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DISCOVER GROUP, INC. v. LEXMARK INTERNATIONAL

September 2, 2004.

DISCOVER GROUP, INC. and AMERICAN TONER PRODUCTS, INC., Plaintiffs,
v.
LEXMARK INTERNATIONAL, INC., Defendant.



The opinion of the court was delivered by: I. LEO GLASSER, Senior District Judge

MEMORANDUM & ORDER

Before the Court is the motion of defendant Lexmark International, Inc. ("Lexmark" or "defendant") to dismiss the complaint of plaintiffs Discover Group, Inc. ("Discover Group") and American Toner Products. Inc. ("American Toner") for failure to state a claim upon which relief can be granted. For the reasons that follow, Lexmark's motion is granted.

FACTUAL BACKGROUND

  Plaintiffs American Toner and Discover Group are New York corporations engaged in the business of importing and distributing printer ink cartridges and imaging film rolls for facsimile machines. (Compl. ¶¶ 1, 6.) American Toner is the wholly-owned subsidiary of Discover Group. (Compl. ¶ 6.) Defendant Lexmark, a Delaware corporation with its principal place of business in Kentucky, develops, manufactures, and sells laser printers and toner cartridges. (Def. Mem. at 1.) Sortek International Corporation and Facsimile Paper Connection Corporation ("Sortek/FPC") are related corporations that are authorized distributors of Lexmark products.

  On July 17, 2001, Lexmark entered into a written Authorized Dealer Agreement with Discover Group ("Dealer Agreement"), which authorized Discover Group to purchase products from Lexmark for marketing to resellers and for Discover Group's "internal use only in Latin America & the Caribbean with the exception of Puerto Rico." (Compl. ¶ 9; Patton Aff. Ex. 2.) According to plaintiffs, authorized distributors such as Sortek/FPC are entitled to purchase Lexmark products at lower prices than authorized dealers such as plaintiffs. As a result. Discover Group purchased Lexmark products from Sortek/FPC, as well as from Lexmark directly. (Compl. ¶ 11.) Discover Group furnished Lexmark products to its subsidiary. American Toner. (Compl. 10.)

  On March 19, 2002, plaintiff American Toner entered into a contract with the State of Michigan ("Michigan Contract"), pursuant to which American Toner became the exclusive supplier of Lexmark printer toner cartridges to Michigan's Family Independence Agency. (Compl. ¶ 13.) In order to fulfill the Michigan Contract, American Toner planned to obtain Lexmark products from Discover Group, which had purchased them from Sortek/FPC. (Compl. ¶ 14.) The Michigan Contract provided that the State of Michigan could cancel the contract "for its convenience, in whole or part, if the State determines that such a cancellation is in the State's best interest." (Patton Aff. Ex. 1.)

  According to plaintiffs, defendant Lexmark had previously attempted to procure a contract with the State of Michigan. (Compl. ¶ 15.) Plaintiffs allege that when defendant learned of American Toner's contract with Michigan, defendant induced the State of Michigan to discontinue doing business with the plaintiffs and to breach the Michigan Contract. (Compl. ¶ 16.) Plaintiffs further allege that defendant threatened Sortek/FPC to cut off all supplies of Lexmark products and revoke its distributorship agreement if Sortek/FPC continued to provide Lexmark products to plaintiffs. (Compl. ¶ 17.) According to plaintiffs, defendant did so in order to render plaintiffs unable to fulfill the Michigan Contract. (Compl. ¶ 17.) As a result, Sortek/FPC ceased doing business with plaintiffs and cancelled all pending orders. (Compl. ¶ 19.)

  On April 7, 2003, defendant Lexmark cancelled the Dealer Agreement with Discover Group and, as a result, American Toner was unable to fulfill the Michigan Contract. (Compl. ¶¶ 13, 20.) The State of Michigan subsequently cancelled the Michigan Contract, which plaintiffs value at $5.569,200.00. (Compl. ¶ 21.) According to plaintiffs, the efforts by defendant were designed solely to harm plaintiffs without any justification. (Compl. ¶ 24.) Plaintiffs believe that defendant or its distributors have now begun supplying the State of Michigan with Lexmark products. (Compl. ¶ 22.) Plaintiffs claim that as a result of defendant's actions, they have sustained severe financial harm. (Compl. ¶ 26.)

  Plaintiffs have filed this suit against defendant for tortious interference with contract, tortious interference with business relationships, and prima facie tort. Defendant now moves this Court to dismiss the complaint for failure to state a claim upon which relief can be granted.

  DISCUSSION

  I. Legal Standard

  When deciding a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), the Court must take all allegations in the complaint as true and draw all reasonable inferences in favor of plaintiffs. Ortiz v. Cornetta, 867 F.2d 146, 149 (2d Cir. 1989). A complaint should not be dismissed "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957); see also Easton v. Sundram, 947 F.2d 1011, 1014-15 (2d Cir. 1991). cert. denied, 504 U.S. 911 (1992).

  The Court's consideration of a motion to dismiss pursuant to 12(b)(6) is limited to the factual allegations in the complaint, documents incorporated by reference in the complaint, matters of which judicial notice may be taken, and documents either in plaintiffs' possession or of which plaintiffs had knowledge and relied on in bringing suit. Brass v. Am. Film Tech., Inc., 987 F.2d 142, 150 (2d Cir. 1993). When a party "introduces matter extraneous to the pleadings, the Court must convert the motion to dismiss into a motion for summary judgment or exclude the extraneous documents from consideration." AIM Int'l Trading, L.L.C. v. Valcucine S.P.A., 2003 WL 21203503, at *3 (S.D.N.Y. May 22, 2003).

  Plaintiffs argue that this motion should be converted into a motion for summary judgment because defendant annexed and referred to exhibits in its motion that were not included in the original complaint. (See Patton Aff. Ex. 1-3.) When, however, "`a plaintiff chooses not to attach to the complaint or incorporate by reference a [document] upon which it solely relies and which is integral to the complaint' the court may nevertheless take that document into consideration in deciding the defendants' motion to dismiss, without converting the motion into one for summary judgment." AIM, 2003 WL 21203503, at *3 (in suit for tortious interference with contract, dealership agreement between parties was not extraneous and was incorporated by reference in the complaint) (quoting Cortec Indus., Inc. v. Sum Holding L.P., 949 F.2d 42, 47-48 ...


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