Vivint, Inc. v. Orr

Filing 10

OPINION AND ORDER: 1) 3 Motion to Dismiss is DENIED without prejudice. 2) 6 Motion to Amend is DENIED. 3) If Vivint, Inc. wishes to file an amended complaint consistent w this opinion, it must do so w/in 14 days from the entry date of this order. Failure to do so will result in dismissal of this action. Signed by Judge Karen K. Caldwell on 10/27/2016. (SCD)cc: COR

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
CENTRAL DIVISION
AT LEXINGTON
VIVINT, INC.,

CIVIL ACTION NO. 5:16-141-KKC

Plaintiff,
V.

OPINION AND ORDER

ALEXANDER ORR,
Defendant.

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This matter is before the Court on the defendant's motion to dismiss (DE 3) and the
plaintiff’s motion to amend its complaint (DE 6). Neither the plaintiff’s complaint nor its
tendered amended complaint meet the pleading standards set forth in Bell Atlantic v.
Twombly, 550 U.S. 544 (2007) and Ashcraft v. Iqbal, 556 U.S. 662 (2009). Given the early
stages of this proceeding, however, and the Court’s preference for deciding matters on their
merits, the Court will grant plaintiff Vivint, Inc. an opportunity to amend its complaint to
address the pleading deficiencies explained in this opinion.
With his motion, the defendant Alexander Orr argues that Vivint’s complaint does
not meet federal pleading standards. Under those standards, “[w]hile 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.@
Twombly, 550 U.S. at 555 (internal citations and brackets omitted). In order to survive a
motion to dismiss, the factual allegations in the complaint Amust be enough to raise a right
to relief above the speculative level.@ Id. The plaintiff must plead Aenough facts to state a

claim to relief that is plausible on its face@ and to nudge his claim Aacross the line from
conceivable to plausible.@ Id. at 570.
In its complaint, Vivint alleges that it provides home security and energy
conservation services to residential and commercial customers. It alleges that one of the
products it sells is called the Doorbell Camera system, which is a wireless doorbell system
that permits customers to monitor their home and to lock and unlock doors at their home
through their home computer or smart phone. Vivint alleges that it is the sole producer and
seller of the Doorbell Camera system and that the system is sold only in conjunction with
its services. Vivint alleges that it does not permit any other individual or business to sell
the system.
Vivint alleges that defendant Alexander Orr, however, sold at least 12 units of the
Doorbell Camera system to an individual named William R. Schmakel, who then then
attempted to sell those systems on eBay and other websites. (DE 1-1, Complaint ¶¶ 12-13,
19.) Vivint alleges that it did not sell the Doorbell Camera system to Orr and has never had
any association with Orr. Vivint alleges, “[o]n information and belief,” that Orr obtained the
systems “thorough unlawful means, including by stealing the units or by otherwise
obtaining them without payment to Vivint and without Vivint’s authorization or
permission.” (DE 1-1, Complaint ¶¶ 16, 23, 30, 36, 47.)
Vivint does not set forth sufficient facts for this Court to draw the reasonable
inference that Orr is liable for the misconduct alleged, i.e., stealing the Doorbell Camera
systems. Iqbal, 556 U.S. at 678. In arguing that its complaint is sufficient, Vivint points to
the following allegations:
1) Vivint is the only seller of the Doorbell Camera system;

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2) Vivint sells the systems only when it installs them in conjunction with Vivent’s
services; and
3) the systems that Schmakel attempted to sell online were sold in their original
Vivint packaging.
While these facts are certainly consistent with Vivint’s allegation that Orr obtained the
systems illegally, that is not sufficient. “Where a complaint pleads facts that are ‘merely
consistent with’ a defendant's liability, it ‘stops short of the line between possibility and
plausibility of ‘entitlement to relief.’” Id. (quoting Twombly, 550 U.S. at 557).“The
plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a
sheer possibility that a defendant has acted unlawfully.” Id.
Vivint alleges sufficient facts to permit an inference that the systems that Schmakel
attempted to sell were illegally obtained by someone but Vivint does not allege any facts
from which the Court can draw the reasonable inference that Orr is the one who illegally
obtained them. This is true even though Vivint alleges that its employee spoke with
Schmakel about the systems Schmakel was attempting to sell. Vivint does not allege that
Schmakel told the employee that he received the systems from Orr.
In its response Vivint states that “[a]s stated in the Complaint, Vivint has reason to
believe, based on its prior investigation” that Orr sold the systems to Schmakel. (DE 5,
Response at 2.) For this assertion, Vivint cites to paragraph 12 of its complaint. But Vivint’s
complaint does not state in paragraph 12 or anywhere that Vivint’s assertion that Orr sold
the systems to Schmakel is based on an investigation. The complaint does not mention an
investigation.
Instead, the complaint alleges that Vivint’s assertion that Orr sold the systems to
Schmakel is based “[o]n information and belief.” (DE 1-1, Complaint, ¶ 12.) But “the mere

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fact that someone believes something to be true does not create a plausible inference that it
is true.” In re Darvocet, Darvon, & Propoxyphene Prods. Liab. Litig., 756 F.3d 917, 931 (6th
Cir.2014). The Sixth Circuit has recognized that “pleading on information and belief may be
permissible in certain circumstances. For example, sometimes a plaintiff may lack personal
knowledge of a fact, but have ‘sufficient data to justify interposing an allegation on the
subject’ or be required to ‘rely on information furnished by others.’” Starkey v. JPMorgan
Chase Bank, NA, 573 F. App'x 444, 447–48 (6th Cir. 2014) (quoting Wright & Miller, 5 Fed.
Prac. & Proc. Civ. § 1224 (3d ed.2012)). “However, pleading on information and belief is not
an appropriate form of pleading if the matter is within the personal knowledge of the
pleader.” Id.
While, if Orr stole the systems, Vivint may not have personal knowledge of how or when
he did it, Vivint does have personal knowledge of the facts that have led it to the conclusion
that Orr stole the systems. Whether those facts arrived from Vivint’s “investigation,” its
conversation with Schmakel, or some other means, Vivint must plead enough of those facts
to permit a reasonable inference that Orr stole the systems. As the complaint stands, there
are no facts that connect the stolen systems to Orr.
Vivint has tendered an amended complaint that it asserts adds two additional
allegations: that the systems are removed from their original packaging when installed and
that the systems at issue were not previously installed. These added allegations support
Vivint’s claim that the systems at issue were actually stolen, and not purchased from a
third party who had legitimately purchased the systems from Vivint. Nevertheless, these
added allegations still do nothing to connect Orr with the stolen systems. Accordingly, the
Court will deny Vivint’s motion to amend its complaint.

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Nevertheless, in this case, justice requires that the Court permit Vivint an opportunity
to amend its pleading with the benefit of this Court’s ruling. This matter is in its early
stages and matters should be settled on their merits when possible. Accordingly, the Court
hereby ORDERS as follows:

1) defendant Orr’s motion to dismiss (DE 3) is DENIED without prejudice;
2) plaintiff Vivint, Inc.’s motion to amend (DE 6) is DENIED; and
3) if Vivint, Inc. wishes to file an amended complaint consistent with this opinion, it
must do so within 14 days from the entry date of this order. Failure to do so will
result in dismissal of this action.

Dated October 27, 2016.

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