ScanSource, Inc. v. The Thurston Group, LLC
Filing
15
MEMORANDUM OPINION. Signed by Chief Judge Deborah K. Chasanow on 5/18/11. (sat, Chambers)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
:
SCANSOURCE, INC.
:
v.
:
Civil Action No. DKC 11-0380
:
THE THURSTON GROUP, LLC
:
MEMORANDUM OPINION
Presently pending and ready for review in this breach of
contract case is the motion to dismiss filed by Defendant, The
Thurston
Group,
preliminary
LLC,
(ECF
injunction
(ECF No. 7).
filed
No.
by
6)
and
the
Plaintiff
motion
for
ScanSource,
a
Inc.
The issues have been fully briefed and the court
now rules, no hearing deemed necessary.
Local Rule 105.6.
For
the reasons that follow, Defendant’s motion to dismiss will be
granted and Plaintiff’s motion for preliminary injunction will
be denied as moot.
I.
Background
Plaintiff ScanSource, Inc. alleges the following facts in
its complaint:
ScanSource is a publicly traded corporation,
organized and existing under the laws of South Carolina, with
its principal office in Greenville, South Carolina.
¶ 2).
(ECF No. 1
ScanSource is an international distributor of specialty
technology
products
and
conducts
business
across
the
United
States, including in Baltimore.
Group,
LLC,
(“Thurston”)
is
(Id.).
a
Defendant, the Thurston
private
computer
consulting
company with its principal place of business in Prince George’s
County, Maryland.
(Id. ¶ 3).
On February 16, 2010, ScanSource and Thurston entered into
the
Independent
Contractor
Agreement
(“Agreement”)
whereby
Thurston was obligated to provide installation, maintenance, and
training
payment.
on
Avaya
(Id.
Systems
¶ 7).
The
for
ScanSource
Agreement
in
included
exchange
a
for
Non-Compete
Clause that stated:
During the term of this Agreement and for a
period of one year following the expiration
of this Agreement, Contractor shall not
serve, represent, market or promote for any
competitors
of
the
Company,
including
without limitation the following businesses:
__________________ or to any customers of
the
Company
without
the
prior
written
authorization of the Company. Contractor
shall not for any reason on Contractor’s own
behalf or on behalf of any person, firm,
partnership,
association,
corporation,
limited
liability
company
or
business
organization, entity or enterprise, other
than the Company, solicit, contact, or call
upon any customer or prospective customer of
the Company, or any representative of any
customer or prospective customer of the
Company, with a view to sell or provide any
deliverable or service competitive with any
deliverable or services sold or provided or
under development by the Company during this
agreement and for the year immediately
following the termination of this Agreement,
provided that the restrictions as set forth
in this paragraph shall apply only to
2
customers or prospective customers of the
Company, or representatives of customers or
prospective customers of the Company, with
which Contractor had contact during the term
of this Agreement as a result of being
retained by the Company.
Each of the parties hereto agrees that,
while
performing
Services
under
this
Agreement, and for a period of two years (24
months) following the termination of this
Agreement, neither party will, except with
the other party’s written approval, solicit
or offer employment to the other party’s
employees or staff engaged in any efforts
under this Agreement.[1]
ScanSource alleges that the Agreement was not terminated and
remains in effect.
(Id. ¶ 12).
At some unidentified time, Verizon Communications, Inc., a
communications provider that does business with ScanSource and
one
of
solicited
Maryland.
its
bids
business
partners,
for
contract
a
(Id. ¶¶ 12-13).
Alliance
for
Technology,
services
in
LLC,
Aberdeen,
Alliance Technology and Thurston
both submitted bids for the Verizon contract.
(Id. ¶¶ 13-14).
On January 31, 2011, ScanSource sent a cease and desist letter
1
ScanSource excerpts a portion of the non-compete clause in
its complaint (ECF No. 1 ¶ 10).
A full copy of the agreement
was attached as exhibit 1 to Thurston’s motion to dismiss
(ECF No. 6-1) and the entirety of the non-compete clause was
taken from this exhibit. Courts may properly consider documents
attached to the complaint as well as documents not attached but
referenced therein when testing the legal sufficiency of a
pleading. See Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551
U.S. 308, 322 (2007) (citing 5B Wright & Miller § 1357 (3d ed.
2004 and Supp. 2007)).
3
to Thurston advising Thurston that its activities related to the
Verizon Aberdeen contract were a breach of the Agreement and
that if Thurston continued its actions, ScanSource would pursue
legal action.
(Id. ¶¶ 15-17).
Thurston did not respond to the
letter and was awarded the Verizon contract.
(Id. ¶¶ 18, 21).
ScanSource alleges that the value of the Verizon contract for
ScanSource is approximately $559,000.
(Id. ¶ 22).
ScanSource filed its complaint on February 11, 2011, and
alleges that Thurston is liable on three counts.
In count I,
ScanSource alleges that Thurston “has violated and/or intends to
violate the provisions of the non-compete clause.”
(Id. ¶ 26).
In count II, ScanSource alleges that Thurston learned of the
Verizon
contract
from
its
work
for
ScanSource
and
used
information from that work to bid on and win the award and that
such conduct constitute unfair competition.
Finally
in
count
III,
ScanSource
alleges
(Id. ¶¶ 28-32).
that
Thurston
“tortiously interfered with the economic advantage of ScanSource
by,
inter
alia,
bidding
on
and
being
awarded
the
Verizon
Aberdeen contract in direct violation of the Non-Compete clause
in section 5 of the Agreement.” (Id. ¶ 35).
For all counts,
ScanSource seeks only money damages in the amount of $559,000.00
and interests and costs.
4
On, March 10, 2011, Thurston filed a motion to dismiss
ScanSource’s complaint in its entirety.
(ECF No. 6).
While
Thurston’s motion was pending, ScanSource filed a motion for a
preliminary injunction.
II.
(ECF No. 7).
Motion To Dismiss
A.
Standard of Review
The purpose of a motion to dismiss pursuant to Fed.R.Civ.P.
12(b)(6)
is
to
test
the
sufficiency
of
the
plaintiff’s
complaint.
See Edwards v. City of Goldsboro, 178 F.3d 231, 243
(4th
1999).
Cir.
Except
in
certain
specified
cases,
a
plaintiff’s complaint need only satisfy the “simplified pleading
standard” of Rule 8(a), Swierkiewicz v. Sorema N.A., 534 U.S.
506, 513 (2002), which requires a “short and plain statement of
the
claim
showing
Fed.R.Civ.P.
requires
a
that
the
8(a)(2).
is
Nevertheless,
‘showing,’
rather
entitlement to relief.”
544, 555 n.3 (2007).
pleader
than
a
entitled
“Rule
to
relief.”
8(a)(2)
blanket
still
assertion,
of
Bell Atl. Corp. v. Twombly, 550 U.S.
That showing must consist of more than “a
formulaic recitation of the elements of a cause of action” or
“naked
assertion[s]
Ashcroft
v.
Iqbal,
devoid
of
further
129
S.Ct.
citations omitted).
5
1937,
factual
1949
enhancement.”
(2009)(internal
In its determination, the court must consider all well-pled
allegations in a complaint as true, Albright v. Oliver, 510 U.S.
266, 268 (1994), and must construe all factual allegations in
the light most favorable to the plaintiff.
See Harrison v.
Westinghouse Savannah River Co., 176 F.3d 776, 783 (4th Cir.
1999)(citing Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134
(4th Cir.
1993)).
The
court
need
not,
however,
accept
unsupported legal allegations, Revene v. Charles County Comm’rs,
882 F.2d 870, 873 (4th Cir. 1989), legal conclusions couched as
factual allegations, Iqbal, 129 S.Ct. at 1950, or conclusory
factual allegations devoid of any reference to actual events,
United Black Firefighters v. Hirst, 604 F.2d 844, 847 (4th Cir.
1979).
See
also
(4th Cir. 2009).
Francis
v.
Giacomelli,
588
F.3d
186,
193
“[W]here the well-pleaded facts do not permit
the court to infer more than the mere possibility of misconduct,
the complaint has alleged, but it has not ‘show[n] . . . that
the pleader is entitled to relief.’”
(quoting Fed.R.Civ.P. 8(a)(2)).
Iqbal, 129 S.Ct. at 1950
Thus, “[d]etermining whether a
complaint states a plausible claim for relief will . . . be a
context-specific task that requires the reviewing court to draw
on its judicial experience and common sense.”
6
Id.
B.
Analysis
Thurston
single issue:
contends
that
its
motion
to
dismiss
raises
a
whether its competition with Alliance Technolgoy,
Inc., a third party not named in its agreement with Plaintiff,
for a contract with Verizon Communications constitutes a breach
of
the
parties’
agreement
or
a
tort.
(ECF
No.
6,
at
1).
Thurston proceeds to argue that for each count ScanSource has
failed to state a claim.
In response, ScanSource argues that
its complaint contains sufficient factual allegations to state
its claims.
(ECF No. 9).
Although
Thurston’s
framing
of
the
issue
presented
is
perhaps too simplistic, ScanSource’s complaint does suffer from
a dearth of factual allegations.
ScanSource attempts to remedy
this defect by inserting additional facts and allegations into
its opposition to the motion to dismiss, but the court must
consider the complaint as it was filed and not with ScanSource’s
subsequent annotations and explanations.
As discussed in detail
below, Plaintiff’s complaint does not contain sufficient factual
allegations to state a claim for any of the counts alleged.
1.
Breach of Contract Claim
Without
conceding
that
the
agreement
is
valid
and
enforceable, Thurston argues that ScanSource has not stated a
claim for breach of the contract as written.
7
Specifically,
Thurston argues that ScanSource has not alleged a breach of the
non-compete clause because it has not alleged “that the Thurston
Group
served,
represented,
marketed,
or
promoted
for
any
competitors of ScanSource or to any customers of ScanSource.”
(ECF No. 6, at 5).
Nor, Thurston contends, does the complaint
allege that the Thurston Group solicited, contacted, or called
upon any customer or prospective customer of ScanSource; the
only alleged competition is with Alliance Technology.
Thurston
also
argues
that
the
non-compete
(Id.).
clause
is
unenforceable.
In
its
opposition
to
the
motion
to
dismiss,
ScanSource
argues that in the course of performing the agreement, Thurston
was made aware of ScanSource’s business practices, the fact that
Verizon Communications was a customer of ScanSource, and that
Thurston did not obtain prior approval from ScanSource before
soliciting Verizon’s business.
(ECF No. 9).
ScanSource also
argues that the non-compete clause is enforceable.
In
order
to
state
a
claim
for
breach
of
contract,
a
plaintiff must plead the existence of the contract, its breach,
and the damages caused by such breach.
Branche Builders, Inc.
v. Coggins, 386 S.C. 43, 48 (2009).2
ScanSource’s complaint
2
Both parties have relied on Maryland contract law in their
arguments.
The agreement contains a choice of law provision,
8
pleads the existence of a contract, but it does not plead facts
sufficient
to
establish
a
breach.
Facts
contained
in
ScanSource’s opposition to the motion to dismiss but not within
the
complaint
establish
a
sufficient
represented,
itself
breach,
to
cannot
be
ScanSource
make
marketed,
it
considered.
would
plausible
or
promoted
need
that
for
In
to
order
plead
Thurston
a
to
facts
served,
competitor
of
ScanSource or that it solicited, contacted, or called upon any
customer or potential customer of ScanSource with a view to sell
or
provide
any
deliverable
or
service
competitive
with
any
deliverable or services sold or provided or under development by
ScanSource.
Nowhere in the complaint does ScanSource identify
any of its competitors, nor does the contract itself identify
Verizon as a competitor of ScanSource.
ScanSource now argues
that Verizon was a customer, but the complaint states only that
ScanSource does business with Verizon; it does not explain the
nature of the relationship.
(See ECF No. 1 ¶ 12).
Similarly,
the complaint does not allege what the services or deliverables
however, specifying “this Agreement shall be construed in
accordance with the laws of the State of South Carolina.”
(ECF No. 6-1, at ¶ 13). Fortunately, it makes little practical
difference because the requirements for stating a breach of
contract claim under Maryland and South Carolina law are the
same.
See RRC Ne., LLC v. BAA Md., Inc., 413 Md. 638, 658
(2010).
9
Thurston offered to Verizon were or that the same services were
offered
by
ScanSource.
The
conclusory
statement
that
“The
Thurston Group contacted Verizon with a view to sell or provide
a
deliverable
or
service
in
competition
with
ScanSource”
(ECF No. 1 ¶ 14), without any further factual allegations, is
insufficient to state a breach of any provision of the contract.
Because ScanSource has not stated a claim for breach of the
contract,
it
is
not
necessary
to
consider
whether
the
non-
compete clause is enforceable at this time.
2.
Unfair Competition
Thurston argues that ScanSource has not stated a claim for
unfair competition because the complaint is devoid of any facts
even to suggest that it committed fraud, deceit, trickery, or
unfair methods.
the
claim
fails
(ECF No. 6, at 8).
because
the
Thurston also argues that
complaint
does
not
contain
any
allegations that Thurston competed, unfairly or otherwise, with
ScanSource.
(Id.).
ScanSource argues in response that it has
included sufficient factual allegations to survive a motion to
dismiss and reiterates that “the Thurston Group did, indeed, use
information from ScanSource to compete against both ScanSource
and Alliance Technology.”
Maryland
recognizes
(ECF No. 9, at 12).
the
tort
of
unfair
competition
to
prevent one business from “damaging or jeopardizing another’s
10
business by fraud, deceit, trickery or unfair methods of any
sort.”
Balt.
(1943).
Bedding
Maryland
specific
Corp.
courts
requirements
for
v.
have
the
Moses,
been
tort,
182
Md.
hesitant
instead
229,
to
236-37,
establish
abiding
by
the
principle that “[w]hat constitutes unfair competition in a given
case is governed by its own particular facts and circumstances.
Each case is a law unto itself, subject, only, to the general
principle that all dealings must be done on the basis of common
honesty
and
fairness,
without
taint
of
fraud
or
deception.”
Id.; see also Trimed, Inc. v. Sherwood Med. Co., 977 F.2d 885,
891 (4th Cir. 1992); S. Volkswagen, Inc. v. Centrix Fin., LLC,
357 F.Supp.2d 837, 852-53 (D.Md. 2005); Electrs. Store, Inc. v.
Cellco P’ship, 127 Md.App. 385, 406-07, cert. denied, 356 Md.
495 (1999).
ScanSource
alleges
only
that
Thurston
learned
of
the
Verizon contract through its work for ScanSource, that it used
information obtained through that work to secure the bid, and
that it should have known this was improper.
30).
(ECF No. 1 ¶¶ 28-
If ScanSource’s complaint also alleged that it had bid on
the Verizon contract, one might conclude from these allegations
that Thurston’s method was unfair and harmful to ScanSource’s
business.
Absent
such
allegations,
there
is
no
basis
to
conclude that Thurston’s actions constituted unfair competition.
11
3.
Tortious Interference With Economic Relations
Finally,
Thurston
argues
that
the
claim
for
tortious
interference is insufficiently pleaded.
Under Maryland law a claim for the tort of intentional
interference with economic relations has the following elements:
“(1)
intentional
and
willful
acts;
(2)
calculated
to
cause
damage to the plaintiffs in their lawful business; (3) done with
the unlawful purpose to cause such damage and loss, without
right or justifiable cause on the part of the defendants; and
(4) actual damage and loss resulting.”
Newspapers,
223
F.Supp.2d
718,
741
Berlyn, Inc. v. Gazette
(D.Md.
2002)
(citing
Alexander & Alexander v. B. Dixon Evander & Assocs., Inc., 336
Md. 635 (1994), aff’d by, 73 F.App’x 576 (2003).
The tort
requires intentional acts “done with the unlawful purpose to
cause . . . damage and loss to the plaintiffs in their lawful
business, without right or justifiable cause on the part of the
defendants which constitutes malice[.]”
Alexander & Alexander
Inc. v. B. Dixon Evander & Assocs., Inc., 336 Md. 635, 655
(1994)
acts
(internal
include
defamation,
quotations
common
injurious
law
omitted).
torts
falsehood
and
or
“Wrongful
violence
other
or
fraud,
or
unlawful
intimidation,
violation
of
criminal law, and the institution or threat of groundless civil
suits or criminal prosecutions in bad faith.”
12
K & K Mgmt. v.
Lee, 316 Md. 137, 166 (1989) (internal quotations omitted).
tort
does
not
lie
simply
because
the
defendant’s
The
breach
of
contract “would foreseeably impinge upon a contracting party’s
economic relations with others.”
Alexander & Alexander Inc.,
336 Md. at 656.
ScanSource
has
not
complied
with
the
pleading
standards
required by Twombly and Iqbal because it has not alleged any
facts to demonstrate that Thurston acted with the intent to
interfere with ScanSource’s business relations.
See Miller v.
Montgomery Cnty. Md., No. AW-09-3137, 2010 WL 3894500, at *14
(D.Md.
Sept.
29,
2010)
(granting
motion
to
dismiss
tortious
interference with business relation claim where plaintiff failed
to make a showing of defendant’s intention to damage plaintiff’s
commercial relationships); S. Volkswagen, Inc. v. Centrix Fin.,
LLC,
357
F.Supp.2d
interference
with
“the
where
intent
at
850-51
(dismissing
plaintiffs
asserted
to
economic
cause
claim
that
harm
for
tortious
defendants
and
acted
injury
to
[plaintiff’s] business” but offered no facts to explain how they
arrived at that conclusion).
Nor does ScanSource’s complaint
allege facts to explain the nature or extent of the alleged
interference
with
ScanSource’s
economic
relationship.
ScanSource has not alleged that it sought to obtain the bid from
Verizon and it has not identified Alliance as a direct affiliate
13
such that one could plausibly conclude that harm to Alliance
directly affects ScanSource.
has
failed
to
state
a
For all these reasons, ScanSource
claim
for
tortious
interference
with
economic relations.
III. Motion for Preliminary Injunction
Because
all
counts
of
ScanSource’s
complaint
will
be
dismissed, ScanSource’s motion for a preliminary injunction is
moot.3
IV.
Conclusion
For
will
be
the
foregoing
granted
and
reasons,
Thurston’s
ScanSource’s
injunction will be denied.
motion
motion
for
a
to
dismiss
preliminary
A separate order will follow.
/s/
DEBORAH K. CHASANOW
United States District Judge
3
ScanSource’s motion was also flawed in that preliminary
injunctions are typically employed to obtain temporary or
immediate relief for a party prior to a final decision granting
a permanent injunction, but Plaintiff’s complaint sought only
monetary damages and not injunctive relief.
Where the alleged
harm is entirely compensable with monetary relief there is no
basis for imposing a preliminary injunction.
14
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