Opinion
No. 1:02CV00879
February 24, 2003
RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
This matter is before the court on Defendants' motion to dismiss Plaintiffs claim for a violation of the North Carolina Sales Representatives Commissions Act [motion 6-1]. Since there has been no consent, the court must deal with the motion by way of a recommended disposition. For the reasons discussed herein, the court will recommend that Plaintiffs claim be dismissed.
On September 5, 2002, Plaintiff filed a Complaint against Defendants Paugh Surgical, Inc. and Michael Paugh in Guilford County District Court. On October 11, 2002, Defendants removed the case to this court based on diversity jurisdiction. On November 12, 2002, Defendants filed their Answer and moved to dismiss Plaintiffs claim for a violation of the North Carolina Sales Representatives Commissions Act, N.C. GEN. STAT. §§ 66-190 to -199 (1991). Plaintiff has responded in opposition to the motion, and the matter is ripe for disposition.
FACTS
Plaintiff is a resident of Guilford County. Defendant Paugh Surgical, Inc. ("PSI") is a corporation with its principal place of business in Virginia, and Defendant Michael D. Paugh is the President of PSI. In October 2000, PSI hired Plaintiff to sell PSI's medical equipment throughout a defined territory. As a PSI salesman, Plaintiffs compensation was based wholly on his sales commissions. By letter dated March 19, 2002, Defendant Paugh informed Plaintiff that his employment with PSI would terminate on March 22, 2002, if Plaintiff did not resign sooner. In the letter, Paugh also directed Plaintiff to return all PSI property in Plaintiff's possession. Plaintiff did not return the property.
The Complaint does not specify Plaintiffs geographical territory or whether Plaintiff was employed in North Carolina.
Plaintiff subsequently filed a Complaint against Defendants, seeking recovery of commissions allegedly owed on completed sales as well as expenses incurred by Plaintiff for sales that were pending when he was fired. Plaintiff also seeks a declaratory judgment from the court as to what items of property Defendants are entitled to have returned to them. Defendant PSI has counterclaimed for conversion and trespass to chattels for Plaintiffs failure to return PSI's property.
DISCUSSION
In ruling on a motion to dismiss for failure to state a claim, it must be recalled that the purpose of a 12(b)(6) motion is to test the sufficiency of the complaint, not to decide the merits of the action. Schatz v. Rosenberg, 943 F.2d 485, 489 (4th Cir. 1991); Food Lion, Inc. v. Capital Cities/ABC, Inc., 887 F. Supp. 811, 813 (M.D.N.C. 1995). At this stage of the litigation, a plaintiffs well-pleaded allegations are taken as true and the complaint, including all reasonable inferences therefrom, are liberally construed in the plaintiff's favor. McNair v. Lend Lease Trucks, Inc., 95 F.3d 325, 327 (4th Cir. 1996).
Dismissal under 12(b)(6) is generally regarded as appropriate only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations. Hishon v. King Spalding, 467 U.S. 69, 73 (1984); McNair, 95 F.3d at 328 (noting that the proper question is whether in the light most favorable to the plaintiff, the complaint states any valid claim for relief); Food Lion, 887 F. Supp. at 813. Stated differently, the issue is not whether the plaintiff will ultimately prevail on his claim, but whether he is entitled to offer evidence to support the claim. See, e.g., Scheuer v. Rhodes, 416 U.S. 232 (1974), overruled on other grounds by Davis v. Scherer, 468 U.S. 183 (1984); Revene v. Charles County Comm'rs, 882 F.2d 870, 872 (4th Cir. 1989).
Generally, the court looks only to the complaint itself to ascertain the propriety of a motion to dismiss. See George v. Kay, 632 F.2d 1103, 1106 (4th Cir. 1989). A plaintiff need not plead detailed evidentiary facts, and a complaint is sufficient if it will give a defendant fair notice of what the plaintiffs claim is and the grounds upon which it rests. See Bolding v. Holshouser, 575 F.2d 461, 464 (4th Cir. 1978). Nonetheless, the requirement of liberal construction does not mean that the court can ignore a clear failure in the pleadings to allege any facts which set forth a claim. With these principles in mind, the court now turns to Defendants' motion to dismiss.
Here, the Complaint alleges four separate "claims for relief," but fails to identify specific legal claims arising from the factual allegations. In the Complaint's Prayer for Relief, Plaintiff requests, among other things, treble damages for commissions due and withheld "beyond the forty-five (45) days provided by statute." Therefore, the allegations seem to indicate that Plaintiff seeks relief under the North Carolina Sales Representatives Commissions Act, the language of which requires payment on commissions owed to sales representatives within 45 days of termination and provides for trebling of commissions. See N.C. GEN. STAT. § 66-191.
The court agrees with Defendants that Plaintiff fails to state a claim under the Act. The Act defines a "sales representative" as, among other things, a person who is not an employee of the principal. N.C. GEN. STAT. § 66-190(4). Here, the Complaint specifically alleges that Plaintiff was an employee of PSI; therefore, Plaintiff does not fall within the meaning of a "sales representative" under the Act. Indeed, Plaintiff essentially concedes in his brief that the Complaint fails to state a claim under the Act. Therefore, to the extent that the Complaint is alleging a claim under North Carolina's Sales Representatives Commissions Act, that claim should be dismissed.
Furthermore, the North Carolina Sales Representatives Commissions Act appears to violate the Dormant Commerce Clause of the United States Constitution. See M-Squared, Inc. v. International Rectifier, Inc., No. 5:99-CV-708-BO(3), 2000 U.S. Dist. LEXIS 22200, at *7 (E.D.N.C. Nov. 14, 2000) (concluding that the Act violates the Dormant Commerce Clause because it applies only to businesses operating outside of North Carolina, therefore giving preferential treatment to North Carolina businesses).
Plaintiff argues in his Brief in Opposition to Defendants' Motion to Dismiss that even if the Complaint does not state a claim under the North Carolina Sales Representatives Commissions Act, the Complaint nevertheless states a claim under North Carolina's Wage and Hour Act. See N.C. GEN. STAT. § 95-25.1 to -25.25 (2001). Defendants argue that the North Carolina Wage and Hour Act does not govern the employment relationship between the parties because the Complaint does not allege that Plaintiff was employed in North Carolina. The court need not address that issue here, however, since Defendants have moved to dismiss only the claim for a violation of the North Carolina Sales Representatives Commissions Act.
Finally, the court notes that the Complaint's four separate "Claims for Relief" are merely factual allegations with no matching legal claims. Thus, it is impossible to tell from reading the Complaint whether Plaintiff is alleging more than the one legal claim of a violation of the North Carolina Sales Representatives Commissions Act. Since Plaintiff argues in his brief that the Complaint also states a claim under the North Carolina Wage and Hour Act, the court assumes that he seeks relief under at least that statute as well. It is recommended that the court give Plaintiff the opportunity to amend the Complaint to articulate any additional legal theories (i.e., in addition to the North Carolina Wage and Hour Act claim) under which he seeks recovery of the commissions and expenses allegedly owed to him.
For instance, if Plaintiff contends that the factual allegations give rise to a claim under a breach of contract or quantum meruit theory, he must identify those legal claims in the amended Complaint. In the event that Plaintiff does not amend the Complaint to identify any additional legal claims, Defendants may reasonably assume that his only remaining legal claim is for a violation of North Carolina's Wage and Hour Act. Although a court must construe a complaint as asserting "any and all legal claims that its factual allegations can fairly be thought to support," Martin v. Gentile, 849 F.2d 863, 868 (4th Cir. 1988), a defendant is not required to make a guess at every legal claim that might possibly flow from the complaint's factual allegations. See Monument Builders of Greater Kansas City, Inc. v. American Cemetery Assoc. of Kansas, 891 F.2d 1473, 1480 (10th Cir. 1989).
Based on the foregoing, IT IS RECOMMENDED that the court dismiss Plaintiffs claim for relief under North Carolina's Sales Representatives Commissions Act. IT IS FURTHER RECOMMENDED that the court allow Plaintiff the opportunity to amend the Complaint to articulate the precise legal claims under which he seeks to recover the commissions and expenses allegedly owed to him.