United States District Court, M.D. Louisiana
K&F RESTAURANT HOLDINGS, LTD., d/b/a IZZO'S ILLEGAL BURRITO, ET AL.
DONALD J. ROUSE, JR., ET AL.
RULING AND ORDER
W. deGRAVELLES JUDGE
matter is before the Court on four Motions to Dismiss
pursuant to Federal Rule of Civil Procedure 12(b)(6). The
first was filed by Donald J. Rouse, Jr. (“Rouse,
Jr.”); Donald J. Rouse, Sr.; Thomas B. Rouse; Allison
Rouse Royster; and Rouse's Enterprises, LLC
(“Rouse's, ” and collectively “the
Rouse Defendants”). (Doc. 148). Plaintiffs K&F
Restaurant Holdings, Ltd. d/b/a Izzo's Illegal Burrito
(“Izzo's”); K&F Restaurant Operations,
LLC; G&O Pizza Holdings, Ltd., d/b/a LIT Pizza
(“LIT Pizza”); G&O Restaurant Operations,
LLC; Osvaldo Fernandez; and A. Gary Kovacs (collectively
“Plaintiffs”) oppose. (Doc. 164). The Rouse
Defendants have filed a Reply in further support of their
Motion. (Doc. 172).
second Motion was filed by Victory Berryland, LLC
(“Berryland”). (Doc. 139). Plaintiffs oppose,
(Doc. 168), and Berryland has filed a Reply in further
support of its Motion, (Doc. 170).
third Motion was filed by Stephen Keller and Creekstone Juban
I, LLC (“Creekstone, ” and collectively
“the Creekstone Defendants”). (Doc. 140).
Plaintiffs oppose. (Doc. 165).
fourth Motion was filed by Russell Mosely and Mosely
Holdings, LLC (collectively, “the Mosely
Defendants”). (Doc. 143). Plaintiffs oppose, (Doc.
163), and the Mosely Defendants have filed a Reply in further
support of their Motion, (Doc. 171).
reasons discussed below, the Motions will be granted, and
this case will be dismissed in its entirety.
September 2011, Jack Trueting, Rouse's “Director of
Perishables, ” called Fernandez to say that Rouse's
was “very impressed with Izzo's products” and
was interested in franchising Izzo's burrito restaurants
in Rouse's grocery stores. (Doc. 138 at 3). Izzo's
declined. (Id.). Rouse, Jr., who manages
Rouse's, then allegedly formed a “scheme” to
steal Izzo's burrito recipes. (Id.).
Specifically, in 2011, Rouse, Jr. “directed” some
of his store managers in Lafayette, Louisiana to make an
offer, “essentially a bribe, ” to Patrick Dartez,
manager of an Izzo's in Lafayette, to “defect to
Rouse's with Izzo's recipes.” (Id.).
Dartez accepted. (Id.). Following the success of the
“scheme, ” Rouse's began selling burritos
that were “very similar, if not identical, ” to
Izzo's burritos in some of its stores. (Id. at
4). Plaintiffs contend that this constitutes illegal use of
Izzo's trade secrets. (Id. at 5-6). Plaintiffs
also contend that Rouse's uses the phrase “build
your own” in connection with its burritos and that this
phrase is very similar to “roll your own, ” which
Izzo's uses in connection with its burritos.
(Id. at 9).
in July 2011, Izzo's sought to “acquire a
restaurant” at Juban Crossing, a commercial development
in Livingston, Louisiana managed by Keller and developed by
Creekstone. (Id. at 4). In 2012, Izzo's, Keller,
and Creekstone signed a letter of intent pursuant to which
Izzo's was to lease space at Juban Crossing.
(Id.). However, in a lease agreement recorded in
June 2013, Rouse's agreed to be the anchor tenant at
Juban Crossing. (Id.; see also Doc. 138-5
at 1). One of the conditions of the agreement was that no
portion of Juban Crossing would be leased or sold to
Izzo's, “K&F Restaurant Management, LLC,
” or any affiliate of either. (Doc. 138 at 1; see
also Doc. 138-5 at 4). According to Plaintiffs, Rouse,
Jr. justified the condition in “interstate phone
calls” occurring in 2012, stating that Izzo's sold
“substandard” products and was
“litigious.” (Doc. 138 at 5). Creekstone refused
to lease space to Izzo's, allegedly resulting in
“millions of dollars” in lost profits to
operative Second Amended Complaint alleges seven
“counts.” (Id. at 6-20). Count I is
against Rouse, Jr. for violating the conspiracy provision of
the Racketeer Influenced and Corrupt Organizations Act
(“RICO”), 18 U.S.C. § 1962(d). (Id.
at 6). Plaintiffs contends that Rouse, Jr. “conspired
to commit three RICO violations against Izzo's, ”
i.e., violating the Travel Act via the scheme to
steal Izzo's recipes, committing wire fraud by stating in
phone calls that Izzo's was litigious and sold
substandard products, and illegally stealing and using trade
secrets. (Id. at 6).
II is a claim for “Conspiracy To Violate La. Civ. Code
Arts. 2324, et seq. as to all Defendants.”
(Id. at 6-7). Plaintiffs claim that their factual
allegations “set forth a civil conspiracy set forth
among the defendants to exclude and group boycott the
plaintiffs from highly desirable developments.”
(Id. at 7). Plaintiffs also contend that “each
of the defendants' name[d] herein are made in act of the
furtherance of the conspiracy by rejecting Izzo's[, ] Lit
and any other development created by Fernandez and
III alleges “Product Defamation and Disparagement
against the Rouse's Defendants.” (Id. at
7). Plaintiffs claim that “Rouse's” made
false statements concerning the quality of Izzo's
products and its litigiousness to “several third
parties but for certain to each of the co-conspirators
herein, Juban, Keller, Long Farms, Mosely, and
Berryland.” (Id. at 7-8). Plaintiffs assert
that these statements were false, as evidenced by Rouse's
desire to franchise Izzo's restaurants and Izzo's
decision not to assert claims against Rouse's when an
Izzo's recipe book was recovered from a Rouse's
store. (Id. at 8).
alleges “Tortious Interference and Business Relations
as to all Defendants.” (Id. at 8). Plaintiffs
contend that “[t]he various aforementioned acts and
practices by the Rouse Group and co-conspirators have
tortiously interfered and continue to tortiously interfere
with lawful business relations between Izzo's and its
partners and other developers.” (Id.). This
count also concerns the statements about Izzo's alleged
litigiousness and substandard products. (Id.).
asserts trademark infringement under La. Rev. Stat. 51:211 et
seq. “as to Rouse's Defendants” based on the
use of the “trade name” “build your
own.” (Id. at 9).
VI asserts a “Conspiracy under Sherman Act and
Restraint of Trade in Transportation Market[, ] 15 U.S.C.A.
§ 1, 35, 36 as to All Defendants.” (Id.
at 9-10). Plaintiffs contend that “Defendants have
monopolized the Market Area in that it has [sic] power to
dictate tenants of its preference and exclude competition in
some or all of the Market Area” and have
“acquired, exercised, and maintained its monopoly power
willfully and intentionally by way of the acts set forth
above.” (Id. at 10). Plaintiffs similarly
allege that Defendants have attempted to monopolize or
conspired to monopolize the “Market Area.”
(Id.). Count VI states that “unlawful
agreements [among the Defendants] are evidenced by, among
other things, the leases, the deed, the economic interests of
Defendants Rouse's, Keller, Juban, Mosely, Long Farms,
and Berryland; the close relationships among Defendants;
Defendants' concerns about the competitive threat that
Izzo's application posed to the Defendants; the history
and anticompetitive practices of Rouse's; and the timing
of various anticompetitive actions taken by Rouse's,
Keller, Juban, Mosely, Long Farms, and Berryland.”
(Id. at 11). Plaintiffs further contend that
“Defendants have engaged in per se anticompetitive
behavior, or, alternatively, anticompetitive behavior without
procompetitive justification, that has unreasonably retrained
trade in violation of Section 1 of the Sherman Act.”
(Id.). Plaintiffs contend that the product market
for this “count” is the “retail food sale
market, ” while the relevant geographic market is the
state of Louisiana. (Id.).
VII asserts a “Complaint for Violation of Federal and
Louisiana Antitrust Laws, Unfair Practices, and Unfair
Competition 15 U.S.C.A. § 1, 2, and 13 as to All
Defendants.” (Id. at 14). Plaintiffs define
the “many” product markets for “retail
food” as “(i) sale of food for cooking; (ii) the
sale of partially prepared food which simply requires
heating; (iii) the sale of precooked food, ready to eat; (iv)
the sale of pre-cooked food concentration on one type of
food; (v) the sale of pre-cooked food with a variety of types
of food; and (vi) the combination of selling un-cooked food
requiring preparation and cooking along with pre-cooked
foods, ready to eat.” (Id. at 15). Plaintiffs
define the “relevant geographic markets for retail food
sales” as “the entire United States” and
“the states commonly known as the Southeastern United
States, including, but not limited to, Louisiana,
Mississippi, Alabama and Florida.” (Id.).
Plaintiffs claim that barriers to entry are high given
“[t]he high concentration in the Market Area, the
sophisticated technology, large expenses, high capital costs,
[and] relationship[s] with farmers and wholesalers.”
(Id. at 16). Plaintiffs contend that
“Defendants” have engaged in refusal to deal and
collusion with developers, constituting monopolization,
attempt to monopolize, and conspiracy to monopolize;
unreasonable restraint of trade; and “unfair
competition.” (Id. at 16-19).
to the Second Amended Complaint are numerous exhibits,
including, inter alia, an affidavit by Fernandez
stating that, in a March 2016 meeting, Russell Mosely
expressed regret that he could not include an Izzo's in a
development, but Rouse, Jr. had told Mosely that there had
been an “incident” between Izzo's and
Rouse's “years ago” and Izzo's would
“never make a dollar off of [him]!” (Doc. 138-6
at 1; see also Doc. 138-10 at 7 (Declaration of
Covenants excluding “Any Izzo's” from a
Mosely property)). Also attached to the Second Amended
Complaint is a Notice of Lease between Berryland and
Rouse's excluding “[a]ny Izzo's or similar
burrito restaurant.” (Doc. 138-12 at 6).
case was filed in state court in April 2016 and removed
shortly thereafter. (Doc. 1). The initial Petition for
Damages named the Rouse Defendants and raised RICO claims and
state law claims for violations of Louisiana's Unfair
Trade Practices and Consumer Protection Act
(“LUTPA”), tortious interference with a contract,
product defamation, civil conversion, trademark infringement,
and conspiracy. (Doc. 1-1 at 2, 8-13). The Rouse Defendants
moved for dismissal of Plaintiffs' state law claims,
while Plaintiffs moved to remand. (Docs. 5, 7). The Court
denied the Motion to Remand and granted in part and denied in
part the Motion to Dismiss. (Docs. 26, 31). Specifically, the
Court ruled that the LUTPA claim was untimely and dismissed
it with prejudice. (Doc. 31 at 5-7, 14). The Court denied the
Motion to Dismiss as to the trademark infringement claim,
ruling that Plaintiffs had adequately pled a
“protectable right” in the trade name “roll
your own” and Rouse's violation of that right.
(Id. at 12, 14). The Court dismissed the remaining
state law claims with leave to amend as inadequately pled.
(Id. at 7-11, 12-14). Plaintiffs moved for
reconsideration and to recuse the then-assigned district
judge. (Docs. 38-41).
later filed an “Amended and Restated Complaint.”
(Doc. 70). This pleading named all of the defendants
currently named (along with one other person) and raised RICO
claims, federal antitrust claims, and state law claims for
“wrongful conversion of proprietary information,
” conspiracy, product defamation and disparagement,
tortious interference with business relations, trademark
infringement, and violation of state antitrust law.
(Id.). Several defendants moved to dismiss.
(See Docs. 71, 78, 83).
Court then denied the outstanding motions for reconsideration
and to recuse. (Docs. 102, 117). Five days after
reconsideration was denied, Plaintiffs again moved to
disqualify the then-assigned district judge. (Doc. 118).
Although that judge ruled that the basis upon which
disqualification was sought, i.e., a lawsuit brought
by Plaintiffs' counsel, was “a transparent attempt
to create bias and hostility in an effort to provoke
disqualification, ” the Court granted the motion given
that “the machinations to which Plaintiffs' counsel
ha[d] resorted to poison and impugn the Court's
impartiality” might cause a “thoughtful and
objective observer” to question the Court's
impartiality. (Doc. 133 at 8-9). The case was thereafter
reassigned to this section of the Court.
the case's reassignment, the Court held a status
conference and granted Plaintiffs' then-pending motion
for leave to file a Second Amended Complaint. (Doc. 136;
see also Doc. 95). The Court informed
Plaintiffs' counsel that “this [was] the last
amendment to the complaint that [would] be allowed by the
Court.” (Doc. 136 at 1). The outstanding Motions to
Dismiss were denied without prejudice to renewal following
the filing of the Second Amended Complaint. (Id. at
1-2). The Second Amended Complaint was filed on October 26,
Johnson v. City of Shelby, Miss., __ U.S. __, 135
S.Ct. 346 (2014), the Supreme Court explained that
“[f]ederal pleading rules call for a ‘short and
plain statement of the claim showing that the pleader is
entitled to relief,' Fed.R.Civ.P. 8(a)(2); they do not
countenance dismissal of a complaint for imperfect statement
of the legal theory supporting the claim asserted.” 135
S.Ct. at 346-47 (citation omitted).
Rule 8(a), the Fifth Circuit has explained:
The complaint (1) on its face (2) must contain enough factual
matter (taken as true) (3) to raise a reasonable hope or
expectation (4) that discovery will reveal relevant evidence
of each element of a claim. “Asking for [such]
plausible grounds to infer [the element of a claim] does
not impose a probability requirement at the pleading
stage; it simply calls for enough facts to raise a reasonable
expectation that discovery will reveal [that the elements of
the claim existed].”
Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 257
(5th Cir. 2009) (quoting Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 556 (2007) (emphasis in
the above case law, the Western District of Louisiana has
Therefore, while the court is not to give the
“assumption of truth” to conclusions, factual
allegations remain so entitled. Once those factual
allegations are identified, drawing on the court's
judicial experience and common sense, the analysis is whether
those facts, which need not be detailed or specific, allow
“the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.”
[Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)];
Twombly,  U.S. at 556, 127 S.Ct. at 1965. This
analysis is not substantively different from that set forth
in Lormand, supra, nor does this jurisprudence
foreclose the option that discovery must be undertaken in
order to raise relevant information to support an element of
the claim. The standard, under the specific language of
Fed.R.Civ.P. 8(a)(2), remains that the defendant be given
adequate notice of the claim and the grounds upon which it is
based. The standard is met by the “reasonable
inference” the court must make that, with or without
discovery, the facts set forth a plausible claim for relief
under a particular theory of law provided that there is a
“reasonable expectation” that “discovery
will reveal relevant evidence of each element of the
claim.” Lormand, 565 F.3d at 257;
Twombly,  U.S. at 556, 127 S.Ct. at 1965.
Diamond Servs. Corp. v. Oceanografia, S.A. De C.V.,
No. 10-00177, 2011 WL 938785, at *3 (W.D. La. Feb. 9, 2011)
recently, in Thompson v. City of Waco, Tex., 764
F.3d 500 (5th Cir. 2014), the Fifth Circuit summarized the
standard for a Rule 12(b)(6) motion:
We accept all well-pleaded facts as true and view all facts
in the light most favorable to the plaintiff . . . To survive
dismissal, a plaintiff must plead enough facts to state a
claim for relief that is plausible on its face. A claim has
facial plausibility when the plaintiff pleads factual content
that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged. Our task,
then, is to determine whether the plaintiff state a legally
cognizable claim that is plausible, not to evaluate the
plaintiff's likelihood of success.
Id. at 502-03 (citations and internal quotations
THE MOTIONS TO DISMISS
The Rouse Defendants
support of their Motion to Dismiss, the Rouse Defendants
first argue that Plaintiffs' claims for “product
defamation and disparagement” fail as vaguely pled and
because the challenged statements concerning Izzo's
alleged “litigiousness” and “substandard
product” are non-actionable matters of opinion. (Doc.
148-1 at 5-6). They also note that defamation claims, like
other tort claims, are subject to a one-year prescriptive
period. (Id. at 5). They similarly argue that
Plaintiffs' claim for tortious interference with business
relations is conclusorily pled, is prescribed, and does not
allege that the Rouse Defendants “acted improperly or
with actual malice.” (Id. at 6-8). The Rouse
Defendants then argue that Plaintiffs' trademark
infringement claim fails, as “build your own” is
a common, descriptive, generic phrase unlikely to cause
confusion and not subject to trademark protection.
(Id. at 8-10). Next, they argue that Plaintiffs'
state law conspiracy claims fail because there is no
“underlying tort” nor any non-conclusory
allegations of a conspiratorial agreement as to a particular
unlawful outcome or result. (Id. at 10-11). With
respect to Plaintiffs' RICO claim, the Rouse Defendants
claim that Plaintiffs have failed to plausibly plead the
elements of each predicate act alleged or a
“pattern” of racketeering activity. (Id.
Rouse Defendants characterize Plaintiffs' antitrust
claims as “facially ridiculous” and
“lack[ing] each and every component of a plausible
claim under either federal or state antitrust law.”
(Id. at 13). First, they observe that Plaintiffs
complain of being excluded from a few developments in
Louisiana but define the relevant market as essentially all
food sales throughout Louisiana, throughout the Southeastern
United States, or throughout the whole of the United States.
(Id. at 13-14). The Rouse Defendants also argue that
Plaintiffs fail to adequately plead “antitrust injury,
” i.e., an injury to competition, not just to
Izzo's, particularly given that Plaintiffs'
competitors were allowed at some of the developments.
(Id. at 14-15).
Rouse Defendants further argue that Plaintiffs' claims of
a vertical price-fixing conspiracy or vertical concerted
refusal to deal under Section 1 of the Sherman Act fail for
failure to plead market power, particularly given the size of
the market. (Id. at 16-18). They also claim that any
additional conspiracy claims under 15 U.S.C. §§ 1,
35, or 36 must be dismissed as duplicative or meritless.
(Id. at 19). The Rouse Defendants likewise argue
that Plaintiffs' claims of monopolization, attempt to
monopolize, and conspiracy to monopolize under Section 2 of
the Sherman Act fail for failure to adequately allege market
power or market share and specific intent to monopolize.
(Id. at 19-22). The Rouse Defendants further argue
that Plaintiffs fail to allege a “single element”
of a claim under 15 U.S.C. § 13. (Id. at 22).
The Rouse Defendants also contend that there is no private
right of action for “unfair competition” under
the Federal Trade Commission Act, and Plaintiffs' LUTPA
claims were previously dismissed with prejudice.
(Id.). Finally, the Rouse Defendants argue that
Plaintiffs' state law antitrust claims are interpreted
consistent with federal law and fail for the same reasons.
(Id. at 22-23).
oppose, arguing throughout that a short, plain statement of
their claims is all that is required to survive a Rule
12(b)(6) motion. (Doc. 164 at 3).
specifically, Plaintiffs first represent that the Rouse
Defendants have stated to co-conspirators that Izzo's
“produced substandard product and was extremely
litigious, ” giving rise to a claim for product
defamation. (Id.). Plaintiffs contend that these
statements are false, as Izzo's sole prior lawsuit
concerning the recipe book was “100% correct, ”
and Rouse's desire to put Izzo's in its stores belies
any contention that Rouse's believed Izzo's product
to be “substandard.” (Id. at 3-4).