Intelsat USA Sales Corp. v. Juch-Tech, Inc. , 935 F. Supp. 2d 101 ( 2013 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
INTELSAT USA SALES CORP., :
:
Plaintiff, Counterdefendant : Civil Action No.: 10-2095 (RC)
:
v. : Re Document No.: 12
:
JUCH-TECH, INC., :
:
Defendant, Counterclaimant :
MEMORANDUM OPINION
GRANTING IN PART AND DENYING IN PART THE PLAINTIFF’S MOTION TO DISMISS THE
DEFENDANT’S COUNTERCLAIM
I. INTRODUCTION
At the heart of this lawsuit is a contract dispute between two satellite communications
companies. Now before the court is the plaintiff’s motion to dismiss the defendant’s
counterclaim. The court grants the motion in part and denies the motion in part.
II. FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND
Intelsat USA Sales Corp. (“Intelsat”) and Juch-Tech, Inc. (“Juch-Tech”) are companies
that operate in the satellite communications industry. In 2005, the parties entered into a
contractual agreement titled the Non-Exclusive Service Agreement (“NESA”). Counterclaim ¶
23. Under this agreement, Juch-Tech leased satellite capacity from Intelsat on two satellites so
that Juch-Tech could provide communications services to its customers. Id.
In early 2009, the parties entered into an additional agreement, under which Juch-Tech
agreed to lease additional satellite capacity from Intelsat. Id. ¶ 24. Juch-Tech claims that it was
induced to enter this additional agreement via several promises: in particular, Intelsat promised
to assign certain consumer contracts to Juch-Tech, to provide certain sales leads, and to abstain
from competing with Juch-Tech under certain circumstances. These promises were
memorialized in a contract called the Transition Agreement. See generally id., Ex. A.
Intelsat claims that it performed all of its contractual obligations but that Juch-Tech
refused to pay for the services rendered. See Compl. ¶¶ 6–7. Juch-Tech claims that Intelsat did
not provide services at the level mandated by the NESA. Counterclaim ¶ 34. Juch-Tech also
claims that Intelsat failed to correct technical problems with its satellites, which made it harder
for Juch-Tech to serve its clients or to obtain new customers. Id. ¶ 27. In addition, Juch-Tech
claims that Intelsat violated the Transition Agreement by failing to assign customer contracts,
failing to provide sales leads, and by breaching its agreement not to compete. Id. Finally, Juch-
Tech claims that Intelsat interfered with its business by spreading false rumors that Juch-Tech
was on the verge of bankruptcy. Id.
Both parties agree that their contractual relationship was terminated in October 2010.
Compl. ¶ 8; Counterclaim ¶ 8. Intelsat brought suit for breach of contract and quantum meruit,
and Juch-Tech brought a host of counterclaims. See Docket No. 10. The counterclaim’s many
counts oscillate between New York and Canadian law: Breach of Contract under New York law
(Count I); Fraud under New York law (Count II); Fraudulent Misrepresentation under Canadian
law (Count III); Tortious Interference with Contractual Relations under New York law (Count
IV); Tortious Interference with Contractual Relations under Canadian law (Count V); Tortious
Interference with Business Relations under New York law (Count VI); Tortious Interference
with Commercial Matters under Canadian law (Count VII); Defamation under New York law
(Count IX);1 Defamation under Canadian Law (Count X); Violation of the Canadian Trademark
1
There is no Count VIII.
2
Act (Count XI); and Declaratory Judgment (Count XII). For the reasons explained below, the
court will grant in part and deny in part Intelsat’s motion to dismiss.
III. ANALYSIS
A. Legal Standard for a Motion to Dismiss Under Rule 12(b)(6)
All that the Federal Rules of Civil Procedure require of a complaint is that it contain a
“short and plain statement of the claim” in order to give the defendants fair notice of what the
claim is and the grounds upon which it rests. FED. R. CIV. P. 8(a)(2), see Erickson v. Pardus, 551
U.S. 89, 93 (2007). A motion to dismiss under Rule 12(b)(6) does not test a plaintiff’s ultimate
likelihood of success on the merits; rather, it tests whether a plaintiff has properly stated a claim.
See Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). A court considering such a motion presumes
the factual allegations of the complaint to be true and construes them liberally in the plaintiff’s
favor. See, e.g., United States v. Philip Morris, Inc., 116 F. Supp. 2d 131, 135 (D.D.C. 2000). It
is not necessary for the plaintiff to plead all elements of his prima facie case in the complaint.
Swierkiewicz v. Sorema N.A., 534 U.S. 506, 510–12 (2002); Bryant v. Pepco, 730 F. Supp. 2d 25,
28–29 (D.D.C. 2010).
Nevertheless, “[t]o survive a motion to dismiss, a complaint must contain sufficient
factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks omitted). “Threadbare recitals of the
elements of a cause of action, supported by mere conclusory statements,” are therefore
insufficient to withstand a motion to dismiss. Id. A court need not accept a plaintiff’s legal
conclusions as true, id., nor must the court presume the veracity of legal conclusions that are
couched as factual allegations. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).
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B. Legal Standard for Pleading a Fraud Claim Under Rule 9(b)
Federal Rule of Civil Procedure 9(b) requires that a party “alleging fraud or mistake . . .
must state with particularity the circumstances constituting fraud or mistake.” FED. R. CIV. P.
9(b). “The rule serves to discourage the initiation of suits brought solely for their nuisance value,
and safeguards potential defendants from frivolous accusations of moral turpitude. . . . And
because “fraud” encompasses a wide variety of activities, the requirements of Rule 9(b)
guarantee all defendants sufficient information to allow for preparation of a response.” United
States ex rel. Joseph v. Cannon, 642 F.2d 1373, 1385 (D.C. Cir. 1981). Although Rule 9(b)
imposes a heightened pleading standard, it should be read in conjunction with Rule 8’s command
that a complaint need only include a “short and plain statement” of the claim. United States ex
rel. Williams v. Martin-Baker Aircraft Co., 389 F.3d 1251, 1256 (D.C. Cir. 2004). Read
together, Rules 8 and 9(b) require that the pleader state the time, place, and content of the false
misrepresentations, the fact misrepresented, and what was retained or given up as a consequence
of the fraud, as well as the individuals allegedly involved in the fraud. Id. (citing Kowal v. MCI
Commc’ns Corp., 16 F.3d 1271, 1278 (D.C. Cir. 1994)).
C. Juch-Tech’s Contract Claim (Count I)
Juch-Tech alleges that Intelsat committed a breach of contract when it violated the NESA
and the Transition Agreement. Counterclaim ¶¶ 33–40. Intelsat argues that Juch-Tech’s
counterclaim does not contain enough factual allegations to constitute a plausible claim to relief
and should be dismissed under Rule 12(b)(6). Pl.’s Mot. at 12.
As a preliminary matter, both parties agree that Count I should proceed under New York
law due to a choice-of-law provision in the contract. Pl.’s Mot. at 9; Def.’s Opp’n at 8. To
establish a breach of contract under New York law, a plaintiff must allege: (1) the existence of
the contract; (2) the plaintiff’s performance pursuant to the contract; (3) the defendant’s breach
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of its obligations pursuant to the contract; and (4) damages resulting from that breach. Elisa
Dreier Reporting Corp. v. Global NAPS Networks, Inc., 2011 WL 1630922, at *4 (N.Y. App.
Div. Apr. 26, 2011).
Juch-Tech alleges that Intelsat breached several contractual agreements. The first is
contained within the NESA. The NESA provided that “Intelsat would supply Juch-Tech with
satellite transponder services at a guaranteed minimum service level.” Counterclaim ¶ 34. Juch-
Tech alleges that Intelsat breached its obligations under the NESA “by failing to provide Juch-
Tech the services identified . . . at a service level required by the NESA and failing to conduct
the transition of services properly.” Id. ¶ 38. Similarly, Juch-Tech alleges that Intelsat “refused
to correct . . . several technical problems with its satellite transponders that materially impaired,
or precluded, Juch-Tech from serving its existing clients or obtaining new customers.” Id. ¶ 26.
Second, Juch-Tech claims that Intelsat breached the Transition Agreement. Id. ¶ 39.
Under the Transition Agreement, Intelsat promised to assign Juch-Tech several customer
contracts. Id. Juch-Tech alleges that Intelsat failed to assign contracts for at least two
customers: Millenium Arrow and Bentley-Walker. Id. ¶¶ 48–49, id., Ex. A (“Transition
Agreement”) (promising to assign those contracts). Intelsat also promised that it would provide
Intelsat with certain sales leads. Transition Agreement § 2(iii) (“Intelsat will provide sales leads
to Juch-Tech when possible.”). Juch-Tech alleges that Intelsat failed to abide by that promise as
well. Counterclaim ¶ 39. Intelsat also agreed not to compete with Juch-Tech under certain
circumstances. See Transition Agreement § 2(iii) (“Intelsat will not directly offer a competing
Linkstar Hub Service in North America which uses a Linkstar hub on any Intelsat Satellite
segment/service for the duration of this agreement.”). Juch-Tech alleges a violation of this
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promise as well. See Counterclaim ¶ 52 (“Intelsat also misrepresented its intention not to
directly compete against Juch-Tech in North America.”).
Intelsat takes issue with the last two arguments, arguing that the missing sales leads are
not specified, and that it did not violate its promise to abstain from competing. Pl.’s Mot. at 14.
Even so, Juch-Tech’s counterclaim contains enough factual matter to proceed to discovery.
Juch-Tech’s factual allegations fit neatly within the confines of a prima facie contract claim:
Juch-Tech alleges (1) the existence of a contract (the NESA and the Transition Agreement); (2)
Juch-Tech’s performance, see Counterclaim ¶ 37 (“Until such time as Intelsat fraudulently
induced Juch-Tech to enter into Service Order No. 22165 and the Transition Agreement, Juch-
Tech performed pursuant to the terms of the NESA and Transition Agreement”); (3) the other
party’s breach (Intelsat’s refusal to provide services, failure to fix technical problems, and failure
to assign customer contracts); and, (4) damages, see id. ¶ 40 (“Juch-Tech has paid for services it
did not receive, suffered the loss of customers and potential customers, and has therefore been
damaged by Intelsat’s breaches of the NESA, Service Order No. 22165, and the Transition
Agreement.”). In sum, the court concludes that Juch-Tech has put forth enough factual matter to
support a plausible claim to relief. Iqbal, 556 U.S. at 678.
1. The NESA’s Limited Liability Clause
Intelsat argues that the NESA contains a limited liability clause that prevents Juch-Tech
from recovering any money damages. Pl.’s Mot. at 13–15. And a court “may dismiss a
complaint based on a contract if the contract unambiguously shows that the plaintiff is not
entitled to the requested relief.” Dyncorp v. GTE Corp., 215 F. Supp. 2d 308, 315 (S.D.N.Y.
2002); see Deutsche Lufthansa A v. Boeing Co., 2007 WL 403301, at *2–3 (S.D.N.Y. Feb. 2,
2007) (construing a contract’s limited liability clause on a motion to dismiss). Juch-Tech argues
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that the clause is unenforceable because it was procured by fraud. Def.’s Opp’n at 9–10. The
clause states as follows:
9.2 With the exception of claims for death or personal injury due to Intelsat’s negligence, for
which there is limitation imposed, it is expressly agreed that Intelsat’s sole obligation and the
Customer’s exclusive remedy for any direct loss whatsoever, arising out of or relating to this
Agreement is Interruption Credits, and the Customer agrees that these are a genuine pre
assessment of loss and damage.
9.3 In no event shall either party be liable for any indirect, special punitive, incidental or
consequential damages whatsoever arising out of or under this Agreement, whether under contract,
warranty, tort or otherwise, including, without limitation, loss of revenue or profits, regardless of
the foreseeability of such damages.
Compl., Ex. A.2
New York law generally endorses the use of limited liability clauses because they
“represent[] the parties’ agreement on the allocation of the risk of economic loss in the event that
the contemplated transaction is not fully executed . . . .” Metro. Life Ins. Co. v. Noble Lowndes
Int’l Inc., 84 N.Y.2d 430, 436 (1994). Thus, a limited liability clause is enforceable even if the
parties “may later regret their assumption of the risks of non-performance,” and courts will
generally “let them lie on the bed they made.” Id. (quoting 5 CORBIN, CORBIN ON CONTRACTS §
1068 (1964)). This rule is not ironclad, however. A limited liability clause may be
unenforceable if “the misconduct for which it would grant immunity smacks of intentional
wrongdoing.” Kalisch-Jarcho, Inc. v. City of New York, 58 N.Y.2d 377, 385 (1983). “This can
be explicit, as when it is fraudulent, malicious or prompted by the sinister intention of one acting
in bad faith. Or, when, as in gross negligence, it betokens a reckless indifference to the rights of
others, it may be implicit.” Id. But this is not an easy standard to meet: courts require “nothing
2
Although the counterclaim does not provide the court with a copy of the NESA, it is incorporated
by reference. See Counterclaim at 3, n.3. Thus, the court may consider its provisions on a
motion to dismiss. See In re XM Satellite Radio Holdings Secs. Litig., 479 F. Supp. 2d 165, 174
(D.D.C. 2007) (“In deciding a motion to dismiss, the Court must typically confine its analysis “to
facts stated on the face of the complaint, in documents appended to the complaint or incorporated
into the complaint by reference, and to matters of which judicial notice may be taken.”) (citation
omitted).
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short of . . . a compelling demonstration of egregious intentional misbehavior evincing extreme
culpability: malice, recklessness, deliberate or callous indifference to the rights of others, or an
extensive pattern of wanton acts.” Net2Globe Int’l, Inc. v. Time Warner Telecom of N.Y., 273 F.
Supp. 2d 436, 454 (S.D.N.Y. 2003).
Juch-Tech alleges that Intelsat acted with such bad faith as to render the limited liability
clause unenforceable, and the court agrees. Juch-Tech’s counterclaim alleges intentional fraud,
defamation, and a number of other misdeeds. If true, these acts certainly “smack[] of intentional
wrongdoing” such that they can pierce a limited liability clause. Kalisch–Jarcho, Inc., 58
N.Y.2d at 385; Turkish v. Kasenetz, 27 F.3d 23, 27–28 (2d Cir. 1994) (“It is well settled that
parties cannot use contractual limitation of liability clauses to shield themselves from liability for
their own fraudulent conduct.”). In addition, Juch-Tech appears to argue that there was fraud in
the procurement—that is to say, Juch-Tech alleges that it never would have entered the contract
but for Intelsat’s fraudulent conduct. If proven true, the contract would be independently
unenforceable. Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Wise Metals Group, LLC, 798
N.Y.S.2d 14, 16 (1st App. Div. 2005) (“A contract induced by fraud, however, is subject to
rescission, rendering it unenforceable by the culpable party.”). Although Juch-Tech will
ultimately face a “high burden to prove that [the defendant’s] conduct falls within this narrow
exception to the general enforceability of limitation of remedy clauses,” Tomoka Re Holdings,
Inc. v. Loughlin, 2004 WL 1118178, at *5 (S.D.N.Y. May 19, 2004), at this stage Juch-Tech’s
allegations must be taken at face value. Accordingly, the court rejects Intelsat’s argument.
2. The Transition Agreement’s Limited Liability Clause
Intelsat also argues that the Transition Agreement contains a similar limitation of liability
clause. Pl.’s Mot. at 14. For the same reasons listed above, this clause does not yet warrant
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dismissal of Juch-Tech’s contract claim. Thus, the court denies Intelsat’s motion to dismiss
Count I.
D. Choice of Law Analysis for Juch-Tech’s Remaining Claims
Juch-Tech brings several claims under the common law of New York and Canada.
Intelsat argues that these claims should be analyzed under D.C. law. Both parties urge the court
to undertake a choice-of-law analysis, but in doing so, they overlook a crucial step. The court is
only required to engage in a choice-of-law analysis if there is an actual conflict between the laws
of the competing jurisdictions. Am. Petroleum Inst. v. Technomedia Intern., Inc., 699 F. Supp.
2d 258, 264 n.3 (D.D.C. 2010) (“Before embarking on any choice of law analysis, the Court
‘must first determine if there is a conflict between the laws of the relevant jurisdictions. Only if
such a conflict exists must the court then determine, pursuant to District of Columbia choice of
law rules, which jurisdiction has the ‘more substantial interest’ in the resolution of the issues.’”
(quoting Young Women’s Christian Ass’n of the Nat’l Capital Area, Inc. v. Allstate Ins. Co., 275
F.3d 1145, 1150 (D.C. Cir. 2002))); Eli Lilly & Co. v. Home Ins. Co., 653 F. Supp. 1, 4–5
(D.D.C. 1984) (concluding that federal courts entertaining a diversity action will not engage in
choice of law exercise when the laws of the interested states do not conflict). If no conflict
exists, the law of the forum—here, D.C. law—applies. Phelps v. Stomber, 2012 WL 3276969, at
*35 (D.D.C. Aug. 13, 2012). Here, neither party has identified any conflict between the laws of
these jurisdictions. Accordingly, the court will consider Juch-Tech’s claims under D.C. law.
E. Juch-Tech’s Fraud Claims (Counts II–III)
In Counts II and III, Juch-Tech claims that Intelsat committed three acts that constituted
fraud. First, Juch-Tech alleges that Intelsat falsely promised to transfer the Millennium Arrow
contract. Counterclaim ¶ 48. Second, Juch-Tech alleges that Intelsat knowingly lied about the
profitability of the Bentley-Walker contract. Id. ¶ 49. Third, Juch-Tech appears to allege that
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Intelsat committed fraud by reneging on its promise not to compete for Juch-Tech’s customers.
Id. ¶¶ 51–52.
To state a claim for fraud, a plaintiff must allege the following elements: “(1) a false
representation, (2) made in reference to a material fact, (3) with knowledge of its falsity, (4) with
the intent to deceive, and (5) an action that is taken in reliance upon the representation.” In re
Estate of McKinney, 953 A.2d 336, 342 (D.C. 2008). In commercial contracts negotiated at
arm’s length, the plaintiffs must also plead (6) reliance that is objectively reasonable. Alicke v.
MCI Commc’ns Corp., 111 F.3d 909, 912 (D.C. Cir. 1997); Hercules & Co. v. Shama Restaurant
Corp., 613 A.2d 916, 923 (D.C. 1992).
At the outset, the court will dismiss the portion of Juch-Tech’s fraud claim that is
predicated on Intelsat’s agreement not to compete. Juch-Tech does not point to any
communications other than the promise contained within the Transition Agreement. And other
than a vague allegation that this promise was broken, there are few details provided. In
particular, there are not enough facts for the court to infer that Intelsat’s promise was known to
be false when it was made. Nor are there enough facts for the court to infer that the promise was
made with an intent to deceive. Finally, Intelsat argues that the contract does not contain the
promise that Juch-Tech says it does, and Juch-Tech has not adequately responded to that point.
Accordingly, the court will dismiss this portion of Count II for failure to plead fraud with
particularity under Rule 9(b).
Juch-Tech’s other claims are plead with more particularity. Juch-Tech alleges that
Intelsat personnel emailed Juch-Tech’s CEO to indicate that several profitable contracts would
be assigned to Juch-Tech under the Transition Agreement. Counterclaim ¶¶ 43–44. Intelsat thus
conveyed that “Juch-Tech would earn a profit from the revenues generated from the assigned
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customers.” Id. ¶ 44. Juch-Tech alleges that these representations induced Juch-Tech to enter
into the Transition Agreement, under which Intelsat agreed to assign Juch-Tech six specific
customer contracts: Easynet, Atlasco (QKON), DCC Satellite Networks, Mattel, Bentley-
Walker, and Millennium Arrow. Id. ¶ 46; see id., Ex. A. These promises were false, Juch-Tech
alleges, because (1) Intelsat promised to transfer a contract (Millennium Arrow) that did not
exist; and (2) Intelsat promised that certain contracts were profitable, when in fact one customer
(Bentley-Walker) had already stopped paying its bills.
Intelsat raises a bevy of arguments in support of its motion to dismiss. First, Intelsat
argues that the claims are too muddled to meet Rule 9(b)’s pleading standard. See Pl.’s Reply at
10 (“The ‘misrepresentation’ that Juch-Tech attempts to muddle together, out of whole cloth, is
that Intelsat was guaranteeing to Juch-Tech that these customers would pay their bills to Juch-
Tech promptly and forever. There was of course no such representation made by Intelsat, nor do
the Counterclaims contain any allegation that there was, despite Juch-Tech’s Opposition’s
strained attempts at misdirecting the Court from examining the Counterclaims’ actual
allegations.”). But Intelsat needlessly distorts Juch-Tech’s allegations. Juch-Tech’s does not
allege—nor does it need to allege—that Intelsat “guaranteed” certain payments “forever.”
Rather, the court may reasonably infer as follows: Intelsat promised that it would transfer certain
valuable contracts to Juch-Tech in exchange for Juch-Tech’s purchase of additional satellite
capacity. Moreover, Intelsat allegedly promised that those contracts were profitable and, at the
time of the promise, were generating a specified revenue stream. Thus, Intelsat’s promise is
allegedly false because (1) Intelsat had no contract with Millennium Arrow to transfer; and (2)
Bentley-Walker’s contract would not be profitable and was not generating the promised revenue
stream because that customer was not paying its bills.
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In the court’s view, Juch-Tech’s allegations meet Rule 9(b)’s heightened pleading
standard: Juch-Tech identifies the time and place of the false misrepresentations, (emails from
Colleen Parent, Michael J. Mendelson, and Alicia Schwarcz to Juch-Tech’s CEO dated January
5, 2009 and March 19, 2009, see Counterclaim ¶ 43); the content of the representations (that if
Juch-Tech agreed to enter into the Transition Agreement and Service Order No. 22165, Intelsat
would assign six profitable contracts to Juch-Tech, see Transition Agreement, Ex. A); its falsity
(that Intelsat had a contractual relationship with Millennium Arrow, and that it had a profitable
relationship with Bentley-Walker, see Counterclaim ¶ 48); an intent to deceive (which can be
inferred from the surrounding facts), what was given up as a consequence of the fraud (an
expanded contract for more satellite space at additional expense, see id.); and reasonable reliance
(Juch-Tech having no reason to doubt Intelsat’s representations).
Second, Intelsat argues that a fraud claim cannot be predicated on a “prediction of future
events.” See Pl.’s Reply at 19. In essence, Intelsat appears to argue that its promise to assign the
Millennium Arrow and Bentley-Walker contracts was not a statement of existing fact, but was
instead “an opinion or a prediction of future events.” Id. at 20. And it is true that “a prophecy or
prediction of something which it is merely hoped or expected will occur in the future is not
actionable upon its nonoccurrence.” Bennett v. Kiggins, 377 A.2d 57, 61 (D.C. 1977). On the
other hand, “[w]hen a person positively states that something is to be done or is to occur, when
he knows the contrary to be true, the statement will support an action in fraud.” Id. Here, there
is no hazy “prophecy or prediction” of future occurrences. Instead, Intelsat promised to assign
several profitable contracts while knowing that—in some circumstances, at least—there were no
profitable contracts to assign. Accordingly, Intelsat’s argument must be rejected.
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Third, Intelsat argues that it committed a mere “omission” of “material facts,” which does
not constitute fraud. Pl.’s Mot. at 21 (“However, it is well established under District of
Columbia law that a fraud claim can be based on an omission of material facts only if there is a
duty to speak.”). Intelsat is halfway correct: “It is well established under District of Columbia
law that ‘mere silence does not constitute fraud unless there is a duty to speak.’” Cadet v.
Draper & Goldberg, PLLC, 2007 WL 2893418, at *6 (D.D.C. Sept. 28, 2007) (quoting Kapiloff
v. Abington Plaza Corp., 59 A.2d 516, 517 (D.C.1948)). But the other half of Intelsat’s
argument is meritless. The fraud alleged does not stem from Intelsat’s innocent failure to advert
Juch-Tech to certain facts. Rather, it stems from Intelsat’s affirmative representation. In the
context of an affirmative statement, Intelsat’s “omission of material facts” is the very essence of
a fraud claim: Intelsat made a promise while “omitting” that the promise was false.
Fourth, Intelsat argues that Juch-Tech was required to plead that its reliance on Intelsat’s
representations was “objectively reasonable.” Pl.’s Mot. at 21. This is true for fraud claims that
arise between commercial entities that negotiate contracts at arm’s length. Hercules & Co. v.
Shama Restaurant Corp., 613 A.2d 916, 923 (D.C. 1992). But Intelsat does not indicate why it
would be objectively unreasonable to rely on its representations. Accordingly, the court rejects
this argument as well.
Fifth, Intelsat also argues that Juch-Tech “cannot show that the alleged
misrepresentations were material, another essential element in a fraud action.” Pl.’s Mot. at 22.
Under D.C. law, a false representation is material if it is shown that the correct facts would have
had a bearing on the action of a decision-maker. See Ellipso, Inc. v. Mann, 541 F. Supp. 2d 365,
374 (D.D.C. 2008). But Intelsat puts forward no reason to suggest—and the court has no
independent reason to believe—that the existence of the Millennium Arrow contract or the
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profitability of the Bentley-Walker contract were somehow immaterial to the promises contained
in the Transition Agreement. To the contrary, as alleged by Juch-Tech, the assignment of the
profitable contracts was the quid-pro-quo for Juch-Tech agreeing to obtain additional satellite
space that, it asserts, it did not otherwise require. The profitability of those contracts is material.
Sixth, Intelsat argues that the Transition Agreement contains an integration clause that
bars Juch-Tech’s fraud claim, Pl.’s Mot. at 21. This argument requires some unpacking. When
deciding contract claims, courts ordinarily focus on the contract’s written language instead of
earlier promises. See 1010 Potomac Assocs. v. Grocery Mfrs. of Am., Inc., 485 A.2d 199, 210
(D.C. 1984) (explaining the parol evidence rule, which “promote[s] stability of transactions by
preventing disgruntled parties from avoiding obligations by alleging oral understandings that
conflict with their written agreements when those agreements were reduced to writing in order to
forestall such contentions”); 11 WILLISTON ON CONTRACTS § 33:1 (4th ed.) (“The parol evidence
rule is a substantive rule of law that prohibits the admission of evidence of prior or
contemporaneous oral agreements, or prior written agreements, whose effect is to add to, vary,
modify, or contradict the terms of a writing which the parties intend to be a final, complete, and
exclusive statement of their agreement. . . . [I]t seeks to achieve the related goals of ensuring that
the contracting parties, whether as a result of miscommunication, poor memory, fraud, or
perjury, will not vary the terms of their written undertakings, thereby reducing the potential for
litigation.”). This rule applies with even greater force if the contract contains a clause—usually
referred to as a “merger clause” or an “integration clause”—indicating that the contract
represents a complete and final expression of the parties’ wishes. See Hercules & Co. v. Shama
Rest. Corp., 613 A.2d 916, 928 & n.17 (D.C. 1992).
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As with every rule, there is an exception. For instance, a contract that was procured by
fraud has no legal effect. See Wash. Inv. Partners of Del., LLC v. Secs. House, K.S.C.C., 28
A.3d 566, 576 (D.C. 2011). And to prove that a contract was the product of fraud, a party is not
confined to the four corners of the contract. McMahon v. Anderson, Hibey & Blair, 728 A.2d
656, 658 n.5 (D.C. 1999) (if alleged to be the product of fraud, “the written contract is not
absolutely sacrosanct against external evidence”). This is true even if the contract contains a
merger clause. Howard Univ. v. Good Food Servs., Inc., 608 A.2d 116, 127 (D.C. 1992);
RESTATEMENT (SECOND) OF CONTRACTS § 214 cmt. c (1981).
Thus, courts may face something of a paradox: even if a contract explicitly disavows all
earlier promises, a party may wriggle out of the contract by claiming fraud and invoking earlier
promises. These rules are necessarily in tension, and the case law suggests an uneasy truce.
Compare One-O-One Enterprises, Inc. v. Caruso, 848 F.2d 1283, 1287 (D.C. Cir. 1988) (“Were
we to permit plaintiffs’ use of the defendants’ prior representations (and defendants’
nondisclosure of negotiations inconsistent with those representations) to defeat the clear words
and purpose of the [contract’s] integration clause, ‘contracts would not be worth the paper on
which they are written.’” (quoting Tonn v. Philco Corp., 241 A.2d 442, 445 (D.C. 1968))) (Bader
Ginsburg, J.) with Whelan v. Abell, 48 F.3d 1247, 1258 (D.C. Cir. 1995) (limiting One-O-One v.
Caruso’s holding and noting that a merger clause cannot bar all fraud claims, for doing so
“would leave swindlers free to extinguish their victims’ remedies simply by sticking in a bit of
boilerplate”).
Unfortunately, none of these rules have any bearing here. The aforementioned rules
govern for contract claims. Hercules & Co. v. Shama Rest. Corp., 613 A.2d 916, 931–33 (D.C.
1992); Capital City Mortg. Corp. v. Habana Village Art & Folklore, Inc., 747 A.2d 564 (D.C
15
2000). They do not apply if a party brings a separate claim—sounding in tort—for fraud. In re
Estate of McKenney, 953 A.2d 336, 341 (D.C. 2008). “Traditionally, a person who was induced
to enter into a contract by a misrepresentation has several common law causes of action,
including fraud in the inducement sounding in tort and rescission sounding in contract.” Id.(emphasis added). “The distinction between these two may be important because each action
requires a different level of proof and allows for different remedies.” Id. “By suing in tort, the
defrauded party ‘does not seek to undo the fraudulent transaction but claims sufficient
compensation to make his position as good as it would have been had he not entered into the
transaction at all.’” United Secs. Corp. v. Franklin, 180 A.2d 505, 510 (D.C. App. 1962) (citing
5 WILLISTON ON CONTRACTS § 4264)).
Count II of Juch-Tech’s counterclaim alleges that Intelsat committed fraud when it made
certain statements before signing the Transition Agreement. Intelsat argues the court must
ignore these statements, for they find no mention in the contract.3 But in the context of a fraud
claim, the court is not restricted to the contract’s language—even if a merger clause is present.
Drake v. McNair, 993 A.2d at 624; see Sabo v. Delman, 143 N.E.2d 906, 161 (N.Y. 1957) (“In
short, a contractual promise made with the undisclosed intention not to perform it constitutes
fraud and, despite the so-called merger clause, the plaintiff is free to prove that he was induced
by false and fraudulent misrepresentations to . . . execute the agreements.”). The court notes that
the merger clause may ultimately make it harder for Juch-Tech to prove its claim. See Drake v.
McNair, 993 A.2d 607 (D.C. 2010) (noting that a settlement agreement’s merger clause did not
bar an independent fraud claim, but that the plaintiff lacked sufficient evidence to show fraud);
In re U.S. Office Products Co. Secs. Litig., 251 F. Supp. 2d 77, 101–02 (D.D.C. 2003)
3
The court disagrees with Intelsat’s premise: the Transition Agreement explicitly contains some of
these promises.
16
(concluding that plaintiffs could not prove fraud in the face of a merger clause because parties
will normally put all “material” statements in the contract). But at this juncture, the court cannot
gauge the sufficiency of Juch-Tech’s evidence. Because “an integration clause does not provide
a blanket exemption” to fraud claims, Drake v. McNair, 993 A.2d at 624, the court will deny
Intelsat’s motion to dismiss Count II.
F. Juch-Tech’s Tortious Interference Claims (Counts IV–VII)
Juch-Tech brings claims for tortious interference with contractual relations under New
York law (Count IV) and Canadian law (Count V). Juch-Tech also brings claims for tortious
interference with business relations under New York law (Count VI) and tortious interference
with commercial matters under Canadian law (Count VII). Juch-Tech alleges that Intelsat
tortiously interfered with its business by spreading false rumors about Juch-Tech’s financial
health, making it harder for Juch-Tech to serve its customers. Counterclaim ¶ 65. Juch-Tech
also alleges that Intelsat competed for Juch-Tech’s business in violation of the Transition
Agreement. Id. In doing so, Juch-Tech alleges that Intelsat induced Juch-Tech’s customers to
breach their contracts with Juch-Tech, or, at the least, “materially impaired or made impossible
Juch-Tech’s ability to serve its existing clients.” Counterclaim ¶¶ 65, 75. Finally, Juch-Tech
alleges that Intelsat interfered with its business by degrading its services, thereby making it more
difficult for Juch-Tech to serve its customers. Id. ¶ 65. Intelsat argues that these claims must be
dismissed for failure to state a plausible claim under Rule 12(b)(6). Pl.’s Mot. at 25.
Under District of Columbia law, there are two types of tortious interference claims:
tortious interference with contract and tortious interference with prospective advantageous
business transaction. See Teltschik v. Williams & Jensen, PLLC, 683 F. Supp. 2d 33, 56 (D.D.C.
2010). For the reasons explained below, the court will allow Juch-Tech’s claims to proceed to
discovery.
17
1. Tortious Interference with Contract
To assert a tortious interference with a contract claim, a plaintiff must allege: (1) the
existence of a contract; (2) knowledge of the contract; (3) intentional procurement of a breach of
the contract; and (4) damages resulting from the breach. Casco Marina Dev., LLC. v. D.C.
Redev. Land Agency, 834 A.2d 77, 83 (D.C. 2003) (quoting Paul v. Howard Univ., 754 A.2d
297, 309 (D.C. 2000).
Intelsat argues that Juch-Tech failed to identify any actual contractual breach that resulted
from Intelsat’s behavior. Thus, Intelsat argues that the claim of tortious interference with
contract must fail because “[a] breach of contract is an essential element of the tort.” Pl.’s Mot.
at 26. In Casco Marina Dev., LLC v. D.C. Redevelopment Land Agency, the D.C. Court of
Appeals held that an actual breach is not a necessary element of the prima facie case. 834 A.2d
77, 84 (D.C. 2003) (“[W]hile we have articulated the third element of tortious interference as
procurement of breach, . . . a ‘breach’ as such is not required, but merely a failure of
performance, whether by the terms of the contract in question or not.”); see Sorrells v.
Garfinckel’s, Brooks Bros., Miller & Rhoads, Inc., 565 A.2d 285, 289–90 (D.C. 1989). But in a
later case, a different panel of that same court concluded that “[u]nlike in some jurisdictions,
courts in the District of Columbia have held that ‘a breach of contract is an essential element’ of
the tort.” Murray v. Wells Fargo, 953 A.2d 308, 325–26 (D.C. 2008) (citing Edmondson &
Gallagher v. Alban Towers Tenants Ass’n, 48 F.3d 1260, 1266 (1995)). Thus, the D.C. Court of
Appeals’ decision in Murray conflicts with Casco Marina and Sorrels, its earlier opinions.
This court finds Murray’s reasoning unpersuasive. The panel in Murray cited the D.C.
Circuit’s opinion in Edmondson & Gallagher v. Alban Towers Tenants Ass’n, 48 F.3d 1260,
1266 (1995) for the proposition that “‘a breach of contract is an essential element’ of the tort.”
953 A.2d at 326. But Edmonson drew no such conclusion. To the contrary, the Circuit
18
acknowledged that the law was unclear and explicitly chose not to decide that question.
Edmonson, 48 F.3d at 1266 (declining supplemental jurisdiction over state-law claims of tortious
interference because “[n]eedless decisions of state law should be avoided,” and because “D.C.
courts are better equipped to resolve the unsettled legal questions in this case.”). Moreover, the
D.C. Court of Appeals is not bound by the D.C. Circuit’s interpretations of state law—though the
Circuit’s decisions may be persuasive. See Johnson v. Fankell, 520 U.S. 911, 916 (1997)
(“Neither this Court nor any other federal tribunal has any authority to place a construction on a
state statute different from the one rendered by the highest court of the State.”). Following the
weight of authority, therefore, the court concludes that Juch-Tech was not required to allege a
specific breach of contract as a part of its prima facie case. Casco Marina, 834 A.2d at 84.
Accordingly, the court will deny Intelsat’s motion to dismiss Counts IV and V.
2. Tortious Interference with Business Relations
Juch-Tech alleges that Intelsat tortiously interfered with several prospective
advantageous business transactions by spreading false rumors about Juch-Tech’s financial
health, by competing with Juch-Tech in derogation of the Transition Agreement, and by
degrading the service Intelsat provided to Juch-Tech. Counterclaim ¶¶ 65, 75. Intelsat puts forth
several reasons why these claims should be dismissed.
To establish a claim for tortious interference with prospective advantageous business
transaction under D.C. law, a plaintiff must show: (1) the existence of a valid business
relationship or expectancy, (2) knowledge of the relationship or expectancy on the part of the
interferer, (3) intentional interference inducing or causing a breach or termination of the
relationship or expectancy, and (4) resultant damage. See Bennett Enters. v. Domino’s Pizza,
Inc., 45 F.3d 493, 498 (D.C. Cir. 1995).
19
Intelsat first argues that the facts alleged do not support an inference of intent. Pl.’s Mot.
at 27. But the requisite level of intent may be inferred if the tortious interference involves
“fraud, misrepresentation, or disparagement.” Genetic Sys. Corp. v. Abbott Labs., 691 F. Supp.
407, 423 (D.D.C. 1988). Thus, the court can infer the necessary level intent from Juch-Tech’s
allegations of fraud, disparagement, and defamation—especially given that intent need only be
alleged generally. FED. R. CIV. P. 9(b).
Second, Intelsat argues that Juch-Tech never identified the customers that purportedly
breached the contracts. Pl.’s Mot. at 27. But a contractual breach is not an element of this tort,
and Intelsat recognizes that Juch-Tech identifies several companies—DCC Satellite Networks,
Atlasco (QKON), Galaxy Broadband, and Link Serve—which were allegedly induced to
terminate their agreements and customer relationships with Juch-Tech. Counterclaim, ¶¶ 50–51.
Third, Intelsat argues that no individual component of Juch-Tech’s allegations, if taken in
isolation, could support a tortious interference claim. See Pl.’s Mot. at 28 (arguing that a poorly
alleged defamation claim cannot constitute tortious interference); id. at 29 (arguing that a breach
of contract claim cannot form the basis for a tortious interference claim); id. (arguing that a
separate putative breach of the Transition Agreement could not form a basis for Juch-Tech’s
claim). But Intelsat misses the larger picture: Juch-Tech alleges that Intelsat reneged on its
agreement, made it harder for Juch-Tech to do business, and spread lies to Juch-Tech’s
customers. Accordingly, these allegations fit the contours of a prima facie claim for tortious
interference with prospective advantageous business transaction. To wit, Juch-Tech alleges (1)
the existence of a valid business relationship or expectancy with DCC Satellite Networks,
Atlasco (QKON), Galaxy Broadband, and Link Serve, see Counterclaim, ¶¶ 50–51; (2)
knowledge of the relationship or expectancy on the part of the interferer; id.; (3) intentional
20
interference in the form of Intelsat’s degradation of its satellite services, spreading of false
rumors, and unlawful competition; and (4) resultant damage, id. ¶ 55. Thus, Juch-Tech plausibly
alleges its prima facie case. See Bennett Enters. v. Domino’s Pizza, Inc., 45 F.3d at 498.
Finally, Intelsat argues Juch-Tech’s claim to relief is foreclosed by the limited liability
clauses in the NESA and Transition Agreement. Pl.’s Mot. at 30. But for the same reasons
discussed earlier, these clauses may be unenforceable. Accordingly, the court will dismiss the
tortious interference with contractual relations claims (Counts IV and V) for failure to allege an
actual breach, but allow the tortious interference with prospective advantageous business
transaction claims (Count VI and VII) to proceed to discovery.
G. Juch-Tech’s Defamation Claims (Counts IX–X)
In Counts IX and X, Juch-Tech alleges that Intelsat personnel committed defamation by
spreading false rumors that Juch-Tech was on the verge of bankruptcy. Counterclaim ¶¶ 27, 87.
Intelsat moves to dismiss, arguing that Juch-Tech does not allege enough factual details to
sustain a plausible claim to relief. Pl.’s Mot. at 28.
Under D.C. law, a plaintiff claiming defamation must show: (1) that the defendant made
a false and defamatory statement concerning the plaintiff; (2) that the defendant published the
statement without privilege to a third party; (3) that the defendant’s fault in publishing the
statement amounted to at least negligence; and (4) either that the statement was actionable as a
matter of law irrespective of special harm or that its publication caused the plaintiff special harm.
Jankovic v. Int’l Crisis Group, 494 F.3d 1080, 1088 (D.C. Cir. 2007); Blodgett v. Univ. Club,
930 A.2d 210, 222 (D.C. 2007). “A statement is ‘defamatory’ if it tends to injure the plaintiff in
his trade, profession or community standing, or lower him in the estimation of the community.”
Clawson v. St. Louis Dispatch, LLC, 906 A.2d 308, 313 (D.C. 2006) (citation omitted).
21
There is no heightened pleading standard for defamation claims in the District of
Columbia. Solers, Inc. v. Doe, 977 A.2d 941, 948 (D.C. 2009). Instead, D.C. courts focus on
whether the factual allegations in the complaint are sufficient to permit the opposing party to
form responsive pleadings. Id.; see Williams v. District of Columbia, 9 A.3d 484, 491 (D.C.
2010); Oparaugo v. Watts, 884 A.2d 63, 76–77 (D.C. 2005); Croixland Props. Ltd. P’ship v.
Corcoran, 174 F.3d 213, 215 n.2 (D.C. Cir. 1999).
Here, Juch-Tech identifies the individual who made the defamatory statement: Mark
Rasmussen, Vice President of Sales for North America Network Services. Counterclaim ¶ 87.
Juch-Tech also alleges the content of the statements: namely, that Juch-Tech was on the verge of
bankruptcy or that Juch-Tech would be shortly out of business. Id. Juch-Tech also identifies the
recipients of the statement: DCC Satellite Networks, Atlasco (QKON), Galaxy Broadband, and
Link Serve, all of whom were actual or potential Juch-Tech customers. Id. Juch-Tech argues
that these rumors were false, and that they were defamatory because their content was damaging
to Juch-Tech’s business relationships. See Clawson, 906 A.2d at 313.
Intelsat argues that Juch-Tech’s claim must be dismissed because the counterclaim does
not list the “the time, place, content, speaker, and listener of the alleged defamatory matter.”
See, e.g., Franklin v. Pepco Holdings, Inc. (PHI), 2012 WL 2870266, at *7 (D.D.C. July 13,
2012). But this is assessment is not entirely accurate. To explain, the “time, place, content,
speaker, and listener” requirement finds its genesis in Ridgewells Caterers v. Nelson, 688 F.
Supp. 760, 763 (D.D.C. 1988). There, the court noted that the plaintiff “does not identify which
of [defendant’s] employees are involved, to whom the alleged defamatory statements were
communicated, the substance of the alleged statements, or any indication of their time, place,
context or frequency.” Id. Later cases took this language out of context, holding that each of
22
these details—time, place, content, speaker, and listener—were rigid pleading requirements.
See, e.g., Stovell v. James, 810 F. Supp. 2d 237, 248 (D.D.C. 2011); Caudle v. Thomason, 942 F.
Supp. 635, 638 (D.D.C. 1996).
In doing so, these cases impose an inaccurate gloss on the law—one that has been
rejected by the D.C. Court of Appeals and the D.C. Circuit. See Oparaugo v. Watts, 884 A.2d
63, 76 (D.C. 2005) (refusing to adopt a heightened standard that would require the plaintiff to
“plead the time, place, content, speaker and listener of the allegedly defamatory matter”);
Croixland Props. Ltd. P’ship v. Corcoran, 174 F.3d at 215 n.2 (“The [defendants] cite Caudle v.
Thomason, 942 F. Supp. 635, 638–39 (D.D.C. 1996), for the proposition that heightened
pleading requirements apply in defamation cases. In fact, as with any pleading, [the plaintiff’s]
complaint must allege the elements of the cause of action; the Federal Rules of Civil Procedure
impose no special pleading requirements for defamation . . . .”). Thus, the court rejects the
plaintiff’s proposed pleading standard.
To be clear: a plaintiff that failed to specify any of these factors would face dismissal
under Iqbal and Twombly. But Juch-Tech has alleged the speaker, recipient, subject matter, and
defamatory nature of the statements; these allegations are sufficient to nudge its claims “across
the line from conceivable to plausible.” Iqbal, 556 U.S. at 680. By no means do Juch-Tech’s
factual allegations consist of “[t]hreadbare recitals of the elements of a cause of action, supported
by mere conclusory statements . . . .” Id. (citing Twombly, 550 U.S. at 569). Rather, Juch-Tech
has alleged enough factual matter to give Intelsat fair notice of the claim and to allow Intelsat to
craft a responsive pleading. See Solers, Inc. v. Doe, 977 A.2d at 948. And for defamation
claims, “[w]hat is called for at the motion to dismiss stage is simply ‘enough facts to raise a
reasonable expectation that discovery will reveal evidence of’ the necessary element.” Williams
23
v. District of Columbia, 9 A. 484, 493 (D.C. 2010) (quotation omitted). Accordingly, the court
denies Intelsat’s motion to dismiss Juch-Tech’s defamation claims.
H. Juch-Tech’s Canadian Trademark Claim (Count XI)
In Count XI, Juch-Tech alleges that Intelsat violated section 7(a) of Canada’s Trademark
Act, which states: “No person shall . . . make a false or misleading statement tending to
discredit the business, wares or services of a competitor.” Trade-marks Act, R.S.C. 1985, c. T-
13 § 7(a); see In re Houbigant Inc., 914 F. Supp. 964, 991 (S.D.N.Y. 1995). Juch-Tech claims
that Intelsat violated this provision when it “made false and misleading statements that Juch-
Tech was in imminent financial peril in order to cause Juch-Tech customers to terminate their
relationships with Juch-Tech and become Intelsat customers, or to dissuade potential customers
from contracting with Juch-Tech.” Counterclaim ¶ 95. Intelsat claims that this court lacks
subject-matter jurisdiction because Canada’s trademark law has “no extraterritorial effect.”
Under the “territoriality” principle, each country’s laws apply within that country’s
boundaries. FTC v. Compagnie de Saint-Gobain-Pont-a-Mousson, 636 F.2d 1300, 1316 (D.C.
Cir. 1980) (describing the territoriality principle and its exceptions). Under the related
“territorial effects” doctrine, a state has jurisdiction over conduct occurring outside its territory
that has—or is intended to have—substantial effects within that state’s territory. Id.; see also
Airways v. Sabena, Belgian World Airlines, 731 F.2d 909, 922 (D.C. Cir. 1984). Thus, a
company that operates within the U.S. is subject to U.S. law—but an American company that
commits acts having a substantial effect abroad may be subject to the host country’s laws.
Juch-Tech alleges that Intelsat violated Canadian law because of the impact Intelsat’s
actions had in Canada. Def.’s Mot. at 19 n.11 (“Juch-Tech is simply seeking to enforce its rights
under the Canadian trademark act for injuries it sustained in Canada”). The allegation in no way
requires the “extraterritorial” application of Canadian law, as Intelsat maintains. It entails
24
nothing more than the notion that an American’s actions can have a cross-border impact that
violates a neighboring country’s laws. Laker Airways, 731 F.2d at 922 (“It has long been settled
law that a country can regulate conduct occurring outside its territory which causes harmful
results within its territory.”); see also Strassheim v. Daily, 221 U.S. 280, 284 (1911) (Holmes, J.)
(“Acts done outside a jurisdiction, but intended to produce and producing detrimental effects
within it, justify a state in punishing the cause of the harm as if he had been present at the effect,
if the state should succeed in getting him within its power.”). Thus, “[a] state has jurisdiction to
prescribe law with respect to . . . conduct outside its territory that has or is intended to have
substantial effect within its territory.” RESTATEMENT (THIRD) OF FOREIGN RELATIONS LAW §
402; see id. cmt. d (noting that the effects principle includes “sending libelous publications
across a boundary”).
Contrary to Intelsat’s suggestions, several courts have concluded that there is no
principled reason to bar, in absolute fashion, claims brought under foreign law for lack of subject
matter jurisdiction. Armstrong v. Virgin Records, Ltd., 91 F. Supp. 2d 628, 637 (S.D.N.Y. 2000)
(“[A] copyright owner may sue an infringer in United States courts even though the only alleged
infringement occurred in another country. Under the territoriality principle, the copyright law of
the other country, and not United States copyright law, will govern the action in the United
States.” (quoting 3 PAUL GOLDSTEIN, COPYRIGHT § 16.2 (2000)); see also Rundquist v. Vapiano
SE, 798 F. Supp. 2d 102, 129–30 (D.D.C. 2011) (concluding that this court had subject-matter
jurisdiction to hear foreign copyright claims for conduct committed abroad); Carell v. Shubert
Org., Inc., 104 F. Supp. 2d 236, 258 (S.D.N.Y. 2000) (“[A]t this stage in the proceedings, there
is no reason to believe that the Court would be foreclosed from applying foreign law to
plaintiff’s foreign infringement claims.”); Frink Am., Inc. v. Champion Road Mach., Ltd., 961 F.
25Supp. 398, 404–05 (N.D.N.Y. 1997) (refusing to dismiss claim brought against U.S. corporation
for violation of Canadian copyright law and stating that objections to the court’s subject matter
jurisdiction “are without merit”).
Intelsat cites to Vanity Fair Mills v. T. Eaton Co., 234 F.2d 633 (2d Cir. 1956), for the
proposition that it is not “the province of United States district courts to determine the validity of
trademarks which officials of foreign countries have seen fit to grant. To do so would be to
welcome conflicts with the administrative and judicial officers of the Dominion of Canada.” Id.
at 647. But Vanity Fair is distinguishable: first, that claim was not dismissed for lack of
jurisdiction, but under the non-jurisdictional doctrine of forum non conveniens. Id. at 646.
Second, that case challenged the validity of the underlying Canadian trademark, and in doing so
asked the court to review the acts of Canadian government officials. Id. In contrast, it is not
clear that this case would require the court to review any foreign official’s acts. See Rundquist v.
Vapiano SE, 798 F. Supp. 2d at 130 (distinguishing Vanity Fair); Frink Am. Inc., 961 F. Supp. at
404 (concluding that the court had subject matter jurisdiction for claims under Canadian
copyright law).
Juch-Tech’s claim, though arising under Canadian law, appears analogous to the
common-law tort of unfair competition. Under D.C. law, the common-law tort of unfair
competition “is not defined in terms of specific elements, but by the description of various acts
that would constitute the tort if they resulted in damage.” Furash & Co., Inc. v. McClave, 130 F.
Supp. 2d 48, 57 (D.D.C. 2001). These acts may include “defamation, disparagement of a
competitor’s goods or business methods,” and “interference with access to the business.” B & W
Mgmt., Inc. v. Tasea Inv. Co., 451 A.2d 879, 881 n.3 (D.C. 1982). A party may state a plausible
claim for unfair competition by alleging defamation and tortious interference with advantageous
26
business relations. Hanley-Wood LLC v. Hanley Wood LLC, 783 F. Supp. 2d 147, 153 (D.D.C.
2011) (noting that allegations of interference with the plaintiff’s business satisfied the pleading
requirements for the “fluid requirements of the tort for unfair competition”); Bus. Equip. Ctr. v.
DeJure-Amsco, Corp., 465 F. Supp. 775, 788 (D.D.C. 1978) (concluding that the cause of action
for tortious interference with business relations is “virtually the same as that for unfair
competition”).
Here, Juch-Tech invokes a provision of Canadian law which falls under the heading
“Unfair Competition and Prohibited Marks.” Trade-marks Act, R.S.C. 1985, c. T-13 § 7. At the
heart of its claim, Juch-Tech alleges that Intelsat’s “false and defamatory statements discredited
Juch-Tech’s business and services.” Counterclaim ¶ 97. These allegations could have easily
been brought as a claim for unfair competition under D.C. law. Like the common law tort
claims, pursuant to a choice-of-law analysis, it seems likely that D.C. law would govern. Phelps
v. Stomber, 2012 WL 3276969, at *35 (if there is no conflict between the competing jurisdiction,
the law of the forum state applies). And, if construed under D.C. law, Juch-Tech’s allegations
would survive a motion to dismiss. Hanley-Wood LLC v. Hanley Wood LLC, 783 F. Supp. 2d at
15. But the parties have not briefed whether statutory claims, like common law claims, are
subject to a choice-of-law analysis. Regardless, because the claims are overlapping, the court
need not decide at this time whether Canadian law or D.C. law applies. Either way, the factual
basis for Juch-Tech’s claim will proceed to discovery. Accordingly, the court will deny
Intelsat’s motion to dismiss Count XI without prejudice at this time until further factual
development of where the harm, if any, has been suffered and pending additional briefing on the
Canadian law issue.
27
I. Juch-Tech’s Declaratory Judgment Claim (Count XII)
A count for a declaratory judgment “is not cognizable as a separate cause of action, but is
more properly included in the[ ] prayer for relief.” Walpin v. Corp. for Nat. & Cmty. Serv., 718
F. Supp. 2d 18, 24 (D.D.C. 2010). Thus, the court will dismiss Count XII and simply construe it
as a portion of Juch-Tech’s prayer for relief. See Bridges v. Blue Cross & Blue Shield Ass’n, 935
F. Supp. 37, 45 (D.D.C. 1996).
IV. CONCLUSION
For the reasons explained above, the court grants in part and denies in part Intelsat’s
motion to dismiss. An order consistent with this memorandum opinion is separately issued this
27th day of March, 2013.
RUDOLPH CONTRERAS
United States District Judge
28