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McGraw-Hill Global Education, LLC v. Griffin

United States District Court, W.D. Kentucky, Paducah Division

October 30, 2014

MCGRAW-HILL GLOBAL EDUCATION, LLC, et al., Plaintiffs,
v.
DAVID GRIFFIN, et al., Defendants, and DAVID GRIFFIN, Third-Party Plaintiff,
v.
CHARLES A. JONES and C.A. JONES MANAGEMENT GROUP, LLC, Third-Party Defendants.

MEMORANDUM OPINION

THOMAS B. RUSSELL, Senior District Judge.

This matter comes before the Court upon the Motion to Dismiss of Third-Party Defendants Charles A. Jones and C.A. Jones Management Group, LLC, (collectively, "Jones"), who ask the Court to dismiss the third-party claims levied against them by Defendant David Griffin. (Docket No. 214.) Griffin has responded, (Docket No. 214), and Jones has replied, (Docket No. 219). Fully briefed, this matter is ripe for adjudication. For the reasons set forth below, the Court will GRANT Jones' Motion to Dismiss.

Factual Background

This action contributes another chapter to the continuing saga of litigation concerning Griffin, Jones, and their soured business relationship: since 2012, the two have been involved in eight lawsuits in Kentucky state and federal courts, to say nothing of those raised in Tennessee. As such, the Court is familiar with the intertwined entities co-owned by Griffin and Jones. As required when deciding a motion to dismiss, the Court presumes that the allegations in the complaint are true. Total Benefits Planning Agency v. Anthem Blue Cross & Blue Shield, 552 F.3d 430, 434 (6th Cir. 2008). Taking them as true, a brief summary of the facts resulting in this action follows.

As of the filing of Griffin's Amended Third-Party Complaint, Griffin owned a fifty-percent share of Integrated Computer Solutions, Inc., ("ICS") and a fifty-percent share of Blackrock Investments, LLC ("BRI"). Jones owned the remaining fifty-percent shares of both ICS and BRI. These companies, in turn, were each part-owners of two college textbook companies: ICS owned 8% interests in SE Book Company, LLC ("SEB") and College Book Rental Company, LLC ("CBR"), with BRI owning the remaining 92% interests in each company. In his initial capacity as manager of both SEB and CBR, Charles A. Jones outsourced management of the companies to C.A. Jones Management Group, LLC ("the Management Company"), of which he served as Chief Executive Officer.

In the underlying lawsuit, Plaintiffs McGraw-Hill Global Education, LLC, Pearson Education, Inc., Cengage Learning, Inc., and John Wiley & Sons, Inc. ("the Publishers") allege that Griffin collaborated with others to craft an intricate plan to maximize the profits of SEB and CBR, the textbook companies. The Publishers contend that Griffin knowingly purchased "International Edition" textbooks at a lower price than that available domestically. According to the Publishers, Griffin purchased these books from nontraditional suppliers, including various companies located in the Dominican Republic. The Publishers further allege that Griffin bought steeply discounted U.S. Edition textbooks, specially priced for distribution in developing companies. Griffin, the Publishers say, was not a third-world bookseller, but a bargain-hunter who intended to nefariously sell or rent the books in the United States.

Although indicia on many of the books specified that they were not authorized for sale in the United States, the Publishers contend that Griffin and Jones instructed their employees to "remov[e] the markings with hot irons or dremmels, cover[] them with USED' stickers, remov[e] copyright pages, replac[e] ISBN numbers, us[e] slicers to trim edges, " and otherwise alter the books. (Docket No. 103 at 3.) The Publishers also claim that Griffin and Jones reproduced textbook covers and other pages containing trademark and/or copyright information, creating "chop shop editions" to be placed in their inventory.

The Publishers' original Complaint alleged various claims under the Copyright Act and the Lanham Act against numerous Defendants, including Jones and the Management Company. Griffin was not subject to this Complaint. ( See Docket No. 1.) Ultimately, the Publishers settled their claims against Jones and the Management Company, (Docket No. 68), and named Griffin as a Defendant, (Docket No. 103).

In his Amended Third-Party Complaint against Jones and the Management Company, Griffin elaborates upon (and distances himself from) the alleged scheme. (Docket No. 210.) According to Griffin, in late 2008 or early 2009, he and Jones traveled to the Dominican Republic to meet business contacts, including Michael Elmudesi. Griffin alleges that some months later, Jones, the Management Company, and their counsel-with no involvement from Griffin-cooperated with Elmudesi to create at least four Dominican entities ("the Dominican Companies") that would purchase discounted International Editions from the Publishers, falsely representing that the books would be distributed to Dominican students. Instead, Griffin says, Jones and the Management Company then caused SEB and CBR, the Murray, Kentucky textbook companies, to purchase the international books themselves. Griffin denies any involvement in the creation, operation, or ownership of the Dominican Companies, maintaining instead that Jones, the Management Company, and others maintained full control-including oversight of the purported purchase of international books and the sale of those books to SEB and CBR.

Griffin alleges that after Jones settled with the Publishers, who dismissed their claims against him, Jones provided the Publishers with false information regarding Griffin's involvement in the alleged misdeeds. He now alleges breach of fiduciary duty and seeks common-law indemnification for the Publishers' claim of fraud. (Docket No. 210.)

Standard

The Federal Rules of Civil Procedure require that pleadings, including complaints, contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). A complaint may be attacked for failure "to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). "In deciding a Rule 12(b)(6) motion, a district court must (1) view the complaint in the light most favorable to the plaintiff and (2) take all well-pleaded factual allegations as true. But the district court need not accept a bare assertion of legal conclusions." Tackett v. M & G Polymers, USA, LLC, 561 F.3d 478, 488 (6th Cir. 2009) (internal citations and quotation omitted).

A complaint need not allege specific facts so long as it provides a defendant with fair notice of the claim and the basis thereof. See Erickson v. Pardus, 551 U.S. 89. 93 (2007). However, even though a "complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 US. 544, 555 (2007) (citations omitted). Instead, the plaintiff's [f]actual allegations must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Id. (citations omitted). A complaint should contain enough facts "to state a claim to relief that is plausible on its face." Id. at 570. A claim becomes plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (citing Twombly, 550 U.S. at 556). If, from the well-pleaded facts, the court cannot "infer more than the mere possibility of misconduct, the complaint has alleged - but has not show[n]- that the pleader is entitled to relief." Id. at 1950 (citing Fed.R.Civ.P. 8(a)(2). "Only a complaint that states a plausible claim for relief survives a motion to dismiss." Id.

Analysis

In his Amended Third-Party Complaint, Griffin alleges claims against Jones and the Management Company for breach of fiduciary duty. He also seeks indemnification in the event that he is found liable to the Publishers for their fraud claim ...


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