NY Machinery Inc. v. Korean Cleaners Monthly, No.
17-cv-12269, 2018 WL 2455926 (D.N.J. May 31, 2018)
Plaintiff Lee is the President of NY Machinery (NYM), which
sells washing machines and dry-cleaning products, and also owns Kleaners LLC, a
magazine publication for the Korean dry-cleaning industry. Defendant Chung owns
defendant TKCM, a monthly trade publication that also targets the Korean
dry-cleaning industry.
NYM previously advertised in TKCM, but stopped and formed
Kleaners to advertise NYM’s products in his own industry magazine. TKCM, in retaliation,
allegedly began a “malicious defamatory campaign” against NYM to damage their
businesses and simultaneously boost their competitors’ businesses, some of
which Defendant Chung allegedly has an ownership interest in. In an August 2017
issue of TKCM, NYM was allegedly referred to as “crooks” and a “fraud” in an
article, and on the magazine’s cover. This allegedly hurt plaintiffs’ goodwill,
leading customers to cancel orders of NYM products or refuse to deal with NYM,
and harming Kleaners’ subscription and ad sales.
TKCM argued that its statements weren’t commercial
advertising or promotion for Lanham Act purposes. The court used the Lexmark-modified Gordon & Breach test, noting that plaintiffs pled commercial
competition by alleging that Chung has an ownership interest in some of NYM’s
competitors, and that TKCM is a competitor of Kleaners. Although it doesn’t
appear that the challenged speech was in a conventional ad, alleging that
defendants falsely criticized plaintiffs’ goods and services in order to
promote NYM’s competitors for defendants’ benefit was enough to allege commercial
speech made in commercial advertising or promotion. New Jersey statutory unfair
competition claims likewise survived, as did tortious interference and
defamation per se claims.
The actual malice standard did not apply; protection for “matters
of public concern” applies “to businesses that are of such inherent public
concern[,]” and not to “businesses like ... the cleaning of clothes, and
numerous other local businesses that involve everyday products or services.” TKCM’s
articles concerning plaintiffs’ dry-cleaning and magazine publishing businesses didn’t involve matters of public
concern. Anyway, plaintiffs sufficiently pled malice by alleging knowing
dissemination of falsehood. This also adequately pled a false light claim. Trade libel claims were dismissed for failure
to plead special damages with the requisite particularity. Plaintiffs said they
were willing to provide specific names under a confidentiality agreement, but
they’d have to amend the complaint to do so.
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