AUDIOLOGY DISTRIBUTION, LLC v. HAWKINS

Filing 57

MEMORANDUM OPINION AND ORDER GRANTING IN PART AND DENYING IN PART 44 PLAINTIFF'S MOTION TO DISMISS DEFENDANT'S COUNTERCLAIMS. The plaintiff's motion to dismiss as to the defendant's claims for libel, invasion of privacy, viola tions of the West Virginia Antitrust Act, and malicious prosecution is hereby GRANTED and the plaintiff's motion to dismiss defendant's claims for intentional or reckless infliction of emotional distress and economic duress is hereby DENIED. Signed by Senior Judge Frederick P. Stamp, Jr. on 2/5/2014. (copy to counsel of record via CM/ECF) (nmm)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
AUDIOLOGY DISTRIBUTION, LLC
d/b/a HEARUSA,
Plaintiff,
v.

Civil Action No. 5:13CV154
(STAMP)

JILL K. HAWKINS, individually
and d/b/a HAWKINS HEARING, LLC,
Defendant.
MEMORANDUM OPINION AND ORDER
GRANTING IN PART AND DENYING IN PART
PLAINTIFF’S MOTION TO DISMISS DEFENDANT’S COUNTERCLAIMS
I.

Procedural History

On November 6, 2013, the plaintiff in the above-styled civil
action filed a complaint against the defendant alleging claims for
breach of contract, breach of the duty of loyalty, and tortious
interference with prospective contractual relations resulting from
the defendant’s alleged violation of a covenant not to compete
(“the covenant”).

Thereafter, the plaintiff filed a motion for a

temporary restraining order and preliminary injunction and a motion
to

expedite

discovery,

to

which

the

defendant

opposition and the plaintiff replied.

responded

in

This Court then held a

hearing on the motion for temporary restraining order on November
12, 2013.

At the hearing, this Court granted the plaintiff’s

motion for temporary restraining order, finding at that time that
the plaintiff had satisfied the requirements for such order.
Court

entered

an

order

confirming

the

pronounced

order

This
and

confirming
injunction.

the

date

for

the

hearing

regarding

a

preliminary

On December 10, 2013, this Court held the hearing on

the motion for a preliminary injunction.

At this hearing, the

Court denied the plaintiff’s motion for a preliminary injunction
without prejudice to refiling upon the completion of further
discovery as to the irreparable harm requirement. This Court
entered an order confirming this pronounced order.
Prior to the hearing concerning the preliminary injunction,
the defendant filed her answer to the plaintiff’s complaint.
defendant also filed a counterclaim against the plaintiff.

The
This

Court believes the counterclaim asserts claims for economic duress,
emotional distress, libel, invasion of privacy, a violation of the
West Virginia Antitrust Act, and malicious prosecution.

The

plaintiff filed a motion to dismiss the counterclaim arguing that
the counterclaim lacks sufficient factual predicate to support such
claims. The defendant responded in opposition arguing that she had
asserted

sufficient

facts

to

support

her

allegations.

The

plaintiff did not file a reply.
This motion is now ripe for disposition.

For the reasons set

forth below, this Court grants the plaintiff’s motion to dismiss
the

counterclaim

in

part

and

denies

the

motion

in

part.

Specifically, this Court grants the plaintiff’s motion as to
defendant’s claims libel, invasion of privacy, violations of the
West Virginia Antitrust Act, and malicious prosecution and denies

2

the

plaintiff’s

intentional

or

motion
reckless

to

dismiss

infliction

of

defendant’s

claims

for

emotional

distress

and

economic duress.
II.

Facts1

Defendant, Jill K. Hawkins, is a licensed audiologist in West
Virginia.

She has her masters and doctorate degrees in audiology.

After the company she worked for from 2000 to 2004 closed, she and
a colleague opened TriState Audiology in Weirton, West Virginia.
Initially,
Audiology.

the

defendant

was

a

49%

shareholder

of

TriState

In October 2007, the defendant no longer owned any

portion of TriState Audiology but stayed with the company as an
employee and sole audiologist.2

At some point in late 2011 or

early 2012, the defendant learned that TriState Audiology may be
sold.

In Spring 2012, the defendant met with Richard Whitman

(“Whitman”), HearUSA’s Vice President of Business Development,
where she learned that HearUSA was considering purchasing TriState
Audiology.

HearUSA did acquire TriState Audiology on or about

September 27, 2012.

1

For purposes of deciding this motion for a preliminary
injunction, this Court, for the most part, adopts the facts as set
forth in the plaintiff’s complaint and as developed by testimony at
the hearing on the motion for a preliminary injunction.
2

The defendant indicated during her testimony that TriState
Audiology also employed “a couple doctoral residents two years in
a row” but that she was the main audiologist.
3

Prior to the acquisition, the defendant met with Whitman at
HearUSA’s

corporate

offices

in

Florida

to

discuss

potential

employment with HearUSA upon its purchase of TriState Audiology.
At this meeting, the defendant and Whitman discussed the terms of
her potential employment, which included a discussion of the
covenant not to compete.

Whitman explained to the defendant that

signing the covenant not to compete was a requirement of employment
with HearUSA.

The covenant states in pertinent part:

For and in consideration of employment with the Company
Employee hereby covenants and agrees that for a period of
twelve months following the termination of employment for
Audiology Distribution,[3] Employee shall not, directly
or indirectly, compete with Audiology Distribution within
a 10 mile radius wherein Employee performed services
under its employment with the Company for or on behalf of
Audiology Distribution, and that this non-compete
covenant specifically includes, but is not limited to,
contacting the customers, clients and prospective
customers and clients of Audiology Distribution.
Employee
acknowledges
that
the
restrictions
and
obligations set forth and imposed herein will not prevent
Employee from obtaining gainful employment in Employee’s
field of expertise or cause Employee undue hardship, and
that the restrictions imposed herein are reasonable and
necessary to protect the legitimate business interests of
Audiology Distribution. Employee further acknowledges
that it is impossible to measure the monetary damages to
Audiology Distribution by reason of breach of any of the
provisions contained herein, and that in the event of a
breach by Employee, Audiology Distribution shall be
entitled to equitable relief, including the right to
enjoin any party in violation of this agreement.
Employee further understands and agrees that if a court
shall hold any part of this covenant not to compete as
unenforceable due to its general scope, duration or
geographic restriction, then in such event Employee

3

This Court notes that Audiology
business under the name HearUSA.
4

Distribution,

LLC

does

agrees that the scope, duration or geographic restriction
shall be amended to the greatest scope, longest period of
time and the largest geographical area enforceable under
the applicable law of the state.
ECF No. 38 Ex. 3.

The defendant’s employment with HearUSA started

on Friday, September 28, 2012. She signed her employment offer and
the covenant the following Monday, October 1, 2012. Her employment
offer contained her salary, a bonus provision, and a commission
provision for the products she sold to her patients.
In Summer 2013, the defendant started to look into opening her
own audiology business. On August 15, 2013, the defendant obtained
a certificate of limited liability company for “Hawkins Hearing.”
On September 6, 2013, on behalf of Hawkins Hearing, the defendant
obtained

a

business

loan.

Then

on

September

10,

2013,

the

defendant, again on behalf of Hawkins Hearing, obtained a business
property lease for a property that was less than three miles from
HearUSA’s Weirton, West Virginia location. A little over two weeks
later, on September 27, 2013, the defendant faxed her resignation
letter to her direct supervisor at HearUSA, and her last day of
employment with HearUSA was October 11, 2013.

Prior to leaving

HearUSA, the defendant told some of her patients that she was
planning to leave and possibly open her own business.

After

leaving, the defendant asserts that she received approximately 25
phone calls at her home from patients asking where she was, to
which

she

responded

she

was

opening

her

own

business.

The

defendant started seeing patients at her new location on November
5

7, 2013. From November 7, 2013 through November 19, 2013, when the
temporary restraining order became effective, the defendant had 25
appointments scheduled with 21 different patients. Twenty of these
patients were prior patients of HearUSA.
III.

Applicable Law

In assessing a motion to dismiss for failure to state a claim
under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a
court must accept all well-pled facts contained in the complaint as
true.

Nemet Chevrolet, Ltd v. Consumeraffairs.com, Inc, 591 F.3d

250, 255 (4th Cir. 2009). However, “legal conclusions, elements of
a cause of action, and bare assertions devoid of further factual
enhancement fail to constitute well-pled facts for Rule 12(b)(6)
purposes.”
(2009)).

Id. (citing Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949
This

Court

also

declines

to

consider

“unwarranted

inferences, unreasonable conclusions, or arguments.”

Wahi v.

Charleston Area Med. Ctr., Inc., 562 F.3d 599, 615 n.26 (4th Cir.
2009).
It has often been said that the purpose of a motion under Rule
12(b)(6) is to test the formal sufficiency of the statement of the
claim for relief; it is not a procedure for resolving a contest
about the facts or the merits of the case.

5B Charles Alan Wright

& Arthur R. Miller, Federal Practice and Procedure § 1356 (3d ed.
1998).

The Rule 12(b)(6) motion also must be distinguished from a

motion for summary judgment under Federal Rule of Civil Procedure

6

56, which goes to the merits of the claim and is designed to test
whether there is a genuine issue of material fact.

Id.

For

purposes of the motion to dismiss, the complaint is construed in
the

light

essentially

most
the

favorable
court’s

to

the

inquiry

party
is

making

directed

the
to

claim

and

whether

the

allegations constitute a statement of a claim under Federal Rule of
Civil Procedure 8(a).

Id. § 1357.

A complaint should be dismissed “if it does not allege ‘enough
facts to state a claim to relief that is plausible on is face.’”
Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir. 2008) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).

“Facial

plausibility is established once the factual content of a complaint
‘allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.’” Nemet Chevrolet,
591 F.3d at 256 (quoting Iqbal, 129 S. Ct. at 1949).

Detailed

factual allegations are not required, but the facts alleged must be
sufficient “to raise a right to relief above the speculative
level.”

Twombly, 550 U.S. at 555.
IV.

Discussion

While the defendant did not separately identify each claim
asserted against the plaintiff, this Court believes that the
defendant

asserts

claims

for

economic

duress,

intentional

infliction of emotional distress, libel, invasion of privacy,
violations

of

West

Virginia’s

Antitrust

7

Act,

and

malicious

prosecution.

Accordingly, this Court will address each claim in

turn.
A.

Economic Duress
Under West Virginia law, economic or business duress occurs

when “the [claimant] is forced into a transaction as a result of
unlawful threats or wrongful, oppressive, or unconscionable conduct
on the part of the defendant which leaves the [claimant] no
reasonable alternative but to acquiesce, the [claimant] may void
the transaction and recover any economic loss.” Machinery Hauling,
Inc. v. Steel of West Virginia, 384 S.E.2d 139, 142 (W. Va. 1989)
(citations omitted).

The plaintiff argues that the defendant has

failed to state a claim for economic duress by failing to allege
sufficient facts to prove the elements of the claim. Specifically,
the plaintiff asserts that the complaint is devoid of any facts
suggesting that the plaintiff engaged in wrongful, oppressive, or
unconscionable

conduct

and

further,

the

defendant

cannot

demonstrate that she had no reasonable recourse but to acquiesce to
the plaintiff’s alleged unreasonable offer of employment.
This Court, however, finds that the defendant has asserted
sufficient facts to withstand the plaintiff’s motion to dismiss as
to

her

counterclaim

for

economic

duress.

Specifically,

the

defendant in her counterclaim seems to assert that the plaintiff
engaged in wrongful conduct in forcing her to sign a covenant not
to compete to retain employment. Further, she asserts that she did

8

not have any other available employment offers at the time and if
she did not sign the covenant not to compete, she could not earn a
livelihood, thereby, asserting that she had no other reasonable
alternatives.

While discovery may prove that the defendant cannot

establish that such assertions amount to economic duress, the
defendant has, at this time, stated a claim to relief that is
plausible on its face.
B.

Intentional or Reckless Infliction of Emotional Distress
In order to prevail on a claim for intentional or reckless

infliction of emotional distress, the West Virginia Supreme Court
has held that a claimant must prove:
(1) that the [counterclaim] defendant’s conduct was
atrocious, intolerable, and so extreme and outrageous as
to exceed the bounds of decency; (2) that the
[counterclaim] defendant acted with the intent to inflict
emotional distress, or acted recklessly when it was
certain or substantially certain emotional distress would
result from [its] conduct; (3) that the actions of the
[counterclaim] defendant caused the [counterclaim]
plaintiff to suffer emotional distress; and (4) that the
emotional distress suffered by the [counterclaim]
plaintiff was so severe that no reasonable person could
be expected to endure it.
Travis v. Alcon Laboratories, Inc., 202 W. Va. 369, 375 (1998).
The plaintiff argues that the defendant has failed to allege any of
the these required elements.

The plaintiff specifically asserts

that the defendant did not allege that the plaintiff acted with the
intent to inflict emotional distress or that the defendant suffered
from any emotional distress as a result of the conduct.

The

defendant responds by stating that the plaintiff’s conduct of
9

forcing her to sign the covenant not to compete amounted to the
intentional infliction of emotional distress.
This Court finds that the defendant has asserted sufficient
facts to withstand the plaintiff’s motion to dismiss as to her
counterclaim for intentional or reckless infliction of emotional
distress.

The defendant outlined the conduct in her counterclaim

that she believes constitutes conduct sufficient to assert a claim
for the intentional or reckless infliction of emotional distress.
Specifically, in paragraph four of her counterclaim she states that
the plaintiff’s actions in requiring her to sign a covenant not to
compete caused her emotional distress.

Again, like defendant’s

claim for economic duress, while discovery may prove that the
defendant cannot establish that such assertions amount to the
intentional or reckless infliction of emotional distress, the
defendant has, at this time, stated a claim to relief that is
plausible on its face.
C.

Libel or Invasion of Privacy
The elements necessary to establish a claim for libel in West

Virginia

are

“(1)

defamatory

statements;

(2)

a

nonprivileged

communication to a third party; (3) falsity; (4) reference to the
plaintiff; (5) at least negligence on the part of the publisher;
and (6) resulting injury.”

Crump v. Beckley Newspapers, Inc., 320

S.E.2d 70, 77 (W. Va. 1983).

The plaintiff argues that the

defendant has failed to assert at least the first and last of these

10

elements.

The plaintiff asserts that the defendant failed to set

forth any statements or inferences that are capable of defamatory
meaning, and even so, she has failed to allege that she was injured
as a result of the alleged defamation.
First, this Court notes that “it is well established that
although libel is generally perpetrated by written communication,
it also includes defamation through the publication of pictures or
photographs.”

Id. at 79.

Here, the defendant states that the

plaintiff has libeled her through the use of pictures of her and
through the use of her name in advertisements that assert that she
is still an employee of the plaintiff.
for

defamation,

defamatory.

however,

the

In order to state a claim

communications

must

have

been

A communication is defamatory “if it tends so to harm

the reputation of another as to lower him in the estimation of the
community or to deter third persons from associating or dealing
with him.”
(1977)).

Id. at 77 (quoting Restatement (Second) of Torts § 559
The West Virginia Supreme Court has also described such

communications

as

those

that

“reflect

disgrace upon [the claimant].”

shame,

contumely,

and

Syl. pt. 1, Sprouse v. Clay

Communication, Inc., 211 S.E.2d 427 (W. Va. 1975).

Whether a

statement is capable of defamatory meaning is a question of law for
the courts to decide. Belcher v. Wal-Mart Stores, Inc., 568 S.E.2d
19 (W. Va. 2002).

The defendant has failed to plead facts or even

to make an assertion that the complained of communications harmed

11

her

reputation,

lowered

her

reputation

in

the

community,

deterred third persons from her associating with her.

or

The bare

allegation that the communications were libelous is insufficient to
state a claim for libel.

Accordingly, this Court must dismiss the

defendant’s claim for libel.
In the same paragraph in which the defendant makes a claim for
libel, she also states that the communications constituted an
invasion

of

privacy.

While

closely

related

to

a

claim

for

defamation, invasion of privacy is a distinct theory of liability.
Crump, 320 S. E. 2d at 81.

The four categories of the invasion of

privacy tort are: “(1) unreasonable intrusion upon the seclusion of
another; (2) appropriation of another’s name or likeness; (3)
unreasonable publicity given to another’s private life; and (4)
publicity that unreasonably places another in a false light before
the public.”

Id. at 83.

Initially, this Court notes that the

defendant has not stated in her counterclaim which category of the
invasion of privacy tort she is making a claim under, nor has she
further elaborated on such claim in her response to the plaintiff’s
motion to dismiss.
claims for her.
1993).

This Court cannot construct the defendant’s

Small v. Enidcott, 998 F.2d 411, 417-18 (7th Cir.

Even if it were inclined to do so, the only category that

the defendant’s claim may fall under is the appropriation of
another’s name of likeness.

The invasion of privacy tort for

appropriation “has primarily served to prevent the emotional harm

12

which results from the unauthorized use of an individual’s name or
likeness

to

promote

a

particular

product

or

service.”

The

defendant has failed to state that any of the plaintiff’s actions
concerning the alleged invasion of privacy caused her emotional
harm. Accordingly, even if this Court were to attempt to construct
the defendant’s claim for her, such a claim would ultimately fail
based on her pleadings.

Thus, defendant’s claim for invasion of

privacy must be dismissed.
D.

Violations of West Virginia’s Antitrust Act
The defendant seems to assert two claims under the West

Virginia Antitrust Act (“WVATA”).

While the defendant does not

state what sections her claims fall under, the claims seem to be
made under §§ 47-18-3(a) and 47-18-4.

The West Virginia Supreme

Court has stated that courts should analyze WVATA claims “under the
guidance provided by federal law.”

Kessel v. Monogalia County

General Hosp. Co., 648 S.E.2d 366, 381 (W. Va. 2007).

To state a

claim under § 47-18-3(a) of the West Virginia Antitrust Act
(“WVATA”), a claimant must allege that there was a conspiracy and
that the “concerted action imposed an unreasonable restraint on
trade.”

Princeton Ins. Agency, Inc. v. Erie Ins. Co., 690 S.E.2d

587, 598 (W. Va. 2009).

The plaintiff argues that the defendant

has failed to allege facts to demonstrate that the covenant not to
compete is an unreasonable restraint on trade.

13

The defendant

responds by only arguing that she does not have to prove her case
at this stage in the litigation.
While the defendant may not have to prove her case at this
stage of the litigation, she still must state a claim for relief
that is plausible on its face.

The allegation that the covenant

not to compete is an unreasonable restraint on trade is not
plausible.

Two approaches exist to demonstrate an unreasonable

restraint on trade, which are the per se and rule of reason
approaches.

Id. at 598.

As “[i]t is axiomatic that an employee’s

covenant not to compete with his employer is not a per se violation
of antitrust law,” the rule of reason must be applied in this case.
Reddy v. Community Health Foundation of Man, 298 S.E.2d 368, 372
(W. Va. 1982).

Under the rule of reason approach, a claimant must

demonstrate “specifically how the alleged conspiratorial conduct
adversely affected competition in the relevant geographic market.”
Princeton Ins., 690 S.E.2d at 599.

The defendant has only alleged

that a restraint on trade or commerce exists in the West Virginia
due to the plaintiff using covenants not to compete.

Such an

allegation does not raise the defendant’s right to relief above the
speculative level.

Thus, this Court must dismiss the defendant’s

claim under § 47-18-3(a).
To assert a claim under § 47-18-4 of the WVATA, which is the
provision of the WVATA that deals with monopolies, a claimant must
establish: “(1) the possession of monopoly power; and (2) willful

14

acquisition or maintenance of that power -- as opposed to simply
superior products or historic accidents.”

E.I. du Pont de Nemours

and Co. v. Kolon Industries, Inc., 637 F.3d 435, 441 (4th Cir.
2011) (citing Eastman Kodak Co. v. Image Technical Servs., Inc.,
504 U.S. 451, 480 (1992)). The plaintiff argues that the defendant
has failed to allege any facts describing the circumstances or
extent of the plaintiff’s power in the relevant market or any facts
describing the circumstances or extent of the plaintiff’s alleged
willful acquisition or maintenance of that power.

The defendant

again responds that she does not have to prove her case at this
time.
This Court finds that the defendant failed to plead sufficient
facts to state a claim for relief under § 47-18-4.

While the

defendant asserts that the plaintiff maintained a monopoly in the
audiology business, such an allegation by itself is insufficient as
it is merely conclusory.

The defendant fails to state any facts

that support her claim that the plaintiff did in fact maintain a
monopoly and that such a monopoly was willfully acquired or
maintained. Accordingly, this Court must dismiss defendant’s claim
under § 47-18-4.
E.

Malicious Prosecution
To assert a claim for malicious prosecution, the claimant must

prove: “(1) that the prosecution was malicious; (2) that it was
without reasonable or probable cause; and (3) that it terminated

15

favorably to [claimant].”

Clark v. Druckman, 624 S.E.2d 864, 870-

71 (W. Va. 2005) (quoting Syl. pt. 1, Lyons v. Davy-Pocahontas Coal
Co., 84 S.E. 744 (1915)).

The plaintiff argues that the defendant

has not pled any facts that would establish that the plaintiff
lacked reasonable cause in commencing the current action.

The

plaintiff also asserts that the defendant has not pled facts that
would establish that it acted with malice and further, argues that
the action is still pending.
This Court finds that the defendant has not stated a claim on
which relief may be granted at this time.

The defendant is

asserting a claim for malicious prosecution relating to this action
prior to this action terminating. The third element of a malicious
prosecution case requires that the action be terminated, and be
terminated in the claimant’s favor.

Accordingly, this Court finds

that such a claim is premature and it must dismiss the defendant’s
claim for malicious prosecution without prejudice to refiling upon
the

termination

of

this

action,

if

such

action

is

in

fact

terminated in defendant’s favor.4
V.

Conclusion

For the reasons stated above, the plaintiff’s motion to
dismiss as to the defendant’s claims for libel, invasion of

4

This Court notes that it is not stating that the defendant
has asserted sufficient facts to establish the remaining elements
of a malicious prosecution claim, only that the claim itself is
premature regardless of the facts presented as to the other
remaining elements.
16

privacy,

violations

of

the

West

Virginia

Antitrust

Act,

and

malicious prosecution is hereby GRANTED and the plaintiff’s motion
to

dismiss

defendant’s

claims

for

intentional

or

reckless

infliction of emotional distress and economic duress is hereby
DENIED.
IT IS SO ORDERED.
The Clerk is DIRECTED to transmit a copy of this memorandum
opinion and order to counsel of record herein.
DATED:

February 5, 2014

/s/ Frederick P. Stamp, Jr.
FREDERICK P. STAMP, JR.
UNITED STATES DISTRICT JUDGE

17