Opinion
C/A No. 2:20-CV-03549-RMG-MGB
03-10-2021
PETER VONLEHE RUEGNER PLAINTIFF, v. SUN PET, LTD, DEFENDANT.
REPORT AND RECOMMENDATION
This is a civil action filed by Plaintiff Peter von Lehe Reugner, appearing pro se, alleging various state law claims arising out of an alleged breach of contract. (Dkt. No. 18.) Before the Court is Defendant's Motion for Partial Dismissal. (Dkt. No. 19.) All pretrial proceedings in this case were referred to the undersigned pursuant to the provisions of 28 U.S.C. § 636(b)(1)(A) and (B) and Local Rule 73.02(B)(2)(d), DSC. For the reasons set forth below, the undersigned recommends Defendant's Motion be granted.
This case is in federal court under diversity jurisdiction.
BACKGROUND
This civil action arises out of an alleged breach of contract by Defendant Sun Pet Ltd, a supplier of "pet retailers and zoos nationwide." (Dkt. No. 18 at 1.) According to Plaintiff, he entered into an "e-Contract" with Sun Pet in April 2018 wherein Plaintiff agreed to raise mice for the entity. (Id.) Plaintiff alleges that he "built a breeder colony" over the next several months and "sold his first batch of rodents to Sun Pet in the beginning of September 2018." (Id. at 2.) Plaintiff alleges that emails he received from Sun Pet led him to believe that: (1) "he alone could cancel the installment contract"; and (2) "Sun Pet would never abandon their animals." (Id. at 2-3.) According to Plaintiff, he "would not have started and expanded the population of animals without those . . . emails." (Id. at 3.)
Plaintiff alleges that "Sun Pet bought just under 20,000 unsexed rodents from [Plaintiff] over a nine month period, paid the agreed to prices, and accepted the quantity shown in the invoices." (Id. at 3-4.) According to Plaintiff, "Scott Goodson" called him on May 9, 2019, demanding "an extremely low price per small rat" and threatening "breach of performance on all future installments" if Plaintiff "did not agree to modify the price." (Id. at 4.) Plaintiff alleges that "Goodson pulled this pricing scheme once the breeder population was finally large and about to produce on a massive level." (Id.) Plaintiff alleges that when he told Goodson "this would destroy [Plaintiff's] business," Goodson said "the price of rats was too high, that Sun Pet did not need the rats anymore, that Sun Pet had found another breeder, that the cost of fuel was too high, and that the only way Sun Pet would continue to pick up their animals was if [Plaintiff] substantially lowered the price by Sunday, May 12, 2019." (Id.) Plaintiff alleges that Goodson deliberately withheld the concern about fuel and the price of the animals, "knowing [Plaintiff] was growing the population further for Sun Pet." (Id.) He alleges Goodson wanted to "force [Plaintiff] into a lower price per animal at the last minute after the breeder population had reached a large size." (Id. at 5.) According to Plaintiff, the "lower price would have instantly destroyed the operation [Plaintiff] built for Sun Pet." (Id.)
Plaintiff alleges that he "demanded assurances on May 12, 2019 that Sun Pet would perform when performance was due the following morning." (Id.) Plaintiff alleges that Sun Pet breached the e-Contract on May 13, 2019, when it failed to "pick up the rodents at 9 am." (Id. at 6.) Plaintiff alleges that "[a]fter the breach, [he] found himself cut out of the rodent market. The cost of feed, water, and power went up after the breach." (Id.) Plaintiff further alleges that he was "unable to resell the rodents to the chain stores he approached because Sun Pet has restrictive contracts with those stores." (Id.) According to Plaintiff, "Sun Pet has a monopoly over the rodent market." (Id. at 7.) Plaintiff alleges that his "rodent farming business that he started specifically for Sun Pet was destroyed," and he "lost all invested capital and expected revenue from Sun Pet's breach, related pricing scheme and monopolization of the rodent market." (Id.)
The Amended Complaint alleges causes of action for breach of contract, breach of contract accompanied by fraudulent act, and violation of the South Carolina Unfair Trade Practices Act ("SCUTPA"). (Id. at 7-9.)
This action was removed to federal court from the Court of Common Pleas for Dorchester County on October 8, 2020. (Dkt. No. 1.) On December 2, 2020, Defendant filed a Motion for Partial Dismissal, seeking dismissal of Plaintiff's claim for violation of SCUTPA. (Dkt. No. 19.) Plaintiff filed a response in opposition on January 4, 2021 (Dkt. No. 24), and Defendant did not file a reply. The Motion is ripe for review.
STANDARD OF REVIEW
Defendant's Motion is made pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. On a 12(b)(6) motion, a "complaint must be dismissed if it does not allege 'enough facts to state a claim to relief that is plausible on its face.'" Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir. 2008) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
DISCUSSION
The SCUTPA prohibits "unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce." S.C. Code Ann. § 39-5-20. To adequately plead a claim for violation of the SCUTPA, the plaintiff must show "(1) that the defendant engaged in an unfair or deceptive act in the conduct of trade or commerce; (2) the unfair or deceptive act affected public interest; and (3) the plaintiff suffered monetary or property loss as a result of the defendant's unfair or deceptive act." See Davis v. Citimortgage, Inc., No. 0:15-CV-04643-MGL, 2016 WL 4040084, at *5 (D.S.C. July 28, 2016) (quoting Health Promotion Specialists, LLC v. S.C. Bd. of Dentistry, 403 S.C. 623, 638, 743 S.E.2d 808, 816 (2013)). "An act is 'unfair' when it is offensive to public policy or when it is immoral, unethical, or oppressive." Health Promotion, 403 S.C. at 816. (citation omitted). "An act is 'deceptive' when it has a tendency to deceive." Id. (citation omitted).
"A plaintiff bringing a private cause of action under SCUTPA must allege and prove that the defendant's actions adversely affected the public interest." Morgan v. HSBC Bank USA, Nat. Ass'n, No. 6:13-CV-03593-JMC, 2015 WL 3888412, at *4 (D.S.C. June 24, 2015) (citing Noack Enterprises Inc. v. Country Corner Interiors, Inc., 290 S.C. 475, 351 S.E.2d 347, 349-50 (Ct. App. 1986)). "Conduct that affects only the parties to the transaction provides no basis for a SCUTPA claim." Id. (citing Robertson v. First Union Nat'l Bank, 350 S.C. 339, 565 S.E.2d 309, 315 (Ct. App. 2002)). The "adverse effect on the public must be proved by specific facts." Jefferies v. Phillips, 316 S.C. 523, 527, 451 S.E.2d 21, 23 (Ct. App. 1994).
An impact on the public interest may be shown if the acts or practices have the potential for repetition. The potential for repetition may be shown in either of two ways: (1) by showing the same kind of actions occurred in the past, thus making it likely they will continue to occur absent deterrence; or (2) by showing the company's procedures created a potential for repetition of the unfair and deceptive acts.Skywaves I Corp. v. Branch Banking & Tr. Co., 423 S.C. 432, 453-54, 814 S.E.2d 643, 655 (Ct. App. 2018 (quoting Singleton v. Stokes Motors, Inc., 358 S.C. 369, 379, 595 S.E.2d 461, 466 (2004))).
In its Motion, Defendant asserts that the Amended Complaint fails to state a claim under SCUTPA. Specifically, Defendant asserts that Plaintiff has failed "to allege specific facts in support of his claim that Defendant's alleged violations of SCUTPA had an effect on the public interest." (Dkt. No. 19 at 4.) According to Defendant, Plaintiff's "allegations showcase that Plaintiff's claim stems only from the parties' contract and Defendant's alleged breach of it." (Id. at 5.) Defendant argues that because "Plaintiff clearly only seeks to redress his private wrong," his SCUTPA claim should be dismissed. (Id. at 6.)
Plaintiff responds that the Amended Complaint alleges that Sun Pet engaged in anticompetitive behavior through its "monopoly over the alternative livestock market" and its inclusion of "restrictive covenants" in its contracts that "restrict who has access to sell to the pet retailers." (Id. at 4-5.) Plaintiff contends that such anticompetitive behavior has "an inherent impact on the public interest." (Id. at 7.) In support, Plaintiff cites Florence Paper Co. v. Orphan, 298 S.C. 210, 212, 379 S.E.2d 289, 290 (1989). (Id.) Florence is not particularly helpful for Plaintiff's argument, however.
In Florence, the Supreme Court of South Carolina considered the "effect on the public interest" requirement where a corporation misappropriated a competitor's proprietary client information. 379 S.E.2d at 290. The court held the aggrieved party could not bring a SCUTPA claim in those circumstances, reasoning that a suit involving two competitors did not necessarily implicate the public interest. Id. at 291. Acknowledging the plaintiff's argument that "unfair methods of competition inherently involve acts which impact public interest," the court found that "such an impact could not be inherent in this situation where only two direct competitors are involved." Id. at 291. The court did not offer any specific examples of behavior that would satisfy the public interest requirement of a SCUTPA claim.
Upon review, the undersigned finds that there are no allegations of an adverse impact on the public sufficient to establish a SCUTPA claim. More specifically, the allegations in the Amended Complaint relate to the parties of this lawsuit. Plaintiff has not alleged any specific facts that the public has suffered any adverse effect—his general assertions of "inherent impact" do not satisfy this requirement. See, e.g., Bartley v. Wells Fargo Bank, NA, No. 3:14-CV-3814-CMC, 2015 WL 5158708, at *9 (D.S.C. Sept. 2, 2015) (dismissing SCUTPA claim because foreclosure of plaintiff's property reflected a private wrong, rather than a public interest); Davis, 2016 WL 4040084, at *5 (dismissing SCUTPA claim where plaintiff's complaint was individual and "private in nature," such that he failed to allege an impact on public interest); see also White v. White, 886 F.2d 721, 723 (4th Cir. 1989) (dismissing pro se complaint because it "failed to contain any factual allegations tending to support his bare assertion"). Nor has Plaintiff offered any compelling argument that the conduct at issue here has the potential for repetition. See Skywaves I Corp., 814 S.E.2d at 655. For these reasons, the undersigned recommends Plaintiff's claim for violation of SCUTPA be dismissed.
CONCLUSION
For the foregoing reasons, the undersigned recommends that Defendant's Motion for Partial Dismissal (Dkt. No. 19) be GRANTED and Plaintiff's SCUTPA claim be dismissed. Accordingly, only Plaintiff's claims for breach of contract and breach of contract accompanied with fraudulent act should remain.
IT IS SO RECOMMENDED. March 10, 2021 Charleston, South Carolina
/s/_________
MARY GORDON BAKER
UNITED STATES MAGISTRATE JUDGE
Notice of Right to File Objections to Report and Recommendation
The parties are advised that they may file specific written objections to this Report and Recommendation with the District Judge. Objections must specifically identify the portions of the Report and Recommendation to which objections are made and the basis for such objections. "[I]n the absence of a timely filed objection, a district court need not conduct a de novo review, but instead must 'only satisfy itself that there is no clear error on the face of the record in order to accept the recommendation.'" Diamond v. Colonial Life & Acc. Ins. Co., 416 F.3d 310 (4th Cir. 2005) (quoting Fed. R. Civ. P. 72 advisory committee's note).
Specific written objections must be filed within fourteen (14) days of the date of service of this Report and Recommendation. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b); see Fed. R. Civ. P. 6(a), (d). Filing by mail pursuant to Federal Rule of Civil Procedure 5 may be accomplished by mailing objections to:
Robin L. Blume, Clerk
United States District Court
Post Office Box 835
Charleston, South Carolina 29402
Failure to timely file specific written objections to this Report and Recommendation will result in waiver of the right to appeal from a judgment of the District Court based upon such Recommendation. 28 U.S.C. § 636(b)(1); Thomas v. Arn, 474 U.S. 140 (1985); Wright v. Collins, 766 F.2d 841 (4th Cir. 1985); United States v. Schronce, 727 F.2d 91 (4th Cir. 1984).