Opinion
CIVIL ACTION NO: 99-3765 SECTION: "J" (5).
September 1, 2000.
Before the Court is a Motion to Dismiss Amended and Restated Complaint in Part (Rec. Doc. 7) filed by defendants Metairie Medical Equipment Leasing Corporation, Modern Medical Modalities Corporation, Roger Findlay, Jan Goldberg, Toby Soprano, and Gary Maccia ("Defendants"). Plaintiff, KFC Ventures, L.C.C. ("KFC") opposes the motion. The motion, set for hearing on August 16, 2000, is before the Court on briefs without oral argument. For the reasons stated below, the Court GRANTS Defendants' motion.
I. PROCEDURAL BACKGROUND
On December 16, 1999, KFC filed suit in this Court, alleging that Defendants knowingly made false and material representations in order to induce KFC to purchase a membership interest in Open MRI Imaging Center of Metairie, L.L.C. ("Open MRI"). Among the various charges contained in KFC's complaint were allegations that Defendants had engaged in "unfair competition and unfair trade practices" in violation of the Louisiana Unfair Trade Practices and Consumer Protection Act, La.R.S. 51:1401, et seq. ("LUTPA"). In response, Defendants filed a Motion to Dismiss arguing that KFC had no claim under the LUTPA because (1) the claim had prescribed, (2) KFC lacked standing to assert a LUTPA claim, and (3) the LUTPA did not apply to securities transactions. Defendants' motion was heard on April 12, 2000, without oral argument, and by its minute entry of June 2, 2000 (Rec. Doc. 5), the Court granted Defendants' motion to dismiss KFC's LUTPA claim. In finding for Defendants on the LUTPA issue, the Court stated:
The complaint also alleged securities fraud, fraud, breach of fiduciary duty and gross negligence, breach of contract, detrimental reliance, and breach of the duty of good faith and fair dealing. None of these claims are at issue in the motion currently before the Court.
The Court also dismissed KFC's federal and state security fraud claims for failure to plead them with particularity. Those claims are not at issue in the instant motion.
Finding that KFC is not a consumer or competitor, the Court pretermits defendants' alternative arguments. LUTPA is "limited to consumers and business competitors." The Complaint is devoid of any allegations which suggest that KFC is either a consumer or a competitor to Open MRI. Therefore, the LUTPA claims should be dismissed.
June 2, 2000 Minute Entry, Rec. Doc. 5 (emphasis added) (citations omitted).
On June 19, 2000, KFC filed an Amended and Restated Complaint, once again asserting its LUTPA claim but this time alleging its status as a "business consumer and/or competitor" of Defendants. Rec. Doc. 6, 680. Defendants then filed the instant motion praying that the Court once again dismiss KFC's LUTPA claim.
II. DEFENDANTS' MOTION
Defendants argue that KFC's new allegations as to its status as a "business consumer and/or competitor" are insufficient as a matter of law to give KFC a right of action against Defendants under the LUTPA. Defendants point out that the LUTPA does not apply to "business consumers," and while Defendants do not dispute that they are KFC's competitor in the field of health care services, they point out that this suit did not arise from any business competition between the parties. Accordingly, so say Defendants, KFC has no claim under the LUTPA.
Defendants also argue that the Court should dismiss KFC's LUTPA claim because the Court did not grant KFC leave to reassert the LUTPA claim when it was dismissed the first time. KFC argues that the Conclusion section of the June 2, 2000 minute entry implied that KFC was free to amend its complaint in order to properly allege a claim under the LUTPA. The Court need not address this argument, however, as the matter can be disposed of in Defendants' favor based solely upon questions of law.
In opposition, KFC points to two cases in which Louisiana appellate courts have given the LUTPA a broader interpretation than the one given by this Court in its prior minute entry. Citing Jarrell v. Carter, 577 So.2d 120, 124 (La.App. 1st Cir. 1991), and Capitol House Preservation Co. v. Perryman Consultants. Inc., 725 So.2d 523, 530 (La.App. 1st Cir. 1998), KFC points out that "business consumers" have been given standing under the LUTPA. Furthermore, KFC argues that the alleged unfair trade practices at issue in this case did in fact arise from Defendants and KFC competing in the health care services field.
A. Applicability of LUTPA to a "business consumer"
Louisiana's Unfair Trade Practices and Consumer Protection Law or LUTPA as it is often called, grants a private right of action for the recovery of damages to "any person who suffers any ascertainable loss . . . as a result of the use or employment by another person of an unfair or deceptive method, act, or practice declared unlawful by R.S. 51:1405." La.R.S. 51:1409. A "person" includes a natural person, corporation, or any other legal entity. Id. § 1402(8).
At first blush, the language of the statute seems to convey a right of action to a broad array of potential plaintiffs. However, as KFC points out in its opposition, Louisiana appellate courts have given disparate interpretations to the breadth of the statute — some courts allowing "business consumers" a right of action, see. e.g., Jarrell v. Carter, 577 So.2d 120, 124 (La.App. 1st Cir. 1991); Capitol House Preservation Co. v. Perryman Consultants, Inc., 725 So.2d 523, 530 (La.App. 1st Cir. 1998), and others precluding such an action, see, e.g., National Gypsum Co. v. Ace Wholesale, Inc., 738 So.2d 128 (La.App. 5th Cir. 1999); Thibaut v. Thibaut, 607 So.2d 587, 607 (La.App. 1st Cir. 1992). As of this time, the Louisiana Supreme Court has not considered the issue.
Nevertheless, notwithstanding the disparate treatment accorded the LUTPA in the state courts, the federal courts in this circuit have been consistent in denying a right of action to "business consumers." See, e.g., Gardes Directional Drilling v. U.S. Turnkey Exploration Co., 98 F.3d 860, 868 (5th Cir. 1996) Delta Truck Tractor v. J.J. Case Co., 975 F.2d 1192 (5th Cir. 1992); Orthopedic Sports Injury Clinic v. Wang Laboratories, Inc., 922 F.2d 220 (5th Cir. 1991); Towery Publishing v. Community Communications, 1997 WL 204920 (E.D. La.); Hamilton v. Business Partners, Inc., 938 F. Supp. 370 (E.D. La. 1996); Surface Preoaration Coating Enters., Inc. v. Martin Marietta Manned Space Sys., 1992 WL 193478 (E.D. La.), aff'd, 1 F.3d 1236 (5th Cir. 1993)
In the Wang case, a medical clinic attempted to pursue a LUTPA claim against a computer retailer. In holding that the clinic was not protected by the LUTPA, the Fifth Circuit held that the act only applied to consumer transactions, "the subject of which transaction is primarily intended for personal, family, orhousehold use." Wang, 922 F.2d at 226 (quoting La.R.S. 51:1402 (3)) (emphasis added). Until such time as the Fifth Circuit changes its interpretation or the state's highest court decides the issue, this Court is bound by the Wang decision. Given then that the subject of the transaction at issue in this case did not pertain to anything even remotely related to personal, family, or household use, KFC has no claim under the LUTPA.
Absent the Wang decision, the Court would be inclined to agree with Judge Berrigan's excellent analysis in Hamilton which concludes that the appellate courts in Louisiana have often permitted LUTPA claims by so-called "business consumers." 938 F. Supp. at 375.
B. KFC and Defendants as competitors
It is undisputed that the LUTPA gives a right of action to a defendant's business competitors. As noted above, KFC's amended complaint alleges, and Defendants do not dispute, that the parties are in fact competitors in the health services industry. Nevertheless, KFC cites no authority to indicate that mere status as a competitor is sufficient to bring a party within the scope of the LUTPA when the claims asserted do not arise from business competition between the parties.
In its opposition memorandum, KFC states, in a conclusory fashion, that the unfair trade practices at issue did in fact arise from the parties competing in the health care services field. Notwithstanding this statement in opposition, the Court finds that the facts as alleged do not support such a finding. To the contrary, this dispute arose out the parties' efforts to join together as members of Open MRI — a single business entity. Accordingly,
IT IS ORDERED that Defendants' Motion to Dismiss Amended and Restated Complaint in Part should be and is hereby GRANTED. Plaintiff's LUTPA claims are DISMISSED WITH PREJUDICE.