Watkins & Son Pet Supplies v. Iams Co.
| Decision Date | 03 March 1999 |
| Docket Number | No. C-3-95-189.,C-3-95-189. |
| Parties | WATKINS & SON PET SUPPLIES, Plaintiff, v. The IAMS COMPANY, Defendant. |
| Court | U.S. District Court — Southern District of Ohio |
John R. Regan, Farmington, Hills, MI, Stephen D. Colbert, Brotherton & Colbert PLLC, Lewisville, TX, for Plaintiff,
Donald Jeffrey Ireland, Mary L. Wiseman, Faruki Gilliam & Ireland, Dayton, OH, John A. Yeager, Willingham & Cote P.C., East Lansing, MI, Nicholas E. Subashi, Law Office of Nicholas E. Subashi, Dayton, OH, for Defendant.
DECISION AND ENTRY SUSTAINING IN PART AND OVERRULING IN PART DEFENDANT'S MOTION TO DISMISS OR TO STRIKE ALL OR A PORTION OF COUNTS I, III, IV, V AND VI OF PLAINTIFF'S FOURTH AMENDED COMPLAINT (DOC. # 90)
This litigation arises out of the termination of a long-term business relationship. Plaintiff Watkins and Son Pet Supplies ("Watkins") has been a distributor of dog and cat food and pet products for more than thirty years.1 Since the late 1970's, Plaintiff has contracted with Defendant Iams Company ("Iams") to be a distributor of Iams' dog and cat products. Beginning in 1985, Iams began to require that Watkins execute written agreements. Each of those agreements was for a term of one year, and none included a renewal clause. Plaintiff alleges that an Iams representative informed it that the agreement was a formality and that Watkins would be able to distribute Iams products so long as it paid its bills and did a good job distributing products. In November, 1993, Watkins was notified that it would not be offered a renewal of its agreement with Iams for the distribution of Iams' dog and cat products for 1994, thus terminating the manufacturer-distributor relationship.
Following the termination of their relationship, Watkins initiated the instant lawsuit. To date, Watkins has filed five Complaints. Plaintiff's Second Amended Complaint (Doc. # 21) contained eleven causes of actions, to wit: 1) a claim against Iams under the Michigan Franchise Investment Law, Mich. Comp. Laws § 445.1501 et seq. ("MFIL"); 2) a claim against Iams and Wolverton,2 alleging that Iams gave allowances and discounts to Wolverton, in violation of § 2(d) and (e) of the Clayton Act, as amended by the Robinson-Patman Act ("Robinson Patman Act"); 3) a claim of exclusive dealing against Iams; 4) a claim against Iams, alleging that it has given illegal discounts to retailers, in violation of § 3 of the Clayton Act; 5) a claim against Iams and Wolverton, alleging that they engaged in an illegal tying arrangement and attempted to monopolize the market for specialty dog and cat food, in violation of §§ 1 and 2 of the Sherman Act; 6) a state law claim of tortious interference and interference with prospective contractual relations against Iams and Wolverton; 7) a state law claim of fraud against Iams; 8) a state law claim of breach of contract; 9) a state law claim of fraud in the inducement against Iams; 10) a state law claim of promissory estoppel against Iams; and 11) a state law claim of breach of duty of good faith and fair dealing against Iams. On March 15, 1996,3 this Court issued a decision, dismissing all the counts alleged against Co-Defendant Wolverton, Inc., and dismissing Counts One, Three, Five, Seven, and Nine against Iams.4 The Court granted Plaintiff leave to replead Counts Seven (Fraud) and Nine (Fraud in the Inducement).
On June 1, 1998, Plaintiff filed its Fourth Amended Complaint.5 In that Complaint, Watkins again alleged eleven causes of action, to wit: 1) violations of the MFIL and the Michigan Consumer Protection Act, Mich. Comp. Laws § 445.901 et seq. ("MCPA"); 2) a state law claim of tortious interference with contractual and prospective contractual relations; 3) illegal discounts, in violation of the Robinson-Patman Act, 15 U.S.C. § 13; 4) exclusive dealing in violation of Section 3 of the Clayton Act; 5) commercial bribery in violation of the Robinson-Patman Act;6 6) an illegal tying arrangement and attempt to monopolize in violation of §§ 1 and 2 of the Sherman Act; 7) a state law claim of fraud; 8) a state law claim of breach of contract; 9) a state law claim of fraud in the inducement; 10) a state law claim of promissory estoppel; and 11) a state law claim of breach of duty of good faith and fair dealing. On June 30, 1998, Iams filed the instant motion to dismiss or strike Counts One, Four, and Six, and to dismiss or strike portions of Counts Three and Five of the Fourth Amended Complaint, pursuant to Fed.R.Civ.P. 12(b)(6) and 12(f). (Doc. # 90) As discussed below, Defendant's Motion is Sustained in Part and Overruled in Part.
The standard for ruling upon motions to dismiss under Fed.R.Civ.P. 12(b)(6) has been set forth in this Court's previous decision (Doc. # 67), and is now repeated. 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, accept all factual allegations as true, and determine whether the plaintiff undoubtedly can prove no set of facts in support of his claims that would entitle him to relief." Cline v. Rogers, 87 F.3d 176, 179 (6th Cir.)(citing In re DeLorean Motor Co., 991 F.2d 1236, 1240 (6th Cir.1993), cert. denied, 519 U.S. 1008, 117 S.Ct. 510, 136 L.Ed.2d 400 (1996); see also Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); Barrett v. Harrington, 130 F.3d 246 (6th Cir.1997), cert. denied, 523 U.S. 1075, 118 S.Ct. 1517, 140 L.Ed.2d 670 (1998)("In considering a motion to dismiss for failure to state a claim, the Court is required to take as true all factual allegations in the complaint."); Lamb v. Phillip Morris, Inc., 915 F.2d 1024, 1025 (6th Cir.1990), cert. denied, 498 U.S. 1086, 111 S.Ct. 961, 112 L.Ed.2d 1048 (1991). However, the Court need not accept as true a legal conclusion couched as a factual allegation. Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986). A well-pleaded allegation is one that alleges specific facts and does not merely rely upon conclusory statements. The Court is to dismiss the complaint "only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984).
Rule 12(f) provides, "[u]pon motion made by a party ..., the court may order stricken from any pleading any insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." Fed. R.Civ.P. 12(f). Because striking a portion of a pleading is a drastic remedy, such motions are generally viewed with disfavor and are rarely granted. AT&T Global Information Solutions Co. v. Union Tank Car Co., C2-94-876, 1997 WL 382101 (S.D.Ohio Mar.31, 1997)(Holschuh, J.), citing, Brown and Williamson Tobacco Corp. v. United States, 201 F.2d 819, 822 (6th Cir.1953); Morrow v. South, 540 F.Supp. 1104, 1111 (S.D.Ohio 1982)(Rice, J.)("Motions under Rule 12(f) are not favored, and should not be granted unless it is apparent that the matter has no possible relation to the controversy."). "The application of this rule, which is in the discretion of the trial judge, should be resorted to only where the pleading contains such allegations that are obviously false and clearly injurious to a party to the action because of the kind of language used or the allegations are unmistakably unrelated to the subject matter." Pessin v. Keeneland Ass'n, 45 F.R.D. 10, 13 (E.D.Ky.1968).
Iams requests that all references to the Michigan Franchise Investment Law and references identifying Watkins as a franchisee be stricken from Watkins' Fourth Amended Complaint. Defendant argues that Judge Cohn of the United States District Court for the Eastern District of Michigan and this Court have both ruled, as a matter of law, that Watkins is not a franchisee, given that it did not pay franchise fees to Iams. In particular, this Court, based on the Michigan court's ruling, dismissed Watkins' cause of action under the MFIL, using the law-of-the-case doctrine. Iams contends that because this Court has previously dismissed Plaintiff's MFIL claim, all references to it are immaterial and prejudicial.
In response to Iams' Motion, Watkins devotes significant energy arguing that the terms of its Distributorship Agreement are sufficient to create a franchise relationship. Plaintiff argues that Judge Cohn, in determining that Watkins is not a franchisee, relied upon a Seventh Circuit opinion, Wright-Moore Corp. v. Ricoh Corp., 908 F.2d 128 (7th Cir.1990), concerning "indirect franchise fees" under Indiana law. Using that case as persuasive authority, Judge Cohn found that Watkins did not constitute a franchisee, because it did not pay any franchise fees. Plaintiff states that the Seventh Circuit has rendered a more recent opinion, To-Am Equipment Co, Inc. v. Mitsubishi Caterpillar Forklift America, Inc., 152 F.3d 658 (7th Cir. 1998),7 in which that court found that a variety of actions required of a dealership by the supplier could constitute indirect franchise fees under the Illinois Franchise Disclosure Act.8 Watkins asserts that the MFIL is analogous to the Illinois statute, and the Michigan statute should be similarly interpreted. Following To-Am, Plaintiff argues, Watkins should be considered within the purview of the MFIL. In its reply memoranda, Iams argues that the law-of-the-case doctrine bars the claim and that none of the exceptions to that doctrine applies.
In this Court's expanded opinion explaining the dismissal of Plaintiff's claim under the MFIL (Doc. # 67), the Court relied on the familiar law-of-the-case doctrine. Simply stated, that doctrine states that a "decision on an issue made by a court at one stage of the case should be given effect in successive stages of the same litigation."...
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CHAPTER § 10.04 State and Federal Causes of Action and Defenses
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