Lawmen Supply Co. of N.J., Inc. v. Glock, Inc.

• Decision Date: 29 June 2018
• Docket Number: No. 1:17–cv–6166 (NLH/JS),1:17–cv–6166 (NLH/JS)
• Citation: 330 F.Supp.3d 1020
• Parties: LAWMEN SUPPLY COMPANY OF NEW JERSEY, INC., Plaintiff, v. GLOCK, INC., Defendant.
• Court: U.S. District Court — District of New Jersey

330 F.Supp.3d 1020

LAWMEN SUPPLY COMPANY OF NEW JERSEY, INC., Plaintiff,

v.GLOCK, INC., Defendant.

No. 1:17–cv–6166 (NLH/JS)

United States District Court, D. New Jersey.

Signed June 29, 2018

JONATHAN LOUIS TRIANTOS, SHAWN C. HUBER, WILLIAM M. TAMBUSSI, BROWN & CONNERY, LLP, 360 HADDON AVENUE, WESTMONT, NJ 08108, On behalf of Plaintiff

JOHN VINCENT TAIT, RENZULLI LAW FIRM, LLP, 81 MAIN STREET, SUITE 508, WHITE PLAINS, NY 10601, On behalf of Defendant

NOEL L. HILLMAN, U.S.D.J.

This matter arises from a Distribution Agreement between Plaintiff Lawmen Supply Company of New Jersey, Inc. and Defendant Glock, Inc. Before the Court is Defendant's Motion to Dismiss. For the reasons that follow, the Court will grant in part and deny in part Defendant's motion. The Court will grant Plaintiff leave to file an amended complaint.

I.

The Court takes its facts from Plaintiff's Complaint. Plaintiff is a licensed distributor of law enforcement products from leading manufacturers to law enforcement agencies. Defendant makes pistols and related products. For over twenty-five years, Plaintiff and Defendant have been in business together. Approximately four years prior to the filing of the Complaint, Plaintiff became a "Glock Only" distributor.

At the time of the filing of the Complaint, Plaintiff held an exclusive state contract with the State of New Jersey for Glock weapons, and thus all law enforcement agencies within the state were required to purchase Glock pistols from Plaintiff. Plaintiff has had similar contracts with the State of Delaware and the State of Maryland.

On December 6, 2016, Plaintiff and Defendant entered into a Distribution Agreement for Plaintiff to distribute "Glock Only" pistols to the law enforcement market. This Distribution Agreement is an annual contract that has been renewed every year since 2011. On July 10, 2017, Defendant attempted to unilaterally terminate the Distribution Agreement "effective immediately." Defendant claimed Plaintiff violated the Distribution Agreement by selling 340 Glock products to the commercial market rather than the law enforcement market.¹

Plaintiff's Complaint brings the following claims: (1) violation of the New Jersey Franchise Practices Act (NJFPA) (unlawful termination); (2) violation of the NJFPA (engagement in prohibited practices); (3) breach of contract; (4) breach of the implied covenant of good faith and fair dealing; (5) promissory and equitable estoppel; (6) tortious interference with business relations; (7) tortious interference with contract; (8) breach of fiduciary duty; (9) fraud and negligent misrepresentation; (10) unjust enrichment, (11) violation of the New Jersey Uniform Commercial Code; and (12) violation of the New Jersey Consumer Fraud Act (NJCFA). Defendant filed its Motion to Dismiss on October 4, 2017.

II.

This Court has subject matter jurisdiction over this matter pursuant to 28 U.S.C. § 1332. Plaintiff is a New Jersey corporation with its principal place of business in Delaware. Defendant is a Georgia corporation with its principal place of business in Georgia. As Defendant's Notice of Removal pleads an amount in controversy in excess of $75,000, exclusive of interest and costs, this Court has diversity jurisdiction pursuant to 28 U.S.C. § 1332.

III.

When considering a motion to dismiss a complaint for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6), a court must accept all well-pleaded allegations in the complaint as true and view them in the light most favorable to the plaintiff. Evancho v. Fisher, 423 F.3d 347, 351 (3d Cir. 2005). It is well settled that a pleading is sufficient if it contains "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2).

"While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do ...." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (alteration in original) (citations omitted) (first citing Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957) ; Sanjuan v. Am. Bd. of Psychiatry & Neurology, Inc., 40 F.3d 247, 251 (7th Cir. 1994) ; and then citing Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986) ).

To determine the sufficiency of a complaint, a court must take three steps. First, the court must "tak[e] note of the elements a plaintiff must plead to state a claim." Second, the court should identify allegations that, "because they are no more than conclusions, are not entitled to the assumption of truth." Third, "whe[n] there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement for relief."

Malleus v. George, 641 F.3d 560, 563 (3d Cir. 2011) (alterations in original) (citations omitted) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 664, 675, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ).

A district court, in weighing a motion to dismiss, asks "not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claim." Twombly, 550 U.S. at 563 n.8, 127 S.Ct. 1955 (quoting Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974) ); see also Iqbal, 556 U.S. at 684, 129 S.Ct. 1937 ("Our decision in Twombly expounded the pleading standard for ‘all civil actions’ ...."); Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009) (" Iqbal... provides the final nail in the coffin for the ‘no set of facts’ standard that applied to federal complaints before Twombly."). "A motion to dismiss should be granted if the plaintiff is unable to plead ‘enough facts to state a claim to relief that is plausible on its face.’ " Malleus, 641 F.3d at 563 (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955 ).

IV.

The Court first addresses what law it applies in deciding this motion. "A federal district court applies the forum state's choice of law rules to diversity actions." Ciecka v. Rosen, 908 F.Supp.2d 545, 552 (D.N.J. 2012). Accordingly, the Court will apply New Jersey choice of law rules. "New Jersey choice-of-law rules provide that ‘[o]rdinarily, when parties to a contract have agreed to be governed by the laws of a particular state, New Jersey courts will uphold the contractual choice.’ " Collins v. Mary Kay, Inc., 874 F.3d 176, 183–84 (3d Cir. 2017) (quoting Instructional Sys., Inc. v. Comput. Curriculum Corp., 130 N.J. 324, 614 A.2d 124, 133 (1992) ).

Parties' freedom to choose the law applicable to their agreements is not without boundaries in New Jersey law. New Jersey looks to Restatement § 187 to determine under what circumstances a choice-of-law clause will not be respected. Specifically, the Restatement provides that the parties' contractual choice will not govern if: "(a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties' choice, or (b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which ... would be the state of the applicable law in the absence of an effective choice of law by the parties."

Id. at 184 (quoting Instructional Sys., 614 A.2d at 133 ).

The Distribution Agreement provides: "This Agreement and the rights and obligations of the parties hereunder shall be governed and construed in accordance with the internal, substantive laws of the State of Georgia, USA, including its provisions of the Uniform Commercial Code, but without giving effect to its conflicts of laws principles."

The parties do not dispute that, if their relationship constitutes a franchise, the NJFPA applies regardless of the Georgia choice of law provision. See, e.g., Colt Indus. v. Fidelco Pump & Compressor Corp., 700 F.Supp. 1330, 1333 (D.N.J. 1987) ("[I]f this Court finds that the relationship between the parties amounts to a franchise as that term is used in the [NJFPA], the choice of law provision contained in the agreements will not abrogate the right of the [parties] to invoke the protections of [the NJFPA]."). The same holds true for Plaintiff's other state statutory claim. Prescription Counter v. AmerisourceBergen Corp., No. 04-5802, 2007 WL 3511301, at *13 (D.N.J. Nov. 14, 2007) ("The importance of the consumer protection policy manifested by the NJCFA has led the courts to apply New Jersey law, even though other choice of law rules pointed elsewhere.").

However, the parties disagree as to what law applies to the state common law claims. Plaintiff argues New Jersey law applies; Defendant argues Georgia law applies. The Court finds that, regardless of whether the NJFPA applies, it must apply Georgia law to the state common law claims. Ocean City Express Co. v. Atlas Van Lines, Inc., No. 13-1467, 2013 WL 3873235, at *4 n.4 (D.N.J. July 25, 2013) ("It may seem incongruous to apply New Jersey law and Indiana law in the same action, with New Jersey law governing the NJFPA claim and Indiana law governing the good faith and fair dealing claim. But other courts in this district have applied two states' laws to cases involving NJFPA claims."); Goldwell of N.J., Inc. v. KPSS, Inc., 622 F.Supp.2d 168, 193–94 (D.N.J. 2009) ("[T]he Court will respect the ... choice of law provisions stipulating that Maryland law shall govern [the] non–NJFPA claims."); Stadium Chrysler Jeep, L.L.C. v. DaimlerChrysler Motors Co., LLC, 324 F.Supp.2d 587, 594 n.1 (D.N.J. 2004) ; Harter Equip., Inc. v. Volvo Constr. Equip. N. Am., Inc., No. 01-4040, 2003 WL 25889139, at *8 (D.N.J. Sept. 24, 2003).

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