United States District Court, District of Columbia
RE DOCUMENT NO. 6 MEMORANDUM OPINION GRANTING
DEFENDANT'S MOTION TO DISMISS
Rudolph Contreras United States District Judge.
Inc., which does business under the trade name BestBus, filed
this lawsuit against Academy Bus, LLC, asserting a claim
under the Racketeer Influenced and Corrupt Organizations Act
(“RICO”), 18 U.S.C. §§ 1961-68, as well
as contract and tort claims. As the Court will explain below,
though, BestBus's complaint is deficient in a number of
ways: the complaint fails to allege the pattern of activity
required for a RICO claim; its contract claims are asserted
against the wrong party; its tortious interference claims do
not identify specific business opportunities that were
impeded; and its conversion claim merely alleges the failure
to repay a debt. Because none of BestBus's claims survive
these defects, the Court grants Academy Bus's motion to
is a D.C. corporation that provides express bus services to a
number of locations in the mid-Atlantic area between D.C. and
New York City. See Compl. ¶ 1, ECF No. 1.
BestBus does not, however, own its own buses or employ its
own drivers, so until 2011, it used a Virginia company named
New World Tours to provide buses and drivers. Id.
¶ 15. In 2011, New World Tours was bought by Academy
Bus, a limited liability company organized under the laws of
New Jersey. Id. ¶¶ 9, 16. In the aftermath
of that sale, Academy Bus expressed interest in acquiring
BestBus, and the two companies were in negotiations for about
a year. Id. ¶ 17. During those discussions,
BestBus provided Academy Bus with certain “confidential
proprietary financial information” and the parties
entered into a “Confidential and Non-Disclosure
Agreement” (“NDA”). Id. ¶ 18.
the parties were ultimately unable to reach a sale agreement,
BestBus opted to pursue an alternative plan. Id.
¶ 19. In June 2013, it negotiated an exclusivity
arrangement with Academy Bus that was memorialized in a
Transportation Service Agreement (“TSA”).
Id. ¶¶ 2, 20. As a formal matter, Academy
Bus, LLC was not a party to that Agreement, though.
See Def.'s Mot. to Dismiss, Ex. 1 at 1-6, ECF
No. 6-2. The contracting parties were instead BestBus (using
its legal name, DC2NY, Inc.) and Academy Express LLC, which
the Agreement referred to simply as “Academy, ”
see id., and which BestBus now claims is merely an
alter ego of Academy Bus, see Pl.'s Opp'n to
Def.'s Mot. to Dismiss at 5, ECF No. 7.
stated that BestBus “desire[d] to utilize Academy as
[its] sole and exclusive transportation provider for motor
transportation services between the points, places and
locations described in Schedule A” of the Agreement,
and that “Academy wishe[d] to provide such services
exclusively to” BestBus. Def.'s Mot. to Dismiss,
Ex. 1 at 1; Compl. ¶ 22. Schedule A in turn listed six
different routes, which together involved eight different
locations: Vienna, Virginia; Springfield, Virginia; DuPont
Circle in D.C.; Union Station in D.C.; Wilmington, Delaware;
Rehoboth Beach, Delaware; Dewey Beach, Delaware; and Penn
Station in New York City. Def.'s Mot. to Dismiss, Ex. 1
further provided that “Academy . . . shall not operate
any other ‘line run' motor coach business in
competition with any existing or future [BestBus] line run
during the term of th[e] Agreement, ” which was five
years. Compl. ¶¶ 21, 24; see also
Def's Mot. to Dismiss, Ex. 1 at 1. The Agreement also
required “Academy . . . to provide professional,
experienced and qualified licensed drivers consistent with
federal motor carrier regulations” and to “direct
its driver employees to adhere to [a] level of
professionalism, courtesy and respect in dealings with the
public.” Def.'s Mot. to Dismiss, Ex. 1 at 2. And
the Agreement stated that “Academy [would] pay
[BestBus]” an annual “service rebate, ” to
be calculated based on “the total annual revenue . . .
paid to Academy by [BestBus] in connection with” the
Agreement. Id. at 7-8; see also Id. at 2;
Compl. ¶ 26. Either party could terminate the TSA
“for any reason upon 90 days written Notice to the
other Party.” Def.'s Mot. to Dismiss, Ex. 1 at 5.
Any disputes, the Agreement stated, would be governed by New
Jersey law. Id.
to BestBus, the execution of the TSA was the first step in
Academy Bus's “plan to drive BestBus out of
business and enter the D.C.-New York market for express bus
services.” Compl. ¶ 19. In furtherance of that
goal, Academy Bus did not make the vast majority of the
rebate payments that it owed under the TSA. See Id.
¶ 57-59. It also refused to repay BestBus a $40, 000
loan obligation it had inherited through its purchase of New
World Tours. See Id. ¶¶ 60-61. Eventually,
Academy Bus informed BestBus that it considered the $40, 000
a security deposit that it would hold “against
potential default by BestBus in future payments” under
the TSA. Id. ¶ 61.
second step of Academy Bus's plan allegedly took place in
2014, when it purchased Go Bus, a New York company that
“provided buses to Vamoose Bus, a direct competitor of
BestBus in the D.C.-New York market.” Compl.
¶¶ 31-32. BestBus claims that Academy Bus
“used the proprietary information it had obtained from
BestBus” during the parties' prior purchase
negotiations in order “to facilitate its acquisition
and subsequent operation of Go Bus, ” in violation of
the parties' NDA. Id. ¶ 45. Then following
its purchase of Go Bus, Academy Bus “used Go Bus's
existing relationship with Vamoose to begin supplying buses
to Vamoose, on the same D.C.-New York route for which it was
supplying buses to BestBus.” Id. ¶ 32.
And Academy Bus provided Vamoose with “newer models and
better buses than the ones [it] supplied to BestBus for the
same routes.” Id. Limited to the older buses,
“BestBus suffered . . . numerous bus breakdowns and
passenger service problems”-far more “than it
would have experienced had it received [the] newer bus
models.” Id. ¶ 34.
problems were exacerbated by the fact that the drivers whom
Academy Bus assigned to BestBus routes “regularly
failed to exhibit . . . professionalism, decorum, courtesy,
and respect.” Id. ¶ 39. “On many
occasions, the drivers did not know the routes to which they
were assigned.” Id. A number of them
“were surly and uncommunicative with passengers.”
Id. And “[s]ome . . . did not clean their
buses between runs” or “help passengers load
their luggage.” Id.
would expect, these problems with the buses and drivers
“diminish[ed] BestBus's public reputation.”
Id. ¶ 34. The company had to “regularly
reimburse passengers who had . . . complaints, ”
which led to increased business losses. Id. BestBus
complained to Academy Bus about these issues multiple times,
and Academy Bus repeatedly indicated that it would make
improvements. See Id. ¶¶ 38, 40. Such
promises ultimately proved empty, though. See id.
all of this was going on, BestBus was also trying to expand
into the New York to Boston market. See Id. ¶
43. And “BestBus made clear to Academy [Bus] that it
needed and expected [Academy Bus's] continued support for
[this] venture, given [Academy Bus's] obligations under
the TSA.” Id. In response, Academy Bus
“officials represented that they would help
BestBus.” Id. But “[t]hrough emails,
telephone calls, and meetings with BestBus executives,
” those officials “deliberately misled BestBus
into believing that [Academy Bus] was doing everything it
could to help BestBus obtain a New York-Boston route.”
Id. ¶ 44. In reality, Academy Bus was focused
on its recent purchase of Go Bus, which already had its own
established New York to Boston route. Id. ¶ 45.
Academy Bus took over that route, thereby “positioning
itself as a competitor in the very market” that BestBus
was seeking to enter. Id. ¶ 47.
BestBus decided to terminate the TSA, consistent with the
Agreement's ninety-day notice provision. See Id.
¶¶ 50-51. During the ensuing ninety-day period, Go
Bus announced that it would begin servicing its own D.C. to
New York routes, see Id. ¶ 52, and Academy Bus
allegedly put “Go Bus flyers on the seats of the buses
that it provided for BestBus, advertising its own
[forthcoming] service at a lower rate than the rate being
offered by BestBus.” Id. ¶ 53. Then after
the ninety-day period passed, BestBus negotiated an agreement
with Panorama Bus Tours for the supply of buses on
BestBus's D.C. to New York route. Id. ¶ 56.
But “[o]n the eve of finalizing this arrangement,
” an Academy Bus representative called Panorama with a
threat: “if Panorama did business with BestBus, ”
the representative said, Panorama “would never do
business with Academy [Bus] again.” Id.
“Panorama suddenly hesitated and stopped returning
BestBus's calls and emails.” Id.
lawsuit, which asserts six claims, followed. BestBus's
first claim is a civil RICO claim premised on the allegation
that Academy Bus committed multiple acts of wire fraud in
furtherance of its scheme to drive BestBus out of business.
See Id. ¶¶ 65-75. Its next two claims are
contract claims: One alleges breaches of a number of the
TSA's provisions. See Id. ¶¶ 76- 79.
The other alleges that Academy Bus violated its contractual
duty of good faith and fair dealing. See Id.
¶¶ 96-99. The final three claims are tort claims.
The first alleges tortious inference with business relations,
the second alleges tortious interference with
prospective business relations, and the third
alleges that Academy Bus unlawfully converted the proceeds of
the $40, 000 loan it inherited from New World Tours. See
Id. ¶¶ 80-95. BestBus ultimately deducted the
$40, 000 principal from the final payment it made to Academy
Bus when it terminated the TSA, but BestBus argues that it is
still entitled to interest that accrued during the time that
the loan went unpaid. Id. ¶¶ 63-64.
Academy Bus responded to BestBus's complaint by filing a
motion to dismiss for failure to state a claim. That motion
is now ripe for disposition.