRelevant Procedural History¹

On April 28, 2017, Ronaldo Designer Jewelry, Inc., with leave of the Court, filed a second amended complaint against James and Catherine Cox "d/b/a JC Designs d/b/a Wire N Rings." Doc. #82. The three-count complaint seeks injunctive and monetary relief for the Coxes' production of jewelry, which allegedly infringes on Ronaldo's intellectual property.

On May 12, 2017, the Coxes answered the second amended complaint. Doc. #87. The Coxes' answer asserted fifteen counterclaims. Id. at 13-48. On June 16, 2017, after receiving a requested extension to respond to the counterclaims, Ronaldo filed a motion to dismiss five of the counterclaims. Doc. #92.

On March 16, 2018, this Court granted Ronaldo's motion and dismissed the challenged counterclaims but with leave for the Coxes to re-file them within twenty-one days. Doc. #101 at 4. The Coxes filed an answer with their first amended counterclaims on April 6, 2018. Doc.#102. The Coxes assert, among other things, a counterclaim for tortious interference with actual business relations (Count X) and a counterclaim for tortious interference with prospective business relations (Count XI). Id. at 45-47.

On April 26, 2018, Ronaldo filed a motion to dismiss Count X and Count XI, Doc. #104, and a motion to strike two affidavits attached to the Coxes' amended counterclaims, Doc. #105. Both motions are fully briefed.

IIMotion to Strike

The Coxes attached two affidavits to their answer and amended counterclaims: (1) an affidavit of Judy Irvine, "a sales representative in the jewelry industry," which expresses the opinion that "Ronaldo company's actions would interfere with [JC Designs] obtaining additional business from new vendors due to the cloud of confusion and disruption Ronaldo has created," Doc. #102-2; and (2) an affidavit of Jennie Bruning, the "Vendor Coordinator for Monograms America," in which Bruning expresses "concern[] that ... non-Ronaldo vendors [at a 2016 vendor forum] were improperly dissuaded and/or intimidated from reordering from JC Designs in an anticompetitive manner by either Ronaldo company itself or through its agents, representatives, and/or distributors," Doc. #102-3. The affidavits are "incorporated by reference" in the counterclaims and are cited as support for certain factual assertions. See Doc. #102 at 28-29. Ronaldo argues that the affidavits should be stricken because "affidavits are not to be part of a complaint and violate of [sic] Rule 10(c)."² Doc. #107 at 2.

Federal Rule of Civil Procedure 10(c) provides, in relevant part, that "[a] copy of a written instrument that is an exhibit to a pleading is a part of the pleading for all purposes." Courts are divided on the issue of whether an affidavit qualifies as a "written instrument" under Rule 10(c).The Second and Third Circuits have held that an affidavit does not qualify as a written instrument because "[t]he case law demonstrates ... that the types of exhibits incorporated within the pleadings by Rule 10(c) consist largely of documentary evidence, specifically, contracts, notes, and other writings on which a party's action or defense is based ...." See Rose v. Bartle, 871 F.2d 331, 339 n.3 (3d Cir. 1989) (internal quotation marks and alterations omitted); Smith v. Hogan, 794 F.3d 249, 254 (2d Cir. 2015) (adopting reasoning of Bartle). The Seventh Circuit, noting that a "broader interpretation comports with the traditionally generous nature in which we view pleadings," has reached the opposite conclusion. N. Ind. Gun & Outdoor Shows, Inc. v. City of South Bend, 163 F.3d 449, 453 & n.4 (7th Cir. 1998). The Eighth Circuit, in an unpublished opinion with no analysis on the issue, has held that an affidavit falls under the ambit of Rule 10(c). Rasidescu v. Globe Coll., Inc., 105 F. App'x 121, 123 (8th Cir. 2004).

The Fifth Circuit, for its part, has not definitively addressed the scope of Rule 10(c). It has, however, held that a district court did not abuse its discretion in refusing to consider opinions or conclusions (as distinct from facts) set forth in an affidavit attached to a complaint. Fin. Acquisition Partners LP v. Blackwell, 440 F.3d 278, 286 (5th Cir. 2006). In so holding, the Fifth Circuit cited with approval a district court case which adopted the Third Circuit's holding that an affidavit is not a written instrument. Id. at 285-86 (citing DeMarco v. DepoTech Corp., 149 F.Supp.2d 1212, 1221 (S.D. Cal. 2001)). In Blackwell, the Fifth Circuit did not reach the larger issue of whether an affidavit itself may be considered a written instrument under Rule 10(c) but noted that "[e]ven if non-opinion portions of an expert's affidavit constitute an instrument pursuant to Rule 10, opinions cannot substitute for facts ...." Id. at 286. In an unpublished decision issued two years later, however, the Fifth Circuit held that an affidavit attached to a complaint and specifically incorporated in an allegation was "properly consider[ed] in ruling on [a] motion to dismiss for failure to state a claim." Malik v. Cont'l Airlines Inc., 305 F. App'x 165, 166 n.2 (5thCir. 2008).

The distinction between affidavits setting forth facts and affidavits setting forth opinions finds some support in the history of Rule 10(c). The advisory committee's note to the 1937 enactment of Rule 10(c) states that "[f]or written instruments as exhibits, see Smith-Hurd Ill.Stats. ch. 110, § 160." At the time of enactment, this statute provided:

Whenever an action, defense or counterclaim is founded upon a written instrument, a copy thereof, or of so much of the same as is relevant, must be attached to the pleading as an exhibit or recited therein, unless the pleader shall attach to his pleading an affidavit stating facts showing that such instrument is not accessible to him. In pleading any written instrument a copy thereof may be attached to the pleading as an exhibit. In either case the exhibit shall constitute a part of the pleading for all purposes. No profert shall be necessary.

Smith-Hurd Ill.Stats. ch. 110, § 160. Although often applied to documentary evidence, such as insurance policies, MacKnight v. Fed. Life Ins. Co., 278 Ill. App. 241, 244 (Ill Ct. App. 1934); the statute, shortly after Rule 10(c)'s enactment, was applied to the contents of affidavits attached to a complaint, Pure Oil Co. v. Miller-McFarland Drilling Co., 34 N.E.2d 854, 859-60 (Ill. 1941).³

Consistent with the post-enactment treatment of § 160 (the basis for Rule 10(c)'s written instrument provision), the Fifth Circuit has expressed a general willingness to consider an attached affidavit as a part of a pleading. Malik, 305 F. App'x at 166 n.2. But, as mentioned above, it has held that opinions in an affidavit are not entitled to this treatment. Blackwell, 440 F.3d at 286. Under these circumstances, the Court concludes that Rule 10(c)'s definition of a written instrument encompasses an affidavit setting forth facts but not opinions. Accordingly, the motion to strike will be granted to the extent it seeks exclusion of opinions in the affidavits, and will be denied to the extent it seeks exclusion of facts in the affidavits.

IIIMotion to Dismiss

A. Standard

Federal Rule of Civil Procedure 8 "requires a pleading to contain a short and plain statement of the claim showing that the pleader is entitled to relief. The purpose of this requirement is to give the defendant fair notice of what the claim is and the grounds upon which it rests." Wooten v. McDonald Transit Assocs., Inc., 788 F.3d 490, 498 (5th Cir. 2015) (internal quotation marks and alteration omitted). "Although Rule 8 and—in specific circumstances—Rule 9 provide the statutory component of the federal pleading standard, Rule 12(b)(6) provides the one and only method for testing whether that standard has been met." Int'l Energy Ventures Mgmt., L.L.C. v. United Energy Grp., Ltd., 818 F.3d 193, 203 (5th Cir. 2016).

"To survive a Rule 12(b)(6) motion to dismiss, the complaint does not need detailed factual allegations, but it must provide the plaintiff's grounds for entitlement for relief—including factual allegations that, when assumed to be true, raise a right to relief above the speculative level." Ruiz v. Brennan, 851 F.3d 464, 468 (5th Cir. 2017). Under this standard, a court must "accept all well-pleaded facts as true." New Orleans City v. Ambac Assurance Corp., 815 F.3d 196, 199 (5th Cir. 2016) (internal quotation marks omitted).

B. Factual Allegations of Counterclaims

Since August of 2000, James Cox has worked in the wire jewelry business, creating, making, and selling handcrafted wire bracelets. Doc. #102 at ¶ 101. At some point, James⁴ began marketing his bracelets under the name "JC Designs Wire N Rings." Id. at ¶ 106.

Ronaldo Designer Jewelry, Inc. is a Kentucky corporation which sells jewelry, including wire bracelets. See id. at ¶¶ 95, 115-16. According to the Coxes, Ronaldo has sought to divertcustomers away from JC Designs by (1) communicating "false and defamatory statements in the marketplace about Mr. and Mrs. Cox, their business, and/or their products, including, but not limited to, phrases such as 'knock-off products' and 'inferior quality products,'" and (2) "intimidat[ing] multiple actual and prospective clients [by] suggesting that unless the customers purchased directly from a Ronaldo Company affiliate, they would be subject to litigation." Id. at ¶ 157.

In the fall of 2016, the Coxes attended a Vendor Forum at which "many new vendors expressed interest in [the Coxes'] bracelets, and placed various orders ...." Id. at ¶ 160. At this forum, in which...