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Wal-Mart Stores, Inc. v. Cuker Interactive, LLC

United States District Court, Western District of Arkansas, Fayetteville Division

December 12, 2014

WAL-MART STORES, INC. PLAINTIFF
v.
CUKER INTERACTIVE, LLC DEFENDANT

MEMORANDUM OPINION AND ORDER

TIMOTHY L. BROOKS UNITED STATES DISTRICT JUDGE

Currently before the Court are Plaintiff’s Motion for Judgment on the Pleadings (Doc. 12) and Brief in Support (Doc. 13), Defendant’s Brief in Opposition (Doc. 17), and Plaintiff’s Reply (Doc. 21). The Court also considered the parties’ oral arguments on the Motion during a hearing conducted on December 11, 2014. For the reasons set forth herein, Plaintiff’s Motion for Judgment on the Pleadings is DENIED.

I. BACKGROUND

In late January 2014, Plaintiff Wal-Mart Stores, Inc. (“Walmart”) and Defendant Cuker International, LLC (“Cuker”) signed a written agreement (“Contract”) under which Cuker agreed to provide Walmart consulting services in exchange for monetary compensation, in order to help Walmart make the website for its ASDA Groceries business (“Website”) mobile responsive.[1] The consulting relationship quickly soured. Walmart accused Cuker, inter alia, of missing various contractual deadlines, providing poor-quality work product, wrongfully withholding work product, and demanding extra-contractual payment for the performance of its contractual duties. Cuker accused Walmart, inter alia, of withholding contractually-obligated payments from Cuker, mischaracterizing aspirational target dates as strict deadlines, causing Cuker’s turnover of work product to be delayed by imposing excessive revisions on good-quality work product, demanding that Cuker perform work outside the scope of the Contract without additional compensation, and misappropriating Cuker’s trade secrets.

On July 29, 2014, Walmart filed a two-count Complaint against Cuker under seal in the Circuit Court for Benton County, Arkansas, (1) alleging breach of contract, and (2) seeking a declaratory judgment that Walmart does not owe Cuker any additional money under the Contract and that Walmart “owns all Work Product produced by Cuker.” (Doc. 4, ¶ 49). Cuker removed the case to this Court on August 26, 2014, on the basis of diversity jurisidiction. (Doc. 2, ¶ 2). On September 2, 2014, Cuker filed its Answer and Counterclaim (Doc. 9), setting forth four claims for relief: (1) unjust enrichment, (2) breach of contract, (3) violation of the Arkansas Trade Secrets Act, Ark. Code Ann. §§ 4-75-601 et seq. (“ATSA”), and (4) injunctive relief pertaining to Walmart’s alleged misappropriation of Cuker’s trade secrets. Walmart filed its Answer to Counterclaim (Doc. 11) on September 26, 2014.

On October 14, 2014, Walmart filed a Motion for Judgment on the Pleadings (Doc. 12) and Brief in Support (Doc. 13) (collectively, “Motion”), asking the Court to dismiss Cuker’s claims for unjust enrichment, ATSA violation, and injunctive relief, pursuant to Fed.R.Civ.P. 12(c) for failure to state a claim. Cuker filed its Brief in Opposition (Doc. 17) (“Response”) on November 7, 2014, and Walmart filed its Reply (Doc. 21) on November 26, 2014. Walmart’s Motion is now ripe for consideration by the Court.

II. LEGAL STANDARD

Since Walmart filed this case in Arkansas state court, and Cuker removed it to this Court on the basis of the parties’ diversity of citizenship, this Court must apply federal procedural law and state substantive law. Ashley County, Ark. v. Pfizer, Inc., 552 F.3d 659, 665 (8th Cir. 2009). The same legal standard applies to a motion for judgment on the pleadings under Rule 12(c) as to a motion to dismiss under Rule 12(b)(6). Id. To survive such a motion, a pleading must provide “a short and plain statement of the claim that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). The purpose of this requirement is to “give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.” Erickson v. Pardus, 551 U.S. 89, 93 (2007) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).

Nevertheless, the pleading “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) (quoting Twombly, 550 U.S. at 570). “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. “A pleading that offers ‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause of action will not do.’ Nor does a [pleading] suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.’” Id. Simply put, “the pleading standard that Rule 8 announces does not require ‘detailed factual allegations, ’ but it demands more than an unadorned, the defendant-unlawfully-harmed-me accusation.” Id. (quoting Twombly, 550 U.S. at 555).

In applying this standard to the instant pleadings, the Court must accept as true all factual allegations set out in the pleadings by Cuker, and construe the pleadings in the light most favorable to Cuker, drawing all inferences in Cuker’s favor. See Ashley County, 552 F.3d at 665. The Court may consider the Contract that is attached as an exhibit to Walmart’s Complaint because it is “necessarily embraced by the pleadings.” Mattes v. ABC Plastics, Inc., 323 F.3d 695, 697 n.4 (8th Cir. 2003). The Contract’s choice-of-law provision invokes Arkansas law. (Doc. 4-1, p. 6).

III. DISCUSSION

A. Cuker’s Unjust Enrichment Claim

Walmart argues that Cuker’s unjust enrichment claim should be dismissed for two independent reasons. First, Walmart cites several cases, including Glenn Mech., Inc. v. S. Ark. Reg’l Health Ctr., Inc., 101 Ark.App. 440 (2008), and Hall Contracting Corp. v. Entergy Svcs., Inc., 309 F.3d 468 (8th Cir. 2002), for the proposition that under Arkansas law a claim for unjust enrichment cannot stand where the parties have a contractual relationship on the same subject matter. However, while this is a correct statement of the general rule, it is not the end of the matter. Arkansas law permits a number of exceptions to this rule, including “where the contract fails on some basis, or does not fully address a subject, or disputed performance is compelled under protest.” QHG of Springdale, Inc. v. Archer, 2009 Ark.App. 692, at *11 (emphasis added).

Cuker alleges that Walmart provided Cuker a list of demands on February 12, 2014, that Cuker told Walmart were “way beyond the scope of the Contract . . . and . . . would change . . . the amount Walmart paid Cuker.” (Doc. 9, p. 2, ¶ 6(a)(2), (3)). Walmart insisted on its demands, and Cuker worked to meet them while maintaining its position that the demands were beyond the scope of the Contract and would require additional payment from Walmart. On July 16, 2014, Cuker “demanded that Walmart pay Cuker $1, 524, 146, ” an amount that included a still-unpaid balance of $57, 629 owed by Walmart under the Contract, with the remainder being the value of the allegedly extra-contractual services rendered by Cuker. Id. at p. 9, ¶ 43. The next day, Cuker delivered the final product to Walmart. Id. at p. 9, ¶ 44. Walmart still has not paid Cuker any of the money that was demanded on July 16, 2014. See Id. at p. 14, ΒΆΒΆ 23-25. Viewing these allegations in the light most favorable to Cuker, the Counterclaim pleads facts sufficient to support a claim of unjust ...


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