Dc2ny, Inc. v. Academy Bus, LLC

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

DC2NY, INC., : : Plaintiff, : Civil Action No.: 18-2127 (RC) : v. : Re Document No.: 20 : ACADEMY EXPRESS, LLC, : : Defendant. : MEMORANDUM OPINION

GRANTING IN PART AND DENYING IN PART PLAINTIFF’S MOTION FOR LEAVE TO FILE SECOND AMENDED COMPLAINT

DC2NY, Inc., which operates under the trade name BestBus, brought this lawsuit against

Academy Express, LLC (“Academy Bus” or “Academy”), asserting contract claims, tortious

interference claims, and a claim under the Racketeer Influenced and Corrupt Organizations Act

(“RICO”), 18 U.S.C. §§ 1961–68. The Court dismissed BestBus’s initial Complaint, DC2NY,

Inc. v. Academy Bus, LLC, No. 18-cv-2127 (“Mot. Dismiss Op.”), 2019 WL 3779571 (D.D.C.

Aug. 12, 2019), ECF No. 10, and, later, granted in part and denied in part BestBus’s motion to

file an Amended Complaint, DC2NY, Inc. v. Academy Bus, LLC, (“Mot. Amend. Op.”), 2020

WL 1536219 (D.D.C. March 31, 2020), ECF No. 18. Now, before having actually filed the

amended complaint that the Court ruled it could file, BestBus moves to amend its complaint for a

second time to add facts establishing diversity jurisdiction and details supporting a claim that

Academy violated the parties’ Transportation Service Agreement (“TSA”) by supplying BestBus

with buses that allegedly had numerous quality deficiencies and that were of a lower quality than buses Academy supplied to a competitor, Vamoose Bus (“Vamoose”). 1 BestBus’s motion to

amend is granted in part and denied in part.

I. BACKGROUND

The Court provided somewhat more detailed factual summaries of this case in its two

earlier memorandum opinions. See Mot. Dismiss Op. at *1–4; see also Mot. Amend. Op. at *1–

5. The Court reiterates many of those facts here and emphasizes additional facts raised for the

first time in the Second Amended Complaint.

BestBus is a D.C. corporation that provides express bus service in the mid-Atlantic area,

including between the District of Columbia and New York City. Second Am. Compl. ¶ 1, ECF

No. 22-1. In 2013, BestBus entered into the TSA with Academy, a New Jersey LLC. Id. ¶ 2.

The TSA stated that Academy would be “BestBus’s exclusive provider of buses and drivers . . .

for specified routes in the Mid-Atlantic corridor . . . .” Id. It required Academy to provide bus

transportation services and drivers to BestBus, id. ¶¶ 25–28, pay a service rebate to BestBus, id.

¶¶ 53–55, and refrain from competing with BestBus on existing and future bus routes, id. ¶ 2.

In 2014, Academy purchased Go Bus, a bus company based in New York that “provided

buses to Vamoose, a direct competitor of BestBus in the D.C.-New York market.” Id. ¶ 4.

Academy began providing buses to Vamoose on the same D.C.-New York route operated by

BestBus. Id. ¶ 5. Although BestBus complained that Academy’s business with Vamoose

violated the TSA, Academy executives stated that their business with Vamoose was temporary

and that they were required to supply buses to Vamoose under a contract with Go Bus. Id. ¶ 33.

1 BestBus originally also sought to allege additional facts supporting a claim that Academy violated the TSA by failing to provide BestBus with experienced and professional drivers, Pl.’s Second Mot. Amend. ¶ 3, ECF No. 20, but BestBus has since withdrawn its attempt to add those facts, Pl.’s Reply ¶ 1, ECF No. 22. The operative proposed Second Amended Complaint is ECF No. 22-1.

2 BestBus alleges that while Academy provided Vamoose with “newer models and better

buses than the ones Academy supplied to BestBus for the same routes . . . Academy deliberately

supplied BestBus with older buses, not the top-of-the-line buses for which BestBus had

contracted.” 2 Id. ¶¶ 32–34. BestBus received complaints from passengers about breakdowns

causing service delays, lost luggage, inoperative WiFi, faulty electrical outlets, and unusable

restrooms. Id. ¶ 34. As a result, BestBus suffered reputational harm and lost profits. Id.

BestBus complained to Academy about the quality of buses that Academy supplied to BestBus

and requested that BestBus be provided with newer buses. Id. ¶ 35. While Academy assured

BestBus that the quality issues would be resolved, id. ¶¶ 35, 37, BestBus asserts that “Academy

took no steps to change its behavior and intentionally continued to supply BestBus with older

buses . . . ,” id. ¶ 35. After continuing disagreements between BestBus and Academy—including

disagreements about bus quality, id. ¶ 37, improper signage displaying signs for Vamoose on

BestBus buses, id. ¶ 38, Academy’s professed support for BestBus’s plan to establish a New

York-Boston route while Academy was also attempting to acquire a New York-Boston route

from Go Bus, id. ¶¶ 40–45, and Academy’s failure to pay service rebates under the TSA, id. ¶¶

53–55—BestBus terminated the TSA in 2016, id. ¶ 47. This lawsuit followed.

BestBus asserted six claims in its original Complaint: (1) one civil RICO violation; (2)

breach of contract claims regarding Academy’s acquisition of a New York-Boston Line operated

by Go Bus, Academy’s provision of buses to Vamoose, Academy’s refusal to pay service rebates

2 BestBus’s First Amended Complaint stated that “Academy promised to provide top-of- the-line buses to BestBus . . . .” See Am. Compl. ¶ 2, ECF No. 11. BestBus further emphasizes this point in the Second Amended Complaint, see Second Am. Compl. ¶ 59 (asserting that Academy’s failure to provide BestBus with “top-of-the-line” buses is a violation of the TSA); see also Pl.’s Reply ¶ 2 (asserting that the TSA required Academy to supply “top-of-the-line” buses to BestBus).

3 in 2016 and 2017, and Academy’s provision of allegedly low quality buses and unprofessional

drivers to BestBus; (3) a claim for breach of the duty of good faith and fair dealing; (4) a claim

for tortious interference with business relations, (5) a claim for tortious interference with

prospective business relations, and (6) a claim for conversion. Mot. Dismiss Op. at *3. The

Court dismissed BestBus’s contract claims for failing to properly name “Academy Express,

LLC” as the defendant, id. at *5–6, tortious interference claims for failure to state a claim, id. at

*8–9, and RICO and conversion claims, id. at *5, 9.

On August 27, 2019, BestBus sought leave to amend its complaint. Pl.’s Mot. Amend.,

ECF No. 11. In the First Amended Complaint, BestBus dropped the RICO and conversion

claims, named Academy Express, LLC as the proper defendant, and alleged additional facts to

support its tortious interference claims. Mot. Amend. Op. at *5 (citing Am. Compl.). On March

31, 2020, the Court denied as futile BestBus’s proposed amendment of the tortious interference

claims and the contract claim regarding driver professionalism, id. at *10, 16, and granted

BestBus’s proposed amendment of its remaining contract claims, including the claim regarding

bus quality, id. at *1. However, the Court explained that while BestBus “has a viable claim that

Academy was contractually obligated not to provide Vamoose with any buses on competing

routes, . . . BestBus ha[d] not pointed to any provision of the TSA that obligated Academy to

provide BestBus with buses of any particular relative level of quality.” Id. at *13. Thus,

BestBus only had a claim regarding the absolute quality of the buses it received from Academy.

Id. at *13–14. Finally, the Court also found that BestBus had failed to establish diversity

jurisdiction and instructed BestBus to add only necessary jurisdictional facts to its Complaint.

Id. at *7 (“Leave to add facts to the complaint is granted only for the limited purpose of

clarifying this Court’s jurisdiction . . . .”).

4 BestBus now seeks leave to amend for a second time. Pl.’s Second Mot. Amend. Here,

BestBus seeks to add facts establishing diversity jurisdiction, see Second Am. Compl. ¶¶ 8–11,

as well as facts supporting a claim that Academy violated the TSA by failing to supply BestBus

with “top-of-the-line” buses and instead supplying BestBus with buses that had numerous quality

issues, id. ¶ 34, and buses that were older and of a lower quality than those Academy supplied to

Vamoose, id. ¶ 59. BestBus’s Second Amended Complaint adds details about the approximate

dates on which various bus quality issues arose. See id. ¶ 34. For example:

On or about July 9, 2015, August 3, 2015, August 17, 2015, January 16. 2016, and April 28, 2016, passengers and BestBus staff complained about gas odors, bathroom odors, and inoperative bathrooms on BestBus buses[.]

Id. While Academy does not oppose amendment of the complaint to add jurisdictional facts

(which the Court has already approved), see Def.’s Op. at 2, ECF No. 21, Academy does oppose

amendment to the extent that BestBus continues to assert that Academy “was contractually

required to provide newer and/or ‘top-of-the-line’ buses” to BestBus, id. at 3–4. The motion is

now ripe for decision.

II. LEGAL STANDARD

A plaintiff may 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. Fed. R. Civ. P. 15(a)(1). A plaintiff

may only make other amendments with the written consent of the opposing party—which

Academy has denied to the extent that BestBus seeks to add facts beyond those necessary to

establish jurisdiction—or with the court’s leave. Fed. R. Civ. P. 15(a)(2). Courts should “freely

give leave when justice so requires.” Id. Courts have discretion to grant or deny a plaintiff’s

motion to amend, Firestone v. Firestone, 76 F.3d 1205, 1208 (D.C. Cir. 1996), and they may

deny leave to amend under certain circumstances such as “undue delay, bad faith or dilatory

5 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).

“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). To determine whether a proposed

amendment would be futile, courts apply a standard similar to that applied in analyzing a motion

to dismiss under Federal Rule of Civil Procedure 12(b)(6). Id. Accordingly, a proposed

amended complaint “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 Bell

Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Under this standard, “[t]hreadbare recitals of

the elements of a cause of action, supported by mere conclusory statements” are insufficient to

survive a motion to dismiss. Id. A court must accept factual allegations in the complaint as true

and draw all reasonable inferences in the plaintiff’s favor. Twombly, 550 U.S. at 555. However,

a court need not accept a plaintiff’s legal conclusions as true, see Iqbal, 556 U.S. at 678, nor

must a court accept as true legal conclusions that are couched as factual allegations, see

Twombly, 550 U.S. at 555. These standards for evaluating the sufficiency of pleadings still apply

in diversity cases where the governing substantive law is that of a state or the District of

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

III. ANALYSIS

BestBus has yet to file the amended complaint that the Court permitted. Now it seeks

leave to amend for a second time. Pl.’s Second Mot. Amend. In granting Academy leave to file

a sur-reply in response to BestBus’s previous motion, the Court observed that opposing

6 amendment of the complaint was Academy’s second chance at “argu[ing] for dismissal of the

case on more or less the same grounds, and that [Academy] w[ould] get a third opportunity when

the Amended Complaint is filed.” Mot. Amend. Op. at *5 n.5. By filing a second Motion for

Leave to Amend directly on the heels of the Court’s resolution of its previous motion, BestBus

has dragged out this preliminary round of the litigation still further. The Court is being asked to

evaluate for a third time whether BestBus has stated certain claims, and there is still every reason

to think that Academy will move to dismiss once an amended complaint is actually filed. For

now, BestBus seeks to add facts establishing diversity jurisdiction, see Second Am. Compl. ¶¶

8–11, and facts supporting a claim that Academy violated the TSA by supplying BestBus with

buses that had numerous quality deficiencies, see id. ¶ 34, and that were of a lower quality than

buses Academy supplied to Vamoose, see id. ¶ 59.

A. Diversity Jurisdiction

The Court’s March 31, 2020, memorandum opinion concluded that BestBus’s First

Amended Complaint lacked sufficient factual details to establish diversity jurisdiction. Mot.

Amend. Op. at *6–7. Accordingly, the Court granted “leave for BestBus to add the necessary

jurisdictional facts [and only those jurisdictional facts] before filing an amended complaint.” Id.

at 13–14. BestBus now seeks to cure this deficiency by adding facts about both parties’ principal

places of business as well as the citizenship of Academy’s members in BestBus’s Second

Amended Complaint. Second Am. Compl. ¶¶ 8–11. Academy does not oppose the addition of

these facts, see Def.’s Op. at 2, which the Court’s prior order expressly contemplated would be

added. The Court grants BestBus leave to add these jurisdictional facts.

7 B. Bus Quality

BestBus’s First Amended Complaint alleged that “[b]y providing superior buses to

Vamoose, a direct competitor of BestBus in the D.C.-New York market for express bus service,

and by supplying BestBus with older buses that suffered breakdowns, and were otherwise

defective, Academy violated Paragraphs 1, 2, and 3 of the TSA.” Am. Compl. ¶ 62. The Court

held that BestBus had a plausible claim that Academy violated the TSA by providing buses to

Vamoose, but that BestBus did not have a plausible claim that the TSA was independently

violated by Academy’s alleged provision of superior buses to Vamoose. See Mot. Amend. Op.

at *13–14. The Court concluded that the TSA made no reference to bus quality anywhere other

than Paragraphs 7 and 11, and that these did nothing more than incorporate applicable federal

regulations that merely set “a floor for quality and compliance.” Id. at *13. Thus, “nothing in

the regulations [or the TSA] plausibly require” Academy to supply BestBus with buses of the

same relative quality or age as those supplied to Vamoose. Id. The TSA only required Academy

to supply buses that met the absolute quality threshold outlined in the regulations. Id. at *13–14.

BestBus’s Second Amended Complaint still alleges that “[b]y providing buses to

Vamoose . . . and by not supplying BestBus with top-of-the-line buses, but rather with older

buses that suffered breakdowns and were otherwise defective, Academy violated Paragraphs 1,

2, and 3 of the TSA.” Second Am. Compl. ¶ 59. BestBus argues that the Court’s March 2020

opinion found only that the regulations do not require Academy to supply BestBus with buses of

any relative quality level, but that the Court failed to consider “whether any other provisions of

the TSA could be read to include such a requirement.” Pl.’s Reply at 2. This misreads the

Court’s opinion. The Court evaluated the TSA and concluded that the TSA said nothing about

bus quality beyond its incorporation of the regulations. Mot. Amend. Op. at *13. Thus, in

8 concluding that nothing in the regulations plausibly requires buses of any relative quality level,

the Court was also stating that nothing in the TSA did so either.

Paragraph 59 of BestBus’s Second Amended Complaint continues to assert a claim for

relative bus quality by stating that it received “older” buses that are not “top-of-the-line.”

Second Am. Compl. ¶ 59. Neither the TSA nor the regulations plausibly requires Academy to

provide BestBus with buses that are of the same age or quality as those provided to Vamoose.

See Mot. Amend Op. at *13. Again, to be clear, BestBus has a viable claim that Academy was

obligated not to provide any buses to Vamoose, but it has no independent claim that Academy

was obligated not to provide better buses to Vamoose. Id. at *13–14. Therefore, to the extent

that BestBus seeks to add facts establishing a deficiency in relative bus quality, the proposed

amendment is futile. When it comes to bus quality, BestBus only has a claim about absolute bus

quality based on quality deficiencies that fail to meet the quality standard required under the

regulations. Id. at *13–14.

IV. CONCLUSION

For the foregoing reasons, BestBus’s Motion for Leave to File a Second Amended

Complaint is GRANTED IN PART AND DENIED IN PART. An order consistent with this

Memorandum Opinion is separately and contemporaneously issued.

Dated: September 2, 2020 RUDOLPH CONTRERAS United States District Judge