Adirondack Transit Lines, Inc. v. Greyhound Lines, Inc.

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ADIRONDACK TRANSIT LINES, INC. et al. plaintiff v. GREYHOUND LINES, INC., Defendant.

No. 1:22-cv-1662-RCL

United States District Court, District of Columbia

January 17, 2023

MEMORANDUM OPINION

Roce C. Lamberth United States District Judge

This opinion considers whether a party may pursue an unjust-enrichment claim based on an allegedly improper temporary restraining order (“TRO”) and when a company may sue a competitor for attempting to poach employees and customers. These issues are raised by plaintiffs' (collectively known as “Trailways”) motion to dismiss counterclaims by defendant (“Greyhound”) The parties first appeared in front of this Court when it issued a TRO requiring Greyhound to “continue interlining” with Trailways pursuant to a prior contract between the parties. ECF No. 9. Interlining, a common practice in the realm of intercity busing, allows customers to purchase a ticket with one bus company to travel with another bus company, although these parties dispute the finer details of the practice. Adirondack Transit Lines, Inc. v. Greyhound Lines, Inc., No. 1:22-cv-1662 (RCL), 2022 WL 2452597, at *1-3 (D.D.C. July 1, 2022), ECF No. 22. After this Court denied a motion for preliminary injunction and allowed the TRO to expire, Greyhound filed counterclaims against Trailways. The counterclaims include counts for tortious interference, unfair competition, unjust enrichment, and restitution. Trailways then moved to dismiss all counts.

After reviewing the counterclaims, applicable law, and parties' briefing, the Court will GRANT IN PART AND DENY IN PART Trailways's motion to dismiss.

I. BACKGROUND

The Court has previously discussed at length the relationship between these parties and the procedural history of this lawsuit up to the point that the Court denied Trailways a preliminary injunction. See id. at *1-4. Therefore a succinct summary of that background will suffice before the Court describes recent developments.

A. The Parties' Pre-Litigation Relationship

“Since at least 1988, Greyhound and Trailways have engaged in a common industry practice known as ‘interlining.'” See id. at *1. Nine years into that interlining relationship, Trailways and Greyhound signed a Revenue Pooling Agreement under which Trailways and Greyhound agreed to pool revenue. Id. at *2-3; Countercls. ¶ 6, ECF No. 33 at 8-16. Under that agreement, Trailways “was given access to and information about Greyhound's employees that it would not have otherwise had.” Countercls. ¶ 6. In February of 2022, Greyhound notified Trailways that Greyhound would be terminating the Revenue Pooling Agreement as of June 1, 2022. Id. at ¶ 7. Furthermore, “Greyhound also informed Trailways that it would cease interlining on June 1, 2022 because it had failed to enter a written interline agreement, and, thus there was no interline agreement.” Adirondack Transit Lines, Inc., 2022 WL 2452597 at *3 (internal quotation marks and citation omitted). On June 8, 2022, Greyhound ceased interlining with Trailways. Id.

B. Issuance of the TRO and Denial of a Preliminary Injunction

On June 9, 2022, Trailways moved for a TRO and preliminary injunction requiring Greyhound to continue interlining with Trailways under a breach of contract theory. Id. at *1, *4. Following a hearing, the Court granted Trailways's motion and issued a fourteen-day TRO, effective June 10, 2022, while reserving the motion for a preliminary injunction pending further briefing from both parties. Id.; ECF No. 9. The TRO ordered Greyhound to “continue interlining” with Trailways. Countercls. ¶ 22; ECF No. 9. The Court subsequently extended the TRO for an additional fourteen days. ECF No. 21.

“To comply with the Temporary Restraining Order, Greyhound was forced to offer for sale to its customers trips on [Trailways] buses on competing routes that are served by Greyhound.” Countercls. ¶ 23. “Rather than have its customers ride on a Greyhound bus and generate that revenue for Greyhound . . . the revenue went to [Trailways].” Id.

On July 1, 2022, the Court issued an order denying the motion for a preliminary injunction. Adirondack Transit Lines, Inc., 2022 WL 2452597; ECF No. 23. The Court held that Greyhound had demonstrated likelihood of success on the merits and that the balance of the equities favored an injunction, but that the other two preliminary injunction factors-irreparable injury to the plaintiff and the public interest-did not favor issuance. Adirondack Transit Lines, Inc., 2022 WL 2452597 at *15. The TRO subsequently expired on its own terms. ECF No. 23. (“[T]he Temporary Restraining Order . . . will expire on July 8, 2022 at 5:15pm.”).

C. Greyhound's Counterclaims and Trailways's Motion to Dismiss

At the end of July, Greyhound filed counterclaims against Trailways alongside its answer to the complaint. ECF No. 33. Greyhound asserts counterclaims for (1) unfair competition; (2) tortious interference; (3) unjust enrichment; and (4) restitution. Countercls. ¶¶ 26-44.

For factual support, Greyhound alleges that Trailways took a variety of actions that give rise to liability. Broadly, it alleges that Trailways “has made a concerted effort to poach employees from Greyhound and steal Greyhound's customers through a host of improper and illegal means.” Id. at ¶ 8. Those allegations are detailed as follows.

For employees, Greyhound alleges that Trailways “using the knowledge it has obtained about the location and employment terms for Greyhound's employees, has approached numerous Greyhound employees and attempted to convince them to leave Greyhound for employment with [Trailways].” Id. at ¶ 9. Greyhound also alleges that Trailways's “representatives have conveyed to Greyhound's employees that because of the Pooling relationship, they have a unique insight into Greyhound's business and operations . . . representatives then seek to scare the Greyhound employees by lying . . . [and stating that] Greyhound intends to close certain locations and end certain routes in upstate New York.” Id. at ¶ 10. Greyhound also alleges that Trailways “knows that under its union contract it cannot offer seniority to a new driver that it has hired away from Greyhound . . . [but] representatives lie and instead state that they are ‘looking into a way' to transfer seniority.” Id. at ¶ 11. “Since the beginning of 2022, multiple employees have left Greyhound and are now employed by [Trailways].” Id. at ¶ 13.

For customers, Greyhound leased space to Trailways in the Albany, NY bus terminal through a lease that “expired on June 1, 2022.” Id. at ¶¶ 15-16. As of the time of the counterclaims, “Greyhound has instituted an eviction proceeding in the Albany City Court, but that matter is not scheduled to be heard until August 26, 2022.” Id. at ¶¶ 17-18. While holding over, Trailways “employees use the intercom system to make statements about Greyhound that they know are false . . . [such as] to falsely announce that Greyhound does not offer refunds to customers.” Id. at ¶ 20. Trailways “representatives also use the intercom system at the Greyhound Albany Terminal to announce that they are offering a discount, upwards of 50%, to any Greyhound ticketed customer who cancels their Greyhound ticket and instead books a trip [with Trailways].” Id. at ¶ 21. Trailways seeks damages resulting from the “loss from customers that were encouraged by [Trailways] to cancel their Greyhound tickets.” Id. at ¶ 34.

On August 26, 2022, Trailways moved to dismiss Greyhound's counterclaims. Pls.' Mot., ECF No. 37 at 1-2; Pls.' Mem. in Supp. (“Trailways's Mem.”), ECF No. 37 at 3-29. Greyhound opposed. Greyhound's Opp'n, ECF No. 40. Trailways replied. Trailways's Reply, ECF No. 42. The motion is now ripe for this Court's review.

II. LEGAL STANDARD

A. Motion to Dismiss for Failure to State a Claim

When a plaintiff moves to dismiss a defendant's counterclaims for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6), the Court applies the same standards that it does when evaluating a motion to dismiss a plaintiff's complaint on the same grounds. Wharf, Inc. v. D.C., 232 F.Supp.3d 9, 16 (D.D.C. 2017).

“To survive a motion to dismiss [under Rule 12(b)(6)], a [counterclaim] must contain sufficient factual matter . . . ‘to state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “[W]hen reviewing the sufficiency of a complaint, a court must first ‘tak[e] note of the elements a plaintiff must plead to state [the] claim' to relief, and then determine whether the plaintiff has pleaded those elements with adequate factual support to ‘state a claim to relief that is plausible on its face.'” Blue v. D.C., 811 F.3d 14, 20 (D.C. Cir. 2015) (alterations in the original) (quoting Iqbal, 556 U.S. at 675, 678). This requires an element-by-element consideration of each counterclaim. See id.

“Though a [counterclaim] is not required to contain ‘detailed factual allegations,' it must present more than ‘[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements.'” Swecker v. FERC, No. 1:21-cv-1590 (RCL), 2022 WL 4534944, at *3 (D.D.C. Sept. 28, 2022) (quoting Iqbal, 556 U.S. at 678). A Court shall “accept as true all of the factual allegations contained in the [counterclaim],” Erickson v. Pardus, 551 U.S 89, 94 (2007), though it need not accept “a legal conclusion couched as a factual allegation,” Iqbal, 556 U.S. at 678. The pleading shall be construed liberally and the party opposing the motion to dismiss shall receive “the benefit of all inferences that can be derived from the facts alleged.” Zukerman v. United States Postal Serv., 961 F.3d 431, 436 (D.C. Cir. 2020) (quoting ...