United States District Court, E.D. North Carolina, Western Division
C. DEVER III UNITED STATES DISTRICT JUDGE.
October 2, 2017, CDI Corporation ("CDF or
"plaintiff') filed a complaint in Wake County
Superior Court against HCL America, Inc. ("HCL" or
"defendant"), alleging claims for breach of
contract, tortious interference with contract, and violations
of the Unfair and Deceptive Trade Practices Act
("UDTPA"), N.C. Gen. Stat.§ 75-1.1, et seq.
[D.E. 1-4]. On October 30, 2017, HCL removed the action to
this court pursuant to 28 U.S.C. § 1441 [D.E. 1]. On
November 17, 2017, CDI filed an amended complaint [D.E. 14].
On December 1, 2017, HCL answered and counterclaimed for
breach of contract [D.E. 24]. On December 21, 2017, CDI
answered the counterclaim [D.E. 27]. On June 28, 2018, HCL
moved for partial judgment on the pleadings concerning
CDI's tortious interference with contract and UDTPA
claims [D.E. 40] and filed a memorandum in support [D.E. 41].
On July 30, 2018, CDI responded in opposition [D.E. 43]. On
August 13, 2018, HCL replied [D.E. 44]. As explained below,
the court grants HCL's motion for partial judgment on the
provides recruitment and staffing solutions for companies in
multiple industries, including industrial equipment,
aerospace, chemicals, and energy. See Am. Compl. [D.E. 14]
¶¶ 1, II. HCL provides information technology
services to companies. See Id. ¶ 1. On December
1, 2014, CDI and HCL entered a three-year contract under
which CDI would provide temporary staffing and recruitment
services to HCL. See Id. ¶¶ 1.16: Simons
Aff. Ex. A [D.E. 17-1], "Pursuant to the [a]greement,
CDI would identify and provide to HCL certain temporary
solutions for staffing projects with personnel who were
experienced and skilled in certain computer functions."
Am. Compl. [D.E. 14] ¶ 17.
November 4, 2015, the parties amended the contract See
Id. ¶¶ 1, 18, 21. The amendment provided
that CDI would pay HCL $ 1.75 million to be a "lead
vendor" of HCL, which "facilitate[d] HCL's
efforts to consolidate resources onto CDI's payroll"
to improve efficiency and decrease costs. Id.
¶¶ 18, 21; Simons Aff. [D.E. 16-1] ¶¶ 9,
12. Because CDI was a lead vendor, the contract required HCL
to terminate its contracts with "Other Suppliers."
See Am. Compl. [D.E. 14] ¶ 22. HCL also agreed not to
engage in the practice known in the industry as
"delayering." See Id. ¶ 23. In other
words, HCL agreed that it would not contract directly with
CDI subcontractors or independent contractors performing work
for HCL before December 1, 2017. See Id.
¶¶ 2, 23; Simons Aff.[D.E. 16-1] ¶¶ 14,
perform under the contract, CDI contracted with numerous
third-party subcontractors and independent contractors to
provide temporary staffing solutions to HCL. See Am. Compl.
[D.E. 14] ¶ 26. These subcontracts contained
post-termination restrictive covenants prohibiting the
subcontractors, independent contractors, and suppliers from
working directly or indirectly with HCL "other than
through CDI." Id. ¶27. Thus, while the
contract between HCL and CDI prohibited HCL from directly or
indirectly contracting with CDI's subcontractors and
independent contractors before December 1, 2017, the
subcontracts contained restrictive covenants prohibiting HCL
from doing so after that date. See Id. ¶28.
March 2016, CDI learned that HCL hired a CDI subcontractor in
violation of the contract. See id ¶ 30; Simons Aff.
[D.E. 16-1] ¶ 21. CDI raised this issue with HCL, and
HCL assured CDI that HCL would not engage in any further
delayering. See Am. Compl. [D.E. 14] ¶ 30. HCL, however,
continued to do so. See Id. ¶¶ 30-31, 36.
Moreover, HCL demanded that CDI pay extra-contractual rebates
"to receive the benefit of [CDI's] bargain."
Id. ¶ 31. CDI alleges that HCL's conduct,
including the demands for extra-contractual rebates and
delayering of CDF s subcontractors, negatively affected CDI.
See Dent Aff. [D.E. 15-1] ¶¶ 7-8; Simons Aff. [D.E.
16-1] ¶¶ 29-31.
March 14, 2017, and May 23, 2017, CDI notified HCL that
CDI's financial performance triggered a contractual
condition requiring HCL to repay the $1.75 million that CDI
paid for lead vendor status to CDI. See Am. Compl. [D.E. 14]
¶ 32; [D.E. 17-2]; [D.E. 16-5]. HCL's management
allegedly acknowledged that HCL owes the $1.75 million to CDL
but HCL failed to repay CDI. See Am. Compl. [D.E. 14]
¶¶ 33. CDI also complied with an audit that HCL
demanded concerning CDI's financial circumstances, which
CDI alleges "confirmed CDI's entitlement to the $
1.75 million payment." Id. ¶ 34. CDI
further alleges that HCL's true intent in demanding the
audit was to force renegotiation of the contract's
anti-delayering terms. See Id. ¶35. In July
2017, the parties met, and HCL conditioned resolving the
repayment issue on an amendment to the contract that would
permit HCL to contract with some of CDI's subcontractors
directly. See Id. CDI also claims that HCL's
complaint that CDI deployed resources at a rate exceeding the
"rate card" was also pretextual. See Id.
¶¶37-38. Finally, CDI alleges that HCL failed to
terminate its relationships with a majority of CDI's
subcontractors and suppliers identified by CDI as required by
the contract. See id. ¶39.
may move for judgment on the pleadings at any time
"[a]fter the pleadings are closed-but early enough not
to delay trial." Fed.R.Civ.P. 12(c). A court should
grant the motion if "the moving party has clearly
established that no material issue of fact remains to be
resolved and the party is entitled to judgment as a matter of
law." Park Univ. Enters, v. Am. Can. Co. of
Reading. 442 F.3d 1239, 1244 (10th Cir. 2006) (quotation
omitted), abrogated on other grounds
by Magnus. Inc. v. Diamond
State Inc. Co., 545 Fed.Appx. 750 (10th Cir. 2013)
(unpublished); see Mayfield v. Nat'l Ass'n for
Stock Car Auto Racing. Inc., 674 F.3d 369, 375 (4th Cir.
2012); Burbach Broad. Co. of Del. v Elkins Radio
Corp., 278 F.3d 401, 405-06 (4th Cir. 2002). A court may
consider the pleadings and any materials referenced in or
attached to the pleadings, which are incorporated by
reference. See Fed.R.Civ.P. 10(c); Fayetteville
Inv'rs v. Commercial Builders. Inc., 936 F.2d 1462,
1465 (4th Cir. 1991). A court also may consider "matters
of which a court may take judicial notice." Tellabs.
Inc. v. Makor Issues & Rights. Ltd., 551 U.S. 308,
same standard applies under Rule 12(c) and Rule 12(b)(6). See
Burbach Broad. Co.. 278 F.3d at 405-06. Thus, a
court construes the facts and reasonable inferences "in
the light most favorable to the [nonmoving party]."
Massey v. Ojaniit, 759 F.3d 343, 347, 352-53 (4th
Cir. 2014) (quotation omitted); see Clatterbuck v. City
of Charlottesville. 708 F.3d 549, 557 (4th Cir. 2013),
abrogated on other grounds by Reed v.
Town of Gilbert. 135 S.Ct. 2218 (2015); Burbach
Broad. Co.. 278 F.3d at 406. Nevertheless, when
analyzing a motion for judgment on the pleadings, a court
must determine whether a pleading is legally and factually
sufficient See Ashcroft v. Iqbal, 556 U.S. 662,
677-80, 684 (2009); Bell Atl. Corp. v. Twombly. 550
U.S. 544, 554-70 (2007); Giarratano v. Johnson 521
F.3d298, 302 (4th Cir. 2008). Therefore, a pleading"must
contain sufficient factual matter, accepted as true, to state
a claim to relief that is plausible on its face."
Iqbal. 556 U.S. at 678 (quotation omitted); see
Twombly. 550 U.S. at 570; Giarratano, 521
F.3d at 302. Moreover, a court need not accept a
pleading's legal conclusions drawn from the facts. See
Iqbal. 556 U.S. at 678-79; Giarratano, 521
F.3d at 302. Similarly, a court "need not accept as true
unwarranted inferences, unreasonable conclusions, or
arguments." Giarratano, 521 F.3d at 302
subject-matter jurisdiction is based on diversity, the court
applies state substantive law and federal procedural rules.
See Erie R.R. v. Tompkins 304 U.S. 64, 78-80 (1938);
Dixon v. Edwards, 290 F.3d 699, 710 (4th Cir. 2002).
The parties agree that North Carolina law applies to all
claims. Accordingly, this court must predict how the Supreme
Court of North Carolina would rule on any disputed state-law
issue. See Twin City Fire Ins. Co. v. Ben Arnold-Sunbelt
Beverage Co. of S.C., 433 F.3d 365, 369 (4th Cir. 2005).
In doing so, the court must look first to opinions of the
Supreme Court of North Carolina. See Id. at 369;
Wade v. Danek Med., Inc., 182 F.3d 281, 286 (4th
Cir. 1999). If there are no governing opinions from that
court, this court may consider the opinions of the North
Carolina Court of Appeals, treatises, and "the practices
of other states." Twin City Fine Ins. Co., 433
F.3d at 369 (quotation omitted). In applying state law, a
federal court should not create or expand a state's
public policy. See Time Warner
Entm't-Advance/Newhouse P'ship v. Carteret-Craven
Elec. Membership Corp., 506 F.3d 304, 314-15 (4th Cir.
2007); Wade. 182 F.3d at 286; St Paul Fire &
Marine Ins. Co. v. Jacobson. 48 F.3d 778, 783 (4th Cir.
alleges that HCL is liable for tortious interference with
contract See Am. Compl. [D.E. 14] ¶¶ 49-59. Under
North Carolina law, a plaintiff must prove five elements to
state a claim for tortious interference with contract: (1) a
valid contract between the plaintiff and a third-party that
gives the plaintiff a contractual right against the
third-party, (2) the defendant knows of the contract, (3) the
defendant intentionally induces the third-party "not to
perform the contract," (4) the defendant acts without
justification, and (5) the defendant's conduct causes
actual damages to the plaintiff. Krawiec v. Manly,370 N.C. 602, 606-07, 811 S.E.2d 542, 546 (2018); Embree