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Champion Food Service, LLC v. Vista Food Exchange

United States District Court, Sixth Circuit

August 7, 2013

Champion Food Service, LLC, Plaintiff,
v.
Vista Food Exchange, et al. Defendants.

MEMORANDUM OPINION AND ORDER

DAVID D. DOWD, Jr., District Judge.

Pending before the Court are two 12(b)(6) motion to dismiss for failure to state a claim: Defendants' Matthew Gibson and Innovative Food Service, LLC's motion (R. 14) and Defendants' Joshua Newman and Vista Food Exchange, Inc.'s motion (R. 15). Plaintiff opposed the motions (R. 34, 35) and Defendants replied (R. 36). For the reasons that follow, Defendants' motions are DENIED.

FACTUAL AND PROCEDURAL HISTORY

Plaintiff Champion Foodservice, LLC ("Champion") filed the First Amended Complaint on May 2, 2013, in the Court of Common Pleas of Crawford County, Ohio. Complaint R. 1-1, PageID#: 7. The action names Matthew Gibson ("Gibson"), Innovative Food Service, LLC ("Innovative"), Vista Food Exchange ("Vista"), and Joshua Newman ("Newman") as Defendants. Id. Defendants filed Notice of Removal on May 29, 2013. R. 1.

The facts as alleged by Plaintiff Champion are as follows. Champion is an Ohio LLC located in Bucyrus, Crawford County, which is engaged in the business of providing meals for children, schools, "and other similar customers." Complaint, R. 1-1, ¶ 1. Champion hired Matthew Gibson, a resident of Michigan, "as an independent contractor through his limited liability company, Innovative Food Service, LLC" to serve as President and CEO of Champion. Id. ¶ 6. Gibson was "responsible for preparing Champion's bid proposal to" the Ohio Association of Foodbanks (OAF), "which was due on March 1, 2013." Id. ¶ 11.

However, on February 26, 2013, Mr. Gibson "abruptly and without notice terminated his employment with Champion." Id. ¶ 12. On February 28, 2013, "Champion contacted Defendant Newman, " an employee acting on behalf of Vista, "and inquired specifically as to whether Vista was working with Gibson on a bid." Id. ¶ 16. Newman told Champion he was not working with Gibson. Id. All Defendants acted in concert in that they were all "aware that Gibson possessed [Champion's] confidential trade secrets and proprietary information" and colluded to use this information for Vista to submits its own OAF bid at the expense of Champion. Id. ¶ 22, 24.

Finally, Gibson refused to return a laptop computer provided to him by Champion to use "while he served as the President and [CEO] of Champion." Id. ¶¶ 7, 13, 14. After Plaintiff filed the complaint, Gibson, "acting for himself and on behalf of all Defendants..., intentionally wiped' the computer memory and hard drive, thereby erasing all data related not only to Champion's business operations, but also related to Defendants' wrongful actions evidencing Champion's claims in this lawsuit against them." Id. ¶ 27.

Defendants collectively filed two motions to dismiss for failure to state a claim on June 14, 2013. R. 14, 15. Plaintiff Champion filed opposing memoranda. R. 34, 35. Defendants filed a reply memorandum in support on July 18, 2013.[1] R. 36.

LAW

Rule 8 of the Federal Rules of Civil Procedure, the general rule governing pleading, requires that a complaint contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007) (internal quotations omitted)). "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." Id. (citing Twombly, 550 U.S. at 556). But Rule 8 requires more than "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements." Id. (citing Twombly, 550 U.S. at 555). In the end, ruling on a motion to dismiss is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679 (citation omitted).

Plaintiff's complaint also includes a fraud claim. R. 1-1, PageID#: 16. This triggers the heightened pleading requirements of Rule 9(b), which requires that "[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake." Fed.R.Civ.P. 9(b). But the "conditions of a person's mind may be alleged generally." Id. This means a plaintiff is required "(1) to specify the allegedly fraudulent statements; (2) to identify the speaker; (3) to plead when and where the statements were made; and (4) to explain what made the statements fraudulent." Republic Bank & Trust Co. v. Bear Stearns & Co., Inc., 683 F.3d 239, 247 (6th Cir. 2012).

ANALYSIS

Plaintiff Champion's complaint sets forth seven causes of action: (1) breach of fiduciary duty; (2) misappropriation of trade secrets; (3) tortious interference; (4) fraud; (5) civil conspiracy; (6) spoliation of evidence; and (7) conversion. Complaint, R. 1-1, PageID#: 7-13. Defendants contend all are insufficiently pled.

Defendants argue the breach of fiduciary duty claim should be dismissed because Gibson was hired as an independent contractor and Plaintiff has not pled any facts which would show there was a fiduciary relationship. See R. 14-1, PageID#: 224-35. But Champion's complaint alleges it hired Gibson, though paid as an independent contractor through an LLC, as President and CEO and had certain important duties. See R. 1-1, ¶¶ 6, 11, 29. "It is well-established that a corporate officer occupies a position of trust in relation to his corporation, " and this "relationship imposes upon directors duties in the nature of a fiduciary obligation." Wing Leasing, Inc. v. M & B Aviation, Inc., 44 Ohio App.3d 178, ...


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