Champion Foodservice, LLC v. Vista Food Exchange, Inc. et al
Filing
44
Memorandum Opinion and Order Denying Defendants' Matthew Gibson and Innovative Food Service, LLC's Motion to dismiss (Related Doc # 14 ); and Denying Defendants' Joshua Newman and Vista Food Exchange, Inc.,'s Motion to dismiss (Related Doc # 15 ). The Court establishes the following case management plan: fact and expert discovery closes November 30, 2013; dispositive motions are due December 30, 2013; responses are due January 17, 2014; replies are due January 31, 2014. In addition, if Plaintiff intends to file a motion for injunctive relief, it must do so by August 30, 2013. Signed by Judge David D. Dowd, Jr. on 8/6/2013. (M,De)
DOWD, J.
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
Champion Food Service, LLC,
Plaintiff,
v.
Vista Food Exchange, et al.
Defendants.
)
)
)
)
)
)
)
)
)
)
CASE NO. 1:13-cv-01195
MEMORANDUM OPINION
AND ORDER
Pending before the Court are two 12(b)(6) motion to dismiss for failure to state a claim:
Defendants’ Matthew Gibson and Innovative Food Service, LLC’s motion (R. 14) and
Defendants’ Joshua Newman and Vista Food Exchange, Inc.’s motion (R. 15). Plaintiff opposed
the motions (R. 34, 35) and Defendants replied (R. 36). For the reasons that follow, Defendants’
motions are DENIED.
FACTUAL AND PROCEDURAL HISTORY
Plaintiff Champion Foodservice, LLC (“Champion”) filed the First Amended Complaint
on May 2, 2013, in the Court of Common Pleas of Crawford County, Ohio. Complaint R. 1-1,
PageID#: 7. The action names Matthew Gibson (“Gibson”), Innovative Food Service, LLC
(“Innovative”), Vista Food Exchange (“Vista”), and Joshua Newman (“Newman”) as
Defendants. Id. Defendants filed Notice of Removal on May 29, 2013. R. 1.
The facts as alleged by Plaintiff Champion are as follows. Champion is an Ohio LLC
located in Bucyrus, Crawford County, which is engaged in the business of providing meals for
(1:13-cv-01195)
children, schools, “and other similar customers.” Complaint, R. 1-1, ¶ 1. Champion hired
Matthew Gibson, a resident of Michigan, “as an independent contractor through his limited
liability company, Innovative Food Service, LLC” to serve as President and CEO of Champion.
Id. ¶ 6. Gibson was “responsible for preparing Champion’s bid proposal to” the Ohio
Association of Foodbanks (OAF), “which was due on March 1, 2013.” Id. ¶ 11.
However, on February 26, 2013, Mr. Gibson “abruptly and without notice terminated his
employment with Champion.” Id. ¶ 12. On February 28, 2013, “Champion contacted Defendant
Newman,” an employee acting on behalf of Vista, “and inquired specifically as to whether Vista
was working with Gibson on a bid.” Id. ¶ 16. Newman told Champion he was not working with
Gibson. Id. All Defendants acted in concert in that they were all “aware that Gibson possessed
[Champion’s] confidential trade secrets and proprietary information” and colluded to use this
information for Vista to submits its own OAF bid at the expense of Champion. Id. ¶ 22, 24.
Finally, Gibson refused to return a laptop computer provided to him by Champion to use
“while he served as the President and [CEO] of Champion.” Id. ¶¶ 7, 13, 14. After Plaintiff filed
the complaint, Gibson, “acting for himself and on behalf of all Defendants . . . , intentionally
‘wiped’ the computer memory and hard drive, thereby erasing all data related not only to
Champion’s business operations, but also related to Defendants’ wrongful actions evidencing
Champion’s claims in this lawsuit against them.” Id. ¶ 27.
2
(1:13-cv-01195)
Defendants collectively filed two motions to dismiss for failure to state a claim on June
14, 2013. R. 14, 15. Plaintiff Champion filed opposing memoranda. R. 34, 35. Defendants filed a
reply memorandum in support on July 18, 2013.1 R. 36.
LAW
Rule 8 of the Federal Rules of Civil Procedure, the general rule governing pleading,
requires that a complaint contain “a short and plain statement of the claim showing that the
pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). “To survive a 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.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atlantic Corp. v. Twombly,
550 U.S. 544, 570 (2007) (internal quotations 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.” Id. (citing Twombly, 550 U.S. at 556). But Rule 8
requires more than “[t]hreadbare recitals of the elements of a cause of action, supported by mere
conclusory statements.” Id. (citing Twombly, 550 U.S. at 555). In the end, ruling on a motion to
dismiss is “a context-specific task that requires the reviewing court to draw on its judicial
experience and common sense.” Id. at 679 (citation omitted).
Plaintiff’s complaint also includes a fraud claim. R. 1-1, PageID#: 16. This triggers the
heightened pleading requirements of Rule 9(b), which requires that “[i]n alleging fraud or
mistake, a party must state with particularity the circumstances constituting fraud or mistake.”
1
Defendants Newman and Vista filed, without leave of court, a letter in support of the
motion on July 29, 2013. R. 39.
3
(1:13-cv-01195)
Fed. R. Civ. P. 9(b). But the “conditions of a person's mind may be alleged generally.” Id. This
means a plaintiff is required “(1) to specify the allegedly fraudulent statements; (2) to identify
the speaker; (3) to plead when and where the statements were made; and (4) to explain what
made the statements fraudulent.” Republic Bank & Trust Co. v. Bear Stearns & Co., Inc., 683
F.3d 239, 247 (6th Cir. 2012).
ANALYSIS
Plaintiff Champion’s complaint sets forth seven causes of action: (1) breach of fiduciary
duty; (2) misappropriation of trade secrets; (3) tortious interference; (4) fraud; (5) civil
conspiracy; (6) spoliation of evidence; and (7) conversion. Complaint, R. 1-1, PageID#: 7-13.
Defendants contend all are insufficiently pled.
Defendants argue the breach of fiduciary duty claim should be dismissed because Gibson
was hired as an independent contractor and Plaintiff has not pled any facts which would show
there was a fiduciary relationship. See R. 14-1, PageID#: 224-35. But Champion’s complaint
alleges it hired Gibson, though paid as an independent contractor through an LLC, as President
and CEO and had certain important duties. See R. 1-1, ¶¶ 6, 11, 29. “It is well-established that a
corporate officer occupies a position of trust in relation to his corporation,” and this “relationship
imposes upon directors duties in the nature of a fiduciary obligation.” Wing Leasing, Inc. v. M &
B Aviation, Inc., 44 Ohio App.3d 178, 181 (10th Dist. Ct. App. 1988) (citing Thomas v.
Matthews, 94 Ohio St. 32, 43 (1916)). The Court concludes Plaintiff Champion sufficiently pled
its breach of fiduciary duty claim.
4
(1:13-cv-01195)
Defendants next contend Plaintiff Champion insufficiently pled the existence of trade
secrets because Plaintiff only provided a “formulaic recitation” of trade secrets which do not
meet the definition of trade secret as set forth in the six-factor test set forward by the Ohio
Supreme Court in State ex rel The Plain Dealer v. Ohio Dept of Ins., 80 Ohio St. 3d 513, 524-25
(1997). R. 14, PageID#: 220; R. 15-1, PageID#: 274. Plaintiff’s complaint alleges the trade
secrets include “pricing lists, labor costs, packing costs, product costs, business markups,
shipping costs, marketing costs, customer lists, active quotes, and business correspondence.” R.
1-1, ¶ 37.
This suffices to plead the existence of a trade secret. “Customer lists in particular may
constitute a trade secret, and there is a presumption of secrecy regarding such lists when the
owner takes measures to keep it from being available to others.”2 Power Marketing Direct, Inc.
v. Ball, 2004 U.S. Dist. LEXIS 29068, 2004 WL 5826149, at *6 (S.D. Ohio April 6, 2004)
(citing Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Kramer, 816 F.Supp. 1242 (N.D. Ohio
1992)).
Defendants also argue Champion’s common law claims are pre-empted by Ohio’s
Uniform Trade Secrets Act (“OUTSA”). R. 14-1, PageID#: 222; R. 15-1, PageID#: 277, 280. A
common law claim is preempted if it is “based entirely on factual allegations of misappropriation
of trade secrets.” Glasstech, Inc. v. TGL Tempering Systems, Inc., 50 F.Supp.2d 722, 730 (N.D.
Ohio 1999). Here, Champion alleges the Defendants not only used Champion’s trade secrets
2
Plaintiff contends Defendant Gibson himself formalized “policies and procedures for
Champion to protect its trade secret business information as confidential and proprietary in
nature.” R. 1-1, ¶ 8.
5
(1:13-cv-01195)
without authorization to submit Vista’s bid to the food program, but also prevented Champion
from successfully submitting its own bid to the 2013 OAF summer food program and interfered
with Champion’s other business relationships. See, e.g., R. 1-1, ¶¶ 40, 47, 59.
Champion asserts a claim with regards to spoliation of evidence and conversion.
Champion alleges that Gibson, “acting for himself and on behalf of all Defendants” intentionally
cleared the memory of the laptop computer. Id. ¶ 27. Champion additionally alleges the laptop
contained information Champion sought to use “for purposes of gathering evidence for its claims
against Gibson in the litigation,” and Gibson erased the hard drive “in preparation for the
injunction hearing.” R. 1-1, ¶ 57. This is sufficient to state Ohio’s five-element spoliation of
evidence cause of action. See Ed Schmidt Pontiac-GMC Truck, Inc. v. DaimlerChrysler Motors
Co., LLC, 538 F.Supp.2d 1032, 1034 (N.D. Ohio 2008) (citations omitted). Further, these facts
are alleged in addition to Plaintiff’s trade secrets claim, and as such, Plaintiff’s spoliation and
conversion claims are not pre-empted by OUTSA.
Champion’s civil conspiracy claim is also not pre-empted by OUTSA for failure to plead
facts in addition to Champion’s trade secret claim. It is not the case, as Defendants argue, that
“the only alleged unlawful act would be the alleged misappropriation of trade secrets.” R. 15-1,
PageID#: 281. Champion’s complaint cites to facts in addition to the facts cited in support of its
misappropriation claim, such as the interference with Champion’s business relations and the
alleged activities relating to the laptop computer. As such, Champion’s common law claims are
not pre-empted by OUTSA.
6
(1:13-cv-01195)
Finally, Defendants argue the fraud claim does not meet the requirements of Rule 9(b). R.
14-1, PageID#: 228. This rule requires a plaintiff “(1) to specify the allegedly fraudulent
statements; (2) to identify the speaker; (3) to plead when and where the statements were made;
and (4) to explain what made the statements fraudulent.” Republic Bank & Trust Co. v. Bear
Stearns & Co., Inc., 683 F.3d 239, 247 (6th Cir. 2012). Here, Plaintiff Champion identified the
speaker as Matthew Gibson, and that the statements were made in early 2013 in connection with
the 2013 OAF bidding program. See R. 1-1, ¶ 46-48. Finally, Plaintiff Champion explained why
the statements were fraudulent. See id. ¶ 49. The Court finds Plaintiff has satisfied the
heightened pleading requirements of Rule 9(b).
CONCLUSION
The Court concludes Plaintiff’s common law claims are not pre-empted by OUTSA and
Plaintiff has stated claims upon which relief can be granted with regards to all seven causes of
action. Accordingly, Defendants’ 12(b)(6) motions to dismiss for failure to state a claim are
DENIED.
Further, the Court establishes the following case management plan: fact and expert
discovery closes November 30, 2013; dispositive motions are due December 30, 2013; responses
are due January 17, 2014; replies are due January 31, 2014.
7
(1:13-cv-01195)
In addition, if Plaintiff intends to file a motion for injunctive relief, it must do so by
August 30, 2013.
IT IS SO ORDERED.
August 6, 2013
Date
s/ David D. Dowd, Jr.
David D. Dowd, Jr.
U.S. District Judge
8
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?