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Active Marketing Group, Inc. v. EB Brands Holdings, Inc.

United States District Court, W.D. Arkansas, Fayetteville Division

July 21, 2016

ACTIVE MARKETING GROUP, INC. PLAINTIFF
v.
EB BRANDS HOLDINGS, INC., d/b/a EB Sport Group, EB Brands, E&B HK Limited, EB Giftware, Sports and Leisure Tech, and Sportline DEFENDANT

          MEMORANDUM OPINION AND ORDER

          TIMOTHY L. BROOKS, UNITED STATES DISTRICT JUDGE

         Currently before the Court are Plaintiff Active Marketing Group, Inc.'s ("Active") Partial Motion to Dismiss Defendant's Second Amended Counterclaim (Doc. 31) and Memorandum of Law in Support (Doc. 32), and Defendant EB Brands Holdings, Inc.'s ("EB") Memorandum in Response (Doc. 33). For the reasons given below, Active's Motion is GRANTED.

         I. BACKGROUND

         According to the Amended Complaint in this case, Active and EB have been doing business with each other since 1989. (Doc. 20, ¶ 10). Specifically, Active has been acting as a sales representative for EB, "placing EB's products for sale with retailers like Walmart." Id. The subject of this lawsuit is the most recent sales representative agreement ("the Contract") between the parties, into which they entered on December 31, 2014. Id. at ¶ 11; see also Doc. 1-1 (the Contract). Active alleges that on April 1, 2016, EB breached the Contract by unilaterally terminating it without adequate notice or good cause, attempting to restrict Active's ability to communicate with Walmart, and withholding sales commissions that were owed to Active by EB under the Contract. See Doc. 20, ¶¶ 28-41; see also Doc. 1-2 (the termination letter fronn EB to Active). Active's Amended Complaint sets forth two counts premised on these allegations: breach of contract, and violation of Ark..Code Ann. § 4-70-301, et seq. (Doc. 20, ¶¶ 42-55). EB has answered Active's Amended Complaint, and asserted four counterclaims for accounting, replevin, declaratory judgment, and breach of contract. (Doc. 28, ¶¶ 56-80).

         Active has moved under Fed.R.Civ.P. 12(b)(6) for this Court to dismiss EB's fourth counterclaim for breach of contract, ''[1] on the grounds that EB has failed to plead sufficient facts to plausibly show that it is entitled to relief. Naturally, EB disagrees. Active's Motion and EB's opposition have been fully briefed, and the Motion is now ripe for decision.

         II. LEGAL STANDARD

         To survive a Rule 12(b)(6) motion to dismiss, a pleading must provide "a short and plain statement of the claim showing that [the claimant] 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)). The Court must accept all of the Counterclaim's factual allegations as true, and construe the pleadings in the light most favorable to EB, drawing all reasonable inferences in EB's favor. See Ashley Cnty., Ark. v. Pfizer, Inc., 552 F.3d 659, 665 (8th Cir. 2009).

         However, the Counterclaim "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 [claimant] 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. In other words, while "the pleading standard that Rule 8 announces does not require 'detailed factual allegations, ' ... it demands more than an unadorned, the defendant-unlawfully-harmed-me accusation." Id.

         III. DISCUSSION

         EB's Counterclaim for breach of contract is premised entirely on the following allegations:

77. The Sales Representative Agreement is a valid and enforceable contract between the parties.
78. Defendant has fully satisfied all of its obligations to Plaintiff under the Sales Representative Agreement.
79. Plaintiff breached its obligations to Defendant under the Sales Representative agreement by, inter alia, failing to perform in accordance with Section 6 of the Sales Representative Agreement, and/or by selling and/or marketing competitive products to existing and targeted, prospective customers in violation of the Sales Representative Agreement.
80. As a result of Plaintiff's breaches, Defendant has lost sales and otherwise been damaged in an amount to be determined at trial, but believed to exceed $4 ...

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