Beaver et al v. Inkmart LLC et al
Filing
116
ORDER granting in part and denying in part 83 Motion to Dismiss for Lack of Jurisdiction - also ORDER amending Court's previous Order at docket entry 46. Signed by Judge Donald M. Middlebrooks on 9/12/2012. (sw)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 12-60028-MIDDLEBROOKS/BRANNON
ROBERT E. BEAVER, JR., et al.,
Plaintiffs,
v.
INKMART, LLC., et al.,
Defendants.
_____________________________________/
ORDER ON DEFENDANT’S MOTION TO DISMISS PURSUANT TO RULE 12(b)(1)
THIS CAUSE comes before the Court upon Defendant Inkmart, LLC’s (“Inkmart”) Motion
to Dismiss Pursuant to Rule 12(b)(1) (AMotion@) (DE 83), filed August 13, 2012. Plaintiffs Robert
E. Beaver (“Beaver”) and Inkmart of New England, LLC (“New England”) filed their Response (DE
98) on August 30, 2012, Inkmart filed its Reply (DE 109) on August 13, 2012, and Inkmart also filed
a Supplemental Memorandum of Law (DE 114) as requested by the Court at the September 5, 2012
Calendar Call.1 I have considered the instant Motion, the Response, the Reply, and Inkmart’s
Supplemental Memorandum of Law, and am otherwise fully advised in the premises.
I.
BACKGROUND2
The legnthy factual background can be found in my Order (DE 103) filed September 4, 2012.
The facts relevant to this Motion are set forth here. I first note that within Plaintiffs’ initial
Complaint was a claim under the Connecticut Unfair Trade Practices Act (“CUTPA”), Conn. Gen.
1
Plaintiffs chose not to accept the Court’s invitation to submit supplemental briefing regarding issues the
Court took with Inkmart’s Motion. These issues are further discussed below.
2
On February 14, 2012, Plaintiffs filed a M otion for Clerk’s Default (DE 14) against Master Franchise
Investments, Inc. (“MFI”). The Clerk has entered a Clerk’s Default against MFI. MFI is still listed as a codefendant, but as of this day has not appeared or otherwise defended this action.
1
Stat., § 42-110, et seq., which I dismissed with prejudice, finding it was precluded by the choice-oflaw provision in the Franchise Agreement. (See DE 46).
Plaintiffs filed their Amended Complaint (DE 52) against Inkmart and MFI on June 25, 2012.
Inkmart filed the first of two Motions to Dismiss the Amended Complaint (DE 54) on July 10, 2012,
which I granted in part and denied in part on September 4, 2012. (See DE 103). Specifically, I
dismissed Plaintiffs’ negligent and fraudulent misrepresentation claims to the extent they were based
on any of the alleged promises, predictions, or representations made by Inkmart or MFI prior to the
Franchise Agreement. (See DE 103 at 12-13). I also dismissed Plaintiffs’ Florida Franchise Act
(“FFA”) claim for failing to state a claim upon which relief may be granted. (See id. at 13).3
The second Motion to Dismiss is currently before the Court. In the Motion, Inkmart seeks
dismissal of Plaintiffs’ Florida Franchise Act (“FFA”) and Florida Unfair Trade Practices Act
(“FDUTPA”) claims for lack of subject matter jurisdiction. Specifically, Inkmart argues that
Plaintiffs lack standing to sue under either Act. (See DE 83 at 1-2).4 On August 30, 2012, Plaintiffs
filed a Response (DE 98) to the instant Motion, to which Inkmart filed a Reply (DE 109) on
September 5, 2012.
Noting that when considering Inkmart’s assertion – as to Plaintiffs’ lack of standing under
FDUTPA – in its current Motion with its assertions – that Plaintiffs had no standing under the
choice-of-law provision to bring a claim under CUTPA – in its Motion to Dismiss the original
Complaint, it appeared to leave Plaintiffs with no avenue of relief under any state’s consumer
3
Inkmart had also filed a Motion for Summary Judgment (DE 56) on July 17, which I denied on September
4, 2012. (See DE 105).
4
Because I already dismissed Plaintiffs' FFA claim, (see DE 103 at 13), Inkmart's arguments with regard to
FFA standing are moot, and I will only address the FDUTPA issue.
2
protection laws. This result seemed counterintuitive due to the individual states’ strong interest in
consumer protection. Accordingly, at the September 5, 2012, Calendar Call, I invited the Parties to
submit supplemental briefing regarding the viability of Plaintiffs’ FDUTPA or CUTPA claims, an
issue the Court had with respect to Inkmart’s argument that Plaintiffs lack standing under FDUTPA.
Inkmart filed its Supplemental Memorandum of Law (DE 114) on September 7, 2012. The Plaintiffs
did not file any supplemental briefing.
II. LEGAL STANDARD
Federal courts have limited subject matter jurisdiction – leaving district courts the power to
decide only certain types of cases. See Morrison v. Allstate Indem. Co., 228 F.3d 1255, 1260-61
(11th Cir. 2000). District courts are “‘empowered to hear only those cases within the judicial power
of the United States as defined by Article III of the Constitution,’ and which have been entrusted to
them by a jurisdictional grant authorized by Congress.” Univ. of S. Ala. v. Am. Tobacco Co., 168
F.3d 405, 409 (11th Cir. 1999) (quoting Taylor v. Appleton, 30 F.3d 1365, 1367 (11th Cir. 1994)).
Further, the burden for establishing subject matter jurisdiction rests with the party bringing the claim.
See Sweet Pea Marine, Ltd. v. APJ Marine, Inc., 411 F.3d 1242, 1247 (11th Cir. 2005).
Attacks on subject matter jurisdiction are seen in two forms: (1) facial attacks; and (2) factual
attacks. See Scarfo v. Ginsberg, 175 F.3d 957, 960 (11th Cir. 1997) (citing Lawrence v. Dunbar,
919 F.2d 1525, 1529 (11th Cir. 1990)). “Facial attacks on a complaint ‘require the court merely to
look and see if the plaintiff has sufficiently alleged a basis of subject matter jurisdiction, and the
allegations in [plaintiff's] complaint are taken as true for the purposes of the motion.’” Id. (alteration
in original). On the other hand, factual attacks dispute “the existence of subject matter jurisdiction
in fact, irrespective of the pleadings, and matters outside the pleadings, such as testimony and
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affidavits, are considered.” Id. The Eleventh Circuit has explained that “in a factual attack the
presumption of truthfulness afforded a plaintiff under Federal Rule of Civil Procedure 12(b)(6) does
not attach, and the court is free to weigh the evidence.” Id. The Court in Lawrence v. Dubar, 919
F.2d at 1529, notes that
when the attack is factual, the trial court may proceed as it never could
under 12(b)(6) or Federal Rule of Civil Procedure 56. Because at issue in
a factual 12(b)(1) motion is the trial court's jurisdiction—its very power
to hear the case—there is substantial authority that the trial court is free
to weigh the evidence and satisfy itself as to the existence of its power to
hear the case. In short, no presumptive truthfulness attaches to plaintiff's
allegations, and the existence of disputed material facts will not preclude
the trial court from evaluating for itself the merits of jurisdictional claims.
Id. (citing Williamson v. Tucker, 645 F.2d 404, 415-16 (5th Cir. 1981)). Contrary to Plaintiffs’
argument, the attack on subject matter jurisdiction in this case is factual, as Inkmart presented factual
evidence from outside the Complaint to the Court. See MGC Comm., Inc. v. BellSouth Telecomm.,
Inc., 146 F. Supp. 1344, 1349 (S.D. Fla. 2001) (Gold, J.) (interpreting the 12(b)(1) motion as a facial
attack, as the defendant “ha[d] not attempted to present any factual evidence from outside the
Complaint to the Court”). With the standards set forth above, I turn to whether Plaintiffs have
standing to sue in this Court under FDUTPA.
III. DISCUSSION
In the instant Motion, Inkmart argues that Plaintiffs lack standing to sue under FDUTPA
because none of the alleged misconduct occurred within the territorial boundaries of Florida. (See
DE 83 at 3-4). As set forth by Inkmart, “the allegedly deceptive conduct occurred telephonically or
via e-mail between Mr. Beaver in Connecticut and various defendants, none of whom were located
in Florida, and during an in-person meeting in Georgia.” (See DE 83 at 3). Plaintiffs do not dispute
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this in their Response; rather, Plaintiffs argue that Inkmart is a Florida Limited Liability Company
and has its principal place of business in Florida, which they claim is sufficient to establish standing
under FDUTPA. (See DE 98 at 9-11).
At the September 5, 2012, Calendar Call, counsel for Plaintiffs argued that the Court should
interpret the Florida choice of law provision in the Franchise Agreement so as to provide protection
under FDUTPA to an out-of-state consumer for conduct occurring entirely outside of Florida. Doing
so, in this Court’s opinion, would violate strong Florida public policy. See Five for Entm’t S.A. v.
Rodriguez, No. 11-24142-CIV, 2012 WL 2918574, at *8 (S.D. Fla. July 9, 2012) (Seitz, J.) (citing
Carnival Corp. v. Rolls-Royce PLC, No. 08-23318-CIV, 2009 WL 3861450, at *6 (S.D. Fla. 2009)
(“FDUTPA applies only to actions that occurred within the state of Florida.”); In re NationsRent
Rental Fee Litigation, No. 06-60924-CIV, 2009 WL 636188, at *5 (S.D. Fla. Feb. 24, 2009) (Brown,
M.J.) (finding that interpreting a choice-of-law provision to provide protection under FDUTPA to
out-of-state consumers based on conduct that occurred outside of Florida would counteract Florida’s
public policy); Millenium Comm. & Fulfillment, Inc. v. Office of the Attorney Gen. Dep’t of Legal
Affairs, State of Fla., 761 So. 2d 1256, 1262 (Fla. 3d DCA 2000) (stating that FDUTPA “seeks to
prohibit unfair, deceptive and/or unconscionable practices which have transpired within the
territorial boundaries of [Florida] without limitation”). Because none of the alleged misconduct
occurred within Florida, Plaintiffs do not have standing to bring a claim under FDUTPA; thus, Count
I of the Amended Complaint must be dismissed. (See DE 52 at 9-13).
While researching the FDUTPA standing issue, I noted that other courts presented with an
out-of-state deceptive and unfair trade practices claim with similar choice of law provisions had
engaged in a Florida “choice of law analysis” and had dismissed such claims without prejudice so
5
as to allow the plaintiff to assert such claim in their home state. See, e.g., Burger King Corp. v.
Weaver, 798 F. Supp. 684, 687, 690 (S.D. Fla. 1992); Scheck v. Burger King Corp., 756 F. Supp.
543, 545-46 (S.D. Fla. 1991).
The Parties, in their briefs relating to the Motion to Dismiss the initial complaint, did not
brief the issue of what impact applying Florida law to Plaintiffs’ CUTPA claim would actually have
and so, no conflict of law analysis was conducted. Accordingly, I find it appropriate to briefly sua
sponte revisit my Order dismissing Plaintiffs’ CUTPA claim with prejudice.
In the Franchise Agreement between the parties, section § 20.5.1 provides a broad choice of
law provision: “With respect to all claims, controversies, disputes or actions related to this
Agreement or the relationship created thereby, this Agreement and any such related claims,
controversies, disputes or actions shall be governed, enforced and interpreted under Florida law.”
(DE 1-2 at § 20.5.1). Absent a showing of fraud or unequal bargaining power, this Court will honor
the Parties’ intent to be governed under the laws of Florida. See Dickinson v. Exec. Bus. Grp., Inc.,
983 F. Supp. 1395, 1397 (M.D. Fla. 1997) (“The contract will be governed in accordance with the
intent of the parties absent any evidence of fraud or unequal bargaining power that would undermine
the validity of the choice of law provision.”); Weaver, 798 F. Supp. at 687 (holding that since
“neither party has offered any evidence of fraud or unequal bargaining power which would
undermine the validity of the choice of law provisions . . . the parties’ choice of Florida law will be
respected”); Scheck, 756 F. Supp. at 546 (“Absent any evidence of fraud or unequal bargaining
power, which this court fails to find, the parties' intention to be governed by Florida law should be
honored.”). Since no showing of fraud or unequal bargaining power has been made by Plaintiffs,
Florida law controls.
6
In applying Florida’s choice of law rules, the appropriate analysis to apply to a deceptive
trade practice statutory claim is the “significant relationships test” of § 145 of the Restatement
(Second) of Conflicts of Laws. See In re NationsRent Rental Fee Litigation, 2009 WL 636188, at
*5 (citing Montgomery v. New Piper Aircraft, Inc., 209 F.R.D. 221, 225 (S.D. Fla. 2002); Trumpet
Vine Investments, N.V. v. Union Capital Partners I, Inc., 92 F.3d 1110, 1115-16 (11th Cir. 1996));
see also Green Leaf Nursery v. E.I. DuPont De Nemours and Co., 341 F.3d 1292, 1301 (11th Cir.
2003) (citing Garcia v. Pub. Health Trust of Dade Cnty., 841 F.2d 1062, 1064-65 (11th Cir. 1988)
(explaining that Florida follows the approach set forth in the Restatement, which states that “[t]he
rights and liability of the parties with respect to an issue in tort are determined by the local law of
the state which, with respect to that issue, has the most significant relationship to the occurrence and
the parties” and that contacts to be taken into account include “(a) the place where the injury
occurred, (b) the place where the conduct causing the injury occurred, (c) the domicile, residence,
nationality, place of incorporation and place of business of the parties, and (d) the place where the
relationship, if any, between the parties is centered”) (quoting Restatement (Second) Conflict of
Laws § 145 (1971))). In the instant case, Plaintiff Beaver is a resident of Connecticut and Plaintiff
New England is a Connecticut Limited Liability Company with its principal place of business in
Connecticut. (See DE 52 at 1). Aside from a business meeting with Inkmart executives in Georgia,
Plaintiffs’ franchises were being operated only in Connecticut. (See DE 52 at ¶ 6; DE 59-1 at 22425).
Given the Plaintiffs’ strong connection with Connecticut, I find that although this Court will
respect the choice of law provision in the Parties’ Franchise Agreement, such a provision should not
foreclose a claim in Connecticut under Connecticut’s own unfair and deceptive trade practices act.
7
However, as a Connecticut court is better fit to address whether to uphold the choice of law
provision in light of Connecticut’s strong public policy, I decline to address this issue at this late
stage in the proceedings. Thus, Plaintiffs’ CUTPA claim was rightfully dismissed, although it
should have been dismissed without prejudice. See, e.g., Weaver, 798 F. Supp. at 690 (S.D. Fla.
1992) (dismissing the plaintiff’s Montana Unfair Trade Practices Act because it was “inapplicable
to a lawsuit construed in accordance with the laws of the State of Florida”).5
III. CONCLUSION
In conclusion, I find that Plaintiffs do not have standing to assert a claim under FDUTPA.6
Further, as discussed above, Plaintiffs should not be precluded from bringing a claim under CUTPA
in their home state of Connecticut. Accordingly, it is hereby
ORDERED AND ADJUDGED that Inkmart's Motion to Dismiss Pursuant to Rule 12(b)(1)
(DE 83) is GRANTED IN PART and DENIED IN PART.
It is further
ORDERED AND ADJUDGED that:
1.
With regard to the FFA claim, Inkmart’s Motion is DENIED AS MOOT;
2.
With regard to the FDUTPA claim, Inkmart’s Motion is GRANTED, and Count 1
of the Amended Complaint (DE 52) is DISMISSED WITH PREJUDICE;
5
The Eleventh Circuit considered this case on appeal but did not address whether the parties’ contractual
choice of Florida law acted to bar the plaintiff’s foreign unfair trade practices claim. See Burger King Corp. v.
Weaver, 169 F.3d 1310, 1318 (11th Cir. 1999).
6
I note that even if I were to view the instant Motion as a “facial” attack on this Court’s subject matter
jurisdiction, the result would be the same, as Plaintiffs have presented no facts to support a finding that any alleged
misconduct occurred within the boundaries of Florida.
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3.
The Court’s previous Order (DE 46) dismissing Count 7 of Plaintiffs’ initial
Complaint (DE 1) alleging a cause of action under CUTPA is hereby AMENDED
to reflect a DISMISSAL WITHOUT PREJUDICE.
DONE AND ORDERED in Chambers at West Palm Beach, Florida, this 12th day of
September, 2012.
____________________________________
DONALD M. MIDDLEBROOKS
UNITED STATES DISTRICT JUDGE
Copies to:
Counsel of Record
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