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Af Gloenco Inc v. Ushers Machine & Tool Company

September 30, 2011

AF GLOENCO INC.,
v.
USHERS MACHINE & TOOL COMPANY, INC., AND DON LINCOLN, DEFENDANTS.



The opinion of the court was delivered by: Gary L. Sharpe District Court Judge

MEMORANDUM-DECISION AND ORDER

I. Introduction

Plaintiff AF Gloenco Inc. (Gloenco), commenced this action against defendants Ushers Machine & Tool Company, Inc. (Ushers) and Donald Lincoln, asserting claims of misappropriation of trade secrets, conversion, common law unfair competition and unjust enrichment. (Am. Compl. ¶¶ 18-33, Dkt. No. 31.) Ushers asserted counterclaims alleging violations of the Sherman Act,*fn1 abuse of process and tortious interference with prospective business advantage. (Ans. ¶¶ 57-94, Dkt. No. 12.) Pending is Gloenco's motion to dismiss Ushers' Sherman Act and abuse of process counterclaims pursuant to Fed. R. Civ. P. 12(b)(6). (Dkt. No. 16.) For the reasons that follow, the motion is granted.

II. Background

Plaintiff Gloenco, a Delaware corporation operated out of Newport, New Hampshire, and defendant Ushers, a New York corporation, both develop and sell precision forged and machined products for various industries. (Am. Compl. ¶¶ 1, 7, Dkt. No. 31.) The principal customer for both parties is General Electric. (Ans. ¶ 66, Dkt. No. 12; Dkt. 18 at 2.) Defendant Donald Lincoln, a former manager of a predecessor of Gloenco, joined Ushers in 2006. (Ans. ¶ 12, Dkt. No. 12.) In December of 2009, Gloenco's President Rick Thomas initiated correspondence with Lincoln to express Gloenco's desire to purchase Ushers. (Id. ¶¶ 58-59.) Ushers contends that similar correspondence continued monthly until June 2010 when Lincoln informed Rick Thomas that he was not interested in selling Ushers. (Id. ¶¶ 61-62.)

Ushers alleges that because it rebuffed Gloenco's attempts at acquisition, Gloenco undertook a concerted effort to diminish Ushers' market share, damage it's relationship with General Electric and force Ushers to agree to being purchased by Gloenco. (Ans. ¶¶ 58-94, Dkt. No. 12.) Specifically, Ushers alleges that once Lincoln told Thomas that he was not interested in selling the firm, Thomas remarked that he could be "vindictive" and that they could pursue the sale "the hard way." (Id. ¶ 63.) Ushers further contends that Gloenco has no proprietary interest in its process drawings, and its claims against Ushers are therefore "frivolous, without any merit" and a "sham." (Id. ¶ 71.) Gloenco's only goal in commencing the present litigation, Ushers argues, was to diminish Ushers' ability to compete for the business of General Electric. (Id. ¶ 72.) In an attempt to further soil Ushers' business reputation, Gloenco informed General Electric of its pending civil action against Ushers and falsely reported that Ushers employees were providing General Electric prints to other companies. (Id. ¶ 90.) These allegations of an organized campaign of "malicious conduct" form the basis of Ushers' counterclaims against Gloenco for violations of the Sherman Act, abuse of process and tortious interference with prospective business advantage. (Ans. ¶¶ 57-94, Dkt. No. 12.)

III. Standard of Review

The standard of review under Federal Rules of Civil Procedure 12(b)(6) is well established and will not be repeated here. For a full discussion of the standard, the court refers the parties to its previous opinion in Ellis v. Cohen & Slamowitz, LLP, 701 F. Supp. 2d 215, 218 (N.D.N.Y. 2010).

IV. Discussion

A. Attempted Monopolization*fn2

In its first counterclaim, Ushers alleges that Gloenco violated Section 2 of the Sherman Act by "engag[ing] in a course of malicious conduct designed to improperly obtain an unfair competitive advantage in the relevant market." (Ans. ¶ 64, Dkt. No. 12.) Gloenco seeks to dismiss Ushers' claim of attempted monopolization on the grounds that it is deficient as to all elements. (Dkt. No. 22 at 3.) The court agrees that dismissal is appropriate.

Section 2 of the Sherman Act makes it a crime for any person to "monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States." 15 U.S.C.A. § 2 (2004). "To establish a claim for attempted monopolization, a plaintiff must prove: (1) that the defendant has engaged in predatory or anticompetitive conduct with (2) specific intent to monopolize and (3) a dangerous probability of achieving monopoly power." Tops Mkts., Inc. v. Quality Mkts., Inc., 142 F.3d 90, 99-100 (2d Cir. 1998) (quotation marks and citation omitted). Because it proves dispositive, the court need only addresses the dangerous probability prong.

The critical inquiry in deciding whether a dangerous probability of achieving monopoly power*fn3 exists is the economic power of the alleged monopolizer in the relevant market. Tops Mkts., 142 F.3d at 100. Here, Ushers fails to adequately define the relevant market or the market power possessed by Gloenco.

A relevant market must be defined according to both geography and the product or service at issue. Hunter Douglas, Inc. v. Comfortex Corp., 44 F. Supp. 2d 145, 151 n.9 (N.D.N.Y. 1999). "The reasonable interchangeability of use or the cross-elasticity*fn4 of demand between the product itself and substitutes for it determine the outer boundaries of a product market." Chapman v. N.Y. Div. for Youth, 546 F.3d 230, 237 (2d Cir. ...


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