Jon-Don v . Malone, et a l . CV-02-429-M 04/10/03 UNITED STATES DISTRICT COURT
DISTRICT OF NEW HAMPSHIRE
Jon-Don Products, Inc., Plaintiff
v. Civil N o . 02-429-M Opinion N o . 2003 DNH 064 John C . Malone, Douglas Malone, William Priestly, and Truck- Mounts Etc., Inc., Defendants
John C . Malone, Counterclaim Plaintiff
v. Jon-Don Products, Inc., Counterclaim Defendant
O R D E R
This case arises from: (1) John C . Malone’s sale of his
business to Jon-Don Products, Inc. (“Jon-Don”), which employed
Malone after the sale; (2) Jon-Don’s subsequent termination of
Malone’s employment; and (3) Malone’s alleged violation of
various non-compete agreements he made with Jon-Don. Jon-Don
initially sued Malone, Douglas Malone, William Priestly, and
Truck-Mounts Etc., Inc. (“Truck-Mounts”), in six counts,
asserting (1) breach of contract; (2) violation of New Hampshire’s Trade Secrets Act; (3) tortious interference with
prospective economic advantage; (4) conversion; (5) unjust
enrichment; and (6) for an accounting. Jon-Don has since
withdrawn its claims against Douglas Malone, William Priestly,
and Truck-Mounts, leaving Malone as the sole defendant.
In his answer to Jon-Don’s complaint, Malone asserted a
counterclaim for breach of contract and requested attorneys’ fees
and costs. In another complaint filed in this court (Civ. N o .
02-457-JD), which has since been consolidated with Jon-Don’s
suit, Malone asserted: (1) wrongful termination (Count I ) ;
(2) breach of the covenant of good faith and fair dealing (Count
I I ) ; (3) a request for enhanced compensatory damages (Count I I I ) ;
(4) violation of N . H . R E V . S T A T . A N N . (“RSA”) § 358-A, New
Hampshire’s Consumer Protection Act (“CPA”) (Count I V ) ; and
( 5 ) violation of the public policy against anti-competitive
practices (Count V ) .
Before the court are: (1) Malone’s motion to dismiss Jon-
Don’s entire complaint for failure to state a claim (document
n o . 2 0 ) , to which Jon-Don objects; and ( 2 ) Jon-Don’s motion to
2 dismiss the Consumer Protection Act claim asserted in Count I V of
Malone’s counterclaim (document n o . 2 7 ) , to which no objection
has been filed. For reasons given below, Malone’s motion to
dismiss is denied, and Jon-Don’s motion to dismiss is granted.
Standard of Review
A motion to dismiss for “failure to state a claim upon which
relief can be granted,” F E D . R . C I V . P . 12(b)(6), requires the
court to conduct a limited inquiry, focusing not on “whether a
plaintiff will ultimately prevail but whether the claimant is
entitled to offer evidence to support the claims.” Scheuer v .
Rhodes, 416 U . S . 2 3 2 , 236 (1974). When considering a motion to
dismiss under Rule 12(b)(6), the court must “accept as true all
well-pleaded allegations and give plaintiffs the benefit of all
reasonable inferences.” Cooperman v . Individual, Inc., 171 F.3d
4 3 , 46 (1st Cir. 1999) (citing Gross v . Summa Four, Inc., 93 F.3d
987, 991 (1st Cir. 1996)). However, “while a court deciding a
motion to dismiss under Rule 12(b)(6) . . . must take all well-
pleaded facts as true . . . it need not credit a complaint’s
‘bald assertions’ or legal conclusions.” Shaw v . Digital Equip.
Corp., 82 F.3d 1194, 1216 (1st Cir. 1996) (quoting Wash. Bar
3 Found. v . Mass. Bar Found., (993 F.2d 9 6 2 , 971 (1st Cir. 1993)).
Finally, “[d]ismissal under F E D . R . C I V . P . 12(b)(6) is only
appropriate if the complaint, so viewed, presents no set of facts
justifying recovery.” Cooperman, 171 F.3d at 46 (citing
Dartmouth Review v . Dartmouth Coll., 889 F.2d 1 3 , 16 (1st Cir.
1989)).
Discussion
I. Malone’s Motion to Dismiss
Malone moves to dismiss Jon-Don’s entire complaint for
failure to state a claim on which relief can be granted. Relying
upon four affidavits, including his own, and invoking D M
Research, Inc. v . College of American Pathologists, 170 F.3d 53
(1st Cir. 1999), Malone argues that Jon-Don has asserted nothing
more than naked conclusory allegations and that the court should
not allow Jon-Don to engage in a “fishing expedition.”
Putting aside the affidavits filed in support of the Rule
12(b)(6) motion (which should entail nothing more than an
examination of the pleadings and attached or referenced
documents), Jon-Don has met the liberal pleading requirements of
4 the Federal Rules of Civil Procedure. See Gorski v . N.H. Dep’t
of Corr., 290 F.3d 466, 474 (1st Cir. 2002) (“notice pleading
does not require recitation of detailed evidence in support of
the claim”). Jon-Don has adequately put Malone on notice that he
must defend against claims that he (1) violated various
agreements with Jon-Don by disclosing and using Jon-Don’s
confidential information and competing against Jon-Don in the New
England market; and (2) interfered with Jon-Don’s commercial
relationships with its distributor, White Magic, as well as with
various customers. The complaint in this case is more
substantial than the complaint in DM Research, which merely
asserted, in conclusory fashion, an implausible conspiracy that
made little or no logical sense. See 170 F.3d at 5 6 . Because
Jon-Don has met the relevant pleading standard, Malone’s motion
to dismiss is denied.
II. Jon-Don’s Motion to Dismiss
In Count IV of his counterclaim, Malone asserts that Jon-Don
engaged in “an unfair method of competition and/or deceptive act
[or] practice in the conduct of commerce within this state” by
5 terminat[ing] Malone’s employment in violation of the public policy of the State of New Hampshire while he was suffering from a workplace injury, and had executed a Non-competition Agreement and a Non-solicitation Agreement, in order to maliciously prevent him from seeking gainful employment or engaging in gainful enterprise.
Jon-Don moves to dismiss Malone’s Consumer Protection Act
counterclaim on grounds that the wrongful act Malone alleges in
that claim is simply not cognizable under the CPA. The court
agrees.
Under the provisions of New Hampshire’s Consumer Protection
Act,
[i]t shall be unlawful for any person to use any unfair method of competition or any unfair or deceptive act or practice in the conduct of any trade or commerce within this state.
RSA 358-A:2. The statute goes on to list fifteen specific
unlawful acts, while also noting that the list is not exclusive.
Id.; see also Brzica v . Trs. of Dartmouth Coll., 147 N.H. 443,
451 (2002) (quoting Gautschi v . Auto Body Discount Ctr., 139 N.H.
457, 459-60 (1995)).
6 However, “the phrase ‘including but not limited to’ [in RSA 358-A] . . . limits the applicability of the Consumer Protection Act to those types of acts [listed in RSA 358-A:2, I-XIV].” Roberts v . General Motors Corp., 138 N.H.
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Jon-Don v . Malone, et a l . CV-02-429-M 04/10/03 UNITED STATES DISTRICT COURT
DISTRICT OF NEW HAMPSHIRE
Jon-Don Products, Inc., Plaintiff
v. Civil N o . 02-429-M Opinion N o . 2003 DNH 064 John C . Malone, Douglas Malone, William Priestly, and Truck- Mounts Etc., Inc., Defendants
John C . Malone, Counterclaim Plaintiff
v. Jon-Don Products, Inc., Counterclaim Defendant
O R D E R
This case arises from: (1) John C . Malone’s sale of his
business to Jon-Don Products, Inc. (“Jon-Don”), which employed
Malone after the sale; (2) Jon-Don’s subsequent termination of
Malone’s employment; and (3) Malone’s alleged violation of
various non-compete agreements he made with Jon-Don. Jon-Don
initially sued Malone, Douglas Malone, William Priestly, and
Truck-Mounts Etc., Inc. (“Truck-Mounts”), in six counts,
asserting (1) breach of contract; (2) violation of New Hampshire’s Trade Secrets Act; (3) tortious interference with
prospective economic advantage; (4) conversion; (5) unjust
enrichment; and (6) for an accounting. Jon-Don has since
withdrawn its claims against Douglas Malone, William Priestly,
and Truck-Mounts, leaving Malone as the sole defendant.
In his answer to Jon-Don’s complaint, Malone asserted a
counterclaim for breach of contract and requested attorneys’ fees
and costs. In another complaint filed in this court (Civ. N o .
02-457-JD), which has since been consolidated with Jon-Don’s
suit, Malone asserted: (1) wrongful termination (Count I ) ;
(2) breach of the covenant of good faith and fair dealing (Count
I I ) ; (3) a request for enhanced compensatory damages (Count I I I ) ;
(4) violation of N . H . R E V . S T A T . A N N . (“RSA”) § 358-A, New
Hampshire’s Consumer Protection Act (“CPA”) (Count I V ) ; and
( 5 ) violation of the public policy against anti-competitive
practices (Count V ) .
Before the court are: (1) Malone’s motion to dismiss Jon-
Don’s entire complaint for failure to state a claim (document
n o . 2 0 ) , to which Jon-Don objects; and ( 2 ) Jon-Don’s motion to
2 dismiss the Consumer Protection Act claim asserted in Count I V of
Malone’s counterclaim (document n o . 2 7 ) , to which no objection
has been filed. For reasons given below, Malone’s motion to
dismiss is denied, and Jon-Don’s motion to dismiss is granted.
Standard of Review
A motion to dismiss for “failure to state a claim upon which
relief can be granted,” F E D . R . C I V . P . 12(b)(6), requires the
court to conduct a limited inquiry, focusing not on “whether a
plaintiff will ultimately prevail but whether the claimant is
entitled to offer evidence to support the claims.” Scheuer v .
Rhodes, 416 U . S . 2 3 2 , 236 (1974). When considering a motion to
dismiss under Rule 12(b)(6), the court must “accept as true all
well-pleaded allegations and give plaintiffs the benefit of all
reasonable inferences.” Cooperman v . Individual, Inc., 171 F.3d
4 3 , 46 (1st Cir. 1999) (citing Gross v . Summa Four, Inc., 93 F.3d
987, 991 (1st Cir. 1996)). However, “while a court deciding a
motion to dismiss under Rule 12(b)(6) . . . must take all well-
pleaded facts as true . . . it need not credit a complaint’s
‘bald assertions’ or legal conclusions.” Shaw v . Digital Equip.
Corp., 82 F.3d 1194, 1216 (1st Cir. 1996) (quoting Wash. Bar
3 Found. v . Mass. Bar Found., (993 F.2d 9 6 2 , 971 (1st Cir. 1993)).
Finally, “[d]ismissal under F E D . R . C I V . P . 12(b)(6) is only
appropriate if the complaint, so viewed, presents no set of facts
justifying recovery.” Cooperman, 171 F.3d at 46 (citing
Dartmouth Review v . Dartmouth Coll., 889 F.2d 1 3 , 16 (1st Cir.
1989)).
Discussion
I. Malone’s Motion to Dismiss
Malone moves to dismiss Jon-Don’s entire complaint for
failure to state a claim on which relief can be granted. Relying
upon four affidavits, including his own, and invoking D M
Research, Inc. v . College of American Pathologists, 170 F.3d 53
(1st Cir. 1999), Malone argues that Jon-Don has asserted nothing
more than naked conclusory allegations and that the court should
not allow Jon-Don to engage in a “fishing expedition.”
Putting aside the affidavits filed in support of the Rule
12(b)(6) motion (which should entail nothing more than an
examination of the pleadings and attached or referenced
documents), Jon-Don has met the liberal pleading requirements of
4 the Federal Rules of Civil Procedure. See Gorski v . N.H. Dep’t
of Corr., 290 F.3d 466, 474 (1st Cir. 2002) (“notice pleading
does not require recitation of detailed evidence in support of
the claim”). Jon-Don has adequately put Malone on notice that he
must defend against claims that he (1) violated various
agreements with Jon-Don by disclosing and using Jon-Don’s
confidential information and competing against Jon-Don in the New
England market; and (2) interfered with Jon-Don’s commercial
relationships with its distributor, White Magic, as well as with
various customers. The complaint in this case is more
substantial than the complaint in DM Research, which merely
asserted, in conclusory fashion, an implausible conspiracy that
made little or no logical sense. See 170 F.3d at 5 6 . Because
Jon-Don has met the relevant pleading standard, Malone’s motion
to dismiss is denied.
II. Jon-Don’s Motion to Dismiss
In Count IV of his counterclaim, Malone asserts that Jon-Don
engaged in “an unfair method of competition and/or deceptive act
[or] practice in the conduct of commerce within this state” by
5 terminat[ing] Malone’s employment in violation of the public policy of the State of New Hampshire while he was suffering from a workplace injury, and had executed a Non-competition Agreement and a Non-solicitation Agreement, in order to maliciously prevent him from seeking gainful employment or engaging in gainful enterprise.
Jon-Don moves to dismiss Malone’s Consumer Protection Act
counterclaim on grounds that the wrongful act Malone alleges in
that claim is simply not cognizable under the CPA. The court
agrees.
Under the provisions of New Hampshire’s Consumer Protection
Act,
[i]t shall be unlawful for any person to use any unfair method of competition or any unfair or deceptive act or practice in the conduct of any trade or commerce within this state.
RSA 358-A:2. The statute goes on to list fifteen specific
unlawful acts, while also noting that the list is not exclusive.
Id.; see also Brzica v . Trs. of Dartmouth Coll., 147 N.H. 443,
451 (2002) (quoting Gautschi v . Auto Body Discount Ctr., 139 N.H.
457, 459-60 (1995)).
6 However, “the phrase ‘including but not limited to’ [in RSA 358-A] . . . limits the applicability of the Consumer Protection Act to those types of acts [listed in RSA 358-A:2, I-XIV].” Roberts v . General Motors Corp., 138 N.H. 5 3 2 , 538 (1994) (brackets and quotation omitted). “Trade or commerce” is defined under the Act as including “the advertising, offering for sale, sale, or distribution of any services and any property, tangible or intangible, real, personal or mixed, and any other article, commodity, or thing of value wherever situated.” RSA 358-A:1, I I .
Brzica, 147 N.H. at 451 (parallel citations omitted).
The CPA’s non-exclusive list of prohibited acts includes
things such as “[p]assing off goods or services as those of
another,” RSA 358-A:2, I , “[u]sing deceptive representations or
designations of geographic origin in connection with goods or
services,” RSA 358-A:2, IV, and “[a]dvertising goods or services
with intent not to sell them as advertised,” RSA 358-A:2, IX.
Based upon that list, it would certainly appear that the wrongful
act alleged by Malone, terminating him while he was suffering
from a workplace injury and subject to a non-compete agreement,
falls well outside the scope of the CPA.
“The New Hampshire Supreme Court has never decided whether
the CPA applies to employer-employee relations.” Bartholomew v .
7 Delahaye Group, Inc., N o . 95-20-B, 1995 WL 907897 (D.N.H. Nov. 8 ,
1995). In a CPA case, the New Hampshire Supreme Court typically
“look[s] to the Massachusetts courts for guidance,” since New
Hampshire’s statute is based on Massachusetts’ own CPA. Milford
Lumber C o . v . RCB Realty, Inc., 147 N.H. 1 5 , 17 (2001); see also
Barrows v . Boles, 141 N.H. 3 8 2 , 390 (1996); Roberts, 138 N.H. at
538-9; Chase v . Dorais, 122 N.H. 6 0 0 , 602 (1982). The Supreme
Judicial Court of Massachusetts has determined that the CPA does
not “cover employment contract disputes between employers and the
employees who work in the employer’s organization [or] disputes
between members of that organization arising out of the
employment relationship.” Manning v . Zuckerman, 444 N.E.2d 1262,
1265 (Mass. 1983). Because the wrongful conduct alleged by
Malone in his CPA claim amounts to little more than a breach of
Jon-Don’s duties to him under an employment contract, Malone
fails to state a claim cognizable under the Consumer Protection
Act. Accordingly, Jon-Don’s motion to dismiss Count IV of
Malone’s counterclaim is granted.
8 Conclusion
For reasons given above, Malone’s motion to dismiss
(document n o . 20) is denied and Jon-Don’s motion to dismiss Count
IV of Malone’s counterclaim (document n o . 27) is granted.
SO ORDERED.
Steven J. McAuliffe United States District Judge
April 1 0 , 2003
cc: Catherine M . Costanzo, Esq. Kevin R. Krantz, Esq. Michael A . Pignatelli, Esq. Paul W . Hodes, Esq.