United States District Court, N.D. Iowa, Eastern Division
MEMORANDUM OPINION AND ORDER
WILLIAMS, UNITED STATES DISTRICT JUDGE
matter is before the Court on defendants Compass Group USA,
Inc. (“Compass”) and Foodbuy LLC's
(“Foodbuy”) Motion to Dismiss. (Doc. 12).
Defendants argue this Court should dismiss counts three
through eight of plaintiffs Jason Fialkoff and Jeff
Knipe's complaint under Federal Rule of Civil Procedure
12(b)(6) for failure to state a claim upon which relief can
be granted. (Id.). Plaintiffs timely filed a
resistance to defendants' motion. (Doc. 18). Defendants
timely filed a reply brief in response. (Doc. 23). For the
following reasons, the motion is granted in
part and denied in part.
allege they were independent contractors employed to
facilitate business between VGM, a company that provided
rebates and incentive programs to restaurant chains, and the
restaurant chains themselves. (Doc. 1, at 2). Plaintiffs were
formerly employed as independent contractors for JKI Client
Rewards before it was acquired by VGM and rebranded as VGM
Client Rewards. (Id., at 1-2). At the time of the
acquisition, plaintiffs signed Independent Contractor
Agreements with VGM which required plaintiffs to solicit new
customers to participate in VGM's incentive programs,
maintain relationships with existing clients, meet with
clients, and present new opportunities to clients.
(Id., at 3). Under the agreements, plaintiffs would
be paid a percentage of the rebates VGM received from
clients. (Id.). Plaintiffs allege they maintained
the Independent Contractor Agreements with VGM from
approximately December 17, 2010, through January 1, 2019.
(Id., at 4).
further allege that VGM began receiving additional money for
client purchases sold under private labels. (Id., at
4). These additional payments, however, were not paid to
plaintiffs as they claim was required by their Independent
Contractor agreements. (Id., at 7). On January 1,
2019, Compass and its subsidiary Foodbuy purchased VGM Client
Rewards and all its related assets. (Id., at 4).
Following this acquisition, defendants offered plaintiffs an
opportunity to continue their work under Consulting
Agreements. (Id., at 10). Defendants also offered
plaintiffs settlement agreements to resolve the issue of
rebates that had not been paid by VGM. (Id.).
Plaintiffs did not sign the Consulting Agreements or the
settlement agreements. (Id., at 11).
brought an eight-count complaint against VGM and defendants
alleging: 1) breach of contract; 2) fraud; 3) violation of
Florida Deceptive and Unfair Trade Practices Act; 4)
defamation; 5) tortious interference with business
relationships; 6) a request for injunctive relief; 7) breach
of contract; and 8) breach of contract. (Doc. 1). Plaintiffs
brought counts one and two only against defendant VGM.
(Id., at 15-16). Counts three through six were
brought against Compass and Foodbuy jointly. (Id.,
at 17-20). Counts seven and eight for breach of contract were
brought against Compass and Foodbuy individually.
(Id., at 20-22). In response, defendants brought
this motion to dismiss counts three through eight for failure
to state a claim upon which relief can be granted under
Federal Rule of Civil Procedure 12(b)(6). (Doc. 12).
Rule of Civil Procedure 8(a) provides that a complaint must
contain “a short and plain statement of the grounds for
the court's jurisdiction . . . a short and plain
statement of the claim showing that the pleader is entitled
to relief . . . and a demand for the relief sought.”
Rule 12(b)(6) provides that a party may assert the defense of
failure to state a claim upon which relief can be granted by
motion and that “[a] motion asserting [this] defense[ ]
must be made before pleading if a responsive pleading is
allowed.” “While a complaint attacked by a Rule
12(b)(6) motion to dismiss does not need detailed factual
allegations, a plaintiff's obligation to provide the
grounds of his entitlement to relief requires more than
labels and conclusions, and a formulaic recitation of the
elements of a cause of action will not do.” Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)
(internal citations and quotation marks omitted).
“Factual allegations must be enough to raise a right to
relief above the speculative level, ” but “a
well-pleaded complaint may proceed even if it strikes a savvy
judge that actual proof of those facts is improbable, and
that recovery is very remote and unlikely.”
Id., at 555-56. Indeed, a theory asserted need only
be plausible, which requires “enough fact to raise a
reasonable expectation that discovery will reveal evidence of
[the conduct alleged].” Id.
the well-pleaded facts do not permit the court to infer more
than the mere possibility of misconduct, the complaint has
alleged-but has not shown-that the pleader
is entitled to relief.” Ashcroft v. Iqbal, 556
U.S. 662, 679 (2009) (emphasis added) (citation and internal
quotation marks omitted). “When there are well-pleaded
factual allegations, a court should assume their veracity and
then determine whether they plausibly give rise to an
entitlement to relief.” Id. When a pleading
contains no more than conclusions, however, those conclusions
are not entitled to the assumption of truth. Id.
“While legal conclusions can provide the framework of a
complaint, they must be supported by factual
allegations.” Id. “[T]here is no
justification for dismissing a complaint for insufficiency of
statement, except where it appears to a certainty that the
plaintiff would be entitled to no relief under any state of
facts which could be proved in support of the claim.”
Leimer v. State Mut. Life Assur. Co. of Worcester,
108 F.2d 302, 306 (8th Cir. 1940).
argues the Court should grant its motion to dismiss because
“[p]laintiffs fail to allege valid claims that are
plausible on their face against [Compass and Foodbuy].”
(Doc. 13, at 2). Plaintiffs bring six counts against
defendants in their complaint: 1) violation of Florida
Deceptive and Unfair Trade Practices Act; 2) defamation; 3)
tortious interference with a business relationship; 4)
request for injunctive relief; 5) breach of contract claim
against Compass; and 6) breach of contract against Foodbuy.
For the following reasons, defendants' Rule 12(b)(6)
motion to dismiss count three (Florida Deceptive and Unfair
Trade Practices Act), and count six (injunctive relief) is
granted. Defendants' motion to dismiss count four
(defamation), count five (interference with a business
relation), and counts seven and eight (breach of contract) is
itemize each of the six counts and detail why they allege
each count to be deficient. The Court is not prepared to
determine which substantive body of law applies to the claims
raised, but defendants challenge the complaint primarily
based on Iowa law. (Doc. 13). Because Iowa law could be
proven to govern the claims at issue, the Court will apply
Iowa law for the sole purpose of determining the sufficiency
of the complaint under Rule 12(b)(6).
Violation of Florida Deceptive and Unfair Trade Practices
Court first considers the violation of Florida Deceptive and
Unfair Trade Practices Act claim (Count Three). The Court
finds the complaint does not provide sufficient factual
information “to raise a reasonable expectation that
discovery will reveal evidence [of the conduct
alleged].” Twombly, 550 U.S. at 555-56.
Florida Deceptive and Unfair Trade Practices Act's
(“FDUTPA”) purpose is “[t]o protect the
consuming public and legitimate business enterprises from
those who engage in unfair methods of competition, or
unconscionable, deceptive, or unfair acts or practices in the
conduct of any trade or commerce.” Fla. Stat. §
501.202(2). “To state a claim under FDUTPA, a party
must allege (1) a deceptive act or unfair practice; (2)
causation; and (3) actual damages.” CEMEX Constr.
Materials Fla., LLC v. Armstrong World Indus., Inc., No.
3:16-cv-186-J-34JRK, 2018 WL 905752, at *14 (M.D. Fla. Feb.
15, 2018). “An unfair practice is one that offends
established public policy and one that is immoral, unethical,
oppressive, unscrupulous or substantially injurious to
consumers, while a deceptive act occurs if there is a
representation, omission, or practice that is likely to
mislead the consumer acting reasonably in the circumstances,
to the consumer's detriment.” Sandshaker Lounge
& Package Store LLC v. RKR Beverage Inc, No.
3:17-cv-00686-MCR-CJK, 2018 WL 7351689, at *6 (N.D. Fla.
Sept. 27, 2018). An entity does not need “to be a
consumer to have standing to bring a FDUTPA claim” but
a claimant does “have to prove that there was an
injury or detriment to consumers in order to satisfy all
of the elements of a FDUTPA claim.” Caribbean
Cruise Line, Inc. v. Better Bus. Bureau of Palm Beach Cty.,
Inc., 169 So.3d 164, 170 (Fla. Dist. Ct. App. 2015)
(emphasis in original).
contend that plaintiffs' FDUTPA claim must fail because
plaintiffs did not explain how “the acts that they
allege were ‘unfair' or ‘deceptive'
caused injuries to customers.” (Doc. 13, at 14).
Specifically, defendants claim any alleged deceptive conduct
was private and not customer facing, so customers could not
have been misled or deceived. (Id., at 14-15).
Defendants also claim that allegedly deceptive advertising
related to increased rebates could not have injured customers
because the customers were actually benefitted by receiving
greater rebates. (Id., at 15). In sum, defendants
argue customers have not been harmed and thus plaintiffs
cannot state a FDUTPA claim. (Id., at 15-16).
Plaintiffs, however, allege consumers were harmed when
defendants concealed information about misappropriated rebate
revenues. (Id., at 15). Specifically, plaintiffs
allege this false information “harmed consumers by
depriving them of the ability to make informed choices about
where to do business and facts that would allow them to
pursue VGM for money they are owed.” (Id., at
plaintiffs argue that consumers may have suffered harm, they
do not allege any facts supporting a plausible inference that
any consumers have or are likely to have suffered actual
damages. It is conceivable a customer may have made a
different choice about whom they would like to conduct
business. But plaintiffs' allegations do not suggest any
consumers made a different choice or were actually harmed by
their decision to continue conducting business with
defendants. Defendants claim consumers actually benefitted
from the alleged conduct. The Court does not need to
determine whether consumers benefitted from the alleged
conduct because it is sufficient that plaintiffs did not show
consumers were harmed.
reasons discussed above, defendants' motion to dismiss
plaintiffs' FDUTPA claim is granted.