Farmers Ins. Exch. v. Jasper

1

FARMERS INSURANCE EXCHANGE et al., Plaintiffs, v. ANDREW JASPER et al., Defendants.

No. 4:23-cv-00406-SRC

United States District Court, E.D. Missouri, Eastern Division

November 1, 2023

MEMORANDUM AND ORDER

STEPHEN R. CLARK, CHIEF UNITED STATES DISTRICT JUDGE

After investigating Andrew Jasper's business practices, Farmers Insurance terminated its Agent Appointment Agreement with Jasper. Around the same time, Jasper allegedly misappropriated Farmers' trade secrets and later solicited Farmers' insureds to terminate their policies and bring their business to Jasper's insurance agency instead. And the allegations don't end there. To recover Farmers brings nine counts against Defendants Jasper; Jasper Insurance Agency, LLC; and Elevated Insurance Group LLC. Defendants move to dismiss all counts under Federal Rule of Civil Procedure 12(b)(6). See doc 20.

I. Background

The Court accepts the following well-pleaded facts as true for the purposes of this Motion to Dismiss. This lawsuit arises from an Agent Appointment Agreement between Farmers and Jasper, under which Jasper served as a Farmers insurance agent in Missouri from approximately February 2018 to April 2022. Doc. 1 at ¶¶ 8, 20. Farmers terminated the agreement after an investigation of Jasper's business revealed that he was-among other things-submitting fraudulent documents on behalf of his insureds and issuing policies without the required down payment. Id. at ¶¶ 13-20. The agreement required Jasper, upon termination, to refrain from soliciting or servicing Farmers' policyholders for one year and to transfer his interest in his telephone number to Farmers. Id. at ¶¶ 10-11. But in the months leading up to his termination, Jasper allegedly printed reports on a number of Farmers' insureds that were unrelated to his work, id. at ¶¶ 22-24, and has since used this information to solicit dozens of Farmers' policyholders to Elevated Insurance, Jasper's new insurance agency, id. at ¶¶ 30-32. He also retained his Farmers telephone number. Id. at ¶ 49.

Plaintiffs Farmers Insurance Exchange, Truck Insurance Exchange, Fire Insurance Exchange, Mid-Century Insurance Company, and Farmers New World Life Insurance Company (collectively, Farmers) bring nine counts against Defendants Andrew Jasper; Jasper Insurance Agency, LLC; and Elevated Insurance Group, LLC. Doc. 1. Defendants move to dismiss all counts for failure to state a claim. Doc. 20.

II. Standard

Under Rule 12(b)(6), a party may move to dismiss a claim for “failure to state a claim upon which relief can be granted.” The notice pleading standard of Rule 8(a)(2) of the Federal Rules of Civil Procedure requires a plaintiff to give “a short and plain statement . . . showing that the pleader is entitled to relief.” To meet this standard and survive a Rule 12(b)(6) motion to dismiss, “a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotations and citation omitted). This requirement of facial plausibility means the factual content of the plaintiff's allegations must “allow[] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Park Irmat Drug Corp. v. Express Scripts Holding Co., 911 F.3d 505, 512 (8th Cir. 2018) (quoting Iqbal, 556 U.S. at 678). The Court must make all reasonable inferences in favor of the nonmoving party. Lustgraaf v. Behrens, 619 F.3d 867, 872-73 (8th Cir. 2010).

When ruling on a motion to dismiss, a court must liberally construe a complaint in favor of the plaintiff. Huggins v. FedEx Ground Package Sys., Inc., 592 F.3d 853, 862 (8th Cir. 2010). However, if a claim fails to allege one of the elements necessary to recovery on a legal theory, the Court must dismiss that claim for failure to state a claim upon which relief can be granted. Crest Constr. II, Inc. v. Doe, 660 F.3d 346, 355 (8th Cir. 2011). Threadbare recitals of a cause of action, supported by mere conclusory statements, do not suffice. Iqbal, 556 U.S. at 678; Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Rule 8 does not “unlock the doors of discovery for a plaintiff armed with nothing more than conclusions.” Iqbal, 556 U.S. at 678-79. “A pleading that merely pleads labels and conclusions, or a formulaic recitation of the elements of a cause of action, or naked assertions devoid of factual enhancement will not suffice.” Hamilton v. Palm, 621 F.3d 816, 817 (8th Cir. 2010) (internal quotations omitted). Although courts must accept all factual allegations as true, they are not bound to accept as true a legal conclusion couched as a factual allegation. Twombly, 550 U.S. at 555 (internal quotations and citation omitted); Iqbal, 556 U.S. at 677-78.

Only a complaint that states a plausible claim for relief survives a motion to dismiss. Iqbal, 556 U.S. at 679. Therefore, the Court must determine if the well-pleaded factual allegations “plausibly give rise to an entitlement to relief.” Id. This “context-specific” task requires the court to “draw on its judicial experience and common sense.” Id. at 679, 682.

III. Discussion

A. Count 1

In count 1 of its Complaint, Farmers seeks to bring a cause of action for injunctive relief. Doc. 1 at ¶¶ 34-47. But, quite simply, no such cause of action exists in either state or federal court. See, e.g., Goerlitz v. City of Maryville, 333 S.W.3d 450, 455 (Mo. 2011), abrogated on other grounds by Glendale Shooting Club, Inc. v. Landolt, 661 S.W.3d 778 (Mo. 2023) (“[A]n injunction is a remedy and not a cause of action; therefore, it must be based on some recognized and pleaded legal theory”) (citation omitted); Guardians Ass'n v. Civ. Serv. Comm'n of N.Y.C., 463 U.S. 582, 595 (1983) (“Whether a litigant has a cause of action ‘is analytically distinct and prior to the question of what relief, if any, a litigant may be entitled to receive'” (quoting Davis v. Passman, 442 U.S. 228, 239 (1979))). Farmers acknowledges as much in its response to Defendants' motion: “Farmers agrees . . . that the remedy [i.e., the injunction] does not stand as a separate cause of action.” Doc. 26 at 15. Therefore, the Court grants the Motion to Dismiss count 1.

B. Count 2

Against Jasper alone, Farmers seeks to bring a false-advertising claim under the Lanham Act, 15 U.S.C. § 1125(a), alleging that he has wrongfully used an office telephone number that he used during his time as an agent for Farmers. Doc. 1 at ¶¶ 48-53. The Act provides the following:

(1) Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which-

(A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or

(B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities,

shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.

15 U.S.C. § 1125(a).

To establish a false-advertising or deceptively-misleading-advertising claim under section 1125(a), a plaintiff must show five elements:

(1) a false statement of fact by [the defendant] about its own or another's product; (2) the statement actually deceived or has the tendency to deceive a substantial segment of its audience; (3) the deception is material, in that it is likely to influence the purchasing decision; (4) the defendant caused its false statement to enter interstate commerce; and (5) the plaintiff has been or is likely to be injured as a result of the false statement.

Am. Italian Pasta Co. v. New World Pasta Co., 371 F.3d 387, 390 (8th Cir. 2004) (quoting United Indus. Corp. v. Clorox Co., 140 F.3d 1175, 1179 (8th Cir. 1998)).

Farmers has not adequately pleaded, or seriously attempted to argue, that its Complaint satisfies the first two elements-and that alone disposes of the claim. Doc. 26 at 3-4. For example, it has not alleged that Jasper has made any “false statement of fact” in connection with the phone number or his product. Am. Italian Pasta Co., 371 F.3d at 390 (quoting Clorox Co., 140 F.3d at 1180); doc. 1 at ¶¶ 48-53. Rather, Farmers asserts that “[t]he telephone number is listed in advertising and directory publications as affiliated with Farmers.” Doc. 26 at 3. But Farmers never alleges or asserts that Jasper himself, after his termination, has made any statement that the number is affiliated with Farmers. Doc. 1.

Even assuming that Jasper's use of the telephone number amounted to a statement, Farmers fails to satisfy the second element. Generally, two categories of a “false statement” establish a section-1125(a) violation: (1) “claims that are literally false as a factual matter and (2) claims that may be literally true or ambiguous but which implicitly convey a false impression, are misleading in context, or likely to deceive consumers.” Clorox Co., 140 F.3d at 1180 (citations omitted). For the second category, the party must prove actual deception, rather than hypothetical deception. See Blue Dane Simmental Corp. v. Am. Simmental Ass'n, 178 F.3d 1035, 1043 (8th Cir. 1999) (“Where advertising is not literally false, the plaintiffs bear ‘the ultimate burden of proving actual deception by using reliable consumer or market research'” (quoting Clorox Co....