DeVries v. Pioneer Wireline Services, LLC et al
FINDINGS AND RECOMMENDATIONS re 4 MOTION to Dismiss filed by Pioneer Wireline Services, LLC. IT IS RECOMMENDED that Pioneer's motion to dismiss (ECF 4 ) be DENIED. Signed by Magistrate Judge Carolyn S Ostby on 12/10/2014. (JDH, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
SERVICES, LLC, f/k/a PIONEER
LOG-TECH, LLC, a Delaware
Limited Liability Company, and
JOHN DOES I-V,
Plaintiff Kenton DeVries (“DeVries”) seeks a declaratory
judgment and damages arising from interpretation of certain provisions
of his employment agreement with his employer, Defendant Pioneer
Wireline Services, LLC (“Pioneer”). Am. Cmplt, Pet. for Declaratory
Judgment and Jury Demand (ECF 3) at ¶¶ 21-33.1 Specifically,
DeVries seeks: (1) a declaration that the agreement’s non-disclosure
and non-compete clause is invalid and unenforceable, id. at ¶ 25 (Count
One); (2) a declaration that Pioneer’s breach of the agreement’s double-
“ECF” refers to the document as numbered in the Court’s Electronic
Case Files. See The Bluebook, A Uniform System of Citation, § 10.8.3.
bonuses provision precludes Pioneer from enforcing the non-disclosure
and non-compete clause, id. at ¶30 (Count Two); (3) payment of double
bonuses to which he claims entitlement under the agreement, id. at ¶
33 (Count Three); and (4) attorneys fees and costs, id. DeVries invokes
the Court’s diversity jurisdiction under 28 U.S.C. § 1332. Id. at ¶ 4.
Now pending is Pioneer’s motion to dismiss. Mtn. to Dismiss
(ECF 4). For the reasons set forth below, the Court recommends that
Pioneer’s motion be denied.
In his amended complaint and petition for declaratory judgment,
DeVries alleges as follows:
DeVries has worked as a field engineer in the petroleum industry
since obtaining a B.S. degree in 1996 in petroleum engineering. ECF 3
at ¶ 6. In 2004, he became an owner of Prairie Investors, d/b/a
Competition Wireline Services and Competition Wireline Services, Inc.
On February 29, 2008, DeVries and Prairie entered into an
employment agreement. On that same day, Prairie was sold to Pioneer
Log-Tech, LLC, which, a few days later, changed its name to Pioneer
Wireline Services, LLC. Id. at ¶¶ 8-9. Pioneer now owns all Prairie
assets in Billings, Montana, including the employment agreement
between DeVries and Prairie. Id. at ¶ 10.
DeVries still works for Pioneer. Id. at ¶ 11. Since becoming an
owner at Prairie in 2004, the only employment agreement DeVries has
entered into is the one now owned by Pioneer. Id. at ¶ 12.
DeVries’ employment agreement with Pioneer contains a nondisclosure and non-compete clause. It also contains terms under which
DeVries is eligible for double bonuses. Id. at ¶14.
Pioneer has informed DeVries that it will attempt to use the nondisclosure and non-compete clause to prevent him from seeking
employment in his field with any other entity. Id. at ¶ 15.
From March 2008 until February 13, 2011, DeVries received
double bonuses under the terms of the employment agreement. Id. at ¶
16. He claims he was entitled to receipt of double bonuses from
February 13, 2011, through August 28, 2013. Id. at ¶ 17. Soon after
August 28, 2013, DeVries requested a transfer to Dickinson, North
Dakota, from where he no longer traveled the distance required to
make double bonuses. Id. at ¶ 18.
On September 12, 2014, DeVries filed this action. Verified Cmplt.
& Pet. for Declaratory Judgment (ECF 1) at 1. On October 2, 2014, he
filed his amended complaint and petition for declaratory judgment
setting forth his claims listed above. ECF 3 at ¶¶ 25, 30, and 33.
Pioneer seeks dismissal of all of DeVries’ claims. Pioneer
generally argues that “they request impermissible advisory opinions or
concern disputed breach of contract facts not appropriately resolved
through a declaratory judgment action.” Pioneer’s Opening Br. (ECF 5)
More specifically, Pioneer argues that: (1) Counts One and Two,
which seek declaratory relief, are not justiciable because they seek an
advisory opinion and do not present an actual case or controversy over
which this Court has subject-matter jurisdiction, id. at 3-8; (2) Count
One, which seeks a declaration voiding the non-disclosure and noncompete clause, does not present a justiciable controversy because: (a)
DeVries still works for Pioneer; (b) DeVries has not threatened to
disclose Pioneer’s trade secrets; and (c) Pioneer has not invoked the
clause, id. at 8-11; (3) Count Two, seeking a declaration that Pioneer
breached the agreement by refusing to pay double bonuses, involves
factual disputes not appropriately determined in a declaratory
judgment action and, even if Pioneer did breach the agreement, it
would not excuse DeVries from performing other contractual
obligations, id. at 11-13; and (4) Count Three, seeking enforcement of
the agreement’s double-bonus-for-travel clause, fails under the
agreement’s plain language and because contested facts preclude
declaratory relief and attorneys’ fees and costs, id. at 13-14.
In response, DeVries argues that his claims for declaratory relief
are justiciable under U.S. Supreme Court precedent, and that his
separate claim for damages in Count Three also is justiciable. DeVries’
Resp. Br. (ECF 8) at 2. He argues that both claims for declaratory
judgment present a justiciable case or controversy because: (1) he
alleges that he “has been informed by Pioneer that Pioneer will attempt
to use the non-disclosure and non-compete clause to prevent [him] from
seeking employment in his field with any other entity[,]” id. at 3; (2)
under U.S. Supreme Court authority, if a party’s legal rights are
genuinely and actively contested, the party need not assume the risk of
severe consequences by waiting before seeking a declaration of the
party’s rights, id.; (3) Pioneer could “have negated the justiciability of
[his] claims for declaratory judgment by filing a covenant not to sue
[him] for any future breach of the non-compete provision” but has not
done so, id. at 4; and (4) his claims properly “ask the court to declare a
contractual provision unenforceable in order to clarify and settle legal
relations and provide relief from uncertainty[,]” id. at 5-6.
DeVries also argues that: (1) Count One is not hypothetical or
speculative because Pioneer has placed a full restraint on his ability to
engage in any activity in competition with Pioneer, id. at 7-8; (2) Count
Two is justiciable because courts can decide legal issues under the
Declaratory Judgment Act even if there are factual disputes raised and
the agreement’s clear language provides that DeVries is “entitled” to
double bonuses that he is “eligible” to receive, id. at 8-10; and (3) Count
Three should not be dismissed because it seeks damages in the form of
double bonuses DeVries was to receive and is not a claim for
declaratory relief, id. at 11-12.
In reply, Pioneer reiterates its position that Counts One and Two
are not justiciable because DeVries remains an employee and, although
“he alleges a threat of enforcement of post-employment non-compete
and non-disclosure provisions of his employment agreement, no such
enforcement has taken place or could take place while he remains
employed by Pioneer.” Pioneer’s Reply Br. (ECF 9) at 2. Also, Pioneer
argues that Count Three fails to state a claim for which relief can be
granted because of the agreement’s clear language stating that DeVries
is “eligible” to receive job-based bonuses.” Id. at 4-5.
Pioneer challenges Counts One and Two, which seek declaratory
relief, for lack of subject matter jurisdiction under Rule 12(b)(1). ECF 5
at 3-13. And, it challenges Count Three, which seeks enforcement of a
provision of the employment agreement and damages, for failure to
state a claim for which relief can be granted under Rule 12(b)(6). Id. at
13-14; ECF 9 at 4-5.
A Rule 12(b)(1) motion may assert either a facial or factual attack
on the allegations. Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039
(9th Cir. 2004). A party making a facial attack asserts that “the
allegations contained in a complaint are insufficient on their face to
invoke federal jurisdiction.” Id. A party making a factual attack, on
the other hand, “disputes the truth of the allegations that, by
themselves, would otherwise invoke federal jurisdiction.” Id.
In this case, Pioneer’s attack on DeVries’ Counts One and Two is
facial. It asserts that both counts, on their face, constitute improper
requests for advisory opinions and thus do not come within this Court’s
subject matter jurisdiction. ECF 5 at 8-13. As noted, Pioneer argues
that Count One, concerning the non-compete and non-disclose clause,
involves a non-justiciable controversy because DeVries remains
employed by Pioneer and has neither left his employment nor
threatened to disclose Pioneer’s trade secrets. And Pioneer argues that
Count Two, on its face, is not appropriate for declaratory relief because
fact disputes exist respecting whether DeVries is eligible for or entitled
to certain bonuses under the agreement. Because Pioneer’s attack on
these claims is facial, “all factual allegations in [DeVries’ amended]
complaint are taken as true and all reasonable inferences are drawn in
his favor.” Pride v. Correa, 719 F.3d 1130, 1133 (9th Cir. 2013).
Respecting Pioneer’s motion to dismiss DeVries’ Count Three,
“[d]ismissal under Rule 12(b)(6) is proper only when the complaint
either (1) lacks a cognizable legal theory or (2) fails to allege sufficient
facts to support a cognizable legal theory.” Zixiang Li v. Kerry, 710
F.3d 995, 999 (9th Cir. 2013) (quoting Mendiondo v. Centinela Hosp.
Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008)). The Court’s standard of
review under Rule 12(b)(6) is informed by Rule 8(a)(2), which requires
that a pleading contain “a short and plain statement of the claim
showing that the pleader is entitled to relief.” Ashcroft v. Iqbal, 556
U.S. 662, 677-678 (2009) (quoting Fed. R. Civ. P 8(a)).
To survive a motion to dismiss under Rule 12(b)(6), “a complaint
must contain sufficient factual matter, accepted as true, to ‘state a
claim to relief that is plausible on its face.’” Id. at 678. “A claim has
facial plausibility when the plaintiff pleads factual content that allows
the court to draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Id. A plausibility determination is context
specific, and courts must draw on judicial experience and common
sense in evaluating a complaint. Levitt v. Yelp! Inc., 2014 WL 4290615,
*10 (9th Cir. 2014).
The Declaratory Judgment Act provides:
In a case of actual controversy within its jurisdiction ... any
court in the United States, upon the filing of an appropriate
pleading, may declare the rights and other legal relations of
any interested party seeking such declaration, whether or
not further relief is or could be sought. Any such declaration
shall have the force and effect of a final judgment or decree
and shall be reviewable as such.
28 U.S.C. § 2201(a).
The phrase “a case of actual controversy” refers to the types of
“cases” and “controversies” justiciable under Article III of the U.S.
Constitution. MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127
(2007). “Absent a true case or controversy, a complaint solely for
declaratory relief under 28 U.S.C. § 2201 will fail for lack of jurisdiction
under Rule 12(b)(1).” Rhoades v. Avon Prods., Inc., 504 F.3d 1151, 1157
(9th Cir. 2007) (citation omitted). For a dispute to be a “case or
controversy,” it must be:
real and substantial and admit of specific relief through a
decree of a conclusive character, as distinguished from an
opinion advising what the law would be upon a hypothetical
state of facts. ... Basically, the question in each case is
whether the facts alleged, under all the circumstances, show
that there is a substantial controversy, between parties
having adverse legal interests, of sufficient immediacy and
reality to warrant the issuance of a declaratory judgment.
MedImmune, 549 U.S. at 127 (citations and internal quotation marks
Taking DeVries’ allegations as true, as it must, the Court
concludes that Counts One and Two of the amended complaint present
sufficiently immediate and real controversies to withstand Pioneer’s
motion to dismiss. As noted, DeVries alleges that: (1) he has more than
18 years of experience as a petroleum engineer, ECF 3 at ¶ 6; (2) he
and others sold their company to Pioneer and he has been working for
Pioneer, with which he has an employment agreement, for more than
six years, id. at ¶¶ 8-9; (3) the employment agreement contains a nondisclosure and non-compete clause, id. at ¶ 14; and (4) Pioneer has
informed him that it will attempt to enforce the clause to prevent him
from seeking employment in his field with any other entity, id. at ¶ 15.
These allegations, especially Pioneer’s threat to enforce the nondisclosure and non-compete clause, permit the reasonable inference
that DeVries will face imminent injury if he seeks employment in his
field with another entity. On the current record, Pioneer does not deny
the allegation. Thus, whether the non-disclosure and non-compete
clause is valid and enforceable or an unlawful restraint on DeVries’
pursuit of his trade and profession presents a “real and substantial”
and “definite and concrete” controversy that “touch[es] the legal
relations of parties having adverse legal interests.” MedImmune, 549
U.S. at 127. Accordingly, at this juncture, the Court concludes that
DeVries’ claims for declaratory relief do not seek advisory opinions and
are not appropriate for dismissal based on lack of subject-matter
Respecting Count Three, as noted, Pioneer maintains that it fails
to state a claim upon which relief can be granted under Rule 12(b)(6).
ECF 9 at 4-5.2 The Court disagrees.
Count Three alleges that DeVries was not paid double bonuses
earned under his employment agreement during a certain period of
time. ECF 3 at ¶¶ 32-33. DeVries seeks damages and does not seek
declaratory relief under this claim. Id. at ¶ 33. He also seeks
attorneys fees and costs. Id.
Under the authority cited above, the Court concludes that
DeVries has stated a claim that is plausible on its face. First, he
alleges breach of contract, which is a cognizable legal theory.
Second, he alleges facts sufficient to support the theory. His
allegations are that: (1) his employment agreement with Pioneer
contains a clause providing for double bonuses in certain situations, id.
Pioneer does not cite to Rule 12(b)(6), but its argument leaves no
doubt that it is challenging Count Three for failure to state a claim.
at ¶¶ 14, 16-18; (2) he was entitled to receive double bonuses for a
certain period of time, id. at ¶ 17; (3) he was not paid such bonuses
during that period of time, id. at ¶ 33; and (4) the employment
agreement provides for an award of attorneys fees and costs to a
prevailing party in any litigation in relation to the employment
agreement, id. at 20.
The Court concludes that Count Three contains sufficient factual
allegations to support a cognizable legal theory for breach of contract.
See Zixiang Li, 710 F.3d at 999. And, DeVries’ amended complaint
contains “a short and plain statement of [his] claim showing that [he] is
entitled to relief.” Iqbal, 556 U.S. at 677-78. In sum, he has
adequately stated a claim for breach of contract. Thus, Pioneer’s
motion must be denied. To the extent Pioneer challenges DeVries’
alleged facts, such a challenge is more appropriately addressed at later
stages of the litigation on a more fully-developed record.
Based on the foregoing, IT IS RECOMMENDED that Pioneer’s
motion to dismiss (ECF 4) be DENIED.
NOW, THEREFORE, IT IS ORDERED that the Clerk shall serve
a copy of the Findings and Recommendation of United States
Magistrate Judge upon the parties. The parties are advised that
pursuant to 28 U.S.C. § 636, any objections to the findings and
recommendation must be filed with the Clerk of Court and copies
served on opposing counsel within fourteen (14) days after entry hereof,
or objection is waived.
DATED this 10th day of December, 2014.
/s/ Carolyn S. Ostby
United States Magistrate Judge
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