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Judge denies injunction that would prevent notice of lawsuit to plumbing company's competitors

PENNSYLVANIA RECORD

Friday, November 22, 2024

Judge denies injunction that would prevent notice of lawsuit to plumbing company's competitors

Federal Court
Leahrimbrogno

Leah R. Imbrogno | Foley & Lardner

PITTSBURGH – A federal judge has denied the attempt of a New Jersey-based plumbing parts company to obtain an injunction preventing distribution of the lawsuit from a Pittsburgh competitor suing it, to other businesses in their industry.

Elias Industries, Inc. of Pittsburgh first filed suit in the U.S. District Court for the Western District of Pennsylvania on July 6 versus Kissler & Co., Inc., of Carlstadt, N.J.

Elias Industries said it is a Pennsylvania-based, family-owned and operated business in operation since 1954, and one of its divisions is Tapco Genuine Parts Center.

The suit said Tapco is the largest wholesale distributor of genuine OEM plumbing parts in the United States, supplies plumbing parts for 85 of the world’s top plumbing lines and specializes in hard-to-find and obsolete plumbing parts to customers.

Meanwhile, Kissler is a New Jersey-based distributor of plumbing parts that also manufactures parts that attempt to duplicate those of name-brand manufacturers.

“Tapco provides its customers access to an online Client Portal accessible through its website. The Client Portal allows customers to place and track orders and provides further information on product pricing, availability, and their ordering history. The Client Portal is available to Tapco customers only. Customers must request and Tapco has to provide a unique login and password to access the Client Portal,” according to the lawsuit.

Tapco customers from across the country used and continue to use the Client Portal to place orders for Tapco products which are then shipped to their locations of choice.

In September 2018, Tapco began to track visitors to the Client Portal using analytics, where they learned that someone in Carlstadt, N.J., the same city where the defendant is based, began using the credentials of another business to access the plaintiff’s Client Portal. A later IP investigation traced the access back to Kissler’s headquarters.

Until July 2019, the suit said Kissler and Tapco engaged in an intermittent game of cat and mouse: Kissler used a variety of different credentials to access to the Client Portal, but upon discovery of a successful login by Kissler using a customer’s credentials, Tapco immediately suspended the credentials of the particular customer. Kissler would then use a different set of credentials and continue attempting to log in.

In its suit, the plaintiff counted 88 total attempts at the defendant accessing or unsuccessfully attempting to access the Client Portal, on 12 different dates between September 2018 and July 2019.

Tapco is unable to determine if, or when, Kissler accessed the Client Portal without authorization prior to Sept. 18, 2018, but adds the frequency with which Kissler accessed the Client Portal and the persistence in using multiple different login credentials leads Tapco to believe Kissler accessed the portal on numerous occasions prior to September 2018.

“This information included product pricing and availability, customers’ buying history, preferences, and timing. Such information provided Kissler with a significant strategic, competitive advantage. Kissler could market the competing products to Tapco customers under more favorable terms,” the suit says.

“Upon information and belief, Tapco has suffered hundreds of thousands – if not millions of dollars – in lost profits and other costs as a result of the fraudulent access.”

On Sept. 4, Kissler filed to levy a preliminary injunction onto the plaintiff and compel it to stop distributing copies of the lawsuit to other firms in the plumbing industry.

“Elias appears intent on preventing Kissler from ever getting a meaningful opportunity to defend itself. Before Kissler has even had the chance to respond to Elias’s complaint, Elias has begun widely disseminating copies of its complaint directly to industry participants, including Kissler’s customers and suppliers,” counsel for Kissler said in its motion.

“As a result of Elias’s smear campaign, numerous Kissler customers and suppliers have contacted Kissler to express their disappointment and concern, and one long-time Kissler customer has informed Kissler that his company will no longer conduct business with Kissler because he does not do business with “immoral people.”

UPDATE

U.S. District Court for the Western District of Pennsylvania Judge Christy Criswell Wiegand denied the motion for an injunction on Feb. 5 – explaining that Kissler did not prove its claim that Elias committed false advertising under the Lanham Act, when it sent copies of the complaint to industry participants.

“Elias’ e-mails transmitting a copy of the complaint to approximately twelve customers do not contain a commercial solicitation, and the complaint was not created with the intent of attracting clients or customers, but rather to right the perceived wrongs alleged therein. Furthermore, the e-mails at issue were not created with the intention of attracting clients or customers,” Wiegand said.

“They were sent to a particular set of twelve of Elias’ existing customers who had their log-in credentials used at Kissler’s headquarters, to inform them of that use. The e-mails also did not refer to a particular product. Though Elias may have been motivated economically to stop unauthorized access to its Client Portal, that economic benefit does not stem from a proposed transaction.”

Wiegand explained the emails “fell outside the common sense understanding of speech that proposes a commercial transaction”, and a result, “they are not commercial speech, commercial advertising, or promotion within the purview of the Lanham Act.”

“The e-mails at issue do not characterize the contents of the complaint…Kissler has not demonstrated that Elias does not believe the allegations in the complaint to be true. Therefore, there was no actual deception or tendency to deceive and Kissler is not likely to succeed in a Lanham Act claim. Given that Kissler is unlikely to succeed on the merits of a Lanham Act claim, it cannot meet the standard for a preliminary injunction,” Wiegand stated.

For violation of the Computer Fraud and Abuse Act tortious interference with both existing and prospective contractual relations and procurement of information by improper means, the plaintiff is seeking to recover all damages sustained as a result of defendant Kissler & Co. Inc.’s activities; that defendant Kissler & Co. Inc. and its officers, directors, agents, servants, employees, and all those persons in active concert or participation with defendant be permanently enjoined and restrained from further commissions of the fraudulent access, attorneys’ fees and costs, enhanced and punitive damages, pre- and post-judgment interest and such other and further relief as the Court deems just and proper.

The plaintiff is represented by Leah R. Imbrogno, Peter S. Vogel, Davis G. Mosmeyer III and Peter Loh of Foley & Lardner, in Detroit, Mich. and Dallas, Texas.

The defendant is represented by Connor P. Sease and Fridrikh V. Shrayber of Denton Cohen & Grigsby, in Pittsburgh.

U.S. District Court for the Western District of Pennsylvania case 2:20-cv-01011

From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com

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