Opinion
906904-20
08-13-2021
COUNTY WASTE AND RECYCLING SERVICE, INC. and Robert Wright Disposal, Inc., Plaintiffs, v. TWIN BRIDGES WASTE AND RECYCLING, LLC, Defendant. Twin Bridges Waste and Recycling, LLC, Third-party Plaintiff, v. Waste Connections, Inc. and Waste Connections US, Inc. d/b/a "Waste Connections," Third-party Defendants.
Nixon Peabody LLP, Attorneys for Plaintiffs and Third-Party Defendants (William E. Reynolds, Andrew C. Rose, Gordon L. Lang and Erin T. Huntington, of counsel), 677 Broadway, 10th Floor, Albany, New York 12207 Dreyer Boyajian LLP, Attorneys for Defendant/Third-Party Plaintiff (William J. Dreyer, Donald W. Boyajian and James R. Peluso, of counsel), 75 Columbia Street, Albany, New York 12210.
Nixon Peabody LLP, Attorneys for Plaintiffs and Third-Party Defendants (William E. Reynolds, Andrew C. Rose, Gordon L. Lang and Erin T. Huntington, of counsel), 677 Broadway, 10th Floor, Albany, New York 12207
Dreyer Boyajian LLP, Attorneys for Defendant/Third-Party Plaintiff (William J. Dreyer, Donald W. Boyajian and James R. Peluso, of counsel), 75 Columbia Street, Albany, New York 12210.
Richard M. Platkin, J.
In this commercial dispute between competing vendors of waste/recycling collection and disposal services, plaintiffs County Waste and Recycling Service, Inc. ("County Waste") and Robert Wright Disposal, Inc. ("Robert Wright") and third-party defendants Waste Connections, Inc. and Waste Connections US, Inc. jointly move under CPLR 3211 (a) (7) and (8) for dismissal of the Amended Counterclaims and Third-party Complaint (see NYSCEF Doc No. 23) filed by defendant Twin Bridges Waste and Recycling, LLC ("Twin Bridges").
BACKGROUND
Plaintiffs County Waste and Robert Wright commenced this action on November 2, 2020 through the filing of a summons and complaint (see NYSCEF Doc No. 1 ["Complaint"]). Plaintiffs allege that Twin Bridges, a competitor in the Capital Region market for waste/recycling collection and disposal services ("Waste Services"), made false statements in soliciting the business of County Waste and Robert Wright customers, wrongfully induced existing County Waste customers to breach their contracts, distributed flyers to Robert Wright customers containing false statements, improperly interfered with the employment agreement of a former County Waste employee, and trespassed upon and damaged property belonging to County Waste (see id. , ¶¶ 27-84). The Complaint alleges eight causes of action: tortious interference with contract (two counts); tortious interference with prospective business relations; unfair competition; violations of General Business Law ("GBL") § 349 ; defamation; injurious falsehood; and trespass to chattels (see id. , ¶¶ 85-172).
Defendant Twin Bridges joined issue by serving an answer on December 18, 2020 (see NYSCEF Doc No. 11 ["Answer"]). Along with its Answer, Twin Bridges served a separate document alleging counterclaims against County Waste and Robert Wright and commencing a third-party action against Waste Connections, Inc. and Waste Connections US, Inc. ("Waste Connections [US]") (see NYSCEF Doc No. 12).
In lieu of answering, plaintiffs and the third-party defendants moved for dismissal of the counterclaims and third-party complaint (see NYSCEF Doc Nos. 15-17). Twin Bridges responded by filing Amended Counterclaims and Third-Party Complaint that, among other things, withdrew its federal antitrust claims (see NYSCEF Doc No. 23 ["ACTC"]).
Twin Bridges refiled the antitrust claims in federal district court (see ACTC, ¶ 306), and those claims are the subject of a pending motion to dismiss (see NYSCEF Doc No. 42 ["Oral Arg Tr"], p. 11).
The amended pleading alleges that County Waste, Robert Wright, Waste Connections, Inc. and Waste Connections (US), referred to collectively in the ACTC as "Waste Connections" (ACTC, ¶ 4; see NYSCEF Doc No. 35 ["Opp Mem"], p. 1), have engaged in a sustained course of anticompetitive and tortious conduct directed at monopolizing the Waste Services market in the Capital Region.
Specifically, Twin Bridges alleges that Waste Connections engaged in predatory pricing, attempted to restrain trade through "never-ending" contracts, tortiously interfered with existing and prospective customer relationships, denied Twin Bridges access to transfer stations and landfills, colluded with other waste management companies to refuse to deal with Twin Bridges, and published false statements about Twin Bridges and its owner (see ACTC, ¶¶ 85-305).
The ACTC alleges nine counterclaims. The first three counterclaims allege attempts to monopolize, in violation of the Donnelly Act (see GBL § 340 et seq. ). The ACTC further alleges counterclaims for unfair competition, tortious interference with contract, tortious interference with prospective business relations, injurious falsehood, prima facie tort and declaratory relief.
County Waste, Robert Wright, Waste Connections, Inc. and Waste Connections (US) (collectively, "Movants") seek dismissal of the first eight counterclaims under CPLR 3211 (a) (7). Movants further argue that the Court lacks personal jurisdiction over Waste Connections, Inc. and Waste Connections (US), both of which are foreign corporations.
The parties agree that the ninth counterclaim, seeking declaratory relief, should be dismissed if the other eight counterclaims are dismissed (see Oral Arg Tr, pp. 73-74).
Oral argument on the motion was held on July 8, 2021, a copy of the argument transcript was filed on July 16, 2021, and this Decision & Order follows.
LEGAL SUFFICIENCY
On a motion to dismiss under CPLR 3211 (a) (7), the court's "sole criterion is whether the pleading states a cause of action, and if from its four corners factual allegations are discerned which taken together manifest any cause of action cognizable at law a motion for dismissal will fail" ( Polonetsky v Better Homes Depot , 97 NY2d 46, 54 [2001] [internal quotation marks and citation omitted]). The pleading "is to be given a liberal construction, the allegations contained within it are assumed to be true and the [proponent of the pleading] is to be afforded every favorable inference" ( State of New York v Jeda Capital-Lenox, LLC , 176 AD3d 1443, 1445 [3d Dept 2019] [internal quotation marks and citation omitted]). "Dismissal ... is warranted if the [proponent] fails to assert facts in support of an element of the claim, or if the factual allegations and inferences to be drawn from them do not allow for an enforceable right of recovery" ( Connaughton v Chipotle Mexican Grill, Inc. , 29 NY3d 137, 142 [2017] [citations omitted]).
A. Attempts to Monopolize (Counts I through III)
The first three counterclaims allege attempted monopolization under the Donnelly Act (see GBL § 340 et seq. ). Twin Bridges contends that Movants have attempted to monopolize the Waste Services market in the Capital Region by: (1) engaging in predatory pricing (see ACTC, ¶¶ 1, 309-311); (2) making false and defamatory statements about Twin Bridges and engaging in other anticompetitive misconduct (see id. , ¶¶ 1, 328-329); and (3) unreasonably refusing Twin Bridges access to waste/recycling disposal facilities (see id. , ¶¶ 1, 338-343).
Movants argue principally that the Donnelly Act claims must be dismissed because they lack an allegation of a conspiracy or other reciprocal relationship of commitment between two or more distinct legal or economic entities.
1. Legal Principles
The Donnelly Act prohibits "[e]very contract, agreement, arrangement or combination whereby [a] monopoly in the conduct of any business, trade or commerce or in the furnishing of any service in this state, is or may be established or maintained, or whereby [c]ompetition ... is or may be restrained" ( GBL § 340 [1] ).
"In order to sufficiently state a violation of [GBL] § 340, a party must allege a conspiracy or a reciprocal relationship between two or more legal or economic entities, identify the relevant market affected, describe the nature and effect of the alleged conspiracy and the manner in which the economic impact of that conspiracy restrains trade in the market" ( Capitaland United Soccer Club v Capital Dist. Sports & Entertainment , 238 AD2d 777, 779 [3d Dept 1997] ; see Benjamin of Forest Hills Realty, Inc. v Austin Sheppard Realty, Inc. , 34 AD3d 91, 94 [2d Dept 2006] ).
"An antitrust claim under the Donnelly Act ... must allege ... concerted action by two or more entities" ( Global Reins. Corp.-U.S. Branch v Equitas Ltd. , 18 NY3d 722, 731 [2012] ; see Capitaland United , 238 AD2d at 779 ["conspiracy or a reciprocal relationship"]). "[T]he statutory term ‘arrangement,’ like the statutory terms ‘contract,’ ‘agreement,’ and ‘combination,’ refers to bilateral conduct and does not connote ‘a one-sided practice’ " ( Matter of Commonwealth Elec. Inspection Servs. v Town of Clarence , 6 AD3d 1185, 1186 [4th Dept 2004], quoting State of New York v Mobil Oil Corp. , 38 NY2d 460, 464 [1976] ).
"Unilateral action is insufficient to support a claimed violation of [GBL] § 340" ( Hall Heating Co. v New York State Elec. & Gas Corp. , 180 AD2d 957, 958 [3d Dept 1992] ; see Rochester Drug Co-op., Inc. v Biogen Idec U.S. , 130 F Supp 3d 764, 770-771 [WD NY 2015] ; see also Monsanto Co. v Spray-Rite Serv. Corp. , 465 US 752, 768 [1984] ["concerted action" requires "evidence that reasonably tends to prove that the (antitrust) defendant(s) and others had a conscious commitment to a common scheme designed to achieve an unlawful objective" (internal quotation marks and citation omitted)]).
The statutory requirement of a conspiracy or other reciprocal relationship of commitment is not met if the parties being sued "are a parent corporation and several of its wholly-owned subsidiaries. A parent corporation and its wholly-owned subsidiaries are considered a single entity under antitrust principles and, therefore, cannot engage in anticompetitive acts" ( North Atl. Utils. v Keyspan Corp. , 307 AD2d 342, 343 [1st Dept 2003] [collecting authorities], lv denied 1 NY3d 503 [2003] ; see Verizon NY, Inc. v Optical Communications Group, Inc. , 91 AD3d 176, 18 [1st Dept 2011]).
2. The Parties’ Contentions
Relying on Twin Bridges’ allegations that Waste Connections, Inc. is the owner of Waste Connections (US), County Waste and Robert Wright (see ACTC, ¶¶ 5, 20-22, 41 & Ex. A), Movants argue that the first three counterclaims challenge only unilateral conduct that does not fall within the ambit of the Donnelly Act.
Movants also rely on the affidavit of Domenico D. Pio, who is the president of Waste Connections of Canada, Inc., which is an indirect subsidiary of Waste Connections, Inc. (see NYSCEF Doc No. 28 ["Pio Aff."], ¶ 1). While this affidavit is directed at the jurisdictional challenge interposed by the third-party defendants, Pio attests that Waste Connections, Inc. is the ultimate parent corporation of Waste Connections (US), County Waste and Robert Wright (see id. , ¶ 7). Pio explains that Waste Connections, Inc. is a holding company (see id. ), and Waste Connections (US) is "an indirect or sub-subsidiary," in that Waste Connections, Inc. "owns a subsidiary that owns another subsidiary that owns another subsidiary that owns another subsidiary that owns [Waste Connections (US)]" (id. , ¶ 8). County Waste, in turn, is owned by a subsidiary of Waste Connections (US) (see id. , ¶ 9), and Robert Wright is a subsidiary of County Waste (see id. , ¶ 10).
According to Movants, any claim they attempted to collude with third parties must fail because there is no allegation of a "reciprocal relationship of commitment" ( Mobil Oil , 38 NY2d at 464 ). In particular, Movants contend that contracts with their Waste Services customers cannot give rise to Donnelly Act claims because customers are not competitors and do not share a commitment to an unlawful antitrust objective.
Movants further contend the allegation they "attempted to collude with other waste management companies to refuse to deal with Twin Bridges" (ACTC, ¶ 282) falls short of claiming any actual agreement, conspiracy or arrangement with the other companies.
Finally, Movants argue that any agreements or arrangements between or among plaintiffs, the third-party defendants and/or individuals affiliated with Movants cannot support a Donnelly Act claim because these entities and their owners, officers, directors and employees are a single economic entity under controlling antitrust principles.
Movants also argue that "a Donnelly Act claim must include specific, factual allegations as to the identities of the co-conspirators, the nature of their conspiracy, how the participants attempted to accomplish their objectives, and what overt acts they performed. Unspecified contracts with unnamed other entities to achieve unidentified anticompetitive effects [do] not meet the minimum standards of pleading a conspiracy under the antitrust laws" (National Gear & Piston, Inc. v Cummins Power Sys., LLC , 861 F Supp 2d 344, 371 [SD NY 2012] [internal quotation marks and citation omitted]).
In opposition to the motion, Twin Bridges maintains it has alleged the existence of numerous reciprocal contracts, agreements and/or arrangements between Movants and third parties, including contracts, agreements and/or arrangements with: (1) customers and potential customers; (2) other waste management companies; (3) other transfer station and landfill owner/operators; (4) other waste haulers; and (5) Jerry Wright and Susan Wright, who are the former owners of Robert Wright.
Twin Bridges also emphasizes there is no requirement that a Donnelly Act claim allege a "conspiracy"; rather, the statute only requires "concerted action" in the form of a contract, agreement, arrangement or other " ‘reciprocal relationship of commitment between two or more ... entities’ " ( Rochester Drug , 130 F Supp 3d at 771, quoting Mobil Oil , 38 NY2d at 464 ).
3. Predatory Pricing (Count I)
Count I alleges that Movants attempted to monopolize the Waste Services market in the Capital Region, in violation of the Donnelly Act, through "predatory pricing designed to weaken and reduce competition" (ACTC, ¶ 308). "In furtherance of this scheme, since in or about 2019, and continuing to date, Waste Connections has engaged in a sustained campaign of offering Waste Services to prospective residential, commercial, and governmental customers at prices well below its appropriate measure of costs in the short term" (id. , ¶ 310).
Upon careful review of the allegations of the ACTC, the Court concludes that Count I alleges only unilateral conduct that is not actionable under the Donnelly Act. Specifically, Count I lacks allegations that the challenged misconduct — the prices at which Waste Connections offers its services to customers (see id. ) — is the product of concerted action with any third party.
In so concluding, the Court rejects Twin Bridges’ contention that County Waste and/or Robert Wright's agreements or arrangements with customers satisfy the requirement of "concerted action" ( Global Reins. , 18 NY3d at 731 ). In Mobil Oil , the Court of Appeals held that "a systematic and deliberate practice of price discrimination by [an] oil company in the sale of gasoline to its dealers ... would not fall within the proscription of [the] Donnelly Act" (38 NY2d at 461-462 ). The term "arrangement" necessarily "contemplate[es] a reciprocal relationship of commitment between two or more legal or economic entities similar to but not embraced within the more exacting terms, ‘contract’, ‘combination’ or ‘conspiracy’ " ( id. at 464 ). The price discrimination challenged in Mobil Oil could "be described as ‘bilateral’ to the extent that it pertains both to the oil company and to its dealers," but "there is no allegation of any agreement or commitment on the part either of the oil company or of its dealers" (id. ). "To interpret the word ‘arrangement’ as embracing any ‘practice’ ... would be unwarranted" (id. ).
Similarly, in Creative Trading Co. v Larkin-Pluznick-Larkin, Inc. (148 AD2d 352 [1st Dept 1989] ), the First Department ruled, with two Justices dissenting, that a Donnelly Act claim had been stated against the organizers and sponsors of trade shows at the Javits Convention Center based on an arrangement whereby "favored exhibitors ... guarantee sufficient payment in return for obtaining the most desirable location" ( id. at 352-354 ). The dissenters disagreed, explaining that "a company's decision to discriminate among its customers is necessarily ‘bilateral’ to the extent it involves both the discriminating company and its customers. However, this bilateralness is not of itself the type of ‘arrangement’ that gives rise to a cause of action under the Donnelly Act" ( id. at 356 [Sullivan, J., dissenting]). On appeal, the Court of Appeals reversed, dismissing the Donnelly Act claim for the reasons stated by the dissent (see 75 NY2d 830, 381 [1990] ; see also Sands v Ticketmaster-New York , 207 AD2d 687, 688 [1st Dept 1994], lv dismissed and denied 85 NY2d 904 [1995] ).
"In short, routine bilateral business dealings that may have the effect of disadvantaging certain competitors are not ... the type of arrangement that gives rise to a cause of action under the Donnelly Act" ( Isaac v Medical Liab. Mut. Ins. Co. , 2014 NY Slip Op 31623[U], *1 [Sup Ct, Erie County 2014] [internal quotation marks and citations omitted], affd for reasons stated below 132 AD3d 1249 [4th Dept 2015], lv denied 26 NY3d 915 [2016] ; see Benjamin of Forest Hills , 34 AD3d at 98 ; LoPresti v Massachusetts Mut. Life Ins. Co. , 30 AD3d 474, 475 [2d Dept 2006] ; Hall Heating , 180 AD2d at 958 ; Pharmacists’ Assn. of W. NY v Blue Cross of W. NY , 112 AD2d 728, 729 [4th Dept 1986] ; Kings Automotive Holdings, LLC v Westbury Jeep Chrysler Dodge, Inc. , 48 Misc 3d 1207[A], 2015 NY Slip Op 50994[U], *12 [Sup Ct, Kings County 2015] ["Plaintiff does not allege any agreement between defendant and any other defendant dealer. Defendant's acts of selling or leasing vehicles through brokers, to whom it may pay fees, constitute unilateral independent acts which are not unlawful" (citations omitted)]; see also Monsanto , 465 US at 768 ).
Given this clear weight of authority, together with the decisions of the Court of Appeals in Mobil Oil (see 38 NY2d at 461 ), Creative Trading (see 75 NY2d at 831 ) and Global Reins. (see 18 NY3d at 731-732 ), the Court is unpersuaded by Twin Bridges’ reliance on the Court of Appeals’ earlier decision in Columbia Gas of NY v New York State Elec. & Gas Corp. (28 NY2d 117, 121 [1971] ).
Because the predatory pricing alleged in Count I constitutes unilateral conduct that is not the product of a contract, agreement, arrangement or other concerted conduct between or among competitors or others who share a commitment to restraining trade or creating a monopoly, the counterclaim must be dismissed.
4. Refusal to Deal (Count III)
Count III alleges that Waste Connections attempted to monopolize the Waste Services market by unreasonably denying Twin Bridges access to its waste/recycling disposal facilities ("Disposal Facilities") in the Capital Region, which are said to be the only such facilities reasonably accommodating of the volume of waste/recycling collected by Twin Bridges (see ACTC, ¶¶ 338-343). For the reasons that follow, the Court concludes that Count III also must be dismissed for failure to allege concerted action.
Insofar as the allegations of Count III are directed at Movants’ refusal to make their own Disposal Facilities available to Twin Bridges (see id. , ¶¶ 338-348), the claim alleges only unilateral conduct that is not the product of a contract, agreement, arrangement or other reciprocal relationship of commitment with a distinct third party.
And while Twin Bridges asserts in its opposition papers that the ACTC "sets forth a multitude of specific anticompetitive misconduct by Waste Connections that was participated in by numerous, identified third parties" (Opp Mem, p. 8), the paragraphs it cites merely allege unilateral efforts on the part of Movants to establish such agreements or arrangements with third parties.
Thus, according to the ACTC, Movants have: "attempted to collude with other management companies to refuse to deal with Twin Bridges"; "discussed and proposed to other waste management companies ... that they refuse to deal with Twin Bridges"; "told other transfer station and landfill owners/operators to refuse to deal with Twin Bridges"; "told other waste haulers not to do business with Twin Bridges"; and "told other waste haulers not to post positive comments about Twin Bridges on social media" (ACTC, ¶¶ 282-286 [emphasis added]). These allegations fall short of alleging the existence of any actual agreements, arrangements or other reciprocal relationships of commitment between Movants and the third parties they allegedly approached.
Accordingly, Count III must be dismissed for failing to plead concerted action (see Saxe, Bacon & Bolan, P.C. v Martindale-Hubbell, Inc. , 710 F2d 87, 90 [2d Cir 1983] ; Lopresti v Massachusetts Mut. Life Ins. Co. , 5 Misc 3d 1006[A], 2004 NY Slip Op 51223[U], *3-4 [Sup Ct, Kings County 2004], affd 30 AD3d 474 [2d Dept 2006] ).
5. Anticompetitive Contracts and Other Misconduct (Count II)
Finally, Count II alleges various forms of anticompetitive misconduct:
Waste Connections has attempted to attain [a] monopoly by engaging in a broad range of sustained anticompetitive conduct, including ... preventing or restricting Twin Bridges from contracting with customers for Waste Services ... through its use of never-ending and/or automatically renewing customer contracts, its use of false and unlawful "cease and desist" letters where no valid or enforceable contract existed, the falsifying and forging of customer contracts, false representations to customers regarding purported contract requirements, false and defamatory statements about Twin Bridges, threatening its own customers to prevent them from switching their service to Twin Bridges, and by conspiring and colluding with third parties to restrict and restrain Twin Bridges[’] efforts to compete in the Capital Region Market for Waste Services" (ACTC, ¶ 329).
For the reasons previously stated, the Court concludes that the requirement of concerted action is not met by an alleged monopolist's contracts, agreements or arrangements with its customers. Thus, insofar as Twin Bridges relies upon Movants’ conduct in relation to their Waste Services customers, including the use of contracts containing an automatic renewal provision and granting Movants a right of first refusal (see id. , ¶ 210), the element of concerted action has not been adequately alleged (see supra ; see also Bayside Carting v Chic Cleaners , 1996 NY Misc LEXIS 647, *7 [Sup Ct, Nassau County 1996] ["a waste service user ... is incapable of conspiring against (the plaintiff-waste services company) to create a monopoly in the waste disposal business"], affd as mod on other grounds 240 AD2d 687 [1997] ).
Finally, Twin Bridges’ allegations of contracts, agreements and/or arrangements with Jerry Wright and/or Susan Wright (see Opp Mem, p. 8) do not suffice to establish the requirement of concerted action between two or more distinct legal and economic entities. Susan Wright is alleged to be an owner, officer, employee and/or agent of Robert Wright (see ACTC, ¶ 289), Jerry Wright is the former owner of Robert Wright and an employee of Movants (see id. , ¶¶ 208-209), and there is no claim the Wrights were acting in any capacity other than on behalf of Movants (see Copperweld Corp. v Independence Tube Corp. , 467 US 752, 769 [1984] ["officers or employees of the same firm do not provide the plurality of actors imperative for (an antitrust) conspiracy"]; Creative Trading Co. v Larkin-Pluznick-Larkin, Inc. , 136 AD2d 461, 462 [1st Dept 1988] ; see also Benjamin of Forest Hills , 34 AD3d at 98 ).
Relatedly, Twin Bridges sought for the first time at oral argument to rely upon allegations of arrangements between and among Movants prior to County Waste's acquisition of Robert Wright on or about August 1, 2019 (see Oral Arg Tr, pp. 17-18; see also ACTC, ¶¶ 204-208). However, Twin Bridges’ argument is inconsistent with the ACTC, which treats Robert Wright and the other Movants as a single integrated entity (see ACTC, ¶ 4; see also id. , ¶ 71 ["Waste Connections has directly and jointly with its integrated subsidiaries attempted ... to monopolize"]). This new argument also is inconsistent with the allegation that Movants’ anticompetitive behavior began "following Scott Earl's purchase of Twin Bridges’ predecessor in July 2019" (id. , ¶ 72). In fact, the ACTC is devoid of any allegations of wrongdoing for the de minimis period between Scott Earl's purchase of Twin Bridges’ predecessor sometime in July 2019 and County Waste's August 1, 2019 acquisition of Robert Wright.
The Court therefore concludes that Count II must be dismissed.
B. Unfair Competition (Count IV)
Count IV alleges unfair competition. Through the anticompetitive misconduct described in the ACTC, including "Waste Connections’ false statements and unlawful inducements as to the existence, validity and enforceability of customer ... contracts" (ACTC, ¶ 357), "Waste Connections has wrongfully appropriated [Twin Bridges’] business and commercial advantage to itself" (id. , ¶ 358).
Movants contend that dismissal of this counterclaim is required because Twin Bridges has not alleged that the public is likely to confuse their services with those of Twin Bridges. Movants acknowledge that Twin Bridges also alleges misappropriation of its trade name through Movants’ creation of a website using the twinbridgeslitigation.com domain—conduct that is said to confuse and misdirect the public, including existing and prospective customers (see id. , ¶ 95)—but Movants argue "there is no claim of confusion about goods or services, only that the website ‘falsely disparage[d] the good name and reputation of Twin Bridges’ " (NYSCEF Doc No. 27 ["MOL"], p. 10, quoting ACTC, ¶ 95). Movants similarly argue the allegation that they "intentionally deceived the public by disseminating and publishing its falsehoods as a means of confusing customers" (ACTC, ¶ 363) does not pertain to goods or services.
New York law has "long recognized two theories of common-law unfair competition: palming off and misappropriation. ‘Palming off’—that is, the sale of the goods of one manufacturer as those of another—was the first theory of unfair competition endorsed by New York courts, and has been extended ... to situations where the parties are not even in competition" ( ITC Ltd. v Punchgini, Inc. , 9 NY3d 467, 476-477 [2007] [internal quotation marks, citations and footnote omitted]). "After the United States Supreme Court sanctioned the misappropriation theory of unfair competition in International News Service v Associated Press (248 US 215 [1918] ), ‘[t]he principle that one may not misappropriate the results of the skill, expenditures and labors of a competitor has ... often been implemented in [New York] courts’ " ( ITC Ltd. , 9 NY3d at 477, quoting Electrolux Corp. v Val-Worth, Inc., 6 NY2d 556, 567 [1959] ). "The essence of the misappropriation theory is not just that the defendant has ‘reap[ed] where it has not sown,’ but that it has done so in an unethical way and thereby unfairly neutralized a commercial advantage that the plaintiff achieved through ‘honest labor’ " ( E.J. Brooks Co. v Cambridge Sec. Seals , 31 NY3d 441, 449 [2018], quoting International News , 248 US at 236, 239-240 ). No showing of consumer confusion is required under a misappropriation theory of unfair competition (see Beverage Mktg. USA, Inc. v South Beach Beverage Co., Inc. , 20 AD3d 439, 439-440 [2d Dept 2005] ).
Here, Twin Bridges alleges that Movants have "wrongfully appropriated [its] business and commercial advantage to [themselves] through the use of deliberately false statements and unlawful inducements" (ACTC, ¶ 358), an allegation that sounds in misappropriation.
The misappropriation theory of unfair competition protects "the intangible but real relationship existing between a merchant and [its] usual customers" ( Allen Mfg. Co., Inc. v Smith , 224 App Div 187, 192 [4th Dept 1928] ). Thus, cases applying New York law recognize that intentionally false statements about a competitor's product may constitute misappropriation of customer goodwill (see Electrolux , 6 NY2d at 570-571 ; see also Twin City Fire Ins. Co. v Arch Ins. Group, Inc. , 2015 NY Slip Op 31586[U], *9 [Sup Ct, NY County 2015] [unfair competition "can consist of wrongful tactics in connection with solicitation of a competitor's customers"], affd 143 AD3d 533 [1st Dept 2016], lv dismissed 29 NY3d 995 [2017] ; Wolo Mfg. Corp. v ABC Corp. , 349 F Supp 3d 176, 209 [ED NY 2018] [declining to dismiss branch of unfair competition claim based on allegations of false and misleading statements regarding a competitor's products]; Romeo & Juliette Laser Hair Removal, Inc. v Assara I LLC , 2016 WL 815205, *8, 2016 US Dist LEXIS 24850, *24 [SD NY 2016, Feb. 29, 2016, No. 08cv0442 (DLC)] ["deliberately posted false statements critical of the plaintiff's services"]).
Based on the foregoing and recognizing the "broad and flexible" nature of the doctrine of unfair competition under New York law ( Roy Exp. Co. Establishment of Vaduz, Liechtenstein v Columbia Broad. Sys., Inc. , 672 F2d 1095, 1105 [2d Cir 1982] [internal quotation marks and citation omitted], cert denied 459 US 826 [1982] ), the branch of the motion seeking the dismissal of Count IV is denied.
C. Tortious Interference (Counts V and VI)
Counts V and VI allege tortious interference with contract and tortious interference with prospective business advantage, respectively. Count V alleges that Movants intentionally induced Twin Bridges’ customers to breach their contracts for Waste Services without legitimate justification (see ACTC, ¶¶ 369-373). As alleged in Count VI, Movants tortiously interfered with the business relationships between Twin Bridges and "former customers who were not under contract, but in all probability would have remained or become customers of Twin Bridges but for" Waste Connections’ wrongful interference (id. , ¶ 378), as well as "potential new customers with whom there had been negotiations and promises" (id. , ¶ 379).
1. Tortious Interference With Contract (Count V)
"The elements of a cause of action for tortious interference with contract are (1) a valid contract between the plaintiff and a third party; (2) the defendant's knowledge of that contract; (3) the defendant's intentional procurement of the third party's breach of that contract; and (4) damages" ( Iacono v Pilavas , 125 AD3d 811, 812 [2d Dept 2015] [citation omitted], lv denied 25 NY3d 909 [2015] ; see Abele Tractor & Equip. Co., Inc. v Schaeffer , 167 AD3d 1256, 1258 [3d Dept 2018] ).
Count V is replete with allegations of economic harm to Twin Bridges through "the loss of ... existing customer[s] with prior service, loss of ... customer[s] who had agreed to service with Twin Bridges" and "the loss of a service rate that Twin Bridges had to reduce to prevent the loss of the customer[s]" (ACTC, ¶ 227; see also id. , ¶ 226 [a-s]). As Movants correctly observe, however, the ACTC does not allege that any of these customers had valid contracts with Twin Bridges that were breached by the customers.
In responding to this contention, Twin Bridges argues that the ACTC alleges "the existence of numerous contracts ... with existing customers which were breached because of tortious interference" (Opp Mem, p. 17). However, the specific paragraphs of the ACTC cited by Twin Bridges fail to adequately support its claim for tortious interference with contract.
Specifically, Paragraphs 226 (a), (d) and (f) of the ACTC assert that Twin Bridges "lost a new residential customer" without pleading that the customer had a valid contract with Twin Bridges that was breached by reason of Movants’ interference.
Indeed, at oral argument, Twin Bridges acknowledged that it does not use long-term contracts, and its customers engage it on a month-to-month basis (see Oral Arg Tr, p. 47).
Likewise, paragraphs 226 (p) and 230 do not allege any breach of contract by the customer and, in fact, merely allege that Twin Bridges was forced to lower its prices to retain certain customers.
Paragraph 231 alleges that a customer "cancel[ed] [its agreement] with Twin Bridges" without any claim that the cancellation breached a valid contract, and paragraph 232 does not disclose what happened after Movants "solicited the customer and offered a lower price."
Finally, Twin Bridges cites paragraphs 233 and 374 of the ACTC, but those paragraphs do not specifically allege the existence of any contract with Twin Bridges that was breached due to Movants’ interference.
"Although on a motion to dismiss the allegations in a complaint should be construed liberally, to avoid dismissal of a tortious interference with contract claim, a plaintiff must support [its] claim with more than mere speculation" ( Influx Capital, LLC v Pershin , 186 AD3d 1622, 1624 [2d Dept 2020] [internal quotation marks and citations omitted]). "Here, ... the ... allegations of the [ACTC] ... fail[ ] to identify [any] relevant contracts with third parties [and] fail[ ] to allege facts describing how those contracts were breached by the third parties" (id. ).
Based on the foregoing, Count V is dismissed.
2. Tortious Interference With Prospective Business Advantage (Count VI)
"A claim for tortious interference with prospective business advantage must allege that: (a) the plaintiff had business relations with a third party; (b) the defendant interfered with those business relations; (c) the defendant acted with the sole purpose of harming the plaintiff or by using unlawful means; and (d) there was resulting injury to the business relationship" ( Thome v Alexander & Louisa Calder Found. , 70 AD3d 88, 108 [1st Dept 2009] [citations omitted], lv denied 15 NY3d 703 [2010] ). "Conduct that is not criminal or tortious will generally be ‘lawful’ and thus insufficiently ‘culpable’ to create liability for interference with prospective contracts or other nonbinding economic relations" ( Carvel Corp. v Noonan , 3 NY3d 182, 190 [2004] ).
Movants argue that Count VI must be dismissed because the ACTC fails to allege (1) their knowledge of Twin Bridges’ alleged relationships, and/or (2) criminal or independently tortious means of interference.
Initially, the Court rejects Movants’ contention that the ACTC fails to allege they knew of the business relations between Twin Bridges and the customers identified in paragraphs 226 (a-s) and 229-232. The ACTC generally alleges Movants’ knowledge of the pertinent business relations (see ACTC, ¶¶ 380, 397), and Movants have identified no requirement that such an allegation be pleaded with heightened particularity.
Moreover, as articulated by Twin Bridges at oral argument, the allegation that Movants sent over one hundred cease and desist letters demanding that Twin Bridges not market its service to certain customers (see ACTC, ¶¶ 235-236) provides some support for the allegation that Movants were aware of Twin Bridges’ relations with certain prospective customers (see Oral Arg Tr, p. 58).
Concerning the means of interference, Movants acknowledge that certain of the conduct cited by Twin Bridges constitutes a crime or independent tort (see MOL, pp. 12-13, citing ACTC, ¶¶ 235-268; see also ACTC, ¶¶ 392-396). As to the bulk of Twin Bridges’ allegations, however, Movants argue, in a footnote, that "the only alleged ‘wrongful’ act is the offering of a lower price, which is certainly not a crime or independent tort" (MOL, p. 12 n 13).
The offering of lower prices to consumers is, of course, ordinarily not a crime or independent tort. However, paragraphs 226 (a-s) and 229-232 of the ACTC must be read in light of Twin Bridges’ overarching allegation that Movants have "intentionally attempted to monopolize the [Waste Services market] in the Capital Region ... to stifle competition and eliminate consumer choice through predatory pricing" (ACTC, ¶ 308).
Federal and state antitrust laws authorize the imposition of criminal penalties for illegal monopolization (see 15 USC § 2 ; GBL § 341 ). Although this Court has ruled that the Donnelly Act claims alleged in Counts I through III fail because they challenge only unilateral conduct on the part of Movants, Twin Bridges’ claims of attempted monopolization under the Sherman Act (see 15 USC § 1 et seq. ) remain pending in federal district court (see Oral Arg Tr, pp. 11, 14).
Indeed, according to Movants, Twin Bridges has "an easier case" in the federal court "because unilateral conduct is reachable" under the Sherman Act (Oral Arg Tr, p. 35; see also id. , p. 15).
The Court recognizes that the Sherman Act claims lie within the exclusive jurisdiction of the federal courts (see id. , pp. 14-15; Marrese v American Academy of Orthopaedic Surgeons , 470 US 373, 379-380 [1985] ). Nonetheless, when questioned at oral argument, Movants offered no persuasive reason why Twin Bridges’ allegations of predatory pricing in violation of the Sherman Act could not constitute "wrongful means" of interference with prospective business relations under State tort law (see Oral Arg Tr, pp. 51-53).
And while Movants point out that Twin Bridges has the burden of establishing that their allegedly "wrongful acts were the proximate cause of the rejection of [Twin Bridges’] proposed contractual relations" ( Jabbour v Albany Med. Ctr. , 237 AD2d 787, 790 [3d Dept 1997] ), the allegations of Count VI sufficiently allege causation (see ACTC, ¶¶ 379, 384).
The Court does agree with Movants, however, that the allegations concerning cease and desist letters sent to Twin Bridges (see id. , ¶ 386) do not support a claim for tortious interference. Besides lacking any claim of injury (see id. , ¶¶ 386-391), the allegations pertain to conduct directed at Twin Bridges, rather than third parties with whom Twin Bridges sought to engage in business relations. "[C]onduct constituting tortious interference with business relations is, by definition, conduct directed not at the [complaining party] itself, but at the party with which [the complaining party] has or seeks to have a relationship" ( Carvel , 3 NY3d at 192 ; see Underwood v Urban Homesteading Assistance [U-HAB], Inc. , 191 AD3d 550, 551 [1st Dept 2021] ["the essence of the claim involves actions directed not at plaintiffs but at third parties"]).
Finally, insofar as Twin Bridges relies on allegations that Movants resisted cancelling customer contracts (see ACTC, ¶¶ 241-268), it bears emphasis that a claim of tortious interference will not lie "[w]here the underlying business relations remained undisturbed" ( Insight Global, LLC v Wenzel , 2018 WL 11318728, *5, 2018 US Dist LEXIS 147597, *17 [SD NY, Aug. 27, 2018, 17 Civ 8323 (PGG)] [internal quotation marks and citations omitted]).
The branch of the motion seeking the dismissal of Count VI is denied in accordance with the foregoing.
D. Injurious Falsehood (Count VII)
Count VII, alleging injurious falsehood, arises from a letter authored by Susan Wright, an owner, officer, employee and/or agent of Robert Wright, regarding Twin Bridges and its owner/principal, Scott Earl, who was the prior owner/president of County Waste (see ACTC, ¶ 289). The letter stated that Scott Earl "was indicted for defrauding Colonie Landfill by falsifying weight tickets" (id. , ¶ 290) and asked readers to consider this "fact[ ] before becoming a Twin Bridges customer" (id. , ¶ 291).
Movants contend that dismissal of the injurious falsehood claim is required because (1) Twin Bridges has failed to plead special damages, and (2) Susan Wright's statement about Scott Earl is substantially true as a matter of law.
1. Special Damages
"The tort of trade libel or injurious falsehood requires the knowing publication of false and derogatory facts about the plaintiff's business of a kind calculated to prevent others from dealing with the plaintiff, to its demonstrable detriment. In addition, the facts so published must cause special damages, in the form of actual lost dealings" ( Banco Popular N. Am. v Lieberman , 75 AD3d 460, 462 [1st Dept 2010] [citations omitted]). The "special damages must be proved to be the direct and natural result of the falsehood" ( SRW Assoc. v Bellport Beach Prop. Owners , 129 AD2d 328, 331 [2d Dept 1987] ).
Special damages consist of the loss of something having economic or pecuniary value (see Agnant v Shakur , 30 F Supp 2d 420, 426 [SD NY 1998] ), and such damages "must be pleaded with sufficient specificity" ( DiSanto v Forsyth , 258 AD2d 497, 498 [2d Dept 1999] ; see Emergency Enclosures, Inc. v National Fire Adj. Co., Inc. , 68 AD3d 1658, 1660 [4th Dept 2009] ; Colon & Rectal Mgmt. Co. v Garbus , 2019 NY Misc LEXIS 11171, *16 [Sup Ct, Nassau County 2019] [collecting authorities]).
Here, the ACTC merely alleges that Twin Bridges has "suffered damages as a result of Waste Connections’ injurious falsehoods, including ... lost revenue and profits, lost business opportunities, harm to its goodwill and reputation, increased costs of doing business, and attorneys’ fees" (ACTC, ¶ 423; see also id. , ¶ 432; Opp Mem, pp. 27-28).
These general and unparticularized allegations of harm cannot support a claim for injurious falsehood (see Gonzalez v Village Taxi Corp. , 155 AD3d 696, 702 [2d Dept 2017] ; Emergency Enclosures , 68 AD3d at 1660 ; DiSanto , 258 AD2d at 498 ["general allegations of lost sales from unidentified lost customers are insufficient"]; Colon & Rectal Mgmt. , 2019 NY Misc LEXIS, *15-16 [loss of "potential referrals"]). The financial losses and increased costs alleged by Twin Bridges are "conjectural in identity and speculative in amount" ( Vigoda v DCA Prods. Plus , 293 AD2d 265, 266 [1st Dept 2002] ). Further, "[t]he allegation that [Twin Bridges] has incurred legal fees does not satisfy th[e] requirement" of pleading special damages ( BCRE 230 Riverside LLC v Fuchs , 59 AD3d 282, 284 [1st Dept 2009] ; see also Rall v Hellman , 284 AD2d 113, 114 [1st Dept 2001] ).
In seeking to avoid dismissal, Twin Bridges cites authorities holding that special damages are not required if the "statements in question either charge plaintiff with a serious crime, dishonesty or improper conduct in business matters or tend to injure [plaintiff] in [its] trade, business or profession" (Opp Mem, p. 24). Movants respond that the cases cited by Twin Bridges concern the tort of defamation, not injurious falsehood (see id. ; see e.g. Sharratt v Hickey , 20 AD3d 734, 735 [3d Dept 2005] ).
While closely allied, in that both the torts of defamation and injurious falsehood concern falsehoods published to third parties, they are distinct causes of action with differing elements (see Hollander v Pressreader, Inc. , 2020 WL 2836189, *6, 2020 US Dist LEXIS 95591, *17 [SD NY 2020, May 30, 2020, No. 19-cv-2130 (AJN)] ; see also In Touch Concepts, Inc. v Cellco Partnership , 949 F Supp 2d 447, 484 n 30 [SD NY 2013] ["A claim for injurious falsehood, unlike a claim for defamation per se , requires the pleading of special damages" (citation omitted)]).
"Where a statement impugns the basic integrity or creditworthiness of a business, an action for defamation lies and injury is conclusively presumed. Where, however, the statement is confined to denigrating the quality of the business’ goods or services, it could support an action for [injurious falsehood], but will do so only if malice and special damages are proven" ( Ruder & Finn v Seaboard Sur. Co. , 52 NY2d 663, 670-671 [1981] ; see Banco Popular , 75 AD3d at 462 ). "[F]alse statements made to third parties concerning the quality of a party's goods or services, which give rise to a cause of action for injurious falsehood, are distinct from those concerning a party's integrity or business methods, which give rise to a defamation cause of action" ( Pitcock v Kasowitz, Benson, Torres & Friedman, LLP , 27 Misc 3d 1238[A], 2010 NY Slip Op 51093[U], *9 [Sup Ct, NY County 2010], affd 80 AD3d 453 [1st Dept 2011], lv denied 16 NY3d 711 [2011] ).
By way of background: "Defamation of a business is substantively similar to defamation of an individual, and thus rests on a well-developed body of precedent that predates the American Revolution.... In light of this focus, where a statement directly impugns the reputation of an individual or business, the statement may be considered defamatory per se and injury will be presumed. Where statements are not deemed defamatory per se, a plaintiff generally must meet the higher burden of proving special damages. By contrast, injurious falsehood developed out of the torts of action on the case and slander of title .... As such, its focus is more properly on the competitive or financial harm caused by false statements. Originally, the claim of slander of title was designed to provide relief against persons who impugned the legitimacy of an owner's right to [one's] land. As ... this tort evolved it was enlarged to cover written aspersions as well. Next it was extended to include title to property other than land and, eventually, to the disparagement of the quality of, as distinguished from title to, property" (4F NY Prac, Com Litig in New York State Courts § 138:8 [5th ed 2020] [internal quotation marks and footnotes omitted]).
Susan Wright's letter stated that Scott Earl was indicted for fraud, a serious integrity-related crime, and asked consumers to "consider th[is] fact" in selecting a Waste Services vendor (ACTC, ¶ 292). The Court is satisfied that the thrust of the letter is an attack on the basic integrity of Twin Bridges and its principal, rather than a denigration of the quality of the Waste Services provided by Twin Bridges (see Henneberry v Sumitomo Corp. of Am. , 415 F Supp 2d 423, 471-472 [SD NY 2018] ; cf. De Marco-Stone Funeral Home v WRGB Broadcasting , 203 AD2d 780, 781 [3d Dept 1994] [suggestion that a funeral home "bungled" a funeral "does not impugn the ... basic integrity of plaintiff but, rather, denigrates the quality of its services"], lv denied 84 NY2d 805 [1994] ).
And while denominated a claim for injurious falsehood, the harms alleged in Count VII include damage to Twin Bridges’ "good name and reputation" (ACTC, ¶ 418) and "loss of [its] business reputation" (id. , ¶ 421). Moreover, Twin Bridges’ pleading recognizes that the allegations of Count VII also "constitute defamation, libel on its face [and] slander per se" (id. , ¶ 422), and, on that basis, Twin Bridges seeks to recover damages for, among other things, "harm to its goodwill and reputation" (id. , ¶ 423).
On a motion to dismiss under CPLR 3211 (a) (7), the Court's "sole criterion is whether the pleading states a cause of action, and if from its four corners factual allegations are discerned which taken together manifest any cause of action cognizable at law a motion for dismissal will fail" ( People v Coventry First LLC , 13 NY3d 108, 115 [2009] [internal quotation marks and citation omitted]). Here, Twin Bridges alleges that Movants’ false and defamatory statement of fact about its business, published with malice, was the proximate cause of reputational harm.
Movants argue that Susan Wright's letter, at most, disparaged Scott Earl, as it did not mention Twin Bridges or any of its products, but the letter clearly can be understood as attributing Scott Earl's misconduct to Twin Bridges (see ACTC, ¶ 410 ["I am asking you to consider the facts before becoming a Twin Bridges customer ..."]).
Liberally construing the ACTC and giving Twin Bridges the benefit of all favorable inferences at this early stage of the litigation, the Court is satisfied that Count VII sufficiently states a cause of action for commercial defamation, and the motion to dismiss should be denied to that extent.
2. Substantial Truth
Movants further contend that the challenged statement, that "Scott Earl ‘was indicted for defrauding Colonie Landfill by falsifying weight tickets" (ACTC, ¶ 406), is substantially true and, therefore, not actionable.
In seeking to demonstrate that the Susan Wright letter would not have had " ‘a different effect on the mind of the reader’ than the ‘truth would have produced’ " (NYSCEF Doc No. 38, p. 11, quoting Biro v Conde Nast , 883 F Supp 2d 441, 458 [SD NY 2012] ; see MOL, pp. 14-15), Movants compare the letter to a press release issued by the Office of the Attorney General ("OAG"). The press release accused Earl and County Waste of "defrauding [the] Town of Colonie" and engaging in a "[s]cam" by underreporting the quantity of waste delivered to the Town's landfill (see https://ag.ny.gov/press-release/2010/new-york-state-attorney-general-andrew-m-cuomo-announces-county-waste-pay-nearly ["Press Release"]; see MOL, pp. 14-15).
The Court is unconvinced by Movants’ argument. It is apparent from OAG's press release, an unsworn instrument, that Scott Earl entered into a monetary settlement "to resolve [OAG's] allegations" of wrongdoing, and there is nothing in the Press Release stating or suggesting that Earl admitted to engaging in a "[s]cam" or "defrauding [the] Town of Colonie." Rather, those were OAG's allegations and characterization of its case against Scott Earl (and County Waste).
Accordingly, the Court has no basis upon which to conclude that a person learning of the Attorney General's fraud claims and the resulting monetary civil settlement without an admission of liability would react in the same way as learning that a grand jury had voted to formally indict Scott Earl on felony charges of defrauding the government.
E. Prima Facie Tort (Count VIII)
Count VIII, pleaded in the alternative (see ACTC ¶ 427), alleges prima facie tort. Such a claim consists of four elements: (1) the intentional infliction of harm, (2) without justification, (3) through an otherwise lawful act, (4) that results in special damages (see Freihofer v Hearst Cor p., 65 NY2d 135, 142-143 [1985] ). Further qualifying the cause of action is a requirement that the sole motive for the act be "disinterested malevolence," meaning the act was prompted exclusively by malice and intent to harm ( Burns Jackson Miller Summit & Spitzer v Lindner , 59 NY2d 314, 333 [1983] ). Prima facie tort is a cause of action to be used sparingly, and not as a "catch-all" alternative ( Freihofer , 65 NY2d at 143 [internal quotation marks and citation omitted]).
For the reasons stated above, the Court concludes that Twin Bridges has failed to plead special damages with the requisite particularity, thus compelling dismissal of this counterclaim. In so concluding, the Court rejects Twin Bridges’ invitation to relax or abandon the requirement that special damages be pleaded with particularity (see Opp Mem, pp. 27-28). It has long been the law of New York that "an essential element of the cause of action [for prima facie tort] is an allegation of special damages" ( ATI, Inc. v Ruder & Finn , 42 NY2d 454, 458 [1977] ), and this Court is not at liberty to disregard the controlling precedent of our appellate courts.
Nor does the Court find it appropriate to grant Twin Bridges’ request to amend the damages allegations of the ACTC absent a formal motion under CPLR 3025 (b) supported by "the proposed amended ... pleading clearly showing the changes or additions to be made."
Accordingly, Count VIII is dismissed.
At oral argument, the Court questioned whether Count VIII plausibly alleges the element of disinterested malevolence, inasmuch as the ACTC is replete with allegations that Movants acted to "deter and eliminate competition" (ACTC, ¶ 1) in order to further their economic interest of "attain[ing] high market share" (id. , ¶ 63; see Oral Arg Tr, p. 71). Given Twin Bridges’ failure to plead special damages, the Court need not consider this issue.
PERSONAL JURISDICTION
The second branch of the motion seeks dismissal of the third-party complaint on the ground that the New York courts lack personal jurisdiction over Waste Connections, Inc., a Canadian corporation with its principal offices in Ontario (executive) and Texas (administrative) (see ACTC, ¶ 17), and Waste Connections (US), a Delaware corporation with a principal place of business in Texas (see id. , ¶ 18).
During the pendency of the motion, Movants withdrew their claim that Waste Connections, Inc. had not been properly served (see NYSCEF Doc No. 34).
Twin Bridges bears the ultimate burden of demonstrating "satisfaction of statutory and due process prerequisites" to the exercise of personal jurisdiction over the third-party defendants ( Stewart v Volkswagen of Am. , 81 NY2d 203, 207 [1993] ; see Archer-Vail v LHV Precast Inc. , 168 AD3d 1257, 1260-1261 [3d Dept 2019] ). However, that burden does not entail making a prima facie showing of personal jurisdiction at this stage of the litigation (see Peterson v Spartan Indus. , 33 NY2d 463, 467 [1974] ).
Rather, for its third-party claims to survive a motion under CPLR 3211 (a) (8), Twin Bridges need only show that it has made a "sufficient start" at demonstrating jurisdiction to warrant discovery (id. ; accord Gottlieb v Merrigan , 119 AD3d 1054, 1056 [3d Dept 2014] ). This showing may be made "by reference to pleadings, affidavits, and other suitable documentation" ( Avilon Auto. Group v Leontiev , 168 AD3d 78, 89 [1st Dept 2019] ).
A. General Jurisdiction
Under CPLR 301, "[a] court may exercise such jurisdiction over persons, property, or status as might have been exercised heretofore." This section preserves the power of the New York courts to exercise general jurisdiction (see Pichardo v Zayas , 122 AD3d 699, 702 [2d Dept 2014], lv denied 26 NY3d 905 [2015] ). "Any exercise of jurisdiction over a foreign corporation on the basis of [ CPLR 301 ] must comport with due process requirement[s]" ( Fernandez v DaimlerChrysler, AG. , 143 AD3d 765, 766 [2d Dept 2016], appeal dismissed 28 NY3d 1129 [2017], cert denied ––– US ––––, 138 S Ct 145 [2017] ).
"Prior to the United State Supreme Court's decision in Daimler AG v Bauman (571 US 117 [2014] ), a foreign corporation was amenable to suit in New York under CPLR 301 if it had engaged in such a continuous and systematic course of doing business here that a finding of its presence in this jurisdiction was warranted" ( Aybar v Aybar , 169 AD3d 137, 143 [2d Dept 2019] [internal quotation marks and citations omitted], lv granted 34 NY3d 905 [2019] ).
Following Daimler AG , however, "general jurisdiction over a foreign corporation ... exists only if the corporation is essentially at home in the forum State typified by the place of incorporation and principal place of business" ( Motorola Credit Corp. v Standard Chartered Bank , 24 NY3d 149, 160 n 4 [2014] [internal quotation marks and citations omitted]; see Aybar , 169 AD3d at 144 ["the paradigm bases for general jurisdiction are the place of incorporation and principal place of business"]; accord State of New York v Vayu, Inc. , 195 AD3d 1337, 1338 n 2 [3d Dept 2021] ).
Twin Bridges argues that general jurisdiction may be exercised over Waste Connections, Inc. and Waste Connections (US) on account of the in-state activities of their sub-subsidiaries, County Waste and Robert Wright, both of which are New York-based corporations (see ACTC, ¶¶ 14, 16). In particular, Twin Bridges relies on the following allegations of the ACTC in seeking to demonstrate general jurisdiction:
• County Waste, Waste Connections, Inc. and Waste Connections (US) share the same corporate headquarters (see id. , ¶¶ 14, 17-18, 36-38);
• Robert Wright is a wholly owned subsidiary of County Waste (see id. , ¶ 22, 24, 41), which is a wholly owned subsidiary of Waste Connections (US) (see id. , ¶¶ 21, 24, 41), which is a wholly owned subsidiary of Waste Connections, Inc. (see id. , ¶¶ 20, 24, 64);
• All four corporations market their services and operate their business as a single integrated entity known as "Waste Connections" (see id. , ¶ 39);
• The four corporations share common directors and officers (see id. , ¶¶ 24, 42-44, 46), including the sharing of a common president and vice-president by Waste Connections, Inc. and County Waste (see id. , ¶¶ 43, 44, 46, 64);
• Waste Connections, Inc. manages its subsidiaries’ operations through geographic operating segments supervised by personnel from the parent corporations (see id. , ¶¶ 48-50); and
• Waste Connections (US) allegedly is the employer of County Waste drivers and sales representatives working in the Capital Region (see NYSCEF Doc No. 36).
Twin Bridges maintains that the foregoing allegations demonstrate that the third-party defendants " ‘exert[ ] some degree of control over [their] subsidiaries through internal business groupings ... comprised of employees of [their] various subsidiaries and organized to achieve common purposes under [their] direction" (Opp Mem, p. 33, quoting Goel v Ramachandran , 111 AD3d 783, 788-789 [2d Dept 2013] ). Twin Bridges further argues that the allegations of the ACTC demonstrate an agency relationship supporting the exercise of general jurisdiction (see Opp Mem, p. 33, citing Yousef v Al Jazeera Media Network , 2018 WL 1665239, *9, 2018 US Dist LEXIS 49614, *28 [SD NY 2018, Mar. 22, 2018, No. 16-cv-6416 (CM)] ).
The Court is unpersuaded by Twin Bridges’ arguments in favor of general jurisdiction. "Aside from ‘an exceptional case,’ a corporation is ‘at home’ only in a state that is the company's place of incorporation or its principal place of business" ( Lowy v Chalkable, LLC , 186 AD3d 590, 592 [2d Dept 2020], quoting Daimler AG , 571 US at 139 n 19 ; see Amelius v Grand Imperial LLC , 57 Misc 3d 835, 849 [Sup Ct, NY County 2017] [Daimler AG "casts significant doubt on the notion that a corporation could ever be subject to general jurisdiction in a state that is neither its state of incorporation nor its principal place of business"]). It is undisputed that New York is neither the place of incorporation nor the principal place of business of Waste Connections, Inc. or Waste Connections (US), and that Waste Connections, Inc. is a multi-billion dollar enterprise that transacts business throughout the United States and Canada (see ACTC, ¶¶ 25-28).
Moreover, while "[j]urisdiction over a parent corporation may be based on the presence of a subsidiary when the parent exercises such complete control ‘that the subsidiary is, in fact, merely a department of the parent’ " ( Benifits By Design Corp. v Contractor Mgt. Servs., LLC , 75 AD3d 826, 829 [3d Dept 2010], quoting Delagi v Volkswagenwerk AG of Wolfsburg, Germany , 29 NY2d 426, 432 [1972] ), the control must rise to such a level that the parent and subsidiary are deemed "one and the same corporation" ( Public Adm'r of County of NY v Royal Bank of Can. , 19 NY2d 127, 132 [1967] ; see Goel , 111 AD3d at 787 ; Brandt v Volkswagen AG. , 161 AD2d 1149, 1150 [4th Dept 1990] [evidence must "negate( ) the conclusion that the subsidiary is operated as a separate and independent entity"]).
The factual allegations relied upon by Twin Bridges, even if credited, fall short of establishing that County Waste and Robert Wright are "mere department(s)" of Waste Connections, Inc. or Waste Connections (US) ( Delagi , 29 NY2d at 432 ). Rather, the jurisdictional facts cited by Twin Bridges are garden-variety allegations of common ownership, headquarters, officers, directors and marketing, together with some regional-level management and oversight by the parent corporations. In contrast, Movants have submitted proof that the parent corporations observe corporate formalities and maintain corporate separateness from their subsidiaries (see Pio Aff., ¶¶ 19-27).
And even assuming that Waste Connections, Inc. and Waste Connections (US) do " ‘exert[ ] some degree of control over [their] subsidiaries’ " (Opp Mem, p. 33, quoting Goel , 111 AD3d at 788-789 ), there is no basis to find that Waste Connections, Inc. or Waste Connections (US), a holding company and an administrative services company, respectively (see ACTC, ¶¶ 6, 31, 35-36; Pio Aff., ¶¶ 11-13), are "essentially at home" in New York ( Daimler AG , 571 US at 139 [internal quotation marks and citation omitted]; see Sonera Holding B.V. v Cukurova Holding A.S. , 750 F3d 221, 225 [2d Cir 2014] [questioning agency theory of general jurisdiction after Daimler AG ], cert denied 573 US 948 [2014] ; Yousef , 2018 WL 1665239, *6, 2018 US Dist LEXIS 49614, *12 [Daimler AG "very likely changes (agency) analysis"]; see also FIMBank P.L.C. v Woori Fin. Holdings Co. Ltd. , 104 AD3d 602, 603 [1st Dept 2013] ).
Waste Connections, Inc. and its subsidiaries are "the third-largest waste management company ... in North America" (ACTC, ¶ 26 [internal quotation marks and citation omitted]), reporting 2019 revenues of about $5.4 billion from operations throughout the United States and Canada (see id. , ¶¶ 25-27). "Appraising the magnitude of [the third-party defendants’ alleged] activities in New York in the context of the entirety of [their] activities [throughout the United States and Canada], it cannot be said that [Waste Connections, Inc. and Waste Connections (US) are] at home in New York" (Aybar , 169 AD3d at 145-146 ).
Finally, the Court finds that the conclusory and generic allegations offered by Twin Bridges in favor of disregarding corporate separateness do not provide a "sufficient start" so as to warrant discovery on its invocation of general jurisdiction (see Qudsi v Larios , 173 AD3d 920, 922 [2d Dept 2019] ; see also n 14 infra ).
B. Long-Arm Jurisdiction
Twin Bridges next argues that the third-party defendants are subject to the personal jurisdiction of the New York courts under CPLR 302 (a), which allows for the exercise of long-arm jurisdiction over a non-domiciliary who, in person or through an agent, "transacts any business within the state," "commits a tortious act within the state" or "commits a tortious act without the state causing injury to person or property within the state."
"[A] two-part analysis must be employed. First, it must be ‘determine[d] whether our long-arm statute ( CPLR 302 ) confers jurisdiction over [the third-party defendants] in light of [their] contacts with this State. If so, it must then be ‘determine[d] whether the exercise of jurisdiction comports with due process’ " ( Andrew Greenberg, Inc. v Sirtech Can., Ltd. , 79 AD3d 1419, 1420 [3d Dept 2010], quoting LaMarca v Pak-Mor Mfg. Co. , 95 NY2d 210, 214 [2000] ). "Due process requires that a nondomiciliary have ‘certain minimum contacts’ with the forum and ‘that the maintenance of the suit does not offend traditional notions of fair play and substantial justice’ " ( Williams v Beemiller, Inc. , 33 NY3d 523, 528 [2019], quoting International Shoe Co. v Washington , 326 US 310, 316 [1945] ). "If either the statutory or constitutional prerequisite is lacking, the action may not proceed" (id. ).
CPLR 302 (a) does not require "a formal agency relationship," but the party claiming jurisdiction must show that the alleged agent engaged in "purposeful activities in this State in relation [to the challenged] transaction(s) for the benefit of and with the knowledge and consent of the [foreign] defendants and that they exercised some control over [the agent] in the matter" ( Kreutter v McFadden Oil Corp. , 71 NY2d 460, 467 [1988] ). "The critical factor is the degree of control the defendant principal exercises over the agent" ( America/Intl. 1994 Venture v Mau , 146 AD3d 40, 54 [2d Dept 2016] [internal quotation marks and citation omitted]).
As Movants observe, the allegations of control set forth in the ACTC are conclusory in nature (see ACTC, ¶ 40) and predicated largely on boilerplate allegations of common ownership, headquarters, officers, directors and marketing (see supra ). Such allegations are insufficient to demonstrate agency under CPLR 302 (a) (see Coast to Coast Energy, Inc. v Gasarch , 149 AD3d 485, 487 [1st Dept 2017] ["plaintiff's allegations must sufficiently detail the defendant's conduct so as to persuade a court that the defendant was a ‘primary actor’ in the specific matter in question; control cannot be shown based merely upon a defendant's title or position within the corporation, or upon conclusory allegations that the defendant controls the corporation" (internal quotation marks and citations omitted)]; Polansky v Gelrod , 20 AD3d 663, 664 [3d Dept 2005] ).
Moreover, the ACTC is not verified, leaving it devoid of probative value. The only evidence in admissible form submitted by Twin Bridges are the affidavits of several former County Waste employees in the Capital Region who received W-2 statements identifying Waste Connections (US) as their employer (see NYSCEF Doc No. 36). However, Twin Bridges makes no claim that the affiants’ work for County Waste pertained in any meaningful way to the allegations of the ACTC.
Nonetheless, it is apparent that the "essential jurisdictional facts" concerning the degree of control, if any, that Waste Connections, Inc. and Waste Connections (US) exercised over County Waste and Robert Wright in relation to the anticompetitive misconduct alleged in the ACTC lie within the "exclusive control" of Movants ( Peterson , 33 NY2d at 466 ). And "[Twin Bridges] need only demonstrate that facts ‘may exist’ whereby to defeat the motion. It need not be demonstrated that they do exist. This obviously must await discovery" (id. ; see Qudsi , 173 AD3d at 922-923 ; Gottlieb , 119 AD3d at 1057 ; Sovik v Healing Network , 244 AD2d 985, 987 [4th Dept 1997], amended on rearg 679 NYS2d 858 [4th Dept 1998] ).
The Court therefore concludes that the facts alleged by Twin Bridges in the ACTC provide a "sufficient start" in demonstrating long-arm jurisdiction under CPLR 302 (a) so as to warrant the taking of limited jurisdictional discovery pursuant to CPLR 3211 (d).
The jurisdictional issues to be explored in discovery include the third-party defendants’ knowledge, consent and control over County Waste and Robert Wright in relation to the allegations of the ACTC. Thus, insofar as Twin Bridges’ claim of general jurisdiction is predicated upon allegations of overarching control by the parent corporations, it is subsumed in the analysis of long-arm jurisdiction, which requires a showing of control only in relation to misconduct alleged in the ACTC.
CONCLUSION
For all of the foregoing reasons, it is
The Court has considered the parties’ remaining arguments and contentions but finds them unpersuasive or unnecessary to reach given the disposition ordered herein.
ORDERED that Counts I, II, III, V and VIII of the Amended Counterclaims and Third-Party Complaint are dismissed; and it is further
ORDERED that the branch of the motion seeking dismissal of the Third-Party Complaint as against Waste Connections, Inc. and Waste Connections US, Inc. is denied, without prejudice to renewal following limited jurisdictional discovery; and it is further
ORDERED that the motion is granted to the extent indicated in the two preceding paragraphs and is otherwise denied in accordance with the foregoing; and finally it is
ORDERED that a remote preliminary conference shall be scheduled, and the parties are directed to confer in advance of such conference regarding the matters set forth in Commercial Division Rule 8, as well as the use of mediation or other forms of alternative dispute resolution to bring about an early resolution of this action.
This constitutes the Decision & Order of the Court, the original of which is being uploaded to NYSCEF for electronic entry by the Albany County Clerk. Upon such entry, counsel for movants shall promptly serve notice of entry on all parties entitled thereto.
Papers Considered :
NYSCEF Doc Nos. 1, 23, 26-31, 34-36, 38-39, 42.