Volume Services, Inc. v. Ovations Food Services, L.P.
| Decision Date | 17 October 2018 |
| Docket Number | 18 CVS 194 |
| Citation | 2018 NCBC 107 |
| Court | Superior Court of North Carolina |
| Parties | VOLUME SERVICES, INC.; and SERVICE AMERICA CORPORATION; collectively d/b/a CENTERPLATE, Plaintiffs, v. OVATIONS FOOD SERVICES, L.P., d/b/a SPECTRA FOOD SERVICES AND HOSPITALITY; GLOBAL SPECTRUM, L.P., d/b/a SPECTRA VENUE MANAGEMENT; CUMBERLAND COUNTY CIVIC CENTER COMMISSION; CUMBERLAND COUNTY BOARD OF COMMISSIONERS; and COUNTY OF CUMBERLAND, Defendants. |
Shanahan McDougal, PLLC, by Gregg E. McDougal, Brandon S Neuman, Jeffrey M. Kelly, and H. Denton Worrell, for Plaintiffs.
Poyner Spruill LLP, by J. Nicholas Ellis and Colin R. McGrath, for Defendants Ovations Food Services, L.P. and Global Spectrum L.P.
Cumberland County Attorney's Office, by Robert A. Hasty, Jr., Phyllis P. Jones, and Rickey L. Moorefield, for Defendants Cumberland County Civic Center Commission, Cumberland County Board of Commissioners, and County of Cumberland.
1. THIS MATTER is before the Court on: (1) Defendants Cumberland County Civic Center Commission (the "Commission"), Cumberland County Board of Commissioners (the "Board"), and the County of Cumberland's (the "County") (collectively, the "County Defendants") Motion to Dismiss (the "County Defendants' Motion"); and (2) Defendants Ovations Food Services, L.P., d/b/a Spectra Food Services and Hospitality ("Spectra Food") and Global Spectrum, L.P., d/b/a Spectra Venue Management's ("Spectra Management") (collectively, the "Spectra Defendants" and, together with the County Defendants, "Defendants") Motion to Dismiss (the "Spectra Defendants' Motion"). The County Defendants' Motion and Spectra Defendants' Motion are referred to collectively as "the Motions."
2. The Motions seek dismissal of all claims against Defendants pursuant to North Carolina Rule of Civil Procedure 12(b)(6). For the reasons set forth herein, the Court GRANTS in part and DENIES in part the Motions.
3. This action arises out of the award of a contract to provide food and beverage services (the "Food and Beverage Contract") at the Crown Complex, a County-owned facility established in Cumberland County in 1964. The Crown Complex is under the authority of the Board, which created the Commission to act in an advisory capacity and assist in operating the Crown Complex. Plaintiffs Volume Services, Inc. and Service America Corporation, collectively d/b/a Centerplate ("Plaintiffs"), held the Food and Beverage Contract from 1996 until 2018.
4. In 2013, the Commission entered into a contract with Spectra Management for it to manage the Crown Complex. In 2017, as Plaintiffs' contract was nearing its expiration, the Commission decided to invite bids for the Food and Beverage Contract and issued a request for proposals ("RFP"). Spectra Food and Plaintiffs were the only bidders considered for the Food and Beverage Contract, which was ultimately awarded to Spectra Food.
5. Plaintiffs allege that the RFP process was conducted in an illegal, arbitrary, and unfair manner and that the Spectra Defendants worked together to misappropriate Plaintiffs' confidential business information and improperly influence the RFP process to give Spectra Food an unfair advantage. Defendants seek dismissal of Plaintiffs' Second Amended Complaint pursuant to Rule 12(b)(6) of the North Carolina Rules of Civil Procedure ("Rule(s)").
6. The Court does not make findings of fact on motions to dismiss under Rule 12(b)(6) but only recites those factual allegations that are relevant and necessary to the Court's determination of the Motions.
7. Plaintiffs are Delaware corporations with their principal offices in Stamford, Connecticut. (Second Am. Compl. ¶¶ 5-6, ECF No. 54 ["Compl."].) Plaintiffs provide hospitality services to event venues across the United States. (Compl. ¶ 15.)
8. Spectra Food is a Pennsylvania limited partnership with its principal office in Philadelphia, Pennsylvania. (Compl. ¶ 7.) Spectra Management is a Delaware limited partnership with its principal office in Philadelphia, Pennsylvania. (Compl. ¶ 8.)
9. Cumberland County owns the Crown Complex, a public facility with five venues for public gatherings, events, and exhibitions. (Compl. ¶¶ 16-18.) The Crown Complex is under the governing authority of the Board and is operated by the Commission, which reports to the Board in an advisory role. (Compl. ¶¶ 18-19.) The Commission conducts regular meetings to address matters concerning the Crown Complex. (See Compl. ¶ 41.)
10. In 1996, the Board and Plaintiffs entered into a contract for Plaintiffs to serve as food and beverage manager of the Crown Complex for a ten-year term (the "Centerplate Contract") and in August 2007, renewed Plaintiffs' contract for an additional ten-year term. (Compl. ¶¶ 20-21.) Pursuant to the Centerplate Contract, Plaintiffs had, with limited exceptions, the exclusive right to operate all food and beverage services at the Crown Complex in exchange for making investments for improvements to the Crown Complex and paying a percentage of food and beverage sales to the Board.[1] (Aff. Darren Hubbard, Ex. A, §§ 7.1, 22.1, 37.1, ECF No. 36.1 ["Centerplate Contract"].)
11. The Centerplate Contract obligated Plaintiffs to report sales and financial information to the manager of the Crown Complex, which was the Commission until 2013. (Compl. ¶¶ 26, 30-32.) The Board agreed not to use or disclose Plaintiffs' confidential information without Plaintiffs' written consent, except to its employees and agents, and to be responsible for ensuring that its employees and agents abided by the confidentiality provision. (Centerplate Contract § 65.)
12. In 2013, the Commission entered into a contract to delegate certain management responsibilities for the Crown Complex to Spectra Management (the "Management Contract"). (Compl. ¶¶ 26, 33.) As part of the Management Contract, Spectra Management agreed to abide by all of the Crown Complex's existing contracts. (Compl. ¶ 27.) Once Spectra Management was on board as manager, Plaintiffs, consistent with their obligations under the Centerplate Contract, submitted their confidential sales information to Spectra Management. (Compl. ¶¶ 30-34.) The information submitted included "detailed reports, pricing policies, and financial information regarding [Plaintiffs'] sales for each event at the Crown Complex." (Compl. ¶ 30.)
13. At a regular meeting in June 2017, the Commission addressed the pending September 30, 2017 expiration of the Centerplate Contract. (Compl. ¶ 41; see Centerplate Contract § 4.1.) Assistant County Attorney Phyllis Jones ("Jones") stated that the RFP for the Food and Beverage Contract "would have to be presented to the [Board] for action should the RFP call for capital improvement recommendations." (Compl. ¶ 41.) The Commission voted in favor of establishing a committee (the "Food and Beverage Ad Hoc Committee") to develop the RFP for publication and to make a preliminary evaluation of submitted proposals to present to the full Commission and then to the Board, if applicable. (Compl. ¶¶ 41-42.)
14. During this and all other Commission meetings during the relevant time period, Rita Perry ("Perry"), a Spectra Management employee, worked for and actively participated on the Commission, assuming responsibilities such as organizing and recording Commission meetings. (Compl. ¶¶ 36-37.)
15. Around August 1, 2017, the Commission initiated a public bidding process and published an RFP inviting sealed proposals for the Food and Beverage Contract to be submitted to the Commission in both electronic and paper form no later than 5:00 p.m. on August 31, 2017. (Compl. ¶ 42; Hubbard Aff. Ex. D, ¶ 1.02, ECF No. 36.4 ["RFP"].)
16. The RFP also required bidders to propose financial terms, including proposals for the percentage of sales to be paid to the Commission and capital investment to "upgrade the [f]oodservice facilities" at the Crown Complex. (RFP ¶¶ 2.13, 3.02, § 3.) Proposals were to include projects to upgrade the facilities, regardless of whether the successful bidder or the Commission would fund all or part of the projects. (RFP ¶ 3.02, § 3.) The RFP stated that capital investments were to be made in an amount no less than $500, 000, at a rate of no less than $100, 000 per year, for the five-year term of the Food and Beverage Contract, with an additional $250, 000 to be paid at a rate of no less than $50, 000 per year for any renewal. (RFP ¶ 2.13.) Equipment, leasehold improvements, and small wares purchased as part of the successful bidder's capital investments were to be immediately titled to the Commission when delivered to or installed in the Crown Complex facilities. (RFP ¶ 3.02, § 3.) The RFP further provided that "[a]t the termination of the [Food and Beverage Contract], for any reason, the Commission will purchase or cause to be purchased the then book value of Food and Beverage Manager's approved investment." (RFP ¶ 3.02, § 3.)
17. In addition to financial proposals, the RFP required bidders to disclose conflicts of interest where the proposer "or any individuals working on the contract has [sic] a possible conflict of interest and, if so, the nature of that conflict." (RFP ¶ 4.02.) Bidders were required to "[i]dentify any material arrangements, relationships associations, employment or other contacts that may cause a conflict of interest or the appearance of a conflict of interest[.]" (RFP ¶ 3.02, § 2 at 12.) Bidders were also required to disclose "any investigation, litigation, including administrative complaints or other administrative proceedings" involving the bidder and any public-sector clients during the past five years. (RFP ¶ 3.02, § 4.)...
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