Opinion
CV156013794
06-29-2016
Advanced Copy Technologies, Inc. v. Christopher Wiegman et al
UNPUBLISHED OPINION
MEMORANDUM OF DECISION RE PLAINTIFF'S MOTION TO STRIKE COUNT FIVE OF DEFENDANT'S COUNTERCLAIM (#146)
Elpedio N. Vitale, Judge.
Pursuant to Practice Book § 10-39 et seq., the plaintiff Advanced Copy Technologies, Inc. (" ACT"), moves to strike Count Five and the prayer for relief for attorneys fees pursuant to Conn. Gen. Stat. § 42-110g and for treble damages pursuant to Conn. Gen. Stat. § 42-110g from defendant Christopher Wiegman's (" Wiegman") Counterclaim dated August 4, 2015. The plaintiff argues that Count Five, alleging a violation of the Connecticut Unfair Trade Practices Act (" CUTPA"), fails because Wiegman, as a former employee, does not allege misconduct in ACT's primary trade or commerce. The plaintiff additionally contends that Wiegman has failed to satisfy the cigarette rule. Consequently, the plaintiff argues that Wiegman's prayer for relief with respect to attorneys fees and treble damages pursuant to Conn. Gen. Stat. § 42-110g should also be stricken.
The defendant opposes the motion to strike and claims that the allegations contained in Count Five of the counterclaim are legally sufficient. The issues raised by the plaintiff's motion are: (1) whether the acts complained of in Wiegman's CUTPA count cannot, as a matter of law, constitute acts " in the conduct of any trade or commerce" for purposes of General Statutes § 42-110b(a) because they arose out of the employment relationship between the plaintiff and Wiegman; and (2) whether the CUTPA count contains sufficient allegations of fact to satisfy the Federal Trade Commission's " cigarette rule" for determining whether a method of competition is " unfair" or a particular act or practice is " unfair or deceptive" under § 42-110b(a).
Nature of the Proceedings
The plaintiff commenced the underlying action by service of process on Wiegman and the defendant Ross Machinery Sales, Inc. (Ross), on June 26 and June 29, 2015, respectively. The thirteen-count complaint arises out of the alleged breach by Wiegman, the plaintiff's former employee, of the noncompetition and nondisclosure provisions of Wiegman's employment contract. The plaintiff alleges that Wiegman violated this agreement by misappropriating the plaintiff's confidential business information and pursuing the plaintiff's customers and by then resigning from the plaintiff's employ in order to begin working for Ross, one of the plaintiff's competitors.
On August 4, 2015, Wiegman filed a five-count counterclaim against the plaintiff sounding in breach of the employment contract (count one), unreasonable failure to pay wages in violation of General Statutes § 31-72 (count two), negligent misrepresentation (count three), intentional interference with a business expectancy (count four), and violation of CUTPA pursuant to General Statutes § 42-110g. In count five of the operative counterclaim --the only count at issue for purposes of the present motion--Wiegman alleges the following facts. The plaintiff and Wiegman began their employment relationship on April 6, 2011, when Wiegman accepted a position as a " document solutions specialist" selling office machines and software for processing documents. As part of this initial employment agreement, Wiegman agreed that, during his employment with the plaintiff and for one year after the termination of this employment, he would not work for any other business that " provides sale and service of office machines, including digital copiers, printers, fax machines, and multifunction color copiers" within a fifty-mile radius of the plaintiff's place of business. Wiegman also agreed that, for a year following his separation from the plaintiff's employ, he would not solicit or contact the plaintiff's customers or suppliers " for the purpose of providing sale and service of office machines, including digital copiers, printers, fax machines, and multifunction color copiers."
On April 7, 2016, subsequent to the plaintiff's filing of the motion to strike presently before the court, Wiegman filed an amended counterclaim; the court construes this as a request for leave to amend. See Practice Book § 10-60. Because there has been no objection filed to the request within fifteen days from its filing, the amendment is " deemed to have been filed by consent." Practice Book § 10-60(a)(3). The plaintiff has not amended its motion to strike in light of the amended counterclaim; therefore, the court considers the amended counterclaim as the operative complaint for purposes of deciding the motion. See Practice Book § 10-61 (" When any pleading is amended the adverse party may plead thereto within the time provided by [Practice Book § ]10-8 or, if the adverse party has already pleaded, alter the pleading, if desired, within ten days after such amendment or such other time as the rules of practice, or the judicial authority, may prescribe, and thereafter pleadings shall advance in the time provided by that section. If the adverse party fails to plead further, pleadings already filed by the adverse party shall be regarded as applicable so far as possible to the amended pleading " [emphasis added]).
Wiegman incorporates by reference count four of his counterclaim into count five. Count four, in turn, incorporates by reference the first sixteen paragraphs of count one.
In August of 2012, Wiegman informed the plaintiff of his intention to resign. To persuade him to remain, the plaintiff offered, among other things, to create a new division devoted to the sale and servicing of a new product that the plaintiff was not at that time in the business of selling or servicing: additive manufacturing machines. These machines, also known as three-dimensional printers, are a type of manufacturing device distinct from the office machines the plaintiff was initially in the business of selling and servicing. Wiegman accepted this offer and eventually began selling three-dimensional printers for the plaintiff, but the plaintiff did not attempt to modify the noncompetition and nonsolicitation clauses of the 2011 employment agreement. In May of 2015, Wiegman was offered a position with Ross. Ross' primary business has at all relevant times been the sale of machine tools, and it does not sell or service office machines. In June 2015, Wiegman informed the plaintiff of his intent to accept Ross' offer, and the plaintiff responded by initiating the present underlying action to restrain Wiegman from entering Ross' employ, on the basis of the noncompetition and nonsolicitation clauses. Wiegman's employment with the plaintiff also terminated at some point during that month.
Wiegman further alleges in count five that, in the course of litigating its action, the plaintiff has falsely represented to the court and to Ross that the noncompetition and nonsolicitation clauses extend beyond the sale and servicing of office machines to the sale of manufacturing machines. Wiegman claims that, in making such misrepresentations, the plaintiff intentionally interfered with his business and employment expectancies with Ross by causing Ross to place on hold its offer of employment. According to Wiegman, this conduct on the part of the plaintiff was immoral, unscrupulous, and oppressive and constitutes an unfair and deceptive trade practice in violation of § 42-110g. As a remedy for the plaintiff's alleged CUTPA violation, Wiegman seeks attorneys fees and treble damages pursuant to § 42-110g.
On March 8, 2016, the plaintiff moved to strike Wiegman's CUTPA claim and the associated prayers for relief on the grounds that Wiegman, being its former employee, cannot as a matter of law allege misconduct in its primary trade or commerce and that Wiegman has failed to plead sufficient facts to satisfy the cigarette rule. In support of its motion, the plaintiff has also filed a memorandum of law (memorandum in support). On April 7, 2016, Wiegman responded with a memorandum of law in opposition to the plaintiff's motion to strike. The plaintiff filed a reply brief on April 19, 2016, and the court heard oral argument on the motion on May 9, 2016.
DISCUSSION
" A motion to strike shall be used whenever any party wishes to contest: (1) the legal sufficiency of the allegations of any complaint, counterclaim or cross claim, or of any one or more counts thereof, to state a claim upon which relief can be granted; or (2) the legal sufficiency of any prayer for relief in any such complaint, counterclaim or cross complaint . . ." Practice Book § 10-39(a). In ruling on a motion to strike, " [the court] construe[s] the complaint in the manner most favorable to sustaining its legal sufficiency . . . Thus, [i]f facts provable in the complaint would support a cause of action, the motion to strike must be denied . . . Moreover, [the court notes] that [w]hat is necessarily implied [in an allegation] need not be expressly alleged . . . It is fundamental that in determining the sufficiency of a complaint challenged by a defendant's motion to strike, all well-pleaded facts and those facts necessarily implied from the allegations are taken as admitted." (Internal quotation marks omitted.) Coppola Construction Co. v. Hoffman Enterprises Ltd. Partnership, 309 Conn. 342, 350, 71 A.3d 480 (2013).
The plaintiff moves to strike a CUTPA counterclaim brought pursuant to § 42-110g. Section 42-110g(a) provides in relevant part that " [a]ny person who suffers any ascertainable loss of money or property, real or personal, as a result of the use or employment of a method, act or practice prohibited by section 42-110b, may bring an action in the [Superior Court]." Section 42-110b(a), in turn, provides that " [n]o person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce." Thus, in order to state a legally sufficient cause of action under § 42-110g(a), a claimant must allege sufficient facts to establish (1) that the acts complained of occurred " in the conduct of any trade or commerce" and (2) that these acts were " unfair or deceptive." The plaintiff contests both of these elements.
As the first ground for its motion to strike, the plaintiff argues that Wiegman's CUTPA claim is legally insufficient because the improper acts alleged do not constitute actions undertaken " in the conduct of any trade or commerce." General Statutes § 42-110b(a). Relying on the Appellate Court's decision in Quimby v. Kimberly Clark Corp, 28 Conn.App. 660, 613 A.2d 838 (1992), the plaintiff contends that the alleged misconduct took place entirely within the plaintiff and Wiegman's employment relationship and is thus outside the scope of " trade or commerce" for the purposes of CUTPA.
The plaintiff raises an additional argument in its memorandum in support. Citing Knudsen v. Buettner, Superior Court, judicial district of Danbury, Docket No. 32 07 08, (March 5, 1996, Moraghan, J.), the plaintiff contends that making a false statement to a court does not constitute an act " in the conduct of any trade or commerce" under General Statutes § 42-110b(a). Even assuming that in-court misrepresentations are per se outside the scope of CUTPA, the plaintiff appears to overlook the fact that Wiegman bases his CUTPA claim not only on the plaintiff's representations to the court, but also the allegedly false representations that it made to Ross. Wiegman alleges that the plaintiff intentionally interfered with his business and employment expectancy by falsely representing to Ross that Wiegman's noncompetition and nonsolicitation clauses barred Wiegman from working at Ross. Because the court ultimately concludes that the plaintiff's alleged misrepresentation to Ross may properly form the basis of a CUTPA claim, the court need not decide whether the plaintiff's alleged misrepresentation to the court may also support the CUTPA claim. See Aurio v. Allstate Ins. Co., Superior Court, judicial district of Waterbury, DocketNo. CV-02-0175465-S (November 26, 2003, Gallagher, J.) (36 Conn.L.Rptr. 39, 40, ) (" [i]f a motion to strike attacks an entire count, but any part of the plaintiff's claims therein are legally sufficient, the motion will fail" [internal quotation marks omitted]).
The employment relationship between an employer and employee is not considered trade or commerce for the purpose of a CUTPA violation. The Appellate Court first made this distinction in Quimby v. Kimberly Clark Corp, [supra, 28 Conn.App. 670], where it found [that] " the employer-employee relationship does not fall within the definition of trade or commerce for the purpose[s] of an action under CUTPA." In Quimby, the plaintiff employee brought an action against the defendant employer seeking compensation for the defendant's alleged wrongful conduct in connection with the plaintiff's workers' compensation claim. The plaintiff alleged that the defendant's mishandling of her workers' compensation claim constituted a CUTPA violation. Id. In affirming the trial court's decision to grant the defendant's motion to strike, the Appellate Court agreed that the allegations were insufficient to support a cause of action for a CUTPA violation. Id. " [A]lthough an employer may engage employees for the purpose of promoting trade or commerce, the actual employment relationship is not itself trade or commerce for the purpose of CUTPA." (Internal quotation marks omitted.) Id.
The Supreme Court in Larsen Chelsey Realty Co. v. Larsen, 232 Conn. 480, 656 A.2d 1009 (1995), limited the application of the Quimby decision and provided further guidance as to when a CUTPA violation can be found in the context of an employment relationship. The court explained that " [t]he Appellate Court's decision in Quimby addressed only the applicability of CUTPA to acts occurring within the very limited confines of the employer-employee relationship. The misconduct revolved entirely around administrative shortcomings and an intracompany workers' compensation dispute." Larsen Chelsey Realty Co. v. Larsen, supra, 232 Conn. 493. In Larsen, the court found that the facts providing the basis for the plaintiff's CUTPA claim involved conduct occurring outside the narrow scope of the employer-employee relationship, and therefore the defendant could be subject to liability for a CUTPA violation. Id. Specifically, the plaintiff employer, a real estate broker, alleged its former employee (Larsen) accepted a job offer with a competing real estate brokerage firm, solicited brokers from the plaintiff's firm, sent a letter to the plaintiff's clients and business contacts falsely stating that the plaintiff was merging with another real estate brokerage firm, and instructed the New Haven board of realtors that the plaintiff was ceasing operations. Id., 494. The court found that " this case presents a fact pattern that involves a potentially viable cause of action under CUTPA because Larsen's allegedly tortious conduct was outside the scope of his employment relationship with the plaintiff." Id., 493-94. As such, it was Larsen's conduct and activities, rather than his relationship with the plaintiff employer, that constituted a basis for his CUTPA liability. Id., 492.
Relying on Larsen, judges of the Superior Court have found that allegations of anti-competitive activities by the employee or former employee fall outside the scope of the employment relationship, and thus can provide the basis for a claim that the employee has violated CUTPA. For instance, in Sabatasso v. Bruno, Superior Court, judicial district of New Haven at Meriden, Docket No. CV 03 0284486, (March 7, 2005, Tanzer, J.), the trial court denied a motion to strike the plaintiffs' CUTPA claim. The plaintiffs, salon owners and operators, alleged in their complaint that after the termination of their employment, the defendants, the plaintiffs' former employees, contacted the plaintiffs' customers to solicit business, and solicited employees to leave plaintiffs' employ. The court, relying on Larsen, found the defendants' alleged conduct fell outside the employer-employee relationship, and was thus subject to CUTPA liability. See also ITech Consulting Partners, LLC v. Briand, Superior Court, judicial district of Danbury, Docket No. CV 02 0345540 (February 26, 2003, Comerford, J.) (34 Conn.L.Rptr. 184, ) (denying a motion to strike the plaintiff employer's count alleging a CUTPA violation after finding that allegations that its former employee solicited plaintiff's current and prospective customers and consultants constituted anti-competitive activities that fell outside the scope of an 'intra-office employer-employee dispute')." (Footnotes omitted.) Robinson & Cole, LLP v. Ryan, Superior Court, judicial district of Hartford, Docket No. CV-11-6021702 (December 5, 2011, Domnarski, J.) (53 Conn.L.Rptr. 63, 65-66, ); see Ostrowski v. Avery, 243 Conn. 355, 379, 703 A.2d 117 (1997) (" [a]lthough purely intracorporate conflicts do not constitute CUTPA violations, actions outside the scope of the employment relationship designed to usurp the business and clientele of one corporation in favor of another . . . fit squarely within the [province] of CUTPA" [internal quotation marks omitted]); Fink v. Golenbock, 238 Conn. 183, 213-14, 680 A.2d 1243 (1996) (noting that, for purposes of CUTPA, " it [is] not the employment relationship that [is] dispositive, but the defendant's conduct, " and thus affirming judgment for plaintiff on shareholder derivative CUTPA claim because defendant co-owner's " actions went well beyond governance of the corporation, and placed him in direct competition with the interests of the corporation"); Russell v. Russell, 91 Conn.App. 619, 647-48, 882 A.2d 98 (retention by defendant, who was part owner of closely held corporation, of proceeds of decedent co-owner's life insurance policy involved " purely intracorporate matters" outside scope of CUTPA because defendant " did not use them in a manner that placed him in direct competition with [the corporation] by usurping its customers, employees or assets"), cert. denied, 276 Conn. 924, 925, 888 A.2d 92 (2005); Metcoff v. Lebovics, 123 Conn.App. 512, 519, 2 A.3d 942 (2010) (in action against officers of merged corporation by shareholders of merging corporation arising out of defendants' alleged failure to abide by terms of merger agreement, plaintiffs failed to plead legally sufficient CUTPA claim because they " did not allege that the defendants personally engaged in any business or commercial activity in competition with the plaintiffs").
As alleged in Wiegman's counterclaim, the parties herein were or had been in an employer-employee relationship at the time of the plaintiff's alleged misconduct. Nevertheless, in light of the foregoing authority, the court must look beyond this relationship to the nature of the particular acts alleged. Wiegman alleges that the plaintiff prevented him from going to work for Ross--a competitor--by falsely representing to Ross that Wiegman was barred from competing with the plaintiff by operation of his employment contract. Although this claim certainly arises, in a literal sense, out of Wiegman's employment with the plaintiff, the crux of the claim is that the plaintiff has wrongfully and intentionally interfered with Wiegman's right to compete with the plaintiff in the three-dimensional printer business. Wrongfully preventing a potential competitor from participating in the marketplace is not materially different from " usurp[ing] the business and clientele of one corporation in favor of another"; [internal quotation marks omitted] Ostrowski v. Avery, supra, 243 Conn. 379; Fink v. Golenbock, supra, 238 Conn. 212; both are anticompetitive in nature. The plaintiff's alleged attempt to prevent Wiegman from competing with it " implicate[s] the services of both [parties]" as three-dimensional printer sellers, rather than as employer and employee, " and thus implicate[s] trade or commerce under CUTPA." Larsen Chelsey Realty Co. v. Larsen, supra, 232 Conn. 494. As a result, the court concludes that Wiegman has sufficiently alleged acts " in the conduct of . . . trade or commerce" under § 42-110b(a).
However, the court must further consider whether these alleged acts are " unfair" or " deceptive" within the meaning of § 42-110b(a). On this issue, the plaintiff proffers two arguments. The plaintiff first contends that statements made by the court, Aurigemma, J., in granting the plaintiff's request for a temporary injunction, " [show] that [the plaintiff's] actions enforcing their [n]oncompetition [a]greement are not immoral, unscrupulous and oppressive." Pl.'s Mem. Support p. 7. In the court's view, this argument is patently without merit; see Zirinsky v. Zirinsky, 87 Conn.App. 257, 268-69 n.9, 865 A.2d 488 (" It is well established that a motion to strike must be considered within the confines of the pleadings and not external documents . . . We are limited . . . to a consideration of the facts alleged in the complaint" [internal quotation marks omitted]), cert. denied, 273 Conn. 916, 871 A.2d 372 (2005).
The court next turns to the plaintiff's primary argument, which is that Wiegman has failed to allege sufficient facts to satisfy the Federal Trade Commission's test for determining whether a particular act or practice is unfair or deceptive.
" It is well settled that in determining whether a practice violates CUTPA [our Supreme Court has] adopted the criteria set out in the cigarette rule by the [F]ederal [T]rade [C]ommission for determining when a practice is unfair: (1) [W]hether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise--in other words, it is within at least the penumbra of some common law, statutory, or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial injury to consumers, [competitors or other businesspersons] . . . All three criteria do not need to be satisfied to support a finding of unfairness. A practice may be unfair because of the degree to which it meets one of the criteria or because to a lesser extent it meets all three." (Internal quotation marks omitted.) Naples v. Keystone Building & Development Corp, 295 Conn. 214, 227-28, 990 A.2d 326 (2010).
The CUTPA claim in the present case is based on an allegation of intentional, tortious interference with a business and employment expectancy. " [T]he essential difference between a tort claim for interference with business expectancies and a claim under CUTPA is the standard by which the alleged acts are measured. While liability in tort is imposed only if the defendant maliciously or deliberately interfered with a competitor's business expectancies, CUTPA liability is premised on a finding that the defendant engaged in unfair competition and unfair or deceptive trade practices." Sportsmen's Boating Corp. v. Hensley, 192 Conn. 747, 755, 474 A.2d 780 (1984). Thus, " [c]onduct that might be actionable under CUTPA may not rise to a level sufficient to invoke tort liability. The reverse of that proposition, however, is seldom true . . . [I]t is difficult to conceive of a situation where tortious interference would be found but a CUTPA violation would not." Id., 756-57; Landmark Investment Group, LLC v. CALCO Construction & Development Co., 318 Conn. 847, 881, 124 A.3d 847 (2015). Indeed, our trial courts routinely hold that, where a claim for tortious interference with a business expectancy has been sufficiently alleged, a CUTPA claim based on that interference is likewise sufficient and therefore not susceptible to a motion to strike. See, e.g., LYS Global Technology, LLC v. Bonarrigo, Superior Court, judicial district of Hartford, Docket No. CV-15-6061764-S, (May 13, 2016, Dubay, J.) (" because the court found that the plaintiff has alleged a sufficient tortious interference claim; the court finds that the CUTPA claim, alleging the same facts, is also sufficient"); Wentworth, DeAngelis & Kaufman, Inc. v. Nims, Superior Court, judicial district of Hartford, Docket No. CV-13-6042633-S, (February 14, 2014, Huddleston, J.) (" [b]ecause there are sufficient allegations against [the defendant] to give rise to a tortious interference claim, the complaint likewise includes sufficient allegations to give rise to a CUTPA violation by [the defendant]"); Raymond Road Associates, LLC v. Taubman Centers, Inc., Superior Court, judicial district of Waterbury, Complex Litigation Docket, Docket No. X02-CV-07-5007877-S (March 3, 2009, Eveleigh, J.) (47 Conn.L.Rptr. 313, 318, ) (" [p]laintiffs' allegations that the defendants tortiously interfered with the plaintiffs' business relationships also establish a proper allegation that defendants engaged in unfair or deceptive trade practices in violation of CUTPA"); see also, Elliott v. Staron, 46 Conn.Supp. 38, 50, 735 A.2d 902 (1997) (rendering judgment for plaintiffs on their CUTPA claim where court held that " [t]he facts supporting the court's conclusion that the defendant tortiously interfered with the plaintiffs' business relationships [were] sufficient to establish that the defendant also engaged in unfair or deceptive acts in violation of CUTPA"), aff'd, 54 Conn.App. 632, 736 A.2d 196 (1999) (adopting trial court decision), cert. dismissed, 255 Conn. 18, 761 A.2d 1291 (2000).
The plaintiff does not expressly contest the legal sufficiency of Wiegman's counterclaim for tortious interference with a business expectancy. Nonetheless, to the extent the plaintiff does so implicitly, the court observes that Wiegman has pleaded a legally sufficient tortious interference claim. " A cause of action sounding in tort for interference with another's business practices and opportunities has long been recognized in Connecticut. The law in this state forbids unjustifiable interferences with any man's right to pursue his lawful business or occupation and to secure to himself the earnings of his industry. Full, fair and free competition is necessary to the economic life of a community, but under its guise, no man can by unlawful means prevent another from obtaining the fruits of his labor." (Internal quotation marks omitted.) American Diamond Exchange, Inc. v. Alpert, 101 Conn.App. 83, 89-90, 920 A.2d 357, cert. denied, 284 Conn. 901, 931 A.2d 261 (2007). " It is well established that the elements of a claim for tortious interference with business expectancies are: (1) a business relationship between the plaintiff and another party; (2) the defendant's intentional interference with the business relationship while knowing of the relationship; and (3) as a result of the interference, the plaintiff suffers actual loss." (Internal quotation marks omitted.) Brown v. Otake, 164 Conn.App. 686, 709-10, 138 A.3d 951 (2016). Also, because " [a] cause of action for tortious interference with a business expectancy requires proof that the defendant was guilty of fraud, misrepresentation, intimidation or molestation . . . or that the defendant acted maliciously" (internal quotation marks omitted), id., 710, " [t]he plaintiff [is required] to plead and prove at least some improper motive or improper means." (Internal quotation marks omitted.) Id.
Accordingly, Wiegman has sufficiently alleged the requisite elements of a tortious interference claim. Specifically, Wiegman alleges that: (1) Ross offered him the chance to go into business with it as its employee; (2) he informed the plaintiff of this prospective relationship, and the plaintiff thereafter intentionally interfered with this prospect by making a misrepresentation to Ross that caused Ross to suspend its offer; and (3), as a result of this interference, he suffered damages in the form of loss of employment. Because Wiegman has thus alleged a legally sufficient claim for tortious interference with a business expectancy, the court therefore concludes that Wiegman has likewise sufficiently pleaded a CUTPA cause of action.
CONCLUSION
For the foregoing reasons, the plaintiff's motion to strike count five of Wiegman's counterclaim and associated prayers for relief is denied.