United States District Court, W.D. Arkansas, Fayetteville Division
ACTIVE MARKETING GROUP, INC. PLAINTIFF
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
OPINION AND ORDER
TIMOTHY L. BROOKS, UNITED STATES DISTRICT JUDGE
before the Court are Plaintiff Active Marketing Group,
Inc.'s ("Active") Partial Motion to Dismiss
Defendant's Third Amended Counterclaim (Doc. 39) and
Memorandum of Law in Support (Doc. 40), and Defendant EB
Brands Holdings, Inc.'s ("EB") Response (Doc.
41) and Brief in Support (Doc. 42). For the reasons given
below, Active's Motion is DENIED.
recounted in a previous Order by this Court:
According to the Amended Complaint in this case, Active and
EB have been doing business with each other since 1989.
Specifically, Active has been acting as a sales
representative for EB, placing EB's products for sale
with retailers like Walmart. 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. 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. 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
(Doc. 34, pp. 1-2) (internal quotation marks and citations
answered and filed counterclaims on June 23 for accounting,
replevin, declaratory judgment, and breach of contract.
Active moved to dismiss EB's counterclaim for breach of
contract under Fed.R.Civ.P. 12(b)(6). This Court granted that
Motion, dismissing the claim without prejudice because
"[a]s currently pleaded, it is impossible for the Court
to determine the grounds upon which EB's contract claim
rests." (Doc. 34) (internal quotation marks and
alterations omitted). The Court explained that while it
appeared EB was alleging that Active breached Section 6 of
the Contract, the Court was unable to glean from the
pleadings which subsection Active was alleged to have
violated, or what conduct or failure on Active's part
could have constituted such a breach:
How did Active violate Section 6 of the Contract? Did it fail
to "maintain a sales office and dedicated support team
with close proximity to the Accounts, " or perhaps fail
to "report on the activity of the Accounts"? (Doc.
1-1, p. 2). Did Active fail to hire a sales manager for
EB's accounts? See Id. Or did the breach consist
entirely of some other objectionable act or omission? The
Court is left only to guess ....
(Doc. 34, p. 6). In other words, the Court did not believe
EB's counterclaim for breach of contract provided Active
with the minimal notice required by Rule 8 of the Federal
Rules of Civil Procedure.
August 19, EB amended its pleadings, this time asserting
factual allegations in support of its counterclaim for breach
of contract with greater specificity. (Doc. 38). Active again
moved on September 6 to dismiss EB's re-pleaded contract
counterclaim under Rule 12(b)(6) for failure to state a
claim, (Doc. 39), and requested this Court to set a hearing
for oral argument on its Motion. The Court held the requested
hearing by telephone conference earlier today and ruled from
the bench. The purpose of this Opinion and Order is to
memorialize the Court's ruling in greater detail.
Court has already explained, in its previous Order, the legal
standard applicable to Rule 12(b)(6) motions to dismiss:
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 BellAtl.
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, 500 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
conclusion' 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
(Doc. 34, pp. 2-3).
the prior version of EB's counterclaim which the Court
dismissed merely made a vague assertion that "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, " (Doc. 28, ¶ 79), this
time EB has pleaded with much greater specificity, such that
a reader of the counterclaim may reasonably infer from the