United States District Court, D. Minnesota
Leslie L. Smith, Plaintiff,
Auto Club Services, Inc., Defendant.
Kathleen Harrell-Latham, Esq. and Loop Legal PLLC, counsel
William Roth Sampson, Esq. and Shook, Hardy, & Bacon LLP,
Douglas R. Boettge, Esq. and Stinson Leonard Street, LLP,
counsel for defendant.
S. Doty, Judge United States District Court
matter is before the court on the motion to dismiss by
defendant Auto Club Services, Inc. Based on a review of the
file, record, and proceedings herein, and for the following
reasons, the motion is granted.
contract dispute arises out of the parties' June 2014,
Entrepreneurial Agent Agreement (Agreement), which authorized
plaintiff Leslie Smith to act as Auto Club's agent in
connection with the sale of its insurance policies in
Minnesota. Compl. ¶ 7; Agreement § I(A). In
exchange for sales commissions, Smith was required to
represent Auto Club exclusively, devote “sufficient
time” to selling its products, and maintain certain
quality standards set by Auto Club. Compl. ¶¶ 8-10.
The Agreement specified that Smith was “an independent
contractor and not an employee of [Auto Club] for any
purpose.” Agreement § IV(D).
Smith signed the Agreement, Auto Club gave her projections
for anticipated sales revenue. Compl. ¶ 18. According to
Smith, Auto Club told her that the projections were
“very conservative” and a “bare
minimum.” Id. ¶ 19. Smith does not allege
the specific sales revenue projected. Relying on those
projections and statements, Smith executed the Agreement.
Id. ¶ 20.
alleges that after she signed the Agreement, Auto Club failed
to authorize necessary approvals that prohibited her from
immediately opening an office and making sales, even though
she was already incurring operating expenses. Id.
¶¶ 21-23. When Smith finally began selling Auto
Club policies in November 2014, she learned that Auto Club
only underwrites policies at a “competitive
price” for persons with high credit scores.
Id. ¶ 25. Smith alleges that Auto Club knew
that the credit-score averages in her territory made it
impossible for her to meet the financial projections, but
purposefully withheld that information from her so that she
would sign the Agreement. Id. ¶¶ 34-36.
She also alleges that Auto Club prevented her from using its
internal system to generate leads with qualifying credit
scores outside of her territory, even though other agents
were permitted to do so. Id. ¶¶ 37-41.
April 2017, after suffering “substantial losses”
due to “disappointing revenue, ” Smith advised
Auto Club that she was closing her office and seeking other
employment. Id. ¶¶ 42-46. She then
commenced this action asserting seven claims: violation of
the Minnesota Franchise Act, Minn. Stat. § 80C.01 et
seq. (Count I); violation of the Minnesota Deceptive Trade
Practices Act, Minn. Stat. § 325D.44 (Count II);
violations of the Fair Labor Standards Act
(“FLSA”), 29 U.S.C. § 201 et seq. (Counts
III and IV); fraud (Count V); unjust enrichment (Count VI);
and declaratory judgment that she was fraudulently induced to
enter into the Agreement (Count VII). Auto Club now moves to
Standard of Review
survive a motion to dismiss for failure to state a claim,
“‘a complaint must contain sufficient factual
matter, accepted as true, to state a claim to relief that is
plausible on its face.'” Braden v. Wal-Mart
Stores, Inc., 588 F.3d 585, 594 (8th Cir. 2009) (quoting
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).
“A claim has facial plausibility when the plaintiff
[has pleaded] factual content that allows the court to draw
the reasonable inference that the defendant is liable for the
misconduct alleged.” Iqbal, 556 U.S. at 678
(citing Bell Atl. Corp. v. Twombly, 550 U.S. 544,
556 (2007)). Although a complaint need not contain detailed
factual allegations, it must raise a right to relief above
the speculative level. Twombly, 550 U.S. at 555.
“[L]abels and conclusions or a formulaic recitation of
the elements of a cause of action” are not sufficient
to state a claim. Iqbal, 556 U.S. at 678 (citation
and internal quotation marks omitted).
court does not consider matters outside the pleadings under
Rule 12(b)(6). Fed.R.Civ.P. 12(d). The court may, however,
consider matters of public record and materials that are
“necessarily embraced by the pleadings.”
Porous Media Corp. v. Pall Corp., 186 F.3d 1077,
1079 (8th Cir. 1999) (citation and internal quotation marks
omitted). Here, the court properly considers the Agreement,
which is referenced throughout the complaint.