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In the United States District Court for the Eastern District of Pennsylvania

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In the United States District Court for the Eastern District of Pennsylvania Case 2:08-cv-04775-TJS Document 57 Filed 03/30/11 Page 1 of 21 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA THE KNIT WITH, : : CIVIL ACTION Plaintiff, : : v. : : KNITTING FEVER, INC., : DESIGNER YARNS, LTD., : FILATURA PETTINATA V.V.G. DI : STEFANO VACCARI & C., SION : NO. 08-4221 ELALOUF, DIANE ELALOUF, JEFFREY : J. DENECKE, JR., JAY OPPERMAN, and : DEBBIE BLISS, : : Defendants. : THE KNIT WITH, : : CIVIL ACTION Plaintiff, : : v. : : EISAKU NORO & CO., LTD., : KNITTING FEVER, INC., : SION ELALOUF, DIANE ELALOUF, : NO. 08-4775 and JAY OPPERMAN, : : Defendants. : MEMORANDUM BUCKWALTER, S.J. March 29, 2011 Currently pending before the Court are Motions to Dismiss filed by Defendants Diane Elalouf, Jay Opperman, and Jeffrey J. Denecke, Jr. (collectively “Moving Defendants”). For the reasons which follow, Diane Elalouf’s Motion is granted, Jeffrey Denecke’s Motion is granted, and Jay Opperman’s Motion is denied. Case 2:08-cv-04775-TJS Document 57 Filed 03/30/11 Page 2 of 21 I. FACTUAL AND PROCEDURAL HISTORY The factual background of this case is one familiar to both the parties and the Court and has been reiterated in several of this Court’s prior opinions.1 This matter arises between Plaintiff, The Knit With (“The Knit”), a small, family-owned and operated business retailing specialty yarns and accessories to consumers, Defendant Knitting Fever, Inc. (“KFI”), a New York corporation that imports and distributes specialty yarns, KFI’s officers and directors, and Defendants Filatura Pettinata V.V.G. Di Stefano Vaccari & C. (“Filatura”), Debbie Bliss, and Designer Yarns, Inc. (“Designer Yarns”), all of whom are non-U.S. entities that design, manufacture, and/or distribute speciality yarns. At the core of the dispute is Plaintiff’s claim that KFI sold designer knitting yarns to The Knit, representing that the yarns contained a percentage of cashmere, which they allegedly did not. Following extensive motion practice by both parties, the Court has dismissed multiple claims and Defendants. The sole claims remaining in this action are: (1) breach of the express warranty of merchantability against Defendants KFI, Sion Elalouf, and Jay Opperman; (2) breach of the implied warranty of merchantability against Defendants KFI, Filatura, Sion Elalouf, and Jay Opperman; (3) injury to business and property pursuant to the Racketeer Influenced and Corrupt Organization Act (“RICO”), 18 U.S.C. § 1962 against Defendant Sion Elalouf; (4) conspiracy to cause injury to business and property pursuant to RICO, 18 U.S.C. §1962(d) against Defendants Sion Elalouf, Diane Elalouf, Jeffrey J. Denecke, Jr., and Jay Opperman; and (5) a piercing the corporate veil allegation against Defendants KFI, Sion Elalouf, and Diane Elalouf. In addition, 1 See The Knit With v. Knitting Fever, Inc., No. CIV.A.08-4221, 2008 WL 5381349, at *1-6 (E.D. Pa. Dec. 18, 2008); The Knit With v. Eisaku Noro, No. CIV.A.08-4775, 2008 WL 5273582, at *1-3 (E.D. Pa. Dec. 18, 2008); The Knit With v. Knitting Fever, Inc., Nos. CIV.A.08-4221, 08-4775, 2011 WL 891871, at *1-2 (E.D. Pa. Mar. 10, 2011). 2 Case 2:08-cv-04775-TJS Document 57 Filed 03/30/11 Page 3 of 21 Defendants Knitting Fever, Inc., Sion Elalouf, Diane Elalouf, Jeffrey J. Denecke, Jr., and Jay Opperman (collectively “the KFI Defendants”) have Counterclaims for defamation, tortious interference with existing and prospective contracts, and trade libel. On January 24, 2011, the Moving Defendants each filed a Motion for Judgment on the Pleadings pursuant to Federal Rule of Civil Procedure 12(c), claiming that the Complaint fails to adequately state a RICO conspiracy claim against them. Plaintiff filed separate Responses to each Motion on February 22, 2011.2 II. STANDARD OF REVIEW Under Rule 12(c) of the Federal Rules of Civil Procedure, “[a]fter the pleadings are closed - but early enough not to delay trial – a party may move for judgment on the pleadings.” FED. R. CIV. P. 12(c). The moving party bears the burden of demonstrating that the plaintiff has not stated a claim upon which relief can be granted. Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005).3 In Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007), the United States Supreme Court recognized that “a plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Id. at 555. It emphasized that it would not require a “heightened fact pleading of specifics,” but only “enough facts to state a claim to relief that is plausible on its face.” Id. at 570. 2 Moving Defendants filed a consolidated Reply brief on March 3, 2011. Upon receipt of a letter from Plaintiff’s counsel suggesting that Defendants had failed to comply with this Court’s previous ruling that the parties must seek leave before filing reply or sur-reply briefs, the Court struck the brief. As later pointed out by counsel for Moving Defendants, this ruling was in error, as they had actually sought and received this Court’s approval. Nonetheless, the Court deems the brief unnecessary to a proper ruling on the Motions for Judgment on the Pleadings. 3 Although most of the cases cited in this standard of review deal with Fed. R. Civ. P. 12(b)(6), the difference between Rules 12(b)(6) and 12(c) is purely procedural and there is “no material difference in the applicable legal standards.” Spruill v. Gillis, 372 F.3d 218, 223 n.2 (3d Cir. 2004). 3 Case 2:08-cv-04775-TJS Document 57 Filed 03/30/11 Page 4 of 21 Following the basic precepts of Twombly, the Supreme Court, in the subsequent case of Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009), enunciated two fundamental principles applicable to a court’s review of a motion to dismiss for failure to state a claim. First, it noted that “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. at 1949. Thus, although “[Federal] Rule [of Civil Procedure] 8 marks a notable and generous departure from the hyper-technical, code-pleading regime of a prior era . it does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions.” Id. at 1950. Second, the Supreme Court emphasized that “only a complaint that states a plausible claim for relief survives a motion to dismiss.” Id. “Determining whether a complaint states a plausible claim for relief will . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id. The Supreme Court explained: The plausibility standard is not akin to a “probability requirement,” but it asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are “merely consistent with” a defendant’s liability, it “stops short of the line between possibility and plausibility of ‘entitlement to relief.’” Id. at 1949 (citing Twombly, 550 U.S. at 556-57). Expanding on the Twombly/Iqbal standards, the United States Court of Appeals for the Third Circuit succinctly summarized the two-prong analysis to be undertaken by district courts during a Rule 12(b)(6) review: [A]fter Iqbal, when presented with a motion to dismiss for failure to state a claim, district courts should conduct a two-part analysis. First, the factual and legal elements of a claim should be separated. The district court must accept all of the complaint’s well-pleaded facts as true, but may disregard any legal conclusions. Second, a district court must then determine whether the facts alleged in the 4 Case 2:08-cv-04775-TJS Document 57 Filed 03/30/11 Page 5 of 21 complaint are sufficient to show that the plaintiff has a “plausible claim for relief.” In other words, a complaint must do more than allege the plaintiff’s entitlement to relief. A complaint has to show such an entitlement with its facts. As the Supreme Court instructed in Iqbal, where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged – but it has not shown – that the pleader is entitled to relief. This plausibility requirement will be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense. Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009) (internal citations omitted). Notwithstanding the foregoing, nothing in Twombly, Iqbal, or Fowler altered some of the fundamental underpinnings of the Rule 12(b)(6) standard of review. Arner v. PGT Trucking, Inc., No. CIV.A.09-565, 2010 WL 1052953, at *2 (W.D. Pa. Mar. 22, 2010); Spence v. Brownsville Area Sch. Dist., No. CIV.A.08-626, 2008 WL 2779079, at *2 (W.D. Pa. July 15, 2008). Federal Rule of Civil Procedure 8 still requires only a short and plain statement of the claim showing that the pleader is entitled to relief and need not contain detailed factual allegations. FED. R. CIV. P. 8; Phillips v. Cnty. of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008). Further, the court must “accept all factual allegations in the complaint as true and view them in the light most favorable to the plaintiff.” Buck v. Hampton Twp. Sch. Dist., 452 F.3d 256, 260 (3d Cir.
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