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

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

October 18, 2016

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



         Currently 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.

         As 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 seq.

(Doc. 34, pp. 1-2) (internal quotation marks and citations removed).

         EB 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.

         On 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.

         The 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 accusation." Id.

(Doc. 34, pp. 2-3).

         Although 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, ΒΆ 79), this time EB has pleaded with much greater specificity, such that a reader of the counterclaim may reasonably infer from the ...

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