Dc2ny, Inc. v. Academy Bus, LLC

• Court: District Court, District of Columbia
• Decided: March 31, 2020
• Docket: Civil Action No. 2018-2127
• Status: Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

DC2NY, INC., : : Plaintiff, : Civil Action No.: 18-2127 (RC) : v. : Re Document No.: 11, 14 : ACADEMY BUS, LLC, : : Defendant. :

MEMORANDUM OPINION

GRANTING IN PART AND DENYING IN PART PLAINTIFF’S MOTION FOR LEAVE TO AMEND COMPLAINT

DC2NY, Inc., which does business under the trade name BestBus, filed this lawsuit

against Academy Bus, LLC (“Academy Bus” or “Academy”), asserting a claim under the

Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1961–68, as well

as contract claims and claims for tortious interference with business relations. Academy moved

to dismiss the Complaint, and the Court granted the motion because it found the Complaint to be

deficient in a number of ways. DC2NY, Inc. v. Academy Bus, LLC, No. 18-cv-2127 (“DC2NY

Mot. Dismiss Op.”), 2019 WL 3779571 (D.D.C. Aug. 12, 2019), ECF No. 10. BestBus now

moves to amend its complaint, and Academy Bus opposes any amendment. The Court finds that

amendment of the tortious interference claims would be futile, but that the same cannot be said

for the entirety of the contract claims. BestBus’s motion to amend is therefore granted in part

and denied in part. I. BACKGROUND 1

The Court provided a detailed factual background in its memorandum opinion addressing

Academy Bus’s motion to dismiss. DC2NY Mot. Dismiss Op. at *1–4. The Court reiterates

many of those facts here, but also emphasizes those additional facts alleged for the first time in

the Amended Complaint.

BestBus is a D.C. corporation that provides express bus services to a number of locations

in the mid-Atlantic area between D.C. and New York City, but it does not own its own buses or

employ its own drivers. See Am. Compl. ¶¶ 1, 15, ECF No. 13-1. 2 In 2011, Academy Bus, a

New Jersey LLC which owns buses and employs its own drivers expressed interest in acquiring

BestBus, and the two companies were in negotiations for about a year. Id. ¶¶ 9, 16–17. During

those discussions, BestBus provided Academy Bus with certain “confidential proprietary

financial information” and the parties entered into a “Confidential and Non-Disclosure

Agreement” (“NDA”). Id. ¶ 18. When the parties were ultimately unable to reach a sale

agreement, BestBus opted to pursue an alternative plan. Id. ¶ 19.

1 At the motion to dismiss stage, the Court accepts the plaintiff’s factual allegations as true. See, e.g., United States v. Philip Morris, Inc., 116 F. Supp. 2d 131, 135 (D.D.C. 2000). When considering a motion to amend a complaint, the Court evaluates the proposed amended complaint by applying essentially the same standard it would on a motion to dismiss. See James Madison Ltd. v. Ludwig, 82 F.3d 1085, 1099 (D.C. Cir. 1996) (citing Foman v. Davis, 371 U.S. 178, 181–82 (1962)). Accordingly, for now, the Court accepts as true the plaintiff’s factual allegations in the amended complaint. These overlap almost entirely with the factual allegations in its original complaint. 2 When it filed its Reply, Pl.’s Reply in Supp. of Mot. Amend (“Reply”), ECF No. 13, BestBus attached a revised version of its proposed Amended Complaint. See Reply at 7. This version omitted any mention of certain 2013 and 2014 rebate payments that had inadvertently been referenced in the first version of the proposed Amended Complaint but which BestBus conceded it was time-barred from suing over. See id.; compare Am. Compl. ¶ 57, ECF No. 13-1 (second version), with Am. Compl. ¶ 57, ECF No. 11 (original version). For purposes of this Memorandum Opinion, the Court refers to the second version of the Amended Complaint because, while Academy Bus opposes the Motion for Leave to Amend, it appears to agree that if leave to amend is granted, any reference to the 2013 and 2014 rebates should be left out. 2 In June 2013, BestBus negotiated an exclusivity arrangement with Academy Bus that was

memorialized in a Transportation Service Agreement (“TSA”). Id. ¶¶ 2, 20; Def.’s Mot. to

Dismiss, Ex. 1 (“TSA”) at 1–6, ECF No. 6-2. As a formal matter, Academy Bus, LLC was not a

party to the TSA. See TSA at 1–6. The contracting parties were instead BestBus (using its legal

name, DC2NY, Inc.) and Academy Express LLC, which the Agreement referred to simply as

“Academy.” See id. 3

The TSA stated that BestBus “desire[d] to utilize Academy as [its] sole and exclusive

transportation provider for motor transportation services between the points, places and locations

described in Schedule A” of the Agreement, and that “Academy wishe[d] to provide such

services exclusively to” BestBus. TSA at 1; Am. Compl. ¶ 22. The TSA further provided that

“Academy . . . shall not operate any other ‘line run’ motor coach business in competition with

any existing or future [BestBus] line run during the term of th[e] Agreement,” which was five

years. Am. Compl. ¶¶ 21, 24; see also TSA at 1. It required “Academy . . . to provide

professional, experienced and qualified licensed drivers consistent with federal motor carrier

regulations” and to “direct its driver employees to adhere to [a] level of professionalism,

courtesy and respect in dealings with the public.” TSA at 2. Either party could terminate the

TSA “for any reason upon 90 days written Notice to the other Party.” Id. at 5. Any disputes, the

Agreement stated, would be governed by New Jersey law. Id. The TSA also stated that

“Academy [would] pay [BestBus]” an annual “service rebate,” to be calculated based on “the

total annual revenue . . . paid to Academy by [BestBus] in connection with” the Agreement. Id.

3 The original complaint named Academy Bus, LLC as a defendant. See Compl. at 1, ECF No. 1. The Court dismissed the contract claims because the named defendant was not a party to the contract. DC2NY Mot. Dismiss Op. at *5–6. The proposed amended complaint names Academy Express, LLC as defendant. Am. Compl. at 1. According to Academy Bus, Academy Express LLC has not been served. Def.’s Opp’n to Mot. Amend. at 1 n.1, ECF No. 12 3 at 7–8; see also id. at 2; Am. Compl. ¶ 26. According to BestBus, Academy Bus did not make

the vast majority of these rebate payments. Am. Compl. ¶¶ 56–58.

In 2014, as part of an alleged plan to drive BestBus out of business, Academy Bus

purchased Go Bus, a New York company that “provided buses to Vamoose Bus, a direct

competitor of BestBus in the D.C.-New York market.” Am. Compl. ¶¶ 31–32. Academy Bus

“used Go Bus’s existing relationship with Vamoose to begin supplying buses to Vamoose, on the

same D.C.-New York route for which it was supplying buses to BestBus.” Id. ¶ 32.

Academy Bus provided Vamoose with “newer models and better buses than the ones [it]

supplied to BestBus for the same routes.” Id. Limited to the older buses, “BestBus suffered . . .

numerous bus breakdowns and passenger services problems”—far more “than it would have

experienced had it received [the] newer bus models.” Id. ¶ 34. These problems were

exacerbated by the fact that the drivers whom Academy Bus assigned to BestBus routes

“regularly failed to exhibit . . . professionalism, decorum, courtesy, and respect.” Id. ¶ 39. “On

many occasions, the drivers did not know the routes to which they were assigned.” Id. A

number of them “were surly and uncommunicative with passengers.” Id. And “[s]ome . . . did

not clean their buses between runs” or “help passengers load their luggage.” Id.

New factual allegations added in the Amended Complaint provide further details about

specific complaints made by specific customers. For example, according to the Amended

Complaint:

Individuals such as Jennifer P., Tyler D., and Valerie S. – customers who regularly use buses to travel the D.C.-New York and other BestBus routes – stated in email complaints to BestBus and on social media outlets that, as a direct result of these deficiencies, they would be switching to other providers and strongly discouraged anyone from using BestBus. . . .

Id. ¶ 34. These problems with the buses and drivers “diminish[ed] BestBus’s public reputation.”

Id. The company had to “regularly reimburse[] passengers who had . . . complaints,” which led 4 to increased business losses. Id. BestBus complained to Academy about these issues multiple

times, and Academy repeatedly indicated that it would make improvements. See id. ¶¶ 38, 40.

Such promises ultimately proved empty, though. See id.

Around the same time, BestBus was trying to expand into the New York to Boston

market, and communicated to Academy “that it needed and expected Academy’s continued

support for the Boston venture, given Academy’s obligations under the TSA ‘to promote and

grow the BestBus business.’” Id. ¶ 43. Academy officials then “deliberately misled BestBus

into believing that [Academy] was doing everything it could to help BestBus obtain a New York-

Boston Route” when in fact Academy “was secretly engaged in acquiring the New York-Boston

line run for itself” via the acquisition of Go Bus, which had its own New York-Boston route. Id.

¶¶ 44–45. BestBus did not learn about Academy’s purchase of Go Bus until 2017. Id. ¶ 46.

Eventually, BestBus terminated the TSA, consistent with the Agreement’s ninety-day

notice provision. See id. ¶¶ 50–51. During the ensuing ninety-day period, Go Bus announced

that it would begin servicing its own D.C. to New York routes, see id. ¶ 52, and Academy

allegedly “put Go Bus flyers on the seats of [the] buses that it provided for BestBus, advertising

its own [forthcoming] service at a lower rate than the rate being offered by BestBus.” Id. ¶ 53.

This lawsuit followed. In its original complaint, BestBus asserted six claims: one civil

RICO violation, two contract claims (breach of contract and breach of the duty of good faith and

fair dealing) and three tort claims (tortious interference with business relations, tortious

interference with prospective business relations, and conversion). DC2NY Mot. Dismiss Op. at

*3. Academy moved to dismiss for failure to state a claim. Id. The RICO claim was dismissed

because the Complaint failed to allege a pattern of racketeering activity as is required to state a

RICO claim. Id. at *5; see Zernik v. U.S. Dep’t of Justice, 630 F. Supp. 2d 24, 27 (D.D.C. 2009).

5 The conversion claim was dismissed because the claim was over a debt of $40,000—a particular

amount of money, but not a particular fund of money of the sort required for a conversion claim.

DC2NY Mot. Dismiss Op. at *9; see Campbell v. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa.,

130 F. Supp. 3d 236, 258 (D.D.C. 2015). The RICO and conversion claims have been dropped

from the amended complaint.

The Court’s decision on the motion to dismiss addressed the two contract claims together.

The parties agreed that New Jersey law governed these claims. DC2NY Mot. Dismiss at *5.

Both claims were dismissed for the fairly simple reason that Academy Bus, the defendant in the

lawsuit, was not a party to the contract—Academy Express, LLC was. Id. at *5–6. BestBus

argued that Academy Bus and Academy Express were alter egos and that the Court could

consequently pierce the corporate veil and hold Academy Bus liable for Academy Express’s

breaches, but the complaint contained no factual allegations to support such a finding and

BestBus had not raised the argument prior to its brief in opposition to dismissal. Id. at *6. The

claims were therefore dismissed because BestBus could not possibly prevail against the

defendant it had named. Id.

The tortious interference claims—for tortious interference with business relations and

tortious interference with prospective business relations—were also addressed together. At the

outset, the Court had to determine what law to apply. Id. at *7. The Court determined that the

law of the District of Columbia governed. Id. at *8. 4 Under D.C. law, BestBus’s two tortious

4 The Court’s analysis, which applied the choice-of-law rules of the District of Columbia involved balancing a variety of factors established by the D.C. courts. See DC2NY Mot. Dismiss Op. at *7–8 (citing In re APA Assessment Fee Litig., 766 F.3d 39, 51 (D.C. Cir. 2014); Washkoviak v. Student Loan Mktg. Ass’n, 900 A.2d 168, 180 (D.C. 2006)). Finding that “the applicable choice-of-law considerations [did] not ‘clearly favor either jurisdiction,’ the tie breaker [went] to D.C., the law of the forum state.” Id. at *8 (quoting In re APA, 766 F.3d at 51 (citing Washkoviak, 900 A.2d at 182)). 6 interference claims each needed to allege four elements: “(1) the existence of a valid business

relationship or expectancy, (2) knowledge of the relationship or expectancy on the part of the

interferer, (3) intentional interference inducing or causing a breach or termination of the

relationship or expectancy, and (4) resultant damage.” Jankovic v. Int’l Crisis Grp., 593 F.3d 22,

29 (D.C. Cir. 2010) (quoting Bennett Enters. v. Domino’s Pizza, Inc., 45 F.3d 493, 499 (D.C.

Cir. 1995)). Both claims require “interference with BestBus’s relationship with third parties.”

DC2NY Mot. Dismiss Op. at *8. As pled by BestBus, the relevant third parties would be its

customers, specifically those customers who traveled on its D.C.-New York routes and those

customers that BestBus expected would travel on its New York-Boston route. Id.

These allegations failed to state a claim, as the Court explained:

[T]ortious interference’s first element—the existence of a valid business relationship or expectancy—“require[s] rather specific business opportunities,” Jankovic, 593 F.3d at 29 . . . . Thus, it is insufficient to allege interference with the “generic opportunities of any successful enterprise.” Jankovic, 593 F.3d at 29. Indeed, “tortious interference claims are routinely dismissed where the plaintiff fails to name specific . . . relationships that the defendant allegedly interfered with.” Nyambal v. Alliedbarton Sec. Servs., LLC, 153 F. Supp. 3d 309, 316 (D.D.C. 2016), recons. granted on other grounds, 344 F. Supp. 3d 183 (D.D.C. 2018). BestBus’s claims in this case fall in that category. Instead of naming a relationship with a specific third party or class of third parties, the claims merely allege lost business. Tortious interference requires more.

Id. “Because both claims . . . focus[ed] entirely on the loss of customers,” the Court dismissed

them. Id. at *9. Having found each of BestBus’s claims fatally flawed in some way or another,

the Court granted Academy Bus’s motion to dismiss, and allowed BestBus thirty days to seek

leave to amend the complaint. Order Granting Def.’s Mot. Dismiss, ECF No. 9.

BestBus filed the instant Motion for Leave to File an Amended Complaint within the

prescribed timeframe and attached a proposed Amended Complaint. See Pl.’s Mot. for Leave to

File Am. Compl. (“Mot. Amend.”), ECF No. 11; Am. Compl. The proposed Amended

Complaint made certain changes to the substance of its factual allegations that will be discussed 7 below, but it also dropped the RICO and conversion claims and substituted Academy Express

LLC as the defendant. See Am. Compl. Academy opposed the motion, noting that Academy

Express was not a party to the action but that it was Academy Express LLC’s sole member.

Def.’s Opp’n to Mot. Amend. (“Opp’n”) at 1 & n.1, ECF No. 12. BestBus filed a Reply. Pl.’s

Reply in Supp. of Mot. Amend (“Reply”), ECF No. 13. And Academy filed a Motion for Leave

to File Sur-Reply, which the Court will grant. 5 See Def.’s Sur-Reply in Further Opp’n to Mot.

Amend. (“Sur-Reply”), ECF No. 14 at 5–16. The motion is now ripe for decision.

5 Although sur-replies are generally disfavored, see Kifafi v. Hilton Hotels Retirement Plan, 736 F. Supp. 2d 64, 69 (D.D.C. 2010), the determination as to whether or not to allow one is entrusted to the discretion of the district court, Akers v. Beal Bank, 760 F. Supp. 2d 1, 2 (D.D.C. 2011). The Court’s exercise of discretion is guided by “whether the movant’s reply in fact raises arguments or issues for the first time; whether the nonmovant’s proposed surreply would be helpful to the resolution of the pending motion; and whether the movant would be unduly prejudiced were leave to be granted.” Paleteria La Michoacana, Inc. v. Productos Lacteos Tobumbo S.A. De C.V., 247 F. Supp. 3d 76, 93–94 (D.D.C. 2017) (quoting Glass v. Lahood, 786 F. Supp. 2d 189, 231 (D.D.C. 2011), aff’d, No. 11-5144, 2011 WL 6759550, at *1 (D.C. Cir. Dec. 8, 2011)). In this instance, the Court is willing to allow the sur-reply. BestBus is correct to note that many of Academy Bus’s arguments against allowing amendment of the complaint overlap with its arguments in favor of dismissing the original complaint. See Pl.’s Opp’n to Def.’s Mot. for Leave to File Sur-Reply (“Sur-Reply Opp’n”) at 2, ECF No 15. However, BestBus’s initial Motion to Amend did not contain any argumentation, meaning that its Reply in further support of that motion was the first time it was arguing how and why the changes it made in its amended complaint are sufficient to avoid the deficiencies the Court identified on the first round. See Mot. Amend; Reply. The Court finds it helpful to know how Academy Bus would respond to these arguments. This is especially so because, with regard to the tortious interference claims, Academy Bus misunderstood what BestBus was alleging in its amended complaint. See Reply at 3 n.1 (clarifying that “Plaintiff does not intend, as Defendant seems to believe, see Opposition at 17–21, to assert separate tortious interference claims with respect to [named] individuals.”). The Court views the misunderstanding as reasonable in light of Plaintiff’s counsel’s brief and under- explanatory email response to Defendant’s counsel’s attempt to clarify the allegations before filing its opposition brief. Opp’n Ex. A, ECF No. 12-1. Leave to file the sur-reply is therefore granted. The Court is mindful, though, of the fact that Academy Bus has twice now argued for dismissal of the case on more or less the same grounds, and that it will get a third opportunity when the Amended Complaint is filed. In granting the motion for leave to amend, the Court has concluded that parts of the amended claims could withstand a motion to dismiss. The Court 8 II. LEGAL FRAMEWORK

Federal Rule of Civil Procedure 15(a) permits a plaintiff to amend a complaint once as a

matter of course within 21 days of serving it or within 21 days of the filing of a responsive

pleading. See Fed. R. Civ. P. 15(a)(1). Otherwise, a plaintiff may amend a pleading only with

the opposing party’s written consent—which has been denied in this case—or by the Court’s

leave. Fed. R. Civ. P. 15(a)(2). Rule 15 instructs courts to “freely give leave when justice so

requires.” Id.; see also Belizan v. Hershon, 434 F.3d 579, 582 (D.C. Cir. 2006) (explaining that

Rule 15 “is to be construed liberally”). Importantly, “[t]he decision to grant or deny leave to

amend . . . is vested in the sound discretion of the trial court.” Commodore–Mensah v. Delta Air

Lines, Inc., 842 F. Supp. 2d 50, 52 (D.D.C. 2012) (citing Doe v. McMillan, 566 F.2d 713, 720

(D.C. Cir. 1977)). Generous standard notwithstanding, courts may deny leave to amend for such

reasons as “undue delay, bad faith or dilatory motive on the part of the movant, repeated failure

to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party

by virtue of allowance of the amendment, [or] futility of amendment.” Foman v. Davis, 371 U.S.

178, 182 (1962). “Amendments that do not radically alter the scope and nature of the action . . .

are especially favored.” United States ex rel. Westrick v. Second Chance Body Armor, Inc., 301

F.R.D. 5, 8 (D.D.C. 2013) (quoting Estate of Gaither ex rel. Gaither v. District of Columbia, 272

F.R.D. 248, 252 (D.D.C. 2011)).

“Courts may deny a motion to amend a complaint as futile . . . if the proposed claim

would not survive a motion to dismiss.” James Madison Ltd. v. Ludwig, 82 F.3d 1085, 1099

(D.C. Cir. 1996) (citing Foman, 371 U.S. at 181–82). Accordingly, in determining the futility of

would therefore not be favorably disposed toward any motion to dismiss the amended complaint filed by Academy Express after it is served that simply repeats the same arguments yet again. 9 amendment, the Court applies the same standard it applies in resolving a motion to dismiss

pursuant to Federal Rule of Civil Procedure 12(b)(6). Id. As noted in the Court’s previous

opinion, to survive a motion to dismiss for failure to state a claim under Federal Rule of Civil

Procedure 12(b)(6), a complaint must contain sufficient factual allegations that, if accepted as

true, would state a plausible claim to relief. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

Threadbare recitals of the elements of a cause of action, supported by mere conclusory

statements, do not suffice.” Id. Instead, plaintiffs must “nudge[ ] their claims across the line

from conceivable to plausible.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). At this

stage, the Court must accept all factual allegations in the complaint as true and draw all

reasonable inferences in the plaintiff’s favor. Id. at 555. These standards derived from the

Federal Rules of Civil Procedure govern evaluations of the sufficiency of pleadings even in a

diversity case where the governing substantive law is the law of a state or of the District of

Columbia. See Abbas v. Foreign Policy Group, LLC, 783 F.3d 1328, 1333–34 (D.C. Cir. 2015).

III. ANALYSIS

A. Local Civil Rule 7(m)

As a preliminary matter, Academy argues that BestBus’s motion should be denied

because BestBus failed to comply with the requirements of Local Civil Rule 7(m), which

provides that:

Before filing any nondispositive motion in a civil action, counsel shall discuss the anticipated motion with opposing counsel in a good-faith effort to determine whether there is any opposition to the relief sought and, if there is, to narrow the areas of disagreement. . . . A party shall include in its motion a statement that the required discussion occurred, and a statement as to whether the motion is opposed.

LCvR 7 (m). The parties dispute the extent to which the required consultation occurred.

Compare Opp’n at 8 (“The first requirement . . . was not meaningfully satisfied.”), with Reply at

7 (“[Defendant’s counsel] threatened [Plaintiff’s counsel] with Rule 11 sanctions . . . [Plaintiff’s 10 counsel] did not think further negotiation . . . would be fruitful.”). BestBus concedes it failed to

include the required Rule 7(m) statement. Reply at 7 n.4. The Court reminds the parties to

diligently confer and be mindful of the burden placed on the Court but declines to resolve

Petitioner’s motion on Rule 7(m) grounds. Cf. Equal Rights Ctr. v. Post Props., Inc., 246 F.R.D.

29, 32 (D.D.C. 2007) (“Perhaps if [the required] conversation occurred . . . the issues now before

the Court could have been narrowed in scope or eliminated altogether.”).

B. Diversity Jurisdiction

Academy argues for dismissal based on BestBus’s failure to plead sufficient fact

supporting diversity jurisdiction—which can be the only basis for the Court’s jurisdiction over

the Amended Complaint, now that BestBus has abandoned its RICO claim. Opp’n at 9 n.7.

Diversity jurisdiction requires that no opposing parties be citizens of the same state, and that

more than $75,000 be in dispute. 28 U.S.C. § 1332. The proposed amended complaint alleges

that a sufficient amount is at stake. See Am. Compl. ¶ 11. The parties’ citizenship, therefore, is

the important question.

BestBus, or DC2NY, Inc., is a corporation, and Academy Express, LLC, the proposed

new defendant, appears to be a limited liability company or “LLC.” A corporation is “a citizen

of every State . . . by which it has been incorporated and of the State . . . where it has its principal

place of business.” 28 U.S.C. § 1332(c)(1); see also id. § 1332(e) (noting that the District of

Columbia is considered a “State” for purposes of diversity jurisdiction). An LLC, like Academy

Express, takes the citizenship of each of its members. See, e.g., Lopes v. JetsetDC, LLC, 994 F.

Supp. 2d 135, 143 (D.D.C. 2014) (citing C.T. Carden & Arkoma Assocs., 494 U.S. 185, 195–96

(1990)).

11 “The party seeking the exercise of diversity jurisdiction bears the burden of pleading the

citizenship of every party to the action,” Loughlin v. United States, 393 F.3d 155, 171 (D.C. Cir.

2004), and “[w]hen challenged on allegations of jurisdictional facts, [the party asserting

jurisdiction] must support their allegations by competent proof,” Hertz Corp. v. Friend, 559 U.S.

77, 96–97 (2010) (citing McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 189 (1936)).

However, the burden of presenting such competent proof is not necessarily triggered by an

adversary’s “simply argu[ing] Plaintiffs have not met their burden” without actually “factually

contravening Plaintiffs’ jurisdictional allegations or raising an issue of fact.” See In re

Lorazepam & Clorazepate Antitrust Litig., 900 F. Supp. 2d 8, 17 (D.D.C. 2012) (declining to

decide, and doubting “whether simply uttering ‘challenge’ constitutes a challenge sufficient

under McNutt to trigger Plaintiffs’ burden”).

The Amended Complaint leaves out some important facts concerning the citizenship of

the parties. It says that DC2NY, Inc. is organized under the laws of the District of Columbia and

that Academy Express LLC “is a corporation organized under the laws of New Jersey” and that it

“does substantial business in the District of Columbia.” Am. Compl. ¶¶ 8–10. The Amended

Complaint does not state the principal place of business for either entity. Further, as Academy

notes, Academy Express LLC appears to be an LLC, not a corporation, which means its state of

organization is not relevant to its citizenship. Opp’n at 9 n.7. The citizenship of its members

would be relevant, and the Amended Complaint contains no information about these. At the

motion to dismiss stage, when the defendant was Academy Bus, LLC, BestBus had submitted

New Jersey state records indicating that all members of that LLC were New Jersey residents.

See DC2NY Mot. Dismiss Op. at *5 n.2 (citing Pl.’s Opp’n to Def.’s Mot. to Dismiss (“Mot.

Dismiss Opp’n”), Exs. 1 to 4, ECF Nos. 7-1 to -4). One of these showed that when Academy

12 Express, LLC was formed in November of 2000, its sole member was Academy Bus, LLC, Mot.

Dismiss Opp’n Ex. 3, ECF No. 7-3, but BestBus has not documented or even alleged any more

recent facts about Academy Express LLC, and it has not attached any new state records to its

Amended Complaint or to its briefing on the Motion to Amend.

The Court will not deny the Motion for Leave to Amend for want of jurisdiction because

it is far from clear that amendment would be “futile” for this reason. Academy points out the

factual deficiencies with the amended pleading, see Opp’n at 9 n.7; Sur-Reply at 6 n.3, but it

does not actually say at any point (a) that the parties are not diverse, (b) that Academy Express

LLC is a citizen of any state other than New Jersey, (c) that DC2NY, Inc. is a citizen of

anywhere other than the District of Columbia, or (d) that Academy Express LLC has had any

change in membership since 2000. The Court imagines that if jurisdiction were, in fact,

improper Academy most likely would have made at least one of these arguments directly, rather

than only insinuating jurisdictional defects. And Academy likely conceded the last of these

points because it stated in its Opposition Brief that “Academy Bus . . . is the sole member of

Academy Express.” Opp’n at 1 n.1. Because Academy Bus has not directly alleged that

jurisdiction is improper, and because we are dealing with only a proposed amended complaint, to

which facts may be added before it becomes operative, the Court will not hold BestBus to the

most stringent pleading standard at this point.

In declining to deny amendment based on jurisdictional concerns, the Court does not hold

that subject-matter jurisdiction is necessarily proper. The Amended Complaint is missing some

key facts, and BestBus will still need to allege them in order to proceed. In granting leave to

amend, then, the Court will also grant leave for BestBus to add the necessary jurisdictional facts

before filing an amended complaint. Leave to add facts to the complaint is granted only for the

13 limited purpose of clarifying this Court’s jurisdiction (i.e. not to bolster the substance of any

surviving claim). If BestBus fails to demonstrate that jurisdiction is proper, or if it cannot do so,

the Court has little doubt that Academy Bus or Academy Express will swiftly move to dismiss

for lack of subject matter jurisdiction once the amended complaint becomes operative. See

Henderson ex rel. Henderson v. Shinseki, 562 U.S. 428, 434 (2011) (“Objections to subject

matter jurisdiction . . . may be raised at any time.”). And at that point, with the question of

subject-matter jurisdiction squarely presented, the Court would be obligated to more closely

scrutinize BestBus’s factual allegations. Lodge of Fraternal Order of Police v. Ashcroft, 185 F.

Supp. 2d 9, 13–14 (D.D.C. 2001) (“‘[T]he plaintiff’s factual allegations in the complaint . . . will

bear closer scrutiny in resolving a 12(b)(1) motion’ [for lack of subject-matter jurisdiction] than

in resolving a 12(b)(6) motion for failure to state a claim.”) (citing 5A Charles A. Wright &

Arthur R. Miller, Federal Practice and Procedure § 1350).

C. The Tortious Interference Claims

Having ruled out the possibility of denying leave to amend across the board—for lack of

compliance with the local rules or for want of subject-matter jurisdiction—the Court now turns

to the specifics of the proposed amended claims, beginning with the claims for tortious

interference with business relations (Amended Count II) and tortious interference with

prospective business relations (Amended Count III). The elements of a tortious interference

claim under D.C. law are, again, “(1) the existence of a valid business relationship or expectancy,

(2) knowledge of the relationship or expectancy on the part of the interferer, (3) intentional

interference inducing or causing a breach or termination of the relationship or expectancy, and

(4) resultant damage.” Jankovic, 593 F.3d at 29 (quoting Bennett Enters., 45 F.3d at 499).

14 The problem with the tortious interference and prospective tortious interference claims in

BestBus’s first complaint was that “[i]nstead of naming a relationship with a specific third party

or class of third parties, the claims merely allege[d] lost business.” DC2NY Mot. Dismiss Op. at

*8. BestBus had argued that Academy Bus’s interference had caused “harm to [BestBus’s]

relationship with existing and future passengers” and “to its prospective business relationship

with future passengers on [a New York-Boston] route.” Id.; Compl. ¶¶ 84, 87. The Court held

that such a theory “effectively conflate[d] the first and fourth elements” of tortious

interference—the existence of a valid business relationship or expectancy and resultant

damage—by arguing that “the ‘business relationship’ interfered with was its relationship with its

customers” and that “the ‘resulting damage’ was the loss of those customers.” DC2NY Mot.

Dismiss Op. at *9. The Court observed that “tortious interference claims are routinely dismissed

where the plaintiff fails to name specific . . . relationships that the defendant allegedly interfered

with.” Id. at *8 (quoting Nyambal, 153 F. Supp. 3d at 316).

BestBus explains, in its Reply, that its proposed amended complaint aims to “satisf[y] the

Court’s concern by identifying with greater specificity the class of customers encompassed by

both of [BestBus’s] tortious interference claims.” Reply at 2. BestBus directs the Court’s

attention in particular to paragraphs 70 and 78 of the Amended Complaint:

70. BestBus had a business relationship with its passengers, for whom it agreed to provide premium bus service in exchange for set fees. The class of individuals with whom BestBus had a business relationship included all persons who actually purchased tickets from BestBus for the routes it serviced, i.e. regular and occasional travelers between the D.C. area and New York, Wilmington, and Rehoboth and Dewey Beaches. This class included, but was not limited to, the following persons: Jennifer P., Tyler D., Valerie S., Kelsey W., Chase H., Anirudh H., and Hong Y.

78. BestBus had the expectation of a business relationship with a definable class of passengers: (1) those passengers who had used BestBus in the past and who would have continued to use BestBus in the future, had their experience been favorable; and (2) those passengers who would have used BestBus but for negative reviews by previous passengers on social media platforms such as Yelp or word of mouth. 15 This class included, but was not limited to: Tyler D., Jennifer P., Valerie S., and A.K.

Am. Comp. ¶¶ 70, 78. BestBus maintains that it is not making separate tortious interference

claims with regard to these named individuals. See Reply at 3 n.1. Rather, the naming of these

individuals “is intended to demonstrate the non-speculative nature of the class of persons with

whom BestBus had, or expected to have, a business relationship.” Id. That is to say their

inclusion is only meant to bolster the class-based claim alleged in the original complaint. See id.

The inclusion of these details gets BestBus somewhat closer to stating a claim, but it is

not enough to satisfy the first element of tortious interference. The pleading requirements

remain unchanged, and BestBus still needs to allege more than “interference with the ‘generic

opportunities of any successful enterprise.’” DC2NY Mot. Dismiss. Op. at *8 (quoting Jankovic,

593 F.3d at 29). A loss of customers, without more specificity, does not generally suffice. See

id. For example, in Guttenberg v. Emery, 41 F. Supp. 3d 61 (D.D.C. 2014), certain doctors

alleged that “disparaging comments” made to the medical community had “caus[ed] [other]

doctors to terminate their referrals to Plaintiffs.” Id. at 73. These allegations were not a

sufficient basis for a tortious interference claim under D.C. law because they amounted to only

“general allegations of harm to their business,” and did not include details such as “examples of

referrals which they would have received but for defendants’ conduct.” Id. BestBus’s proposed

amended claims fall short in the same way.

Merely putting partial names to a few members of the alleged class of third parties,

without including more specific identifying information or “facts related to future contracts

compromised by the alleged interferer” is an insufficient basis for a tortious interference claim.

Nyambal, 153 F. Supp. 3d at 316 (observing that “tortious interference claims are routinely

dismissed where the plaintiff fails to” allege such facts or “to name specific contractual

16 relationships”). To separate interference with the proposed class of customers from generic harm

to its business, BestBus would have had to plead more specific facts about existing and

prospective business relations. BestBus has not identified a sufficiently specific class because

the business relationship described is simply the relationship BestBus has with all or nearly all of

its customers. Every single BestBus customer “actually purchased tickets from BestBus” and

was either a “regular [or] occasional traveler[]” between areas serviced by BestBus. Am. Comp.

¶ 70. There is no specificity in a class described in this way. The prospective class described in

paragraph 78 is not quite as universal, but it remains very nonspecific as it covers nearly all past

customers who would use BestBus again. See id. ¶ 78. Furthermore, tortious interference with

prospective business relations requires “business expectancies not grounded in present

contractual relationships.” Sabre Intern. Sec. v. Torres Advanced Enter. Sols., Inc., 820 F. Supp.

2d 62, 77 (D.D.C. 2011) (citing Democratic State Comm. of the District of Columbia v.

Bebchick, 706 A.2d 569, 572 (D.C. 1998)). The prospective class is further deficient in this

regard because, as Academy notes, Opp’n at 18–19, three of the four named members (Tyler D.,

Jennifer P., and Valerie S.) are also identified in Amended Count II as members of the class of

persons with whom BestBus already had a business relationship. See Am. Compl. ¶¶ 70, 78.

The fourth member of the prospective class, A.K., is mentioned nowhere else in the complaint,

so the facts alleged regarding this customer are entirely inadequate. See Opp’n at 19.

BestBus argues that the kind of customer-focused tortious interference theory it pursues

was validated by the D.C. Court of Appeals in Whitt v. American Property Construction, P.C.,

157 A.3d 196 (D.C. 2017). In that case, the owner of a hair salon was able to bring a tortious

interference claim against a construction firm alleging that the firm caused the salon to lose

customers and ultimately to shut down because the firm’s work on a construction project on an

17 adjoining property made it exceedingly difficult if not impossible for salon customers to access

the salon. See id. at 200. This Court cited Whitt in its first opinion in this case, though only by

way of identifying the elements of a tortious interference claim under D.C. law. DC2NY Mot.

Dismiss Op. at *7 (citing Whitt, 157 A.3d at 202).

The Court is unpersuaded that Whitt stands for the proposition that the kind of theory

BestBus puts forward would suffice to state a claim for tortious interference under D.C. law.

Most importantly, as BestBus acknowledges, the decision in Whitt did not actually address the

first element of a tortious interference claim. See Reply at 5 (acknowledging this). As of early

2020, the D.C. Court of Appeals has considered Whitt twice, first in the cited 2017 decision and

again, recently in an unpublished per curiam Memorandum of Judgment, Wash. Gas Light Co. v.

Whitt, No. 18-CV-330+ (D.C. Feb. 26, 2020) (per curiam). There is no indication that on either

occasion the D.C. Court of Appeals gave any thought to how specific a business relationship or

expectancy was required for the first element of the claim. Accordingly, even though the D.C.

courts are the authorities on questions of D.C. law, this Court is not inclined to give greater

weight to implicit holdings from Whitt than it gives to clear statements by courts in this district

that did consider the issue. Cf. District of Columbia Dep’t. of Mental Health v. District of

Columbia Dep’t. of Employment Servs., 15 A.3d 692, 697 (D.C. 2011) (“[W]e will not assume

that [an] issue has been considered sub silentio when there is no discernable evidence that it

has.” (internal quotation omitted, second alteration in original)).

Additionally, two other courts in this district have cited Whitt for the elements of a

tortious interference claim under D.C. law and then proceeded to dismiss a plaintiff’s tortious

interference claim for failure to identify sufficiently specific prospective business relationships.

Precision Contracting Sols., LP v. ANGI Homeservices, Inc., 415 F. Supp. 3d 113, 124–25

18 (D.D.C. 2019); Samuel v. Wells Fargo & Co., No. 17-cv-2539, 2018 WL 4705807, at *3 (D.D.C.

Oct. 1, 2018) (“Plaintiff merely claimed that Defendants’ actions left him without the time and

resources to pursue other clients.”). In one of these cases, the “allegations of inference with

relationships” bore some similarity to the ones BestBus has alleged, as they were based on

“existing and valid business relationships” that the Plaintiff claimed to have based on “customers

who had given glowing ratings and reviews about [Plaintiff] on [Defendant’s] websites.”

Precision Contracting Sols., 415 F. Supp. 3d. at 125. In neither case, apparently, did the district

court see any notable tension between any implicit holding in Whitt and the application of

standard caselaw requiring more specific business relations than standard relationships with

customers. Nor, for that matter, did this Court recognize any inconsistencies in its earlier

opinion, which likewise cited Whitt for the elements of the claim but did not reflect that it had

lowered the pleadings required for any of these elements. DC2NY Mot. Dismiss Op. at *8–9.

The Court therefore relies on the same precedents and reaches the same conclusion it

reached when reviewing BestBus’s first complaint. “[T]he existence of a valid business

expectancy . . . ‘require[s] rather specific business opportunities,’ Jankovic, 593 F.3d at 29, like a

prospective book deal with publishing companies, see Browning v. Clinton, 292 F.3d 235, 242–

43 (D.C. Cir. 2002), or ‘three [particular] potential sources of prospective employment,’ Kimmel

v. Gallaudet Univ., 639. F. Supp. 2d 34, 45 (D.D.C. 2009).” DC2NY Mot. Dismiss Op. at *8. A

claim that focuses on lost business does not qualify. Id. It is theoretically possible that a

plaintiff could plead sufficient details about particular customers to transform a claim focused on

lost business into a viable claim for tortious interference, but that would require more than the

partial names and minimal factual elaboration that BestBus has presented in its proposed

Amended Complaint. Because these proposed amended claims would not survive a motion to

19 dismiss, they are futile and may not be included in the amended complaint that BestBus

ultimately files.

D. The Contract Claims

This leaves only the contract law claims for breach of contract (Amended Count I) and

for breach of the covenant of good faith and fair dealing (Amended Count IV) as potentially

viable. Academy concedes that at least one aspect of these contract claims is not futile,

specifically the claim that Academy failed to pay service rebates in 2016 and 2017. Opp’n at 17

(citing Am. Compl. ¶ 57). This means that both contract claims can go forward—at least to

some extent. 6 The question therefore becomes whether or to what extent Academy is correct in

its contention that the contract claims are otherwise futile because they would not survive a

motion to dismiss. Because BestBus identified the wrong defendant in its first complaint, this

review of these proposed claims is the first time the Court has measured them against the

familiar legal standards for failure to state a claim. The Court must therefore evaluate, for each

proposed violation of the TSA, whether the proposed amended complaint “contain[s] sufficient

factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Iqbal,

556 U.S. at 678 (quoting Twombly, 550 U.S. at 570).

The parties agree that New Jersey law governs the contract claims. DC2NY Mot. Dismiss

Op. at *5. The Court is therefore mindful of some of some of the tenets of contract construction

under that state’s laws. In New Jersey, as elsewhere, “fundamental canons of contract

construction require that [courts] examine the plan language of the contract and the parties’

intent, as evidenced by the contract’s purpose and surrounding circumstances.” Highland Lakes

6 The Court addresses the claim for breach of the covenant of good faith and fair dealing in section III.D.5. 20 Country Club & Cmty. Ass’n v. Franzino, 892 A.2d 646, 656 (N.J. 2006) (quotation omitted). If

the contract is ambiguous, the ambiguous term is strictly construed against the party who drafted

it. GMAC Mortgage, LLC v. Willoughby, 165 A.3d 787, 794 (N.J. 2017). But courts must also

be “sensible” and should not “read into a private agreement that which is not there, and that

which people dealing fairly with one another could not have intended.” Werner Indus., Inc. v.

First State Ins. Co., 548 A.2d 188, 192 (N.J. 1988) (quotations omitted).

1. New York-to-Boston Line

BestBus first alleges that Academy “violated paragraph 2 of the TSA by acquiring and

operating a New York-Boston Line Run Service” operated by Go Bus. Reply at 10 (citing Am.

Compl. ¶ 24); see also Am. Compl. ¶¶ 45, 47 (describing Academy’s acquisition of competitor

Go Bus and its New York-Boston line). Paragraph 2 of the TSA states, in relevant part, that

“Academy shall serve as DC2NY’s exclusive motor coach transportation provider, and Academy

shall provide such services exclusively for DC2NY and shall not operate any other ‘line run’

motor coach business in competition with any existing or future DC2NY [line] run during the

term of this Agreement.” TSA ¶ 2 (misspelling corrected).

Academy first argues that because BestBus “never actually started a New York-to-Boston

route . . . there was no ‘existing’ or ‘future’ BestBus line run during the term of th[e]

Agreement” that Academy’s Go Bus line competed with. Opp’n at 10–11. Certainly there was

no “existing” BestBus line, but Academy’s argument overlooks the TSA’s reference to any

“future DC2NY line run.” TSA ¶ 2. Under New Jersey law, “[c]ontract provisions are to be

interpreted so as to give each provision meaning, rather than rendering some provisions

superfluous.” MacDonald v. CashCall, Inc., 883 F.3d 220, 229 (3d Cir. 2018) (quoting Carter v.

Exxon Co. USA, 177 F.3d 197, 206 (3d Cir. 1999) (citing, inter alia, Ehnes v. Hronis, 23 A.2d

21 592, 593 (N.J. 1942))). If paragraph 2 required BestBus to have a new line up and running

before it barred Academy from competing with it, the word “future” would be superfluous. Any

such already-operational line, even if it was not operational when the TSA was signed, would be

an “existing . . . DC2NY line run during the term of th[e] Agreement” at the time Academy

started competing with it. TSA ¶ 2. The language of paragraph 2 is inartfully drafted, and the

reference to “future” lines raises a number of questions including how Academy could know

where BestBus would operate in the future, and whether BestBus could force Academy into a

breach by opening a new line alongside an existing Academy route. The Court need not evaluate

at this time what the best reading of the TSA would be, but it is obligated to read the reference to

“future” lines as meaning something.

The TSA was concluded in June 2013. See TSA at 6. Less than a year later, BestBus

announced it was interested in a New York-to-Boston line, and BestBus executives were meeting

with Academy representatives in Boston to discuss the endeavor. Am. Compl. ¶¶ 42–43. By the

end of 2014, Academy was operating the New York-to-Boston Go Bus route. Id. ¶¶ 5, 45, 47.

Considering the Court’s obligation to draw inferences in BestBus’s favor at this stage, it is

enough to say that, because a “future” line should refer to something more than an “existing”

line, the TSA’s reference to “future” BestBus lines might plausibly be interpreted to cover at

least a line like New York-to-Boston, which Academy knew BestBus was taking significant

steps toward opening. The contract’s meaning is uncertain enough that the Court cannot rule out

the possibility that BestBus and Academy Bus mutually understood it to require Academy Bus

not to open a competing New York-to-Boston line. Consequently, the proposed amended

complaint states a claim for breach of paragraph 2 based on Academy Bus’s alleged conduct.

The amendment of this claim is therefore not futile in this regard.

22 Regarding this same alleged breach of paragraph 2, Academy argues that amendment

would be futile because BestBus’s amended complaint does not contain a plausible claim for

damages flowing from the breach, as is required for a breach-of-contract claim under New Jersey

law. See Newark Cab Ass’n v. City of Newark, 901 F.3d 146, 160 (3d Cir. 2018). Academy

argues that its acquisition of Go Bus and its New York-to-Boston route “did not deter BestBus

from entering that market” because BestBus did not know about the acquisition until 2017, “after

the TSA was terminated.” 7 Opp’n at 11. Academy also argues that because Go Bus was already

operating a New York-to-Boston route, Academy did not introduce any new competition into the

relevant market when it acquired Go Bus. Id.

BestBus will have to account for each of these arguments in order to prove its damages,

but damages caused by this particular breach have been pled well enough for the motion to

dismiss stage. BestBus alleges that Academy’s breaches caused, among other forms of damage,

“lost profits that BestBus would have earned from customers in the market for express bus

services between New York and Boston, between 2015 and 2017.” Am. Compl. ¶ 68. It is

plausible enough, at this stage, to infer that if Academy had been living up to its obligations

under TSA paragraph 2 rather than operating its own New York-to-Boston line run through Go

Bus, BestBus may have managed to get its own line up and running in this time period. The

proposed amended complaint makes clear that while it was trying to set up a New York-to-

Boston line, BestBus was relying on Academy’s assistance and advice, and that “Academy

officials represented that they would help BestBus.” Am. Compl. ¶ 43. Viewed in the light most

7 BestBus learned about Academy Bus’s acquisition of Go Bus in 2017 and the TSA was terminated on January 5, 2017. Am. Compl. ¶¶ 46, 51. It therefore is conceivable, though unlikely, that BestBus learned about the acquisition in the first few days of the year while the TSA was in operation. See Opp’n at 11–12. BestBus has not addressed this question. 23 favorable to BestBus, it is plausible to think that if Academy had not been secretly arranging for

its own line on the same route, Academy might have provided more or better help to BestBus

and that BestBus might have successfully operated a New York-to-Boston line. The Court

cautions that, because the claim is for breach of contract and not for fraud or a similar tort,

BestBus will need to prove damages stemming from the breach of paragraph 2, and not damages

stemming from false statements made by Academy representatives. This may be challenging,

though BestBus represents that it will present a damages expert, Reply at 11. For now, BestBus

has said enough to demonstrate that this alleged breach could survive a motion to dismiss, and

thus that amendment would not be futile.

2. Provision of Buses to Vamoose

BestBus’s second alleged breach charges that Academy Bus’s provision of buses to

Vamoose violated both paragraph 2 and the TSA preamble. The preamble states: “DC2NY

desires to utilize Academy as DC2NY’s sole and exclusive transportation provider for motor

transportation services between the points, places and locations described in Schedule A . . . and

Academy wishes to provide [motor coach transportation] services exclusively to DC2NY.” TSA

at 1 & ¶ 2; see also id. ¶ 1 (incorporating the preamble into the agreement). Academy responds

that although Vamoose ran a line from Lorton, Virginia to New York City, it did not and is not

alleged to have run buses to or from any of the specific “points, places and locations” within the

District of Columbia or New York City that are listed on Schedule A—or, indeed, from

anywhere in the District. See Opp’n at 11–12 (citing Mot. Dismiss Opp’n at 18–19, ECF No. 7).

Again, the Court sees sufficient ambiguity in the TSA to allow the claim to move

forward. The geographical terms—“points, places and locations”—are undefined and

ambiguous and the TSA does nothing to clarify how far away a different bus line would have to

24 operate in order to be at a different point, place, or location. The Court would therefore be

unlikely to dispose of this claim at the motion to dismiss stage based on a conclusion that, for

example, Vamoose’s Lorton, Virginia location is sufficiently far from BestBus’s Springfield

Metro location as to be a meaningfully different “location” within the meaning of the TSA.

Further, any bus route from the D.C. metro area to the New York metro area is, to some extent

“in competition with” all other such routes, TSA ¶ 2, so it seems reasonable to infer that

paragraph 2 of the TSA could have been violated even by actions on a route operating from a

different location. The proposed amendment is therefore not futile with regard to this alleged

breach.

3. Bus Quality

Academy next argues that amendment is futile with regard to a number of alleged

breaches focused on the quality of the buses it supplied to BestBus. First is the claim that

Academy violated the TSA “[b]y providing superior buses to Vamoose.” Am. Compl. ¶ 62. The

Court has just held that BestBus has a viable claim that Academy was contractually obligated not

to provide Vamoose with any buses on competing routes, but BestBus has not pointed to any

provision of the TSA that obligated Academy to provide BestBus with buses of any particular

relative level of quality. Paragraph 3 requires “motor coaches that fully comply with the

specifications attached . . . as Schedule C,” but Schedule C is entirely blank. See TSA ¶ 3, & 10.

Paragraph 7 says that Academy’s equipment must be “in compliance with all applicable [Federal

Motor Carrier Safety Administration] laws and regulations,” TSA ¶ 7, but this only sets a floor

for quality and compliance, it does not suggest that BestBus was entitled to Academy Bus’s best

or newest vehicles. If supplying buses to Vamoose was a violation—and at this stage the claim

has been plausibly alleged—then that alone was a breach of the TSA. BestBus has not pointed to

25 anything in the TSA indicating that supplying superior buses to Vamoose would be an additional

breach. It would therefore be futile to allow amendment regarding whether the TSA was

violated when Vamoose allegedly received superior buses.

The remaining allegations concerning vehicle quality concern the absolute—as opposed

to relative—quality of the vehicles BestBus received. As described, it seems as though TSA

Schedule C was intended to establish minimum levels of quality for the vehicles BestBus

received, but the Schedule was apparently left blank and BestBus has not argued otherwise. The

only other parts of the TSA that touch on bus quality are paragraphs 7 and 11, which incorporate

applicable federal regulations. TSA ¶ 7 (“Academy . . . covenants that it is, and will remain, in

compliance with all applicable FMCA laws and regulations concerning its equipment[.]”); id.

¶ 11(D) (also requiring “compliance with federal motor carrier rules and regulations”). The

proposed amended complaint directs the Court to 49 C.F.R. § 374.313(a)–(c), Am. Compl. ¶ 63,

which requires three things: (a) a temperature control system that provides for “a reasonable

temperature on each bus”; (b) “a clean, regularly maintained restroom, free of offensive odor,”

although “[a] bus may be operated without a restroom if it makes reasonable rest stops”; and (c)

a bus that is “kept clean, with all required items in good working order.” 49 C.F.R.

§ 374.313(a)–(c).

BestBus alleges that it was provided “older buses that suffered breakdowns and were

otherwise defective,” and “buses that had inoperative electrical outlets, defective toilets and

broken restroom doors, bathroom odors, heating and air conditioning problems, and bus

breakdowns.” Am. Compl. ¶¶ 62, 64. The proposed amended complaint also mentions

“inadequate or non-functional WiFi.” Id. ¶ 34; see also id. ¶ 36 (“defective WiFi service”).

Academy first argues that it was not obligated to provide its newest buses to BestBus. Opp’n at

26 14. To the extent that BestBus intended for its receipt of “older buses” to be read as a standalone

argument for breach, Academy is correct and this argument would be futile—nothing in the

regulation plausibly requires this. The other alleged deficiencies could potentially fit within the

regulation’s requirements, including defective outlets and WiFi because these are at least

arguably “required items” that must be “in good working order.” 49 C.F.R. § 374.313(c).

Academy argues that all of BestBus’s allegations concerning the inadequacy of buses fail

to meet the required pleading standard because the proposed amended complaint lacks “specific

facts or examples of the problems.” Opp’n at 15. Academy argues that this means BestBus is

levelling only “‘naked assertions’ devoid of ‘further factual enhancement’” like routes, dates,

duration of the problem, and information about how it was reported to Academy Bus. See Sur-

Reply at 9–10 (quoting Iqbal, 556 U.S. at 678). 8 This overstates what Iqbal requires and

understates the factual detail included in the proposed amended complaint. BestBus’s pleading

regarding deficiencies in the buses it received from Academy meet the standard set out in

Twombly and Iqbal because the proposed amended complaint contains more than bare legal

conclusions. These cases require that courts “assume [the] veracity” of “well-pleaded factual

allegations . . . and then determine whether they plausibly give rise to an entitlement to relief.”

Iqbal, 556 U.S. at 679 (citing Fed. R. Civ. Pro. 8(a)(2)). Courts should only reject “pleadings

that, because they are no more than conclusions, are not entitled to the assumption of truth.” Id.

at 678. BestBus has alleged that “[b]etween 2014 and 2017, [it] regularly forwarded customer

complaints about older buses . . . to Academy,” and has provided the dates and partial contents of

8 Academy Bus also argues that the allegations are unreliably based on complaints from passengers who stood to be reimbursed if they lodged complaints. Opp’n at 15. This argument relies on the Court drawing an inference that the passengers likely lied, but all inferences must be drawn in BestBus’s favor at this stage of litigation. Twombly, 550 U.S. at 555. The Court therefore cannot dismiss based on this theory. 27 some of these communications regarding the WiFi service. Am. Compl. ¶¶ 37–38. This kind of

factual support “permit[s] the Court to infer more than the mere possibility of misconduct.”

Iqbal, 556 U.S. at 679. It also provides an example of the sort of evidence BestBus will rely on

in proving its case more broadly. See Twombly, 550 U.S. at 545 (“Asking for plausible grounds

[for relief] does not impose a probability requirement at the pleading stage; it simply calls for

enough fact to raise a reasonable expectation that discovery will reveal evidence of

[misconduct].”).

In allowing BestBus to amend its claim for breach based on inadequate WiFi, outlets,

restrooms, and similar deficiencies, the Court has not concluded as a matter of law that any

particular deficiency would constitute a breach if it could be established. Going forward

BestBus will still have to prove not only the fact of the breach but also Academy’s duty under

the TSA not to provide a vehicle with each and every deficiency it claims constituted a violation.

Proof may be relatively straightforward for the temperature controls and restroom quality

guaranteed by 49 C.F.R. § 374.313(a) and (b), but it will take more work to establish what

“required items” Academy was required to furnish “in good working condition” under subsection

(c). Facts concerning the circumstances of the contract and the parties’ mutual understanding of

its requirements will play a role in determining what the TSA required, so it would be premature

to attempt a determination at this stage of which particular deficiencies were violations of that

agreement. Drawing all inferences in BestBus’s favor, though, the Court is persuaded that

“industry standards for interstate bus service” may have required, for example, WiFi and

functioning outlets. See Reply at 14. Subsection (c) might best be interpreted in line with such

standards. See id. At the very least, the Court is willing to let BestBus advance this argument

more fully. Because it is plausible that at least some of the alleged deficiencies can be shown to

28 violate the TSA, the amendment of the complaint with regard to this alleged breach would not be

futile.

4. Driver Professionalism

The final alleged breach that Academy challenges is BestBus’s contention that “[b]y

assigning drivers to BestBus routes who were incompetent, rude, and unprofessional, and who

engaged in texting while driving, Academy violated federal regulations and Paragraphs 7 and 8

of the TSA.” Am. Compl. ¶ 65. Paragraph 7 says that “Academy . . . covenants to provide

professional, experienced and qualified licensed drivers consistent with federal motor carrier

regulations under this Agreement.” TSA ¶ 7. The proposed amended complaint points to 49

C.F.R. § 392.80, which prohibits drivers from texting while driving. Am. Compl. ¶ 63.

Paragraph 8 establishes a hierarchy for reporting and discipline. TSA ¶ 8. It reads:

8. Academy believes that it has a sound understanding of the level of professionalism, decorum, courtesy and respect its drivers should adhere to when dealing with members of the public, and Academy shall direct its driver employees to adhere to that level of professionalism, courtesy and respect in dealings with the public. If DC2NY receives complaints concerning the performance of any driver, the same shall be communicated to Academy for review and further action. Academy, in its sole judgment and discretion, shall determine whether any of its driver employees assigned to DC2NY should be removed, re-assigned, or disciplined. If the action taken by Academy does not ameliorate the concerns raised with respect to a driver[, the] Parties shall confer to determine what if any additional action may be warranted and taken.

Id. Academy makes a number of arguments, including that a violation cannot be established

because a driver falling short of desired standards did not constitute a violation, and that the

proposed amended complaint never alleges that Academy failed to take action against any

particular driver. Opp’n at 15–16. In short, Academy argues that “[t]he claim is too vague, and

too contrary to TSA [paragraph] 8, to be actionable.” Sur-Reply at 16.

On this alleged breach, Academy has the better of the argument because BestBus fails to

explain how exactly the facts it lays out amount to a violation of the TSA. The proposed 29 amended complaint lists a variety of incidents but does not explain—as it does for the deficient

buses issue—how these incidents were communicated to BestBus or how BestBus

communicated them to Academy, if at all. Compare Am. Compl. ¶ 36 (“BestBus regularly

forwarded customer complaints about older buses . . . to Academy.”), with id. ¶ 39 (listing

incidents with no discussion of reporting). BestBus alleges that it “complained to Academy

about the incompetence and unprofessional behavior of drivers,” id. ¶ 40, but Academy is correct

that the TSA gave it “sole judgment and discretion” to determine appropriate disciplinary

actions, TSA ¶ 8, and nothing in the TSA sets a minimum standard for driver quality. Through

the TSA, Academy only promised to “direct its driver employees to adhere to [a certain] level of

professionalism, courtesy and respect.” TSA ¶ 8. The proposed amended complaint describes

how Academy was frustratingly unresponsive to a series of complaints about drivers and claims

that Academy representatives lied about their intended responses. See Am. Compl. ¶ 40. But it

fails to explain what provision of the TSA this is supposed to have violated.

Additionally, even if BestBus had established that it could prove with sufficient detail the

content and volume of violations it reported to Academy, and that Academy’s responses were

unsatisfactory, this would still not necessarily amount to a violation of the TSA. The TSA

explicitly contemplates that “the action taken by Academy” might “not ameliorate the concerns

raised with respect to a driver.” TSA ¶ 8. To have violated the TSA’s driver-discipline

requirements, then, Academy would need to have done something more than fail to ameliorate

BestBus’s concerns. It is not obvious from the face of the agreement what that would be, and

BestBus has not explained sufficiently in its pleadings for this group of alleged breaches to

survive a motion to dismiss. Amendment of the complaint is therefore futile in this regard.

30 The allegation that drivers were texting while driving comes closer to stating a violation

of the TSA because this texting violates the regulations that Academy agreed to comply with in

paragraph 7. Texting drivers could amount to a violation of paragraph 7 regardless of the

reporting and disciplinary procedures laid out in paragraph 8. The problem with the texting

allegations is that the proposed amended complaint provides no detail about when or how these

violations occurred. See id. ¶ 39. BestBus says only that “[o]n multiple occasions [between

2013 and 2017], customers complained that drivers were texting on their cell phones while they

were driving.” Id. This is too conclusory. The pleading requirements in Rule 8 are meant to

ensure that pleadings will give defendants “fair notice of what the . . . claim is and the grounds

upon which it rests.” Twombly, 550 U.S. at 555 (quoting Conley v. Gibson, 355 U.S. 41, 47

(1957)). Among other things, Rule 8 is intended “to permit the adverse party the opportunity to

file a responsive answer, [and] prepare an adequate defense.” Economic Research Servs., Inc. v.

Resolution Economics, LLC, 208 F. Supp. 3d 219, 226 (D.D.C. 2016) (quoting Brown v.

Califano, 75 F.R.D. 497, 498 (D.D.C. 1977)).

The allegation that Academy drivers texted while driving “on multiple occasions” over

the course of four years is too vague to put Academy on sufficient notice. There is no allegation

that Academy itself failed to train drivers properly or to notify them about the regulation against

texting, just a conclusory statement that on multiple occasions violations occurred. BestBus has

given no indication of how it would prove this claim, and Academy could not know where to

begin investigating whether it is true. The allegation therefore does not fulfill “a plaintiff’s

obligation to provide the grounds of his entitlement to relief” with “more than labels and

conclusions.” Twombly, 550 U.S. at 555 (quotations omitted); see also Heard v. Dep’t of State,

No. 08-cv-2123, 2009 WL 10694340, at *3 (D.D.C. Sept. 29, 2009) (“[A]bsent any indication of

31 ‘where, when, and how’ the defendants allegedly violated the statutory provisions cited . . .

[they] are without the ‘fair notice’ they are entitled to receive.”). The proposed amendment is

therefore futile in this regard also.

5. Implied Covenant of Good Faith and Fair Dealing

Amended Count IV alleges a breach of the duty of good faith and fair dealing. Am.

Compl. ¶¶ 85–88; see also Sons of Thunder, Inc. v. Borden, Inc., 690 A.2d 575, 587 (N.J. 1997)

(“[E]very contract in New Jersey contains an implied covenant of good faith and fair dealing.”).

This duty, or covenant, requires “that ‘neither party shall do anything which will have the effect

of destroying or injuring the right of the other party to receive the fruits of the contract.’” Sons

of Thunder, 690 A.2d at 587 (quoting Palisades Properties, Inc. v. Brunetti, 207 A.2 522, 531

(N.J. 1965)). This Count challenges all of the conduct by Academy that has been previously

discussed. After incorporating the preceding allegations by reference, BestBus asserts that

“Academy’s deceptive, intentional, and continuous actions and omissions . . . deprived BestBus

of its reasonable expectations under the TSA, and its rights to receive the fruits of the TSA.”

Am. Compl. ¶¶ 85, 87. Three times in its opposition, Academy Bus cites New Jersey precedents

stating that the duty of good faith and fair dealing cannot be cited by a party seeking to expand

its rights under a contract beyond those which it was able to negotiate for. See, e.g., Opp’n at 12

(citing Glenfed Fin. Corp. v. Penick Corp., 647 A.2d 852, 858 (N.J. Super. Ct. App. Div. 1994),

cert denied, 139 N.J. 442 (N.J. 1995)); see also Opp’n at 13 n.11, 16–17. BestBus makes no

mention of the duty of good faith and fair dealing in its Reply, see Reply, and arguments in

dispositive motions that go unaddressed by the nonmoving party are generally treated as

32 conceded, see Davis v. Transp. Sec. Admin., 264 F. Supp. 3d 6, 10 (D.D.C. 2017). 9 In this

instance, however, the Court cannot treat Amended Count IV as conceded, for two reasons.

First, although Academy repeats its claim about the scope of the implied covenant three times, it

never elaborates with any clarity what it is asking the Court to make of this—to disallow

Amended Count IV entirely or just to limit it to the terms of the contract. Second, and more

importantly, the relevant New Jersey law allows for more than what Academy suggests.

Academy Bus is correct that “the duty of good faith and fair dealing ‘does not alter the

terms of a written agreement.’” Arias v. Elite Mortg. Group, Inc., 108 A.3d 21, 25–26 (N.J.

Super. Ct. App. Div. 2015) (citing Glenfed Fin. Corp., 647 A.2d at 858). However, Academy

overlooks other caselaw clarifying that “[a]lthough the implied covenant of good faith and fair

dealing cannot override an express term in a contract, a party’s performance under a contract

may breach that implied covenant even though that performance does not violate a pertinent

express term.” Wade v. Kessler Inst., 798 A.2d 1251, 1259–60 (N.J. 2002) (quoting Wilson v.

Amerada Hess Corp., 773 A.2d 1121, 1126 (N.J. 2001)). “Unlike in many other states, in New

Jersey a party to a contract may breach the implied covenant of good faith and fair dealing in

performing its obligations even when it exercises an express and unconditional right to

terminate.” Wilson, 733 A.2d at 1126 (citation and quotation omitted). As a result, under New

Jersey law “the discretion afforded to [a party under a contract] is not unbridled discretion” and

“performance under the contract is tempered by the implied covenant of good faith and fair

9 The frequently quoted rule in this Circuit is “that when a plaintiff files an opposition to a dispositive motion and addresses only certain arguments raised by the defendant, a court may treat those arguments that the plaintiff failed to address as conceded.” Davis, 264 F. Supp. 3d at 10; Hopkins v. Women’s Div. Gen. Bd. of Glob. Ministries, 284 F. Supp. 2d 15, 25 (D.D.C. 2003). In the case of motion for leave to amend, the defendant’s opposition on grounds of futility of amendment functions as a motion to dismiss, so the same rule could be applied here. 33 dealing and the reasonable expectations of the parties.” Id. at 1130. Acting within the terms of

an agreement, but with improper motives, may constitute a violation. See id. (“Without bad

motive or intention, discretionary decisions that happen to result in economic disadvantage to the

other party are of no legal significance.”).

Because Academy did not clearly argue that Amended Count IV should be disallowed in

its entirety, and because the law of New Jersey would not support such a holding in any event,

the Court will not treat the count as conceded. Other than its flawed legal argument, Academy

does not make any argument that Amended Count IV could not survive a motion to dismiss, and

“pleading in the alternative is permissible in New Jersey, so long as the alternative claims meet

the pleading standards.” In re AZEK Bldg. Prods., Inc., Mktg. & Sales Practices Litig., 82 F.

Supp. 3d 608, 620 (D.N.J. 2015); see Talon Indus., LLC v. Rolled Metal Prods., Inc., No. 15-cv-

4103, 2016 WL 11325768, at *2 (D.N.J. Apr. 12, 2016) (“Courts in this district have permitted

claims [under New Jersey law] for both breach of contract and breach of the implied covenant of

good faith and fair dealing to proceed.”). Amended Count IV challenges a range of conduct

broader than what Amended Count II challenges. Some the alleged breaches in Amended Count

II have been found to be incapable of surviving a motion to dismiss, because they challenged

conduct that does not violate the TSA. This TSA-compliant conduct could still be the basis for a

breach of the covenant of good faith and fair dealing, if BestBus can demonstrate that Academy

exercised its rights under the contract with improper motive to harm BestBus. See Wilson, 773

A.2d at 1132 (permitting discovery into motive surrounding alleged breaches of a covenant of

good faith and fair dealing). As a result, Amended Count IV, the claim for the breach of the duty

of good faith and fair dealing therefore remains viable in its entirety.

34 IV. CONCLUSION

For the foregoing reasons, BestBus’s Motion for Leave to File an Amended Complaint

(ECF No. 11) is GRANTED IN PART AND DENIED IN PART. Academy Bus’s Motion for

Leave to File a Sur-Reply in Further Opposition (ECF No. 14) is GRANTED and the Sur-Reply

(ECF No. 14 at 5–16) is deemed filed. An order consistent with this Memorandum Opinion is

separately and contemporaneously issued.

Dated: March 31, 2020 RUDOLPH CONTRERAS United States District Judge