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Soccer Connection, Inc. v. Nike USA, Inc.

United States District Court, D. Utah

August 10, 2018

SOCCER CONNECTION, INC., a Utah corporation; and WILLIAM RADER, an individual, Plaintiffs,
v.
NIKE USA, INC., an Oregon corporation, Defendant.

          MEMORANDUM DECISION AND ORDER

          Honorable Dustin B. Pead United States Magistrate Judge

         This matter came before the Court on Defendant Nike USA, Inc.'s (“Nike”) Motion to Dismiss for Failure to State a Claim Under Rule 12(b)(6) (“Motion”) (ECF No. 14.) The court heard oral argument on July 19, 2018. (ECF No. 24.) Lauren Shurman appeared on behalf of Nike and Zane Froerer appeared on behalf of Plaintiffs, Soccer Connection, Inc. (“Soccer Connection”) and William Rader (“Rader”). Having considered the written submissions and arguments, the court now issues its Memorandum Decision and Order granting Defendant's Motion.

         I. BACKGROUND

         Plaintiffs Soccer Connection and Rader initiated this action against Nike in Utah state court, seeking damages stemming from an alleged termination by Nike of a “Partnership Agreement” between Soccer Connection, Nike, and non-party Wasatch Soccer Club (the “Club”). (State Court Action, Case No. 180900028.) Plaintiffs asserts three causes of action against Nike: breach of contract, “bad faith breach of contract, ” and tortious interference. Nike removed the action to the federal court based on diversity and then moved to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). (ECF No. 2, ECF No. 14.) The parties' consent to have this case heard by a U.S. Magistrate Judge pursuant to 28 U.S.C. § 636(c). (ECF No. 12.)

         II. PLAINTIFFS' COMPLAINT

         The following facts are taken from Plaintiffs' Complaint and are accepted as true for purposes of this Motion. See Ridge at Red Hawk, L.L.C. v. Schneider, 493 F.3d 1174, 1177 (10thCir. 2007); Fed.R.Civ.P. 12(b)(6).

         Soccer Connection operated as a retail store that sold soccer equipment, uniforms, and supplies. (ECF No. 2-2, ¶1.) Rader is the president and sole shareholder of Soccer Connection. (Id., ¶2.) Nike is a multinational designer and manufacturer of athletic attire. (Id., ¶3.) Soccer Connection was a retailer of Nike products. (Id., ¶4.) Through its retail store, Soccer Connection supplied uniforms to soccer teams, including the Club's teams. (Id.) The Club is a non-profit youth soccer club that organizes competitive and recreational soccer teams. (Id., ¶5.)

         Soccer Connection alleges that a relationship between itself, Nike, and the Club was formed on or about April 16, 2014 when the parties entered into the Partnership Agreement. (Id. at ¶4.) Soccer Connection contends that the Partnership Agreement obligated Nike to supply uniforms to the Club through Soccer Connection for a six-year duration, from 2014 through 2020. (Id., ¶20.) In exchange for product discounts, the Club agreed that its teams would wear exclusively Nike apparel and would purchase that apparel through Soccer Connection. (Id., Exhibit A.) Plaintiffs attach a copy of the alleged Partnership Agreement to their Complaint. (Id.)

         The pages of the Partnership Agreement show the logos of Nike and the Club, but the agreement bears only the signature of the “Club President or Designated Representative.” (Id.) The Partnership Agreement was not signed by Nike or Soccer Connection. (Id.) The Partnership Agreement provides for an express term of February 1, 2014 to January 31, 2020 and labels the arrangement as a “6-year deal.” (Id.)

         In 2016, Nike informed Soccer Connection that it was terminating Soccer Connection's account and that it would no longer accept any new orders from Soccer Connection. (Id., ¶15.) As a result, the Club no longer purchases its uniforms and supplies through Soccer Connection, which harmed Soccer Connection's retail business. (Id., ¶40.) Plaintiffs also allege that a potential sale of Soccer Connection to a third party, Matthew Tidwell, fell through because of Nike's refusal to supply product to Soccer Connection. (Id., ¶¶35-39.)

         III. ANALYSIS

         A. Standard of Review

         Federal Rule of Civil Procedure 12(b)(6) authorizes a court to dismiss a complaint if it fails to state a claim upon which relief can be granted. When considering a motion to dismiss for failure to state a claim, a court “accept[s] all well-pleaded facts as true and view[s] them in the light most favorable to the plaintiff.” Jordan-Arapahoe, LLP v. Bd. of Cty. Comm'rs, 633 F.3d 1022, 1025 (10th Cir. 2011). A claim must be dismissed if the complaint does not contain sufficient facts to make the claim “plausible on its face.” See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Although a plaintiff is not required to include detailed factual allegations, a complaint must contain “more than labels and conclusions” or “a formulaic recitation of the elements of a cause of action, ” and ultimately must “raise a right to relief above the speculative level.” Id. at 555.

         B. Breach of Contract

         The elements of a prima facie case for breach of contract are: “‘(1) a contract, (2) performance by the party seeking recovery, (3) breach of the contract by the other party, and (4) damages.'” Am. W. Bank Members, L.C. v. State, 2014 UT 49, ¶ 15, 342 P.3d 224 (quoting Bair v. Axiom Design, L.L.C., 2001 UT 20, ¶ 14, 20 P.3d 388). To state a claim for breach of contract, Plaintiffs must allege the existence of a valid contract and a breach of that contract by Nike. Here, Soccer Connection asserts that Nike breached the Partnership Agreement by prematurely terminating in 2016, prior to expiration of the agreement's six-year term.[1] Nike moves for dismissal on the grounds that the Partnership Agreement is void under Utah's statute of frauds.

         Utah's statute of frauds provides that “every agreement that by its terms is not to be performed within one year from the making of the agreement” is “void unless the agreement, or some note or memorandum of the agreement, is in writing, signed by the party to be charged with the agreement.” Utah Code Ann. §25-5-4(1)(a). The Partnership Agreement provides for a “6-year deal” with an express term of February 1, 2014 to January 31, 2020. (ECF No. 2-2, Exhibit A.) Thus, the Partnership Agreement is an “agreement that by its terms is not to be performed within one year from the making of the agreement.” Id. Further, the Partnership Agreement is not signed by Nike, the “party to be charged with the agreement.” Id. The Agreement has only one signature: the signature of the “Club President or Designated Representative.” In addition, Soccer Connection does not plead the existence of any ...


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