Byker et al v. Smith

Filing 48

MEMORANDUM OPINION Signed by Magistrate Judge John E Ott on 5/25/18. (SAC )

FILED
2018 May-25 PM 04:06
U.S. DISTRICT COURT
N.D. OF ALABAMA

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
DAVID G. BYKER, ROBERT
PRZYDYSZ, GLOBAL ASSET
MANAGEMENT HOLDINGS,
LLC,
Plaintiffs,
vs.
NANNETTE SMITH,
Defendant.

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Case No.: 2:16-cv-02034-JEO

MEMORANDUM OPINION
David G. Byker, Robert Przybysz, Global Asset Management Holdings,
LLC (“GAM”) (collectively, “Plaintiffs”) filed this suit against defendant Nannette
Smith, invoking this court’s diversity jurisdiction under 28 U.S.C. § 1332(a).
(Doc. 1). Plaintiffs assert that Ms. Smith breached a settlement agreement between
the parties. Ms. Smith filed a motion to dismiss, contending that this court lacks
subject matter jurisdiction based on Plaintiffs’ failure to join an indispensable party
who would destroy the court’s diversity jurisdiction.

(Doc. 21).

Plaintiffs

responded in opposition to Ms. Smith’s motion (doc. 31), and Ms. Smith has filed
a reply (doc. 32). Also pending before the court are Ms. Smith’s motion to strike
(doc. 40), Plaintiffs’ motions for leave to file a subpoena on an out-of-state thirdparty (docs. 41, 43), Plaintiffs’ motion for a status conference (doc. 44), and

Plaintiff’s motion to lift the stay on discovery (doc. 45).1 Ms. Smith has filed a
response in opposition to the motion to lift the stay discovery. (Doc. 47). Upon
consideration, the court 2 finds that Ms. Smith’s motion to dismiss is due to be
denied, Ms. Smith’s motion to strike is due to be denied as moot, Plaintiffs’
motions for leave to file a subpoena are due to be granted, Plaintiffs’ motion for a
status conference and to lift the stay are due to be denied as moot.
I.

BACKGROUND
In broad strokes, this case arises out of a dispute between the parties

regarding computer software that is designed to run payment systems in gas
stations and convenience stores (the “B2K Software”). Ms. Smith developed the
B2K Software and owned a business to market and implement the Software. (Doc.
23-1, ¶ 2).

In 2012, Mr. Przybysz, the managing member of Ingenuity

International, LLC (“Ingenuity”), approached Ms. Smith about purchasing her
business, and Ms. Smith agreed to the sale. (See Doc. 23-1, ¶¶ 3-4; Doc. 31-1,
¶ 1). As part of that agreement, Ingenuity formed a new company called B2K
Systems, LLC (“B2K LLC”) to purchase the assets of Ms. Smith’s business,
including the B2K Software, and Ms. Smith became an employee of B2K LLC.
1

Document 46 is duplicative of document 45, even though it was filed by opposing counsel. It
apparently was filed in error.

2

The parties have consented to an exercise of plenary jurisdiction by the undersigned magistrate
judge pursuant to 28 U.S.C. § 636(c). (See Doc. 17).

2

(Doc. 23-1, ¶ 4). Ms. Smith held a 20% interest in B2K LLC, and Ingenuity held
the remaining 80% interest in the company. (Doc. 23-1, ¶ 4).
B2K LLC experienced financial difficulties and took several loans from
GAM, which were secured by the B2K Software. (See Doc. 1, ¶ 8; Doc. 23-1, ¶¶
7-8; Doc. 31-2, ¶ 1).3 B2K LLC defaulted on the loans, and GAM eventually sued
B2K in Michigan state court to collect on the loans. (Doc. 23-1, ¶ 9; Doc. 31-2, ¶
3). Ms. Smith attempted to intervene in GAM’s action against B2K LLC to protect
her interest in the B2K Software, but the Michigan state court denied her request.
(Doc. 23-1, ¶ 10; Doc. 23-2). GAM won a default judgement against B2K LLC in
the Michigan lawsuit, and B2K LLC subsequently filed for bankruptcy protection
in the Western District of Michigan. (Doc. 23-1, ¶ 10; Doc. 31-2, ¶¶ 3-4). As a
secured creditor, GAM filed a proof of claim in B2K LLC’s bankruptcy
proceedings. (Doc. 31-2, ¶ 4). In 2016, the bankruptcy administrator abandoned
B2K LLC’s assets that had been disclosed to the bankruptcy court, and GAM
succeeded to control of those assets. (Doc. 31-2, ¶ 5).
As B2K LLC was foundering, the relationship between Ms. Smith and B2K
LLC deteriorated. B2K LLC terminated Ms. Smith’s employment in 2014 and
then sued Ms. Smith in Michigan state court. (Doc. 31-2, ¶ 2). Ms. Smith
reciprocated by suing B2K LLC, GAM, Ingenuity, Mr. Byker, and Mr. Przybysz in
3

Mr. Byker is the sole member of GAM. (Doc. 31-2, ¶ 1).

3

Alabama state court. (Doc. 23-1, ¶ 12; Doc. 31-1, ¶ 1; Doc. 31-2, ¶ 2). 4 The
Alabama state court action is based on Ms. Smith’s allegations that the defendants
in that action conspired to steal the B2K Software. (See Doc. 31-3). After B2K
LLC filed bankruptcy, the Alabama court severed and stayed all of Ms. Smith’s
claims against the company, and Ms. Smith’s claims against the remaining
defendants proceeded to trial on November 14, 2016. (Doc. 31-1, ¶ 2; Doc. 31-4,
pp. 4-5; see also Doc. 31-5, pp. 25-26). 5
The parties in the Alabama state court action reached a settlement on
November 15, 2016, the second day of pre-trial motions. (Doc. 31-1, ¶ 14).
Counsel read the terms of the settlement on the record, and the settlement
contained the following six essential terms:
(1)

GAM or Mr. Byker would pay Ms. Smith $500,000 in
installments over a period of time;

(2)

Ms. Smith would send the B2K Software to a third-party
expert, who would verify the software was the same functional
and operational software that he previously reviewed in the
course of the state court action, and the software would then be
sent to GAM or Mr. Byker after they paid the first settlement
installment to Ms. Smith;

(3)

The parties would “use their good faith, best efforts” to
conclude the B2K LLC bankruptcy, and Mr. Byker, GAM, Mr.
Przybysz or Ingenuity will indemnify Ms. Smith if the

4

Ms. Smith added GAM and Mr. Byker as defendants to the Alabama state court action through
an amended complaint in 2015. (Doc. 31-2, ¶ 6).
5

B2K LLC filed for bankruptcy during the pendency of the Alabama state court action. (Doc.
31-1, ¶ 2; Doc. 31-4, p. 2).

4

bankruptcy court claws back any payment from B2K LLC to
her or her son;
(4)

The parties would enter full mutual releases of any and all
claims up through the date of the settlement agreement;

(5)

GAM would void its judgment against B2K LLC, or mark it as
satisfied; and

(6)

The B2K LLC’s Michigan lawsuit against Ms. Smith “will be
dismissed with prejudice.”

(Doc. 1-1, pp. 4-9; Doc. 23-1, ¶ 14). Because the settlement agreement required
payments over time, the Circuit Court of Jefferson County retained jurisdiction
over the matter until payment under the agreement was complete, but moved the
action to its administrative docket. (Doc. 1-1, pp. 16-17).
The parties’ settlement broke down approximately a month after they
entered the agreement. According to the plaintiffs in this case, Ms. Smith did not
deliver the promised B2K Software to the third-party expert. They contend that
Ms. Smith delivered a “read only” version of the B2K Software rather than a
functional and operational copy of the software. (Doc. 1, ¶ 14; Doc. 31-2, ¶ 8).
Ms. Smith, on the other hand, contends that she fully complied with her obligation
under the parties’ settlement agreement. (Doc. 23-1, ¶¶ 15-16). While Ms. Smith
does not dispute that she delivered a “read only” version of the B2K Software to
the third party expert, she asserts that it was exactly the same as the software the

5

expert reviewed during the litigation and that the read only software was functional
and operational. (Doc. 23-1, ¶¶ 16-17).
Mr. Byker, Mr. Przybysz, and GAM filed this action against Ms. Smith
based on Ms. Smith’s alleged breach of the parties’ settlement agreement. (Doc.
1). They assert claims against Ms. Smith for breach of contract, promissory
estoppel, fraudulent misrepresentation, and fraudulent suppression based upon her
alleged failure to deliver functional and operational B2K Software to GAM. (Id.).
Plaintiffs request monetary damages and seek preliminary and permanent
injunctions ordering Ms. Smith to provide GAM with a functional and operational
copy of the B2K Software. (Id.). 6 Ms. Smith asks this court to dismiss the action,
arguing that B2K LLC is an indispensable party whose joinder would destroy the
court’s diversity jurisdiction in this matter. (Doc. 22).
II.

STANDARD OF REVIEW
Under Rule 12(b)(7) of the Federal Rules of Civil Procedure, a defendant

may move to dismiss an action for “failure to join a party under Rule 19.” FED. R.
CIV. P. 12(b)(7). A district court undergoes a two-step inquiry when deciding a
motion to dismiss under Rule 12(b)(7) and Rule 19.
6

First, the court must

After Plaintiffs filed this action, Ms. Smith filed an emergency motion for entry of consent
judgment in the Alabama state court. (Doc. 23-4). In response to that motion, the Alabama
court ordered Plaintiffs to dismiss this action because it had retained jurisdiction to enforce the
settlement agreement, (Doc. 23-5, p. 29), but the Supreme Court of Alabama later directed the
court to vacate that portion of its order. See Ex parte Przybysz, -- So. 3d --, 2017 WL 3821272,
*5 (11th Cir. Sept. 1, 2017).

6

determine “whether the absent part is a ‘required party’ within the meaning of Rule
19.” Auto-Owners Ins. Co. v. Morris, 191 F. Supp. 3d 1302, 1303 (N.D. Ala.
2016) (citing Molinos Valle Del Cibao v. Lama, 633 F.3d 1330, 1344 (11th Cir.
2011)). Then, “if the absent party is ‘required’ but cannot be joined in the action,
the court must consider if, ‘in equity and good conscience, the action should
proceed among the existing parties or should be dismissed.’” Id. (quoting FED. R.
CIV. P. 19(b)).
The moving party bears the burden of proving that the absent party is a
required and indispensable party under Rule 19. Barrow v. OM Fin. Life Ins. Co.,
2011 WL 2659987, at *1-2 (M.D. Fla. July 6, 2011) (citing Am. Gen. Life &
Accident Ins. Co. v. Wood, 429 F.3d 83, 92 (4th Cir. 2005)). Finally, when
deciding a motion to dismiss under Rule 12(b)(7), the court may look to matters
outside of the pleadings and consider evidence presented by the parties. AutoOwners Ins. Co., 191 F. Supp. 3d at 1303 (citing Estes v. Shell Oil Co., 234 F.2d
847, 849 n.5 (5th Cir. 1956)).
III.

DISCUSSION
A.

Ms. Smith’s Motion to Dismiss

Plaintiffs invoke this court’s diversity jurisdiction under 28 U.S.C. § 1332.
(Doc. 1, ¶ 5). Plaintiffs, Mr. Byker, Mr. Pryzbysz, and GAM, are citizens of
Michigan, while the defendant, Ms. Smith, is a citizen of Alabama. (Doc. 1, ¶¶ 17

4; Doc. 31-1, p. 2); see also Rolling Greens L.P. v. Comcast SCH Holdings LLC,
374 F.3d 1020, 1022 (11th Cir. 2004) (“a limited liability company is a citizen of
any state of which a member of the company is a citizen.”). As a result, complete
diversity exists between Plaintiffs and Ms. Smith. Additionally, the amount of
controversy exceeds $75,000, (see Doc. 1), and Ms. Smith does not dispute that
fact. Thus, based on the current parties, the court has diversity jurisdiction over
this action.
Ms. Smith moves to dismiss under Rule 12(b)(7) based on the plaintiffs’
failure to join B2K LLC, an entity she contends is a required and indispensable
party under Rule 19. (See Docs. 21, 22). B2K LLC is a citizen of both Alabama
and Michigan. (Doc. 23-1, ¶ 4; Doc. 31-1, ¶ 7, p. 5); see also Rolling Greens L.P.,
374 at 1022. Therefore, B2K LLC cannot be joined in this action because its
joinder would destroy the complete diversity between the parties and this court’s
subject matter jurisdiction over this matter. See Groves v. Rogers, 547 F.2d 898,
900 (5th Cir. 1977).7 Accordingly, if B2K LLC is a required and indispensable
party under Rule 19, then the court would be mandated to grant Ms. Smith’s
motion and dismiss the action for lack of subject matter jurisdiction. However, as

7

The decisions of the former Fifth Circuit handed down before October 1, 1981 are binding in
the Eleventh Circuit. Bonner v. City of Prichard, 661 F.2d 1206, 1207 (11th Cir. 1981) (en
banc).

8

discussed below, because the court concludes that B2K LLC is a not a required or
indispensable party under Rule 19, Ms. Smith’s motion is due to be denied. 8
1.

B2K LLC is not a Required Party

To rule on Ms. Smith’s motion, the court first must determine whether B2K
LLC is a required party. See Molinos Valle, 633 F.3d at 1344. Rule 19(a)(1) sets
out the standard for determining if a party is required:
A person who is subject to service of process and whose joinder will
not deprive the court of subject-matter jurisdiction must be joined as a
party if:
(A) in that person’s absence, the court cannot accord complete relief
among existing parties; or
(B) that person claims an interest relating to the subject of the action
and is so situated that disposing of the action in the person’s
absence may:
(i) as a practical matter impair or impede the person’s ability to
protect the interest; or
(ii) leave an existing party subject to a substantial risk of
incurring double, multiple, or otherwise inconsistent
obligations because of the interest.

8

To the extent that Ms. Smith argues that this court lacks subject matter jurisdiction over this
action because the Alabama state court retained jurisdiction to enforce the settlement agreement,
(see Doc. 21, ¶ 2; Doc. 22, pp. 1-2, 7, 15; Doc. 32, p. 3), the court is not persuaded. An action
regarding an alleged breach of a settlement agreement is a new cause of action between the
parties rather than a continuation of the underlying state court action. The parties did not agree
under the terms of the settlement agreement that the Alabama state court would be the exclusive
forum to resolve disputes regarding the agreement. (See Doc. 1-1). Moreover, as the Supreme
Court of Alabama recognized, the Alabama state court lacked power to order Plaintiffs to
dismiss this action. See Ex parte Przybysz, 2017 WL 3821272, *5.

9

FED. R. CIV. P. 19(a)(1). According to Ms. Smith, both B2K LLC and Ingenuity9
are required parties under Rule 19(a) because they are parties to the settlement
agreement at issue and have obligations and interests under the agreement. (Doc.
22, p. 2). Ms. Smith points to those obligations and rights to support her argument
that B2K LLC and Ingenuity are required parties. (See Doc. 22, pp. 11-12; Doc.
31, p. 6).
As an initial matter, the parties dispute whether B2K LLC is a party to the
settlement agreement. (See Doc. 22, p. 11; Doc. 31, pp. 6-8). 10 The court need not
resolve that dispute to determine if B2K LLC is a required party under Rule 19(a)
because an entity is not necessarily a required party in a breach of contract action
simply because it is a party to the contract at issue. See Wheaton v. Diversified
Energy, LLC, 215 F.R.D. 487, 490 (E.D. Pa. 2003). “Such a hard and fast rule
9

Ingenuity’s members are residents of Michigan, North Carolina, California, Ohio, and Illinois,
(Doc. 31-1, p. 5); therefore, Ingenuity is a citizen of those states. See Rolling Greens L.P., 374 at
1022. Because Ms. Smith, the defendant, is a citizen of Alabama, Ingenuity could be added as a
plaintiff in this matter without destroying complete diversity between the parties and this court’s
subject matter jurisdiction over this action.
10

The parties’ settlement agreement was dictated onto the record; the parties did not memorialize
the agreement in writing. (See Doc. 1-1). Because of that fact, as discussed below, it is not clear
whether B2K LLC is a party to the settlement agreement. The Alabama state court severed and
stayed the claims involving B2K LLC before the parties reached the settlement agreement before
the second day of the trial. (See Doc. 31-4). However, Mr. Przybysz agreed to the terms of the
settlement agreement on behalf of B2K LLC, which indicates that B2K LLC is bound to the
Agreement. (Doc. 1-1, p. 15). Plaintiffs argue that B2K LLC was not represented by counsel
during the settlement hearing and, therefore, could not be party to the settlement agreement
because a limited liability company cannot appear pro se. (Doc. 31, pp. 6, 8). But, at the
beginning of the hearing, counsel for the defendants in the state court action did not indicate on
the record who he was representing. (See Doc. 1-1, p. 4). As a result, it is not clear from the
hearing transcript whether B2K LLC was represented by counsel during the settlement hearing
or whether B2K is a party to the settlement agreement.

10

would violate Rule 19(a).” Id. Thus, even if B2K LLC is a party to the settlement
agreement, Ms. Smith still must show that the Rule 19(a) standard is satisfied in
order to establish that B2K LLC is a required party. Likewise, Ms. Smith must
demonstrate that the Rule 19(a) standard is satisfied with respect to Ingenuity to
show that it is a required party.
Ms. Smith argues that in B2K LLC’s and Ingenuity’s absence, the court
cannot enforce the settlement agreement as a whole and afford complete relief to
the parties in this action. (Doc. 22, pp. 11-12; Doc. 32, p. 1). The court is not
persuaded. Plaintiffs allege that Ms. Smith breached the settlement agreement by
failing to provide GAM with a functional and operational copy of the B2K
Software, and Plaintiffs seek monetary damages from Ms. Smith for her alleged
breach along with an injunction ordering Ms. Smith to provide functional and
operational software to GAM. (Doc. 1, pp. 7-15). Neither Plaintiffs’ claims nor
the relief they seek involve B2K LLC or Ingenuity. Accordingly, the court may
afford complete relief among the existing parties even if B2K LLC and Ingenuity
are not joined in this action.
Ms. Smith attempts to avoid that conclusion that arguing that “[i]f the court
were to order the relief that Plaintiffs seek, it does not protect the remainder of
[her] contractual interests, and deprives [her] of the ability to enforce the benefit of
her bargain . . . .” (Doc. 22, p. 12). However, Plaintiffs do not seek to void or
11

nullify any portion of the settlement agreement; therefore, Ms. Smith’s citation to
In re Delta Air Lines, Inc., 374 B.R. 516, 523 (S.D.N.Y. 2007), is inapposite. In
addition, even though Plaintiffs seek to enforce only certain provisions of the
settlement agreement in this case, Ms. Smith has not shown how enforcement of
those provisions could impact the remaining provisions of the settlement
agreement or impede her ability to protect her interest in those provisions. Indeed,
if a dispute arises regarding the remaining provisions of the settlement agreement,
Ms. Smith could seek enforcement of those provisions in this or another forum,
including in the Alabama state court.

Thus, Ms. Smith’s argument does not

persuade the court that it cannot order complete relief to the parties in the absence
of B2K LLC and Ingenuity.
Ms. Smith also argues that disposing of this action in the B2K LLC’s or
Ingenuity’s absence may impair or impede their ability to protect their interest in
the settlement agreement. (See Doc. 22, p. 12). The provision of the settlement
agreement that Plaintiffs seek to enforce does not involve B2K LLC or Ingenuity,
and Ms. Smith has not shown that enforcement of the provision would have any
effect on the remainder of the agreement. Moreover, if necessary just like Ms.
Smith, B2K LLC and Ingenuity could enforce other provisions of the settlement
agreement in another forum if necessary. Thus, Ms. Smith has not shown that an

12

order disposing of this action would impact B2K LLC’s and Ingenuity’s interests
in the settlement agreement or impair their ability to protect their interests.
Finally, nothing before the court suggests that Ms. Smith or Plaintiffs could
be subject to multiple or inconsistent obligations under the settlement agreement
due to the absence of B2K LLC and Ingenuity in this action. As a result, and for
the reasons stated above, the court finds that B2K LLC and Ingenuity are not
required parties in this action under Rule 19(a). Thus, Ms. Smith’s motion to
dismiss is due to be denied. Additionally, even assuming that B2K LLC is a
required party in this action, Ms. Smith’s motion would still be denied because
B2K LLC is not an indispensable party Rule 19(b).
2.

B2K LLC is not an Indispensable Party

If B2K LLC was a required party, the court next would have to “determine
whether, in equity and good conscience, the action should proceed among the
existing parties or should be dismissed.” Fed. R. Civ. P. 19(b). To make that
determination, “[t]he factors for the court to consider include:
(1) the extent to which a judgment rendered in the person's absence
might prejudice that person or the existing parties;
(2) the extent to which any prejudice could be lessened or avoided by:
(A) protective provisions in the judgment;
(B) shaping the relief; or
(C) other measures;
13

(3) whether a judgment rendered in the person’s absence would be
adequate; and
(4) whether the plaintiff would have an adequate remedy if the action
were dismissed for nonjoinder.
Id. The four factors identified in Rule 19(b) are nonexclusive, and determining
whether a case should proceed without a required party is a case-specific inquiry.
Republic of the Philippines v. Pimental, 553 US. 851, 862-64 (2008).
With respect to the first and second factors, Ms. Smith contends that she and
B2K LLC will both be prejudiced by B2K LLC’s and Ingenuity’s absence in this
matter because Plaintiffs only seek an order enforcing certain provisions of the
settlement agreement, rather than all of the agreement. (Doc. 22, p. 13). Ms.
Smith also contends that the court cannot take any measures, or shape the relief in
this action, to lessen the potential prejudice to her and B2K LLC because the Court
(1) cannot order dismissal of B2K LLC’s lawsuit against her, (2) cannot order B2K
LLC to use best efforts and good faith to conclude its bankruptcy action, (3) cannot
order Ingenuity to indemnify her for potential claw backs from the bankruptcy
court, and (4) cannot order mutual releases between all the parties to the state court
action. (Doc. 22, pp. 13-14).11
First, the bankruptcy court terminated B2K LLC’s bankruptcy action on
October 13, 2017. Text Order of Final Decree, In re B2K Systems, LLC, Case No.
11

Nothing in the record before the court indicates that there are currently any disputes regarding
those four provisions of the underlying settlement agreement.

14

14-07179, Docket Entry 193, (Bankr. W.D. Mich. Oct. 13, 2017).12 Thus, this
court’s inability to order B2K LLC to use its best effort to conclude the bankruptcy
action or to order Ingenuity to indemnify Ms. Smith for potential claw backs from
the bankruptcy court are moot points. Next, during the pendency of B2K LLC’s
bankruptcy proceeding, the bankruptcy trustee abandoned the assets B2K LLC had
disclosed in its bankruptcy schedules, and GAM succeeded to control of those
assets, including B2K LLC’s claims against Ms. Smith in the Michigan state court
action. (Doc. 31-2, p. 3). As a result, GAM, who is a party to this action, has the
power to dismiss B2K LLC’s lawsuit against Ms. Smith, and the court could order
such relief if necessary. Finally, enforcement of the provisions at issue in this
action will not impact any party’s rights under the remaining provisions, and, as
mentioned above, there is nothing to suggest that Ms. Smith and B2K LLC could
not seek enforcement of the remaining provisions of the settlement agreement in a
different forum, such as the Alabama state court. Therefore, Ms. Smith has not
shown that a judgment made in B2K LLC’s absence would prejudice her or B2K
LLC, and the first two Rule 19(b) factors weigh in favor of allowing this action to
proceed in B2K LLC’s absence.

12

“[A] ‘court may take judicial notice of a document filed in another court not for the truth of the
matters asserted in the other litigation, but rather to establish the fact of such litigation and
related filings.’ [] Accordingly, a court may take notice of another court’s order only for the
limited purpose of recognizing the ‘judicial act’ that the order represents or the subject matter of
the litigation.” United States v. Jones, 29 F.3d 1549, 1553 (11th Cir.1994) (citations omitted).

15

With respect to the third factor identified in Rule 19(b), i.e., “whether a
judgment rendered in [B2K LLC’s] absence would be adequate,” FED. R. CIV. P.
19(b)(3), “adequacy refers to the ‘public stake in settling disputes by wholes,
whenever possible.’”

Republic of the Philippines, 553 U.S. at 870 (quoting

Provident Tradesmens Bank & Trust Co. v. Patterson, 390 U.S. 102, 111 (1968)).
Ms. Smith argues that this factor weighs in favor of dismissal because the court
cannot enforce the underlying settlement agreement as a whole. (See Doc. 22, p.
14). While the settlement agreement contains multiple provisions, the parties’
dispute here only pertains to the provisions involving Mr. Byker or GAM’s
payment to Ms. Smith, and Ms. Smith’s requirement to provide the B2K Software
to a third-party expert who would send it to Mr. Byker or GAM. (See Doc. 1; see
also Doc. 1-1). Based on the record before the court, the parties do not have a
dispute regarding the other provisions of the settlement agreement, including the
provisions involving B2K LLC. Thus, the court could resolve the parties’ entire
dispute even if B2K LLC is not a party to this action, and the third factor does not
weigh in favor of dismissal.
Last, Ms. Smith argues that the court should dismiss this action because the
Alabama state court retained jurisdiction over the parties and the settlement
agreement. (Doc. 22, p. 15). Therefore, according to Ms. Smith, Plaintiffs have an
adequate remedy if this case is dismissed because they can bring their claims in the
16

state court. (Id., p. 15). Indeed, Plaintiffs could have chosen to bring their breach
of contract claims against Ms. Smith in the action before the Alabama state court.
However, Plaintiffs chose to bring their claims in this court, and dismissing this
case would deny Plaintiffs the ability to invoke this court’s diversity jurisdiction
over their claims. See New Orleans Public Service, Inc. v. Council of City of New
Orleans, 491 U.S. 350, 358-59 (1989) (“‘When a Federal court is properly
appealed to in a case over which it has by law jurisdiction, it is its duty to take such
jurisdiction . . . . The right of a party plaintiff to choose a Federal court where
there is a choice cannot be properly denied.”) (quoting Willcox v. Consolidated
Gas Co., 212 U.S. 19, 40 (1909). On balance, therefore, the court concludes that
the fourth Rule 19(b) factor does not weigh in favor of either dismissing this action
or allowing it to proceed.
Based on the foregoing, and because the first three Rule 19(b) factors weigh
in favor of allowing the action to proceed, the court finds that even if B2K LLC
was a required party under Rule 19(a), it is not an indispensable party to this
action. As a result, the court concludes that this action should proceed in B2K
LLC’s absence, and Ms. Smith’s motion to dismiss is due to be denied.
B.

Other Pending Motions

Also pending before the court are Ms. Smith’s motion to strike (doc. 40),
Plaintiffs’ motions for leave to serve subpoena (docs. 41, 43), Plaintiffs’ request
17

for status conference (doc. 44), and Plaintiff’s motion to lift the stay on discovery
(doc. 45). First, Ms. Smith’s motion to strike, which pertains to material Plaintiffs
filed in advance of a July 10, 2017 telephone status conference, is moot. Next,
Plaintiffs ask the court for leave to serve a subpoena on Yusuf Musaji, Ms. Smith’s
third-party expert who evaluated the B2K Software during the Alabama state court
litigation and for purposes of the underlying settlement agreement. (Docs. 41, 43).
Ms. Smith objected to service of the subpoena on the grounds that discovery
should not take place in this action until the court rules on her motion to dismiss
(doc. 42), but Ms. Smith’s objections are now moot. Accordingly, the court finds
that Plaintiffs’ motions for leave to serve a subpoena (docs. 41, 43) are due to be
granted. Finally, Plaintiffs’ motion for a status conference to address their motions
for leave to serve a subpoena on Mr. Musaji, (doc. 44), and to lift the stay (doc. 45)
are moot.
IV.

CONCLUSION
For the reasons discussed above, the court finds that B2K LLC is not a

required or indispensable party under Rule 19, and Ms. Smith’s motion to dismiss
(doc. 21) is due to be denied. Ms. Smith’s motion to strike (doc. 40), Plaintiffs’
motion for a status conference (doc. 44), and Plaintiffs’ motion to lift the stay of
discovery (doc 45) are due to be denied as moot. Plaintiffs’ motion for leave to
serve a subpoena (doc. 41) and renewed motion for leave to serve a subpoena (doc.
18

43) are due to be granted. The parties are to meet and confer to determine a
schedule for discovery, including experts and dispositive motions. 13 A separate
order will be entered.
DATED, this 25th day of May, 2018.

_________________________________
JOHN E. OTT
Chief United States Magistrate Judge

13

Should the parties experience any difficulties, the court should be notified and the matter will
be set for a telephone conference call.

19