Tori Belle Cosmetics LLC v. Meek

• Court: District Court, W.D. Washington
• Decided: February 14, 2023
• Docket: 2:21-cv-00066
• Status: Unknown

Opinion

4 UNITED STATES DISTRICT COURT 5 WESTERN DISTRICT OF WASHINGTON AT SEATTLE 6 7 TORI BELLE COSMETICS, LLC, Cause No. C21-0066RSL 8 Plaintiff, ORDER GRANTING IN 9 v. PART MOTION TO DISMISS 10 COUNTERCLAIMS NATALIE MEEK, et al., 11 Defendants. 12 13 This matter comes before the Court on “Counterclaim-Defendants Tori Belle Cosmetics, 14 15 LLC and Laura Hunter’s Motion to Dismiss Natalie Meek’s Counterclaims.” Dkt. # 84. The 16 question for the Court on a motion to dismiss is whether the facts alleged in the pleading 17 sufficiently state a “plausible” ground for relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 18 19 (2007). In the context of a motion under Rule 12(b)(6) of the Federal Rules of Civil Procedure, 20 the Court must “accept factual allegations in the complaint as true and construe the pleadings in 21 the light most favorable to the nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 22 23 519 F.3d 1025, 1031 (9th Cir. 2008) (citation omitted). The Court’s review is generally limited 23 to the contents of the pleading. Campanelli v. Bockrath, 100 F.3d 1476, 1479 (9th Cir. 1996). 25 To survive a motion to dismiss under Rule 12(b)(6), a complaint must allege 26 “enough facts to state a claim to relief that is plausible on its face.” []Twombly, 27 550 U.S. [at 570]. A plausible claim includes “factual content that allows the court 28 1 to draw the reasonable inference that the defendant is liable for the misconduct alleged.” U.S. v. Corinthian Colls., 655 F.3d 984, 991 (9th Cir. 2011) (quoting 2 Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). Under the pleading standards of Rule 3 8(a)(2), a party must make a “short and plain statement of the claim showing that 4 the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). . . . A complaint “that 5 offers ‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause of action will not do.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555). 6 Thus, “conclusory allegations of law and unwarranted inferences are insufficient 7 to defeat a motion to dismiss.” Adams v. Johnson, 355 F.3d 1179, 1183 (9th Cir. 8 2004).

9 Benavidez v. Cty. of San Diego, 993 F.3d 1134, 1144–45 (9th Cir. 2021). If the pleading fails to 10 state a cognizable legal theory or fails to provide sufficient facts to support a claim, dismissal is 11 12 appropriate. Shroyer v. New Cingular Wireless Servs., Inc., 622 F.3d 1035, 1041 (9th Cir. 2010). 13 A. Wage Claim 14 Ms. Meek seeks an award of double damages and attorney’s fees under RCW 49.48.030, 15 16 which states that “[i]n any action in which any person is successful in recovering judgment for 17 wages or salary owed to him or her, reasonable attorney’s fees, in an amount to be determined 18 by the court, shall be assessed against said employer or former employer . . . .”1 Tori Belle and 19 20 Ms. Hunter (collectively, “the counterclaim defendants”) argue that RCW 49.48.030 is 21 inapplicable because Ms. Meek was an independent contractor, not an employee, as previously 22 admitted by Ms. Meek and found by the Court. 23 23 25 26 1 There is no mention of double damages in the statute, nor has Ms. Meek provided any other 27 authority for such a claim. 28 1 1. Applicability of RCW 49.48.030 Outside the Employment Context 2 Ms. Meek relies on Wise v. City of Chelan, 133 Wn. App. 167, 174-75 (2006), and 3 Sambasivan v. Kadlec Med. Ctr., 2012 WL 5208657, 171 Wn. App. 1013 (2012), to argue that 4 5 an award of fees under RCW 49.48.030 is available to “any person,” including independent 6 contractors, who recover compensation owed by reason of services provided. Those cases do, in 7 fact, support that argument, but they are not binding on the Court, the analysis is unpersuasive, 8 9 and the Court is convinced that the Washington Supreme Court would reject it. See King v. Ord. 10 of United Com. Travelers of Am., 333 U.S. 153, 158 (1948) (“[F]ederal courts are bound by 11 decisions of a state’s intermediate appellate courts unless there is persuasive evidence that the 12 13 highest state court would rule otherwise.”); PSM Holding Corp. v. Nat’l Farm Fin. Corp., 884 14 F.3d 812, 828 (9th Cir. 2018) (holding that decisions of state appellate courts are persuasive, not 15 binding, authority, but that federal courts “should nevertheless follow a published intermediate 16 17 state court decision regarding [state] law unless we are convinced that the [state] Supreme Court 18 would reject it.” (citation omitted). 19 In Wise, Division 3 of the Washington Court of Appeals was asked to determine whether 20 21 an independent contractor who was awarded unpaid compensation due under a contract was 22 entitled to attorney’s fees under RCW 49.48.030. Relying on a plain language analysis of the 23 statute, the court noted that an award of fees must be made to “any person” who prevails in an 23 25 action for wages or salary owed. Based largely on the “any person” phrase, the court held that 26 the recipient of the award need not be an employee and that an independent contractor could 27 28 1 claim fees under the statute. Wise, 133 Wn. App. at 174. The court did not address the fact that 2 the statute specifies that such fees “shall be assessed against said employer or former employer.” 3 RCW 49.48.030.2 4 5 The Ninth Circuit rejected Wise, noting that all statutory language must be given effect 6 and that RCW 49.48.030 “authorizes an award of attorney fees only against an employer or 7 former employer.” Leslie v. Cap Gemini Am., Inc., 319 Fed. App’x 689, 691 (9th Cir. 2009). In 8 9 Anfinson v. FedEx Ground Package Sys., Inc., Division 1 of the Washington Court of Appeals 10 noted that RCW 49.48.030 was part “of the wage statute” and found that in the absence of a 11 judgment for wages under the Minimum Wage Act, a claim for attorney’s fees was premature. 12 13 159 Wn. App. 35, 73–74 (2010), aff'd, 174 Wn.2d 851 (2012). More importantly, the 14 Washington Supreme Court’s discussion of RCW 49.48.030 in Int’l Ass’n of Fire Fighters, 15 Local 46 v. City of Everett starts with the proposition that the purpose of the statute is “to protect 16 17 employee wages and assure payment” and then presumes that the term “person” refers to 18 employees. 146 Wn.2d 29, 35, 44 (2002). While the Washington Supreme Court has not 19 specifically addressed whether the fee-shifting statute would apply if a non-employee were to 20 21 obtain a judgment for “wages or salary,” courts interpreting RCW 49.48.030 have applied the 22 definition of “wage” set forth in the Minimum Wage Act, which incorporates a requirement that 23 the payment be “compensation due to an employee by reason of employment.” Bates v. City of 23 25 26 2 Sambasivan followed Wise, concluding that the reference to an employer “is descriptive rather 27 than a necessary condition for recovery.” 2012 WL 5208657, at *9 (unpublished). 28 1 Richland, 112 Wn. App. 919, 939–40 (2002); RCW 49.46.010(7). Thus, the Court is convinced, 2 based on the language of the relevant statutory provision, the Supreme Court’s declaration of 3 legislative intent, and the definitions provided in the surrounding enactments, that the 4 5 Washington Supreme Court would conclude that RCW 49.48.030 is triggered by a judgment for 6 wages against an employer or former employer. 7 2. Independent Contractor vs. Employee 8 9 The counterclaim defendants assert that Ms. Meek has admitted, and the Court has 10 already found, that she was an independent contractor for Tori Belle. The “admission” and 11 “finding” to which counterclaim defendants refer were made in the context of a motion to 12 13 dismiss, where Tori Belle’s allegations were accepted as true for purposes of the analysis. Ms. 14 Meek specifically denied the allegations, reciting them only because it was required under the 15 motion to dismiss standard. Dkt. # 29 at 8 n.1. She therefore reserved the right to contest the 16 17 veracity of the allegations and has done so here. The counterclaim defendants cannot obtain a 18 summary determination of the claim based on admissions and findings that were, at best, 19 conditional. 20 21 B. Breach of Contract and of the Covenant of Good Faith and Fair Dealing 22 Ms. Meek alleges that the counterclaim defendants violated their contractual promise to 23 “furnish a high quality” or “salable” product for the Affiliates to sell. Dkt. # 71 at ¶¶ 24 and 26. 23 25 She further alleges that, in the absence of such a product, it was impossible for the Affiliates to 26 perform their contractual obligations to: 27 28 1 a. Ethically sell to consumers; 2 b. Speak about the product in a positive, non-misleading way; 3 c. Attach their personal reputations to transactions; or 4 5 d. Persuade others to become Affiliates and expect a win-win. 6 Dkt. # 71 at ¶ 25. Ms. Meek asserts that these failures constitute a material breach of the parties’ 7 agreement and violated the covenant of good faith and fair dealing, relieving her of any further 8 9 duty to perform. 10 Ms. Meek does not identify a contractual provision which obligated Tori Belle to provide 11 a product of any particular quality. The only “agreement” cited is Tori Belle’s “Policies and 12 13 Procedures,” which states that the compensation plan for Affiliates “is based on the sale of 14 products and services to end consumers.” Dkt. # 71 at ¶ 24 (citing Dkt. # 1-1 at 28). In the 15 absence of an allegation of a contractual duty, the breach of contract claim fails as a matter of 16 17 law. 3 18 The counterclaim relies primarily on the assertion that Tori Belle breached its duty of 19 good faith and fair dealing by failing to provide a high-quality or salable eye lash product. 20 21 22

23 3 Although not mentioned in the statement of her legal claim, Ms. Meek has alleged facts that would support a claim that she was owed wages under her agreements with Tori Belle and that Tori 23 Belle breached the agreements. See Dkt. # 71 at ¶ 13 (“At the time [the Affiliate relationship was 25 terminated], Ms. Meek was owed thousands of dollars. Tori Belle, despite repeated requests, refused to pay what it owes.”) and ¶ 19 (“Ms. Meek was owed wages pursuant to her agreement with Tori Belle.”). 26 That aspect of a breach of contract claim against Tori Belle will be permitted to proceed. Ms. Meek has not, however, explained how Ms. Hunter could be held liable under a contract to which she was not a 27 party. 28 1 Under Washington law, “[t]here is in every contract an implied duty of good faith and fair dealing” that “obligates the parties to cooperate with each other so that 2 each may obtain the full benefit of performance.” Badgett v. Sec. State Bank, 116 3 Wn.2d 563, 569 (1991). [The parties] agree that the implied covenant of good faith 4 and fair dealing cannot add or contradict express contract terms and does not 5 impose a free-floating obligation of good faith on the parties. Instead, “the duty [of good faith and fair dealing] arises only in connection with terms agreed to by the 6 parties.” Id.; Johnson v. Yousoofian, 84 Wn. App., 755, 762 (1996) (“The implied 7 duty of good faith is derivative, in that it applies to the performance of specific 8 contract obligations. If there is no contractual duty, there is nothing that must be performed in good faith.” (citations omitted)). 9

10 In particular, the duty of good faith and fair dealing arises “when the contract 11 gives one party discretionary authority to determine a contract term.” Goodyear Tire & Rubber Co. v. Whiteman Tire, Inc., 86 Wn. App. 732, 738 (1997); see 12 Amoco Oil Co. v. Ervin, 908 P.2d 493, 498 (Colo.1995) (“The duty of good faith 13 and fair dealing applies when one party has discretionary authority to determine 14 certain terms of the contract, such as quantity, price, or time.”). When asked to 15 apply Washington law in this area, the Ninth Circuit concluded that “[g]ood faith limits the authority of a party retaining discretion to interpret contract terms; it 16 does not provide a blank check for that party to define terms however it chooses.” 17 Scribner v. Worldcom, Inc., 249 F.3d 902, 910 (9th Cir. 2001). 18 Rekhter v. State, Dep’t of Soc. & Health Servs., 180 Wn.2d 102, 112–13 (2014). Ms. Meek 19 20 asserts that Tori Belle retained discretionary authority to determine what type and quality of 21 products it offers to its Affiliates for sale and that it did not exercise that discretion in good faith, 22 thereby precluding Ms. Meek from obtaining the benefits of the bargain. In the circumstances 23 23 presented here, the imposition of a type or quality standard would improperly inject substantive 25 terms into the parties’ contract. Badgett, 116 Wn.2d at 569. The parties agreed to a month-to- 26 month relationship through which Affiliates direct market Tori Belle products and Tori Belle 27 28 1 compensates them for their sales and workforce development. The relevant documents say 2 almost nothing about the products at issue: the one exception is a provision forbidding Affiliates 3 from selling certain products for other companies, including magnetic eyeliner, magnetic 4 5 mascara, and false eye lashes. Dkt. # 1-1 at 41. Neither the product offerings nor their quality 6 was the subject of the parties’ agreement: if Affiliates are unhappy with the nature, type, variety, 7 or quality of the products on offer, they can halt their sales efforts, stop paying their monthly 8 9 fees, and dissolve the relationship. Giving Affiliates a say in what products Tori Belle offers, the 10 quality of those products, or even whether Tori Belle continues production at all would not be a 11 derivative limitation arising from Tori Belle’s contractual obligations but rather a judicial grant 12 13 of substantive rights to the Affiliates. The Court declines to stretch the duty of good faith and 14 fair dealing that far. 15 C. Washington Consumer Protection Act (“CPA”) Claim 16 17 The CPA provides that “unfair methods of competition and unfair or deceptive acts or 18 practices in the conduct of any trade or commerce are hereby declared unlawful.” RCW 19 19.86.020. In order to establish a claim under the CPA, Ms. Meek bears the burden of proving 20 21 the following elements: (1) an unfair or deceptive practice; (2) occurring in trade or commerce; 22 (3) affecting the public interest; (4) that injures Ms. Meek in her business or property; and (5) a 23 causal link between the unfair or deceptive act and the injury suffered. Hangman Ridge Training 23 25 Stables, Inc. v. Safeco Title Ins. Co., 105 Wn.2d 778, 719 P.2d 531, 535–39 (1986). Ms. Meek 26 asserts that, if the counterclaim defendants deny that they had a duty to develop and sell a high 27 28 1 quality or salable product, their efforts to persuade people to join the ranks of Affiliates without 2 disclosing that they did not feel duty-bound to provide quality products is unfair and deceptive. 3 The counterclaim defendants do not challenge the adequacy of the allegations regarding the first 4 5 three elements of a CPA claim, but argue that Ms. Meek has not adequately alleged injury or 6 causation. 7 An injury cognizable under the CPA is one to “business or property.” RCW 19.86.020. 8 9 Personal injuries such as mental distress or embarrassment are not compensable, Panag v. 10 Farmers Ins. Co. of Wash., 166 Wn.2d 27, 57 (2009), but damage to one’s professional 11 reputation can satisfy the fourth element of a CPA claim, Wash. State Physicians Ins. Exch. & 12 13 Ass’n v. Fisons Corp., 122 Wn.2d 299, 317 (1993). Taking the allegations of the counterclaims 14 in the light most favorable to Ms. Meek, she has adequately alleged that the counterclaim 15 defendants’ failure to disclose that they were willing to sell products that were not suited for 16 17 their intended purpose (false lashes that would not stay in place or that affirmatively injured the 18 consumer) misled her into becoming a Tori Belle Affiliate and ultimately injured her reputation. 19 In particular, she alleges that her brand depends on trust, that she cannot be seen promoting 20 21 snake-oil-type products, and that Tori Belle’s 2020 product modifications put her in the position 22 of selling a shoddy product that generated “a bevy of complaints by downline Affiliates and 23 customers.” Dkt. # 71 at ¶ 6. The causal connection between the injury to Ms. Meek’s brand or 23 25 reputation and the alleged failure to disclose has been adequately alleged. 26

27 28 1 For all of the foregoing reasons, the motion to dismiss Ms. Meek’s counterclaims is 2 GRANTED in part and DENIED in part. The wage claim may proceed pending a determination 3 regarding Ms. Meek’s status as an employee or an independent contractor, the breach of contract 4 5 claim may proceed against Tori Belle with regards to the alleged non-payment of amounts due 6 under the compensation agreement, and the CPA claim may proceed. All other counterclaims 7 (or aspects of the counterclaims) are DISMISSED. 8 9 10 Dated this 14th day of February, 2023. 11

12 Robert S. Lasnik 13 United States District Judge 14 15 16 17 18 19 20 21 22 23 23 25 26 27 28