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QFS Transportation, LLC v. Infinity Transport Services, Inc.

United States District Court, S.D. Ohio, Western Division

June 6, 2019

QFS TRANSPORTATION, LLC, Plaintiff,
v.
INFINITY TRANSPORT SERVICES, INC., et al., Defendants.

          Barrett, J.

          REPORT AND RECOMMENDATION

          Karen L. Litkovitz United States Magistrate Judge.

         Plaintiff QFS Transportation, LLC ("QFS") initiated this breach of contract action in September 2018 against its former intermodal shipping agent, [1]defendant Infinity Transport Services, Inc. ("Infinity"), and Infinity's owner and primary principal, defendant Joseph Dimperio ("Dimperio"). (Doc. 1). Defendants filed an answer and counterclaim against plaintiff. (Doc. 7). This matter is before the Court on plaintiffs motion to dismiss Counts 3 and 4 of defendants' counterclaim (Doc. 14), defendants' response in opposition (Doc. 21), and plaintiffs reply memorandum (Doc. 23). Pursuant to the undersigned's standing order to foster increased oral advocacy opportunities for newer lawyers, the Court heard oral arguments on the motion to dismiss on February 20, 2019.

         I. Counterclaim Allegations

         On November 6, 2018, defendants filed their answer and counterclaims for breach of contract (Count 1), unjust enrichment (Count 2), defamation (Count 3), and tortious interference with business relationships (Count 4). (Doc. 7).[2] In their Count 3 defamation counterclaim, defendants allege that they maintain contractual and business relationships with owner-operators and drivers who transport freight for their customers. (Id. at ¶ 18). Defendants allege that QFS "failed to properly pay or compensate those owner-operators and drivers and improperly mishandled, depleted, or failed to return compensation, escrow funds, and deposits to those owner-operators and drivers." (Id. At ¶ 19). Defendants allege that QFS and its authorized agents, however, "have made false statements of material fact to Defendants' owner-operators and drivers" suggesting that defendants, rather than QFS, are improperly holding or refusing to return escrow funds. (Id. at ¶ 20). Defendants allege that "[t]hese false statements by QFS and/or its authorized agents are defamatory, reflect unfavorably on Defendants' character, and have injured Defendants' trade and business." (Id. at ¶ 21). Defendants allege that QFS "made such false and defamatory statements unreasonably, negligently, with knowledge of their falsity, and/or with reckless disregard for the truth or falsity of such statements." (Id. at ¶ 22). Defendants allege that they suffered damages as a result of the false and defamatory statements. (Id. At ¶23).

         In their Count 4 tortious interference with business relationships counterclaim, defendants allege that their owner-operators and drivers signed lease agreements with QFS, and QFS collected funds from the owner-operators and drivers to be held in escrow for the stated purpose of reimbursing QFS for certain advanced expenses, including charge-backs, damaged shipments, per diem charges, toll violations, fuel taxes, fuel surcharges, and detention fees. (Id. at ¶¶ 25-26). However, QFS failed to return the escrow funds under certain agreed-upon conditions, stating that QFS is withholding the funds due to "active litigation." (Id. at ¶¶ 27-28). Defendants' contractual and economic relations with the owner-operators and drivers suffered as a result. (Id. at ¶ 29).

         II. Plaintiffs Motion to Dismiss Counts 3 and 4 of Defendants' Counterclaim (Doc. 14) A. Rule 12(b)(6) Standard

         In deciding a motion to dismiss under Rule 12(b)(6), the Court must accept all factual allegations as true and make reasonable inferences in favor of the non-moving party. Keys v. Humana, Inc., 684 F.3d 605, 608 (6th Cir. 2012) (citing Harbin-Bey v. Rutter, 420 F.3d 571, 575 (6th Cir. 2005)). Only "a short and plain statement of the claim showing that the pleader is entitled to relief is required. Id. (quoting Fed.R.Civ.P. 8(a)(2)). "[T]he statement need only give the defendant fair notice of what the . .. claim is and the grounds upon which it rests." Id. (quoting Erickson v. Pardus, 551 U.S. 89, 93 (2007) (internal quotation marks omitted) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). Although the plaintiff need not plead specific facts, the "[f]actual allegations must be enough to raise a right to relief above the speculative level" and to "state a claim to relief that is plausible on its face." Id. (quoting Twombly, 550 U.S. at 555, 570). A plaintiff must "plead[] factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).

         B. Count 3 (Defamation)

         Plaintiff moves to dismiss defendants' Count 3 counterclaim for defamation on the basis that it fails to state the necessary elements for defamation under Ohio law. (Doc. 14). Plaintiff argues that defendants have not (1) identified any actual statements or specific third-party recipients, (2) alleged that QFS's statements, if any, were defamatory, (3) shown that QFS's statements were not privileged, or (4) pled that the alleged defamatory statements were defamatory per se, or that there were any special damages. (Id. at 2).

         Defendants argue that they have pled sufficient facts to support each element of their defamation claim. Defendants contend that "[s]pecific facts are not necessary; the statement need only give the defendant fair notice of what the . . . claim is and the grounds upon which it rests." (Doc. 21 at 4-5) (quoting MedChoice Fin., LLC v. ADS Alliance Data Sys., 857 F.Supp.2d 665, 673 (S.D. Ohio 2012)). Defendants argue that their counterclaim specifically alleges that plaintiff or its agents made statements falsely suggesting defendants were withholding escrow funds. (Id. at 5). Defendants argue that they have sufficiently alleged that plaintiffs statements were defamatory by expressly alleging that these statements "reflect[ed] unfavorably on [Defendants'] character, and have injured Defendants' trade and business." (Id. at 6) (citing Doc. 7 at ¶ 21).

         Under Ohio law, "defamation occurs when a publication contains a false statement 'made with some degree of fault, reflecting injuriously on a person's reputation, or exposing a person to public hatred, contempt, ridicule, shame or disgrace, or affecting a person adversely in his or her trade, business or profession.'" Jackson v. Columbus, 883 N.E.2d 1060, 1064 (Ohio 2008) (quoting A & B-Abell Elevator Co. v. Columbus/Cent. Ohio Bldg. & Const. Trades Council, 651 N.E.2d 1283, 1298 (Ohio 1995)). To state a claim for relief for defamation, plaintiff must allege facts showing: "(1) that a false statement of fact was made, (2) that the statement was defamatory, (3) that the statement was published, (4) that the plaintiff suffered injury as a proximate result of the publication, and (5) that the defendant acted with the requisite degree of fault in publishing the statement." Boulger v. Woods, No. 2:17-cv-186, 2018 WL 527009, at *8 (S.D. Ohio Jan. 24, 2018) (citing Susan B. Anthony List v. Driehaus, 779 F.3d 628, 632-33 (6th Cir. 2015) (in turn quoting Am. Chem. Soc. v. Leadscope, Inc., 978 N.E.2d 832, 852, ¶ 77 (Ohio 2012)). Failure to establish any one of these elements is fatal to the claim. Id. Courts have held that the general pleading standards of Rule 8(a)(2) apply to defamation claims. Universal Health Grp. v. Allstate Ins. Co., No. 09-12524, 2010 WL 2278618, at *4 (E.D. Mich. May 12, 2010) (Report and Recommendation) ("[N]othing in the Federal Rules suggests that pleading a defamation claim is subject to higher pleading standard than any other claim."), adopted, 2010 WL 2287151 (E.D. Mich. June 4, 2010); Scheser v. Island Hospitality Mgmt., No. 09-cv-961, 2010 WL 1742532, at *l (W.D. Ky. Apr. 28, 2010) (there is "no reason to impose a heightened pleading standard" in a defamation case).

         Plaintiff first argues that defendants have failed to identify false and defamatory statements or third-party recipients. (Doc. 14 at 6). Plaintiff argues that defendants' defamation claim is a "bare allegation" and fails to "plead or identify what was specifically communicated, to which owner-operators and drivers the 'suggestions' [about the withholding of escrow funds] were made, how the 'suggestions' were made (orally or in writing), and where and when they were made," (Id.). Plaintiff also argues that defendants have not alleged that any statements were defamatory and only make a conclusory statement that they have been injured in their trade and business, without explaining how. (Id. at 8).

         "A defamation [counterclaim] must allege the substance of the alleged defamatory statements although they need not be set out verbatim." Doe v. Univ. of Dayton, No. 3:l7-cv-134, 2018 WL 1393894, at *5 (S.D. Ohio Mar. 20, 2018), aff'd, No. 18-3339, 2019 WL 1224606 (6th Cir. Mar. 15, 2019). Under Ohio law, a statement is defamatory if it, inter alia, "affect[s] a person adversely in his or her trade, business or profession." Croce v. N.Y.Times Co., 345 F.Supp.3d 961, 974 (S.D. Ohio 2018) (internal citations omitted). Defendants' counterclaim sufficiently identifies the substance of the alleged defamatory statement-that QFS and/or its agents made false statements of fact suggesting that defendants were "improperly holding or refusing to return" escrow funds-and the third parties to whom QFS made the alleged statements-to defendants' owner-operators and drivers. (Doc. 7 at ΒΆ 20). Defendants also allege that these statements made by QFS to defendants' owner-operators and drivers were false and defamatory and injured defendants' trade and ...


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