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Distribuidora Industrial De Calzado S.A. v. Brooks Sports, Inc.

United States District Court, W.D. Washington, Seattle

June 6, 2019

DISTRIBUIDORA INDUSTRIAL DE CALZADO S.A., d/b/a BROOKS RUNNING COSTA RICA, Plaintiff,
v.
BROOKS SPORTS INC., et al., Defendants.

          ORDER

          JOHN C. COUGHENOUR, UNITED STATES DISTRICT JUDGE.

         This matter comes before the Court on Plaintiff's motion to dismiss Defendant Brooks Sports Inc.'s counterclaim (Dkt. No. 36). Having thoroughly considered the parties' briefing and the relevant record, the Court finds oral argument unnecessary and hereby DENIES the motion for the reasons explained herein.

         I. BACKGROUND

         Plaintiff and Defendant entered into a Distributor Agreement (the “Agreement”) in 2015. (See Dkt. Nos. 33 at 4, 34 at 3.) The Agreement awarded Plaintiff a five-year term as Defendant's exclusive distributor in Costa Rica and Guatemala. (Dkt. No. 33 at 30-32.) On June 30, 2016, Defendant expanded Plaintiff's exclusive distribution rights to include Nicaragua, El Salvador, Honduras, Belize, and Ecuador (collectively with Costa Rica and Guatemala, “Plaintiff's region”). (Id. at 46.) Plaintiff claims it operated four “concept stores” to sell Defendant's products; Defendant denies this. (Id. at 3; see also Dkt. No. 34 at 2-3.)

         On June 20, 2017, Plaintiff informed Defendant that Plaintiff's competitor Harari, Inc. was obtaining Defendant's products from a different distributor and selling them in Guatemala in violation of Plaintiff's exclusive distribution rights. (See Dkt. No. 33 at 6.) In 2017, Defendant's Latin America and Asia Territory Manager Justin Dempsey-Chiam informed Plaintiff that Defendant was considering granting Harari the distribution rights for Panama and Colombia. (Id.; Dkt. No. 34 at 4.) Plaintiff states that it informed Dempsey-Chiam of its reluctance to do business with Harari because of Harari's history of dishonesty and the likely harms to Plaintiff's business. (See Dkt. No. 33 at 7.) In November 2017, Defendant announced its decision to make Harari the new exclusive distributor for Panama, the Caribbean, and Colombia. (Id. at 8.) Defendant later terminated the Agreement with Plaintiff and made Harari its exclusive distributor in Plaintiff's region. (Id. at 11; Dkt. No. 34 at 7.)

         The Agreement included an annual Minimum Purchase Requirement (“MPR”), defined as “a target for the purchase of Products by [Plaintiff] under this Agreement.” (Id. at 31.) “Products” is defined as “all [Defendant] Brooks-branded products, including footwear, apparel, and accessories.” (Id.) The Agreement quantifies the MPR in “pairs.” (See Id. at 30.)

         On June 20, 2017, Plaintiff sent Defendant an order for 3, 018 pairs of Brooks shoes to be delivered in October and November 2017 (the “Order”). (Id. at 8; Dkt. No. 34 at 5.) Over the course of several months, Defendant delayed the Order on five separate occasions, in violation of the Agreement. (Dkt. No. 33 at 8-10.) With the Order still not fulfilled, on January 3, 2018, Defendant terminated Plaintiff for failure to meet its 2017 MPR. (Id. at 48-49.)

         Plaintiff sued Defendant for breach of contract and breach of implied covenant of good faith and fair dealing. Plaintiff alleges that it met the 2017 MPR and that Defendant failed to comply with the Agreement. (Dkt. No. 33 at 20-26, 31-32, 38-39.) Defendant counterclaimed for breach of contract. (Dkt. No. 34 at 19-20.) Defendant alleges that after it terminated the Agreement, Plaintiff continued to promote, market, and sell Defendant's products beyond the six-month grace period allowed under the Agreement. (Id. at 19.) Defendant also claims that Plaintiff continued to use Defendant's trademarks, logos, and trade dress in stores and on social media, and failed to “return or destroy” promotional materials. (Id.) Defendant asserts that Plaintiff conducted the breach “in its stores and on social media.” (Id.)

         Plaintiff moves to dismiss Defendant's counterclaim because it does not identify: (1) Plaintiff's stores where alleged breach occurred; (2) the promotional materials allegedly used by Plaintiff in committing the breach; and (3) the form of Defendant's damages and how the Plaintiff caused such damages. (Dkt. No. 36.)

         II. DISCUSSION

         A. Motion to Dismiss Legal Standard

         A claim for relief must include “a short and plain statement of the claim showing that the pleader is entitled to relief; and . . . a demand for the relief sought . . . .” Fed.R.Civ.P. 8(a). A short and plain statement need not include factual minutiae so long as the statement puts a party on fair notice of the claim and its grounds. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).

         A party may move to dismiss for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). In reviewing a motion to dismiss, the Court accepts all factual allegations as true and views them in the light most favorable to the nonmoving party. Vasquez v. L.A. County, 487 F.3d 1246, 1249 (9th Cir. 2007). To survive a motion to dismiss, a claim must be “plausible” in that the facts pled “allow[] the court to draw the reasonable inference that the [accused party] is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The claim must go beyond a conclusory and “formulaic recitation of the elements of a cause of action.” Twombly, 550 U.S. at 555. A claim cannot be purely speculative, but “may proceed even if . . . recovery is very remote and unlikely.” Id. at 556-57. Determining plausibility is “context-specific” and “requires the reviewing court to draw on its judicial experience and common sense.” Iqbal, 556 U.S. at 679. The plausibility requirement serves to “minim[ize] expenditure of time and money by the parties and the court.” Twombly, 550 U.S. at 558.

         B. Defendant's Breach of ...


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