United States District Court, D. South Carolina, Greenville Division
OPINION AND ORDER
Honorable A. Marvin Quattlebaum, Jr. United States District
matter comes before the Court on the Motion to Dismiss or
Transfer of Defendants' Blue Eyed Bull Investment
Corporation, Timothy Rebori, and Marilyn Rebori (collectively
“Defendants”). (ECF No. 37.) The matter has been
fully briefed, and the Court heard argument from counsel on
May 10, 2018. For the reasons set forth below, the
Defendants' Motion is granted in part and denied in part.
Franchise Group, LLC (“Plaintiff”) initiated this
action on January 29, 2018 by filing its complaint in the
United States District Court for the District of South
Carolina. (ECF No. 1.) Thereafter, Plaintiff filed its
amended complaint on March 7, 2018. (ECF No. 35.) The amended
complaint alleges ten causes of action against Defendants for
breach of a franchise agreement, breach of a non-disclosure
agreement, violations of the Defend Trade Secrets Act,
violations of the Lanham Act, violations of the South
Carolina Trade Secrets Act, violation of the South Carolina
Unfair Trade Practices Act, and tortious interference with
contract, among others. Id.
is a limited liability company organized and operating in the
State of South Carolina, with its principal place of business
located in Greenville, South Carolina. Id. at 1.
Plaintiff grants franchises to qualified persons for the
operation of an ARCpoint franchised business, which employs
the ARCpoint branded proprietary system for operating a
full-service laboratory business offering testing, screening,
and related services both on and off-site, including drug,
alcohol and DNA testing and background screens. Id.
at 3. ARCpoint franchisees may also provide clinical testing,
corporate wellness services, regulatory compliance services,
telehealth services and other related services. Id.
ARCpoint franchisees are licensed to use ARCpoint trademarks,
service marks, logos, designs and materials in the conduct of
the business. Id.
Blue Eyed Bull Investment Company (“BEBIC”) is a
corporate entity organized and existing pursuant to the laws
of the State of Kansas, and is authorized to do business in
the state of Missouri. Id. at 1. Plaintiff alleges
that Defendants Timothy Rebori (“Mr. Rebori”) and
Marilyn Rebori (“Mrs. Rebori”) are residents of
Kansas. Id. Mr. and Mrs. Rebori are the owners,
shareholders and/or sole members of BEBIC. Id.
about December 27, 2010, Plaintiff, BEBIC and Mr. Rebori
entered into a franchise agreement regarding BEBIC's
operation of an ARCpoint franchised business. Id. at
5. In addition to the franchise agreement, BEBIC and Mr.
Rebori executed a Nondisclosure and Non-Competition agreement
on the same date. Id. at 6. Finally, Mr. Rebori
executed an Unlimited Guaranty and Assumption of Obligations
as part of the agreement between Plaintiff and BEBIC.
Id. From the date of execution of the franchise
agreement, BEBIC operated the ARCpoint franchised businesses.
Id. at 8. Defendants operated the business in a
territory encompassing areas in and around Kansas City,
Kansas and Kansas City, Missouri. Id.
November or December of 2017, Defendants failed to make
certain payments of royalties, technology and advertising
fund fees to Plaintiff as required by the franchise
agreement. Id. at 9. In a letter dated January 15,
2018, Defendants stated that they wished to end their
franchise relationship with Plaintiff. Id. at 13.
This litigation ensued.
move for an order (1) dismissing Plaintiff's Complaint in
total as to Marilyn Rebori for lack of personal jurisdiction
pursuant to Rule 12(b)(2) of the Federal Rules of Civil
Procedure; (2) for an order dismissing Plaintiff's
Complaint in total as to all Defendants for improper venue
pursuant to Rule 12(b)(3) of the Federal Rules of Civil
Procedure and 28 U.S.C. § 1406(a) or, in the
alternative, transferring the case to the United States
District Court for the District of Kansas pursuant to 28
U.S.C. § 1404(a); and (3) for an order dismissing
Plaintiff's Third, Sixth, Eighth and Ninth causes of
action for failure to state a claim pursuant to Rule 12(b)(6)
of the Federal Rules of Civil Procedure. The Court will
address each ground for the motion in turn.
Motion to Dismiss for Lack of Personal Jurisdiction as to
move the Court for an order dismissing Ms. Marilyn Rebori
from this action in accordance with Rule 12(b)(2) of the
Federal Rules of Civil Procedure. In its response to
Defendants' Motion to Dismiss, Plaintiff acknowledged
that this Court lacks personal jurisdiction over Ms. Rebori.
(ECF No. 42 at 2, n. 1.) Furthermore, Plaintiff stated that
“it consents to the dismissal of Ms. Rebori from this
action as well as the dismissal of its Ninth Claim.”
Id. Therefore, upon consent of the parties,
Defendants' Motion to Dismiss as to Ms. Marilyn Rebori is
Motion to Dismiss for Improper Venue
move to dismiss the Complaint in its entirety due to improper
venue under Rule 12(b)(3) of the Federal Rules for Civil
Procedure and 28 U.S.C. § 1406(a). For the reasons set
forth below, the Motion to Dismiss for Improper Venue is
motion to dismiss under Rule 12(b)(3), the Court is permitted
to consider evidence outside of the pleadings. Aggarao v.
MOL Ship Mgmt. Co., 675 F.3d 355, 365-66 (4th Cir.
2012). A plaintiff need only make a prima facie showing of
proper venue in order to defeat a motion to dismiss.
Id. at 366. In determining whether the plaintiff has
made a prima facie venue showing, the Court views the facts
in the light most favorable to the plaintiff. Id.
1406(a) provides that where a litigant files a case laying
venue in the wrong division or district, the Court shall
dismiss the case or, in the interests of justice, transfer
the case to any district or division where venue is proper.
The question of whether venue is “wrong” or
improper is governed by 28 U.S.C. § 1391. Section
1391(b) sets forth three options for proper venue. First,
venue is proper in a judicial district where any defendant
resides, provided all defendants are residents of the State
where the district is located. § 1391(b)(1). Second,
venue is proper in a judicial district where a substantial
part of the events or omissions that gave rise to the claim
occurred, or where a substantial part of the property that is
the subject of the action is located. § 1391(b)(2).
Third, venue is proper in any judicial district where a
defendant is subject to the court's personal jurisdiction
with regards to the action, but only if there is no district
in which the action may otherwise be brought as provided in
§ 1391(b)(1) and (2). § 1391(b)(3) “When
venue is challenged, the court must determine whether the
case falls within one of the three categories set out in
§ 1391(b).” Atl. Marine Const. Co. v. U.S.
Dist. Court for W. Dist. of Texas, 571 U.S. 49, 56
(2013). If it does not, then the case must be dismissed or
transferred under § 1406(a). Id.