99 F. Supp. 3d 426
S.D.N.Y.2015Background
- UPS and related entities operate UPS Stores in New York City under franchise agreements with the Hagans; the Hagans ran eleven stores and engaged in contracts with UPS.
- UPS terminated the Hagans’ eleven franchise agreements in February 2014 after an internal pricing investigation and related findings of overcharges.
- The Hagans responded with a 210-page Answer asserting twelve counterclaims and attaching extensive exhibits.
- The Court criticized the length and redundant nature of both sides’ pleadings and directed they be downsized and narrowed under Rule 8.
- Ultimately, the Court dismissed all Hagans’ counterclaims except for one under New York General Business Law § 349 (NYFSA), and ordered amended pleadings to conform to Rule 8.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Contract counterclaims survive under California law? | Hagans rely on California choice of law in Franchise Agreements. | Franchise agreements govern under California law; termination was alleged breach. | First and Third Counterclaims dismissed; California law applied to contract claims. |
| Breach of the covenant of good faith and fair dealing? | Hagans allege UPS acted contrary to contract purposes. | No express contractual duties shown; broad duty lacks specificity. | Third Counterclaim dismissed. |
| Fraud claims under Rule 9(b)? | Hagans allege misrepresentations by UPS executives. | Counts fail to plead particularized misrepresentations and speaker. | Second Counterclaim dismissed for lack of particularity. |
| Tortious interference with contract? | Hagans allege UPS caused third parties to breach contracts. | Allegations are too vague to identify specific third-party contracts. | Eleventh Counterclaim dismissed. |
| New York consumer protection claim viability (GBL § 349)? | Deceptive practices harmed consumers and public interest. | Competition and consumer-harm aspects are insufficient for standing and pleading. | Ninth Counterclaim survives; others dismissed; remains actionable under § 349. |
Key Cases Cited
- Wireless Int’l Comm., Inc. v. Baranski, 787 F.Supp.2d 298 (S.D.N.Y.2011) (pleading length risks waiving viable claims)
- Salahuddin v. Cuomo, 861 F.2d 40 (2d Cir.1988) (prolix pleadings justified dismissal in some contexts)
- Wynder v. McMahon, 360 F.3d 73 (2d Cir.2004) (Rule 8 dismissal authority for noncompliant pleadings)
- DiFolco v. MSNBC Cable L.L.C., 622 F.3d 104 (2d Cir.2010) (integral documents must be authenticated; no dispute about authenticity)