Group v. Nucloud Global, Inc.
| Decision Date | 18 April 2016 |
| Docket Number | Case No. 2:15-cv-00533-TC |
| Parties | TLS GROUP, S.A., Plaintiff, v. NUCLOUD GLOBAL, INC., Defendant. NUCLOUD GLOBAL, INC., Counterclaim-Plaintiff, v. TLS GROUP, S.A.; TELEPERFORMANCE, S.A.; TPUSA, INC.; and TELEPERFORMANCE GROUP, INC., Counterclaim-Defendants. |
| Court | U.S. District Court — District of Utah |
This case centers on a dispute between two technology companies over the ownership of proprietary software. Each party has filed a motion with the court: Plaintiff and Counterclaim-Defendant TLS Group, S.A., (TLS) has moved to dismiss counterclaims brought against it, as well as TLS's parent corporation, Teleperformance, S.A., and TLS's sister corporations, TPUSA, Inc., and Teleperformance Group, Inc. (the parent and sister corporations will be collectively referred to as the "TP Entities"). Defendant and Counterclaimant NuCloud Global, Inc. (NuCloud),1 asks for leave to amend its counterclaim for a third time.2 TLS and the TP Entities object to the proposed amendment contending that the amendments would be futile.
For the reasons discussed below, the court grants in part and denies in part TLS's and the TP Entities' Motion to Dismiss (ECF No. 29), and grants in part and denies in part NuCloud's Motion for Leave to File a Proposed Third Amended Counterclaim (ECF No. 36).
The facts are taken from the allegations in NuCloud's proposed Third Amended Counterclaim, which are accepted as true for purposes of these motions only.
TLS provides information-technology services to organizations; one of its largest clients is the United Kingdom's Visa and Immigration (UKVI) service. NuCloud is a company focused on cloud computing, software, and technology. In the spring of 2013, TLS and NuCloud signed a Consulting Agreement, under which NuCloud wrote software that enabled TLS to provide cloud-computing technology to its clients, including the UKVI client.
But by the fall of 2014, the relationship had deteriorated because TLS supposedly interfered with NuCloud's work, destroyed morale, refused to pay on time, and rejected attempts to enter into a new agreement with NuCloud. In October 2014, NuCloud told TLS that becauseTLS had breached the Agreement, NuCloud was stopping its work, and, significantly, that TLS could no longer use NuCloud's software on the UKVI project.
In an attempt to save the relationship, two of the TP Entities' executives, Brent Welch and Dev Mudaliar, negotiated two new agreements between TLS and NuCloud. According to Mr. Welch and Mr. Mudaliar, the agreements would resolve all disputes and set a new course for the future. Mr. Welch and Mr. Mudaliar assured NuCloud that the TP Entities controlled TLS and the TP Entities would compel TLS to perform its contractual obligations. Furthermore, Mr. Welch and Mr. Mudaliar represented that the TP Entities would consider hiring NuCloud for their own work separate from the TLS relationship.
The two new agreements between TLS and NuCloud were the Settlement Agreement and Mutual Release (SAMR) and the Services Agreement. The parties signed the agreements on December 18, 2014. But within a week of the signing, the relationship soured with each party contending that the other was breaching the agreements.
In the summer of 2015, TLS sued NuCloud in this court. NuCloud filed a counterclaim listing fourteen causes of action against TLS and three causes of action against the TP Entities. TLS filed a criminal complaint against NuCloud in Luxembourg, where TLS is incorporated.
TLS and the TP Entities now move to dismiss seven of NuCloud's counterclaims: abuse of process, fraudulent inducement, fraudulent misrepresentation, unjust enrichment, trade defamation, tortious interference with business relationships, and violation of § 1201(a)(1) of the Digital Millennium Copyright Act (DMCA), 17 U.S.C. § 1201-1205 (2012). NuCloud asks the court for leave to amend its counterclaim; it proposes to supplement its allegations and add a negligent-misrepresentation claim against the TP Entities.
I. The claims
NuCloud raised fifteen claims in its Second Amended Counterclaim against TLS and the TP Entities collectively. TLS & the TP Entities now move to dismiss eight of those claims3 under Rule 12(b)(6) of the Federal Rules of Civil Procedure. In light of their motion, NuCloud seeks the court leave to amend and submits a proposed Third Amended Counterclaim. The proposed counterclaim would (1) withdraw the abuse-of-process and fraudulent-misrepresentation claims; (2) leave the unjust-enrichment claim without amendment from the Second Amended Counterclaim; (3) amend and supplement the trade-defamation claim, the intentional-interference-with-business-relationships claim, the violation of the DMCA claim, the two fraudulent-inducement claims along with addition factual allegations; and finally (4) add a completely new negligent-misrepresentation claim.
The court accepts NuCloud's withdrawal, or stipulated dismissal, of the abuse-of-process and fraudulent-misrepresention claims. The court analyzes the remaining three types of claims in order.
When assessing whether to dismiss a claim, the court "must accept all the well-pleaded allegations of the complaint as true and must construe them in the light most favorable" to the claimant. Thomas v. Kaven, 765 F.3d 1183, 1190 (10th Cir. 2014). But the court is not required to accept legal conclusions as true; a pleading "must offer specific factual allegations to supporteach claim." Kan. Penn Gaming, LLC v. Collins, 656 F.3d 1210, 1214 (10th Cir. 2011) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). For a claim to survive dismissal, a pleading "must have enough allegations of fact, taken as true, 'to state a claim to relief that is plausible on its face.'" Id. (quoting Twombly, 550 U.S. at 570).
TLS argues that the unjust-enrichment claim is precluded by the other breach-of-contract claims found in the both the second and the proposed Third Amended Counterclaim. TLS is correct that if NuCloud were to prevail on the contract claims, equitable relief would not be possible. Ashby v. Ashby, 227 P.3d 246, 251 (Utah 2010). But the fact that a contract claim would preclude recovery under an equity claim does not foreclose a party's ability to plead them in the alternative. Id. (). Pleading inconsistent claims in the alternative is explicitly allowed. Fed. R. Civ. P. 8(d)(2), (d)(3); Cleveland v. Policy Mgmt. Sys. Corp., 526 U.S. 795, 805 (1999) (), quoted with approval in Montano v. Christmas by Krebs Corp., 293 F. App'x 625, 630 (10th Cir. 2008).
Here, NuCloud seeks to set aside, or rescind, the SAMR and Services Agreement under a theory that the agreements were fraudulently formed. If NuCloud were to succeed in having those contracts set aside, it would need an equitable cause of action to obtain relief. If NuCloud were to prevail on the breach-of-contract claims, it would not need this alternative route to relief.
Under Federal Rule of Civil Procedure 15(a), NuCloud asks the court for leave to amend and supplement the factual allegations for these claims: (1) trade defamation, (2) intentional interference with business relationships, (3) violation of DMCA, and (4) fraudulent inducement.
Normally, the court should grant leave to amend "when justice so requires." Fed. R. Civ. P. 15(a). But TLS and the TP Entities object to the proposed amendment arguing that it would be futile because, under Rule 12(b)(6), the Third Amended Counterclaim still fails. The court may properly "deny a motion for leave to amend as futile when the proposed amended complaint would be subject to dismissal for any reason" including failure to state a claim. Bauchman for Bauchman v. W. High Sch., 132 F.3d 542, 562 (10th Cir. 1997). Accordingly, the court will decide whether the factual allegations within the proposed Third Amended Counterclaim, taken as true, "states a claim to relief that is plausible on its face." Kan. Penn Gaming, 656 F.3d at 1214 (quoting Twombly, 550 U.S. at 570).
If the factual allegations found within the proposed Third Amended Counterclaim satisfy the Rule 12(b)(6) standard, the court will grant NuCloud's motion seeking leave to amend. The proposed factual allegations for the four claims will be discussed in the same order as discussed above.
NuCloud alleges that TLS defamed it with statements to the TP Entities, other technology firms, and to personnel-recruiting companies. To establish defamation, a claimant must allege that (1) the opponent published or orally communicated statements concerning the claimant; (2) those statements were false, defamatory, and not subject to any privilege; (3) the statements weremade with the requisite degree of fault; and (4) the claimant was damaged by statements. West v. Thomson Newspapers, 872 P.2d 999, 1007-08 (Utah 1994). When pleading defamation, a claimant must do so with enough facts to allow the opponent to defend itself. McGeorge v. Cont'l Airlines, Inc., 871 F.2d 952, 955 (10th Cir. 1989) (citing Fed. R. Civ. P. 8(a)). Although Utah law provides a heightened pleading standard for defamation claims, in federal court a claimant need only allege facts sufficient to establish plausibility in accordance with Rule 8 of the Federal Rules of Civil Procedure. Biro v. Conde Nast, 807 F.3d 541, 545 (2d Cir. 2015); Pippen v....
To continue reading
Request your trial