PLAINTIFF FORTILINE, INC.'S BRIEF IN SUPPORT OF MOTION TO DISMISS COUNTERCLAIMS

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1 STATE OF SOUTH CAROLINA COUNTY OF GREENVILLE FORTILINE, INC., Plaintiff, IN THE COURT OF COMMON PLEAS v. CIVIL ACTION NO. 2017CP JAMES "RICHIE" BURROWS; ATLANTIC WATERWORKS AND SUPPLY, INC.; CAROLINA AUTOMATIC SPRINKLER CO., INC.; and CHRISTOPHER McCAMERON, Defendants. PLAINTIFF FORTILINE, INC.'S BRIEF IN SUPPORT OF MOTION TO DISMISS COUNTERCLAIMS NOW COMES Plaintiff Fortiline, Inc., ("Fortiline") by and through counsel and, pursuant to the South Carolina Rules of Civil Procedure, hereby files this Brief in Support of its Motion to Dismiss Plaintiffs Counterclaims pursuant to Rule 12(b)(6) of the South Carolina Rules of Civil Procedure. I. Procedural Posture and Statement of Facts Relevant to this Motion This civil action involves a dispute between a Fortiline and its former employee, James "Richie" Burrows ("Burrows"), and three other Defendants concerning the Defendants' efforts to injure Fortiline's business unlawfully following Burrows's resignation from Fortiline. Fortiline filed its Complaint in this civil action on January 13, In summary, Fortiline distributes underground utility products for installation in 1

2 public and private sector projects. (Compl. 12.) On May 31, 2016, Fortiline purchased the assets of a company named Atlantic Supply & Equipment Company, Inc. ("Atlantic"). (Compl ) Defendant Burrows was an employee of Atlantic, and became an employee of Fortiline on June 1, 2016 following the purchase. (Compl ) He remained an employee of Fortiline until he resigned with no prior notice on November 7, (Compl. 24.) He stated that he was leaving Fortiline to join Defendant Carolina Automatic Sprinkler Company, Inc. ("CAS"). (Compl. 25.) Fortiline later learned that Burrows was not working for CAS, but for another venture also using the name "Atlantic." (Compl. 27.) In fact, on July 21, 2016 and during Burrows's employment with Fortiline, Defendant McCameron incorporated an entity named Atlantic Waterworks and Supply, Inc., also a Defendant in this case ("Atlantic II"). (Compl. T19-22.) Fortiline alleges other specific actions undertaken by Burrows and the other Defendants in support of Fortiline's causes of action, including, but not limited to, unusual orders that Burrows fulfilled for CAS soon before his abrupt exit from Fortiline (Compl. 23), Burrows's misleading information about his new employer (Compl ), Burrows's retention of supply catalogs (Compl. 27), intentional misrepresentations made to Fortiline's customers (Compl. 28), and incorporating under a trade name nearly identical to the business Fortiline purchased. (Compl. 30.) Fortiline brought this civil action to seek remedies for the injury to Fortiline's business resulting from the Defendants' intent to injure Fortiline's business and 2

3 create confusion in the marketplace through the false impression that Atlantic's business continued under another name. (Compl. 22, ) Fortiline has sued the Defendants for (1) breach of the duty of loyalty (Compl ); (2) tortious interference with contractual relations (Compl. T ) ; (3) tortious interference with prospective contractual relations (Compl ); (4) civil conspiracy (Compl ); (5) conversion (Compl ); (6) unjust enrichment (Compl ); (7) violation of the South Carolina Unfair Trade Practices Act (Compl ); and (8) defamation (Compl ). Fortiline served all Defendants, and Defendants answered on April 20, Additionally, Defendants Burrows, Atlantic II and McCameron filed Counterclaims. Specifically, Defendant Burrows counterclaimed against Fortiline for defamation, and Defendants Burrows, Atlantic II, and McCameron counterclaimed against Fortiline under the South Carolina Unfair Trade Practices Act. (Ans ) The allegations in Defendants' Counterclaims lay no factual foundation and are so cursory that they can easily be excerpted here in their entirety. First, Defendant Burrows claims the following in his Counterclaim for defamation: 40. Plaintiff, acting through its agents, officers, and/or employees, defamed Defendant James Burrows by publishing false, defamatory, statements that Defendant Burrows committed a crime of moral turpitude by stealing Plaintiffs property. 41. Plaintiff knew or should have known that such defamatory statements were false, untrue, and without basis. 42. Defendant Burrows is entitled to damages, both consequential and punitive, as a result of Plaintiffs defamatory statements. Second, Defendants Burrows, Atlantic II, and McCameron allege the following in their Counterclaim under the UTPA: 3

4 44. Plaintiff has violated S.C. Code through , UTPA. 45. Plaintiff, through its agents, officers, and/or employees, threatened, intimidated and coerced vendors, manufacturers and suppliers not to sell their products and goods to Defendants. 46. Plaintiff continues to use its purchasing power to improperly restrain open and fair competition in the market place. 47. Plaintiffs activities are in the stream of commerce and affect business activities with this state. 48. Plaintiffs actions adversely affect free and competitive commerce which is in the public interest. 49. Plaintiffs unfair trade practice is ongoing and is not only capable of repetition, but also is being repeated currently. 50. Plaintiffs actions were done knowingly, willfully, intentionally, maliciously, and in knowing violation of fair trade practices. 51. Defendants are entitled to actual damages, treble damages, reasonable attorney fees, and costs. Fortiline not only denies these allegations, but the allegations fail to state a claim upon which relief can be granted (even if they were true). Therefore, on May 23, 2017 Fortiline filed its Answer to and Motion to Dismiss Counterclaims, seeking to dismiss the Counterclaims pursuant to Rule 12(b)(6) of the South Carolina Rules of Civil Procedure. II. LEGAL ARGUMENTS AND CITATION OF AUTHORITIES A. Standard of Review The standard of dismissal under South Carolina Rule 12(b)(6) tracks Rule 12(b)(6) of the Federal Rules of Civil Procedure. See Brown v. Leverette, 291 S.C. 364, 366 (S.C. 1987). The trial court must dispose of a motion for failure to state a cause of action based solely upon the allegations set forth on the face of the complaint. Id. The motion should be denied if facts alleged in the complaint and inferences reasonably deducible therefrom would entitle plaintiff to any relief on 4

5 any theory of the case. Id. Here, Defendants' Counterclaims must be dismissed because the claims fail to include sufficient allegations to state a claim under South Carolina law. B. Defamation: Defendant Burrows cannot plausibly claim defamation because his Counterclaim, as it is pleaded, does not indicate whether a false and defamatory statement was made in that the Counterclaim contains no specific description of the content of the alleged statement. Burrows's allegations of defamation (excerpted above) are astonishingly thin. In summary, his claim is that Fortiline accused him of a "crime of moral turpitude by stealing [Fortiline's] property," that Fortiline knew these alleged statements were false, and that Burrows is due damages. Instead, a viable claim for defamation must establish: I. A false and defamatory statement was made; 2. The unprivileged publication of the statement to a third party; 3. The publisher was at fault; and 4. Either the statement was actionable irrespective of harm or the publication of the statement caused special harm. Erickson v. Jones St. Publishers, LLC, 368 S.C. 444, 464 (S.C. 2006) (Attachment 1). Burrows's broad, unspecific, and bald allegations cannot support a claim for defamation under South Carolina law. Beyond being easy to deny, the allegations fall far short of a colorable claim even if they were true. For instance, turning back to the Erickson elements of a demation claim, Burrows's Counterclaim, even if taken as true, is too vague to state a claim and survive a motion to dismiss. The allegations do not even leave hints as to whom any such statements were allegedly made, what was said or when, whether specific accusations of criminal activity were 5

6 communicated, what was allegedly stolen, or how many times such statements were supposedly made. See Sellers v. S.C. Autism Soc., Inc., 3: CMC-JRM, 2012 U.S. Dist. LEXIS 39128, at *1749 (D.S.C. Feb. 22, 2012) (Attachment 2), report and recommendation accepted by 861 F. Supp. 2d 692, (D.S.C. 2012). In fact, the Counterclaim does not even indicate which form of defamation is involved: libel or slander. See id. Burrows cannot merely parrot the threadbare defamation elements, fail to identify the alleged speaker, gloss over the alleged statements made, or give no indication who heard the statement, and expect to maintain a cause of action. See Dickerson v. Albemarle Corp., No. 5:14-cv JMC, 2016 U.S. Dist. LEXIS, at *7-11 (D.S.C. Jan. 21, 2016) (granting a 12(b)(6) motion because "Plaintiffs broad and unspecific allegation of defamation in this case is lacking" in sufficiently pleading specific defamatory conduct) (Judge Childs) (Attachment 3), citing Brown v. Ferguson Enters., Inc., CCB , 2012 WL at *3 (D. Md. Dec. 11, 2012) (no defamation where pleadings "contain[ed] no specific description of the content of the alleged statements). Burrows's Counterclaim comes nowhere near the standards for stating a defamation claim upon which relief can be granted under South Carolina law. Accordingly, the Court must dismiss his claim for failure to state a claim upon which relief may be granted. Fortiline need not spend time and effort litigating a claim that is invalid ab initio, and neither should the Court spend time adjudicating such a claim. 6

7 C. Unfair Trade Practices: Burrows, Atlantic II, and McCameron have failed to allege sufficient facts to state a claim against Fortiline for violation of the Unfair Trade Practices Act. Likewise, Defendants Burrows's, Atlantic II's, and McCameron's threadbare allegations concerning their Counterclaim under the Unfair Trade Practices Act ("UTPA") fail to conform to the requirements of Rule 12(b)(6) and Rule 8. Defendants have failed to state facts sufficient to state a cause of action, and have failed to allege sufficient facts on each element of the cause of action. The only "factual" predicate that Burrows, Atlantic II, and McCameron allege in support of their UTPA Counterclaim are contentions that Fortiline intimidated and coerced vendors, manufacturers and suppliers not to sell their products and goods to Defendants, and that Fortiline has used its purchasing power to improperly restrain open and fair competition. Again, as with the defamation Counterclaim, Defendants do not identify the specific actions they believe Fortiline has taken, to whom or what those actions were directed, when those actions occurred, and the like. Without such specific allegations, Defendants cannot rely on the vague and the boilerplate to state a claim upon which relief can be granted; accordingly, the Court must grant Fortiline's motion to dismiss this Counterclaim. See Flucker v. Gantt (In re Flucker), 2011 Bankr. LEXIS 4023, at *23-29 (Bankr. D.S.C. Oct. 24, 2011) (Attachment 4). III. CONCLUSION Both the defamation Counterclaim and the UTPA Counterclaim must be dismissed for failure to state a claim upon which relief may be granted. In both 7

8 instances, the Counterclaimants simply do not have sufficient allegations to state a claim for defamation or violation of the UTPA. Burrows, Atlantic II, and McCameron lay next to no predicate for either Counterclaim, and what foundation they tried to lay is vague, unspecific, and insufficient according to legal standards applicable to their pleadings. Therefore, Fortiline prays that the Court grant its Motion to Dismiss the Counterclaims pursuant to Rule 12(b)(6) of the South Carolina Rules of Civil Procedure, dismiss with prejudice the Counterclaims for defamation and violation of UTPA, and award attorneys' fees, costs, and any other relief the Court deems appropriate under the circumstances. Respectfully submitted this 19th day of July, s/jeffrey A. Lehrer Jeffrey A. Lehrer S.C. Bar No jlehrer@fordharrison.com s/matthew J. Gilley Matthew J. Gilley S.C. Bar No mgilley@fordharrison.com FORD & HARRISON LLP 100 Dunbar Street, Suite 300 Spartanburg, South Carolina Phone: (864) Fax: (864) Attorneys for Fortiline, Inc. 8

9 CERTIFICATE OF SERVICE I, Matthew J. Gilley, do hereby certify that I have this day served a copy of the foregoing document upon the following person(s) by (1) facsimile transmission to (864) , (2) electronic mail to owbannister@bannisterwyatt.com, and (3) placing a copy of the same in the United States Mail (certified-return receipt requested), with the correct amount of postage affixed thereon and properly addressed to: 0. W. Bannister, Esq. Bannister, Wyatt & Stalvey, LLC P. 0. Box Greenville, SC Attorneys for Defendants Dated this the 19th day of July, Dunbar Street, Suite 300 Spartanburg, South Carolina Telephone: (864) Facsimile: (864) FORD & HARRISON LLP By: s/matthew J. Gilley Matthew J. Gilley WSACTIVELLP: