Ocean City Express Co. v. Atlas Van Lines, Inc.
Ocean City Express Co. v. Atlas Van Lines, Inc.
Opinion of the Court
OPINION
I. INTRODUCTION
The matter comes before the Court on Defendant Atlantic Van Lines, Inc.’s (hereinafter, “Defendant”) motion to dismiss Plaintiffs Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). [Docket Item 20.] Plaintiff Ocean City Express Co., Inc.’s (hereinafter, “Plaintiff’) two-count Amended Complaint asserts claims for violation of the New Jersey Franchise Protection Act (hereinafter, the “NJFPA”) and for breach of the implied duty of good faith and fair dealing. Defendant generally alleges that Plaintiff fails to state a viable claim under the NJFPA and, alternatively, that federal law preempts the NJFPA as applied to the parties’ relationship. Defendant also challenges Plaintiffs Amended Complaint to the extent it reasserts a good faith and fair dealing claim.
The Court has previously addressed, on two separate occasions, the viability of Plaintiffs claims. In the first such ruling, the Court granted Defendant’s motion to dismiss for failure to state a claim pursuant to Federal Rule of Civil Procedure
The principal issues now before the Court are whether Plaintiff, in its third attempt, states a plausible NJFPA claim and, relatedly, whether federal law preempts application of the NJFPA in this instance. For the reasons explained below, the Court will deny in part and dismiss as moot in part Defendant’s motion to dismiss.
II. BACKGROUND
A. Factual Background
The. facts set forth below are those alleged in Plaintiffs Amended Complaint, which the Court accepts as true for the purposes of the pending motion. Defendant Atlas Van Lines, Inc., an entity incorporated in Indiana, and with its principal place of business in Evansville, Indiana, engages in interstate commerce as a motor carrier registered with the Department of Transportation. (First Am. Compl. [Docket Item 18], ¶ 3 & Ex. A.)
On or about March 31, 2006, Defendant entered into an agency agreement with Plaintiff Ocean City Express Co., Inc., a corporation formed in New Jersey and with a principal place of business in Pleas-antville, New Jersey. (First Am. Compl. at ¶ 4.) In the agreement, Plaintiff generally agreed to represent and act on Defendant’s behalf in connection with Defendant’s “business as an interstate common and contract motor carrier and property broker.” (Id., Ex. A.) Plaintiff alleges that compliance with the agency agreement required it to incur “substantial expense” in order to conform its markings, signage, and printed materials to Defendant’s requirements. (First Am. Compl. at ¶ 5.) Despite the initial expense, Plaintiff asserts that its gross sales arising out of the agency agreement amounted to more than $35,000 within the twelve months preceding this action, that “gross sales for 2010 exceeded $2.7 million[,]” and that “gross sales for 2011 exceeded $1.8 million.” (Id. at ¶ 7.) Plaintiff further alleges that the revenue derived from the agency agreement “comprised between 85% and 90% of Plaintiffs total revenue.” (Id. at ¶ 8.)
B. Procedural History
Defendant removed this action from the Superior Court of New Jersey on March 11, 2013. (See Notice of Removal [Docket Item 1].)
On March 18, 2013, Defendant filed its first motion to dismiss Plaintiffs complaint for improper venue pursuant to Federal Rule of Civil Procedure 12(b)(3) and/or for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). [Docket Item 3.] The Court’s July 25, 2013 Opinion found that Plaintiff “failed to plead sufficient facts” to demonstrate that the parties’ business relationship “qualified as a franchise relationship under the NJFPA.” Ocean City Express Co., Inc., 2013 WL 3873235, at *5. The Court found, in particular, that Plaintiffs pleading failed to allege the gross sales stemming from the parties’ relationship and also failed to allege the percentage of Plaintiffs sales derived from the agency agreement. Id. at *3. The Court therefore dismissed Plaintiffs NJFPA claim without prejudice, and without reaching the issue of whether federal law preempts the NJFPA nor whether Plaintiff alleged facts in support of the NJFPA’s other requirements. Id. at *5.
On August 7, 2013, Plaintiff filed a motion to amend pursuant to Federal Rule of Civil Procedure 15(a). [Docket Item 12.] The Court’s February 19, 2014 Opinion found that Plaintiff pleaded “facts sufficient to satisfy the license, community of interest, gross sales, and sales percentage requirements of an NJFPA franchise[,]” but failed “to plead that its principal office” constituted a qualifying place of business under the NJFPA. Ocean City Express Co., Inc., 2014 WL 654589, at *7. Consequently, without reaching the issue of whether federal law preempts the NJFPA, the Court again dismissed Plaintiffs NJFPA claim without prejudice, and with the right to file an amended pleading without “seeking leave of court” to the extent such filing comported with counsel’s obligations under Federal Rule of Civil Procedure 11. Id.
Plaintiff filed its Amended Complaint on February 28, 2014, in which Plaintiff modified its pleading in only two respects. (Compare First Am. Compl. [Docket Item 13], mth First Am. Compl. [Docket Item 18].) Plaintiff specifically defines Plaintiffs “principal office” location as its “ ‘Place of Business[,]’ ” and further states that
Plaintiffs Place of Business included an office where all sales personnel were located and made and/or received calls or walk-in customers seeking moving/re-loeation services, displayed the Atlas Van Lines name and logo, displayed and distributed Atlas Van Lines brochures/sales materials and agreements of service, was listed as its retail address in any advertisements directed at its customers or potential customers and generally conducted all day to day operations of Plaintiffs business and marketing operations. Plaintiffs Place of Business also was its only operation hub for all of its moving vehicles (which were*507 labeled as Atlas Van Lines vehicles) and served as a warehouse for its customers goods that were temporarily stored as part of the moving or relocation services provided by Plaintiff.
(Id. at ¶ 2.) The pending motion to dismiss followed thereafter. [Docket Item 20.]
C. Parties’ Arguments
Defendant generally argues that Plaintiffs pleading fails to satisfy the “qualifying place of business” requirement under the NJFPA and, therefore, fails to state a cognizable NJFPA claim. (Def.’s Br. [Docket Item 20-1], 2-3.) Defendant specifically asserts that the NJFPA requires Plaintiff to allege that “gross sales of products or services between the franchisor and franchisee” exceeded $35,000 “for the 12 months preceding” the initiation of the litigation. (Id. at 3 (emphases omitted).) Defendant argues that Plaintiff instead alleges that its “gross sales stemming from the Agency Agreement ‘exceeded] $35,000 within the 12 months preceding the law suit’ ” and that “revenue from Defendant ‘comprised between 85% and 90% of Plaintiffs total revenuef.]’ ” (Id. (citing First Am. Compl. [Docket Item 18], ¶¶ 7-8).) Defendant asserts, however, that these allegations fail to satisfy the NJFPA’s requirements, because Plaintiff has not alleged “gross sales” between Plaintiff and Defendant during the “one year period” prior to this action, nor has Plaintiff “plead the volume of its gross sales” between Plaintiff and Defendant “during the 12 months preceding the termination of the agency agreement[.]”
Defendant also argues that Plaintiff fails to plead the location from which its sales derived, nor in accordance with “the statutory exception,” has Plaintiff alleged that its principal place of business constitutes “a locus of sales activity involving interaction between Plaintiffs’ salespeople and actual or potential customers of’ Defendant’s services, rather than “a mere office or warehouse.” (Def.’s Reply [Docket Item 25], 8-9; see also Defi’s Br. [Docket Item 20-1], 4.) Alternatively, and in addition, Defendant asserts that federal law, namely, the Federal Aviation Administration Authorization Act, 49 U.S.C. § 14501(c)(1) (hereinafter, the “FAAA Act”), preempts the NJFPA “as applied” to the parties’ relationship, because the agency agreement relates to the “ ‘transportation of property’ or the ‘service’ of a motor carrier[.]” (Def.’s Br. [Docket Item 20-1], 7.)
III. STANDARD OF REVIEW
Under Federal Rule of Civil Procedure 12(b)(6), the court must generally accept as true the factual allegations in the complaint, and construe all “reasonable inferences” in the light most favorable to the plaintiff. Revell v. Port Auth. of N.Y., N.J., 598 F.3d 128, 134 (3d Cir. 2010). However, “[a] pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action” fails to suffice. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). Rather, the plaintiffs factual allegations must be facially sufficient to demonstrate a “plausible” right to relief, by pleading factual content sufficient for the Court “to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)); see also Umland v. PLANCO Fin. Serv., Inc., 542 F.3d 59, 64 (3d Cir. 2008). In evaluating whether a complaint meets this pleading standard, the Court strips away conelusory statements and reviews instead the “well-pled factual allegations, assume[s] their veracity, and then determine[s] whether” the allegations demonstrate a plausible “entitlement to relief.” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (internal quotation marks omitted).
IV. DISCUSSION
A. Plaintiffs Pleading Satisfies the NJFPA’s Place of Business Requirement
Having previously addressed the sufficiency of Plaintiffs pleading, the Court need only address in the context of the pending motion whether Plaintiffs Amended Complaint cures the prior pleading deficiencies regarding the NJFPA’s place of business requirement. Consequently, the Court notes that, in order to satisfy the “place of business” requirement under the NJFPA, the contractual
Plaintiff Amended Complaint alleges in this instance that Plaintiffs “Place of Business” constitutes the hub of Plaintiffs “day to day” business and marketing operations, (First Am. Compl. [Docket Item 18], ¶ 2), in addition to:
1. The location of “all sale personnel” and the site at which such personnel “made and/or received calls” or walk-in customers seeking “moving/relocation” services (id.)-,
2. The location identified “as its retail address in any advertisements directed at its customers or potential customers” (id.);
3. The location at which Plaintiff “displayed and distributed” Defendant’s signage, “brochures/sales materials and agreements of service,” (id.); and
4. Plaintiffs “warehouse” for the “tem-porar[y]” storage of “customers^] goods” retained in connection with Plaintiffs “moving or relocation services[J”
(Id.) These allegations suffice to demonstrate that Plaintiffs place of business constitutes a sales location of sufficient sub-stantiality under the NJFPA. Indeed, the allegations, accepted as true, clearly allege that Plaintiff regularly used its business location as the core of Plaintiffs sales activities, and housed all of its sales force at this location precisely for such purpose. The allegations further allege that the activities at this location included direct telephonic or in-person customer interaction and visual displays and/or advertisements to such customers. Consequently, though this location also served as a “warehouse[,]” an office for day-to-day operations, and a temporary “place of storage” for customers’ goods, it is readily apparent that the allegations sufficiently allege that Plaintiffs place of business constitutes a qualifying place of business under the NJFPA. N.J.S.A. § 56:10-3®.
B. Federal Law Does Not Preempt Application of the NJFPA in this Action
Having concluded that Plaintiff states a valid NJFPA claim, the Court next considers whether Section 14501(c)(1) of the FAAA Act preempts the NJFPA. The FAAA Act, enacted in 1994 as part of a Congressional effort “to pre-empt state trucking regulation[,]” Rowe v. N.H. Motor Transp. Ass’n, 552 U.S. 364, 368, 128 S.Ct. 989, 169 L.Ed.2d 933 (2008), generally preempts state and local regulations “related to a price, route, or service of any motor carrier ... with respect to the transportation of property.” 49 U.S.C. § 14501(c)(1). “[Borrowed” from the preemption language of the Airline Deregulation Act of 1978 (hereinafter, the “ADA”), courts have interpreted the breadth of preemption under the FAAA Act consistently with the ADA. N.H. Motor Transp. Ass’n, 552 U.S. at 368, 128 S.Ct. 989. In Morales v. Trans World Airlines, Incorporated, 504 U.S. 374, 112 S.Ct. 2031, 119 L.Ed.2d 157 (1992), the Supreme Court broadly interpreted the language of the ADA as preempting “ ‘[s]tate enforcement actions having a connection with, or reference to’ carrier ‘rates, routes, or services[,]’ ” even if the state law only “ ‘indirectly]’ ” affects such rates, routes, or services. Rowe, 552 U.S. at 370, 128 S.Ct. 989 (quoting Morales, 504 U.S. at 384, 386, 112 S.Ct. 2031) (emphasis in original). In Rowe v. New Hampshire Motor Transport Association, the Supreme Court expressly concluded that this liberal interpretation of the ADA applies, with equal effect, to the “related to” language of 49 U.S.C. § 14501(c)(1). 552 U.S. at 370-71, 128 S.Ct. 989.
Section 14501(c)(1) principally aims to deregulate certain aspects of “intrastate transportation” that: (1) impose “an unreasonable burden” on interstate commerce; (2) impede “the free flow of trade, traffic, and transportation” of interstate commerce; and (3) result in “unreasonable cost” to consumers. Federal Aviation Administration Authorization Act of 1994, Pub.L. 103-105, § 601(a), 108 Stat. 1605 (1994). Section 14501(c)(1) does not, however, “pre-empt state laws that affect rates, routes, or services in ‘too tenuous, remote, or peripheral a manner. ’ ” Rowe, 552 U.S. at 375, 128 S.Ct. 989 (quoting Morales, 504 U.S. at 390,. 112 S.Ct. 2031) (emphasis in original). Rather, Section 14501(c)(1) only preempts state laws that impose a “ ‘significant impact’ on carrier rates, routes, or services,” or that significantly hinder the FAAA Act’s ability to achieve its “deregulatory and pre-emptionrelated objectives,” Rowe, 552 U.S. at 371, 375, 128 S.Ct. 989 (citation omitted) (emphasis in original).
Rather, the Court follows the rationale set forth in Kozak v. Hillsborough Public Transportation Commission, 695 F.Supp.2d 1285 (M.D.Fla. 2010). In Kozak, defendant, a legislatively-created transportation commission, enacted a “ ‘luxury transportation service rule,’ ” requiring “any person wishing to operate a public vehicle conducting for-hire trips” to obtain a certificate and permit prior to loading and transporting passengers. Id. at 1289-90. The Kozak plaintiff, a passenger minivan operator, asserted that the FAAA Act
Here, the Court similarly finds no substantial evidence to support any assertion that the NJFPA significantly impacts rates, routes, or services in a manner sufficient to trigger federal preemption. Indeed, Defendant predicates its preemption assertion on a generic recitation of Section 14501(c)(1), and relies, in primary part, on defendant’s desire to choose the agents with whom it contracts. (See, e.g., Def.’s Reply [Docket Item 25], 10-17.) Section 14501(c)(1), however, “does not preempt state laws that affect rates, routes, or services in ‘too tenuous, remote, or peripheral a manner[,]’ ” Rowe, 552 U.S. at 375, 128 S.Ct. 989 (citation omitted), and the application of the NJFPA in this instance only imposes such limited effect. Indeed, the operative provision of the NJFPA merely erects a procedural mechanism in recognition of the historic “power disparity between franchisors and franchisees[,]” and in order “to protect ‘the innocent franchisee’ ” from franchise terminations that occur “ ‘at the franchisor’s convenience.’ ” Goldsworthy v. Browndorf, No. A-2204-10T3, 2011 WL 3687401, at *3-*4 (NJ.Super.Ct.App.Div. Aug. 24, 2011) (quoting Westfield Centre Serv., Inc. v. Cities Serv. Oil Co., 86 N. J. 453, 432 A.2d 48, 53 (1981)) (emphasis in original), certif. denied, 209 N.J. 98, 35 A.3d 681 (2012). The NJFPA, however, expressly enables a franchisor to terminate a franchise agreement where the franchisee acts in contravention of the franchise agreement or otherwise fails to substantially comply with the agreement’s requirements. See id.; see also N.J.S.A. § 56:10-9 (setting forth the substantial noncompliance defense under the NJFPA). Consequently, the NJFPA, by its own terms, preserves Defendant’s autonomy in a manner consistent with Section 14501(c)(1). For all of those reasons, the Court does not find at this time that the FAAA Act preempts, as a matter of law, the application of the NJFPA in this action.
y. CONCLUSION
The Court concludes that Plaintiffs Amended Complaint pleads a valid NJFPA claim and, therefore, denies Defendant’s motion to dismiss with respect to such claim. Having previously dismissed Plaintiffs good faith and fair dealing claim with prejudice, the Court will dismiss Defendant’s motion as moot with respect to the good faith and fair dealing claim. The Court will, however, direct Plaintiff to file an Amended Complaint, omitting any reference to the good faith and fair dealing claim within seven (7) days of entry of this Opinion and the accompanying Order. The accompanying Order will be entered.
. Consequently, the Court need not engage in any protracted inquiry concerning Plaintiff’s reassertion of a good faith and fair dealing claim. (See First Am. Compl. [Docket Item 18], 4.) The Court's prior ruling unequivocally dismissed Plaintiff's implied good faith and fair dealing claim with prejudice. See Ocean City, 2014 WL 654589, at *7. In reasserting the good faith and fair dealing claim, Plaintiff does not address why, given the Court’s prior ruling, this claim remains viable. Nor does Plaintiff proffer any grounds for relief from the Court’s prior Order pursuant to Federal Rule of Civil Procedure 60(b). Rather, Plaintiff recapitulates identically the allegations previously dismissed by the Court. (Compare First Am. Compl. [Docket Item 13], with First Am. Compl. [Docket Item 18].)
. To the extent Defendant reargues its position that Plaintiff’s Amended Complaint fails to plead facts sufficient to satisfy the gross sales and sales percentage requirements of the NJFPA, (see Def.’s Br. [Docket Item 20-1], 3-4; Def.’s Reply [Docket Item 25], 3-4), the Court rejects these arguments for the reasons set forth in the Court's February 14, 2014 Opinion. See Ocean City Express Co., Inc., 2014 WL 654589, at *6-*7. Indeed, the Court expressly concluded, with respect to the same allegations presented in Plaintiff’s Amended Complaint, that Plaintiff's pleading satisfied these NJFPA requirements. Id. Moreover, the Court finds Defendant’s reliance on DeLuca v. Allstate Ins. Co., Nos. BER-C-185-11, BER-C-291-11, BER-C-299-11, 2011 N.J.Super. Unpub. LEXIS 3140 (N.J.Super.Ct. Ch. Div. Dec. 28, 2011) inappo-site. The state court in DeLuca found the NJFPA inapplicable to plaintiff's claims because New Jersey statutory authority prohibited plaintiff, an insurance agent, from directly selling the insurer defendant’s products. Id. at *67-*68. Rather, the DeLuca court found that insurance agents, like the DeLuca plaintiff, only solicit customers and offer "the products and services of the insurer for sale,” but do not sell either. Id. at *68. The agency agreement in this instance, however, clearly requires Plaintiff to "solicit[,]” "book[J” and "haul shipments” under Defendant’s authority. (Ex. A [Docket Item 18].)
. . In addition to the "Statement of Facts” set forth in Plaintiff's opposition brief, Plaintiff has also submitted an "Opposition Statement[,]” which endeavors to respond, by numbered paragraphs, to the averments set forth in Defendant’s motion. (Def.’s Br. [Docket Item 24], 2-3; Pl.’s Opp’n Statement to Mot. to Dismiss Pursuant to Rule 12(b)(6) [Docket Item 23]; Def.'s Mot. to Dismiss for Failure to State a Claim Pursuant to Fed. R. of Civ. P. 12(b)(6) [Docket Item 20].) It is axiomatic, as noted by Defendant, that the Court may not, in resolving a motion to dismiss, consider "matters extraneous to the pleadings.” In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997). Rather, the Court may only consider a " 'document integral to or explicitly relied upon in the complaint,’ ” or an " 'undisputedly authentic document’ ” if such document forms the predicate for the complaint. In re Rockefeller Ctr. Props., Inc., Sec. Litig., 184 F.3d 280, 287 (3d Cir. 1999) (citations and emphases omitted). The Court shall therefore not consider the parties' submissions to the extent such submissions make factual assertions extraneous to the pleadings.
Reference
- Full Case Name
- OCEAN CITY EXPRESS CO., INC. v. ATLAS VAN LINES, INC.
- Cited By
- 2 cases
- Status
- Published