Pietoso, Inc. v. Republic Servs., Inc.

• Decision Date: 09 July 2021
• Docket Number: No. 20-2950,20-2950
• Parties: PIETOSO, INC., a Missouri corporation, individually and on behalf of all those similarly situated, doing business as Cafe Napoli, Plaintiff - Appellant v. REPUBLIC SERVICES, INC., A Delaware corporation; Allied Services, LLC, A Deleware limited liability company, doing business as Allied Waste Services of Bridgeton, Defendants - Appellees
• Court: U.S. Court of Appeals — Eighth Circuit

4 F.4th 620

PIETOSO, INC., a Missouri corporation, individually and on behalf of all those similarly situated, doing business as Cafe Napoli, Plaintiff - Appellant

v.REPUBLIC SERVICES, INC., A Delaware corporation; Allied Services, LLC, A Deleware limited liability company, doing business as Allied Waste Services of Bridgeton, Defendants - Appellees

No. 20-2950

United States Court of Appeals, Eighth Circuit.

Submitted: April 13, 2021

Filed: July 9, 2021

Nathaniel R. Carroll, Arch City Defenders, Ryan A. Keane, Michael C. Seamands, Law Offices of Michael C. Seamands, Saint Louis, MO, Steven W. Duke, Keane Law, LLC., Clayton, MO, for Plaintiff-Appellant.

Steven J. Alagna, Jeffrey Scott Russell, Barbara A. Smith, Bryan & Cave, Saint Louis, MO, for Defendants-Appellees.

Before GRUENDER, BENTON, and SHEPHERD, Circuit Judges.

GRUENDER, Circuit Judge.

Pietoso, Inc. d/b/a Café Napoli appeals part of the district court's order and judgment dismissing with prejudice Pietoso's complaint against Republic Services, Inc. and Allied Services, LLC d/b/a Allied Waste Services of Bridgeton ("Defendants").¹ We reverse.

I.

Pietoso operates Café Napoli in Clayton, Missouri.² In April 2011, Pietoso entered into an agreement ("Agreement") with Allied Services, a subsidiary of Republic Services, for waste-removal services at the restaurant. In the Agreement, Pietoso agreed to pay a basic-service rate of $323 per month for trash pickup four times a week. Pietoso was billed monthly for these services. The Agreement had an initial thirty-six-month term and automatically renewed for successive thirty-six-month terms. If Pietoso terminated the Agreement before the end of a thirty-six-month term for a reason other than Defendants’ breach of the Agreement, Pietoso would have to pay liquidated damages.

Pursuant to a provision in the Agreement entitled "Rate Adjustments," Defendants had the right to increase the basic-service rate without Pietoso's consent for any one of five enumerated, cost-related reasons ("Unilateral Reason"). They also could increase the basic-service rate with Pietoso's consent for any other reason ("Optional Reason"). The Agreement specified that this consent "may be evidenced verbally, in writing or by the parties’ actions and practices." Pietoso would suffer no consequences under the Agreement if it refused to consent to an Optional Reason rate increase—Defendants still had to provide Pietoso the same services and could not terminate the Agreement early.

Since April 2011, Defendants have regularly increased Pietoso's monthly basic-service rate for the same waste-removal services provided four times a week such that the rate went from $323 in April 2011 to $870.25 by August 2018. The monthly invoices sent to Pietoso that reflected rate increases never indicated that a given increase was for an Optional Reason that Pietoso was not obligated to pay. To the contrary, the increases were "always presented" as increases for a Unilateral Reason that Pietoso was obligated to pay. Accordingly, Pietoso believed that the increases were for Unilateral Reasons and paid them in accordance with its obligations under the Agreement.

Pietoso continued paying the monthly invoices until early 2019. At that time, Pietoso contacted Defendants to complain about the increases to its basic-service rate. In response, Defendants offered to reduce Pietoso's basic-service rate from $870.25 to $280, a figure below Pietoso's initial April 2011 basic-service rate. For this reason, Pietoso suspected that Defendants repeatedly had increased the basic-service rate for Optional Reasons without obtaining its consent, thereby breaching the Agreement.

Accordingly, Pietoso terminated the Agreement and commenced this putative nationwide class action, claiming breach of contract.³ Defendants moved to dismiss, arguing that Pietoso had failed to state a claim for breach of contract, see Fed. R. Civ. P. 12(b)(6), because Pietoso pleaded that it was aware of and paid the rate increases for approximately eight years, thereby consenting by its "actions and practices" to the increases. The district court agreed and dismissed Pietoso's complaint with prejudice. Pietoso appeals, challenging the dismissal of its breach-of-contract count.

II.

We review de novo the district court's grant of a Rule 12(b)(6) motion to dismiss, accepting the facts alleged in the complaint as true and drawing all reasonable inferences in favor of the nonmovant. Trone Health Servs. , 974 F.3d at 850. To survive a motion to dismiss, a plaintiff must allege facts that, accepted as true, state a claim to relief that is plausible on its face. Soueidan , 926 F.3d at 1034. "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Glick v. W. Power Sports, Inc. , 944 F.3d 714, 717 (8th Cir. 2019).

It is undisputed that Missouri law governs Pietoso's breach-of-contract claim. Under Missouri law, this claim has four elements: "(1) the existence and terms of a contract; (2) that plaintiff performed or tendered performance pursuant to the contract; (3) breach of the contract by the defendant; and (4) damages suffered by the plaintiff." WireCo WorldGroup, Inc. v. Liberty Mut. Fire Ins. , 897 F.3d 987, 994 (8th Cir. 2018) (quoting Keveney v. Mo. Mil. Acad. , 304 S.W.3d 98, 104 (Mo. 2010) ). The only element in dispute here is the third, and the issue is whether Pietoso has plausibly pleaded that Defendants breached the Agreement by increasing the basic-service rate for Optional Reasons without Pietoso's consent.

Defendants do not dispute that Pietoso plausibly pleaded that Defendants increased the basic-service rate for Optional Reasons. Instead, Defendants contend, and the district court concluded, that Pietoso pleaded itself out of its own claim by asserting that it was aware of and paid the increases for approximately eight years. To Defendants and the district court, Pietoso's faithful invoice payments constituted "actions and practices" manifesting its consent to Optional Reason increases, meaning that Defendants could not have breached the Agreement in the manner Pietoso alleged. We disagree.

The Agreement permitted Defendants to increase Pietoso's basic-service rate for an Optional Reason if Pietoso consented to paying the increase, and the Agreement specified that Pietoso's consent "may be evidenced" by "the parties’ actions and practices." This provision of the Agreement essentially incorporated hornbook contract law. See Maples v. United Sav. & Loan Ass'n , 686 S.W.2d 525, 527 (Mo. Ct. App. 1985) (noting that assent may be determined "by the conduct of the parties" to a contract); Restatement (Second) of Contracts § 19 cmt. a (Am. L. Inst. 1981) (noting that conduct "may often convey" assent "as clearly as words"). The Agreement does not explicate this consent-by-conduct provision, such as by specifying in what circumstances "actions and practices" would manifest consent or whether particular "actions and practices" would be deemed to manifest consent. But we presume that Pietoso and Defendants contracted with existing principles of Missouri contract law in mind as to when conduct will show consent. See Wheeling Pittsburgh Steel Corp. v. Beelman River Terminals, Inc. , 254 F.3d 706, 713 (8th Cir. 2001) ("[I]t is presumed that the parties had the well settled law of the land in contemplation when the contract was made." (quoting Sadler v. Bd. of Educ. of Cabool Sch. Dist. R-4 , 851 S.W.2d 707, 712-13 (Mo. Ct. App. 1993) )).

Under Missouri law, whether conduct manifests consent is determined by "what a reasonably prudent person would be led to believe" by that conduct, Silver Dollar City, Inc. v. Kitsmiller Constr. Co. , 931 S.W.2d 909, 914 (Mo. Ct. App. 1996), in light of "all the circumstances and relations of the parties," Roper v. Clanton , 258 S.W.2d 283, 288 (Mo. Ct. App. 1953). Conduct that is "unambiguous" in light of all relevant circumstances suffices to show consent. Roper , 258 S.W.2d at 288 ; see also Maples , 686 S.W.2d at 527 (noting that consent is implied if it is a "necessary deduction from the circumstances, general language or conduct of the parties"). But...