C.H. Robinson Worldwide, Inc. v. Rodriguez
Filing
24
ORDER denying 10 defendants' Motion to Dismiss (Written Opinion). Signed by Senior Judge David S. Doty on 10/12/2012. (PJM)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Civil No. 12-264(DSD/SER)
C.H. Robinson Worldwide, Inc.,
Plaintiff,
ORDER
v.
Priscilla Rodriguez, and Sun
Commodities, Inc., d/b/a
Sun International, a Florida
corporation,
Defendants.
Shannon M. McDonough, Esq., Alyson M. Palmer, Esq. and
Fafinski, Mark & Johnson, P.A., 775 Prairie Center Drive,
Suite 400, Eden Prairie, MN 55344, counsel for plaintiff.
Lee A. Lastovich, Esq. and Felhaber, Larson, Fenlon &
Vogt, P.A., 220 South Sixth Street, Suite 2200,
Minneapolis, MN 55402, counsel for defendants.
This matter is before the court upon the motion to dismiss by
defendants Priscilla Rodriguez and Sun Commodities, Inc. d/b/a Sun
International (Sun Commodities).
Based on a review of the file,
record and proceedings herein, and for the following reasons, the
motion is denied.
BACKGROUND
This noncompetition dispute arises from the employment of
Rodriguez by Sun Commodities.
Prior to joining Sun Commodities,
Rodriguez worked for plaintiff C.H. Robinson Worldwide, Inc. (C.H.
Robinson).
First Am. Compl. ¶ 10.
C.H. Robinson transports and
sells produce throughout the United States and Puerto Rico.
¶¶ 8-9.
Id.
Rodriguez began her employment with C.H. Robinson as an
assistant/operations person in January 2001 and was promoted to
account manager in 2009.
On
December
22,
Id. ¶¶ 11, 13.
2005,
agreement (the Agreement).
Rodriguez
Id. ¶ 14.
signed
a
noncompetition
The Agreement stated that
upon the conclusion of employment, Rodriguez would not
[d]irectly or indirectly solicit, sell or
render services to or for the benefit of any
Competing Business,1 including a business ...
own[ed] in whole or in part, with any customer
or prospective customer of the Company with
whom I worked or had regular contact, or on
whose account I worked, at any time during the
last two years of my employment with the
Company.
Id. Ex. 1, ¶ IV(C)(1).
The Agreement explained that Rodriguez
agreed to its terms “in consideration of the Company[] entrusting
[her] with Confidential Information, ... [her] employment by the
Company, and ... the compensation to be paid to [her] from time to
time during such employment.”
Id. ¶ IV.
1
The Agreement also
Competing Business is defined as:
“any business, firm, undertaking, company or
organization, other than the Company, which
(1) is engaged in ... a business or business
similar
to
the
Company
Business,
or
(2) regardless of the nature of its business,
either competes directly or indirectly with
the Company in any of the Company Business, or
(3) any person, company or organization
engaged in the produce or transportation
industries as a shipper, receiver or carrier.
First Am. Compl. Ex. 1, ¶ II(D).
2
contained a forum selection clause designating Minnesota as the
exclusive legal forum.
In
November
Id. ¶ IX.
2007,
restricted stock units.
C.H.
Robinson
granted
Rodriguez
110
In return Rodriguez acknowledged that:
In consideration of and in return for
this grant of Restricted Stock ... (1) I have
received and had an opportunity to review and
consider the documentation, Questions and
Answers, and program description for the
[stock program]; and (2) [The Company’s]
grant of Restricted Stock Units/Shares to me
is part of the compensation and consideration
available to me in return for and as a
condition
of
the
various
agreements
I
previously have entered into with [the
Company], which agreements may include, among
others
...
[a]
Confidentiality
and
Noncompetition Agreement.
Id. ¶ 23.
Rodriguez also agreed to “automatically forfeit all
restricted stock” upon a breach of the Agreement.
Id. ¶ 24.
Rodriguez resigned from C.H. Robinson on April 9, 2011.
¶ 25.
Id.
Thereafter, C.H. Robinson informed Rodriguez that it would
limit the scope of the noncompetition clause to nine companies if
she complied with the general provisions of the Agreement.
¶ 27.
Id.
On August 29, 2011, Rodriguez began a produce salesperson
position with Sun Commodities, a company not on the list of
restricted companies.
Id. ¶ 28.
C.H. Robinson alleges that Sun
Commodities is a Competing Business as defined in the Agreement.
Id. ¶ 29.
C.H. Robinson sent cease-and-desist letters to both
Rodriguez and Sun Commodities on October 26, 2011.
id. Ex. 3.
3
Id. ¶¶ 31-32;
On February 23, 2012, C.H. Robinson filed suit, alleging
breach of contract against Rodriguez and tortious interference with
contractual relations against Sun Commodities.
seeks
to
enjoin
Rodriguez’s
employment
at
C.H. Robinson also
Sun
Commodities.
Rodriguez and Sun Commodities move to dismiss for lack of personal
jurisdiction or, in the alternative, for failure to state a claim.
DISCUSSION
I.
Personal Jurisdiction
To
survive
a
motion
to
dismiss
for
lack
of
personal
jurisdiction, a plaintiff must establish a prima facie case that
the forum state has personal jurisdiction over the defendant.2
Stevens v. Redwing, 146 F.3d 538, 543 (8th Cir. 1998).
See
In the
absence of an evidentiary hearing, a court “must look at the facts
in the light most favorable to the nonmoving party and resolve all
factual conflicts in favor of that party.”
Dakota Indus., Inc. v.
Dakota Sportswear, Inc., 946 F.2d 1384, 1387 (8th Cir. 1991)
(citations omitted).
A federal court may assume jurisdiction over
a nonresident defendant “only to the extent permitted by the longarm statute of the forum state and by the Due Process Clause.”
Romak USA, Inc. v. Rich, 384 F.3d 979, 984 (8th Cir. 2004)
(citation and quotation marks omitted).
2
Because the Minnesota
The court must resolve questions of jurisdiction before
considering the merits of an action. See Crawford v. F. Hoffman-La
Roche Ltd., 267 F.3d 760, 764 (8th Cir. 2001).
4
long-arm
statute
“confers
jurisdiction
to
the
fullest
extent
permitted by the Due Process Clause,” the court need only consider
due process requirements.
See Coen v. Coen, 509 F.3d 900, 905 (8th
Cir. 2007) (citation omitted).
To satisfy due process, a defendant must have “sufficient
minimum contacts” with the forum state such that maintaining the
suit
“does
not
offend
traditional
notions
of
fair
play
and
substantial justice.”
Romak, 384 F.3d at 984 (citation omitted).
“Sufficient
exist
when
forum
state
connection
contacts
with
the
[a]
are
defendant’s
such
that
conduct
[it]
reasonably anticipate being haled into court there.”
and
should
Coen, 509
F.3d at 905 (citation and internal quotation marks omitted).
Contacts
with
the
forum
state
can
establish
personal
jurisdiction under either general or specific jurisdiction.
A
forum state has specific jurisdiction when the cause of action
“arise[s] out of” or “relate[s] to” a defendant’s activities within
that state.
(1985).
cause
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472
General jurisdiction is present when, regardless of the
of
action,
a
defendant
has
contacts with the forum state.”
“continuous
and
systematic
Coen, 509 F.3d at 905 (citation
and quotation marks omitted).
A.
A
Enforceability of Agreement
valid
forum
selection
specific jurisdiction.
clause
is
sufficient
to
confer
See St. Paul Fire & Marine Ins. Co. v.
5
Courtney
Enters.,
Inc.,
270
F.3d
621,
624
(8th
Cir.
2001).
Moreover, “[d]ue process is satisfied when a defendant consents to
personal jurisdiction by entering into a contract that contains a
valid forum selection clause.” Dominium Austin Partners, L.L.C. v.
Emerson, 248 F.3d 720, 726 (8th Cir. 2001) (citation omitted).
Defendants do not dispute that the Agreement contains a forum
selection
clause,
unenforceable.
but
instead
argue
that
the
Agreement
is
Specifically, defendants claim that the Agreement
is invalid for lack of consideration and failure of consideration.3
1.
Lack of Consideration
Defendants first argue that the Agreement is invalid for a
lack of consideration.
“Where a noncompetition agreement is not
ancillary to an employment contract, it must be supported by
independent consideration to be enforceable.”
Sanborn Mfg. v.
Currie, 500
1993)
omitted).
N.W.2d
161,
164
(Minn. Ct.
App.
(citation
“The mere continuation of employment can constitute
adequate compensation to uphold [noncompetition] agreements, but
the [agreement] must be bargained for and provide the employee with
real advantages.”
C.H. Robinson Worldwide, Inc. v. FLS Transp.,
Inc., 772 N.W.2d 528, 534 (Minn. Ct. App. 2009) (citing Davies &
3
Lack of consideration and failure of consideration are
distinct legal theories. “A lack of consideration means that no
contract was ever formed; a failure of consideration, by contrast,
means that an initially valid contract has become unenforceable.”
Olympus Ins. Co. v. Aon Benfield, Inc., No. 11-CV-2607, 2012 WL
1072334, at *8 n.5 (D. Minn. Mar. 30, 2012).
6
Davies Agency, Inc. v. Davies, 298 N.W.2d 127, 130-31 (Minn.
1980)).
“The adequacy of consideration for restrictive covenants
signed during an ongoing employment relationship will depend upon
the facts of each case.”
Freeman v. Duluth Clinic, Inc., 334
N.W.2d 626, 630 (Minn. 1983).
Defendants argue that C.H. Robinson’s grant of restricted
stock was not independent consideration sufficient to support the
Agreement.
Specifically,
defendants
assert
that
the
amended
complaint contains no evidence that the stock was accepted, had any
value or would have been unavailable to Rodriguez had she not
signed the Agreement.
The
amended
complaint,
however,
alleges
that
“Rodriguez
accepted the grant of restricted stock,” agreeing that it “was part
of the compensation and consideration available ... in return for
and as a condition of various agreements, which may include, among
others, [a] Confidentiality and Noncompetition Agreement.”
Am. Compl. ¶¶ 22-23.
First
Upon a motion to dismiss for lack of personal
jurisdiction, the court construes all factual disputes in favor of
the nonmoving party. See Dakota Indus., Inc. v. Dakota Sportswear,
Inc., 946 F.2d 1384, 1387 (8th Cir. 1991) (citations omitted).
a
result,
these
meager
facts
in
the
amended
complaint
As
are
sufficient to “raise a reasonable expectation that discovery will
reveal evidence” that Rodriguez accepted valuable stock that would
have otherwise been unavailable had she not signed the Agreement.
7
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007).
Therefore,
defendants’ argument is without merit, and the court denies the
motion to dismiss for lack of consideration.4
2.
Failure of Consideration
Defendants next argue that the Agreement is invalid for a
failure of consideration.
Specifically, defendants argue that
under the terms of the C.H. Robinson stock program, Rodriguez
“automatically forfeit[ed] all restricted stock” upon a breach of
the Agreement.
occurs
when
First Am. Compl. ¶ 24.
a
contract
that
was
A failure of consideration
initially
valid
“becomes
unenforceable because the performance bargained for has not been
rendered.”
1976).
however,
Clearing,
Franklin v. Carpenter, 244 N.W.2d 492, 495 (Minn.
“Where a promisor received what [s]he bargained for,
there
is
no
Inc., 408
Minnesota law).
failure
F.3d
of
512,
consideration.”
515
(8th Cir.
2005)
In
re
MJK
(applying
In other words, the court does not inquire as to
what will occur after an alleged breach of contract; it need only
4
Defendants also argue that consideration was lacking because
issuance of the restricted stock occurred two years after execution
of the Agreement.
In the employment context, however,
consideration need not be contemporaneous to the execution of a
noncompetition agreement. See, e.g., Davies, 298 N.W.2d at 131
(upholding noncompetition agreement where employee received no
consideration at time of signing agreement but later obtained
“substantial economic and professional benefits”); Satellite
Indus., Inc. v. Keeling, 396 N.W.2d 635, 639 (Minn. Ct. App. 1986)
(finding sufficient consideration when employee is employed for
many years after signing agreement, advances within the company and
is given increased responsibilities).
8
determine
whether
the
promisor
received
that
for
which
she
bargained. Rodriguez, according to the amended complaint, received
the restricted stock, and thus subsequent divestment, due to an
alleged breach of contract, does not render the Agreement void for
failure of consideration.
Therefore, defendants’ argument is
without merit, and the court denies the motion to dismiss for
failure of consideration.
B.
Enforceability of Forum Selection Clause
Defendants next argue that the forum selection clause is
unenforceable. As an initial matter, the court must decide whether
to apply state or federal law.
The enforceability of a forum
selection clause implicates both the substantive law of contracts
and the procedural law of venue, and the Eighth Circuit has not
taken a definitive position on what law to apply.
See Servewell
Plumbing, LLC v. Fed. Ins. Co., 439 F.3d 786, 789 (8th Cir. 2006).
But see Fru-Con Const. Corp. v. Controlled Air, Inc., 574 F.3d 527
(8th Cir. 2009) (“[E]nforcement ... of the contractual forum
selection clause was a federal court procedural matter governed by
federal law.”).
The court need not answer this question, however,
because Minnesota follows the federal standard announced by the
Court in M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972).
See Hauenstein & Bermeister, Inc. v. Met–Fab Indus., Inc., 320
N.W.2d 886, 889–90 (Minn. 1982).
As a result, the court applies
the standard announced in Bremen and adopted by the highest court
9
in Minnesota.
See M.B. Rests., Inc. v. CKE Rests., Inc., 183 F.3d
750, 752 (8th Cir. 1999) (avoiding Erie question and applying
federal law to determine enforceability of forum selection clause
where parties did not argue federal and state standards differ).
1.
“Forum
Rodriguez
selection
clauses
are
prima
facie
valid
and
are
enforced unless they are unjust or unreasonable or invalid for
reasons such as fraud or overreaching.”
752 (citing Bremen, 407 U.S. at 15).
M.B. Rests., 183 F.3d at
When “the forum selection
clause is the fruit of an arm’s-length negotiation, the party
challenging the clause bears an especially ‘heavy burden of proof’
to avoid its bargain.”
Servewell Plumbing, 439 F.3d at 789
(quoting Bremen, 407 U.S. at 15).
“A forum selection clause is
unjust or unreasonable if: (1) the clause is the product of fraud
or overreaching; (2) the party would effectively be deprived of
h[er] day in court if the clause is enforced; and (3) enforcing the
clause would contravene the public policy of the forum in which
suit is brought.”
St. Jude Med., S.C. v. Biosense Webster, Inc.,
No.
WL
12-621,
2012
1576141,
at
*3
(D.
Minn.
May
4,
2012)
(citations omitted).
Rodriguez first argues that the forum selection clause is
unreasonable because it is an adhesion contract.
Specifically,
Rodriguez argues that C.H. Robinson presented the Agreement on a
take-it-or-leave-it basis and that her signature was the result of
10
unequal bargaining power.
The “bare assertion that the [contract
was] offered on [this] basis is not sufficient as a matter of law
to establish adhesion.”
Dominium Austin Partners, LLC v. Emerson,
248 F.3d 720, 727 (8th Cir. 2001).
Moreover, “[t]he fact that the
contract was a form contract and that the individual clauses were
not
actually
negotiated
unenforceable.”
does
not
render
the
clause
per
se
M.B. Rests., 183 F.3d at 753 (citing Carnival
Cruise Lines v. Shute, 499 U.S. 585, 593 (1991)).
Viewing the
facts in a light most favorable to C.H. Robinson, the court is not
persuaded that the Agreement is an adhesion contract.
Rodriguez next argues that the forum selection clause is
invalid
because
Rodriguez
it
is
explains that
seriously
she
inconvenient.
lives
more
then 2000
In
support,
miles
from
Minnesota and that all events pertaining to this action took place
in Florida. Mere inconvenience, however, is insufficient to defeat
a forum selection clause.
a
party
seeking
to
M.B. Rests., 183 F.3d at 753.
avoid
her
promise
must
Instead,
demonstrate
that
proceeding in “the contractual forum will be so gravely difficult
and inconvenient that [s]he will for all practical purposes be
deprived of h[er] day in court.”
Dominium Austin Partners, 248
F.3d at 727 (citation and internal quotation marks omitted).
No
such evidence is present. Therefore, the forum selection clause is
not unreasonable, and dismissal of Rodriguez is not warranted.
11
2.
Sun Commodities
Sun Commodities argues that it is not subject to the forum
selection clause because it was neither a party nor an intended
third-party beneficiary to the Agreement.
However, “a third party
may be bound by a forum selection clause where it is ‘closely
related to the dispute such that it becomes foreseeable that it
will be bound.’”
Medtronic, Inc. v. Endologix, Inc., 530 F. Supp.
2d 1054, 1056 (D. Minn. 2008) (quoting
Marano Enters. of Kan. v.
Z-Teca Rests., L.P., 254 F.3d 753, 757 (8th Cir. 2001)).5
In
Medtronic, the court explained that the defendants were closely
related, because the third-party employer solicited employees while
being “fully aware of the [noncompete] agreements and, hence, the
forum selection clauses.”
Id. at 1057.
Sun Commodities, relying
on this language, attempts to distinguish Medtronic, and argues
that C.H. Robinson did not allege in the first amended complaint
that it knew of Rodriguez’s noncompetition agreement.
A company’s lack of knowledge regarding a noncompetition
agreement, however, does not end the inquiry.
For example, the
Medtronic court also explained that “all of the defendants clearly
share a common interest in this action: the right of [former
employees] to solicit their former ... customers on behalf of their
5
Both parties cite Minnesota law.
In C.H. Robinson
Worldwide, Inc. v. FLS Transportation, Inc., 772 N.W.2d 528, 534-35
(Minn. Ct. App. 2009), Minnesota adopted the federal standard. For
the reasons already discussed and because analysis under federal or
Minnesota law does not differ, the court applies federal law.
12
new employer.”
Id. 1057; see ELA Med., Inc. v. Arrhythmia Mgmt.
Assocs., Inc., No. 06-3580, 2007 WL 892517, at *6 (D. Minn. Mar.
21, 2007) (explaining “common interest” among defendants as an
important factor in determining whether to apply the closelyrelated-party doctrine). Moreover, courts will examine whether the
defendants’
interests
are
so
closely
represented by the same counsel.
1056.
aligned
that
they
are
Medtronic, 530 F. Supp. 2d at
Further, courts inquire as to whether the third-party
employer was a willing party to a prior litigation involving the
same subject matter.
See St. Jude Medical, S.C., Inc. v. Biosense
Webster, Inc., No. 12-621, 2012 WL 1576141, at *5 (D. Minn. May 4,
2012)
(“[Defendant
corporation]
first-filed ... action.”).
was
a
willing
party
to
the
As a result, the court is unpersuaded
that the only inquiry is whether Sun Commodities was aware of the
Agreement prior to hiring Rodriguez.6
Instead, the proper inquiry is whether, “the third party
reasonably [should] foresee being bound by the forum selection
clause because of its relationships to the cause of action and the
signatory to the forum selection clause.”
2d at 1057.
Medtronic, 530 F. Supp.
Sun Commodities and Rodriguez share a common interest
in Rodriguez’s continued employment, have the same attorney and Sun
6
From a policy standpoint, this interpretation is logical
because otherwise employers have a disincentive to inquire as to
whether a noncompetition agreement exists between a prospective
employee and their former employer.
13
Commodities has already sought a declaration of its rights under
the Agreement in Florida federal court.
See Sun Commodities, Inc.
v. C.H. Robinson Worldwide, Inc., No. 11-62738, 2012 WL 602616
(S.D. Fla. Feb. 23, 2012). Moreover, after learning of Rodriguez’s
employment at Sun Commodities, C.H Robinson sent cease-and-desist
letters threatening legal action against both defendants.
Am. Compl. Ex. 3.
to
employ
First
Despite this warning, Sun Commodities continued
Rodriguez.
As
such,
it
was
foreseeable
that
Sun
Commodities would be haled into court in Minnesota. Therefore, Sun
Commodities is subject to personal jurisdiction under the closelyrelated-party doctrine, and dismissal of Sun Commodities is not
warranted.
II.
Failure to State a Claim
To survive a motion to dismiss for failure to state a claim,
“‘a complaint must contain sufficient factual matter, accepted as
true, to state a claim to relief that is plausible on its face.’”
Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 594 (8th Cir. 2009)
(quoting Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009)).
“A
claim has facial plausibility when the plaintiff [has pleaded]
factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.”
Iqbal, 129 S. Ct. at 1949 (citing Bell Atl. Corp. v. Twombly, 550
U.S. 544, 556 (2007)).
Although a complaint need not contain
detailed factual allegations, it must raise a right to relief above
14
the speculative level.
See Twombly, 550 U.S. at 555.
“[L]abels
and conclusions or a formulaic recitation of the elements of a
cause of action are not sufficient to state a claim.”
Iqbal, 129
S. Ct. at 1949 (citation and internal quotation marks omitted).
Defendants argue that dismissal for failure to state a claim
is
warranted
because
the
Agreement
is
invalid
for
lack
of
consideration and failure of consideration and that the forum
selection clause is unjust and unreasonable. As already explained,
these arguments fail. Therefore, defendants’ motion to dismiss for
failure to state a claim is denied.
CONCLUSION
Accordingly,
based
on
above,
IT
IS
HEREBY
ORDERED
that
defendants’ motion to dismiss [ECF No. 10] is denied.
Dated:
October 12, 2012
s/David S. Doty
David S. Doty, Judge
United States District Court
15
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