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Smith Enterprise Inc. v. Hammonds

United States District Court, D. Arizona

March 6, 2014

Smith Enterprise Incorporated, Plaintiff,
v.
Jason Edward Hammonds, Defendant.

ORDER

G. MURRAY SNOW, District Judge.

Pending before the Court are Defendant Jason Hammonds' Motion to Dismiss (Doc. 16) and Motion for Sanctions (Doc. 24). For the following reasons, Defendant's Motion to Dismiss is granted and Defendant's Motion for Sanctions is denied

BACKGROUND

This case arises from a statement made by Defendant on an internet message board. Plaintiff Smith Enterprise Incorporated ("SEI") is an Arizona corporation that manufactures firearms and related accessories. (Doc. 1 ¶ 2.) In addition to other products, SEI manufactures M14 receivers, the part of an M14 rifle that houses its operating parts. ( Id. ¶ 9.) SEI manufactures its M14 receivers using a lengthy process that involves carving the receiver out of a solid block of steel. ( Id. 13-16.) SEI does not sell its M14 receivers to end users, but instead uses a distributer, Crocs Gunshop, to manage consumer sales. ( Id. ¶ 19.) Given the apparently high demand for the M14 receivers and the extended manufacturing process, Crocs Gunshop requires customers to put down a deposit to buy one of the receivers. ( Id. ¶ 20.) Crocs Gunshop collects this deposit and holds it until the customer's receiver is shipped from SEI. SEI does not receive any part of this deposit, and only receives payment from Crocs Gunshop once the receiver has shipped. ( Id. ¶ 21.)

Defendant Jason Hammonds is a resident of Georgia and works as a medical school professor. (Doc. 16-1.) At some point prior to May 2013, Hammonds placed an order for five SEI M14 receivers from Crocs Gunshop. (Doc. 16-2 at 2.) On or about May 29, 2013, a Crocs Gunshop customer posted a comment on an online message board known as the "M14 Forum" regarding his SEI M14 receiver order. (Doc. 1 ¶ 22.) The customer asked for information about when he might receive the receiver that he had ordered. ( Id. ) This comment began a thread in which a number of other customers discussed their orders and some expressed frustration at the length of time it was taking for them to receive the items. ( Id. 23-25.) In the course of this message board thread, Hammonds posted the following:

I heard from a reliable source that they are experiencing heat treatment issues in their receivers. Reports of receiver threads cracking upon barrel installation, stuff like that. I can't imagine it's been this long getting the tooling in order. Feeding us BS. At this point I believe you have every right to demand a full refund. Crocs has offered such to others that have been waiting. Feel free to use this info to your every advantage.

(Doc. 1-1 at 3.)

An SEI employee saw this post and replied: "Unless your source is one of us, then it's wrong. None of that is true." ( Id. at 4.) Shortly after, Hammonds responded: "Good to know, I guess. Then where are the receivers????? Current explanation does not seem to add up." ( Id. )

SEI President Ron Smith then called Hammonds and told him that the statement he made on the message board was false and that SEI would "not hesitate to file a lawsuit to protect its reputation and goodwill" if Hammonds did not retract his statement. ( Id. ¶ 32.) SEI claims that Hammonds refused to retract his statement, but did return to the M14 Forum to post:

I had what I have found to be a reliable source tell me some reasoning behind the delay in SEI M14 receiver deliveries. It was merely conjecture as the source was secondary in nature, but has proven over time to me to be quite accurate in hindsight. Pretty good source of info. Anyway, it seemed logical as we had seen no product. We had gotten nothing from SEI except excuses for 6 months. Poor Croc. I feel for him. Caught in the middle. Anyway, it was time to nudge them and force an explanation.

(Doc. 1-1 at 13.)

Hammonds further posted that:

We don't know exactly. We are all guessing and listening to folks that we respect come up with likely reasoning. I was told they may have been experiencing heat treatment issues and that is the reason why we have not seen any product. The source of info was merely brainstorming reasoning behind such a delay in the ...

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