United States District Court, D. Arizona
ANDREW E. ZALKOW; and ZALKOW DISCOUNT SOURCING, an Arizona limited liability company, Plaintiffs,
TAYMOR INDUSTRIES U.S.A., INC., a California corporation; TAYMOR INDUSTRIES LTD., a Canadian corporation, Defendants.
PRELIMINARY ORDER AND OPINION
JOHN W. SEDWICK, Senior District Judge.
I. PRELIMINARY NATURE OF THIS ORDER
This order does NOT decide the motion at docket 36. Rather, this order is intended to assist counsel in preparing for oral argument. It sets forth the court's preliminary views. It does not authorize the filing of any additional motion papers. Following oral argument, the court may adopt the order in whole or in part in its disposition of the motion.
II. MOTION PRESENTED
At docket 36, pursuant to Federal Rule of Civil Procedure 12(b)(6), defendant Taymor Industries Ltd. ("Taymor Canada") moves for dismissal of Counts One and Three of the First Amended Complaint and for dismissal of the request for injunctive and declaratory relief in Count Two of the First Amended Complaint. Defendant Taymor Industries U.S.A., Inc. ("Taymor USA") moves for dismissal of Count Three of the First Amended Complaint. Plaintiffs Andrew E. Zalkow ("Zalkow") and Zalkow Discount Sourcing ("ZDS") respond at docket 46. Defendants reply at docket 49. Oral argument is scheduled for May 22, 2015.
Taymor USA is a California corporation that imports and sells hardware items, including towel racks, toilet paper holders, faucets, and lock sets. It is wholly owned by Taymor Canada. Zalkow was formerly employed as the president of Taymor USA, where his compensation included an annual bonus that was based on a percentage of the profits of both Taymor Canada and Taymor USA. In 2013 Taymor USA tendered Zalkow an annual bonus of $489, 608. Zalkow rejected the bonus as insufficient "due to a variety of factors, including but not limited to, decisions made by Taymor Canada related to the operations of Taymor [USA] that substantially reduced its 2012-2013 profits."
After Zalkow resigned from Taymor USA, he established ZDS, a company that sells products that do not compete with Taymor USA, including tile, manufactured stone, doors, and patio furniture. Zalkow tried to recruit three independent marketing representatives who have business relationships with Taymor USA. All three were initially interested in working with Zalkow, but were dissuaded from doing so when Taymor Canada told them it would be a conflict of interest. Taymor Canada also is alleged to have misrepresented the scope of the Zalkow's non-compete and non-solicitation provisions to at least one of the representatives.
Plaintiffs brought the present action against defendants, originally alleging a claim for breach of contract and a claim for intentional interference with prospective contractual relations. Pursuant to defendants' first motion to dismiss at docket 6, the court dismissed the breach-of-contract claim as to Taymor Canada and the contract interference claim as to Taymor USA. Plaintiffs then amended their complaint. Count One of the First Amended Complaint alleges a breach of contract by both Taymor USA and Taymor Canada. Count Two alleges that Taymor Canada intentionally interfered with plaintiffs' prospective contractual relations. Count Three alleges a breach of the covenant of good faith and fair dealing by both defendant companies. Defendants subsequently filed the motion to dismiss at issue, requesting that Count One be dismissed as to Taymor Canada, that Count Two be dismissed to the extent it requests injunctive and declaratory relief, and that Count Three be dismissed in its entirety.
IV. STANDARD OF REVIEW
Rule 12(b)(6) tests the legal sufficiency of a plaintiff's claims. In reviewing such a motion, "[a]ll allegations of material fact in the complaint are taken as true and construed in the light most favorable to the nonmoving party." To be assumed true, the allegations "may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively." Dismissal for failure to state a claim can be based on either "the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory." "Conclusory allegations of law... are insufficient to defeat a motion to dismiss."
To avoid dismissal, a plaintiff must plead facts sufficient to "state a claim to relief that is plausible on its face.'" "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." "The plausibility standard is not akin to a probability requirement, ' but it asks for more than a sheer possibility that a defendant has acted unlawfully." "Where a complaint pleads facts that are merely consistent with' a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief.'" "In sum, for a complaint to survive a motion to dismiss, the non-conclusory factual content, ' and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief."