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MegaForce v. Eng

United States District Court, D. Minnesota

February 1, 2019

MegaForce, a South Korea corporation, Plaintiff,
v.
Joseph Robert Eng, an individual; William Joseph Johnson, an individual; and WAV Events and Entertainment, LLC, a Minnesota Limited Liability Company, Defendants.

          Rachel K. Paulose, DLA Piper LLP, Minneapolis, MN; Mandy Chan, DLA Piper LLP, San Francisco, CA; Miles Cooley, DLA Piper LLP, Los Angeles, CA; and Sangwon Sung, DLA Piper LLP, East Palo Alto, CA, for Plaintiff MegaForce.

          Brian N. Niemczyk, Stephen M. Ringquist, and Carol R. M. Moss, Hellmuth & Johnson, PLLC, Edina, MN, for Defendant William Joseph Johnson.

          MEMORANDUM OPINION AND ORDER

          Eric C. Tostrud Judge

         Plaintiff MegaForce, a concert promoter based in South Korea, commenced this action on June 19, 2018, alleging that it had entered into two contracts with Defendant WAV Events and Entertainment, LLC (“WAV”)-the “Performance Agreement” and the “Appearance Agreement, ”-for two events MegaForce was producing in South Korea on January 26 and 27, 2018. See generally Compl. ¶ 19 [ECF No. 1] and Exs. A [ECF No. 1-1] (hereinafter “Performance Agreement”), and B [ECF No. 1-2] (hereinafter “Appearance Agreement, ” and with the Performance Agreement, the “Agreements”). Under the Agreements, WAV was to have arranged for “the celebrity appearances of Floyd Mayweather Jr., and musical artists Lil Wayne and Lil Jamez.” Compl. at 1. MegaForce alleges that it paid WAV $110, 000 under the Agreements, and incurred hundreds of thousands of dollars more in third-party expenses and liabilities as it prepared for the two events, but WAV never produced the promised celebrities, giving MegaForce less than two weeks' notice of the celebrities' non-appearance. Id. ¶¶ 13-14, 25, 35, 63-64. MegaForce sued WAV and its two co-“managers, ” Defendants Joseph Robert Eng (“Eng”) and William Joseph Johnson (“Johnson”), whom MegaForce alleges personally strung it along for months until virtually the last minute. MegaForce brings claims for breach of contract and for breach of the covenant of good faith and fair dealing under each of the Agreements (Counts I and II for breach of contract and Counts IV and V for breach of covenant), and for fraud (Count III), unjust enrichment (Count VI), violation of the Minnesota Deceptive Trade Practices Act, Minn. Stat. § 325D.44 (Count VII), and civil conspiracy (Count VIII). See generally Id. ¶ 4, 36-61. MegaForce brings the breach-of-contract claims and the claims for breach of covenant of good faith and fair dealing against WAV only; it brings each of its other claims against all Defendants. See Id. ¶¶ 66-112.

         WAV and Eng have not appeared in this action, and MegaForce now moves for a default judgment on its claims against them. ECF No. 48. Johnson, who has appeared, opposes the default-judgment motion to the extent a default judgment against WAV and Eng might somehow prejudice his rights as he defends against this litigation, and on the additional basis of an arbitration clause in each of the Agreements, under which (Johnson contends) all of MegaForce's claims in this action are subject to mandatory arbitration in New York. See generally Johnson Opp'n to Pl.'s Mot. for Dflt. J. [ECF No. 33], Johnson Opp'n to Pl.'s Second Mot. for Dflt. J. [ECF No. 61] (incorporating by reference ECF No. 33). Johnson moves to compel arbitration and dismiss the claims against him. ECF No. 41. MegaForce opposes that motion, arguing primarily that Johnson, as a non-signatory to either of the Agreements, cannot compel arbitration under their respective arbitration clauses. MegaForce Opp'n to Johnson Arb. Mot. (“MegaForce Arb. Opp'n”) [ECF No. 62]. Johnson's motion to compel MegaForce to arbitrate its claims against him will be granted, and MegaForce's motion for default judgment as to the two other Defendants will be denied without prejudice.

         I

         A

         Johnson denominated his motion to compel arbitration under Fed.R.Civ.P. 12(b)(1), but, as MegaForce points out, recent Eighth Circuit case law makes clear that such motions should be analyzed under Rule 12(b)(6) or Rule 56, not under Rule 12(b)(1) or Rule 12(b)(3). See Seldin v. Seldin, 879 F.3d 269, 272 (8th Cir. 2018); City of Benkelman, Neb. v. Baseline Eng'g Corp., 867 F.3d 875, 881 (8th Cir. 2017). Johnson states that he “has no objection to this motion being deemed a motion to dismiss under either” Rule 12(b)(6) or Rule 12(b)(1). Johnson Arb. Reply Br. at 4 [ECF No. 70]. In view of the Eighth Circuit's holdings in Seldin and Benkelman, Johnson's motion to compel arbitration will be analyzed under Rule 12(b)(6).

         In reviewing a motion to dismiss for failure to state a claim under Fed.R.Civ.P. 12(b)(6), a court must accept as true all of the factual allegations in the complaint and draw all reasonable inferences in the plaintiff's favor. Gorog v. Best Buy Co., 760 F.3d 787, 792 (8th Cir. 2014) (citation omitted). Although the factual allegations need not be detailed, they must be sufficient to “raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citation omitted). The complaint must “state a claim to relief that is plausible on its face.” Id. at 570.

         Ordinarily, courts do not consider matters outside the pleadings in resolving a Rule 12(b)(6) motion to dismiss, see Fed. R. Civ. P. 12(d), but the Court may consider exhibits attached to the complaint and documents that are necessarily embraced by the pleadings without transforming the motion into one for summary judgment. Mattes v. ABC Plastics, Inc., 323 F.3d 695, 697 n.4 (8th Cir. 2003) (citation omitted). Because the Agreements are attached to, and embraced by, MegaForce's Complaint, they may be considered in resolving Johnson's motion.

         B

         Johnson is not a signatory to any Agreement with MegaForce containing an arbitration clause; those Agreements were signed by MegaForce and WAV only. The arbitration clause in each Agreement provides:

ARBITRATION: This Agreement shall be governed and construed in accordance with the laws of the State of New York. Any claim or dispute arising out of or relating to this agreement or the breach thereof shall be settled by arbitration in the State of New York in accordance with the rules and regulations of the American Arbitration Association. The parties hereto agree to be bound by the award in such arbitration and judgment upon ...

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