Redeye Grill, L.P. v Restaurant Opportunities Ctr. of NY, Inc.

[*1] Redeye Grill, L.P. v Restaurant Opportunities Ctr. of NY, Inc. 2006 NY Slip Op 51789(U) [13 Misc 3d 1212(A)] Decided on August 16, 2006 Supreme Court, New York County Lehner, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on August 16, 2006
Supreme Court, New York County

Redeye Grill, L.P., Plaintiff,

against

Restaurant Opportunities Center of New York, Inc., Defendant,



117382/05



For plaintiff,

Arthur J. Robb, Esq.

Clifton Budd & DeMaria, LLP, 420 Lexington Avenue, Suite 420, New York, NY 10170

For defendant,

Daniel Kirschbaum, Esq.

Paul, Weiss, Rifkin, Wharton & Garrison LLP

1285 Avenue of the Americas, New York, NY 10019

Edward H. Lehner, J.

Defendant Restaurant Opportunities Center of New York, Inc. (ROC-NY)[FN1] moves to dismiss the plaintiff's action pursuant to CPLR 3211(a)(7). The complaint alleges seven causes of action: i) unfair competition; ii) injurious falsehood; iii) tortious interference with prospective business relations; iv) deceptive trade practices under General Business Law ("GBL") §349; v) civil conspiracy; vi) prima facie tort; and vii) injunctive relief.

In considering a motion under CPLR 3211(a)(7), the court is required to accept as true the facts as alleged in the complaint, giving plaintiff "the benefit of every possible favorable inference," and determining "only whether the facts as alleged fit within any cognizable legal theory" [Leon v. Martinez, 84 NY2d 83, 87-8 (1994)]. However, this does not apply to bare legal conclusions and factual claims which are "inherently incredible," flatly contradicted by documentary evidence, or "patently untrue" [O'Donnell Fox & Gartner, P.C. v. R-2000 Corp., 198 AD2d 154 (1st Dept. 1993); Mark Hampton, Inc. v. Bergreen, 173 AD2d 220 (1st Dept. 1991), lv. to app. den. 80 NY2d 788; Leo v. Mt. St. Michael Academy, 272 AD2d 145 (1st Dept. 2000)].

Facts

ROC-NY is an organization that advocates for restaurant worker rights and seeks to develop employee-owned restaurants in the New York City area. Redeye Grill is an upscale restaurant located at Seventh Avenue and 57th Street. Some of ROC-NY's members are former employees of the Windows on the World restaurant that was atop the World Trade Center, and they have collaborated in forming a restaurant, Colors, at 417 Lafayette Street, in which the workers own a 20% interest and ROC-NY owns a 40% interest. The restaurant is not operated for economic gain other than to repay investors who currently own a 40% interest therein (Tr. pp. 12-13). [*2]On Friday December 9, 2005, during dinner hours, ROC-NY members and non-affiliated allies picketed and leafleted outside the Redeye Grill, claiming that 50 of its employees were filing a lawsuit "to recover over $3,000,000 in stolen tips and overtime wages and to end unfair workplace practices."[FN2] The leaflets urged readers not to patronize the restaurant and to "support the workers in their struggle for decent working conditions!" The protesters employed megaphones, whistles and a nine-foot inflatable skunk in making their statement. Nothing about the protest or distributed leaflets identified ROC-NY or its members as restaurant owners or competitors in the restaurant industry, but the leaflets bore ROC-NY's logo, address, and contact information. A second protest on December 14, 2005, was substantively the same as the first, but took place during the lunch hour. Plaintiff claims that the picketers knew the information they disseminated was false, and it is asserted that they were partially motivated by the desire to drive business away from Redeye Grill to the benefit of Colors. General damages are alleged based on sales purportedly lost as a result of these actions.

Claims

1)Unfair Competition

I find that it is "inherently incredible" to claim that plaintiff's West 57th Street upscale steakhouse is in competition with the eclectic international restaurant located at 417 Lafayette Street in lower Manhattan that is partially owned by the defendant. Even if the picketers' actions intended to drive business away from the Redeye Grill, it is highly unlikely that any customers who turned away from the midtown steakhouse would then travel more than three miles downtown, past literally hundreds of upscale restaurants, to dine at Colors instead, particularly since, as plaintiff acknowledges, nothing in the leaflets mentioned Colors restaurant as an alternative dining establishment. Thus, it cannot be said that defendant is in competition with the plaintiff, other than in the very most broad sense that every fine eating establishment in the City of New York is competitive with every other such facility. ROC-NY's mission statement makes clear that its purpose is "improving conditions for restaurant workers and raising public recognition of restaurant workers' contributions to the city." Its behavior, as alleged in this complaint, is consistent with promoting this goal, and there is nothing that would tend to show that the intent of the picketing was to in [*3]any way financially benefit Colors.[FN3]

While it has been said that to prevent "unethical business practices," a court may sustain a claim of unfair competition even if the parties are not "actual competitors," [Dior v. Milton, 9 Misc 2d 425, 434 (Sup. Ct. NY Co. 1956), aff'd. 2 AD2d 878 (1st Dept. 1956)], that court concluded that the tort "does not rest solely on the ground of direct competitive injury, but on the broader principle that property rights of commercial value are to be and will be protected from any form of unfair invasion or infringement and from any form of commercial immorality." This case was cited with approval by the Court of Appeals in Ruder & Finn Incorporated v. Seaboard Safety Company, 52 NY2d 663, 671 (1981), where it was stated that the "cornerstone of the tort" of unfair competition is the "misappropriation of another's commercial advantage," with the "primary concern in unfair competition (being) the protection of a business from another's misappropriation of the business' organization or its expenditure of labor, skill and money."

Here, it is not alleged that defendant has misappropriated plaintiff's property in any way. Therefore, the only applicable cause of action is the subcategory of unfair competition by product disparagement. Such claim is viable where the statement is "confined to denigrating the quality of a business' goods or services" [Ruder & Finn Incorporated v. Seaboard Surety Company, supra at p. 670]. To prevail on such a claim a plaintiff must establish: "(i) the falsity of the statements; (ii) publication to a third person; (iii) malice and (iv) special damages" [Gucci America, Inc. v. Duty Free Apparel, Ltd. 277 F. Supp. 2d 269, 275-76 (S.D.NY 2003)]. Moreover, the "special damages must be fully and accurately stated"[Drug Research Corporation v. Curtis Publishing Company, 7 NY2d 435, 440-441 (1960)]. See also, Kevin Spence & Sons, Inc. v. Boar's Head Provisions Co., Inc., 5 AD3d 352 (2nd Dept. 2004). The requisite specificity of damages is missing in the complaint herein.

ROC-NY's activities did not malign the goods and services of Redeye Grill as a restaurant. Rather it protested the restaurant's treatment of its employees. This is not sufficient to state a cause of action for product disparagement. Therefore, the cause of action for unfair competition is dismissed. [*4]

2)Injurious Falsehood

The key legal issue presented by this cause of action is whether the use of the words "stolen tips"[FN4] in the leaflet disseminated by picketers advocating the improvement in wages and working conditions of restaurant workers is speech protected by the First Amendment.

The general rules as to whether a statement is protected by the First Amendment were set forth in Steinhilber v. Alphonse, 68 NY2d 283 (1986), as follows (pp. 289-290): "The rule to be applied may be simply stated. An expression of pure opinion is not actionable. It receives the Federal constitution protection accorded to the expression of ideas, no matter how vituperative or unreasonable it may be .... A pure opinion' is a statement of opinion which is accompanied by a recitation of the facts upon which it is based. An opinion not accompanied by such a factual recitation may, nevertheless, be pure opinion' if it does not imply that it is based upon undisclosed facts .... When, however, the statement of opinion implies that it is based upon facts which justify the opinion but are unknown to those reading or hearing it, it is a mixed opinion' and is actionable" (internal citations omitted)

* * * "The essential task is to decide whether the words complained of, considered in the context of the entire communication and of the circumstances in which they were spoken or written, may be reasonably understood as implying the assertion of undisclosed facts justifying the opinion."

See also, Gross v. New York Times Company, 82 NY2d 146 (1993); Brian v. Richardson, 87 NY2d 46 (1995).

The question as to whether a statement expresses fact or opinion "is one of law for the court and one which must be answered on the basis of what the average person hearing or reading the communication would take it to mean" (Steinhilber v. [*5]Alphonse, supra at p. 290). There the defendant union official put a recorded message on a private union telephone line that contained scathing comments about plaintiff who had crossed a union picket line. In dismissing the action, the court concluded that "the inescapable conclusion from the verbal context of the entire message and all of the circumstances under which it was delivered is that the statement would be understood by the ordinary listener for what it is: a tasteless effort to lampoon plaintiff for her activities as a scab'" (pp. 294-295). In so concluding, the court quoted with approval the statement in Ollman v. Evans, 750 F.2d 970 (D.C. Cir. 1984), cert. den. 471 U.S. 1127 (1985), that "even apparent statements of fact may assume the character of statements of opinion, and thus be privileged, when made in public debate, heated labor dispute, or other circumstances in which an audience may anticipate the use of epithets, fiery rhetoric or hyperbole" (p. 294).

In Gross v. New York Times Company, supra, it was observed that a statement that "John is a thief" could well be treated as an expression of opinion or rhetorical hyperbole where it is accompanied by other statements ... that, taken in context, convey to the reasonable reader that something other than an objective fact is being asserted" (p. 155). In 600 West 115th Street Corp. v. Von Gutfeld, 80 NY2d 130 (1992), the court dismissed a claim based on a statement made by defendant at a Community Board meeting that a lease "is as fraudulent as you can get and smells of bribery and corruption" (p. 135), stating that "the type of forum is relevant because reasonable listeners arrive armed with the knowledge that deliberations are in progress, that no expertise is required of those who choose to speak, and that robust, controversial debate is expected; ... (and) reasonable listeners in such circumstances arrive with an appropriate amount of skepticism" (p. 141). See also, Immuno AG v. Moor-Jankowski, 77 NY2d 235, 254 (1991) ("the purpose of court review (is to) determine whether the reasonable reader would have believed that the challenged statements were conveying facts about the libel plaintiff"); Fox Den Development Corp. v. Town of Yorktown, 231 AD2d 551, 552 (2nd Dept. 1996)("courts must consider the content of the communications as a whole, its tone and apparent purposes, as well as the over-all context in which the statements were made").

The bedrock for the holdings in the foregoing New York cases are certain United States Supreme Court decisions, in one of which the court stated that "[b]ecause the threat of actual imposition of pecuniary liability for alleged defamation may impair the unfettered exercise of First Amendment freedoms, the Constitution imposes stringent limitations upon the permissible scope of such liability" [Greenbelt Cooperative Publishing Association v. Bressler, 398 US 6, 12 (1970)]. There the defendant newspaper reported that at a public meeting it was said that plaintiff's negotiating position constituted "blackmail." In holding that the use of that word at [*6]the public meeting was "not slander when spoken and not libel when reported" by the defendant newspaper, the court concluded that "the most careless reader must have perceived that the word was no more than rhetorical hyperbole, a vigorous epithet used by those who considered (plaintiff's) negotiating position extremely unreasonable" (pp. 13-14).

In Old Dominion Branch No. 496, National Association of Letter Carriers, AFL-CIO v. Austin, 418 U.S. 264 (1974), the court posed the issue to be decided as "the extent to which state libel laws may be applied to penalize statements made in the course of labor disputes without undermining the freedom of speech which has long been a basic tenet of federal labor policy" (p. 270). There an article in a union newsletter referred to plaintiff as a "scab" and included a definition of such term as a person who is a "traitor." In dismissing the claim, the court stated that the words used by defendant "were obviously used here in a loose, figurative sense to demonstrate the union's strong disagreement with the views of those workers who oppose unionization" (p. 284), and observed that "exaggerated rhetoric was commonplace in labor disputes" (p. 286), and that it is "impossible to believe that any reader (of the article) would have understood the newsletter to be charging the (plaintiff) with the criminal offense of treason" (p. 285).

In the case at bar, the subject leaflet clearly shows that the leafleters were engaged in activity attempting to better the earnings and working conditions of restaurant workers. The reference in the leaflet to the contemplated litigation as one to recover money would tend to show that a civil action was to be instituted, there being no indication that plaintiff was being accused of having committed the crime of larceny. Although this is not a labor dispute involving a union, I conclude that the use of the word "stolen" was an expression of an opinion that money was owing to various workers at the Redeye Grill, and can be treated, under the circumstances, as "rhetorical hyperbole" or merely as a "vigorous epithet," and thus nonactionable. Accordingly, the cause of action is dismissed.

3)Tortious Interference with Prospective Business Relations

For a cause of action for tortious interference with business relationships to stand, the plaintiff must demonstrate that defendant "interfered with the plaintiff's business relationships either with the sole purpose of harming the plaintiff, or by means that were unlawful or improper." 71 Pierrepont Assocs. v. 71 Pierrepont Corp., 243 AD2d 625, 625-26 (2d Dept 1997). See also, Guard-Life Corporation v. S. Parker Hardware Manufacturing Corp., 50 NY2d 183, 191 (1980); Thur v. Ipco Corporation, 173 AD2d 344 (1st Dept. 1991). Here, it is not alleged by the plaintiff that the sole purpose of defendant's actions was to harm the plaintiff; rather, the plaintiff acknowledges that advancing employee rights was at least part of the defendant's [*7]objective. Since defendant's conduct was not unlawful in that it had procured permits for the peaceful protest, and there was nothing "wrongful" about the picketing, as defined in Guard-Life Corporation v. Parker Hardware Manufacturing Corp., supra at p. 191, this cause of action lacks merit.

4)Deceptive Trade Practices Under GBL §349

To make out a prima facie case for deceptive trade practices under GBL §349, it must be alleged that the deceptive acts were "consumer-oriented," materially misleading, and that the plaintiff was injured as a result, and "the deceptive practice must be likely to mislead a reasonable consumer acting reasonably under the circumstances" [Stutman v. Chemical Bank, 95 NY2d 24, 29 (2000)]. Hence, to sustain a claim under this section, "the defendant's acts or practices must have a broad impact on consumers at large" [New York University v. Continental Insurance Company, 87 NY2d 308, 320 (1995)]. See also, Scott v. Bell Atlantic Corporation, 282 AD2d 180 (1st Dept. 2001); Canario v. Gunn, 300 AD2d 332 (2nd Dept. 2002). Here, the only "public harm" plaintiff alleges is dissemination of false information, which does not meet the standard for broad consumer protection required under the statute. Therefore, this claim does not suffice to satisfy the pleading requirements of GBL §349, and is dismissed

5)Prima Facie Tort

The elements of a cause of action for prima facie tort are: "(1) the intentional infliction of harm, (2) which results in special damages, (3) without any excuse or justification, (4) by an act or series of acts which would otherwise be lawful." [Freihofer v. Hearst Corporation, 65 NY2d 135, 142-43 (1985)]. Recovery under this tort will not lie "unless malevolence is the sole motive for a defendant's otherwise lawful act" [Smuckler v. Lofts Realty, Inc., 156 AD2d 161 (1st Dept. 1987)].

Plaintiff has not alleged that defendant's sole motivation was malice. The record makes clear that its actions were motivated primarily by the advancement of restaurant employee rights. Therefore, this cause of action is also not viable.

6)Civil Conspiracy

In New York State, there is no independent cause of action for civil conspiracy [Bronx-Lebanon Hospital Center v. Wiznia, 284 AD2d 265 (1st Dept. 2001); Romano v. Romano, 2 AD3d 430, 432 (2nd Dept. 2003)]. However,"[w]hile there is no cognizable action for a civil conspiracy, a plaintiff may plead conspiracy in order to connect the actions of the individual defendants with an actionable underlying tort and establish that those actions flow from a common scheme or plan." [American Preferred Prescription, Inc. v. Health Management, Inc., 252 AD2d 414, 416 (1st Dept. 1998)]. Since none of the other alleged tort causes of action asserted herein has been [*8]sustained, this claim must therefore also be dismissed.

7)Injunctive Relief

Injunctive relief in the context of peaceful picketing is clearly improper as a violation of free speech guaranteed by the First Amendment. [Milk Wagon Drivers Union of Chicago, Local 753 v. Meadowmoor Dairies, Inc., 312 U.S. 287, 296 (1940); Thornhill v. Alabama, 310 U.S. 88 (1940)]. Moreover, since I have found that none of the claims asserted state a viable cause of action, there is no improper conduct to enjoin. Accordingly, this cause of action for a permanent injunction is dismissed.

Conclusion

In light of the foregoing, the entire complaint is dismissed and the Clerk shall enter judgment accordingly.

Dated: August 16, 2006______________

J.S.C. Footnotes

Footnote 1: By stipulation at oral argument, the title of the action was amended to reflect that it is only against the above-named corporate defendant (Tr. pp. 2-3).

Footnote 2: In the copies of the leaflet attached to defendant's papers, the word "stolen" is omitted, and the papers do not indicate when that leaflet was distributed..

Footnote 3: It is noted that at oral argument on March 7, 2006 before Judge Gerard Lynch in a related case in the Southern District of New York (SMJ Group, Inc. v. 417 Lafayette Restaurant, LLC, 06 Civ. 1774), the judge, commenting on the possible competitive nature of activity, against other restaurants owned by the owner of plaintiff herein in the Carnegie Hall area, by persons who have some interest in Colors Restaurant, stated "it would verge on the bizarre for someone trying to attract customers to a downtown restaurant to single out a handful of the many fine dining establishments in the city that might in the very general way ... be competitors and go after them in some way: (p. 14).

Footnote 4: It is noted that in the federal action subsequently commenced by the workers of the Redeye Grill (Arroyo v. Redeye Grill, LP, 06 Civ. 00381), the claim regarding tips is not that the owners of the restaurant siphoned off tips, but rather that portions of tips received by servers were split with zone maitre'ds, who were described in the complaint as "managers" of the restaurant.