United States District Court, W.D. North Carolina, Statesville Division
JAMES A. ROBICHAUD, Plaintiffs,
ENGAGE2EXCEL, INC COMVEST INVESTMENT PARTNERS HOLDINGS, LLC U.S. BANK, N.A. E2E HOLDINGS, INC PHILLIP STEWART GC REPRESENTATIVE COMPANY, LLC, Defendants.
C. Mullen, United States District Judge
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.
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.
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).
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
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.
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
STANDARD OF REVIEW
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)).
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.
Violation of the North Carolina Unfair and Deceptive Trade
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.