Miami Valley Mobile Health Servs., Inc. v. Examone Worldwide, Inc.

• Decision Date: 10 February 2012
• Docket Number: Case No. 3:11–cv–158.
• Citation: 852 F.Supp.2d 925
• Parties: MIAMI VALLEY MOBILE HEALTH SERVICES, INC., et al., Plaintiffs, v. EXAMONE WORLDWIDE, INC., Defendant.
• Court: U.S. District Court — Southern District of Ohio

852 F.Supp.2d 925

MIAMI VALLEY MOBILE HEALTH SERVICES, INC., et al., Plaintiffs,

v.EXAMONE WORLDWIDE, INC., Defendant.

Case No. 3:11–cv–158.

United States District Court,

S.D. Ohio,

Western Division.

Feb. 10, 2012.

Jeffrey W. Snead, Joseph John Mondock, III, Thorson, Switala, Wilkins & Snead, LLP, Dayton, OH, for Plaintiff.

Brian Donald Wright, Donald Jeffrey Ireland, Erin Rhinehart, Faruki Ireland & Cox PLL, Dayton, OH, for Defendant.

DECISION AND ENTRY SUSTAINING IN PART AND OVERRULING IN PART DEFENDANT'S MOTION TO DISMISS (DOC. # 9)

WALTER HERBERT RICE, District Judge.

Plaintiffs, Miami Valley Mobile Health Services, Inc. (“MVMHS”), and its President, Joy M. Brush, filed suit against ExamOne Worldwide, Inc. (“ExamOne”), successor-in-interest to World Wide Health Services, Inc. (“WWHS”), seeking declaratory judgment and monetary damages. Plaintiffs' claims arise out of a licensing agreement and an agency agreement. The Court's jurisdiction is based on diversity of citizenship. See28 U.S.C. § 1332(a).

This matter is currently before the Court on Defendant's Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted. Doc. # 9. For the reasons set forth below, that motion is sustained in part and overruled in part.

I. Background and Procedural History

Defendant, ExamOne, coordinates paramedical examinations for the insurance industry. It is a Pennsylvania corporation with a principal place of business in Kansas. Compl. ¶¶ 7–8. When an individual applies for life insurance or health insurance, ExamOne, through its licensed agents, conducts the necessary medical examination. Compl. ¶ 13. Plaintiff MVMHS, formerly known as World Wide Health Services/Miami Valley, Inc. (“WWHS/MVI”), was one of ExamOne's licensed agents.

The origins of the relationship between MVMHS and ExamOne date back to 1989. On August 10, 1989, Shirley Mullins entered into a “License Agreement” with WWHS, ExamOne's predecessor. She was granted an exclusive license to conduct paramedical examinations on behalf of WWHS in 16 counties in northwest Ohio (the “licensed area”). Ex. 1 to Compl. On October 25, 1991, pursuant to the terms of a separate Agency Agreement, this territory was expanded to include 8 more counties in southwest Ohio (the “Cincinnati region”). Compl. ¶¶ 22–23.

In March of 1995, Mullins sold her business to Plaintiff Joy Brush and WWHS/MVI, now known as MVMHS. Pursuant to the terms of an Asset Purchase Agreement,Mullins assigned the License Agreement and other agreements to WWHS/MVI. Compl. ¶ 25. On November 28,1995, WWHS entered into an Agency Agreement with WWHS/MVI whereby WWHS/MVI would provide services in the Cincinnati region. Compl. ¶ 26; Ex. 3 to Compl.

According to the Complaint, early in 2000, WWHS was bought out by ExamOne. Shortly thereafter, ExamOne began to open its own corporate offices to perform paramedical examinations, including offices in the licensed area and the Cincinnati region. Compl. ¶ 41. Plaintiffs allege that ExamOne began stealing clients through the use of centralized scheduling systems. They further allege that, by late 2005 or 2006, ExamOne began using a new “zip code” model to chip away Plaintiffs' licensed territory. Compl. ¶¶ 42–46. According to Plaintiffs, by June of 2007, they believed that ExamOne was also stealing confidential trade secrets, including client contact information, and making it difficult for Plaintiffs' clients to schedule examinations. Compl. ¶¶ 47–48.

On February 8, 2011, ExamOne unilaterally terminated the November 28, 1 995 Agency Agreement, effective May 11, 2011, allegedly because Plaintiffs had made unauthorized use of a client's trademark in an email message. Compl. ¶¶ 49–54.

Plaintiffs then filed suit against ExamOne. Plaintiffs seek a declaration that the August 10, 1989, License Agreement and other related agreements remain valid and enforceable. They also seek compensatory and punitive damages for breach of the License Agreement, breach of the Agency Agreement, breach of implied contract, promissory estoppel, breach of fiduciary duty, unjust enrichment, misappropriation of trade secrets, tortious interference with business relationships, tortious interference with contractual relationships, and conversion.

Defendant has moved to dismiss the Complaint with prejudice pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted.

II. Standard of Review

Rule 12(b)(6) of the Federal Rules of Civil Procedure provides that a complaint may be dismissed if it fails to state a claim upon which relief can be granted. Because a motion under Rule 12(b)(6) is directed solely to the complaint itself, Roth Steel Prods. v. Sharon Steel Corp., 705 F.2d 134, 155 (6th Cir.1983), the focus is on whether the plaintiff is entitled to offer evidence to support the claims, rather than on whether the plaintiff will ultimately prevail. Jackson v. Birmingham Bd. of Educ., 544 U.S. 167, 184, 125 S.Ct. 1497, 161 L.Ed.2d 361 (2005) (citing Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974)).

The purpose of a motion to dismiss under Rule 12(b)(6) “is to allow a defendant to test whether, as a matter of law, the plaintiff is entitled to legal relief even if everything alleged in the complaint is true.” Mayer v. Mylod, 988 F.2d 635, 638 (6th Cir.1993). If there is an absence of law to support the type of claim made, or if the facts alleged are insufficient to state a valid claim, or if on the face of the complaint there is an insurmountable bar to relief, dismissal of the action is proper. Little v. UNUMProvident Corp., 196 F.Supp.2d 659, 662 (S.D.Ohio 2002) (citing Rauch v. Day & Night Mfg. Corp., 576 F.2d 697 (6th Cir.1978)).

The function of the complaint is to afford the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests. See Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); Lewis v. ACB Business Serv., Inc., 135 F.3d 389, 405 (6th Cir.1998). A complaintneed not set down in detail all the particularities of a plaintiff's claim. Rule 8(a)(2) of the Federal Rules of Civil Procedure requires only a “short and plain statement of the claim showing that the pleader is entitled to relief.” However, “Rule 8 ... does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions.” Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1950, 173 L.Ed.2d 868 (2009). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. at 1949.See also Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (“A formulaic recitation of the elements of a cause of action” is not enough). The complaint “must contain either direct or inferential allegations respecting all the material elements to sustain a recovery under some viable legal theory.” Scheid v. Fanny Farmer Candy Shops, Inc., 859 F.2d 434, 436 (6th Cir.1988) (emphasis in original).

Legal conclusions “must be supported by factual allegations” that give rise to an inference that the defendant is, in fact, liable for the misconduct alleged. Iqbal, 129 S.Ct. at 1949–50. The factual allegations must show more than a possibility that the defendant acted unlawfully. “Where a complaint pleads facts that are ‘merely consistent with’ a defendant's liability, it ‘stops short of the line between possibility and plausibility of ‘entitlement to relief.’ ” Id. at 1949 (quoting Twombly, 550 U.S. at 557, 127 S.Ct. 1955).

When considering a motion to dismiss pursuant to Rule 12(b)(6), the court must construe the complaint in the light most favorable to the plaintiff and accept all well-pleaded material allegations in the complaint as true. See Scheuer, 416 U.S. at 236, 94 S.Ct. 1683;Arrow v. Federal Reserve Bank of St. Louis, 358 F.3d 392, 393 (6th Cir.2004); Mayer, 988 F.2d at 638. The court will indulge all reasonable inferences that might be drawn from the pleading. See Saglioccolo v. Eagle Ins. Co., 112 F.3d 226, 228 (6th Cir.1997). However, it will not accept conclusions of law or unwarranted inferences cast in the form of factual allegations. See Gregory v. Shelby County, 220 F.3d 433, 446 (6th Cir.2000); Lewis, 135 F.3d at 405.

III. Analysis

Defendant argues that Plaintiffs' claims should be dismissed because they are time-barred. In the alternative, Defendant argues that many of Plaintiffs' claims should be dismissed as duplicative of the breach of contract claims, because they are preempted, or because Plaintiffs have otherwise failed to state a claim upon which relief may be granted.

A. Statute of Limitations

In its Motion to Dismiss, Defendant first argues that, under Pennsylvania law, Plaintiffs' claims of breach of contract, breach of implied contract, promissory estoppel, breach of fiduciary duty, misappropriation of trade secrets, tortious interference, and conversion are all time-barred.

1. Governing Law

The threshold issue concerning the statute of limitations defense is which state's law applies. Defendant maintains that Pennsylvania law applies; Plaintiffs maintain that Ohio law applies. It makes a difference because, as a general rule, Pennsylvania has much shorter statutes of limitations. If Pennsylvania law governs, many of Plaintiffs' claims will be time-barred.

The parties agree that a federal court exercising diversity jurisdiction must apply the choice-of-law rules of the state in which it sits. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). Under Ohio law, contractual choice-of-law provisions are valid and enforceable. See Schulke Radio Prod. Ltd. v. Midwestern Broad. Co., 6 Ohio St.3d 436, 438–39, 453 N.E.2d 683, 686 (Ohio 1983). Although the 1989 License Agreement contains a choice-of-law provision, the parties disagree as to its interpretation. The parties also...