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Topshelf Mgmt., Inc. v. Campbell-Ewald Co.

United States District Court, M.D. North Carolina

August 3, 2015

TOPSHELF MANAGEMENT, INC., TOPSHELF CO., LLC, TOPSHELF COMPANY, LLC f/k/a SHOWTIME SPORTS AND MARKETING, LLC, and SHOWTIME MOTORSPORTS, INC., Plaintiffs,
v.
CAMPBELL-EWALD COMPANY, Defendant

For TOPSHELF MANAGEMENT, INC., TOPSHELF CO., LLC, TOPSHELF COMPANY, LLC, formerly known as SHOWTIME SPORTS AND MARKETING, LLC, SHOWTIME MOTORSPORTS, INC., Plaintiffs: ELLIS B. DREW, III, LEAD ATTORNEY, WELLS JENKINS LUCAS & JENKINS, WINSTON-SALEM, NC.

For CAMPBELL-EWALD COMPANY, Defendant: ZANETA MOORE ROBINSON, ELLIOT A. FUS, BLANCO TACKABERY & MATAMOROS, P.A., WINSTON-SALEM, NC.

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MEMORANDUM OPINION AND ORDER

Thomas D. Schroeder, United States District Judge.

In this business dispute, Defendant moves to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) (Doc. 6), and Plaintiffs respond by seeking to amend the complaint (Doc. 11). For the reasons set forth below, Plaintiffs' proposed amendment would be futile, so the complaint will be dismissed, but without prejudice.

I. BACKGROUND

Because Plaintiffs seek to amend the complaint, the court summarizes the facts from the proposed amendment, which are viewed in the light most favorable to Plaintiffs.

Topshelf Company, LLC, successor in interest to Showtime Sports and Marketing, LLC, and Showtime Motorsports, Inc., is a small business owned and operated by Brian Efird. (Doc. 11 (Am. Compl.) ¶ ¶ 1, 3.) The business leases office space with a related company, Topshelf Management,

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Inc. (Id. ¶ 2.) For purposes of this motion, all Plaintiffs are referred to as " Topshelf."

Defendant Campbell-Ewald Company (" CEC" ) is a foreign corporation engaged in marketing. It contracts with the United States Navy to provide simulators for use at shows across the country that would allow prospective recruits to experience what it is like to engage in certain naval activities. (Id. ¶ 8.) CEC subcontracted out this work, but when its subcontractor failed to meet its obligations, CEC's performance under its contract with the Navy was hampered. (Id.) Thus, in 2008, CEC engaged Topshelf as its subcontractor to assist in providing simulators. (Id.) Topshelf was able to meet an imminent deadline for " 3-D simulators," and CEC sought to enter into a longer-term subcontract. (Id. ¶ 9.)

Topshelf alleges that " at the time [CEC] was bidding on its current advertising services contract with the Navy," CEC and two of its representatives, Chuck Spieser and John Schroder, " promised, in both written and oral communications, that [CEC] would provide [Topshelf] a continuing business relationship if [Topshelf] agreed to provide the 4-D 'Mobile Full Motion Movie-Ride Simulators' specified in the Navy contract." (Id.) On " numerous occasions," Spieser and Schroder assured Topshelf that the companies were " on the same team" and that once CEC was awarded the prime contract, CEC and Topshelf would execute a long-term contract for the provision of naval simulators. (Id. ¶ 13.) Topshelf is one of only two companies in the nation capable of supplying the 4-D simulators called for in the prime contract. (Id. ¶ 12.) The other, Metropolis Entertainment, Ltd., is Topshelf's business partner, from which CEC also requested a proposal. (Id. ¶ 8.)

Topshelf, in partnership with Metropolis Entertainment, Ltd., agreed to provide these 4-D simulators, which permitted CEC to secure a prime contract with the Navy. (Id. ¶ 10.) This arrangement also helped CEC fulfill the small business subcontracting requirements of the Navy contract. (Id. ¶ 11.) Hoping to receive a five-year subcontract from CEC to provide the simulators, Topshelf submitted multiple proposals to CEC in pursuit of the subcontract. (Id. ¶ 14.) In return, CEC only awarded Topshelf several " short-term" subcontracts, though CEC had told Topshelf that it would receive a subcontract for a longer term. (Id.)

While Topshelf was either pursuing a subcontract or performing one of its short-term subcontracts, CEC began contacting Topshelf's suppliers in an effort to build a new simulator on its own. (Id. ¶ 16.) CEC also sought detailed specifications and other technical information from Topshelf, claiming to need the information in order to match Topshelf's scope of work with the Navy's requested scope of work. (Id.) Plaintiffs allege that, in reality, CEC sought this technical information to enable another company, Doron Precision Systems, to build CEC's simulators.[1] (Id. ¶ 17.)

Despite CEC's request for information about the 4-D simulators, CEC never ordered them from Topshelf, instead requiring Topshelf to maintain and build 3-D simulators. (Id. ¶ 20.) Topshelf became aware that CEC never produced a 4-D simulator, as required by the Navy prime contract, instead building a cheaper 3-D simulator itself. (Id. ¶ ¶ 21-22.) When Topshelf confronted CEC about its business

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practices, CEC terminated its business relationship in January 2012. (Id. ¶ 21.) Topshelf alleges that it has suffered significant financial and reputational harm as a result of CEC's deceptions. (Id. ¶ 20.)

On October 29, 2014, Topshelf filed a complaint against CEC in a North Carolina superior court. (Doc. 3.) CEC removed the action to this court based on diversity jurisdiction. (Doc. 1.) Topshelf's complaint brings three causes of action against CEC: negligent misrepresentation; fraud; and unfair and deceptive trade practices under N.C. Gen. Stat. § 75-1.1.

CEC moved to dismiss the complaint, arguing that Topshelf has failed to plead its claims with particularity, as required by Rule 9(b) of the Federal Rules of Civil Procedure. (Doc. 6.) Topshelf responded (Doc. 13) and moved to amend its complaint (Doc. 11). The only material change in Topshelf's proposed amended complaint appears to be the addition of the identity of two CEC employees that allegedly made misrepresentations to Topshelf. CEC has filed a reply brief on the motion to dismiss (Doc. 14) and ...


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