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Robichaud v. Engage2excel, Inc.

United States District Court, W.D. North Carolina, Statesville Division

May 9, 2019

JAMES A. ROBICHAUD, Plaintiffs,
v.
ENGAGE2EXCEL, INC COMVEST INVESTMENT PARTNERS HOLDINGS, LLC U.S. BANK, N.A. E2E HOLDINGS, INC PHILLIP STEWART GC REPRESENTATIVE COMPANY, LLC, Defendants.

          ORDER

          Graham C. Mullen, United States District Judge

         THIS MATTER COMES before this Court on Defendants Engage2Excel, Inc. (“E2E”), Comvest Investment Partners Holdings, LLC (“Comvest”), E2E Holdings, Inc. (“E2E Holdings”), and Philip Stewart's (“Stewart”) (E2E, Comvest, E2E Holdings, and Stewart collectively “E2E Defendants”) Motion to Dismiss (Doc. No. 23) and Defendant GC Representative Company, LLC's (“GC”) Motion to Dismiss (Doc. No. 25). Plaintiff James Robichaud (“Plaintiff”) responded to both Motions and both the E2E Defendants and GC (collectively “Defendants”) replied. Thus, this matter is ripe for disposition.

         I. FACTUAL BACKGROUND

         For purposes of this Motion, the Court accepts the facts in the Amended Complaint as true. Those facts serve as the factual basis for this Order.

         Plaintiff worked as an independent distributor for E2E until December 29, 2016. (Amend. Compl. ¶32). E2E operated in the human resources solutions industry. (Id. at ¶31). When Plaintiff left his employment with E2E, E2E offered Plaintiff a buyout in exchange for a non-compete agreement. (Id. at ¶33). Plaintiff refused the buyout as Plaintiff intended to remain within the same industry. (Id. at ¶33, 34). Despite leaving E2E, Plaintiff remained a minority stockholder in the company. (Id. at ¶12, 13).

         After leaving the employ of E2E, Plaintiff founded Global Engagement Solutions (“GES”). (Id. at ¶1). GES became a direct competitor of E2E in February of 2017. (Id. at ¶35). In June of 2017, a significant client of E2E moved its business from E2E to GES. (Id. at ¶37). Defendants knew of Plaintiff's involvement with GES. (Id. at ¶36).

         E2E merged with Comvest via a reverse triangular merger. (Id. at ¶38). The merger extinguished all of Plaintiff's shares in E2E. (Id. at ¶12). The Board of Directors and a majority of the stockholders of E2E approved the merger. (Id. at ¶40). Plaintiff did not vote in favor of the merger. (Id. at ¶41).

         After Comvest and E2E completed the merger, Defendants sent out Letters of Transmittal to the stockholders of E2E. (Id. at ¶44). The Merger Agreement provided a form Letter of Transmittal. (Id. at ¶43). According to the Merger Agreement, a stockholder entitled to merger consideration may receive the consideration upon the surrender of their shares and execution of the Letter of Transmittal. (Id. at ¶44). Despite the inclusion of a form Letter of Transmittal in the Merger Agreement, Defendants sent Plaintiff a Letter of Transmittal that contained non-compete and non-solicitation clauses. (Id. at ¶46). Plaintiff was the only squeezed-out stockholder to receive these restrictions in their Letter of Transmittal. (Id. at ¶47). Defendants continue to withhold Plaintiff's merger consideration until Plaintiff provides the Letter of Transmittal including the non-compete and non-solicitation clauses.

         II. STANDARD OF REVIEW

         When faced with a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, the Court must “accept as true all well-pleaded allegations and . . . view the complaint in a light most favorable to the plaintiff.” Mylan Labs, Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993). The Court “assume[s] the[] veracity” of these factual allegations, and “determine[s] whether they plausibly give rise to an entitlement to relief.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). However, the court “need not accept as true unwarranted inferences, unreasonable conclusions, or arguments.” E. Shore Mkts., Inc. v. J.D. Assocs. LLP, 213 F.3d 175, 180 (4th Cir. 2000). Thus, to survive a motion to dismiss, the plaintiff must include within his complaint “sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Iqbal, 556 U.S. at 678 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).

         III. DISCUSSION

         As a result of Defendants' actions, Plaintiff sued Defendants claiming: (1) Violation of the North Carolina Unfair and Deceptive Trade Practices Act, (2) Violation of the Wisconsin Deceptive Trade Practices Act, (3) Civil Conspiracy, (4) Fraud, (5) Unjust Enrichment, (6) Punitive Damages, (7) Declaratory Judgment, and (8) Injunctive Relief. The Court will discuss each cause of action below delineating between which Defendant is specifically being sued to the extent such a distinction becomes relevant.

         a. Violation of the North Carolina Unfair and Deceptive Trade Practices Act

         First, Plaintiff claimed that Defendants' act of withholding Plaintiff's merger consideration constituted a violation of the North Carolina Unfair and Deceptive Trade Practices Act (“NCUDTPA”). N.C. Gen. Stat. § 75-1.1, et seq. In order to state a claim under the NCUDTPA, a plaintiff must allege: “(1) the defendant engaged in conduct that was in or affecting commerce, (2) the conduct was unfair or had the capacity or tendency to deceive, and (3) the plaintiff suffered actual injury as a proximate result of defendant's deceptive statement or misrepresentation.” Belk Inc., v. Meyer Corp., U.S., 679 F.3d 146, 164 (4th Cir. 2012) (internal quotations omitted). North Carolina courts have held that the NCUDTPA does not apply to securities transactions. Skinne ...


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