Star Tobacco Inc. v. Darilek
| Decision Date | 23 December 2003 |
| Docket Number | No. 4:03-CV-313.,4:03-CV-313. |
| Citation | 298 F.Supp.2d 436 |
| Parties | STAR TOBACCO, INC., Plaintiff, v. D. David DARILEK, Jr., Jeff Cotten, Andrew Gornall, Dennis Schocron, Derek Lind, DDM Enterprises, Ltd. d/b/a Crown Distributing, Defendant. |
| Court | U.S. District Court — Eastern District of Texas |
Paul E. Ridley, of Kirkpatrick & Lockhart, Dallas, TX, for Plaintiffs.
Gregory William Carboy of Cowles & Thompson, Dallas, TX, Jeff C. Spahn, Jr. of Martin, Pringle, Oliver, Wallace and Bauer, Wichita, KS, for Defendants.
ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION TO DISMISS DEFENDANTS' COUNTERCLAIM
This matter is before the court on Plaintiff's "Motion to Dismiss Defendants' Counterclaim Pursuant to Rule 12(b)(6) and Brief in Support" (Dkt.# 10), filed October 27, 2003. After consideration of the briefing and the applicable law, the court is of the opinion that Plaintiff's motion should be granted in part and denied in part.
Plaintiff and Defendants are competitors in the cigarette market in Texas. Defs.' Ans. to Compl. & Counterclaim at 5. Plaintiff Star Tobacco is a Virginia corporation that manufactures discount cigarettes to sell to Texas cigarette distributors. Compl., ¶ 13. Additionally, Star purchases some of its cigarettes back from the Texas distributors and sells them directly to retailers as a promotion. Id. If the retailer is satisfied with the Star product and wants to continue to carry it, Star directs the retailer to the nearest wholesaler carrying Star products. Id.
Five of the individual defendants are former Star employees. Defs.' Mem. in Opp. to Pl.'s Mot. to Dismiss at 1. The remaining individual defendant, Derek Lind, did not work for Star. Defs.' Ans. to Compl. & Counterclaim at 5. Lind worked for a cigarette distributor in Texas named A.B. Coker. Id. The final defendant is DDM Enterprises, Ltd., which does business as Crown Distributing. DDM is a corporation formed by the individual defendants. Defs.' Mem. in Opp. to Pl.'s Mot. to Dismiss at 1. Defendants intended DDM to make money by marketing and distributing discount cigarettes, including those manufactured by Star. Id.
The roots of this dispute are found in Defendants' formation of DDM. Plaintiff alleges that Defendants initially planned for DDM "to purchase the Texas operations of the distributor for which Lind worked and to operate that business." Compl., ¶ 20. Plaintiff claims that DDM planned to generate revenue selling Star products, its own in-house brand of discount cigarettes, and other imported discount cigarettes. Id. In order to boost sales of DDM's own in-house brands, Plaintiff alleges that Defendants "planned to piggy back off of Star's sales, i.e., to offer good prices or terms on Star products on the condition that customers also bought their brands." Id. Plaintiff claims that DDM eventually purchased a different cigarette distributor but alleges that DDM would nevertheless compete with Star by selling its own brand of discount cigarettes. Id., ¶¶ 23-25.
Ultimately, Plaintiff claims that several of the individual defendants used their positions of authority as employees of Star to injure Star Tobacco. Defendants allegedly did this to pave the way for the success of DDM. Id., ¶ 21. Specifically, Plaintiff alleges that Defendant Darilek, the head of Star's sales staff in Texas, "ordered his conspirators at Star to `lay down' and to stop aggressively promoting Star's brands." Id. Darilek allegedly wanted Star to make fewer sales so that Star's customers would have more money available to purchase cigarettes from DDM. Id.
Thereafter, Plaintiff alleges that DDM conspired with A.B. Coker and one other cigarette distributor to "limit competitive pressure" and stabilize discount cigarette prices in Texas by limiting "competition on exclusive brands." Id., ¶ 29. More specifically, DDM and its alleged co-conspirators purportedly agreed to decrease sales on Star brands for the purpose of fueling "the growth of more profitable discount brands." Id. Additionally, Plaintiffs claim that Id., ¶ 30. Plaintiff claims that these actions have cost Star over $2 million in lost sales. Id., ¶¶ 35 & 38.
Defendants deny the majority of Plaintiff's allegations and claim that it is Plaintiff who has acted inappropriately. Defendants claim that when Plaintiff became aware that DDM was trying to organize and engage in business in Texas, Plaintiff then attempted to run Defendants out of business by "boycotting any business that agreed to do business with [Defendants], refusing to sell cigarettes to any business that had agreed to do business with [Defendants], [and] giving price reductions if customers did not do business with defendants...." Defs.' Ans. to Compl. & Counterclaim at 5. Further, Defendants claim that Plaintiff sold cigarettes to its customers "with the understanding or agreement that those customers ... would raise the prices of cigarettes sold by defendants," and claim that "[o]ne of the intended effects of this scheme is to lessen competition in the discount cigarette business in the State of Texas." Id., at 6.
On August 22, 2003, Plaintiff Star Tobacco filed a complaint alleging generally that Defendants violated their fiduciary duties to Plaintiff, conspired to commit tortious and illegal acts against Plaintiff, and tortiously interfered with Plaintiff's prospective business relations. Compl., ¶¶ 11-14. In response, Defendants filed a counterclaim, alleging that Plaintiff has violated § 15.05 of the Texas Free Enterprise and Antitrust Act of 1993 ("TFEAA") and has tortiously interfered with Defendants prospective business relations.1 Defs.' Ans. to Compl. & Counterclaim at 6-7.
Thereafter, Plaintiff moved the court to dismiss Defendants' antitrust and tort counterclaims. Generally, Plaintiff claims that Defendants have failed to allege facts sufficient to support their counterclaim. Mot. to Dismiss Defs.' Counterclaim Pursuant to Rule 12(b)(6) & Br. in Supp. ay 1-2. The question now before the court is whether Defendants have pled facts sufficient to support their counterclaim.
An order granting a Rule 12(b)(6) motion to dismiss is "appropriate where `it appears beyond doubt that the plaintiff can provide no set of facts in support of his claim which would entitle him to relief.'" Bauer v. Texas, 341 F.3d 352, 356 (5th Cir.2003) (citing Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). "In making this determination, the court accepts as true all allegations contained in the plaintiff's complaint and all reasonable inferences are to be drawn in favor of the plaintiff's claims." Id. (citing Kaiser Aluminum & Chem. Sales Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1050 (5th Cir.1982)).
In this case, Plaintiff has moved for dismissal of Defendants claims on the grounds that Defendants have failed to adequately plead them. Rule 8(a)(2) of the Federal Rules of Civil Procedure states, "[a] pleading which sets forth a claim for relief, whether an original claim, counterclaim, cross-claim, or third-party claim, shall contain ... a short and plain statement of the claim showing that the pleader is entitled to relief...." Fed.R.Civ.P. 8(a)(2). Rule 8 specifies that each averment of the pleading "shall be simple, concise and direct." Fed.R.Civ.P. 8(e)(1). Rule 8 additionally specifies that "[a]ll pleadings shall be so construed as to do substantial justice." Fed.R.Civ.P. 8(f).
Pleading requirements in federal courts have been generally characterized as liberal. See Byers v. Dallas Morning News, Inc., 209 F.3d 419, 425 (5th Cir.2000); accord General Star Indem. Co. v. Vesta Fire Ins. Corp., 173 F.3d 946, 950 (5th Cir.1999); Austin Black Contractors Ass'n v. City of Austin, Tex., 78 F.3d 185, 187 (5th Cir.1996). In Leatherman v. Tarrant County Narcotics Intelligence and Coordination Unit, 507 U.S. 163, 168, 113 S.Ct. 1160, 122 L.Ed.2d 517 (1993), the Supreme Court held that no cause of action is subject to heightened pleading requirements unless it is included in Rule 9(b) of the Federal Rules of Civil Procedure, which establishes heightened pleading requirements only for allegations of fraud and mistake. In Leatherman, the Court reaffirms its holding in Conley v. Gibson, that
the Federal Rules of Civil Procedure do not require a claimant to set out in detail the facts upon which he bases his claim. To the contrary, all the Rules require is `a short and plain statement of the claim' that will give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests.
355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957).
In the wake of Leatherman, the Fifth Circuit has held that "judicial attempts to apply a heightened pleading standard in antitrust cases had been `scotched' by the Supreme Court[] ...," and that after Leatherman, an "antitrust plaintiff need not include `the particulars of his claim' to survive a motion to dismiss." Apani Southwest, Inc. v. Coca-Cola Enterprises, Inc., 300 F.3d 620, 631 (5th Cir.2002) (citation omitted) (quoting MCM Partners, Inc. v. Andrews-Bartlett & Assoc., Inc., 62 F.3d 967, 976-77 (7th Cir.1995)). "It is instead sufficient for the plaintiff to include in its complaint only `a short and plain statement of the claim' showing an entitlement to relief." Id.
Nonetheless, an antitrust claimant must allege "facts sufficient to support an antitrust violation." Apani, 300 F.3d at 633 (citing Endsley v. City of Chicago, 230 F.3d 276, 282 (7th Cir.2000)).
In this case, Defendants allege that Plaintiff has violated § 15.05 of the TFEAA. Defs.' Ans. to Compl. & Counterclaim at 7. Specifically, Defenda...
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