Baba Lodging, L.L.C. v. Wyndham Worldwide Operations, Inc. et al
Filing
61
MEMORANDUM RULING granting 39 Motion to Dismiss. Signed by Judge S Maurice Hicks on 3/19/2012. (crt,McDonnell, D)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
SHREVEPORT DIVISION
BABA LODGING, LLC
CIVIL ACTION 10-1750
VERSUS
JUDGE S. MAURICE HICKS, JR.
WYNDHAM WORLDWIDE
OPERATIONS, INC., ET AL.
MAGISTRATE JUDGE HORNSBY
MEMORANDUM RULING
Before the Court is a Motion to Dismiss Pursuant to Rule 12(c) (Record Document
39) filed by Defendant Wyndham Worldwide Operations, Inc. (“WWO”). Specifically, WWO
moves the Court to dismiss all claims against it because Plaintiff BABA Lodging, Inc.
(“BABA”) has not alleged, and cannot allege, that it is a business competitor or individual
consumer under the Louisiana Unfair Trade Practices and Consumer Protection Law, La.
R.S. 51:1405 et seq. (“LUTPA”). See id. BABA opposed the motion, arguing that it has
stated a claim against WWO under the LUTPA and negligence theories. See Record
Document 49. For the reasons which follow, the Motion to Dismiss is GRANTED.
I.
BACKGROUND.
BABA owns and operates a hotel at 1984 Airline Drive, Bossier City, Louisiana that
operated as a Howard Johnson from March 13, 2008 to October 1, 2010. See Petition
(Record Document 1-1) at ¶2. BABA alleges that WWO, a foreign corporation who handles
all hotel operating systems for Howard Johnson hotels, directed BABA to install the
software of Brilliant Hotelsoftware, Inc. (“Brilliant”), a co-defendant in this matter, as BABA’s
hotel operating system in July 2008. See id. at ¶¶ 1, 3. BABA contends that WWO and
Brilliant operate a joint venture in the hotel operating system software business and further
alleges that WWO uses its influence over its subsidiaries to compel the use of Brilliant’s
product and technicians. See id. at ¶4.
BABA claims that WWO had various of its employees, along with other individuals,
manipulate BABA’s hotel operating software to make BABA overpay certain franchise fees,
pay fees not otherwise owed, divert customers to other hotels, and improperly show clean
rooms as dirty ones, and thus unavailable to guests. See id. at ¶¶ 6-10. BABA contends
that these actions caused loss of revenue and patrons and constituted unfair trade
practices in violation of the LUPTA. See id. at ¶¶ 11, 12. In its answer, WWO denied these
allegations. See Record Document 4. WWO has now filed the instant motion seeking
dismissal pursuant to Rule 12(c) for BABA’s failure to state a claim. See Record Document
39.
II.
LAW AND ANALYSIS.
A.
Rule 12(c) Standard.
Federal Rule of Civil Procedure 12(c) provides that “[a]fter the pleadings are
closed--but early enough not to delay trial–a party may move for judgment on the
pleadings.” F.R.C.P. 12(c). “Once a responsive pleading has been filed, a motion to
dismiss for failure to state a claim should properly be filed as a motion for judgment on the
pleadings.” In re Enron Corp. Securities, Derivative & “ERISA” Litigation, 439 F.Supp.2d
692, 695 -696 (S.D.Tex. 2006) citing Jones v. Greninger, 188 F.3d 322, 324 (5th Cir.1999)
(per curiam).
In assessing a motion to dismiss for failure to state a claim, the court must accept
as true all well-pleaded facts in the complaint and view those facts in the light most
favorable to the plaintiff. See In re Katrina Canal Breaches Litigation, 495 F.3d 191, 205
(5th Cir.2007). “To survive a Rule 12(b)(6) motion to dismiss, a complaint ‘does not need
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detailed factual allegations,’ but must provide the plaintiff’s grounds for entitlement to
relief-including factual allegations that when assumed to be true ‘raise a right to relief above
the speculative level.’” Cuvillier v. Taylor, 503 F.3d 397, 401 (5th Cir.2007), quoting Bell
Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1964–65 (2007).
B.
LUTPA.
Section 1409(A) of the LUTPA provides, in pertinent part:
Any person who suffers any ascertainable loss of money or movable property,
corporeal or incorporeal, as a result of the use or employment by another person of
an unfair or deceptive method, act, or practice declared unlawful by R.S. 51:1405,
may bring an action individually but not in a representative capacity to recover actual
damages.
La. R.S. 51:1409(A). Notwithstanding what appears to be inclusive language, the Fifth
Circuit has consistently held that the right to bring a claim under the LUPTA belongs only
to individual consumers and business competitors. See Turbos de Acero de Mexico, S.A.
v. American International Investment Corp., 292 F.3d 471, 480 (5th Cir. 2002).
WWO has moved for dismissal of BABA’s LUTPA claims, arguing that BABA has
failed to state a claim against WWO under the requirements of the LUTPA.
specifically, WWO argued:
First, BABA does not allege that it manufactures or operates hotel operating
systems in competition with WWO. Second, BABA does not allege it is an
individual consumer, but rather acknowledges that it “owns and operates a
hotel.” [Petition, ¶ 2]. It is well established in the Fifth Circuit that LUTPA
claims may be advanced only by business competitors or individual
consumers. See, e.g., Turbos de Acero de Mexico, S.A. v. American Int’l Inv.
Corp., 292 F.3d 471, 480 (5th Cir. 2002); Orthopedic & Sports Injury Clinic
v. Wang Labs., Inc., 922 F.2d 220, 226-27 (5th Cir. 1991); Central Healthcare
Servs., Inc. v. Eterna Petersburg, Inc., 2004 WL 1823036 at *2 (E.D. La.);
Total Sleep Diagnostics, Inc. v. United Healthcare Ins. Co., 2009 WL 152537
(E.D.La. Jan. 21, 2009); Washington Mut. Bank v. Monticello, 976 So.2d 251,
258 (La. App. 3d Cir. 2008). BABA has not alleged any facts to support or
establish that it is either a business competitor or an individual consumer
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More
under LUTPA and thus the Petition should be dismissed for failure to state
a claim and for lack of standing.
Record Document 39-1 at 5.1 The Court must first determine if BABA and WWO are
business competitors. If the analysis reveals that BABA and WWO are not business
competitors, then the Court will move on to consider the scope of LUTPA standing.
1.
Business Competitors.
“To be considered a business competitor, the plaintiff must establish [it] engages in
business that competes directly or indirectly with the defendant as a business competitor.”
Washington Mut. Bank v. Monticello, 2007-1018 (La.App. 3 Cir. 2/6/08), 976 So.2d 251,
258. Here, the Court notes that BABA has failed to offer factual support for a claim that it
manufactures or operates hotel operating systems in competition with WWO.
Instead, relying upon Morris v. Rental Tools, Inc., 435 So.2d 528, 532 (La.App. 5
Cir.1983) and Jefferson v. Chevron U.S.A., Inc., 98-0254 (La.App. 4 Cir. 5/20/98), 713
So.2d 785, 792-793, BABA contends it has established that WWO is a business competitor
and conspirator because of WWO’s alleged unilateral benefit at the expense of hotel
owners such as BABA. See Record Document 49 at 3-5. More specifically, BABA
contends that WWO is a business competitor for the following reasons:
The practices of [WWO] are deceptive, misleading, and they allow [WWO] to
unfairly compete with the plaintiff by diverting patrons of plaintiff’s
establishment to other franchisees affiliated with [WWO] by gathering the
personal information of plaintiff’s patrons and discounting rates at other
locations surrounding plaintiff’s hotel all to the detriment of plaintiff.
1
In its opposition, BABA argues that “[WWO] has established itself as a business
competitor.” Record Document 49 at 5. BABA does not contend that it is an individual
consumer; therefore, the Court will assume any such argument is abandoned and will not
address the individual consumer issue.
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...
[BABA] has demonstrated [WWO’s] status as a business competitor and
conspirator because [WWO] has set itself up to benefit unilaterally at the
expense of hotel owners, such as the plaintiff, who are the franchisees of
subsidiary corporations of [WWO].
Id. at 4-5. The Court finds this reasoning to be unpersuasive.
In Morris, the defendants argued that plaintiff lacked standing under the LUTPA as
he was not actually competing against them. Morris, 435 So.2d at 532. Conversely, the
plaintiff claimed he was both an actual business competitor, as well as a potential
competitor. See id. The appellate court held that the plaintiff had standing as a business
competitor because he had been preparing to compete with defendants in the leasing of
oilfield service equipment and the parties’ non-compete agreement expressly contemplated
that plaintiff was a potential competitor. See id. at 532-533. The appellate court further
noted that “the trader whose methods are assailed as unfair must have present or potential
rivals in trade whose business will be, or is likely to be, lessened or otherwise injured.” Id.
at 533.
In Jefferson, the plaintiffs were individual service station owners/dealers that
purchased gasoline and diesel fuel from Chevron. See Jefferson, 713 So.2d at 787-788.
As to their claim against Chevron, the plaintiffs maintained that “Chevron arbitrarily
manipulate[d] the price of the fuel it sold to [them]” and prohibited them from purchasing
fuel at lower prices, giving Chevron a competitive advantage at its own co-op stations. Id.
at 788. It does not appear that the Jefferson court focused on standing; however, the court
did note that there is a private right of action under the LUTPA for business competitors,
“such as the plaintiff dealers in this case.” Id. at 792. A review of the court’s LUTPA
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analysis reveals that the plaintiffs clearly had standing under LUTPA because Chevron
“[sold] fuels directly to the public through its company operated stations which also compete
with plaintiffs.” Id. at 791. The focus of the analysis was not Chevron’s alleged unfair and
deceptive conduct, but rather that the plaintiffs and Chevron were in the same type of
business and in competition with each other. See id. at 793.
Neither Morris nor Jefferson supports BABA’s contention that it and WWO are
business competitors under the LUTPA. As to the standard set forth in Morris, BABA has
not plead that it is either a present or potential rival in trade, i.e., a competitor, with WWO.
BABA’s reliance on Jefferson is likewise misplaced. BABA contends that WWO’s alleged
conduct diverted patrons to other hotel franchises somehow affiliated with WWO. Under
Jefferson, the business competitors in such a scenario would be BABA and the other
hotels, not BABA and WWO. Therefore, the Court finds that BABA and WWO are not
business competitors under the LUTPA.
2.
Standing.
BABA further relies upon Cheramie Services, Inc. vs. Shell Deepwater Production,
Inc., 2009-1633 (La. 4/23/10), 35 So. 3d 1053, and argues that the Louisiana Supreme
Court has now ruled against limiting LUTPA standing. In Cheramie, a plurality opinion, the
Louisiana Supreme Court held:
Based on the language of the statute [the LUPTA], which does not contain
a clear, unequivocal and affirmative expression that the private right of action
provided in LSA–R.S. 51:1409(A) extends only to business competitors and
consumers, LUTPA does not exclude other persons who assert a “loss of
money or . . . property . . . as a result of the use or employment by another
person of an unfair or deceptive method, act, or practice.” Contrary holdings
are hereby repudiated, because any limitation must be contained in the
language of the statute.
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Id. at 1058. However, the portion of the opinion concerning LUPTA standing was joined
by only three out of seven justices.2 Cheramie, therefore, does not represent a holding of
the majority of the Louisiana Supreme Court and does not have binding effect on Louisiana
state courts or this Court. See Chaney v. Travelers Ins. Co., 249 So.2d 181, 184 (La.
1971) (appellate court erred in considering itself bound by a plurality opinion of the
Louisiana Supreme Court); Citizen Committee for Better Law Enforcement v. City of
Lafayette, 95-1630 (La.App. 3 Cir. 11/20/96), 685 So.2d 289, 293 (“Nevertheless, Alliance
was a plurality opinion, with three judges dissenting and one concurring. Justice Johnson
in her concurrence stated that she did not agree with the plurality opinion finding standing
in favor of the plaintiffs. As a result, the holding of the plurality opinion is of little value as
precedent and should properly be limited to the facts of that case only.”).
As non-binding precedent, it appears to the undersigned that Cheramie does not
change the state of the law concerning standing under the LUPTA. Moreover, in the
absence of a majority opinion of the Louisiana Supreme Court definitively interpreting
standing under LUPTA, the Court will follow the binding Fifth Circuit holding in Turbos, 292
F.3d at 480, and dismiss BABA’s claims under the LUPTA for lack of standing.3
2
Justice Kimball did not participate. See Cheramie, 35 So.3d at 1054 n. 1. Justice
Knoll concurred in the result only. See id. at 1065. Justice Guidry stated that the standing
discussion was dicta. See id. Justice Johnson expressly disagreed with the standing
discussion. See id. at 1063-1065.
3
This Court is aware of the opinion in Home Builders Ass’n of Northwest Louisiana
v. Martin, No. 09-1679, 2010 WL 5109987 (W.D. La. 12/8/10), a case where the parties
consented to trial before a United States Magistrate Judge. This Court notes that the
Magistrate Judge did not discuss the precedential value of Cheramie in his ruling, as all
parties conceded in briefing that Cheramie changed the law. Therefore, the instant matter
is distinguishable because WWO specifically argued that “Cheramie Services is a plurality
opinion and therefore not precedential authority on the LUTPA standing issue.” Record
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C.
Negligence.
WWO’s Rule 12(c) motion focused on LUTPA; however, in its opposition brief, BABA
argues that “[p]lain and simple, [it] has stated a claim against the defendants for their
negligence and has demonstrated how it was damaged as a result thereof.” Record
Document 49 at 2. Throughout the opposition, BABA continues to maintain that its “petition
states a claim at minimum under the theory of negligence” and has stated several claims
against WWO “under theories of negligence, gross negligence, and intentional actions.”
Id. at 3, 5.
The Court’s review of the Petition reveals that BABA’s factual allegations do not
raise a right to relief under negligence theories above the speculative level. See Cuvillier
v. Taylor, 503 F.3d at 401. Federal Rule of Civil Procedure 8(a)(2) provides:
(a)
A pleading that states a claim for relief must contain:
(2)
a short and plain statement of the claim showing that the
pleader is entitled to relief.
F.R.C.P. 8(a)(2). Under Rule 8(a), BABA “must do more than name laws that may have
been violated by [WWO], it must also allege facts regarding what conduct violated those
laws.” Anderson v. U.S. Dept. of Housing and Urban Dev., 554 F.3d 525, 528 (5th Cir.
2008).
BABA’s petition does not contain the word “negligence” or any reference to failure
to exercise reasonable care. Moreover, BABA has failed to plead any of the basic
requirements of Louisiana’s duty-risk analysis: “(1) the defendant had a duty to conform
his conduct to a specific standard (the duty element); (2) the defendant’s conduct failed to
Document 39-1 at 7.
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conform to the appropriate standard (the breach element); (3) the defendant’s substandard
conduct was a cause in fact of the plaintiff’s injuries (the cause-in-fact element); (4) the
defendant’s substandard conduct was a legal cause of the plaintiff’s injuries (the scope of
liability or scope of protection element); and (5) the actual damages (the damage element).”
Carpenter v. Foremost Signature Ins. Co., --- So.3d ----, 2012 WL 638068, *3 (La.App. 2
Cir. 2/29/12). BABA failed in both its Petition and its opposition to articulate WWO’s duty
and/or what actions on the part of WWO constituted a breach of that duty. Therefore, the
Rule 12(c) motion is GRANTED as to and purported negligence claims/theories.
III.
CONCLUSION.
Based on the foregoing analysis, WWO’s Motion to Dismiss is GRANTED, as BABA
has no standing under the LUTPA and has failed to state a negligence claim. Accordingly,
all claims against WWO are DISMISSED.
A judgment consistent with the terms of the instant Memorandum Ruling shall issue
herewith.
THUS DONE AND SIGNED, in Shreveport, Louisiana, this 19th day of March, 2012.
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