Massey, Inc. et al v. Moe's Southwest Grill, LLC et al

Filing 501

ORDER denying Plaintiffs' 435 Motion for Reconsideration as to Court's Order on Spoliation Evidence, the Walkers' 440 Motion for Reconsideration as to Damages Claims of Scott Walker and Steven Walker is DENIED, and the Walkers' 441 Motion to Amend to Join JSW Cascade, LLC as a Party Plaintiff is GRANTED. Signed by Judge Richard W. Story on 7/1/2014. (cem)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
MASSEY, INC., et al.,

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Plaintiffs,
v.
MOE’S SOUTHWEST GRILL,
LLC, et al.,
Defendants.

CIVIL ACTION NO.
1:07-CV-741-RWS

ORDER
This case is before the Court on Plaintiffs’ Motion for Reconsideration as
to Court’s Order on Spoliation Evidence [435], Plaintiffs Scott Walker and
Steven Walker’s Motion for Reconsideration as to Damages Claims [440], and
Plaintiffs Scott Walker and Steven Walker’s Motion to Amend to Join JSW
Cascade, LLC as a Party Plaintiff [441]. After reviewing the record and the
Parties’ submissions, the Court enters the following Order.
I.

Motions for Reconsideration
A.

Legal Standard

Under the Local Rules of this Court, “[m]otions for reconsideration shall
not be filed as a matter of routine practice[,]” but only when “absolutely

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necessary.” LR 7.2(E). Such absolute necessity arises where there is “(1)
newly discovered evidence; (2) an intervening development or change in
controlling law; or (3) a need to correct a clear error of law or fact.” Bryan v.
Murphy, 246 F. Supp. 2d 1256, 1258-59 (N.D. Ga. 2003).
A motion for reconsideration may not be used “to present the court with
arguments already heard and dismissed or to repackage familiar arguments to
test whether the court will change its mind.” Id. at 1259. Nor may it be used
“to offer new legal theories or evidence that could have been presented in
conjunction with the previously filed motion or response, unless a reason is
given for failing to raise the issue at an earlier stage in the litigation.” Adler v.
Wallace Computer Servs., Inc., 202 F.R.D. 666, 675 (N.D. Ga. 2001). Finally,
“[a] motion for reconsideration is not an opportunity for the moving party . . . to
instruct the court on how the court ‘could have done it better’ the first time.”
Pres. Endangered Areas of Cobb’s History, Inc. v. U.S. Army Corps of Eng’rs,
916 F. Supp. 1557, 1560 (N.D. Ga. 1995), aff’d, 87 F.3d 1242 (11th Cir. 1996).
B.

Plaintiffs’ Motion Regarding Spoliation Evidence [435]

Plaintiffs move for reconsideration of the Court’s Order dated November
26, 2013 [432], granting Defendants’ motion to exclude evidence of spoliation
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damages. As Defendants note, Plaintiffs’ motion consists of recycled
arguments from their initial response brief. Therefore, the motion does not raise
proper grounds for reconsideration. However, even if the merits of Plaintiffs’
motion were considered, the result would not change.
Plaintiffs argue that the Court committed clear factual and legal errors in
its Order. According to Plaintiffs, the facts show that the missing “standards
and specifications” were at one time in Moe’s Southwest Grill, LLC’s
(“Moe’s”) possession, and the “wholly unexplained loss” of that evidence
warrants spoliation sanctions. However, Plaintiffs’ position oversimplifies the
record.
In its initial briefing on this issue, Moe’s did offer an explanation for why
it no longer possessed the “standards and specifications” sought by Plaintiffs.1
Email correspondence dated March 31, 2006, explains that “quality
specifications” are included in Moe’s individual vendor contracts. ([357-3] at
1-2 of 5.) Before litigation, those contracts were turned over to select members
of the franchisee-run Franchise Advisory Council. (Id.) Then, in 2007, Moe’s

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The Court agrees with Defendants that Plaintiffs have failed to identify
precisely which “standards and specifications” they believe were in Moe’s possession
(e.g., which products, over what time frame, etc.).
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sold its assets, including the contracts, to Focus Brands, Inc. After Plaintiffs
learned in April 2009 that Moe’s did not have the “standards and
specifications” in its possession, Plaintiffs subpoenaed numerous third-party
vendors and Focus Brands to get the information.
Thus, Plaintiffs’ argument based on “wholly unexplained loss of
evidence” is unpersuasive (now, as it was when the Court entered its Order).
As the Court previously concluded, Plaintiffs have not produced sufficient
evidence to support an inference of bad faith or culpability on Defendants’ part.
Therefore, even considering their repackaged argument, Plaintiffs’ Motion for
Reconsideration is DENIED.
C.

Walkers’ Motion Regarding Damages Claims [440]

Scott Walker and Steven Walker (“Walkers”) move for reconsideration
of the Court’s Order dated November 26, 2013 [432], granting Defendants’
motion for summary judgment as to the Walkers’ individual damages claims.
In its Order, the Court concluded that “the Walkers have not asserted a basis
under which they can personally recover.”2 (Order, [432] at 5 of 16.) The

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The Court recognizes that in limited circumstances, shareholders may have
standing to sue individually, rather than derivatively on behalf of the corporation. For
example, shareholder plaintiffs may allege “an injury which is separate and distinct
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Walkers’ present motion reiterates arguments made in their initial response
brief and therefore is not a valid basis for reconsideration.3 Accordingly, the
Walkers’ Motion for Reconsideration is DENIED, but the Court offers the
following to clarify its prior Order.
The Second Amended Complaint [94] identifies “Scott Walker and
Steven Walker d/b/a JSW Cascade, LLC” as Plaintiffs. The Walkers claim that
the case caption was changed4 in response to Defendants’ denial that JSW
Cascade, LLC was a Moe’s franchisee. By the time they filed their motion for

from that suffered by other shareholders, or a wrong involving a contractual right of a
shareholder . . . which exists independently of any right of the corporation.” Phoenix
Airline Serv.s, Inc. v. Metro Airlines, Inc., 397 S.E.2d 699, 702 (Ga. 1990). Here,
however, the Second Amended Complaint contains no allegations regarding special
injuries to the Walkers, separate and distinct from the injuries suffered by Scoven
Enterprises or JSW Cascade, LLC. Likewise, the wrongful conduct alleged in the
Second Amended Complaint – Defendants’ alleged fraudulent disclosures and
omissions of material facts in the UFOC – is not unique or special to the Walkers in
their individual capacities.
3

The Walkers raise one new legal theory in their reply brief in support of their
motion for reconsideration. The new theory is based on the “alter ego” doctrine.
However, Plaintiffs cite no relevant authority for their argument. Furthermore, they
could have raised this argument during briefing on Defendants’ motion for summary
judgment (or indeed, in their brief in support of the motion for reconsideration), but
failed to do so. Accordingly, that argument is also not a valid basis for
reconsideration.
4

In the Original Complaint, the Walkers were individual named plaintiffs and
JSW Cascade, LLC was a separate named plaintiff.
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summary judgment against the Walkers, however, Defendants clearly
recognized that JSW Cascade, LLC was in fact a franchisee that had potential
claims against Defendants. (See Def.s’ MSJ Br. on Walkers’ Damages Claims,
[349-1] at 3 of 11 (“Scoven Enterprises is the 100% owner of two entities that
entered into franchise agreements with Moe’s . . . [including] JSW Cascade,
LLC . . ., which executed a Franchise Agreement with Moe’s on February 20,
2004 . . . .”); at 7 of 11 (“The damages the Walkers claim for the Moe’s
Cascade restaurant are for additional operating costs due to ‘undisclosed
sheltered income arrangements.’ The Walkers did not pay those costs, JSW
Cascade, LLC did.”).)
To the extent the Walkers have been standing in the place of JSW
Cascade, LLC,5 therefore, their claims are not dismissed. To avoid confusion
going forward, the Court will allow Plaintiffs to amend the Second Amended
Complaint to reflect that JSW Cascade, LLC is the proper Plaintiff. (See Part
II, infra.)

5

There are remaining franchisee claims in this suit. In a prior Order [285], the
Court found that material factual disputes precluded summary judgment on Counts I,
II, and III of the Second Amended Complaint (i.e., the Counts common to all
remaining Plaintiffs). Thus, JSW Cascade, LLC may be entitled to damages along
with the other franchisees.
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II.

Walkers’ Motion to Amend [441]
The Walkers move to amend the Second Amended Complaint to join

JSW Cascade, LLC as a party plaintiff. For the reasons stated above, Plaintiffs’
motion is GRANTED. They may replace “Steve Walker and Scott Walker
d/b/a JSW Cascade, LLC” with “JSW Cascade, LLC” in the case caption. The
Court finds that Plaintiffs have shown good cause as to why this amendment is
proper.
The case is styled in its current fashion because of Defendants’ initial
denial that JSW Cascade, LLC was a Moe’s franchisee. However, Defendants
now readily admit that the LLC was a franchisee and, unlike the Walkers, may
be entitled to damages against Moe’s. Plaintiffs are not seeking to add new
claims or factual allegations, and Defendants have been aware of JSW Cascade,
LLC’s claims from the outset of this suit. No additional discovery will be
required. Thus, Defendants will not be unduly prejudiced by this late
amendment.
Conclusion
Based on the foregoing, Plaintiffs’ Motion for Reconsideration as to
Court’s Order on Spoliation Evidence [435] is DENIED, the Walkers’ Motion
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for Reconsideration as to Damages Claims of Scott Walker and Steven Walker
[440] is DENIED, and the Walkers’ Motion to Amend to Join JSW Cascade,
LLC as a Party Plaintiff is GRANTED.

SO ORDERED, this 1st day of July, 2014.

________________________________
RICHARD W. STORY
United States District Judge

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