AUDIOLOGY DISTRIBUTION, LLC v. HAWKINS

Filing 70

MEMORANDUM OPINION AND ORDER DENYING DEFENDANT'S MOTION TO AMEND THE COUNTERCLAIM: Denying 65 Motion to Amend/Correct; Signed by Senior Judge Frederick P. Stamp, Jr on 7/17/14. (soa)

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
DENYING DEFENDANT’S MOTION TO AMEND THE COUNTERCLAIM
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

the

injunction.

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.

Thereafter,

following an appeal of that order, the United States Court of
Appeals for the Fourth Circuit affirmed this Court’s findings.
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.
Court

believes

the

counterclaim

asserted

claims

for

The
This

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, which this
Court denied insomuch as it sought to dismiss the defendant’s
counterclaims

for

economic

duress

and

emotional

distress

and

granted insomuch as it sought to dismiss the defendant’s claims for
libel, invasion of privacy, a violation of the West Virginia
Antitrust Act, and malicious prosecution.
The

defendant

has

now

filed

a

motion

to

amend

her

counterclaim, in which she asserts that she has adopted the
deficiencies noted in the Court’s opinion granting in part and

2

denying in part plaintiff’s motion to dismiss.

The defendant does

not provide any further explanation as to why her motion to amend
should be granted. The plaintiff filed a response to the motion to
amend,

arguing

that

the

defendant’s

attempt

to

re-plead

her

counterclaims is futile and the only new allegations contained in
the amended counterclaim are unsupported legal conclusions.

The

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

For the reasons set

forth below, this Court denies the defendant’s motion to amend her
counterclaim.
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

1

For purposes of deciding this motion, 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

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.
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

3

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

Distribution,

LLC

does

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
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.
5

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
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.
Although

Rule

13

Applicable Law

controls

the

pleading

standards

for

a

counterclaim or crossclaim, an amendment to add a counterclaim is
governed by Rule 15.

Fed. R. Civ. P. 13 advisory committee’s note

(noting the abrogation of Rule 13(f) and the use of Rule 15 in its
place).

Federal Rule of Civil Procedure 15(a)(1)(A) states, in

pertinent part, that “[a] party may amend its pleading once as a
matter of course . . . before being served with a responsive
pleading.”

If a party seeks to amend its pleadings in all other

cases, it may only do so “with the opposing party’s written consent
or the court’s leave.”

Fed. R. Civ. P. 15(a)(2).

However, courts

are to grant leave freely when justice so requires.

Id.

“A motion to amend may be denied when it has been unduly
delayed[,]

when

allowing

the

6

motion

would

prejudice

the

nonmovant[,]” is based on bad faith, or would be futile.

Newport

News Holdings Corp. v. Virtual City Vision, Inc., 650 F.3d 423, 439
(4th Cir. 2011) (citing Foman v. Davis, 371 U.S. 178, 182 (1962)).
Further, a court has broad discretion to grant or deny leave to
amend “based upon a balancing of the equities, including whether
the

non-moving

party

will

be

prejudiced,

whether

additional

discovery will be required, and whether the court’s docket will be
strained.”

Barnes Group, Inc. v. C&C Products, Inc., 716 F.2d

1023, 1035 n.35 (4th Cir. 1993).

However, the United States Court

of Appeals for the Fourth Circuit has held that “delay alone,
without prejudice, does not support the denial of a motion for
leave to amend.”

CSX Transp., Inc. v. Gilkison, 406 F. App’x 723,

732 n.4 (4th Cir. 2010) (citing Deasy v. Hill, 833 F.2d 38, 41 (4th
Cir. 1987)).
IV.

Discussion

The defendant attempts to re-plead her claims for libel,
invasion of privacy, violations of the West Virginia Antitrust Act,
and malicious prosecution.

Accordingly, this Court will discuss

each re-plead counterclaim in turn.
A.

Libel
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;

7

and (6) resulting injury.”

Crump v. Beckley Newspapers, Inc., 320

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

“[I]t 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 her picture and name in association with HearUSA
in advertisements.
however,

the

In order to state a claim for defamation,

communications

must

have

been

defamatory.

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.”
77 (quoting Restatement (Second) of Torts § 559 (1977)).

Id. at

The West

Virginia Supreme Court has also described such communications as
those that “reflect shame, contumely, and disgrace upon [the
claimant].”

Syl. pt. 1, Sprouse v. Clay Communication, Inc., 211

S.E.2d 427 (W. Va. 1975).
In conjunction with her claim for libel, the defendant now
asserts that the libel “harmed her reputation, caused others
question her good reputation, and deterred potential clients from
association or dealing with Hawkins.”

ECF No. 65 Ex. 1 *3.

She

also asserted that it caused her “to be ridiculed[,]” caused “her
veracity to be questioned,” and caused her “to be subjected to
shame, contumely and disgrace.”

8

These additional allegations are nothing more than conclusory
recitations of the above stated law concerning libel.

While a

court must accept all well-pled facts contained in the complaint as
true when assessing a pleading, “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.”

Nemet Chevrolet, Ltd v. Consumeraffairs.com, Inc, 591

F.3d 250, 255 (4th Cir. 2009) (citing Ashcroft v. Iqbal, 129 S. Ct.
1937, 1949 (2009)).

Accordingly, because the new assertions

concerning her claim for libel are nothing more than that, allowing
the amendment of the counterclaim would be futile, as it still
fails to state a claim on which relief may be granted.
B.

Invasion of Privacy
While closely related to a claim for defamation, invasion of

privacy is a distinct theory of liability.
81.

Crump, 320 S. E. 2d at

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.
In this Court’s original opinion dismissing the defendant’s
counterclaim for invasion of privacy, this Court noted that the
defendant did not state which invasion of privacy tort she was

9

asserting and this Court could not construct her claim for her.
Further, this Court stated that even if it were to construe the
defendant’s claim as a claim for the appropriation of another’s
name or likeness, the counterclaim would still fail as she failed
to plead that any alleged appropriation caused emotional harm.

In

light of this ruling, the defendant has now included the following
statement

regarding

her

invasion

of

privacy

counterclaims:

“HearUSA’s conduct was an unreasonable intrusion or subversion of
Hawkins’ privacy, HearUSA’s [sic] appropriated Hawkins’ likeness,
caused unreasonable publicity to her private life, which conduct
placed Hawkins in a false light before the public and thus has
caused Hawkins great emotional harm.”

ECF No. 65 Ex. 1 *3.

The

defendant has merely made a general statement that the plaintiff
has committed all four invasion of privacy torts.

Because these

are unsupported legal conclusions, the defendant has again failed
to state a claim for an invasion of privacy tort upon which relief
may be granted.

Accordingly, allowing the amendment as it relates

to defendant’s invasion of privacy counterclaims would be futile.
C.

West Virginia Antitrust Act Violations
The defendant cites three different sections of the West

Virginia Antitrust Act (“WVATA”) in her amended counterclaim.
Specifically, she cites West Virginia Code §§ 47-18-3(b)(1)(A),
47-18-3(a)(3),

47-18-4.

Initially,

§ 47-18-3(a)(3) does not exist.

this

Court

notes

that

a

Instead, a § 47-18-3(a) exists as

10

does a § 47-18-3(b)(3), and, therefore, this Court will assume that
the defendant is attempting to assert a claim under either of those
statutes.

This

counterclaims

Court

brought

will

under

first

§

address

47-18-3,

and

the
then

defendant’s
discuss

her

counterclaim under § 47-18-4.
i.
To

West Virginia Code § 47-18-3
state

a

claim

under

§

47-18-3

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).

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

competition in the relevant geographic market.”
690 S.E.2d at 599.

affected

Princeton Ins.,

In doing so, it is not sufficient to only show

economic injury to the party asserting the claim, but instead the
party must show “injury to competition in the form of increased
cost, reduced supply of services, or harm to the patient.”

11

Patel

v. Scotland Memorial Hosp., No. 3:94CV00284, 1995 WL 319213 at *6
(M.D.N.C. Mar. 31, 1995); see also Princeton Ins., 690 S.E.2d at
599 (quoting Patel).
In this Court’s original opinion, it found that the defendant
had only alleged that a restraint on trade or commerce existed in
the West Virginia due to the plaintiff using covenants not to
compete.

This Court found such conclusory allegation to be

insufficient to state a claim at that time.

In her amended

counterclaim, the defendant now asserts the following concerning
her claim under § 47-18-3:
This concerted action [of having employees sign covenants
not to compete] had as its sole purpose the furtherance
of a conspiracy which imposed an unreasonable restraint
of [sic] trade or commerce in the State of West Virginia
and caused economic duress to those adversely affected
thereby, including Hawkins . . . . This concerted action
was designed and imposed to eliminate competition, at
least by Hawkins, or those with whom she would associate,
in the hearing aid business, which enabled HearUSA to
inflate costs of its goods services which misconduct was
Hawkins’ primary reason for termination of her employment
with HearUSA.
ECF No. 65 Ex. 1 *4 (emphasis added).
This Court again finds that these allegations fail to state a
claim upon which this Court may grant relief. The defendant stated
that the plaintiff is in a conspiracy imposing an unreasonable
restraint on trade in West Virginia.

When attempting to provide

factual support for this proposition, however, the defendant only
stated that the practice of using such covenants would eliminate
competition “at least by Hawkins.”
12

Assertions concerning Hawkins

alone cannot be considered sufficient to state a claim for the
“relevant

geographic

market”

of

the

State

of

West

Virginia.

Accordingly, this Court must deny the defendant’s motion to amend
the complaint as to any claims brought under § 47-18-3.
ii.

West Virginia Code § 47-18-4

To state 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
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)). Like claims under § 47-18-3, “a [party]
making

monopoly

and

attempted

monopoly

claims

must

allege

a

relevant geographic market to help the court determine whether the
[other party] has monopoly power.” E.I. du Pont de Nemours and Co.
v. Kolon Industries, 637 F.3d 435, 339 (4th Cir. 2011); see Kessel
v. Monongalia County General Hosp. Co., 648 S.E.2d 366, 381 (W. Va.
2007) (stating that courts should analyze WVATA claims “under the
guidance provided by federal law.”).
In its original opinion dismissing the defendant’s attempt at
asserting a claim under this section, this Court found that the
defendant had only made a conclusory statement that the plaintiff
had a monopoly on the audiology business and she failed to state

13

that

there

was

a

willful

acquisition

or

maintenance

of

the

monopoly. In her proposed amended counterclaim, the defendant adds
additional verbiage to her claim, asserting that based on the
covenant not to compete, the plaintiff has a monopoly in the
restricted ten-mile radius and if there are no competitors, the
plaintiff could continue to charge its inflated prices for goods
and services.

First, these additional statements still do not

address whether the plaintiff has willfully acquired or maintained
this alleged monopoly power.

Second, while the defendant asserts

that the relevant geographic market is the State of West Virginia,
she has failed to provide this Court with any allegation that the
plaintiff has a monopoly outside of the ten-mile radius encompassed
by the covenant not to compete.

Third, this Court finds that even

if the relevant geographic market was the ten-mile radius, there is
no assertion that the plaintiff is preventing any other entity from
entering the audiology business other than the defendant.

A

monopoly is defined as “[c]ontrol or advantage obtained by one
supplier or producer over the commercial market within a given
region.”

Black’s Law Dictionary 1160 (10th ed. 2014).

A business

allegedly only preventing one person or entity from entering a
given region without further allegations that any other person or
entity is so prevented cannot be said to meet the definition of
controlling a “given region.” Accordingly, the defendant’s amended
counterclaim under § 47-18-4 must fail, as the amendment is futile.

14

The claim in its proposed amended form still fails to state a claim
upon which relief may be granted.
D.

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
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)). In the defendant’s original counterclaim
and now in her amended counterclaim, the defendant asserts a claim
for malicious prosecution relating to the prosecution of this
action. As this Court has previously stated, and will state again,
such claim is premature.
therefore,

the

fourth

This action has not terminated, and
element,

which

requires

termination cannot and is not established.

a

favorable

Accordingly, any

amendment concerning the defendant’s malicious prosecution claim
must be dismissed as futile because the defendant cannot plausibly
state a claim for malicious prosecution upon which relief may be
granted.
V.

Conclusion

For the reasons stated above, the defendant’s motion to amend
the counterclaim is DENIED.
IT IS SO ORDERED.

15

The Clerk is DIRECTED to transmit a copy of this memorandum
opinion and order to counsel of record herein.
DATED:

July 17, 2014

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

16