United States District Court, E.D. Michigan, Southern Division
OPINION & ORDER GRANTING SCRAPPOST'S MOTION
FOR SUMMARY JUDGMENT (Doc. # 52) RE: PEONY'S
F. COX UNITED STATES DISTRICT JUDGE.
case involves a dispute between two companies that publish
pricing information relating to the scrap metal industry.
Defendant/Counter-Plaintiff Peony Online Inc.
(“Peony”) alleges that
Plaintiff/Counter-Defendant Scrappost, LLC
(“Scrappost”) wrongfully obtained Peony's
publications and subsequently solicited Peony's
subscribers to also become subscribers of Scrappost.
Peony's counter-claim includes claims for tortious
interference, unfair competition, unjust enrichment and
misappropriation of hot news.
before the Court is Scrappost's Motion for Summary
Judgment. The motion has been fully briefed by the parties.
The Court finds that oral argument would not significantly
aid in the decisional process and therefore orders that the
instant motion will be decided upon the briefs. See
E.D. Mich. LR 7.1(f). The Court shall GRANT
Scrappost's Motion for Summary Judgment for the reasons
is in the business of publishing pricing information relating
to the scrap metal industry. Since 1993, Peony has offered
its customers a Consumer Broker Exporter's
(“CBE”) report. (Scrappost's Stmt. ¶ 11;
Peony's Stmt. ¶ 11). The CBE report is a
single-page, daily report that contains 70 price quotes for
several scrap metal varieties. (Scrappost's Stmt. ¶
11; Peony's Stmt. ¶ 11).
report's format has not changed since its creation.
(Scrappost's Stmt. ¶ 13; Peony's Stmt. ¶
13). The CBE report is not interactive and Peony subscribers
do not directly contribute to the report. (Scrappost's
Stmt. ¶ 14; Peony's Stmt. ¶ 14). Peony
publishes data from a subscriber if it deems the metal trader
suitable for the service. (Scrappost's Stmt. ¶ 17;
Peony's Stmt. ¶ 17). The purpose of the CBE report
is to provide buyers and sellers of scrap metal with price
information. (Scrappost's Stmt. ¶ 16; Peony's
Stmt. ¶ 16).
report can be accessed by Peony subscribers through fax or
email. (Scrappost's Stmt. ¶ 12; Peony's Stmt.
¶ 12). In 2009, Peony began providing the CBE report on
its website. (Scrappost's Stmt. ¶ 18; Peony's
Stmt. ¶ 18).
operates a website that provides “an online marketplace
for scrap [metal] dealers, brokers and consumers - offering a
single destination to easily get scrap market news, commodity
pricing and real time offers to buy/sell scrap
materials.” (Scrappost's Stmt. ¶ 1;
Peony's Stmt. ¶ 1). Scrappost considers itself to be
a “Craigslist” type of business for the scrap
metal industry. (Scrappost's Stmt. ¶ 2; Ex. B to
Scrappost's Stmt., at 25).
purpose of the Scrappost business is to connect scrap metal
buyers and sellers in order to enable the direct transaction
of business in one forum. (Scrappost's Stmt. ¶ 3;
Peony's Stmt. ¶ 3). Scrappost's business model
is “software as a subscription, ” wherein
Scrappost derives revenue from the annual or monthly
subscription fees it charges to users of its website.
(Scrappost's Stmt. ¶ 4; Ex. D to Scrappost's
Stmt., at 163).
co-presidents acknowledged that the pricing services provided
by both Scrappost and Peony are not unique and that other
pricing services exist in the scrap metal industry. (Ex. G to
Scrappost's Stmt., at 229; Ex. I to Scrappost's
Stmt., at 34).
website went live in early September 2013. (Scrappost's
Stmt. ¶ 5; Peony's Stmt. ¶ 5). Matthew Newman
runs Scrappost's day-to-day operations. (Scrappost's
Stmt. ¶ 6; Peony's Stmt. ¶ 6). According to
Scrappost, its employees sought to obtain new subscribers by:
(1) searching for scrap metal companies on the internet and
cold-calling them or emailing them; (2) networking with scrap
traders at conventions; (3) contacting scrap traders in
Scrappost owner Michael Bassirpour's rolodex; and (4)
contacting members of trade associations. (Scrappost's
Stmt. ¶ 7).
solicits postings to the Scrappost website from subscribers
by contacting Scrappost subscribers throughout the day and
asking if they wish to post materials for sale on the
Scrappost website. (Scrappost Stmt. ¶ 8; Peony Stmt.
¶ 8). In June 2015, Scrappost began to broker scrap
metal transactions directly. (Scrappost's Stmt. ¶
10; Peony's Stmt. ¶ 10).
Giving Rise To Instant Action
to Peony, Scrappost obtained its subscribers by having access
to Peony reports. Newman testified that during the time frame
that he was soliciting subscribers, he periodically received
email attachments containing Peony reports from Mike Comisso
(a former owner of Scrappost), Mike Bassirpour (Scrappost
owner) and Dale Turken (of Scrapgo). (Ex. 1 to Peony Resp.,
at 125). The reports were not sent on a regular basis and
there is no evidence as to how the information in the reports
October 2, 2013, Peony sent a letter to Scrappost asking
Scrappost to “stop immediately receiving the Peony
report, using in any manner the Peony report or any
information contained within the report.” (Ex. 7 to
Doc. #55). The letter further asked Scrappost to stop
targeting or soliciting Peony's contributors.
2014, Peony created the Instant Quote (“IQ”)
service. (Scrappost's Stmt. ¶19). IQ provided
customers with the ability to directly post scrap metal for
sale. (Scrappost's Stmt. ¶ 19). In order to
subscribe to the IQ service, subscribers were required to
sign an exclusivity provision contained within IQ's
subscriber agreement. The exclusivity provision reads:
Subscriber agrees to list his or her materials and prices on
Peony Instant Quote exclusively. Subscriber agrees not to
list any prices in a similar fashion (i.e., along with his or
her name, company name and contact information) on any other
web sites or price reports, except on Peony.s [sic] CBE and
subscriber.s [sic] own web site, during his or her
subscription to Peony.s [sic] CBE/Instant Quote.”
(Ex. L to Scrappost Br.).
co-president, Ganru Ge, testified that Scrappost coming into
existence was one reason IQ was created, however, the main
reason was to better serve Peony's subscribers. (Ex. G to
Scrappost's Stmt. at 194). Ganru Ge also testified that
one of the reasons for the exclusivity provision was to
prevent third-parties from trying to enter into relationships
with Peony customers. (Id. at 211). Peony
co-president Vivian Ge testified that Peony has never taken
any action against Peony subscribers for violating its
exclusive listing provision and that Peony would never take
such action. (Scrappost's Stmt. ¶ 21; Peony Stmt.
Newman was first made aware of the exclusivity provision
Peony had with its subscribers in April 2014. (Ex. 6 to
Peony's Resp. at 12-13). Scrappost claims that its
subscribers complained that Peony called them advising that
they were not allowed to advertise on both Scrappost and
Peony's sites. (Ex. B. to Scrappost's Stmt. at
135-36). Once made aware of the exclusivity provision,
Scrappost continued to run its business as it normally did.
(Ex. 1 to Peony Resp. at 101). Specifically, Newman testified
as to the following:
Q. Okay. After that date, did you continue soliciting price
information from your subscribers who had told you that Peony
told them that they couldn't list with you?
A. Yes, they were my subscribers. Their agreements with Peony
have nothing to do with ...