Scooter's Chicken International, L.L.C. et al v. Sunday Dinner, L.L.C. et al

Filing 22

ORDER & REASONS granting 13 Motion to Dismiss, without prejudice, for Lack of Jurisdiction. Signed by Judge Martin L.C. Feldman on 7/23/2014. (caa)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
SCOOTER'S CHICKEN
INTERNATIONAL, LLC

CIVIL ACTION

v.

NO. 13-6766

SUNDAY DINNER, LLC, ET AL.

SECTION "F"

ORDER AND REASONS
Before the Court is the defendants' motion to dismiss or
transfer.

For the reasons that follow, the motion is GRANTED, and

the plaintiff's lawsuit is dismissed without prejudice.
Background
This litigation arises out of an alleged scheme orchestrated
by a franchisee of Scooter's Chicken in which the franchisee
misappropriated Scooter's intellectual property and proprietary
information and, without authorization, transformed the restaurant
into Rooster's Chicken, a carbon copy of Scooter's.
In

2007

Brandon

J.

Hidalgo

founded

Scooter's

Chicken

International, L.L.C.,1 a casual dining restaurant chain that
operated under the trade name of Scooter's Chicken.

Hidalgo

created the menu, recipes, restaurant layout, images, and logos for
Scooter's Chicken. His concept was designed and marketed to become

1

Scooter's Chicken International's principle place of
business was located in Metairie, Louisiana.
1

a national brand with franchising as the catalyst for expansion.
The company grew and multiple Scooter's Chicken restaurants opened
across south Louisiana and Mississippi.
Larry Williamson was the landlord and owner of the property at
2501

Highway

11

North,

in

Picayune,

Mississippi,

where

one

Scooter's Chicken franchise was located, Store No. 2202. Store No.
2202 was a large, free-standing building that Hidalgo envisioned
would serve as a flagship restaurant for Scooter's.
Restaurant

that

had

opened

there

in

May

2012.

The Scooter's
But

it

was

unprofitable, and the franchisee intended to close Store No. 2202.
In early 2013 Hidalgo began discussions with Williamson about the
prospect of Williamson taking over as franchisee of Store No. 2202.
Williamson expressed interest in the Scooter's Chicken concept,
product, and franchise development.
They reached a deal.

Williamson, on behalf of his company

Sunday Dinner, L.L.C., entered into a franchise agreement with
Hildago, on behalf of Scooter's Chicken International, L.L.C. for
the operation of the Scooter's Chicken restaurant at Store No.
2202.

The franchise agreement was executed on March 6, 2013, and

had an initial term of 20 years.

In entering into the agreement,

Hidalgo agreed to waive the initial $25,000 franchise fee; he also
agreed to personally train Williamson, his managers, and his
employees

in

Scooter's

secrets, and recipes.

Chicken

operations,

procedures,

trade

To fulfill his part, Hidalgo traveled daily

2

from Metairie, Louisiana to Picayune, Mississippi to assist in
training the employees, marketing, and to

help the overall

performance of Scooter's Chicken Store No. 2202.
Store No. 2202 was (allegedly) a success.

Williamson was so

pleased that he inquired about building additional franchises. And
Hidalgo claims he was approached by numerous investors and brokers
who were interested in expanding the franchise.
But the relationship between Hidalgo and Williamson soured.
After a couple months of operations, Williamson began excluding
Hidalgo.

Store No. 2202's manager told Hidalgo not to return, and

ordered him to stop training and even speaking with employees. All
said to be part of Williamson's alleged scheme to eliminate
Hidalgo's involvement, so that he could transform Scooter's Chicken
into a carbon copy restaurant operating under a different name. In
furtherance of Williamson's plan, Store No. 2202 violated Scooter's
Chicken company protocol and procedures:

it failed to use proper

sales specials; failed to abide by labor reporting guidelines;
failed to follow food standard policies; sold unapproved products;
marketed products without approval; improperly used the company
logo; and failed to report profits and losses.

All violations of

the franchise agreement.
On May 17, 2013 Hidalgo, by email, demanded that Williamson
and Sunday Dinner, L.L.C. cease and desist from operating Store No.
2202, and that they remove all signs, logos, food and intellectual

3

property of Scooter's Chicken. Williamson continued to operate the
fast food chicken restaurant, albeit by a different name; he
painted

over

all

Scooter's

signs

and

wrote

"Rooster's".2

Williamson continued to use all of the menus, products, techniques,
and

intellectual

property

that

Hidalgo

exclusive use of his Scooter's franchise.

had

created

for

the

To this day, it is

alleged, Williamson and Sunday Dinner continue to operate and
promote

Rooster's

Chicken,

all

the

while

using

Scooter's

proprietary information and intellectual property.
On December 23, 2013 Scooter's Chicken International, L.L.C.
sued Sunday Dinner, L.L.C. and Larry Williamson for breach of
contract, breach of the covenant of good faith and fair dealing,
detrimental reliance, intentional misrepresentation, unfair trade
practices, and tortious interference with contract.

Scooter's

Chicken seeks general damages, permanent injunctive relief, and
attorney's fees and costs. Denying the existence of jurisdictional
amount, the defendants now seek dismissal of the plaintiff's claims
for lack of subject matter or personal jurisdiction; alternatively,
they request that venue be transferred.
I.
"When a Rule 12(b)(1) motion is filed in conjunction with
other Rule 12 motions, the Court should consider the Rule 12(b)(1)

2

Hidalgo discovered this development around July 18,

2013.
4

jurisdictional attack before addressing any attack on the merits."
Morris v. Livingston, 739 F.3d 740, 745 (5th Cir. 2014)(quoting
Randall D. Wolcott, M.D., P.A. v. Sebelius, 635 F.3d 757, 762 (5th
Cir. 2011)).

Motions filed under Rule 12(b)(1) of the Federal

Rules of Civil Procedure allow a party to challenge the Court’s
subject matter jurisdiction.

Fed.R.Civ.P. 12(b)(1).

"The burden

of proof for a Rule 12(b)(1) motion to dismiss is on the party
asserting jurisdiction."

Alfonso v. United States, --- F.3d ---,

2014 WL 1884891, at *1 (5th Cir. May 12, 2014)(quoting In re FEMA
Trailer Formaldehyde Prods. Liab. Litig., 646 F.3d 185, 189 (5th
Cir. 2011)(internal citation and quotation marks omitted)). "As a
court of limited jurisdiction, a federal court must affirmatively
ascertain subject-matter jurisdiction before adjudicating a suit.
The district court should dismiss where it appears certain that the
plaintiff cannot prove a plausible set of facts that establish
subject-matter

jurisdiction."

Venable

v.

Louisiana

Workers'

Compensation Corp., 740 F.3d 937, 941 (5th Cir. 2014)(citations and
internal quotations omitted).

The Court may find a plausible set

of facts to support subject matter jurisdiction by considering any
of the following: “(1) the complaint alone; (2) the complaint
supplemented by undisputed facts evidenced in the record; or (3)
the complaint supplemented by undisputed facts plus the court's
resolution of disputed facts.”

Spotts v. United States, 613 F.3d

559, 565-66 (5th Cir. 2010)(citation omitted); Ambraco, Inc. v.

5

Clipper Faith MV, 570 F.3d 233, 238 (5th Cir. 2009)(in considering
a Rule 12(b)(1) motion to dismiss, "the court is permitted to look
at evidence in the record beyond simply those facts alleged in the
complaint and its proper attachments"), cert. denied, 588 U.S. 1111
(2009).
The standard of review applicable to motions to dismiss under
Rule 12(b)(1) is similar to that applicable to motions to dismiss
under Rule 12(b)(6).

See Williams v. Wynne, 533 F.3d 360, 364-65

n.2 (5th Cir. 2008)(observing that the Rule 12(b)(1) and Rule
12(b)(6) standards are similar, but noting that applying the Rule
12(b)(1) standard permits the Court to consider a broader range of
materials in resolving the motion). "'[T]he central issue [in
deciding a motion to dismiss] is whether, in the light most
favorable to the plaintiff, the complaint states a valid claim for
relief.'"

Gentilello

v.

2010)(citation omitted).

Rege,

627

F.3d

540,

544

(5th

Cir.

To survive a Rule 12 motion to dismiss,

“a complaint must contain sufficient factual matter, accepted as
true, to state a claim to relief that is plausible on its face.’”
Gonzalez v. Kay, 577 F.3d 600, 603 (5th Cir. 2009)(quoting Ashcroft
v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949 (2009))(internal
quotation marks omitted).

“A claim has facial plausibility when

the plaintiff pleads factual content that allows the court to draw
the reasonable inference that the defendant is liable for the
misconduct alleged.” Iqbal, 129 S. Ct. at 1949.

6

II.
A.
The

plaintiff

attempts

to

invoke

this

Court's

diversity

jurisdiction. 28 U.S.C. § 1332 requires "the matter in controversy
[to] exceed[ ] the sum or value of $75,000, exclusive of interest
and costs, and [be] between ... citizens of different States...."
28 U.S.C. § 1332; Mumfrey v. CVS Pharmacy, Inc., 719 F.3d 392, 397
(5th

Cir.

2013).

The

parties

do

not

dispute

diversity

of

citizenship. Instead, the defendants charge that the plaintiff has
failed to satisfy its burden of establishing that the amount in
controversy requirement is met.

The Court agrees.

When, as here, a plaintiff fails in his complaint to allege a
specific amount of damages, he must when challenged prove by a
preponderance of the evidence that the amount in controversy
exceeds the jurisdictional amount.

St. Paul Reinsurance Co., Ltd.

v. Greenberg, 134 F.3d 1250, 1253 (5th Cir. 1998)(citing Allen v.
R&H Oil & Gas. Co., 63 F.3d 1326, 1335 (5th Cir. 1995)).

If it is

not facially apparent from the complaint that the claims exceed
$75,000, the Court may look to summary judgment-type evidence to
ascertain the amount in controversy.

Id.

B.
The plaintiff's sole allegation concerning subject matter
jurisdiction is "[t]his Court has jurisdiction pursuant to 28
U.S.C. § 1332, because there is diversity of citizenship and the

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amount in controversy exceeds $75,000.00, exclusive of costs and
interest." The plaintiff seeks to recover damages for breach of
contract,

detrimental

reliance,

unfair

trade

practices,

and

tortious interference with contract; the plaintiff also seeks
injunctive relief in connection with the defendants' breach of the
franchise

agreement

information.3

and

misappropriation

of

proprietary

Beyond referencing how to calculate royalty fees,

service fees, and advertising fees (all percentages of sales), the
complaint offers no guidance for determining how much is at stake
in this litigation. And it is not facially-apparent that the
plaintiff's claims exceed the jurisdictional threshold.
summary

judgment-type

evidence

likewise

fails

to

Resort to

advance

the

quantum inquiry here.
In support of their contention that the amount in controversy
requirement is not met, the defendants submit that they stopped
operating the franchise, or any restaurant at all, after seven
months because it was not profitable.

As to the lost fees and

royalties that the plaintiff seeks to recover, the defendants
submit invoices for combined fees and royalties in the scant amount
of $2,396 for March 2013; using this to estimate the seven months
of lost royalties and fees, the defendants estimate that this

3

"The amount in controversy in an action for ...
injunctive relief is the value of the right to be protected or the
extent of the injury to be prevented." St. Paul Reinsurance Co.,
Ltd. v. Greenberg, 134 F.3d 1250, 1252-53 (5th Cir. 1998)(citation
omitted).
8

dispute involves only around $17,000, well below the jurisdictional
threshold.

Even

assuming

that

defendants

stole

proprietary

information, they submit that there is no reasonable basis to
believe that any damages, together with the lost royalties and
fees, would exceed $75,000.

The plaintiff counters, in conclusory

fashion, that the term of the franchise agreement was for 20 years,
not seven months, and that in addition to failure to pay royalties
and fees, plaintiff seeks to recover for stolen intellectual
property and attorney's fees.

The plaintiff offers nothing to

assist the Court in quantifying the alleged damages; rather, they
merely suggest smugly "[i]t goes without saying that [p]laintiff's
total damage claims far exceed $17,000.00."4

The Court disagrees.

The Court declines to indulge the plaintiff's unsupported
conclusions regarding the jurisdictional amount in controversy.
The only evidence before the Court are the invoices for nominal
royalty fees.

That the term of the franchise was for 20 years does

not serve the plaintiff to increase the amount in controversy
where, as the plaintiff points out, royalty fees are calculated as
a percentage of gross sales and, here, the franchise ceased
operations not long after it switched to defendants' hands.

In

fact, neither side has offered any evidence to assist the Court in
ascertaining actual potential damages for the contract-related

4

Alternatively, the plaintiff urges the Court to dismiss
their case without prejudice so that it may be re-filed in state
court.
9

claims; likewise, there is nothing in this record to suggest any
reasonable estimate of the value of the proprietary information
allegedly stolen.

The plaintiff's unsupported claims, without

more, fall short of establishing that the amount in controversy,
more likely than not, exceeds $75,000.

Plaintiff has failed to

meet its burden.
Accordingly, the defendants' motion to dismiss is GRANTED; the
plaintiff's lawsuit is dismissed without prejudice for lack of
subject matter jurisdiction.
New Orleans, Louisiana, July 23, 2014

______________________________
MARTIN L. C. FELDMAN
UNITED STATES DISTRICT JUDGE

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