Boat People S.O.S., Inc. v. Coalition

BOAT PEOPLE S.O.S., INC., Plaintiff v. URBAN AFFAIRS COALITION, et al., Defendants

CIVIL ACTION No. 16-5486

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

January 25, 2018

Goldberg, J.

MEMORANDUM OPINION

This case involves a business dispute over the alleged transition of resources and employees from one corporation to another. Plaintiff Boat People SOS, Inc. ("BPSOS") has sued Defendant Urban Affairs Coalition ("UAC"), and multiple individual Defendants Nancy Nguyen, Catherine Nguyen, Mai Huynh, Lan Dinh, Duong Ly, Francis Fred Melroy, and David Forde, Jr. Plaintiff alleges causes of action for: Civil Conspiracy (Count I); Breach of the Duty of Loyalty (Count II); Tortious Interference with a Contract (Count III); Tortious Interference with Business Relationships (Count IV); Defamation (Count V), Conversion (Count VI), and Computer Trespass (Count VII). Presently before the Court are two Motions—one by Defendant UAC and one by Defendants N. Nguyen, C. Nguyen, Dinh, and Ly—to dismiss the Amended Complaint for failure to state a claim upon which relief may be granted.

For the reasons set forth below, Defendant UAC's Motion will be granted and Defendants N. Nguyen, C. Nguyn, Dinh, and Ly's Motion will be denied.

I. BACKGROUND

BPSOS and UAC are nonprofit corporations with charitable missions. BPSOS initially employed the individual Defendants, some of whom UAC later employed as staff for VietLEAD, an unincorporated organization operating as a sponsored program of UAC. The Amended Complaint asserts that UAC and VietLEAD's staff conspired between and among themselves, and with other named defendants and nonparties, to unlawfully take control of BPSOS's Delaware Valley offices and divert their operations, assets, revenue, grants, contracts, business relationships, good will, and client data to VietLEAD. (Am. Compl. ¶¶ 90, 95.)

A. The Parties

Plaintiff BPSOS is a nonprofit corporation organized under the laws of Virginia, with a principal place of business in Falls Church, Virginia. BPSOS has branch offices in Pennsauken, New Jersey and Philadelphia, Pennsylvania (together, the "Delaware Valley offices"). BPSOS's stated mission is "to empower, organize and equip Vietnamese individuals and communities in their pursuit of liberty and dignity." BPSOS has operated a youth development project in the Delaware Valley also named, "VietLEAD." (Am. Compl. ¶¶ 1, 13(b), 14-16.)

Defendant UAC is a nonprofit corporation organized under the laws of Pennsylvania, with headquarters in Philadelphia, Pennsylvania. UAC's stated mission is "to build wealth in urban communities and develop youth and young adults." "UAC works with a network of partner organizations that offer an array of services . . . in the areas of youth development, adult education and job training, health related services, financial education, housing support, advocacy and economic inclusion." UAC's fiscal sponsorship provides a "full suite of 'back-office' support to its program partners," including "general management, financial, administrative and human resource support." (Def. UAC Br. at 2-5.)

B. Procedural Background

On April 22, 2016, BPSOS commenced this action in the District Court for the Eastern District of Virginia against the same Defendants named here and against another DefendantPublic Health Management Corporation ("PHMC"). BPSOS voluntarily dismissed the complaint against PHMC without prejudice.

On October 18, 2016, the Virginia District Court granted separate motions to dismiss for lack of personal jurisdiction over UAC, N. Nguyen, C. Nguyen, Dinh, and Ly and improper venue, and transferred all claims against all Defendants to the Eastern District of Pennsylvania. Upon transfer, the parties were directed to refile any motions which were pending before the action was transferred. On January 20, 2017, Defendants filed the present Rule 12(b)(6) motions.

C. Facts Alleged in the Amended Complaint¹

From March 30, 2009 through June 30, 2015, Nancy Nguyen was BPSOS's Branch Manager and then Executive Director of the Delaware Valley offices. On March 6, 2015, N. Nguyen emailed UAC "to discuss moving BPSOS's Delaware Valley operations to UAC 'independent of our national office.'" The persons at UAC with whom N. Nguyen communicated are not identified. (Am. Compl. ¶¶ 17-18.)

On April 2, 2015, another BPSOS employee, Mai Huynh, "contacted the BPSOS Board of Directors to discuss the possibility of setting up a locally incorporated entity affiliated with BPSOS." Huynh allegedly did so "on behalf of" a collection of other persons referred to as "The Group." The Group comprises twelve persons: the named individual Defendants Nancy Nguyen, Catherine Nguyen, Mai Huynh, Lan Dinh, Duong Ly, Francis Fred Melroy, and DavidForde, Jr.,² as well as other persons who are not named as defendant parties in this action. (Id. ¶¶ 20, 95.)

On April 10, 2015, some Group members met with BPSOS's Board of Directors. At the meeting, Group members proposed that the Delaware Valley offices be transferred to a separate organization that The Group planned to form. As justification for that proposal, Group members voiced concerns about the "indirect cost rate" that the Board was using as a goal to assess the Delaware Valley offices' actually incurred, average overhead costs. The Board proposed a multi-year transition of the Delaware Valley offices to a separate organization, and Group members proposed an immediate transition. Despite several more meetings, no agreement on a transition plan was reached, and on July 7, 2015, the Board terminated discussions with The Group. (Id. ¶¶ 21-22, 24-25, 27, 93.)

In early July, 2015, Group members began negotiating with UAC for a sponsorship contract. Under the contemplated contract, UAC was to "be the fiscal sponsor for the Delaware Valley offices of BPSOS." The Amended Complaint neither identifies the Group members or the UAC representatives who negotiated nor pleads any specific acts or statements by any individuals. (Id. ¶ 26.)

On July 7, 2015, Nancy Nguyen sent an email to unidentified Group members "asking if The Group's new organization could still engage directly with BPSOS funders to request that the funders move to the new organization." She also wrote in an email: "How do we move forward now? Do we go to funders and ask to move anyway? . . . What would national do?" That same day, other communications were exchanged between and among Group members regarding problems that might arise should they realize their plan to move the operations, assets, andfunding of the Delaware Valley offices to a newly formed organization, separate from BPSOS. (Id. ¶¶ 28-31.)

On or about July 7, 2015, a "plot was formulated" among members of "The Group," who are identified as N. Nguyen, C. Nguyen, Huynh, Dinh, Ly, Melroy, Forde, and nonparty Khai Dino Tran. The agreement is described as "a plot to take control of the BPSOS Delaware Valley offices and all assets, revenue, business relationships, goodwill, client data, existing grants and contracts and future grants and contracts away from BPSOS." The Amended Complaint alleges that "The Group had a plan to recruit community leaders to support VietLEAD"—the name chosen by The Group for their newly formed, unincorporated organization based in Philadelphia, Pennsylvania, separate from BPSOS. (Id. ¶¶ 90, 95.)

On August 10, 2015, UAC entered into a "Fiscal Sponsorship Agreement" with VietLEAD, effective September 1, 2015. (Agreement, Def. UAC Mot., Ex. C.) The Agreement was signed by the President and CEO of UAC, Nancy Nguyen as Executive Director of VietLEAD, and Mai Huynh as Chair of the Advisory Board of VietLEAD. The Agreement's stated purpose was "to establish Program Partner as a fiscally sponsored program of UAC and to set forth the terms and conditions that will govern the relationship." (Id. § II at 2.) Under the Agreement, VietLEAD was a "Program Partner" that was "under the legal control and authority of UAC as a fiscally sponsored Program Partner for the duration of this agreement." (Id., Preamble at 1, Recitals ¶ E at 1.) The Agreement further stated that VietLEAD's Executive Director and Advisory Board, (subject to the ultimate direction and fiduciary responsibility of UAC's Board of Directors), was responsible for VietLEAD's "day-to-day operations," and VietLEAD was "fully responsible for raising sufficient funds to cover operating expenses." (Id. § VII.A, C at 4.) In addition, under the Agreement, UAC was "the employer of record of all staffmembers of Program Partner," VietLEAD, and "all personnel to be compensated for working as Program Partners['] staff, shall become at-will employees of UAC on the effective date," September 1, 2015. (Id. §§ I, VI.A, B at 2-3; Am. Compl. ¶ 32.)

On August 19, 2015, Catherine Nguyen and Mai Huynh met with UAC. The purpose of the meeting was "to discuss moving the BPSOS Delaware Valley offices to UAC." On August 25, 2015, Huynh "reported to The Group" that "after meeting with the executives from UAC, I am comfortable and confident with moving forward and continuing on with our agreed plan which is to move our back end office to UAC." The Amended Complaint does not identify the persons at UAC with whom C. Nguyen and Huynh met. It further alleges that UAC's "executives" suggested that VietLEAD start with UAC "officially on September 1, 2015 with the 100K grant." UAC's executives also "suggested that VietLEAD 'keep [the] two organizations in operation until BPSOS (Delaware Valley) spends down all funds from the grants that are due to end by the end of 2015.'" (Am. Compl. ¶¶ 33, 36-37, 40-41.)

On September 1, 2015, UAC became "the employer of record for staff members of VietLEAD," and "assumed 'legal control and authority' of the organization." Specifically, the Amended Complaint alleges that Nancy Nguyen, Mai Huynh, Lan Dinh, and Duong Ly became employees of UAC, and that they were "employees" and "agents" of UAC who acted "on behalf of UAC" in...