Power Restoration Int'l, Inc. v. Pepsico, Inc., CIVIL ACTION NO. 12-1922

POWER RESTORATION INTERNATIONAL, INC. Plaintiff, v. PEPSICO, INC., et al. Defendants/Third Party Plaintiffs, v. GREGORY JENNINGS, et al. Third Party Defendants

CIVIL ACTION NO. 12-1922

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

APRIL 29, 2014

MEMORANDUM

PRATTER, J.

I. FACTUAL AND PROCEDURAL BACKGROUND¹

Power Restoration International, Inc. ("Power Restoration") sued Pepsico, Inc. ("Pepsico"), Bottling Group, LLC ("Bottling Group"), and Frito-Lay Trading Company (Europe), Gmbh ("Frito-Lay") (collectively, the "PepsiCo Parties"), based on a business relationship that had gone sour. The PepsiCo Parties moved to dismiss Power Restoration's Complaint, and the Court granted the motion in part and denied it in part (Doc. No. 35).

Following subsequent discovery, the PepsiCo Parties brought counterclaims against Power Restoration. (Doc. No. 39.) The PepsiCo Parties alleged that discovery and other case developments revealed that Gregory Jennings, President of Power Restoration, was involved in ascheme to defraud the PepsiCo Parties, and accordingly, on December 20, 2013, the PepsiCo Parties filed a Third Party Complaint (Doc. No. 42) against Mr. Jennings.²

The PepsiCo Parties allege that Mr. Jennings, John Cairo, Robert Fabrizio, and George Mazzoli, a Siemens employee, (collectively "the Power Restoration Founders") formed Power Restoration in August of 2010, specifically in anticipation of harmonic abatement work to be performed for PepsiCo, through Siemens. The PepsiCo Parties allege that the Power Restoration Founders ensured that Power Restoration would be selected as the contractor to implement the harmonic abatement work through an inappropriate relationship with a "rogue" PepsiCo employee, Steven Bertz. The PepsiCo Parties allege that Power Restoration made Mr. Bertz "advisory counsel" to Power Restoration and identified him to potentially share in the company's profits.

The PepsiCo Parties state that they were unaware of the inappropriate relationship between Power Restoration and their employee Mr. Bertz. Additionally, the PepsiCo Parties allege that Mr. Jennings misrepresented to them that Power Restoration was a large and experienced company. Accordingly, the PepsiCo Parties arranged for Power Restoration to audit certain of their facilities. And, if following the audits the PepsiCo Parties decided to purchase Siemens' harmonic abatement system, they would hire Power Restoration as the contractor to install the system. Power Restoration completed audits for the PepsiCo Parties and installed the harmonic abatement system in a few of the PepsiCo Parties' plants. The PepsiCo Parties claim that Power Restoration's work was substandard, and, thus, they ended the relationship. ThePepsiCo Parties contend that at this point Mr. Mazzoli and Mr. Bertz formed their own company without Mr. Jennings.

Based on the above-alleged conduct, the PepsiCo Parties filed the Third Party Complaint against Mr. Jennings for contribution (Count II), fraudulent inducement (Count III), fraud (Count IV), conspiracy to commit fraud (Count V), negligent misrepresentation (Count VI), and aiding and abetting breach of fiduciary duty (Count VII). Mr. Jennings moved to dismiss the Complaint for failure to state a claim. For the following reasons, the Court concludes that Mr. Jennings's Motion is premature and the Court will deny the Motion.

II. LEGAL STANDARD

A Rule 12(b)(6) motion to dismiss tests the sufficiency of a complaint. Although Rule 8 of the Federal Rules of Civil Procedure requires only "a short and plain statement of the claim showing that the pleader is entitled to relief," Fed. R. Civ. P. 8(a)(2), "in order to 'give the defendant fair notice of what the . . . claim is and the grounds upon which it rests,'" Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citation omitted) (alteration in original), the plaintiff must provide "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do," id.

To survive a motion to dismiss, the plaintiff must plead "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Specifically, "[f]actual allegations must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555. The question is not whether the claimant "will ultimately prevail . . . but whether his complaint [is] sufficient to cross the federal court's threshold." Skinner v. Switzer, 131 S. Ct. 1289, 1296 (2011) (citation and internal quotation marks omitted). Thus, assessment of the sufficiency of a complaint is "acontext-dependent exercise" because "[s]ome claims require more factual explication than others to state a plausible claim for relief." W. Penn Allegheny Health Sys., Inc. v. UPMC, 627 F.3d 85, 98 (3d Cir. 2010).

In evaluating the sufficiency of a complaint, the court adheres to certain well-recognized parameters. For one, the court "must consider only those facts alleged in the complaint and accept all of the allegations as true." ALA, Inc. v. CCAIR, Inc., 29 F.3d 855, 859 (3d Cir. 1994); see also Twombly, 550 U.S. at 555 (stating that courts must "assum[e] that all the allegations in the complaint are true (even if doubtful in fact)"); Mayer v. Belichick, 605 F.3d 223, 230 (3d Cir. 2010) ("[A] court must consider only the complaint, exhibits attached to the complaint, matters of public record, as well as undisputedly authentic documents if the complainant's claims are based upon these documents."). The Court also must accept as true all reasonable inferences that may be drawn from the allegations, and view those facts and inferences in the light most favorable to the nonmoving party. See Rocks v. City of Philadelphia, 868 F.2d 644, 645 (3d Cir. 1989); see also Revell v. Port Auth., 598 F.3d 128, 134 (3d Cir. 2010). That admonition does not demand the Court turn its back on reality. The Court "need not accept as true unsupported conclusions and unwarranted inferences," Doug Grant, Inc. v. Greate Bay Casino Corp., 232 F.3d 173, 183-84 (3d Cir. 2000) (citations and internal quotation marks omitted), and "the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Ashcroft, 556 U.S. at 678; see also Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997) (explaining that a court need not accept a plaintiff's "bald assertions" or "legal conclusions" (citations omitted)). Finally, "if a [claim] is vulnerable to 12(b)(6) dismissal, a district court must permit a curative amendment, unless anamendment would be inequitable or futile." Phillips v. County of Allegheny, 515 F.3d 224, 236 (3d Cir. 2008).

III. DISCUSSION

A. Statute of Limitations

Mr. Jennings asserts that each of the PepsiCo Parties' claims against him are barred by the applicable statute of limitations because all of the alleged acts occurred more than two years before the filing of the Third Party Complaint. The PepsiCo Parties contend that their claims are timely because of the discovery rule, the inherent fraud doctrine, and the fraudulent concealment doctrine. The PepsiCo Parties explain that the "statute of limitations was tolled during the time period Jennings purposefully hid the scheme to deceive [them]; and the clock did not begin to run until the [PepsiCo Parties] had a reasonable opportunity to discover this scheme, which opportunity did not arise until discovery commenced in this action." PepsiCo Br. 9. Additionally, the PepsiCo Parties claim that at the motion to dismiss stage, it is inappropriate for the Court to resolve this disputed issue of fact of when the PepsiCo Parties had a reasonable opportunity to discover they had been harmed by Mr. Jennings.

A statute of limitations defense can be used in the context of a Rule 12(b)(6) motion to dismiss only where "the complaint facially shows noncompliance with the limitations period and the affirmative defense clearly appears on the face of the pleading." Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1385, n. 2 (3d Cir. 1994). Additionally, courts are "reluctant to grant motions to dismiss on this basis where the discovery rule applies and it is not readily apparent when a party had a reasonable opportunity to discover that a wrong had been committed against him or her." Bral Corp. v. Johnstown Am. Corp., No. 08-232, 2011 WL 7037122, *5 (W.D. Pa. Dec. 7, 2011). See also DIRECTV, Inc. v. Rodkey, 369 F.Supp. 2d 587, 600 (W.D. Pa.2005) ("[W]hen the Plaintiff first had a reasonable opportunity to discover the Defendant's violation of 18 U.S.C. §§ 2511(a), (c), and (d), presents a genuine issue of material fact which cannot be determined by the Court on the Defendant's Motion to Dismiss, or in the alternative, Motion for Summary Judgment."). Accordingly, because the PepsiCo Parties allege that they were unaware of Mr. Jennings's wrongful actions until discovery in this case brought it to light, it is not clear on the face of the Third Party Complaint that the PepsiCo Parties' claims against Mr. Jennings are barred by the statute of limitations.³

B. Fraudulent Inducement, Fraud, and Negligent Misrepresentation

Mr. Jennings argues that the PepsiCo Parties' claims for fraudulent inducement, fraud, and negligent misrepresentation fail as a matter of law because the Third Party Complaint fails to sufficiently allege the elements required for each claim. However, as the PepsiCo Parties point out, while the body of the Third Party Complaint may lack factual specificity, the Third Party Complaint incorporated the factual allegations contained in the PepsiCo Parties' Counterclaims attached to the Third Party Complaint. See Third Party Complaint ("TPC") ¶ 9 ("The [PepsiCo Parties] refer to and...