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Webb Mason, Inc. v. Video Plus Print Solutions, Inc.

United States District Court, D. Maryland

August 27, 2018

WEBB MASON, INC. Plaintiff,
v.
VIDEO PLUS PRINT SOLUTIONS, INC., Defendant.

          MEMORANDUM OPINION

          Ellen L. Hollander United States District Judge

         In this breach of contract litigation, plaintiff Webb Mason, Inc. (“Webb Mason”) has filed suit against Video Plus Print Solutions, Inc. (“VPP”), alleging that VPP accepted business from a customer of Webb Mason, in violation of the “non-interference” clause of their contract. See ECF 1 (“Complaint”), ¶¶ 3-6.[1] VPP has moved to dismiss the Complaint or, in the alternative, for summary judgment. See ECF 12. The motion is supported by a memorandum of law (ECF 12-1) (collectively, the “Motion”) and exhibits. ECF 12-2 through 12-4. Webb Mason opposes the motion. ECF 17 (“Opposition”). VPP has replied. ECF 18 (“Reply”).

         No hearing is necessary to resolve the Motion. See Local Rule 105.6. For the reasons that follow, I shall construe the Motion under Rule 12(b)(6), and I shall deny the Motion.

         I. Factual Background[2]

         Webb Mason is an “integrated marketing solutions and services provider engaged in the business of helping their [sic] clients execute their marketing strategies.” ECF 1, ¶ 1. Among other things, Webb Mason helps clients “design and produc[e] marketing and promotional materials with the assistance of [its] preferred vendors.” Id. ¶ 1. These “preferred vendors” comprise a “Preferred Partner Network, ” which “consists of businesses that Webb Mason identified as world-class suppliers that can provide Webb Mason's customers with superior products at a cost effective price.” Id. ¶ 1, 13. Suppliers in the network gain access to Webb Mason sales executives, who in turn offer the suppliers business opportunities with Webb Mason's clients. Id. ¶ 14.

         VPP is a Canadian corporation with its principal place of business in Ontario, Canada. Id. ¶ 8. It “is a video marketing device manufacturer, which sells a variety of marketing devices, including video mailers.” Id. ¶ 2. Video mailers are “marketing mailers with a built-in screen that plays a prerecorded video message.” Id. ¶ 19. On January 8, 2015, VPP became a member of Webb Mason's Preferred Partner Network by signing plaintiff's Preferred Partner Agreement (“PPA” or “Agreement”). Id. ¶ 18. A copy of the PPA is attached as an exhibit to the Complaint. See ECF 1-1.

         In connection with joining Webb Mason's network, VPP agreed to certain “minimum program requirements, ” including a “non-interference requirement.” ECF 1, ¶ 15; see ECF 1-1 at 11. In relevant part, the non-interference requirement of the PPA provides, ECF 1-1 at 11[3]:

[B]eginning on the date of the Contractor's most recent receipt of Customer Information from the Company on a specific Customer and for two (2) years thereafter, Contractor (and its affiliates) shall not without the prior written consent of the Company, (i) directly or indirectly solicit, or accept the business of the Customer or induce the Customer to cease doing business with the Company or otherwise interfere with the Company's relationship with the Customer or: (ii) use Customer information to solicit or accept the business of, or otherwise interfere with, the Company's relationship with any Excluded Customer.

         Elsewhere in the Agreement, Webb Mason highlights its “policy to prohibit suppliers in the Preferred Partner Network from selling same or related products directly to [plaintiff's] customers as identified through confidential communications, request for quotation or actual work product.” ECF 1-1 at 6.[4] Webb Mason alleges that the parties “have had numerous conversations about VPP's non-interference obligations . . . and have discussed prospective business activities that would have infringed the non-interference clause” in the PPA. Id. ¶ 26. CoStar, a commercial real estate information company, is one of Webb Mason's “long-standing customer[s].” Id. Webb Mason alleges that VPP produced materials for CoStar, giving rise to the breach of contract claim here. Id. at 27.

         In particular, in January 2017 CoStar “began soliciting bids for a marketing campaign” that required “production of a video mailer.” ECF 1, ¶ 19. The campaign was to be developed by CoStar for Apartments.com. Id. On January 19, 2017, Webb Mason requested a quote from VPP as to the development of the video mailers requested by CoStar. Id. ¶ 20. At the same time, Webb Mason communicated customer information about CoStar to VPP, “including the logistics for the Apartments.com marketing campaign project.” Id.

         On January 22, 2017, VPP provided plaintiff with estimates for pricing, “potential upgrade costs, shipping costs for the devices, and a seven week production schedule.” Id. ¶¶ 22-23. On that same date, Webb Mason submitted its bid to CoStar, using VPP's estimates. Id.

         Webb Mason did not win the bid for the project. Id. ¶ 24. However, VPP “worked directly with CoStar on the video mailers project.” Id. ¶ 25. According to Webb Mason, VPP negotiated pricing for CoStar and received payment directly from CoStar, despite knowing “that a portion of the project was for CoStar's Apartments.com marketing campaign.” Id. Webb Mason asserts: “Not only did VPP accept business from CoStar, in direct violation of the noninterference clause of the Preferred Partner Agreement, [but] VPP sold video mailers to CoStar for the exact project that Webb Mason told VPP about . . . .” Id. ¶ 27. Webb Mason contends that this activity “caused Webb Mason to lose its bid for CoStar's Apartments.com project.” Id. at 40.

         In the Motion, VPP asserts that it submitted a quotation to Jack Nadel International (“JNI”), a company not a party to this litigation, for a project unknown to them that turned out to be the same Apartments.com project. ECF 12-1 at 4. But, Webb Mason does not mention JNI or any other third party in the Complaint.

         Although VPP outlines its version of the facts in its Motion (see ECF 12-1 at 2-5), and it may ultimately prove those facts, those facts are not pertinent at this stage of the litigation. To the contrary, as discussed, infra, I must consider only the facts alleged in the Complaint.

         II. Standard of Review

         A.

         As noted, VPP has moved to dismiss or, in the alternative, for summary judgment. ECF 12. A motion styled in the alternative, either to dismiss or for summary judgment, implicates the court's discretion under Rule 12(d) of the Federal Rules of Civil Procedure. See Kensington Vol. Fire Dept., Inc. v. Montgomery Cty., 788 F.Supp.2d 431, 436-37 (D. Md. 2011).

         Ordinarily, a court “is not to consider matters outside the pleadings or resolve factual disputes when ruling on a motion to dismiss.” Bosiger v. U.S. Airways, 510 F.3d 442, 450 (4th Cir. 2007). However, under Rule 12(b)(6), a court, in its discretion, may consider matters outside of the pleadings, pursuant to Rule 12(d). If the court does so, typically “the motion must be treated as one for summary judgment under Rule 56, ” and “[a]ll parties must be given a reasonable opportunity to present all the material that is pertinent to the motion.” Fed.R.Civ.P. 12(d). But when, as here, the movant expressly captions its motion “in the alternative, ” as one for summary judgment, and submits matters outside the pleadings for the court's consideration, the parties are deemed to be on notice that conversion under Rule 12(d) may occur. At that point, the court “does not have an obligation to notify parties of the obvious.” Laughlin v. Metro. Wash. Airports Auth., 149 F.3d 253, 261 (4th Cir. 1998).

         A district judge has “complete discretion to determine whether or not to accept the submission of any material beyond the pleadings that is offered in conjunction with a Rule 12(b)(6) motion and rely on it, thereby converting the motion, or to reject it or simply not consider it.” 5C Alan Wright & Arthur Miller, et al., Federal Practice & Procedure § 1366 (3d ed). This discretion “should be exercised with great caution and attention to the parties' procedural rights.” Id. at 149. In general, courts are guided by whether consideration of extraneous material “is likely to facilitate the disposition of the action, ” and “whether discovery prior to the utilization of the summary judgment procedure” is necessary. Id. at 165-67.

         Summary judgment is generally inappropriate “where the parties have not had an opportunity for reasonable discovery.” E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 448-49 (4th Cir. 2011); see Putney v. Likin, 656 Fed.Appx. 632, 638-640 (4th Cir. 2016) (per curiam); McCray v. Maryland Dep't of Transp., 741 F.3d 480, 483 (4th Cir. 2014) (“McCray”). However, “the party opposing summary judgment ‘cannot complain that summary judgment was granted without discovery unless that party has made an attempt to oppose the motion on the grounds that more time was needed for discovery.'” Harrods Ltd. v. Sixty Internet Domain Names, 302 F.3d 214, 244 (4th Cir. 2002) (hereinafter, “Harrods”) (quoting Evans v. Tech's. Applications & Serv. Co., 80 F.3d 954, 961 (4th Cir. 1996)); see also Dave & Buster's, Inc. v. White Flint Mall, LLLP, 616 Fed.Appx. 552, 561 (4th Cir. 2015).

         To raise adequately the issue that discovery is needed, the nonmovant must file an affidavit or declaration pursuant to Rule 56(d) (formerly Rule 56(f)), explaining why, “for specified reasons, it cannot present facts essential to justify its opposition, ” without needed discovery. Fed.R.Civ.P. 56(d); see Harrods, 302 F.3d at 244-45 (discussing the affidavit requirement of former Rule 56(f)). A nonmoving party's Rule 56(d) request for additional discovery is properly denied “where the additional evidence sought for discovery would not have by itself created a genuine issue of material fact sufficient to defeat summary judgment.” Strag v. Bd. of Trs., Craven Cmty. Coll., 55 F.3d 943, 954 (4th Cir. 1995); see Amirmokri v. Abraham, 437 F.Supp.2d 414, 420 (D. Md. 2006), aff'd, 266 Fed.Appx. 274 (4th Cir. 2008), cert. denied, 555 U.S. 885 (2008).

         A nonmoving party that believes that further discovery is necessary before consideration of summary judgment, but that fails to file a Rule 56(d) affidavit, does so at its peril, because “‘the failure to file an affidavit . . . is itself sufficient grounds to reject a claim that the opportunity for discovery was inadequate.'” Harrods, 302 F.3d at 244 (quoting Evans, 80 F.3d at 961); see also Dave & Buster's, Inc., 616 Fed.Appx. at 561. But, the nonmoving party's failure to file a Rule 56(d) affidavit does not obligate a court to issue a summary judgment ruling that is obviously premature.

         Although the Fourth Circuit has placed “‘great weight'” on the Rule 56(d) affidavit, and has said that a mere “‘reference to Rule 56(f) [now Rule 56(d)] and the need for additional discovery in a memorandum of law in opposition to a motion for summary judgment is not an adequate substitute for [an] affidavit, '” the appellate court has “not always insisted” on a Rule 56(d) affidavit. Harrods, 302 F.3d at 244 (quoting Evans, 80 F.3d at 961). Indeed, the failure to file an affidavit may be excused “if the nonmoving party has adequately informed the district court that the motion is pre-mature [sic] and that more discovery is necessary, ” or when the “nonmoving party's objections before the district court ‘served as the functional equivalent of an affidavit, '” and if the nonmoving party “was not lax in pursuing discovery.” Harrods, 302 F.3d at 244-45 (quoting First Chicago Int'l v. United Exchange Co., LTD, 836 F.2d 1375, 1380-81 (D.C. Cir. 1988)).

         Webb Mason did not file an affidavit or declaration under Fed.R.Civ.P. 56(d). But, it has indicated that it believes summary judgment is premature, as reflected in its opening protest: “VPP seeks to require Webb Mason to ‘try' its case in the Complaint.” ECF 17 at 2. Moreover, Webb Mason points out that “[i]t is inappropriate to convert a motion to dismiss to a motion for summary judgment at an early stage of the litigation when parties have not had an opportunity to conduct reasonable discovery.” Id. at 6. Further, it highlights that Rule 8 “‘defers until after discovery any challenge to [the complaint's] claims insofar as they rely on facts'” and that “the Court ‘must account for the possibility that a noticed claim would become legally sufficient if the necessary facts were to be developed during discovery.'” Id. (citing Teachers' Retirement Systems of Louisiana v. Hunter, 477 F.3d 162, 170 (4th Cir. 2007)).

         In my view, plaintiff is entitled to conduct reasonably discovery. As the Fourth Circuit stated in McCray, 741 F.3d at 483: “Summary judgment before discovery forces the non-moving party into a fencing match without a sword or mask.” A party “needs an ‘adequate opportunity' to present its case and ‘demonstrate a genuine issue of material fact.'” Adams Housing, LLC v. City of Salisbury, Md., 672 Fed.Appx. 220, 222 (4th Cir. 2016) (per curiam) (quoting U.S. Dev. Corp. v. Peoples Fed. Sav. & Loan Ass'n, 873 F.2d 731, 735 (4th Cir. 1989)).

         Therefore, I decline to convert the Motion to one for summary judgment. Instead, I shall construe it as a ...


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