JTH Tax LLC v. Kelly

• Court: District Court, W.D. Washington
• Decided: September 8, 2020
• Docket: 3:20-cv-05484
• Status: Unknown

Opinion

1 HONORABLE ROBERT J. BRYAN

2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 WESTERN DISTRICT OF WASHINGTON AT TACOMA 9

10 JTH TAX LLC (d/b/a LIBERTY TAX Case No. 3:20-cv-05484-RJB SERVICE), 11 ORDER GRANTING MOTION TO Plaintiff, DISMISS COUNTERCLAIMS 12 vs. 13 MARK KELLY, 14 Defendant. 15 16 This matter comes before the court on Plaintiff JTH Tax LLC d/b/a Liberty Tax 17 Service’s (“Liberty”) Motion to Dismiss Defendant’s Counterclaims. Dkt. 30. The Court is 18 familiar with the record related to the motion and the remaining record herein. 19 I. FACTS 20 In this case, Liberty alleges that the Defendant, Mark Kelly, a former franchisee, 21 breached his franchise agreement with Liberty by operating a competing tax preparation 22 business and using Liberty’s federally registered trademarks, service marks, and logos after his 23 franchised business was terminated. Dkt. 1. Liberty makes claims for violations of the 24 Lanham Act, 15 U.S.C. §§ 1125(a) and 1125(c), the Defend Trade Secrets Act, 18 U.S.C. 25 §1836, et. seq., Washington Uniform Trade Secrets Act, RCW 19.108, et. seq., breach of 26 contract, breach of covenants not to compete or solicit, request for accounting, conversion, 1 unjust enrichment, and tortious interference with business relations. Id. Liberty requested 2 damages, injunctive relief, attorneys’ fees and costs. Id. 3 In his Answer to the Complaint, Defendant Kelly asserts counterclaims for violations 4 of the Sherman Antitrust Act, 15 U.S.C. §§ 1 and 1px solid var(--green-border)">2, violations of Washington’s “franchise 5 disclosure requirements” found at RCW 19.100.080, breach of contract, breach of the implied 6 covenant of good faith and fair dealing, violations Washington’s Franchise Investment Act, 7 RCW 19.100.180, and violations of Washington’s Unfair Businesses Practices Act, RCW 8 19.86.020. Dkt. 24. 9 On August 19, 2020, the Court issued an order granting Liberty’s Motion for a 10 Temporary Restraining Order, which, by its terms, has now been converted to a Preliminary 11 Injunction. Dkt. 33. 12 Now pending is Liberty’s motion to dismiss Defendant Kelly’s counterclaims. Dkt. 30. 13 Kelly’s response to the Motion to Dismiss was due on August 24, 2020. Kelly filed no 14 15 response. 16 II. DISCUSSION 17 Fed. R. Civ. P. 12(b) motions to dismiss may be based on either the lack of a 18 cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal 19 theory. Balistreri v. Pacifica Police Department, 901 F.2d 696, 699 (9th Cir. 1990). Material 20 allegations are taken as admitted and the complaint is construed in the plaintiff's favor. 21 Keniston v. Roberts, 717 F.2d 1295 (9th Cir. 1983). “While a complaint attacked by a Rule 22 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to 23 24 provide the grounds of his entitlement to relief requires more than labels and conclusions, and 25 a formulaic recitation of the elements of a cause of action will not do.” Bell Atlantic Corp. v. 26 Twombly, 550 U.S. 544, 554-55 (2007) (internal citations omitted). “Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the 1 allegations in the complaint are true (even if doubtful in fact).” Id. at 555. The complaint 2 must allege “enough facts to state a claim to relief that is plausible on its face.” Id. at 547. 3 “Except for motions for summary judgment, if a party fails to file papers in opposition 4 to a motion, such failure may be considered by the court as an admission that the motion has 5 merit.” Local Rules W.D. Wash. LCR 7(b)(2). Here, the Court considers Defendant Kelly’s 6 7 failure to file a response as an admission that the motion to dismiss has merit. 8 The Motion to Dismiss (Dkt. 30) should be granted. Liberty properly points out his 9 Sherman Act claims should be dismissed because Defendant Kelly has failed to allege 10 sufficient facts which would demonstrate that he has standing, has failed to adequately identify 11 a relevant market, failed to plead which two products he alleges are “tied,” allege facts to 12 support an assertion that Liberty had market power or monopoly power, or that Defendant 13 Kelly suffered a cognizable antitrust injury. 14 15 Moreover, Liberty properly points out that Defendant Kelly’s franchise disclosure 16 claim is time barred. As to Defendant Kelly’s breach of contract, Liberty’s argument, that 17 Defendant Kelly fails to point to any provision of the contract Liberty is alleged to have 18 breached, has merit. In regard to Defendant Kelly’s claim for breach of the implied covenant 19 of good faith and fair dealing, Liberty’s argument the claim should be dismissed because 20 Virginia (which is the law the parties agreed would apply to this contact) does not recognize 21 such a claim, is well taken. 22 23 Further, Liberty properly points out that Defendant Kelly’s claims for violations 24 Washington’s Franchise Investment Act, RCW 19.100.180 should be dismissed because he 25 failed to plead that Liberty’s purchasing requirements “substantially affect competition” as 26 required under RCW 19.100.180(b) or that the sales complained of were from Liberty during 1 properly points out that Defendant failed to plead that the actions by Liberty complained of 2 affected the public interest as is necessary to state a claim for violations of Washington’s 3 Unfair Businesses Practices Act, RCW 19.86.020. 4 The motion should be granted and the counterclaims dismissed. 5 6 III. ORDER 7 It is ORDERED that: 8 • Plaintiff JTH Tax LLC d/b/a Liberty Tax Service’s Motion to Dismiss Defendant’s 9 Counterclaims (Dkt. 30) IS GRANTED; and 10 • Defendant’s counterclaims ARE DISMISSED. 11 DATED this 8th day of September, 2020. A 12

13 ROBERT J. BRYAN 14 United States District Judge 15 16 17 18 19 20 21 22 23 24 25 26