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Emergency Essentials, LLC v. Taylor

United States District Court, D. Utah

January 30, 2017

EMERGENCY ESSENTIALS, LLC, a Delaware limited liability company, Plaintiff,
v.
SAMUEL JARVIS TAYLOR, a Utah resident; RICHARD TAYLOR, a Massachusetts resident; TAYLOR & TAYLOR, LLC, a Utah limited liability company; CHAPARRAL GROUP, a Utah company; DOES I through X, inclusive; and ROE CORPORATIONS I through X, inclusive, Defendant.

          MEMORANDUM DECISION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS

          Ted Stewart District Judge

         This matter is before the Court on Defendants' Motion to Dismiss. Defendants seek dismissal of Plaintiffs second, eighth, and ninth causes of action. For the reasons discussed below, the Court will grant the Motion in part and deny it in part. Specifically, the Court will dismiss Plaintiff's trade dress claim as inadequately pleaded, but will do so without prejudice. The Court will deny the remainder of Defendants' Motion.

         I. BACKGROUND

         Plaintiff Emergency Essentials, LLC (“Emergency Essentials”) sells food products that can be stored for long periods of time or immediately consumed. Defendant Samuel Jarvis Taylor (“Samuel Taylor”) began working for Emergency Essentials as a sales person in February 2016. Prior to joining Emergency Essentials, Samuel Taylor and his brother Richard Taylor formed a Utah limited liability company called Taylor & Taylor. After joining Emergency Essentials, Taylor & Taylor filed a DBA registration with the state of Utah under the name Chaparral Group. Chaparral Group began offering food products that could be stored for long periods of time, bringing that business in direct competition with Emergency Essentials.

         In addition to competing with Emergency Essentials, Plaintiff alleges that Samuel Taylor caused Emergency Essentials millions of dollars in harm. In particular, Plaintiff alleges that Samuel redirected payments from Emergency Essentials' customers to Chaparral Group's bank account; used Emergency Essentials' credit card and payment accounts to purchase flights, freight, shipping, and other services for Chaparral Group; secured orders for Emergency Essentials' customers but changed the fulfillment of those orders to Chaparral Group; secured orders for Emergency Essentials and intentionally failed to notify the company, so the orders were not fulfilled; solicited Emergency Essentials' customers to purchase Chaparral Group's products while on trips for Emergency Essentials; stole Emergency Essentials trade secrets and used them for the benefit of Chaparral Group; and used Emergency Essentials' trade dress on Chaparral's products.

         Plaintiff brings claims for conversion, fraud, tortious interference with business relationships, breach of contract, breach of the covenant of good faith and fair dealing, breach of fiduciary duty, misappropriation of trade secrets, trade dress infringement and unfair competition, false description of origin, violation of the Computer Fraud and Abuse Act, civil conspiracy, and aiding and abetting. Defendants initially sought dismissal of Plaintiff's second, eighth, and ninth causes of action asserting fraud, trade dress infringement, unfair competition, and false description of origin. In their reply, Defendants concede that Plaintiff adequately pleaded a claim for unfair competition.

         II. MOTION TO DISMISS STANDARD

         In considering a motion to dismiss for failure to state a claim upon which relief can be granted under Rule 12(b)(6), all well-pleaded factual allegations, as distinguished from conclusory allegations, are accepted as true and viewed in the light most favorable to Plaintiff as the nonmoving party.[1] Plaintiff must provide “enough facts to state a claim to relief that is plausible on its face, ”[2] which requires “more than an unadorned, the-defendant-unlawfully harmed-me accusation.”[3] “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 complaint suffice if it tenders ‘naked assertion[s]' devoid of ‘further factual enhancement.'”[4]

         “The court's function on a Rule 12(b)(6) motion is not to weigh potential evidence that the parties might present at trial, but to assess whether the plaintiff's complaint alone is legally sufficient to state a claim for which relief may be granted.”[5] As the Court in Iqbal stated,

only a complaint that states a plausible claim for relief survives a motion to dismiss. Determining whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense. But where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not shown-that the pleader is entitled to relief.[6]

         III. DISCUSSION

         A. FRAUD

         Plaintiff's second cause of action asserts a claim for fraud.

[I]n order to prevail on a claim of fraud, all the elements of fraud must be established by clear and convincing evidence. Those elements are: “(1) a representation; (2) concerning a presently existing material fact; (3) which was false; (4) which the representer either (a) knew to be false, or (b) made recklessly, knowing that he had insufficient knowledge on which to base such representation; (5) for the purpose or inducing the other party to act upon it; (6) that the other party, acting reasonably and in ignorance of its falsity; (7) did in fact rely upon it; (8) and was thereby induced to act; (9) to his injury and damage.”[7]

         Under Federal Rule of Civil Procedure 9(b), when “alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake.”[8] The Tenth Circuit has held that “[a]t a minimum, Rule 9(b) requires that a plaintiff set forth the who, what, when, where and how of the alleged fraud and must set forth the time, place, and contents of the false representation.”[9] The purpose of the rule is ...


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