MYSTIC RETREAT MED SPA & WEIGHT LOSS CENTER v. ZELTIQ AESTHETICS LLC

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

MYSTIC RETREAT MED SPA & )

WEIGHT LOSS CENTER, and MISTY )

SINCLAIR, M.D., )

)

Plaintiffs, )

)

v. ) 1:21-cv-00515

)

ASCENTIUM CAPITAL LLC, ZELTIQ )

AESTHETICS LLC, and ALLERGAN )

USA, INC., )

)

Defendants. )

MEMORANDUM OPINION AND ORDER

THOMAS D. SCHROEDER, Chief District Judge.

This is an action involving a contract for “CoolSculpting”

weight loss equipment that uses cold temperatures to kill fat cells

in an effort to improve one’s appearance. Plaintiffs Mystic

Retreat Med Spa & Weight Loss Center, PLLC, (“Mystic”) and Misty

Sinclair, M.D., move for leave to file an amended complaint. (Doc.

46.) Defendants Zeltiq Aesthetics, Inc. (“Zeltiq”) and Allergan

USA, Inc. (“Allergan”) (collectively, the “Allergan Defendants”)

filed a response. (Doc. 47.) Defendant Ascentium Capital, LLC

(“Ascentium”) did not file a response. Plaintiffs filed a reply

(Doc. 48), attaching a “Revised Proposed Amended Complaint” (Doc.

48-1). In response, the Allergan Defendants moved for leave to

file a surreply. (Docs. 49, 49-1.) Plaintiffs have responded in

opposition. (Doc. 50.)

For the reasons set forth below, Plaintiffs’ motion to amend

(Doc. 46) will be denied and the Allergan Defendants’ motion for

leave to file a surreply (Doc. 49) will be denied as moot.

I. BACKGROUND

The basic facts, as relevant to the motions before the court,

are as follows:

Zeltiq sold, and Ascentium financed, the purchase of medical

devices designed to assist with weight loss. (Doc. 7 ¶ 8.) On

June 22, 2016, Sinclair and her business partner, Marcia Ballard,

met with Wes Lev, Zeltiq’s sales manager, to execute a Master Sales

Agreement (“MSA”) with Zeltiq1 for Mystic’s purchase of

CoolSculpting System equipment and services. (Doc. 29-3.) Lev

presented, and Sinclair and Ballard signed, a single-page MSA Sales

Order.2 (Doc. 29-3, Doc. 34-1 ¶ 13, Doc. 34-2 ¶ 12.)

As demand for the CoolSculpting System declined, Plaintiffs

refused to make additional payments to Defendants and sought to

return the device and terminate the business relationship.

(Doc. 7 ¶¶ 25-26.) Plaintiffs allege Ascentium took possession of

the device but wrongfully demanded the balance due under the

1 Allergan USA, Inc. acquired Zeltiq in 2017. (Doc. 16 ¶ 5.)

2 The parties dispute whether additional terms to the MSA (including a

provision mandating arbitration of disputes) were incorporated by

reference based on attachments that the Allergan Defendants maintain

were emailed to Plaintiffs before the execution of the MSA. (See Doc.

73 (memorandum opinion and order denying motion to compel arbitration

without prejudice).)

equipment financing agreements. (Id. ¶¶ 27, 31.)

On May 10, 2021, Plaintiffs filed their complaint against

Defendants in The General Court of Justice, Superior Court

Division, in Moore County, North Carolina. (Doc. 7.) Ascentium’s

counsel accepted service of the complaint on June 7, 2021 (Doc. 1-

1 at 15), and on June 23 the Allergan Defendants, with Ascentium’s

consent, timely filed a notice of removal in this court. (Doc. 1

¶ 8.) On March 15, 2022, the final day the court’s scheduling

order permitted motions to amend pleadings (Doc. 31), Plaintiffs

moved for leave to file an amended complaint (Doc. 46) to add

factual allegations and a claim for breach of fiduciary duty

against the Allergan Defendants (Doc. 46-1). After the Allergan

Defendants responded and challenged the adequacy of the proposed

amended complaint, Plaintiffs attached a “Revised Proposed Amended

Complaint” to their reply brief. (Doc. 48-1.) This prompted the

Allergan Defendants to seek leave to file a surreply in response.

(Doc. 49.)3

II. ANALYSIS

A. Legal Standard

Federal Rule of Civil Procedure 15 provides that a plaintiff

may amend a complaint once as a matter of course within 21 days

3 Because Ascentium did not oppose Plaintiffs’ motion to amend,

Plaintiffs requested that the court “deem Ascentium’s right to contest

Plaintiffs’ Motion to be waived.” (Doc. 48 at 2 n.1.) However, on

August 5, 2022, Plaintiffs notified the court that they settled their

claims against Ascentium. (Doc. 74; Doc. 80.)

after the earlier of (1) service of a responsive pleading or (2)

service of a motion under Federal Rule of Civil Procedure 12(b),

(e), or (f). After that period, a party may amend only with either

the opposing party’s written consent or leave of court. Fed. R.

Civ. P. 15(a)(1)(2); Foman v. Davis, 371 U.S. 178, 182 (1962)

(noting that “the grant or denial of an opportunity to amend is

within the discretion of the District Court”). While district

courts have discretion to grant or deny a motion to amend, the

Fourth Circuit has interpreted Rule 15(a) to provide that “leave

to amend a pleading should be denied only when the amendment would

be prejudicial to the opposing party, there has been bad faith on

the part of the moving party, or the amendment would have been

futile.” Laber v. Harvey, 438 F.3d 404, 426 (4th Cir. 2006)

(citation omitted); Foman, 371 U.S. at 182 (same).

“[I]f the proposed change advances a claim or defense that is

legally insufficient on its face, the court may deny leave to

amend.” Williams v. Little Rock Municipal Water Works,

21 F.3d 218, 225 (8th Cir. 1994) (citing Charles A. Wright & Arthur

Miller, Fed. Prac. & Proc.: Civil, § 1487, at 637 (1991))

(alterations adopted); see Joyner v. Abbott Labs, 674 F. Supp.

185, 190 (E.D.N.C. 1987) (same). “To determine whether a proposed

amended complaint would be futile, the Court reviews the revised

complaint under the standard used to evaluate a motion to dismiss

for failure to state a claim.” Amaya v. DGS Construction, LLC,

326 F.R.D. 439, 451 (D. Md. 2018) (citing Katyle v. Penn National

Gaming, Inc., 637 F.3d 462, 471 (4th Cir. 2011)). Thus, “[a]

motion to amend a complaint is futile ‘if the proposed claim would

not survive a motion to dismiss.’” Pugh v. McDonald, 266 F. Supp.

3d 864, 866 (M.D.N.C. 2017) (quoting James Madison Ltd. v. Ludwig,

82 F.3d 1085, 1099 (D.C. Cir. 1996)).

A Rule 12(b)(6) motion to dismiss is meant to “test[] the

sufficiency of a complaint” and not to “resolve contests

surrounding the facts, the merits of a claim, or the applicability

of defenses.” Republican Party of North Carolina v. Martin, 980

F.2d 943, 952 (4th Cir. 1992). To survive such a motion, “a

complaint must contain sufficient factual matter, accepted as

true, to ‘state a claim to relief that is plausible on its face.’”

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic

Corp. v. Twombly, 550 U.S. 544, 570 (2007)). In considering a

Rule 12(b)(6) motion, a court “must accept as true all of the

factual allegations contained in the complaint,” Erickson v.

Pardus, 551 U.S. 89, 94 (2007) (per curiam), and all reasonable

inferences must be drawn in the non-moving party’s favor, Ibarra

v. United States, 120 F.3d 472, 474 (4th Cir. 1997).

Rule 12(b)(6) and Rule 15 should be balanced against Federal

Rule of Civil Procedure 8(a)(2), which provides that a complaint

need only contain a “short and plain statement of the claim showing

that the pleader is entitled to relief.” Rule 12(b)(6), and thus

Rule 15, protect against meritless litigation by requiring

sufficient factual allegations “to raise a right to relief above

the speculative level” so as to “nudge[] the[] claims across the

line from conceivable to plausible.” Twombly, 550 U.S. at 545,

570 (2007); see Iqbal, 556 U.S. at 678 (2009). When considering

whether a Rule 15 motion to amend is futile, the court “need not

accept as true unwarranted inferences, unreasonable conclusions,

or arguments.” Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir.

2008).

B. Motion to Amend

1. Proposed amended complaint

Plaintiffs move to amend their complaint to add a claim for

breach of fiduciary duty arising from an alleged partnership

agreement. (Doc. 46; Doc. 46-1 ¶¶ 68-73.) The Allergan Defendants

argue that Plaintiffs’ new claim is futile because the amended

complaint does not sufficiently plead the existence of a

partnership. (Doc. 47 at 5-9.) The Allergan Defendants also

contend that Plaintiffs’ request to file an amended complaint, 309

days after their original complaint, is “unduly delayed.”4 (Id.

at 9-10.) In reply, Plaintiffs argue that their partnership

allegation satisfies the requirements of notice pleading. (Doc.

4 The Allergan Defendants further maintain that amendment is precluded

by their motion to compel arbitration pursuant to an arbitration clause

in the MSA. (Doc. 47 at 4-5.) However, the court has denied without

prejudice the Allergan Defendants’ motion to compel arbitration. (Doc.

73.)

48 at 8-11.) Additionally, Plaintiffs argue that their motion for

leave to amend is not untimely because it was filed on the last

day the court’s scheduling order expressly permits amended

pleadings. (Id. at 11-12; see Doc. 31.)

The North Carolina Uniform Partnership Act defines a

partnership as “an association of two or more persons to carry on

as co-owners a business for profit.” N.C. Gen. Stat. § 59–36. A

partnership is also described as

a combination of two or more persons of their property,

effects, labor, or skill in a common business or venture,

under an agreement to share the profits or losses in

equal or specified proportions, and constituting each

member as an agent of the others in matters appertaining

to the partnership and within the scope of its business.

Zickgraf Hardwood Co. v. Seay, 298 S.E.2d 208, 211 (N.C. Ct. App.

1982). A partnership does not require an express agreement; a de

facto partnership may be inferred by the parties’ conduct and an

examination of all the facts and circumstances. Best Cartage,

Inc. v. Stonewall Packaging, LLC, 727 S.E.2d 291, 299 (N.C. Ct.

App. 2012) (citing Potter v. Homestead Preservation Assn., 412

S.E.2d 1, 5 (N.C. 1992)). The parties are not required to know

that their actions will have the effect of creating a partnership,

that a partnership has been created, or that they have become

partners. Dealers Supply Co. v. Cheil Industries, Inc., 348 F.

Supp. 2d 579, 588 (M.D.N.C. 2004).

There are “two indispensable elements for a partnership:

sharing of any actual profits and co-ownership of the business,”

and the “[f]ailure to plead these elements (through these factors)

is fatal to any claim based on the existence of a partnership.”

VRX USA, LLC v. VRX Ventures, Ltd., No. 3:20CV409-GCM, 2020 WL

7229672, at *5 (W.D.N.C. Dec. 8, 2020); see Best Cartage, 727

S.E.2d at 299. Factors such as holding an association out to the

public as a partnership, the contribution of capital, and state

licensing may demonstrate that a partnership exists. See In re

Brokers, Inc., 363 B.R. 458, 469 (Bankr. M.D.N.C. 2007) (collecting

cases); Compton v. Kirby, 577 S.E.2d 905, 912–14 (N.C. Ct. App.

2003). So may the filing of partnership tax returns and the

establishment of partnership bank accounts. Dealers Supply, 348

F. Supp. 2d at 588; In re Brokers, 363 B.R. at 469.

Here, Plaintiffs’ proposed amended complaint does not allege

any facts which demonstrate the existence of a partnership.

Plaintiffs do not allege that the parties entered into an express

partnership agreement, nor do they allege the “indispensable

requisites for a [de facto] partnership” of co-ownership and

sharing of profits. Best Cartage, 727 S.E.2d at 299 (citation

omitted). Rather, Plaintiffs’ proposed amended complaint merely

alleges that “Zeltiq formed a partnership with Mystic to provide

Coolsculpting services to members of the public.” (Doc. 46-1 ¶ 18;

see id. ¶ 69 (“After entering into partnership with Mystic for the

sale of Coolsculpting services to the public, Defendants Zeltiq

and Allergan owed fiduciary duties to Mystic.”).) This conclusory

allegation is insufficient to plausibly establish the existence of

a partnership. VRX USA, 2020 WL 7229672, at *5 (“Failure to plead

[the two indispensable] elements . . . is fatal to any claim based

on the existence of a partnership.”); cf. Twombly, 550 U.S. at

555, 557 (“[C]ourts are not bound to accept as true a legal

conclusion couched as a factual allegation[.] . . . [A] naked

assertion of conspiracy . . . gets the complaint close to stating

a claim, but without some further factual enhancement it stops

short of the line between possibility and plausibility.” (citation

omitted)). Thus, Plaintiffs’ motion to amend to add a claim for

breach of fiduciary duty against the Allergan Defendants based on

the existence a partnership is futile.

2. Revised Proposed Amended Complaint

In their reply brief, ostensibly in response to the Allergan

Defendants’ arguments, Plaintiffs attached a “Revised Proposed

Amended Complaint” (Doc. 48-1), which includes “additional

allegations detailing the formation and contours of the Zeltiq-

Mystic partnership.” (Doc. 48 at 8-9.) This prompted the Allergan

Defendants to move for leave to file a surreply “to address the

procedural impropriety of the revised amended complaint and

futility of such an amendment.” (Doc. 49 ¶ 9.) Plaintiffs oppose

the Allergan Defendants’ motion. (Doc. 50.)

Local Rule 7.3(h) provides that “[a] reply brief is limited

to discussion of matters newly raised in the response.”

L.R. 7.3(h); see Henry v. N.C. Acupuncture Licensing Board, No.

1:15CV831, 2017 WL 401234, at *4 (M.D.N.C. Jan. 30, 2017). Courts

in this district “have consistently held that ‘[r]eply

briefs . . . may not inject new grounds . . . [and that an]

argument [that] was not contained in the main brief . . . is not

before the Court.’” Tyndall v. Maynor, 288 F.R.D. 103, 108

(M.D.N.C. 2013) (quoting Triad International Maintenance Corp. v.

Aim Aviation, Inc., 473 F. Supp. 2d 666, 670 n.1 (M.D.N.C. 2006)).

It is improper, under Local Rule 7.3(h), to wait until a reply

brief to provide support for an unsupported argument made in a

party’s first motion. See Jarvis v. Stewart, No. 1:04CV00642,

2005 WL 3088589, at *1 (M.D.N.C. Nov. 17, 2005). In sum, Rule

7.3(h) “exists to give the replying party a chance to rebut newly

raised arguments, not to give the replying party an unfair

advantage in having a chance to make new arguments that should

have been raised initially.” Pouncey v. Guilford County, No.

1:18CV1022, 2020 WL 1274264, at *5 (M.D.N.C. Mar. 17, 2020). Thus,

because these grounds for leave to amend were advanced for the

first time in a reply brief, the court need not consider

Plaintiffs’ “Revised Proposed Amended Complaint.”

In addition, Plaintiffs’ request for leave to amend contained

in their reply brief is not accompanied by a motion. A “request

for a court order must be made by motion,” which must state the

grounds for seeking the order and state the relief sought. Fed.

R. Civ. P. 7(b)(1). A request for further leave to amend, in the

event that any part of the proposed amended complaint is dismissed,

appearing at the end of a plaintiffs’ reply brief supporting a

motion to amend is not a proper motion for leave to amend; a court

may deny the request on these grounds alone. See Cozzarelli v.

Inspire Pharmaceuticals Inc., 549 F.3d 618, 630–31 (4th Cir. 2008).

Additionally, this court’s local rules require a proposed amended

pleading to be attached to any motion for leave to amend a

pleading. L.R. 15.1. The purpose of this rule is to avoid having

cases thrust into limbo on such generalized requests that may later

prove unsupported. Robinson v. Pepsi Bottling Group, No.

1:13CV729, 2014 WL 2048127, at *4 (M.D.N.C. May 19, 2014). It is

within the discretion of a district court to deny a motion for

leave to amend where the moving party fails to comply with Local

Rule 15.1. See U.S. ex rel. Rostholder v. Omnicare, Inc., 745

F.3d 694, 703 (4th Cir. 2014).

Here, Plaintiffs have not made a proper motion for further

leave to amend. Plaintiffs’ urging that the court accept their

Revised Proposed Amended Complaint “[o]ut of an abundance of

caution and to conserve judicial resources” would circumvent the

local rules and demonstrates the confusion that it engenders by

causing the filing of yet further briefing. Thus, Plaintiffs’

request for leave to amend to file the “Revised Proposed Amended

Complaint” through their reply brief will be denied.

Furthermore, even if the court were to consider the Revised

Proposed Amended Complaint, Plaintiffs have failed to allege a

plausible fiduciary duty claim. The Revised Proposed Amended

Complaint does not allege either of the indispensable requisites

of a partnership: a sharing of profits, and co-ownership between

the parties. VRX USA, 2020 WL 7229672, at *5. Plaintiffs merely

allege that the Allergan Defendants controlled the price of each

CoolSculpting treatment such that they “cost approximately 50% of

the price providers [like Plaintiffs] were allowed to charge

patients.” (Doc. 48-1 ¶ 24.) Plaintiffs conclude that it was a

partnership “because Zeltiq only made money if Mystic made money

from providing Coolsculpting cycles” to patients. (Id. ¶ 25.)

But this merely alleges a sales campaign, devoid of any profit

sharing.

The Revised Proposed Amended Complaint also does not allege

any of the other factors courts have recognized as indicia of a

partnership, such as contribution of capital, partnership tax

returns, or a partnership bank account. Instead, Plaintiffs allege

a series of general statements by the Allergan Defendants’

representatives indicating they believed they were in a

“partnership” with their distributors, like Plaintiffs. (See id.

¶¶ 21-39.) However, these private declarations alone cannot

create a partnership. VRX USA, 2020 WL 7229672, at *5. Therefore,

Plaintiffs’ Revised Proposed Amended Complaint would be futile.

For these reasons, Plaintiffs’ motion to amend will be denied

as futile, and the Allergan Defendants’ motion to file a surreply

will be denied as moot.

III. CONCLUSION

For the reasons stated,

IT IS THEREFORE ORDERED that Plaintiffs’ motion to amend (Doc.

46) is DENIED.

IT IS FURTHER ORDERED that the Allergan Defendants’ motion

for leave to file a surreply (Doc. 49) is DENIED as moot.

/s/ Thomas D. Schroeder

United States District Judge

August 17, 2022