BEATY, Chief Judge.
This matter is currently before the Court on Defendant Hanesbrands, Inc.'s ("Hanesbrands," "HBI" or "Defendant") Motion for Judgment on the Pleadings [Doc. #11] which seeks judgment on Plaintiff Rashard Mendenhall's ("Mr. Mendenhall" or "Plaintiff") claim for breach of contract. For the reasons set forth below, Defendant's Motion for Judgment on the Pleadings [Doc. #11] will be DENIED.
Taking as true the facts alleged in the Complaint, the Court will recount the relevant background facts surrounding Plaintiff's claim against Defendant. Mr. Mendenhall is a professional athlete in the National Football League ("NFL") and is employed as a running back by the Pittsburgh Steelers. (Complaint ¶ 1). In May 2008, Mr. Mendenhall and Hanesbrands, a Maryland corporation with its principal place of business located in Winston-Salem, North Carolina, entered into a Talent Agreement (the "Talent Agreement"). (Complaint, Ex. A at 1). Under the terms of the Talent Agreement, Hanesbrands would use the services of Mr. Mendenhall to advertise and promote Hanesbrands' products sold under the Champion trademark. (Complaint, Ex. A at 1). The Talent Agreement was for a three-year term, beginning on May 1, 2008, and expiring on April 30, 2011. (Complaint, Ex. A at 1).
In August 2010, the parties executed an "Amendment and Extension of Hanesbrands Inc. Talent Agreement" (the "Extension Agreement"), which extended the term of the Talent Agreement for an additional four years, until April 30, 2015. (Complaint, Ex. B at 1). In addition to extending the term of the Talent Agreement, the Extension Agreement modified Section 17(a) of the Talent Agreement. (Complaint, Ex B at 4). Under the original terms of Section 17(a) as stated in the Talent Agreement:
(Complaint, Ex. A at 7). Pursuant to Section 3(a) of the Extension Agreement, the
(Complaint, Ex. B at 4).
Beginning in January 2011, Mr. Mendenhall "used the Twitter social media platform ("Twitter") to be himself, to express his opinions and [to] foster debate on controversial and non-controversial issues." (Complaint ¶¶ 3, 18). On his Twitter profile, Mr. Mendenhall describes himself as a "Conversationalist and Professional Athlete." (Complaint ¶ 19; Answer ¶ 19). Between March 15, 2011, and May 1, 2011, Plaintiff used his Twitter account to candidly express his views about Islam, women, parenting and relationships, and made comments in which Plaintiff compared the NFL to the slave trade. (Complaint ¶¶ 20-32). Plaintiff alleges that in response to these tweets, "Hanesbrands at no time suggested that it disagreed with Mr. Mendenhall's comments or that his tweets were in any way inconsistent with the values of the Champion brand or his obligations under the Talent Agreement, or that because of his tweets, Hanesbrands believed Mr. Mendenhall could no longer continue to effectively communicate on behalf of and represent Champion with consumers." (Complaint ¶¶ 25, 27, 29, 31).
On May 2, 2011, Plaintiff issued the following tweets regarding Osama bin Laden, whose death had been announced by President Obama on May 1, 2011:
(Complaint ¶ 35).
In response to the May 2, 2011 tweets noted above, Plaintiff received some comments in support and some comments opposed to his views. (Complaint ¶ 36). On May 4, 2011, "[i]n response to some negative reaction" to the May 2, 2011 tweets, Mr. Mendenhall issued the following explanation:
(Complaint ¶ 36).
In a letter dated May 5, 2011, and addressed to Rob Lefko, one of Mr. Mendenhall's representatives at Priority Sports and Entertainment, Hanesbrands' Associate General Counsel, L. Lynette Fuller-Andrews, indicated that it was Hanesbrands' intent to terminate the Talent Agreement effective Friday, May 13, 2011, pursuant to Paragraph 17(a) of the Agreement. (Complaint, Ex. C). On May 6, 2011, Hanesbrands issued a public statement to ESPN, stating the following:
(Complaint, Ex. D; Answer ¶ 39).
In a series of correspondence between Mr. Mendenhall's representative at Priority Sports and Entertainment and Hanesbrands' Associate General Counsel, Mr. Mendenhall contended that Hanesbrands had no legal basis for terminating the Talent Agreement and Extension. In contrast, Hanesbrands contended that Mr. Mendenhall's May 2, 2011 tweets regarding the death of Osama bin Laden and the events of September 11, 2001, met the standard set forth in Section 17(a) of the Talent Agreement and Extension and therefore Hanesbrands was within its right to terminate the Agreement. (Complaint, Exs. E and F).
On July 18, 2011, Plaintiff filed this civil action, alleging that Hanesbrands breached the Talent Agreement and Extension "[b]y its actions purporting to terminate the Talent Agreement and Extension under Section 17(a), and by its failure and refusal to pay amounts due Mr. Mendenhall." (Complaint ¶ 48). Specifically, Plaintiff alleges that the "unilateral action taken by Hanesbrands is unreasonable, violates the express terms of the Talent Agreement and Extension, is contrary to the course of dealing between the parties with regard to Mr. Mendenhall's use of Twitter to freely express opinions on controversial and non-controversial subjects, violates the covenant of good faith and fair dealing implied in every contract, and constitutes a breach of the Talent Agreement." (Complaint ¶ 4).
Defendant, in its Motion for Judgment on the Pleadings, contends that it was within its rights under the express terms of Section 17(a) to terminate the Talent Agreement and Extension with Mr. Mendenhall pursuant to Section 17(a) of the Agreement. Hanesbrands argues that its decision on all matters arising under Section 17(a) are to be deemed conclusive pursuant to the Section's express terms. It is for these reasons that Hanesbrands moves for Judgment on the Pleadings [Doc. #11], asserting that "[b]ecause the undisputed terms of the Talent Agreement vested Hanesbrands with the conclusive authority to terminate its contractual relationship with Mr. Mendenhall once it determined that his controversial and offensive statements tended to bring him into public disrepute, contempt, scandal or ridicule, or tended to shock, insult, or offend the majority of the consuming public, Mr. Mendenhall's breach of contract claim fails as a matter of law." (Def.'s Mot. for J. on the Pleadings [Doc. #11] at 2). In the alternative, Defendant requests that the Court dismiss Plaintiff's Complaint for failure to state a claim. (Id. at 3). The Court notes, however, that it will not treat Defendant's Motion as a Motion to Dismiss because procedurally, a Motion to Dismiss would not be appropriate because Defendant has already filed its Answer.
(Complaint, Ex. A at 10). Therefore, the Court will apply New York law in construing the requirements of the Talent Agreement between Hanesbrands and Mr. Mendenhall.
Federal Rule of Civil Procedure 12(c) provides that "[a]fter the pleadings are closed-but early enough not to delay trial-a party may move for judgment on the pleadings." A motion for judgment of the pleadings pursuant to Rule 12(c) is analyzed under the same standard as a Federal Rule of Civil Procedure 12(b)(6) motion to dismiss. Burbach Broad. Co. of Del. v. Elkins Radio Corp., 278 F.3d 401, 405-06 (4th Cir.2002); Edwards, 178 F.3d at 243. Accordingly, the Court will assume that the facts alleged in the Complaint are true and will draw all reasonable inferences in Plaintiff's favor as the nonmoving party. Burbach, 278 F.3d at 405-06. However, while the Court "take[s] the facts in the light most favorable to the [P]laintiff, ... [the Court] need not accept the legal conclusions drawn from the facts," and "need not accept as true unwarranted inferences, unreasonable conclusions or arguments." Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir.2008) (quoting Eastern Shore Mkts., Inc. v. J.D. Assocs. Ltd. P'ship, 213 F.3d 175, 180 (4th Cir.2000)). Additionally, the Complaint must allege "enough facts to state a claim to relief that is plausible on its face." Id. (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 1974, 167 L.Ed.2d 929 (2007)). A pleading that "offers labels and conclusions or a formulaic recitation of the elements of a cause of action will not do" and a complaint will not
However, "[u]nlike on a Rule 12(b)(6) motion ... on a Rule 12(c) motion the [C]ourt may consider the Answer as well." Alexander v. City of Greensboro, No. 1:09-CV-293, 2011 WL 3360644, at *2 (M.D.N.C. August 3, 2011); Rinaldi v. CCX, Inc., No. 3:05-cv-108, 2008 WL 2622971, at *2 n. 3 (W.D.N.C. July 2, 2008) (noting that "the Court considers the Answer as well as the Complaint"); Bradley v. Ramsey, 329 F.Supp.2d 617, 622 (W.D.N.C.2004) (finding that as it relates to Rule 12(b)(6), the key difference under Rule 12(c) is "the [C]ourt is to consider the [A]nswer as well as the [C]omplaint"). The "factual allegations in the [A]nswer are taken as true to the extent they have not been denied or do not conflict with the [C]omplaint." Farmer v. Wilson Hous. Auth., 393 F.Supp.2d 384, 386 (E.D.N.C. 2004) (internal quotation marks omitted) (citing Pledger v. North Carolina Dep't of Health & Human Servs., 7 F.Supp.2d 705, 707 (E.D.N.C.1998)); Jadoff v. Gleason, 140 F.R.D. 330, 331 (M.D.N.C.1991). For the "purposes of this motion Defendant cannot rely on allegations of fact contained only in the [A]nswer, including affirmative defenses, which contradict [the][C]omplaint" because Plaintiff was "not required to reply to Defendant's [A]nswer, and all allegations in the [A]nswer are deemed denied." Jadoff 140 F.R.D. at 332; Lefkoe v. Jos. A. Bank Clothiers, No. WMN-06-1892, 2008 WL 7275126, at *3 (D.Md. May 13, 2008); see Fed.R.Civ.P. 8(b)(6) ("If a responsive pleading is not required, an allegation is considered denied or avoided."). In "determining a motion for judgment on the pleadings, the [C]ourt may consider documents incorporated by reference in the pleadings." Farmer, 393 F.Supp.2d at 386 (internal quotation marks omitted) (citing Parks v. Alteon, Inc., 161 F.Supp.2d 645, 649 n. 1 (M.D.N.C.2001)). However, documents attached to the Answer are part of the pleadings for Rule 12(c) purposes, and may be considered without converting a motion for judgment on the pleadings into a motion for summary judgment, only if the documents are central to the Plaintiff's claim and the authenticity is not challenged. Horsley v. Feldt, 304 F.3d 1125, 1134-35 (11th Cir. 2002) (finding that the "incorporation by reference doctrine ... under which a document attached to a motion to dismiss may be considered by the court without converting the motion into one for summary judgment only if the attachment is: (1) central to the plaintiff's claim; and (2) undisputed" applies "for Rule 12(c) purposes to documents attached to answers"); Lefkoe, 2008 WL 7275126, at *4; Farmer, 393 F.Supp.2d at 386. In addition, judgment on the pleadings is only appropriate when, taking all of the non-moving party's factual allegations as true, no genuine issues of material fact remain and the case can be determined as a matter of law. Smith v. McDonald, 562 F.Supp. 829, 842 (M.D.N.C.1983), aff'd, 737 F.2d 427 (4th Cir.1984), aff'd, 472 U.S. 479, 105 S.Ct. 2787, 86 L.Ed.2d 384 (1985); Med-Trans Corp. v. Benton, 581 F.Supp.2d 721, 728 (E.D.N.C.2008).
Under New York law, in order to state a claim for breach of contract, the Complaint must allege: (1) the existence of a contract, (2) performance by the party seeking recovery, (3) non-performance by the other party, and (4) damages attributable to the breach. RCN Telecom Servs., Inc. v. 202 Centre St. Realty LLC, 156
As to the third element, that is, as to Plaintiff's contention of non-performance by Defendant, Plaintiff has alleged that "by [Hanesbrands'] actions purporting to terminate the Talent Agreement and Extension under Section 17(a), and by its failure and refusal to pay amounts due Mr. Mendenhall, Defendant Hanesbrands is in breach of the Talent Agreement and Extension." (Complaint ¶ 48). As previously noted, pursuant to Section 17(a) of the Talent Agreement and Extension, Hanesbrands had the right to immediately terminate the Agreement, "[i]f Mendenhall commits or is arrested for any crime or becomes involved in any situation or occurrence tending to bring Mendenhall into public disrepute, contempt, scandal or ridicule, or tending to shock, insult or offend the majority of the consuming public or any protected class or group thereof." (Complaint, Ex. B at 4). Plaintiff does not allege that the morals clause in Section 17(a) is unenforceable as a general matter.
As it relates to the reasonableness of Hanesbrands' action, implied in all contracts governed by New York law "is a covenant of good faith and fair dealing in the course of contract performance," which requires parties exercising discretion under the contract "not to act arbitrarily or irrationally in exercising that discretion." Dalton v. Educ. Testing Serv., 87 N.Y.2d 384, 389, 639 N.Y.S.2d 977, 663 N.E.2d 289 (1995) (finding that "within the implied obligation of each promisor to exercise good faith are any promises which a reasonable person in the position of the promisee would be justified in understanding were included" and that where the contract contemplates the exercise of discretion, the covenant of good faith and fair dealing "includes a promise not to act arbitrarily or irrationally in exercising that discretion"); Fishoff v. Coty Inc., 634 F.3d 647, 653 (2d Cir.2011); Sveaas v. Christie's Inc., 452 Fed.Appx. 63, 66 (2d Cir.2011).
In the present case, the Court finds that to the extent that the Talent Agreement and Extension provides Hanesbrands with discretionary termination rights under Section 17(a), that discretion is subject to the implied covenant of good faith and fair dealing. As such, Hanesbrands' exercise of any such discretion, under the implied covenant of good faith and fair dealing, would include a promise on Hanesbrands' part not to act arbitrarily, irrationally or unreasonably in exercising that discretion. See Dalton, 87 N.Y.2d at 389, 639 N.Y.S.2d at 979-80, 663 N.E.2d 289; Fishoff, 634 F.3d at 653.
In alleging that Hanesbrands acted unreasonably, Plaintiff's Complaint includes factual allegations that Hanesbrands, in a letter dated May 5, 2011, purported to terminate the Talent Agreement and Extension pursuant to Section 17(a) of the Agreement, while at the same time issuing a public statement to ESPN on May 6, 2011, which indicated that Hanesbrands ended its business relationship with Mr. Mendenhall for another reason, that being because it strongly disagreed with Mr. Mendenhall's comments. Since Section 17(a) is applicable only to the extent that Mr. Mendenhall became involved in an act that tended to "bring [him] into public disrepute, contempt, scandal or ridicule," or tended "to shock, insult or offend the majority of the consuming public or any protected class or group thereof," mere disagreement with Mr. Mendenhall's comments would not have triggered Hanesbrands' termination rights under Section 17(a). Therefore, from Plaintiff's factual allegations, the Court can reasonably infer that Defendant's actions in purporting to terminate the Talent Agreement and Extension pursuant to Section 17(a), may have been unreasonable, in light of the covenant of good faith and fair dealing, if such action was based on mere disagreement with Plaintiff's statements rather than on the applicability of Section 17(a)'s standard, as alleged by Plaintiff.
However, Defendant, in its Memorandum in Support of its Motion for Judgment on the Pleadings, contends that "Defendant had the right to terminate the contract as a result of the backlash caused by [Plaintiff's] outrageous statements." (Def's Mem. in Supp. of Mot. for J. on the Pleadings [Doc. #12] at 2). Defendant also contends that there was well-documented negative public reaction to Plaintiff's May 2, 2011 statements and that "Plaintiff's statements caused an almost instantaneous public uproar." (Id. at 7). In support of its contention, Defendant attached to its Answer select news reports relating to Mr. Mendenhall's May 2, 2011 tweets. The Court notes that for the purposes of a motion for judgment on the pleadings, documents attached to the Answer are part of the pleadings and may be considered by the Court without converting the motion to one for summary judgment only if the documents are central to Plaintiff's claim and the authenticity is not challenged. Horsley, 304 F.3d at 1134-35;
Nevertheless, Defendant contends that even without reference to the news reports, the undisputed facts support dismissal of this action. Specifically, Defendant contends that Plaintiff admits in the Complaint that: 1) after posting the 9/11 Tweets, he received `negative reaction' and comments `opposed' to his views; 2) his statements were `controversial'; and 3) Plaintiff "apparently received enough criticism or ridicule in the two days that followed his posting of the 9/11 Tweets that he felt the need to post a public `clarification' to attempt to mollify anyone he had `unintentionally harmed' by his statements." (Def's Mem. in Supp. of Mot. for J. on the Pleadings [Doc. #12] at 13; Def's Reply Mem. in Further Supp. of Mot. for J. on the Pleadings [Doc. #17] at 3).
However, taking Plaintiff's allegations as true, and drawing all reasonable inferences in Plaintiff's favor, the Court notes that although Plaintiff alleges in his Complaint that in response to "some negative reaction," he issued an explanation of his May 2, 2011 tweets, Plaintiff at no time in his Complaint made a blanket admission as to the nature of the public's response to his May 2, 2011 tweets as being consistent with the characterization that Defendant suggests is covered by Section 17(a) of the Agreement. In fact, Plaintiff alleged that he received supportive tweets from members of the public in response to his May 2, 2011 comments regarding the death of Osama bin Laden. Among the positive responses alleged by Plaintiff were the following tweets:
(Complaint ¶ 37).
Therefore, the Court finds that a dispute of fact exists between the parties as to the nature of the public's response to Plaintiff's May 2, 2011 tweets. Furthermore, based on Plaintiff's allegations, the Court finds that, at this early stage of the proceedings, Plaintiff has stated at the very least a plausible claim for breach of contract based on the implied covenant of good faith and fair dealing. To find otherwise would require the Court to impermissibly draw inferences in Defendant's favor. To resolve this matter, a factual determination as to the nature of the public's response is necessary in order to assess whether the public's response to Plaintiff's May 2, 2011 tweets could reasonably be characterized in a manner that would trigger Hanesbrands' right to terminate the Agreement under Section 17(a)'s standard, which applied only to acts that tended to "bring [Mr. Mendenhall] into public disrepute,
For the reasons set forth herein, the Court finds that a judgment on the pleadings would be premature at this time and is not warranted given the allegations of Plaintiff's Complaint. IT IS THEREFORE ORDERED that Defendant's Motion for Judgment on the Pleadings [Doc. #11] is DENIED.
