NORTH JERSEY MEDIA GROUP, INC v. BERGEN NEWSPAPER GROUP L.L.C.

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

 

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-4025-11T2

NORTH JERSEY MEDIA GROUP, INC.,

Plaintiff-Appellant,

v.

BERGEN NEWSPAPER GROUP, L.L.C.,

Defendant,

and

BERGEN NEWS PUBLISHING CORP.,

Defendant-Respondent.

_________________________________

BERGEN NEWSPAPER GROUP L.L.C.,

Third-Party Plaintiff-

Respondent,

v.

STEPHEN A. BORG and JENNIFER

BORG,

Third-Party Defendants,

and

PHYLLIS COHEN, JILL S. COHEN,

and LESLEY PROWDA,

Third-Party Defendants-

Respondents.

_____________________________

A

January 18, 2013

rgued December 11, 2012 - Decided

 

Before Judges Reisner and Harris.

 

On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-6894-11.

 

Samuel J. Samaro argued the cause for appellant (Pashman Stein, attorneys; Mr. Samaro, of counsel and on the brief; Maxiel Gomez, on the brief).

 

Christopher L. Weiss argued the cause for respondents (Ferro Labella & Zucker, L.L.C., attorneys; Mr. Weiss, of counsel and on the brief; Russell T. Brown, on the brief).

PER CURIAM

Plaintiff North Jersey Media Group (NJMG or plaintiff) appeals from two orders dated December 13, 2011 and March 2, 2012, dismissing its damages claims against defendants Bergen Newspaper Group, L.L.C. (Bergen Newspaper) and Bergen News Publishing Corp. (Bergen News) for failure to state a claim on which relief can be granted, and denying plaintiff's motion to amend the complaint. For the reasons that follow, we reverse the orders on appeal and remand this matter to the trial court for further proceedings consistent with this opinion.

I

Because the complaint was dismissed on defendants' motion under Rule 4:6-2(e), and plaintiff's motion to amend the complaint was denied, we focus on the facts pled in the complaint and amended complaint.1 Those allegations, which must be taken as true for purposes of the motion, can be briefly summarized as follows. NJMG publishes The Record, a daily newspaper, and The Ridgewood News. Bergen Newspaper publishes a weekly newspaper called The Press Journal. Bergen News is the former publisher of The Press Journal.2 The publications owned, respectively, by plaintiff and defendant were competitors for the business of municipalities and other government entities that are required by statute to publish official advertisements (e.g., public notices, ordinances, and resolutions) in newspapers of general circulation.

According to the complaint, the public advertising statute, N.J.S.A. 35:1-2.2, requires public notices to be published in newspapers that meet certain specific criteria, including having a "general paid circulation possessing an average news content of not less than 35%" and qualifying "for 2 years as second-class mail matter" under federal postal laws. To qualify as second-class mail matter, federal law requires that at least fifty percent of a newspaper's distribution be to persons who have paid more than a nominal price.

The complaint asserts that defendant intentionally interfered with plaintiff's prospective economic advantage by misrepresenting to public entity customers that The Press Journal met the statutory criteria to carry public notices when, in fact, it did not. As a result, according to the complaint, The Press Journal wrongfully obtained advertising business that would otherwise have been published by plaintiff's newspapers, "because they are the only newspapers in Bergen County qualified under the law to do so." The complaint sought a declaration that The Press Journal was not qualified to accept official advertisements for publication in Bergen County, an injunction barring defendant from accepting such advertisements, and monetary damages.

The proposed amended complaint set forth the same essential claim, but with greater factual specificity. The amended complaint, read indulgently, alleged that The Press Journal is not a newspaper of general paid circulation, but rather sells, at most, one-third of its newspapers and gives the rest away free or sells them at a nominal price. The amended complaint also asserted that the prior and current owners of The Press Journal were aware that it did not meet the statutory criteria but fraudulently certified to public entity customers that the newspaper was qualified to publish public notices. The amended complaint further asserted that defendants fraudulently solicited business from NJMG's customer base, knowing that by doing so they were depriving NJMG of that business.

Plaintiff initially filed the complaint in General Equity and sought preliminary restraints. At that time, Bergen Newspaper was the only defendant served with the complaint. Bergen Newspaper argued that plaintiff could obtain money damages and therefore equitable relief was not required. The General Equity judge denied injunctive relief, primarily on that basis, and transferred the case to the Law Division.3 Thereafter, Bergen News was served with the complaint, and filed a motion to dismiss the complaint; Bergen Newspaper joined in that motion. Plaintiff filed a cross-motion for leave to add as individual defendants the principals of The Press Journal's parent company, and to add claims for unfair competition and punitive damages.

In a written opinion, the Law Division judge granted the motion to dismiss. The judge construed the complaint as an attempt to assert a private right of action against defendant for violating the official advertising statute. He reasoned that the statute, N.J.S.A. 35:1-2.2, was enacted to protect the public and the Legislature did not intend to create a private right of action for violations of the statute.

II

On this appeal, plaintiff argues that the trial court misconstrued its complaint and misapplied the law pertaining to intentional interference with prospective economic advantage (tortious interference). Plaintiff contends that its complaint states a claim for tortious interference, a well-understood common law cause of action, and its claim should not be barred because the supporting evidence will include proof that defendant violated a state statute, or because the customers for whose business the parties were competing happened to be public entities. We agree.

On this appeal, the very lenient standards under which we review a pleading dismissed on a Rule 4:6-2(e) motion are well established:

[O]ur inquiry is limited to examining the legal sufficiency of the facts alleged on the face of the complaint. However, a reviewing court "searches the complaint in depth and with liberality to ascertain whether the fundament of a cause of action may be gleaned even from an obscure statement of claim, opportunity being given to amend if necessary." At this preliminary stage of the litigation the Court is not concerned with the ability of plaintiffs to prove the allegation contained in the complaint. For purposes of analysis plaintiffs are entitled to every reasonable inference of fact.

 

[Printing Mart-Morristown v. Sharp Electronics Corp., 116 N.J. 739, 746 (1989) (citations omitted).]

 

The cause of action for tortious interference with prospective economic advantage protects a business from "'the luring away, by devious, improper and unrighteous means, of the customer of another.'" Id. at 750 (quoting Louis Kamm, Inc. v. Flink, 113 N.J.L. 582, 586 (E. & A. 1934)). While vigorous competition is permitted, "the line must be drawn where one competitor interferes with another's economic advantage through conduct which is fraudulent, dishonest, or illegal." Ideal Dairy Farms, Inc. v. Farmland Dairy Farms, Inc., 282 N.J. Super. 140, 205 (App. Div.), certif. denied, 141 N.J. 99 (1995). Plainly, a competitor's "illegal" conduct, e.g., business conduct that violates a law, can be the basis for a claim of tortious interference, so long as the plaintiff can satisfy the other elements of that cause of action.

A plaintiff need not prove that it had an existing contract with a customer, but only that the plaintiff had a "reasonable expectation" of obtaining such a contract.

A complaint based on tortious interference must allege facts that show some protectable right -- a prospective economic or contractual relationship. Although the right need not equate with that found in an enforceable contract, there must be allegations of fact giving rise to some "reasonable expectation of economic advantage." A complaint must demonstrate that a plaintiff was in "pursuit" of business. Second, the complaint must allege facts claiming that the interference was done intentionally and with "malice[,]" . . . defined to mean that the harm was inflicted intentionally and without justification or excuse. Third, the complaint must allege facts leading to the conclusion that the interference caused the loss of the prospective gain. . . . Fourth, the complaint must allege that the injury caused damage.

 

[Printing Mart, supra, 116 N.J. at 751-52 (citations omitted).]

 

Gauged by those legal standards, we conclude that plaintiff's complaint and proposed amended complaint stated a cause of action for tortious interference. Assuming NJMG's factual allegations are true, defendant fraudulently misrepresented its own qualifications when dealing with the customers for whose business it was competing with NJMG. Plaintiff's publications were the only ones qualified to run public notices in Bergen County and, therefore, plaintiff would have obtained the business of those customers, but for defendant's luring them away by fraudulent and "unrighteous" competitive practices. Id. at 750; see Lamorte Burns & Co., Inc. v. Walters, 167 N.J. 285, 306-07 (2001) (stating that "plaintiff must show that it had a reasonable expectation of economic advantage that was lost as a direct result of defendants' malicious interference").4

Printing Mart involved defendant's unfair interference with a competitor's ability to successfully bid on a contract with a customer for whose business they were competing. That is essentially what plaintiff alleged here. The fact that defendant's alleged "unrighteous" practices, in submitting its own fraudulent bids, also happened to be illegal does not change the result. See Feiler v. New Jersey Dental Association, 191 N.J. Super. 426 (Ch. Div. 1983) (finding a cause of action for unfair competition where a dentist allegedly unlawfully under-billed his patients, thereby undercutting the ability of other dentists to compete for those clients), affirmed, 199 N.J. Super. 363 (App. Div.), certif. denied, 99 N.J. 162 (1984).

We disagree with the trial judge's reasoning that plaintiff's reliance on N.J.S.A. 35:1-2.2 to satisfy one element of its claim transmuted its lawsuit into a "private right of action" for violating the statute. Plaintiff was clearly asserting a common law right against tortious interference, and "the presumption is against statutory abrogation of a common-law right." Campione v. Adamar of New Jersey, 155 N.J. 245, 265 (1998) (a casino patron could not assert a private damage action for violation of the Casino Control Act, but might be permitted to assert a common law cause of action for alleged discriminatory exclusion from the casino); see also R.J. Gaydos Ins. Agency v. Nat'l Consumer Ins. Co., 168 N.J. 255, 281 (2001).

Nor does the fact that the customers here were public entities serve to defeat plaintiff's claim. In Printing Mart, after describing the defendant's improper interference with the plaintiff's bid, the Supreme Court stated that "[c]ourts applying New Jersey law have permitted actions against defendants for similar 'sharp dealing.'" Printing Mart, supra, 116 N.J. at 757. In support of that proposition, the Court cited two cases involving tortious interference with a supplier's ability to obtain a contract with a public entity. Id. at 758. We briefly describe those cases.

In Somers Construction Co. v. Board of Education, 198 F. Supp. 732 (D.N.J. 1961), the court declined to infer a private right of action for damages by a disappointed low bidder against a school board that rejected its bid. Id. at 736. The court reasoned that allowing the bidder to recover damages from the public entity would be contrary to the purpose of the public bidding laws and "would simply aggravate the injury to the general public." Ibid. However, the court declined to dismiss the plaintiff's claim for tortious interference against the architects who advised the board to accept a competitor's bid. The court held that, in alleging that the architects "maliciously" totaled the competing bids improperly in order "to deprive the plaintiff of the construction contract," the plaintiff stated a cause of action. Id. at 739.

In Robsac Industries, Inc. v. Chartpak, 204 N.J. Super. 149 (App. Div. 1985), plaintiff Robsac, the low bidder on a federal government contract, alleged that defendant Chartpak, a rival bidder, scuttled Robsac's bid by maliciously depriving it of the "uninterrupted source of supply" required to fulfill the contract, and by providing false negative information about Robsac to the government agency customer. Id. at 151-52. We reversed the trial court's grant of summary judgment dismissing the plaintiff's complaint for tortious interference and other causes of action.

We conclude that NJMG's complaint and amended complaint stated a cause of action. Further, given the somewhat unusual contours of the claim, even if we had some doubt as to its viability, we would be inclined to permit plaintiff to complete discovery so that the issues could be decided on a full factual record. See DiCristofaro v. Laurel Grove Mem. Park, 43 N.J. Super. 244, 257-58 (App. Div. 1957). Accordingly, we reverse both orders on appeal and remand this case to the trial court. On remand, plaintiff shall be permitted to file the amended complaint and the case should thereafter proceed in the ordinary course.

Reversed and remanded.

1 Plaintiff's brief contains numerous references to evidence allegedly developed during discovery. That evidence is irrelevant for purposes of this appeal from the grant of a motion to dismiss on the pleadings, and we decline to consider it.

2 Except where the interests of clarity dictate otherwise, we will refer to Bergen Newspaper and Bergen News collectively as "defendant."

3 All parties agree that the doctrine of judicial estoppel does not apply to this appeal, because not all defendants participated in the General Equity application. On March 2, 2012, Bergen Newspaper consented to "a permanent injunction barring it from accepting Official Advertisements for publication in Bergen County."

4 Taking plaintiff's factual allegations as true, defendant's alleged illegal conduct was not remote from or "collateral" to its business dealings with the customers -- a factor leading to rejection of the plaintiff's claim in Lexington National Insurance Corp. v. Ranger Insurance Co., 326 F.3d 416, 419-20 (3d Cir. 2003). Consequently, Lexington is not on point here.