Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

M.H. Eby, Inc. v. Timpte Industries, Inc.

United States District Court, E.D. Pennsylvania

December 19, 2019

M.H. EBY, INC., Plaintiff,


          EDWARD G. SMITH, J.

         The plaintiff originally commenced this action seeking a declaratory judgment that it was blameless in (1) ending its 40-year relationship with the defendant in which it served as an authorized dealer of the defendant's trailers and parts and (2) starting to manufacture and sell its own trailers. Specifically, the plaintiff seeks declarations that it properly terminated an agreement between the parties, that it is not required to return anything to the defendant, and that it did not violate the defendant's intellectual property rights. Unsurprisingly, the defendant's newly asserted counterclaims allege a different story. The defendant alleges that plaintiff fraudulently induced it to enter into the agreement, that the plaintiff breached the agreement, that the plaintiff misappropriated trade secrets, and that the plaintiff engaged in unfair competition by misusing the defendant's confidential information.

         In response to these allegations, the plaintiff has now filed this motion pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure to dismiss the defendant's counterclaims. After thoroughly reviewing the allegations in the amended counterclaim and the parties' submissions, the court finds that the defendant has set forth plausible counterclaims against the plaintiff, and the various arguments that the plaintiff invokes are insufficient to bar the counterclaims. Therefore, the court will deny the motion to dismiss in its entirety. However, the court will provide plaintiff with the ability to reassert its arguments at a later stage in the litigation when these arguments are no longer premature and when the record is more fully developed.


         The plaintiff, M.H. Eby Inc. (“M.H. Eby”), filed a complaint for declaratory judgment against Timpte Industries Inc., d/b/a Timpte Inc. (“Timpte”), on January 25, 2019. See generally Compl., Doc. No. 1. In the complaint, M.H. Eby alleges that it acted as an authorized dealer of Timpte trailers and parts pursuant to a dealer agreement, which the parties had renewed annually for more than 40 years. See Compl. at ¶ 9. In December 2018, M.H. Eby notified Timpte that it intended to terminate the parties' 2018 dealer agreement (the “Agreement”) and not execute a new agreement for 2019. See Id. at ¶ 16. In response to this notice, Timpte requested that M.H. Eby, inter alia, provide Timpte with its customer lists and return parts for which it already paid. See Id. at ¶ 17. Timpte also accused M.H. Eby of misappropriating its trade secrets by developing its own “hopper bottom” trailer. See Id. at ¶ 19.

         Timpte threatened to file a lawsuit for breach of contract against M.H. Eby and indicated that it would attempt to stop it from showing its “hopper bottom” trailers at an upcoming trade show. See Id. at ¶ 24. In response to Timpte's actions, M.H. Eby filed the instant action in which it seeks declarations that (1) it properly terminated the Agreement, (2) it is not required to return already-paid-for parts or customer lists to Timpte, and (3) it did not violate Timpte's intellectual property rights. See Id. at 5-8.

         On February 27, 2019, Timpte answered the complaint. See Doc. No. 8. The court held an initial pretrial conference with counsel for the parties on April 4, 2019, and entered a scheduling order the following day. See Doc. Nos. 16, 17. The parties filed a joint motion to have the court extended the deadlines in the original scheduling order and, after a telephone conference the prior day, the court granted that motion on August 8, 2019. See Doc. Nos. 29, 30, 32, 33.

         On September 30, 2019, the final day permitted for amendment under the court's August 8, 2019 amended scheduling order, Timpte filed a motion for leave to amend and a proposed amended answer with counterclaims. See Doc. No. 35. The court entered an order on October 7, 2019, denying the motion for leave to file an amended answer and counterclaims as moot and directing the clerk of court to docket Timpte's amended answer and counterclaims per the amended scheduling order. See Order, Doc. No. 37.

         In the amended answer and counterclaims, Timpte alleges that it (and its predecessors-in-interest) have manufactured bulk-commodity transportation equipment for over 130 years. Countercls. at ¶ 5, Doc. No. 38.[1] Timpte currently “manufactures and sells state-of-the-art aluminum bulk-commodity trailers known as hopper-bottom trailers, as well as repair and replacement parts for hopper-bottom trailers.” See Id. From 1978 through December 2018, Timpte and M.H. Eby entered into agreements, typically one-year dealer agreements, through which M.H. Eby sold Timpte's hopper-bottom trailers, parts, and accessories to the public. See Id. at ¶ 11. M.H. Eby also performed warranty work on these trailers for Timpte's customers. See Id. M.H. Eby's sales territory for Timpte products included Ohio and Pennsylvania, although there was also a several-year period where M.H. Eby sold Timpte products in Indiana. See id. at ¶ 16.

         Timpte alleges that it had to terminate M.H. Eby's dealership rights in Indiana due to weak sales there. See Id. Due to the termination of this dealership arrangement in Indiana, Timpte asserts that M.H. Eby “embark[ed] on a plan to compete directly with Timpte in the market for hopper- bottom grain trailers.” Id. at ¶ 17. As part of this plan, it renewed its dealership agreements with Timpte for Ohio and Pennsylvania and used that year to

(a) design and manufacture its own hopper-bottom grain trailer to compete with Timpte; (b) maintain and enhance its relationships with Timpte customers; (c) take advantage of Timpte's goodwill, production systems, customer lists, favorable dealer pricing, and confidential pricing information, all of which provided a benefit to M.H. Eby in its plan to compete against Timpte.


         In addition, on October 29, 2018, M.H. Eby placed an order for Timpte hopper-bottom trailer parts totaling $52, 166.36, which “was the largest parts order Timpte had ever received and included multiple quantities of many of Timpte's most valuable and unique hopper-bottom trailer parts, including proprietary extruded aluminum parts.” Id. at ¶ 28. When asked about the large parts order, M.H. Eby told Timpte that the request was part of its new strategy to become more responsive to its customers and reduce freight costs of multiple orders. See Id. at ¶ 29. Timpte asserts that this “new strategy” had nothing to do with reducing freight costs or improving responsiveness to customers; rather, M.H. Eby was stockpiling the parts to offer more competitive pricing on parts sold at retail after it terminated the 2018 dealer agreement. See Id. at ¶ 30.

         Timpte also alleges that M.H. Eby failed to give it timely notice of its intent to terminate the Agreement. See Id. at ¶¶ 33, 34. In this regard, the Agreement provided that M.H. Eby had to give Timpte 30 days' notice of its intent to terminate the Agreement. See Id. at ¶ 33. The Agreement was set to expire on December 31, 2018, and M.H. Eby did not notify Timpte of its intent to terminate the Agreement until December 4, 2018. See Id. at ¶¶ 34, 36.

         Based on these allegations, Timpte asserts the following counterclaims against M.H. Eby: (1) breach of contract; (2) fraudulent misrepresentation and concealment; (3) misappropriation of trade secrets; (4) violation of the Defend Trade Secrets Act; and (5) unfair competition. See Amended Answer and Countercls. at 14-19. For its requests for relief, Timpte seeks monetary damages, injunctive relief, and its attorney's fees and costs. Id. at 19-20.

         On October 28, 2019, M.H. Eby filed a motion to dismiss these counterclaims for failure to state a claim. See Doc. No. 42. Timpte filed a response in opposition to the motion to dismiss on November 12, 2019. See Doc. No. 46. After receiving an extension, M.H. Eby timely filed a reply brief on November 25, 2019. See Doc. Nos. 48, 51. The motion to dismiss is now ripe for resolution.


         A. Standard of Review Under Fed.R.Civ.P. 12(b)(6)

         In considering a motion to dismiss under Rule 12(b)(6), a court must accept as true all well-pleaded allegations in the complaint, or in this case the counterclaims, and construe all reasonable inferences flowing from those facts in the light most favorable to the non-moving party. See Jordan v. Fox, Rothschild, O'Brien & Frankel, Inc., 20 F.3d 1250, 1261 (3d Cir. 1994). “To survive a motion to dismiss, the factual allegations in a complaint, assumed true, must suffice ‘to state a claim to relief that is plausible on its face.'” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). This standard does not require detailed factual allegations, but it demands more than “an unadorned accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

         B. ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.