L.G. MotorSports, Inc. v. NGMCO, Inc., CASE NO. 4:11CV112
| Decision Date | 06 March 2012 |
| Docket Number | CASE NO. 4:11CV112 |
| Parties | L.G. MOTORSPORTS, INC. Plaintiff, v. NGMCO, INC., CORVETTE RACING, INC., MICHELIN NORTH AMERICA, INC., and DOUG FEHAN Defendants. |
| Court | U.S. District Court — Eastern District of Texas |
Now before the Court is Defendant General Motors, LLC f/k/a NGMCO, Inc.'s Motion to Dismiss (Dkt. 6). As set forth below, the Court finds that the motion should be GRANTED in part and DENIED in part.
This is a removed action. Plaintiff L.G. Motorsports, Inc. (LG) claims that its efforts to race the number 28 Corvette C6 in the GT2 Class of the American Le Mans Series has been stymied by the anti-competitive acts of GM, LLC (New GM), Corvette Racing, Michelin and Doug Fehan.
LG contends that its efforts to continue its World Challenge record in racing was compromised when the Old GM (the GM that went into bankruptcy) lobbied to have the sanctioning body add 190 pounds to its Corvette which "effectively neutered the vehicle." LG decided to race its car in the American Le Mans Series, but only after it secured promises from Old GM that GMwould not race a GT2 series car.
LG is in the business of not only racing but also building race cars and selling automobile parts. LG contends that its success is tied to its performance on the track. LG contends that, to race in various series, there must be a completed homologation process. One series, the Automobile Club de L'Ouest (ACO) requires that factory specifications be provided for the road car and that any deviations be approved by the governing body. A competitor of ACO, Federation Internationale de L' Automobile (FIA) requires authorization and cooperation of the manufacturer to complete homologation.
LG purchased a homologated race car from Riley Technologies (Riley). This car was approved by GM and sold as a GT2 Corvette to LG. LG claims that it purchased the car based on the promise by GM that it would complete all necessary approvals for homologation according to the FIA and that GM was not planning to race a vehicle in the GT2 class. This all took place in the spring of 2008.
LG raced the car in the ACO series in 2008, and in the fall of 2008, alleges that GM suddenly changed course and decided to race a GT2 class car in the FIA series and refused to work with Riley and complete the homologation process required by the FIA. All these actions occurred prior to GM's bankruptcy. As a result, LG could not compete in the FIA sanctioned events, resulting in a reversal of its racing fortunes. LG alleges that the new GM has continued to take actions to exclude LG from sanctioned FIA events.
In a statement that would make any advertising agency proud, LG contends that Michelin tires are the best in the sport. And second best is not even close.
LG contends that the new GM, Corvette Racing (the in-house marketing organization of new GM) and Doug Fehan, the head of Corvette Racing, have all entered into an express agreement with Michelin whereby Michelin will not provide or sell Michelin racing tires to LG. Because Michelin would not provide tires, LG alleges that its driver quit the team resulting in a substantial loss of time and money to LG.1 LG alleges in its petition a number of instances where it tried to secure Michelin tires but to no avail.
In August of 2009, LG alleges, Michelin told it that the new GM did not want LG to have Michelin tires. LG states that this is the type of anti-competitive activity practiced by the new GM to secure its place in the winner's circle to the exclusion of a smaller competitor, LG.
LG brings its suit for violations of the Sherman Antitrust Act and Texas Free Enterprise and Antitrust Act of 1983, unlawful monopolization (and attempted monopolization) in violation of Section 2 of the Sherman Act and Texas Free Enterprise and Antitrust Act of 1983, tortious interference with prospective contractual relations, tortious interference with existing contract, business disparagement and civil conspiracy.
General Motors, LLC has filed a Motion under Federal Rule of Civil Procedure 12(b)(6) (Dkt. 6). Defendant Michelin North America, Inc. has filed an unopposed notice of joinder in the motion (Dkt. 9). In the Fifth Circuit "(A) motion to dismiss under rule 12(b)(6) 'is viewed with disfavor and is rarely granted.'" Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498 (5th Cir.2000) (quoting Kaiser Aluminum & Chem. Sales v. Avondale Shipyards, 677 F.2d 1045, 1050 (5th Cir. 1982)). The court is required to construe the complaint liberally in favor of the plaintiff, and takes all facts pleaded in the complaint as true. See Campbell v. Wells Fargo Bank, 781 F.2d 440, 442 (5th Cir. 1986). "To survive a Rule 12(b)(6) motion to dismiss, the plaintiff must plead 'enough facts to state a claim to relief that is plausible on its face.'" Severance v. Patterson, 566 F.3d 490, 501 (5th Cir. 2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1974, 167 L.Ed.2d 929 (2007)).
General Motors, LLC claims that LG's disparagement claim fails. The general elements of a claim for business disparagement are publication by the defendant of the disparaging words, falsity, malice, lack of privilege and special damages. See Hurlbut v. Gulf Atlantic Life Ins. Co., 749 SW 2d 762 (Tex. 1987). In the petition, LG only alleges that the Defendants published disparaging words about LG Motorsports' economic interests - not that the Defendants disparaged LG Motorsports. The petition is silent as to what disparaging words were stated.
LG has submitted a declaration of Lou Gigliotti, President of LG. He states that, in September of 2009, Fehan disparaged LG by asserting that LG failed to comply with the applicable rules - effectively, that LG had cheated or had achieved a higher qualifying position than GM's Corvette Racing team by other than skilled technical prowess. See Dkt. 22 at Exhibit A.
However, in ruling on a Rule 12(b)(6) motion to dismiss, the district court cannot look beyond the pleadings, Cinel v. Connick, 15 F.3d 1338, 1341 (5th Cir.1994). Thus, the Court will notlook beyond the pleadings here. Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." See Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1949, 173 L. Ed.2d 868 (2009). Rule 8 does not require "detailed factual allegations but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Id. Thus, a complaint will survive a motion to dismiss if it contains "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 167 L. Ed.2d 929 (2007) (internal quotation omitted). A plaintiff meets this standard when it "pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 129 S.Ct. at 1949. Nevertheless, specific words or statements must be identified in order to determine whether the statements are in fact disparaging or false. Granada Biosciences, Inc. v. Barrett, 958 S.W.2d 215, 222 (Tex.App.-Amarillo 1997, pet. denied).
The Court can find no statements in the petition which disparage LG or its economic interests. Nor is there any pleading of facts in support of the publication element of its claims. See WFAA -TV, Inc. McLemore, 978 S.W.2d 568, 571 (Tex. 1998). It is just the type of conclusory pleading that Iqbal disfavors. After thoroughly reviewing the petition, LG's complaint for business disparagement does not pass "Iqbal muster."
General Motors, LLC purchased the assets of old GM on July 10, 2009. Thus, the Court will first look to the petition to determine the complaints raised against GM, LLC on or after July 10,2009.
Plaintiff alleges that GM, LLC has entered into an agreement precluding LG from purchasing or otherwise obtaining Michelin racing tires. However, other teams racing different cars are not affected. Michelin goes along with this conduct because it wants to sell tires to GM, LLC. See Dkt. 1-1 at ¶ 36. LG also alleges that GM, LLC continues to refuse to complete the homologation with Riley. See Dkt. 1-1 at¶ 38. A driver for LG also tried to obtain Michelin tires for the Corvette. He was not able to do so but was able to obtain tires for a Ford that he drove later on. See Dkt. 1-1 at ¶ 41. In or about August 2009, Michelin confirmed that GM, LLC did not want LG to have Michelin tires. Other teams were not so precluded. See Dkt. 1-1 at ¶ 42.
Thus, viewing the petition in the light most favorable to the Plaintiff, it appears that a jealous racing sports competitor has entered into an agreement to keep a smaller racing competitor from competing against it by preventing a manufacturer from selling tires to the smaller racing competitor. In addition, the larger racing competitor refuses to complete the homologation process with Riley so the smaller racing competitor can participate in one of the valued sanctioned car events.
The federal antitrust laws protect competition, not competitors. Brunswick, 429 U.S. at 488, 97 S.Ct. at 697. Section 1 of the Sherman Act states that "[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal." 15 U.S.C. § 1.
The first question to be addressed is whether LG has sufficiently stated a claim for per seviolation of Section 1 of the Act. If the application of the per se rule is appropriate, competitive harm is presumed and further analysis is unnecessary. See Viazis v. American Ass'n of Orthodonists, 314 F.3d 758, 765 (5th Cir. 2002). The Supreme Court has held that a...
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