Semtek International v. Lockheed Martin (Balt. City Circuit Court, Bus. And Tech. Ct.)

Filed April 12, 2007—Opinion by Judge Albert J. Matricciani

Prior Proceedings:
Semtek sought to amend its complaint shortly before a trial in 2003 in order to add additional allegations and two new causes of action under Massachusetts law. The Court granted Lockheed’s motion to strike the amended complaint, with the modification that permitted Semtek to allege additional facts relating to intentional interference with prospective economic advantage, which was the single count before the Court for trial. At the close of Semtek's case, the Court granted Lockheed’s moved for judgment under Md. Rule 2-519. The Court of Special Appeals affirmed, but remanded to the Circuit Court to consider the two additional Massachusetts causes of action that Semtek had tried to insert in the stricken amended complaint. On remand, Semtek engaged new counsel and filed a second amended complaint, which Lockheed moved to strike or dismiss.

Memorandum Opinion:
The Court denied the motion to strike the second amended complaint but granted with prejudice the motion to dismiss it. The Court found that the factual allegations were expanded significantly in the second amended complaint but the causes of action were the same as those asserted by Semtek in its first amended complaint. Because those were the causes of action the Court of Special Appeals had directed the Court to consider on remand, it would not strike the second amended complaint.

The Court determined, however, that the Court of Special Appeals had already conclusively determined that Lockheed had not interfered with Semtek’s prospective economic advantage and had not engaged in other tortuous conduct that had been alleged. Applying those conclusions as the law of the case, the Court determined that even with the additional allegations of the second amended complaint, Semtek’s claims under the Massachusetts causes of action could not withstand a motion to dismiss or summary judgment. The Court dismissed the amended complaint with prejudice.

The opinion and order are available in PDF.

Baron Financial Corp. v. Natanzon (Maryland U.S.D.C.)(Approved for Publication)

Issued July 7, 2006 -- Opinion of Judge Susan K. Gauvey. (Approved for publication.)

This opinion addresses a Counterclaim and Third-Party Complaint ("Natanzon's Claim") filed by Defendant Roni Natanzon ("Natanzon") against Baron Financial Corporation ("Baron") and Samuel Buchbinder ("Buchbinder"), in the above-captioned case, in which a Co-Defendant ERN, LLC ("ERN"), an LLC in which Natanzon held a membership interest, had already declared bankruptcy. A synopsis of another ruling in this case involving different procedural and substantive issues in dispute is available here.

Baron and Buchbinder moved to dismiss the two remaining counts in Natanzon's Claim: Intentional Interference with Economic Advantage ("Count I") and Unfair Competition ("Count IV.")

Regarding Count I, the Court noted that Natanzon claimed damages under three subtheories:

1. Baron and Buchbinder allegedly damaged ERN’s and Natanzon’s economic relationships with independent sales organizations (ISOs) and merchants by making statements to ISOs about their lawsuits against ERN and Natanzon and about Natanzon personally.

The Court held that since Natanzon personally lacked either a contract with the ISOs or an existing business relationship with them, he lacked standing to bring suit for any claim of tortious interference on the basis of his mere membership in ERN, and failed to allege facts sufficient to allow a defamation claim to proceed under a more liberal reading of the claim.

2. Baron interfered with Natanzon’s business interests by "frustrating ERN's and Natanzon's ability to devote" their full time to the operation of their business.

The Court held that Natanzon had failed to allege sufficient facts to establish either a contract with ISOs or a likelihood of a prospective business relationship with any identified ISOs, and dismissed the claim for failure to state a claim on which relief might be granted.

3. Baron and Buchbinder allegedly filed lawsuits and otherwise interfered in Natanzon’s attempt to rehabilitate ERN and meet his obligations under the Memorandum of Understanding between the parties.

The Court held that since Baron and Buchbinder were themselves parties to the Memorandum of Understanding, they could not commit tortious interference with their own contract against Natanzon as a matter of law. Accordingly, the Court dismissed Count I with prejudice.

Count IV of Natanson's Claim alleged the following as acts constituting "unfair competition":

(1) Buchbinder's and Baron's institution and prosecution of numerous lawsuits against Natanzon, ERN, and ERN Israel; (2) their failure to make residual payments to ISOs with respect to their Assigned Portfolios, pursuant to the terms of the MOU and the Rider; (3) their improper demands for documentation; (4) their claim that ERN failed to process the patent application even though Buchbinder is aggressively his own 'all-in-one' POS machine (which has diminishes the value of any patent ERN might obtain); and (5) [other additional matters]

The Court held that all of Natanzon's alleged damages arose out of his ownership interest in ERN, and that since Natanzon had not pled any distinct injury to himself specifically as an owner, as opposed to financial damages to ERN itself, he lacked standing to sue for Baron and Buchbinder for unfair competition under Maryland law. Accordingly, the Court dismissed Count IV.

Natanzon had previous conceded his lack of standing to bring Counts II and III of his Claim, and the Court summarily dismissed those two conceded counts. All counts having been dismissed, the Court dismissed Natanzon's Claim in its entirety.

The full memorandum opinion is available in PDF.

Cole v. Anne Arundel County Brd of Education (Maryland U.S.D.C.)(not approved for publication)

Decided November 30, 2006--Opinion by Judge Catherine C. Blake (not approved for publication)

To recover for tortious interference with business relationships, the plaintiff must prove that defendant’s conduct was independently wrongful or unlawful, i.e., that the defendant's conduct in interfering with contract or business relations was accomplished through "improper means.” Independent "improper means," included "violence or intimidation, defamation, injurious falsehood or other fraud, violation of the criminal law, and the institution or threat of groundless civil suits or criminal prosecutions in bad faith."

In a free speech/retaliation claim, a burden rests on the plaintiff to show that the speech involved a matter of "public concern," that the plaintiff was deprived of a valuable benefit, and that but for the protected speech, the government would not have taken the retaliatory action. It is not a matter of "public concern" when a public employee speaks not as a citizen upon matters of public concern, but instead as an employee upon matters only of personal interest, absent the most unusual circumstances.

Transfers and reassignments that do not constitute firings or suspensions typically have not been held to implicate a property interest to which, with respect to government employees, due process rights attach.

To establish a prima facie case of discriminatorily motivated demotion, a plaintiff must prove: 1) that she is a member of a protected class, 2) that she was demoted, 3) that at the time of the demotion she was performing her job at a level that met her employer's legitimate expectations, and 4) "ordinarily," that she was replaced by someone of comparable qualifications who was not a member of the protected class.

A plaintiff's unsubstantiated beliefs that defendant treated her unfairly and that race and national origin formed the basis of her termination are not sufficient to rebut the defendant's proof of a nondiscriminatory reason.

The full opinion is available in PDF.