Dc2ny, Inc. v. Academy Bus, LLC ( 2020 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
DC2NY, INC., :
:
Plaintiff, : Civil Action No.: 18-2127 (RC)
:
v. : Re Document No.: 20
:
ACADEMY EXPRESS, LLC, :
:
Defendant. :
MEMORANDUM OPINION
GRANTING IN PART AND DENYING IN PART
PLAINTIFF’S MOTION FOR LEAVE TO FILE SECOND AMENDED COMPLAINT
DC2NY, Inc., which operates under the trade name BestBus, brought this lawsuit against
Academy Express, LLC (“Academy Bus” or “Academy”), asserting contract claims, tortious
interference claims, and a claim under the Racketeer Influenced and Corrupt Organizations Act
(“RICO”), 18 U.S.C. §§ 1961–68. The Court dismissed BestBus’s initial Complaint, DC2NY,
Inc. v. Academy Bus, LLC, No. 18-cv-2127 (“Mot. Dismiss Op.”), 2019 WL 3779571 (D.D.C.
Aug. 12, 2019), ECF No. 10, and, later, granted in part and denied in part BestBus’s motion to
file an Amended Complaint, DC2NY, Inc. v. Academy Bus, LLC, (“Mot. Amend. Op.”), 2020
WL 1536219 (D.D.C. March 31, 2020), ECF No. 18. Now, before having actually filed the
amended complaint that the Court ruled it could file, BestBus moves to amend its complaint for a
second time to add facts establishing diversity jurisdiction and details supporting a claim that
Academy violated the parties’ Transportation Service Agreement (“TSA”) by supplying BestBus
with buses that allegedly had numerous quality deficiencies and that were of a lower quality than
buses Academy supplied to a competitor, Vamoose Bus (“Vamoose”). 1 BestBus’s motion to
amend is granted in part and denied in part.
I. BACKGROUND
The Court provided somewhat more detailed factual summaries of this case in its two
earlier memorandum opinions. See Mot. Dismiss Op. at *1–4; see also Mot. Amend. Op. at *1–
5. The Court reiterates many of those facts here and emphasizes additional facts raised for the
first time in the Second Amended Complaint.
BestBus is a D.C. corporation that provides express bus service in the mid-Atlantic area,
including between the District of Columbia and New York City. Second Am. Compl. ¶ 1, ECF
No. 22-1. In 2013, BestBus entered into the TSA with Academy, a New Jersey LLC. Id. ¶ 2.
The TSA stated that Academy would be “BestBus’s exclusive provider of buses and drivers . . .
for specified routes in the Mid-Atlantic corridor . . . .” Id. It required Academy to provide bus
transportation services and drivers to BestBus, id. ¶¶ 25–28, pay a service rebate to BestBus, id.¶¶ 53–55, and refrain from competing with BestBus on existing and future bus routes, id. ¶ 2.
In 2014, Academy purchased Go Bus, a bus company based in New York that “provided
buses to Vamoose, a direct competitor of BestBus in the D.C.-New York market.” Id. ¶ 4.
Academy began providing buses to Vamoose on the same D.C.-New York route operated by
BestBus. Id. ¶ 5. Although BestBus complained that Academy’s business with Vamoose
violated the TSA, Academy executives stated that their business with Vamoose was temporary
and that they were required to supply buses to Vamoose under a contract with Go Bus. Id. ¶ 33.
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BestBus originally also sought to allege additional facts supporting a claim that
Academy violated the TSA by failing to provide BestBus with experienced and professional
drivers, Pl.’s Second Mot. Amend. ¶ 3, ECF No. 20, but BestBus has since withdrawn its attempt
to add those facts, Pl.’s Reply ¶ 1, ECF No. 22. The operative proposed Second Amended
Complaint is ECF No. 22-1.
2
BestBus alleges that while Academy provided Vamoose with “newer models and better
buses than the ones Academy supplied to BestBus for the same routes . . . Academy deliberately
supplied BestBus with older buses, not the top-of-the-line buses for which BestBus had
contracted.” 2 Id. ¶¶ 32–34. BestBus received complaints from passengers about breakdowns
causing service delays, lost luggage, inoperative WiFi, faulty electrical outlets, and unusable
restrooms. Id. ¶ 34. As a result, BestBus suffered reputational harm and lost profits. Id.BestBus complained to Academy about the quality of buses that Academy supplied to BestBus
and requested that BestBus be provided with newer buses. Id. ¶ 35. While Academy assured
BestBus that the quality issues would be resolved, id. ¶¶ 35, 37, BestBus asserts that “Academy
took no steps to change its behavior and intentionally continued to supply BestBus with older
buses . . . ,” id. ¶ 35. After continuing disagreements between BestBus and Academy—including
disagreements about bus quality, id. ¶ 37, improper signage displaying signs for Vamoose on
BestBus buses, id. ¶ 38, Academy’s professed support for BestBus’s plan to establish a New
York-Boston route while Academy was also attempting to acquire a New York-Boston route
from Go Bus, id. ¶¶ 40–45, and Academy’s failure to pay service rebates under the TSA, id. ¶¶
53–55—BestBus terminated the TSA in 2016, id. ¶ 47. This lawsuit followed.
BestBus asserted six claims in its original Complaint: (1) one civil RICO violation; (2)
breach of contract claims regarding Academy’s acquisition of a New York-Boston Line operated
by Go Bus, Academy’s provision of buses to Vamoose, Academy’s refusal to pay service rebates
2
BestBus’s First Amended Complaint stated that “Academy promised to provide top-of-
the-line buses to BestBus . . . .” See Am. Compl. ¶ 2, ECF No. 11. BestBus further emphasizes
this point in the Second Amended Complaint, see Second Am. Compl. ¶ 59 (asserting that
Academy’s failure to provide BestBus with “top-of-the-line” buses is a violation of the TSA);
see also Pl.’s Reply ¶ 2 (asserting that the TSA required Academy to supply “top-of-the-line”
buses to BestBus).
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in 2016 and 2017, and Academy’s provision of allegedly low quality buses and unprofessional
drivers to BestBus; (3) a claim for breach of the duty of good faith and fair dealing; (4) a claim
for tortious interference with business relations, (5) a claim for tortious interference with
prospective business relations, and (6) a claim for conversion. Mot. Dismiss Op. at *3. The
Court dismissed BestBus’s contract claims for failing to properly name “Academy Express,
LLC” as the defendant, id. at *5–6, tortious interference claims for failure to state a claim, id. at
*8–9, and RICO and conversion claims, id. at *5, 9.
On August 27, 2019, BestBus sought leave to amend its complaint. Pl.’s Mot. Amend.,
ECF No. 11. In the First Amended Complaint, BestBus dropped the RICO and conversion
claims, named Academy Express, LLC as the proper defendant, and alleged additional facts to
support its tortious interference claims. Mot. Amend. Op. at *5 (citing Am. Compl.). On March
31, 2020, the Court denied as futile BestBus’s proposed amendment of the tortious interference
claims and the contract claim regarding driver professionalism, id. at *10, 16, and granted
BestBus’s proposed amendment of its remaining contract claims, including the claim regarding
bus quality, id. at *1. However, the Court explained that while BestBus “has a viable claim that
Academy was contractually obligated not to provide Vamoose with any buses on competing
routes, . . . BestBus ha[d] not pointed to any provision of the TSA that obligated Academy to
provide BestBus with buses of any particular relative level of quality.” Id. at *13. Thus,
BestBus only had a claim regarding the absolute quality of the buses it received from Academy.
Id. at *13–14. Finally, the Court also found that BestBus had failed to establish diversity
jurisdiction and instructed BestBus to add only necessary jurisdictional facts to its Complaint.
Id. at *7 (“Leave to add facts to the complaint is granted only for the limited purpose of
clarifying this Court’s jurisdiction . . . .”).
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BestBus now seeks leave to amend for a second time. Pl.’s Second Mot. Amend. Here,
BestBus seeks to add facts establishing diversity jurisdiction, see Second Am. Compl. ¶¶ 8–11,
as well as facts supporting a claim that Academy violated the TSA by failing to supply BestBus
with “top-of-the-line” buses and instead supplying BestBus with buses that had numerous quality
issues, id. ¶ 34, and buses that were older and of a lower quality than those Academy supplied to
Vamoose, id. ¶ 59. BestBus’s Second Amended Complaint adds details about the approximate
dates on which various bus quality issues arose. See id. ¶ 34. For example:
On or about July 9, 2015, August 3, 2015, August 17, 2015, January 16. 2016, and
April 28, 2016, passengers and BestBus staff complained about gas odors,
bathroom odors, and inoperative bathrooms on BestBus buses[.]
Id. While Academy does not oppose amendment of the complaint to add jurisdictional facts
(which the Court has already approved), see Def.’s Op. at 2, ECF No. 21, Academy does oppose
amendment to the extent that BestBus continues to assert that Academy “was contractually
required to provide newer and/or ‘top-of-the-line’ buses” to BestBus, id. at 3–4. The motion is
now ripe for decision.
II. LEGAL STANDARD
A plaintiff may amend a complaint “once as a matter of course” within 21 days of serving
it or within 21 days of the filing of a responsive pleading. Fed. R. Civ. P. 15(a)(1). A plaintiff
may only make other amendments with the written consent of the opposing party—which
Academy has denied to the extent that BestBus seeks to add facts beyond those necessary to
establish jurisdiction—or with the court’s leave. Fed. R. Civ. P. 15(a)(2). Courts should “freely
give leave when justice so requires.” Id. Courts have discretion to grant or deny a plaintiff’s
motion to amend, Firestone v. Firestone, 76 F.3d 1205, 1208 (D.C. Cir. 1996), and they may
deny leave to amend under certain circumstances such as “undue delay, bad faith or dilatory
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motive on the part of the movant, repeated failure to cure deficiencies by amendments previously
allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, [or]
futility of amendment.” Foman v. Davis, 371 U.S. 178, 182 (1962).
“Courts may deny a motion to amend a complaint as futile . . . if the proposed claim
would not survive a motion to dismiss.” James Madison Ltd. v. Ludwig, 82 F.3d 1085, 1099
(D.C. Cir. 1996) (citing Foman, 371 U.S. at 181–82). To determine whether a proposed
amendment would be futile, courts apply a standard similar to that applied in analyzing a motion
to dismiss under Federal Rule of Civil Procedure 12(b)(6). Id. Accordingly, a proposed
amended 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) (quoting Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Under this standard, “[t]hreadbare recitals of
the elements of a cause of action, supported by mere conclusory statements” are insufficient to
survive a motion to dismiss. Id. A court must accept factual allegations in the complaint as true
and draw all reasonable inferences in the plaintiff’s favor. Twombly, 550 U.S. at 555. However,
a court need not accept a plaintiff’s legal conclusions as true, see Iqbal, 556 U.S. at 678, nor
must a court accept as true legal conclusions that are couched as factual allegations, see
Twombly, 550 U.S. at 555. These standards for evaluating the sufficiency of pleadings still apply
in diversity cases where the governing substantive law is that of a state or the District of
Columbia. See Abbas v. Foreign Policy Grp., LLC, 783 F.3d 1328, 1333–34 (D.C. Cir. 2015).
III. ANALYSIS
BestBus has yet to file the amended complaint that the Court permitted. Now it seeks
leave to amend for a second time. Pl.’s Second Mot. Amend. In granting Academy leave to file
a sur-reply in response to BestBus’s previous motion, the Court observed that opposing
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amendment of the complaint was Academy’s second chance at “argu[ing] for dismissal of the
case on more or less the same grounds, and that [Academy] w[ould] get a third opportunity when
the Amended Complaint is filed.” Mot. Amend. Op. at *5 n.5. By filing a second Motion for
Leave to Amend directly on the heels of the Court’s resolution of its previous motion, BestBus
has dragged out this preliminary round of the litigation still further. The Court is being asked to
evaluate for a third time whether BestBus has stated certain claims, and there is still every reason
to think that Academy will move to dismiss once an amended complaint is actually filed. For
now, BestBus seeks to add facts establishing diversity jurisdiction, see Second Am. Compl. ¶¶
8–11, and facts supporting a claim that Academy violated the TSA by supplying BestBus with
buses that had numerous quality deficiencies, see id. ¶ 34, and that were of a lower quality than
buses Academy supplied to Vamoose, see id. ¶ 59.
A. Diversity Jurisdiction
The Court’s March 31, 2020, memorandum opinion concluded that BestBus’s First
Amended Complaint lacked sufficient factual details to establish diversity jurisdiction. Mot.
Amend. Op. at *6–7. Accordingly, the Court granted “leave for BestBus to add the necessary
jurisdictional facts [and only those jurisdictional facts] before filing an amended complaint.” Id.at 13–14. BestBus now seeks to cure this deficiency by adding facts about both parties’ principal
places of business as well as the citizenship of Academy’s members in BestBus’s Second
Amended Complaint. Second Am. Compl. ¶¶ 8–11. Academy does not oppose the addition of
these facts, see Def.’s Op. at 2, which the Court’s prior order expressly contemplated would be
added. The Court grants BestBus leave to add these jurisdictional facts.
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B. Bus Quality
BestBus’s First Amended Complaint alleged that “[b]y providing superior buses to
Vamoose, a direct competitor of BestBus in the D.C.-New York market for express bus service,
and by supplying BestBus with older buses that suffered breakdowns, and were otherwise
defective, Academy violated Paragraphs 1, 2, and 3 of the TSA.” Am. Compl. ¶ 62. The Court
held that BestBus had a plausible claim that Academy violated the TSA by providing buses to
Vamoose, but that BestBus did not have a plausible claim that the TSA was independently
violated by Academy’s alleged provision of superior buses to Vamoose. See Mot. Amend. Op.
at *13–14. The Court concluded that the TSA made no reference to bus quality anywhere other
than Paragraphs 7 and 11, and that these did nothing more than incorporate applicable federal
regulations that merely set “a floor for quality and compliance.” Id. at *13. Thus, “nothing in
the regulations [or the TSA] plausibly require” Academy to supply BestBus with buses of the
same relative quality or age as those supplied to Vamoose. Id. The TSA only required Academy
to supply buses that met the absolute quality threshold outlined in the regulations. Id. at *13–14.
BestBus’s Second Amended Complaint still alleges that “[b]y providing buses to
Vamoose . . . and by not supplying BestBus with top-of-the-line buses, but rather with older
buses that suffered breakdowns and were otherwise defective, Academy violated Paragraphs 1,
2, and 3 of the TSA.” Second Am. Compl. ¶ 59. BestBus argues that the Court’s March 2020
opinion found only that the regulations do not require Academy to supply BestBus with buses of
any relative quality level, but that the Court failed to consider “whether any other provisions of
the TSA could be read to include such a requirement.” Pl.’s Reply at 2. This misreads the
Court’s opinion. The Court evaluated the TSA and concluded that the TSA said nothing about
bus quality beyond its incorporation of the regulations. Mot. Amend. Op. at *13. Thus, in
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concluding that nothing in the regulations plausibly requires buses of any relative quality level,
the Court was also stating that nothing in the TSA did so either.
Paragraph 59 of BestBus’s Second Amended Complaint continues to assert a claim for
relative bus quality by stating that it received “older” buses that are not “top-of-the-line.”
Second Am. Compl. ¶ 59. Neither the TSA nor the regulations plausibly requires Academy to
provide BestBus with buses that are of the same age or quality as those provided to Vamoose.
See Mot. Amend Op. at *13. Again, to be clear, BestBus has a viable claim that Academy was
obligated not to provide any buses to Vamoose, but it has no independent claim that Academy
was obligated not to provide better buses to Vamoose. Id. at *13–14. Therefore, to the extent
that BestBus seeks to add facts establishing a deficiency in relative bus quality, the proposed
amendment is futile. When it comes to bus quality, BestBus only has a claim about absolute bus
quality based on quality deficiencies that fail to meet the quality standard required under the
regulations. Id. at *13–14.
IV. CONCLUSION
For the foregoing reasons, BestBus’s Motion for Leave to File a Second Amended
Complaint is GRANTED IN PART AND DENIED IN PART. An order consistent with this
Memorandum Opinion is separately and contemporaneously issued.
Dated: September 2, 2020 RUDOLPH CONTRERAS
United States District Judge
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