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Inc. v. Academy Bus, LLC

United States District Court, District of Columbia

August 12, 2019

DC2NY, INC., Plaintiff,
v.
ACADEMY BUS, LLC, Defendant.

          RE DOCUMENT NO. 6 MEMORANDUM OPINION GRANTING DEFENDANT'S MOTION TO DISMISS

          Rudolph Contreras United States District Judge.

         I. INTRODUCTION

         DC2NY, 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 dismiss.

         II. BACKGROUND[1]

         BestBus 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.

         When 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.

         The TSA 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 at 7.

         The TSA 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.

         According 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.

         The 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.

         These 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.

         As one 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.

         While 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.

         Eventually, 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.

         This 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.

         III. ...


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